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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): DECEMBER 30, 1997
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LUND INTERNATIONAL HOLDINGS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 000-16319 41-1568618
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(STATE OR OTHER (COMMISSION (I.R.S. EMPLOYER
JURISDICTION OF FILE NUMBER) IDENTIFICATION NO.)
INCORPORATION)
911 LUND BOULEVARD, ANOKA, MN 55303
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (612) 576-4200
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
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On December 30, 1997, a wholly-owned subsidiary of the
registrant, Zephyros Acquisition Corporation, a Delaware corporation
("Purchaser"), closed the acquisition (the "Acquisition") of 4,742,411
shares of Common Stock (the "Purchased Shares") of Deflecta-Shield
Corporation, a Delaware Corporation (the "Company"), for per share
consideration of $16.00 net to the holders of the Purchased Shares in cash
(the "Offer Price"), or total consideration of $75,878,576, upon the terms
and conditions set forth in the Offer to Purchase, dated November 28, 1997
(the "Offer to Purchase"), and the related Letter of Transmittal (together
with the Offer to Purchase, the "Offer"). The Offer was made pursuant to
the Agreement and Plan of Merger, dated as of November 25, 1997, by and
among the registrant, Purchaser and the Company (the "Merger Agreement").
The Purchased Shares represented approximately 98.8% of the
issued and outstanding shares of Common Stock of the Company as of December
30, 1997. Pursuant to the terms of the Merger Agreement, Purchaser will be
merged with and into the Company (the "Merger"), with the Company surviving
the Merger. In the Merger, the holders of the remaining shares of Common
Stock of the Company as of the effective time of the Merger (other than the
registrant and its affiliates) will receive an amount per share in cash
equal to the Offer Price, without interest thereon. The shares of Common
Stock of Purchaser outstanding immediately prior to the Merger shall be
converted into shares of Common Stock of the Company.
The funds for the purchase of the Purchased Shares were obtained
from (i) an equity investment in the registrant of approximately $30
million from an affiliate of Harvest Partners, Inc., (ii) a loan to
Purchaser of approximately $41 million from Heller Financial, Inc.
("Heller"), pursuant to the Tender Offer Loan Agreement, dated as of
December 30, 1997 (the "Loan Agreement"), by and among the registrant,
Purchaser and Heller, as agent for the lenders and as lender, and (iii)
working capital of the registrant. The current interest rate for the loan
is the Base Rate (which, generally, is defined in the Loan Agreement to
mean the rate of interest from time to time published by the Board of
Governors of the Federal Reserve System as the "Bank Prime Loan" rate in
Federal Reserve Statistical Release H.15(519)) plus 1.5% per annum. To
secure their obligations under the Loan Agreement, the registrant pledged
its shares of stock in certain of its subsidiaries and Purchaser pledged
the Purchased Shares. In addition, borrowings under the Loan Agreement are
required to be repaid not later than the earlier to occur of (i) the Merger
or (ii) June 30, 1998 (the "Termination Date"). If such borrowings are not
repaid by the Termination Date, then the interest rate will be equal to the
then applicable Interest Rate plus 2% per annum, provided that for each 90
day period that borrowings are not so paid (the first such period to
commence on the 91st day after the Termination Date), beginning on the
first day of such period, the interest rate (as increased) shall increase
by an additional 1% percent per annum (not to exceed 18% per annum).
If the Termination Date has occurred and the interest rate under
the Loan Agreement is equal to 18% per annum at any time, Heller would be
entitled to purchase shares of the registrant's Common Stock pursuant to
the Warrant to Purchase Common Stock of Lund International Holdings, Inc.,
dated December 30, 1997 (the "Warrant"), initially equal to 2% of the fully
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diluted shares, as defined in the Warrant, of the registrant, subject to
increase by an additional 2% of the fully diluted shares on the first day
of each succeeding calendar quarter until all amounts owing under the Loan
Agreement are paid in full. The initial warrant price is $.01 per share of
the Common Stock of the registrant.
The statements in this Item 2 are intended to summarize the
transactions and documents referred to in this Item 2. Such statements are
qualified in their entirety by reference to the exhibits listed in Item 7
hereof.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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(b) Pro Forma Financial Statements
The unaudited pro forma financial statements of the Company
giving effect to the Merger will be filed within 60 days of January 14,
1997, the day that this report was due to be filed.
(c) Exhibits:
1. Agreement and Plan of Merger, dated as of November 25, 1997,
by and among the Parent, the Purchaser and the Company.*
2. Stockholder Agreement, dated November 25, 1997, by and
between the Parent and Mark C. Mamolen.*
3. Stockholder Agreement, dated November 25, 1997, by and
between the Parent and Charles S. Meyer.*
4. Tender Offer Loan Agreement, dated as of December 30, 1997,
by and among the registrant, Purchaser and Heller, as agent
and as lender.
5. Guaranty of Payment, dated as of December 30, 1997, by the
registrant in favor of Heller, as agent for the benefit of
the lender.
6. Pledge Agreement, dated as of December 30, 1997, by the
registrant in favor of Heller, as agent for the benefit of
the lenders.
7. Borrower Pledge Agreement, dated as of December 30, 1997, by
Purchaser in favor of Heller, as agent for the benefit of
the lenders.
8. Warrant to Purchase Common Stock of Lund International
Holdings, Inc., dated December 30, 1997.
9. Tender Offer Note, dated as of December 30, 1997, by
Purchaser for the maximum amount of $41 million.
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10. Press Release, dated December 30, 1997.
____________________
*Incorporated herein by reference to file number 005-44017.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
LUND INTERNATIONAL HOLDINGS, INC.
By: /s/ William J. McMahon
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Name: William J. McMahon
Title: President
Dated: January 14, 1998
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EXHIBIT INDEX
Exhibit Description
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4. Tender Offer Loan Agreement, dated as of December 30, 1997,
by and among the registrant, Purchaser and Heller, as agent
and as lender.
5. Guaranty of Payment, dated as of December 30, 1997, by the
registrant in favor of Heller, as agent for the benefit of
the lender.
6. Pledge Agreement, dated as of December 30, 1997, by the
registrant in favor of Heller, as agent for the benefit of
the lenders.
7. Borrower Pledge Agreement, dated as of December 30, 1997, by
Purchaser in favor of Heller, as agent for the benefit of
the lenders.
8. Warrant to Purchase Common Stock of Lund International
Holdings, Inc., dated December 30, 1997.
9. Tender Offer Note, dated as of December 30, 1997, by
Purchaser for the maximum amount of $41 million.
10. Press Release, dated December 30, 1997.
Exhibit 4
TENDER OFFER
LOAN AGREEMENT
AMONG
ZEPHYROS ACQUISITION CORPORATION,
AS BORROWER,
LUND INTERNATIONAL HOLDINGS, INC.,
AS GUARANTOR,
THE LENDING INSTITUTIONS LISTED HEREIN,
AND
HELLER FINANCIAL, INC.,
AS AGENT AND AS LENDER
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DATED AS OF DECEMBER 30, 1997
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TABLE OF CONTENTS
PAGE
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SECTION 1. DEFINITIONS......................................................1
1.1 CERTAIN DEFINED TERMS. .........................................1
1.2 ACCOUNTING TERMS................................................14
1.3 OTHER DEFINITIONAL PROVISIONS...................................14
SECTION 2. LOANS AND COLLATERAL............................................15
2.1 LOANS...........................................................15
(A) TENDER OFFER LOAN ADVANCES..................................15
(B) NOTES.......................................................15
(C) EVIDENCE OF TENDER OFFER LOAN OBLIGATIONS...................15
(D) BORROWING OPTIONS.........................................15
(E) MINIMUM AMOUNT OF EACH TENDER OFFER
LOAN ADVANCE..............................................16
(F) BORROWING MECHANICS.......................................16
(G) OPEN MARKET PURCHASES.....................................16
2.2 INTEREST. .....................................................16
(A) RATE OF INTEREST. .......................................16
(B) INTEREST PERIODS. .......................................17
(C) COMPUTATION AND PAYMENT OF INTEREST. ....................17
(D) INTEREST LAWS.............................................18
(E) CONVERSION OR CONTINUATION. .............................18
2.3 FEES............................................................19
(A) UNUSED LINE FEE...........................................19
(B) OTHER FEES AND EXPENSES. ................................19
(C) FEE LETTER................................................19
2.4 PAYMENTS AND PREPAYMENTS........................................19
(A) MANNER AND TIME OF PAYMENT. .............................19
(B) MANDATORY PREPAYMENTS.....................................20
(C) VOLUNTARY PREPAYMENTS.....................................20
(D) PAYMENTS ON BUSINESS DAYS.................................20
2.5 TERM OF THIS AGREEMENT..........................................20
2.6 STATEMENTS......................................................20
2.7 CAPITAL ADEQUACY AND OTHER ADJUSTMENTS..........................21
2.8 TAXES...........................................................21
(A) NO DEDUCTIONS.............................................21
(B) CHANGES IN TAX LAWS.......................................21
(C) FOREIGN LENDERS...........................................22
2.9 REQUIRED TERMINATION AND PREPAYMENT.............................23
2.10 OPTIONAL PREPAYMENT/REPLACEMENT OF AGENT OR LENDERS IN
RESPECT OF INCREASED COSTS......................................23
2.11 COMPENSATION....................................................23
2.12 BOOKING OF LIBOR LOANS..........................................24
2.13 ASSUMPTIONS CONCERNING FUNDING OF LIBOR LOANS...................24
2.14 REGULATION U AND REGULATION G...................................24
SECTION 3. CONDITIONS TO LOANS.............................................24
3.1 CONDITIONS TO LOANS.............................................24
(A) CLOSING DELIVERIES........................................24
(B) SECURITY INTERESTS........................................24
(C) REPRESENTATIONS AND WARRANTIES............................24
(D) FEES......................................................25
(E) NO DEFAULT................................................25
(F) PERFORMANCE OF AGREEMENTS.................................25
(G) NO PROHIBITION............................................25
(H) NO LITIGATION.............................................25
(I) COMPLIANCE WITH REGULATIONS...............................25
(J) ISSUANCE TO HOLDINGS......................................25
(K) CORPORATE STRUCTURE.......................................25
(L) FORM FR U-1 OR FORM FR G..................................25
(M) USE OF OTHER FUNDS........................................26
(N) CONSUMMATION OF TENDER OFFER..............................26
(O) TENDER OF SHARES OF TARGET; CONTROL.......................26
(P) ADVERSE CHANGE............................................26
(Q) FINANCIAL INFORMATION, PRE-COMMITMENT INFORMATION.........26
SECTION 4. BORROWER'S AND HOLDINGS' REPRESENTATIONS AND
WARRANTIES................................................27
4.1 ORGANIZATION, POWERS, CAPITALIZATION............................27
(A) ORGANIZATION AND POWERS...................................27
(B) CAPITALIZATION; SUBSIDIARIES..............................27
4.2 AUTHORIZATION OF BORROWING, NO CONFLICT.........................27
4.3 APPROVALS.......................................................28
4.4 FINANCIAL CONDITION.............................................28
4.5 INDEBTEDNESS AND LIABILITIES....................................29
4.6 NAMES...........................................................29
4.7 LOCATIONS; FEIN.................................................29
4.8 TITLE TO PROPERTIES; LIENS......................................29
4.9 PERFECTED, VALID SECURITY INTEREST..............................29
4.10 LITIGATION; ADVERSE FACTS.......................................30
4.11 PAYMENT OF TAXES................................................30
4.12 INVESTMENTS.....................................................30
4.13 MATERIAL AGREEMENTS.............................................30
4.14 PERFORMANCE OF AGREEMENTS.......................................30
4.15 EMPLOYEE BENEFIT PLANS..........................................31
4.16 INTELLECTUAL PROPERTY...........................................31
4.17 BROKER'S FEES...................................................31
4.18 ENVIRONMENTAL COMPLIANCE........................................31
4.19 SOLVENCY........................................................31
4.20 DISCLOSURE......................................................32
4.21 INSURANCE.......................................................32
4.22 EMPLOYEE MATTERS................................................32
4.23 COMPLIANCE WITH LAWS............................................33
4.24 GOVERNMENT REGULATION; USE OF PROCEEDS;
MARGIN REGULATIONS..............................................33
4.25 ACQUISITION.....................................................34
4.26 HOLDINGS AND BORROWER ACTIVITIES................................34
4.27 OPEN MARKET PURCHASES...........................................34
4.28 AMENDMENTS TO SCHEDULES.........................................34
SECTION 5. AFFIRMATIVE COVENANTS...........................................34
5.1 FINANCIAL STATEMENTS AND OTHER REPORTS..........................34
(A) MONTHLY FINANCIALS........................................34
(B) QUARTERLY FINANCIALS......................................35
(C) YEAR-END FINANCIALS.......................................35
(D) ACCOUNTANTS' REPORTS......................................35
(E) COMPLIANCE CERTIFICATE....................................36
(F) MANAGEMENT REPORT.........................................36
(G) GOVERNMENT NOTICES........................................36
(H) EVENTS OF DEFAULT, ETC....................................36
(I) TRADE NAMES...............................................36
(J) LOCATIONS.................................................37
(K) LITIGATION................................................37
(L) PROJECTIONS...............................................37
(M) OTHER INDEBTEDNESS NOTICES................................37
(N) OTHER INFORMATION.........................................37
(O) PUBLIC FILINGS............................................37
(P) AGREEMENT NOTICES.........................................38
5.2 ACCESS TO ACCOUNTANTS AND MANAGEMENT............................38
5.3 INSPECTION......................................................38
5.4 COLLATERAL RECORDS..............................................38
5.5 CORPORATE EXISTENCE.............................................38
5.6 PAYMENT OF TAXES ETC............................................38
5.7 MAINTENANCE OF PROPERTIES; INSURANCE............................39
5.8 COMPLIANCE WITH LAWS............................................39
5.9 PERFORMANCE OF MATERIAL CONTRACTS...............................39
5.10 TRANSACTIONS WITH AFFILIATES....................................39
5.11 PERFORMANCE OF ACQUISITION DOCUMENTS............................39
5.12. CONSUMMATION OF MERGER..........................................40
5.13 FURTHER ASSURANCES..............................................40
5.14 USE OF PROCEEDS AND MARGIN SECURITY.............................40
SECTION 6. FINANCIAL COVENANTS.............................................40
6.1 FIXED CHARGE COVERAGE...........................................40
SECTION 7. NEGATIVE COVENANTS..............................................40
7.1 INDEBTEDNESS AND LIABILITIES....................................40
7.2 GUARANTIES......................................................41
7.3 TRANSFERS, LIENS AND RELATED MATTERS............................41
(A) TRANSFERS.................................................41
(B) LIENS.....................................................41
(C) NO NEGATIVE PLEDGES.......................................41
(D) NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS
TO HOLDINGS OR BORROWER...................................41
7.4 INVESTMENTS AND LOANS...........................................42
7.5 RESTRICTED JUNIOR PAYMENTS......................................42
7.6 RESTRICTION ON FUNDAMENTAL CHANGES..............................42
7.7 CHARTER AMENDMENTS..............................................43
7.8 ACCOUNTING CHANGES..............................................43
7.9 PREPAYMENTS, ETC. OF DEBT.......................................43
7.10 TRANSACTIONS WITH AFFILIATES....................................43
7.11 ENVIRONMENTAL LIABILITIES.......................................43
7.12 CONDUCT OF BUSINESS.............................................43
7.13 COMPLIANCE WITH ERISA...........................................43
7.14 TAX CONSOLIDATIONS..............................................43
7.15 SUBSIDIARIES....................................................44
7.16 PRESS RELEASE; PUBLIC OFFERING MATERIALS........................44
SECTION 8. DEFAULT, RIGHTS AND REMEDIES....................................44
8.1 EVENT OF DEFAULT................................................44
(A) PAYMENT...................................................44
(B) DEFAULT IN OTHER AGREEMENTS...............................44
(C) BREACH OF CERTAIN PROVISIONS..............................44
(D) BREACH OF WARRANTY........................................44
(E) OTHER DEFAULTS UNDER LOAN DOCUMENTS.......................44
(F) CHANGE IN CONTROL.........................................45
(G) INVOLUNTARY BANKRUPTCY; APPOINTMENT OF
RECEIVER, ETC.............................................45
(H) VOLUNTARY BANKRUPTCY; APPOINTMENT OF
RECEIVER, ETC.............................................45
(I) LIENS.....................................................45
(J) JUDGMENT AND ATTACHMENTS..................................46
(K) DISSOLUTION...............................................46
(L) SOLVENCY..................................................46
(M) INJUNCTION................................................46
(N) INVALIDITY OF LOAN DOCUMENTS AND
ACQUISITION DOCUMENTS.....................................46
(O) FAILURE OF SECURITY.......................................46
(P) DAMAGE, STRIKE, CASUALTY..................................46
(Q) LICENSES AND PERMITS......................................46
(R) FORFEITURE................................................46
(S) CHANGE OF BUSINESS ACTIVITIES.............................47
8.2 SUSPENSION OF COMMITMENTS.......................................47
8.3 ACCELERATION....................................................47
8.4 APPOINTMENT OF ATTORNEY-IN-FACT.................................47
8.5 LIMITATION ON DUTY OF AGENT WITH RESPECT TO COLLATERAL..........47
8.6 APPLICATION OF PROCEEDS.........................................48
8.7 WAIVERS, NON-EXCLUSIVE REMEDIES.................................48
SECTION 9. ASSIGNMENT AND PARTICIPATION....................................48
9.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS.........................48
9.2 AGENT...........................................................50
(A) APPOINTMENT...............................................50
(B) NATURE OF DUTIES..........................................50
(C) RIGHTS, EXCULPATION, ETC..................................50
(D) RELIANCE..................................................51
(E) INDEMNIFICATION...........................................51
(F) HELLER INDIVIDUALLY.......................................51
(G) SUCCESSOR AGENT...........................................52
(1) RESIGNATION.........................................52
(2) APPOINTMENT OF SUCCESSOR............................52
(3) SUCCESSOR AGENT.....................................52
(H) COLLATERAL MATTERS........................................52
(1) RELEASE OF COLLATERAL...............................52
(2) CONFIRMATION OF AUTHORITY; EXECUTION
OF RELEASES.................................52
(3) ABSENCE OF DUTY.....................................53
(I) AGENCY FOR PERFECTION.....................................53
(J) EXERCISE OF REMEDIES......................................53
9.3 CONSENTS........................................................53
9.4 SET OFF AND SHARING OF PAYMENTS.................................54
9.5 DISBURSEMENT OF FUNDS...........................................54
9.6 SETTLEMENTS, PAYMENTS AND INFORMATION...........................55
(A) TENDER OFFER LOAN ADVANCES AND PAYMENTS;
FEE PAYMENTS..............................................55
(B) AVAILABILITY OF LENDER'S PRO RATA SHARE...................55
(C) RETURN OF PAYMENTS........................................56
9.7 DISSEMINATION OF INFORMATION....................................56
SECTION 10. MISCELLANEOUS..................................................57
10.1 EXPENSES AND ATTORNEYS' FEES....................................57
10.2 INDEMNITY.......................................................57
10.3 AMENDMENTS AND WAIVERS..........................................58
10.4 NOTICES.........................................................59
10.5 SURVIVAL OF WARRANTIES AND CERTAIN AGREEMENTS...................60
10.6 INDULGENCE NOT WAIVER...........................................60
10.7 MARSHALING; PAYMENTS SET ASIDE..................................60
10.8 ENTIRE AGREEMENT................................................60
10.9 INDEPENDENCE OF COVENANTS.......................................60
10.10 SEVERABILITY....................................................61
10.11 LENDERS' OBLIGATIONS SEVERAL; INDEPENDENT NATURE
OF LENDERS' RIGHTS..............................................61
10.12 HEADINGS........................................................61
10.13 APPLICABLE LAW..................................................61
10.14 SUCCESSORS AND ASSIGNS..........................................61
10.15 NO FIDUCIARY RELATIONSHIP; LIMITATION OF LIABILITIES............61
10.16 CONSENT TO JURISDICTION.........................................62
10.17 WAIVER OF JURY TRIAL............................................62
10.18 CONSTRUCTION....................................................62
10.19 COUNTERPARTS; EFFECTIVENESS.....................................62
10.20 NO DUTY.........................................................63
10.21 CONFIDENTIALITY.................................................63
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EXHIBITS
A Assignment and Assumption Agreement
B Compliance Certificate
C Notice of Borrowing
SCHEDULES
1.1(A) Other Liens
1.1(B) Pro Forma
1.1(C) Projections
3.1(A) List of Closing Documents
4.1(B) Capitalization; Subsidiaries
4.3 Approvals
4.5 Indebtedness and Liabilities
4.6 Names
4.7 Location of Principal Place of Business and Books and Records; FEIN
4.8(A) Properties Owned
4.10 Litigation
4.12 Investments
4.17 Broker's Fees
7.2 Guaranties
7.3(D) Restrictions on Distributions
7.4 Investments and Loans
7.5 Restricted Junior Payments
<PAGE>
TENDER OFFER
LOAN AGREEMENT
This TENDER OFFER LOAN AGREEMENT is dated as of December 30, 1997
and entered into among ZEPHYROS ACQUISITION CORPORATION, a Delaware
corporation ("Borrower"), with its principal place of business at 911
Lund Boulevard, Anoka, Minnesota 55303, LUND INTERNATIONAL HOLDINGS,
INC., a Delaware corporation ("Holdings"), with its principal place of
business at 911 Lund Boulevard, Anoka, Minnesota 55303, the financial
institution(s) listed on the signature pages hereof and their
respective successors and assigns (each individually a "Lender" and
collectively "Lenders") and HELLER FINANCIAL, INC., a Delaware
corporation (in its individual capacity, "Heller"), with offices at
500 West Monroe, Chicago, Illinois 60661, for itself as a Lender and
as Agent. All capitalized terms used herein are defined in Section 1
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of this Agreement.
WHEREAS, Borrower, which is a wholly-owned subsidiary of
Holdings, has commenced the Tender Offer for the Target Shares (as
each of such terms is hereinafter defined);
WHEREAS, Deflecta-Shield Corporation, a Delaware corporation
("Target"), Borrower and Holdings have entered into the Merger
Agreement which provides for the Tender Offer and the Merger (as each
of such terms is hereinafter defined);
WHEREAS, Borrower has requested the Lenders to make Tender Offer
Loan Advances (as hereinafter defined) of up to $42,000,000 to
Borrower for the purpose of financing (x) a portion of the purchase of
the Target Shares tendered and accepted for payment by Borrower
pursuant to the Tender Offer Documents and (y) any Open Market
Purchases (as hereinafter defined);
WHEREAS, Borrower desires to secure its obligations under the
Loan Documents by pledging to Agent, for the benefit of Lenders, all
of the shares of capital stock of Target which Borrower shall own;
WHEREAS, Holdings ("Corporate Guarantor") is willing to guaranty
all of the obligations of Borrower to Agent and Lenders under the Loan
Documents and to pledge to Agent, for the benefit of Lenders, all of
the shares of capital stock of all of Holdings' subsidiaries,
including Borrower, Lund Industries, Incorporated ("LII"), and Lund
Acquisition Corp.; and
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, Borrower,
Holdings, Agent and Lenders agree as follows:
SECTION 1. DEFINITIONS
1.1 Certain Defined Terms. The following terms used in this
---------------------
Agreement shall have the following meanings:
"Acquisition" means the purchase by Borrower for cash of the
outstanding Target Shares pursuant to the Offer to Purchase.
"Acquisition Documents" means the Tender Offer Documents, the
Merger Agreement, and all other documents and information sent by
Holdings, Borrower or Target to the shareholders of Target or filed
with the SEC in connection with the Tender Offer.
"Affiliate" means any Person: (a) directly or indirectly
controlling, controlled by, or under common control with, any Loan
Party; (b) directly or indirectly owning or holding five percent (5%)
or more of any equity interest in Holdings or Borrower; (c) five
percent (5%) or more of whose stock or other equity interest having
ordinary voting power for the election of directors or the power to
direct or cause the direction of management, is directly or indirectly
owned or held by Holdings or Borrower; or (d) which has a senior
executive officer who is also a senior executive officer of Holdings
or Borrower. For purposes of this definition, "control" (including
with correlative meanings, the terms "controlling", "controlled by"
and "under common control with") means the possession directly or
indirectly of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of
voting securities or other equity interest, or by contract or
otherwise. Neither any Lender nor any parent of any Lender nor any
Subsidiary of any such Lender or parent shall be treated as an
Affiliate of Borrower or Holdings or of any Subsidiary or Affiliate of
Borrower or Holdings.
"Agent" means Heller in its capacity as agent for the Lenders
under the Loan Documents and any successor in such capacity appointed
pursuant to subsection 9.1.
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"Agent's Account" means ABA No. 0710-0001-3, Account No. 52-
98695 at First National Bank of Chicago, One First National Plaza,
Chicago, IL 60670, Reference: Heller Corporate Finance Group for the
benefit of Lund International Holdings, Inc.
"Agreement" means this Tender Offer Loan Agreement as it may be
amended, restated, supplemented or otherwise modified from time to
time.
"Assignment and Assumption Agreement" means an agreement among
Agent, a Lender and such Lender's assignee regarding their respective
rights and obligations with respect to assignments of the Loans, the
Commitments and other interests under this Agreement and the other
Loan Documents substantially in the form of Exhibit A.
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"Base Rate" means a variable rate of interest per annum equal to
the rate of interest from time to time published by the Board of
Governors of the Federal Reserve System as the "Bank Prime Loan" rate
in Federal Reserve Statistical Release H.15(519) entitled "Selected
Interest Rates" or any successor publication of the Federal Reserve
System reporting the Bank Prime Loan rate or its equivalent. The
statistical release generally sets forth a Bank Prime Loan rate for
each Business Day. The applicable Bank Prime Loan rate for any date
not set forth shall be the rate set forth for the last preceding day.
In the event the Board of Governors of the Federal Reserve System
ceases to publish a Bank Prime Loan rate or its equivalent, the term
"Base Rate" shall mean a variable rate of interest per annum equal to
the highest of the "prime rate", "reference rate", "base rate", or
other similar rate as determined by Agent announced from time to time
by any of Citibank, N.A., Bankers Trust Company or The Chase Manhattan
Bank, or their successors (with the understanding that any such rate
may merely be a reference rate and may not necessarily represent the
lowest or best rate actually charged to any customer by any such
bank).
"Base Rate Loans" means Loans bearing interest at rates
determined by reference to the Base Rate.
"Basic Agreements" means, collectively, the Acquisition Documents
and the Loan Documents.
"Board" means the Board of Governors of the Federal Reserve
System.
"Borrower" has the meaning assigned to that term in the preamble
to this Agreement.
"Business Day" means any day excluding Saturday, Sunday and any
day which is a legal holiday under the laws of the States of Illinois
or Pennsylvania, or is a day on which banking institutions located in
any such state are closed, or for the purposes of LIBOR Loans only, a
day on which commercial banks are open for dealings in Dollar deposits
in the London, England (U.K.) market.
"Capital Expenditures" means all expenditures (including
deposits) for, or contracts for expenditures (excluding contracts for
expenditures under or with respect to Capital Leases, but including
cash down payments for assets acquired under Capital Leases) with
respect to any fixed assets or improvements, or for replacements,
substitutions or additions thereto, which have a useful life of more
than one year, including the direct or indirect acquisition of such
assets by way of increased product or service charges, offset items or
otherwise.
"Capital Lease" means any lease of any property (whether real,
personal or mixed) that, in conformity with GAAP, should be accounted
for as a capital lease.
"Cash Equivalents" means: (a) marketable direct obligations
issued or unconditionally guaranteed by the United States Government
or issued by any agency thereof and backed by the full faith and
credit of the United States, in each case maturing within six (6)
months from the date of acquisition thereof; (b) commercial paper
maturing no more than six (6) months from the date issued and, at the
time of acquisition, having a rating of at least A-1 from Standard &
Poor's Corporation or at least P-1 from Moody's Investors Service,
Inc.; and (c) certificates of deposit or bankers' acceptances maturing
within six (6) months from the date of issuance thereof issued by, or
overnight reverse repurchase agreements from, any commercial bank
organized under the laws of the United States of America or any state
thereof or the District of Columbia having combined capital and
surplus of not less than $250,000,000 and not subject to setoff rights
in favor of such bank.
"Closing Date" means December 30, 1997.
"Collateral" means the Pledged Shares, as defined in the Pledge
Agreements, together with any and all other collateral pledged
pursuant to the Pledge Agreements.
"Commitment" or "Commitments" means the commitment or commitments
of Lenders to make Loans as set forth in subsection 2.1(A).
-----------------
"Compliance Certificate" means a certificate duly executed by the
chief executive officer or chief financial officer of Holdings and
Borrower appropriately completed and in substantially the form of
Exhibit B.
- ---------
"Consulting Agreements" means the Consulting Agreements dated
March 31, 1997 by and between Old World Industries, Inc. ("Old World")
and LII, as amended, supplemented or otherwise modified from time to
time; provided, that any such amendment, supplement or modification
--------
relating to fees or commissions to be paid by LII to Old World or
expenses incurred by Old World shall be approved by Agent in advance
in writing.
"Corporate Guarantor" has the meaning assigned to that term in
the preamble to this Agreement.
"Corporate Guaranty" means the continuing guaranty by Corporate
Guarantor in a form reasonably acceptable to Agent, as such agreement
may hereafter be amended, restated, supplemented or otherwise modified
from time to time.
"Default" means a condition, act or event that, after notice or
lapse of time or both, would constitute an Event of Default if that
condition or event were not cured or removed within any applicable
grace or cure period.
"Default Rate" has the meaning assigned to that term in
subsection 2.2.
- --------------
"Defaulted Amount" means, with respect to any Lender at any time,
any amount required to be paid by such Lender to Agent or any other
Lender hereunder or under any other Loan Document at or prior to such
time which has not been so paid as of such time, including, without
limitation, any amount required to be paid by such Lender to Agent to
reimburse Agent for the amount of any Loan made by Agent for the
account of such Lender.
"Defaulting Lender" means, at any time, any Lender that, at such
time, owes a Defaulted Amount.
"Defaulting Lender Notice" has the meaning assigned to that term
in subsection 9.6(B)(3).
--------------------
"Depositary Agent" means IBJ Schroder Bank & Trust Company,
having a place of business at One State Street, New York, New York
10004.
"Depositary Agreement" means that certain Depositary Agreement
dated December 30, 1997, among the Depositary Agent, Borrower, Lund,
Harris Trust & Savings Bank ("Transfer Agent"), Deflecta and Agent,
pursuant to which the Depositary Agent and the Transfer Agent, as
agents, bailees and custodians for Agent, shall, among other things,
hold the Target Shares (whether certificated or uncertificated or
security entitlements) and any funds wired to the Depositary Agent by
Lenders, for the benefit of Agent, for the benefit of Lenders, in
accordance with the terms and conditions of such Depositary Agreement.
"Dollars" and "$" means lawful money of the United States of
America.
"EBITDA" means, for any period, without duplication, the total of
the following for Holdings, Borrower and their respective Subsidiaries
(other than Target and its Subsidiaries) on a consolidated basis, each
calculated for such period: (1) net income determined in accordance
with GAAP; plus, to the extent included in the calculation of net
----
income, (2) the sum of (a) income and franchise taxes paid or accrued;
(b) Interest Expenses, net of interest income, paid or accrued; (c)
interest paid in kind; (d) amortization and depreciation, (e) other
non-cash charges (excluding accruals for cash expenses made in the
ordinary course of business); and (f) gains or losses of assets from
sales or other dispositions (other than Inventory) in the normal
course of business; less, to the extent included in the calculation of
----
net income, (3) the sum of (a) the income of any Person (other than
wholly-owned Subsidiaries of Holdings) in which Holdings or Borrower
or a wholly-owned Subsidiary of Holdings or Borrower has an ownership
interest except to the extent such income is received by Holdings or
Borrower or such wholly-owned Subsidiary in a cash distribution during
such period; and (b) extraordinary or non-recurring gains, but not net
of extraordinary or non-recurring "cash" losses.
"Employee Benefit Plan" means any employee benefit plan within
the meaning of Section 3(3) of ERISA which (a) is maintained for
------------
employees of any Loan Party or its Subsidiaries or --- any ERISA
Affiliate or (b) has at any time within the preceding six (6) years
been maintained for the employees of any Loan Party or its
Subsidiaries or any current or former ERISA Affiliate.
"Environmental Claims" means claims, liabilities, investigations,
litigation, administrative proceedings, judgments or orders relating
to Hazardous Materials.
"Environmental Laws" means any present or future federal, state
or local law, rule, regulation or order relating to pollution, waste,
disposal or the protection of human health or safety, plant life or
animal life, natural resources or the environment.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute and all
rules and regulations promulgated thereunder.
"ERISA Affiliate", as applied to any Loan Party or its
Subsidiaries, means any Person who is a member of a group which is
under common control with any Loan Party or its Subsidiaries, who
together with any Loan Party or its Subsidiaries is treated as a
single employer within the meaning of Section 414(b) and (c) of the
----------------------
IRC.
"Event of Default" means each of the events set forth in
subsection 8.1.
- --------------
"Excess Interest" has the meaning assigned to that term in
subsection 2.2(D).
- -----------------
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Expiration Date" has the meaning assigned to that term in
subsection 2.5.
- --------------
"Federal Funds Effective Rate" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100th of 1%) of
the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published
on the next succeeding Business Day by the Federal Reserve Bank of New
York or, if such rate is not so published for any day that is a
Business Day, the average (rounded upwards, if necessary, to the next
1/100th of 1%) of the quotations for such day for such transactions
received by Agent from three Federal funds brokers of recognized
standing selected by Agent.
"Fee Letter" means that certain letter agreement between Holdings
and Agent, dated November 24, 1997, relating to fees.
"First Advance" has the meaning assigned to that term in
subsection 2.1(D).
- -----------------
"Fiscal Year" means each twelve month period ending (x) on June
30 in each year in the case of Holdings and the Lund Subsidiaries and
(y) on December 31 in each year in the case Target and its
Subsidiaries, provided, however, that, beginning with the year
-------- -------
commencing January 1, 1998, and each year thereafter, Fiscal Year for
Holdings and its Subsidiaries (including Target and its Subsidiaries)
shall mean each twelve month period ending on December 31 in each
year.
"Fixed Charge Coverage" means, for any period, the ratio of
Operating Cash Flow to Fixed Charges.
"Fixed Charges" means, for any period, and each calculated for
such period (without duplication), (a) Interest Expenses paid or
accrued by Holdings, Borrower and their respective Subsidiaries (other
than Target and its Subsidiaries); plus (b) scheduled payments of
----
principal with respect to all Indebtedness of Holdings, Borrower and
their respective Subsidiaries (other than Target and its Subsidiaries;
plus (c) any provision for (to the extent it is greater than zero)
- ----
income or franchise taxes included in the determination of net income,
excluding any provision for deferred taxes; plus (d) Restricted Junior
----
Payments made in cash to the extent permitted under subsection 7.5(b);
-----------------
plus (e) payment of deferred taxes accrued in any prior period.
- ----
"Funding Date" means the date of each funding of a Loan.
"GAAP" means generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards
Board that are applicable to the circumstances as of the date of
determination.
"Hazardous Material" means all or any of the following: (a)
substances that are defined or listed in, or otherwise classified
pursuant to, any Environmental Laws or regulations as "hazardous
substances", "hazardous materials", "hazardous wastes", "toxic
substances" or any other formulation intended to define, list or
classify substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity, or toxicity;
(b) oil, petroleum or petroleum derived substances, natural gas,
natural gas liquids or synthetic gas and drilling fluids, produced
waters and other wastes associated with the exploration, development
or production of crude oil, natural gas or geothermal resources; (c)
any flammable substances or explosives or any radioactive materials;
and (d) asbestos in any form or electrical equipment which contains
any oil or dielectric fluid containing polychlorinated biphenyls.
"IDRB" means the Industrial Development Revenue Bonds issued
pursuant to that certain Indenture of Trust between City of Anoka,
Minnesota and First Trust National Association, Trustee, dated as of
September 1, 1994 Industrial Development Revenue Bonds (Lund
Industries Incorporated Projects) and the Mortgage and Security
Agreement and Fixture Financing Statement from Lund Industries
Incorporated, as Mortgagor, to the First Trust National Association,
as Mortgagee, dated as of September 1, 1994, which Mortgage secures
the repayment of the obligations of Lund Industries Incorporated under
that certain Loan Agreement between City of Anoka, Minnesota and Lund
Industries Incorporated, dated as of September 1, 1994, the payments
under which have been assigned to First Trust National Association, as
Trustee, under such Indenture of Trust.
"Indebtedness", as applied to any Person, means without
duplication: (a) all indebtedness for borrowed money; (b) obligations
under leases which in accordance with GAAP constitute Capital Leases;
(c) notes payable and drafts accepted representing extensions of
credit whether or not representing obligations for borrowed money; (d)
any obligation owed for all or any part of the deferred purchase price
of property or services if the purchase price is due more than six
months from the date the obligation is incurred or is evidenced by a
note or similar written instrument; (e) all indebtedness secured by
any Lien on any property or asset owned or held by that Person
regardless of whether the indebtedness secured thereby shall have been
assumed by that Person or is non recourse to the credit of that
Person; (f) obligations in respect of letters of credit and (g) any
advances under any factoring arrangement.
"Intellectual Property" means all present and future designs,
patents, patent rights and applications therefor, trademarks and
registrations or applications therefor, trade names, inventions,
copyrights and all applications and registrations therefor, software
or computer programs, license rights, trade secrets, methods,
processes, know-how, drawings, specifications, descriptions, and all
memoranda, notes and records with respect to any research and
development, whether now owned or hereafter acquired, all goodwill
associated with any of the foregoing, and proceeds of all of the
foregoing, including, without limitation, proceeds of insurance
policies thereon.
"Interest Expenses" means, without duplication, for any period,
the following, for Holdings, Borrower and their respective
Subsidiaries (other than Target and its Subsidiaries) each calculated
for such period: interest expenses deducted in the determination of
net income (excluding (i) the amortization of fees and costs with
respect to the transactions contemplated by this Agreement which have
been capitalized as transaction costs in accordance with the
provisions of subsection 1.2; and (ii) interest paid in kind).
--------------
"Interest Period" has the meaning assigned to that term in
subsection 2.2(B).
- -----------------
"Interest Rate" has the meaning assigned to that term in
subsection 2.2(A).
- -----------------
"Inventory" means all "inventory" (as defined in the UCC),
including, without limitation, finished goods, raw materials, work in
process and other materials and supplies used or consumed in a
Person's business, and goods which are returned or repossessed.
"Investments" means (i) any direct or indirect purchase or other
acquisition by Holdings, Borrower or any of their respective
Subsidiaries of any beneficial interest in, including stock,
partnership interest or other equity securities of, or ownership
interest in, any other Person; and (iii) any direct or indirect loan,
advance or capital contribution by Holdings, Borrower or any of their
respective Subsidiaries to any other Person, including all
indebtedness and accounts receivable from that other Person that are
not current assets or did not arise from sales to that other Person in
the ordinary course of business.
"IRC" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor statute and all rules and regulations
promulgated thereunder.
"Lender" or "Lenders" has the meaning assigned to that term in
the preamble to this Agreement.
"Liabilities" shall have the meaning given that term in
accordance with GAAP and shall include Indebtedness.
"LIBOR" means, for each Interest Period, a rate of interest equal
to:
(a) the rate of interest determined by Agent at which deposits in
Dollars for the relevant Interest Period are offered based on
information presented on the Reuters Screen LIBOR Page as of 11:00
A.M. (London time) on the day which is two (2) Business Days prior to
the first day of such Interest Period; provided that if at least two
--------
such offered rates appear on the Reuters Screen LIBOR Page in respect
of such Interest Period, the arithmetic mean of all such rates (as
determined by Agent) will be the rate used; provided, further, that if
-------- -------
Reuters ceases to provide LIBOR quotations, such rate shall be the
average rate of interest determined by Agent at which deposits in
Dollars are offered for the relevant Interest Period by Citibank,
N.A., Bankers Trust Company, The Chase Manhattan Bank, or its
successors to prime banks in the London interbank market as of 11:00
A.M. (London time) on the applicable interest rate determination date,
divided by (b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day which is two (2) Business Days prior
to the beginning of such Interest Period (including, without
limitation, basic, supplemental, marginal and emergency reserves under
any regulations of the Board of Governors of the Federal Reserve
System or other governmental authority having jurisdiction with
respect thereto, as now and from time to time in effect) for
Eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of such Board) which are required to be
maintained by a member bank of the Federal Reserve System; (such rate
to be adjusted to the nearest one sixteenth of one percent (1/16 of
1%) or, if there is not a nearest one sixteenth of one percent (1/16
of 1%), to the next higher one sixteenth of one percent (1/16 of 1%)).
"LIBOR Loans" means at any time that portion of the Loans bearing
interest at rates determined by reference to LIBOR.
"Lien" means any lien, mortgage, pledge, security interest,
charge or encumbrance of any kind, whether voluntary or involuntary,
(including any conditional sale or other title retention agreement,
any lease in the nature thereof, and any agreement to give any
security interest).
"LII" has the meaning assigned to that term in the preamble of
this Agreement.
"Loan" or "Loans" means an advance or advances under the Tender
Offer Loan Commitment.
"Loan Documents" means this Agreement, the Tender Offer Notes,
Corporate Guaranty, the Pledge Agreements, the Lender Option
Agreement, and all other instruments, documents and agreements
executed by or on behalf of any Loan Party and delivered concurrently
herewith or at any time hereafter to or for Agent or any Lender in
connection with the Loans and other transactions contemplated by this
Agreement, all as amended, restated, supplemented or modified from
time to time.
"Loan Party" means each of Holdings and Borrower and any other
Person (other than Agent or any Lender) which is or becomes a party to
any Loan Document (collectively, referred to as the "Loan Parties").
"Lund Subsidiaries" means collectively, Borrower, Lund
Industries, Incorporated, Lund Acquisition Corp. and Lund FSC,
Incorporated.
"Margin Stock" has the meaning specified in Regulation G or
Regulation U, as applicable.
"Material Adverse Effect" means a material adverse effect upon
(a) the business, condition, properties, assets, performance or
condition (financial or otherwise) of any Loan Party and its
Subsidiaries, taken as a whole, or (b) the ability of any Loan Party
to perform its obligations under any Loan Document to which it is a
party or of Agent or any Lender to enforce or collect any of the
Obligations or (c) the rights and remedies of Agent and Lenders under
the Loan Documents.
"Maximum Default Rate" has the meaning assigned to that term in
subsection 2.2(A).
- -----------------
"Maximum Loan Amount" means, as of any date of determination,
fifty percent (50%) (or such lesser percentage as is assigned as the
maximum loan value pursuant to Regulation G or U, as applicable), of
the current market value (as defined in Regulation G or U, as
applicable), of the Target Shares (x) accepted for payment and
purchased by Borrower pursuant to the Tender Offer Documents and (y)
purchased by Borrower through Open Market Purchases, in each case
pledged to secure the Tender Offer Loan Advances under the Loan
Documents; provided, however, that, if more than ninety percent (90%)
-------- -------
of the Target Shares have been validly tendered and not withdrawn and
accepted for payment by Borrower pursuant to the Offer to Purchase,
Maximum Loan Amount shall be deemed to mean the Tender Offer Loan
Commitments.
"Maximum Rate" has the meaning assigned to that term in
subsection 2.2(D).
- -----------------
"Merger" means the merger of Borrower with and into Target as
contemplated in the Merger Agreement.
"Merger Agreement" means the Agreement and Plan of Merger, dated
as of November 25, 1997, by and among Borrower, Holdings and Target,
including any exhibits, appendices and annexes thereto, as the same
may be amended, supplemented or otherwise modified from time to time;
provided, however, that any amendments, supplements or other
- -------- -------
modifications shall be approved by the Requisite Lenders in advance in
writing.
"Notes" means the Tender Offer Notes.
"Notice of Borrowing" has the meaning assigned to that term in
subsection 2.1(F).
"Obligations" means all obligations, liabilities and indebtedness
of every nature of each Loan Party from time to time owed to Agent or
to any Lender under the Loan Documents including the principal amount
of all debts, claims and indebtedness (whether incurred before or
after the Termination Date), accrued and unpaid interest and all fees,
costs and expenses, whether primary, secondary, direct, contingent,
fixed or otherwise, heretofore, now and/or from time to time hereafter
owing, due or payable including, without limitation, all interest,
fees, cost and expenses accrued or incurred after the filing of any
petition under any bankruptcy or insolvency law.
"Offer to Purchase" means the Offer to Purchase, dated November
28, 1997, of Borrower issued in connection with the Acquisition, as
the same may be amended, supplemented or otherwise modified to the
date hereof, and as further amended, modified, or supplemented,
provided, however, that any such further amendments, supplements or
- -------- -------
other modifications shall be approved by the Requisite Lenders in
advance in writing.
"Old World" has the meaning assigned to that term in the
definition of "Consulting Agreement".
"Open Market Purchases" means the purchase by Borrower, from time
to time, for cash in the open market (other than in the Tender Offer)
or in a privately negotiated purchases of the outstanding Target
Shares which were not tendered and accepted for payment by Borrower
pursuant to the Offer to Purchase.
"Operating Cash Flow" means, for any period, (a) EBITDA less (b)
----
Capital Expenditures plus (c) cash dividends and cash contributions
----
received.
"Permitted Encumbrances" means the following types of Liens: (a)
Liens (other than Liens relating to Environmental Claims or ERISA) for
taxes, assessments or other governmental charges not yet due and
payable; (b) statutory Liens of landlords, carriers, warehousemen,
mechanics, materialmen and other similar liens imposed by law, which
are incurred in the ordinary course of business for sums not more than
thirty (30) days delinquent or which are being diligently contested in
good faith in a manner which stays enforcement of such Liens, provided
that reserves or other appropriate provisions shall have been
established therefor in accordance with GAAP and the aggregate amount
of liabilities secured by such Liens does not exceed $50,000 at any
time; (c) Liens (other than any Lien imposed by ERISA or any rule or
regulation promulgated thereunder) incurred or deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security, statutory
obligations, surety and appeal bonds, bids, leases, government
contracts, trade contracts, performance and return-of-money bonds and
other similar obligations (exclusive of obligations for the payment of
borrowed money); (d) easements, rights-of-way, restrictions, and other
similar charges or encumbrances not interfering in any material
respect with the ordinary conduct of the business of any Loan Party or
any of its Subsidiaries; (e) Liens for purchase money obligations,
provided (i) the Indebtedness secured by any such Lien is permitted
- --------
under subsection 7.1 and (ii) such Lien encumbers only the asset so
--------------
purchased; (f) Liens in favor of Agent, on behalf of Lenders, and (g)
Liens set forth on Schedule 1.1(A).
---------------
"Person" means and includes natural persons, corporations,
limited partnerships, general partnerships, limited liability
companies, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations, whether or not legal entities, and
governments and agencies and political subdivisions thereof.
"Pledge Agreements" means, collectively, those certain stock
pledge agreements executed and delivered by Borrower and Holdings,
respectively, in favor of Agent, on behalf of Lenders, in form and
substance satisfactory to Agent as such agreements may hereafter be
amended, restated, supplemented or otherwise modified from time to
time.
"Pledged Shares" has the meaning assigned to that term in each of
the Pledge Agreements.
"Pre-Commitment Information" shall have the meaning assigned to
that term in subsection 3.1(Q).
-----------------
"Pro Forma" means the unaudited consolidated and consolidating
balance sheet of Holdings, Borrower and their respective Subsidiaries
as of the Closing Date after giving effect to the transactions
contemplated by this Agreement and the Acquisition Documents. The Pro
Forma is annexed hereto as Schedule 1.1(B).
---------------
"Projections" means each of Holdings', Borrower's and their
respective Subsidiaries' forecasted consolidated and consolidating:
(a) balance sheets; (b) profit and loss statements; (c) cash flow
statements; and (d) capitalization statements, all prepared on a
division by division and Subsidiary by Subsidiary basis and otherwise
consistent with such Holdings', Borrower's and their respective
Subsidiaries' historical financial statements, together with
appropriate supporting details and a statement of underlying
assumptions. The Projections are annexed hereto as Schedule 1.1(C).
---------------
"Pro Rata Share" means (a) with respect to matters relating to a
particular Commitment of a Lender, the percentage obtained by dividing
(i) such Commitment of that Lender by (ii) all such Commitments of all
Lenders and (b) with respect to all other matters, the percentage
obtained by dividing (i) the Total Loan Commitment of a Lender by (ii)
the Total Loan Commitments of all Lenders, in either case as such
percentage may be adjusted by assignments permitted pursuant to
subsection 9.1; provided, however, if any Commitment is terminated
- -------------- -------- -------
pursuant to the terms hereof, then "Pro Rata Share" means the
percentage obtained by dividing (x) the aggregate amount of such
Lender's outstanding Loans related to such Commitment by (y) the
aggregate amount of all outstanding Loans related to such Commitment.
"Regulation G" means Regulation G of the Board as from time to
time in effect and any successor to all or a portion thereof
establishing margin requirements.
"Regulation U" means Regulation U of the Board as from time to
time in effect and any successor to all or a portion thereof
establishing margin requirements.
"Requisite Lenders" means Lenders holding or being responsible
for sixty-six and two- thirds percent (66.66%) or more of the sum of
(a) outstanding Loans and (b) unutilized Commitments.
"Restricted Junior Payment" means: (a) any dividend or other
distribution, direct or indirect, on account of any shares of any
class of stock of Holdings or any Subsidiary (including Target and its
Subsidiaries) of Holdings, other than wholly-owned Subsidiaries of
Holdings, now or hereafter outstanding, except a dividend payable
solely with shares of the class of stock on which such dividend is
declared; (b) any payment or prepayment of principal of, premium, if
any, or interest on, or any redemption, conversion, exchange,
retirement, defeasance, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, of any Indebtedness
subordinated in right of payment to the Obligations or any shares of
any class of stock of Holdings, Borrower or any of their respective
Subsidiaries now or hereafter outstanding, or the issuance of a notice
of an intention to do any of the foregoing; (c) any payment made to
retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire shares of any class of stock of
Holdings, Borrower or any of their respective Subsidiaries now or
hereafter outstanding; and (d) any payment (other than in shares of
capital stock) by Holdings, Borrower or any of their respective
Subsidiaries of any management, consulting or similar fees to any
Affiliate, whether pursuant to a management agreement or otherwise.
"SEC" means the Securities and Exchange Commission.
"Securities Act of 1933" means the Securities Act of 1993, as
amended.
"Settlement Date" has the meanings assigned to that term in
subsection 9.6(A)(2).
- --------------------
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than fifty percent
(50%) of the total voting power of shares of stock (or equivalent
ownership or controlling interest) entitled (without regard to the
occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other
subsidiaries of that Person or a combination thereof. Unless otherwise
expressly provided, (x) all references herein to Subsidiary shall mean
a Subsidiary of Holdings and/or Borrower, as applicable, and (y)
Target and its Subsidiaries will be deemed a single Subsidiary, taken
as a whole, of Borrower on and after the Tender Offer Closing Date.
"Target" has the meaning assigned to that term in the preamble of
this Agreement.
"Target Shares" means the shares of common stock, par value $0.1
per share, of Target.
"Tender Offer" means the tender offer made by Borrower to
purchase, for cash, all of the outstanding Target Shares pursuant to
the Tender Offer Documents.
"Tender Offer Closing Date" means the date of the closing of the
Tender Offer pursuant to the Tender Offer Documents, which also shall
be the date the Target Shares are accepted for payment by Borrower.
"Tender Offer Documents" means collectively, the Offer to
Purchase, Schedule 14D-1 dated November 28, 1997, filed by Borrower,
Schedule 14D-9, dated November 28, 1997, filed by Target with respect
to the Offer to Purchase, and all amendments and exhibits thereto and
related documents filed with the SEC or distributed to the
stockholders of Target.
"Tender Offer Loan" means the unpaid balance of all Tender Offer
Loan Advances made pursuant to subsection 2.1(A).
-----------------
"Tender Offer Loan Advances" means the advances made pursuant to
subsection 2.1(A).
- -----------------
"Tender Offer Loan Commitment" means (a) as to any Lender, the
commitment of such Lender to make its Pro Rata share of the Tender
Offer Loan Advances in the maximum aggregate amount set forth on the
signature page of this Agreement opposite such Lender's signature or
in the most recent Assignment and Assumption Agreement, if any,
executed by such Lender and (b) as to all Lenders, the aggregate
commitment of all Lenders to make the Tender Offer Loan Advances.
"Tender Offer Note" or "Tender Offer Notes" means each promissory
note of Borrower in a form acceptable to Agent, issued pursuant to
subsection 2.1(B).
- -----------------
"Termination Date" means the earlier to occur of the Merger or
June 30, 1998.
"Total Loan Commitment" means as to any Lender the aggregate
commitments of such Lender with respect to its Tender Offer Loan
Commitment.
"Transfer Agent" has the meaning assigned to that term in the
definition of "Depositary Agreement".
"UCC" means the Uniform Commercial Code as in effect on the date
hereof in the State of New York, as amended from time to time, and any
successor statute.
1.2 Accounting Terms. For purposes of this Agreement, all
----------------
accounting terms not otherwise defined herein shall have the meanings
assigned to such terms in conformity with GAAP. Financial statements
and other information furnished to Agent or any Lender pursuant to
subsection 5.1 shall be prepared in accordance with GAAP (as in effect
- --------------
at the time of such preparation) on a consistent basis. In the event
any "Accounting Changes" (as defined below) shall occur and such
changes affect financial covenants, standards or terms in this
Agreement, then Holdings and Borrower and Lenders agree to enter into
good faith negotiations in order to amend such provisions of this
Agreement so as to equitably reflect such Accounting Changes with the
desired result that the criteria for evaluating the financial
condition of Holdings and Borrower shall be the same after such
Accounting Changes as if such Accounting Changes had not been made,
and until such time as such an amendment shall have been executed and
delivered by Holdings and Borrower and Requisite Lenders, (A) all
financial covenants, standards and terms in this Agreement shall be
calculated and/or construed as if such Accounting Changes had not been
made, and (B) Holdings and Borrower shall prepare footnotes to each
Compliance Certificate and the financial statements required to be
delivered hereunder that show the differences between the financial
statements delivered (which reflect such Accounting Changes) and the
basis for calculating financial covenant compliance (without
reflecting such Accounting Changes). "Accounting Changes" means: (a)
changes in accounting principles required by GAAP and implemented by
Holdings and Borrower; (b) changes in accounting principles
recommended by Holdings' and Borrower's certified public accountants;
and (c) changes in carrying value of Holdings' and Borrower's or any
of their respective Subsidiaries' assets, liabilities or equity
accounts resulting from (i) the application of purchase accounting
principles (A.P.B. 16 and/or 17 and EITF 88-16 and FASB 109) to the
Acquisition, Open Market Purchases, the execution and delivery of the
Loan Documents and the funding of all Loans or (ii) any other
adjustments that, in each case, were applicable to, but not included
in, the Pro Forma. All such adjustments resulting from expenditures
made subsequent to the Closing Date (including, but not limited to,
capitalization of costs and expenses or payment of pre-Closing Date
liabilities) shall be treated as expenses in the period the
expenditures are made and deducted as part of the calculation of
EBITDA in such period.
1.3 Other Definitional Provisions. References to "Sections",
-----------------------------
"subsections", "Exhibits" and "Schedules" shall be to Sections,
subsections, Exhibits and Schedules, respectively, of this Agreement
unless otherwise specifically provided. Any of the terms defined in
subsection 1.1 may, unless the context otherwise requires, be used in
- --------------
the singular or the plural depending on the reference. In this
Agreement, words importing any gender include the other genders; the
words "including," "includes" and "include" shall be deemed to be
followed by the words "without limitation"; references to agreements
and other contractual instruments shall be deemed to include
subsequent amendments, assignments, and other modifications thereto,
but only to the extent such amendments, assignments and other
modifications are not prohibited by the terms of this Agreement or any
other Loan Document; references to Persons include their respective
permitted successors and assigns or, in the case of governmental
Persons, Persons succeeding to the relevant functions of such Persons;
and all references to statutes and related regulations shall include
any amendments of same and any successor statutes and regulations.
SECTION 2. LOANS AND COLLATERAL
--------------------
2.1 Loans.
(A) Tender Offer Loan Advances. Subject to the terms and
--------------------------
conditions of this Agreement and in reliance upon the representations
and warranties of Borrower and Holdings set forth herein and in the
other Loan Documents, each Lender, severally, agrees to lend to
Borrower its Pro Rata Share of each Tender Offer Loan Advance for the
sole purpose of financing (x) a portion of the purchase price of the
Target Shares to be purchased by Borrower pursuant to the Offer to
Purchase and (y) any Open Market Purchases. The aggregate amount of
all Tender Offer Loan Commitments shall not exceed at any time
$42,000,000. Subject to the notice provisions set forth in subsection
----------
2.1(F) and the conditions precedent set forth in Section 3, Borrower
- ------
may request Tender Offer Loan Advances by means of up to three draws.
Except as otherwise provided herein, no Lender shall have any
obligation to make an advance under this subsection 2.1(A) to the
extent such advance would cause the Tender Offer Loan (after giving
effect to any immediate application of the proceeds thereof) to exceed
the Tender Offer Loan Commitment(s) of all Lenders. Notwithstanding
the foregoing, the Lenders shall have no obligation to make, and there
shall at no time remain outstanding, Tender Offer Loan Advances which
in the aggregate exceed the Maximum Loan Amount. Amounts borrowed
under this subsection 2.1(A) and prepaid or repaid may not be
reborrowed.
(B) Notes. Borrower shall execute and deliver to each Lender
-----
with appropriate insertions a Tender Offer Note to evidence such
Lender's Tender Offer Loan Commitment. In the event of an assignment
under subsection 9.1, Borrower shall, upon surrender of the assigning
--------------
Lender's Tender Offer Note, issue a new Tender Offer Note to reflect
the interest held by the assigning Lender and its assignee.
(C) Evidence of Tender Offer Loan Obligations. Each Tender
-----------------------------------------
Offer Loan Advance shall be evidenced by this Agreement, the Tender
Offer Note, and notations made from time to time by Agent in its books
and records, including computer records. Agent shall record in its
books and records, including computer records, the principal amount of
the Tender Offer Loan owing to each Lender from time to time. Agent's
books and records shall constitute presumptive evidence, absent
manifest error, of the accuracy of the information contained therein.
Failure by Agent to make any such notation or record shall not affect
the obligations of Borrower to Lenders with respect to the Tender
Offer Loan.
(D) Borrowing Options. The Tender Offer Loan Advances shall,
-----------------
at the option of Borrower except as otherwise provided in this
Agreement, be incurred and maintained as, and/or converted pursuant to
subsection 2.2(E) into, (i) Base Rate Loans or (ii) LIBOR Loans. Any
- -----------------
Tender Offer Loan Advance made on the Closing Date (the "First
Advance") shall be a Base Rate Loan and shall remain a Base Rate Loan
for at least five (5) Business Days thereafter. No Tender Offer Loan
Advance shall be a LIBOR Rate Loan if less than thirty (30) days are
remaining until the Termination Date.
(E) Minimum Amount of Each Tender Offer Loan Advance. The
------------------------------------------------
aggregate principal amount of each Tender Offer Loan Advance shall not
be less than (i) in the case of a Base Rate Loan, (x) $5,000,000 for
the initial Tender Offer Loan Advance and (y) $500,000 for each Tender
Offer Loan Advance thereafter and (ii) in the case of any LIBOR Rate
Loan, $5,000,000 and, in the case of clause (i)(x) and clause (ii), if
greater, shall be in an integral multiple of $1,000,000 in excess of
such minimum and, in the case of clause (i)(y), if greater, shall be
in an integral multiple of $100,000 in excess of such minimum.
(F) Borrowing Mechanics. On any day when Borrower desires an
-------------------
advance under this subsection 2.1, Borrower shall give Agent
--------------
telephonic notice of the proposed borrowing by 11:00 a.m. Central time
on the Funding Date of a Base Rate Loan and three (3) Business Days in
advance of the Funding Date of a LIBOR Loan, which notice (a "Notice
of Borrowing") shall also specify the proposed Funding Date (which
shall be a Business Day), whether such Loans shall consist of Base
Rate Loans or LIBOR Loans, and for LIBOR Loans the Interest Period
applicable thereto. Any such telephonic notice shall be confirmed in
writing on the same day by delivery by Borrower of a Notice of
Borrowing in the form of Exhibit C annexed hereto. Neither Agent nor
---------
Lender shall incur any liability to Borrower for acting upon any
telephonic notice Agent believes in good faith to have been given by a
duly authorized officer or other person authorized to borrow on behalf
of Borrower or for otherwise acting in good faith under this
subsection 2.1(F). Neither Agent nor Lender will make any advance
- -----------------
pursuant to any telephonic notice unless Agent has also received all
documents required under subsection 5.1 by 11:00 a.m. Central time.
--------------
Each Tender Offer Loan Advance shall be deposited by wire transfer in
immediately available funds in such account as Borrower may from time
to time designate to Agent in writing.
(G) Open Market Purchases. Lenders shall have no obligation
---------------------
to make Tender Offer Loan Advances to finance Open Market Purchases,
unless the Tender Offer is consummated and completed pursuant to the
Offer to Purchase and fifty percent (50%) but less than ninety percent
(90%) of the Target Shares have been tendered and accepted for payment
by Borrower pursuant thereto.
2.2 Interest.
--------
(A) Rate of Interest. The Loans and all other Obligations
----------------
shall bear interest from the date such Loans are made or such other
Obligations become due to the date paid at a rate per annum equal to
(i) in the case of Base Rate Loans and other Obligations for which no
other interest rate is specified, the Base Rate plus one and one-half
percent (1.50%) and (ii) in the case of LIBOR Loans, LIBOR plus two
and three quarters percent (2.75%) (the "Interest Rate"). The
applicable basis for determining the rate of interest shall be
selected by Borrower initially at the time a Notice of Borrowing is
given pursuant to subsection 2.1(F); provided, however, that any Loan
----------------- -------- -------
made on the Closing Date shall be a Base Rate Loan as provided in
subsection 2.1(D). The basis for determining the interest rate with
- -----------------
respect to any Loan or a portion of any Loan may be changed from time
to time pursuant to subsection 2.2(E). If on any day a Loan or a
portion of any Loan is outstanding with respect to which notice has
not been delivered to Agent in accordance with the terms of this
Agreement specifying the basis for determining the rate of interest,
then for that day that Loan or portion thereof shall bear interest
determined by reference to the Base Rate.
After the occurrence and during the continuance of an Event
of Default (i) the Loans and all other Obligations shall, at the
option of Requisite Lenders, bear interest at a rate per annum equal
to two percent (2%) plus the applicable Interest Rate (the "Default
Rate"), (ii) each LIBOR Loan shall automatically convert to a Base
Rate Loan at the end of any applicable Interest Period and (iii) no
Loans may be converted to LIBOR Loans. If the Event of Default
consists of a failure to pay all amounts outstanding under the Loans
on the Termination Date, the Loans and all other Obligations shall
bear interest at the Default Rate (as increased as provided in the
following proviso) from the Termination Date to and including the date
the Loans are paid in full; provided, however, that for each ninety
-------- -------
(90) day period that the Loans and other Obligations are not so paid
(the first such period to commence on the ninety-first (91st) day
after the Termination Date), beginning on the first day of each such
period, the Default Rate (as increased) shall increase by an
additional one percent (1%) per annum; provided, further that the
-------- -------
Default Rate as increased shall not exceed eighteen percent (18%) per
annum (the "Maximum Default Rate").
(B) Interest Periods. In connection with each LIBOR Loan,
----------------
the interest period (each an "Interest Period") to be applicable to
such Loan shall be a one month period; provided that:
(1) the initial Interest Period for any LIBOR Loan
shall commence on the Funding Date of such Loan;
(2) in the case of successive Interest Periods, each
successive Interest Period shall commence on the day on which the
immediately preceding Interest Period expires;
(3) if the day on which an Interest Period expires is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that if any Interest Period
--------
expiration date is not a Business Day but is a day of the month after
which no further Business Day occurs in such month, such Interest
Period shall expire on the immediately preceding Business Day;
(4) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to part (5) below, end on the last
Business Day of a calendar month; and
(5) no Interest Period shall extend beyond the
Termination Date.
(C) Computation and Payment of Interest. Interest on the
-----------------------------------
Loans and all other Obligations shall be computed on the daily
principal balance on the basis of a 360 day year for the actual number
of days elapsed in the period during which it accrues. In computing
interest on any Loan, the related Funding Date or the first day of an
Interest Period applicable to such Loan or, with respect to a Base
Rate Loan being converted from a LIBOR Loan, the date of conversion of
such LIBOR Loan to such Base Rate Loan, shall be included; and the
date of payment of such Loan or the expiration date of an Interest
Period applicable to such Loan, or with respect to a Base Rate Loan
being converted to a LIBOR Loan, the date of conversion of such Base
Rate Loan to such LIBOR Loan, shall be excluded; provided that if a
Loan is repaid on the same day on which it is made, one day's interest
shall be paid on that Loan. Interest on Base Rate Loans and all other
Obligations other than LIBOR Loans shall be payable to Agent for
benefit of Lenders monthly in arrears on the first day of each month,
on the date of any prepayment of Loans, and at maturity, whether by
acceleration or otherwise. Interest on LIBOR Loans shall be payable to
Agent for benefit of Lenders on the last day of the applicable
Interest Period for such Loan, on the date of any prepayment of the
Loans, and at maturity, whether by acceleration or otherwise.
(D) Interest Laws. Notwithstanding any provision to the
-------------
contrary contained in this Agreement or any other Loan Document,
Borrower shall not be required to pay, and neither Agent nor any
Lender shall be permitted to collect, any amount of interest in excess
of the maximum amount of interest permitted by applicable law ("Excess
Interest"). If any Excess Interest is provided for or determined by a
court of competent jurisdiction to have been provided for in this
Agreement or in any other Loan Document, then in such event: (1) the
provisions of this subsection shall govern and control; (2) neither
Borrower nor any other Loan Party shall be obligated to pay any Excess
Interest; (3) any Excess Interest that Agent or any Lender may have
received hereunder shall be, at such Lender's option, (a) applied as a
credit against the outstanding principal balance of the Obligations or
accrued and unpaid interest (not to exceed the maximum amount
permitted by law), (b) refunded to the payor thereof, or (c) any
combination of the foregoing; (4) the interest rate(s) provided for
herein shall be automatically reduced to the maximum lawful rate
allowed from time to time under applicable law (the "Maximum Rate"),
and this Agreement and the other Loan Documents shall be deemed to
have been and shall be, reformed and modified to reflect such
reduction; and (5) neither Borrower nor any Loan Party shall have any
action against Agent or any Lender for any damages arising out of the
payment or collection of any Excess Interest. Notwithstanding the
foregoing, if for any period of time interest on any Obligations is
calculated at the Maximum Rate rather than the rate otherwise
applicable under this Agreement, and thereafter the rate otherwise
applicable under this Agreement becomes less than the Maximum Rate,
the rate of interest payable on such Obligations shall remain at the
Maximum Rate until each Lender shall have received the amount of
interest which such Lender would have received during such period on
such Obligations had the rate of interest not been limited to the
Maximum Rate during such period. Nothing in this subsection 2.2(D)
-----------------
shall be interpreted to limit the ability of Borrower to make
prepayments as provided in subsection 2.4(C).
-----------------
(E) Conversion or Continuation. Subject to the provisions of
--------------------------
subsection 2(A) Borrower shall have the option to (1) convert at any
- ---------------
time all or any part of outstanding Loans equal to $5,000,000 and
integral multiples of $1,000,000 in excess of that amount from Base
Rate Loans to LIBOR Loans; provided, however, that the First Advance
-------- -------
may be converted only at any time after five (5) Business Days after
the date of the related Funding Date, or (2) upon the expiration of
any Interest Period applicable to a LIBOR Loan, to (a) continue all or
any portion of such LIBOR Loan equal to $5,000,000 and integral
multiplies of $1,000,000 in excess of that amount as a LIBOR Loan or
(b) convert all or any portion of such LIBOR Loan to a Base Rate Loan.
The succeeding Interest Period(s) of such continued or converted Loan
commence on the last day of the Interest Period of the Loan to be
continued or converted; provided that no outstanding Loan may be
continued as, or be converted into, a LIBOR Loan, when any Event of
Default or Default has occurred and is continuing or if less than
thirty days are remaining from the expiration of an Interest Period
and the Termination Date.
Borrower shall deliver a notice of conversion/continuation
to Agent no later than noon (New York time) at least three (3)
Business Days in advance of the proposed conversion/ continuation date
("Notice of Conversion/Continuation"). A Notice of
Conversion/Continuation shall certify: (1) the proposed
conversion/continuation date (which shall be a Business Day); (2) the
amount of the Loan to be converted/continued; (3) the nature of the
proposed conversion/continuation; (4) in the case of conversion to, or
a continuation of, a LIBOR Loan, the requested Interest Period; and
(5) that no Default or Event of Default has occurred and is continuing
or would result from the proposed conversion/continuation.
In lieu of delivering the Notice of Conversion/Continuation,
Borrower may give Agent telephonic notice by the required time of any
proposed conversion/continuation under this subsection 2.2(E);
-----------------
provided that such notice shall be promptly confirmed in writing by
delivery of a Notice of Conversion/Continuation to Agent on or before
the proposed conversion/continuation date.
Neither Agent nor any Lender shall incur any liability to
Borrower in acting upon any telephonic notice referred to above that
Agent believes in good faith to have been given by a duly authorized
officer or other person authorized to act on behalf of Borrower or for
otherwise acting in good faith under this subsection 2.2(E) and upon
-----------------
conversion/continuation by Lenders in accordance with this Agreement
pursuant to any telephonic notice, Borrower shall have effected such
conversion or continuation, as the case may be, hereunder.
2.3 Fees.
----
(A) Unused Line Fee. Borrower shall pay to Agent, for the
---------------
benefit of Lenders, a fee in an amount equal to the Tender Offer Loan
Commitment less the sum of the average daily balance of the Tender
Offer Loan during the preceding month multiplied by one-half percent
(.50%) per annum, such fee to be calculated on the basis of a 360 day
year for the actual number of days elapsed and to be payable monthly
in arrears on the first day of the first month following the Closing
Date and the first day of each month thereafter.
(B) Other Fees and Expenses. Borrower shall pay to Agent, for
-----------------------
its own account, all charges for returned items and all other bank
charges incurred by Agent, as well as Agent's standard wire transfer
charges for each wire transfer made under this Agreement.
(C) Fee Letter. Holdings shall pay or cause to be paid to
----------
Agent for Agent's own account all payments due under and pursuant to
the Fee Letter.
2.4 Payments and Prepayments.
------------------------
(A) Manner and Time of Payment. If Agent elects to bill
--------------------------
Borrower for any amount due hereunder, such amount shall be
immediately due and payable with interest thereon as provided herein.
All payments made by Borrower with respect to the Obligations shall be
made without deduction, defense, setoff or counterclaim. All payments
to Agent hereunder shall, unless otherwise directed by Agent, be made
to Agent's Account. Proceeds remitted to Agent's Account shall be
credited to the Obligations on the first Business Day following the
day such proceeds were received; provided, however, for the purpose of
-------- -------
calculating interest on the Obligations, such funds shall be deemed
received on the first Business Day thereafter. Proceeds remitted to
Agent's Account by wire transfer shall be credited to the Obligations
on the Business Day received; provided, however, for the purpose of
calculating interest on the Obligations such funds shall be deemed
received the first Business Day thereafter.
(B) Mandatory Prepayments. At any time that the Tender Offer
---------------------
Loan exceeds the lesser of (x) the Tender Offer Loan Commitments for
all Lenders and (y) the Maximum Loan Amount, Borrower shall
immediately repay the Tender Offer Loan to the extent necessary to
reduce the principal balance to an amount equal to or less than the
lesser of (x) the Tender Offer Loan Commitments for all Lenders and
(y) the Maximum Loan Amount.
(C) Voluntary Prepayments. Except as provided in subsection
--------------------- ----------
2.4(B), Borrower's Obligations may be prepaid in whole at any time or
- ------
in part from time to time, without penalty or premium, except as
otherwise provided herein. Any partial prepayment of Borrower's
Obligations shall be in a minimum aggregate amount of $1,000,000 and
in integral multiples of $1,000,000 above such minimum; provided that
any such prepayments of LIBOR Loans shall be subject to the provisions
of subsection 2.11. Borrower shall irrevocably give notice to Agent
---------------
(which shall promptly advise each Lender) of each proposed prepayment
hereunder, prior to 11:00 A.M. (New York time) on the third Business
Day prior to the proposed prepayment date, which notice shall specify
the proposed prepayment date (which shall be a Business Day) and the
aggregate principal amount of the proposed prepayment.
(D) Payments on Business Days. Whenever any payment to be
-------------------------
made hereunder shall be stated to be due on a day that is not a
Business Day, the payment may be made on the next succeeding Business
Day and such extension of time shall be included in the computation of
the amount of interest or fees due hereunder.
2.5 Term of this Agreement. The Commitments shall (unless
----------------------
earlier terminated pursuant to this Agreement) terminate upon the
earlier of (i) the date on which the Tender Offer must be consummated
and completed as provided in the Offer to Purchase ("Expiration
Date"); provided, however, that if the Tender Offer has been completed
-------- -------
and consummated in accordance with the terms and conditions of the
Offer to Purchase then this clause (i) shall not apply for purposes of
determining the date on which the Commitments terminate pursuant to
this subsection 2.5; (ii) the occurrence of an event specified in
--------------
subsection 8.3 or (iii) the Termination Date. Upon termination in
- --------------
accordance with subsection 8.3 or on the Expiration Date on the
--------------
Termination Date, all Obligations shall become immediately due and
payable without notice or demand. Notwithstanding any termination,
until all Obligations have been fully paid and satisfied, Agent, on
behalf of Lenders, shall be entitled to retain security interests in
and liens upon all Collateral, and even after payment of all
Obligations hereunder, Holdings' and Borrower's obligation to
indemnify Agent and each Lender in accordance with the terms hereof
shall continue.
2.6 Statements. Agent shall render a monthly statement of
----------
account to Borrower within fifteen (15) days after the end of each
month. Such statement of account shall constitute an account stated
unless Borrower makes written objection thereto within thirty (30)
days from the date such statement is mailed to Borrower. Borrower
promises to pay all of its Obligations as such amounts become due or
are declared due pursuant to the terms of this Agreement.
2.7 Capital Adequacy and Other Adjustments. In the event
--------------------------------------
Agent or any Lender shall have determined that the adoption after the
date hereof of any law, treaty, governmental (or quasi-governmental)
rule, regulation, guideline or order regarding capital adequacy,
reserve requirements or similar requirements or compliance by Agent or
such Lender or any corporation controlling Agent or such Lender with
any request or directive regarding capital adequacy, reserve
requirements or similar requirements (whether or not having the force
of law and whether or not failure to comply therewith would be
unlawful) from any central bank or governmental agency or body having
jurisdiction does or shall have the effect of increasing the amount of
capital, reserves or other funds required to be maintained by Agent or
such Lender or any corporation controlling Agent or such Lender and
thereby reducing the rate of return on Agent's or such Lender's or
such corporation's capital as a consequence of its obligations
hereunder, then Borrower shall from time to time within fifteen (15)
days after notice and demand from such Lender (with a copy to Agent)
or Agent (together with the certificate referred to in the next
sentence) pay to Agent or such Lender additional amounts sufficient to
compensate Agent or such Lender for such reduction. A certificate as
to the amount of such cost and showing the basis of the computation of
such cost submitted by Agent or any Lender to Borrower shall, absent
manifest error, be final, conclusive and binding for all purposes.
2.8 Taxes.
-----
(A) No Deductions. Any and all payments or reimbursements
-------------
made hereunder or under the Notes shall be made free and clear of and
without deduction for any and all taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto;
excluding, however, the following: taxes imposed on the net income of
any Lender or Agent by the jurisdiction under the laws of which Agent
or such Lender is organized or doing business or any political
subdivision thereof and taxes imposed on its net income by the
jurisdiction of Agent's or such Lender's applicable lending office or
any political subdivision thereof (all such taxes, levies, imposts,
deductions, charges or withholdings and all liabilities with respect
thereto excluding such taxes imposed on net income, herein "Tax
Liabilities"). If Borrower shall be required by law to deduct any such
Tax Liabilities from or in respect of any sum payable hereunder to
Agent or any Lender, then the sum payable hereunder shall be increased
as may be necessary so that, after making all required deductions,
Agent or such Lender receives an amount equal to the sum it would have
received had no such deductions been made.
(B) Changes in Tax Laws. In the event that, subsequent to the
-------------------
Closing Date, (i) any changes in any existing law, regulation, treaty
or directive or in the interpretation or application thereof, (ii) any
new law, regulation, treaty or directive enacted or any interpretation
or application thereof, or (iii) compliance by Lender with any request
or directive (whether or not having the force of law) from any
governmental authority, agency or instrumentality:
(1) does or shall subject Agent or any Lender to any tax
of any kind whatsoever with respect to this Agreement, the other Loan
Documents or any Loans made hereunder, or change the basis of taxation
of payments to Agent or such Lender of principal, fees, interest or
any other amount payable hereunder (except for net income taxes, or
franchise taxes imposed in lieu of net income taxes, imposed generally
by federal, state or local taxing authorities with respect to interest
or commitment or other fees payable hereunder or changes in the rate
of tax on the overall net income of Agent or such Lender); or
(2) does or shall impose on Agent or any Lender any other
condition or increased cost in connection with the transactions
contemplated hereby or participations herein; and the result of any of
the foregoing is to increase the cost to Agent or such Lender of
making or continuing any Loan hereunder or to reduce any amount
receivable hereunder,
then, in any such case, Borrower shall promptly pay to Agent or such
Lender, upon its demand, any additional amounts necessary to
compensate Agent or such Lender, on an after-tax basis, for such
additional cost or reduced amount receivable, as determined by Agent
or such Lender with respect to this Agreement or the other Loan
Documents. If Agent or any Lender becomes entitled to claim any
additional amounts pursuant to this subsection, it shall promptly
notify Borrower of the event by reason of which Agent or such Lender
has become so entitled. A certificate as to any additional amounts
payable pursuant to the foregoing sentence submitted by Agent or any
Lender to Borrower shall, absent manifest error, be final, conclusive
and binding for all purposes.
(C) Foreign Lenders. Each Lender organized under the laws of
---------------
a jurisdiction outside the United States (a "Foreign Lender") as to
which payments to be made under this Agreement or under the Notes are
exempt from United States withholding tax or are subject to United
States withholding tax at a reduced rate under an applicable statute
or tax treaty shall provide to Borrower and Agent (i) a properly
completed and executed Internal Revenue Service Form 4224 or Form 1001
or other applicable form, certificate or document prescribed by the
Internal Revenue Service of the United States certifying as to such
Foreign Lender's entitlement to such exemption or reduced rate of
withholding with respect to payments to be made to such Foreign Lender
under this Agreement and under the Notes (a "Certificate of
Exemption"), or (ii) a letter from any such Foreign Lender stating
that it is not entitled to any such exemption or reduced rate of
withholding (a "Letter of Non-Exemption"). Prior to becoming a Lender
under this Agreement and within fifteen (15) days after a reasonable
written request of Borrower or Agent from time to time thereafter,
each Foreign Lender that becomes a Lender under this Agreement shall
provide a Certificate of Exemption or a Letter of Non-Exemption to
Borrower and Agent.
If a Foreign Lender is entitled to an exemption with respect
to payments to be made to such Foreign Lender under this Agreement (or
to a reduced rate of withholding) and does not provide a Certificate
of Exemption to Borrower and Agent within the time periods set forth
in the preceding paragraph, Borrower shall withhold taxes from
payments to such Foreign Lender at the applicable statutory rates and
Borrower shall not be required to pay any additional amounts as a
result of such withholding; provided, however, that all such
--------
withholding shall cease upon delivery by such Foreign Lender of a
Certificate of Exemption to Borrower and Agent.
2.9 Required Termination and Prepayment. If on any date any
-----------------------------------
Lender shall have reasonably determined (which determination shall be
final and conclusive and binding upon all parties) that the making or
continuation of its LIBOR Loans has become unlawful or impossible by
compliance by Lender in good faith with any law, governmental rule,
regulation or order (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful), then,
and in any such event, that Lender shall promptly give notice (by
telephone confirmed in writing) to Borrower and Agent of that
determination. Subject to prior withdrawal of a Notice of Borrowing or
a Notice of Conversion/Continuation or prepayment of LIBOR Loans as
contemplated by subsection 2.10, the obligation of Lender to make or
---------------
maintain its LIBOR Loans during any such period shall be terminated at
the earlier of the termination of the Interest Period then in effect
or when required by law and Borrower shall no later than the
termination of the Interest Period in effect at the time any such
determination pursuant to this subsection 2.9 is made or, earlier when
required by law, repay or prepay LIBOR Loans together with all
interest accrued thereon or convert LIBOR Loans to Base Rate Loans.
2.10 Optional Prepayment/Replacement of Agent or Lenders in
------------------------------------------------------
Respect of Increased Costs. Within fifteen (15) days after receipt by
- --------------------------
Borrower of written notice and demand from Agent or any Lender (an
"Affected Lender") for payment of additional costs as provided in
subsection 2.7, Borrower may, at its option, notify Agent and such
Affected Lender of its intention to do one of the following:
(A) Borrower may obtain, at Borrower's expense, a
replacement Lender ("Replacement Lender") for such Affected Lender,
which Replacement Lender shall be reasonably satisfactory to Agent. In
the event Borrower obtains a Replacement Lender within ninety (90)
days following notice of its intention to do so, the Affected Lender
shall sell and assign its Loans and Commitments to such Replacement
Lender, provided that Borrower has reimbursed such Affected Lender for
--------
its increased costs for which it is entitled to reimbursement under
this Agreement through the date of such sale and assignment.
(B) Borrower may prepay in full all outstanding Obligations
owed to such Affected Lender and terminate such Affected Lender's
Commitments. Borrower shall, within ninety (90) days following notice
of its intention to do so, prepay in full all outstanding Obligations
owed to such Affected Lender (including such Affected Lender's
increased costs for which it is entitled to reimbursement under this
Agreement through the date of such prepayment) and terminate such
Affected Lender's Commitments.
2.11 Compensation. Borrower shall compensate Lender, upon written
------------
request by Lender (which request shall set forth in reasonable detail
the basis for requesting such amounts and which shall, absent manifest
error, be conclusive and binding upon all parties hereto), for all
reasonable losses, expenses and liabilities including, without
limitation, any loss sustained by Lender in connection with the
re-employment of such funds: (i) if for any reason (other than a
default by Lender) a borrowing of any LIBOR Loan does not occur on a
date specified therefor in a Notice of Borrowing, a Notice of
Conversion/Continuation or a telephonic request for borrowing or
Conversion/Continuation; (ii) if any prepayment of any of its LIBOR
Loans occurs on a date that is not the last day of an Interest Period
applicable to that Loan; (iii) if any prepayment of any of its LIBOR
Loans is not made on any date specified in a notice of prepayment
given by Borrower; or (iv) as a consequence of any other default by
Borrower to repay its LIBOR Loans when required by the terms of this
Agreement; provided that during the period while any such amounts have
not been paid, Lender shall reserve an equal amount from amounts
otherwise available, if any, to be borrowed under the Tender Offer
Loan Commitment.
2.12 Booking of LIBOR Loans. Each Lender may make, carry or
----------------------
transfer LIBOR Loans at, to, or for the account of, any of its branch
offices or the office of an affiliate of Lender.
2.13 Assumptions Concerning Funding of LIBOR Loans. Calculation
---------------------------------------------
of all amounts payable to Lender under subsection 2.11 shall be made
as though each Lender had actually funded its relevant LIBOR Loan
through the purchase of a LIBOR deposit bearing interest at LIBOR in
an amount equal to the amount of that LIBOR Loan and having maturity
comparable to the relevant Interest Period and through the transfer of
such LIBOR deposit from an offshore office to a domestic office in the
United States of America; provided, however, that each Lender may fund
each of its LIBOR Loans in any manner it sees fit and the foregoing
assumption shall be utilized only for the calculation of amounts
payable under subsection 2.11.
---------------
2.14 Regulation U and Regulation G. Each Lender shall be
-----------------------------
responsible for its compliance hereunder with Regulation U and
Regulation G, if and as applicable, and Agent shall have no
responsibility with respect to any such compliance by any Lender.
SECTION 3. CONDITIONS TO LOANS
------------------------------
3.1 Conditions to Loans. The obligations of Agent and each Lender
-------------------
to make Loans on the Closing Date and on each Funding Date are subject
to satisfaction of all of the conditions set forth below.
(A) Closing Deliveries. Agent shall have received, in form
------------------
and substance, reasonably satisfactory to Agent, all documents,
instruments and information identified on Schedule 3.1(A) and all
---------------
other agreements, notes, certificates, orders, authorizations,
financing statements, and other documents which Agent may at any time
reasonably request.
(B) Security Interests. Agent shall have received
------------------
satisfactory evidence that all security interests and liens granted to
Agent for the benefit of Lenders pursuant to this Agreement, the
Pledge Agreements and the other Loan Documents have been duly
perfected and constitute first priority liens on the Collateral,
subject only to the Lien in favor of Agent pursuant to the Loan
Documents
(C) Representations and Warranties. The representations and
------------------------------
warranties contained herein and in each of the Loan Documents shall be
true, correct and complete in all material respects on and as of that
Funding Date to the same extent as though made on and as of that date,
except for any representation or warranty limited by its terms to a
specific date and taking into account any amendments to the Schedules
or Exhibits as a result of any disclosures made by Borrower to Agent
after the Closing Date and approved by Agent.
(D) Fees. With respect to Loans to be made on the Closing
----
Date, Borrower shall have paid the fees payable on the Closing Date
referred to in subsection 2.3.
--------------
(E) No Default. No event shall have occurred and be
---------
continuing or would result from the consummation of the requested
borrowing that would constitute an Event of Default or a Default.
(F) Performance of Agreements. Each Loan Party shall have
-------------------------
performed in all material respects all agreements and satisfied all
conditions which any Loan Document provides shall be performed by it
on or before that Funding Date.
(G) No Prohibition. No order, judgment or decree of any
--------------
court, arbitrator or governmental authority shall purport to enjoin or
restrain Agent or any Lender from making any Loans.
(H) No Litigation. There shall not be pending or, to any Loan
-------------
Party's knowledge, threatened any action, charge, claim, demand, suit,
proceeding, petition, investigation, litigation or arbitration by,
against or affecting any Loan Party or any of its Subsidiaries (to any
Loan Party's knowledge with respect to Target and its Subsidiaries) or
any property of any Loan Party or any of its Subsidiaries that has not
been disclosed to Agent by Borrower or Holdings in writing, and there
shall have occurred no development in any such action, charge, claim,
demand suit, proceeding, petition investigation, litigation or
arbitration that, in the opinion of Agent, would reasonably be
expected to have a Material Adverse Effect.
(I) Compliance with Regulations. All Loans made under this
---------------------------
Agreement shall be in full compliance with all applicable requirements
of law, including, without limitation, Regulations G, T, U, and X of
the Board.
(J) Issuance to Holdings. On or prior to the Closing Date (i)
--------------------
Borrower shall have received gross cash proceeds in the aggregate
amount of at least $35,000,000 from the issuance by Borrower to
Holdings of all of its common stock and (ii) Agent shall have received
satisfactory evidence that Borrower has received such proceeds.
(K) Corporate Structure. On or prior to the Closing Date,
-------------------
Agent shall be reasonably satisfied with the corporate and legal
structure and capitalization of each Loan Party and each of its
Subsidiaries, and Target and its Subsidiaries, including, without
limitation, the terms and conditions of the charter, by-laws and each
class of capital stock of each Loan Party and each such Subsidiary and
of each agreement or instrument relating to such structure or
capitalization.
(L) Form FR U-1 or Form FR G-3. On or prior to the Closing
--------------------------
Date, Borrower shall have delivered to each Lender a duly completed
Form FR U-1 referred to in Regulation U or Form FR G-3 referred to in
Regulation G, as applicable. On each Funding Date, each Lender shall
be able in good faith to complete an addendum to Form FR U-1 or Form
FR G-3, as applicable and showing that the Tender Offer Loan Advance
then being made satisfy the collateral requirements of Regulation G or
U, as applicable, and Agent shall have received from each Lender a
properly completed and duly executed Form FR U-1 and Form FR G-3, as
applicable, with any such addendum.
(M) Use of Other Funds. Prior to or concurrently with the
------------------
Closing Date, Borrower shall have utilized all proceeds received by it
as described in clause (J) above to purchase the Target Shares in
connection with the Offer to Purchase and to pay certain fees and
expenses in connection therewith.
(N) Consummation of Tender Offer. (i) The Tender Offer shall
----------------------------
have been consummated pursuant to the terms and conditions of the
Acquisition Documents (without any waiver or amendment of any term or
condition therein not consented to by the Requisite Lenders) and in
compliance with all applicable laws and with all necessary consents
and approvals, (ii) each of the conditions to purchase the Target
Shares contained in the Acquisition Documents shall have been
satisfied in all material respects to the satisfaction of Agent;
provided, however, that any waiver of any condition by any party to
- -------- -------
the Merger Agreement shall not constitute a waiver by Agent for
purposes of this condition, and (iii) Agent shall be satisfied that
there are no state takeover laws and no supermajority charter
provisions applicable to the Acquisition, or that any conditions to
avoiding such restrictions have been satisfied.
(O) Tender of Shares of Target; Control. Agent shall have
-----------------------------------
received evidence reasonably satisfactory to Agent that: (i) the
Tender Offer Closing Date shall have occurred, (ii) there shall have
been validly tendered to Borrower and not withdrawn the number of
Target Shares that satisfies the "Minimum Condition" (as such term is
defined in the Offer to Purchase) and (iii) such number of Target
Shares shall have been validly tendered to Borrower, free and clear of
all Liens and restrictions to purchase imposed by applicable law or
otherwise and such Target Shares shall not have been validly withdrawn
and shall be available for purchase in accordance with the terms and
conditions set forth in the Offer to Purchase.
(P) Adverse Change. There shall have occurred no material
--------------
adverse change in the business, condition (financial or otherwise),
operations, performance or properties of either (i) Holdings, Borrower
and their respective Subsidiaries (other than Target and its
Subsidiaries), taken as a whole, since September 30, 1997, or (ii) the
Target and its Subsidiaries, taken as a whole since September 30,
1997.
(Q) Financial Information, Pre-Commitment Information. On or
-------------------------------------------------
prior to the Closing Date, (i) Borrower, Holdings and Target shall
have given Agent such access to their respective books and records as
Agent may have reasonably requested in order to carry out its
investigations, appraisals and analyses, (ii) Agent shall have
received all financial, business and other information regarding
Holdings, Borrower and their respective Subsidiaries (other than
Target and its Subsidiaries) and their respective properties and
Target and its Subsidiaries and their respective properties as Agent
shall have reasonably requested, and (iii) all of the information
provided by or on behalf of Holdings, Borrower or any of their
respective Subsidiaries (to any Loan Party's knowledge with respect to
Target and its Subsidiaries) to Agent prior to their commitment in
respect of the Tender Offer Loan Commitment (the "Pre-Commitment
--------------
Information") shall be true and correct in all material respects.
- -----------
SECTION 4. BORROWER'S AND HOLDINGS' REPRESENTATIONS AND WARRANTIES
-------------------------------------------------------
To induce Agent and each Lender to enter into this Agreement, and
to make Loans, each Loan Party jointly and severally represents and
warrants to Agent and each Lender that the following statements are
and will be true, correct and complete:
4.1 Organization, Powers, Capitalization.
------------------------------------
(A) Organization and Powers. Each of the Loan Parties is a
-----------------------
corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation and qualified to
do business in all states where such qualification is required except
where failure to be so qualified could not be reasonably expected to
have a Material Adverse Effect. Each of the Loan Parties has all
requisite corporate power and authority to own and operate its
properties, to carry on its business as now conducted and proposed to
be conducted and to enter into each Loan Document.
(B) Capitalization; Subsidiaries. Set forth on Schedule
---------------------------- --------
4.1(B) is a complete and accurate list of all Subsidiaries of each
- ------
Loan Party, showing as to each such Subsidiary, the jurisdiction of
its incorporation, the number of shares of each class of capital stock
authorized, and the number issued and outstanding, on the date hereof
and the percentage of the outstanding shares of each such class owned
(directly or indirectly) by such Loan Party and the number of shares
covered by all outstanding options, warrants, rights of conversion or
purchase and similar rights at the date hereof. All of the outstanding
capital stock of all of such Subsidiaries has been validly issued, is
fully paid and non-assessable and is owned by such Loan Party or one
or more of its Subsidiaries free and clear of all Liens, except those
created under the Loan Documents. Each such Subsidiary (i) is a
corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, (ii) is duly
qualified and in good standing as a foreign corporation in each other
jurisdiction in which it owns or leases property or in which the
conduct of its business requires it to so qualify or be licensed,
except where the failure to so qualify or be licensed could not
reasonably be expected to have a Material Adverse Effect, and (iii)
has all requisite corporate power and authority (including, without
limitation, all governmental licenses, permits and other approvals) to
own or lease and operate its properties and to carry on its business
as now conducted and as proposed to be conducted (except where failure
to have such governmental licenses, permits and approvals would not
have a Material Adverse Effect).
4.2 Authorization of Borrowing, No Conflict. Each Loan Party has
---------------------------------------
the corporate power and authority to incur the Obligations and to
pledge and grant security interests in the Collateral. The execution,
delivery and performance by each Loan Party of this Agreement, the
Notes and each other Loan Document to which it is or is to be a party,
and the consummation of the transactions contemplated hereby, are
within such Loan Party's corporate powers, have been duly authorized
by all necessary corporate action, and do not (i) contravene such Loan
Party's charter or bylaws, (ii) violate any law (including, without
limitation, the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, and the Racketeer Influenced and
Corrupt Organizations Chapter of the Organized Crime Control Act of
1970), rule, regulation (including, without limitation, Regulation G,
T, U or X of the Board) order, writ, judgment, injunction, decree,
determination or award, (iii) conflict with or result in the breach
of, or constitute a default under, any material contract, loan
agreement, indenture, mortgage, deed of trust, lease or other material
instrument or agreement binding on or affecting any Loan Party, any of
its Subsidiaries or any of their respective properties or (iv) except
for the Liens created under the Loan Documents, result in or require
the creation or imposition of any Lien upon or with respect to any of
the properties of any Loan Party or any of its Subsidiaries. This
Agreement is, and the other Loan Documents, including the Notes when
executed and delivered will be, the legally valid and binding
obligations of the applicable Loan Parties respectively, each
enforceable against the Loan Parties, as applicable, in accordance
with their respective terms.
4.3 Approvals. Except as set forth on Schedule 4.3, no
--------- ------------
authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body or any
other third party is required by the Loan Parties for (i) the due
execution, delivery, recordation, filing or performance by any Loan
Party and its Subsidiaries of this Agreement, the Notes or any other
Loan Document or any Acquisition Document to which it is or is to be a
party, or for the consummation of the Acquisition or any Open Market
Purchases or the other transactions contemplated hereby, (ii) the
grant by any Loan Party of the Liens granted by it pursuant to the
Loan Documents, (iii) the perfection or maintenance of the Liens
created by the Loan Documents (including the first and only priority
nature thereof) or (iv) the exercise by Agent or any Lender Party of
its rights under the Loan Documents or the remedies in respect of the
Collateral pursuant to the Loan Documents. All applicable waiting
periods in connection with the Acquisition, and the other transactions
contemplated hereby have expired without any action having been taken
by any competent authority restraining, preventing or imposing
materially adverse conditions upon the Acquisition, the transactions
contemplated hereby or the rights of the Loan Parties or their
Subsidiaries freely to transfer or otherwise dispose of, or to create
any Lien on, any properties now owned or hereafter acquired by any of
them.
4.4 Financial Condition. All financial statements concerning
-------------------
Holdings, Borrower and their respective Subsidiaries which have been
or will hereafter be furnished by Holdings, Borrower and their
respective Subsidiaries to Agent or any Lender pursuant to this
Agreement have been or will be (except with respect to Pro Forma and
Projections) prepared in accordance with GAAP consistently applied
throughout the periods involved (except as disclosed therein) and do
or will present fairly in all material respects the financial
condition of the corporations covered thereby as at the dates thereof
and the results of their operations for the periods then ended. The
Pro Forma was prepared by Holdings and Borrower based on the unaudited
consolidated balance sheet of Holdings and Borrower dated September
30, 1997, and of Target and its Subsidiaries dated September 30, 1997.
The Projections delivered and to be delivered have been and will be
prepared by Holdings and Borrower in light of the past operations of
the business of Holdings, Borrower and their respective Subsidiaries,
and such Projections represent and will represent the good faith
estimate of Holdings and Borrower and their respective senior
management concerning the most probable course of its business as of
the date such Projections are prepared and delivered.
4.5 Indebtedness and Liabilities. Neither Holdings nor Borrower
----------------------------
nor any of their respective Subsidiaries (to any Loan Party's
knowledge with respect to Target and its Subsidiaries) has (a) any
Indebtedness except as reflected on Schedule 4.5 and as contemplated
by the Loan Documents or (b) any Liabilities except as reflected on
Schedule 4.5 and as contemplated by the Loan Documents.
4.6 Names. Schedule 4.6 sets forth all names, trade names,
----- ------------
fictitious names and business names under which any Loan Party and its
Subsidiaries (to any Loan Party's knowledge with respect to Target and
its Subsidiaries) currently conducts business or has at any time
during the past five years conducted business.
4.7 Locations; FEIN. Schedule 4.7 sets forth the location of each
--------------- ------------
Loan Party's principal place of business, the location of each Loan
Party's books and records, the location of all other offices of each
Loan Party's, and such locations are such Loan Party's sole locations
for its business. Each Loan Party's federal employer identification
number is set forth on the signature page hereof.
4.8 Title to Properties; Liens. (A) Set forth on Schedule 4.8(A)
-------------------------- ---------------
is a complete and accurate list of all real property owned by any Loan
Party or any of its Subsidiaries (to any Loan Party's knowledge with
respect to Target and its Subsidiaries) showing as of the date hereof
the street addresses, county or other relevant jurisdiction, state,
record owner and book and estimate fair value thereof. Each Loan Party
and each of its Subsidiaries (to any Loan Party's knowledge with
respect to Target and its Subsidiaries) has good, sufficient and legal
title, subject to Permitted Encumbrances, to all its respective
material properties and assets. Except for Permitted Encumbrances, all
such properties and assets are free and clear of Liens.
(B) To the best knowledge of Holdings or Borrower, (x) there
are no actual, threatened or alleged defaults with respect to any
leases of real property under which Holdings, Borrower or any of their
respective Subsidiaries is lessee or lessor which would have a
Material Adverse Effect and (y) each such lease is the legal, valid
and binding obligation of the lessor thereof, enforceable in
accordance with its terms.
4.9 Perfected, Valid Security Interest. The Loan Documents create
----------------------------------
in favor of Agent, for the ratable benefit of the Lenders, a valid and
perfected first priority security interest in the Collateral listed on
Schedule I to the Pledge Agreement, securing the payment of the
Obligations, and all filings and other actions necessary or reasonably
desirable to perfect and protect such security interest have been duly
taken. The Loan Parties are the legal and beneficial owners of the
Collateral free and clear of any Lien, except for the Lien in favor of
Agent on behalf of Lenders pursuant to the Loan Documents.
4.10 Litigation; Adverse Facts. Except as set forth on Schedule
------------------------- --------
4.10, there are no judgments outstanding against any Loan Party or its
- ----
Subsidiaries or affecting any property of any Loan Party or its
Subsidiaries nor is there any action, charge, claim, demand, suit,
proceeding, petition, governmental investigation or arbitration now
pending or, to the best knowledge of Holdings and Borrower after due
inquiry, threatened against or affecting any Loan Party or its
Subsidiaries or any property of any Loan Party or its Subsidiaries
which could reasonably be expected to result in any Material Adverse
Effect. Neither any of the Loan Parties nor any of their respective
Subsidiaries (to any Loan Party's knowledge with respect to Target and
its Subsidiaries) has received any opinion or memorandum or legal
advice from legal counsel to the effect that it is exposed to any
liability which could reasonably be expected to result in any Material
Adverse Effect.
4.11 Payment of Taxes. All material tax returns and reports of
----------------
Holdings and Borrower and each of their respective Subsidiaries (to
any Loan Party's knowledge with respect to Target and its
Subsidiaries) required to be filed by any of them have been timely
filed, and all taxes, assessments, fees and other governmental charges
upon such Persons and upon their respective properties, assets, income
and franchises which are shown on such returns as due and payable have
been paid when due and payable; provided, however, that no such tax
-------- -------
need to be paid if such Loan Party or one of its Subsidiaries is
contesting same in good faith in a manner which stays enforcement
thereof by appropriate proceedings promptly instituted and diligently
conducted and if such Loan Party or such Subsidiary has established
reserves or other appropriate provisions as shall be required in
conformity with GAAP. None of the United States income tax returns of
any Loan Party or any of its Subsidiaries (to any Loan Party's
knowledge with respect to Target and its Subsidiaries) are under
audit. No tax liens have been filed and no claims (except as otherwise
permitted by Section 5.6) are being asserted with respect to any such
-----------
taxes. The charges, accruals and reserves on the books of the Loan
Parties and each of their respective Subsidiaries (to any Loan Party's
knowledge with respect to Target and its Subsidiaries) in respect of
any taxes or other governmental charges are in accordance with GAAP.
4.12 Investments. Set forth on Schedule 4.12 is a complete and
----------- -------------
accurate list of all Investments in excess of $1,000,000 (including
the Target Shares purchased by Borrower upon the consummation of the
Tender Offer pursuant to Offer to Purchase) held by any Loan Party or
any of its Subsidiaries, showing as of the date hereof the amount,
obligor or issuer and maturity, if any, thereof.
4.13 Material Agreements. Neither any Loan Party nor any of its
-------------------
Subsidiaries is a party to any indenture, loan or credit agreement or
any lease or other agreement or instrument or subject to any charter
or corporate restriction that could reasonably be expected to have a
Material Adverse Effect.
4.14 Performance of Agreements. None of the Loan Parties and none
-------------------------
of their respective Subsidiaries (to any Loan Party's knowledge with
respect to Target and its Subsidiaries) is in default in the
performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any contractual obligation of any
such Person, which default would have a Material Adverse Effect, and
no condition exists that, with the giving of notice or the lapse of
time or both, would constitute such a default.
4.15 Employee Benefit Plans. Each Loan Party and each of its
----------------------
Subsidiaries (to any Loan Party's knowledge with respect to Target and
its Subsidiaries) and each ERISA Affiliate is in compliance in all
material respects with all applicable provisions of ERISA, the IRC and
all other applicable laws and the regulations and interpretations
thereof with respect to all Employee Benefit Plans, except where the
failure to so comply would not have a Material Adverse Effect. No
material liability has been incurred by any Loan Party, any of their
respective Subsidiaries (to any Loan Party's knowledge with respect to
Target and its Subsidiaries) or any ERISA Affiliate which remains
unsatisfied for any funding obligation, taxes or penalties with
respect to any Employee Benefit Plan.
4.16 Intellectual Property. Each Loan Party and each of its
---------------------
Subsidiaries (to any Loan Party's knowledge with respect to Target and
its Subsidiaries) owns, is licensed to use or otherwise has the right
to use, all Intellectual Property used in or reasonably necessary for
the conduct of its business as currently conducted.
4.17 Broker's Fees. Except as set forth on Schedule 4.17, no
-------------
broker's or finder's fee or commission will be payable by any Loan
Party or any of its Subsidiaries with respect to any of the
transactions contemplated hereby.
4.18 Environmental Compliance. Each Loan Party and each of its
------------------------
Subsidiaries (to any Loan Party's knowledge with respect to Target and
its Subsidiaries) has been and is currently in compliance with all
applicable Environmental Laws, including obtaining and maintaining in
effect all permits, licenses or other authorizations required by
applicable Environmental Laws, except where the failure to so comply
would not have a Material Adverse Effect. There are no claims,
liabilities, investigations, litigation, administrative proceedings,
whether pending or, to the knowledge of such Loan Party, threatened,
or judgments or orders relating to any Hazardous Materials asserted
or, to the knowledge of any Loan Party, threatened against any Loan
Party or its Subsidiaries (to any Loan Party's knowledge with respect
to Target and its Subsidiaries) or relating to any real property
currently or formerly owned, leased or operated by any Loan Party or
its Subsidiaries.
4.19 Solvency. After giving effect to the transactions
--------
contemplated by the Loan Documents and the Acquisition Documents, and
as of, from and after the date of this Agreement, each Loan Party and
each of their respective Subsidiaries (including Target and its
Subsidiaries): (a) owns and will own assets the fair salable value of
which are (i) greater than the total amount of its liabilities
(including contingent liabilities) and (ii) greater than the amount
that will be required to pay the probable liabilities of such Loan
Party or its Subsidiary (including Target or its Subsidiaries) as they
mature; (b) has capital that is not unreasonably small in relation to
its business as presently conducted or any contemplated or undertaken
transaction; and (c) does not intend to incur and does not believe
that it will incur debts beyond its ability to pay such debts as they
become due. There is no material fact known to any Loan Party that has
or could have a Material Adverse Effect and that has not been fully
disclosed herein or in such other documents, certificates and
statements furnished to Agent or Lenders for use in connection with
the transactions contemplated hereby.
4.20 Disclosure. No representation or warranty of any Loan Party
----------
or any of its Subsidiaries contained in this Agreement, the financial
statements, the other Loan Documents, the Pre-Commitment Information,
or any other document, certificate or written statement furnished to
Agent or any Lender by or on behalf of any such Person for use in
connection with the Loan Documents contains any untrue statement of a
material fact or omitted, omits or will omit to state a material fact
necessary in order to make the statements contained herein or therein
not misleading in light of the circumstances in which the same were
made. The Projections and the pro forma financial information
contained in such materials are based upon good faith estimates and
assumptions believed by such Persons to be reasonable at the time
made, it being recognized by Agent and Lenders that such projections
as to future events are not to be viewed as facts and that actual
results during the period or periods covered by any such projections
may differ from the projected results. There is no material fact known
to any Loan Party that has had or will have a Material Adverse Effect
and that has not been disclosed herein or in such other documents,
certificates and statements furnished to Agent or any Lender for use
in connection with the transactions contemplated hereby. None of the
Pre-Commitment Information or any information, exhibit or report
furnished by or on behalf of any Loan Party to Agent or any Lender in
connection with the Acquisition Documents contained any untrue
statement of a material fact or omitted to state a material fact
necessary to make the statements made therein nor misleading.
4.21 Insurance. Each Loan Party and each of its Subsidiaries (to
---------
any Loan Party's knowledge with respect to Target and its
Subsidiaries) maintains adequate insurance policies for public
liability, workers compensation, employee benefit liability, fidelity
liability, directors' and officers' liability, errors and omissions,
property damage for its business and properties, product liability,
and business interruption, in each case in amounts customarily carried
or maintained by corporations of established reputations engaged in
similar businesses. Such policies are in full force and effect. No
notice of cancellation has been received with respect to such policies
and such Loan Party and each of its Subsidiaries (to any Loan Party's
knowledge with respect to Target and its Subsidiaries) is in
compliance with all conditions contained in such policies.
4.22 Employee Matters. (a) No Loan Party nor any of its
----------------
Subsidiaries (to any Loan Party's knowledge with respect to Target and
its Subsidiaries) nor any of such Loan Party's or Subsidiary's (to any
Loan Party's knowledge with respect to Target and its Subsidiaries)
employees is subject to any collective bargaining agreement, (b) no
petition for certification or union election is pending with respect
to the employees of any Loan Party or its Subsidiary (to any Loan
Party's knowledge with respect to Target and its Subsidiaries) and no
union or collective bargaining unit has sought or, to the knowledge of
each Loan Party, is currently seeking such certification or
recognition with respect to the employees of any Loan Party or its
Subsidiary (to any Loan Party's knowledge with respect to Target and
its Subsidiaries) and (c) there are no strikes, slowdowns, work
stoppages or controversies pending or, to the best knowledge of
Holdings and Borrower after due inquiry, threatened between any Loan
Party or its Subsidiary and its respective employees, other than
employee grievances arising in the ordinary course of business which
could reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect. No Loan Party nor any of its
Subsidiaries (to any Loan Party's knowledge with respect to Target and
its Subsidiaries) is subject to an employment contract.
4.23 Compliance with Laws. Neither any Loan Party nor any of its
--------------------
Subsidiaries (to any Loan Party's knowledge with respect to Target and
its Subsidiaries) is in violation of any law, ordinance, rule,
regulation, order, policy, guideline, writ, judgment, injunction,
decree, determination, or other requirement of any domestic or foreign
government or any instrumentality or agency thereof, having
jurisdiction over the conduct of its business or the ownership of its
properties, including, without limitation, any violation relating to
any use, release, storage, transport or disposal of any Hazardous
Material, which violation would subject such Loan Party or any of its
Subsidiaries, or any of their respective officers to criminal
liability or have a Material Adverse Effect and, to the knowledge of
each Loan Party, no such violation has been alleged.
4.24 Government Regulation; Use of Proceeds; Margin Regulations.
----------------------------------------------------------
(A) None of the Loan Parties and their respective Subsidiaries is, or
after giving effect to any Loan will be, subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act
or the Investment Company Act of 1940. The Loan Parties and their
respective Subsidiaries are not subject to regulation under any
federal, state or foreign statute or regulation which limits its
ability to incur Indebtedness.
(B) Neither Borrower nor Holdings nor any of their
respective Subsidiaries is engaged, directly or indirectly,
principally, or as one of its important activities, in the business of
extending, or arranging for the extension of, credit for the purpose
of purchasing or carrying Margin Stock within the meaning of
Regulation G, T, U or X of the Board.
(C) Neither the making of any Tender Offer Loan Advance, nor
the application of the proceeds or repayment thereof by Borrower, nor
the consummation or financing of the Acquisition will violate any
provision of any act, rule, regulation or order of the SEC or any
takeover, disclosure or other federal, state or foreign securities law
or Regulation G, T, U or X of the Board. Upon receipt by Borrower of
the proceeds of the Tender Offer Loan Advances, Borrower will use such
proceeds immediately to pay for the Target Shares purchased pursuant
to the Tender Offer Documents or purchased through an Open Market
Purchase. No part of the proceeds of the Tender Offer Loan Advances
will be used (x) to purchase or carry any Margin Stock in violation of
Regulation U or Regulation G or (y) to extend credit for the purpose
of purchasing or carrying any Margin Stock in violation of such
Regulation U or Regulation G.
(D) The loan value of the Collateral (after giving effect to
50% of the value of the Collateral consisting of Margin Stock pursuant
to Regulation G or U) is sufficient for Lenders to lend the full
Commitment hereunder.
4.25 Acquisition. The Acquisition Documents have been duly
-----------
executed and delivered and are in full force and effect. The
representations and warranties contained in the Acquisition Documents
are true and correct in all material respects on the date hereof and
will be true and correct in all material respects on the Closing Date,
as if made on such date, and Agent and Lenders shall be entitled to
rely upon such representations and warranties with the same force and
effect as if they were incorporated in this Agreement and made to
Agent and each Lender directly as of the date hereof and the Closing
Date. The Acquisition shall have been consummated in accordance with
and pursuant to the terms and conditions of the Acquisition Documents
(without any waiver or amendment of any term or condition therein not
consented to by the Requisite Lenders) and in compliance with all
applicable laws and all necessary approvals. Neither Borrower,
Holdings nor Target is in default under the Merger Agreement or under
any instrument or document delivered or to be delivered in connection
therewith.
4.26 Holdings and Borrower Activities. Borrower is a wholly-owned
--------------------------------
Subsidiary of Holdings. Borrower's sole business activity and purpose
is to (i) purchase the Target Shares pursuant to and in accordance
with the Acquisition Documents, (ii) purchase the Target Shares
through Open Market Purchases, and (iii) merge with and into Target
pursuant to and in accordance with the Merger Agreement.
4.27 Open Market Purchases. Any Open Market Purchases shall have
---------------------
been consummated in compliance with all applicable laws and all
necessary approvals.
4.28 Amendments to Schedules. The Loan Parties may, at any time
-----------------------
and from time to time amend any one or more of the Schedules referred
in this Agreement and any representation or warranty contained herein
---------
which refers to any such Schedule shall from and after the date of any
such amendment refer to such Schedule as so amended, provided,
however, that in no event may the Loan Parties amend any such Schedule
if such amendment would reflect or evidence a Default or Event of
Default.
SECTION 5. AFFIRMATIVE COVENANTS
---------------------
Each Loan Party covenants and agrees that, so long as any of the
Commitments hereunder shall be in effect and until payment in full of
all Obligations, unless Requisite Lenders shall otherwise give their
prior written consent, each Loan Party shall perform, and shall cause
each of its Subsidiaries to perform, all covenants in this Section 5.
5.1 Financial Statements and Other Reports. Holdings and Borrower
--------------------------------------
will maintain, and cause each of their respective Subsidiaries to
maintain, a system of accounting established and administered in
accordance with sound business practices to permit preparation of
financial statements in conformity with GAAP. Borrower will deliver to
Agent and each Lender (unless specified to be delivered solely to
Agent) the financial statements and other reports described below.
(A) Monthly Financials. As soon as available and in any
event within twenty-five (25) days after the end of each month (or
within forty-five (45) days after the last month of each fiscal
quarter), Borrower will deliver (1) the consolidated and consolidating
balance sheet of Holdings, Borrower and their respective Subsidiaries
as at the end of such month and the related consolidated and
consolidating statements of income, stockholders' equity and cash flow
for such month and for the period from the beginning of the then
current Fiscal Year to the end of such month, and (2) a schedule of
the outstanding Indebtedness for borrowed money of each Loan Party and
its Subsidiaries describing in reasonable detail each such debt issue
or loan outstanding and the principal amount and amount of accrued and
unpaid interest with respect to each such debt issue or loan.
(B) Quarterly Financials. (i) As soon as available, and in
--------------------
any event within one (1) Business Day after Holdings or Target files
its respective quarterly reports on Form 10-Q with the SEC for each of
its respective first three fiscal quarters in each Fiscal Year,
Borrower will deliver, or will cause to be delivered, to Agent, such
reports; and (ii) in respect of the fourth fiscal quarter in each
Fiscal Year, as soon as available, and in any event within forty-five
(45) days after the end of such fiscal quarter, Borrower will deliver
to Agent financial statements that are equivalent in format to the
financial statements that would have been included in a quarterly
report on Form 10-Q made by Holdings and Target for such fiscal
quarter.
(C) Year-End Financials. As soon as available and in any
-------------------
event within ninety (90) days after the end of each Fiscal Year or, if
earlier, the date on which Holdings or Target files its respective
annual reports on Form 10-K with the SEC in respect of such Fiscal
Year, Borrower will deliver: (1) the consolidated balance sheet of
Holdings, Borrower and their respective Subsidiaries as at the end of
such year and the related consolidated and consolidating statements of
income, stockholders' equity and cash flow for such Fiscal Year; (2) a
schedule of the outstanding Indebtedness of Holdings, Borrower and
their respective Subsidiaries describing in reasonable detail each
such debt issue or loan outstanding and the principal amount and
amount of accrued and unpaid interest with respect to each such debt
issue or loan; (3) a report with respect to the financial statements
from Coopers & Lybrand LLC or a firm of independent certified public
accountants selected by Holdings and Borrower and reasonably
acceptable to Agent, which report shall be unqualified as to going
concern and scope of audit of Holdings, Borrower and their respective
Subsidiaries and shall state that (a) such consolidated and
consolidating financial statements present fairly in all material
respects the consolidated and consolidating financial position of
Holdings, Borrower and their respective Subsidiaries as at the dates
indicated and the results of their operations and cash flow for the
periods indicated in conformity with GAAP and (b) that the examination
by such accountants in connection with such consolidated and
consolidating financial statements has been made in accordance with
generally accepted auditing standards; and (4) copies of the
consolidating financial statements of Holdings, Borrower and their
respective Subsidiaries, including (a) consolidating balance sheets of
Holdings, Borrower and their respective Subsidiaries as at the end of
such Fiscal Year showing intercompany eliminations and (b) related
consolidating statements of earnings of Holdings, Borrower and their
respective Subsidiaries showing intercompany eliminations.
(D) Accountants' Reports. Promptly upon receipt thereof,
--------------------
Borrower will deliver copies of all significant reports submitted by
Holdings' and Borrower's and Target's firm of certified public
accountants in connection with each annual, interim or special audit
or review of any type of the financial statements or related internal
control systems of Holdings and Borrower and Target made by such
accountants, including any comment letter submitted by such
accountants to management in connection with their services.
(E) Compliance Certificate. Together with the delivery of
----------------------
each set of financial statements referenced in subparts (A), (B) and
(C) of this subsection 5.1, Borrower will deliver a Compliance
--------------
Certificate, together with copies of the calculations and work-up
employed to determine Borrower's compliance or noncompliance with the
financial covenants set forth in Section 6.
---------
(F) Management Report. Together with each delivery of
-----------------
financial statements of Holdings, Borrower and their respective
Subsidiaries pursuant to subdivisions (A), (B) and (C) of this
subsection 5.1, Borrower will deliver a management report: (1)
- --------------
describing the operations and financial condition of each Loan Party
and its respective Subsidiaries for the month then ended and the
portion of the current Fiscal Year then elapsed (or for the Fiscal
Year then ended in the case of year-end financials); (2) setting forth
in comparative form the corresponding figures for the corresponding
periods of the previous Fiscal Year and the corresponding figures from
the most recent Projections for the current Fiscal Year delivered to
Lenders pursuant to subsection 5.1(L) and (3) discussing the reasons
-----------------
for any significant variations. The information above shall be
presented in reasonable detail and shall be certified by the chief
financial officer of Holdings and Borrowers or Target, as applicable,
to the effect that such information fairly presents the results of
operations and financial condition of Holdings, Borrower and their
respective Subsidiaries (other than Target and its Subsidiaries) and
of Target and its Subsidiaries, as applicable, as at the dates and for
the periods indicated.
(G) Government Notices. Holdings and Borrower will deliver,
------------------
and cause each of their respective Subsidiaries to deliver, to Agent
promptly after receipt copies of all notices, requests, subpoenas,
inquiries or other writings received from any governmental agency
concerning any Employee Benefit Plan, the violation or alleged
violation of any Environmental Laws, the storage, use or disposal of
any Hazardous Material, the violation or alleged violation of the Fair
Labor Standards Act or the respective Loan Party or its Subsidiary
payment or non- payment of any taxes including any tax audit, and, in
each case, seeking corrective action, damages in excess of $100,000 or
injunctive relief.
(H) Events of Default, etc. Promptly upon any officer of any
----------------------
Loan Party or any Subsidiary of any Loan Party obtaining knowledge of
any of the following events or conditions, the respective Loan Party
shall deliver, or cause its Subsidiary to deliver, a certificate of
the respective entity's chief executive officer specifying the nature
and period of existence of such condition or event and what action the
Loan Party or Subsidiary has taken, is taking and proposes to take
with respect thereto: (1) any condition or event that constitutes an
Event of Default or Default; (2) any notice of default that any Person
has given to any Loan Party or any of their respective Subsidiaries or
any other action taken with respect to a claimed default; or (3) any
Material Adverse Effect.
(I) Trade Names. Loan Parties and each of their Subsidiaries
-----------
will give Agent at least ten (10) days advance written notice of any
change of name or of any new trade name or fictitious business name.
Any Loan Party's or any Subsidiary's use of any trade name or
fictitious business name will be in material compliance with all laws
regarding the use of such names.
(J) Locations. Loan Parties will give Agent at least ten
---------
(10) days advance written notice of any change in any Loan Party's and
each of its Subsidiary's principal place of business or any change in
the location of its books and records or of any new location for its
books and records.
(K) Litigation. Promptly upon (but in any event within five
----------
(5) Business Days after) any officer of any Loan Party or any
Subsidiary of any Loan Party obtaining knowledge of (1) the
institution of any action, suit, proceeding, governmental
investigation or arbitration which seeks either (x) injunctive relief
or (y) damages in excess of $100,000 against or affecting any Loan
Party or any of its Subsidiaries or any property of any Loan Party or
any of its Subsidiaries not previously disclosed by any Loan Party to
Agent or (2) any material development in any action, suit, proceeding,
governmental investigation or arbitration at any time pending against
or affecting any Loan Party or any of its Subsidiaries or any property
of any Loan Party or any of its Subsidiaries which could reasonably be
expected to have a Material Adverse Effect, such Loan Party or
Subsidiary of any Loan Party will promptly give notice thereof to
Agent and provide such other information as may be reasonably
available to them to enable Agent and its counsel to evaluate such
matter.
(L) Projections. As soon as available and in any event no
-----------
later than the last day of such Loan Party's Fiscal Year, each Loan
Party will deliver consolidated and consolidating Projections of such
Loan Party and its Subsidiaries for the forthcoming three (3) Fiscal
Years, year by year, and for the forthcoming Fiscal Year, month by
month.
(M) Other Indebtedness Notices. Each Loan Party shall
--------------------------
promptly deliver copies of all notices given or received by such Loan
Party and any of its Subsidiaries with respect to noncompliance with
any term or condition related to (x) any Indebtedness in excess of
$100,000 subordinated in right of payment to the Obligations and (y)
other Indebtedness in excess of $100,000, and shall promptly notify
Lenders and Agent of any potential or actual event of default with
respect to any such Indebtedness subordinated in right of payment to
the Obligations or such other Indebtedness.
(N) Other Information. With reasonable promptness, each Loan
-----------------
Party will deliver, and will cause each of its Subsidiaries to
deliver, annual business plans and forecasts, reports to shareholders
and such other information and data with respect to any Loan Party or
any Subsidiary of any Loan Party as Agent or any Lender may reasonably
request from time to time.
(O) Public Filings. Within one (1) Business Day after the
--------------
filing or release thereof relating to any Loan Party or any of its
Subsidiaries, Borrower will deliver to Agent a copy of each
registration statement (and amendment and supplement thereto), report,
press release, prospectus, proxy statement or other filing or
disclosure made with any securities commission, exchange or
association or under the Securities Act of 1933, the Securities
Exchange Act of 1934, any related laws or regulations or any
comparable state acts, laws or regulations.
(P) Agreement Notices. Promptly upon receipt thereof, copies
-----------------
of all notices, requests and other documents received by any Loan
Party or any of its Subsidiaries under or pursuant to any Acquisition
Document or material contract or indenture, loan or credit agreement
or similar agreement or instrument regarding or related to any breach
or default by any party thereto or any event that could materially
impair the value of the interests or the rights of any Loan Party or
any of its Subsidiaries or otherwise have a Material Adverse Effect
and copies of any amendment, modification or waiver of any provision
of any Acquisition Document or material contract or indenture, loan or
credit agreement or similar agreement or indenture and, from time to
time upon request by the Agent, such information and reports regarding
the foregoing as the Agent may reasonably request.
5.2 Access to Accountants and Management. Each Loan Party
------------------------------------
authorizes Agent and Lenders to discuss the financial condition and
financial statements of such Loan Party and its Subsidiaries with such
Loan Party's independent public accountants upon reasonable notice to
such Loan Party of its intention to do so, and authorizes such
accountants to respond to all of Agent's and Lenders' inquiries. Each
Lender may with the consent of Agent, which will not be unreasonably
denied, confer with such Loan Party management directly regarding such
Loan Party's business, operations and financial condition.
5.3 Inspection. Each Loan Party shall permit Agent and any
----------
authorized representatives designated by Agent to visit and inspect
any of the properties of such Loan Party or any of its Subsidiaries,
including its financial and accounting records, and in conjunction
with such inspection, to make copies and take extracts therefrom, and
to discuss its affairs, finances and business with its officers and
independent public accountants, at such reasonable times during normal
business hours and as often as may be reasonably requested.
5.4 Collateral Records. Each Loan Party shall keep, and shall
------------------
cause each of its Subsidiaries to keep, full and accurate books and
records relating to the Collateral and shall mark such books and
records to indicate Agent's security interests in the Collateral, for
the benefit of Lenders.
5.5 Corporate Existence. Except as otherwise permitted under
-------------------
subsection 7.6, each Loan Party will, and will cause each of its
Subsidiaries to, at all times preserve and keep in full force and
effect its corporate existence and all rights (charter and statutory)
franchises, permits, licenses and approvals material to its business.
Each Loan Party will promptly notify Agent of any change in its or its
Subsidiaries' ownership or corporate structure.
5.6 Payment of Taxes etc. Each Loan Party will, and will cause
--------------------
each of its Subsidiaries to, pay and discharge (i) all taxes,
assessments and other governmental charges imposed upon it or any of
its properties or assets or with respect to any of its franchises,
business, income or property before any penalty accrues thereon and
(ii) all lawful claims that, if unpaid, might by law become a Lien
upon its property; provided that no such tax need be paid -------- if
Holdings, Borrower or one of their respective Subsidiaries is
contesting same in good faith by appropriate proceedings promptly
instituted and diligently conducted and if such Loan Party or such
Subsidiary has established appropriate reserves as shall be required
in conformity with GAAP.
5.7 Maintenance of Properties; Insurance. Each Loan Party will
------------------------------------
maintain or cause to be maintained in good repair, working order and
condition all material properties used in the business of such Loan
Party and its Subsidiaries, except for ordinary wear and tear, and
will make or cause to be made all appropriate repairs, renewals and
replacements thereof. Each Loan Party will maintain or cause to be
maintained, with financially sound and reputable insurers, public
liability, workers compensation, employee benefit liability insurance,
fidelity insurance, errors and omissions insurance, directors' and
officers' liability insurance, business interruption insurance and
property damage insurance with respect to each Loan Party's and each
of their respective Subsidiaries' business and properties and the
business and properties of each Loan Party and each of their
respective Subsidiaries against loss or damage of the kinds
customarily carried or maintained by corporations of established
reputation engaged in similar businesses and in amounts acceptable to
Agent.
5.8 Compliance with Laws. Each Loan Party will, and will cause
--------------------
each of its Subsidiaries to, (a) comply with the requirements of all
applicable laws, rules, regulations, ERISA, Environmental Laws and
orders of any governmental authority as now in effect and which may be
imposed in the future in all jurisdictions in which such Loan Party or
any of its Subsidiaries is now doing business or may hereafter be
doing business other than those laws the noncompliance with which
could not be reasonably expected to have a Material Adverse Effect and
(b) maintain or obtain all licenses, qualifications, and permits now
held or hereafter required to be held by each Loan Party and their
respective Subsidiaries, for which the loss, suspension, revocation or
failure to obtain or renew, could reasonably expected to have a
Material Adverse Effect;
5.9 Performance of Material Contracts. Each Loan Party shall
---------------------------------
perform and observe, and cause each of its Subsidiaries to, perform
and observe, all of the terms and provisions of each contractual
obligation to be performed or observed by it, maintain, and cause each
of its Subsidiaries to maintain, each such contractual obligation in
full force and effect, and enforce, and cause each of its Subsidiaries
to enforce each such contractual obligation in accordance with its
terms.
5.10 Transactions with Affiliates. Each Loan Party shall conduct,
----------------------------
and cause each of its Subsidiaries to conduct, all transactions
otherwise permitted under the Loan Documents with any of their
Affiliates on terms that are fair and reasonable and no less favorable
to such Loan Party or Subsidiary than it would obtain in a comparable
arms-length transaction with a Person not an Affiliate.
5.11 Performance of Acquisition Documents. Each Loan Party shall,
------------------------------------
and shall cause each of its Subsidiaries to, (i) perform and observe
all of the terms and provisions of each Acquisition Document to be
performed or observed by it, (ii) maintain each such Acquisition
Document in full force and effect, (iii) enforce each such Acquisition
Document in accordance with its terms, (iv) take all such action to
such end as may be from time to time requested by Agent and, (v) upon
request of Agent, make to each other party to each such Acquisition
Document such demands and requests for action or for information and
reports as any Loan Party or Target is entitled to make under such
Acquisition Document.
5.12. Consummation of Merger. Use reasonable efforts to
----------------------
consummate the Merger in accordance with the terms and conditions of
the Merger Agreement as soon as practicable after the consummation and
completion of the Tender Offer.
5.13 Further Assurances. Each Loan Party shall, and shall cause
------------------
each of its Subsidiaries to, from time to time, execute such financing
or continuation statements, documents, security agreements, reports
and other documents or deliver to Agent such instruments, certificates
of title or other documents as Agent at any time may reasonably
request to evidence, perfect or otherwise implement the security for
repayment of the Obligations provided for in the Loan Documents.
5.14 Use of Proceeds and Margin Security. No portion of the
-----------------------------------
proceeds of any Loan shall be used by any Loan Party or its
Subsidiaries for the purpose of purchasing or carrying Margin Stock
within the meaning of Regulation G or Regulation U, or in any manner
that might cause the borrowing or the application of such proceeds to
violate Regulation T or Regulation X or any other regulation of the
Board or to violate the Exchange Act; provided, however, that the
proceeds of the Loans made hereunder shall be used only by Borrower
for the sole purpose of purchasing the Target Shares purchased (x)
pursuant to the Tender Offer Documents and (y) through Open Market
Purchases; provided, further, that the borrowing of such Loans or the
application of such proceeds do not violate such Regulations or any
other regulation of the Board or violate the Exchange Act.
SECTION 6. FINANCIAL COVENANTS
Each Loan Party covenants and agrees that so long as any of the
Commitments remain in effect and until payment in full of all
Obligations unless Borrower has received the prior written consent of
Requisite Lenders, each Loan Party shall comply with and shall cause
each of their respective Subsidiaries to comply with all covenants in
this Section 6 .
6.1 Fixed Charge Coverage. Fixed Charge Coverage shall not be
---------------------
less than 1.0 to 1.0 for any fiscal quarter in any Fiscal Year.
SECTION 7. NEGATIVE COVENANTS
-----------------------------
Each Loan Party covenants and agrees that so long as any of the
Commitments remain in effect and until payment in full of all
Obligations, unless such Loan Party has received the prior written
consent of Requisite Lenders, no Loan Party shall permit nor allow any
of their respective Subsidiaries (including Target and its
Subsidiaries) to:
7.1 Indebtedness and Liabilities. Directly or indirectly create,
----------------------------
incur, assume, guaranty, or otherwise become or remain directly or
indirectly liable, on a fixed or contingent basis, with respect to any
Indebtedness except: (a) the Obligations; (b) Indebtedness (excluding
Capital Leases) not to exceed $250,000 in the aggregate at any time
outstanding secured by purchase money Liens; (c) Indebtedness under
Capital Leases not to exceed $ $250,000 outstanding at any time in the
aggregate; and (d) Indebtedness existing on the Closing Date and
identified on Schedule 4.5. Except for Indebtedness described
------------
permitted in the preceding sentence, Loan Parties will not, and will
not permit any of their Subsidiaries to, incur any Liabilities except
(x) for trade payables and normal accruals in the ordinary course of
business not yet due and payable or with respect to which any Loan
Party or any of their Subsidiaries is contesting in good faith the
amount or validity thereof by appropriate proceedings and then only to
the extent that such Loan Party or any of its Subsidiaries has
established adequate reserves therefor, if appropriate under GAAP and
(y) for the refinancing of existing Indebtedness, provided such
refinancing is on terms and conditions acceptable to Agent and
Lenders.
7.2 Guaranties. Guaranty, endorse, or otherwise in any way become
----------
or be responsible for any obligations of any other Person, whether
directly or indirectly, by agreement to purchase the indebtedness of
any other Person or through the purchase of goods, supplies or
services, or maintenance of working capital or other balance sheet
covenants or conditions, or by way of stock purchase, capital
contribution, advance or loan for the purpose of paying or discharging
any indebtedness or obligation of such other Person or otherwise,
except for: (a) the guaranty of the Obligations by Holdings under the
Corporate Guaranty and under the Loan Documents; (b) any future
guaranty by Holdings or Borrower of the obligations of Holdings,
Borrower or any of their respective Subsidiaries under the
Indebtedness permitted to be incurred under subsection 7.1; (c)
--------------
endorsements of instruments or items of payment for collection in the
ordinary course of business; and (d) the existing Capital Leases,
operating leases and subsidiary guaranties set forth in Schedule 7.2.
-------- ---
7.3 Transfers, Liens and Related Matters.
(A) Transfers. Sell, assign (by operation of law or
---------
otherwise) or otherwise dispose of, or grant any option with respect
to any of the assets of such Loan Party or Subsidiary, whether now
owned or hereafter acquired, except that each Subsidiary (other than
Borrower) may sell (i) inventory in the ordinary course its of
business and (ii) obsolete equipment not used or useful in its
business, provided that the aggregate purchase prices paid to the
--------
Subsidiaries with respect to such obsolete equipment shall
not exceed $250,000.
(B) Liens. (i) Except for (x) Permitted Encumbrances and (y)
-----
the IDRB, directly or indirectly create, incur, assume or permit to
exist any Lien on or with respect to any assets or properties of such
Person or any proceeds, income or profits therefrom, whether now owned
or hereafter acquired; and (ii) notwithstanding anything to the
contrary in clause (i) above, except for the Lien in favor of Agent
pursuant to the Loan Documents, directly or indirectly create, incur,
assume or permit to exist any Lien on or with respect to the
Collateral or any proceeds, income or profits therefrom whether now
owned or hereafter acquired.
(C) No Negative Pledges. Enter into or assume any agreement
-------------------
(other than the Loan Documents) prohibiting the creation or assumption
of any Lien upon its properties or assets, whether now owned or
hereafter acquired.
(D) No Restrictions on Subsidiary Distributions to Holdings
-------------------------------------------------------
or Borrower. Except as provided herein and on Schedule 7.3(D),
- -----------
directly or indirectly create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind
on the ability of Borrower or any Subsidiary of Borrower or Holdings
to: (1) pay dividends or make any other distribution on any of such
Subsidiary's capital stock owned by Holdings, Borrower or any other
Subsidiary of Holdings, provided that any such payments of dividends
--------
or any such distributions shall only be made to Holdings,
Borrower or any other wholly-owned Subsidiary of Borrower or Holdings;
(2) subject to subordination provisions, pay any indebtedness owed to
Holdings, Borrower or any other wholly-owned Subsidiary of Holdings or
Borrower; (3) make loans or advances to Holdings, Borrower or any
other wholly-owned Subsidiary of Holdings or Borrower; or (4) transfer
any of its property or assets to Holdings, Borrower or any other
wholly- owned Subsidiary of Holdings or Borrower.
7.4 Investments and Loans. Except as set forth on Schedule 7.4,
--------------------- ------------
make or permit to exist Investments in any Person, except that the
Loan Parties and their respective Subsidiaries may (a) make and own
Investments in Cash Equivalents; and (b) make loans and advances to
employees for (i) payment of taxes in connection with restricted stock
awards and (ii) moving, entertainment, travel and other similar
expenses in the ordinary course of business, in the case of clause (i)
and (ii), not to exceed $500,000 in the aggregate at any time
outstanding.
7.5 Restricted Junior Payments. Except as set forth on Schedule
-------------------------- --------
7.5 and except for payments made by LII to Old World Management
- ---
Industries, Inc. pursuant to and in accordance with the terms and
provisions of the Consulting Agreement, directly or indirectly
declare, order, pay, make or set apart any sum for any Restricted
Junior Payment, except that, so long as no Default or Event of Default
shall have occurred and be continuing or would result therefrom,
Borrower or any Subsidiary of any Loan Party may make Restricted
Junior Payments with respect to their common stock to the extent
necessary to permit such Loan Party to pay the Obligations.
7.6 Restriction on Fundamental Changes. (a) Enter into any
----------------------------------
transaction of merger or consolidation; (b) liquidate, wind-up or
dissolve itself (or suffer any liquidation or dissolution); (c)
convey, sell, lease, sublease, transfer or otherwise dispose of, in
one transaction or a series of transactions, all or any substantial
part of its business or assets, whether now owned or hereafter
acquired; or (d) (other than with respect to Holdings), issue or sell
any capital stock of any Loan Party or its Subsidiaries or any
warrants, rights or options to acquire such capital stock or assign,
pledge or otherwise encumber or dispose of any shares of capital stock
of any Loan Party or its Subsidiaries except as permitted in
subsection 7.5 and for the pledge and Lien in favor of Agent pursuant
to the Loan Documents; (e) sell any of the Target Shares purchased
pursuant to the Offer to Purchase and purchased through Open Market
Purchases or assign, pledge or otherwise encumber or dispose of any
such purchased Target Shares, except for the pledge and Lien in favor
of Agent pursuant to the Loan Documents; or (f) acquire by purchase or
otherwise all or any substantial part of the business or assets of, or
stock or other evidence of beneficial ownership of, any Person or
enter into any joint venture with any Person; provided, however, that
(i) the Acquisition and Merger shall be consummated in accordance with
and subject to the terms and conditions of the Acquisition Documents,
(ii) any wholly-owned Subsidiary of Holdings (other than Borrower) or
of Borrower may be liquidated, wound-up or dissolved into any other
wholly-owned Subsidiary of Holdings or Borrower, (iii) upon not less
than five (5) Business Days prior written notice to Agent, any
wholly-owned Subsidiary of Holdings or Borrower may be merged with or
into any other wholly-owned Subsidiary of Holdings or Borrower,
provided that Borrower is the surviving entity in the case of any
- --------
merger or consolidation to which the Borrower is a party.
7.7 Charter Amendments. Amend, or permit any of its Subsidiaries
------------------
to amend, its certificate or articles of incorporation or bylaws.
7.8 Accounting Changes. Except as provided in subsection 1.2,
------------------
make or permit, or permit any of its Subsidiaries to make or permit,
any changes in (i) accounting policies or reporting practices, except
as required by GAAP (which required changes may be made on a timely
basis), or (ii) its Fiscal Year.
7.9 Prepayments, Etc. of Debt. Prepay, redeem, purchase, defease
-------------------------
or otherwise satisfy prior to the scheduled maturity thereof in any
manner, or make any payment in violation of any subordination terms
of, any debt.
7.10 Transactions with Affiliates. Except as set forth on
----------------------------
Schedule 7.5, directly or indirectly, enter into or permit to exist
- ------------
any transaction (including the purchase, sale or exchange of property
or the rendering of any service) with any Affiliate or with any
officer, director or employee of any Loan Party or its Subsidiary,
except for transactions in the ordinary course of and pursuant to the
reasonable requirements of such Loan Party's or its Subsidiary's
business and upon fair and reasonable terms which, except for
transactions which are expressly permitted pursuant to the terms of
this Agreement, are fully disclosed to Agent and Lenders and which are
no less favorable to such Loan Party or its Subsidiary than it would
obtain in a comparable arm's length transaction with an unaffiliated
Person.
7.11 Environmental Liabilities. (a) Violate any applicable
-------------------------
Environmental Law; (b) dispose of any Hazardous Materials (except in
accordance with applicable law) into or onto or from, any real
property owned, leased or operated by any Loan Party or its
Subsidiary; or (c) permit any Lien imposed pursuant to any
Environmental Law to be imposed or to remain on any real property
owned, leased or operated by any Loan Party or its Subsidiary.
7.12 Conduct of Business. From and after the Closing Date, engage
-------------------
in any business other than businesses of the type engaged in by
Holdings, Borrower or any of their respective Subsidiaries on the
Closing Date.
7.13 Compliance with ERISA. Establish any new Employee Benefit
---------------------
Plan or amend any existing Employee Benefit Plan if the liability or
increased liability resulting from such establishment or amendment is
material. Neither Loan Party nor any Subsidiary of either Loan Party
shall fail to establish, maintain and operate each Employee Benefit
Plan in compliance in all material respects with the provisions of
ERISA, the IRC and all other applicable laws and the regulations and
interpretations thereof.
7.14 Tax Consolidations. File or consent to the filing of any
------------------
consolidated income tax return with any Person other than the Loan
Parties or any of their respective Subsidiaries; provided that in the
event Borrower or any Subsidiary of Borrower or Holdings files a
return with Holdings or Borrower, as applicable, Borrower's or such
Subsidiary's contribution with respect to taxes as a result of the
filing of such consolidated return shall not be greater, nor the
receipt of tax benefits less, than they would have been had Borrower
or such Subsidiary not filed a consolidated return with Holdings or
Borrower, as applicable.
7.15 Subsidiaries. Establish, create or acquire any new
------------
Subsidiaries.
7.16 Press Release; Public Offering Materials. Disclose the name
----------------------------------------
of Agent or any Lender in any press release or in any prospectus,
proxy statement or other materials filed with any governmental entity
relating to a public offering of the capital stock of any Loan Party
except as may be required by law.
SECTION 8. DEFAULT, RIGHTS AND REMEDIES
---------------------------------------
8.1 Event of Default. "Event of Default" shall mean the
occurrence or existence of any one or more of the following:
(A) Payment. Failure of a Loan Party to make payment of any
-------
of the Obligations when due and in the case of interest, such failure
shall not be cured within five (5) days of the applicable due date; or
(B) Default in Other Agreements. (1) Failure of Holdings,
---------------------------
Borrower or any of their respective Subsidiaries to pay when due any
principal or interest on any Indebtedness (other than the Obligations)
or (2) breach or default of Holdings, Borrower or any of their
Subsidiaries with respect to any Indebtedness (other than the
Obligations); if such failure to pay, breach or default entitles the
holder to cause such Indebtedness having an individual principal
amount in excess of $250,000 or having an aggregate principal amount
in excess of $1,000,000 to become or be declared due prior to its
stated maturity; or
(C) Breach of Certain Provisions. Failure of Holdings,
----------------------------
Borrower or any of their respective Subsidiaries to perform or comply
with any term or condition contained in subsection 5.1(A), (B) or (C),
-----------------------------
subsection 5.3, subsection 5.5, subsection 5.11, or subsection 5.14 or
- -------------------------------------------------------------------
contained in Section 6 or Section 7; or
--------- ---------
(D) Breach of Warranty. Any representation, warranty,
------------------
certification or other statement made by any Loan Party in any Loan
Document or in any statement or certificate at any time given by such
Person in writing pursuant or in connection with any Loan Document is
false in any material respect on the date made; or
(E) Other Defaults Under Loan Documents. Any Loan Party
defaults in the performance of or compliance with any term contained
in this Agreement or the other Loan Documents and such default is not
remedied or waived within ten (10) days after receipt by such Loan
Party of notice from Agent or Requisite Lenders of such default (other
than occurrences described in other provisions of this subsection 8.1
for which a different grace or cure period is specified or which
constitute immediate Events of Default); or
(F) Change in Control. (1) Holdings ceases to beneficially
-----------------
own and control, directly or indirectly, at least one hundred percent
(100%) of the issued and outstanding shares of each class of capital
stock of Borrower and the other Lund Subsidiaries entitled (without
regard to the occurrence of any contingency) to vote for the election
of a majority of the members of the board of directors of Borrower or
such other Lund Subsidiaries free and clear of all Liens other than
Liens in favor of Agent, or (2) Borrower ceases to beneficially own
and control at least one hundred percent (100%) of the aggregate
number of Target Shares purchased by Borrower (x) pursuant to the
Offer to Purchase and (y) through any Open Market Purchases; or
(G) Involuntary Bankruptcy; Appointment of Receiver, etc.
-----------------------------------------------------
(1) A court enters a decree or order for relief with respect to
Holdings, Borrower or any of their respective Subsidiaries in an
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, which decree or order is not
stayed or other similar relief is not granted under any applicable
federal or state law; or (2) the continuance of any of the following
events for sixty (60) days unless dismissed, bonded or discharged: (a)
an involuntary case is commenced against Holdings, Borrower or any of
their respective Subsidiaries, under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect; or (b) a
decree or order of a court for the appointment of a receiver,
liquidator, sequestrator, trustee, custodian or other officer having
similar powers over Holdings, Borrower, Target or any of their
respective Subsidiaries, or over all or a substantial part of their
respective property, is entered; or (c) an interim receiver, trustee
or other custodian is appointed without the consent of Holdings,
Borrower or any of their respective Subsidiaries, for all or a
substantial part of the property of Holdings, Borrower or any such
Subsidiary; or
(H) Voluntary Bankruptcy; Appointment of Receiver, etc.
--------------------------------------------------
(1) An order for relief is entered with respect to Holdings, Borrower or
any of their respective Subsidiaries or Holdings, Borrower or any of
their respective Subsidiaries commences a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consents to the entry of an order for relief
in an involuntary case or to the conversion of an involuntary case to
a voluntary case under any such law or consents to the appointment of
or taking possession by a receiver, trustee or other custodian for all
or a substantial part of its property; or (2) Holdings, Borrower or
any of their respective Subsidiaries makes any assignment for the
benefit of creditors; or (3) the board of directors of Holdings,
Borrower or any of their respective Subsidiaries adopts any resolution
or otherwise authorizes action to approve any of the actions referred
to in this subsection 8.1(H); or
-----------------
(I) Liens. Any lien, levy or assessment is filed or recorded
-----
with respect to or otherwise imposed upon all or any part of the
Collateral or the properties or assets of Holdings, Borrower or any of
their respective Subsidiaries by the United States or any department
or instrumentality thereof or by any state, county, municipality or
other governmental agency (other than Permitted Encumbrances) and such
lien, levy or assessment is not stayed, vacated, paid or discharged
within thirty (30) days; or
(J) Judgment and Attachments. Any money judgment, writ or
------------------------
warrant of attachment, or similar process involving (1) an amount in
any individual case in excess of $250,000 or (2) an amount in the
aggregate at any time in excess of $500,000 (in either case not
adequately covered by insurance as to which the insurance company has
acknowledged coverage) is entered or filed against Holdings, Borrower
or any of their respective Subsidiaries or any of their respective
properties or assets and remains undischarged, unvacated, unbonded or
unstayed for a period of forty-five (45) days or in any event later
than five (5) days prior to the date of any proposed sale thereunder;
or
(K) Dissolution. Any order, judgment or decree is entered
-----------
against Holdings, Borrower or any of their respective Subsidiaries
decreeing the dissolution or split up of Holdings, Borrower, Target or
such Subsidiary and such order remains undischarged or unstayed for a
period in excess of twenty (20) days; or
(L) Solvency. Holdings, Borrower or any of their respective
--------
Subsidiaries ceases to be solvent (as represented by Holdings and
Borrower in subsection 4.19) or admits in writing its present or
prospective inability to pay its debts as they become due; or
(M) Injunction. Holdings, Borrower or any of their respective
----------
Subsidiaries is enjoined, restrained or in any way prevented by the
order of any court or any administrative or regulatory agency from
conducting all or any material part of its business and such order
continues for more than thirty (30) days; or
(N) Invalidity of Loan Documents and Acquisition Documents.
------------------------------------------------------
Any of the Loan Documents or Acquisition Documents for any reason,
other than a partial or full release in accordance with the terms
thereof, ceases to be in full force and effect or is declared to be
null and void, or any Loan Party or Target. as applicable, denies that
it has any further liability under any Loan Document or Acquisition
Document to which it is party, or gives notice to such effect; or
(O) Failure of Security. Agent, on behalf of Lenders, does
-------------------
not have or ceases to have a valid and perfected first priority
security interest in the Collateral, in each case, for any reason
other than the failure of Agent or any Lender to take any action
within its control; or
(P) Damage, Strike, Casualty. Any material damage to, or
------------------------
loss, theft or destruction of, any Collateral, the cessation or
substantial curtailment of revenue producing activities at any
facility of Holdings, Borrower or any of their respective Subsidiaries
if any such event or circumstance could reasonably be expected to have
a Material Adverse Effect; or
(Q) Licenses and Permits. The loss, suspension or revocation
--------------------
of, or failure to renew, any license or permit now held or hereafter
acquired by Holdings, Borrower or any of their respective
Subsidiaries, if such loss, suspension, revocation or failure to renew
could reasonably be expected to have a Material Adverse Effect; or
(R) Forfeiture. There is filed against Holdings, Borrower,
----------
Target or any of their respective Subsidiaries, any civil or criminal
action, suit or proceeding under any federal or state racketeering
statute (including, without limitation, the Racketeer Influenced and
Corrupt Organization Act of 1970), which action, suit or proceeding
(1) is not dismissed within one hundred twenty (120) days; and (2)
could result in the confiscation or forfeiture of any material portion
of the Collateral; or
(S) Change of Business Activities. Holdings or Borrower shall
-----------------------------
engage in any business activities, other than activities solely
related to: (i) with respect to the Borrower, (x) the purchase of the
Target Shares pursuant to the Offer to Purchase, (y) the ownership
thereof and (z) the merger with and into Target; and (ii) with respect
to Holdings, (x) the ownership of the capital stock of Borrower and
the other Lund Subsidiaries and (y) the management of Borrower and the
other Lund Subsidiaries.
8.2 Suspension of Commitments. Upon the occurrence of any Default
-------------------------
or Event of Default, notwithstanding any grace period or right to
cure, Agent may or upon demand by Requisite Lenders shall, without
notice or demand, immediately cease making additional Loans and the
Commitments shall be suspended; provided that, in the case of a
--------
Default, if the subject condition or event is waived or cured within
any applicable grace or cure period, the Commitments shall be
reinstated.
8.3 Acceleration. Upon the occurrence of any Event of Default
------------
described in the foregoing subsections 8.1(G) or 8.1(H), all
----------------------------
Obligations shall automatically become immediately due and payable,
without presentment, demand, protest or other requirements of any
kind, all of which are hereby expressly waived by Holdings and
Borrower, and the Commitments shall thereupon terminate. Upon the
occurrence and during the continuance of any other Event of Default,
Agent may, and upon demand by Requisite Lenders shall, by written
notice to Holdings and Borrower, (a) declare all or any portion of the
Obligations to be, and the same shall forthwith become, immediately
due and payable, without presentment, demand, protest or other
requirement of any kind, and the Commitments shall thereupon
terminate.
8.4 Appointment of Attorney-in-Fact. Each Loan Party hereby
-------------------------------
constitutes and appoints Agent as such Loan Party's attorney-in-fact
with full authority in the place and stead of such Loan Party and in
the name of such Loan Party, Agent or otherwise, from time to time in
Agent's discretion while an Event of Default is continuing to take any
action and to execute any instrument that Agent may deem necessary or
advisable to accomplish the purposes of this Agreement. The
appointment of Agent as each Loan Party's attorney and Agent's rights
and powers are coupled with an interest and are irrevocable until
payment in full and complete performance of all of the Obligations.
8.5 Limitation on Duty of Agent with Respect to Collateral.
------------------------------------------------------
Beyond the safe custody thereof, Agent and each Lender shall have no
duty with respect to any Collateral in its possession or control (or
in the possession or control of any agent or bailee) or with respect
to any income thereon or the preservation of rights against prior
parties or any other rights pertaining thereto. Agent shall be deemed
to have exercised reasonable care in the custody and preservation of
the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which Agent accords its own
property. Neither Agent nor any Lender shall be liable or responsible
for any loss or damage to any of the Collateral, or for any diminution
in the value thereof, by reason of the act or omission of any carrier,
agency, or other agent or bailee selected by Agent in good faith.
8.6 Application of Proceeds. Upon the occurrence and during the
-----------------------
continuance of an Event of Default, (a) the Loan Parties irrevocably
waive the right to direct the application of any and all payments at
any time or times thereafter received by Agent from or on behalf of
any Loan Party, and such Loan Party hereby irrevocably agrees that
Agent shall have the continuing exclusive right to apply and to
reapply any and all payments received at any time or times after the
occurrence and during the continuance of an Event of Default against
the Obligations in such manner as Agent may deem advisable
notwithstanding any previous entry by Agent upon any books and records
and (b) the proceeds of any sale of, or other realization upon, all or
any part of the Collateral shall be applied: first, to all fees, costs
-----
and expenses incurred by Agent or any Lender with respect to this
Agreement, the other Loan Documents or the Collateral; second, to all
------
fees due and owing to Agent and Lenders; third, to accrued and unpaid
-----
interest on the Obligations; fourth, to the principal amounts of the
------
Obligations outstanding; and fifth, to any other indebtedness or
-----
obligations of the Loan Parties owing to Agent or any Lender.
8.7 Waivers, Non-Exclusive Remedies. No failure on the part of
-------------------------------
Agent or any Lender to exercise, and no delay in exercising and no
course of dealing with respect to, any right under this Agreement or
the other Loan Documents shall operate as a waiver thereof; nor shall
any single or partial exercise by Agent or any Lender of any right
under this Agreement or any other Loan Document preclude any other or
further exercise thereof or the exercise of any other right. The
rights in this Agreement and the other Loan Documents are cumulative
and are not exclusive of any other remedies provided by law.
SECTION 9. ASSIGNMENT AND PARTICIPATION
---------------------------------------
9.1 Assignments and Participations in Loans.
---------------------------------------
(A) Each Lender may assign its rights and delegate its
obligations under this Agreement to another Person; provided, that (a)
--------
such Lender shall first obtain the written consent of Agent, which
shall not be unreasonably withheld, (b) the amount of Commitments and
Loans of the assigning Lender being assigned shall in no event be less
than the lesser of (i) $5,000,000 or (ii) the entire amount of the
Commitments and Loans of such assigning Lender and (c)(i) each such
assignment shall be of a pro rata portion of all such assigning
Lender's Loans and Commitments hereunder, and (ii) the parties to such
assignment shall execute and deliver to Agent for acceptance and
recording an Assignment and Assumption Agreement together with (x) a
processing and recording fee of $3,000 payable to Agent and (y) the
Notes originally delivered to the assigning Lender. Upon receipt of
all of the foregoing, Agent shall notify Borrower of such assignment
and Borrower shall comply with its obligations under the last sentence
of subsection 2.1(B). In the case of an assignment authorized under
----------------
this subsection 9.1, the assignee shall have, to the extent of such
--------------
assignment, the same rights, benefits and obligations as it would if
it were a Lender hereunder. The assigning Lender shall be relieved of
its obligations hereunder with respect to its Commitment or assigned
portion thereof. The Loan Parties hereby acknowledge and agree that
any assignment will give rise to a direct obligation of each Loan
Party to the assignee and that the assignee shall be considered to be
a "Lender".
(B) Each Lender may sell participations in all or any part
of any Loans made by it to another Person; provided, that any such
--------
participation shall be in a minimum amount of $5,000,000, and
provided, further, that all amounts payable by Borrower hereunder
- -------- -------
shall be determined as if that Lender had not sold such participation
and the holder of any such participation shall not be entitled to
require such Lender to take or omit to take any action hereunder
except action directly effecting (a) any reduction in the principal
amount, interest rate or fees payable with respect to any Loan in
which such holder participates; (b) any extension of the Termination
Date or the date fixed for any payment of principal, interest or fees
payable with respect to any Loan in which such holder participates;
and (c) any release of substantially all of the Collateral (other than
in accordance with the terms of this Agreement or the Loan Documents).
The Loan Parties hereby acknowledge and agree that the participant
under each participation shall for purposes of subsection 2.7, 2.8,
--------------------
2.9, 9.4 and 10.2 be considered to be a "Lender".
- -----------------
(C) Except as otherwise provided in this subsection 9.1 no
Lender shall, as between Borrower and that Lender, be relieved of any
of its obligations hereunder as a result of any sale, assignment,
transfer or negotiation of, or granting of participation in, all or
any part of the Loans or other Obligations owed to such Lender. Each
Lender may furnish any information concerning the Loan Parties and
their respective Subsidiaries in the possession of that Lender from
time to time to assignees and participants (including prospective
assignees and participants) provided that the Persons obtaining such
information agrees to maintain the confidentiality of such information
to the extent required by subsection 10.21.
----------------
(D) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time create a security interest in
all or any portion of its rights under this Agreement (including,
without limitation, the Loans owing to it and the Notes in favor of
any Federal Reserve Bank in accordance with Regulation A of the Board
of Governors of the Federal Reserve System).
9.2 Agent.
(A) Appointment. Each Lender hereby designates and appoints
----------
Heller as its agent under this Agreement and the Loan Documents, and
each Lender hereby irrevocably authorizes Agent to take such action or
to refrain from taking such action on its behalf under the provisions
of this Agreement and the Loan Documents and to exercise such powers
as are set forth herein or therein, together with such other powers as
are reasonably incidental thereto. Agent is authorized and empowered
to amend, modify, or waive any provisions of this Agreement or the
other Loan Documents on behalf of Lenders subject to the requirement
that certain of Lenders' consent be obtained in certain instances as
provided in subsection 9.3. Agent agrees to act as such on the express
--------------
conditions contained in this subsection 9.2. The provisions of this
--------------
subsection 9.2 are solely for the benefit of Agent and Lenders and
- --------------
neither Holdings nor Borrower shall have any rights as a third party
beneficiary of any of the provisions hereof. In performing its
functions and duties under this Agreement and the other Loan
Documents, Agent shall act solely as an administrative representative
of Lenders and does not assume and shall not be deemed to have assumed
any obligation toward or relationship of agency or trust with or for
Lenders, Borrower or any Loan Party. Agent may perform any of its
duties hereunder, or under the Loan Documents, by or through its
agents or employees.
(B) Nature of Duties. Agent shall have no duties,
----------------
obligations or responsibilities except those expressly set forth in
this Agreement or in the Loan Documents. The duties of Agent shall be
mechanical and administrative in nature. Agent shall not have by
reason of this Agreement a fiduciary relationship in respect of any
Lender. Each Lender shall make its own independent investigation of
the financial condition and affairs of Holdings and Borrower in
connection with the extension of credit hereunder and shall make its
own appraisal of the credit worthiness of Holdings and Borrower and
Agent shall have no duty or responsibility, either initially or on a
continuing basis, to provide any Lender with any credit or other
information with respect thereto, whether coming into its possession
before the Closing Date or at any time or times thereafter. If Agent
seeks the consent or approval of any Lenders to the taking or
refraining from taking any action hereunder, then Agent shall send
notice thereof to each Lender. Agent shall promptly notify each Lender
any time that the applicable percentage of Lenders have instructed
Agent to act or refrain from acting pursuant hereto.
(C) Rights, Exculpation, Etc. Neither Agent nor any of its
------------------------
officers, directors, employees or agents shall be liable to any Lender
for any action taken or omitted by them hereunder or under any of the
Loan Documents, or in connection herewith or therewith, except that
Agent shall be obligated on the terms set forth herein for performance
of its express obligations hereunder, and except that Agent shall be
liable with respect to its own gross negligence or willful misconduct.
Agent shall not be liable for any apportionment or distribution of
payments made by it in good faith and if any such apportionment or
distribution is subsequently determined to have been made in error the
sole recourse of any Lender to whom payment was due but not made,
shall be to recover from other Lenders any payment in excess of the
amount to which they are determined to be entitled (and such other
Lenders hereby agree to return to such Lender any such erroneous
payments received by them). In performing its functions and duties
hereunder, Agent shall exercise the same care which it would in
dealing with loans for its own account, but Agent shall not be
responsible to any Lender for any recitals, statements,
representations or warranties herein or for the execution,
effectiveness, genuineness, validity, enforceability, collectability,
or sufficiency of this Agreement or any of the Loan Documents or the
transactions contemplated thereby, or for the financial condition of
any Loan Party. Agent shall not be required to make any inquiry
concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement or any of the Loan
Documents or the financial condition of any Loan Party, or the
existence or possible existence of any Default or Event of Default.
Agent may at any time request instructions from Lenders with respect
to any actions or approvals which by the terms of this Agreement or of
any of the Loan Documents Agent is permitted or required to take or to
grant, and Agent shall be absolutely entitled to refrain from taking
any action or to withhold any approval and shall not be under any
liability whatsoever to any Person for refraining from any action or
withholding any approval under any of the Loan Documents until it
shall have received such instructions from the applicable percentage
of the Lenders. Without limiting the foregoing, no Lender shall have
any right of action whatsoever against Agent as a result of Agent
acting or refraining from acting under this Agreement or any of the
other Loan Documents in accordance with the instructions of the
applicable percentage of the Lenders and notwithstanding the
instructions of Lenders, Agent shall have no obligation to take any
action if it, in good faith believes that such action exposes Agent to
any liability.
(D) Reliance. Agent shall be entitled to rely upon any
--------
written notices, statements, certificates, orders or other documents
or any telephone message or other communication (including any
writing, telex, telecopy or telegram) believed by it in good faith to
be genuine and correct and to have been signed, sent or made by the
proper Person, and with respect to all matters pertaining to this
Agreement or any of the Loan Documents and its duties hereunder or
thereunder, upon advice of counsel selected by it. Agent shall be
entitled to rely upon the advice of legal counsel, independent
accountants, and other experts selected by Agent in its sole
discretion.
(E) Indemnification. Each Lender, severally, agrees to
---------------
reimburse and indemnify Agent for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses, advances or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against
Agent in any way relating to or arising out of this Agreement or any
of the Loan Documents or any action taken or omitted by Agent under
this Agreement for any of the Loan Documents, in proportion to each
Lender's Pro Rata Share; provided, however, that no Lender shall be
liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses,
advances or disbursements resulting from Agent's gross negligence or
willful misconduct. The obligations of Lenders under this subsection
9.2(E) shall survive the payment in full of the Obligations and the
termination of this Agreement.
(F) Heller Individually. With respect to its Commitments and
-------------------
the Loans made by it, and the Notes issued to it, Heller shall have
and may exercise the same rights and powers hereunder and is subject
to the same obligations and liabilities as and to the extent set forth
herein for any other Lender. The terms "Lenders" or "Requisite
Lenders" or any similar terms shall, unless the context clearly
otherwise indicates, include Heller in its individual capacity as a
Lender or one of the Requisite Lenders. Heller may lend money to, and
generally engage in any kind of banking, trust or other business with
any Loan Party as if it were not acting as Agent pursuant hereto.
(G) Successor Agent.
---------------
(1) Resignation. Agent may resign from the performance of
-----------
all its functions and duties hereunder at any time by giving at least
thirty (30) Business Days' prior written notice to the Loan Parties
and the Lenders. Such resignation shall take effect upon the
acceptance by a successor Agent of appointment pursuant to clause (2)
below or as otherwise provided below.
(2) Appointment of Successor. Upon any such notice of
------------------------
resignation pursuant to clause (G)(1) above, Requisite Lenders shall,
upon receipt of Borrower's prior consent which shall not unreasonably
be withheld, appoint a successor Agent. If a successor Agent shall not
have been so appointed within said thirty (30) Business Day period,
the retiring Agent, upon notice to Borrower, shall then appoint a
successor Agent who shall serve as Agent until such time, as Requisite
Lenders, upon receipt of Borrower's prior written consent which shall
not be unreasonably withheld, appoint a successor Agent as provided
above.
(3) Successor Agent. Upon the acceptance of any appointment
---------------
as Agent under the Loan Documents by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations
under the Loan Documents. After any retiring Agent's resignation as
Agent under the Loan Documents, the provisions of this subsection 9.2
shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under the Loan Documents.
(H) Collateral Matters.
(1) Release of Collateral. Lenders hereby irrevocably
---------------------
authorize Agent, at its option and in its discretion, to release any
Lien granted to or held by Agent upon any property covered by this
Agreement or the Loan Documents (i) upon termination of the
Commitments and payment and satisfaction of all Obligations; or (ii)
constituting property being sold or disposed of if the Loan Parties
certify to Agent that the sale or disposition is made in compliance
with the provisions of this Agreement or the Loan Document (and Agent
may rely in good faith conclusively on any such certificate, without
further inquiry).
(2) Confirmation of Authority; Execution of Releases.
------------------------------------------------
Without in any manner limiting Agent's authority to act without any
specific or further authorization or consent by Lenders (as set forth
in subsection 9.2(H)(1)), each Lender agrees to confirm in writing,
--------------------
upon request by Agent, the authority to release any property covered
by this Agreement or the Loan Documents conferred upon Agent under
subsection 9.2(H)(1). So long as no Event of Default is then
- --------------------
continuing, upon receipt by Agent of confirmation from the requisite
percentage of Lenders, of its authority to release any particular item
or types of property covered by this Agreement or the Loan Documents,
and upon at least five (5) Business Days prior written request by
Borrower, Agent shall (and is hereby irrevocably authorized by Lenders
to) execute such documents as may be necessary to evidence the release
of the Liens granted to Agent for the benefit of Lenders herein or
pursuant hereto upon such Collateral; provided, however, that (i)
-------- -------
Agent shall not be required to execute any such document on terms
which, in Agent's opinion, would expose Agent to liability or create
any obligation or entail any consequence other than the release of
such Liens without recourse or warranty, and (ii) such release shall
not in any manner discharge, affect or impair the Obligations or any
Liens upon (or obligations of any Loan Party, in respect of), all
interests retained by any Loan Party, including, without limitation,
the proceeds of any sale, all of which shall continue to constitute
part of the property covered by this Agreement or the Loan Documents.
(3) Absence of Duty. Agent shall have no obligation
---------------
whatsoever to any Lender or any other Person to assure that the
property covered by this Agreement or the Loan Documents exists or is
owned by any Loan Party or is cared for, protected or insured or has
been encumbered or that the Liens granted to Agent on behalf of
Lenders herein or pursuant hereto have been properly or sufficiently
or lawfully created, perfected, protected or enforced or are entitled
to any particular priority, or to exercise at all or in any particular
manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted
or available to Agent in this subsection 9.2(H) or in any of the Loan
-----------------
Documents, it being understood and agreed that in respect of the
property covered by this Agreement or the Loan Documents or any act,
omission or event related thereto, Agent may act in any manner it may
deem appropriate, in its discretion, given Agent's own interest in
property covered by this Agreement or the Loan Documents as one of the
Lenders and that Agent shall have no duty or liability whatsoever to
any of the other Lenders; provided, that Agent shall exercise the same
--------
care which it would in dealing with loans for its own account.
(I) Agency for Perfection. Each Lender hereby appoints each other
---------------------
Lender as agent for the purpose of perfecting Lenders' security
interest in Collateral which, in accordance with of the Uniform
Commercial Code in any applicable jurisdiction, can be perfected only
by possession. Should any Lender (other than Agent) obtain possession
of any such Collateral, such Lender shall notify Agent thereof, and,
promptly upon Agent's request therefor, shall deliver such Collateral
to Agent or in accordance with Agent's instructions.
(J) Exercise of Remedies. Each Lender agrees that it will not
--------------------
have any right individually to enforce or seek to enforce this
Agreement or any Loan Document or to realize upon any collateral
security for the Loans, it being understood and agreed that such
rights and remedies may be exercised only by Agent.
9.3 Consents.
--------
(A) In the event Agent requests the consent of a Lender
and does not receive a written denial thereof within five (5) Business
Days after such Lender's receipt of such request, then such Lender
will be deemed to have given such consent.
(B) In the event Agent requests the consent of a Lender
and such consent is denied, then Heller may, at its option, require
such Lender to assign its interest in the Loans to Heller for a price
equal to the then outstanding principal amount thereof plus accrued
and unpaid interest and fees due such Lender, which interest and
fees will be paid when collected from Borrower. In the event that
Heller elects to require any Lender to assign its interest to Heller,
Heller will so notify such Lender in writing within forty-five (45)
days following such Lender's denial, and such Lender will assign its
interest to Heller no later than five (5) days following receipt of
such notice.
9.4 Set Off and Sharing of Payments. In addition to any rights
-------------------------------
now or hereafter granted under applicable law and not by way of
limitation of any such rights, upon the occurrence and during the
continuance of any Event of Default, each Lender is hereby authorized
by Loan Parties at any time or from time to time, with reasonably
prompt subsequent notice to such Loan Party or to any other Person
(any prior or contemporaneous notice being hereby expressly waived) to
set off and to appropriate and to apply any and all (A) balances held
by such Lender or such holder at any of its offices for the account of
such Loan Party or any of its Subsidiaries (regardless of whether such
balances are then due to such Loan Party or its Subsidiaries), and (B)
other property at any time held or owing by such Lender or such holder
to or for the credit or for the account of such Loan Party or any of
its Subsidiaries, against and on account of any of the Obligations
which are not paid when due; except that no Lender or any such holder
shall exercise any such right without the prior written consent of
Agent. Any Lender which has exercised its right to set off shall, to
the extent the amount of any such set off exceeds its Pro Rata Share
of the Obligations, purchase for cash (and the other Lenders or
holders shall sell) participations in each such other Lender's or
holder's Pro Rata Share of the Obligations as would be necessary to
cause such Lender to share such excess with each other Lender or
holder in accordance with their respective Pro Rata Shares. Each Loan
Party agrees, to the fullest extent permitted by law, that (a) any
Lender or holder may exercise its right to set off with respect to
amounts in excess of its Pro Rata Share of the Obligations and may
sell participations in such excess to other Lenders and holders, and
(b) any Lender or holder so purchasing a participation in the Loans
made or other Obligations held by other Lenders or holders may
exercise all rights of set-off, bankers' lien, counterclaim or similar
rights with respect to such participation as fully as if such Lender
or holder were a direct holder of Loans and other Obligations in the
amount of such participation.
9.5 Disbursement of Funds. Agent may, on behalf of Lenders,
---------------------
disburse funds to Borrower for Loans requested. Each Lender shall
reimburse Agent on demand for all funds disbursed on its behalf by
Agent, or if Agent so requests, each Lender will remit to Agent its
Pro Rata Share of any Loan before Agent disburses same to Borrower. If
Agent elects to require that funds be made available prior to
disbursement to any Loan Party, Agent shall advise each Lender by
telephone, telex or telecopy of the amount of such Lender's Pro Rata
Share of such requested Loan no later than (a) one (1) Business Day
prior to the Funding Date applicable thereto for LIBOR Loans and (b)
by 1:00 p.m. Central time on the Funding Date for Base Rate Loans, and
each such Lender shall pay Agent such Lender's Pro Rata Share of such
requested Loan, in same day funds, by wire transfer to Agent's account
not later than 10:00 a.m. Central time on such Funding Date for LIBOR
Loans and 3:00 p.m. Central time for Base Rate Loans. If any Lender
fails to pay the amount of its Pro Rata Share forthwith upon Agent's
demand, Agent shall promptly notify Borrower, and Borrower shall
immediately repay such amount to Agent. Any repayment required
pursuant to this subsection 9.5 shall be without premium or penalty.
--------------
Nothing in this subsection 9.5 or elsewhere in this Agreement or the
--------------
other Loan Documents, including without limitation the provisions of
subsection 9.6, shall be deemed to require Agent to advance funds on
- --------------
behalf of any Lender or to relieve any Lender from its obligation to
fulfill its Commitments hereunder or to prejudice any rights that
Agent or Borrower may have against any Lender as a result of any
default by such Lender hereunder.
9.6 Settlements, Payments and Information.
(A) Tender Offer Loan Advances and Payments; Fee Payments.
(1) Payments of principal, interest and fees in respect
of the Tender Offer Loan will be settled on the Business Day received.
Notwithstanding these procedures, each Lender's obligation to fund its
Pro Rata Share of any advances made by Agent to Borrower will commence
on the date such advances are made by Agent. Such payments will be
made by such Lender without set-off, counterclaim or reduction of any
kind.
(2) Once each week, or more frequently (including
daily), if Agent so elects (each such day being a "Settlement Date"),
Agent will advise each Lender by 1 p.m. Central time by telephone,
telex, or telecopy of the amount of each such Lender's Pro Rata Share
of the Tender Offer Loan. In the event payments are necessary to
adjust the amount of such Lender's share of the Tender Offer Loan to
such Lender's Pro Rata Share of the Tender Offer Loan, the party from
which such payment is due will pay the other, in same day funds, by
wire transfer to the other's account not later than 3:00 p.m. Central
time on the Business Day following the Settlement Date.
(3) On the first Business Day of each month ("Interest
Settlement Date"), Agent will advise each Lender by telephone, telex
or telecopy of the amount of interest and fees charged to and
collected from Borrower for the proceeding month. Provided that such
Lender has made all payments required to be made by it under this
Agreement, Agent will pay to such Lender, by wire transfer to such
Lender's account (as specified by such Lender on the signature page of
this Agreement as amended by such Lender from time to time after the
date hereof pursuant to the notice provisions contained herein or in
the applicable Assignment and Assumption Agreement) not later than 3
p.m. Central time on the next Business Day following the Interest
Settlement Date such Lender's share of such interest and fees.
(B) Availability of Lender's Pro Rata Share.
---------------------------------------
(1) Unless Agent has been notified by a Lender prior to
a Funding Date of such Lender's intention not to fund its Pro Rata
Share of a Loan requested by Borrower, Agent may assume that such
Lender will make such amount available to Agent on the Settlement Date
or the Business Day following the next Settlement Date, as applicable,
and Agent may (but shall not be so required), in reliance upon such
assumption, make available to Borrower on such date a corresponding
amount.
(2) Nothing contained in this subsection 9.6(B) will be
-----------------
deemed to relieve a Lender of its obligation to fulfill its
Commitments or to prejudice any rights Agent or Borrower may have
against such Lender as a result of any default by such Lender under
this Agreement, but no Lender shall be responsible for the failure of
any other Lender to make such other Lender's Pro Rata Share of the
Loan to be made by such other Lender on any Funding Date.
(3) If and to the extent that a Lender has not paid its
Pro Rata Share according to the terms of this Agreement, and Agent has
made such amount available to Borrower, the Defaulting Lender shall,
on the Business Day following (i) such Funding Date or (ii) the first
Business Day following the next Settlement Date, as applicable, make
such amount available to Agent, together with interest at the Federal
Funds Effective Rate for each day such amount is outstanding until the
date the Defaulting Lender makes such amount available to Agent. A
notice from Agent submitted to any Lender with respect to amounts
owing under this subsection shall be conclusive, absent manifest
error. If such amount is not made available to Agent, Agent shall
promptly notify the applicable Borrower of such failure to fund (a
"Defaulting Lender Notice"). Any payments received by Agent thereafter
shall be applied first to reduce Agent's overfunding resulting from
the default by the Defaulting Lender, and to the extent any such
payments or advances are insufficient to reduce the entire such
amount, then Agent may, on or after the tenth day following its
delivery of the Defaulting Lender Notice, make demand upon Borrower
and Borrower shall immediately pay such amount to Agent for Agent's
account, together with interest thereon for each day elapsed since the
date of such borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Loan made by the other Lenders on such
Funding Date.
(4) Agent shall not transfer to a Defaulting Lender any
payment made by Borrower to Agent or any amount otherwise received by
Agent for application to the Obligations, nor shall a Defaulting
Lender be entitled to the sharing of any fees or payments hereunder.
(5) For purposes of voting or consenting to matters with
respect to the Loan Documents and determining Pro Rata Shares and the
Tender Offer Loan Commitment, a Defaulting Lender shall be deemed not
to be a "Lender" and such Lender's Tender Offer Loan Commitment shall
be deemed to be zero (0).
(C) Return of Payments
------------------
(1) If Agent pays an amount to a Lender under this
Agreement in the belief or expectation that a related payment has been
or will be received by Agent from a Loan Party and such related
payment is not received by Agent, then Agent will be entitled to
recover such amount from such Lender without set-off, counterclaim or
deduction of any kind.
(2) If Agent determines at any time that any amount
received by Agent under this Agreement must be returned to Borrower or
paid to any other person pursuant to any solvency law or otherwise,
then, notwithstanding any other term or condition of this Agreement,
Agent will not be required to distribute any portion thereof to any
Lender. In addition, each Lender will repay to Agent on demand any
portion of such amount that Agent has distributed to such Lender,
together with interest at such rate, if any, as Agent is required to
pay to Borrower or such other Person, without set-off, counterclaim or
deduction of any kind.
9.7 Dissemination of Information. Agent will provide Lenders with
----------------------------
any information received by Agent from Borrower which is required to
be provided to a Lender hereunder; provided, however, that Agent shall
not be liable to Lenders for any failure to do so, except to the
extent that such failure is attributable to Agent's gross negligence
or willful misconduct.
SECTION 10. MISCELLANEOUS
-------------------------
10.1 Expenses and Attorneys' Fees. Whether or not the
----------------------------
transactions contemplated hereby shall be consummated, each Loan Party
jointly and severally agrees to promptly pay all fees, costs and
expenses incurred by Agent in connection with any matters contemplated
by or arising out of this Agreement or the other Loan Documents
including the following, and all such fees, costs and expenses shall
be part of the Obligations, payable on demand and secured by the
Collateral: (a) fees, costs and expenses (including reasonable
attorneys' fees, reasonable allocated costs of internal counsel and
fees of environmental consultants, accountants and other professionals
retained by Agent) incurred in connection with the examination,
review, due diligence investigation, documentation and closing of the
financing arrangements evidenced by the Loan Documents; (b) fees,
costs and expenses (including attorneys' fees, allocated costs of
internal counsel and fees of environmental consultants, accountants
and other professionals retained by Agent) incurred in connection with
the review, negotiation, preparation, documentation, execution,
syndication, and administration of the Loan Documents, the Loans, and
any amendments, waivers, consents, forbearances and other
modifications relating thereto or any subordination or intercreditor
agreements; (c) fees, costs and expenses incurred by Agent in
creating, perfecting and maintaining perfection of Liens in favor of
Agent, on behalf of Lenders; (d) fees, costs and expenses incurred by
Agent in connection with forwarding to Borrower the proceeds of Loans
including Agent's or any Lenders' standard wire transfer fee; (e)
fees, costs, expenses (including attorneys' fees and allocated costs
of internal counsel) of Agent or any Lender and costs of settlement
incurred in collecting upon or enforcing rights against the Collateral
or incurred in any action to enforce this Agreement or the other Loan
Documents or to collect any payments due from Borrower or any other
Loan Party under this Agreement or any other Loan Document or incurred
in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement, whether in the nature of a
"workout" or in connection with any insolvency or bankruptcy
proceedings or otherwise.
10.2 Indemnity. In addition to the payment of expenses pursuant
---------
to subsection 10.1, whether or not the transactions contemplated
hereby shall be consummated, each Loan Party jointly and severally
agrees to indemnify and hold harmless Agent, each Lender and each of
their respective Affiliates and their respective officers, directors,
employees, agents, consultants, auditors, advisors, Persons engaged by
and on behalf of Agent or any Lender or any holder of any of the Notes
to evaluate or monitor the Collateral, affiliates and attorneys of
Agent, Lender and such holders (each, an "Indemnified Party") from and
-----------------
against any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and expenses of
counsel) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with
or by reason of, or in connection with the preparation for a defense
of, any investigation, litigation or proceeding arising out of,
related to or in connection with (i) any Open Market Purchases, the
Acquisition or any related transaction of Loan Parties or any of their
Subsidiaries or other Affiliates and any of the other transactions
contemplated by the Loan Documents and the Acquisition Documents, (ii)
any acquisition or proposed acquisition or similar business
combination or proposed business combination by Loan Parties or any of
their Subsidiaries or other Affiliates of all or any portion of the
shares of capital stock or substantially all of the property and
assets of any other Person, (iii) the Tender Offer Loan and any use
made or proposed to be made with the proceeds thereof, or the Tender
Offer Loan Commitment, or the actual or proposed use of the proceeds
of the Tender Offer Loan Advances by Borrower or Holdings or any of
their respective Subsidiaries or other Affiliates or any of the other
transactions contemplated by the Loan Documents, (iv) the statements
contained in the Fee Letter and Commitment Letter delivered by Agent
or any Lender, or (v) the actual or alleged presence of Hazardous
Materials on any property of any Loan Party or any of its Subsidiaries
or any Environmental Action relating in any way to any Loan Party or
any of its Subsidiaries, in each case whether or not such
investigation, litigation or proceeding is brought by any Loan Party
or any of its Subsidiaries or such Loan Party's or Subsidiary's
directors, officers, employees, stockholders or creditors or an
Indemnified Party or any Indemnified Party otherwise a party thereto
and whether or not the transactions contemplated hereby are
consummated, except to the extent such claim, damage, loss, liability
or expense is found in a final, non-appealable judgment by a court of
competent jurisdiction to have resulted from such Indemnified Party's
gross negligence or willful misconduct. Each Loan Party also agrees
not to assert any claim against Agent, any Lender or any of their
respective Affiliates, or any of their respective officers, directors,
employees, attorneys and agents, on any theory of liability, for
special, indirect, consequential or punitive damages arising out of or
otherwise relating to any Open Market Purchases, the Acquisition, the
Tender Offer Loan Commitment, the actual or proposed use of the
proceeds of the Tender Offer Loan Advances, the Loan Documents, the
Acquisition Documents or any of the transactions contemplated thereby,
other than claims for direct, as opposed to consequential, damages
which shall have been determined in a final nonappealable judgment by
a court of competent jurisdiction to have resulted from such Person's
gross negligence or willful misconduct.
10.3 Amendments and Waivers.
----------------------
(A) Except as otherwise provided herein, no amendment,
modification, termination or waiver of any provision of this Agreement
or any Loan Document, or consent to any departure by any Loan Party
therefrom, shall in any event be effective unless the same shall be in
writing and signed by Requisite Lenders or Agent, as applicable;
provided, that no amendment, modification, termination or waiver
- --------
shall, unless in writing and signed by all Lenders, do any of the
following: (i) increase the Commitment of any Lender; (ii) reduce the
principal of, rate of interest on or fees payable with respect to any
Loan; (iii) extend the scheduled due date of any installment of
principal of the Loans; (iv) change the percentage of the Commitments
or of the aggregate unpaid principal amount of the Loans, or the
percentage of Lenders which shall be required for Lenders or any of
them to take any action hereunder; (v) amend or waive this subsection
----------
10.3 or the definitions of the terms used in this subsection 10.3
- ---- ---------------
insofar as the definitions affect the substance of this subsection
----------
10.3; and (vi) consent to the assignment or other transfer by any Loan
- ----
Party of any of its rights and obligations under any Loan Document;
and provided, further, that no amendment, modification, termination or
-------- -------
waiver affecting the rights or duties of Agent under any Loan Document
shall in any event be effective, unless in writing and signed by
Agent, in addition to the Lenders required herein above to take such
action.
(B) Each amendment, modification, termination or waiver
shall be effective only in the specific instance and for the specific
purpose for which it was given. No amendment, modification,
termination or waiver shall be required for Agent to take additional
Collateral pursuant to any Loan Document.
(C) In the event Agent waives (1) any Default arising under
subsection 8.1(E) as a result of the breach of any of the provisions
- -----------------
of Section 5 of this Agreement (other than any such breach which
---------
constitutes an Event of Default) or (2) any Default constituting a
condition to the funding under this Agreement, such waiver shall
expire on the date upon which the Default which was the subject of
such waiver matures into an Event of Default pursuant to the terms of
this Agreement.
10.4 Notices. Unless otherwise specifically provided herein, all
-------
notices shall be in writing addressed to the respective party as set
forth below and may be personally served, telecopied or sent by
overnight courier service or United States mail and shall be deemed to
have been given: (a) if delivered in person, when delivered; (b) if
delivered by telecopy, on the date of transmission if transmitted on a
Business Day before 4:00 p.m. Central time or, if not, on the next
succeeding Business Day; (c) if delivered by overnight courier, two
(2) days after delivery to such courier properly addressed; or (d) if
by U.S. Mail, four (4) Business Days after depositing in the United
States mail, with postage prepaid and properly addressed.
If to Holdings or Borrower: Lund International Holdings, Inc.
c/o Harvest Partners
747 Third Avenue
New York, New York 10017
Attention: Ira Kleinman
Telephone No.: (212) 838-7776 (x113)
Telecopy No.: (212) 593-0734
With a copy to: Reid & Priest
40 West 57th Street
New York, New York 10019-4097
Attention: Leonard Gubar, Esq.
Steven L. Wasserman, Esq.
Telephone No.: (212) 603-6771
Telecopy No.: (212) 603-2436
If to Agent or to Heller: HELLER FINANCIAL, INC.
500 West Monroe
Chicago, Illinois, 60661
Attn: Portfolio Manager
Telecopy No.: (312) 441-7367
With a copy to: HELLER FINANCIAL, INC.
500 West Monroe
Chicago, Illinois 60661
Attn: Legal Department/CFG
Telecopy No.: (312) 441-7367
If to any Lender: Its address indicated on the signature page
hereto, in an Assignment and Assumption Agreement or in a notice to
Agent and Borrower or to such other address as the party addressed
shall have previously designated by written notice to the serving
party, given in accordance with this subsection 10.4.
10.5 Survival of Warranties and Certain Agreements. All
---------------------------------------------
agreements, representations and warranties made herein shall survive
the execution and delivery of this Agreement and the making of the
Loans hereunder. Notwithstanding anything in this Agreement or implied
by law to the contrary, the agreements of Loan Parties set forth in
subsections 10.1 and 10.2 shall survive the payment of the Loans and
- -------------------------
the termination of this Agreement.
10.6 Indulgence Not Waiver. No failure or delay on the part of
---------------------
Agent, any Lender or any holder of any Notes in the exercise of any
power, right or privilege hereunder or under the Notes shall impair
such power, right or privilege or be construed to be a waiver of any
default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or
further exercise thereof or of any other right, power or privilege.
10.7 Marshaling; Payments Set Aside. Neither Agent nor any Lender
------------------------------
shall be under any obligation to marshal any assets in favor of any
Loan Party or any other party or against or in payment of any or all
of the Obligations. To the extent that any Loan Party makes a payment
or payments to Agent and/or any Lender or Agent and/or any Lender
enforces its security interests or exercise its rights of setoff, and
such payment or payments or the proceeds of such enforcement or setoff
or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to
a trustee, receiver or any other party under any bankruptcy law, state
or federal law, common law or equitable cause, then to the extent of
such recovery, the Obligations or part thereof originally intended to
be satisfied, and all Liens, rights and remedies therefor, shall be
revived and continued in full force and effect as if such payment had
not been made or such enforcement or setoff had not occurred.
10.8 Entire Agreement. This Agreement, the Tender Offer Notes and
----------------
the other Loan Documents referred to herein embody the final, entire
agreement among the parties hereto and supersede any and all prior
commitments, agreements, representations, and understandings, whether
written or oral, relating to the subject matter hereof and may not be
contradicted or varied by evidence of prior, contemporaneous, or
subsequent oral agreements or discussions of the parties hereto. There
are no oral agreements among the parties hereto.
10.9 Independence of Covenants. All covenants hereunder shall be
-------------------------
given independent effect so that if a particular action or condition
is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitations
of, another covenant shall not avoid the occurrence of a Default or an
Event of Default if such action is taken or condition exists.
10.10 Severability. The invalidity, illegality or
------------
unenforceability in any jurisdiction of any provision in or obligation
under this Agreement or the other Loan Documents shall not affect or
impair the validity, legality or enforceability of the remaining
provisions or obligations under this Agreement, or the other Loan
Documents or of such provision or obligation in any other
jurisdiction.
10.11 Lenders' Obligations Several; Independent Nature of
---------------------------------------------------
Lenders' Rights. The obligation of each Lender hereunder is several
- ---------------
and not joint and neither Agent nor any Lender shall be responsible
for the obligation or commitment of any other Lender hereunder. In the
event that any Lender at any time should fail to make a Loan as herein
provided, the Lenders, or any of them, at their sole option, may make
the Loan that was to have been made by the Lender so failing to make
such Loan. Nothing contained in any Loan Document and no action taken
by Agent or any Lender pursuant hereto or thereto shall be deemed to
constitute Lenders to be a partnership, an association, a joint
venture or any other kind of entity. The amounts payable at any time
hereunder to each Lender shall be a separate and independent debt,
and, provided Agent fails or refuses to exercise any remedies against
Borrower or Holdings after receiving the direction of the Requisite
Lenders, each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for
any other Lender to be joined as an additional party in any proceeding
for such purpose.
10.12 Headings. Section and subsection headings in this Agreement
--------
are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given
any substantive effect.
10.13 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
--------------
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES.
10.14 Successors and Assigns. This Agreement shall be binding
----------------------
upon and inure to the benefit of the parties hereto and their
respective successors and assigns except that no Loan Party may assign
its rights or obligations hereunder without the prior written consent
of Lenders.
10.15 No Fiduciary Relationship; Limitation of Liabilities.
----------------------------------------------------
(A) No provision in this Agreement or in any of the other
Loan Documents and no course of dealing between the parties shall be
deemed to create any fiduciary duty by Agent or any Lender to any Loan
Party.
(B) Neither Agent nor any Lender, nor any affiliate,
officer, director, shareholder, employee, attorney, or agent of Agent
or any Lender shall have any liability with respect to, and each Loan
Party hereby waives, releases, and agrees not to sue any of them upon,
any claim for any special, indirect, incidental, or consequential
damages suffered or incurred by any Loan Party in connection with,
arising out of, or in any way related to, this Agreement or any of the
other Loan Documents, or any of the transactions contemplated by this
Agreement or any of the other Loan Documents. Each Loan Party hereby
waives, releases, and agrees not to sue Agent or any Lender or any of
Agent's or any Lender's Affiliates, officers, directors, employees,
attorneys, or agents for punitive damages in respect of any claim in
connection with, arising out of, or in any way related to, this
Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or any of the transactions
contemplated hereby.
10.16 CONSENT TO JURISDICTION. EACH LOAN PARTY HEREBY CONSENTS TO
-----------------------
THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE
COUNTY OF NEW YORK, STATE OF NEW YORK AND IRREVOCABLY AGREES THAT,
SUBJECT TO AGENT'S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF
OR RELATING TO THIS AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS
SHALL BE LITIGATED IN SUCH COURTS. EACH LOAN PARTY ACCEPTS FOR ITSELF
AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY,
THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY
DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY
ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, THE
NOTES, THE OTHER LOAN DOCUMENTS OR THE OBLIGATIONS.
10.17 WAIVER OF JURY TRIAL. EACH LOAN PARTY, AGENT AND EACH
--------------------
LENDER HEREBY WAIVES THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT,
OR THE OTHER LOAN DOCUMENTS. EACH LOAN PARTY, AGENT AND EACH LENDER
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A
BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN
ENTERING INTO THIS AGREEMENT, THE NOTES AND THE OTHER LOAN DOCUMENTS
AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED
FUTURE DEALINGS. EACH LOAN PARTY, AGENT AND EACH LENDER FURTHER
WARRANTS AND REPRESENTS THAT EACH HAS REVIEWED THIS WAIVER WITH ITS
LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
10.18 Construction. Each Loan Party, Agent and each Lender each
------------
acknowledge that it has had the benefit of legal counsel of its own
choice and has been afforded an opportunity to review this Agreement
and the other Loan Documents with its legal counsel and that this
Agreement and the other Loan Documents shall be construed as if
jointly drafted by each Loan Party, Agent and each Lender.
10.19 Counterparts; Effectiveness. This Agreement and any
---------------------------
amendments, waivers, consents, or supplements may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be
deemed an original, but all of which counterparts together shall
constitute but one and the same instrument. This Agreement shall
become effective upon the execution of a counterpart hereof by each of
the parties hereto. Delivery of an executed counterpart of a signature
page to this Agreement, any amendments, waivers, consents or
supplements, or to any other Loan Document by telecopier shall be as
effective as delivery of a manually executed counterpart thereof.
10.20 No Duty. All attorneys, accountants, appraisers, and other
-------
professional Persons and consultants retained by Agent or any Lender
shall have the right to act exclusively in the interest of Agent or
such Lender and shall have no duty of disclosure, duty of loyalty,
duty of care, or other duty or obligation of any type or nature
whatsoever to any Loan Party or any Loan Parties' shareholders or any
other Person.
10.21 Confidentiality. Agent and Lenders shall hold all nonpublic
---------------
information obtained pursuant to the requirements hereof and
identified as such by any Loan Party in accordance with such Person's
customary procedures for handling confidential information of this
nature and in accordance with safe and sound business practices and in
any event may make disclosure to such of its respective Affiliates,
officers, directors, employees, agents and representatives as need to
know such information in connection with the Loans. If any Lender is
otherwise a creditor of a Loan Party, such Lender may use the
information in connection with its other credits. Agent and Lenders
may also make disclosure reasonably required by a bona fide offeree or
assignee (or participation), or as required or requested by any
governmental authority or representative thereof, or pursuant to legal
process, or to its accountants, lawyers and other advisors, and shall
require any such offeree or assignee (or participant) to agree (and
require any of its offerees, assignees or participants to agree) to
comply with this Section 10.21. In no event shall Agent or any Lender
-------------
be obligated or required to return any materials furnished by any Loan
Party; provided, however, each offeree shall be required to agree that
-------- -------
if it does not become a assignee (or participant) it shall return all
materials furnished to it by any Loan Party in connection herewith.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
WITNESS the due execution of this Agreement by the
respective duly authorized officers of the undersigned as of the date
first written above.
ZEPHYROS ACQUISITION CORPORATION
By: /s/ Ira D. Kleinman
-----------------------------------
Name: Ira D. Kleinman
Title: Chairman of the Board of Directors
FEIN: 41-1894249
---------------------------------
LUND INTERNATIONAL HOLDINGS, INC.
By: /s/ Ira D. Kleinman
-----------------------------------
Name: Ira D. Kleinman
Title: Chairman of the Board of Directors
FEIN: 41-1568618
---------------------------------
HELLER FINANCIAL, INC.
By: /s/ Daniel J. Marszalek
----------------------------------
Name: Daniel J. Marszalek
Title: Senior Vice President
Tender Offer Loan Commitment:
$42,000,000
Exhibit 5
GUARANTY OF PAYMENT
-------------------
THIS GUARANTY OF PAYMENT (this "GUARANTY") is made this 30th day
of December, 1997, by LUND INTERNATIONAL HOLDINGS, INC., a Delaware
corporation ("GUARANTOR") in favor of HELLER FINANCIAL, INC., a
Delaware corporation, as agent for the benefit of the Lenders (in its
capacity as Agent for the Lenders, "AGENT").
RECITALS
--------
A. Financial Accommodations. Guarantor and Zephyros Acquisition
------------------------
Corporation ("BORROWER") are entering into that certain Tender Offer
Loan Agreement dated as of the date hereof with Agent and certain
financial institutions from time to time party thereto (collectively,
"LENDERS") (as it may be amended, restated, supplemented or otherwise
modified and in effect from time to time, the "LOAN AGREEMENT")
providing for loans and other financial accommodations to be made by
Lenders to Borrower;
B. Purpose. Borrower desires to incur such loans pursuant to the
-------
Agreement for the purpose of financing a portion of the purchase price
of all of the Target Shares pursuant to the Offer to Purchase;
C. Inducement. Borrower is a wholly-owned subsidiary of Guarantor
----------
and as such, Guarantor will derive direct and indirect economic
benefits from the making of loans and other financial accommodations
under the Loan Agreement;
In consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Guarantor hereby agrees as follows:
SECTION 1 DEFINED TERMS
-------------
All capitalized terms used herein and not otherwise defined shall
have the meanings assigned to such term in the Loan Agreement.
SECTION 2 THE GUARANTY
------------
2.1 GUARANTY OF OBLIGATIONS. Guarantor unconditionally and
-----------------------
absolutely guarantees the full and prompt payment and performance when
due, whether at maturity or earlier, by reason of acceleration or
otherwise, and at all times thereafter, of the indebtedness,
liabilities and obligations of every kind and nature of Borrower to
Agent or Lenders arising under or in any way relating to the Loan
Agreement or any of the other Loan Documents, howsoever created,
incurred or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing, due or to become due, and
howsoever owned, held or acquired by Agent, for the benefit of Lenders
(collectively, the "OBLIGATIONS"). Without limitation to the
foregoing, the Obligations shall include (a) all reasonable attorneys'
and paralegals' fees, costs and expenses and all court costs and costs
of appeal incurred by Agent in collecting any amount due Lenders under
this Guaranty or in prosecuting any action against Borrower, Guarantor
or any other guarantor with respect to all or any part of the
Obligations and (b) all interest, fees, costs and expenses due Lenders
after the filing of a bankruptcy petition by or against Borrower
regardless of whether such amounts can be collected during the
pendency of the bankruptcy proceedings.
2.2 CONTINUING GUARANTY; GUARANTY OF PAYMENT. This Guaranty is a
----------------------------------------
continuing guaranty of the Obligations, and Guarantor agrees that the
obligations of Guarantor to Agent, for the benefit of Lenders,
hereunder shall be primary obligations, shall not be subject to any
counterclaim, set-off, abatement, deferment or defense based upon any
claim that Guarantor may have against Agent, Borrower or any other
person or entity, and shall remain in full force and effect without
regard to, and shall not be released, discharged or affected in any
way by any circumstances or condition (whether or not Guarantor shall
have any knowledge thereof), including, without limitation: (a) the
attempt or the absence of any attempt by Agent to obtain payment or
performance by Borrower or any other guarantor (this being a guaranty
of payment and performance and not of collection); (b) Agent's delay
in enforcing Guarantor's Obligations hereunder, or any prior partial
exercise by Agent of any right or remedy against Guarantor hereunder;
(c) the lack of validity or enforceability of, or Agent's waiver or
consent with respect to, any provision of any instrument evidencing,
securing or otherwise relating to the Obligations, or any part
thereof; (d) the failure by Agent to take any steps to perfect,
maintain and enforce its security interests, or to preserve its rights
to any security or collateral, for the Obligations; (e) any voluntary
or involuntary bankruptcy, insolvency, reorganization, arrangement,
readjustment, assignment for the benefit of creditors, composition,
receivership, liquidation, marshalling of assets and liabilities or
similar events or proceedings with respect to Borrower or Guarantor,
as applicable, or any of their respective properties (each, an
"INSOLVENCY PROCEEDING"), or any action taken by Agent, any trustee or
receiver or by any court in any such proceeding; (f) in any proceeding
under Title 11 of the United States Code (11 U.S.C. Section 101 et
seq.), as amended (the "BANKRUPTCY CODE"), (i) any election by Agent
under Section 1111(b)(2) of the Bankruptcy Code, (ii) any borrowing or
grant of a security interest by Borrower as debtor-in-possession under
Section 364 of the Bankruptcy Code, (iii) the inability of Agent to
enforce the Obligations against Borrower by application of the
automatic stay provisions of Section 362 of the Bankruptcy Code, or
(iv) the disallowance, under Section 502 of the Bankruptcy Code, of
all or any portion of Agent's claim(s) against Borrower for repayment
of the Obligations; (g) the failure of Guarantor to receive notice of
any intended disposition of the collateral for the Obligations; (h)
any merger or consolidation of Borrower into or with any other entity,
or any sale, lease or transfer of any of the assets of Borrower or
Guarantor to any other person or entity; (i) any change in the
ownership of Borrower or any change in the relationship between
Borrower and Guarantor, or any termination of any such relationship;
and (k) any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of Borrower, Guarantor or any
other guarantor.
Guarantor hereby expressly waives and surrenders any defense to
its liability under this Guaranty based upon any of the foregoing
acts, omissions, agreements, waivers or matters. It is the purpose and
intent of this Guaranty that the obligations of Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
2.3 RIGHTS OF AGENT. Agent is hereby authorized, without notice
---------------
to or demand of Guarantor and without affecting the liability of
Guarantor hereunder, to take any of the following actions from time to
time: (a) increase or decrease the amount of, or renew, extend,
accelerate or otherwise change the time for payment of, or other terms
relating to, the Obligations, or otherwise modify, amend or change the
terms of any promissory note or other agreement evidencing, securing
or otherwise relating to any of the Obligations, including, without
limitation, the making of additional advances thereunder; (b) accept
and apply any payments on or recoveries against the Obligations from
any source, and any proceeds of any security therefor, to the
Obligations in such manner, order and priority as Agent may elect; (c)
take, hold, sell, release or otherwise dispose of all or any security
for the Obligations or the payment of this Guaranty; (d) settle,
release, compromise, collect or otherwise liquidate the Obligations or
any portion thereof; (e) accept, hold, substitute, add or release any
other guaranty or endorsements of the Obligations; and (f) at any time
after maturity of the Obligations, appropriate and apply toward
payment of the Obligations (i) any indebtedness due or to become due
from Agent to Guarantor, and (ii) any moneys, credits, or other
property belonging to Guarantor at any time held by or coming into the
possession of Agent or any affiliates thereof, whether for deposit or
otherwise.
SECTION 3 GUARANTOR'S WAIVERS
-------------------
3.1 STATUTES OF LIMITATION. Guarantor irrevocably waives all
----------------------
statutes of limitation as a defense to any action or proceeding
brought against Guarantor by Agent, to the fullest extent permitted by
law.
3.2 ELECTION OF REMEDIES. Guarantor irrevocably waives any
--------------------
defense based upon an election of remedies made by Agent or any other
election afforded to Agent pursuant to applicable law, including,
without limitation, (a) any election to proceed by judicial or
nonjudicial foreclosure or by deed in lieu thereof, or any election of
remedies which destroys or otherwise impairs the subrogation rights of
the Guarantor or the rights of the Guarantor to proceed against
Borrower for reimbursement, or both, (b) the waiver by Agent, either
by action or inaction of Agent or by operation of law, of a deficiency
judgment against Borrower, and (c) any election pursuant to an
Insolvency Proceeding.
3.3 RIGHTS OF SUBROGATION AND OTHER RIGHTS. Guarantor irrevocably
--------------------------------------
waives (a) all rights at law or in equity to seek subrogation,
contribution, indemnification or any other form of reimbursement or
repayment from Borrower or any other person or entity now or hereafter
primarily or secondarily liable for any of the Obligations for any
disbursements made by Guarantor under or in connection with this
Guaranty, (b) all claims of any kind or type against Borrower as a
result of any payment made by Guarantor to Agent, and (c) any right to
participate in any security now or hereafter held by Agent. In
furtherance, and not in limitation, of the foregoing, Guarantor agrees
that any payment to Agent pursuant to this Guaranty shall be deemed a
contribution to the capital of Borrower or other obligated party and
shall not constitute Guarantor a creditor of such party. Guarantor
further agrees that to the extent the waiver of its rights of
subrogation as set forth herein is found by a court of competent
jurisdiction to be void or voidable for any reason, any rights of
subrogation Guarantor may have against Borrower or against any
collateral or security for any of the Obligations shall be junior and
subordinate to any rights Agent may have against Borrower and to all
right, title and interest Agent may have in such collateral or
security.
3.4 DEMANDS AND NOTICES. Guarantor irrevocably waives all
-------------------
presentments, demands for performance, protests, notices of protest,
notices of dishonor, notices of acceptance of this Guaranty and of the
existence, creation or incurring of new or additional Obligations, and
demands and notices of every kind that may be required to be given by
any statute or rule or law.
3.5 BORROWER INFORMATION; OTHER DEFENSES. Guarantor irrevocably
------------------------------------
waives (a) any duty of Agent to advise Guarantor of any information
known to Agent regarding the financial condition of Borrower (it being
the obligation of Guarantor to keep informed regarding such
condition), and (b) any defense based on any claim that Guarantor's
obligations exceed or are more burdensome than those of Borrower, and
any and all other defenses now or at any time hereafter available to
Guarantor at law or in equity.
SECTION 4 REPRESENTATIONS AND WARRANTIES
------------------------------
Guarantor represents and warrants to Agent as follows:
4.1 EXISTENCE; AUTHORITY; EXECUTION. To the extent Guarantor is a
-------------------------------
corporation, limited liability company or limited partnership,
Guarantor hereby represents and warrants that: (a) it is duly
organized, validly existing, and in good standing under the laws of
the state of its incorporation or formation; and (b) this Guaranty has
been duly and validly authorized, executed and delivered and
constitutes the binding obligation of Guarantor, enforceable in
accordance with its terms.
4.2 FINANCIAL STATEMENTS. All financial statements and other
--------------------
financial information furnished or to be furnished to Agent (a) are or
will be true and correct and do or will fairly represent the financial
condition of Guarantor (including all contingent liabilities), and (b)
were or will be prepared in accordance with generally accepted
accounting principles, or such other accounting principles as may be
acceptable to Agent at the time of their preparation, consistently
applied. There has been no material adverse change in Guarantor's
financial condition since the dates of the statements most recently
furnished Agent.
4.3 NO DEFAULTS. There is no existing event of default, and no
-----------
event has occurred which with the passage of time and/or the giving of
notice or both will constitute an event of default, under any
agreement to which Guarantor is a party, the effect of which event of
default will impair performance by Guarantor of the Obligations
pursuant to and as contemplated by the terms of this Guaranty, and
neither the execution and delivery of this Guaranty nor compliance
with the terms and provisions hereof will violate any presently
existing provision of law or any presently existing regulation, order,
writ, injunction or decree of any court or governmental department,
commission, board, bureau, agency or instrumentality, or constitute a
default under, any agreement to which Guarantor is a party or by which
Guarantor is bound.
4.4 NO LITIGATION. There are no actions, suits or proceedings
-------------
pending or, to the knowledge of Guarantor, threatened against the
Guarantor before any court or any governmental, administrative,
regulatory, adjudicatory or arbitrational body or agency of any kind
that will adversely affect performance by the Guarantor of his
obligations pursuant to and as contemplated by the terms and
provisions of this Guaranty.
4.5 ACCURACY. Neither this Guaranty nor any document, financial
--------
statement, credit information, certificate or statement heretofore
furnished or required herein to be furnished to Agent by the Guarantor
contains any untrue statement of fact or omits to state a fact
material to this Guaranty.
SECTION 5 EVENTS OF DEFAULT
-----------------
Upon the occurrence of any of the following events, Agent may,
without notice to Borrower or Guarantor, declare any or all of the
Obligations, whether or not then due, immediately due and payable by
Guarantor under the Guaranty, and Agent shall be entitled to enforce
the obligations of Guarantor hereunder:
5.1 DEFAULT BY BORROWER. Borrower shall default in the payment or
-------------------
performance of any of the Obligations guarantied hereby, after giving
effect to any applicable notice and cure provisions.
5.2 FAILURE TO PERFORM. Guarantor fails to perform any of its
------------------
obligations under this Guaranty or any agreement under which security
is given therefor, or this Guaranty is revoked or terminated by
Guarantor, or any representation or warranty made or given by
Guarantor to Agent proves to be false or misleading in any material
respect on the date made.
5.3 INSOLVENCY PROCEEDING. The making by Guarantor of any
---------------------
assignment for the benefit of creditors, or a trustee or receiver
being appointed for Guarantor or for any property of Guarantor, or
Guarantor becoming insolvent or the subject of any Insolvency
Proceeding and, in the case of such a proceeding being commenced
against Guarantor, such proceeding is not dismissed within forty-five
(45) days following the commencement date thereof.
5.4 DISSOLUTION. Guarantor dissolves or liquidates, or the
-----------
business of Guarantor is suspended or terminated for any reason.
SECTION 6 MISCELLANEOUS
-------------
6.1 REVIVAL AND REINSTATEMENT. If at any time all or any part of
-------------------------
any payment theretofore applied by Agent to any of the Obligations is
or must be rescinded or returned by Agent for any reason whatsoever
(including, without limitation, the insolvency, bankruptcy or
reorganization of Borrower), such Obligations shall, for the purposes
of this Guaranty, to the extent such payment is or must be rescinded
or returned, be deemed to have continued in existence, notwithstanding
such application by Agent, and this Guaranty shall continue to be
effective or be reinstated, as the case may be, as to such
Obligations, all as though such application by Agent had not been
made.
6.2 NO MARSHALING. Agent has no obligation to marshal any assets
-------------
in favor of Guarantor, or against or in payment of (a) any of the
Obligations, or (b) any other obligation owed to Agent by Guarantor,
Borrower, or any other person.
6.3 NO MODIFICATION, WAIVER OR RELEASE WITHOUT WRITING. Except as
--------------------------------------------------
may otherwise be expressly set forth herein, this Guaranty may not be
modified, amended, revised, revoked, terminated, changed or varied in
any way whatsoever, nor shall any waiver of any of the provisions of
this Guaranty be binding upon Agent, except as expressly set forth in
a writing duly executed by Agent. No waiver by Agent of any default
shall operate as a waiver of any other default or the same default on
a future occasion, and no action by Agent permitted hereunder shall in
any way affect or impair Agent's rights or the obligations of
Guarantor under this continuing Guaranty.
6.4 ASSIGNMENT; SUCCESSORS AND ASSIGNS. Guarantor may not assign
----------------------------------
Guarantor's obligations or liabilities under this Guaranty. Subject to
the preceding sentence, this Guaranty shall be binding upon the
parties hereto and their respective heirs, executors, successors,
representatives and assigns and shall inure to the benefit of the
parties hereto and their respective successors and assigns. Agent may
assign its rights under this Guaranty.
6.5 INTEGRATION. This Guaranty and the other Loan Documents
-----------
represent the entire agreement of Guarantor with respect to the
subject matter of this Guaranty.
6.6 RIGHTS CUMULATIVE. All of Agent's rights under this Guaranty
-----------------
are cumulative. The exercise of any one right does not exclude the
exercise of any other right given in this Guaranty or any other right
of Agent not set forth in this Guaranty.
6.7 SEVERABILITY. Whenever possible each provision of this
------------
Guaranty shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Guaranty
shall be prohibited by or invalid under such law, such provision shall
be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Guaranty.
6.8 MATERIAL INDUCEMENT; CONSIDERATION. Guarantor acknowledges
----------------------------------
and agrees that Agent is specifically relying upon the
representations, warranties, agreements and waivers contained herein
and that such representations, warranties, agreements and waivers
constitute a material inducement to Agent to accept this Guaranty and
to enter into the Loan Agreement and the transactions contemplated
therein. Guarantor further acknowledges that it expects to benefit
from Agent's extension of financing accommodations to Borrower because
of its relationship to Borrower, and that it is executing this
Guaranty in consideration of that anticipated benefit.
6.9 INDEMNIFICATION. Guarantor agrees to indemnify, pay and hold
---------------
Agent and its officers, directors, employees, agents, and attorneys
(collectively called the "INDEMNITEES") harmless from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any
kind or nature whatsoever (including the reasonable fees and
disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or
threatened, whether or not such Indemnitee shall be designated a party
thereto) that may be imposed on, incurred by, or asserted against that
Indemnitee, in any manner relating to or arising out of this Guaranty
or the exercise of any right or remedy hereunder or under the other
documents pertaining to the Obligations (the "INDEMNIFIED
LIABILITIES"); provided that Guarantor shall have no obligation to an
--------
Indemnitee hereunder with respect to Indemnified Liabilities arising
from the gross negligence or willful misconduct of that Indemnitee as
determined by a court of competent jurisdiction. To the extent that
the undertaking to indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it violates any law or
public policy, Guarantor shall contribute the maximum portion that it
is permitted to pay and satisfy under applicable law to the payment
and satisfaction of all Indemnified Liabilities incurred by the
Indemnitees or any of them.
6.10 COUNTERPARTS. This Guaranty may be executed in counterparts,
------------
each of which shall be deemed an original, but all of which, when
taken together, shall be deemed one and the same agreement.
6.11 GOVERNING LAW. This Guaranty shall be governed by and
-------------
construed in accordance with the internal laws of the State of New
York, without regard to conflicts of law principles.
6.12 VENUE. GUARANTOR HEREBY CONSENTS TO THE JURISDICTION OF ANY
-----
STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW YORK STATE OF
NEW YORK AND IRREVOCABLY AGREES THAT, SUBJECT TO AGENT'S ELECTION, ALL
ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTY
SHALL BE LITIGATED IN SUCH COURTS. GUARANTOR EXPRESSLY SUBMITS AND
CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY
DEFENSE OF FORUM NON CONVENIENS. GUARANTOR HEREBY WAIVES PERSONAL
SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF
PROCESS MAY BE MADE UPON GUARANTOR BY CERTIFIED OR REGISTERED MAIL,
RETURN RECEIPT REQUESTED, ADDRESSED TO GUARANTOR, AT THE ADDRESS SET
FORTH IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN (10)
DAYS AFTER THE SAME HAS BEEN POSTED.
6.13 WAIVER OF JURY TRIAL. GUARANTOR AND AGENT HEREBY WAIVE THEIR
--------------------
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS GUARANTY. GUARANTOR AND AGENT
ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A
BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE WAIVER IN ENTERING
INTO THIS GUARANTY AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER
IN THEIR RELATED FUTURE DEALINGS. BORROWER AND AGENT WARRANT AND
REPRESENT THAT EACH HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY
WAIVER WITH LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS.
6.14 WAIVERS. THE WAIVERS SET FORTH HEREIN (INCLUDING, WITHOUT
-------
LIMITATION, SECTIONS 2.2 AND 3 ABOVE) ARE KNOWINGLY, INTENTIONALLY,
AND VOLUNTARILY MADE BY GUARANTOR, AND GUARANTOR ACKNOWLEDGES THAT
NEITHER AGENT NOR ANY PERSON ACTING ON BEHALF OF AGENT HAS MADE ANY
REPRESENTATIONS OF FACT TO INDUCE THESE WAIVERS OR IN ANY WAY TO
MODIFY OR NULLIFY ITS EFFECT. GUARANTOR FURTHER ACKNOWLEDGES THAT IT
HAS BEEN REPRESENTED (OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED) IN
THE SIGNING OF THIS GUARANTY AND IN THE MAKING OF THESE WAIVERS BY
INDEPENDENT LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL, AND THAT IT
HAS HAD THE OPPORTUNITY TO DISCUSS THESE WAIVERS WITH COUNSEL.
<PAGE>
Guarantor has duly executed this Guaranty as of the date and year
first above written.
LUND INTERNATIONAL HOLDINGS, INC.
By: /s/ Ira D. Kleinman
---------------------------------------
Name: Ira D. Kleinman
Title: Chairman of the Board of Directors
ACKNOWLEDGED AND ACCEPTED BY:
HELLER FINANCIAL, INC.
By: /s/ Daniel J. Marszalek
------------------------------
Name: Daniel J. Marszalek
Title: Senior Vice President
Exhibit 6
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "AGREEMENT") dated as of December 30,
1997 by LUND INTERNATIONAL HOLDINGS, INC., a Delaware corporation, (in
its capacity as pledgor under the terms of this Agreement, "PLEDGOR"),
in favor of HELLER FINANCIAL, INC., a Delaware corporation, as agent
(the "AGENT") for the benefit of Lenders (defined below).
W I T N E S S E T H:
WHEREAS, Pledgor legally and beneficially owns all of the issued
and outstanding shares of capital stock of each of the Persons
respectively identified on Schedule I hereto (collectively, the
"SUBSIDIARIES"), all of which shares of stock are described on
Schedule I.
WHEREAS, Pledgor is entering into that certain Tender Offer Loan
Agreement dated as of the date hereof with Zephyros Acquisition
Corporation, as Borrower, Agent and certain financial institutions
from time to time party thereto (collectively, "LENDERS") (as it may
be amended, restated, supplemented or otherwise modified and in effect
from time to time, the "LOAN AGREEMENT") providing for loans and other
financial accommodations to be made by Lenders to Borrower;
WHEREAS, Borrower desires to incur such loans pursuant to the
Agreement for the purpose of financing the purchase price of all of
the issued and outstanding shares of common stock of Deflecta-Shield
Corporation, a Delaware corporation;
WHEREAS, Borrower is a wholly-owned subsidiary of Pledgor and as
such, Pledgor will derive direct and indirect economic benefits from
the making of loans and other financial accommodations under the Loan
Agreement;
WHEREAS, Pledgor has executed the Guaranty of Payment (the
"GUARANTY") of even date herewith in favor of Agent for the benefit of
Lenders under the Loan Agreement and the other Loan Documents and
Pledgor desires to secure the Guaranty by means of this Agreement;
WHEREAS, it is a condition precedent to the making of loans and
the availability of other financial accommodations under the Loan
Agreement that Pledgor shall have, among other things, (i) pledged to
Agent, on behalf of Lenders, all of the present and future capital
stock of Subsidiaries now or hereafter owned by Pledgor and (ii)
executed the Guaranty; and
WHEREAS, Pledgor desires to execute this Agreement to satisfy the
conditions described in (i) of the preceding paragraph;
NOW, THEREFORE, in consideration of the premises and in order to
induce Lenders to make loans and provide other financial
accommodations under the Loan Agreement, Pledgor hereby agrees with
Agent for its benefit and the benefit of Lenders as follows:
Section 1. Defined Terms. Unless otherwise defined herein, all
-------------
capitalized terms used herein shall have the respective meanings
ascribed thereto in the Loan Agreement. Terms defined in the UCC which
are not otherwise defined in this Agreement or in the Loan Agreement
are used in this Agreement as defined in the UCC as in effect on the
date hereof.
Section 2. Pledge. Pledgor hereby pledges, assigns, hypothecates,
------
transfers, delivers and grants to Agent, on behalf of Lenders, a first
lien on and first security interest in all of the capital stock of
each Subsidiary owned by Pledgor (collectively the "PLEDGED SHARES"),
all other property hereafter delivered to, or in the possession or in
the custody of, Pledgor in substitution for or in addition to the
Pledged Shares and in all proceeds thereof, as collateral security for
(i) the prompt and complete payment when due (whether at the stated
maturity, by acceleration or otherwise) and performance of all
Obligations, regardless of whether the Loan Agreement or any other
Loan Document shall have terminated, and (ii) the due and punctual
payment and performance by Pledgor of its obligations and liabilities
under, arising out of or in connection with this Agreement, the Loan
Agreement and all other Loan Documents to which Pledgor is a party
(all of the foregoing being referred to hereinafter collectively as
the "LIABILITIES"). All of the capital stock of Subsidiaries of
Pledgor are presently represented by the stock certificates listed on
Schedule I hereto, which stock certificates, with undated stock powers
duly executed in blank by Pledgor, are being delivered simultaneously
herewith to Agent. Agent shall maintain possession and custody of the
certificates representing the Pledged Shares.
Section 3. Representations and Warranties of Pledgor. Pledgor
-----------------------------------------
represents and warrants to Agent and Lenders that:
(a) Schedule I sets forth with respect to Pledgor (i) the
authorized capital stock of each Subsidiary, (ii) the number of shares
of capital stock of each Subsidiary that are issued and outstanding as
of the date hereof, and (iii) the number of shares of capital stock of
each Subsidiary held in its treasury. Pledgor is the record and
beneficial owner of, and has good and marketable title to, the Pledged
Shares, and such shares are and will remain free and clear of all
pledges, liens, security interests and other encumbrances and
restrictions whatsoever, except the liens and security interests
created by this Agreement;
(b) Pledgor has full power, authority and legal right to
execute the pledge provided for herein and to pledge the Pledged
Shares to Agent, on behalf of Lenders;
(c) This Agreement has been duly authorized, executed and
delivered by Pledgor and constitutes a legal, valid and binding
obligation of Pledgor enforceable in accordance with its terms;
(d) There are no outstanding options, warrants or other
agreements with respect to the Pledged Shares and there are no
outstanding options, warrants or other agreements with respect to any
other shares of capital stock of any Subsidiary except, in each case,
as set forth on Schedule 3(d) hereto;
-------------
(e) The Pledged Shares have been duly and validly authorized
and issued, are fully paid and non-assessable and represent all of the
issued and outstanding shares of the capital stock of each Subsidiary;
(f) No consent, approval or authorization of or designation
or filing with any governmental authority on the part of Pledgor is
required in connection with the pledge and security interest granted
under this Agreement except as set forth on Schedule 3(f) hereto;
(g) The execution, delivery and performance of this
Agreement will not violate any provision of any applicable law or
regulation or of any order, judgment, writ, award or decree of any
court, arbitrator or governmental authority, domestic or foreign, or
of the charter or by-laws of Pledgor or any Subsidiary or of any
securities issued by Pledgor or any Subsidiaries or of any mortgage,
indenture, lease, contract, or other material agreement, instrument or
undertaking to which Pledgor or any Subsidiary is a party or which
purports to be binding upon Pledgor or any Subsidiary or upon any of
its respective assets, and will not result in the creation or
imposition of any lien, charge or encumbrance on or security interest
in any of the assets of Pledgor or any Subsidiary except as
contemplated by this Agreement;
(h) The pledge and assignment to Agent, on behalf of
Lenders, of the Pledged Shares pursuant to this Agreement creates a
valid first lien on and a first perfected security interest in the
Pledged Shares and the proceeds thereof in favor of Agent, on behalf
of Lenders, subject to no prior pledge, lien, mortgage, hypothecation,
security interest, charge, option or encumbrance or to any agreement
purporting to grant to any third party a security interest in the
property or assets of any Pledgor which would include the Pledged
Shares. Pledgor covenants and agrees that it will defend Agent's
right, title and security interest in and to the Pledged Shares and
the proceeds thereof against the claims and demands of all persons
whomsoever; and
(i) All information heretofore, herein or hereafter supplied
to Agent by or on behalf of Pledgor with respect to the Pledged Shares
is and will be accurate and complete in all material respects, taking
into account any amendments to Schedules as a result of any
disclosures made by Pledgor to Agent after the Closing Date and
approved by Agent.
Section 4. Stock Dividends, Distributions, etc. If, while this
-----------------------------------
Agreement is in effect, Pledgor shall become entitled to receive or
shall receive any stock certificate (including, without limitation,
any certificate representing a stock dividend or a stock distribution
in connection with any reclassification, increase or reduction of
capital, or issued in connection with any reorganization), or any
options or rights, whether as an addition to, in substitution for, or
in exchange for any of the Pledged Shares, or otherwise, Pledgor
agrees to accept the same as Agent's agent and to hold the same in
trust for Agent, on behalf of Lenders, and to deliver the same
forthwith to Agent on behalf of Agent, as the case may be, in the
exact form received, with the endorsement of Pledgor when necessary
and/or appropriate undated stock powers duly executed in blank, to be
held by Agent, on behalf of Lenders, subject to the terms hereof as
additional collateral security for the Liabilities. In case any
distribution of capital shall be made on or in respect of the Pledged
Shares or any property shall be distributed upon or with respect to
the Pledged Shares pursuant to the recapitalization or
reclassification of the capital of the issuer thereof or pursuant to
the reorganization thereof, the property so distributed shall be
delivered to Agent to be held by it as additional collateral security
for the Liabilities. All sums of money and property so paid or
distributed in respect of the Pledged Shares which are received by any
Pledgor shall, until paid or delivered to Agent, be held by such
Pledgor in trust as additional collateral security for the
Liabilities.
Section 5. Administration of Security. The following provisions
--------------------------
shall govern the administration of the Pledged Shares:
(a) So long as no Event of Default has occurred and is
continuing, Pledgor shall be entitled (subject to the other provisions
hereof, including, without limitation, Section 8 below) to (i) vote or
consent with respect to the Pledged Shares in any manner not
inconsistent with this Agreement, the Loan Agreement, any other Loan
Document, or any note, document or instrument delivered or to be
delivered pursuant to or in connection with the transactions
contemplated by the foregoing, and (ii) receive cash dividends or
other distributions in the ordinary course made in respect of the
Pledged Shares. Pledgor hereby grants to Agent or its nominee, on
behalf of Lenders, an irrevocable proxy to exercise all voting and
corporate rights relating to the Pledged Shares in any instance
effective upon the occurrence and during the continuance of an Event
of Default. After the occurrence and during the continuance of an
Event of Default and upon the request of Agent, Pledgor agrees to
deliver to Agent, on behalf of Lenders, such further evidence of such
irrevocable proxy or such further irrevocable proxies to vote the
Pledged Shares as Agent may request.
(b) Upon the occurrence and during the continuance of an
Event of Default, in the event that Pledgor, as record and beneficial
owner of the Pledged Shares, shall have received or shall have become
entitled to receive, any cash dividends or other distributions in the
ordinary course, Pledgor shall deliver to Agent, on behalf of Lenders,
and Agent shall be entitled to receive and retain, all such cash or
other distributions as additional security for the Liabilities.
(c) Subject to any sale or other disposition by Agent of
the Pledged Shares or other property pursuant to this Agreement, the
Pledged Shares and any other property then held as part of the Pledged
Shares in accordance with the provisions of this Agreement shall be
delivered to Pledgor upon indefeasible full payment, satisfaction and
termination of all of the Liabilities, the termination of the lien and
security interest hereby granted pursuant to Section 14 hereof and the
termination of the Commitments under the Loan Agreement.
Section 6. Rights of Agent. Neither Agent nor Lenders shall be
---------------
liable for failure to collect or realize upon the Obligations or any
collateral security or guaranty therefor, or any part thereof, or for
any delay in so doing, nor shall Agent or Lenders be under any
obligation to take any action whatsoever with regard thereto. Any or
all of the Pledged Shares held by Agent hereunder may, if an Event of
Default has occurred and is continuing, with reasonably prompt
subsequent notice to Pledgor, be registered in the name of Agent or
its nominee, on behalf of Lenders, and Agent or its nominee, on behalf
of Lenders, may thereafter, without notice, exercise all voting and
corporate rights at any meeting with respect to Subsidiaries and
exercise any and all rights of conversion, exchange, subscription or
any other rights, privileges or options pertaining to any of the
Pledged Shares as if it were the absolute owner thereof, including,
without limitation, the right to vote in favor of, and to exchange at
its discretion any and all of the Pledged Shares upon, the merger,
consolidation, reorganization, recapitalization or other readjustment
with respect to Subsidiaries or upon the exercise by Pledgor or Agent,
on behalf of Lenders, of any right, privilege or option pertaining to
any of the Pledged Shares, and in connection therewith, to deposit and
deliver any and all of the Pledged Shares with any committee,
depositary, transfer agent, registrar or other designated agency upon
such terms and conditions as Agent may determine, all without
liability except to account for property actually received by Agent,
on behalf of Lenders, but Agent shall have no duty to exercise any of
the aforesaid rights, privileges or options and shall not be
responsible for any failure to do so or delay in so doing.
Section 7. Remedies. Upon the occurrence and during the
--------
continuance of an Event of Default, Agent without demand of
performance or other demand, advertisement or notice of any kind
(except the notice specified below of time and place of public or
private sale) to or upon Pledgor or any other person (all and each of
which demands, advertisements and/or notices are hereby expressly
waived), may forthwith collect, receive, appropriate and realize upon
the Pledged Shares, or any part thereof, and/or may forthwith sell,
assign, give an option or options to purchase, contract to sell or
otherwise dispose of (including the disposition by merger) and deliver
said Pledged Shares, or any part thereof, in one or more portions at
public or private sale or sales or transactions, at any exchange,
broker's board or at any of Agent's offices or elsewhere upon such
terms and conditions as Agent may deem advisable and at such prices as
it may deem best, for any combination of cash and/or securities or
other property or on credit or for future delivery without assumption
of any credit risk, with the right to Agent upon any such sale or
sales, public or private, to purchase the whole or any part of said
Pledged Shares so sold, free of any right or equity of redemption in
Pledgor, which right or equity is hereby expressly waived or released.
Agent shall apply the net proceeds of any such collection, recovery,
receipt, appropriation, realization, sale or disposition, after
deducting all reasonable costs and expenses of every kind incurred
therein or incidental to the safekeeping of any and all of the Pledged
Shares or in any way relating to the rights of Agent or Lenders
hereunder, including reasonable attorneys' fees and legal expenses, to
the payment, in whole or in part, of the Obligations incurred under or
pursuant to the Loan Agreement in such order as is in accordance with
the terms of the Loan Agreement or, if no such order shall be
specified, in such order as Agent may elect. Pledgor shall remain
liable for any deficiency remaining unpaid after such application.
Only after so paying over such net proceeds and after the payment by
Agent of any other amount required by any provision of law, including,
without limitation, Section 9-504(1)(c) of the UCC, need Agent account
for the surplus, if any, to Pledgor. Pledgor agrees that Agent need
not give more than ten days' notice of the time and place of any
public sale or of the time after which a private sale or other
intended disposition is to take place and that such notice is
reasonable notification of such matters. No notification need be given
to Pledgor if Pledgor has signed after the occurrence of an Event of
Default under the Loan Agreement a statement renouncing or modifying
any right to notification of sale or other intended disposition. In
addition to the rights and remedies granted to Agent in this Agreement
and in any other instrument or agreement securing, evidencing or
relating to any of the Liabilities, Agent and Lenders shall have all
the rights and remedies of a secured party under the UCC and under any
other applicable law. Pledgor further agrees to waive and agrees not
to assert any rights or privileges which it may acquire under Section
9-112 of the UCC (other than the right to receive surplus, if any, in
accordance with the foregoing terms of this subsection 7) and Pledgor
shall be liable for the deficiency if the proceeds of any sale or
other disposition of the Pledged Shares are insufficient to pay all
amounts to which Agent and Lenders are entitled, and the fees of any
attorneys employed by Agent and Lenders to collect such deficiency and
any other costs and expenses incurred in connection therewith.
Section 8. No Disposition, etc. Without the prior written consent
-------------------
of Agent, Pledgor agrees not to sell, assign, transfer, exchange, or
otherwise dispose of (except as expressly permitted by the Loan
Agreement), or grant any option with respect to, the Pledged Shares,
nor will Pledgor create, incur or permit to exist any pledge, lien,
mortgage, hypothecation, security interest, charge, option or any
other encumbrance with respect to any of the Pledged Shares, or any
interest therein, or any proceeds thereof, except for the lien and
security interest provided for by this Agreement. Without the prior
written consent of Agent, except as expressly specified in accordance
with the terms and conditions of the Loan Agreement, Pledgor agrees
not to vote to enable, and not to otherwise permit, Subsidiaries to
(i) issue any stock or other securities of any nature in addition to
or in exchange or substitution for the Pledged Shares, or (ii)
dissolve, liquidate, retire any of their capital stock, reduce their
capital or merge or consolidate with any other Person.
Section 9. Sale of Pledged Shares.
----------------------
(a) Pledgor recognizes that Agent may be unable to effect a
public sale or disposition of any or all the Pledged Shares by reason
of certain prohibitions contained in the Securities Act of 1933, as
amended (the "ACT"), and applicable state securities laws, but may be
compelled to resort to one or more private sales or dispositions
thereof to a restricted group of purchasers who will be obliged to
agree, among other things, to acquire such securities for their own
account for investment and not with a view to the distribution or
resale thereof. Pledgor acknowledges and agrees that any such private
sale or disposition may result in prices and other terms (including
the terms of any securities or other property received in connection
therewith) less favorable to the seller than if such sale or
disposition were a public sale or disposition and, notwithstanding
such circumstances, agrees that any such private sale or disposition
shall be deemed to be reasonable and affected in a commercially
reasonable manner. Agent and Lenders shall be under no obligation to
delay a sale or disposition of any of the Pledged Shares in order to
permit Pledgor or Subsidiaries to register such securities for public
sale under the Act, or under applicable state securities laws, even if
Pledgor or Subsidiaries would agree to do so.
(b) Pledgor further agrees to do or cause to be done all
such other acts and things as may be necessary to make such sale or
sales or dispositions of any portion or all of the Pledged Shares
valid and binding and in compliance with any and all applicable laws,
regulations, orders, writs, injunctions, decrees or awards of any and
all courts, arbitrators or governmental instrumentalities, domestic or
foreign, having jurisdiction over any such sale or sales or
dispositions, all at Pledgor's expense. Pledgor further agrees that a
breach of any of the covenants contained in Sections 2, 4, 5(b), 8, 9
or 10 hereof will cause irreparable injury to Agent and Lenders, that
Agent and Lenders have no adequate remedy at law in respect of such
breach and, as a consequence, agrees, without limiting the right of
Agent to seek and obtain specific performance of other obligations of
Pledgor contained in this Agreement, that each and every covenant
referenced above shall be specifically enforceable against Pledgor,
and Pledgor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except
for a defense that no Event of Default has occurred under the Loan
Agreement.
(c) Pledgor further agrees to indemnify and hold harmless
Agent, each of its respective successors and assigns, officers,
directors, employees and agents, and any Person in control of any
thereof, from and against any loss, liability, claim, damage and
expense, including, without limitation, reasonable counsel fees (in
this Section 9(c) collectively called the "INDEMNIFIED LIABILITIES"),
under federal and state securities laws or otherwise insofar as such
loss, liability, claim, damage or expense (i) arises out of or is
based upon any untrue statement or alleged untrue statement of a
material fact contained in any registration statement, prospectus or
offering memorandum or in any preliminary prospectus or preliminary
offering memorandum or in any amendment or supplement to any of the
foregoing or in any other writing prepared in connection with the
offer, sale or resale of all or any portion of the Pledged Shares
unless such untrue statement of material fact was provided by Agent
specifically for inclusion therein, or (ii) arises out of or is based
upon any omission or alleged omission to state therein a material fact
required to be stated or necessary to make the statements therein not
misleading, such indemnification to remain operative regardless of any
investigation made by or on behalf of Agent or any successor thereof,
or any Person in control of any thereof. In connection with a public
sale or other distribution, Pledgor will provide customary
indemnification to any underwriters, their respective successors and
assigns, their respective officers and directors and each Person who
controls any such underwriter (within the meaning of the Act). If and
to the extent that the foregoing undertakings in this Section 9(c) may
be unenforceable for any reason, Pledgor agrees to make maximum
contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law. The
obligations of Pledgor under this Section 9(c) shall survive any
termination of this Agreement.
(d) Pledgor further agrees to waive any and all rights of
subrogation any of them may have against Subsidiaries upon the sale or
sales or dispositions by Agent of any portion of, or all of, the
Pledged Shares.
Section 10. Further Assurances. Pledgor agrees that at any time
------------------
and from time to time, upon the written request of Agent, Pledgor
shall execute and deliver all stock powers, irrevocable proxies,
financing statements and such further documents and do such further
acts and things as Agent may reasonably request consistent with the
provisions hereof in order to effect the purposes of this Agreement.
Section 11. Severability. Any provision of this Agreement which
------------
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
Section 12. No Waiver; Cumulative Remedies. Agent shall not by
------------------------------
any act, delay, omission or otherwise be deemed to have waived any of
its remedies hereunder, and no waiver by Agent shall be valid unless
in writing and signed by Agent and then only to the extent therein set
forth. A waiver by Agent of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which
Agent would otherwise have on any further occasion. No course of
dealing between Pledgor and Agent and no failure to exercise, nor any
delay in exercising on the part of Agent any right, power or privilege
hereunder or under the Loan Documents shall impair such right or
remedy or operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies herein provided are cumulative
and may be exercised singly or concurrently, and are not exclusive of
any rights or remedies provided by law.
Section 13. Successors. This Agreement and all obligations of
----------
Pledgor hereunder shall be binding upon the successors and assigns of
Pledgor, and shall, together with the rights and remedies of Agent and
Lenders hereunder, inure to the benefit of Pledgor, Lenders and Agent
and their successors and assigns, except that Pledgor shall not have
any right to assign its rights or obligations under this Agreement or
any interest herein without the prior written consent of Agent.
Section 14. Termination. This Agreement and the liens and
-----------
security interests granted hereunder shall terminate upon full and
complete performance, indefeasible payment in full and satisfaction of
the Liabilities and termination of the Commitments under the Loan
Agreement, and with reasonable promptness, upon such full and complete
performance, satisfaction and termination, Agent shall surrender the
certificates evidencing the Pledged Shares to Pledgor and take such
other action as Pledgor may reasonably request to evidence the
termination of this Agreement, all at the sole cost and expense of
Pledgor.
Section 15. Possession of Pledged Shares. Beyond the exercise of
----------------------------
reasonable care to assure the safe custody of the Pledged Shares in
the physical possession of Agent pursuant hereto, neither Agent nor
any nominee of Agent shall have any duty or liability to collect any
sums due in respect thereof or to protect, preserve or exercise any
rights pertaining thereto, and shall be relieved of all responsibility
for the Pledged Shares upon surrendering them to Pledgor.]
Section 16. Survival of Representations. All representations and
---------------------------
warranties of Pledgor contained in this Agreement shall survive the
execution and delivery of this Agreement.
Section 17. Taxes and Expenses. Pledgor will upon demand pay to
------------------
Agent all fees, costs and expenses (including reasonable attorneys'
fees, reasonably allocated costs of internal counsel and fees of
accountants and other professionals retained by Agent) incurred by
Agent in connection with (i) the review, negotiation, preparation,
documentation, execution and administration hereof, and (ii) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Pledged Shares. Pledgor will upon demand
pay to Agent all fees, costs and expenses (including attorneys' fees,
allocated costs of internal counsel and fees of accountants and other
professionals retained by Agent) incurred by Agent in connection with
(i) the exercise or enforcement of any of the rights of Agent
hereunder, and (ii) the failure of Pledgor to perform or observe any
of the provisions hereof.
Section 18. Agent Appointed Attorney-In-Fact. Pledgor hereby
--------------------------------
irrevocably appoints Agent as its attorney-in-fact, effective upon the
occurrence and during the continuance of an Event of Default, with
full authority in the place and stead of Pledgor and in the name of
Pledgor or otherwise, from time to time in Agent's discretion, to take
any action and to execute any instrument that Agent deems reasonably
necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation, to receive, endorse and collect all
instruments made payable to Pledgor representing any dividend,
interest payment or other distribution in respect of the Pledged
Shares or any part thereof and to give full discharge for the same,
when and to the extent permitted by this Agreement.
Section 19. Notices. Unless otherwise provided specifically
-------
herein, all notices, approvals, requests, demands and other
communications hereunder shall be given in writing addressed to the
respective party in accordance with the terms of the Loan Agreement.
Section 20. Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY,
--------------
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES.
Section 21. Consent to Jurisdiction and Service of Process.
----------------------------------------------
PLEDGOR AGREES THAT, SUBJECT TO AGENT'S ELECTION, ANY ACTION OR
PROCEEDING TO ENFORCE OR ARISING OUT OF THIS AGREEMENT MAY BE
COMMENCED IN ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF
NEW YORK, STATE OF NEW YORK, AND PLEDGOR WAIVES PERSONAL SERVICE OF
PROCESS AND AGREES THAT A SUMMONS AND COMPLAINT COMMENCING AN ACTION
OR PROCEEDING IN ANY SUCH COURT SHALL BE PROPERLY SERVED AND SHALL
CONFER PERSONAL JURISDICTION IF SERVED BY MESSENGER OR REGISTERED MAIL
TO IT AND, IF BY REGISTERED MAIL, SERVICE SO MADE SHALL BE DEEMED TO
BE COMPLETED FOUR (4) BUSINESS DAYS AFTER THE SAME SHALL HAVE BEEN
POSTED, OR AS OTHERWISE PROVIDED BY THE LAWS OF NEW YORK OR THE UNITED
STATES.
Section 22. Waiver of Jury Trial. PLEDGOR, AGENT AND EACH LENDER
--------------------
ACKNOWLEDGES THAT THE TIME AND EXPENSE REQUIRED FOR TRIAL BY JURY
EXCEED THE TIME AND EXPENSE REQUIRED FOR A BENCH TRIAL AND HEREBY
WAIVES, TO THE EXTENT PERMITTED BY LAW, TRIAL BY JURY. PLEDGOR HEREBY
WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, ANY OBJECTION TO
VENUE OF ANY ACTION INSTITUTED HEREUNDER, AND WAIVES ANY BOND OR
SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE
REQUIRED OF AGENT OR LENDERS.
Section 23. Changes in Writing. No amendment, modification,
------------------
termination or waiver of any provision of this Agreement or consent to
any departure by Pledgor therefrom, shall in any event be effective
without the written agreement of Agent and Pledgor, and then only to
the extent specifically set forth in such writing.
Section 24. Headings. Section and subsection headings in this
--------
Agreement are included herein for convenience of reference only and
shall not constitute a part of this Agreement for any other purpose or
be given any substantive effect.
Section 25. Counterparts. This Agreement may be executed in any
------------
number of counterparts, all of which taken together shall constitute
one and the same instrument and any of the parties hereto may execute
this Agreement by signing any such counterpart.
Section 26. Entire Agreement. This Agreement embodies the entire
----------------
agreement and understanding between Pledgor and Agent with respect to
the subject matter hereof and supersedes all prior oral and written
agreements and understandings between Pledgor and Agent relating to
the subject matter hereof.
[Signature page to follow]
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Pledge
Agreement to be duly executed and delivered by their duly authorized
officers as of the date first above written.
LUND INTERNATIONAL HOLDINGS, INC.
By: /s/ Ira D. Kleinman
------------------------------------
Name: Ira D. Kleinman
Title: Chairman of the Board of Directors
Agreed to and Acknowledged:
HELLER FINANCIAL, INC.,
as Agent
By: /s/ Daniel J. Marszalek
--------------------------------
Name: Daniel J. Marszalek
Title: Senior Vice President
<PAGE>
STATE OF NEW YORK )
) SS
COUNTY OF NEW YORK )
I, Geneva Browne, a Notary Public in and for said County,
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in the State aforesaid, DO HEREBY CERTIFY that Ira D. Kleinman,
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personally known to me to be a Chairman of the Board, the person who
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executed the foregoing instrument, who being by me duly sworn, did
depose and say he is a Chairman of the Board of each such corporation
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described in and which executed the foregoing instrument; that said
instrument is signed on behalf of each such corporation by order its
respective Board of Directors; and that he acknowledged said
instrument to be the free act and deed of each such corporation.
GIVEN under my hand and notarial seal this 30 day of
---
December, 1997.
/s/ Geneva Browne
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Notary Public
My commission expires:
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GENEVA BROWNE
Notary Public, State of New York
No. 24-4692359
Qualified in Kings County
Certificate filed in New York County
Commission Expires Nov. 30, 1999
<PAGE>
SCHEDULE I
PLEDGED SHARES
<TABLE>
<CAPTION>
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AUTHORIZED ISSUED AND NO. OF
CAPITAL OUTSTANDING STOCK TREASURY
PLEDGED ENTITY STOCK STOCK CERTIFICATES SHARES PLEDGOR
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LUND LUND
Acquisition International
Corp. 1,000 shares 1,000 shares 1 None. Holdings, Inc.
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LUND LUND
Industries, 10,000 2,000 shares 16 None. International
Incorporated shares Holdings, Inc.
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Zephyros LUND
Acquisition 100 shares 100 shares 1 None. International
Corporation holdings, Inc.
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</TABLE>
<PAGE>
SCHEDULE 3(D)
OPTIONS, WARRANTS AND AGREEMENTS
<PAGE>
SCHEDULE 3(F)
CONSENTS, APPROVALS AND AUTHORIZATIONS
Exhibit 7
BORROWER PLEDGE AGREEMENT
-------------------------
THIS PLEDGE AGREEMENT (this "AGREEMENT") dated as of
December 30, 1997 by ZEPHYROS ACQUISITION CORPORATION, a Delaware
corporation (in its capacity as pledgor under the terms of this
Agreement, "PLEDGOR"), in favor of HELLER FINANCIAL, INC., a
Delaware corporation, as agent ("AGENT") for the benefit of
Lenders (defined below).
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Pledgor legally and beneficially owns all of the
issued and outstanding shares of capital stock of each of the
Persons identified on Schedule I hereto (collectively,
----------
"SUBSIDIARIES"), all of which shares of stock are described on
Schedule I;
----------
WHEREAS, Pledgor, upon consummation of (x) the Tender Offer
pursuant to the Tender Offer Documents, or (y) any Open Market
Purchases, shall legally and beneficially own all of the issued
and outstanding shares of capital stock of Target (defined
below), all of which shares of stock are identified on Schedule
---------
I.
-
WHEREAS, Pledgor, as Borrower, is entering into that certain
Tender Offer Loan Agreement, dated as of the date hereof with
Lund International Holdings, Inc., Agent and certain financial
institutions from time to time party thereto (collectively,
"LENDERS") (as it may be amended, restated, supplemented or
otherwise modified and in effect from time to time, the "LOAN
AGREEMENT") providing for loans and other financial
accommodations to be made by Lenders to Pledgor;
WHEREAS, Pledgor desires to incur such loans pursuant to the
Agreement for the purpose of financing (x) the purchase price of
all of the issued and outstanding shares of common stock of
Deflecta-Shield Corporation, a Delaware corporation ("TARGET"),
tendered pursuant to the Tender Offer Documents or (y) any Open
Market Purchases;
WHEREAS, it is a condition precedent to the making of loans
and the availability of other financial accommodations under the
Loan Agreement that Pledgor shall have pledged to Agent, on
behalf of Lenders, all of the present and future capital stock of
Subsidiaries now or hereafter owned by Pledgor; and
WHEREAS, Pledgor desires to execute this Agreement to
satisfy the conditions described in the preceding paragraph;
NOW, THEREFORE, in consideration of the premises and in
order to induce Lenders to make loans and provide other financial
accommodations under the Loan Agreement, Pledgor hereby agrees
with Agent for its benefit and the benefit of Lenders as follows:
Section 1. Defined Terms. Unless otherwise defined
-------------
herein, all capitalized terms used herein shall have the
respective meanings ascribed thereto in the Loan Agreement.
Terms defined in the UCC which are not otherwise defined in this
Agreement or in the Loan Agreement are used in this Agreement as
defined in the UCC as in effect on the date hereof.
Section 2. Pledge. Pledgor hereby pledges, assigns,
------
hypothecates, transfers, delivers and grants to Agent, on behalf
of Lenders, a first lien on and first security interest in all of
the capital stock of each Subsidiary owned by such Pledgor
(collectively the "PLEDGED SHARES"), all other property hereafter
delivered to, or in the possession or in the custody of, Pledgor
in substitution for or in addition to the Pledged Shares and in
all proceeds thereof, as collateral security for (i) the prompt
and complete payment when due (whether at the stated maturity, by
acceleration or otherwise) and performance of all Obligations,
regardless of whether the Loan Agreement or any other Loan
Document shall have terminated, and (ii) the due and punctual
payment and performance by Pledgor of its obligations and
liabilities under, arising out of or in connection with this
Agreement, the Loan Agreement and all other Loan Documents to
which Pledgor is a party (all of the foregoing being referred to
hereinafter collectively as the "LIABILITIES").
All of the capital stock of the Subsidiaries tendered
and purchased pursuant to the Tender Offer shall be held by the
Depositary Agent and the Transfer Agent and subsequently
delivered to Agent in accordance with the terms of the Depositary
Agreement.
All such capital stock are represented by the stock
certificate(s) listed on Schedule I hereto, which stock
----------
certificates, with undated stock powers duly executed in blank by
Pledgor, shall be delivered forthwith to Agent. Agent shall
maintain possession and custody of the certificate(s)
representing the Pledged Shares.
Section 3. Representations and Warranties of Pledgor.
-----------------------------------------
Pledgor represents and warrants to Agent and Lenders that:
(a) Schedule I sets forth with respect to Pledgor (i)
----------
the authorized capital stock of each Subsidiary (to the knowledge
of the Pledgor with respect to the authorized capital stock of
the Target and its Subsidiaries (as such term is defined in the
Loan Agreement)), (ii) the number of shares of capital stock of
each Subsidiary (to the knowledge of the Pledgor with respect to
the authorized capital stock of the Target and its Subsidiaries
(as such term is defined in the Loan Agreement)) that are issued
and outstanding as of the date hereof and (iii) the number of
shares of capital stock of each Subsidiary (to the knowledge of
the Pledgor with respect to the authorized capital stock of the
Target and its Subsidiaries (as such term is defined in the Loan
Agreement)) held in its treasury.
Pledgor is the record and beneficial owner of, and has
good and marketable title to, the Pledged Shares, and such shares
are and will remain free and clear of all pledges, liens,
security interests and other encumbrances and restrictions
whatsoever, except the liens and security interests created by
this Agreement;
(b) Pledgor has full power, authority and legal right
to execute the pledge provided for herein and to pledge the
Pledged Shares to Agent, on behalf of Lenders;
(c) This Agreement has been duly authorized, executed
and delivered by Pledgor and constitutes a legal, valid and
binding obligation of Pledgor enforceable in accordance with
terms;
(d) There are no outstanding options, warrants or
other agreements with respect to the Pledged Shares and there are
no outstanding options, warrants or other agreements with respect
to any other shares of capital stock of any Subsidiary except, in
each case, as set forth in Schedule 3(d) hereto;
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(e) The Pledged Shares have been duly and validly
authorized and issued, are fully paid and non-assessable and
represent all of the issued and outstanding shares of the capital
stock of each Subsidiary;
(f) No consent, approval or authorization of or
designation or filing with any governmental authority on the part
of Pledgor is required in connection with the pledge and security
interest granted under this Agreement except as set forth on
Schedule 3(f) hereto;
------------
(g) The execution, delivery and performance of this
Agreement will not violate any provision of any applicable law or
regulation or of any order, judgment, writ, award or decree of
any court, arbitrator or governmental authority, domestic or
foreign, or of the charter or by-laws of Pledgor or any
Subsidiary or of any securities issued by Pledgor or any
Subsidiaries or of any mortgage, indenture, lease, contract, or
other material agreement, instrument or undertaking to which
Pledgor or any Subsidiary is a party or which purports to be
binding upon Pledgor or any Subsidiary or upon any of its assets,
and will not result in the creation or imposition of any lien,
charge or encumbrance on or security interest in any of the
assets of Pledgor or any Subsidiary except as contemplated by
this Agreement;
(h) The pledge and assignment to Agent, on behalf of
Lenders, of the Pledged Shares pursuant to this Agreement creates
a valid first lien on and a first perfected security interest in
the Pledged Shares and the proceeds thereof in favor of Agent, on
behalf of Lenders, subject to no prior pledge, lien, mortgage,
hypothecation, security interest, charge, option or encumbrance
or to any agreement purporting to grant to any third party a
security interest in the property or assets of any Pledgor which
would include the Pledged Shares. Pledgor covenants and agrees
that it will defend Agent's right, title and security interest in
and to the Pledged Shares and the proceeds thereof against the
claims and demands of all persons whomsoever; and
(i) All information heretofore, herein or hereafter
supplied to Agent by or on behalf of Pledgor with respect to the
Pledged Shares is and will be accurate and complete in all
material respects, taking into account any amendments to
Schedules as a result of any disclosures made by Pledgor to Agent
after the Closing Date and approved by Agent.
Section 4. Stock Dividends, Distributions, etc. If,
------------------------------------
while this Agreement is in effect, Pledgor shall become entitled
to receive or shall receive any stock certificate (including,
without limitation, any certificate representing a stock dividend
or a stock distribution in connection with any reclassification,
increase or reduction of capital, or issued in connection with
any reorganization), or any options or rights, whether as an
addition to, in substitution for, or in exchange for any of the
Pledged Shares, or otherwise, Pledgor agrees to accept the same
as Agent's agent and to hold the same in trust for Agent, on
behalf of Lenders, and to deliver the same forthwith to the
Depository, on behalf of Agent, in the exact form received, with
the endorsement of Pledgor when necessary and/or appropriate
undated stock powers duly executed in blank, to be held by Agent,
on behalf of Lenders, subject to the terms hereof as additional
collateral security for the Liabilities. In case any
distribution of capital shall be made on or in respect of the
Pledged Shares or any property shall be distributed upon or with
respect to the Pledged Shares pursuant to the recapitalization or
reclassification of the capital of the issuer thereof or pursuant
to the reorganization thereof, the property so distributed shall
be delivered to Agent to be held by it as additional collateral
security for the Liabilities. All sums of money and property so
paid or distributed in respect of the Pledged Shares which are
received by Pledgor shall, until paid or delivered to Agent, be
held by Pledgor in trust as additional collateral security for
the Liabilities.
Section 5. Administration of Security. The following
--------------------------
provisions shall govern the administration of the Pledged Shares:
(a) So long as no Event of Default has occurred and is
continuing, Pledgor shall be entitled (subject to the other
provisions hereof, including, without limitation, Section 8
below) to (i) vote or consent with respect to the Pledged Shares
in any manner not inconsistent with this Agreement, the Loan
Agreement, any other Loan Document, or any note, document or
instrument delivered or to be delivered pursuant to or in
connection with the transactions contemplated by the foregoing,
and (ii) receive cash dividends or other distributions in the
ordinary course made in respect of the Pledged Shares. Pledgor
hereby grants to Agent or its nominee, on behalf of Lenders, an
irrevocable proxy to exercise all voting and corporate rights
relating to the Pledged Shares in any instance effective upon the
occurrence and during the continuance of an Event of Default.
After the occurrence and during the continuance of an Event of
Default and upon the request of Agent, Pledgor agrees to deliver
to Agent, on behalf of Lenders, such further evidence of such
irrevocable proxy or such further irrevocable proxies to vote the
Pledged Shares as Agent may request.
(b) Upon the occurrence and during the continuance of
an Event of Default, in the event that Pledgor, as record and
beneficial owner of the Pledged Shares, shall have received or
shall have become entitled to receive, any cash dividends or
other distributions in the ordinary course, Pledgor shall deliver
to Agent, on behalf of Lenders, and Agent shall be entitled to
receive and retain, all such cash or other distributions as
additional security for the Liabilities.
(c) Subject to any sale or other disposition by Agent
of the Pledged Shares or other property pursuant to this
Agreement, the Pledged Shares and any other property then held as
part of the Pledged Shares in accordance with the provisions of
this Agreement shall be delivered to Pledgor upon indefeasible
full payment, satisfaction and termination of all of the
Liabilities, the termination of the lien and security interest
hereby granted pursuant to Section 14 hereof and the termination
of the Commitments under the Loan Agreement.
Section 6. Rights of Agent. Neither Agent nor Lenders
---------------
shall be liable for failure to collect or realize upon the
Obligations or any collateral security or guaranty therefor, or
any part thereof, or for any delay in so doing, nor shall Agent
or Lenders be under any obligation to take any action whatsoever
with regard thereto. Any or all of the Pledged Shares hereunder
may, if an Event of Default has occurred and is continuing, with
reasonably prompt subsequent notice to Pledgor, be registered in
the name of Agent or its nominee, on behalf of Lenders, and Agent
or its nominee, on behalf of Lenders, may thereafter, without
notice, exercise all voting and corporate rights at any meeting
with respect to Subsidiaries and exercise any and all rights of
conversion, exchange, subscription or any other rights,
privileges or options pertaining to any of the Pledged Shares as
if it were the absolute owner thereof, including, without
limitation, the right to vote in favor of, and to exchange at its
discretion any and all of the Pledged Shares upon, the merger,
consolidation, reorganization, recapitalization or other
readjustment with respect to Subsidiaries or upon the exercise by
Pledgor or Agent, on behalf of Lenders, of any right, privilege
or option pertaining to any of the Pledged Shares, and in
connection therewith, to deposit and deliver any and all of the
Pledged Shares with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and
conditions as Agent may determine, all without liability except
to account for property actually received by Agent, on behalf of
Lenders, but Agent shall have no duty to exercise any of the
aforesaid rights, privileges or options and shall not be
responsible for any failure to do so or delay in so doing.
Section 7. Remedies. Upon the occurrence and during the
--------
continuance of an Event of Default, Agent without demand of
performance or other demand, advertisement or notice of any kind
(except the notice specified below of time and place of public or
private sale) to or upon Pledgor or any other person (all and
each of which demands, advertisements and/or notices are hereby
expressly waived), may forthwith collect, receive, appropriate
and realize upon the Pledged Shares, or any part thereof, and/or
may forthwith sell, assign, give an option or options to
purchase, contract to sell or otherwise dispose of (including the
disposition by merger) and deliver said Pledged Shares, or any
part thereof, in one or more portions at public or private sale
or sales or transactions, at any exchange, broker's board or at
any of Agent's offices or elsewhere upon such terms and
conditions as Agent may deem advisable and at such prices as it
may deem best, for any combination of cash and/or securities or
other property or on credit or for future delivery without
assumption of any credit risk, with the right to Agent upon any
such sale or sales, public or private, to purchase the whole or
any part of said Pledged Shares so sold, free of any right or
equity of redemption in Pledgor, which right or equity is hereby
expressly waived or released. Agent shall apply the net proceeds
of any such collection, recovery, receipt, appropriation,
realization, sale or disposition, after deducting all reasonable
costs and expenses of every kind incurred therein or incidental
to the safekeeping of any and all of the Pledged Shares or in any
way relating to the rights of Agent or Lenders hereunder,
including reasonable attorneys' fees and legal expenses, to the
payment, in whole or in part, of the Obligations incurred under
or pursuant to the Loan Agreement in such order as is in
accordance with the terms of the Loan Agreement or, if no such
order shall be specified, in such order as Agent may elect.
Pledgor shall remain liable for any deficiency remaining unpaid
after such application. Only after so paying over such net
proceeds and after the payment by Agent of any other amount
required by any provision of law, including, without limitation,
Section 9-504(1)(c) of the UCC, need Agent account for the
surplus, if any, to Pledgor. Pledgor agrees that Agent need not
give more than ten days' notice of the time and place of any
public sale or of the time after which a private sale or other
intended disposition is to take place and that such notice is
reasonable notification of such matters. No notification need be
given to Pledgor if Pledgor has signed after the occurrence of an
Event of Default under the Loan Agreement a statement renouncing
or modifying any right to notification of sale or other intended
disposition. In addition to the rights and remedies granted to
Agent in this Agreement and in any other instrument or agreement
securing, evidencing or relating to any of the Liabilities, Agent
and Lenders shall have all the rights and remedies of a secured
party under the UCC and under any other applicable law. Pledgor
further agrees to waive and agrees not to assert any rights or
privileges which it may acquire under Section 9-112 of the UCC
(other than the right to receive surplus, if any, in accordance
with the foregoing terms of this subsection 7) and Pledgor shall
be liable for the deficiency if the proceeds of any sale or other
disposition of the Pledged Shares are insufficient to pay all
amounts to which Agent and Lenders are entitled, and the
reasonable fees of any attorneys employed by Agent and Lenders to
collect such deficiency and any other costs and expenses incurred
in connection therewith.
Section 8. No Disposition, etc. Without the prior
--------------------
written consent of Agent, Pledgor agrees not to sell, assign,
transfer, exchange, or otherwise dispose of (except as expressly
permitted by the Loan Agreement), or grant any option with
respect to, the Pledged Shares, nor will Pledgor create, incur or
permit to exist any pledge, lien, mortgage, hypothecation,
security interest, charge, option or any other encumbrance with
respect to any of the Pledged Shares, or any interest therein, or
any proceeds thereof, except for the lien and security interest
provided for by this Agreement. Without the prior written
consent of Agent, except as expressly specified in accordance
with the terms and conditions of the Loan Agreement, Pledgor
agrees not to vote to enable, and not to otherwise permit,
Subsidiaries to (i) issue any stock or other securities of any
nature in addition to or in exchange or substitution for the
Pledged Shares, or (ii) dissolve, liquidate, retire any of their
capital stock, reduce their capital or merge or consolidate with
any other Person.
Section 9. Sale of Pledged Shares.
----------------------
(a) Pledgor recognizes that Agent may be unable to
effect a public sale or disposition of any or all the Pledged
Shares by reason of certain prohibitions contained in the
Securities Act of 1933, as amended (the "ACT"), and applicable
state securities laws, but may be compelled to resort to one or
more private sales or dispositions thereof to a restricted group
of purchasers who will be obliged to agree, among other things,
to acquire such securities for their own account for investment
and not with a view to the distribution or resale thereof.
Pledgor acknowledges and agrees that any such private sale or
disposition may result in prices and other terms (including the
terms of any securities or other property received in connection
therewith) less favorable to the seller than if such sale or
disposition were a public sale or disposition and,
notwithstanding such circumstances, agrees that any such private
sale or disposition shall be deemed to be reasonable and affected
in a commercially reasonable manner. Agent and Lenders shall be
under no obligation to delay a sale or disposition of any of the
Pledged Shares in order to permit Pledgor or Subsidiaries to
register such securities for public sale under the Act, or under
applicable state securities laws, even if Pledgor or Subsidiaries
would agree to do so.
(b) Pledgor further agrees to do or cause to be done
all such other acts and things as may be necessary to make such
sale or sales or dispositions of any portion or all of the
Pledged Shares valid and binding and in compliance with any and
all applicable laws, regulations, orders, writs, injunctions,
decrees or awards of any and all courts, arbitrators or
governmental instrumentalities, domestic or foreign, having
jurisdiction over any such sale or sales or dispositions, all at
Pledgor's expense. Pledgor further agrees that a breach of any
of the covenants contained in Sections 2, 4, 5(b), 8, 9 or 10
hereof will cause irreparable injury to Agent and Lenders, that
Agent and Lenders have no adequate remedy at law in respect of
such breach and, as a consequence, agrees, without limiting the
right of Agent to seek and obtain specific performance of other
obligations of Pledgor contained in this Agreement, that each and
every covenant referenced above shall be specifically enforceable
against Pledgor, and Pledgor hereby waives and agrees not to
assert any defenses against an action for specific performance of
such covenants except for a defense that no Event of Default has
occurred under the Loan Agreement.
(c) Pledgor further agrees to indemnify and hold
harmless Agent, each of its successors and assigns, officers,
directors, employees and agents, and any Person in control of any
thereof, from and against any loss, liability, claim, damage and
expense, including, without limitation, reasonable counsel fees
(in this Section 9(c) collectively called the "INDEMNIFIED
LIABILITIES"), under federal and state securities laws or
otherwise insofar as such loss, liability, claim, damage or
expense (i) arises out of or is based upon any untrue statement
or alleged untrue statement of a material fact contained in any
registration statement, prospectus or offering memorandum or in
any preliminary prospectus or preliminary offering memorandum or
in any amendment or supplement to any of the foregoing or in any
other writing prepared in connection with the offer, sale or
resale of all or any portion of the Pledged Shares unless such
untrue statement of material fact was provided by Agent
specifically for inclusion therein, or (ii) arises out of or is
based upon any omission or alleged omission to state therein a
material fact required to be stated or necessary to make the
statements therein not misleading, such indemnification to remain
operative regardless of any investigation made by or on behalf of
Agent or any successor thereof, or any Person in control of any
thereof. In connection with a public sale or other distribution,
Pledgor will provide customary indemnification to any
underwriters, its successors and assigns, its officers and
directors and each Person who controls any such underwriter
(within the meaning of the Act). If and to the extent that the
foregoing undertakings in this Section 9(c) may be unenforceable
for any reason, Pledgor agrees to make maximum contribution to
the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. The
obligations of Pledgor under this Section 9(c) shall survive any
termination of this Agreement.
(d) Pledgor further agrees to waive any and all rights
of subrogation it may have against Subsidiaries upon the sale or
sales or dispositions by Agent of any portion of, or all of, the
Pledged Shares.
Section 10. Further Assurances. Pledgor agrees that at
------------------
any time and from time to time, upon the written request of
Agent, Pledgor shall execute and deliver all stock powers,
irrevocable proxies, financing statements and such further
documents and do such further acts and things as Agent may
reasonably request consistent with the provisions hereof in order
to effect the purposes of this Agreement.
Section 11. Severability. Any provision of this
------------
Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
Section 12. No Waiver; Cumulative Remedies. Agent shall
------------------------------
not by any act, delay, omission or otherwise be deemed to have
waived any of its remedies hereunder, and no waiver by Agent
shall be valid unless in writing and signed by Agent and then
only to the extent therein set forth. A waiver by Agent of any
right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which Agent would
otherwise have on any further occasion. No course of dealing
between Pledgor and Agent and no failure to exercise, nor any
delay in exercising on the part of Agent any right, power or
privilege hereunder or under the Loan Documents shall impair such
right or remedy or operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege
hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and
remedies herein provided are cumulative and may be exercised
singly or concurrently, and are not exclusive of any rights or
remedies provided by law.
Section 13. Successors. This Agreement and all
----------
obligations of Pledgor hereunder shall be binding upon the
successors and assigns of Pledgor, and shall, together with the
rights and remedies of Agent and Lenders hereunder, inure to the
benefit of Pledgor, Lenders and Agent and its successors and
assigns, except that Pledgor shall not have any right to assign
its rights or obligations under this Agreement or any interest
herein without the prior written consent of Agent.
Section 14. Termination. This Agreement and the liens
-----------
and security interests granted hereunder shall terminate upon
full and complete performance, indefeasible payment in full and
satisfaction of the Liabilities and termination of the
Commitments under the Loan Agreement, and with reasonable
promptness, upon such full and complete performance, satisfaction
and termination, Agent shall surrender the certificates
evidencing the Pledged Shares to Pledgor and take such other
action as Pledgor may reasonably request to evidence the
termination of this Agreement, all at the sole cost and expense
of Pledgor.
Section 15. Possession of Pledged Shares. Beyond the
----------------------------
exercise of reasonable care to assure the safe custody of the
Pledged Shares in the physical possession of the Depository or
Agent pursuant hereto, neither Agent nor any nominee of Agent
shall have any duty or liability to collect any sums due in
respect thereof or to protect, preserve or exercise any rights
pertaining thereto, and shall be relieved of all responsibility
for the Pledged Shares upon surrendering them to Pledgor.
Section 16. Survival of Representations. All
---------------------------
representations and warranties of Pledgor contained in this
Agreement shall survive the execution and delivery of this
Agreement.
Section 17. Taxes and Expenses. Pledgor will upon demand
------------------
pay to Agent all fees, costs and expenses (including reasonable
attorneys' fees, reasonably allocated costs of internal counsel
and fees of accountants and other professionals retained by
Agent) incurred by Agent in connection with (i) the review,
negotiation, preparation, documentation, execution and admin-
istration hereof, and (ii) the custody or preservation of, or the
sale of, collection from, or other realization upon, any of the
Pledged Shares. Pledgor will upon demand pay to Agent all fees,
costs and expenses (including attorneys' fees, allocated costs of
internal counsel and fees of accountants and other professionals
retained by Agent) incurred by Agent in connection with (i) the
exercise or enforcement of any of the rights of Agent hereunder,
and (ii) the failure of Pledgor to perform or observe any of the
provisions hereof.
Section 18. Agent Appointed Attorney-In-Fact. Pledgor
--------------------------------
hereby irrevocably appoints Agent as its attorney-in-fact,
effective upon the occurrence and during the continuance of an
Event of Default, with full authority in the place and stead of
Pledgor and in the name of Pledgor or otherwise, from time to
time in Agent's discretion, to take any action and to execute any
instrument that Agent deems reasonably necessary or advisable to
accomplish the purposes of this Agreement, including, without
limitation, to receive, endorse and collect all instruments made
payable to Pledgor representing any dividend, interest payment or
other distribution in respect of the Pledged Shares or any part
thereof and to give full discharge for the same, when and to the
extent permitted by this Agreement.
Section 19. Notices. Unless otherwise provided
-------
specifically herein, all notices, approvals, requests, demands
and other communications hereunder shall be given in writing
addressed to the respective party in accordance with the terms of
the Loan Agreement.
Section 20. Applicable Law. THIS AGREEMENT SHALL BE
--------------
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.
Section 21. Consent to Jurisdiction and Service of
---------------------------------------
Process. PLEDGOR AGREES THAT, SUBJECT TO AGENT'S ELECTION, ANY
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ACTION OR PROCEEDING TO ENFORCE OR ARISING OUT OF THIS AGREEMENT
MAY BE COMMENCED IN ANY STATE OR FEDERAL COURT LOCATED WITHIN THE
COUNTY OF NEW YORK, STATE OF NEW YORK, AND PLEDGOR WAIVES
PERSONAL SERVICE OF PROCESS AND AGREES THAT A SUMMONS AND
COMPLAINT COMMENCING AN ACTION OR PROCEEDING IN ANY SUCH COURT
SHALL BE PROPERLY SERVED AND SHALL CONFER PERSONAL JURISDICTION
IF SERVED BY MESSENGER OR REGISTERED MAIL TO IT AND, IF BY
REGISTERED MAIL, SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED
FOUR (4) BUSINESS DAYS AFTER THE SAME SHALL HAVE BEEN POSTED, OR
AS OTHERWISE PROVIDED BY THE LAWS OF NEW YORK OR THE UNITED
STATES.
Section 22. Waiver of Jury Trial. PLEDGOR, AGENT AND
--------------------
EACH LENDER ACKNOWLEDGES THAT THE TIME AND EXPENSE REQUIRED FOR
TRIAL BY JURY EXCEED THE TIME AND EXPENSE REQUIRED FOR A BENCH
TRIAL AND HEREBY WAIVES, TO THE EXTENT PERMITTED BY LAW, TRIAL BY
JURY. PLEDGOR HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON
----- ---
CONVENIENS, ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED
----------
HEREUNDER, AND WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH
BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF AGENT OR
LENDERS.
Section 23. Changes in Writing. No amendment,
------------------
modification, termination or waiver of any provision of this
Agreement or consent to any departure by Pledgor therefrom, shall
in any event be effective without the written agreement of Agent
and Pledgor, and then only to the extent specifically set forth
in such writing.
Section 24. Headings. Section and subsection headings in
--------
this Agreement are included herein for convenience of reference
only and shall not constitute a part of this Agreement for any
other purpose or be given any substantive effect.
Section 25. Counterparts. This Agreement may be executed
------------
in any number of counterparts, all of which taken together shall
constitute one and the same instrument and any of the parties
hereto may execute this Agreement by signing any such
counterpart.
Section 26. Entire Agreement. This Agreement embodies
----------------
the entire agreement and understanding between Pledgor and Agent
with respect to the subject matter hereof and supersedes all
prior oral and written agreements and understandings between
Pledgor and Agent relating to the subject matter hereof.
[Signature page to follow]
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Pledge
Agreement to be duly executed and delivered by their duly
authorized officers as of the date first above written.
ZEPHYROS ACQUISITION CORPORATION
By: /s/ Ira D. Kleinman
------------------------------------
Name: Ira D. Kleinman
Title: Chairman of the Board of Directors
Agreed to and Acknowledged:
HELLER FINANCIAL, INC.,
as Agent
By: /s/ Daniel J. Marszalek
-------------------------------
Name: Daniel J. Marszalek
Title: Senior Vice President
<PAGE>
STATE OF NEW YORK )
) SS
COUNTY OF NEW YORK)
I, Geneva Browne, a Notary Public in and for said
-------------
County, in the State aforesaid, DO HEREBY CERTIFY that
Ira D. Kleinman, personally known to me to be a
---------------
Chairman of the Board, the person who executed the foregoing
---------------------
instrument, who being by me duly sworn, did depose and say he is
a Chairman of the Board of each such corporation described in
---------------------
and which executed the foregoing instrument; that said instrument
is signed on behalf of each such corporation by order its Board
of Directors; and that he acknowledged said instrument to be the
free act and deed of each such corporation.
GIVEN under my hand and notarial seal this 30 day of
---
December, 1997.
/s/ Geneva Browne
--------------------------------
Notary Public
My commission expires:
________________________________
GENEVA BROWNE
Notary Public, State of New York
No. 24-4692359
Qualified in Kings County
Certificate Filed in New York County
Commission Expires Nov. 30, 1999
<PAGE>
SCHEDULE I
----------
PLEDGED SHARES
--------------
-----------------------------------------------------------------
: :
: AUTHORIZED ISSUED AND NO. OF :
: PLEDGED CAPITAL OUTSTANDING TREASURY :
: ENTITY STOCK STOCK SHARES PLEDGOR :
: ------- ---------- ----------- -------- ------- :
: :
: Deflecta- 20,000,000 4,742,411 None Zephyros :
: Shield common stock common stock Acquisition :
: Corporation 2,500,000 Corporation :
: preferred stock :
-----------------------------------------------------------------
<PAGE>
SCHEDULE 3(d)
-------------
OPTIONS, WARRANTS AND AGREEMENTS
--------------------------------
<PAGE>
SCHEDULE 3(f)
-------------
CONSENTS, APPROVALS AND AUTHORIZATIONS
--------------------------------------
Exhibit 8
THIS WARRANT AND THE WARRANT SHARES HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, NOR REGISTERED OR QUALIFIED UNDER ANY STATE
SECURITIES LAWS, AND MAY NOT BE PLEDGED, HYPOTHECATED,
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS SO
REGISTERED OR AN EXCEPTION THEREFROM IS AVAILABLE
WARRANT TO PURCHASE COMMON STOCK
OF LUND INTERNATIONAL HOLDINGS, INC.
THIS CERTIFIES THAT, for value received, Lund International
Holdings, Inc., a Delaware corporation (the "Company"), promises
to issue at the dates set forth below to Heller Financial, Inc.
("Heller"), the holder of this Warrant (the "Holder"), its
nominees, successors or assigns nonassessable shares of Common
Stock, $.01 par value, of the Company ("Common Stock") the number
of which shall be equal to the product of the Issuance Percentage
(as defined below) multiplied by the sum of (i) all shares of
Common Stock outstanding as of the relevant Warrant Vesting Date
(as hereinafter defined), (ii) all shares of Common Stock
issuable upon (a) the exercise of any rights or any options
outstanding as of the relevant Warrant Vesting Date for the
purchase of Common Stock or Convertible Securities (as defined
herein) and (b) conversion of any Convertible Securities
outstanding as of the relevant Warrant Vesting Date, upon the
payment by the Holder to the Company of the Warrant Price set
forth herein and to deliver to the Holder a certificate or
certificates representing the Common Stock purchased. Such sum
shall be the "Fully Diluted Shares." The number of shares of
Common Stock purchasable upon exercise of this Warrant and the
Warrant Price shall be subject to adjustment from time to time as
provided herein. The initial Warrant Price per share of Common
Stock shall be $.01 per share of Common Stock.
Section 1 Conditions to Issuance. The Warrant shall only
----------------------
become exercisable subject to the following conditions
("Conditions to Exercise"):
(a) The Tender Offer Loan Agreement dated as of
December___, 1997, among the Company, Zephyros
Acquisition Corp. and Heller (the "Loan Agreement")
shall not have any amounts outstanding thereunder;
(b) The Termination Date (as defined in the Loan Agreement)
shall have occurred; and
(c) Pursuant to the terms of the Loan Agreement the rate of
interest per annum paid by the Borrower is equal to 18%
per annum at any time.
Upon the occurrence of such conditions the Warrant will
become exercisable for 2% ("Issuance Percentage") of the Fully
Diluted Shares on the first day of the calendar quarter in which
the conditions are met. The Warrant will become issuable for an
additional 2% of the Fully Diluted Shares on the first day of
each succeeding calendar quarter until all amounts owing under
the Loan Agreement are repaid in full. The first day of a
calendar quarter on which this Warrant becomes issuable for any
share of Common Stock shall be a "Warrant Vesting Date."
If at any time after his Warrant becomes exercisable, all
obligations under the Loan Agreement are paid, the Warrant will
terminate with respect to any additional shares of Common Stock
as to which this Warrant would otherwise become exercisable.
For the purpose of this Warrant, the term "Common Stock"
shall mean (i) the class of stock designated as the Common Stock
of the Company at the date of this Warrant, or, (ii) any other
class or classes of stock resulting from successive changes or
reclassifications of such stock.
Section 2. Term of Warrant, Restrictions on Transfer,
Exercise of Warrant.
------------------------------------------
2.1 Tenn of Warrant. Subject to the terms of this Warrant,
---------------
the Holder shall have the right, at its option, which may be
exercised in whole or in part, at any time, commencing at time
after of this Warrant becomes exercisable and until 5:00 p.m.
Eastern Time on December 27, 2017 ("Warrant Expiration Date"), to
purchase from the Company the number of fully paid and
nonassessable shares of Common Stock which the Holder may at the
time be entitled to purchase on exercise of this Warrant
("Warrant Shares"). After such time, this Warrant will be void.
2.2. Restrictions on Transfer. This Warrant and the Warrant
------------------------
Shares will be restricted securities as defined under the
Securities Act of 1933, as amended (the "Act") and therefore will
not be transferable except in compliance with applicable federal
and state securities laws, including Rule 144 adopted under the
Act. Unless Warrant Shares shall have been duly registered under
the Act, certificates representing such shares shall bear a
legend comparable to the legend on the first page of this Warrant
regarding restrictions on transfer. Unless the transfer
restrictions have been terminated pursuant to Section 11 hereof,
the Holder agrees to give written notice to the Company before
offering for sale, selling or otherwise disposing of any of the
Warrants or Warrant Shares, except when such offer, sale or other
disposition is made pursuant to a registration statement then in
effect under the Act. The notice shall describe the manner of
any proposed offer, sale, or other disposition and shall be
accompanied by a written opinion of counsel for such Holder,
which counsel and opinion shall be reasonably satisfactory to the
Company and its counsel, to the effect that the proposed offer,
sale or other disposition of such Warrant or Warrant Shares may
be effected without registration under the Act. In connection
with a sale or other disposition of the Warrant or the underlying
Warrant Shares, the subsequent Holder or Holders shall be bound
by the provisions of this Agreement.
2.3. Exercise of Warrant. The Holder may exercise this
-------------------
Warrant by delivering to the Company (i) a written notice
specifying the number of shares of Common Stock to be purchased,
and (ii) payment of the aggregate exercise price in cash or by a
certified or cashier's check. Upon receipt of written notice,
the Company shall as promptly as practicable execute or cause to
be executed and deliver to such Holder a certificate or
certificates representing the aggregate number of shares of
Common Stock purchased. Such certificate or certificates shall
be deemed to have been issued to the Holder which shall be deemed
to have become a holder of record of such Warrant Shares as of
the date of payment of the Warrant Price. If this Warrant shall
have been exercised only in part, the Company shall also deliver
a new Warrant of like tenor evidencing the rights of such Holder
to purchase the remaining shares of Common Stock called for by
this Warrant.
This Warrant does not entitled the Holder to any voting
rights or other rights as a shareholder of the Company prior to
exercise and payment of the Warrant Price in accordance with this
Section 2.3.
Section 3. Exchange of Warrant. Subject to Section 2.2
-------------------
and Section 4 hereof, the Warrant may be exchanged for another
Warrant or Warrants entitling the Holder to purchase a like
aggregate number of Warrant Shares as this Warrant then entitles
such Holder to purchase. Any Holder desiring to exchange this
Warrant shall make such request in writing delivered to the
Company, and shall surrender this Warrant, properly endorsed.
Thereupon the Company shall execute and deliver to the person
entitled thereto a new Warrant or Warrants, as the case may be,
as so requested.
Section 4. Payment of Taxes. The Company shall pay all
----------------
documentary stamp taxes, if any, attributable to the initial
issuance of any Warrant Shares upon the exercise of this Warrant;
provided, however, that the Company shall not be required to pay
--------
any tax or taxes which may be payable in respect of any transfer
involved in the issue or delivery of any Warrant or certificate
for Warrant Shares in a name other than that of the Holder of
this Warrant as such name is then shown on the books of the
Company.
Section 5. Mutilated or Missing Warrant. In case this
----------------------------
Warrant shall be mutilated, lost, stolen or destroyed, the
Company shall issue in exchange and substitution for and upon
cancellation of the mutilated Warrant, or in lieu of and
substitution for the Warrant lost, stolen or destroyed, a new
Warrant of like tenor and representing an equivalent right or
interests, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction of
this Warrant (provided that an affidavit, containing appropriate
indemnities, of the Holder as to a loss, theft or destruction of
the Warrant shall be deemed to be evidence reasonably
satisfactory to the Company of such loss, theft or destruction
for purposes of this Section 4) and indemnity (which may include
a bond), if requested, also reasonably satisfactory to the
Company.
Section 6. Certain Covenants.
-----------------
6.1. Reservation of Warrant Shares. The Company shall at
-----------------------------
all times keep reserved, out of its authorized Common Stock, a
number of shares of Common Stock sufficient to provide for the
exercise of the rights of purchase represented by this Warrant.
At each Warrant Vesting Date, the Company shall reserve such
additional shares of Common Stock sufficient to provide for the
additional shares into which the Warrant may be converted, and
within ten (10) days of any Warrant Vesting Date will issue a
statement to the Holder indicating the number of shares of Common
Stock for which the Warrant may be exercised at such date. The
transfer agent, if any, for the Common Stock, and every
subsequent transfer agent for any shares of the Company's Common
Stock issuable upon the exercise of any of the rights of purchase
as set out in this Warrant, shall be irrevocably authorized and
directed at all times to reserve such number of authorized shares
as shall be requisite for such purpose. The Company shall keep a
copy of this Warrant on file with any transfer agent for the
Common Stock and with every subsequent transfer agent for any
shares of the Company's Common Stock issuable upon the exercise
of the rights of purchase represented by this Warrant. Any
transfer agent for the Common Stock and any successor transfer
agent for the Common Stock is hereby irrevocably authorized to
cause to be issued from time to time the share certificates
required to honor this Warrant upon its exercise in accordance
with the terms hereof. The Company shall supply any such
transfer agent with duly executed share certificates for such
purpose.
6.2. No Impairment. The Company shall not by any action
-------------
including, without limitation, amending its articles of
incorporation, any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities
or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant,
but shall at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action, as may be
reasonably necessary or appropriate to protect the rights of the
Holder against impairment. Without limiting the generality of
the foregoing, the Company shall (a) take all such action as may
be necessary or appropriate in order that the Company may validly
issue fully paid and nonassessable Common Stock upon the exercise
of this Warrant, and (b) obtain all such authorizations,
exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Company to
perform its obligations under
this Warrant.
Upon the request of the Holder, the Company shall at any
time during the period this Warrant is outstanding acknowledge in
writing, in form satisfactory to the Holder, the continued
validity of this Warrant and the Company's obligations hereunder.
6.3. Listing. If the Company shall list any of its Common
-------
Stock on any securities exchange or automated quotation system,
it will, at its expense, list thereon, maintain and, when
necessary, increase such listing of, all of its Common Stock
issued or, to the extent permissible under the applicable
securities exchange or quotation system rules, issuable upon the
exercise of this Warrant so long as any of its Common Stock shall
be so listed.
6.4. Notice of Certain Corporate Action. In case the
----------------------------------
Company shall propose (a) to pay any dividend or to make any
other distribution to the holders of its Common Stock, or (b) to
offer to the holders of its Common Stock rights to subscribe for
or to purchase any shares of Common Stock or shares of stock of
any class or any other securities, rights or options, or (c) to
effect any reclassification of its Common Stock (other than a
reclassification involving only the subdivision, or combination,
of outstanding shares of Common Stock), or (d) to effect any
capital reorganization, or (e) to effect any consolidation,
merger or sale, transfer or other disposition of all or
substantially all of its property, assets or business, or (f) to
effect the liquidation, dissolution or winding up of the Company,
then in each such case (but without limiting the provisions of
Section 7), the Company shall give to each Holder of a Warrant,
in accordance with Section 14, a notice of such proposed action,
which shall specify the date on which a record is to be taken for
purposes of such dividend, distribution of offer of rights, or
the date on which such reclassification, reorganization,
consolidation, merger, sale, transfer, disposition, liquidation,
dissolution, or winding up is to take place and the date of
participation therein by the holders of Common Stock, if any such
date is to be fixed and shall also set forth such facts with
respect thereto as shall be reasonably necessary to indicate the
effect of such action on the Common Stock. Such notice shall be
so given in the case of any action covered by clause (a) or (b)
above at least ten (10) calendar days prior to the record date
for determining holders of the Common Stock for purposes of such
action, and in the case of any other such action, at least ten
(10) calendar days prior to the date of the taking of such
proposed action or the date of participation therein by the
holders of Common Stock, whichever shall be the earlier.
Section 7. Adjustment of the Number of Shares Into Which
the Warrant is Convertible.
---------------------------------------------
7.1 If outstanding shares of the Company's Common Stock
shall be subdivided into a greater number of shares thereof, or a
dividend in Common Stock shall be paid in respect of Common
Stock, the number of shares of Common Stock purchasable upon
exercise of the Warrants immediately prior to such subdivision or
at the record date of such dividend shall, simultaneously with
the effectiveness of such subdivision or immediately after the
record date of such dividend, be proportionately increased, and
conversely, if outstanding shares of Common Stock shall be
combined into a smaller number of shares thereof, the number of
shares of Common Stock purchasable upon exercise of the Warrants
immediately prior to such combination shall, simultaneously with
the effectiveness of such combination, be proportionately
reduced.
7.2 When any adjustment is required to be made in the
number of shares of Common Stock purchasable upon the exercise of
this Warrant, the exercise price shall be changed to the number
determined by dividing (a) the aggregate exercise price in effect
immediately prior to such adjustment by (b) the aggregate number
of shares issuable pursuant to the exercise of this Warrant
immediately after such adjustment.
Section 8. Registration.
------------
8.1. Incidental Registration.
-----------------------
(a) General. If the Company at any time proposes to
-------
register on its own behalf or behalf of any of its security
holders any of shares of Common Stock (other than by a
Registration on Form S-4, S-8 or any successor or similar short-
form registration statement), whether or not pursuant to
registration rights granted to other holders of its securities,
it will each such time give prompt written notice to all Holders
of its intention to do so and of such Holders' rights under this
Section, provided that in any event, such notice shall be given
--------
to all such Holders at least twenty (20) days prior to such
proposed registration. Such notice shall set forth the intended
method of disposition of the securities proposed to be registered
by the Company. The notice shall offer to include in such filing
such number of shares of Warrant Shares as such Holder may
request.
(b) Included Securities. Warrant Shares will be
-------------------
included in any such filing upon the written request of any such
Holder made within ten (10) days after receipt of any such notice
(which request shall specify the Warrant Shares intended to be
disposed of by such holder and the intended method of
disposition thereof). The Company shall use its best efforts to
effect the registration of all Warrant Shares which the Company
has been so requested to register by the Holders thereof, to the
extent necessary to permit the disposition of the Warrant Shares
so to be registered; provided that (i) each Holder shall pay its
--------
proportionate share of the underwriting discounts or commissions,
(ii) nothing herein shall require the Company to obtain the
effectiveness of or preclude the Company from withdrawing a
Registration Statement, and (iii) the Holder shall promptly
provide to the Company for inclusion in the Registration
Statement such information with respect to the Holder and the
plan of distribution as may be required under the 1933 Act or the
rules and regulations thereunder or reasonably requested by any
underwriter.
(c) Priority in Underwritten Offerings. If the
----------------------------------
Company at any time proposes to register shares of Common Stock
as contemplated by this Section and such securities are to be
distributed by or through one or more underwriters, the Company
shall, if requested by any Holder or as provided in this Section
8.1, use its best efforts to arrange for such underwriters to
include all the Warrant Shares to be offered and sold by such
Holder among the shares of Common Stock to be distributed by such
underwriters, provided that if the managing underwriter of such
--------
underwritten offering shall advise the Company in writing (with a
copy to each holder of Warrant Shares requesting such
registration) that, in its reasonable and good faith judgment the
number of Warrant Shares requested to be included in such
Registration concurrently with the securities by the Company or
any other Person would adversely affect the price, timing or
distribution of such shares or would exceed the number of shares
it is advisable to offer to sell at such time (the "Sales
Limit"), then the Company will include in such registration, to
the extent of the number of securities which the Company is so
advised can be sold in such offering, the securities that the
Company proposes to issue and sell for its own account and such
number of shares of Warrants Shares requested to be registered by
the Holders thereof pursuant to this Section 8.1 or on behalf of
any other Person pro rata on the basis of the total number of
shares of such securities requested to be registered by each such
Person so that the aggregate number of Warrant Shares and other
shares being listed by or on behalf of another Person does not
exceed the difference between the aggregate Sales Limit and the
securities that the Company proposes to issue and sell for its
own account. Any Holder of Warrant Shares to be included in such
Registration may withdraw its request to have its securities so
included by notice to the Company within five (5) Business Days
after receipt of a copy of a notice from the managing underwriter
pursuant to this Section. Any or all of the conditions precedent
to the obligations of such underwriters under such underwriting
agreement shall be conditions precedent to the obligations of
such Holders of Warrant Shares. Except as set forth in this
Section 8.1, no Holder of Warrant Shares shall be required to
make any representations or warranties to or agreements with the
Company or the underwriters other than customary representations,
warranties or agreements regarding such Holder, such Holder's
Warrant Shares and such Holder's intended method of distribution
and any other representation required by law.
(d) Abandonment or Suspension. The Company may
-------------------------
abandon or suspend any registration effected pursuant to the
provisions of this Section 8.1 at any time and without any
liability to any Holder hereof other than its obligations, to the
extent permitted by applicable law, to pay the expenses of the
Company and the selling security holders in connection therewith.
8.2. Demand Registration.
-------------------
(a) General. The Holder shall have the right to
-------
request that the Company effect the registration of the Warrant
Shares under the Securities Act of 1933 ("Registration") in a
manner which permits the Holder to sell without registration or
restriction all of such Holder's Warrant Shares in the United
States (the "Registration"), specifying the intended method of
disposition thereof, thereupon the Company shall use its best
efforts to effect, as expeditiously as practicable, the
Registration of
(i) the Warrant Shares which the Company has been
so requested by the Holder, for disposition in
accordance with the intended method or methods of
disposition stated in such request, and
(ii) all other Warrant Shares the holders of which
shall have made a written request to the Company for
registration thereof within twenty (20) days after the
giving of such written notice by the Company (which
request shall specify the intended method or methods of
disposition thereof),
all to the extent necessary to permit the disposition (in
accordance with the intended methods thereof as aforesaid) of the
Warrant Shares so to be registered; provided, however, that the
--------
rights of the Holder pursuant to this Section 8.2 may be
exercised on not more than four occasions and any such request
may not be made within six months of any preceding request, if
any; provided, further, that the aggregate offering price of any
offering of Common Stock registered pursuant to this Section 8.2
shall be not less than $1,000,000.. Any holder of Warrant Shares
to be included in any such Registration, by written notice to the
Company within ten (10) Business Days after its receipt of a copy
of a notice from the managing underwriter delivered pursuant to
Section 8.2(d), may withdraw such request for Registration and,
on receipt of notices from the Holders of a majority (by number
of shares) of the Warrant Shares requested to be included in such
Registration (the "Requisite Holders") withdrawing their
requests, the Company may elect not to effect such Registration.
(b) Registration Statement Form. Registrations
---------------------------
pursuant to this Section 8.2 shall be on such appropriate
registration form or form of prospectus of the Securities and
Exchange Commission (the "Commission") in the appropriate
jurisdiction (i) as shall be reasonably selected by the Requisite
Holders and as such be reasonably acceptable to the Company, and
(ii) as shall permit the disposition of such Warrant Shares in
accordance with the intended method or methods of disposition
specified in the request for their Registration. The Company
agrees to include in any such registration statement or
prospectus all information which any Holder of Warrant Shares
being registered, upon advice of counsel, shall reasonably
request.
(c) Effective Registration Statement or Prospectus. A
----------------------------------------------
Registration requested pursuant to this Section 8.2 shall not be
deemed to have been effected unless a registration statement with
respect thereto has become effective; provided that a
--------
Registration which does not become effective after the Company
has filed a registration statement or prospectus with respect
thereto solely by reason of the refusal to proceed by the
Requisite Holders (other than a refusal to proceed based upon the
advice of counsel relating to a matter with respect to the
Company or the withdrawal of a request for Registration pursuant
to the final proviso of Section 7.2(a)) then the Holders of the
Warrant Shares that were to have been Registered shall pay all
expenses of Registration (all of which are otherwise payable by
the Company) in connection with such Registration.
Notwithstanding the foregoing, a Registration requested pursuant
to this Section 8.2 shall not be deemed to have been effected if
either (i) after a registration statement has become effective,
such Registration is interfered with by any stop order,
injunction or other order or requirement of the Commission in the
appropriate jurisdiction or other governmental agency or court
for any reason; or (ii) the conditions to closing specified in
the purchase agreement or underwriting agreement entered into in
connection with such Registration are not satisfied, other than
by reason of some act or omission by the Holders of the Warrant
Shares that were to have been registered.
(d) Priority in Requested Registrations. If a
-----------------------------------
requested Registration pursuant to this Section 8.2 involves an
underwritten offering and the managing underwriter shall advise
the Company in writing (with a copy to each holder of Warrant
Shares requesting Registration) that, in its reasonable and good
faith judgment, the number of shares of Warrant Shares requested
to be included in such Registration concurrently with securities
being registered by the Company or any other person or entity
would adversely affect the price, timing or the distribution of
such Warrant Shares or would exceed the number of shares it is
advisable to offer to sell at such time, in the reasonable and
good faith judgment of such managing underwriter, the Company
will include in such Registration, to the extent of the number of
securities which the Company is so advised can be sold in such
offering, (i) first, such number of Warrant Shares requested to
be registered by the Holders thereof pursuant to this Section
8.2, and (ii) second, all other securities of the Company
proposed to be included in such Registration, in accordance with
the priorities, if any, then existing among the Company and the
holders of such securities.
(c) Priority of Other Registration Rights. The Company
-------------------------------------
shall not, without the prior written consent of the Holder, grant
to any Person the right to request or require the Company to
register any share of Common Stock or Convertible Securities, or
any rights to subscribe for or to purchase, or any options for
the purchase of, Common Stock or Convertible Securities, which
rights would be senior to the rights of the Holders to request
registration hereunder pursuant to Sections 8.1 or 8.2.
(e) Demand Underwritten Offerings. Unless otherwise
-----------------------------
directed by the Holder of Warrant Shares pursuant to a
Registration requested under this Section 8.2, the Company shall
use reasonable efforts to enter into a firm commitment
underwriting agreement with such underwriters for such offering,
such agreement to be reasonably satisfactory in substance and
form to each such Holder and the underwriters and to contain such
representations and warranties by the Company and such other
terms as are generally prevailing in such agreements, including,
without limitation, conditions precedent to the closing
contemplated by such agreement and customary indemnities. Except
as set forth in this Section 8.2(e), any such Holder of Warrant
Shares shall not be required to make any representations or
warranties to or agreements with the Company or the underwriters
other than representations, warranties, customary indemnities and
agreements regarding such Holder, such Holder's Warrant Shares
and such Holder's intended method of distribution and any other
representation required by law.
Section 9. Termination of Restrictions. The
---------------------------
restrictions imposed by Section 2.2 hereof upon the
transferability of any Warrant Shares shall cease and terminate
as to any Warrant Shares (a) when such securities shall have been
effectively registered under the Act and disposed of in
accordance with the registration statement covering such
securities, or (b) when, in the opinions of both counsel for the
Holder and counsel for the Company, such restrictions are no
longer required in order to insure compliance with the Act.
Whenever such restrictions shall terminate as to the Warrant or
any Warrant Shares, the Holder shall be entitled to receive from
the Company, without expense (other than transfer taxes, if any),
new certificates representing the Warrant or Warrant Shares not
bearing a legend as to restrictions on transfer.
Section 10. No Rights as a Shareholder; Notice to Holder.
--------------------------------------------
Nothing contained in this Warrant shall be construed as
conferring upon the Holder or its transferees the right to vote
or to consent or to receive notice as a shareholder in respect of
any meeting of shareholders for the election of directors of the
Company or any other matter, or any rights whatsoever as a
shareholder of the Company.
Section 11. Representations and Warranties. The Company
------------------------------
hereby represents and warrants to Holder as follows:
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware and has full power and lawful authority to carry on
its business;
(b) The Company has the full power to execute, deliver
and issue this Warrant and to carry out its obligations
hereunder, the execution, delivery and issuance of this Warrant,
and delivery and issuance of Warrant Shares upon exercise of this
Warrant, have been duly and validly authorized by the Company, no
other acts or proceedings on the part of the Company are
necessary to authorize this Warrant or the Warrant Shares; and
this Warrant constitutes a valid and legally binding obligation
of the Company, enforceable against the Company in accordance
with its terms;
(c) The Warrant Shares will, when issued pursuant to
this Warrant, be duly authorized and validly issued, fully paid
and nonassessable, and not subject to preemptive rights;
(d) No consent or approval by, or filing with, any
governmental authority is required in connection with the
execution, delivery and issuance by the Company of this Warrant
or the delivery and issuance of the Warrant Shares other than
such as have been obtained or made (or as may be required in the
future under applicable securities laws in connection with the
transfer or exercise of this Warrant or the resale of the Warrant
Shares); and
(e) The execution, delivery, issuance of this Warrant
and the delivery and issuance of the Warrant Shares will not
result in the violation of any term or provision of the charter
or bylaws of the Company, or any loan agreement, indentured note
or other instrument, or decree, order, statute, rule or
regulation applicable to the Company (subject, however, to
compliance with applicable securities laws in connection with the
transfer or exercise of this Warrant or the resale of the Warrant
Shares).
Section 12. Notices. Any notice pursuant to this Warrant
-------
by the Company or by the Holder shall be in writing and shall be
mailed by certified mail, return receipt requested, (a) to the
Company, at its principal office at (b) to the Holder, to Heller
Financial, Inc., 150 East 42nd Street, New York, New York 10017.
Either party may from time to time change the address to which
notices to it are to be delivered or mailed under this Warrant by
notice in writing to the other party.
Section 13. Applicable Law. This Warrant shall be
--------------
governed by and construed in accordance with the laws of the
State of New York, without giving effect to principles of
conflict of laws.
Section 14. Captions. The captions of the Sections and
--------
subsections of this Warrant have been inserted for convenience
only and shall have no substantive effect.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this
Warrant this 30th day of December, 1997.
LUND INTERNATIONAL HOLDINGS, INC.
By: /s/ Ira D. Kleinman
---------------------------------------
Name: Ira D. Kleinman
Title: Chairman of the Board of Directors
Attest: /s/ Kathy Smith
------------------------
Secretary
<PAGE>
LUND INTERNATIONAL HOLDINGS, INC.
PURCHASE FORM
The undersigned irrevocably elects to exercise the right of
purchase under the enclosed Warrant, all of the Warrant Shares
provided for in the enclosed Warrant, and requires that
certificates for such shares be issued in the name of:
_________________________________________________________________
(Please Print Name and Social Security No.)
_________________________________________________________________
(Street Address)
_________________________________________________________________
(City, State and Zip Code)
Dated: _______________, 199_
Name of Warrantholder or Assignee: ______________________________
(Please Print)
Address:_________________________________________________________
_________________________________________________________________
Signature:_______________________________________________________
<PAGE>
ASSIGNMENT
(To be signed only upon assignment of Warrant)
FOR VALUE RECEIVED, the undersigned sells, assigns and transfers
unto
_________________________________________________________________
(Name of Assignee Must be Printed or Typewritten)
_________________________________________________________________
(Street Address)
_________________________________________________________________
(City, State and Zip Code)
the within Warrant, irrevocably constituting and appointing
_________________________________________________________________
Attorney to transfer such Warrant on the books of the Company,
with full power of substitution in the premises.
Dated: ______________, 199__
___________________________________
Signature of Registered Holder
Exhibit 9
TENDER OFFER NOTE
-----------------
$42,000,000.00 New York, New York
December 30, 1997
FOR VALUE RECEIVED, the undersigned, ZEPHYROS
ACQUISITION CORPORATION, as Borrower ("Borrower"), hereby
unconditionally promises to pay to the order of HELLER
FINANCIAL, INC., a Delaware corporation ("Lender"), at the
office of Agent (as defined in the Loan Agreement referred to
below) at 500 West Monroe Street, Chicago, Illinois 60661, or at
such other place as the holder of this Tender Offer Note may from
time to time designate in writing, in lawful money of the United
States of America and in immediately available funds, the
principal sum of FORTY-TWO MILLION DOLLARS AND NO CENTS
($42,000,000.00), or, if less, the aggregate unpaid principal
amount of all advances made to Borrower by Lenders under the
Tender Offer Loan Agreement pursuant to subsection 2.1(A) of the
----------------
Loan Agreement (as hereinafter defined), at such times as are
specified in and in accordance with the provisions of the Loan
Agreement.
This Tender Offer Note is the Tender Offer Note
referred to in, was executed and delivered pursuant to, and
evidences obligations of Borrower under, that certain Tender
Offer Loan Agreement dated as of December 30, 1997, by and among
Borrower, Lund International Holdings, Inc., the lending
institutions listed therein and Agent (as the same may be
amended, restated, modified or supplemented and in effect from
time to time, the "Loan Agreement"), to which reference is hereby
made for a statement of the terms and conditions under which the
loan evidenced hereby is made and is to be repaid and for a
statement of Agent's and Lenders' remedies upon the occurrence of
an Event of Default (as defined therein). The Loan Agreement is
incorporated herein by reference in its entirety. Capitalized
terms used but not otherwise defined herein are used in this
Tender Offer Note as defined in the Loan Agreement.
Borrower further promises to pay interest on the unpaid
principal amount of each advance from time to time outstanding
under the Tender Offer Loan from the date of such advance until
payment in full thereof at the rate from time to time applicable
to the Tender Offer Loan as determined in accordance with the
Loan Agreement; provided, that upon the occurrence and during the
--------
continuance of an Event of Default, as provided in the Loan
Agreement, Borrower shall pay to the Agent, for the benefit of
Lenders, interest on the principal balance of the Tender Offer
Loan from time to time outstanding at the rate of interest
applicable upon the occurrence and during the continuance of an
Event of Default as determined in accordance with the Loan
Agreement.
Interest charges shall be computed as set forth in the
Loan Agreement and shall be payable at the rates, at the times
and from the dates specified in the Loan Agreement, on the date
of any prepayment hereof, at maturity, whether due by
acceleration or otherwise, and as otherwise provided in the Loan
Agreement. From and after the date when the principal balance
hereof becomes due and payable, whether by acceleration or
otherwise, interest hereon shall be payable on demand.
This Tender Offer Note is secured pursuant to the Loan
Agreement and the Loan Documents referred to therein, and
reference is made thereto for a statement of the terms and
conditions of such security.
If a payment hereunder becomes due and payable
hereunder other than on a Business Day, the due date thereof
shall be extended to the next succeeding Business Day, and
interest shall be payable thereon during such extension at the
applicable rate specified in the Loan Agreement. Credit for any
payments made by Borrower shall, for the purpose of computing
interest earned by Lenders, be given in accordance with the Loan
Agreement. In no contingency or event whatsoever shall interest
charged hereunder, however such interest may be characterized or
computed, exceed the highest rate permissible under any law which
a court of competent jurisdiction shall, in a final
determination, deem applicable hereto. In the event that such a
court determines that Lenders have received interest hereunder in
excess of the highest rate applicable hereto, such excess shall
be applied in accordance with the terms of the Loan Agreement.
Agent shall have the continuing exclusive right to
apply and to reapply any and all payments hereunder against the
Obligations in such manner, consistent with the terms of the Loan
Agreement, as Agent deems advisable.
Borrower hereby waives demand, presentment and protest
and notice of demand, presentment, protest and nonpayment.
Borrower also waives all rights to notice and hearing of any kind
upon the occurrence and continuance of an Event of Default prior
to the exercise by Lenders, or Agent on behalf of Lenders, of its
right to repossess the Collateral without judicial process or to
replevy, attach or levy upon the Collateral without notice or
hearing.
In addition to, and not in limitation of, the foregoing
and the provisions of the Loan Agreement, the undersigned further
agrees, subject only to any limitation imposed by applicable law,
to pay all expenses, including attorneys' fees and legal
expenses, incurred by the holder of this Tender Offer Note in
endeavoring to collect any amounts payable hereunder which are
not paid when due, whether by acceleration or otherwise.
THIS TENDER OFFER NOTE, INCLUDING PROVISIONS REGARDING
THE PAYMENT OF INTEREST, SHALL BE DEEMED TO HAVE BEEN DELIVERED
AND MADE AT NEW YORK, NEW YORK AND SHALL BE INTERPRETED AND THE
RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN
ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW
PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK.
Whenever possible each provision of this Tender Offer
Note shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Tender
Offer Note shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Tender Offer
Note. Whenever in this Tender Offer Note reference is made to
Agent, Lenders or Borrower, such reference shall be deemed to
include, as applicable, a reference to their respective permitted
successors and assigns and, in the case of any Lender, any
financial institutions to which it has sold or assigned all or
any part of its commitment to make the Tender Offer Loan as
permitted under the Loan Agreement. The provisions of this
Tender Offer Note shall be binding upon and shall inure to the
benefit of such permitted successors and assigns. Borrower's
successors and assigns shall include, without limitation, a
receiver, trustee or debtor in possession of or for Borrower.
ZEPHYROS ACQUISITION CORPORATION
By: /s/ Ira D. Kleinman
---------------------------------------
Name: Ira D. Kleinman
Title: Chairman of the Board of Directors
Exhibit 10
Contacts:
FOR LUND INTERNATIONAL HOLDINGS FOR HARVEST PARTNERS
William J. McMahon/Kathy Smith George Sard/Anton Nicholas/
612/576-4200 Brandy Bergman
Sard Verbinnen & Co.
212/687-8080
LUND INTERNATIONAL COMPLETES TENDER OFFER
FOR DEFLECTA-SHIELD
ANOKA, MINNESOTA, DECEMBER 30, 1997 - Lund International
Holdings, Inc. (NASDAQ: LUND), a leading manufacturer of
appearance accessories for light trucks, today announced that its
cash tender offer for all outstanding common stock of Deflecta-
Shield Corporation (NASDAQ: TRUX) at $16 per share expired at
12:00 midnight (EST) Monday, December 29, 1997. Lund, through a
wholly-owned subsidiary, has accepted for payment all shares
tendered.
Based on information provided by the Depositary for the tender
offer, a total of approximately 4,742,411 shares of Common Stock
were tendered, which include 34,309 shares delivered pursuant to
the guarantee delivery procedures. This represents approximately
98.8% of the outstanding shares of Deflecta-Shield which have
been validly tendered and not withdrawn pursuant to Lund's
previously announced tender offer.
In the Second step of the acquisition, Deflecta-Shield will
become a wholly-owned subsidiary of Lund. Because at least 90%
of Deflecta-Shield's outstanding shares were tendered, the merger
may be effected without a meeting of Deflecta-Shield will be
converted into and represent the right to receive $16 in cash,
without interest.
Based in Anoka, Minnesota, Lund International Holdings is a
leading designer, manufacturer and marketer of a broad line of
fiberglass and plastic appearance accessories for new and used
light trucks, including pick-up trucks, sport utility vehicles,
minivans and other vans.
With annual sales of $72 million, Deflecta-Shield Corporation
manufactures plastic, fiberglass and aluminum appearance
accessories for light trucks and heavy trucks. Based in
Indianola, Iowa, the company also supplies suspension systems and
shock absorbers for light trucks.
