<PAGE>
==============================================================================
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): November 7, 1996
JORDAN INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Illinois 33-24317 36-3598114
(State or other jurisdiction (Commission File number) (I.R.S. Employer)
of incorporation) Identification No.)
ArborLake Centre, Suite 550
1751 Lake Cook Road, Deerfield, IL 60015
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including are code: (847) 945-5591
Not Applicable
(Former name or former address, if changed since last report)
==============================================================================
<PAGE>
INFORMATION TO BE INCLUDED IN REPORT
Item 1. Changes in Control of Registrant.
Not Applicable.
Item 2. Acquisition or Disposition of Assets.
On November 7, 1996, Jordan Industries, Inc. (the "Company"), through
its majority-owned subsidiaries Motors and Gears, Inc. ("Motors") and
Motors and Gears Industries, Inc. ("Industries") and its newly formed
majority-owned subsidiaries, The New Imperial Electric Company, The New
Scott Motors Company and New Gear Research, Inc. (collectively, along with
Motors and Industries, the "Purchasers") acquired the businesses and net
assets of The Imperial Electric Company, The Scott Motors Company and Gear
Research, Inc. (collectively, the "Sellers"), manufacturers of
fractional/integral horsepower and gear and gearbox products, from JII,
Inc. ("JII"). Each of the Sellers and JII is a wholly-owned subsidiary of
the Company. The acquisition was made pursuant to an Agreement for
Purchase and Sale of Assets (the "Asset Purchase Agreement"), by and among
the Purchasers and the Sellers. The Purchasers presently intend to
continue using the acquired assets in the same manner as was used by the
Sellers immediately prior to the acquisition. Each of the Purchasers is a
"non-restricted" subsidiary while each of the Sellers and JII is a
"restricted" subsidiary for purposes of the Company's indentures relating
to its Senior Notes and Senior Subordinated Discount Debentures due 2003
and 2005, respectively (collectively, the "Jordan Indentures"). Motors
indirectly owns Merkle-Korff Industries, Inc. ("Merkle-Korff") and BCM
Holdings, Inc. ("BCM") which are also "non-restricted" subsidiaries under
the Jordan Indentures.
In consideration for the assets purchased pursuant to the Asset
Purchase Agreement, at the closing the Company, through the Purchasers: (i)
paid the Sellers $75.0 million in cash and (ii) assumed and/or refinanced
approximately $5.1 million in liabilities. The Company further agreed,
pursuant to a Contingent Earnout Agreement (the "Contingent Earnout
Agreement"), and through the Purchasers, to pay to the Sellers 50% of the
cumulative EBITDA (as defined in the Contingent Earnout Agreement) above
$50 million of the Purchasers earned during the five fiscal years ended
December 31, 1996 through December 31, 2000. Payments, if any, under the
Contingent Earnout Agreement will be determined and made on April 30, 2001.
In order to determine the amount of consideration paid under the Asset
Purchase Agreement, the Company compared the financial aspects of the
Sellers to other Company acquisitions and received and reviewed a fairness
opinion by Duff & Phelps.
The cash portion of the consideration paid at closing was raised by
the private placement by Motors of $170.0 million of its 10 3/4% Series A
Senior Notes due 2006 (the "Series A Notes"), as more fully described in
Item 5 hereof.
Descriptions of the Asset Purchase Agreement and the Contingent
Earnout Agreement and the transactions contemplated thereunder do not
purport to be complete. Included as exhibits hereto are the Asset Purchase
Agreement and the Contingent Earnout Agreement and the documents relating
thereto and, as such, the foregoing description is qualified in its
entirety by reference to and incorporation of the terms and provisions
contained in those exhibits.
Item 3. Bankruptcy or Receivership.
Not Applicable.
Item 4. Changes in Registrant's Certifying Accountant.
Not Applicable.
Item 5. Other Events.
On November 7, 1996, Motors completed an offering of Series A Notes
pursuant to a Purchase Agreement (the "Note Purchase Agreement") in a
private placement to certain initial purchasers who, in turn, offered the
Series A Notes to qualified institutional buyers and certain accredited
investors. In addition, pursuant to a Registration Rights Agreement (the
"Registration Rights Agreement"), Motors agreed to register its 10 3/4%
Series B Senior Notes due 2006 (the "Series B Notes" and, together with the
Series A Notes, the "Senior Notes") under the Securities Act of 1933, as
amended, and to offer the Series B Notes in exchange for the outstanding
Series A Notes. The terms of the Senior Notes are governed by an Indenture
(the "Indenture"), between Motors and Fleet National Bank, as trustee.
Motors used the proceeds from the issuance of the Series A Notes to:
(i) fund the cash portion of the purchase price payable by the Purchasers
in connection with the acquisition of the businesses and net assets of the
Sellers from JII and (ii) repay certain indebtedness under Merkle-Korff's
existing credit agreement. In connection with the issuance of the Series A
Notes, Merkle-Korff refinanced its existing credit facility and Industries,
along with Merkle-Korff, BCM and the Purchasers (other than Motors) entered
into a new revolving credit facility (the "Credit Agreement") with Bankers
Trust Company, which provides for revolving loans of up to $75.0 million.
The Company applied the net proceeds received from Motors to repay
senior indebtedness.
Descriptions of the Note Purchase Agreement, the Registration Rights
Agreement, the Indenture and the Credit Agreement and the transactions
contemplated thereunder do not purport to be complete. Included as
exhibits hereto are the Note Purchase Agreement, the Registration Rights
Agreement, the Indenture and the Credit Agreement and the documents
relating thereto and, as such, the foregoing description is qualified in
its entirety by reference to and incorporation of the terms and provisions
contained in those exhibits.
Item 6. Resignations of Registrant's Directors.
Not Applicable.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
The response to this Item is submitted as a separate Exhibit Index
accompanying this filing and is incorporated herein by reference.
Item 8. Change in Fiscal Year.
Not Applicable.
Item 9. Sales of Equity Securities Pursuant to Regulation S.
Not Applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
JORDAN INDUSTRIES, INC.
Date: November 19, 1996 By: /s/ Thomas C. Spielberger
---------------------------------
Name: Thomas C. Spielberger
Title: Vice President, Controller and
Principal Accounting Officer
<PAGE>
EXHIBIT INDEX
Exhibit Sequential
Number Description Page No.
- ------- ----------- ----------
1.1 Purchase Agreement, dated as of November 1,
1996, by and among Motors and Gears, Inc.,
Donaldson, Lufkin & Jenrette Securities
Corporation, BT Securities Corporation and
Jefferies & Company, Inc. *
2.1 Agreement for Purchase and Sale of Assets, dated
as of November 7, 1996, by and among Motors and
Gears, Inc., Motors and Gears Industries, Inc.,
The New Imperial Electric Company, The New
Scott Motors Company, New Gear Research, Inc.,
The Imperial Electric Company, The Scott Motors
Company and Gear Research, Inc. *
2.2. Contingent Earnout Agreement, dated as of November 7,
1996, by and among Motors and Gears, Inc., Motors and
Gears Industries, Inc., The New Imperial Electric
Company, The New Scott Motors Company, New Gear
Research, Inc., The Imperial Electric Company,
The Scott Motors Company and Gear Research, Inc.
10.1 Registration Rights Agreement, dated as of November 7,
1996, by and among Motors and Gears, Inc., Donaldson,
Lufkin & Jenrette Securities Corporation, BT
Securities Corporation and Jefferies & Company, Inc
10.2 Indenture, dated as of November 7, 1996, between
Motors and Gears, Inc. and Fleet National Bank,
as Trustee *
10.3 Credit Agreement, dated as of November 7, 1996,
by and among Motors and Gears Industries, Inc., the
other lenders party thereto and Bankers Trust
Company, as agent *
10.4 Security Agreement, dated as of November 7, 1996,
by and among Motors and Gears Industries, Inc.,
Merkle-Korff Industries, Inc., BCM Holdings, Inc.,
The New Imperial Electric Company, The New
Scott Motors Company, New Gear Research, Inc. and
Bankers Trust Company, as agent *
10.5 Stock Pledge Agreement, dated as of November 7,
1996, by and among Motors and Gears Industries,
Inc., Merkle-Korff Industries, Inc., BCM Holdings,
Inc., The New Imperial Electric Company, The
New Scott Motors Company, New Gear Research, Inc.
and Bankers Trust Company, as agent *
10.6 Revolving Note in the aggregate principal amount of
$75,000,000
10.7 TJC Management Consulting Agreement, dated
as of November 7, 1996, by and among Motors
and Gears Holdings, Inc., Motors and Gears, Inc.,
Motors and Gears Industries, Inc., Merkle-Korff
Industries, Inc., BCM Holdings, Inc., The New
Imperial Electric Company, The New Scott Motors
Company, New Gear Research, Inc. and TJC
Management Corporation
10.8 JII Management Services Agreement, dated as of
November 7, 1996, by and among Motors and Gears
Holdings, Inc., Motors and Gears, Inc., Motors
and Gears Industries, Inc., Merkle-Korff Industries,
Inc., BCM Holdings, Inc., The New Imperial Electric
Company, The New Scott Motors Company, New Gear
Research, Inc. and the Company
99 Press release issued by the Company
__________________
* The schedules to this agreement have not been filed pursuant to
Item 601(b)(2) of Regulation S-K. Such schedules will be filed
supplementally upon the request of the Securities and Exchange
Commission.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
JORDAN INDUSTRIES, INC.
Date: November 19, 1996 By: /s/ Thomas C. Spielberger
--------------------------------
Name: Thomas C. Spielberger
Title: Vice President, Controller and
Principal Accounting Officer
<PAGE>
EXHIBIT 1.1
==============================================================================
MOTORS AND GEARS, INC.
________________________________________
$170,000,000
10 % SERIES A SENIOR NOTES DUE 2006
________________________________________
___________________
PURCHASE AGREEMENT
DATED AS OF NOVEMBER 1, 1996
___________________
Donaldson, Lufkin & Jenrette BT Securities Jefferies & Company, Inc.
Securities Corporation Corporation
==============================================================================
<PAGE>
November 1, 1996
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BT SECURITIES CORPORATION
JEFFERIES & COMPANY, INC.
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
140 Broadway
New York, New York 10005
Dear Sirs:
Motors and Gears, Inc., a Delaware corporation (the "COMPANY"),
proposes to issue and sell an aggregate of $170,000,000 in principal amount
of 10 % Series A Senior Notes due 2006 (the "Series A Senior Notes") of the
Company, to Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), BT
Securities Corporation ("BT") and Jefferies & Company, Inc. ("JEFFERIES"
and, together with DLJ and BT, the "INITIAL PURCHASERS"). The Series A
Senior Notes will be issued pursuant to an indenture (the "INDENTURE")
among the Company and Fleet National Bank as trustee (the "TRUSTEE").
The Senior Notes are being issued and sold in connection with the
acquisition (the "ACQUISITION") by the Company, through a newly-formed
indirect subsidiary of the Company ("ACQUISITION SUB"), of the business and
net assets of Imperial Electric Company ("IMPERIAL"), Scott Motor Company
("SCOTT") and Gear Research, Inc. ("GEAR" and, together with Imperial and
Scott, the "ACQUIRED ENTITIES"). The Acquisition will close on the Closing
Date (as defined below) pursuant to an agreement for the purchase and sale
of assets (the "Acquisition Agreement"), to be dated as of November 7,
1996.
The proceeds to the Company from the sale to the Initial Purchasers
of the Senior Notes (the "PROCEEDS") and borrowings (the "BORROWINGS")
under a revolving credit agreement (the "NEW CREDIT AGREEMENT"), to be
dated as of November 7, 1996, by and among Motors and Gears Industries,
Inc., a wholly owned subsidiary of the Company, Bankers Trust Company
("BTC"), as agent, and the other lenders thereunder will be used to fund
the Acquisition. In addition, the Company will use the Proceeds and the
Borrowings to repay, in full, all outstanding indebtedness under the Credit
Agreement, dated September 22, 1995, by and among Merkle-Korff Industries,
Inc., an indirect wholly owned subsidiary of the Company, BTC, as agent,
and the other lenders thereunder (the "OLD CREDIT AGREEMENT").
1. ISSUANCE OF SECURITIES. The Series A Senior Notes will be
offered and sold to the Initial Purchasers pursuant to an exemption from
the registration requirements under the Securities Act of 1933, as amended
(the "ACT"). The Company has prepared a preliminary offering memorandum,
dated October 16, 1996 (the "PRELIMINARY OFFERING MEMORANDUM"), and a final
offering memorandum, dated November 1, 1996 (the "OFFERING MEMORANDUM" and,
together with the Preliminary Offering Memorandum, the "OFFERING
DOCUMENTS"), relating to the Company and the Series A Senior Notes.
Upon original issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the Act, the Series A
Senior Notes (and all securities issued in exchange therefor or in
substitution thereof) shall bear the following legend:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF
THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND
THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY
IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION
PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH
SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)
(A) INSIDE THE UNITED STATES TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, (B) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144 UNDER THE SECURITIES ACT, (C) OUTSIDE THE UNITED STATES TO A
FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904
UNDER THE SECURITIES ACT OR (D) IN ACCORDANCE WITH ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED
UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE
COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE
SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE."
2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, (i) the Company agrees to issue and sell the
Series A Senior Notes to the Initial Purchasers, and (ii) each Initial
Purchaser agrees, severally and not jointly, to purchase Series A Senior
Notes from the Company in the principal amount set forth opposite the name
of such Initial Purchaser in Schedule I at a price of 97% of the principal
amount of the Series A Senior Notes (the "PURCHASE PRICE").
3. TERM OF OFFERING. The Initial Purchasers have advised the
Company that the Initial Purchasers will make offers (the "EXEMPT RESALES")
of the Series A Senior Notes purchased by the Initial Purchasers hereunder
on the terms set forth in the Offering Memorandum, as amended or
supplemented, solely to (i) persons (each, a "144A PURCHASER") whom the
Initial Purchasers reasonably believe to be "qualified institutional
buyers" as defined in Rule 144A under the Act ("QIBs"), (ii) a limited
number of other institutional "accredited investors," as defined in Rule
501(a) (1), (2), (3) and (7) under the Act, that make certain
representations and agreements to the Company (each, an "ACCREDITED
INSTITUTION") and (iii) to non-U.S. persons outside the United States in
reliance upon Regulation S under the Securities Act (such persons specified
in clauses (i), (ii) and (iii) being referred to herein as the "ELIGIBLE
PURCHASERS"). The Initial Purchasers will offer the Series A Senior Notes
to Eligible Purchasers initially at a price equal to 100% of the principal
amount thereof. Such price may be changed at any time without notice.
Holders (including subsequent transferees) of the Series A Senior
Notes will have the registration rights set forth in the registration
rights agreement (the "REGISTRATION RIGHTS AGREEMENT"), to be dated the
Closing Date (as defined below), in substantially the form of Exhibit A
hereto, for so long as such Series A Senior Notes constitute "TRANSFER
RESTRICTED SECURITIES" (as defined in the Registration Rights Agreement).
Pursuant to the Registration Rights Agreement, the Company will agree to
file with the Securities and Exchange Commission (the "COMMISSION") under
the circumstances set forth therein, (i) a registration statement under the
Act (the "EXCHANGE OFFER REGISTRATION STATEMENT") relating to (A) the
Company's 10 % Series B Senior Notes due 2006 (the "SERIES B SENIOR NOTES"
and, together with the Series A Senior Notes, the "SENIOR NOTES") to be
offered in exchange for the Series A Senior Notes, (such offer to exchange
being referred to as the "REGISTERED EXCHANGE OFFER") and/or (ii) a shelf
registration statement pursuant to Rule 415 under the Act (the "SHELF
REGISTRATION STATEMENT" and together with the Exchange Offer Registration
Statement, the "REGISTRATION STATEMENTS") relating to the resale by certain
holders of the Series A Senior Notes, and to use their best efforts to
cause such Registration Statements to be declared effective. This
Agreement, the Indenture and the Registration Rights Agreement are
hereinafter referred to collectively as the "OPERATIVE DOCUMENTS."
4. DELIVERY AND PAYMENT. Delivery to the Initial Purchasers by the
Company of, and payment by the Initial Purchasers for, the Series A Senior
Notes shall be made at 10:00 A.M., New York City time, on November 7, 1996
(the "CLOSING DATE") following the date of the initial offering (or such
other date as the Company and the Initial Purchasers may agree), at the
offices of Mayer, Brown & Platt, 1675 Broadway, New York, New York 10019.
One or more Series A Senior Notes in definitive form, registered in
the name of Cede & Co., as nominee of the Depository Trust Company ("DTC"),
or such other names as the Initial Purchasers may request upon at least one
business days' notice to the Company, having an aggregate principal amount
corresponding to the aggregate principal amount of Series A Senior Notes
sold pursuant to Exempt Resales to QIBs and to Accredited Institutions,
shall be delivered by the Company to the Initial Purchasers, against
payment by the Initial Purchasers of the purchase price thereof by
certified or official bank check or checks payable in next day funds (prior
payment or deposit of which the Initial Purchasers shall bear no
responsibility for) to the order of the Company or as the Company may
direct. The Master Note in definitive form shall be made available to the
Initial Purchasers for inspection not later than 9:30 a.m. on the business
day immediately preceding the Closing Date.
5. AGREEMENTS OF THE COMPANY. The Company agrees with the Initial
Purchasers:
(a) To advise the Initial Purchasers promptly and, if
requested by the Initial Purchasers, to confirm such advice in
writing, (i) of receipt of any notification with respect to the
issuance by any state securities commission of any stop order
suspending the qualification or exemption from qualification of any
of the Series A Senior Notes for offering or sale in any jurisdiction
designated by the Initial Purchasers pursuant to Section 5(f), or the
initiation of any proceeding for such purpose by any state securities
commission or other regulatory authority, and (ii) of the happening
of any event that makes any statement of a material fact made in the
Offering Documents (or any amendment or supplement thereto) untrue or
that requires the making of any additions to or changes in the
Offering Documents (or any amendment or supplement thereto) in order
to make the statements therein, in the light of the circumstances in
which they are made, not misleading. The Company shall use its best
efforts to prevent the issuance of any stop order or order suspending
the qualification or exemption from qualification of the Series A
Senior Notes under any state securities or Blue Sky laws, and, if at
any time any state securities commission or other regulatory
authority shall issue any stop order or order suspending the
qualification or exemption from qualification of any of the Series A
Senior Notes under any state securities or Blue Sky laws, the Company
shall use its best efforts to obtain the withdrawal or lifting of
such order at the earliest possible time.
(b) Subject to paragraph (e) below, to furnish to the Initial
Purchasers, without charge, as many copies of the Offering Documents,
and any amendments or supplements thereto, as the Initial Purchasers
may reasonably request. The Company consents to the use of the
Offering Documents, and any amendments or supplements thereto, by the
Initial Purchasers in connection with Exempt Resales.
(c) Not to amend or supplement the Offering Memorandum,
whether before or after the Closing Date, unless (i) the Initial
Purchasers have been previously advised thereof, and (ii) the Initial
Purchasers have not reasonably objected thereto (unless in the
opinion of counsel to the Company such amendment or supplement is
necessary, in the judgment of counsel to the Company, to make the
statements made in the Offering Memorandum not misleading); and to
prepare, promptly upon the Initial Purchasers' request, any amendment
or supplement to the Offering Memorandum that the Initial Purchasers
deem necessary or advisable in connection with Exempt Resales (except
to the extent any such amendment or supplement requested would, in
the judgment of counsel to the Company, render the statements made in
the Offering Memorandum, as proposed to be amended or supplemented,
misleading).
(d) Subject to paragraph (e) below, if, after the date hereof
and prior to the completion of Exempt Resales of the Series A Senior
Notes by the Initial Purchasers, any event shall occur as a result of
which it becomes necessary to amend or supplement the Offering
Memorandum to comply with any law or to make the statements therein,
in the light of the circumstances at the time that the Offering
Memorandum is delivered to an Eligible Purchaser which is a
prospective purchaser, not misleading, to promptly (i) prepare an
appropriate amendment or supplement to the Offering Memorandum so
that the statements in the Offering Memorandum, as so amended or
supplemented, will comply with all applicable laws and will not, in
the light of the circumstances at the time it is so delivered, be
misleading, and (ii) furnish each Initial Purchaser with such number
of copies of the Offering Memorandum, as amended or supplemented, as
such Initial Purchaser may reasonably request.
(e) Prior to the earlier of the consummation of the Exchange
Offer or the effectiveness of an applicable shelf registration
statement if, in the reasonable judgment of the Initial Purchasers,
the Initial Purchaser or any of their affiliates (as such term is
defined in the rules and regulations under the Securities Act) are
required to deliver an offering memorandum in connection with sales
of, or market-making activities with respect to, the Senior Notes,
(A) to periodically amend or supplement the Offering Memorandum so
that the information contained in the Offering Memorandum complies
with the requirements of Rule 144A of the Securities Act, (B) to
amend or supplement the Offering Memorandum when necessary to reflect
any material changes in the information provided therein so that the
Offering Memorandum will not contain any untrue statement of a
material fact or omit to state any material fact necessary in order
to make the statements therein, in light of the circumstances
existing as of the date the Offering Memorandum is so delivered, not
misleading and (C) to provide the Initial Purchasers with copies of
each such amended or supplemented Offering Memorandum, as the Initial
Purchasers may reasonably request.
Following the consummation of the Exchange Offer or the
effectiveness of an applicable shelf registration statement and for
so long as the Senior Notes are outstanding if, in the reasonable
judgment of the Initial Purchasers, the Initial Purchasers or any of
their affiliates (as such term is defined in the rules and
regulations under the Securities Act) are required to deliver a
prospectus in connection with sales of, or market-making activities
with respect to, such securities, (A) to periodically amend the
applicable registration statement so that the information contained
therein complies with the requirements of Section 10(a) of the
Securities Act, (B) to amend the applicable registration statement or
supplement the related prospectus or the documents incorporated
therein when necessary to reflect any material changes in the
information provided therein so that the registration statement and
the prospectus will not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make
the statements therein, in light of the circumstances existing as of
the date the prospectus is so delivered, not misleading and (C) to
provide the Initial Purchasers with copies of each amendment or
supplement filed and such other documents as the Initial Purchasers
may reasonably request.
The Company hereby expressly acknowledges that the
indemnification and contribution provisions of Section 8 hereof are
specifically applicable and relate to each offering memorandum,
registration statement, prospectus, amendment or supplement referred
to in this Section 5(e).
(f) To (i) cooperate with the Initial Purchasers and counsel
for the Initial Purchasers in connection with the qualification of
the Series A Senior Notes for offer and sale by the Initial
Purchasers under the state securities or Blue Sky laws of such
jurisdictions as the Initial Purchasers may request, (ii) continue
such qualification in effect so long as required for Exempt Resales
of the Series A Senior Notes and (iii) file such consents to service
of process or other documents as may be necessary in order to effect
such qualification; provided that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is
not now so qualified, or take any action which would subject it to
general service of process in any jurisdiction where it is not now so
subject.
(g) So long as any of the Senior Notes are outstanding, to
file reports pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and, during
the period of three years following the date of this Agreement, to
deliver to the Initial Purchasers, promptly upon their becoming
available, (i) copies of all current, regular and periodic reports
filed by the Company with any securities exchange or with the
Commission or any governmental authority succeeding to any of the
Commission's functions, and (ii) copies of each report or other
publicly available information of the Company mailed to the holders
of Senior Notes and such other publicly available information
concerning the Company and its subsidiaries as the Initial Purchasers
may request.
(h) To use the Proceeds from the sale of the Series A Senior
Notes in the manner specified in the Offering Documents (and any
amendments or supplements thereto) under the caption "Use of
Proceeds."
(i) Not to voluntarily claim, and to resist actively any
attempts to claim, the benefit of any usury laws against the holders
of the Senior Notes.
(j) Except as otherwise agreed to by the parties hereto, to
pay all costs, expenses, fees and taxes incident to,
(1) the preparation, printing, filing and distribution of
the Offering Documents (including financial statements and
exhibits) and all amendments and supplements to any of them,
(2) the printing and delivery of the Operative Documents,
the Series A Senior Notes, the preliminary and supplemental Blue
Sky memoranda and all other agreements, memoranda,
correspondence and other documents printed and delivered in
connection herewith and with the Exempt Resales (including in
each case any disbursements of counsel to the Initial Purchasers
relating to such printing and delivery),
(3) the issuance and delivery by the Company of the
Series A Senior Notes,
(4) the registration or qualification of the Series A
Senior Notes for offer and sale under the securities or Blue Sky
laws of the several states (including in each case the fees and
disbursements of counsel to the Initial Purchasers relating to
such registration or qualification and memoranda relating
thereto),
(5) furnishing such copies of the Offering Documents
(including all documents incorporated by reference therein) and
all amendments and supplements thereto as may be requested for
use in connection with the Exempt Resales,
(6) the rating of the Series A Senior Notes by rating
agencies, if any,
(7) all expenses and listing fees in connection with the
application for quotation of the Series A Senior Notes in the
National Association of Securities Dealers, Inc. Automated
Quotation System - PORTAL ("PORTAL"),
(8) all fees and expenses (including fees and expenses of
counsel) of the Company in connection with approval of the
Series A Senior Notes by DTC for "book-entry" transfer, and
(9) the performance by the Company of its other
obligations under this Agreement.
(k) If this Agreement shall be terminated pursuant to any of
the provisions hereof (otherwise than a default by the Initial
Purchasers) or if for any reason the Company shall be unable or
unwilling to perform their obligations hereunder, the Company shall,
except as otherwise agreed by the parties hereto, reimburse the
Initial Purchasers for the fees and expenses to be paid or reimbursed
pursuant to Section 5(j) above, and reimburse the Initial Purchasers
for all out-of-pocket expenses (including the fees and expenses of
counsel to the Initial Purchasers) reasonably incurred by the Initial
Purchasers in connection with the transactions contemplated by this
Agreement.
(l) Prior to the Closing Date, to furnish to the Initial
Purchasers, as soon as they have been prepared by the Company, a copy
of any consolidated financial statements of the Company for any
period subsequent to the period covered by the financial statements
appearing in the Offering Documents.
(m) Not to distribute prior to the Closing Date any offering
material in connection with the offering and sale of the Series A
Senior Notes other than the Offering Documents.
(n) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the
Act) that would be integrated with the sale of the Series A Senior
Notes in a manner that would require the registration under the Act
of the sale to the Initial Purchasers or the Eligible Purchasers of
Series A Senior Notes.
(o) For so long as any of the Senior Notes remain outstanding
and during any period in which the Company is not subject to Section
13 or 15(d) of the Exchange Act, to make available to any Eligible
Purchaser or beneficial owner of Senior Notes in connection with any
sale thereof and any prospective purchaser of such Senior Notes from
such Eligible Purchaser or beneficial owner, the information required
by Rule 144A(d)(4) under the Act.
(p) To comply with their agreements in the Registration Rights
Agreement, and all agreements set forth in the representation letters
of the Company to DTC relating to the approval of the Series A Senior
Notes by DTC for "book-entry" transfer.
(q) On the Closing Date, to deliver to the Initial Purchasers
true and correct copies of the executed Acquisition Agreement and New
Credit Agreement and all documents and agreements related thereto and
not to enter into any amendment, alteration, modification or waiver
thereto or in the exhibits or schedules thereto that have not been
delivered to the Initial Purchasers.
(r) To use its best efforts to effect the inclusion of the
Series A Senior Notes in PORTAL.
(s) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement
by the Company prior to the Closing Date and to satisfy all
conditions precedent to the delivery of the Series A Senior Notes.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each Initial Purchaser that:
(a) The Offering Documents have been prepared in connection
with the Exempt Resales. The Preliminary Offering Memorandum as of
its date does not, and the Offering Memorandum as of its date does
not and as of the Closing Date will not, and any amendment or
supplement thereto will not, contain any untrue statement of a
material fact or omit to state any material fact necessary in order
to make the statements therein, in light of the circumstances under
which they were made, not misleading, except that the representations
and warranties contained in this paragraph (a) shall not apply to
statements or omissions in the Offering Documents (or any amendment
or supplement thereto) based upon information relating to the Initial
Purchasers furnished to the Company in writing by the Initial
Purchasers expressly for use therein. No stop order preventing the
use of the any of the Offering Documents, or any amendment or
supplement thereto, or any order asserting that any of the
transactions contemplated by this Agreement are subject to the
registration requirements of the Securities Act, have been issued.
(b) The Company and each of its subsidiaries (1) is duly
organized, validly existing and in good standing under the laws of
its respective jurisdiction of incorporation, (2) has full corporate
power and authority to carry on its respective business as it is
currently being conducted and to own, lease and operate its
respective properties, and (3) except as otherwise agreed to by the
parties hereto, is duly qualified and in good standing as a foreign
corporation registered to do business in each jurisdiction in which
the nature of its business or its ownership or leasing of property
requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the condition
(financial or other), business, property, prospects, net worth or
results of operations of the Company and its subsidiaries taken as a
whole (a "MATERIAL ADVERSE EFFECT").
(c) All of the outstanding capital stock of the Company and
each of its subsidiaries has been duly authorized and validly issued,
is fully paid and nonassessable, is not and, as a result of the
Offering or the consummation of the Acquisition pursuant to the
Acquisition Agreement, will not be, subject to preemptive or similar
rights and, except as described in the Offering Memorandum, (i) all
of the Company's subsidiaries' capital stock is owned by the Company,
free and clear of any security interest, claim, lien or encumbrance,
except as described in the Offering Memorandum and (ii) there are no
outstanding rights, warrants or options to acquire, or instruments
convertible into or exchangeable for, any shares of capital stock or
other equity interest in any such subsidiary.
(d) The Company has all necessary corporate power and
authority to enter into and perform its obligations under the
Operative Documents and to issue, sell and deliver the Series A
Senior Notes to the Initial Purchasers.
(e) Neither the Company nor any of its subsidiaries is (1) in
violation of its respective charter or bylaws or (2) in default in
any material respect in the performance of any obligation, agreement
or condition contained in any bond, debenture, note or any other
evidence of indebtedness or in any other agreement, indenture or
instrument material to the conduct of the business of the Company and
its subsidiaries taken as a whole, to which the Company or any of its
subsidiaries is a party or by which it or any of its subsidiaries or
their respective property is bound.
(f) None of (A) the execution, delivery or performance by the
Company of this Agreement, the New Credit Agreement and the other
Operative Documents, (B) the performance by the Company of the
Acquisition Agreement and consummation of the Acquisition pursuant to
the terms of the Acquisition Agreement, (C) the issuance and sale of
the Senior Notes by the Company and (D) the consummation by the
Company of the transactions described in the Offering Memorandum
under the caption "Use of Proceeds," will conflict with or constitute
a breach of any of the terms or provisions of, or a default under, or
result in the imposition of a lien or encumbrance on any properties
of the Company or any of its subsidiaries, or an acceleration of
indebtedness pursuant to, (1) the charter or bylaws of the Company or
any of its subsidiaries, (2) any bond, debenture, note, indenture,
mortgage, deed of trust or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which any of them
or their property is bound, the violation of which would reasonably
be expected to result in a Material Adverse Effect, or (3) any law or
administrative regulation applicable to the Company, any of its
subsidiaries or any of their assets or properties, or any judgment,
order or decree of any court or governmental agency or authority
entered in any proceeding to which the Company or any of its
subsidiaries was or is now a party or to which any of them or their
respective properties may be subject. No consent, approval,
authorization or order of, or filing or registration with, any
regulatory body, administrative agency, or other governmental agency
(except as securities or Blue Sky laws of the various states may
require) that has not been made or obtained is required for (1) the
execution, delivery and performance of the Operative Documents, the
New Credit Agreement and the valid issuance and sale of the Series A
Senior Notes or (2) the performance by the Company of the Acquisition
Agreement and all documents or agreements related thereto and the
transactions contemplated hereby and thereby. No consents or waivers
from any person are required to consummate the transactions
contemplated by the Operative Documents or the Offering Documents,
other than such consents and waivers as have been or will be obtained
prior to the Closing Date or, in the case of the Registration Rights
Agreement and the transactions contemplated thereby, will be obtained
and made) under the Act, the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act") and state securities or Blue Sky laws and
regulations.
(g) This Agreement has been duly authorized and validly
executed by the Company and (assuming the due execution and delivery
thereof by the Initial Purchasers) is a legally valid and binding
obligation of the Company, enforceable against it in accordance with
its terms, except as the enforceability thereof may be (i) subject to
applicable bankruptcy, insolvency, moratorium, reorganization or
similar laws in effect which affect the enforcement of creditors
rights generally, (ii) limited by general principles of equity
(whether considered in a proceeding at law or in equity) and (iii)
limited by securities laws prohibiting or limiting the availability
of, and public policy against, indemnification or contribution.
(h) The Company has duly authorized the Indenture, and when
the Company has duly executed and delivered it (assuming the due
authorization, execution and delivery thereof by the Trustee), the
Indenture will be a legally valid and binding obligation of the
Company, enforceable against it in accordance with its terms, except
as the enforceability thereof may be (i) subject to applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws in
effect which affect the enforcement of creditors rights generally and
(ii) limited by general principles of equity (whether considered in a
proceeding at law or in equity).
(i) The Company has duly authorized the Series A Senior Notes
and, when issued and authenticated in accordance with the terms of
the Indenture and delivered to and paid for by the Initial Purchasers
in accordance with the terms hereof, the Series A Senior Notes will
conform to the description thereof in the Offering Memorandum, and
will be the legally valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms,
except as the enforceability thereof may be (i) subject to applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws in
effect which affect the enforcement of creditors rights generally and
(ii) limited by general principles of equity (whether considered in a
proceeding at law or in equity).
(j) The Company has duly authorized the Series B Senior Notes
and, when issued and authenticated in accordance with the terms of
the Registered Exchange Offer and the Indenture, the Series B Senior
Notes will conform to the description thereof in the applicable
Registration Statement, and will be the legally valid and binding
obligations of the Company, enforceable against the Company in
accordance with their terms, except as the enforceability thereof may
be (i) subject to applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws in effect which affect the enforcement
of creditors rights generally and (ii) limited by general principles
of equity (whether considered in a proceeding at law or in equity).
(k) The Registration Rights Agreement has been duly authorized
and validly executed by the Company and (assuming the due execution
and delivery thereof by the Initial Purchasers) is a legally valid
and binding obligation of the Company, enforceable against it in
accordance with its terms, except as the enforceability thereof may
be (i) subject to applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws in effect which affect the enforcement
of creditors rights generally, (ii) limited by general principles of
equity (whether considered in a proceeding at law or in equity) and
(iii) limited by securities laws prohibiting or limiting the
availability of, and public policy against, indemnification or
contribution.
(l) The Acquisition Agreement has been duly and validly
authorized by Acquisition Sub and is a valid and binding agreement of
Acquisition Sub, enforceable against it in accordance with its terms,
except as enforcement may be (i) subject to applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws in effect
which affect the enforcement of creditors rights generally, (ii)
limited by general principles of equity (whether considered in a
proceeding at law or in equity) and (iii) limited by securities laws
prohibiting or limiting the availability of, and public policy
against, indemnification or contribution.
(m) There is (i) no action, suit or proceeding before or by
any court, arbitrator or governmental agency, body or official,
domestic or foreign, now pending, threatened, or, to the knowledge of
the Company, contemplated to which the Company or any of its
subsidiaries is or may be a party or to which the business or
property of the Company or any of its subsidiaries is subject, (ii)
no statute, rule, regulation or order that has been enacted, adopted
or issued by any governmental agency or, to the best knowledge of any
Company, proposed by any governmental body or (iii) no injunction,
restraining order or order of any nature by a federal or state court
of competent jurisdiction to which the Company or any of its
subsidiaries is or may be subject issued that, in the case of clauses
(i), (ii) and (iii) above, (1) is required to be disclosed in the
Offering Memorandum and that is not so disclosed, (2) might have a
Material Adverse Effect, (3) would interfere with or adversely affect
the issuance of the Series A Senior Notes or (4) in any manner draw
into question the validity of the Operative Documents or the Series A
Senior Notes.
(n) No holder of any security of the Company or any of its
subsidiaries has any right or, by reason of the execution by the
Company of this Agreement, the New Credit Agreement, any other
Operative Document or the Acquisition Agreement or the consummation
of the transactions contemplated hereby or and thereby, have the
right to require registration of any security of the Company.
(o) Neither the Company nor any of its subsidiaries is
involved in any material labor dispute nor, to the knowledge of the
Company or any of its subsidiaries, is any material dispute
threatened which, if such dispute were to occur, could have a
Material Adverse Effect.
(p) Neither the Company nor any of its subsidiaries has
violated any safety or similar law applicable to its business, nor
any federal or state law relating to discrimination in the hiring,
promotion or pay of employees nor any applicable federal or state
wages and hours laws, nor any provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or the rules and
regulations promulgated thereunder, except for such instances of
noncompliance that, either singly or in the aggregate, could not have
a Material Adverse Effect.
(q) Except as set forth in the Offering Memorandum, the
Company, its subsidiaries and the Acquired Entities are in compliance
with all applicable existing federal, state, local and foreign laws
and regulations (collectively, "ENVIRONMENTAL LAWS") relating to
protection of human health or the environment or imposing liability
or standards of conduct concerning any Hazardous Material (as defined
below), except for such instances of noncompliance that, either
singly or in the aggregate, could not have a Material Adverse Effect.
The term "HAZARDOUS MATERIAL" means (i) any "hazardous substance" as
defined by the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, (ii) any "hazardous waste" as
defined by the Resource Conservation and Recovery Act, as amended,
(iii) any petroleum or petroleum product, (iv) any polychlorinated
biphenyl and (v) any pollutant or contaminant or hazardous, dangerous
or toxic chemical, material, waste or substance regulated under or
within the meaning of any other Environmental Law. Except as set
forth in the Offering Memorandum, there is no alleged liability, or,
to the best knowledge and information of the Company, potential
liability (including, without limitation, alleged or potential
liability for investigatory costs, cleanup costs, governmental
response costs, natural resources damages, property damages, personal
injuries, or penalties) of the Company, any of its subsidiaries or
the Acquired Entities arising out of, based on, or resulting from (1)
the presence or release into the environment of any Hazardous
Material at any location currently or previously owned by the
Company, any of its subsidiaries or the Acquired Entities or at any
location currently or previously used or leased by the Company, any
of its subsidiaries or the Acquired Entities, or (2) any violation or
alleged violation of any Environmental Law, except in each case with
respect to clause (1) and (2), alleged or potential liabilities that,
singly or in the aggregate, could not have a Material Adverse Effect.
(r) The Company and each of its subsidiaries owns or possesses
the patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names (collectively,
"INTELLECTUAL PROPERTY") presently employed by it and the Acquired
Entities in connection with the businesses now operated by it and the
Acquired Entities, except where the failure to own or possess such
Intellectual Property could not, either singly or in the aggregate,
have a Material Adverse Effect, and neither the Company nor any of
its subsidiaries has received any notice that its use of any
Intellectual Property allegedly infringes upon, or conflicts with,
rights asserted by others, except for such instances that, singly or
in the aggregate, could not have a Material Adverse Effect if an
unfavorable decision, judgment, ruling or finding is rendered against
the Company or any of its subsidiaries.
(s) Except as set forth in the Offering Memorandum, all tax
returns required to be filed by the Company and each of its
subsidiaries in any jurisdiction have been filed, and all material
taxes (including, but not limited to, withholding taxes, penalties
and interest, assessments, fees and other charges due or claimed to
be due from any taxing authority) have been paid other than those (i)
being contested in good faith and for which adequate reserves have
been provided, or (ii) currently payable without penalty or interest.
(t) Except as set forth in the Offering Memorandum or that,
singly or in the aggregate, could not have a Material Adverse Effect,
(i) the Company and each of its subsidiaries has (1) such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("PERMITS") as are necessary to own, lease and operate
its respective properties and to conduct its business as presently
conducted, and (2) fulfilled and performed all of its material
obligations with respect to the Permits, and (ii) no event has
occurred that could allow, or after notice or lapse of time could
allow, revocation or termination of any Permit or that could result
in any other material impairment of the rights granted to the Company
or any of its subsidiaries under any Permit, and the Company has no
reason to believe that any governmental body or agency is considering
limiting, suspending or revoking any Permit.
(u) Except as set forth in the Offering Memorandum or that,
singly or in the aggregate, could not have a Material Adverse Effect,
(i) the Company and each of its subsidiaries has good and marketable
title, free and clear of all liens, claims, encumbrances and
restrictions except liens for taxes not yet due and payable, to all
property and assets described in the Offering Memorandum as being
owned by it, (ii) each lease to which the Company and each of its
subsidiaries is a party is valid and binding and no default has
occurred or is continuing thereunder and (iii) the Company and its
subsidiaries enjoy peaceful and undisturbed possession under all such
leases to which it is a party as lessee.
(v) The Company and each of its subsidiaries maintains
adequate insurance for their respective businesses and the value of
their respective properties (including, without limitation, public
liability insurance, third party property damage insurance and
replacement value insurance), and all such insurance is outstanding
and in force as of the date hereof.
(w) The financial statements, together with related notes
forming part of the Offering Documents (and any amendment or
supplement thereto), present fairly the consolidated financial
position, results of operations and changes in financial position of
the Company and its subsidiaries on the basis stated in the Offering
Documents at the respective dates or for the respective periods to
which they apply, and such financial statements and related schedules
and notes have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods
involved, except as disclosed therein. The pro forma financial
statements, together with related notes forming part of the Offering
Documents (and any amendment or supplement thereto), are, in all
material respects, accurately presented and prepared in good faith on
the basis of the assumptions described therein, and such assumptions
are reasonable and the adjustments used therein are appropriate to
give effect to the transactions and circumstances referred to
therein.
(x) The Company and each of its subsidiaries maintains a
system of internal accounting controls sufficient to provide
assurance that:
(1) transactions are executed in accordance with
management's general or specific authorizations;
(2) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability
for assets; and
(3) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate
action is taken with respect thereto.
(y) Subsequent to the dates for which information is given in
the Offering Documents and up to the Closing Date, unless set forth
in the Offering Memorandum or the Company has notified the Initial
Purchasers:
(1) none of the Company or its subsidiaries has incurred
any liabilities or obligations, direct or contingent, which are
material, individually or in the aggregate, to the Company and
its subsidiaries taken as a whole, nor entered into any material
transactions not in the ordinary course of business;
(2) there has not been any decrease in the Company's
capital stock or the capital stock of the Company's subsidiaries
or any increase in long-term indebtedness to meet working
capital requirements or any material increase in short-term
indebtedness of the Company or its subsidiaries or any payment
of or declaration to pay any dividends or any other distribution
with respect to the Company's or any of its subsidiaries'
capital stock, as the case may be; and
(3) there has not been any event or series of events that
would have a Material Adverse Effect.
(z) Prior to and after the issuance of the Series A Senior
Notes, (i) the present fair salable value of the assets of the
Company and its subsidiaries exceeded and will exceed the amount that
will be required to be paid on, or in respect of, the debts and other
liabilities (including contingent liabilities) of the Company and its
subsidiaries as they become absolute and matured, (ii) the assets of
the Company and its subsidiaries do not constitute and will not
constitute unreasonably small capital to carry out their businesses
as conducted or as proposed to be conducted, and (iii) the Company
and its subsidiaries do not intend to, or believe that they will,
incur debts or other liabilities beyond their ability to pay such
debts and liabilities as they mature. The Company does not intend to
permit any of its subsidiaries to incur debts or other liabilities
beyond their respective ability to pay such debts and liabilities as
they mature.
(aa) Neither the Company nor any agent thereof acting on its
behalf, has taken or will take any action that might cause this
Agreement or the issuance or sale of the Series A Senior Notes to
violate Regulation G (12 C.F.R. Part 207), Regulation T (12 C.F.R.
Part 220), Regulation U (12 C.F.R. Part 221) or Regulation X (12
C.F.R. Part 224) of the Board of Governors of the Federal Reserve
System, in each case as in effect now or as the same may hereafter be
in effect on the Closing Date.
(ab) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(ac) Ernst & Young LLP is an independent public accountants
with respect to the Company as required by the Act.
(ad) When the Series A Senior Notes are issued and delivered
pursuant to this Agreement, such Series A Senior Notes will not be of
the same class (within the meaning of Rule 144A under the Act) as
securities of the Company that are listed on a national securities
exchange registered under Section 6 of the Exchange Act or that are
quoted in a United States automated inter-dealer quotation system.
(ae) Assuming (i) that the representations and warranties of
the Initial Purchasers in Section 7 hereof are true, (ii) that the
representations of the Accredited Institutions set forth in the
certificates of such Accredited Institutions in the form set forth in
Annex A to the Offering Memorandum are true, (iii) compliance by the
Initial Purchasers with their covenants set forth in Section 7
hereof, (iv) that none of the Eligible Purchasers is an affiliate of
the Company and (v) that each of the Eligible Purchasers is a QIB or
an Accredited Institution, the purchase and resale of the Series A
Senior Notes pursuant hereto (including pursuant to the Exempt
Resales) is exempt from the registration requirements of the Act. No
form of general solicitation or general advertising (as these terms
are defined in Regulation D under the Act) was used by the Company or
any of their representatives (other than the Initial Purchasers, as
to whom the Company makes no representation) in connection with the
offer and sale of the Series A Senior Notes, including, but not
limited to, articles, notices or other communications published in
any newspaper, magazine, or similar medium or broadcast over
television or radio, or any seminar or meeting whose attendees have
been invited by any general solicitation or general advertising. No
securities of the same class as the Series A Senior Notes have been
issued and sold by the Company within the six-month period
immediately prior to the date hereof.
(af) The Company has no direct or indirect subsidiaries other
than those listed on Exhibit A hereto.
(ag) Set forth on Exhibit B hereto is a list of each employee
pension or benefit plan with respect to which the Company is a party
in interest or disqualified person. The execution and delivery of
this Agreement, the other Operative Documents and the sale of the
Series A Senior Notes to be purchased by the Eligible Purchasers will
not involve any prohibited transaction within the meaning of Section
406 of ERISA or Section 4975 of the Code. The representation made by
the Company in the preceding sentence is made in reliance upon and
subject to the accuracy of, and compliance with, the representations
and covenants made or deemed made by the Eligible Purchasers as set
forth in the Offering Documents under the Section entitled "Notice to
Investors."
(ah) None of the Company, its subsidiaries or any of its or
their affiliates or any person acting on its or their behalf has
engaged or will engage in any directed selling efforts within the
meaning of Regulation S with respect to the Senior Notes, and the
Company, its subsidiaries and its or their affiliates and all persons
acting on its or their behalf have complied with and will comply with
the offering restrictions requirements of Regulation S in connection
with the offering of the Senior Notes outside the United States;
(ai) There is no "substantial U.S. market interest" as defined
in rule 902(n) of Regulation S for the Senior Notes or any security
of the same class as the Senior Notes; and
(aj) The sale of the Series A Senior Notes in offshore
transactions pursuant to Regulation S is not part of a plan or scheme
to evade the registration provisions of the Act.
7. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF THE
INITIAL PURCHASERS.
(a) Each Initial Purchaser, severally and not jointly, represents
and warrants to the Company as follows:
(1) Each Initial Purchaser represents and warrants with
respect to itself that such Initial Purchaser is either a QIB or an
Accredited Institution, in either case with such knowledge and
experience in financial and business matters as are necessary in
order to evaluate the merits and risks of an investment in the Series
A Senior Notes.
(2) Such Initial Purchaser (i) is not acquiring the Series A
Senior Notes with a view to any distribution thereof or with any
present intention of offering or selling any of the Series A Senior
Notes in a transaction that would violate the Act or the securities
laws of any State of the United States or any other applicable
jurisdiction, (ii) will be reoffering and reselling the Series A
Senior Notes only to QIBs in reliance on the exemption from the
registration requirements of the Act provided by Rule 144A and to a
limited number of Accredited Institutions that execute and deliver a
letter containing certain representations and agreements in the form
attached as Annex A to the Offering Documents and (iii) has not
solicited and, unless and until the Series A Senior Notes are
registered under the Act, will not solicit any offer to buy or offer
to sell the Series A Senior Notes by means of any form of general
solicitation or general advertising (as such terms are defined in
Regulation D under the Act) or in any manner involving a public
offering within the meaning of the Act.
(3) Each Initial Purchaser also understands that the Company
and, for purposes of the opinions to be delivered to the Initial
Purchasers pursuant to Sections 9(d) and (e) hereof, counsel to the
Company and counsel to the Initial Purchasers will rely upon the
accuracy and truth of the foregoing representations and the Initial
Purchasers hereby consent to such reliance.
(b) The Initial Purchasers agree that, in connection with the Exempt
Resales, the Initial Purchasers will solicit offers to buy the Series A
Senior Notes only from, and will offer to sell the Series A Senior Notes
only to, the Eligible Purchasers. The Initial Purchasers further agree
that they will offer to sell the Series A Senior Notes only to, and will
solicit offers to buy the Series A Senior Notes only from, persons who in
purchasing such Series A Senior Notes will be deemed to have represented
and agreed (1) if such Eligible Purchaser is a QIB, that they are
purchasing the Series A Senior Notes for their own account or an account
with respect to which they exercise sole investment discretion and that
they or such accounts are QIBs, (2) that such Series A Senior Notes will
not have been registered under the Act and may be resold, pledged or
otherwise transferred, only (A) (I) inside the United States to a person
who the seller reasonably believes is a "qualified institutional buyer"
within the meaning of Rule 144A under the Act in a transaction meeting the
requirements of Rule 144A, (II) in a transaction meeting the requirements
of Rule 144 under the Act, (III) outside the United States to a foreign
person in a transaction meeting the requirements of Rule 904 under the Act
or (IV) in accordance with another exemption from the registration
requirements of the Act (and based upon an opinion of counsel if the
Company so requests), (B) to the Company or (C) pursuant to an effective
registration statement under the Act, in each case, in accordance with any
applicable securities laws of any State of the United States or any other
applicable jurisdiction, and (3) that the holder will, and each subsequent
holder is required to, notify any purchaser from it of the security
evidenced thereby of the resale restrictions set forth in (2) above.
Accordingly, each Initial Purchaser represents and agrees that neither it,
its affiliates nor any persons acting on its or their behalf has engaged or
will engage in any directed selling efforts within the meaning of Rule
901(b) of Regulation S with respect to the Senior Notes, and it, its
affiliates and all persons acting on its or their behalf have complied and
will comply with the offering restrictions requirements of Regulation S.
(c) Each Initial Purchaser represents and agrees that the Senior
Notes offered and sold in reliance on Regulation S have been and will be
offered and sold only in offshore transactions and that such securities
have been and will be represented upon issuance by a global security that
may not be exchanged for definitive securities until the expiration of the
Restricted Period and only upon certification of beneficial ownership of
the securities by a non-U.S. person or a U.S. person who purchased such
securities in a transaction that was exempt from the registration
requirements of the Act, which U.S. person will acquire an interest in a
transfer restricted security.
(d) Each Initial Purchaser agrees that, at or prior to confirmation
of a sale of Senior Notes (other than a sale pursuant to Rule 144A or to
Accredited Institutional Investors in transactions that are exempt from the
registration requirements of the Act), it will have sent to each
distributor, dealer or person receiving a selling concession, fee or other
remuneration that purchases Senior Notes from it during the Restricted
Period a confirmation or notice to substantially the following effect:
"The Senior Notes covered hereby have not been registered under the
U.S. Securities Act of 1933 (the "Securities Act") and may not be
offered and sold within the United States or to, or for the account
or benefit of, U.S. persons (i) as part of their distribution at any
time or (ii) otherwise until 40 days after the later of the
commencement of the offering and the closing date, except in either
case in accordance with Regulation S (or Rule 144A if available)
under the Securities Act. Terms used above have the meanings
assigned to them in Regulation S."
Each Initial Purchaser further agrees that it has not entered and
will not enter into any contractual arrangement with respect to the
distribution or delivery of the Senior Notes, except with its affiliates or
with the prior written consent of the Company.
(e) Each Initial Purchaser further represents and agrees that (1) it
has not offered or sold and will not offer or sell any Senior Notes to
persons in the United Kingdom prior to the expiry of the period of six
months from the issue date of the Senior Notes, except to persons whose
ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of their
business or otherwise in circumstances which have not resulted and will not
result in an offer to the public in the United Kingdom within the meaning
of the Public Offers of Securities Regulations 1995, (ii) it has complied
and will comply with all applicable provisions of the Financial Services
Act 1986 with respect to anything done by it in relation to the Senior
Notes in, from or otherwise involving the United Kingdom, and (iii) it has
only issued or passed on and will only issue or pass on in the United
Kingdom any document received by it in connection with the issuance of the
Senior Notes to a person who is of a kind described in Article 11(3) of the
Financial Services Act of 1986 (Investment Advertisements) (Exemptions)
Order 1995 or is a person to whom the document may otherwise lawfully be
issued or passed on.
(f) Each Initial Purchaser agrees that it will not offer, sell or
deliver any of the Senior Notes in any jurisdiction outside the United
States except under circumstances that will result in compliance with the
applicable laws thereof, and that it will take at its own expense whatever
action is required to permit its purchase and resale of the Senior Notes in
such jurisdictions. The Initial Purchaser understands that no action has
been taken to permit a public offering in any jurisdiction outside the
United States where action would be required for such purpose.
(g) Each Initial Purchaser agrees not to cause any advertisement of
the Senior Notes to be published in any newspaper or periodical or posted
in any public place and not to issue any circular relating to the Senior
Notes, except such advertisements as include the statements required by
Regulation S.
(h) The sale of the Series A Senior Notes in offshore transactions
pursuant to Regulation S is not part of a plan or scheme to evade the
registration provisions of the Act.
(i) On the Closing Date, the Initial Purchasers will provide the
Company with a list setting forth the names, addresses and such other
information as the Company may reasonably request of all persons to whom
the Initial Purchasers will sell the Senior Notes in offshore transactions
pursuant to Regulation S.
Terms used in this Section 7 that have meanings assigned to them in
Regulation S are used herein as so defined.
8. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each
Initial Purchaser and each person, if any, who controls any Initial
Purchaser within the meaning of Section 15 of the Act or Section 20
of the Exchange Act, from and against any and all losses, claims,
damages, liabilities and judgments caused by any untrue statement or
alleged untrue statement of a material fact contained in the Offering
Documents (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto), or caused by any
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein in light of the circumstances under which they were made, not
misleading, except insofar as such losses, claims, damages,
liabilities or judgments are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon
information relating to such Initial Purchaser furnished in writing
to the Company by such Initial Purchaser expressly for use therein;
provided, however, that the indemnification contained in this
paragraph (a) with respect to the Preliminary Offering Memorandum
shall not inure to the benefit of any Initial Purchaser (or to the
benefit of any person controlling such Initial Purchaser) on account
of any such loss, claim, damage, liability or judgment (i) arising
from the sale of the Series A Senior Notes by such Initial Purchaser
to any person if a copy of the Offering Memorandum shall not have
been delivered or sent to such person, at or prior to the written
confirmation of such sale, and the untrue statement or alleged untrue
statement or omission or alleged omission of a material fact
contained in the Preliminary Offering Memorandum was corrected in the
Offering Memorandum, provided that the Company has delivered the
Offering Memorandum to the Initial Purchasers in requisite quantity
on a timely basis to permit such delivery or sending or (ii)
resulting from the use by such Initial Purchaser of any offering
memorandum, registration statement or prospectus, or any amendment or
supplement thereto, referred to in Section 5(e) hereof when, under
Section 11 hereof, such Initial Purchaser was not permitted to do so;
provided further, however, that the foregoing exceptions in clauses
(i) and (ii) shall not affect the indemnity with respect to any other
Initial Purchaser not otherwise subject to such exceptions.
(b) In case any action shall be brought against any Initial
Purchaser or any person controlling such Initial Purchaser, based
upon any Offering Document or any amendment or supplement thereto and
with respect to which indemnity may be sought against the Company,
such Initial Purchaser shall promptly notify the Company in writing
and the Company shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to such indemnified
party and payment of all fees and expenses. Any Initial Purchaser or
any such controlling person shall have the right to employ separate
counsel in any such action and participate in the defense thereof,
but the reasonable fees and expenses of such counsel shall be at the
expense of such Initial Purchaser or such controlling person unless
(i) the employment of such counsel has been specifically authorized
in writing by the Company, (ii) the Company has failed to assume the
defense and employ counsel or (iii) the named parties to any such
action (including any impleaded parties) include both such Initial
Purchaser or such controlling person and the Company, and such
Initial Purchaser or such controlling person shall have been advised
by such counsel that there may be one or more legal defenses
available to it which are different from or additional to those
available to the Company (in which case the Company shall not have
the right to assume the defense of such action on behalf of such
Initial Purchaser or such controlling person, it being understood,
however, that the Company shall not, in connection with any one such
action or separate but substantially similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) for all
such Initial Purchasers and controlling persons, which firm shall be
designated in writing by DLJ, and that all such fees and expenses
shall be reimbursed as they are incurred). The Company shall not be
liable for any settlement of any such action effected without the
written consent of the Company but if settled with the Company's
written consent, the Company agrees to indemnify and hold harmless
any Initial Purchaser and any such controlling person from and
against any loss or liability by reason of such settlement. No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that
are the subject matter of such proceeding.
(c) Each Initial Purchaser agrees, severally and not jointly,
to indemnify and hold harmless the Company, their directors and
officers, and any person controlling them within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act (collectively
the "COMPANY INDEMNIFIED PARTIES"), to the same extent as the
foregoing indemnity from the Company to each Initial Purchaser but
only with reference to information relating to such Initial Purchaser
furnished in writing by such Initial Purchaser expressly for use in
the Offering Documents. In case any action shall be brought against
any Issuer Indemnified Party in respect of which indemnity may be
sought against an Initial Purchaser, such Initial Purchaser shall
have the rights and duties given to the Company (except that if the
Company shall have assumed the defense thereof, such Initial
Purchaser shall not be required to do so, but may employ separate
counsel therein and participate in the defense thereof but the fees
and expenses of such counsel shall be at the expense of such Initial
Purchaser), and the Issuer Indemnified Parties shall have the rights
and duties given to such Initial Purchaser by Section 8(b) hereof.
(d) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages, liabilities and
judgments (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the
Initial Purchasers on the other hand from the offering of the Series
A Senior Notes or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Company and the
Initial Purchasers in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations.
Except in the case of any indemnity arising under the last paragraph
of Section 5(e) hereof, the relative benefits received by the Company
and the Initial Purchasers shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Series
A Senior Notes (before deducting expenses) received by the Company,
and the total discounts and commissions received by the Initial
Purchasers, bear to the total price to investors of the Series A
Senior Notes, in each case as set forth in the table on the cover
page of the Offering Memorandum. The relative fault of the Company
and the Initial Purchasers shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to
information supplied by the Company or the Initial Purchasers and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the Initial Purchasers agree that it would not
be just and equitable if contribution pursuant to this paragraph were
determined by pro rata allocation (even if the Initial Purchasers
were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph.
The losses, claims, damages, liabilities or judgments of an
indemnified party referred to in the immediately preceding paragraph
shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this Section
8, no Initial Purchaser shall be required to contribute any amount in
excess of the amount by which the discounts and commissions received
by it exceeds the amount of any damages which such Initial Purchaser
has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Initial
Purchasers' obligations to contribute pursuant to this Section 8(d)
are several in proportion to the respective principal amount of
Series A Senior Notes purchased by each of the Initial Purchasers
hereunder and not joint.
(e) The Company hereby designates The Jordan Company, 9 West
57th Street, New York, New York 10019, as their authorized agent,
upon which process may be served in any action, suit or proceeding
which may be instituted in any state or federal court in the State of
New York by any Initial Purchaser or person controlling such Initial
Purchaser asserting a claim for indemnification or contribution under
or pursuant to this Section 8, and the Company will accept the
jurisdiction of such court in such action, and waive, to the fullest
extent permitted by applicable law, any defense based upon lack of
personal jurisdiction or venue. A copy of any such process shall be
sent or given to the Company, at the address for notices specified in
Section 11(a) hereof.
(f) The indemnity and contribution agreements contained in
this Section 8 are in addition to any liability which the
indemnifying persons may otherwise have to the indemnified persons
referred to above.
9. CONDITIONS OF THE INITIAL PURCHASERS' OBLIGATIONS. The several
obligations of the Initial Purchasers to purchase the Series A Senior Notes
under this Agreement are subject to the satisfaction of each of the
following conditions:
(a) All the representations and warranties of the Company,
after giving effect to the New Credit Agreement and the Acquisition
pursuant to the terms of the Acquisition Agreement, contained in this
Agreement shall be true and correct on the date hereof and on the
Closing Date, with the same force and effect as if made on and as of
the date hereof and the Closing Date, respectively. The Company
shall have performed or complied with all of the agreements and
satisfied all conditions to be performed, complied with or satisfied
by it on or prior to the Closing Date.
(b) (1) The Offering Memorandum shall have been printed and
copies distributed to the Initial Purchasers not later than 9:00
a.m., New York City time, on November 5, 1996, or at such later date
and time as the Initial Purchasers may approve in writing;
(2) no injunction, restraining order or order of any
nature by a federal or state court of competent jurisdiction
shall have been issued as of the Closing Date which would
prevent the issuance of the Series A Senior Notes; and
(3) at the Closing Date, no stop order preventing the use
of the Offering Documents, or any amendment or supplement
thereto, or suspending the qualification or exemption from
qualification of the Series A Senior Notes for sale in any
jurisdiction designated by the Initial Purchasers pursuant to
Section 5(f) hereof shall have been issued and no proceedings
for that purpose shall have been commenced or shall be pending
before or, to the knowledge of the Company, be contemplated.
(c) (1) Since the date of the latest balance sheet included
in the Offering Documents, there shall not have been any event that
had a Material Adverse Effect, or any development involving a
prospective change that could have a Material Adverse Effect, whether
or not arising in the ordinary course of business;
(2) since the date of the latest balance sheet included
in the Offering Documents, there has not been any change, or any
development involving a prospective change, in the capital stock
or in the long-term debt of the Company and its subsidiaries
from that set forth in the Offering Documents;
(3) the Company and its subsidiaries shall have no
material liability or obligation, direct or contingent, other
than those reflected in the Offering Memorandum;
(4) there shall not have been any material adverse
change, or development that is reasonably likely to result in a
material adverse change, in the assets of Acquired Entities; and
(5) on the Closing Date, the Initial Purchasers shall
have received certificates dated the Closing Date, signed on
behalf of the Company by the President and the Chief Financial
Officer of the Company, confirming all matters set forth in
Sections 9(a), (b), and (c) hereof with respect to the Company.
(d) The Initial Purchasers shall have received on the Closing
Date an opinion (satisfactory to the Initial Purchasers and counsel
to the Initial Purchasers) dated the Closing Date, of Mayer, Brown &
Platt, special securities law counsel for the Company, to the effect
that:
(1) The Company has all necessary corporate power and
authority to enter into and perform its obligations under the
Operative Documents and to issue, sell and deliver the Series A
Senior Notes to the Initial Purchasers to be sold by the Initial
Purchasers pursuant hereto;
(2) No consent, approval, authorization or order of, or
filing or registration with, any regulatory body, administrative
agency, or other governmental agency (except as securities or
Blue Sky laws of the various states may require) which has not
been made or obtained is required for (1) the execution,
delivery and performance of this Agreement, the New Credit
Agreement and the other Operative Documents and the valid
issuance and sale of the Series A Senior Notes or (2) the
performance by the Company of the Acquisition Agreement and all
documents or agreements related thereto and the transactions
contemplated hereby and thereby, such as to which the failure to
be obtained or made would not reasonably be expected, either
individually or in the aggregate, to have a Material Adverse
Effect;
(3) To the best of such counsel's knowledge, no consents
or waivers from any person are required to consummate the
transactions contemplated by the Operative Documents or the
Offering Documents, other than such consents and waivers as have
been or will be obtained prior to the Closing Date or, in the
case of the Registration Rights Agreement and the transactions
contemplated thereby, will be obtained and made) under the Act,
the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act") and state securities or Blue Sky laws and
regulations.
(4) This Agreement has been duly authorized and validly
executed by the Company and (assuming the due execution and
delivery thereof by the Initial Purchasers) is a legally valid
and binding obligation of the Company, enforceable against it in
accordance with its terms, except as the enforceability thereof
may be (i) subject to applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws in effect which
affect the enforcement of creditors rights generally, (ii)
limited by general principles of equity (whether considered in a
proceeding at law or in equity) and (iii) limited by securities
laws prohibiting or limiting the availability of, and public
policy against, indemnification or contribution.
(5) The Company has duly authorized the Indenture and
when the Company has duly executed and delivered it (assuming
due authorization, execution and delivery thereof by the
Trustee), the Indenture will be a legally valid and binding
obligation of the Company, enforceable against it in accordance
with its terms, except as the enforceability thereof may be (i)
subject to applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws in effect which affect the
enforcement of creditors rights generally and (ii) limited by
general principles of equity (whether considered in a proceeding
at law or in equity).
(6) The Company has duly authorized the Series A Senior
Notes and, when issued and authenticated in accordance with the
terms of the Indenture and delivered to and paid for by the
Initial Purchasers in accordance with the terms hereof, the
Series A Senior Notes will conform to the description thereof in
the Offering Memorandum, and will be the legally valid and
binding obligations of the Company, enforceable against the
Company in accordance with their terms, except as the
enforceability thereof may be (i) subject to applicable
bankruptcy, insolvency, moratorium, reorganization or similar
laws in effect which affect the enforcement of creditors rights
generally and (ii) limited by general principles of equity
(whether considered in a proceeding at law or in equity).
(7) The Company has duly authorized the Series B Senior
Notes and, when issued and authenticated in accordance with the
terms of the Registered Exchange Offer and the Indenture, the
Series B Senior Notes will conform to the description thereof in
the Offering Memorandum, and will be the legally valid and
binding obligations of the Company, enforceable against the
Company in accordance with their terms, except as the
enforceability thereof may be (i) subject to applicable
bankruptcy, insolvency, moratorium, reorganization or similar
laws in effect which affect the enforcement of creditors rights
generally and (ii) limited by general principles of equity
(whether considered in a proceeding at law or in equity).
(8) The Registration Rights Agreement has been duly
authorized and validly executed by the Company and (assuming the
due execution and delivery thereof by the Initial Purchasers) is
a legally valid and binding obligation of the Company,
enforceable against it in accordance with its terms, except as
the enforceability thereof may be (i) subject to applicable
bankruptcy, insolvency, moratorium, reorganization or similar
laws in effect which affect the enforcement of creditors rights
generally, (ii) limited by general principles of equity (whether
considered in a proceeding at law or in equity) and (iii)
limited by securities laws prohibiting or limiting the
availability of, and public policy against, indemnification or
contribution.
(9) The New Credit Agreement has been duly authorized and
validly executed by Motors and Gears Industries, Inc. and
(assuming the due execution and delivery thereof by the other
parties thereto) is a legally valid and binding obligation of
Motors and Gears, Industries, Inc., enforceable against it in
accordance with its terms, except as the enforceability thereof
may be (i) subject to applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws in effect which
affect the enforcement of creditors rights generally, (ii)
limited by general principles of equity (whether considered in a
proceeding at law or in equity) and (iii) limited by securities
laws prohibiting or limiting the availability of, and public
policy against, indemnification or contribution;
(10) The statements under the captions "Certain
Transactions," "Description of Notes" and "Description of
Certain Indebtedness" in the Offering Memorandum, insofar as
such statements constitute a summary of legal matters, documents
or proceedings referred to therein, are correct in all material
respects;
(11) The Company is not and, after giving effect to the
New Credit Agreement and the Acquisition pursuant to the terms
of the Acquisition Agreement, will not be, an "investment
company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as
amended;
(12) When the Series A Senior Notes are issued and
delivered pursuant to this Agreement, such Series A Senior Notes
will not be of the same class (within the meaning of Rule 144A
under the Act) as securities of the Company that are listed on a
national securities exchange registered under Section 6 of the
Exchange Act or that are quoted in a United States automated
inter-dealer quotation system;
(13) Neither the Company nor any of its subsidiaries or
(any agent thereof acting on the behalf of any of them) has
taken, and none of them will take, any action that might cause
this Agreement or the issuance or sale of the Senior Notes to
violate Regulation G (12 C.F.R. Part 207), Regulation T (12
C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or
Regulation X (12 C.F.R. Part 224) of the Board of Governors of
the Federal Reserve System, in each case as in effect now or as
the same may hereafter be in effect on the Closing Date;
(14) The Indenture is not required to be qualified under
the Trust Indenture Act prior to the first to occur of (i) the
Registered Exchange Offer and (ii) the effectiveness of the
Shelf Registration Statement; and
(15) No registration under the Act of the Series A Senior
Notes is required for the sale of the Series A Senior Notes to
the Initial Purchasers as contemplated hereby or for the Exempt
Resales as described in the Offering Memorandum (assuming (i)
that the Eligible Purchasers who buy the Series A Senior Notes
in the Exempt Resales are QIBs or Accredited Institutions, (ii)
the accuracy of, and compliance with, the representations of the
Initial Purchasers and those of the Company contained in
Sections 6 and 7 hereof and (iii) the accuracy of the
representations made by each Accredited Institution who
purchases Series A Senior Notes pursuant to an Exempt Resale as
set forth in the letters of representation executed by such
Accredited Institutions in the form of Annex A to the Offering
Memorandum).
In addition, such counsel shall state that it has participated
in conferences with representatives of the Company, representatives
of the Company's accountants, the Initial Purchasers' representatives
and counsel for the Initial Purchasers, at which conferences the
contents of the Offering Documents and related matters were
discussed, and, although such counsel has not independently verified
and is not passing upon and assumes no responsibility for the
accuracy, completeness or fairness of the statements contained in the
Offering Documents, no facts have come to such counsel's attention
which led it to believe that the Offering Memorandum, on the date
thereof or on the date of such opinion, contained or contains an
untrue statement of a material fact or omitted or omits to state a
material fact necessary to make the statements contained therein, in
light of the circumstances under which they were made, not misleading
(it being understood that such counsel need express no view with
respect to the financial statements and data and related notes, the
financial statement schedules and other financial, statistical and
accounting data included in the Offering Documents).
(e) The Initial Purchasers shall have received on the Closing
Date an opinion (satisfactory to the Initial Purchasers and counsel
to the Initial Purchasers) dated the Closing Date, of Bryan Cave LLP,
counsel for the Company, to the effect that:
(1) Each of the Company and each of its subsidiaries (A)
is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of
incorporation, (B) has, and after giving effect to the New
Credit Agreement and the Acquisition, will have, full corporate
power and authority to carry on its respective business as it is
currently being conducted and to own, lease and operate its
respective properties, and (C) to the best of such counsel's
knowledge, is and, after giving effect to the New Credit
Agreement and the Acquisition, will be, duly qualified and is in
good standing as a foreign corporation registered to do business
in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification,
except where the failure to be so qualified would not have a
Material Adverse Effect;
(2) All of the outstanding capital stock of the Company
and each of its subsidiaries has been duly authorized and
validly issued and is fully paid and nonassessable, is not
subject to preemptive or similar rights and all of the Company's
subsidiaries' capital stock is directly or indirectly owned by
the Company, and, to the best of such counsel's knowledge,
except as described in the Offering Memorandum, is free and
clear of any security interest, claim, lien or encumbrance;
(3) To the best of such counsel's knowledge, except as
disclosed in the Offering Memorandum, there are and, after
giving effect to the New Credit Agreement and the Acquisition
pursuant to the Acquisition Agreement, will not be, any
outstanding rights, warrants or options to acquire, or
instruments convertible into or exchangeable for, any shares of
capital stock in the Company or any of its subsidiaries;
(4) Neither the Company nor any of its subsidiaries is in
violation of its respective charter or bylaws, as the case may
be, and, to the best knowledge of such counsel after due
inquiry, neither the Company nor any of its subsidiaries is in
default in the performance of any obligation, agreement or
condition contained in any bond, debenture, note or any other
evidence of indebtedness or in any other agreement, indenture or
instrument material to the conduct of the business of the
Company and its subsidiaries taken as a whole, to which the
Company or any of its subsidiaries is a party or by which it or
any of its subsidiaries or their respective property is bound;
(5) None of (A) the execution, delivery or performance by
the Company of this Agreement, the New Credit Agreement and the
other Operative Documents, (B) the performance by the Company of
the Acquisition Agreement and consummation of the Acquisition
pursuant to the terms of the Acquisition Agreement, (C) the
issuance and sale of the Senior Notes by the Company and (D) the
consummation by the Company of the transactions described in the
Offering Memorandum under the caption "Use of Proceeds," will
conflict with or constitute a breach of any of the terms or
provisions of, or a default under, or result in the imposition
of a lien or encumbrance on any properties of the Company or any
of its subsidiaries, or an acceleration of indebtedness pursuant
to, (1) the charter or bylaws of any of the Company or the
Company's subsidiaries, (2) any bond, debenture, note,
indenture, mortgage, deed of trust or other agreement or
instrument known to such counsel after due inquiry to which the
Company or any of its subsidiaries is a party or by which any of
them or their property is bound, or (3) to the best of such
counsel's knowledge, any law or administrative regulation
applicable to the Company, any of its subsidiaries or any of
their assets or properties, or any judgment, order or decree of
any court or governmental agency or authority entered in any
proceeding to which the Company or any of its subsidiaries was
or is now a party or to which any of them or their respective
properties may be subject and which is known to such counsel;
(6) The Acquisition Agreement has been duly and validly
authorized by Acquisition Sub and is a valid and binding
agreement of Acquisition Sub, enforceable against it in
accordance with its terms, except as enforcement may be limited
by applicable bankruptcy, insolvency, fraudulent conveyance,
moratorium, reorganization or other similar laws and court
decisions affecting or relating to the rights of creditors
generally or by general principles of equity, and except as
rights to indemnification may be limited by applicable law.
(7) To the best knowledge of such counsel, after due
inquiry, there is (i) no action, suit or proceeding before or by
any court, arbitrator or governmental agency, body or official,
domestic or foreign, now pending, threatened or contemplated to
which the Company or any of its subsidiaries is or may be a
party or to which the business or property of the Company or any
of its subsidiaries is or may be subject, (ii) no statute, rule,
regulation or order that has been enacted, adopted or issued by
any governmental agency or proposed by any governmental body, or
(iii) no injunction, restraining order or order of any nature by
a federal or state court of competent jurisdiction applicable to
the Company or any of its subsidiaries has been issued that, in
the case of clauses (i), (ii) and (iii) above, (a) is required
to be disclosed in the Offering Memorandum and that is not so
disclosed, (b) would interfere with or adversely affect the
issuance of the Series A Senior Notes, or (c) might invalidate
any provision or the validity of the Operative Documents or the
Series A Senior Notes;
(8) To the best knowledge of such counsel, there is no
contract or document concerning the Company or any of its
subsidiaries that is not described in the Offering Memorandum,
that would be required to be described or filed in a
registration statement on Form S-4 if the Senior Notes were
registered pursuant to the Securities Act;
(9) To the best knowledge of such counsel, after due
inquiry, no holder of any security of the Company has any right
to require registration of any of the Company's securities by
virtue of the execution of the Operative Documents or the
Acquisition Agreement by the Company, the issuance and sale of
the Series A Senior Notes by the Company or the transactions
contemplated hereby and thereby, other than such rights as will
be waived prior to the Closing Date;
(f) The Initial Purchasers shall have received on the Closing
Date an opinion, dated the Closing Date, of Latham & Watkins, in form
and substance satisfactory to the Initial Purchasers, and the Company
shall have provided Latham & Watkins such papers and information as
it requests to enable it to pass upon the matters contained in such
opinion.
(g) The Initial Purchasers shall have received letters from
Ernst & Young LLP, independent public accountants, on the date hereof
and on the Closing Date, in form and substance satisfactory to the
Initial Purchasers, with respect to the financial statements and
certain financial information contained in the Offering Memorandum.
(h) The Company and the Trustee shall have entered into the
Indenture and the Initial Purchasers shall have received
counterparts, conformed as executed, thereof.
(i) The Company and the Initial Purchasers shall have entered
into the Registration Rights Agreement and the Initial Purchaser
shall have received counterparts, conformed as executed, thereof.
(j) The Company shall have entered into the New Credit
Agreement (the form and substance of which shall be reasonably
acceptable to the Initial Purchasers) and the Initial Purchasers
shall have received counterparts, conformed as executed, thereof and
of all other documents and agreements entered into in connection
therewith.
(k) At or prior to the Closing Date, the closing under the New
Credit Agreement shall have been consummated on terms that conform in
all material respects to the description thereof in the Offering
Memorandum and the Initial Purchasers shall have received evidence
satisfactory to the Initial Purchaser of the consummation thereof.
(l) Each condition to the closing contemplated by the
Acquisition Agreement (other than the issuance and sale of the Senior
Notes pursuant hereto and the initial borrowing under the New Credit
Agreement) shall have been satisfied or waived.
(m) The Company shall have fully performed or complied with
any of the agreements herein contained and required to be performed
or complied with by the Company on or prior to the Closing Date.
10. EFFECTIVE DATE OF AGREEMENT AND TERMINATION. This Agreement
shall become effective at the time that the Company and the Initial
Purchasers execute this Agreement.
The Initial Purchasers may terminate this Agreement at any time prior
to the Closing Date by written notice to the Company if any of the
following has occurred:
(a) Since the respective dates as of which information is
given in the Offering Documents, any adverse change or development
involving a prospective adverse change which would cause a Material
Adverse Effect, on the earnings, affairs, or business prospects of
the Company or any of its subsidiaries, whether or not arising in the
ordinary course of business, which would, in the Initial Purchasers'
judgment, make it impracticable to market the Series A Senior Notes
on the terms and in the manner contemplated in the Offering
Documents;
(b) Any outbreak or escalation of hostilities or other
national or international calamity or crisis or material change in
economic conditions, if the effect of such outbreak, escalation,
calamity, crisis or change on the financial markets of the United
States or elsewhere would, in the Initial Purchasers' judgment, be
material and adverse and make it impracticable to market the Series A
Senior Notes on the terms and in the manner contemplated in the
Offering Documents;
(c) The suspension or material limitation of trading in
securities on the New York Stock Exchange, the American Stock
Exchange or the NASDAQ National Market System or limitation on prices
for securities on any such exchange or National Market Systems;
(d) The enactment, publication, decree or other promulgation
of any federal or state statute, regulation, rule or order of any
court or other governmental authority which in the Initial
Purchasers' opinion causes or will cause a Material Adverse Effect;
(e) The declaration of a banking moratorium by either federal
or New York State authorities;
(f) The taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs
which in the Initial Purchasers' opinion has a material adverse
effect on the financial markets in the United States; or
(g) Any of the Company's securities shall have been downgraded
or placed on any "watch list" for possible downgrading by any
nationally recognized statistical rating organization, provided that
in the case of such "watch list" placement, termination shall be
permitted only if such placement would, in the judgment of any
Initial Purchaser, make it impracticable or inadvisable to market the
Series A Senior Notes or to enforce contracts for the sale of the
Series A Senior Notes or materially impair the investment quality of
the Series A Senior Notes.
If on the Closing Date either of the Initial Purchasers shall fail or
refuse to purchase the Series A Senior Notes, which it has agreed to
purchase hereunder on such date and arrangements satisfactory to the
Company for purchase of such Series A Senior Notes are not made within 48
hours after such default, this Agreement will terminate without liability
on the part of any non-defaulting Initial Purchaser. In any such case that
does not result in termination of this Agreement, the Company shall have
the right to postpone the Closing Date, but in no event for longer than
seven days, in order that the required changes, if any, in the Offering
Memorandum or any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve any defaulting Initial
Purchaser from liability in respect of any default by it under this
Agreement.
11. AGREEMENT OF THE INITIAL PURCHASERS.
Each Initial Purchaser agrees, severally and not jointly, that, upon
its receipt of any written notice from the Company of the existence of any
fact or the happening of any event that requires the making of any
additions to or changes in any offering memorandum, registration statement
or prospectus, or amendment or supplement thereto, referred to in Section
5(e) hereof in order that such document will not contain any untrue
statement of a material fact or omission to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances existing as of the date such document was delivered, not
misleading, such Initial Purchaser shall forthwith discontinue disposition
of the applicable Senior Notes pursuant to such document until (i) such
Initial Purchaser receives from the Company copies of an amended or
supplemented document that the Company states in writing may be used by
such Initial Purchaser or (ii) such Initial Purchaser is advised in writing
by the Company that the use of such document may be resumed.
12. MISCELLANEOUS.
(a) Notices given pursuant to any provision of this Agreement
shall be addressed as follows: (i) if to the Company, to Motors and
Gears, Inc., ArborLake Centre, Suite 550, 1751 Lake Cook Road,
Deerfield, IL 60015, Attention: Chief Financial Officer, with a copy
to Mayer, Brown & Platt, 1675 Broadway, Suite 1900, New York, New
York 10019, Attention: James B. Carlson, (ii) if to the Initial
Purchasers, c/o Donaldson, Lufkin & Jenrette Securities Corporation,
140 Broadway, New York, New York 10005, Attention: Syndicate
Department, and (iii) if to the Initial Purchasers pursuant to
Section 11 hereof, (A) to Donaldson, Lufkin & Jenrette Securities
Corporation, 140 Broadway, New York, New York 10005, Attention:
Syndicate Department & Compliance Department, (B) to BT Securities
Corporation, 130 Liberty Street, 30th Floor, New York, NY 10062,
Attention: Syndicate Department and (C) to Jefferies & Company,
Inc., 11100 Santa Monica Boulevard, Los Angeles, California 90025,
Attention: Syndicate Department & Compliance Department or in any
case to such other address as the person to be notified may have
requested in writing.
(b) The respective indemnities, contribution agreements,
representations, warranties and other statements set forth in or made
pursuant to this Agreement shall remain operative and in full force
and effect, and will survive delivery of and payment for the Series A
Senior Notes, regardless of (i) any investigation, or statement as to
the results thereof, made by or on behalf of any such person, (ii)
acceptance of the Series A Senior Notes and payment for them
hereunder and (iii) termination of this Agreement.
(c) Except as otherwise provided, this Agreement has been and
is made solely for the benefit of and shall be binding upon the
Company, the Initial Purchasers, any controlling persons referred to
herein and their respective successors and assigns, all as and to the
extent provided in this Agreement, and no other person shall acquire
or have any right under or by virtue of this Agreement. The term
"successors and assigns" shall not include a purchaser of any of the
Series A Senior Notes from any of the several Initial Purchasers
merely because of such purchase.
(d) This Agreement shall be construed, interpreted and the
rights of the parties determined in accordance with the laws of the
State of New York without reference to its choice of law provisions.
(e) This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the Initial Purchasers.
Very truly yours,
MOTORS AND GEARS, INC.
By: /s/ Jonathan F. Boucher
--------------------------------
Name: Jonathan F. Boucher
Title: Vice President
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BT SECURITIES CORPORATION
JEFFERIES & COMPANY, INC.
Acting on behalf of
itself, BT Securities Corporation
and Jefferies & Company, Inc.
By: DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Craig Packer
---------------------------
Name: Craig Packer
Title: Vice President
<PAGE>
EXHIBIT 2.1
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
among
THE NEW IMPERIAL ELECTRIC COMPANY
THE NEW SCOTT MOTORS COMPANY,
NEW GEAR RESEARCH,
MOTORS AND GEARS, INC.
and
MOTORS AND GEARS INDUSTRIES, INC.
and
THE IMPERIAL ELECTRIC COMPANY,
THE SCOTT MOTORS COMPANY, and
GEAR RESEARCH, INC.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I PURCHASE AND SALE; PRICE................................ 1
1.01 Definitions............................................. 1
1.02 Purchase and Sale....................................... 3
1.03 Purchase Price.......................................... 3
1.04 Post Closing Adjustments................................ 4
1.05 Assumed Liabilities..................................... 4
1.06 Purchase Price Allocation............................... 4
1.07 Product Claims and Returns.............................. 4
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS............... 4
2.01 Corporate Organization, etc............................. 5
2.02 Capital Stock; Options.................................. 5
2.03 Subsidiaries............................................ 5
2.04 Authorization, etc...................................... 5
2.05 No Violation............................................ 5
2.06 Governmental Authorities................................ 5
2.07 Disclosure.............................................. 6
2.08 Title and Related Matters............................... 6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER............. 6
3.01 Corporate Organization, etc............................. 6
3.02 Capitalization.......................................... 6
3.03 Authorization, etc...................................... 6
3.04 No Violation............................................ 6
3.05 Governmental Authorities................................ 7
ARTICLE IV COVENANTS OF THE SELLERS................................ 7
4.01 Regular Course of Business.............................. 7
4.02 Amendments.............................................. 7
4.03 Capital Changes......................................... 7
4.04 Dividends; Bonuses...................................... 7
4.05 Capital and Other Expenditures.......................... 7
4.06 Borrowing............................................... 8
4.07 Other Commitments....................................... 8
4.08 Full Access and Disclosure.............................. 8
4.09 Consents................................................ 8
4.10 Breach of Agreement..................................... 8
4.11 Further Assurances...................................... 8
4.12 Fulfillment of Conditions............................... 8
ARTICLE V COVENANTS OF PURCHASER.................................. 9
5.01 Confidentiality......................................... 9
5.02 Books and Records....................................... 9
ARTICLE VI OTHER AGREEMENTS........................................ 9
6.01 Agreement to Defend..................................... 9
6.02 Consultants, Brokers and Finders........................ 9
6.03 Assumption Agreement.................................... 10
6.04 Apportionment of Taxes.................................. 10
6.05 Contingent Earnout Agreement............................ 10
ARTICLE VII CONDITIONS TO THE OBLIGATIONS OF PURCHASER.............. 11
7.01 Representations and Warranties; Performance............. 11
7.02 Consents and Approvals.................................. 11
7.03 Opinion of Sellers' Counsel............................. 11
7.04 No Adverse Change....................................... 11
7.05 No Proceeding or Litigation............................. 11
7.06 Other Documents......................................... 11
7.07 Other Agreements........................................ 12
7.08 Stockholder and Board of Directors Approval............. 12
7.09 Cancellation or Conversion of Intercompany Debt......... 12
7.10 Lender Approvals........................................ 12
7.11 Fairness Opinion........................................ 12
ARTICLE VIII CONDITIONS TO THE OBLIGATIONS OF THE SELLERS............ 12
8.01 Representations and Warranties; Performance............. 12
8.02 No Proceeding or Litigation............................. 12
8.03 Opinion of Counsel...................................... 13
8.04 Payment................................................. 13
8.05 Other Documents......................................... 13
8.06 Other Agreements........................................ 13
8.07 Board of Directors Approval............................. 13
ARTICLE IX CLOSING................................................. 13
9.01 Closing................................................. 13
9.02 Deliveries at Closing................................... 13
9.03 Specific Performance.................................... 14
9.04 Bulk Sales Waiver....................................... 14
9.05 Name Change............................................. 14
ARTICLE X TERMINATION AND ABANDONMENT............................. 15
10.01 Methods of Termination.................................. 15
10.02 Procedure Upon Termination.............................. 15
ARTICLE XI INDEMNIFICATION......................................... 15
11.01 Indemnification of Sellers.............................. 15
11.02 Tender of Defense for Damages........................... 17
11.03 Survival................................................ 17
11.04 Indemnification Exclusive Remedy........................ 18
ARTICLE XII MISCELLANEOUS PROVISIONS................................ 19
12.01 Amendment and Modification.............................. 19
12.02 Waiver of Compliance; Consents.......................... 19
12.03 Expenses................................................ 19
12.04 Investigations; Survival of Warranties.................. 19
12.05 Notices................................................. 19
12.06 Definitions............................................. 21
12.07 Assignment.............................................. 21
12.08 Governing Law........................................... 21
12.09 Counterparts............................................ 21
12.10 Neutral Interpretation.................................. 21
12.11 Headings................................................ 22
12.12 Entire Agreement........................................ 22
SCHEDULE OF EXHIBITS................................................. 26
............................................................... iv
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
-----------------------------------------
THIS AGREEMENT (this "Agreement"), dated as of the 7th day of
November, 1996, is made by and among (A) THE NEW IMPERIAL ELECTRIC COMPANY,
a Delaware corporation (hereinafter "Purchaser"), THE NEW SCOTT MOTORS
COMPANY, a Delaware corporation ("New Scott"), NEW GEAR RESEARCH, INC., a
Delaware corporation ("New Gear"), MOTORS AND GEARS, INC., a Delaware
corporation ("M&G"), and MOTORS AND GEARS INDUSTRIES, INC., a Delaware
corporation ("Industries") and (B) THE IMPERIAL ELECTRIC COMPANY, an Ohio
corporation ("Imperial"), THE SCOTT MOTORS COMPANY, a Delaware corporation
("Scott") and GEAR RESEARCH, INC., a Delaware corporation ("Gear")
(Imperial, Scott and Gear are hereinafter referred to collectively as
"Sellers" and individually as "Seller").
ARTICLE I
---------
PURCHASE AND SALE; PRICE
------------------------
1.01 Definitions. For purposes of this Article I and other
provisions of this Agreement, the following terms shall have the meanings
set forth below:
"Assumed Liabilities" means the liabilities and obligations of the
Sellers described on Exhibit 1.05 hereto other than the Excluded
Liabilities.
"Capitalized Lease Amount" means the aggregate amounts paid by
Sellers on November 6, 1996 in order to pay-off the outstanding balances
due as of said date with respect to the capitalized leases described on the
attached Exhibit 1.06.
"Closing Balance Sheet" means the unaudited consolidated statement of
financial position of Sellers as at the Closing as prepared by Purchaser in
accordance with generally accepted accounting principals, consistently
applied and reviewed by Ernst & Young LLP.
"Current Operating Liabilities" means the current portion of Sellers'
trade accounts payable, cash overdrafts, accrued payroll, accrued payroll
taxes, advance deposits, accrued sales and use taxes, accrued operating
expenses and other general current operating liabilities other than the
Excluded Liabilities.
"Excluded Liabilities" means the liabilities and obligations of the
Sellers described on Exhibit 1.07 hereto.
"Intercompany Notes" means the obligations of the Sellers to each
other and certain other affiliates pursuant to the Intercompany Notes
described on Exhibit 1.08.
"NWC" means the difference of (a) the sum of all Sellers' net
accounts receivable, inventories (net of reserves), prepaid expenses and
other current assets as reflected in the Closing Balance Sheet, minus (b)
Current Operating Liabilities as reflected in the Closing Balance Sheet.
For example purposes, a calculation of NWC as of December 31, 1995, is
attached as Exhibit 1.01.
"Purchased Assets" means all of Sellers' assets, properties and
rights (real and personal, tangible and intangible) owned or used in the
conduct of their respective businesses as going concerns at December 31,
1995 and all of Sellers' respective assets, properties and rights (real and
personal, tangible and intangible) acquired after said date and owned by
Sellers on the Closing Date except for those assets which have since been
sold, transferred or disposed of in the ordinary and regular course of
business (hereinafter collectively referred to as the "Purchased Assets").
The Purchased Assets shall include, without limitation, the following at
the Closing Date:
(a) Real Property. All of Sellers' right, title and interest
(including leasehold interests as tenant, if any) in the lands, buildings
and any and all improvements thereon.
(b) Equipment. All of Sellers' machinery, equipment, furniture,
fixtures, telephone numbers (toll-free and others) and other personal
property and all of Sellers' fixed assets.
(c) Cash and Accounts Receivable. All of Sellers' cash, cash
equivalents, certificates of deposit, notes receivable (and security
therefor), accounts receivable and all other receivables of any other kind.
(d) Records. All of Sellers' books, financial and business records,
insurance policies and any claims and credits thereunder.
(e) Inventory. All inventories and other supplies pertaining to
Sellers' operations on hand or at third party premises or in transit
including raw materials, work in process and finished goods, and including
all rights of the Sellers to warranties received from suppliers.
(f) Intellectual Property. All of Sellers' interests and rights to
any and all patents, copyrights, trade names, service marks, trademarks,
product designations, trade secrets, formula, processes, know-how and any
other intellectual property, all registrations, applications, assignments,
amendments, research, development, updates and modifications pertaining
thereto and to all drawings, art work, designs, printing plates, dies,
molds, samples and the like relating to Sellers' current business or
business prospects and any corporate name variants thereof.
(g) Other Intangibles. All of Sellers' right, title and interest in
any claims franchises, licenses, permits, options and any inventions,
developments and ideas.
(h) Contracts, Prepaids, Materials, etc. Sellers' rights and
privileges arising from its unshipped orders, prepaid expenses, customer
contracts, customer lists, outstanding offers, sales records, advertising
materials, and all agreements for the sale, purchase or lease of goods or
services, and all other contracts, agreements, assets and things of value
now beneficially owned or acquired by Sellers at or before the Closing
Date, whether tangible or intangible, real or personal, inchoate, partial
or complete, fixed or contingent, of every kind and description and
wherever situated.
(i) Securities. All of Sellers' securities, stocks and other
investments or ownership interests in other entities except for Imperial's
stock ownership in Scott and Gear.
"Purchase Price" means the total consideration to be paid by
Purchaser to Sellers at the Closing as described in further detail herein.
1.02 Purchase and Sale. In consideration of the Purchase Price, the
assumption by Purchaser of the Assumed Liabilities of Sellers, the other
agreements contained herein and subject to the terms and conditions set
forth in this Agreement, Sellers will sell to Purchaser and Purchaser will
purchase from Sellers, at the Closing Date (as hereinafter defined), all or
substantially all of the Purchased Assets.
1.03 Purchase Price. Subject to the terms and conditions of this
Agreement and in reliance on the representations and warranties of the
Sellers herein contained, and in consideration of the sale, conveyance,
transfer and delivery of the Purchased Assets (subject to the Assumed
Liabilities) provided for in this Agreement, Purchaser agrees to pay and
deliver to the Sellers at the Closing the Purchase Price as follows:
(a) $75,000,000 by delivery to the Sellers of a certified or
cashier's check or funds by wire transfer to Sellers' accounts;
(b) An amount equal to the Capitalized Lease Amount as set forth on
Exhibit 1.06 hereof; and
(c) The Contingent Earnout Agreement described in Section 6.05
hereof.
1.04 Post Closing Adjustments. Within sixty (60) days after the
Closing, Sellers and Purchaser (with Sellers paying one-half of the cost
and expense and Purchaser paying the other one-half of the cost and
expense) shall cause the Closing Balance Sheet to be completed and copies
thereof delivered to Purchaser and Sellers. Within thirty (30) days after
completion and delivery of the Closing Balance Sheet, the parties shall
make payment as follows: (a) if NWC exceeds $11,336,029, then Purchaser
shall pay an amount in cash equal to such excess to Sellers; (b) if NWC is
less than $11,336,029, then Sellers shall pay an amount in cash equal to
such deficiency to Purchaser; and (c) if NWC equals $11,336,029, no
payments between the parties shall be made.
1.05 Assumed Liabilities. The parties have agreed that the amount
of the Purchase Price was established and agreed upon and will be paid
based on the agreement of the parties that effective at the Closing, and
subject to Sections 6.04 and 1.07, Purchaser will assume the Assumed
Liabilities; provided, however, the Purchaser shall not assume any other
liabilities, obligations or debts of Sellers, including, but not limited to
the Excluded Liabilities. For purposes of this Agreement, the "Assumed
Liabilities" are limited to those obligations, liabilities and claims
listed on Exhibit 1.05.
1.06 Purchase Price Allocation. The Purchase Price shall be
allocated to the Purchased Assets and among the Sellers as set forth on
Exhibit 1.09.
1.07 Product Claims and Returns. Purchaser shall be responsible for
customer claims relating to services rendered by Sellers prior to the
Closing Date, and customer claims relating to, or returns of, products of
Sellers sold and shipped by Sellers prior to the Closing Date or in the
finished goods inventory of Sellers as of the Closing Date. If a customer
makes a claim or seeks a return and, in the judgment of Purchaser the claim
or return is proper, Purchaser shall replace or repair, as the case may be,
the services rendered or product purchased at Purchaser's then generally
prevailing prices and labor rates. Such repairs or returns shall be for
the account of Purchaser.
ARTICLE II
----------
REPRESENTATIONS AND WARRANTIES OF SELLERS
-----------------------------------------
The Sellers, jointly and severally, hereby represent and warrant to
Purchaser, as follows:
2.01 Corporate Organization, etc. Sellers are corporations duly
organized, validly existing and in good standing under the laws of the
state of Delaware with respect to Scott and Gear and Ohio with respect to
Imperial. Each has all requisite corporate power and authority to carry on
its business as it is now being conducted and to own, operate and lease its
properties and assets. Exhibit 2.01.1 lists each of the states where
Sellers are qualified as a foreign corporation. Exhibit 2.01.2 contains
complete and correct copies of Sellers' (i) articles or certificate of
incorporation; (ii) bylaws; and (iii) certificates of authority for the
states listed in Exhibit 2.01.1, each amended to date.
2.02 Capital Stock; Options. The authorized capital stock of
Sellers and the shares of capital stock of Sellers issued and outstanding
("Shares"), of all classes, are as set forth in Exhibit 2.02. Sellers have
no treasury stock except as listed in Exhibit 2.02. All of the Shares are
validly issued, fully paid and nonassessable. There are no issued and
outstanding options, warrants, rights, securities, contracts, commitments,
understandings or arrangements by which Sellers are bound to issue any
additional shares of capital stock or options to purchase shares of capital
stock.
2.03 Subsidiaries. Except as set forth in Exhibit 2.03, Sellers
have no subsidiaries or investments in any other entity or business
operation.
2.04 Authorization, etc. The Sellers have full power and authority
to enter into this Agreement and to carry out the transactions contemplated
hereby. This Agreement and all actions contemplated herein which require
the approval of Sellers' directors or stockholders have duly received the
required approval and Sellers shall have delivered certified copies of
their stockholder lists and consents to resolutions which shall have been
duly adopted by Sellers' directors and stockholders, substantially in the
form of Exhibit 2.04.
2.05 No Violation. Except as set forth in Exhibit 2.05, Sellers are
not subject to or obligated under any article or certificate of
incorporation, bylaw, Law (as defined in Section 12.06), or any material
agreement or instrument, or any material license, franchise or permit,
which would be breached or violated by Sellers' execution, delivery and
performance of this Agreement. Sellers will comply with all applicable
Laws in connection with their execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby.
2.06 Governmental Authorities. The Sellers are not required to
submit any notice, report or other filing with, and no consent, approval or
authorization is required, by any governmental or regulatory authority in
connection with their execution, delivery, consummation or performance of
this Agreement or the transactions contemplated hereby.
2.07 Disclosure. No representation or warranty made by Sellers in
this Agreement or in any agreement, instrument, document, certificate,
statement or letter furnished to Purchaser, by or on behalf of Sellers in
connection with any of the transactions contemplated by this Agreement,
when taken as a whole, contains any untrue statement of fact or omits to
state a material fact necessary in order to make the statements herein or
therein not materially misleading in light of the circumstances in which
they are made.
2.08 Title and Related Matters. Subject to the Assumed Liabilities,
Sellers have good and marketable title to the Purchased Assets and Sellers
will convey the Purchased Assets to Purchaser free and clear of liens and
encumbrances.
ARTICLE III
-----------
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
Purchaser hereby represents and warrants to the Sellers, as follows:
3.01 Corporate Organization, etc. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware and will be qualified to do business in Delaware on the
Closing Date.
3.02 Capitalization. As of the date of this Agreement, Purchaser
has authorized capital stock consisting of 1,000 shares of Common Stock,
$.01 par value per share.
3.03 Authorization, etc. Purchaser has full corporate power and
authority to enter into this Agreement and to carry out the transactions
contemplated hereby. The Board of Directors of Purchaser has duly
authorized the execution and delivery of this Agreement and the
transactions contemplated hereby, and no other corporate proceedings on its
part are necessary to authorize this Agreement and the transactions
contemplated hereby.
3.04 No Violation. Purchaser is not subject to or obligated under
any certificate of incorporation, bylaw, Law, or any agreement or
instrument, or any license, franchise or permit, which would be breached or
violated by its execution, delivery or performance of this Agreement.
Purchaser will comply with all Laws in connection with its execution,
delivery and performance of this Agreement and the transactions
contemplated hereby.
3.05 Governmental Authorities. Purchaser is not required to submit
any notice, report or other filing with and no consent, approval or
authorization is required by any governmental or regulatory authority in
connection with Purchaser's execution or delivery of this Agreement or the
consummation of the transactions contemplated hereby.
ARTICLE IV
----------
COVENANTS OF THE SELLERS
------------------------
Except as otherwise consented to or approved by Purchaser in writing,
until the Closing, the Sellers covenant and agree as follows:
4.01 Regular Course of Business. Sellers will operate their
businesses in the ordinary course, diligently and in good faith, consistent
with past management practices.
4.02 Amendments. Except as required for the transactions
contemplated in this Agreement, no change or amendment shall be made in
Sellers' articles or certificate of incorporation or bylaws. Sellers will
not merge into or consolidate with any other corporation or person, or
change the character of their businesses.
4.03 Capital Changes. Sellers will not issue or sell any shares of
capital stock of any class or issue or sell any securities convertible
into, or options, warrants to purchase or rights to subscribe to, any
shares of capital stock of any class.
4.04 Dividends; Bonuses. Sellers will not, except in the ordinary
course of the conduct of business, declare, pay or set aside for payment
any dividend or other distribution in respect of its capital stock, nor
shall Sellers, directly or indirectly, redeem, purchase or otherwise
acquire any shares of capital stock. Sellers will not, except in the
ordinary course of the conduct of business, pay, set aside, accrue, agree
to or become liable in any manner for any bonus, of any nature or type, to
shareholders or to any employee or officer of Sellers.
4.05 Capital and Other Expenditures. Sellers will not, except in
the ordinary course of the conduct of business, make any capital
expenditures, or commitments with respect thereto, except as set forth in
Exhibit 4.05. Sellers will not prepay any debt or obligation in excess of
$25,000 (except for prepaying trade accounts payable in the normal course
of business to take advantage of cash discounts).
4.06 Borrowing. Sellers will not incur, assume or guarantee any
indebtedness or capital leases. Sellers will not create or permit to
become effective any mortgage, pledge, lien, encumbrance or charge of any
kind upon its assets other than in the ordinary course of business.
4.07 Other Commitments. Except in the ordinary course of business
consistent with past practices, Sellers will not enter into any
transaction, make any commitment or incur any obligation.
4.08 Full Access and Disclosure.
(a) Sellers shall afford to Purchaser and its counsel, accountants
and other authorized representatives access during business hours to
Sellers' plants, properties, books and records in order that Purchaser may
have full opportunity to make such reasonable investigations as it shall
desire to make of the affairs of Sellers and Sellers will cause its
respective officers and employees to furnish such additional financial and
operating data and other information as Purchaser shall from time to time
reasonably request.
(b) From time to time prior to the Closing Date, Sellers will
promptly supplement or amend in writing information previously delivered to
Purchaser with respect to any matter hereafter arising which, if existing
or occurring at the date of this Agreement, would have been required to be
set forth or disclosed.
4.09 Consents. Sellers will use all necessary means at its disposal
to obtain on or prior to the Closing Date all consents necessary to the
consummation of the transactions contemplated hereby.
4.10 Breach of Agreement. Sellers will not take any action which,
if taken prior to the Closing Date, would constitute a breach of this
Agreement.
4.11 Further Assurances. Sellers and Sellers' counsel will furnish
Purchaser with such other and further documents, certificates, opinions,
consents and information as Purchaser shall reasonably request to enable
Purchaser to borrow funds from a bank or other lending entity or
individual(s) for the acquisition of the Purchased Assets and to evidence
compliance with the terms and conditions of any credit agreement to be
entered into between Purchaser and a bank and/or other lending entities or
individuals.
4.12 Fulfillment of Conditions. Sellers will take all commercially
reasonable steps necessary or desirable, and proceed diligently and in good
faith, to satisfy each condition to the obligations of Purchaser contained
in this Agreement and will not take or fail to take any action that could
reasonably be expected to result in the nonfulfillment of any material
condition.
ARTICLE V
---------
COVENANTS OF PURCHASER
----------------------
Purchaser hereby covenants and agrees with the Sellers that:
5.01 Confidentiality. Purchaser will hold in strict confidence and
not disclose to any other party (other than its counsel and other
advisors), without the Sellers' prior consent, all information received by
Purchaser from the Sellers or any of Sellers' officers, directors,
employees, agents, counsel or auditors in connection with the transactions
contemplated hereby, except as may be required by applicable law or as
otherwise contemplated herein.
5.02 Books and Records. Purchaser shall preserve and keep Sellers'
books and records delivered hereunder for a period of three (3) years from
the date hereof and shall, during such period, make such books and records
available to former officers and directors of Sellers for any reasonable
purpose.
ARTICLE VI
----------
OTHER AGREEMENTS
----------------
Purchaser and the Sellers covenant and agree that:
6.01 Agreement to Defend. In the event any action, suit, proceeding
or investigation of the nature specified in Section 7.05 or Section 8.02
hereof is commenced, whether before or after the Closing Date, all the
parties hereto agree to cooperate and use their best efforts to defend
against and respond thereto.
6.02 Consultants, Brokers and Finders. The Sellers and Purchaser
each represent and warrant to the other that they have not retained any
consultant, broker or finder in connection with the transactions
contemplated by this Agreement, except Jordan Industries, Inc. and The
Jordan Company. The Sellers and Purchaser each hereby agree to indemnify,
defend and hold the other party and its officers, directors, employees and
affiliates, harmless from and against any and all claims, liabilities or
expenses for any brokerage fees, commissions or finders fees due to any
consultant, broker or finder retained by the indemnifying party.
6.03 Assumption Agreement. At the Closing, Purchaser and Sellers
will enter into the Assumption Agreement, as contemplated by Section
9.02(e) hereof, in the form set forth in Exhibit 6.03.
6.04 Apportionment of Taxes. Sellers shall be liable and indemnify
Purchaser for all Taxes attributable to the ownership or sale of the
Purchased Assets or any operations of the Sellers for all taxable periods
ending on or before the Closing Date ("Pre-Closing Taxes"). Purchaser
shall be liable and indemnify Sellers for all Taxes attributable to the
ownership of the Purchased Assets or any operations of Purchaser for all
taxable periods from and after the Closing Date ("Post-Closing Taxes").
With respect to Taxes attributable to a taxable period beginning prior to
and ending after the Closing Date ("Straddle Taxes"), Pre-Closing Taxes
shall include the portion of such Straddle Taxes attributable to the
operations of the Sellers and the ownership of the Purchased Assets for the
period ending immediately prior to the Closing Date, including any income
or gain arising from the sale of the Purchased Assets and all transactions
related thereto, and Post-Closing Taxes shall include the Straddle Taxes
attributable to the ownership of the Purchased Assets for the period
beginning from and ending after the Closing Date. Straddle Taxes which are
real property or personal property Taxes shall be apportioned between
Pre-Closing Taxes and Post-Closing Taxes based on the number of days in the
applicable taxable period during which the Purchased Assets were owned by
the Sellers and Purchaser. If Purchaser makes a payment of any Pre-Closing
Taxes, it shall be entitled to prompt reimbursement from Sellers for such
Taxes upon presentation to Sellers of evidence of such payment. If Sellers
pay any Post-Closing Taxes, Sellers shall be entitled to prompt
reimbursement from Purchaser for such Post-Closing Taxes upon presentation
to Purchaser of evidence of such payment. Sellers shall be liable and
indemnify Purchaser for any sales, use, documentary, recording, stamp,
transfer or similar Taxes arising from the sale of the Purchased Assets and
the transactions contemplated by this Agreement.
6.05 Contingent Earnout Agreement. Purchaser, New Scott, New Gear,
M&G, Industries and Imperial agree to enter into the Contingent Earnout
Agreement as of the Closing, as contemplated by Section 9.02(a) hereof, in
the form set forth in Exhibit 6.05 ("Contingent Earnout Agreement").
ARTICLE VII
-----------
CONDITIONS TO THE OBLIGATIONS OF PURCHASER
------------------------------------------
Each and every obligation of Purchaser under this Agreement shall be
subject to the satisfaction, on or before the Closing Date, of each of the
following conditions unless waived in writing by Purchaser:
7.01 Representations and Warranties; Performance. The
representations and warranties made by the Sellers herein shall be true and
correct on the Closing Date; the Sellers shall have performed and complied
with all agreements, covenants and conditions required by this Agreement to
be performed and complied with by them prior to the Closing Date; Sellers
shall have caused an executive officer of Sellers to have delivered to
Purchaser certificates, dated the Closing Date, in the form designated
Exhibit 7.01 hereto, certifying to such matters and the other conditions
contained in this Article VII.
7.02 Consents and Approvals. All consents from and filings with
third parties, regulators and governmental agencies required to consummate
the transactions contemplated hereby, or which, either individually or in
the aggregate, if not obtained, would cause a material adverse effect on
Sellers' financial condition or business shall have been obtained and
delivered to Purchaser.
7.03 Opinion of Sellers' Counsel. Purchaser shall have received an
opinion of Sellers' counsel, dated the Closing Date, substantially in the
form attached hereto as Exhibit 7.03.
7.04 No Adverse Change. There shall have been no material adverse
change in the business, prospects, financial condition, earnings or
operations of Sellers' businesses.
7.05 No Proceeding or Litigation. No material action, suit or
proceeding before any court or any governmental or regulatory authority
shall have been commenced or threatened, and no investigation by any
governmental or regulatory authority shall have been commenced or
threatened against the Sellers, Purchaser or any of their respective
principals, officers or directors seeking to restrain, prevent or change
the transactions contemplated hereby or questioning the validity or
legality of any of such transactions or seeking damages in a material
amount in connection with any of such transactions.
7.06 Other Documents. Sellers will furnish Purchaser with such
other and further documents and certificates of its officers and others as
Purchaser shall reasonably request to evidence compliance with the
conditions set forth in this Agreement.
7.07 Other Agreements. The Agreements described in Article VI shall
have been entered into and delivered.
7.08 Stockholder and Board of Directors Approval. The Stockholder
and Board of Directors of Purchaser shall have approved this Agreement, the
transactions contemplated hereby and the Closing.
7.09 Cancellation or Conversion of Intercompany Notes. Purchaser
shall have received written evidence satisfactory to Purchaser that prior
to Closing, all of Sellers' obligations pursuant to the Intercompany Notes
have been cancelled or converted to equity.
7.10 Lender Approvals. Sellers shall have obtained all required
consents, approvals and documents from First National Bank of Boston, JII,
Inc., and any other lenders necessary to the consummation of the terms of
this Agreement.
7.11 Fairness Opinion. Purchaser shall have received a fairness
opinion regarding the transactions contemplated hereby from Duff and
Phelps, LLC.
ARTICLE VIII
------------
CONDITIONS TO THE OBLIGATIONS OF THE SELLERS
--------------------------------------------
Each and every obligation of the Sellers under this Agreement shall
be subject to the satisfaction, on or before the Closing Date, of each of
the following conditions unless waived in writing by the Sellers:
8.01 Representations and Warranties; Performance. The
representations and warranties made by Purchaser herein shall be true and
correct on the Closing Date; Purchaser shall have performed and complied
with all agreements, covenants and conditions required by this Agreement to
be performed and complied with by it prior to the Closing Date; Purchaser
shall have delivered to the Sellers a certificate of an executive officer
dated the Closing Date, certifying to the fulfillment of the conditions set
forth herein, in the form designated as Exhibit 8.01 and the other
conditions contained in this Article VIII.
8.02 No Proceeding or Litigation. No material action, suit or
proceeding before any court or any governmental or regulatory authority
shall have been commenced, or threatened, and no investigation by any
governmental or regulatory authority shall have been commenced, or
threatened, against Sellers, Purchaser or any of their respective
principals, officers or directors, seeking to restrain, prevent or change
the transactions contemplated hereby or questioning the validity or
legality of any of such transactions or seeking damages in a material
amount in connection with any of such transactions.
8.03 Opinion of Counsel. The Sellers shall have received an opinion
of counsel to Purchaser dated the Closing Date substantially in the form of
Exhibit 8.03.
8.04 Payment. The payment(s) described in Section 1.03 shall have
been made.
8.05 Other Documents. Purchaser will furnish the Sellers with such
other documents and certificates to evidence compliance with the conditions
set forth in this Article as may be reasonably requested by the Sellers.
8.06 Other Agreements. The agreements described in Article VI shall
have been entered into and delivered.
8.07 Board of Directors Approval. The Board of Directors of Sellers
shall have approved this Agreement, the fairness opinion being rendered by
Duff and Phelps and the transactions contemplated hereby and the Closing.
ARTICLE IX
----------
CLOSING
-------
9.01 Closing. The parties agree that a closing (the "Closing")
shall be held on November 7, 1996 upon full execution of this Agreement by
all of the parties hereto (the "Closing Date") at such place or places as
Purchaser shall designate.
9.02 Deliveries at Closing.
(a) At the Closing, Sellers shall transfer and assign to Purchaser
all of the Purchased Assets, subject to the Assumed Liabilities, and the
Purchaser shall deliver to the Sellers cash consideration, the fully
executed Contingent Earnout Agreement (as set forth in Exhibit 6.05), and
the other agreements, certifications and other documents required to be
executed and delivered hereunder at the Closing.
(b) At and after the Closing, Sellers shall have the right to review
and obtain copies of any financial records of Sellers, in the possession of
Purchaser, necessary for the preparation of Sellers' tax returns, and
Purchaser agrees to retain such records until the statute of limitations
pertaining to the final tax returns filed by Sellers expires, and Purchaser
shall have the right to review and obtain copies of the minute book, stock
book and stock register of Sellers.
(c) At the Closing, Sellers shall deliver to Purchaser, in form
reasonably satisfactory to counsel for Purchaser, such bills of sale,
assignments, deeds or other conveyances and all third party consents as may
be appropriate or necessary to effect the transfer to Purchaser of the
property and rights as contemplated herein.
(d) From time to time after the Closing, at Purchaser's request and
without further consideration from Purchaser, Sellers shall execute and
deliver such other instruments of conveyance and transfer and take such
other action as Purchaser reasonably may require to convey, transfer to and
vest in Purchaser and to put Purchaser in possession of any assets or
property to be sold, conveyed, transferred and delivered hereunder.
(e) The assumption of the Assumed Liabilities hereunder shall be by
assumption agreement (as set forth in Exhibit 6.03). Purchaser and its
successors and assigns will forever defend, indemnify and hold Sellers
harmless from any and all of the Assumed Liabilities of Sellers which have
been assumed by Purchaser at the Closing, or which shall arise from any
acts or omissions of Purchaser after the Closing.
9.03 Specific Performance. The parties agree that if any party
hereto is obligated to, but nevertheless does not, consummate this
transaction, then any other party, in addition to all other rights or
remedies, shall be entitled to the remedy of specific performance mandating
that the other party or parties consummate this transaction. In an action
for specific performance by any party against any other party, the other
party shall not plead adequacy of damages at law.
9.04 Bulk Sales Waiver. Purchaser waives compliance with the
provisions of the Bulk Sales Act (Article 6 of the Uniform Commercial Code)
in reliance upon the representations and warranties of Sellers and the
covenants to perform the obligations hereunder.
9.05 Name Change. Within thirty (30) days after the Closing,
Sellers shall change their respective names to another name different from
the present names and do such other things as shall be necessary or
desirable to permit Purchaser to assume and use the names "The Scott Motors
Company", "Gear Research, Inc." and "The Imperial Electric Company" and use
all other names utilized by Sellers in operating their respective
businesses as ongoing concerns.
ARTICLE X
---------
TERMINATION AND ABANDONMENT
---------------------------
10.01 Methods of Termination. This Agreement may be terminated and
the transactions herein contemplated may be abandoned at any time
(notwithstanding approval by the Board of Directors of Purchaser):
(a) by mutual consent of Purchaser and the Sellers; or
(b) by either Purchaser or Sellers, if (i) such party is
not in breach hereunder and the other party is in breach hereunder, and
(ii) this Agreement is not consummated on or before the Closing Date,
including extensions.
10.02 Procedure Upon Termination. In the event of termination and
abandonment pursuant to Section 10.01 hereof, this Agreement shall
terminate and shall be abandoned, without further action by any of the
parties hereto. If this Agreement is terminated as provided herein:
(a) each party will upon request redeliver all documents and other
materials of any other party relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to the
party furnishing the same;
(b) no party hereto shall have any liability or further obligation
to any other party to this Agreement; and
(c) each party shall bear its own expenses.
ARTICLE XI
----------
INDEMNIFICATION
---------------
11.01 Indemnification of Sellers. The Sellers jointly and severally
agree to indemnify Purchaser and each of its shareholders, officers and
directors against any loss, damage, or expense, (including but not limited
to reasonable attorneys' fees) ("Damages"), incurred or sustained by
Purchaser or any of its shareholders, officers or directors as a result of
(a) any breach of any term, provision, covenant or agreement contained in
this Agreement by the Sellers; (b) any inaccuracy in any of the
representations or warranties made by the Sellers in Article II of this
Agreement; (c) any liability or obligation of Sellers or any stockholder of
Sellers not expressly assumed in writing by Purchaser; or (d) failure of
Sellers and Purchaser to comply with the provisions of any applicable
Uniform Commercial Code provisions or similar laws and/or regulations
relating to bulk sales. The indemnification obligations of the Sellers as
set forth in this Article XI shall be subject to and limited by the
following:
(a) Purchaser shall not be entitled to indemnification pursuant to
subparts (b), (c) or (d) of Section 11.01 until such time as its aggregate
right to such indemnification exceeds $500,000 after which Purchaser will
be entitled to such indemnification in excess of $500,000. Purchaser
shall not be entitled to indemnification pursuant to this Section 11.01 for
amounts which, in the aggregate, exceed a $15,000,000 ceiling, except for
indemnification claims in respect of a breach by any Seller of its
representations and warranties set forth in Section 2.01, as to which
Purchaser shall not be entitled to indemnification pursuant to said Section
2.01 for amounts which, in the aggregate, exceed the Purchase Price.
Purchaser releases and discharges the Sellers from any further claims,
obligations or liabilities for any losses, claims or Damages in excess of
such ceiling amounts.
(b) Purchaser will not be entitled to indemnification pursuant to
this Article XI:
(i) with respect to consequential Damages consisting of
business interruption or lost profits, or with respect to
punitive Damages;
(ii) with respect to any claim by or liability to any
employee employed by Sellers arising as the result of the
termination of such employee's employment with the Sellers or
any action by Purchaser subsequent to the Closing Date;
(iii) with respect to any obligation, liability or matter,
including environmental remediation and clean-up, arising
under laws, regulations or statutes that arise or are
promulgated or announced after the Closing Date; and
(iv) any obligation, liability or matter arising out of
information Purchaser discloses to any third party which
disclosure is not required by applicable environmental laws or
for which disclosure would not otherwise be reasonable
business practice in accordance with Purchaser's past
practices, without consideration of indemnification under this
Article XI.
(c) Purchaser shall utilize all reasonable efforts, consistent with
normal practices and policies and good commercial practice, to mitigate
Damages, including reasonably pursuing other available indemnity rights.
(d) Any amounts payable under this Article XI shall be treated by
Purchaser and Sellers as an adjustment to the Purchase Price, and shall be
calculated after giving effect to (i) any proceeds received for insurance
policies covering the Damage, loss, liability or expense that is the
subject to the claim for indemnity and (ii) the actual recognized tax
benefit to the indemnitee resulting from the Damage, loss, liability or
expense that is the subject of the indemnity as long as Purchaser and
Seller are part of the same consolidated tax group; provided that to the
extent that any tax benefit is recognized in a tax year other than the year
in which the indemnity is paid, the indemnitee shall make a payment to the
indemnitor in the amount of such recognized tax benefit in the year in
which it is realized. For purposes hereof, an actual recognized tax
benefit is an actual reduction in taxes payable or a refund of taxes
previously paid. Without limiting clause (ii), the taking of a tax
deduction in connection with any such Damage, loss, liability or expense
that is subject to a claim for indemnification shall be at the discretion
of Purchaser.
11.02 Tender of Defense for Damages. Promptly upon receipt by
Purchaser of a notice of a claim by a third party which may give rise to a
claim for Damages, Purchaser shall give written notice thereof to Sellers.
No failure or delay of Purchaser in the performance of the foregoing shall
relieve, reduce or otherwise affect the Sellers' obligations and liability
to indemnify Purchaser pursuant to this Agreement, except to the extent
that such failure or delay shall have adversely affected the Sellers'
ability to defend against such claim for Damages. If Sellers give to
Purchaser an agreement in writing, in a form reasonably satisfactory to
Purchaser's counsel, to defend such claim for Damages, Sellers may, at
their sole expense, undertake the defense against such claim and may
contest or settle such claim on such terms, at such time and in such manner
as Sellers, in their sole discretion, shall elect and Purchaser shall
execute such documents and take such steps as may be reasonably necessary
in the opinion of counsel for Sellers to enable Sellers to conduct the
defense of such claim for Damages. If Sellers fail or refuse to defend any
claim for Damages, Sellers may nevertheless, at their own expense,
participate in the defense of such claim by Purchaser and in any and all
settlement negotiations relating thereto. In any and all events, Sellers
shall have such access to the records and files of Purchaser relating to
any claim for Damages as may be reasonably necessary to effectively defend
or participate in the defense thereof.
11.03 Survival. All of the terms and conditions of this Agreement,
together with the warranties, representations, agreements and covenants
contained herein or in any instrument or document delivered or to be
delivered pursuant to this Agreement, shall survive the execution of this
Agreement and the Closing Date, notwithstanding any investigation
heretofore or hereafter made by or on behalf of any party hereto; provided,
however, that (a) the agreements and covenants (other than the
indemnification provisions set forth in this Article XI, which will survive
as provided below) therein shall have been performed and satisfied and the
applicable statute of limitations for breaches or defaults of such
agreements and covenants has expired; and (b) all representations and
warranties, and the related agreements of the Sellers to indemnify set
forth in this Article XI, shall survive and continue for, and all
indemnification claims with respect thereto shall be made prior to the end
of two years from the Closing Date, except for representations, warranties
and related indemnities for which an indemnification claim shall be pending
as of the end of the applicable period referred to above, in which event
such indemnities shall survive with respect to such indemnification claim
until the final disposition thereof, and (c) representations and warranties
set forth in Section 2.01 and indemnities related thereto, which will
survive indefinitely. Thereafter, no party shall be under any obligation
or liability whatsoever with respect to any such representation, warranty,
covenant or agreement or any certificate in respect thereto.
11.04 Indemnification Exclusive Remedy. The sole recourse and
exclusive remedy of Purchaser after the Closing Date for the breach of any
representations and warranties contained in this Agreement, any agreement,
or instrument contemplated hereby, any document relating hereto or thereto
contained in any Schedules or Exhibit to this Agreement, or otherwise
arising from Purchaser's acquisition of the Purchased Assets, shall be to
assert a claim for indemnification under the indemnification provisions of
this Article XI. The only legal action which may be asserted by any party
hereto against any other party hereto with respect to any matter which is
the subject of this Article XI shall be a contract action to enforce, or to
recover Damages for the breach of, this Agreement. Without limiting the
generality of the foregoing, no legal action based upon predecessor or
successor liability, contribution, tort or strict liability may be
maintained by any party hereto against any other party hereto with respect
to any matter that is the subject of this Article XI.
ARTICLE XII
-----------
MISCELLANEOUS PROVISIONS
------------------------
12.01 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified and supplemented only by written
agreement of the Sellers and Purchaser.
12.02 Waiver of Compliance; Consents. Any failure of the Sellers on
the one hand, or Purchaser on the other hand, to comply with any
obligation, covenant, agreement or condition herein may be waived in
writing by Purchaser or the Sellers, respectively, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement
requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the
requirements for a waiver of compliance as set forth in this Section 12.02.
12.03 Expenses. Each party will pay its own legal, accounting and
other expenses incurred by such party or on its behalf in connection with
this Agreement and the transactions contemplated herein. If Sellers shall
at any time pay any expenses incurred in connection with this Agreement or
any part thereof or any of the proceedings and transactions contemplated
hereunder including, without limitation, any legal, accounting, printing,
filing or other costs, then the Purchase Price shall be reduced by an equal
amount.
12.04 Investigations; Survival of Warranties. The respective
representations and warranties of the Sellers and Purchaser contained
herein or in any certificates or other documents delivered prior to or at
the Closing are true, accurate and correct and each and every such
representation and warranty shall survive the Closing Date.
12.05 Notices. Any notice, request, consent or communication
(collectively a "Notice") under this Agreement shall be effective only if
it is in writing and (i) personally delivered, (ii) sent by certified or
registered mail, return receipt requested, postage prepaid, (iii) sent by a
nationally recognized overnight delivery service, with delivery confirmed,
or (iv) telexed or telecopied, with receipt confirmed, addressed as
follows:
(a) If to the Purchaser to:
The New Imperial Electric Company
Attn: Thomas H. Quinn
ArborLake Centre, Suite 550
1751 Lake Cook Road
Deerfield, Illinois 60015
Telephone: (708) 945-5591
Telecopier: (708) 945-5698
in each case with a copy to:
Mayer, Brown & Platt
Attn: James B. Carlson, Esq.
1675 Broadway, Suite 1900
New York, New York 10019
Telephone: (212) 506-2515
Telecopier: (212) 262-1910
or to such other person or address as Purchaser shall furnish to Sellers in
writing.
(b) If to Sellers to:
The Imperial Electric
Company, The Scott Motors
Company and Gear Research, Inc.
Attention: Gordon Nelson
ArborLake Centre, Suite 550
1751 Lake Cook Road
Deerfield, Illinois 60015
Telephone: (708) 945-5591
Telecopier: (708) 945-5698
with a copy to:
G. Robert Fisher, Esq.
Steven L. Rist, Esq.
Bryan Cave LLP
One Kansas City Place
1200 Main, Suite 3500
Kansas City, Missouri 64105
Telephone: (816) 474-7400
Telecopier: (816) 391-7600
or such other persons or addresses as shall be furnished in writing by any
party to the other party. A Notice shall be deemed to have been given as
of the date when (i) personally delivered, (ii) five (5) days after the
date when deposited with the United States mail properly addressed, (iii)
when receipt of a Notice sent by an overnight delivery service is confirmed
by such overnight delivery service, or (iv) when receipt of the telex or
telecopy is confirmed, as the case may be, unless the sending party has
actual knowledge that a Notice was not received by the intended recipient.
12.06 Definitions. For the purpose of this Agreement, "Laws" shall
include, without limitation, all foreign, federal, state and local laws,
statutes, rules, regulations, codes, ordinances, plans, orders, judicial
decrees, writs, injunctions, notices, decisions or demand letters issued,
entered or promulgated pursuant to any foreign, federal, state or local
law. For the purpose of this Agreement, "generally accepted accounting
principles" shall mean such principles, applied on a consistent basis, as
set forth in Opinions of the Accounting Principles Board of the American
Institute of Certified Public Accountants and/or in statements of the
Financial Accounting Standards Board which are applicable in the
circumstances as of the date in question, and the requirement that such
principles be applied on a "consistent basis" means that accounting
principles observed in the current period are comparable in all material
respects to those applied in the preceding periods, except as change is
permitted or required under or pursuant to such accounting principles.
12.07 Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and
their respective heirs, successors and permitted assigns. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by either party without the prior written consent of the other
party, provided, however, that (i) Sellers hereby consent to the
Purchaser's assignment of this Agreement and the right to enforce the terms
hereof to any lender who is now, or may in the future be, financing the
Purchaser's acquisition of the Purchased Assets as contemplated by this
Agreement or any other lender of Purchaser and (ii) Purchaser hereby
consents to the Sellers' assignment of this Agreement and the right to
enforce the terms hereof to JII, Inc., Jordan Industries, Inc. or any
subsidiary of Jordan Industries, Inc. or any lender of Sellers.
12.08 Governing Law. This Agreement shall be governed by the laws
of the State of Illinois (regardless of the laws that might otherwise
govern under applicable principles of conflicts of law of the state of
Illinois) as to all matters including, but not limited to, matters of
validity, construction, effect, performance and remedies.
12.09 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.10 Neutral Interpretation. This Agreement constitutes the
product of the negotiation of the parties hereto and the enforcement hereof
shall be interpreted in a neutral manner, and not more strongly for or
against any party based upon the source of the draftsmanship hereof.
12.11 Headings. The article and section headings contained in this
Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
12.12 Entire Agreement. This Agreement, which term as used
throughout includes the Exhibits hereto, embodies the entire agreement and
understanding of the parties hereto in respect of the subject matter
contained herein. There are no restrictions, promises, representations,
warranties, covenants or undertakings other than those expressly set forth
or referred to herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
IN WITNESS WHEREOF, the parties hereto have entered into this
Agreement as of the date first hereinabove set forth.
PURCHASER:
THE NEW IMPERIAL ELECTRIC COMPANY
By: /s/ Jonathan F. Boucher
-------------------------------
Printed Name: Jonathan F. Boucher
Title: Vice President
NEW SCOTT:
THE NEW SCOTT MOTORS COMPANY
By: /s/ Jonathan F. Boucher
------------------------------
Printed Name: Jonathan F. Boucher
Title: Vice President
NEW GEAR:
NEW GEAR RESEARCH, INC.
By: /s/ Jonathan F. Boucher
------------------------------
Printed Name: Jonathan F. Boucher
Title: Vice President
M&G:
MOTORS AND GEARS, INC.
By: /s/ Jonathan F. Boucher
------------------------------
Printed Name: Jonathan F. Boucher
Title: Vice President
INDUSTRIES:
MOTORS AND GEARS INDUSTRIES, INC.
By: /s/ Jonathan F. Boucher
------------------------------
Printed Name: Jonathan F. Boucher
Title: Vice President
SELLER:
THE IMPERIAL ELECTRIC COMPANY
By: /s/ Jonathan F. Boucher
------------------------------
Printed Name: Jonathan F. Boucher
Title: Vice President
SELLER:
THE SCOTT MOTORS COMPANY
By: /s/ Jonathan F. Boucher
------------------------------
Printed Name: Jonathan F. Boucher
Title: Vice President
SELLER:
GEAR RESEARCH, INC.
By: /s/ Jonathan F. Boucher
------------------------------
Printed Name: Jonathan F. Boucher
Title: Vice President
SCHEDULE OF EXHIBITS TO
AGREEMENT FOR PURCHASE AND SALE OF ASSETS AMONG
THE NEW IMPERIAL ELECTRIC COMPANY,
THE NEW SCOTT MOTORS COMPANY,
NEW GEAR RESEARCH,
MOTORS AND GEARS, INC.
and
MOTORS AND GEARS INDUSTRIES, INC.
AND
THE IMPERIAL ELECTRIC COMPANY,
THE SCOTT MOTORS COMPANY, and
GEAR RESEARCH, INC.
Exhibits Title
- --------- -----
Exhibit 1.01 Calculation of NWC
Exhibit 1.05 Assumed Liabilities
Exhibit 1.06 Capitalized Lease Amount
Exhibit 1.07 Excluded Liabilities
Exhibit 1.08 Intercompany Debt
Exhibit 1.09 Allocation
Exhibit 2.01.1 Foreign Qualifications
Exhibit 2.01.2 Certificate or Articles of Incorporation, Bylaws and
Certificates of Authority
Exhibit 2.02 Schedule of Authorized, Issued and Outstanding Capital
Stock
Exhibit 2.03 Schedule of Subsidiaries and Affiliates
Exhibit 2.04 Authorizing Resolutions
Exhibit 2.05 Restrictions on Ability to Perform
Exhibit 6.03 Assumption Agreement
Exhibit 6.05 Contingent Earnout Agreement
Exhibit 7.01 Certificate of Fulfillment of Conditions by Sellers
Exhibit 7.03 Opinion of the Sellers' Counsel
Exhibit 8.01 Certificate of Fulfillment of Conditions by Purchaser
Exhibit 8.03 Opinion of Purchaser's Counsel
<PAGE>
EXHIBIT 2.2
CONTINGENT EARNOUT AGREEMENT
CONTINGENT EARNOUT AGREEMENT
----------------------------
THIS CONTINGENT EARNOUT AGREEMENT ("Agreement"), dated as of November
7, 1996, by and among (A) MOTORS AND GEARS, INC., a Delaware corporation
("M&G"), MOTORS AND GEARS INDUSTRIES, INC., a Delaware corporation
("INDUSTRIES"), THE NEW IMPERIAL ELECTRIC COMPANY, a Delaware corporation
("New Imperial"), THE NEW SCOTT MOTORS COMPANY, a Delaware corporation and
a direct, wholly-owned subsidiary of New Imperial ("New Scott"), and NEW
GEAR RESEARCH, INC., a Delaware corporation and a direct, wholly-owned
subsidiary of New Imperial ("New Gear"), and (B) THE IMPERIAL ELECTRIC
COMPANY, an Ohio corporation ("Old Imperial"), SCOTT MOTORS COMPANY, a
Delaware corporation ("Old Scott"), and GEAR RESEARCH, INC., a Delaware
corporation ("Old Gear").
Recitals
--------
(a) New Imperial, Old Imperial, Old Scott and Old Gear are parties
to a certain Agreement for Purchase and Sale of Assets dated November 7,
1996 (the "Purchase Agreement").
(b) The Companies (defined below) have agreed to enter into this
Agreement as partial payment of the "Purchase Price" (defined in the
Purchase Agreement) in order to induce Old Imperial to (i) enter into the
Purchase Agreement and to cause Old Scott and Old Gear to do the same, and
(ii) consummate and cause Old Scott and Old Gear to consummate the
transactions contemplated therein.
In consideration of the mutual covenants and agreements herein set
forth, and the special benefits described herein and in the Purchase
Agreement accruing to the Companies on the one hand and Old Imperial on the
other, the parties hereto agree as follows:
AGREEMENTS:
----------
1. Definitions
-----------
"Closing Date" means the date of execution of this Agreement by the
parties hereto.
"Cash Flow" for purposes of this Agreement shall have the same
meaning as set forth in the Indenture except that in calculating Cash Flow
for purposes hereof (i) neither subpart (l) of said defined term in the
Indenture relating to net losses in respect of discontinued operations nor
subpart (k) of said defined term in the Indenture relating to the net loss
of any person, other than those of a Restricted Subsidiary shall apply to
said definition for purposes hereof, and (ii) in determining Consolidated
Net income (as defined in the Indenture) for purposes of calculating Cash
Flow herein, Restructuring Charges (defined in the Indenture) shall be
included in Consolidated Net Income notwithstanding subpart (E) of said
definition of Consolidated Net Income in the Indenture which excludes
Restructuring Charges and Consolidated Net Income shall be increased by an
amount equal to any fees charged in respect of the JII Services Agreement
provided said fees would otherwise reduce Consolidated Net Income. Cash
Flow under this Agreement shall be determined from audited financial
statements prepared by independent public accountants excluding any impact
of Post Closing Acquired Companies.
"Companies" means M&G, Industries, New Imperial, New Scott and New
Gear.
"Cumulative Cash Flow" means the sum of Cash Flow of Old Imperial,
Old Scott and Old Gear for the period commencing as of January 1, 1996
until (but excluding) the Closing Date plus the aggregate Cash Flow of New
Imperial, New Scott and New Gear for the period commencing as of the
Closing Date through the close of business as of December 31, 2000 (the
"Expiration Date").
"Financing Agreements" means any senior or subordinated debt,
preferred stock, common or other capital stock, lease or other financing
agreements, instruments and documents, including, without limitation, any
agreements or instruments relating to any Indebtedness, binding upon M&G,
Industries, New Imperial or any of their direct or indirect subsidiaries,
or their respective properties and assets, from time to time in effect.
"Indebtedness" means any indebtedness, whether or not contingent, in
respect of borrowed money or evidenced by bonds, notes, debentures or
similar instruments or letters of credit (or reimbursement agreements in
respect thereof) or representing the deferred and unpaid balance of the
purchase price of any property (including pursuant to capital leases),
except any such balance that constitutes an accrued expense or a trade
payable, and any financial hedging obligations, if and to the extent such
indebtedness (other than a financial hedging obligation) would appear as a
liability upon a balance sheet prepared on a consolidated basis in
accordance with generally accepted accounting principles, and also
includes, to the extent not otherwise included, the guarantee of items that
would be included within this definition.
"Indenture" means the Indenture dated as of November 7, 1996 between
M&G and Fleet National Bank, as trustee regarding the 10 3/4% Series A
Senior Notes due 2006 of M&G in the aggregate principal amount of
$170,000,000.
"Post Closing Acquired Company" means any business, the assets or
capital stock of which are acquired after the Closing Date by New Imperial,
New Scott or New Gear.
"Payment Amount" means an amount equal to one-half of Cumulative Cash
Flow in excess of $50,000,000.
"Payment Date" means the date following the Expiration Date upon
which the calculation of the Payment Amount is finally determined in
accordance with the provisions hereof; provided, however, that in all
events the Payment Date shall occur prior to December 31, 2001.
"Stop Payment Event" means the occurrence and existence as of the
applicable date of any violation or breach of any Financing Agreement after
the Closing Date if the violation or breach prohibits payment of the
Payment Amount.
2. Calculation of Payment Amount. Following the Expiration Date the
parties shall calculate the Payment Amount based upon audited Financial
Statements which shall be reviewed by independent public accountants. Any
disputes regarding the calculation of Cumulative Cash Flow or the Payment
Amount and the preparation of audited financial statements in connection
with said calculations shall be resolved in accordance with Sections 14 and
15 hereof. The parties acknowledge and agree that the Payment Amount is
based on a cumulative test of Cash Flow over a five-year period ending on
the Expiration Date. Accordingly, no determination of amounts due Old
Imperial hereunder can be made until after the Expiration Date and,
therefore, the Companies shall have no payment obligations hereunder until
the Payment Date.
3. Payment. If there is no Stop Payment Event as of the Payment
Date, the Companies hereby jointly and severally agree to pay Old Imperial
the Payment Amount on the Payment Date. If a Stop Payment Event exists on
the Payment Date, the Companies jointly and severally agree to pay Old
Imperial the Payment Amount immediately upon termination or elimination of
the Stop Payment Event.
4. Not A Stock Equivalent. The Companies and Old Imperial agree and
acknowledge that this Agreement does not confer upon Old Imperial any
rights or interests as a stockholder of any of the Companies and that no
fiduciary duties are owed by the Companies or their respective directors,
officers and stockholders in respect of this Agreement. Old Imperial
further agrees and acknowledges that the Companies are not, and shall not
be, restricted or limited in any manner from engaging in transactions that
may have dilutive effects, entering into or modifying any Financing
Agreements that restrict or limit payments hereunder, incurring
Indebtedness, engaging in transactions involving the stock or assets of the
Companies, acquiring business interests, completing capital expenditures,
declaring dividends, allocating amounts, determining rates or otherwise
making determinations in respect of Indebtedness or Cash Flow, making other
adjustments pursuant to this Agreement, or otherwise taking actions that
may affect the Payment Amount. The determination of Post Closing Acquired
Companies and the amounts thereof and income derived therefrom and expenses
related thereto, shall be determined by the appropriate Board of Directors
of the Companies. Nothing in this Agreement shall be construed to create a
right for the benefit of Old Imperial to participate in or receive the
benefit of any related or unrelated business opportunities evaluated or
pursued by any of the Companies other than as provided specifically herein.
5. Successors and Assigns. This Agreement shall be binding on Old
Imperial and the Companies and their respective successors and assigns.
6. Counterparts. This Agreement may be executed in two or more
counterparts, any one of which shall be deemed an original without
reference to the others.
7. Amendments. This Agreement may not be amended or modified, and
no waivers hereunder may be granted, except with the approval of each of
the parties hereto.
8. Notice. Any notice ("Notice"), request, demand or other
communication required or permitted to be given under this Agreement shall
be given in writing and if delivered personally, or sent by certified or
registered mail, return receipt requested, as follows (or to such other
addressee or address as shall be set forth in a notice given in the same
manner):
a. If to the Companies to:
Motors and Gears, Inc.
Attn: Thomas H. Quinn
ArborLake Centre, Suite 550
1751 Lake Cook Road
Deerfield, Illinois 60015
Telephone: (708) 945-5591
Telecopier: (708) 945-5698
in each case with a copy to:
Mayer, Brown & Platt
Attn: James B. Carlson, Esq.
1675 Broadway, Suite 1900
New York, New York 10019
Telephone: (212) 506-2515
Telecopier: (212) 262-1910
or to such other person or address as the Companies shall furnish to Old
Imperial in writing.
b. If to Old Imperial to:
The Imperial Electric Company
Attn: Gordon Nelson
ArborLake Centre, Suite 550
1751 Lake Cook Road
Deerfield, Illinois 60015
Telephone: (708) 945-5591
Telecopier: (708) 945-5698
with a copy to:
G. Robert Fisher, Esq.
Steven L. Rist, Esq.
Bryan Cave LLP
One Kansas City Place
1200 Main, Suite 3500
Kansas City, Missouri 64105
Telephone: (816) 474-7400
Telecopier: (816) 391-7600
Any such notices shall be deemed to be given on the date personally
delivered or such return receipt is issued.
9. Old Imperial's Representations. Old Imperial hereby warrants and
represents to the Companies that Old Imperial has carefully reviewed and
considered the provisions of this Agreement, and in connection therewith,
has consulted with such advisors as it considers appropriate, and that Old
Imperial is not subject to any covenants, agreements or restrictions,
including without limitation any covenants, agreements or restrictions
which would be breached or violated by Old Imperial's execution of this
Agreement.
10. Obligations of the Companies. Old Imperial agrees and
acknowledges that this Agreement and the obligations of the Companies
hereunder are solely obligations and liabilities of the Companies. None of
the Companies' directors, officers, employees, stockholders and affiliates
or any other persons shall be obligated or liable in respect of this
Agreement, and Old Imperial hereby releases them from any such obligation
or liability.
11. Entire Agreement. This Agreement reflects the entire agreement
among the parties relating to the subject matter of this Agreement, and
supersedes and terminates all prior agreements, obligations, commitments or
understandings relating to such subject matter.
12. Severability. If for any reason, any provision hereof shall be
determined to be invalid or unenforceable, the validity and effect of the
other provisions hereof shall not be affected thereby. Whenever possible,
each provision of this Agreement shall be interpreted in such a manner as
to be effective and valid under applicable law, but if any provision of
this Agreement is held to be invalid, illegal or unenforceable in any
respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other
provision or any other jurisdiction, but this Agreement shall be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision had never been contained herein. If any court
determines that any provision hereof is unenforceable because of the power
to reduce the scope or duration of such provision, as the case may be and,
in its reduced form, such provision shall then be enforceable.
13. Waiver of Breach; Enforcement. The waiver by the Companies or
Old Imperial of a breach of any provision of this Agreement by the other
party shall not operate or be construed as a waiver of any other breach of
such other party. Each of the parties (and third party beneficiaries) to
this Agreement shall be entitled to enforce its rights under this breach of
any provision of this Agreement and to exercise all other rights existing
in its favor.
14. Litigation. THIS AGREEMENT SHALL BE GOVERNED BY CONSTRUED,
APPLIED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
ILLINOIS, UNITED STATES OF AMERICA, AND NO DOCTRINE OF CHOICE OF LAW SHALL
BE USED TO APPLY ANY LAW OTHER THAN THAT OF ILLINOIS, AND NO DEFENSE,
COUNTERCLAIM OR RIGHT OF SET-OFF GIVEN OR ALLOWED BY THE LAWS OF ANY OTHER
STATE OR JURISDICTION, OR ARISING OUT OF THE ENACTMENT, MODIFICATION OR
REPEAL OF ANY LAW, REGULATION, ORDINANCE OR DECREE OF ANY FOREIGN
JURISDICTION, BE INTERPOSED IN ANY ACTION HEREON. SUBJECT TO SECTION 15,
THE PARTIES AGREE THAT ANY ACTION OR PROCEEDING TO ENFORCE OR ARISING OUT
OF THIS AGREEMENT MAY BE COMMENCED IN THE STATE COURTS, OR IN THE UNITED
STATES DISTRICT COURTS IN CHICAGO, ILLINOIS. THE PARTIES CONSENT TO SUCH
JURISDICTION, AGREE THAT VENUE WILL BE PROPER IN SUCH COURTS AND WAIVE ANY
OBJECTIONS BASED UPON FORUM NON CONVENIENS. THE CHOICE OF FORUM SET FORTH
IN THIS SECTION 14 SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY
ACTION UNDER THIS AGREEMENT IN ANY OTHER JURISDICTION.
15. Arbitration. THE COMPANIES AND OLD IMPERIAL HEREBY WAIVE AND
SHALL NOT SEEK JURY TRIAL IN ANY LAWSUIT, PROCEEDING, CLAIM, COUNTERCLAIM,
DEFENSE OR OTHER LITIGATION OR DISPUTE UNDER OR IN RESPECT OF THIS
AGREEMENT. THE PARTIES AGREE THAT ANY SUCH DISPUTE BETWEEN OR AMONG THE
PARTIES TO THIS AGREEMENT RELATING TO OR IN RESPECT OF THIS AGREEMENT, ITS
NEGOTIATION, EXECUTION, PERFORMANCE, SUBJECT MATTER, OR ANY COURSE OF
CONDUCT OR DEALING OR ACTIONS UNDER OR IN RESPECT OF THIS AGREEMENT, SHALL
BE SUBMITTED TO, AND RESOLVED EXCLUSIVELY PURSUANT TO ARBITRATION IN
ACCORDANCE WITH THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN
ARBITRATION ASSOCIATION. SUCH ARBITRATION SHALL TAKE PLACE IN CHICAGO,
ILLINOIS, UNITED STATES OF AMERICA, AND SHALL BE SUBJECT TO THE SUBSTANTIVE
LAW OF THE STATE OF ILLINOIS. DECISIONS PURSUANT TO SUCH ARBITRATION SHALL
BE FINAL, CONCLUSIVE AND BINDING ON THE PARTIES. UPON THE CONCLUSION OF
ARBITRATION, SELLER, OR THE COMPANIES MAY APPLY TO ANY COURT OF THE TYPE
DESCRIBED IN SECTION 14 TO ENFORCE THE DECISION PURSUANT TO SUCH
ARBITRATION.
IN WITNESS WHEREOF, the parties hereto have caused this Contingent
Earnout Agreement to be duly executed as of the day and year first above
written.
OLD IMPERIAL
THE IMPERIAL ELECTRIC COMPANY:
By: /s/ Jonathan F. Boucher
------------------------
Its: Vice President
THE COMPANIES
MOTORS AND GEARS, INC.
By: /s/ Jonathan F. Boucher
------------------------
Its: Vice President
MOTORS AND GEARS INDUSTRIES, INC.
By: /s/ Jonathan F. Boucher
------------------------
Its: Vice President
THE NEW IMPERIAL ELECTRIC COMPANY
By: /s/ Jonathan F. Boucher
------------------------
Its: Vice President
THE NEW SCOTT MOTORS COMPANY
By: /s/ Jonathan F. Boucher
------------------------
Its: Vice President
NEW GEAR RESEARCH, INC.
By: /s/ Jonathan F. Boucher
------------------------
Its: Vice President
SCOTT MOTORS COMPANY
By: /s/ Jonathan F. Boucher
------------------------
Its: Vice President
GEAR RESEARCH, INC.
By: /s/ Jonathan F. Boucher
------------------------
Its: Vice President
<PAGE>
EXHIBIT 10.1
==============================================================================
MOTORS AND GEARS, INC.
________________________________________
$170,000,000
10 % SERIES A SENIOR NOTES DUE 2006
________________________________________
___________________
REGISTRATION RIGHTS AGREEMENT
DATED AS OF NOVEMBER 7, 1996
___________________
Donaldson, Lufkin & Jenrette BT Securities Jefferies & Company, Inc.
Securities Corporation Corporation
===============================================================================
This Registration Rights Agreement (this "Agreement") is made and
entered into as of November 7, 1996, by and among Motors and Gears, Inc.,
a Delaware corporation (the "Company"), and Donaldson, Lufkin & Jenrette
Securities Corporation, BT Securities Corporation and Jefferies & Company,
Inc. (each a "Purchaser" and, collectively, the "Purchasers"), each of
which has agreed to purchase the Company's 10 % Series A Senior Notes due
2006 (the "Series A Senior Notes") pursuant to the Purchase Agreement (as
defined below).
This Agreement is made pursuant to the Purchase Agreement, dated
November 1, 1996 (the "Purchase Agreement"), by and between the Company and
the Purchasers. In order to induce the Purchasers to purchase the Series A
Senior Notes, the Company has agreed to provide the registration rights set
forth in this Agreement. The execution and delivery of this Agreement is a
condition to the obligations of the Purchasers set forth in the Purchase
Agreement.
The parties hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
Act: The Securities Act of 1933, as amended.
Business Day: Any day except a Saturday, Sunday or other day in the
City of New York, or in the city of the corporate trust office of the
Trustee, on which banks are authorized to close.
Broker-Dealer: Any broker or dealer registered under the Exchange
Act.
Broker-Dealer Transfer Restricted Senior Notes: Series B Senior
Notes that are acquired by a Broker-Dealer in the Exchange Offer in
exchange for Series A Senior Notes that such Broker-Dealer acquired for its
own account as a result of market-making activities or other trading
activities (other than Series A Senior Notes acquired directly from the
Company or any of its affiliates).
Closing Date: The date hereof.
Commission: The Securities and Exchange Commission.
Consummate: An Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Series B Senior Notes to be issued in the Exchange Offer,
(b) the maintenance of such Registration Statement continuously effective
and the keeping of the Exchange Offer open for a period not less than the
minimum period required pursuant to Section 3(b) hereof and (c) the
delivery by the Company to the Registrar under the Indenture of Series B
Senior Notes in the same aggregate principal amount as the aggregate
principal amount of Series A Senior Notes tendered by Holders thereof
pursuant to the Exchange Offer.
Damages Payment Date: With respect to the Series A Senior Notes,
each Interest Payment Date.
Effectiveness Target Date: As defined in Section 5.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The registration by the Company under the Act of the
Series B Senior Notes pursuant to the Exchange Offer Registration Statement
pursuant to which the Company shall offer the Holders of all outstanding
Transfer Restricted Senior Notes the opportunity to exchange all such
outstanding Transfer Restricted Senior Notes for Series B Senior Notes in
an aggregate principal amount equal to the aggregate principal amount of
the Transfer Restricted Senior Notes tendered in such exchange offer by
such Holders.
Exchange Offer Registration Statement: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchasers
propose to sell the Series A Senior Notes to certain "qualified
institutional buyers," as such term is defined in Rule 144A under the Act,
and to certain "accredited investors," as such term is defined in Rule
501(a)(1), (2), (3), (5) and (7) of Regulation D under the Act.
Holders: As defined in Section 2 hereof.
Indemnified Holder: As defined in Section 8(a) hereof.
Indenture: The Indenture, dated the Closing Date, among the Company
and Fleet National Bank, as trustee (the "Trustee"), pursuant to which the
Senior Notes are to be issued, as such Indenture is amended or supplemented
from time to time in accordance with the terms thereof.
Interest Payment Date: As defined in the Indenture and the Senior
Notes.
NASD: National Association of Securities Dealers, Inc.
Person: An individual, partnership, corporation, trust,
unincorporated organization, or a government or agency or political
subdivision thereof.
Prospectus: The prospectus included in a Registration Statement at
the time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated
by reference into such Prospectus.
Record Holder: With respect to any Damages Payment Date, each Person
who is a Holder of Senior Notes on the record date with respect to the
Interest Payment Date on which such Damages Payment Date shall occur.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Company
relating to (a) an offering of Series B Senior Notes pursuant to an
Exchange Offer or (b) the registration for resale of Transfer Restricted
Senior Notes pursuant to the Shelf Registration Statement, in each case,
(i) which is filed pursuant to the provisions of this Agreement and (ii)
including the Prospectus included therein, all amendments and supplements
thereto (including post-effective amendments) and all exhibits and material
incorporated by reference therein.
Restricted Broker-Dealer: Any Broker-Dealer which holds
Broker-Dealer Transfer Restricted Senior Notes.
Senior Notes: The Series A Senior Notes and the Series B Senior
Notes.
Series B Senior Notes: The Company's 10 % Series B Senior Notes due
2006 to be issued pursuant to the Indenture (i) in the Exchange Offer or
(ii) upon the request of any Holder of Series A Senior Notes covered by a
Shelf Registration Statement, in exchange for such Series A Senior Notes.
Shelf Registration Statement: As defined in Section 4 hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section
77aaa-77bbbb) as in effect on the date of the Indenture.
Transfer Restricted Senior Notes: Each Senior Note, until the
earliest to occur of (a) the date on which such Senior Note is exchanged in
the Exchange Offer and entitled to be resold to the public by the Holder
thereof without complying with the prospectus delivery requirements of the
Act, (b) the date on which such Senior Note has been disposed of in
accordance with a Shelf Registration Statement, (c) the date on which such
Senior Note is disposed of by a Broker-Dealer pursuant to the "Plan of
Distribution" contemplated by the Exchange Offer Registration Statement
(including delivery of the Prospectus contained therein) or (d) the date on
which such Senior Note is distributed to the public pursuant to Rule 144
under the Act.
Underwritten Registration or Underwritten Offering: A registration
in which securities of the Company are sold to an underwriter for
reoffering to the public.
2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Senior Notes
(each, a "Holder") whenever such Person owns Transfer Restricted Senior
Notes.
3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable
federal law (after the procedures set forth in Section 6(a)(i) below have
been complied with), the Company shall (i) cause to be filed with the
Commission as soon as practicable after the Closing Date, but in no event
later than 60 days after the Closing Date, the Exchange Offer Registration
Statement, (ii) use their best efforts to cause such Exchange Offer
Registration Statement to become effective at the earliest possible time,
but in no event later than 120 days after the Closing Date, (iii) in
connection with the foregoing, (A) file all pre-effective amendments to
such Exchange Offer Registration Statement as may be necessary in order to
cause such Exchange Offer Registration Statement to become effective, (B)
file, if applicable, a post-effective amendment to such Exchange Offer
Registration Statement pursuant to Rule 430A under the Act and (C) cause
all necessary filings, if any, in connection with the registration and
qualification of the Series B Senior Notes to be made under the Blue Sky
laws of such jurisdictions as are necessary to permit Consummation of the
Exchange Offer, and (iv) upon the effectiveness of such Exchange Offer
Registration Statement, commence and Consummate the Exchange Offer. The
Exchange Offer shall be on the appropriate form permitting registration of
the Series B Senior Notes to be offered in exchange for the Series A Senior
Notes that are Transfer Restricted Senior Notes and to permit sales of
Broker-Dealer Transfer Restricted Senior Notes by Restricted Broker-Dealers
as contemplated by Section 3(c) below.
(b) The Company shall use its best efforts to cause the Exchange
Offer Registration Statement to be effective continuously, and shall keep
the Exchange Offer open, for a period of not less than the minimum period
required under applicable federal and state securities laws to Consummate
the Exchange Offer; provided, however, that in no event shall such period
be less than 20 Business Days. The Company shall cause the Exchange Offer
to comply with all applicable federal and state securities laws. No
securities other than the Senior Notes shall be included in the Exchange
Offer Registration Statement. The Company shall use its best efforts to
cause the Exchange Offer to be Consummated on the earliest practicable date
after the Exchange Offer Registration Statement has become effective, but
in no event later than 30 Business Days thereafter.
(c) The Company shall include a "Plan of Distribution" section in
the Prospectus contained in the Exchange Offer Registration Statement and
indicate therein that any Restricted Broker-Dealer who holds Series A
Senior Notes that are Transfer Restricted Senior Notes and that were
acquired for the account of such Broker-Dealer as a result of market-making
activities or other trading activities, may exchange such Series A Senior
Notes (other than Transfer Restricted Senior Notes acquired directly from
the Company) pursuant to the Exchange Offer; however, such Broker-Dealer
may be deemed to be an "underwriter" within the meaning of the Act and
must, therefore, deliver a prospectus meeting the requirements of the Act
in connection with its initial sale of each Series B Senior Note received
by such Broker-Dealer in the Exchange Offer, which prospectus delivery
requirement may be satisfied by the delivery by such Broker-Dealer of the
Prospectus contained in the Exchange Offer Registration Statement. Such
"Plan of Distribution" section shall also contain all other information
with respect to such sales of Broker-Dealer Transfer Restricted Senior
Notes by Restricted Broker-Dealers that the Commission may require in order
to permit such sales pursuant thereto, but such "Plan of Distribution"
shall not name any such Broker-Dealer or disclose the amount of Senior
Notes held by any such Broker-Dealer except to the extent required by the
Commission as a result of a change in policy after the date of this
Agreement.
The Company shall use its reasonable best efforts to keep the
Exchange Offer Registration Statement continuously effective, supplemented
and amended as required by the provisions of Section 6(c) below to the
extent necessary to ensure that it is available for sales of Broker-Dealer
Transfer Restricted Senior Notes by Restricted Broker-Dealers, and to
ensure that such Registration Statement conforms with the requirements of
this Agreement, the Act and the policies, rules and regulations of the
Commission as announced from time to time, for a period of 180 days from
the date on which the Exchange Offer is Consummated.
The Company shall promptly provide sufficient copies of the latest
version of such Prospectus to such Restricted Broker-Dealers promptly upon
request, and in no event later than two days after such request, at any
time during such one-year period in order to facilitate such sales.
4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Company is not required to file
an Exchange Offer Registration Statement with respect to the Series B
Senior Notes because the Exchange Offer is not permitted by applicable law
(after the procedures set forth in Section 6(a)(i) below have been complied
with) or (ii) if any Holder of Transfer Restricted Senior Notes shall
notify the Company within 20 Business Days following the Consummation of
the Exchange Offer that (A) such Holder is prohibited by law or Commission
policy from participating in the Exchange Offer or (B) such Holder may not
resell the Series B Senior Notes acquired by it in the Exchange Offer to
the public without delivering a prospectus and the Prospectus contained in
the Exchange Offer Registration Statement is not appropriate or available
for such resales by such Holder or (C) such Holder is a Broker-Dealer and
holds Series A Senior Notes acquired directly from the Company or one of
its affiliates, then the Company shall (x) cause to be filed on or prior to
the earliest of (1) 60 days after the date on which the Company is notified
by the Commission or otherwise determines that it is not required to file
the Exchange Offer Registration Statement pursuant to clause (i) above and
(2) 60 days after the date on which the Company receives the notice
specified in clause (ii) above, a shelf registration statement pursuant to
Rule 415 under the Act, (which may be an amendment to the Exchange Offer
Registration Statement (in either event, the "Shelf Registration
Statement")), relating to all Transfer Restricted Senior Notes the Holders
of which shall have provided the information required pursuant to Section
4(b) hereof, and (y) use their best efforts to cause such Shelf
Registration Statement to become effective at the earliest possible time,
but in no event later than 120 days after the date on which the Company
becomes obligated to file such Shelf Registration Statement. If, after the
Company has filed an Exchange Offer Registration Statement which satisfies
the requirements of Section 3(a) above, the Company is required to file and
make effective a Shelf Registration Statement solely because the Exchange
Offer shall not be permitted under applicable federal law, then the filing
of the Exchange Offer Registration Statement shall be deemed to satisfy the
requirements of clause (x) above. Such an event shall have no effect on
the requirements of clause (y) above, or on the Effectiveness Target Date
as defined in Section 5 below. The Company shall use its reasonable best
efforts to keep the Shelf Registration Statement discussed in this Section
4(a) continuously effective, supplemented and amended as required by and
subject to the provisions of Sections 6(b) and (c) hereof to the extent
necessary to ensure that it is available for sales of Transfer Restricted
Senior Notes by the Holders thereof entitled to the benefit of this Section
4(a), and to ensure that it conforms with the requirements of this
Agreement, the Act and the policies, rules and regulations of the
Commission as announced from time to time, for a period of at least three
years (as extended pursuant to Section 6(c)(i)) following the date on which
such Shelf Registration Statement first becomes effective under the Act or
such shorter period that will terminate when all Transfer Restricted Senior
Notes covered by the Shelf Registration Statement have been sold pursuant
thereto.
(b) Provision by Holders of Certain Information in Connection with
the Shelf Registration Statement. No Holder of Transfer Restricted Senior
Notes may include any of its Transfer Restricted Senior Notes in any Shelf
Registration Statement pursuant to this Agreement unless and until such
Holder furnishes to the Company in writing, within 20 days after receipt of
a request therefor, such information specified in item 507 of Regulation
S-K under the Act for use in connection with any Shelf Registration
Statement or Prospectus or preliminary Prospectus included therein. No
Holder of Transfer Restricted Senior Notes shall be entitled to Liquidated
Damages pursuant to Section 5 hereof unless and until such Holder shall
have used its best efforts to provide all such information. Each Holder as
to which any Shelf Registration Statement is being effected agrees to
furnish promptly to the Company all information required to be disclosed in
order to make the information previously furnished to the Company by such
Holder not materially misleading.
5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not
filed with the Commission on or prior to the date specified for such filing
in this Agreement, (ii) any such Registration Statement has not been
declared effective by the Commission on or prior to the date specified for
such effectiveness in this Agreement (the "Effectiveness Target Date"),
(iii) the Exchange Offer has not been Consummated within 30 Business Days
after the Effectiveness Target Date with respect to the Exchange Offer
Registration Statement or (iv) subject to the provisions of Section 6(c)(i)
below, any Registration Statement required by this Agreement is filed and
declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose without being succeeded immediately (but in
any event within five Business Days thereafter) by a post-effective
amendment to such Registration Statement that cures such failure and that
is itself declared effective within such five Business Day period, other
than, in the case of clause (iv) above, for such period in which such
Registration Statement shall cease to be effective as a result of
post-effective amendments to incorporate annual filings which the Company
is required to file with the Commission or post-effective amendments not
otherwise covered by Section 6(c)(i) hereof, provided that the Company in
good faith attempts to cause such Registration Statement to be declared
effective as soon as reasonably practicable (each such event referred to in
clauses (i) through (iv), a "Registration Default"), the Company hereby
agrees to pay to each Holder of Transfer Restricted Senior Notes, for the
first 90-day period immediately following the occurrence of such
Registration Default, liquidated damages in an amount equal to $.05 per
week per $1,000 principal amount of Senior Notes constituting Transfer
Restricted Senior Notes held by such Holder for so long as the Registration
Default continues. The amount of liquidated damages payable to each Holder
shall increase by an additional $.05 per week per $1,000 in principal
amount of Transfer Restricted Senior Notes held by such Holder for each
subsequent 90-day period up to a maximum of $.40 per week per $1,000 in
principal amount of Senior Notes constituting Transfer Restricted Senior
Notes held by such Holder; provided, however, that (1) upon filing of the
Exchange Offer Registration Statement (and/or, if applicable, the Shelf
Registration Statement), in the case of (i) above, (2) upon the
effectiveness of the Exchange Offer Registration Statement (and/or, if
applicable, the Shelf Registration Statement), in the case of (ii) above,
(3) upon Consummation of the Exchange Offer, in the case of (iii) above, or
(4) upon the filing of a post-effective amendment to the Registration
Statement or an additional Registration Statement that causes the Exchange
Offer Registration Statement (and/or, if applicable, the Shelf Registration
Statement) to again be declared effective or made usable in the case of
(iv) above, the liquidated damages payable with respect to such Transfer
Restricted Senior Notes as a result of such clause (i), (ii), (iii) or
(iv), as applicable, shall cease.
All accrued liquidated damages shall be paid by the Company to the
Global Note Holder by wire transfer of immediately available funds or by
federal funds check and to Holders of Certificated Securities by wire
transfer to the accounts specified by them or by mailing checks to their
registered addresses if no such accounts have been specified on each
Damages Payment Date. All obligations of the Company set forth in the
preceding paragraph that are outstanding with respect to any Transfer
Restricted Senior Note at the time such security ceases to be a Transfer
Restricted Senior Note shall survive until such time as all such
obligations with respect to such security shall have been satisfied in
full.
6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
Exchange Offer, the Company shall comply with all applicable provisions of
Section 6(c) below, shall use their best efforts to effect such exchange
and to permit the sale of Broker-Dealer Transfer Restricted Senior Notes
being sold in accordance with the intended method or methods of
distribution thereof, and shall comply with all of the following
provisions:
(i) If, following the date hereof there has been published a
change in Commission policy with respect to exchange offers such as
the Exchange Offer, such that in the reasonable opinion of counsel to
the Company there is a substantial question as to whether the
Exchange Offer is permitted by applicable federal law or Commission
policy, the Company hereby agrees to seek a no-action letter or other
favorable decision from the Commission allowing the Company to
Consummate an Exchange Offer for such Series A Senior Notes. The
Company hereby agrees to pursue the issuance of such a decision to
the Commission staff level but shall not be required to take
commercially unreasonable action to effect a change of Commission
policy. In connection with the foregoing, the Company hereby agrees,
however, to take all such other actions as are requested by the
Commission or otherwise required in connection with the issuance of
such decision, including without limitation (A) participating in
telephonic conferences with the Commission, (B) delivering to the
Commission staff an analysis prepared by counsel to the Company
setting forth the legal bases, if any, upon which such counsel has
concluded that such an Exchange Offer should be permitted and (C)
diligently pursuing a resolution (which need not be favorable) by the
Commission staff of such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer
Restricted Senior Notes shall furnish, upon the request of the
Company, prior to the Consummation of the Exchange Offer, a written
representation to the Company (which may be contained in the letter
of transmittal contemplated by the Exchange Offer Registration
Statement) to the effect that (A) it is not an affiliate of the
Company, (B) it is not engaged in, and does not intend to engage in,
and has no arrangement or understanding with any person to
participate in, a distribution of the Series B Senior Notes to be
issued in the Exchange Offer and (C) it is acquiring the Series B
Senior Notes in its ordinary course of business. Each Holder hereby
acknowledges and agrees that any Broker-Dealer and any such Holder
using the Exchange Offer to participate in a distribution of the
securities to be acquired in the Exchange Offer (1) could not under
Commission policy as in effect on the date of this Agreement rely on
the position of the Commission enunciated in Morgan Stanley and Co.,
Inc. (available June 5, 1991) and Exxon Capital Holdings Corporation
(available May 13, 1988), as interpreted in the Commission's letter
to Shearman & Sterling dated July 2, 1993, and similar no-action
letters (including, if applicable, any no-action letter obtained
pursuant to clause (i) above), and (2) must comply with the
registration and prospectus delivery requirements of the Act in
connection with a secondary resale transaction and that such a
secondary resale transaction must be covered by an effective
registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation
S-K if the resales are of Series B Senior Notes obtained by such
Holder in exchange for Series A Senior Notes acquired by such Holder
directly from the Company or an affiliate thereof.
(iii) To the extent required by the Commission, prior to
effectiveness of the Exchange Offer Registration Statement, the
Company shall provide a supplemental letter to the Commission (A)
stating that the Company is registering the Exchange Offer in
reliance on the position of the Commission enunciated in Exxon
Capital Holdings Corporation (available May 13, 1988), Morgan Stanley
and Co., Inc. (available June 5, 1991) and, if applicable, any
no-action letter obtained pursuant to clause (i) above, (B) including
a representation that the Company has not entered into any
arrangement or understanding with any Person to distribute the Series
B Senior Notes to be received in the Exchange Offer and that, to the
best of the Company's information and belief, each Holder
participating in the Exchange Offer is acquiring the Series B Senior
Notes in its ordinary course of business and has no arrangement or
understanding with any Person to participate in the distribution of
the Series B Senior Notes received in the Exchange Offer and (C) any
other undertaking or representation required by the Commission as set
forth in any no-action letter obtained pursuant to clause (i) above.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement the Company shall comply with all the provisions of
Section 6(c) below and shall use its best efforts to effect such
registration to permit the sale of the Transfer Restricted Senior Notes
being sold in accordance with the intended method or methods of
distribution thereof (as indicated in the information furnished to the
Company pursuant to Section 4(b) hereof), and pursuant thereto the Company
will prepare and file with the Commission a Registration Statement relating
to the registration on any appropriate form under the Act, which form shall
be available for the sale of the Transfer Restricted Senior Notes in
accordance with the intended method or methods of distribution thereof
within the time periods and otherwise in accordance with the provisions
hereof.
(c) General Provisions. In connection with any Registration
Statement and any related Prospectus required by this Agreement to permit
the sale or resale of Transfer Restricted Senior Notes (including, without
limitation, any Exchange Offer Registration Statement and the related
Prospectus, to the extent that the same are required to be available to
permit sales of Broker-Dealer Transfer Restricted Senior Notes by
Restricted Broker-Dealers), the Company shall:
(i) use its reasonable efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements for the period specified in Section 3 or 4 of this
Agreement, as applicable. Upon the occurrence of any event that
would cause any such Registration Statement or the Prospectus
contained therein (A) to contain a material misstatement or omission
or (B) not to be effective and usable for resale of Transfer
Restricted Senior Notes during the period required by this Agreement,
the Company shall file promptly an appropriate amendment to such
Registration Statement, (1) in the case of clause (A), correcting any
such misstatement or omission, and (2) in the case of either clause
(A) or (B), use its reasonable efforts to cause such amendment to be
declared effective and such Registration Statement and the related
Prospectus to become usable for their intended purpose(s) as soon as
practicable thereafter. Notwithstanding the foregoing, if (A) the
Board of Directors of the Company determines in good faith that it is
in the best interests of the Company not to disclose the existence of
or facts surrounding any proposed or pending material corporate
transaction involving the Company or its subsidiaries and (B) the
Company notifies the Holders within two Business Days after the Board
of Directors makes such determination, the Company may allow the
Shelf Registration Statement to fail to be effective and usable as a
result of such nondisclosure for up to 60 days during the three-year
period of effectiveness required by Section 4 hereof, but in no event
for any period in excess of 30 consecutive days; provided, however,
that the three-year period referred to in Section 4 hereof during
which the Shelf Registration Statement is required to be effective
and usable shall be extended by the number of days during which such
registration statement was not effective or usable pursuant to the
foregoing provisions.
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be
necessary to keep the Registration Statement effective for the
applicable period set forth in Section 3 or 4 hereof, or such shorter
period as will terminate when all Transfer Restricted Senior Notes
covered by such Registration Statement have been sold; cause the
Prospectus to be supplemented by any required Prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424 under the
Act, and to comply fully with Rules 424 and 430A, as applicable,
under the Act in a timely manner; and comply with the provisions of
the Act with respect to the disposition of all securities covered by
such Registration Statement during the applicable period in
accordance with the intended method or methods of distribution by the
sellers thereof set forth in such Registration Statement or
supplement to the Prospectus;
(iii) advise the underwriter(s), if any, and selling Holders
promptly and, if requested by such Persons, confirm such advice in
writing, (A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any
Registration Statement or any post-effective amendment thereto, when
the same has become effective, (B) of any request by the Commission
for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information relating
thereto, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement under the
Act or of the suspension by any state securities commission of the
qualification of the Transfer Restricted Senior Notes for offering or
sale in any jurisdiction, or the initiation of any proceeding for any
of the preceding purposes, (D) of the existence of any fact or the
happening of any event that makes any statement of a material fact
made in the Registration Statement, the Prospectus, any amendment or
supplement thereto or any document incorporated by reference therein
untrue, or that requires the making of any additions to or changes in
the Registration Statement in order to make the statements therein
not misleading, or that requires the making of any additions to or
changes in the Prospectus in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, or any
state securities commission or other regulatory authority shall issue
an order suspending the qualification or exemption from qualification
of the Transfer Restricted Senior Notes under state securities or
Blue Sky laws, the Company shall use its reasonable efforts to obtain
the withdrawal or lifting of such order at the earliest possible
time;
(iv) in the case of a Shelf Registration Statement, use
reasonable efforts to furnish to the Purchaser, each selling Holder
named in any Registration Statement or Prospectus and each of the
underwriter(s) in connection with such sale, if any, before filing
with the Commission, copies of any Registration Statement or any
Prospectus included therein or any amendments or supplements to any
such Registration Statement or Prospectus (including all documents
incorporated by reference after the initial filing of such
Registration Statement), prior to filing and reasonably respond to
comments received from such persons, and make the Company's
representatives available for discussion of such documents and other
customary due diligence matters.
(v) subject to execution of confidentiality agreements that
are reasonably satisfactory to the Company as to the disclosure of
any non-public information obtained pursuant to this Section
6(c)(vi), make available upon reasonable notice and at reasonable
times for inspection by the selling Holders, any managing underwriter
participating in any disposition pursuant to such Registration
Statement and any attorney or accountant retained by such selling
Holders or any of such underwriter(s), all financial and other
records, pertinent corporate documents and properties of the Company
and cause the Company's officers, directors and employees to supply
all information reasonably requested by any such Holder, underwriter,
attorney or accountant in connection with such Registration Statement
or any post-effective amendment thereto subsequent to the filing
thereof and prior to its effectiveness;
(vi) in the case of a Shelf Registration Statement, if
requested by any selling Holders or the underwriter(s) in connection
with such sale, if any, promptly include in any Registration
Statement or Prospectus, pursuant to a supplement or post-effective
amendment if necessary, such information as such selling Holders and
underwriter(s), if any, may reasonably request to have included
therein, including, without limitation, information relating to the
"Plan of Distribution" of the Transfer Restricted Senior Notes,
information with respect to the principal amount of Transfer
Restricted Senior Notes being sold to such underwriter(s), the
purchase price being paid therefor and any other terms of the
offering of the Transfer Restricted Senior Notes to be sold in such
offering; and make all required filings of such Prospectus supplement
or post-effective amendment as soon as practicable after the Company
is notified of the matters reasonably requested to be included in
such Prospectus supplement or post-effective amendment;
(vii) in the case of a Shelf Registration Statement, furnish to
each selling Holder and each of the underwriter(s) in connection with
such sale, if any, without charge, at least one copy of the
Registration Statement, as first filed with the Commission, and of
each amendment thereto, including all documents incorporated by
reference therein and all exhibits (including exhibits incorporated
therein by reference);
(viii) deliver to each selling Holder and each of the
underwriter(s), if any, without charge, as many copies of the
Prospectus (including each preliminary prospectus) and any amendment
or supplement thereto as such Persons reasonably may request; the
Company hereby consents to the use (in accordance with law) of the
Prospectus and any amendment or supplement thereto by each of the
selling Holders and each of the underwriter(s), if any, in connection
with the offering and the sale of the Transfer Restricted Senior
Notes covered by the Prospectus or any amendment or supplement
thereto;
(ix) enter into such customary agreements and make such
representations and warranties and take all such other actions in
connection therewith in order to expedite or facilitate the
disposition of the Transfer Restricted Senior Notes pursuant to any
Registration Statement contemplated by this Agreement as may be
reasonably requested by any Holder of Transfer Restricted Senior
Notes or underwriter in connection with any sale or resale pursuant
to any Registration Statement contemplated by this Agreement, and in
such connection, whether or not an underwriting agreement is entered
into and whether or not the registration is an Underwritten
Registration, the Company shall:
(A) furnish (or in the case of paragraphs (2) and (3),
use its best efforts to furnish) to each selling Holder and each
underwriter, if any, upon the effectiveness of the Shelf
Registration Statement and to each Restricted Broker-Dealer upon
Consummation of the Exchange Offer:
(1) a certificate, dated the date of Consummation
of the Exchange Offer or the date of effectiveness of the
Shelf Registration Statement, as the case may be, signed
on behalf of the Company by (x) the President or any Vice
President and (y) a principal financial or accounting
officer of the Company confirming, as of the date thereof,
the matters set forth in paragraphs (a) through (d) of
Section 9 of the Purchase Agreement and such other similar
matters as the Holders and/or underwriter(s) may
reasonably request;
(2) an opinion, dated the date of Consummation of
the Exchange Offer or the date of effectiveness of the
Shelf Registration Statement, as the case may be, of
counsel for the Company, covering matters customarily
covered in opinions requested in Underwritten Offerings
and dated the date of effectiveness of the Shelf
Registration Statement or the date of Consummation of the
Exchange Offer, as the case may be; and
(3) a customary comfort letter, dated as of the
date of effectiveness of the Shelf Registration Statement
or the date of Consummation of the Exchange Offer, as the
case may be, from the Company's independent accountants,
in the customary form and covering matters of the type
customarily covered in comfort letters to underwriters in
connection with Underwritten Offerings, and affirming the
matters set forth in the comfort letters delivered
pursuant to Section 9(i) of the Purchase Agreement,
without exception;
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, in connection with any sale or
resale pursuant to any Shelf Registration Statement the
indemnification provisions and procedures of Section 8 hereof
with respect to all parties to be indemnified pursuant to said
Section; and
(C) deliver such other documents and certificates as may
be reasonably requested by the selling Holders or the
underwriter(s), if any, to evidence compliance with clause (A)
above and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the
Company pursuant to this clause (x).
The above shall be done at each closing under such underwriting
or similar agreement, as and to the extent required thereunder, and
if at any time the representations and warranties of the Company
contemplated in (A)(1) above cease to be true and correct, the
Company shall so advise the underwriter(s), if any, and selling
Holders promptly and if requested by such Persons, shall confirm such
advice in writing;
(x) prior to any public offering of Transfer Restricted Senior
Notes, cooperate with the selling Holders, the underwriter(s), if
any, and their respective counsel in connection with the registration
and qualification of the Transfer Restricted Senior Notes under the
securities or Blue Sky laws of such jurisdictions as the selling
Holders or underwriter(s), if any, may request and do any and all
other acts or things necessary or advisable to enable the disposition
in such jurisdictions of the Transfer Restricted Senior Notes covered
by the applicable Registration Statement; provided, however, that the
Company shall not be required to register or qualify as a foreign
corporation where it is not now so qualified or to take any action
that would subject it to the service of process in suits or to
taxation, other than as to matters and transactions relating to the
Registration Statement, in any jurisdiction where it is not now so
subject;
(xi) issue, upon the request of any Holder of Series A Senior
Notes covered by any Shelf Registration Statement contemplated by
this Agreement, Series B Senior Notes, having an aggregate principal
amount equal to the aggregate principal amount of Series A Senior
Notes surrendered to the Company by such Holder in exchange therefor
or being sold by such Holder; such Series B Senior Notes to be
registered in the name of such Holder or in the name of the
purchaser(s) of such Senior Notes, as the case may be; in return, the
Series A Senior Notes held by such Holder shall be surrendered to the
Company for cancellation;
(xii) in connection with any sale of Transfer Restricted Senior
Notes that will result in such securities no longer being Transfer
Restricted Senior Notes, cooperate with the selling Holders and the
underwriter(s), if any, to facilitate the timely preparation and
delivery of certificates representing Transfer Restricted Senior
Notes to be sold and not bearing any restrictive legends; and to
register such Transfer Restricted Senior Notes in such denominations
and such names as the Holders or the underwriter(s), if any, may
request at least two Business Days prior to such sale of Transfer
Restricted Senior Notes;
(xiii)use its reasonable efforts to cause the disposition of the
Transfer Restricted Senior Notes covered by the Registration
Statement to be registered with or approved by such other U.S.
governmental agencies or authorities as may be necessary to enable
the seller or sellers thereof or the underwriter(s), if any, to
consummate the disposition of such Transfer Restricted Senior Notes,
subject to the proviso contained in clause (xi) above;
(xiv) subject to Section 6(c)(i), if any fact or event
contemplated by Section 6(c)(iii)(D) above shall exist or have
occurred, prepare a supplement or post-effective amendment to the
Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of Transfer
Restricted Senior Notes, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(xv) provide a CUSIP number for all Transfer Restricted Senior
Notes not later than the effective date of a Registration Statement
covering such Transfer Restricted Senior Notes and provide the
Trustee under the Indenture with printed certificates for the
Transfer Restricted Senior Notes which are in a form eligible for
deposit with the Depository Trust Company;
(xvi) cooperate and assist in any filings required to be made
with the NASD and in the performance of any due diligence
investigation by any underwriter (including any "qualified
independent underwriter") that is required to be retained in
accordance with the rules and regulations of the NASD, and use its
reasonable efforts to cause such Registration Statement to become
effective and approved by such governmental agencies or authorities
as may be necessary to enable the Holders selling Transfer Restricted
Senior Notes to consummate the disposition of such Transfer
Restricted Senior Notes;
(xvii) otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the Commission, and make
generally available to its security holders with regard to any
applicable Registration Statement, as soon as practicable, a
consolidated earnings statement meeting the requirements of Rule 158
(which need not be audited) covering a twelve-month period beginning
after the effective date of the Registration Statement (as such term
is defined in paragraph (c) of Rule 158 under the Act);
(xviii) cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement
required by this Agreement and, in connection therewith, cooperate
with the Trustee and the Holders of Senior Notes to effect such
changes to the Indenture as may be required for such Indenture to be
so qualified in accordance with the terms of the TIA; and execute and
use its reasonable efforts to cause the Trustee to execute, all
documents that may be required to effect such changes and all other
forms and documents required to be filed with the Commission to
enable such Indenture to be so qualified in a timely manner; and
(xix) provide promptly to each Holder upon request each document
filed with the Commission pursuant to the requirements of Section 13
or Section 15(d) of the Exchange Act.
(d) Restrictions on Holders. Each Holder agrees by acquisition of a
Transfer Restricted Senior Note that, upon receipt of the notice referred
to in Section 6(c)(i) or any notice from the Company of the existence of
any fact of the kind described in Section 6(c)(iii)(D) hereof, such Holder
will forthwith discontinue disposition of Transfer Restricted Senior Notes
pursuant to the applicable Registration Statement until such Holder's
receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 6(c)(xv) hereof, or until it is advised in writing
by the Company that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus (the "Advice"). If so directed
by the Company, each Holder will deliver to the Company (at the Company's
expense) all copies, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Transfer Restricted Senior
Notes that was current at the time of receipt of either such notice. In
the event the Company shall give any such notice, the time period regarding
the effectiveness of such Registration Statement set forth in Section 3 or
4 hereof, as applicable, shall be extended by the number of days during the
period from and including the date of the giving of such notice pursuant to
Section 6(c)(i) or Section 6(c)(iii)(D) hereof to and including the date
when each selling Holder covered by such Registration Statement shall have
received the copies of the supplemented or amended Prospectus contemplated
by Section 6(c)(xv) hereof or shall have received the Advice.
7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's performance of or
compliance with this Agreement will be borne by the Company, regardless of
whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses (including
filings made with the NASD and counsel fees in connection therewith); (ii)
all fees and expenses of compliance with federal securities and state Blue
Sky or securities laws; (iii) all printing expenses of printing (including
printing certificates for the Series B Senior Notes and printing of
Prospectuses); (iv) all fees and disbursements of counsel for the Company
and, in accordance with Section 7(b) below, the Holders of Transfer
Restricted Senior Notes; and (v) all fees and disbursements of independent
certified public accountants of the Company (including the expenses of any
special audit and comfort letters required by or incident to such
performance).
The Company will, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its officers
and employees performing legal or accounting duties), the expenses of any
annual audit and the fees and expenses of any Person, including special
experts, retained by the Company.
(b) In connection with any Shelf Registration Statement required by
this Agreement, the Company will reimburse the Holders of Transfer
Restricted Senior Notes the distribution of which is being registered
pursuant to the Shelf Registration Statement for the reasonable fees and
disbursements of not more than one counsel chosen by the Holders of a
majority of the principal amount of such Transfer Restricted Senior Notes,
which counsel shall be satisfactory to the Company in its sole discretion.
8. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless (i) each
Holder and (ii) each person, if any, who controls (within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act) any Holder (any of
the persons referred to in this clause (ii) being hereinafter referred to
as a "controlling person") and (iii) the respective officers, directors,
partners, employees, representatives and agents of any Holder or any
controlling person (any person referred to in clause (i), (ii) or (iii) may
hereinafter be referred to as an "Indemnified Holder"), from and against
any and all losses, claims, damages, liabilities and judgments caused by
any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement or Prospectus (or any amendment or
supplement thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, except insofar as such losses, claims, damages,
liabilities or judgments (i) are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information
relating to any of the Holders furnished in writing to the Company by any
of the Holders expressly for use therein, (ii) with respect to the
preliminary prospectus, result from the fact that the Holder sold Transfer
Restricted Senior Notes to a person to whom there was not sent or given, at
or prior to the written confirmation of such sale, a copy of the
prospectus, as amended or supplemented, if the Company shall have
previously furnished copies thereof to the Holder in accordance with this
Agreement and the prospectus, as amended or supplemented, would have
corrected such untrue statement or omission or (iii) are a result of the
use by the Indemnified Holder of any prospectus, when, upon receipt of a
notice from the Company of the existence of any fact of the kind described
in Section 6(c)(iii)(D) hereof contemplated by the last paragraph of
Section 6 hereof, the Indemnified Holder was not permitted to do so.
In case any action or proceeding shall be brought against any of the
Indemnified Holders with respect to which indemnity may be sought against
the Company, such Indemnified Holder (or the Indemnified Holder controlled
by such controlling person) shall promptly notify the Company in writing
(provided, that the failure to give such notice shall not relieve the
Company of its obligations pursuant to this Agreement). Such Indemnified
Holder shall have the right to employ its own counsel in any such action
but the fees and expenses of such counsel shall be at the expense of the
Indemnified Holder or such controlling person unless (i) the employment of
such counsel shall have been specifically authorized in writing by the
Company, (ii) the Company shall have failed to assume the defense and
employ counsel or (iii) the named parties to any such action (including any
impleaded parties) include both the Indemnified Holder or such controlling
person and the Company and the Indemnified Holder or such controlling
person shall have been advised in writing by such counsel that there may be
one or more legal defenses available to it which are different from or
additional to those available to the Company (in which case the Company
shall not have the right to assume the defense of such action on behalf of
the Indemnified Holder or such controlling person), it being understood,
however, that the Company shall not, in connection with any one such action
or proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys (in addition to any
local counsel) at any time for such Indemnified Holders, which firm shall
be designated by the Holders and be reasonably satisfactory to the Company.
The Company shall not be liable for any settlement of any such action or
proceeding effected without the Company's prior written consent, which
consent shall not be withheld unreasonably, but if settled with the
Company's written consent, and the Company agrees to indemnify and hold
harmless any Indemnified Holder from and against any loss or liability by
reason of such settlement. The Company shall not, without the prior
written consent of each Indemnified Holder effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Holder
is or could have been a party and indemnity could have been sought
hereunder by such Indemnified Holder, unless such settlement includes an
unconditional release of such Indemnified Holder from all liability on
claims that are the subject matter of such proceeding.
(b) Each Holder of Transfer Restricted Senior Notes agrees,
severally and not jointly, to indemnify and hold harmless the Company, and
its directors, officers, and any person controlling the Company (within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, to the
same extent as the foregoing indemnity from the Company to each of the
Indemnified Holders, but only with respect to information relating to such
Holder furnished in writing by such Holder expressly for use in any
Registration Statement. In case any action or proceeding shall be brought
against the Company or its directors or officers or any such controlling
person in respect of which indemnity may be sought against a Holder of
Transfer Restricted Senior Notes, such Holder shall have the rights and
duties given the Company and the Company or its directors or officers or
such controlling person shall have the rights and duties given to each
Holder by the preceding paragraph. In no event shall the liability of any
selling Holder hereunder be greater in amount than the dollar amount of the
proceeds received by such Holder upon the sale of the Registrable
Securities giving rise to such indemnification obligation.
(c) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party under Section 8(a) or Section 8(b)
hereof (other than by reason of exceptions provided in those Sections) in
respect of any losses, claims, damages, liabilities or judgments referred
to therein, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages, liabilities or judgments (i) in such proportion as is appropriate
to reflect the relative benefits received by the Company on the one hand
and the Holders on the other hand from their sale of Transfer Restricted
Senior Notes or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to
reflect the relative fault of the Company on the one hand and of the
Indemnified Holder on the other in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and of the Indemnified Holder
on the other shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Company or by the Indemnified Holder and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result
of the losses, claims, damages, liabilities and judgments referred to above
shall be deemed to include, subject to the limitations set forth in the
second paragraph of Section 8(a), any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or
defending any action or claim.
The Company and each Holder of Transfer Restricted Senior Notes agree
that it would not be just and equitable if contribution pursuant to this
Section 8(c) were determined by pro rata allocation (even if the Holders
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The losses, claims,
damages, liabilities or judgments referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 8, none of the
Holders (and its related Indemnified Holders) shall be required to
contribute, in the aggregate, any amount in excess of the amount by which
the dollar amount of proceeds received by such Holder upon the sale of
Transfer Restricted Senior Notes exceeds the amount of any damages which
such Holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The Holders' obligations to
contribute pursuant to this Section 8(c) are several in proportion to the
respective principal amount of Series A Senior Notes held by each of the
Holders hereunder and not joint.
9. RULE 144A
The Company hereby agrees with each Holder, for so long as any
Transfer Restricted Senior Notes remain outstanding and during any period
in which the Company is not subject to Section 13 or 15(d) of the
Securities Exchange Act, to make available, upon request of any Holder of
Transfer Restricted Senior Notes, to any Holder or beneficial owner of
Transfer Restricted Senior Notes in connection with any sale thereof and
any prospective purchaser of such Transfer Restricted Senior Notes
designated by such Holder or beneficial owner, the information required by
Rule 144A(d)(4) under the Act in order to permit resales of such Transfer
Restricted Senior Notes pursuant to Rule 144A.
10. UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Senior Notes on the basis provided in customary underwriting arrangements
entered into in connection therewith and (b) completes and executes all
reasonable questionnaires, powers of attorney, lock-up letters and other
documents required under the terms of such underwriting arrangements.
11. SELECTION OF UNDERWRITERS
Subject to the Company's consent, for any Underwritten Offering, the
investment banker or investment bankers and manager or managers for any
Underwritten Offering that will administer such offering will be selected
by the Holders of a majority in aggregate principal amount of the Transfer
Restricted Senior Notes included in such offering. Such investment bankers
and managers are referred to herein as the "underwriters."
12. MISCELLANEOUS
(a) Remedies. Each Holder, in addition to being entitled to
exercise all rights provided herein, in the Indenture, the Purchase
Agreement or granted by law, including recovery of liquidated or other
damages, will be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not, on or after
the date of this Agreement, enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders in
this Agreement or otherwise conflicts with the provisions hereof. The
Company has not previously entered into any agreement granting any
registration rights with respect to its securities to any Person, other
than those rights existing by virtue of the Stockholders Agreement, dated
April 14, 1989, among the Company and certain of its stockholders, as
amended. The rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to the
holders of the Company's securities under any agreement in effect on the
date hereof.
(c) Adjustments Affecting the Senior Notes. The Company will not
take any action, or voluntarily permit any change to occur, with respect to
the Senior Notes that would materially and adversely affect the ability of
the Holders to Consummate any Exchange Offer.
(d) Amendments and Waivers. The provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given unless the Company
has obtained the written consent of Holders of a majority of the
outstanding principal amount of Transfer Restricted Senior Notes.
Notwithstanding the foregoing, a waiver or consent to departure from the
provisions hereof that relates exclusively to the rights of Holders whose
securities are being tendered pursuant to the Exchange Offer and that does
not affect directly or indirectly the rights of other Holders whose
securities are not being tendered pursuant to such Exchange Offer may be
given by the Holders of a majority of the outstanding principal amount of
Transfer Restricted Senior Notes subject to such Exchange Offer.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class
mail (registered or certified, return receipt requested), telex,
telecopier, or air courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of
the Registrar under the Indenture, with a copy to the Registrar under
the Indenture; and
(ii) if to the Company:
Motors and Gears, Inc.
1751 Lake Cook Road
Suite 550
Deerfield, IL 60015
Telecopier No.: (708) 945-5698
Attention: Chief Financial Officer
With a copy to:
Mayer, Brown & Platt
1675 Broadway
New York, NY 10019
Telecopier No.: (212) 262-1910
Attention: James B. Carlson, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if
mailed; when receipt acknowledged, if telecopied; and on the next business
day, if timely delivered to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Senior Notes;
provided, however, that this Agreement shall not inure to the benefit of or
be binding upon a successor or assign of a Holder unless and to the extent
such successor or assign acquired Transfer Restricted Senior Notes directly
from such Holder at a time when such Holder could not transfer such
Transfer Restricted Senior Notes pursuant to a Shelf Registration
Statement.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO THE CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the validity,
legality and enforceability of any such provision in every other respect
and of the remaining provisions contained herein shall not be affected or
impaired thereby.
(k) Entire Agreement. This Agreement together with the other
Operative Documents (as defined in the Purchase Agreement) is intended by
the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There
are no restrictions, promises, warranties or undertakings, other than those
set forth or referred to herein with respect to the registration rights
granted by the Company with respect to the Transfer Restricted Senior
Notes. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
MOTORS AND GEARS, INC.
By: /s/ Jonathan F. Boucher
--------------------------------
Name: Jonathan F. Boucher
Title: Vice President
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BT SECURITIES CORPORATION
JEFFERIES & COMPANY, INC.
Acting on behalf of itself,
BT Securities Corporation and
Jefferies & Company, Inc.
By: DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Craig Packer
------------------------
Name: Craig Packer
Title: Vice President
<PAGE>
EXHIBIT 10.2
===============================================================================
Motors and Gears, Inc.
________________________________________
SERIES A AND SERIES B
10 % SENIOR NOTES DUE 2006
________________________________________
___________________
INDENTURE
DATED AS OF NOVEMBER 7, 1996
___________________
Fleet National Bank
Trustee
===============================================================================
This Indenture, dated as of November 7, 1996, is between Motors and
Gears, Inc., a Delaware corporation (the "Company"), and Fleet National
Bank, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the holders of the Company's 10 %
Series A Senior Notes due 2006 (the "Series A Senior Notes") and the
Company's 10 % Series B Senior Notes due 2006 (the "Series B Senior Notes,"
and, together with the Series A Senior Notes, the "Senior Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01.Definitions.
"Affiliate" means any of the following: (i) any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company, (ii) any spouse, immediate family member or other
relative who has the same principal residence as any Person described in
clause (i) above, (iii) any trust in which any such Persons described in
clause (i) or (ii) above has a beneficial interest, and (iv) any
corporation or other organization of which any such Persons described above
collectively own 50% or more of the equity of such entity.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Asset Sale" means the sale, lease, conveyance or other disposition
by the Company or a Restricted Subsidiary of assets or property whether
owned on the date of original issuance of the Senior Notes or thereafter
acquired, in a single transaction or in a series of related transactions,
that are outside of the ordinary course of business of the Company or such
Restricted Subsidiary; provided that Asset Sales will not include such
sales, leases, conveyances or dispositions in connection with (i) the sale
or disposition of any Restricted Investment, (ii) any Equity Offering by
(a) the Company or (b) any Restricted Subsidiary if the proceeds therefrom
are used to make mandatory prepayments of Indebtedness under the New Credit
Agreement or Indebtedness of the Restricted Subsidiaries or redeem Senior
Notes as described in Section 3.07, (iii) the sale or lease of equipment,
inventory, accounts receivable or other assets in the ordinary course of
business, (iv) Receivables Financings, (v) the surrender or waiver of
contract rights or the settlement, release or surrender of contract, tort
or other claims of any kind, (vi) the grant of any license of patents,
trademarks, registration therefor and other similar intellectual property,
(vii) a transfer of assets by the Company or a Restricted Subsidiary to any
of the Company, a Restricted Subsidiary or a Non-Restricted Subsidiary,
(viii) the designation of a Restricted Subsidiary as a Non-Restricted
Subsidiary pursuant to Section 4.17, (ix) the sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Company
as permitted under Section 5.01," (x) the sale or disposition of obsolete
equipment or other obsolete assets, or (xi) Restricted Payments permitted
by Section 4.05.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the Company's board of directors or any
authorized committee of such board of directors.
"Business Day" means any day other than a Legal Holiday.
"Capital Stock" means any and all shares, interests, participations
or other equivalents (however designated) of corporate stock, including any
preferred stock.
"Cash Flow" means, for any given period and Person, the sum of,
without duplication, Consolidated Net Income, plus (a) the portion of Net
Income attributable to the minority interests in its Subsidiaries, to the
extent not included in calculating Consolidated Net Income, plus (b) any
provision for taxes based on income or profits to the extent such income or
profits were included in computing Consolidated Net Income, plus (c)
Consolidated Interest Expense, to the extent deducted in computing
Consolidated Net Income, plus (d) the amortization of all intangible
assets, to the extent such amortization was deducted in computing
Consolidated Net Income (including, but not limited to, inventory
write-ups, goodwill, debt and financing costs, and Incentive Arrangements),
plus (e) any non-capitalized transaction costs incurred in connection with
financings, acquisitions or divestitures (including, but not limited to,
financing and refinancing fees, including those in connection with the
Offering and the Refinancing Plan, in each case, to the extent deducted in
computing Consolidated Net Income), plus (f) all depreciation and all other
non-cash charges (including, without limitation, those charges relating to
purchase accounting adjustments and LIFO adjustments), to the extent
deducted in computing Consolidated Net Income, plus (g) any interest
income, to the extent such income was not included in computing
Consolidated Net Income, plus (h) all dividend payments on preferred stock
(whether or not paid in cash) to the extent deducted in computing
Consolidated Net Income, plus (i) any extraordinary or non-recurring charge
or expense arising out of the implementation of SFAS 106 or SFAS 109 to the
extent deducted in computing Consolidated Net Income, plus (j) to the
extent not covered in clause (e) above, fees paid or payable in respect of
the TJC Agreement to the extent deducted in computing Consolidated Net
Income, plus (k) the net loss of any Person, other than those of a
Restricted Subsidiary, to the extent deducted in computing Consolidated Net
Income, plus (l) net losses in respect of any discontinued operations as
determined in accordance with GAAP, to the extent deducted in computing
Consolidated Net Income; provided, however, that if any such calculation
includes any period during which an acquisition or sale of a Person or the
incurrence or repayment of Indebtedness occurred, then such calculation for
such period shall be made on a Pro Forma Basis.
"Cash Flow Coverage Ratio" means, for any given period and Person,
the ratio of: (i) Cash Flow, divided by (ii) the sum of Consolidated
Interest Expense and the amount of all dividend payments on any series of
preferred stock of such Person (except dividends paid or payable in
additional shares of Capital Stock (other than Disqualified Stock)), in
each case, without duplication; provided, however, that if any such
calculation includes any period during which an acquisition or sale of a
Person or the incurrence or repayment of Indebtedness occurred, then such
calculation for such period shall be made on a Pro Forma Basis.
"Change of Control" means the occurrence of each of the following:
(i) any "person" or "group" (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act), excluding the Jordan Stockholders, is or
becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act, except that a Person shall be deemed to have "beneficial
ownership" of all securities that such Person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time), directly or indirectly, of more than 50% of the total Voting Stock
of the Company; and (ii) the Company consolidates with, or merges with or
into, another Person or sells, assigns, conveys, transfers, leases or
otherwise disposes of all or substantially all of its assets to any Person,
or any Person consolidates with, or merges with or into, the Company, in
any such event pursuant to a transaction in which the outstanding Voting
Stock of the Company is converted into or exchanged for cash, securities or
other property, other than any such transaction where (A) the outstanding
Voting Stock of the Company is converted into or exchanged for (1) Voting
Stock (other than Redeemable Capital Stock) of the surviving or transferee
corporation or (2) cash, securities and other property in an amount which
could be paid by the Company as a Restricted Payment under the Indenture
and (B) immediately after such transaction no "person" or "group" (as such
terms are used in Sections 13(d) and 14(d) of the Exchange Act), excluding
the Jordan Stockholders, is the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a Person shall be
deemed to have "beneficial ownership" of all securities that such Person
has the right to acquire, whether such right is exercisable immediately or
only after the passage of time), directly or indirectly, of more than 50%
of the total Voting Stock of the surviving or transferee corporation; and
(iii) during any consecutive two-year period, individuals who at the
beginning of such period constituted the Board of Directors of the Company
(together with any new directors whose election by such Board of Directors
or whose nomination for election by the stockholders of the Company was
approved by a vote of a majority of the directors then still in office who
are entitled to vote to elect such new director and were either directors
at the beginning of such period or Persons whose election as directors or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of the Company then in
office.
The definition of Change of Control includes a phrase relating to the
sale, lease, transfer, conveyance or other disposition of "all or
substantially all" of the Company's assets. Although there is a developing
body of case law interpreting the phrase "substantially all," there is no
precise established definition of the phrase under applicable law.
Accordingly, the ability of a holder of Senior Notes to require the Company
to repurchase such Senior Notes as a result of a sale, lease, transfer,
conveyance or other disposition of less than all of the assets of the
Company and its subsidiaries to another Person may be uncertain.
Furthermore, an acquisition of the Company by the Jordan Stockholders
including pursuant to a spin-off to the Jordan Stockholders by Jordan
Industries, Inc., directly or indirectly of its investment in the Company,
would not constitute a Change of Control.
"Commission" means the Securities and Exchange Commission.
"Company" means Motors and Gears, Inc., a Delaware Corporation.
"Consolidated Interest Expense" means, for any given period and
Person, the aggregate of the interest expense in respect of all
Indebtedness of such Person and its Subsidiaries for such period, on a
consolidated basis, determined in accordance with GAAP (including
amortization of original issue discount on any such Indebtedness, all
non-cash interest payments, the interest portion of any deferred payment
obligation and the interest component of capital lease obligations, but
excluding amortization of deferred financing fees if such amortization
would otherwise be included in interest expense); provided, however, that
for the purpose of the Cash Flow Coverage Ratio, Consolidated Interest
Expense shall be calculated on a Pro Forma Basis; provided further that any
premiums, fees and expenses (including the amortization thereof) payable in
connection with the Offering and the Refinancing Plan and the application
of the net proceeds therefrom or any other refinancing of Indebtedness will
be excluded.
"Consolidated Net Income" means, for any given period and Person, the
aggregate of the Net Income of such Person and its Subsidiaries for such
period, on a consolidated basis, determined in accordance with GAAP;
provided, however, that: (i) the Net Income of any Person acquired in a
pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded, and (ii) Consolidated Net Income of any
Person will not include, without duplication, any deduction for: (A) any
increased amortization or depreciation resulting from the write-up of
assets pursuant to Accounting Principles Board Opinion Nos. 16 and 17, as
amended or supplemented from time to time, (B) the amortization of all
intangible assets (including amortization attributable to inventory
write-ups, goodwill, debt and financing costs, and Incentive Arrangements),
(C) any non-capitalized transaction costs incurred in connection with
financings, acquisitions or divestitures (including, but not limited to,
financing and refinancing fees), (D) any extraordinary or nonrecurring
charges relating to any premium or penalty paid, write-off or deferred
financing costs or other financial recapitalization charges in connection
with redeeming or retiring any Indebtedness prior to its stated maturity,
and (E) any Restructuring Charges; provided, however, that for purposes of
determining the Cash Flow Coverage Ratio, Consolidated Net Income shall be
calculated on a Pro Forma Basis.
"Consolidated Net Worth" with respect to any Person means, as of any
date, the consolidated equity of the common stockholders of such Person
(excluding the cumulated foreign currency translation adjustment), all
determined on a consolidated basis in accordance with GAAP, but without any
reduction in respect of the payment of dividends on any series of such
Person's preferred stock if such dividends are paid in additional shares of
Capital Stock (other than Disqualified Stock); provided, however, that
Consolidated Net Worth shall also include, without duplication: (a) the
amortization of all write-ups of inventory, (b) the amortization of all
intangible assets (including amortization of goodwill, debt and financing
costs, and Incentive Arrangements), (c) any non-capitalized transaction
costs incurred in connection with financings, acquisitions or divestitures
(including, but not limited to, financing and refinancing fees), (d) any
increased amortization or depreciation resulting from the write-up of
assets pursuant to Accounting Principles Board Opinion Nos. 16 and 17, as
amended and supplemented from time to time, (e) any extraordinary or
nonrecurring charges or expenses relating to any premium or penalty paid,
write-off or deferred financing costs or other financial recapitalization
charges incurred in connection with redeeming or retiring any Indebtedness
prior to its stated maturity, (f) any Restructuring Charges, and (g) any
extraordinary or non-recurring charge arising out of the implementation of
SFAS 106 or SFAS 109; provided, however, that Consolidated Net Worth shall
be calculated on a Pro Forma Basis.
"Contingent Earnout Agreement" means the Contingent Earnout
Agreement, among the Company and certain of its Restricted Subsidiaries and
Jordan Industries, Inc. and certain of its Restricted Subsidiaries, as in
effect on the date of original issuance of the Senior Notes.
"Credit Agreement" means the Credit Agreement, dated September 22,
1995, among Merkle-Korff Industries, Inc., its Subsidiaries and Bankers
Trust Company, and all loan documents and instruments thereunder, as
amended and restated in connection with the Offering, and as further
amended, modified, extended, restated, replaced, or supplemented, from time
to time.
"Default" means any event that is, or after notice or passage of time
or both would be, an Event of Default.
"Definitive Senior Notes" means Senior Notes that are in the form of
Exhibit A attached hereto (but without including the text referred to in
footnotes 1 and 2 thereto).
"Depositary" means, with respect to the Senior Notes issuable or
issued in whole or in part in global form, the Person specified in Section
2.03 hereof as the Depositary with respect to the Senior Notes, until a
successor shall have been appointed and become such pursuant to Section
2.06 of this Indenture, and, thereafter, "Depositary" shall mean or include
such successor.
"Disqualified Stock" means any Capital Stock that by its terms (or by
the terms of any security into which it is convertible-or for which it is
exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise,
or is redeemable at the option of the holder thereof, in whole or in part
on, or prior to, the maturity date of the Senior Notes.
"Equity Interests" means Capital Stock or partnership interests or
warrants, options or other rights to acquire Capital Stock or partnership
interests (but excluding (i) any debt security that is convertible into, or
exchangeable for, Capital Stock or partnership interests, and (ii) any
other Indebtedness or Obligation) provided, however, that Equity Interests
will not include any Incentive Arrangements or obligations or payments
thereunder.
"Equity Offering" means a public or private offering by the Company
and/or its Subsidiaries for cash of Capital Stock or other Equity Interests
and all warrants, options or other rights to acquire Capital Stock, other
than (i) an offering of Disqualified Stock or (ii) Incentive Arrangements
or obligations or payments thereunder.
"Exchange Offer" means the offer by the Company to Holders to
exchange Series B Senior Notes for Series A Senior Notes.
"GAAP" means generally accepted accounting principles, consistently
applied, as of the date of original issuance of the Senior Notes. All
financial and accounting determinations and calculations under the
Indenture will be made in accordance with GAAP.
"Global Senior Note" means a Senior Note that contains the paragraph
referred to in footnote 1 and the additional schedule referred to in
footnote 2 to the form of the Note attached hereto as Exhibit A.
"Hedging Obligations" means, with respect to any Person, the
Obligations of such Persons under (i) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements, (ii)
foreign exchange contracts, currency swap agreements or similar agreements,
and (iii) other agreements or arrangements designed to protect such Person
against fluctuations, or otherwise to establish financial hedges in respect
of, exchange rates, currency rates or interest rates.
"Holder" means a Person in whose name a Senior Note is registered.
"Imperial Acquisitions" means the acquisition by the Company and
certain of its Restricted Subsidiaries of the business and net assets of
Imperial Electric Company, Scott Motor Company and Gear Research Company,
as contemplated by the Offering Memorandum.
"Incentive Arrangements" means any earn-out agreements, stock
appreciation rights, "phantom" stock plans, employment agreements,
non-competition agreements, subscription and stockholders agreements and
other incentive and bonus plans and similar arrangements made in connection
with acquisitions of Persons or businesses by the Company or the Restricted
Subsidiaries or the retention of executives, officers or employees by the
Company or the Restricted Subsidiaries.
"Indebtedness" means, with respect to any Person, any indebtedness,
whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or representing the deferred
and unpaid balance of the purchase price of any property (including
pursuant to capital leases), except any such balance that constitutes an
accrued expense or a trade payable, and any Hedging Obligations, if and to
the extent such indebtedness (other than a Hedging Obligation) would appear
as a liability upon a balance sheet of such Person prepared on a
consolidated basis in accordance with GAAP, and also includes, to the
extent not otherwise included, the guarantee of items that would be
included within this definition; provided, however, that "Indebtedness"
will not include any Incentive Arrangements or obligations or payments
thereunder.
"Indenture" means this Indenture, as amended or supplemented from
time to time.
"Initial Purchasers" means Donaldson, Lufkin & Jenrette Securities
Corporation, BT Securities Corporation and Jefferies & Company, Inc.
"Insolvency or Liquidation Proceeding" means (i) any insolvency or
bankruptcy or similar case or proceeding, or any reorganization,
receivership, liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, or (ii) any assignment for the benefit of
creditors or any other marshalling of assets and liabilities of the
Company.
"Investment" means any capital contribution to, or other debt or
equity investment in, any Person.
"issue" means create, issue, assume, guarantee, incur or otherwise
become directly or indirectly liable for any Indebtedness or Capital Stock,
as applicable; provided, however, that any Indebtedness or Capital Stock of
a Person existing at the time such Person becomes a Restricted Subsidiary
(whether by merger, consolidation, acquisition or otherwise) shall be
deemed to be issued by such Restricted Subsidiary at the time it becomes a
Restricted Subsidiary. For this definition, the terms "issuing," "issuer,"
"issuance" and "issued" have meanings correlative to the foregoing.
"JII Services Agreement" means the Management and Administration
Services Agreement, to be dated November 7, 1996, between the Company and
Jordan Industries, Inc., as in effect on the date of original issuance of
the Senior Notes.
"Jordan Stockholders" means Jordan Industries, Inc., The Jordan
Company and Jordan/Zalaznick Capital Corporation and their respective
affiliates, principals, partners and employees, family members of any of
the foregoing and trusts for the benefit of any of the foregoing,
including, without limitation, MCIT PLC and Leucadia National Corporation
and their respective Subsidiaries.
"Junior Seller Note" means the subordinated promissory note, dated
September 22, 1995, issued by Merkle-Korff Industries, Inc., in the
principal amount of $5.0 million, and maturing on December 31, 2003, as in
effect on the date of the original issuance of the Senior Notes.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York, the city in which the principal
corporate trust office of the Trustee is located or at a place of payment
are authorized by law, regulation or executive order to remain closed. If
a payment date is a Legal Holiday at a place of payment, payment may be
made at that place on the next succeeding day that is not a Legal Holiday,
and no interest shall accrue for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under
applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement
to sell and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Liquidated Damages" means all liquidated damages then owing pursuant
to Section 5 of the Registration Rights Agreement.
"Motors and Gears Industries" means Motors and Gears Industries,
Inc., a Delaware corporation and a wholly owned subsidiary of the Company.
"MK Installment Note" means the promissory note, dated September 22,
1995, issued by Merkle-Korff Industries, Inc., in the principal amount of
$90.0 million, and due and payable on December 26, 1996, as in effect on
the date of the original issuance of the Senior Notes.
"MK Installment Note LC Facility" means the Letter of Credit
Agreement, dated September 22, 1995, among the Company, Merkle-Korff
Industries, Inc., and Bankers Trust Company, including the cash collateral
agreement and letter of credit thereunder, and all loan documents and
instruments thereunder, pursuant to which Bankers Trust Company has issued
and has outstanding a standby letter of credit in the face amount of $90.0
million, as in effect on the date of the original issuance of the Senior
Notes.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP, excluding, however, any
gain or loss, together with any related provision for taxes, realized in
connection with any Asset Sale (including, without limitation, dispositions
pursuant to sale and leaseback transactions).
"Net Proceeds" means, with respect to any Asset Sale, the aggregate
amount of cash proceeds (including any cash received by way of deferred
payment pursuant to a note receivable issued in connection with such Asset
Sale, other than the portion of such deferred payment constituting
interest, and including any amounts received as disbursements or
withdrawals from any escrow or similar account established in connection
with any such Asset Sale, but, in either such case, only as and when so
received) received by the Company or any of its Restricted Subsidiaries in
respect of such Asset Sale, net of: (i) the cash expenses of such Asset
Sale (including, without limitation, the payment of principal of, and
premium, if any, and interest on, Indebtedness required to be paid as a
result of such Asset Sale (other than the Senior Notes) and legal,
accounting, management and advisory and investment banking fees and sales
commissions), (ii) taxes paid or payable as a result thereof, (iii) any
portion of cash proceeds that the Company determines in good faith should
be reserved for post-closing adjustments, it being understood and agreed
that on the day that all such post-closing adjustments have been
determined, the amount (if any) by which the reserved amount in respect of
such Asset Sale exceeds the actual post-closing adjustments payable by the
Company or any of its Restricted Subsidiaries shall constitute Net Proceeds
on such date, (iv) any relocation expenses and pension, severance and
shutdown costs incurred as a result thereof, and (v) any deduction or
appropriate amounts to be provided by the Company or any of its Restricted
Subsidiaries as a reserve in accordance with GAAP against any liabilities
associated with the asset disposed of in such transaction and retained by
the Company or such Restricted Subsidiary after such sale or other
disposition thereof, including, without limitation, pension and other
post-employment benefit liabilities and liabilities related to
environmental matters or against any indemnification obligations associated
with such transaction.
"New Credit Agreement" means the credit agreement, to be dated
November 7, 1996, among M&G Industries, Inc., certain of its subsidiaries
and the lenders party thereto in their capacities as lenders thereunder and
Bankers Trust Company, as agent, together with all loan documents and
instruments thereunder (including, without limitation, any guarantee
agreements and security documents), in each case as such agreements may be
amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including,
without limitation, increasing the amount of available borrowings
thereunder, and all Obligations with respect thereto, in each case, to the
extent permitted by Section 4.07, or adding Subsidiaries of the Company as
additional borrowers or guarantors thereunder) all or any portion of the
Indebtedness under such agreement or any successor or replacement agreement
and whether by the same or any other agent, lender or group of lenders.
"Non-Restricted Subsidiary" means any Subsidiary of the Company other
than a Restricted Subsidiary.
"Obligations" means, with respect to any Indebtedness, all principal,
interest, premiums, penalties, fees, indemnities, expenses (including legal
fees and expenses), reimbursement obligations and other liabilities payable
to the holder of such Indebtedness under the documentation governing such
Indebtedness, and any other claims of such holder arising in respect of
such Indebtedness.
"Offering" means the offer and sale of the Senior Notes as
contemplated by the Offering Memorandum.
"Offering Memorandum" means the Offering Memorandum, dated November
1, 1996, relating to the Company's offering and placement of the Senior
Notes.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant
Treasurer, the Controller, the Secretary or any Vice-President of such
Person.
"Officer's Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 10.04 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of
Section 10.05 hereof. The counsel may be an employee of or counsel to the
Company, any Subsidiary of the Company or the Trustee.
"Other Permitted Indebtedness" means: (i) Indebtedness of the Company
and its Restricted Subsidiaries existing as of the date of original
issuance of the Senior Notes; (ii) Indebtedness of the Company and its
Restricted Subsidiaries in respect of bankers acceptances and letters of
credit (including, without limitation, letters of credit in respect of
workers' compensation claims) issued in the ordinary course of business, or
other Indebtedness in respect to reimbursement-type obligations regarding
workers' compensation claims; (iii) Refinancing Indebtedness, provided
that: (A) the principal amount of such Refinancing Indebtedness shall not
exceed the outstanding principal amount of Indebtedness (including unused
commitments) extended, refinanced, renewed, replaced, substituted or
refunded plus any amounts incurred to pay premiums, fees and expenses in
connection therewith, (B) the Refinancing Indebtedness shall have a
Weighted Average Life to Maturity equal to or greater than the Weighted
Average Life to Maturity of the Indebtedness being extended, refinanced,
renewed, replaced, substituted or refunded; provided, however, that this
limitation in this clause (B) does not apply to Refinancing Indebtedness of
Senior Indebtedness, and (C) in the case of Refinancing Indebtedness of
Subordinated Indebtedness, such Refinancing Indebtedness shall be
subordinated to the Senior Notes at least to the same extent as the
Subordinated Indebtedness being extended, refinanced, renewed, replaced,
substituted or refunded; (iv) intercompany Indebtedness of and among the
Company and its Restricted Subsidiaries (excluding guarantees by Restricted
Subsidiaries of Indebtedness of the Company not issued in compliance with
Section 4.15; (v) Indebtedness of the Company and its Restricted
Subsidiaries incurred in connection with making permitted Restricted
Payments under clauses (iii) or (iv), but only to the extent that such
Indebtedness is provided by the Company or a Restricted Subsidiary, or (x)
of Section 4.05(b); (vi) Indebtedness of any Non-Restricted Subsidiary
created after the date of original issuance of the Senior Notes, provided
that such Indebtedness is nonrecourse to the Company and its Restricted
Subsidiaries and the Company and its Restricted Subsidiaries have no
Obligations with respect to such Indebtedness; (vii) Indebtedness of the
Company and its Restricted Subsidiaries under Hedging Obligations; (viii)
Indebtedness of the Company and its Restricted Subsidiaries arising from
the honoring by a bank or other financial institution of a check, draft or
similar instrument inadvertently (except in the case of daylight
overdrafts, which will not be, and will not be deemed to be, inadvertent)
drawn against insufficient funds in the ordinary course of business; (ix)
Indebtedness of any Person at the time it is acquired as a Restricted
Subsidiary, provided that such Indebtedness was not issued by such Person
in connection with or in anticipation of such acquisition; (x) guarantees
by Restricted Subsidiaries of Indebtedness of any Restricted Subsidiary if
such Indebtedness so guaranteed is permitted under the Indenture; (xi)
guarantees by a Restricted Subsidiary of Indebtedness of the Company if the
Indebtedness so guaranteed is permitted under the Indenture and the Senior
Notes are guaranteed by such Restricted Subsidiary to the extent required
by Section 4.15; (xii) guarantees by the Company of Indebtedness of any
Restricted Subsidiary if the Indebtedness so guaranteed is permitted under
the Indenture; (xiii) Indebtedness of the Company and its Restricted
Subsidiaries in connection with performance, surety, statutory, appeal or
similar bonds in the ordinary course of business; (xiv) Indebtedness of the
Company and its Restricted Subsidiaries in connection with agreements
providing for indemnification, purchase price adjustments and similar
obligations in connection with the sale or disposition of any of their
business, properties or assets; (xv) Indebtedness of the Restricted
Subsidiaries in respect of the Junior Seller Note; (xvi) Indebtedness of
the Restricted Subsidiaries in respect of the MK Installment Note and the
MK Installment Note LC Facility; and (xvii) Indebtedness of the Company and
its Restricted Subsidiaries in respect of the Contingent Earnout Agreement.
"Parent" means Motors and Gears Holdings, Inc., a Delaware
corporation and corporate parent of the Company.
"Permitted Liens" means:
(a) with respect to the Company and its Restricted Subsidiaries, (i)
Liens for taxes, assessments, governmental charges or claims which are
being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted and if a reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall have
been made therefor; (ii) statutory Liens of landlords and carriers',
warehousemen's, mechanics', suppliers', materialmen's, repairmen's or other
like Liens arising in the ordinary course of business and with respect to
amounts not yet delinquent or being contested in good faith by appropriate
proceedings, if a reserve or other appropriate provision, if-any as shall
be required in conformity with GAAP shall have been made therefor; (iii)
Liens incurred on deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
types of social security; (iv) Liens incurred on deposits made to secure
the performance of tenders, bids, leases, statutory obligations, surety and
appeal bonds, government contracts, performance and return of money bonds
and other obligations of a like nature incurred in the ordinary course of
business (exclusive of obligations for the payment of borrowed money); (v)
easements, rights-of-way, zoning or other restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the business of the Company or any
of its Restricted Subsidiaries incurred in the ordinary course of business;
(vi) Liens (including extensions, renewals and replacements thereof) upon
property acquired (the "Acquired Property") after the date of original
issuance of the Senior Notes, provided that: (A) any such Lien is created
solely for the purpose of securing Indebtedness representing, or issued to
finance, refinance or refund, the cost (including the cost of construction)
of the Acquired Property, (B) the principal amount of the Indebtedness
secured by such Lien does not exceed 100% of the cost of the Acquired
Property, (C) such Lien does not extend to or cover any property other than
the Acquired Property and any improvements on such Acquired Property, and
(D) the issuance of the Indebtedness to purchase the Acquired Property is
permitted by Section 4.07; (vii) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of customs duties
in connection with the importation of goods; (viii) judgment and attachment
Liens not giving rise to an Event of Default; (ix) leases or subleases
granted to others not interfering in any material respect with the business
of the Company or any of its Restricted Subsidiaries; (x) Liens securing
Indebtedness under Hedging Obligations; (xi) Liens encumbering deposits
made to secure obligations arising from statutory, regulatory, contractual
or warranty requirements; (xii) Liens arising out of consignment or similar
arrangements for the sale of goods entered into by the Company or its
Restricted Subsidiaries in the ordinary course of business; (xiii) any
interest or title of a lessor in property subject to any capital lease
obligation or operating lease; (xiv) Liens arising from filing Uniform
Commercial Code financing statements regarding leases; (xv) Liens existing
on the date of original issuance of the Senior Notes and any extensions,
refinancings, renewals, replacements, substitutions or refundings thereof;
(xvi) any Lien granted to the Trustee and any substantially equivalent Lien
granted to any trustee or similar institution under any indenture for
Senior Indebtedness permitted by the terms of the Indenture; (xvii) Liens
securing Indebtedness under the MK Installment Note LC Facility; and
(xviii) additional Liens at any one time outstanding in respect of
properties or assets where aggregate fair market value does not exceed
$10,000,000 (the fair market value to be determined on the date such Lien
is granted on such properties or assets);
(b) with respect to the Restricted Subsidiaries, (i) Liens securing
Restricted Subsidiaries' reimbursement Obligations with respect to letters
of credit that encumber documents and other property relating to such
letters of credit and the products and proceeds thereof; (ii) Liens
securing Indebtedness issued by Restricted Subsidiaries if such
Indebtedness is (A) under the Credit Agreement or New Credit Agreement, or
(B) permitted by Section 4.07(a), clauses (i), (ii), (iii) or (iv) of
Section 4.07(b), or clauses (i), (iii) (to the extent the Indebtedness
subject to such Refinancing Indebtedness was subject to Liens), (vi),
(vii), (ix), (x) or (xvi) of the definition of Other Permitted
Indebtedness; (iii) Liens securing intercompany Indebtedness issued by any
Restricted Subsidiary to the Company or another Restricted Subsidiary; and
(iv) Liens securing guarantees by Restricted Subsidiaries of Indebtedness
issued by the Company if such guarantees permitted by clause (xi) (but only
in respect of the property, rights and assets of the Restricted
Subsidiaries issuing such guarantees) of the definition of Other Permitted
Indebtedness;
(c) with respect to the Company, (i) Liens securing Indebtedness
issued by the Company if such Indebtedness is (A) under the Credit
Agreement or the New Credit Agreement, or (B) if such Indebtedness is
permitted by Section 4.07 (including, but not limited to, Indebtedness
issued by the Company under the Credit Agreement or the New Credit
Agreement pursuant to clause (i) and/or clause (iv) of Section 4.07(b));
(ii) Liens securing Indebtedness of the Company if such Indebtedness is
permitted by clauses (i), (iii) (to the extent the Indebtedness subject to
such Refinancing Indebtedness was subject to Liens) or (vii) of the
definition of Other Permitted Indebtedness; (iii) Liens securing guarantees
by the Company of Indebtedness issued by Restricted Subsidiaries if such
Indebtedness is permitted by Section 4.07 (including, but not limited to,
Indebtedness issued by Restricted Subsidiaries under the Credit Agreement
or the New Credit Agreement pursuant to clause (i) and/or clause (iv) of
Section 4.07(b)) and if such guarantees are permitted by clause (xii) (but
only in respect of Indebtedness issued by the Restricted Subsidiaries under
the Credit Agreement or the New Credit Agreement pursuant to Section 4.07)
of the definition of Other Permitted Indebtedness; and (iv) Liens securing
the Company's reimbursement obligations with respect to letters of credit
that encumber documents and other property relating to such letters of
credit and the products and proceeds thereof
provided, however, that, notwithstanding any of the foregoing, the
Permitted Liens referred to in clause (c) of this definition shall not
include any Lien on Capital Stock of Restricted Subsidiaries held directly
by the Company (as distinguished from Liens on Capital Stock of Restricted
Subsidiaries held by other Restricted Subsidiaries) other than Liens
securing (A) Indebtedness of the Company issued under the Credit Agreement
or the New Credit Agreement pursuant to Section 4.07 and any permitted
Refinancing Indebtedness of such Indebtedness, and (B) guarantees by the
Company of Indebtedness issued by Restricted Subsidiaries under the Credit
Agreement or the New Credit Agreement pursuant to Section 4.07 and any
permitted Refinancing Indebtedness of such Indebtedness.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Pro Forma Basis" means, for purposes of determining Consolidated Net
Income in connection with the Cash Flow Coverage Ratio (including in
connection with Section 4.05, Section 4.16, Section 5.01, the incurrence of
Indebtedness pursuant to Section 4.07(a) and Consolidated Net Worth for
purposes of Section 5.01, giving pro forma effect to (x) any acquisition or
sale of a Person, business or asset, related incurrence, repayment or
refinancing of Indebtedness or other related transactions, including any
Restructuring Charges which would otherwise be accounted for as an
adjustment permitted by Regulation S-X under the Securities Act or on a pro
forma basis under GAAP, or (y) any incurrence, repayment or refinancing of
any Indebtedness and the application of the proceeds therefrom, in each
case, as if such acquisition or sale and related transactions,
restructurings, consolidations, cost savings, reductions, incurrence,
repayment or refinancing were realized on the first day of the relevant
period permitted by Regulation S-X under the Securities Act or on a pro
forma basis under GAAP. Furthermore, in calculating the Cash Flow Coverage
Ratio, (1) interest on outstanding Indebtedness determined on a fluctuating
basis as of the determination date and which will continue to be so
determined thereafter shall be deemed to have accrued at a fixed rate per
annum equal to the rate of interest on such Indebtedness in effect on the
determination date; (2) if interest on any Indebtedness actually incurred
on the determination date may optionally be determined at an interest rate
based upon a factor of a prime or similar rate, a eurocurrency interbank
offered rate, or other rates, then the interest rate in effect on the
determination date will be deemed to have been in effect during the
relevant period; and (3) notwithstanding clause (1) above, interest on
Indebtedness determined on a fluctuating basis, to the extent such interest
is covered by agreements relating to interest rate swaps or similar
interest rate protection Hedging Obligations, shall be deemed to accrue at
the rate per annum resulting after giving effect to the operation of such
agreements.
"Receivables" means, with respect to any Person, all of the following
property and interests in property of such Person, whether now existing or
existing in the future or hereafter acquired or arising: (i) accounts, (ii)
accounts receivable (including, without limitation, all rights to payment
created by or arising from sales of goods, leases of goods or leased or the
rendition of services rendered no matter how evidenced, whether or not
earned by performance), (iii) all unpaid seller's or lessor's rights
(including, without limitation, recession, replevin, reclamation and
stoppage in transit, relating to any of the foregoing or arising
therefrom), (iv) all rights to any goods or merchandise represented by any
of the foregoing (including, without limitation, returned or repossessed
goods), (v) all reserves and credit balances with respect to any such
accounts receivable or account debtors, (vi) all letters of credit,
security or guarantees of any of the foregoing, (vii) all insurance
policies or reports relating to any of the foregoing, (viii) all collection
or deposit accounts relating to any of the foregoing, (ix) all proceeds of
any of the foregoing, and (x) all books and records relating to any of the
foregoing.
"Receivables Financing" means (i) the sale, factoring or other
disposition of Receivables that arise in the ordinary course of business,
or (ii) the sale, factoring or other disposition of Receivables that arise
in the ordinary course of business to a Receivables Subsidiary followed by
a financing transaction in connection with such sale or disposition of such
Receivables.
"Receivables Subsidiary" means any Subsidiary of the Company or any
other corporation trust or entity that is exclusively engaged in
Receivables Financings and activities reasonably related thereto.
"Redeemable Preferred Stock" means preferred stock that by its terms
or otherwise is required to be redeemed or is redeemable at the option of
the holder thereof on, or prior to, the maturity date of the Senior Notes.
"Refinancing Indebtedness" means (i) Indebtedness of the Company and
its Restricted Subsidiaries issued or given in exchange for, or the
proceeds of which are used to, extend, refinance, renew, replace,
substitute or refund any Indebtedness permitted under this Indenture or any
Indebtedness issued to so extend, refinance, renew, replace, substitute or
refund such Indebtedness, (ii) any refinancings of Indebtedness issued
under the New Credit Agreement, and (iii) any additional Indebtedness
issued to pay premiums and fees in connection with clauses (i) and (ii).
"Refinancing Plan" means the Company's repayment of Indebtedness
under the Credit Agreement and certain other Indebtedness with the net
proceeds from the sale of the Senior Notes and borrowing under the New
Credit Agreement as contemplated by the Offering Memorandum.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of November 7, 1996, by and among the Company and the
Initial Purchasers.
"Representative" means the agent or other representative in respect
of the New Credit Agreement, with the Representative originally being
Bankers Trust Company.
"Restricted Investment" means Investment in any Person, provided that
Restricted Investments will not include: (i) Investments in marketable
securities and other negotiable instruments permitted by this Indenture;
(ii) any Incentive Arrangements; (iii) Investments in the Company; or (iv)
Investments in any Restricted Subsidiary (provided that any Investment in a
Restricted Subsidiary was made for fair market value (as determined by the
Board of Directors in good faith)). The amount of any Restricted Investment
shall be the amount of cash and the fair market value at the time of
transfer of all other property (as determined by the Board of Directors in
good faith) initially invested or paid for such Restricted Investment, plus
all additions thereto, without any adjustments for increases or decreases
in value of or write-ups, write-downs or write-offs with respect to, such
Restricted Investment.
"Restricted Subsidiary" means: (i) any Subsidiary of the Company
existing on the date of original issuance of the Senior Notes, and (ii) any
other Subsidiary of the Company formed, acquired or existing after the date
of original issuance of the Senior Notes that is designated as a
"Restricted Subsidiary" by the Company pursuant to a resolution approved a
majority of the Board of Directors, provided, however, that the term
Restricted Subsidiary shall not include any Subsidiary of the Company that
has been redesignated by the Company pursuant to a resolution approved by a
majority of the Board of Directors as a Non-Restricted Subsidiary in
accordance with Section 4.16 unless such Subsidiary shall have subsequently
been redesignated a Restricted Subsidiary in accordance with clause (ii) of
this definition.
"Restructuring Charges" means any charges or expenses in respect of
restructuring or consolidating any business, operations or facilities, any
compensation or headcount reduction, or any other cost savings, of any
Persons or businesses either alone or together with the Company or any
Restricted Subsidiary, as permitted by GAAP or Regulation S-X under the
Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" means: (i) all Obligations (including any
interest accruing subsequent to the filing of a petition of bankruptcy at
the rate provided for in the documentation with respect thereto, whether or
not such interest is an allowed claim under applicable law) on any
Indebtedness of the Company, whether outstanding on the date of issuance of
the Senior Notes or thereafter created, incurred or assumed, of the
following types: (A) all Indebtedness of the Company (including without
limitation the Senior Notes) for money borrowed, and (B) all Indebtedness
evidenced by notes, debentures, bonds or other similar instruments for the
payment of which the Company is responsible or liable; (ii) all capitalized
lease obligations of the Company; (iii) all Obligations of the Company: (A)
for the reimbursement of any obligor on any letter of credit, banker's
acceptance or similar credit transaction, (B) all constituting Hedging
Obligations, or (C) issued as the deferred purchase price of property and
all conditional sale Obligations of the Company and all Obligations of the
Company under any title retention agreement; (iv) all guarantees of the
Company with respect to Obligations of other Persons of the type referred
to in clauses (ii) and (iii) and with respect to the payment of dividends
of other Persons; and (v) all Obligations of the Company consisting of
modifications, renewals, extensions, replacements and refundings of any
Obligations described in clauses (i), (ii), (iii) or (iv) unless, in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is expressly provided that such Obligations are
subordinated or junior in right of payment to the Senior Notes; provided,
however, that Senior Indebtedness shall not be deemed to include: (1) any
Obligation of the Company to any Subsidiary, (2) any liability for federal,
state, local or other taxes owed or owing by the Company, (3) any accounts
payable or other liability to trade creditors arising in the ordinary
course of business (including guarantees thereof or instruments evidencing
such liabilities), (4) any Indebtedness, guarantee or Obligation of the
Company that is contractually subordinated or junior in any respect to any
other Indebtedness, guarantee or Obligation of the Company, or (5) any
Indebtedness to the extent the same is incurred in violation of the
Indenture. Senior Indebtedness shall include all Obligations in respect of
the Senior Notes and the Indenture.
To the extent any payment on the Senior Notes, whether by or on
behalf of the Company, as proceeds of security or enforcement of any right
of setoff or otherwise, is declared to be fraudulent or preferential, set
aside or required to be paid to a trustee, receiver or other similar party
under any bankruptcy, insolvency, receivership or similar law, then if such
payment is recovered by, or paid over to, such trustee, receiver or other
similar party, the Senior Notes or part thereof originally intended to be
satisfied by such payment shall be deemed to be reinstated and outstanding
as if such payment had not occurred.
"Senior Notes" means the Series A Notes and the Series B Notes.
"Series A Notes" means the Company's 10 Series A Notes due 2006.
"Series B Notes" means the Company's 10 Series B Notes due 2006.
"SFAS 106" means Statement of Financial Accounting Standards No. 106.
"SFAS 109" means Statement of Financial Accounting Standards No. 109.
"Significant Subsidiary" means any Restricted Subsidiary of the
Company that would be a "significant subsidiary" as defined in clause (2)
of the definition of such term in Rule 1-02 of Regulation S-X under the
Securities Act and the Exchange Act.
"Subordinated Indebtedness" means all Obligations of the type
referred to in clauses (i) through (v) of the definition of Senior
Indebtedness, if the instrument creating or evidencing the same, or
pursuant to which the same is outstanding, designates such Obligations as
subordinated or junior in right of payment to Senior Indebtedness.
"Subsidiary" of any Person means any entity of which the Equity
Interests entitled to cast at least a majority of the votes that may be
cast by all Equity Interests having ordinary voting power for the election
of directors or other governing body of such entity are owned by such
Person (regardless of whether such Equity Interests are owned directly by
such Person or through one or more Subsidiaries).
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
77aaa-77bbbb), as amended, as in effect on the date of original issuance of
the Senior Notes.
"TJC Agreement" means the Management Consulting Agreement, to be
dated as of November 7, 1996, between the Company and TJC Management
Corporation, as in effect on the date of original issuance of the Senior
Notes.
"Transfer Restricted Senior Notes" means securities that bear or are
required to bear the legend set forth in Section 2.06.
"Trustee" means Fleet National Bank until a successor replaces it in
accordance with the applicable provisions of this Indenture, and thereafter
means the successor.
"U.S. Government Obligations" means direct obligations of the Untied
States of America for the payment of which the full faith and credit of the
United States of America is pledged, provided that no U.S. Government
Obligation shall be callable at the issuer's option.
"Voting Stock" means any class or classes of Capital Stock pursuant
to which the holders thereof have the general voting power under ordinary
circumstances to elect the board of directors.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the
then outstanding principal amount of such Indebtedness into (ii) the sum of
the product(s) obtained by multiplying (a) the amount of each then
remaining installment, sinking fund, serial maturity or other requirement
payment of principal, including payment at final maturity, in respect
thereof, by (b) the number of years (calculated to the nearest one-twelfth)
which will elapse between such date and the making of such payment.
Section 1.02. Other Definitions.
Defined in
Term Section
"Affiliate Transaction"............................4.08
"Asset Sale Disposition Date"......................4.14
"Asset Sale Trigger Date"..........................4.14
"Change of Control Trigger Date"...................4.13
"covenant defeasance option".......................8.01
"Disposition"......................................5.01
"DTC"..............................................2.03
"Event of Default".................................6.01
"Excess Proceeds"..................................4.14
"legal defeasance option"..........................8.01
"Notice of Default"................................6.01
"Offer"............................................3.08
"Other Indebtedness"...............................4.15
"Other Indebtedness Guarantee".....................4.15
"Paying Agent".....................................2.03
"Purchase Date"....................................3.08
"Registrar"........................................2.03
"Restricted Payments"..............................4.05
"Successor Corporation"............................5.01
"Trustee Expenses".................................6.08
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in, and made a part of, this
Indenture. Any terms incorporated by reference in this Indenture that are
defined by the TIA, defined by TIA reference to another statute or defined
by SEC rule under the TIA have the meanings so assigned to them therein.
Section 1.04 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it herein;
(2) an accounting term not otherwise defined herein has the meaning
assigned to it under GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular; and
(5) provisions apply to successive events and transactions.
ARTICLE 2
THE SENIOR NOTES
Section 2.01. Form and Dating.
The Senior Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A, which is part of this
Indenture. The Senior Notes may have notations, legends or endorsements
required by law, stock exchange rule or usage. Each Senior Note shall be
dated the date of its authentication. The Senior Notes shall be in
denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Senior Notes shall
constitute, and are hereby expressly made, a part of this Indenture and, to
the extent applicable, the Company and the Trustee, by their execution and
delivery of this Indenture, expressly agree to such terms and provisions
and to be bound thereby.
Each Global Senior Note shall represent such of the outstanding
Senior Notes as shall be specified therein and each shall provide that it
shall represent the aggregate amount of outstanding Senior Notes from time
to time endorsed thereon and that the aggregate amount of outstanding
Senior Notes represented thereby may from time to time be reduced or
increased, as appropriate, to reflect exchanges and redemptions. Any
endorsement of a Global Senior Note to reflect the amount of any increase
or decrease in the amount of outstanding Senior Notes represented thereby
shall be made by the Trustee or the Senior Note Custodian, at the direction
of the Trustee, in accordance with instructions given by the Holder thereof
as required by Section 2.06.
Section 2.02. Execution and Authentication.
One Officer shall sign the Senior Notes for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Senior
Notes and may be in facsimile form.
If an Officer whose signature is on a Senior Note no longer holds
that office at the time a Senior Note is authenticated, the Senior Note
shall nevertheless be valid.
A Senior Note shall not be valid until authenticated by the manual
signature of an authorized signatory of the Trustee, and the Trustee's
signature shall be conclusive evidence that the Senior Note has been
authenticated under this Indenture. The form of Trustee's certificate of
authentication to be borne by the Senior Notes shall be substantially as
set forth in Exhibit A.
The Trustee shall, upon a written order of the Company signed by two
Officers directing the Trustee to authenticate the Senior Notes and
certifying that all conditions precedent to the issuance of the Senior
Notes contained herein have been complied with, authenticate Senior Notes
for original issuance up to an aggregate principal amount stated in
paragraph 4 of the Senior Notes (the aggregate principal amount of
outstanding Senior Notes may not exceed that amount at any time, except as
provided in Section 2.07).
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Senior Notes. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Senior Notes whenever
the Trustee may do so. Each reference in this Indenture to authentication
by the Trustee includes authentication by such agent. An authenticating
agent has the same rights as an Agent to deal with the Company or an
Affiliate of the Company.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency (the "Registrar")
where Senior Notes may be presented for registration of transfer or for
exchange and an office or agency (the "Paying Agent") where Senior Notes
may be presented for payment. The Registrar shall keep a register of the
Senior Notes and of their transfer and exchange. The Company may appoint
one or more co-registrars and one or more additional paying agents. The
term "Registrar" includes any co-registrar, and the term "Paying Agent"
includes any additional paying agent. The Company may change any Paying
Agent or Registrar without prior notice to any Holder. The Company shall
notify in writing the Trustee and the Trustee shall notify the Holders in
writing of the name and address of any Agent not a party to this Indenture.
If the Company fails to appoint or maintain another entity as Registrar or
Paying Agent, the Trustee shall act as such. The Company shall enter into
an appropriate agency agreement with any Agent not a party to this
Indenture, and such agreement shall incorporate the TIA's provisions and
implement the provisions of this Indenture that relate to such Agent.
The Company initially appoints The Depository Trust Company ("DTC")
to act as Depository with respect to the Global Senior Notes.
The Company initially appoints the Trustee as Registrar, Paying Agent
and agent for service of notices and demands in connection with the Senior
Notes and as Senior Note Custodian with respect to the Global Senior Notes.
The Company or any of its Subsidiaries may act as Paying Agent, Registrar
or co-registrar. If the Company fails to appoint or maintain a Registrar
and Paying Agent, the Trustee shall act as such, and shall be entitled to
appropriate compensation in accordance with Section 7.07.
Section 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the Holders'
benefit or the Trustee all money the Paying Agent holds for redemption or
purchase of the Senior Notes or for the payment of principal of, or
premium, if any, or interest on, or Liquidated Damages, if any, with
respect to the Senior Notes, and will promptly notify the Trustee of any
Default by the Company in providing the Paying Agent with sufficient funds
to (i) purchase Senior Notes tendered pursuant to an Offer arising under
Section 4.13, (ii) redeem Senior Notes called for redemption, or (iii) make
any payment of principal, premium, interest or Liquidated Damages due on
the Senior Notes. While any such Default continues, the Trustee may
require the Paying Agent to pay all money it holds to the Trustee and to
account for any funds disbursed. The Company at any time may require the
Paying Agent to pay all money it holds to the Trustee and to account for
any funds disbursed. Upon payment over to the Trustee, the Paying Agent
(if other than the Company or any of its Subsidiaries) shall have no
further liability for the money it delivered to the Trustee. If the
Company or any of its Subsidiaries acts as Paying Agent, it shall segregate
and hold in a separate trust fund for the Holders' benefit or the Trustee
all money it holds as Paying Agent.
Section 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses
of all Holders and shall otherwise comply with TIA 312(a). If the
Trustee is not the Registrar, the Company shall furnish to the Trustee at
least seven Business Days before each interest payment date and at such
other times as the Trustee may request in writing, a list in such form and
as of such date as the Trustee may reasonably require that sets forth the
names and addresses of, and the aggregate principal amount of Senior Notes
held by, each Holder, and the Company shall otherwise comply with Section
312(a) of the TIA.
Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Definitive Senior Notes. When
Definitive Senior Notes are presented by a Holder to the Registrar with a
request:
(x) to register the transfer of the Definitive Senior Notes;
or
(y) to exchange such Definitive Senior Notes for an equal
principal amount of Definitive Senior Notes of other
authorized denominations,
the Registrar shall register the transfer or make the exchange as requested
if its requirements for such transactions are met; provided, however, that
the Definitive Senior Notes presented or surrendered for register of
transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the
Registrar duly executed by such Holder or by his attorney,
duly authorized in writing; and
(ii) in the case of a Definitive Senior Note that is a Transfer
Restricted Senior Note, such request shall be accompanied
by the following additional information and documents, as
applicable:
(A) if such Transfer Restricted Senior Note is being
delivered to the Registrar by a Holder for
registration in the name of such Holder, without
transfer, a certification to that effect from such
Holder (in substantially the form of Exhibit B
hereto); or
(B) if such Transfer Restricted Senior Note is being
transferred (1) to a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act) in
accordance with Rule 144A under the Securities Act or
(2) pursuant to an exemption from registration in
accordance with Rule 144 under the Securities Act
(and based on an opinion of counsel if the Company so
requests) or (3) pursuant to an effective
registration statement under the Securities Act, a
certification to that effect from such Holder (in
substantially the form of Exhibit B hereto);
(C) if such Transfer Restricted Senior Note is being
transferred to an institutional "accredited
investor," within the meaning of Rule 501(a)(1), (2),
(3) or (7) under the Securities Act pursuant to a
private placement exemption from the registration
requirements of the Securities Act (and based on an
opinion of counsel if the Company so requests), a
certification to that effect from such Holder (in
substantially the form of Exhibit B hereto) and a
certification from the applicable transferee (in
substantially the form of Exhibit C hereto);
(D) if such Transfer Restricted Senior Note is being
transferred pursuant to an exemption from
registration in accordance with Rule 904 under the
Securities Act (and based on an opinion of counsel if
the Company so requests), certifications to that
effect from such Holder (in substantially the form of
Exhibits B and D hereto); or
(E) if such Transfer Restricted Senior Note is being
transferred in reliance on another exemption from the
registration requirements of the Securities Act (and
based on an opinion of counsel if the Company so
requests), a certification to that effect from such
Holder (in substantially the form of Exhibit B
hereto).
(b) Transfer of a Definitive Senior Note for a Beneficial Interest
in a Global Senior Note. A Definitive Senior Note may not be exchanged for
a beneficial interest in a Global Senior Note except upon satisfaction of
the requirements set forth below. Upon receipt by the Trustee of a
Definitive Senior Note, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Trustee, together
with:
(i) if such Definitive Senior Note is a Transfer Restricted
Senior Note, a certification from the Holder thereof (in
substantially the form of Exhibit B hereto) to the effect
that such Definitive Senior Note is being transferred by
such Holder to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act) in
accordance with Rule 144A under the Securities Act; and
(ii) whether or not such Definitive Senior Note is a Transfer
Restricted Senior Note, written instructions from the
Holder thereof directing the Trustee to make, or to direct
the Senior Note Custodian to make, an endorsement on the
Global Senior Note to reflect an increase in the aggregate
principal amount of the Senior Notes represented by the
Global Senior Note,
the Trustee shall cancel such Definitive Senior Note in accordance with
Section 2.11 and cause, or direct the Senior Note Custodian to cause, in
accordance with the standing instructions and procedures existing between
the Depository and the Senior Note Custodian, the aggregate principal
amount of Senior Notes represented by the Global Senior Note to be
increased accordingly. If no Global Senior Notes are then outstanding, the
Company shall issue and, upon receipt of an authentication order in
accordance with Section 2.02, the Trustee shall authenticate a new Global
Senior Note in the appropriate principal amount.
(c) Transfer and Exchange of Global Senior Notes. The transfer and
exchange of Global Senior Notes or beneficial interests therein shall be
effected through the Depository, in accordance with this Indenture and the
procedures of the Depository therefor, which shall include restrictions on
transfer comparable to those set forth herein to the extent required by the
Securities Act.
(d) Transfer of a Beneficial Interest in a Global Senior Note for a
Definitive Senior Note.
(i) Any Person having a beneficial interest in a Global Senior
Note may upon request exchange such beneficial interest
for a Definitive Senior Note. Upon receipt by the Trustee
of written instructions or such other form of instructions
as is customary for the Depository, from the Depository or
its nominee on behalf of any Person having a beneficial
interest in a Global Senior Note, and, in the case of a
Transfer Restricted Senior Note, the following additional
information and documents (all of which may be submitted
by facsimile):
(A) if such beneficial interest is being transferred to
the Person designated by the Depository as being the
beneficial owner, a certification to that effect from
such Person (in substantially the form of Exhibit B
hereto); or
(B) if such beneficial interest is being transferred (1)
to a "qualified institutional buyer" (as defined in
Rule 144A under the Securities Act) in accordance
with Rule 144A under the Securities Act or (2)
pursuant to an exemption from registration in
accordance with Rule 144 under the Securities Act
(and based on an opinion of counsel if the Company so
requests) or (3) pursuant to an effective
registration statement under the Securities Act, a
certification to that effect from the transferor (in
substantially the form of Exhibit B hereto); or
(C) if such beneficial interest is being transferred to
an institutional "accredited investor," within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act pursuant to a private placement
exemption from the registration requirements of the
Securities Act (and based on an opinion of counsel if
the Company so requests), a certification to that
effect from such Holder (in substantially the form of
Exhibit B hereto) and a certification from the
applicable transferee (in substantially the form of
Exhibit C hereto);
(D) if such beneficial interest is being transferred
pursuant to an exemption from registration in
accordance with Rule 904 under the Securities Act
(and based on an opinion of counsel if the Company so
requests), certifications to that effect from such
Holder (in substantially the form of Exhibits B and D
hereto); or
(E) if such beneficial interest is being transferred in
reliance on another exemption from the registration
requirements of the Securities Act (and based on an
opinion of counsel if the Company so requests), a
certification to that effect from such Holder (in
substantially the form of Exhibit B hereto).
the Trustee or the Senior Note Custodian, at the direction
of the Trustee, shall, in accordance with the standing
instructions and procedures existing between the
Depository and the Senior Note Custodian, cause the
aggregate principal amount of Global Senior Notes to be
reduced accordingly and, following such reduction, the
Company shall execute and, upon receipt of an
authentication order in accordance with Section 2.02
hereof, the Trustee shall authenticate and deliver to the
transferee a Definitive Senior Note in the appropriate
principal amount.
(ii) Definitive Senior Notes issued in exchange for a
beneficial interest in a Global Senior Note pursuant to
this Section 2.06(d) shall be registered in such names and
in such authorized denominations as the Depository,
pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee.
The Trustee shall deliver in accordance with the standard
procedures of the Depository such Definitive Senior Notes
to the Persons in whose names such Senior Notes are so
registered.
(e) Restrictions on Transfer and Exchange of Global Senior Notes.
Notwithstanding any other provision of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.06), a Global
Senior Note may not be transferred as a whole except by the Depository to a
nominee of the Depository or by a nominee of the Depository to the
Depository or another nominee of the Depository or by the Depository or any
such nominee to a successor Depository or a nominee of such successor
Depository.
(f) Authentication of Definitive Senior Notes in Absence of
Depository. If at any time:
(i) the Depository for the Senior Notes notifies the Company
that the Depository is unwilling or unable to continue as
Depository for the Global Senior Notes and a successor
Depository for the Global Senior Notes is not appointed by
the Company within 90 days after delivery of such notice;
or
(ii) The Company, at its sole discretion, notifies the Trustee
in writing that it elects to cause the issuance of
Definitive Senior Notes under this Indenture,
then the Company shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.02, authenticate and
deliver, Definitive Senior Notes in an aggregate principal amount equal to
the principal amount of the Global Senior Notes in exchange for such Global
Senior Notes and registered in such names as the Depository shall instruct
the Trustee or the Company in writing.
(g) Legends.
(i) Except for any Transfer Restricted Senior Note sold or
transferred (including any Transfer Restricted Senior Note
represented by a Global Senior Note) as described in (ii)
below, each Senior Note certificate evidencing Global
Senior Notes and Definitive Senior Notes (and all Senior
Notes issued in exchange therefor or substitution thereof)
shall bear legends in substantially the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF
THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE
SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS
OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY
AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH
SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY (1)(a) INSIDE THE UNITED STATES TO A PERSON WHO THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT)
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144
UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO
A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR
(3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND,
IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE."
(ii) Upon any sale or transfer of a Transfer Restricted Senior
Note (including any Transfer Restricted Senior Note
represented by a Global Senior Note) pursuant to an
effective registration statement under the Securities Act,
pursuant to Rule 144 under the Securities Act or pursuant
to an opinion of counsel reasonably satisfactory to the
Company and the Registrar that no legend is required:
(A) in the case of any Transfer Restricted Senior Note
that is a Definitive Senior Note, the Registrar shall
permit the Holder thereof to exchange such Transfer
Restricted Senior Note for a Definitive Senior Note
that does not bear the legend set forth in (i) above
and rescind any restriction on the transfer of such
Transfer Restricted Senior Note; and
(B) in the case of any Transfer Restricted Senior Note
represented by a Global Senior Note, such Transfer
Restricted Senior Note shall not be required to bear
the legend set forth in (i) above if all other
interests in such Global Senior Note have been or are
concurrently being sold or transferred pursuant to
Rule 144 under the Securities Act or pursuant to an
effective registration statement under the Securities
Act, but such Transfer Restricted Senior Note shall
continue to be subject to the provisions of Section
2.06(c); provided, however, that with respect to any
request for an exchange of a Transfer Restricted
Senior Note that is represented by a Global Senior
Note for a Definitive Senior Note that does not bear
the legend set forth in (i) above, which request is
made in reliance upon Rule 144, the Holder thereof
shall certify in writing to the Registrar that such
request is being made pursuant to Rule 144 (such
certification to be substantially in the form of
Exhibit B hereto).
(iii) Notwithstanding the foregoing, upon consummation of the
Exchange Offer, the Company shall issue and, upon receipt
of an authentication order in accordance with Section
2.02, the Trustee shall authenticate, Series B Senior
Notes in exchange for Series A Senior Notes accepted for
exchange in the Exchange Offer, which Series B Senior
Notes shall not bear the legend set forth in (i) above,
and the Registrar shall rescind any restriction on the
transfer of such Senior Notes, in each case unless the
Holder of such Series A Senior Notes is either (A) a
broker-dealer, (B) a Person participating in the
distribution of the Series A Senior Notes or (C) a Person
who is an affiliate (as defined in Rule 144A) of the
Company. The Company shall identify to the Trustee such
Holders of the Senior Notes in a written certification
signed by an Officer of the Company and, absent
certification from the Company to such effect, the Trustee
shall assume that there are no such Holders.
(h) Cancellation and/or Adjustment of Global Senior Notes. At such
time as all beneficial interests in Global Senior Notes have been exchanged
for Definitive Senior Notes, redeemed, repurchased or cancelled, all Global
Senior Notes shall be returned to or retained and cancelled by the Trustee
in accordance with Section 2.11. At any time prior to such cancellation,
if any beneficial interest in a Global Senior Note is exchanged for
Definitive Senior Notes, redeemed, repurchased or cancelled, the principal
amount of Senior Notes represented by such Global Senior Note shall be
reduced accordingly and an endorsement shall be made on such Global Senior
Note, by the Trustee or the Senior Notes Custodian, at the direction of the
Trustee, to reflect such reduction.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate
Definitive Senior Notes and Global Senior Notes at the
Registrar's request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any transfer
tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange or transfer
pursuant to Sections 3.07, 4.13, 4.14 and 9.05).
(iii) Neither the Company nor the Registrar shall be required to
register the transfer of or exchange any Senior Note
selected for redemption in whole or in part, except the
unredeemed portion of any Senior Note being redeemed in
part.
(iv) All Definitive Senior Notes and Global Senior Notes issued
upon any registration of transfer or exchange of
Definitive Senior Notes or Global Senior Notes in
accordance with this Indenture (including any increase in
the aggregate principal amount of the Senior Notes
represented by the Global Senior Note pursuant to
subsection (b) above) shall be the valid obligations of
the Company, evidencing the same debt, and entitled to the
same benefits under this Indenture, as the Definitive
Senior Notes or Global Senior Notes surrendered upon such
registration of transfer or exchange.
(v) The Company shall not be required to issue Senior Notes
and the Registrar shall not be required to register the
transfer of or to exchange Senior Notes during a period
beginning at the opening of business 15 days before the
day of any selection of Senior Notes for redemption under
Section 3.02 and ending at the close of business on the
day of selection, or to register the transfer of or to
exchange a Senior Note between a record date and the next
succeeding interest payment date.
(vi) Prior to due presentment for the registration of a
transfer of any Senior Note, the Trustee, any Agent and
the Company may deem and treat the Person in whose name
any Senior Note is registered as the absolute owner of
such Senior Note for the purpose of receiving payment of
principal of, premium, if any, accrued and unpaid
interest, and Liquidated Damages, if any, on such Senior
Notes, and neither the Trustee, any Agent nor the Company
shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Definitive Senior Notes and
Global Senior Notes in accordance with the provisions of
Section 2.02.
Section 2.07. Replacement Senior Notes.
If any mutilated Senior Note is surrendered to the Trustee, or the
Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Senior Note, the Company shall issue and
the Trustee, upon the Company's written order signed by two Officers, shall
authenticate a replacement Senior Note if the Trustee's requirements are
met. If the Trustee or the Company requires it, the Holder must supply an
indemnity bond that is sufficient in the judgment of the Trustee and the
Company to protect the Company, the Trustee, any Agent or any
authenticating agent from any loss that any of them may suffer if a Senior
Note is replaced. The Company and the Trustee may charge for their
expenses in replacing a Senior Note. Every replacement Senior Note is an
additional Obligation of the Company.
Section 2.08. Outstanding Senior Notes.
The Senior Notes outstanding at any time are all the Senior Notes the
Trustee has authenticated except for those it has cancelled, those
delivered to it for cancellation, those representing reductions in the
interest in a Global Senior Note effected by the Trustee in accordance with
the provisions hereof, and those described in this Section as not
outstanding.
If a Senior Note is replaced pursuant to Section 2.07, it ceases to
be outstanding unless the Trustee receives proof satisfactory to it that a
bona fide purchaser holds the replaced Senior Note.
If the entire principal of, and premium, if any, and accrued interest
on, and Liquidated Damages, if any, with respect to any Senior Note is
considered paid under Section 4.01, it ceases to be outstanding and
interest and Liquidated Damages on it cease to accrue.
Subject to Section 2.09, a Senior Note does not cease to be
outstanding because the Company or an Affiliate holds the Senior Note.
Section 2.09. Treasury Senior Notes.
In determining whether the Holders of the required principal amount
of Senior Notes have concurred in any direction, waiver or consent, Senior
Notes owned by the Company or an Affiliate shall be considered as though
not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or
consent, only Senior Notes that a Trust Officer of the Trustee knows are so
owned shall be so disregarded. Notwithstanding the foregoing, Senior Notes
that the Company or an Affiliate offers to purchase or acquires pursuant to
an Offer, exchange offer, tender offer or otherwise shall not be deemed to
be owned by the Company or an Affiliate until legal title to such Senior
Notes passes to the Company or such Affiliate, as the case may be.
Section 2.10. Temporary Senior Notes.
Until Definitive Senior Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Senior Notes.
Temporary Senior Notes shall be substantially in the form of Definitive
Senior Notes but may have variations that the Company considers appropriate
for temporary Senior Notes. Without unreasonable delay, the Company shall
prepare and the Trustee, upon receipt of the Company's written order signed
by two Officers which shall specify the amount of temporary Senior Notes to
be authenticated and the date on which the temporary Senior Notes are to be
authenticated, shall authenticate Definitive Senior Notes and deliver them
in exchange for temporary Senior Notes. Until such exchange, Holders of
temporary Senior Notes shall be entitled to the same rights, benefits and
privileges as Definitive Senior Notes.
Section 2.11. Cancellation.
The Company at any time may deliver Senior Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the
Trustee any Senior Notes surrendered to them for registration of transfer,
exchange, replacement, payment (including all Senior Notes called for
redemption and all Senior Notes accepted for payment pursuant to an Offer)
or cancellation, and the Trustee shall cancel all such Senior Notes and
shall destroy all cancelled Senior Notes (subject to the Exchange Act's
record retention requirements) and deliver a certificate of their
destruction to the Company unless by written order, signed by two Officers
of the Company, the Company shall direct that cancelled Senior Notes be
returned to it. The Company may not issue new Senior Notes to replace any
Senior Notes that have been cancelled by the Trustee or that have been
delivered to the Trustee for cancellation. If the Company or an Affiliate
acquires any Senior Notes (other than by redemption or pursuant to an
Offer), such acquisition shall not operate as a redemption or satisfaction
of the Indebtedness represented by such Senior Notes unless and until such
Senior Notes are delivered to the Trustee for cancellation.
Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Senior Notes,
it shall pay the defaulted interest in any lawful manner plus, to the
extent lawful, interest payable on the defaulted interest, to Holders on a
subsequent special record date, in each case at the rate provided in the
Senior Notes and in Section 4.01. The Company shall fix or cause to be
fixed each such special record date and payment date. As early as
practicable prior to the special record date, the Company (or the Trustee,
in the name of and at the expense of the Company) shall mail a notice that
states the special record date, the related payment date and the amount of
interest to be paid.
Section 2.13. Record Date.
The record date for purposes of determining the identity of Holders
of Senior Notes entitled to vote or consent to any action by vote or
consent authorized or permitted under this Indenture shall be determined as
provided for in section 316(c) of the TIA.
Section 2.14. CUSIP Number.
A "CUSIP" number shall be printed on the Senior Notes, and the
Trustee shall use the CUSIP number in notices of redemption, purchase or
exchange as a convenience to Holders, provided that any such notice may
state that no representation is made as to the correctness or accuracy of
the CUSIP number printed in the notice or on the Senior Notes and that
reliance may be placed only on the other identification numbers printed on
the Senior Notes. The Company shall promptly notify the Trustee of any
change in the CUSIP number.
ARTICLE 3
OPTIONAL REDEMPTION AND MANDATORY OFFERS TO PURCHASE
Section 3.01. Notices to Trustee.
If the Company elects to redeem Senior Notes pursuant to Section
3.07, it shall furnish to the Trustee, at least 40 days prior to the
redemption date and at least 10 days prior to the date that notice of the
redemption is to be mailed by the Company to Holders, an Officers'
Certificate stating that the Company has elected to redeem Senior Notes
pursuant to Section 3.07(a) or 3.07(b), as the case may be, the date notice
of redemption is to be mailed to Holders, the redemption date, the
aggregate principal amount of Senior Notes to be redeemed, the redemption
price for such Senior Notes and the amount of accrued and unpaid interest
on and Liquidated Damages, if any, with respect to such Senior Notes as of
the redemption date. If the Trustee is not the Registrar, the Company
shall, concurrently with delivery of its notice to the Trustee of a
redemption, cause the Registrar to deliver to the Trustee a certificate
(upon which the Trustee may rely) setting forth the name of, and the
aggregate principal amount of Senior Notes held by, each Holder.
If the Company is required to offer to purchase Senior Notes pursuant
to Section 4.13 or 4.14, it shall furnish to the Trustee, at least 2
Business Days before notice of the Offer is to be mailed to Holders, an
Officers' Certificate setting forth that the Offer is being made pursuant
to Section 4.13 or 4.14, as the case may be, the Purchase Date, the maximum
principal amount of Senior Notes the Company is offering to purchase
pursuant to the Offer, the purchase price for such Senior Notes, and the
amount of accrued and unpaid interest on and Liquidated Damages, if any,
with respect to such Senior Notes as of the Purchase Date.
The Company will also provide the Trustee with any additional
information that the Trustee reasonably requests in connection with any
redemption or Offer.
Section 3.02. Selection of Senior Notes to be Redeemed or Purchased.
If less than all outstanding Senior Notes are to be redeemed or if
less than all Senior Notes tendered pursuant to an Offer are to be accepted
for payment, the Trustee shall select the outstanding Senior Notes to be
redeemed or accepted for payment pro rata, by lot or by a method that
complies with the requirements of any stock exchange on which the Senior
Notes are listed and that the Trustee considers fair and appropriate. If
the Company elects to mail notice of a redemption to Holders, the Trustee
shall at least 5 business days prior to the date notice of redemption is to
be mailed, (i) select the Senior Notes to be redeemed from Senior Notes
outstanding not previously called for redemption and (ii) notify the
Company of the names of each Holder of Senior Notes selected for
redemption, the principal amount of Senior Notes held by each such Holder
and the principal amount of such Holder's Senior Notes that are to be
redeemed. If less than all Senior Notes tendered pursuant to an Offer on
the Purchase Date are to be accepted for payment, the Trustee shall select
on or promptly after the Purchase Date the Senior Notes to be accepted for
payment. The Trustee shall select for redemption or purchase Senior Notes
or portions of Senior Notes in principal amounts of $1,000 or integral
multiples of $1,000; except that if all of the Senior Notes of a Holder are
selected for redemption or purchase, the aggregate principal amount of the
Senior Notes held by such Holder, even if not a multiple of $1,000, shall
be redeemed or purchased. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Senior Notes called for
redemption or tendered pursuant to an Offer also apply to portions of
Senior Notes called for redemption or tendered pursuant to an Offer. The
Trustee shall notify the Company promptly of the Senior Notes or portions
of Senior Notes to be called for redemption or selected for purchase.
Section 3.03. Notice of Redemption.
At least 30 days but not more than 60 days before a redemption date,
the Company shall mail a notice of redemption to each Holder of Senior
Notes or portions thereof that are to be redeemed.
The notice shall identify the Senior Notes or portions thereof to be
redeemed and shall state:
(1) the redemption date;
(2) the redemption price for the Senior Notes and separately
stating the amount of unpaid and accrued interest on, and
Liquidated Damages, if any, with respect to, such Senior
Notes as of the date of redemption;
(3) if any Senior Note is being redeemed in part, the portion
of the principal amount of such Senior Notes to be
redeemed and that, after the redemption date, upon
surrender of such Senior Note, a new Senior Note or Senior
Notes in principal amount equal to the unredeemed portion
will be issued;
(4) the name and address of the Paying Agent;
(5) that Senior Notes called for redemption must be
surrendered to the Paying Agent to collect the redemption
price for, and any accrued and unpaid interest on, and
Liquidated Damages, if any, with respect to such Senior
Notes;
(6) that, unless the Company defaults in making such
redemption payment, interest on Senior Notes called for
redemption ceases to accrue on and after the redemption
date;
(7) the paragraph of the Senior Notes pursuant to which the
Senior Notes called for redemption are being redeemed; and
(8) the CUSIP number; provided that no representation is made
as to the correctness or accuracy of the CUSIP number
listed in such notice and printed on the Senior Notes.
At the Company's request, the Trustee shall (at the Company's
expense) give the notice of redemption in the Company's name at least 30
but not more than 60 days before a redemption; provided, however, that the
Company shall deliver to the Trustee, at least 45 days prior to the
redemption date and at least 10 days prior to the date that notice of the
redemption is to be mailed to Holders, an Officers' Certificate that (i)
requests the Trustee to give notice of the redemption to Holders, (ii) sets
forth the information to be provided to Holders in the notice of
redemption, as set forth in the preceding paragraph, (iii) states that the
Company has elected to redeem Senior Notes pursuant to Section 3.07(a) or
3.07(b), as the case may be, and (iv) sets forth the aggregate principal
amount of Senior Notes to be redeemed and the amount of accrued and unpaid
interest and Liquidated Damages, if any, thereon as of the redemption date.
If the Trustee is not the Registrar, the Company shall, concurrently with
any such request, cause the Registrar to deliver to the Trustee a
certificate (upon which the Trustee may rely) setting forth the name of,
the address of, and the aggregate principal amount of Senior Notes held by,
each Holder.
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed, Senior Notes called for
redemption become due and payable on the redemption date at the price set
forth in the Senior Note. Upon surrender to the Trustee or Paying Agent,
such Senior Notes called for redemption shall be paid at the redemption
price (which shall include accrued interest thereon to the redemption date)
but installments of interest, the maturity of which is on or prior to the
redemption date, shall be payable to Holders of record at the close of
business on the relevant record dates.
Section 3.05. Deposit of Redemption Price.
On or prior to any redemption date, the Company shall deposit with
the Trustee or with the Paying Agent money sufficient to pay the redemption
price of, and accrued interest on, and Liquidated Damages, if any, with
respect to all Senior Notes to be redeemed on that date. The Trustee or
the Paying Agent shall return to the Company any money that the Company
deposited with the Trustee or the Paying Agent in excess of the amounts
necessary to pay the redemption price of, and accrued interest on, and
Liquidated Damages, if any, with respect to all Senior Notes to be
redeemed.
If the Company complies with the preceding paragraph, interest on the
Senior Notes to be redeemed will cease to accrue on such Senior Notes on
the applicable redemption date, whether or not such Senior Notes are
presented for payment. If a Senior Note is redeemed on or after an
interest record date but on or prior to the related interest payment date,
then any accrued and unpaid interest and Liquidated Damages, if any, shall
be paid to the Person in whose name such Senior Note was registered at the
close of business on such record date. If any Senior Note called for
redemption shall not be so paid upon surrender for redemption because of
the failure of the Company to comply with the preceding paragraph, interest
will be paid on the unpaid principal, premium, if any, interest and
Liquidated Damages, if any, from the redemption date until such principal,
premium, interest and Liquidated Damages, if any, is paid, at the rate of
interest provided in the Senior Notes and Section 4.01.
Section 3.06.Senior Notes Redeemed in Part.
Upon surrender of a Senior Note that is redeemed in part, the Company
shall issue and the Trustee shall authenticate for the Holder at the
Company's expense a new Senior Note equal in principal amount to the
unredeemed portion of the Senior Note surrendered.
Section 3.07.Optional Redemption Provisions.
(a) Except as provided in Section 3.07(b), the Senior Notes may not
be redeemed at the option of the Company prior to November 15, 2001.
During the twelve (12) month period beginning on November 15 of the years
indicated below, the Senior Notes will be redeemable at the option of the
Company, in whole or in part, on at least 30 but not more than 60 days'
notice to each Holder of Senior Notes to be redeemed, at the redemption
prices (expressed as percentages of the principal amount) set forth below,
plus any accrued and unpaid interest and Liquidated Damages, if any, to the
redemption date:
Year Percentage
---- ----------
2001............................................105.375%
2002............................................103.583%
2003............................................101.792%
2004 and thereafter.............................100.000%
(b) Notwithstanding the foregoing, prior to November 15, 1999, the
Company may (but shall not have the obligation to) redeem up to 35% of the
original aggregate principal amount of the Senior Notes at a redemption
price of 109.750% of the principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, to the redemption date, with the
net proceeds of one or more Equity Offerings; provided that at least 65% of
the aggregate principal amount of Senior Notes originally issued remain
outstanding immediately after the occurrence of any such redemption; and
provided, further, that any such redemption shall occur within 60 days of
the date of the closing of any such Equity Offering.
SECTION 3.08. MANDATORY PURCHASE PROVISIONS.
(a) Within 30 days after any Change of Control Trigger Date or Asset
Sale Trigger Date, the Company shall mail a notice to each Holder at such
Holder's registered address stating (i) that an offer ("Offer") is being
made pursuant to Section 4.13 or Section 4.14, as the case may be, the
length of time the Offer shall remain open and the maximum aggregate
principal amount of Senior Notes that will be accepted for payment pursuant
to such Offer; (ii) the purchase price for the Senior Notes (as set forth
in Section 4.13 or Section 4.14, as the case may be), the amount of accrued
and unpaid interest on, and Liquidated Damages, if any, with respect to,
such Senior Notes as of the purchase date, and the purchase date (which
shall be no earlier than 30 days and no later than 40 days from the date
such notice is mailed (the "Purchase Date")); (iii) that any Senior Note
not accepted for payment will continue to accrue interest and Liquidated
Damages, if any; (iv) that, unless the Company fails to deposit with the
Paying Agent on the Purchase Date an amount sufficient to purchase all
Senior Notes accepted for payment, interest shall cease to accrue on such
Senior Notes after the Purchase Date; (v) that Holders electing to tender
any Senior Note or portion thereof will be required to surrender their
Senior Note, with a form entitled "Option of Holder to Elect Purchase"
completed, to the Paying Agent at the address specified in the notice prior
to the close of business on the Business Day preceding the Purchase Date,
provided that Holders electing to tender only a portion of any Senior Note
must tender a principal amount of $1,000 or integral multiples thereof;
(vi) that Holders will be entitled to withdraw their election to tender
Senior Notes, if the Paying Agent receives, not later than the close of
business on the third Business Day preceding the Purchase Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of Senior Notes delivered for purchase, and a
statement that such Holder is withdrawing his election to have such Senior
Note purchased; and (vii) that Holders whose Senior Notes are accepted for
payment in part will be issued new Senior Notes equal in principal amount
to the unpurchased portion of Senior Notes surrendered; provided that only
Senior Notes in a principal amount of $1,000 or integral multiples thereof
will be accepted for payment in part.
(b) On the Purchase Date for any Offer, the Company shall, to the
extent required by this Indenture and such Offer, (i) in the case of an
Offer resulting from a Change of Control, accept for payment all Senior
Notes or portions thereof tendered pursuant to such Offer and, in the case
of an Offer resulting from an Asset Sale, accept for payment the maximum
principal amount of Senior Notes or portions thereof tendered pursuant to
such Offer that can be purchased out of Excess Proceeds from such Asset
Sale Trigger Date, (ii) deposit with the Paying Agent the aggregate
purchase price of all Senior Notes or portions thereof accepted for payment
and any accrued and unpaid interest and Liquidated Damages, if any, on such
Senior Notes as of the Purchase Date, and (iii) deliver or cause to be
delivered to the Trustee all Senior Notes tendered pursuant to the Offer.
(c) With respect to any Offer, if less than all of the Senior Notes
tendered pursuant to an Offer are to be purchased by the Company, the
Trustee shall select on the Purchase Date the Senior Notes or portions
thereof to be accepted for payment pursuant to Section 3.02.
(d) Promptly after consummation of an Offer, (i) the Paying Agent
shall mail (or cause to be transferred by book entry) to each Holder of
Senior Notes or portions thereof accepted for payment an amount equal to
the purchase price for, plus any accrued and unpaid interest on, and
Liquidated Damages, if any, with respect to such Senior Notes, (ii) with
respect to any tendered Senior Note not accepted for payment in whole or in
part, the Trustee shall return such Senior Note to the Holder thereof, and
(iii) with respect to any Senior Note accepted for payment in part, the
Trustee shall authenticate and mail to each such Holder a new Senior Note
equal in principal amount to the unpurchased portion of the tendered Senior
Note.
(e) The Company will publicly announce the results of the Offer on
or as soon as practicable after the Purchase Date.
(f) The Company shall comply with any tender offer rules under the
Exchange Act which may then be applicable, including Rule 14e-1, in
connection with an Offer required to be made by the Company to repurchase
the Senior Notes as a result of a Change of Control Trigger Date or an
Asset Sale Trigger Date. To the extent that the provisions of any
securities laws or regulations conflict with provisions of this Indenture,
the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under
this Indenture by virtue thereof.
(g) With respect to any Offer, if the Company deposits prior to 10
a.m. New York City time with the Paying Agent on the Purchase Date an
amount in available funds sufficient to purchase all Senior Notes accepted
for payment, interest shall cease to accrue on such Senior Notes after the
Purchase Date; provided, however, that if the Company fails to deposit such
amount on the Purchase Date, interest shall continue to accrue on such
Senior Notes until such deposit is made.
ARTICLE 4
COVENANTS
Section 4.01. Payment of Senior Notes.
The Company shall pay the principal of, and premium, if any, and
accrued and unpaid interest on the Senior Notes on the dates and in the
manner provided in the Senior Notes. Holders of Senior Notes must
surrender their Senior Notes to the Paying Agent to collect principal
payments. Principal of, premium, if any, and accrued and unpaid interest,
and Liquidated Damages, if any, shall be considered paid on the date due if
the Paying Agent (other than the Company or any of its Subsidiaries), the
Global Senior Note Holder or each Holder that has specified an account,
holds, as of 10:00 a.m. New York City time, money the Company deposited in
immediately available funds designated for and sufficient to pay in cash
all principal, premium, if any, and accrued and unpaid interest on, and
Liquidated Damages, if any, then due; provided that, to the extent that the
Holders have not specified accounts, such amounts shall be considered paid
on the date due if the Company mails a check for such amounts on such date.
The Paying Agent shall return to the Company, no later than five days
following the date of payment, any money (including accrued interest) that
exceeds the amount of principal, premium, if any, accrued and unpaid
interest, and Liquidated Damages, if any, paid on the Senior Notes. The
Company shall pay all Liquidated Damages, if any, in the same manner on the
dates and in the amounts set forth in the Registration Rights Agreement.
If any Liquidated Damages become payable, the Company shall not later than
3 Business Days prior to the date that any payment of Liquidated Damages is
due (i) deliver an Officers' Certificate to the Trustee setting forth the
amount of Liquidated Damages payable to Holders and (ii) instruct the
Paying Agent to pay such amount of Liquidated Damages to Holders entitled
to receive such Liquidated Damages.
To the extent lawful, the Company shall pay interest (including
Post-Petition Interest) on (i) overdue principal and premium at the rate
equal to 2% per annum in excess of the then applicable interest rate on the
Senior Notes, compounded semiannually and (ii) overdue installments of
interest and Liquidated Damages (without regard to any applicable grace
period) at the same rate as set forth in clause (i), compounded
semiannually.
Section 4.02. SEC Reports.
(a) The Company shall file with the Trustee, within 15 days after it
files them with the SEC, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any
of the foregoing as the SEC may by rules and regulations prescribe) that
the Company is required to file with the SEC pursuant to Section 13 or
15(d) of the Exchange Act. If the Company is not subject to the
requirements of Section 13 or 15(d) of the Exchange Act, the Company shall
file with the Trustee, within 15 days after it would have been required to
file with the SEC, financial statements, including any notes thereto (and
with respect to annual reports, an auditor's report by a firm of
established national reputation), and a "Management's Discussion and
Analysis of Financial Condition and Results of Operations," both comparable
to that which the Company would have been required to include in such
annual reports, information, documents or other reports if the Company were
subject to the requirements of Section 13 or 15(d) of the Exchange Act.
Subsequent to the qualification of this Indenture under the TIA, the
Company also shall comply with the provisions of section 314(a) of the TIA.
(b) If the Company is required to furnish annual or quarterly
reports to its stockholders pursuant to the Exchange Act, the Company shall
cause any annual report furnished to its stockholders generally and any
quarterly or other financial reports it furnishes to its stockholders
generally to be filed with the Trustee and the Company shall mail to the
Holders at their addresses appearing in the register of Senior Notes
maintained by the Registrar. If the Company is not required to furnish
annual or quarterly reports to its stockholders pursuant to the Exchange
Act, the Company shall cause its financial statements referred to in
Section 4.02(a), including any notes thereto (and with respect to annual
reports, an auditors' report by a firm of established national reputation),
and a "Management's Discussion and Analysis of Financial Condition and
Results of Operations," to be so mailed to the Holders within 120 days
after the end of each of the Company's fiscal years and within 60 days
after the end of each of the first three fiscal quarters of each year. The
Company shall cause to be disclosed in a statement accompanying any annual
report or comparable information as of the date of the most recent
financial statements in each such report or comparable information the
amount available for payments pursuant to Section 4.05. As of the date
hereof, the Company's fiscal year ends on December 31.
(c) If the Company is not subject to the requirements of Section 13
or 15(d) of the Exchange Act, for so long as any Senior Notes remain
outstanding, the Company shall furnish to the Holders and prospective
investors, upon their request, the information required to be delivered
pursuant to Rule 144A(d)(4) under the Securities Act.
Section 4.03. Compliance Certificate.
The Company shall deliver to the Trustee, within 120 days after the
end of each fiscal year of the Company, an Officers' Certificate stating
that a review of the activities of the Company and its Subsidiaries during
the preceding fiscal year has been made under the supervision of the
signing Officers with a view to determining whether the Company has kept,
observed, performed and fulfilled its obligations under this Indenture, and
further stating, as to each such Officer signing such certificate, that, to
the best of his or her knowledge, the Company has kept, observed, performed
and fulfilled each and every covenant contained in this Indenture and is
not in default in the performance or observance of any of the terms,
provisions and conditions hereof (or, if a Default or Event of Default
shall have occurred, describing all such Defaults or Events of Default of
which he or she may have knowledge and what action the Company has taken or
proposes to take with respect thereto) and that, to the best of his or her
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of, premium, if any, and accrued and
unpaid interest on, and Liquidated Damages, if any, with respect to the
Senior Notes are prohibited or if such event has occurred, a description of
the event and what action the Company is taking or proposes to take with
respect thereto.
So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the financial
statements delivered pursuant to Section 4.02 shall be accompanied by a
written statement of the Company's independent public accountants (who
shall be a firm of established national reputation reasonably satisfactory
to the Trustee) that in making the examination necessary for certification
of such financial statements nothing has come to their attention that would
lead them to believe that the Company has violated any provisions of
Section 4.01, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14,
4.15 or 4.16 or of Article 5 or, if any such violation has occurred,
specifying the nature and period of existence thereof, it being understood
that such accountants shall not be liable directly or indirectly to any
Person for any failure to obtain knowledge of any such violation.
The Company shall, so long as any of the Senior Notes are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming
aware of any Default or Event of Default, an Officers' Certificate
specifying such Default or Event of Default and what action the Company is
taking or proposes to take with respect thereto.
Section 4.04. Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay, extension or usury law
wherever enacted, now or at any time hereafter in force, that might affect
the covenants or the performance of this Indenture; and the Company (to the
extent it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted
to the Trustee, but will suffer and permit the execution of every such
power as though no such law has been enacted.
Section 4.05. Limitation on Restricted Payments.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, (i) declare or pay any dividend or
make any distribution on account of the Company's or such Restricted
Subsidiary's Capital Stock or other Equity Interests (other than dividends
or distributions payable in Capital Stock or other Equity Interests (other
than Disqualified Stock) of the Company or a Restricted Subsidiary and
other than dividends or distributions payable by a Restricted Subsidiary to
another Restricted Subsidiary or to the Company); (ii) purchase, redeem or
otherwise acquire or retire for value any Capital Stock or other Equity
Interests of the Company or any of its Restricted Subsidiaries (other than
any such Equity Interest purchased from the Company or any Restricted
Subsidiary for fair market value (as determined by the Board of Directors
in good faith); (iii) voluntarily prepay Subordinated Indebtedness, whether
any such Subordinated Indebtedness is outstanding on, or issued after, the
date of original issuance of the Senior Notes except as specifically
permitted by the covenants of this Indenture; (iv) make any Restricted
Investment (all such dividends, distributions, purchases, redemptions,
acquisitions, retirements, prepayments and Restricted Investments, being
collectively referred to as "Restricted Payments"), if, at the time of such
Restricted Payment:
(A) a Default or Event of Default shall have occurred and be
continuing or shall occur as a consequence thereof, or
(B) immediately after such Restricted Payment and after giving
effect thereto on a Pro Forma basis, the Company shall not be
able to issue $1.00 of additional Indebtedness pursuant to
Section 4.07(a), or
(C) such Restricted Payment, together with the aggregate of all
other Restricted Payments made after the date of original
issuance of the Senior Notes, without duplication, exceeds the
sum of (1) 50% of the aggregate Consolidated Net Income
(including, for this purpose, gains from Asset Sales and, to the
extent not included in Consolidated Net Income, any gain from a
sale or disposition of a Restricted Investment) of the Company
(or, in case such aggregate is a loss, 100% of such loss) for
the period (taken as one accounting period) from the beginning
of the first fiscal quarter commencing immediately after the
date of original issuance of the Senior Notes and ended as of
the Company's most recently ended fiscal quarter at the time of
such Restricted Payment, plus (2) 100% of the aggregate net cash
proceeds and the fair market value of any property or securities
(as determined by the Board of Directors in good faith) received
by the Company from the issue or sale of Capital Stock or other
Equity Interests of the Company subsequent to the date of
original issuance of the Senior Notes (other than (x) Capital
Stock or other Equity Interests issued or sold to a Restricted
Subsidiary and (y) the issuance or sale of Disqualified Stock),
plus (3) $5,000,000, plus (4) the amount by which the principal
amount of and any accrued interest on either (x) Senior
Indebtedness of the Company or (y) any Indebtedness of any
Restricted Subsidiary is reduced on the Company's consolidated
balance sheet upon the conversion or exchange other than by a
Restricted Subsidiary subsequent to the date of original
issuance of the Senior Notes of any Indebtedness of the Company
or any Restricted Subsidiary (not held by the Company or any
Restricted Subsidiary) for Capital Stock or other Equity
Interests (other than Disqualified Stock) of the Company or any
Restricted Subsidiaries (less the amount of any cash, or the
fair market value of any other property or securities (as
determined by the Board of Directors in good faith), distributed
by the Company or any Restricted Subsidiary (to Persons other
than the Company or any other Restricted Subsidiary) upon such
conversion or exchange), plus (5) if any Non-Restricted
Subsidiary is redesignated as a Restricted Subsidiary, the value
of the deemed Restricted Payment resulting therefrom and
determined in accordance with the second sentence of Section
4.16; provided, however, that for purposes of this clause (5),
the value of any redesignated Non-Restricted Subsidiary shall be
reduced by the amount that any such redesignation replenishes or
increases the amount of Restricted Investments permitted to be
made pursuant to Section 4.05(b)(iii).
(b) Notwithstanding Section 4.05(a), the following Restricted
Payments may be made: (i) the payment of any dividend within 60 days after
the date of declaration thereof, if at said date of declaration such
payment would comply with all the provisions hereof (including, but not
limited to, this Section 4.05); (ii) making Restricted Investments at any
time, and from time to time, in an aggregate outstanding amount of
$10,000,000 after the date of original issuance of the Senior Notes (it
being understood that if any Restricted Investment after the date of
original issuance of the Senior Notes pursuant to this clause (ii) is sold,
transferred or otherwise conveyed to any Person other than the Company or a
Restricted Subsidiary, the portion of the net cash proceeds or fair market
value of securities or properties paid or transferred to the Company and
its Restricted Subsidiaries in connection with such sale, transfer or
conveyance that relates or corresponds to the repayment or return of the
original cost of such a Restricted Investment will replenish or increase
the amount of Restricted Investments permitted to be made pursuant to this
Section 4.05(b)(ii), so that up to $10,000,000 of Restricted Investments
may be outstanding under this Section 4.05(b)(ii) at any given time;
provided that any Restricted Investment in a Restricted Subsidiary made
pursuant to this clause (ii) is made for fair market value (as determined
by the Board of Directors in good faith); (iii) the repurchase, redemption,
retirement or acquisition of the Company's stock from the executives,
management, employees or consultants of the Company or its Subsidiaries
pursuant to the terms of any subscription, stockholder or other agreement
or plan, up to an aggregate amount not to exceed $5,000,000; (iv) any
loans, advances, distributions or payments from the Company to its
Restricted Subsidiaries, or any loans, advances, distributions or payments
by a Restricted Subsidiary to the Company or to another Restricted
Subsidiary, in each case pursuant to intercompany Indebtedness,
intercompany management agreements and other intercompany agreements and
obligations; (v) investments in marketable securities and other negotiable
instruments through the William Penn Funds (including the William Penn
Interest Income Fund); (vi) the purchase, redemption, retirement or other
acquisition of (A) any Senior Indebtedness of the Company or any
Indebtedness of a Restricted Subsidiaries required by its terms to be
purchased, redeemed, retired or acquired with the net proceeds from asset
sales (as defined in the instrument evidencing such Senior Indebtedness or
Indebtedness) or upon a change of control (as defined in the instrument
evidencing such Senior Indebtedness or Indebtedness) and (B) the Senior
Notes pursuant to Sections 4.13 and 4.14; (vii) the payment of (A)
consulting, financial and investment banking fees under the TJC Agreement,
provided, that no Default or Event of Default shall have occurred and be
continuing or shall occur as a consequence thereof, and the Company's
Obligations to pay such fees under the TJC Agreement shall be subordinated
expressly to the Company's Obligations in respect of the Senior Notes, and
(B) indemnities, expenses and other amounts under the TJC Agreement; (viii)
the payment of management, advisory and service fees, indemnities, expenses
and other amounts under the JII Services Agreement; (ix) the redemption,
repurchase, retirement or the acquisition of any Capital Stock or other
Equity Interests of the Company or any Restricted Subsidiary in exchange
for, or out of the proceeds of, the substantially concurrent sale (other
than to a Subsidiary of the Company) of other Capital Stock or other Equity
Interests of the Company or any Restricted Subsidiary (other than any
Disqualified Stock); provided that any net cash proceeds that are utilized
for any such redemption, repurchase, retirement or other acquisition, and
any Net Income resulting therefrom, shall be excluded from this Section
4.05(a)(iv)(c)(1) and (c)(2); (x) the defeasance, redemption or repurchase
of pari passu or Subordinated Indebtedness with the net cash proceeds from
an issuance of permitted Refinancing Indebtedness or the substantially
concurrent sale (other than to a Subsidiary of the Company) of Capital
Stock or other Equity Interests of the Company or of a Restricted
Subsidiary (other than Disqualified Stock); provided that any net cash
proceeds that are utilized for any such defeasance, redemption or
repurchase, and any Net Income resulting therefrom, shall be excluded from
this Section 4.05(a)(iv)(c)(1) and (c)(2); (xi) payments of fees, expenses
and indemnities in respect of the Company's and its Subsidiaries' directors
and such payments to Parent (and its parent companies) in respect of their
directors, provided that the aggregate amount of such fees payable to all
such directors does not exceed $250,000 in any fiscal year; (xii) payments
to Parent (and its parent companies) in respect of accounting, legal or
other professional or administrative expenses or reimbursements or
franchise or similar taxes and governmental charges incurred by them
relating to the business, operations or finances of the Company and its
Subsidiaries and in respect of fees and related expenses associated with
their registration statements filed with the Commission and subsequent
ongoing public reporting requirements; (xiii) so long as Parent files
consolidated income tax returns which include the Company, payments to
Parent (and its parent companies) pursuant to the Tax Sharing Agreement;
(xiv) payments in respect of the Junior Seller Note, the MK Installment
Note and the MK Installment Note LC Facility; (xv) payments in connection
with the Imperial Acquisitions, the Offering and the Refinancing Plan;
(xvi) payments in respect of the Contingent Earnout Agreement; (xvii)
Restricted Investments made or received in connection with the sale,
transfer or disposition of any business, properties or assets of the
Company or any Restricted Subsidiary, provided, that if such sale, transfer
or disposition constitutes an Asset Sale, the Company complies with Section
4.14; (xviii) any Restricted Investment constituting securities or
instruments of a Person issued in exchange for trade or other claims
against such Person in connection with a financial reorganization or
restructuring of such Person; and (xix) any Restricted Investment
constituting an equity investment in a Receivables Subsidiary.
Section 4.06. Corporate Existence.
Subject to Section 4.14 and Article 5, the Company shall do or cause
to be done all things necessary to preserve and keep in full force and
effect its corporate existence and the corporate, partnership or other
existence of each of its Restricted Subsidiaries in accordance with the
respective organizational documents of each of its Restricted Subsidiaries
and the rights (charter and statutory), licenses and franchises of the
Company and each of its Restricted Subsidiaries; provided, however, that
the Company shall not be required to preserve any such right, license or
franchise, or the corporate, partnership or other existence of any
Restricted Subsidiary, if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business
of the Company and its Restricted Subsidiaries taken as a whole, and that
the loss thereof is not adverse in any material respect to the Holders.
Section 4.07. Limitation on Incurrence of Indebtedness.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, issue any Indebtedness (other than the Indebtedness
represented by the Senior Notes) unless the Company's Cash Flow Coverage
Ratio for its four full fiscal quarters next preceding the date such
additional Indebtedness is issued would have been at least 2.00 to 1, if
such date is on or prior to November 15, 1998, and 2.25 to 1 thereafter, in
each case determined on a Pro Forma basis (including, for this purpose, any
other Indebtedness incurred since the end of the applicable four quarter
period) as if such additional Indebtedness and any other Indebtedness
issued since the end of such four-quarter period had been issued at the
beginning of such four-quarter period.
(b) Section 4.07(a) shall not apply to the issuance of (i)
Indebtedness of the Company and/or its Restricted Subsidiaries as measured
on such date of issuance in an aggregate principal amount outstanding on
any such date of issuance not exceeding the greater of (A) $75,000,000
aggregate principal amount pursuant to the New Credit Agreement and (B) an
aggregate principal amount up to the sum of (1) 85% of the book value of
the Receivables of the Company and its Restricted Subsidiaries on a
consolidated basis and (2) 65% of the book value of the inventories of the
Company and its Restricted Subsidiaries on a consolidated basis; provided
that the aggregate principal amount of Indebtedness outstanding under this
clause (i) together with the aggregate principal amount of Indebtedness
outstanding under clause (iv) below shall not exceed $80.0 million in
aggregate principal amount at any one time outstanding; (ii) Indebtedness
of the Company and its Restricted Subsidiaries pursuant to any Receivables
Financing; (iii) Indebtedness of the Company and its Restricted
Subsidiaries in connection with capital leases, sale and leaseback
transactions, purchase money obligations, capital expenditures or similar
financing transactions relating to (A) their properties, assets and rights
as of the date of original issuance of the Senior Notes up to $5,000,000 in
aggregate principal amount or (B) their properties, assets and rights
acquired after the date of original issuance of the Senior Notes, provided
that the aggregate principal amount of such Indebtedness under this Section
4.07(b)(iii)(B) does not exceed 100% of the cost of such properties, assets
and rights; (iv) additional Indebtedness of the Company and its Restricted
Subsidiaries in an aggregate principal amount up to $25,000,000 (all or any
portion of which may be issued as additional Indebtedness under the New
Credit Agreement); provided that the aggregate principal amount of
Indebtedness outstanding under this clause (iv) together with the aggregate
principal amount of Indebtedness outstanding under clause (i) above shall
not exceed $80.0 million in aggregate principal amount at any one time
outstanding; and (v) Other Permitted Indebtedness.
(c) Notwithstanding Sections 4.07(a) and (b), no Restricted
Subsidiary shall under any circumstances issue a guarantee of any
Indebtedness of the Company except for guarantees issued by Restricted
Subsidiaries pursuant to Section 4.15, provided, however, that the
foregoing will not limit or restrict guarantees issued by Restricted
Subsidiaries in respect of Indebtedness of other Restricted Subsidiaries.
Section 4.08. Limitation on Transactions With Affiliates.
(a) Except as otherwise set forth herein, neither the Company nor
any of its Restricted Subsidiaries shall make any loan, advance, guarantee
or capital contribution to, or for the benefit of, or sell, lease, transfer
or dispose of any properties or assets to, or for the benefit of, or
purchase or lease any property or assets from, or enter into or amend any
contract, agreement or understanding with, or for the benefit of, an
Affiliate (each such transaction or series of related transactions that are
part of a common plan, an "Affiliate Transaction"), except in good faith
and on terms that are no less favorable to the Company or the relevant
Restricted Subsidiary than those that would have been obtained in a
comparable transaction on an arm's length basis from an unrelated Person.
(b) The Company shall not, and shall not permit any Restricted
Subsidiary to, engage in any Affiliate Transaction involving aggregate
payments or other transfers by the Company and its Restricted Subsidiaries
in excess of $5,000,000 (including cash and non-cash payments and benefits
valued at their fair market value by the Board of Directors of the Company
in good faith), unless the Company delivers to the Trustee: (i) a
resolution of the Board of Directors stating that the Board of Directors
(including a majority of the disinterested directors, if any) has, in good
faith, determined that such Affiliate Transaction complies with the
provisions of this Indenture; and (ii)(A) with respect to any Affiliate
Transaction involving the incurrence of Indebtedness, a written opinion of
a nationally recognized investment banking or accounting firm experienced
in the review of similar types of transactions, (B) with respect to any
Affiliate Transaction involving the transfer of real property, fixed assets
or equipment, either directly or by a transfer of 50% or more of the
Capital Stock of a Restricted Subsidiary which holds any such real
property, fixed assets or equipment, a written appraisal from a nationally
recognized appraiser experienced in the review of similar types of
transactions or (C) with respect to any Affiliate Transaction not otherwise
described in (A) or (B) above, a written certification from a nationally
recognized professional experienced in evaluating similar types of
transactions, in each case, stating that the terms of such transaction are
fair to the Company or such Restricted Subsidiary, as the case may be, from
a financial point of view.
(c) Notwithstanding Sections 4.08(a) and (b), this Section 4.08
shall not apply to (i) transactions between the Company and any Restricted
Subsidiary or between Restricted Subsidiaries; (ii) payments under the TJC
agreement or the JII Services Agreement; (iii) payments under the
Contingent Earnout Agreement; (iv) any other payments or transactions
permitted pursuant to Section 4.05; (v) reasonable compensation paid to
officers, employees or consultants of the Company or any Subsidiary as
determined in good faith by the Company's Board of Directors or executives;
(vi) transactions in connection with a Receivables Financing; or (vii)
payments and transactions in connection with the Imperial Acquisitions, the
Offering and the Refinancing Plan.
Section 4.09. Limitation on Liens.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien (other than Permitted Liens) upon any property or asset now
owned or hereafter acquired by them, or any income or profits therefrom, or
assign or convey any right to receive income therefrom; provided, however,
that in addition to creating Permitted Liens on its properties or assets,
the Company and any of its Restricted Subsidiaries may create any Lien upon
any of their properties or assets (including, but not limited to, any
Capital Stock of its Subsidiaries) if the Senior Notes are equally and
ratably secured.
Section 4.10. Compliance With Laws, Taxes.
The Company shall, and shall cause each of its Restricted
Subsidiaries to, comply with all statutes, laws, ordinances, or government
rules and regulations to which it is subject, the non-compliance with which
would materially adversely affect the business, prospects, earnings,
properties, assets or condition, financial or otherwise, of the Company and
its Restricted Subsidiaries taken as a whole.
The Company shall, and shall cause each of its Restricted
Subsidiaries to, pay prior to delinquency all taxes, assessments and
governmental levies, except those contested in good faith by appropriate
proceedings.
Section 4.11. Limitation on Dividends and Other Payment Restrictions
Affecting Restricted Subsidiaries.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective, any encumbrance or
restriction on the ability of any Restricted Subsidiary to (i) pay
dividends or make any other distributions on its Capital Stock or any other
interest or participation in, or measured by, its profits, owned by the
Company or any Restricted Subsidiary, or pay any Indebtedness owed to, the
Company or any Restricted Subsidiary; (ii) make loans or advances to the
Company; or (iii) transfer any of its properties or assets to the Company,
except for such encumbrances or restrictions existing under or by reason of
(A) applicable law; (B) Indebtedness permitted (1) under Section 4.07(a),
(2) under Sections 4.07(b)(i), (ii), (iii) and (iv) and clauses (i), (v),
(vi), (vii), (ix), (x), (xi), (xv), (xvi) and (xvii) of the definition of
Other Permitted Indebtedness, or (3) by agreements and transactions
permitted under Section 4.05; (C) customary provisions restricting
subletting or assignment of any lease or license of the Company or any
Restricted Subsidiary; (D) customary provisions of any franchise,
distribution or similar agreement; (E) any instrument governing
Indebtedness or any other encumbrance or restriction of a Person acquired
by the Company or any Restricted Subsidiary at the time of such
acquisition, which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Person,
or the property or assets of the Person, so acquired; (F) Indebtedness or
other agreements existing on the date of original issuance of the Senior
Notes; (G) any Refinancing Indebtedness of Indebtedness described in
Section 4.07(b) and clauses (i), (v), (vi), (vii), (ix), (x), (xi), (xv),
(xvi) and (xvii) of the definition of Other Permitted Indebtedness;
provided that the encumbrances and restrictions created in connection with
such Refinancing Indebtedness are no more restrictive in any material
respect with regard to the interests of the Holders of Senior Notes than
the encumbrances and restrictions in the refinanced Indebtedness; (H) any
restrictions, with respect to a Restricted Subsidiary, imposed pursuant to
an agreement that has been entered into for the sale or disposition of the
stock, business, assets or properties of such Restricted Subsidiary; (I)
the terms of any Indebtedness of the Company incurred in connection with
Section 4.07, provided that the terms of such Indebtedness constitute no
greater encumbrance or restriction on the ability of any Restricted
Subsidiary to pay dividends or make distributions, make loans or advances
or transfer properties or assets than is otherwise permitted by this
Section 4.11; and (J) the terms of purchase money obligations, but only to
the extent such purchase money obligations restrict or prohibit the
transfer of the property so acquired.
(b) Nothing contained in this Section 4.11 shall prevent the Company
from entering into any agreement or instrument providing for the incurrence
of Permitted Liens or restricting the sale or other disposition of property
or assets of the Company or any of its Restricted Subsidiaries that are
subject to Permitted Liens.
Section 4.12.Maintenance of Office or Agencies.
The Company shall maintain in the Borough of Manhattan, the City of
New York an office or an agency (which may be an office of any Agent) where
Senior Notes may be surrendered for registration of transfer or exchange
and where notices and demands to or upon the Company in respect of the
Senior Notes and this Indenture may be served. The Company shall give
prompt written notice to the Trustee of any change in the location of such
office or agency. If at any time the Company shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices
and demands may be made or served at the Corporate Trust Office.
The Company may also from time to time designate one or more other
offices or agencies where the Senior Notes may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission
shall in any matter relieve the Company of its obligation to maintain an
office or agency in the Borough of Manhattan, the City of New York for such
purposes. The Company shall give prompt written notice to the Trustee of
any such designation or rescission and of any change in the location of any
such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee located at 14 Wall Street, 8th Floor, Window #2, New York, New York
10005 as one such office or agency of the Company in accordance with
Section 2.03.
Section 4.13. Change of Control.
(a) Upon the occurrence of a Change of Control (such date being the
"Change of Control Trigger Date"), each Holder of Senior Notes shall have
the right to require the Company to purchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's Senior Notes
pursuant to an Offer at a purchase price in cash equal to 101% of the
aggregate principal amount thereof, plus any accrued and unpaid interest
and Liquidated Damages, if any, to the date of purchase. Although the
failure of the Company to purchase all Senior Notes tendered in such an
Offer shall be a Default, if the Company is unable to purchase all Senior
Notes tendered in such an Offer, the Company shall nevertheless purchase
the maximum principal amount of Senior Notes that it is able to purchase at
that time.
(b) Prior to the mailing of the notice referred to in Section
3.08(a), but in any event within 30 days following any Change of Control
Trigger Date, the Company shall (i) repay in full and terminate all
commitments under Indebtedness under the New Credit Agreement and all other
Senior Indebtedness the terms of which require repayment upon a Change of
Control or offer to repay in full and terminate all commitments under all
Indebtedness under the New Credit Agreement and all such other Senior
Indebtedness and to repay the Indebtedness owed to each lender which has
accepted such offer or (ii) obtain the requisite consents under the New
Credit Agreement and all such other Senior Indebtedness to permit the
repurchase of the Senior Notes as provided in Section 3.08(b). The Company
shall first comply with Section 4.13(b)(ii) before it shall be required to
repurchase Senior Notes pursuant to the provisions in Section 3.08. The
Company's failure to comply with this Section 4.13(b) shall constitute an
Event of default described in clause (iii) and not in clause (ii) under
Section 6.01(a)
(c) In the event of a Change of Control, the Company shall not offer
to purchase or redeem any Subordinated Indebtedness required or entitled by
its terms to be redeemed or purchased until the Change of Control Offer for
the Senior Notes has been consummated and all Senior Notes tendered
pursuant to such Offer have been accepted for payment.
Section 4.14. Limitation on Asset Sales.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, consummate an Asset Sale (including
the sale of any of the Capital Stock of any Restricted Subsidiary)
providing for Net Proceeds in excess of $2,500,000 unless at least 75% of
the Net Proceeds from such Asset Sale are applied (in any manner otherwise
permitted by this Indenture) to one or more of the following purposes in
such combination as the Company shall elect: (i) an investment in another
asset or business in the same line of business as, or a line of business
similar to that of, the line of business of the Company and its Restricted
Subsidiaries at the time of the Asset Sale; provided that such investment
occurs on or prior to the 365th day following the date of such Asset Sale
(the "Asset Sale Disposition Date"), (ii) to reimburse the Company or its
Subsidiaries for expenditures made, and costs incurred, to repair, rebuild,
replace or restore property subject to loss, damage or taking to the extent
that the Net Proceeds consist of insurance proceeds received on account of
such loss, damage or taking, (iii) the purchase, redemption or other
prepayment or repayment of outstanding Senior Indebtedness of the Company
or Indebtedness of the Company's Restricted Subsidiaries on or prior to the
365th day following the Asset Sale Disposition Date or (iv) an Offer
expiring on or prior to the Purchase Date.
(b) The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, consummate an Asset Sale unless at
least 75% of the consideration thereof received by the Company or such
Restricted Subsidiary is in the form of cash, cash equivalents or
marketable securities; provided that, solely for purposes of calculating
such 75% of the consideration, the amount of (i) any liabilities (as shown
on the Company's or such Restricted Subsidiary's most recent balance sheet
or in the notes thereto, excluding contingent liabilities and trade
payables), of the Company or any Restricted Subsidiary (other than
liabilities that are by their terms subordinated to the Senior Notes) that
are assumed by the transferee of any such assets and (ii) any notes or
other obligations received by the Company or any such Restricted Subsidiary
from such transferee that are promptly, but in no event more than 30 days
after receipt, converted by the Company or such Restricted Subsidiary into
cash (to the extent of the cash received), shall be deemed to be cash and
cash equivalents for purposes of this provision. Any Net Proceeds from any
Asset Sale that are not applied or invested as provided in Section 4.14(a)
shall constitute "Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds exceeds $10,000,000
(such date being an "Asset Sale Trigger Date"), the Company shall make an
Offer to all Holders of Senior Notes to purchase the maximum principal
amount of the Senior Notes then outstanding that may be purchased out of
Excess Proceeds, at an offer price in cash in an amount equal to 100% of
principal amount thereof plus any accrued and unpaid interest and
Liquidated Damages, if any, to the Purchase Date in accordance with the
procedures set forth in this Indenture.
(d) To the extent that any Excess Proceeds remain after completion
of an Offer, the Company may use such remaining amount for general
corporate purposes.
(e) If the aggregate principal amount of Senior Notes surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall
select the Senior Notes to be purchased on a pro rata basis, by lot or by a
method that complies with the requirements of any stock exchange on which
the Senior Notes are listed and that the Trustee considers fair and
appropriate.
(f) Upon completion of an Asset Sale Offer, the amount of Excess
Proceeds shall be reset at zero.
(g) Notwithstanding the foregoing, to the extent that any or all of
the Net Proceeds of an Asset Sale is prohibited or delayed by applicable
local law from being repatriated to the United States, the portion of such
Net Proceeds so affected will not be required to be applied pursuant to
Section 4.14, but may be retained for so long, but only for so long, as the
applicable local law prohibits repatriation to the United States. The
Company will promptly take all reasonable actions required by the
applicable local law to permit such repatriation, and once such
repatriation of any affected Net Proceeds is not prohibited under
applicable local law, such repatriation will be immediately effected and
such repatriated Net Proceeds will be applied in the manner set forth above
as if such Asset Sale have occurred on the date of repatriation.
Section 4.15 Limitation on Guarantees of Company Indebtedness by Restricted
Subsidiaries.
(a) The Company shall not permit any Restricted Subsidiary, directly
or indirectly, to guarantee any Indebtedness of the Company other than the
Senior Notes (the "Other Company Indebtedness") unless (i) such Restricted
Subsidiary contemporaneously executes and delivers a supplemental indenture
to the Indenture providing for a guarantee of payment of the Senior Notes
then outstanding by such Restricted Subsidiary to the same extent as the
guarantee of payment (the "Other Company Indebtedness Guarantee") of the
Other Company Indebtedness (including waiver of subrogation, if any) and
(ii) if the Other Company Indebtedness guaranteed by such Restricted
Subsidiary is (A) Senior Indebtedness, the guarantee for the Senior Notes
shall be pari passu in right of payment with the Other Company Indebtedness
Guarantee and (B) Subordinated Indebtedness, the guarantee for the Senior
Notes shall be senior in right of payment to the Other Company Indebtedness
Guarantee; provided that the foregoing will not limit or restrict
guarantees issued by Restricted Subsidiaries in respect of Indebtedness of
other Restricted Subsidiaries.
(b) Each guarantee of the Senior Notes created by a Restricted
Subsidiary pursuant to Section 4.15(a) shall be in accordance with Section
4.15(a), shall be delivered to the Trustee and shall provide, among other
things, that it will be automatically and unconditionally released and
discharged upon (i) any sale, exchange or transfer permitted by this
Indenture of (A) all of the Company's Capital Stock in such Restricted
Subsidiary or (B) the sale of all or substantially all of the assets of the
Restricted Subsidiary and upon the application of the Net Proceeds from
such sale in accordance with the requirements of Section 4.14 or (ii) the
release or discharge of the Other Company Indebtedness Guarantee that
resulted in the creation of such guarantee of the Senior Notes, except a
discharge or release by or as a result of direct payment under such Other
Company Indebtedness Guarantee.
Section 4.16 Designation of Restricted and Non-Restricted Subsidiaries.
(a) From and after the date of original issuance of the Senior
Notes, the Company may designate any existing or newly formed or acquired
Subsidiary as a Non-Restricted Subsidiary, provided that (i) either (A) the
Subsidiary to be so designated has total assets of $1,000,000 or less or
(B) immediately before and after giving effect to such designation on a Pro
Forma Basis; (1) the Company could incur $1.00 of additional Indebtedness
pursuant to Section 4.07(a) determined on a Pro Forma Basis; and (2) no
Default or Event of Default shall have occurred and be continuing, and (ii)
all transactions between the Subsidiary to be so designated and its
Affiliates remaining in effect are permitted pursuant to Section 4.08. Any
Investment made by the Company or any Restricted Subsidiary which is
redesignated from a Restricted Subsidiary to a Non-Restricted Subsidiary
shall thereafter be considered as having been a Restricted Payment (to the
extent not previously included as a Restricted Payment) made on the day
such Subsidiary is designated a Non-Restricted Subsidiary in the amount of
the greater of (i) the fair market value (as determined by the Board of
Directors of the Company in good faith) of the Equity Interests of such
Subsidiary held by the Company and its Restricted Subsidiaries on such
date, and (ii) the amount of the Investments determined in accordance with
GAAP made by the Company and any of its Restricted Subsidiaries in such
Subsidiary.
(b) A Non-Restricted Subsidiary may be redesignated as a Restricted
Subsidiary. The Company shall not, and shall not permit any Restricted
Subsidiary to, take any action or enter into any transaction or series of
transactions that would result in a Person becoming a Restricted Subsidiary
(whether through an acquisition, the redesignation of a Non-Restricted
Subsidiary or otherwise, but not including through the creation of a new
Restricted Subsidiary) unless, immediately before and after giving effect
to such action, transaction or series of transactions on a Pro Forma Basis,
(i) the Company could incur at least $1.00 of additional Indebtedness
pursuant to Section 4.07(a) and (ii) no Default or Event of Default shall
have occurred and be continuing.
(c) The designation of a Subsidiary as a Restricted Subsidiary or
the removal of such designation is required to be made by a resolution
adopted by a majority of the Board of Directors of the Company stating that
the Board of Directors has made such designation in accordance with this
Indenture, and the Company is required to deliver to the Trustee such
resolution together with an Officers' Certificate certifying that the
designation complies with this Indenture. Such designation shall be
effective as of the date specified in the applicable resolution, which may
not be before the date the applicable Officers' Certificate is delivered to
the Trustee.
ARTICLE 5
SUCCESSORS
Section 5.01. Merger or Consolidation.
(a) The Company shall not consolidate or merge with or into, or
sell, lease, convey or otherwise dispose of all or substantially all of its
assets to, any Person (any such consolidation, merger or sale being a
"Disposition") unless (i) the successor corporation of such Disposition or
the corporation to which such Disposition shall have been made is a
corporation organized or existing under the laws of the United States, any
state thereof or the District of Columbia; (ii) the successor corporation
of such Disposition or the corporation to which such Disposition shall have
been made expressly assumes the Obligations of the Company, pursuant to a
supplemental indenture in a form reasonably satisfactory to the Trustee,
under the Indenture and the Senior Notes; (iii) immediately after such
Disposition, no Default or Event of Default shall exist; and (iv) the
corporation formed by or surviving any such Disposition, or the corporation
to which such Disposition shall have been made, shall (A) have Consolidated
Net Worth (immediately after the Disposition but prior to giving any pro
forma effect to purchase accounting adjustments or Restructuring Charges
resulting from the Disposition) equal to or greater than the Consolidated
Net Worth of the Company immediately preceding the Disposition, (B) be
permitted immediately after the Disposition by the terms of this Indenture
to issue at least $1.00 of additional Indebtedness determined on a Pro Form
Basis, and (C) have a Cash Flow Coverage Ratio, for the four fiscal
quarters immediately preceding the applicable Disposition, and determined
on a Pro Forma Basis, equal to or greater than the actual Cash Flow
Coverage Ratio of the Company for such four quarter period. The limitations
in this Section 5.01(a) on the Company's ability to make a Disposition do
not restrict the Company's ability to sell less than all or substantially
all of its assets, such sales being governed by Section 4.14.
(b) Prior to the consummation of any proposed Disposition, the
Company shall deliver to the Trustee an Officers' Certificate to the
foregoing effect and an Opinion of Counsel stating that the proposed
Disposition and such supplemental indenture comply with this Indenture.
Section 5.02. Successor Corporation Substituted.
Upon any Disposition, the Successor Corporation resulting from such
Disposition shall succeed to, and be substituted for, and may exercise
every right and power of, the Company under this Indenture with the same
effect as if such Successor has been named as the Company herein; provided,
however, that neither the Company nor any Successor Corporation shall be
released from its Obligation to pay the principal of, premium, if any, and
accrued and unpaid interest on, and Liquidated Damages, if any, with
respect to the Senior Notes.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
(a) An Event of Default is:
(i) a default for 30 days in payment of interest on, or
Liquidated Damages, if any, with respect to, the Senior
Notes;
(ii) a default in payment when due of principal or premium, if
any, with respect to, the Senior Notes;
(iii) the failure of the Company to comply with any of its other
agreements or covenants in, or provisions of, this
Indenture or the Senior Notes outstanding and the Default
continues for the period, if applicable, and after the
notice specified in Section 6.01(b);
(iv) a default by the Company or any Restricted Subsidiary
under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the
Company or any Restricted Subsidiary (or the payment of
which is guaranteed by the Company or any Restricted
Subsidiary), whether such Indebtedness or guarantee now
exists or shall be created hereafter, if (A) either (1)
such default results from the failure to pay principal of
or interest on any such Indebtedness at or after the final
maturity thereof (after giving effect to any extension
thereof) and such default continues for 30 days beyond any
applicable grace period or (2) as a result of such default
the maturity of such Indebtedness has been accelerated
prior to its expressed maturity, and (B) the principal
amount of such Indebtedness, together with the principal
amount of any other such Indebtedness in default for
failure to pay principal or interest thereon at final
maturity, or because of the acceleration of the maturity
thereof, aggregates in excess of $10,000,000;
(v) a failure by the Company or any Restricted Subsidiary to
pay final judgments (not covered by insurance) aggregating
in excess of $10,000,000 which judgments a court of
competent jurisdiction does not rescind, annul or stay
within 45 days after their entry and the Default or Event
of Default continues for the period and after the notice
specified in Section 6.01(b);
(vi) in existence when the Company or any Significant
Subsidiary pursuant to or within the meaning of any
Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against
it in an involuntary case,
(C) consents to the appointment of a Custodian of it or
for all or substantially all of its property, or
(D) makes a general assignment for the benefit of its
creditors; and
(vii) in existence when a court of competent jurisdiction enters
an order or decree under any Bankruptcy Law that:
(A) is for relief against the Company or any Significant
Subsidiary in an involuntary case,
(B) appoints a Custodian of the Company or any
Significant Subsidiary or for all or substantially
all of the property of the Company or any Significant
Subsidiary, or
(C) orders the liquidation of the Company or any
Significant Subsidiary,
and any such order or decree remains unstayed and in
effect for 60 days.
(b) A Default or Event of Default under Section 6.01(a)(iii) (other
than an Event of Default arising under Section 5.01 which shall be an Event
of Default with the notice but without the passage of time specified in
this Section 6.01(b)) or Section 6.01(a)(v) is not an Event of Default
under this Indenture until the Trustee or the Holders of at least 25% in
principal amount of the Senior Notes then outstanding notify the Company of
the Default and the Company does not cure the Default within 30 days after
receipt of the notice. The notice must specify the Default, demand that it
be remedied, and state that the notice is a "Notice of Default."
(c) In the case of any Event of Default pursuant to Section 6.01(a)
or Section 6.01(b) occurring by reason of any willful action (or inaction)
taken (or not taken) by or on behalf of the Company with the intention of
avoiding payment of the premium that the Company would have to pay if the
Company then had elected to redeem the Senior Notes pursuant to paragraph 5
of the Senior Notes, an equivalent premium shall also become and be
immediately due and payable to the extent permitted by law, anything in
this Indenture or in the Senior Notes contained to the contrary
notwithstanding.
(d) The Trustee shall not be charged with knowledge of any Default
or Event of Default unless written notice thereof shall have been given to
a Trust Officer at the Corporate Trust Office of the Trustee by the Company
or any other Person.
Section 6.02. Acceleration.
(a) Upon the occurrence of an Event of Default (other than an Event
of Default under Section 6.01(a)(vii) or (viii)), the Trustee or the
holders of at least 25% in principal amount of the then outstanding Senior
Notes may declare all Senior Notes (i) to be due and payable immediately
and, upon such declaration, the principal of, premium, if any, and any
accrued and unpaid interest on, and Liquidated Damages, if any, with
respect to all Senior Notes shall be due and payable immediately; or (ii)
if there are any amounts outstanding under the New Credit Agreement, to be
due and payable immediately upon the first to occur of (A) an acceleration
under the New Credit Agreement or (B) five business days after receipt by
the Company and the Representative under the New Credit Agreement of such
notice of acceleration but only if such Event of Default is then
continuing; provided, however, that if an Event of Default arises under
Section 6.01(a)(vi) or (vii), the principal of, premium, if any, and any
accrued and unpaid interest on, and Liquidated Damages, if any, with
respect to all Senior Notes, shall ipso facto become and be immediately due
and payable without any declaration or other act on the part of the Trustee
or any Holders of Senior Notes.
(b) The holders of a majority in principal amount of the Senior
Notes then outstanding, by notice to the Trustee, may rescind any
declaration of acceleration of such Senior Notes and its consequences (if
the rescission would not conflict with any judgment or decree) if all
existing Events of Default (other than the nonpayment of principal of or
interest on such Senior Notes that shall have become due by such
declaration) shall have been cured or waived.
(c) If there has been a declaration of acceleration of the Senior
Notes because an Event of Default under Section 6.01(a)(iv) has occurred
and is continuing, such declaration of acceleration shall be automatically
annulled if the holders of the Indebtedness described in Section
6.01(a)(iv) have rescinded the declaration of acceleration in respect of
such Indebtedness within 30 Business Days thereof and if (i) the annulment
of such acceleration would not conflict with any judgment or decree of a
court of competent jurisdiction, (ii) all existing Events of Default,
except non-payment of principal, premium, interest or Liquidated Damages
that shall have become due solely because of the acceleration, have been
cured or waived, and (iii) the Company has delivered an Officers'
Certificate to the Trustee to the effect of clauses (i) and (ii) above.
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal of,
premium, if any, or any accrued and unpaid interest on, or Liquidated
Damages, if any, with respect to the Senior Notes or to enforce the
performance of any provision of the Senior Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Senior Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of Default.
All remedies are cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults.
The holders of a majority in aggregate principal amount of the Senior
Notes then outstanding by notice to the Trustee may on behalf of all
Holders of Senior Notes waive any existing Default or Event of Default
under this Indenture and its consequences, except a continuing Default in
the payment of the principal of, premium, if any, and interest on, and
Liquidated Damages, if any, with respect to such Senior Notes, which may
only be waived with the consent of each Holder of Senior Notes affected.
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; provided that no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon.
Section 6.05. Control by Majority.
Subject to Section 7.01(e), the Holders of a majority in principal
amount of the then outstanding Senior Notes may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on it by this Indenture.
However, the Trustee may refuse to follow any direction that conflicts with
law or this Indenture, that the Trustee determines may be unduly
prejudicial to the rights of other Holders or would involve the Trustee in
personal liability.
Section 6.06. Limitation on Suits.
A Holder may pursue a remedy with respect to this Indenture or the
Senior Notes only if (i) the Holder gives to the Trustee notice of a
continuing Event of Default; (ii) the Holders of at least 25% in principal
amount of the then outstanding Senior Notes make a request to the Trustee
to pursue the remedy; (iii) such Holder or Holders offer to the Trustee
indemnity satisfactory to the Trustee against any loss, liability or
expense; (iv) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of indemnity; and (v) during
such 60-day period the Holders of a majority in principal amount of the
then outstanding Senior Notes do not give the Trustee a direction
inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over another Holder.
Holders of the Senior Notes may not enforce this Indenture, except as
provided herein.
Section 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of principal of, premium, if any, and any
accrued and unpaid interest on, and Liquidated Damages, if any, with
respect to a Senior Note, on or after a respective due date expressed in
the Senior Note, or to bring suit for the enforcement of any such payment
on or after such respective date, shall not be impaired or affected without
the consent of the Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(a)(i) or (ii) occurs
and is continuing, the Trustee is authorized to recover judgment in its own
name and as trustee of an express trust against the Company for (i) the
principal, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Senior Notes, (ii) interest on overdue principal and premium,
if any, and, to the extent lawful, interest, and (iii) such further amount
as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel ("Trustee Expenses").
Section 6.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable to have the claims of the
Trustee (including any claim for Trustee Expenses) and the Holders allowed
in any Insolvency or Liquidation Proceeding or other judicial proceeding
relative to the Company (or any other obligor upon the Senior Notes), its
creditors or its property and shall be entitled and empowered to collect,
receive and distribute to Holders any money or other property payable or
deliverable on any such claims and each Holder authorizes any Custodian in
any such Insolvency or Liquidation Proceeding or other judicial proceeding
to make such payments to the Trustee, and if the Trustee shall consent to
the making of such payments directly to the Holders any such Custodian is
hereby authorized to make such payments directly to the Holders, and to pay
to the Trustee any amount due to it hereunder for Trustee Expenses, and any
other amounts due the Trustee under Section 7.07. To the extent that the
payment of any such Trustee Expenses, and any other amounts due the Trustee
under Section 7.07 out of the estate in any such proceeding, shall be
denied for any reason, payment of the same shall be secured by a Lien on,
and shall be paid out of, any and all distributions, dividends, money,
securities and other properties which the Holders may be entitled to
receive in such proceeding, whether in liquidation or under any plan of
reorganization or arrangement or otherwise. Nothing herein contained shall
be deemed to authorize the Trustee to authorize or consent to or accept or
adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Senior Notes or the rights of any
Holder, or to authorize the Trustee to vote in respect of the claim of any
Holder in any Insolvency or Liquidation Proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to Holders for amounts due and unpaid on the Senior Notes
for principal, premium and Liquidated Damages, if any, and
interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the
Senior Notes for principal, premium and Liquidated
Damages, if any, and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the
filing by any party litigant in the suit of an undertaking to pay the costs
of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or
defenses made by the party litigant. This Section does not apply to a suit
by the Trustee, a suit by a Holder pursuant to Section 6.07, or a suit by
Holders of more than 10% in principal amount of the then outstanding Senior
Notes.
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default occurs (and has not been cured) the
Trustee shall (i) exercise the rights and powers vested in it by this
Indenture, and (ii) use the same degree of care and skill in exercising
such rights and powers as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee's duties shall be determined solely by the
express provisions of this Indenture and the Trustee need
perform only those duties that are specifically set forth
in this Indenture and no others, and no implied covenants
or obligations shall be read into this Indenture against
the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and
opinions to determine whether they conform to this
Indenture's requirements.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own wilful
misconduct, except that:
(i) this paragraph does not limit the effect of Section
7.01(b);
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved
that the Trustee was negligent in ascertaining the
pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with
a direction it receives pursuant to Section 6.05.
(d) Whether or not expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), (c) and (e) of this Section.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee shall be
under no obligation to exercise any of its rights and powers under this
Indenture at the request of any Holders unless such Holders shall have
offered to the Trustee security and indemnity satisfactory to it against
any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money it
receives except as the Trustee may agree in writing with the Company.
Money the Trustee holds in trust need not be segregated from other funds
except to the extent required by law.
Section 7.02. Rights of Trustee.
(a) The Trustee may rely on any document it believes to be genuine
and to have been signed or presented by the proper Person. The Trustee
shall not be obligated to investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it may
reasonably require an Officers' Certificate or an Opinion of Counsel, or
both. The Trustee shall not be liable for any action it takes or omits to
take in good faith in reliance on such Officers' Certificate or Opinion of
Counsel. The Trustee may consult with counsel and advice of such counsel
or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon.
(c) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any Agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take, except to the extent that such action or omission to act
constitutes negligence or wilful misconduct on the part of the Trustee.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient
if signed by an Officer.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Senior Notes and may otherwise deal with the Company or
an Affiliate with the same rights it would have if it were not Trustee.
However, if the Trustee acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to
continue as Trustee or resign. Any Agent may do the same with like rights.
The Trustee is also subject to Sections 7.10 and 7.11.
Section 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Senior Notes, it
shall not be accountable for the Company's use of the proceeds from the
Senior Notes or for any money paid to the Company or upon the Company's
direction under any provisions hereof, it shall not be responsible for the
use or application of any money any Paying Agent other than the Trustee
receives, and it shall not be responsible for any statement or recital
herein or any statement in the Senior Notes or any other document furnished
or issued in connection with the sale of the Senior Notes or pursuant to
this Indenture, other than its certificate of authentication.
Section 7.05. Notice to Holders of Defaults and Events of Default.
If a Default or Event of Default occurs and is continuing and if it
is actually known to the Trustee, the Trustee shall mail to Holders a
notice of the Default or Event of Default within 90 days after it occurs.
Except in the case of a Default or Event of Default in payment on any
Senior Note (including any failure to redeem Senior Notes called for
redemption or any failure to purchase Senior Notes tendered pursuant to an
Offer that are required to be purchased by the terms of this Indenture),
the Trustee may withhold the notice if and so long as a committee of its
Trust Officers in good faith determines that withholding the notice is in
the Holders' interests.
Section 7.06. Reports by Trustee to Holders.
Within 60 days after each August 1 beginning with August 1, 1996, the
Trustee shall mail to Holders a brief report dated as of such reporting
date that complies with section 313(a) of the TIA (but if no event
described in section 313(a) of the TIA has occurred within the twelve
months preceding the reporting date, no report need be transmitted). The
Trustee also shall comply with section 313(b)(2) of the TIA. The Trustee
shall also transmit by mail all reports as required by section 313(c) of
the TIA.
Commencing at the time this Indenture is qualified under the TIA, a
copy of each report at the time of its mailing to Holders shall be filed
with the SEC and each national securities exchange on which the Senior
Notes are listed. The Company shall notify the Trustee when the Senior
Notes are listed on any national securities exchange.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee (in its capacities as Trustee,
Paying Agent and/or Registrar) from time to time reasonable compensation
for its services hereunder. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee upon request for all reasonable
disbursements, advances, fees and expenses it incurs or makes in addition
to the compensation for its services. Such expenses shall include the
reasonable compensation, disbursements and expenses of the Trustee's agents
and counsel.
The Company shall indemnify and hold harmless the Trustee (in its
capacities as Trustee, Paying Agent and/or Registrar) against any and all
losses, liabilities or expenses the Trustee incurs arising out of or in
connection with the acceptance or administration of its duties under this
Indenture, except as set forth below. The Trustee shall notify the Company
promptly of any claim for which it may seek indemnity. Failure by the
Trustee to so notify the Company shall not relieve the Company of its
Obligations hereunder. The Company shall defend the claim and the Trustee
shall reasonably cooperate in the defense. The Trustee may have separate
counsel and the Company shall pay the reasonable fees and expenses of such
counsel. The Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld.
The Company's Obligations under this Section 7.07 shall survive the
satisfaction and discharge of this Indenture.
The Company need not reimburse any expense or indemnify against any
loss or liability the Trustee incurs through negligence or bad faith.
To secure the Company's payment of its Obligations in this Section,
the Trustee shall have a Lien prior to the Senior Notes on all money or
property the Trustee holds or collects. Such Lien shall survive the
satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(a)(vii) or (viii) occurs, the expenses
and the compensation for the services (including the fees and expenses of
its agents and counsel) are intended to constitute administrative expenses
under any Bankruptcy Law.
Section 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign and be discharged from the trust hereby
created by so notifying the Company. The Holders of a majority in
principal amount of the then outstanding Senior Notes may remove the
Trustee by so notifying the Trustee and the Company. The Company may
remove the Trustee if:
(i) the Trustee fails to comply with Section 7.10;
(ii) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(iii) a Custodian or public officer takes charge of the Trustee or its
property; or
(iv) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee, provided that the Holders of a majority in principal
amount of the then outstanding Senior Notes may appoint a successor Trustee
to replace any successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company
or the Holders of at least 10% in principal amount of the then outstanding
Senior Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective and
the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee shall mail a notice of
its appointment to Holders. The retiring Trustee shall promptly transfer
all property it holds as Trustee to the successor Trustee, provided all
sums owing to the retiring Trustee hereunder have been paid and subject to
the Lien provided for in Section 7.07. Notwithstanding replacement of the
Trustee pursuant to this Section 7.08, the Company's obligations under
Section 7.07 shall continue for the retiring Trustee's benefit with respect
to expenses and liabilities it incurred prior to being replaced.
Section 7.09. Successor Trustee by Merger, Etc.
If the Trustee consolidates, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
Section 7.10. Eligibility; Disqualification.
The Trustee shall at all times (i) be a corporation organized and
doing business under the laws of the United States of America, of any state
thereof, or the District of Columbia authorized under such laws to exercise
corporate trustee power, (ii) be subject to supervision or examination by
federal or state authority, (iii) have a combined capital and surplus of at
least $100,000,000 as set forth in its most recent published annual report
of condition, and (iv) satisfy the requirements of sections 310(a)(1), (2)
and (5) of the TIA. The Trustee is subject to section 310(b) of the TIA.
Section 7.11.Preferential Collection of Claims Against the Company.
The Trustee is subject to section 311(a) of the TIA, excluding any
creditor relationship listed in section 311(b) of the TIA. A Trustee who
has resigned or been removed shall be subject to section 311(a) of the TIA
to the extent indicated therein.
ARTICLE 8
DISCHARGE OF INDENTURE
Section 8.01. Discharge of Liability on Senior Notes; Defeasance.
(a) When (i) the Company delivers to the Trustee all outstanding
Senior Notes (other than Senior Notes replaced pursuant to Section 2.07)
for cancellation, or (ii) all outstanding Senior Notes have become due and
payable and the Company irrevocably deposits with the Trustee funds
sufficient to pay at maturity all outstanding Senior Notes, including
interest, premium and Liquidated Damages thereon (other than Senior Notes
replaced pursuant to Section 2.07), and if in either case the Company pays
all other sums payable under this Indenture by the Company, then this
Indenture shall, subject to Sections 8.01(c) and 8.06, cease to be of
further effect.
(b) Subject to Sections 8.01(c), 8.02, and 8.06, the Company at any
time may terminate (i) all its obligations under the Senior Notes and this
Indenture ("legal defeasance option") or (ii) its obligations under
Sections 4.02, 4.03, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.13, 4.14,
4.15, and 4.16, and the operation of Sections 5.01(a)(iii), 5.01(a)(iv), or
6.01(a)(iii) through (a)(vi) ("covenant defeasance option"). The Company
may exercise its legal defeasance option notwithstanding its prior exercise
of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment of the
Senior Notes may not be accelerated because of an Event of Default. If the
Company exercises its covenant defeasance option, payment of the Senior
Notes shall not be accelerated because of an Event of Default specified in
6.01(a)(iii) through (a)(vi) or because of the Company's failure to comply
with Section 5.01(a)(iii) and 5.01(a)(iv).
Upon satisfaction of the conditions set forth herein and upon the
Company's request (and at the Company's expense), the Trustee shall
acknowledge in writing the discharge of those obligations that the Company
has terminated.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 4.01, 4.04, 7.07,
7.08, 8.04, 8.05 and 8.06, and the Trustee's and the Paying Agent's
obligations in Section 8.04 shall survive until the Senior Notes have been
paid in full. Thereafter, the Company's obligations in Sections 7.07 and
8.05 and the Company's, the Trustee's and the Paying Agent's obligations in
Section 8.04 shall survive.
Section 8.02. Conditions to Defeasance.
The Company may exercise its legal defeasance option or its covenant
defeasance option only if:
(1) the Company irrevocably deposits in trust (the "defeasance
trust") with the Trustee money or U.S. Government Obligations
sufficient for the payment in full of the principal of, premium,
if any, and any accrued and unpaid interest on, and Liquidated
Damages, if any, with respect to the Senior Notes then
outstanding, as of the maturity date, the redemption date or the
Purchase Date, as the case may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing
their opinion that the payments of principal and interest when
due and without reinvestment of the deposited U.S. Government
Obligations plus any deposited money without investment will
provide cash at such times and in such amounts as will be
sufficient to pay when due principal of, premium, if any, and
any accrued and unpaid interest on, and Liquidated Damages, if
any, with respect to all the Senior Notes to maturity or
redemption, as the case may be;
(3) since the Company's irrevocable deposit provided for in Section
8.02(1), 91 days have passed;
(4) no Default has occurred and is continuing on the date of such
deposit and after giving effect to it;
(5) the deposit does not constitute a default under any other
agreement binding on the Company;
(6) the Company delivers to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company
under the Investment Company Act of 1940, as amended;
(7) in the case of the legal defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that
(i) the Company has received from, or there has been published
by, the Internal Revenue Service a ruling or (ii) under
applicable federal income tax law, in either case, to the effect
that, and based thereon such Opinion of Counsel shall confirm
that, the Holders will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit and
defeasance and will be subject to federal income tax on the same
amount, in the same manner and at the same times as would have
been the case if such defeasance had not occurred;
(8) in the case of the covenant defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel to the
effect that the Holders will not recognize income, gain or loss
for federal income tax purposes as a result of such deposit and
covenant defeasance and will be subject to federal income tax on
the same amount, in the same manner and at the same times as
would have been the case if such covenant defeasance had not
occurred (and, in the case of legal defeasance only, such
opinion of counsel must be based on a ruling of the Internal
Revenue Service or other change in applicable federal income tax
law); and
(9) the Company delivers to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions
precedent to the defeasance and discharge of the Senior Notes
contemplated by this Article 8 have been satisfied.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption or purchase of Senior Notes
at a future date in accordance with Article 3.
Section 8.03. Application of Trust Money.
The Trustee shall hold in trust money or U.S. Government Obligations
deposited with it pursuant to this Article 8. It shall apply the deposited
money and the money from U.S. Government Obligations through the Paying
Agent and in accordance with this Indenture to the payment of principal of,
premium, if any, and any accrued and unpaid interest on, and Liquidated
Damages, if any, with respect to the Senior Notes.
Section 8.04. Repayment to the Company.
After the Senior Notes have been paid in full, the Trustee and the
Paying Agent shall promptly turn over to the Company any excess money or
securities they hold.
The Trustee and the Paying Agent shall pay to the Company upon
written request by the Company any money they hold for the payment of
principal, premium, interest or Liquidated Damages that remains unclaimed
for 1 year after the date upon which such payment shall have become due;
provided, however, that the Company shall have either caused notice of such
payment to be mailed to each Holder entitled thereto no less than 30 days
prior to such repayment or within such period shall have published such
notice in a financial newspaper of widespread circulation published in The
City of New York (including, without limitation, The Wall Street Journal).
After payment to the Company, Holders entitled to the money must look to
the Company for payment as general creditors unless an applicable abandoned
property law designates another Person, and all liability of the Trustee
and such Paying Agent with respect to such money shall cease.
Section 8.05. Indemnity for Government Obligations.
The Company shall pay and shall indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against deposited U.S.
Government Obligations or the principal and interest received on such U.S.
Government Obligations.
Section 8.06. Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with this Article 8 by reason of any
legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Indenture and the Senior
Notes shall be revived and reinstated as though no deposit had occurred
pursuant to this Article 8 until such time as the Trustee or Paying Agent
is permitted to apply all such money or U.S. Government Obligations in
accordance with this Article 8; provided, however, that, if the Company has
made any payment of principal of, premium, if any, and any accrued and
unpaid interest on, and Liquidated Damages, if any, with respect to any
Senior Notes because of the reinstatement of its Obligations, the Company
shall be subrogated to the Holders' rights to receive such payment from the
money or U.S. Government Obligations the Trustee or Paying Agent holds.
ARTICLE 9
AMENDMENTS
Section 9.01. Amendments and Supplements Permitted Without Consent of Holders.
Notwithstanding Section 9.02, the Company and the Trustee may amend
or supplement this Indenture or the Senior Notes without the consent of any
Holder (a) to cure any ambiguity, defect or inconsistency; (b) to provide
for uncertificated Senior Notes in addition to or in place of certificated
Senior Notes; (c) to provide for the assumption by a Successor Corporation
of the Company's Obligations to the Holders in the event of a Disposition
pursuant to Article 5; (d) to comply with SEC's requirements to effect or
maintain the qualification of this Indenture under the TIA; (e) to provide
for additional Guarantees with respect to the Senior Notes; or (f) to make
any change that does not materially adversely affect any Holder's legal
rights under this Indenture.
Upon the Company's request, after receipt by the Trustee of a
resolution of the Board of Directors authorizing the execution of any
amended or supplemental indenture, the documents described in Section 9.06,
the Trustee shall join with the Company in the execution of any amended or
supplemental indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations
that may be contained in any such amended or supplemental indenture, but
the Trustee shall not be obligated to enter into an amended or supplemental
indenture that affects its own rights, duties or immunities under this
Indenture or otherwise.
Section 9.02. Amendments and Supplements Requiring Consent of Holders.
Subject to Section 6.07, the Company and the Trustee may amend or
supplement this Indenture or the Senior Notes with the written consent of
the Holders of at least a majority in principal amount of the then
outstanding Senior Notes (including consents obtained in connection with a
tender offer or exchange offer for the Senior Notes). Subject to Sections
6.04 and 6.07, the Holders of a majority in principal amount of the Senior
Notes then outstanding (including consents obtained in connection with a
tender offer or exchange offer for the Senior Notes) may also waive any
existing Default or Event of Default (other than a payment Default) and its
consequences or compliance in a particular instance by the Company with any
provision of this Indenture or the Senior Notes.
Upon the Company's request and after receipt by the Trustee of a
resolution of the Board of Directors authorizing the execution of any
supplemental indenture, evidence of the Holders' consent, and the documents
described in Section 9.06, the Trustee shall join with the Company in the
execution of such amended or supplemental indenture unless such amended or
supplemental indenture affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may
in its discretion, but not be obligated to, enter into such amended or
supplemental indenture.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment or waiver,
but it shall be sufficient if such consent approves the substance thereof.
After an amendment or waiver under this Section becomes effective,
the Company shall mail to each Holder affected thereby a notice briefly
describing the amendment, supplement or waiver. Any failure of the Company
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such amended or supplemental indenture
or waiver. Without the consent of each Holder affected, an amendment,
supplement or waiver under this Section may not (1) reduce the principal
amount of Senior Notes whose Holders must consent to an amendment,
supplement or waiver; (2) reduce the rate of or change the time for payment
of interest, including default interest as set forth in Section 4.01, or
Liquidated Damages on any Senior Note or alter the redemption or purchase
provisions with respect thereto or the price at which the Company is
required to offer to purchase any Senior Note; (3) reduce the principal of
or change the fixed maturity of any Senior Note; (4) make any Senior Note
payable in money other than that stated in the Senior Note; (5) make any
change in Section 6.04 or 6.07 or in this sentence of this Section 9.02; or
(6) waive a default in the payment of the principal of, or premium, if any,
or any accrued and unpaid interest on, or Liquidated Damages, if any, with
respect to, or redemption or purchase payment with respect to, any Senior
Note (except a rescission of acceleration of the Senior Notes by the
Holders of at least a majority in aggregate principal amount of the then
outstanding Senior Notes and a waiver of the payment default that resulted
from such acceleration).
Section 9.03. Compliance with TIA.
Every amendment or supplement to this Indenture or the Senior Notes
shall be set forth in an amended supplemental indenture that complies with
the TIA as then in effect.
Section 9.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Senior Note is a continuing consent by the Holder
and every subsequent Holder of a Senior Note or portion of a Senior Note
that evidences the same Indebtedness as the consenting Holder's Senior
Note, even if notation of the consent is not made on any Senior Note.
However, any such Holder or subsequent Holder may revoke the consent as to
his or her Senior Note or portion of a Senior Note if the Trustee receives
the notice of revocation before the date on which the Trustee receives an
Officer's Certificate certifying that the Holders of the requisite
principal amount of Senior Notes have consented to the amendment or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders of Senior Notes entitled to consent
to any amendment or waiver. If a record date is fixed, then,
notwithstanding the provisions of the immediately preceding paragraph,
those Persons who were Holders of Senior Notes at such record date (or
their duly designated proxies), and only those Persons, shall be entitled
to consent to such amendment or waiver or to revoke any consent previously
given, whether or not such Persons continue to be Holders of Senior Notes
after such record date. No consent shall be valid or effective for more
than 90 days after such record date unless consents from Holders of the
principal amount of Senior Notes required hereunder for such amendment or
waiver to be effective shall have also been given and not revoked within
such 90-day period.
After an amendment or waiver becomes effective it shall bind every
Holder, unless it is of the type described in any of clauses (1) through
(6) of Section 9.02. In such case, the amendment or waiver shall bind each
Holder who has consented to it and every subsequent Holder of a Senior Note
that evidences the same debt as the consenting Holder's Senior Note.
Section 9.05. Notation on or Exchange of Senior Notes.
The Trustee may (at the Company's expense) place an appropriate
notation about an amendment, supplement or waiver on any Senior Note
thereafter authenticated. The Company in exchange for all Senior Notes may
issue and the Trustee shall authenticate new Senior Notes that reflect the
amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Senior Note
shall not affect the validity and effect of such amendment, supplement or
waiver.
Section 9.06. Trustee Protected.
The Trustee shall sign any amendment or supplemental indenture
authorized pursuant to this Article 9 if the amendment does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. If it
does, the Trustee may, but need not, sign it. In signing such amendment or
supplemental indenture, the Trustee shall be entitled to receive and,
subject to Section 7.01, shall be fully protected in relying upon, an
Officers' Certificate and Opinion of Counsel as conclusive evidence that
such amendment or supplemental indenture is authorized or permitted by this
Indenture, that it is not inconsistent herewith, and that it will be valid
and binding upon the Company in accordance with its terms. The Company may
not sign an amendment or supplemental indenture until the Board of
Directors approves it.
ARTICLE 10
MISCELLANEOUS
Section 10.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies, or conflicts
with the duties imposed by operation of section 318(c) of the TIA, the
imposed duties shall control.
Section 10.02. Notices.
Any notice or communication by the Company or the Trustee to the
other is duly given if in writing and delivered in person, mailed by
registered or certified mail, postage prepaid, return receipt requested or
delivered by telecopier or overnight air courier guaranteeing next day
delivery to the other's address:
If to the Company:
Motors and Gears, Inc.
ArborLake Centre, Suite 550
1751 Lake Cook Road
Deerfield, Illinois 60015
Attention: Chief Financial Officer
Telecopier No.: (708) 945-5698
with a copy to:
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
Attention: James B. Carlson, Esq.
Telecopier No.: (212) 262-1910
If to the Trustee:
Fleet National Bank
777 Main Street
Hartford, Connecticut 06115
Attention: Corporate Trust Administration CTMO0238
Telecopier No.: (860) 986-7920
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; the date receipt is acknowledged, if mailed by
registered or certified mail; when answered back, if telecopied; and the
next Business Day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by
first-class mail to his or her address shown on the register kept by the
Registrar. Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other
Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
Section 10.03. Communication by Holders with Other Holders.
Holders may communicate pursuant to section 312(b) of the TIA with
other Holders with respect to their rights under this Indenture or the
Senior Notes. The Company, the Trustee, the Registrar and any other Person
shall have the protection of section 312(c) of the TIA.
Section 10.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate (which shall include the statements set
forth in Section 10.05) stating that, in the opinion of the
signers, all conditions precedent and covenants, if any,
provided for in this Indenture relating to the proposed action
have been complied with; and
(b) an Opinion of Counsel (which shall include the statements set
forth in Section 10.05) stating that, in the opinion of such
counsel, all such conditions precedent provided for in this
Indenture relating to the proposed action have been complied
with.
Section 10.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a
certificate provided pursuant to section 314(a)(4) of the TIA) shall
include:
(1) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained
in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made
such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether, in such Person's opinion, such
condition or covenant has been complied with.
Section 10.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar or Paying Agent may make reasonable rules and
set reasonable requirements for its functions.
Section 10.07. Legal Holidays.
If a payment date is a Legal Holiday at a place of payment, payment
may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
Section 10.08. No Recourse Against Others.
No officer, employee, director, stockholder or Subsidiary of the
Company shall have any liability for any Obligations of the Company under
the Senior Notes or this Indenture, or for any claim based on, in respect
of, or by reason of, such Obligations or the creation of any such
Obligation, except, in the case of a Subsidiary, for an express guarantee
or an express creation of any Lien by such Subsidiary of the Company's
Obligations under the Senior Notes. Each Holder by accepting a Senior Note
waives and releases all such liability, and such waiver and release is part
of the consideration for the issuance of the Senior Notes. The foregoing
waiver may not be effective to waive liabilities under the Federal
securities law and the Commission is of the view that such a waiver is
against public policy.
Section 10.09. Counterparts.
This Indenture may be executed in any number of counterparts and by
the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
Section 10.10. Variable Provisions.
The Company initially appoints the Trustee as Paying Agent, Registrar
and authenticating agent.
The first compliance certificate to be delivered by the Company to
the Trustee pursuant to Section 4.03 shall be for the fiscal year ending on
December 31, 1996.
Section 10.11. Governing Law.
The internal laws of the State of New York shall govern this
Indenture and the Senior Notes, without regard to the conflict of laws
provisions thereof.
Section 10.12. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan
or debt agreement of the Company or any of its Subsidiaries, and no other
indenture, loan or debt agreement may be used to interpret this Indenture.
Section 10.13. Successors.
All agreements of the Company in this Indenture and the Senior Notes
shall bind its successor. All agreements of the Trustee in this Indenture
shall bind its successor.
Section 10.14. Severability.
If any provision in this Indenture or in the Senior Notes shall be
invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
Section 10.15. Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table, and headings of the
Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof, and shall in no
way modify or restrict any of the terms or provisions hereof.
[NEXT PAGE IS THE SIGNATURE PAGE]
Dated as of November 7, 1996 MOTORS AND GEARS, INC.
By: /s/ Jonathan F. Boucher
---------------------------
Name: Jonathan F. Boucher
Title: Vice President
Dated as of November 7, 1996 FLEET NATIONAL BANK,
as Trustee
By: /s/ Michael M. Hopkins
--------------------------
Name: Michael M. Hopkins
Title: Vice President
By: /s/ Dennis Fisher
-------------------------
Name: Dennis Fisher
Title: Assistant Vice President
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01.Definitions............................................. 1
Section 1.02.Other Definitions....................................... 14
Section 1.03.Incorporation by Reference of Trust Indenture Act....... 15
Section 1.04.Rules of Construction................................... 15
ARTICLE 2
THE SENIOR NOTES
Section 2.01.Form and Dating......................................... 15
Section 2.02.Execution and Authentication............................ 16
Section 2.03.Registrar and Paying Agent.............................. 16
Section 2.04.Paying Agent to Hold Money in Trust..................... 17
Section 2.05.Holder Lists............................................ 17
Section 2.06.Transfer and Exchange................................... 17
Section 2.07.Replacement Senior Notes................................ 23
Section 2.08.Outstanding Senior Notes................................ 24
Section 2.09.Treasury Senior Notes................................... 24
Section 2.10.Temporary Senior Notes.................................. 24
Section 2.11.Cancellation............................................ 24
Section 2.12.Defaulted Interest...................................... 25
Section 2.13.Record Date............................................. 25
Section 2.14.CUSIP Number............................................ 25
ARTICLE 3
OPTIONAL REDEMPTION AND MANDATORY OFFERS TO PURCHASE
Section 3.01.Notices to Trustee...................................... 25
Section 3.02.Selection of Senior Notes to be Redeemed or Purchased... 26
Section 3.03.Notice of Redemption.................................... 26
Section 3.04.Effect of Notice of Redemption.......................... 27
Section 3.05.Deposit of Redemption Price............................. 27
Section 3.06.Senior Notes Redeemed in Part........................... 28
Section 3.07.Optional Redemption Provisions.......................... 28
Section 3.08.Mandatory Purchase Provisions........................... 28
ARTICLE 4
COVENANTS
Section 4.01.Payment of Senior Notes................................. 30
Section 4.02.SEC Reports............................................. 30
Section 4.03.Compliance Certificate.................................. 31
Section 4.04.Stay, Extension and Usury Laws.......................... 32
Section 4.05.Limitation on Restricted Payments....................... 32
Section 4.06.Corporate Existence..................................... 35
Section 4.07.Limitation on Incurrence of Indebtedness................ 35
Section 4.08.Limitation on Transactions With Affiliates.............. 36
Section 4.09.Limitation on Liens..................................... 36
Section 4.10.Compliance With Laws, Taxes............................. 37
Section 4.11.Limitation on Dividends and Other Payment
Restrictions Affecting Restricted Subsidiaries............ 37
Section 4.12.Maintenance of Office or Agencies....................... 38
Section 4.13.Change of Control....................................... 38
Section 4.14.Limitation on Asset Sales............................... 38
Section 4.15Designation of Restricted and Non-Restricted Subsidiaries. 40
ARTICLE 5
SUCCESSORS
Section 5.01.Merger or Consolidation................................. 41
Section 5.02.Successor Corporation Substituted....................... 41
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01.Events of Default....................................... 43
Section 6.02.Acceleration............................................ 44
Section 6.03.Other Remedies.......................................... 45
Section 6.04.Waiver of Past Defaults................................. 45
Section 6.05.Control by Majority..................................... 45
Section 6.06.Limitation on Suits..................................... 45
Section 6.07.Rights of Holders to Receive Payment.................... 46
Section 6.08.Collection Suit by Trustee.............................. 46
Section 6.09.Trustee May File Proofs of Claim........................ 46
Section 6.10.Priorities.............................................. 47
Section 6.11.Undertaking for Costs................................... 47
ARTICLE 7
TRUSTEE
Section 7.01.Duties of Trustee....................................... 47
Section 7.02.Rights of Trustee....................................... 48
Section 7.03.Individual Rights of Trustee............................ 49
Section 7.04.Trustee's Disclaimer.................................... 49
Section 7.05.Notice to Holders of Defaults and Events of Default..... 49
Section 7.06.Reports by Trustee to Holders........................... 49
Section 7.07.Compensation and Indemnity.............................. 49
Section 7.08.Replacement of Trustee.................................. 50
Section 7.09.Successor Trustee by Merger, Etc........................ 51
Section 7.10.Eligibility; Disqualification........................... 51
Section 7.11.Preferential Collection of Claims Against the Company... 51
ARTICLE 8
DISCHARGE OF INDENTURE
Section 8.01.Discharge of Liability on Senior Notes; Defeasance...... 51
Section 8.02.Conditions to Defeasance................................ 52
Section 8.03.Application of Trust Money.............................. 53
Section 8.04.Repayment to the Company................................ 53
Section 8.05.Indemnity for Government Obligations.................... 54
Section 8.06.Reinstatement........................................... 54
ARTICLE 9
AMENDMENTS
Section 9.01.Amendments and Supplements Permitted Without Consent of
Holders................................................... 54
Section 9.02.Amendments and Supplements Requiring Consent of Holders. 55
Section 9.03.Compliance with TIA..................................... 55
Section 9.04.Revocation and Effect of Consents....................... 56
Section 9.05.Notation on or Exchange of Senior Notes................. 56
Section 9.06.Trustee Protected....................................... 56
ARTICLE 10
MISCELLANEOUS
Section 10.01.Trust Indenture Act Controls........................... 57
Section 10.02.Notices................................................ 57
Section 10.03.Communication by Holders with Other Holders............ 58
Section 10.04.Certificate and Opinion as to Conditions Precedent..... 58
Section 10.05.Statements Required in Certificate or Opinion.......... 58
Section 10.06.Rules by Trustee and Agents............................ 58
Section 10.07.Legal Holidays......................................... 59
Section 10.08.No Recourse Against Others............................. 59
Section 10.09.Counterparts........................................... 59
Section 10.10.Variable Provisions.................................... 59
Section 10.11.Governing Law.......................................... 59
Section 10.12.No Adverse Interpretation of Other Agreements.......... 59
Section 10.13.Successors............................................. 59
Section 10.14.Severability........................................... 59
Section 10.15.Table of Contents, Headings, Etc....................... 60
EXHIBITS
Exhibit A Form of Senior Note ......................................A-1
Exhibit B Certificate of Transferor ................................B-1
Exhibit C Certificate of Institutional Accredited Investor .........C-1
Exhibit D Certificate of Regulation S Transferor ...................D-1
<PAGE>
EXHIBIT 10.3
=============================================================================
CREDIT AGREEMENT
among
MOTORS AND GEARS INDUSTRIES, INC.,
VARIOUS BANKS,
and
BANKERS TRUST COMPANY,
as AGENT
__________________________________
Dated as of November 7, 1996
__________________________________
===============================================================================
TABLE OF CONTENTS
-----------------
Page
----
SECTION 1. Amount and Terms of Credit........................ 1
1.01 The Commitments................................... 1
1.02 Minimum Amount of Each Borrowing.................. 3
1.03 Notice of Borrowing............................... 4
1.04 Disbursement of Funds............................. 5
1.05 Notes............................................. 5
1.06 Conversions....................................... 6
1.07 Pro Rata Borrowings............................... 7
1.08 Interest.......................................... 7
1.09 Interest Periods.................................. 8
1.10 Increased Costs, Illegality, etc.................. 9
1.11 Compensation...................................... 11
1.12 Change of Lending Office.......................... 12
1.13 Replacement of Banks.............................. 12
SECTION 2. Letters of Credit................................. 14
2.01 Letters of Credit................................. 14
2.02 Minimum Stated Amount............................. 15
2.03 Letter of Credit Requests......................... 15
2.04 Letter of Credit Participations................... 16
2.05 Agreement to Repay Letter of Credit Drawings...... 18
2.06 Increased Costs................................... 19
SECTION 3. Fees; Reductions of Commitment.................... 20
3.01 Fees.............................................. 20
3.02 Voluntary Termination of Unutilized Commitments... 21
3.03 Mandatory Reduction of Commitments................ 22
SECTION 4. Prepayments; Payments; Taxes...................... 24
4.01 Voluntary Prepayments............................. 24
4.02 Mandatory Repayments and Cash Collateralizations.. 25
4.03 Method and Place of Payment....................... 26
4.04 Net Payments; Taxes............................... 26
SECTION 5. Conditions Precedent to Credit Events on the Initial
Borrowing Date.................................. 28
5.01 Execution of Agreement; Notes..................... 28
5.02 Officer's Certificate............................. 28
5.03 Fees, etc......................................... 29
5.04 Opinions of Counsel............................... 29
5.05 Corporate Documents; Proceedings; etc............. 29
5.06 Employee Benefit Plans; Shareholders' Agreements;
Management Agreements; Employment Agreements;
Collective Bargaining Agreements; Debt Agreements;
Tax Sharing Agreements; Material Contracts....... 30
5.07 Adverse Change.................................... 31
5.08 Litigation........................................ 31
5.09 Approvals, etc.................................... 31
5.10 Issuance of Senior Unsecured Notes................ 32
5.11 Consummation of the Acquisition and the Merger.... 32
5.12 Refinancing of Existing Credit Agreement.......... 33
5.13 Pledge Agreement.................................. 34
5.14 Security Agreement................................ 34
5.15 Subsidiary Guaranty............................... 35
5.16 Stockholders' Agreement, Subscription Agreements,
Consulting Agreements, Affiliate Leases, etc..... 35
5.17 Consent Letter.................................... 36
5.18 Solvency Certificate; Environmental Assessments;
and Insurance Certificates....................... 36
5.19 Existing Indebtedness............................. 36
5.20 Financial Statements; Pro Forma Financial
Information; Projections......................... 37
5.21 Existing Tax Sharing Agreement.................... 37
5.22 Existing Seller Letter of Credit Agreement........ 38
5.23 Intercompany Notes................................ 38
SECTION 6. Conditions Precedent to All Credit Events......... 38
6.01 No Default; Representations and Warranties........ 38
6.02 Adverse Change, etc............................... 39
6.03 Litigation........................................ 39
6.04 Notice of Borrowing; Letter of Credit Request..... 39
SECTION 7. Representations and Warranties.................... 39
7.01 Corporate Status.................................. 40
7.02 Corporate Power and Authority..................... 40
7.03 No Violation...................................... 40
7.04 Governmental Approvals............................ 41
7.05 Financial Statements; Financial Condition;
Undisclosed Liabilities; Projections; etc........ 41
7.06 Litigation........................................ 44
7.07 True and Complete Disclosure...................... 44
7.08 Use of Proceeds; Margin Regulations............... 45
7.09 Tax Returns and Payments.......................... 45
7.10 Compliance with ERISA............................. 45
7.11 Security Documents................................ 46
7.12 Representations and Warranties in Documents....... 47
7.13 Properties........................................ 47
7.14 Capitalization.................................... 47
7.15 Subsidiaries...................................... 48
7.16 Compliance with Statutes, etc..................... 48
7.17 Investment Company Act............................ 48
7.18 Public Utility Holding Company Act................ 48
7.19 Environmental Matters............................. 49
7.20 Labor Relations................................... 49
7.21 Patents, Licenses, Franchises and Formulas........ 50
7.22 Indebtedness...................................... 50
7.23 Transaction....................................... 50
7.24 Special Purpose Corporations...................... 51
7.25 Subordinated Notes................................ 51
7.26 Insurance......................................... 51
SECTION 8. Affirmative Covenants............................. 51
8.01 Information Covenants............................. 52
8.02 Books, Records and Inspections.................... 55
8.03 Maintenance of Property; Insurance................ 56
8.04 Corporate Franchises.............................. 57
8.05 Compliance with Statutes, etc..................... 57
8.06 Compliance with Environmental Laws................ 57
8.07 ERISA............................................. 58
8.08 End of Fiscal Years; Fiscal Quarters.............. 59
8.09 Performance of Obligations........................ 59
8.10 Payment of Taxes.................................. 59
8.11 Additional Security; Further Assurances; etc...... 60
8.12 Maintenance of Corporate Separateness............. 63
8.13 Use of Proceeds................................... 63
8.14 UCC Searches...................................... 63
8.15 Permitted Transactions............................ 63
8.16 Foreign Subsidiaries Security..................... 67
8.17 Receivables Facility Transaction.................. 68
SECTION 9. Negative Covenants................................ 68
9.01 Liens............................................. 68
9.02 Consolidation, Merger, Purchase or Sale of
Assets, etc...................................... 72
9.03 Restricted Payments............................... 75
9.04 Indebtedness...................................... 80
9.05 Advances, Investments and Loans................... 83
9.06 Transactions with Affiliates...................... 87
9.07 Changes in Business............................... 89
9.08 Consolidated Interest Coverage Ratio.............. 89
9.09 Leverage Ratio.................................... 90
9.10 Limitation on Modifications of Certain Indebtedness;
Modifications of Certificate of Incorporation,
By-Laws and Certain Agreements; etc.............. 90
9.11 Limitation on Certain Restrictions on Subsidiaries 93
9.12 Limitation on Issuance of Capital Stock........... 93
9.13 Limitation on Creation of Subsidiaries............ 94
SECTION 10. Events of Default................................ 94
10.01 Payments......................................... 94
10.02 Representations, etc............................. 94
10.03 Covenants........................................ 95
10.04 Default Under Other Agreements................... 95
10.05 Bankruptcy, etc.................................. 96
10.06 ERISA............................................ 96
10.07 Security Documents............................... 97
10.08 Guaranties....................................... 97
10.09 Judgments........................................ 97
10.10 Change of Control................................ 97
10.11 Senior Unsecured Notes; Parent Subordinated
Intercompany Note............................... 98
10.12 Certain Tax Payments............................. 98
SECTION 11. Definitions and Accounting Terms................. 99
11.01 Defined Terms.................................... 99
SECTION 12. The Agent........................................145
12.01 Appointment......................................145
12.02 Nature of Duties.................................145
12.03 Lack of Reliance on the Agent....................145
12.04 Certain Rights of the Agent......................146
12.05 Reliance.........................................146
12.06 Indemnification..................................146
12.07 The Agent in its Individual Capacity.............147
12.08 Holders..........................................147
12.09 Resignation by the Agent.........................147
SECTION 13. Miscellaneous....................................148
13.01 Payment of Expenses, etc.........................148
13.02 Right of Setoff..................................149
13.03 Notices..........................................149
13.04 Benefit of Agreement.............................150
13.05 No Waiver; Remedies Cumulative...................151
13.06 Payments Pro Rata................................152
13.07 Calculations; Computations.......................152
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE;
WAIVER OF JURY TRIAL.............................153
13.09 Counterparts.....................................154
13.10 Effectiveness....................................154
13.11 Headings Descriptive.............................155
13.12 Amendment or Waiver; etc.........................155
13.13 Survival.........................................156
13.14 Domicile of Loans................................156
13.15 Confidentiality..................................157
13.16 Register.........................................157
SCHEDULE I Commitments
SCHEDULE II Bank Addresses
SCHEDULE III Real Property
SCHEDULE IV Projections
SCHEDULE V Subsidiaries
SCHEDULE VI Scheduled Existing Indebtedness
SCHEDULE VII Insurance
SCHEDULE VIII Existing Liens
EXHIBIT A Form of Notice of Borrowing
EXHIBIT B-1 Form of Revolving Note
EXHIBIT B-2 Form of Swingline Note
EXHIBIT C Form of Letter of Credit Request
EXHIBIT D Form of Section 4.04(b)(ii) Certificate
EXHIBIT E-1 Form of Opinion of Mayer, Brown & Platt
EXHIBIT E-2 Form of Opinion of Bryan, Cave
EXHIBIT F Form of Officers' Certificate
EXHIBIT G Form of Pledge Agreement
EXHIBIT H Form of Security Agreement
EXHIBIT I Form of Subsidiary Guaranty
EXHIBIT J Form of Consent Letter
EXHIBIT K Form of Officer's Solvency Certificate
EXHIBIT L Form of Non-Wholly-Owned Subsidiary Guaranty
EXHIBIT M Form of Intercompany Note
EXHIBIT N Form of Subordination Provisions
EXHIBIT O Form of Existing Seller Subordinated Note
EXHIBIT P Form of Assignment and Assumption Agreement
EXHIBIT Q Form of Existing Seller Installment Note
EXHIBIT R Form of Shareholder Subordinated Note
EXHIBIT S Form of Parent Subordinated Intercompany Note
CREDIT AGREEMENT, dated as of November 7, 1996, among MOTORS AND
GEARS INDUSTRIES, INC., a Delaware corporation (the "Borrower"), the Banks
party hereto from time to time and BANKERS TRUST COMPANY, as Agent (all
capitalized terms used herein and defined in Section 11 are used herein as
therein defined).
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, subject to and upon the terms and conditions set forth
herein, the Banks are willing to make available the credit facility
provided for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
--------------------------
1.01 The Commitments. (a) Subject to and upon the terms and
conditions set forth herein, each Bank severally agrees, at any time and
from time to time on and after the Initial Borrowing Date and prior to the
Final Maturity Date, to make a loan or loans (each, a "Revolving Loan" and,
collectively, the "Revolving Loans") to the Borrower, which Revolving
Loans:
(i) shall, at the option of the Borrower, be incurred and
maintained as, and/or converted into, Base Rate Loans or Eurodollar
Loans, provided that (x) except as otherwise specifically provided in
Section 1.10(b), all Revolving Loans comprising the same Borrowing
shall at all times be of the same Type and (y) unless the Agent has
determined that the Syndication Date has occurred, no more than one
Borrowing of Revolving Loans to be maintained as Eurodollar Loans may
be incurred (whether pursuant to this Section 1.01(a) or by way of
conversion pursuant to Section 1.06) prior to the 60th day after the
Initial Borrowing Date (which Borrowing of Eurodollar Loans may only
have an Interest Period of one month, and which Borrowing may only be
made on a single date occurring on or prior to the fifth day
following the Initial Borrowing Date);
(ii) may be repaid and reborrowed in accordance with the
provisions hereof; and
(iii) shall not exceed for any Bank at any time outstanding that
aggregate principal amount which, when added to the product of (x)
such Bank's Percentage and (y) the sum of (I) the aggregate amount of
all Letter of Credit Outstandings (exclusive of Unpaid Drawings which
are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Revolving Loans) at such
time and (II) the aggregate principal amount of all Swingline Loans
(exclusive of Swingline Loans which are repaid with the proceeds of,
and simultaneously with the incurrence of, the respective incurrence
of Revolving Loans) then outstanding, equals the Available Commitment
of such Bank at such time.
Notwithstanding anything to the contrary contained above, the aggregate
principal amount of Revolving Loans incurred on the Initial Borrowing Date
may not exceed $5,000,000.
(b) Subject to and upon the terms and conditions set forth
herein, the Swingline Bank agrees to make at any time and from time to time
after the Initial Borrowing Date and prior to the Swingline Expiry Date, a
loan or loans (each, a "Swingline Loan" and, collectively, the "Swingline
Loans") to the Borrower, which Swingline Loans:
(i) shall be made and maintained as Base Rate Loans;
(ii) may be repaid and reborrowed in accordance with the
provisions hereof;
(iii) shall not exceed in aggregate principal amount at any time
outstanding, when combined with (x) the aggregate principal amount of
all Revolving Loans then outstanding and (y) the amount of all Letter
of Credit Outstandings at such time, an amount equal to the Total
Available Commitment at such time (after giving effect to any
reductions thereto on such date); and
(iv) shall not exceed in aggregate principal amount at any time
outstanding the Maximum Swingline Amount.
The Swingline Bank shall not be obligated to make any Swingline Loans at a
time when a Bank Default exists unless the Swingline Bank has entered into
arrangements satisfactory to it to eliminate the Swingline Bank's risk with
respect to the Bank which is subject of such Bank Default, including by
cash collateralizing such Bank's Percentage of the outstanding Swingline
Loans. Notwithstanding anything to the contrary contained in this Section
1.01(b), the Swingline Bank shall not make any Swingline Loan after
receiving a written notice from the Borrower or the Required Banks stating
that a Default or an Event of Default exists and is continuing until such
time as the Swingline Bank shall have received written notice of (i)
rescission of all such notices from the party or parties originally
delivering such notice, (ii) the waiver of such Default or Event of Default
by the Required Banks or (iii) the Agent in good faith believes that such
Default or Event of Default has ceased to exist.
(c) On any Business Day, the Swingline Bank may, in its sole
discretion, give notice to the Banks that its outstanding Swingline Loans
shall be funded with a Borrowing of Revolving Loans (provided that such
notice shall be deemed to have been automatically given upon the occurrence
of a Default or an Event of Default under Section 10.05 or upon the
exercise of any of the remedies provided in the last paragraph of Section
10), in which case a Borrowing of Revolving Loans constituting Base Rate
Loans (each such Borrowing, a "Mandatory Borrowing") shall be made on the
immediately succeeding Business Day from all Banks (without giving effect
to any terminations and/or reductions thereto pursuant to the last
paragraph of Section 10) pro rata on the basis of their respective
Percentages (determined before giving effect to any termination of the
Commitments pursuant to the last paragraph of Section 10) and the proceeds
thereof shall be applied directly to the Swingline Bank to repay the
Swingline Bank for such outstanding Swingline Loans. Each such Bank hereby
irrevocably agrees to make Revolving Loans upon one Business Day's notice
pursuant to each Mandatory Borrowing in the amount and in the manner
specified in the preceding sentence and on the date specified in writing by
the Swingline Bank notwithstanding (i) that the amount of the Mandatory
Borrowing may not comply with the minimum amount for Borrowings otherwise
required hereunder, (ii) whether any conditions specified in Section 5 or 6
are then satisfied, (iii) whether a Default or an Event of Default then
exists, (iv) the date of such Mandatory Borrowing and (v) the amount of the
Total Available Commitment at such time. In the event that any Mandatory
Borrowing cannot for any reason be made on the date otherwise required
above (including, without limitation, as a result of the commencement of a
proceeding under the Bankruptcy Code with respect to the Borrower), then
each such Bank hereby agrees that it shall forthwith purchase (as of the
date the Mandatory Borrowing would otherwise have occurred, but adjusted
for any payments received from the Borrower on or after such date and prior
to such purchase) from the Swingline Bank such participations in the
outstanding Swingline Loans as shall be necessary to cause such Banks to
share in such Swingline Loans ratably based upon their respective
Percentages (determined before giving effect to any termination of the
Commitments pursuant to the last paragraph of Section 10); provided, that
(x) all interest payable on the Swingline Loans shall be for the account of
the Swingline Bank until the date as of which the respective participation
is required to be purchased and, to the extent attributable to the
purchased participation, shall be payable to the participant from and after
such date and (y) at the time any purchase of participations pursuant to
this sentence is actually made, the purchasing Bank shall be required to
pay the Swingline Bank interest on the principal amount of participation
purchased for each day from and including the day upon which the Mandatory
Borrowing would otherwise have occurred to but excluding the date of
payment for such participation, at the rate otherwise applicable to
Revolving Loans maintained as Base Rate Loans hereunder for each day
thereafter.
1.02 Minimum Amount of Each Borrowing. The aggregate principal
amount of each Borrowing of Loans under a respective Tranche shall not be
less than the Minimum Borrowing Amount for such Tranche, provided that
Mandatory Borrowings shall be in the amounts required by Section 1.01(c).
More than one Borrowing may occur on the same date, but at no time shall
there be outstanding more than six Borrowings of Eurodollar Loans.
1.03 Notice of Borrowing. (a) Whenever the Borrower desires
to make a Borrowing hereunder (excluding Borrowings of Swingline Loans and
Mandatory Borrowings), the Borrower shall give the Agent at its Notice
Office at least one Business Day's prior written notice (or telephonic
notice promptly confirmed in writing) of each Base Rate Loan and at least
three Business Days' prior written notice (or telephonic notice promptly
confirmed in writing) of each Eurodollar Loan to be made hereunder,
provided that any such notice shall be deemed to have been given on a
certain day only if given before 11:00 A.M. (New York time) on such day.
Each such written notice or written confirmation of telephonic notice
(each, a "Notice of Borrowing"), except as otherwise expressly provided in
Section 1.10, shall be irrevocable and shall be given by an Authorized
Officer of the Borrower in the form of Exhibit A, appropriately completed
to specify the aggregate principal amount of the Revolving Loans to be made
pursuant to such Borrowing, the date of such Borrowing (which shall be a
Business Day) and whether the Revolving Loans being made pursuant to such
Borrowing are to be initially maintained as Base Rate Loans or Eurodollar
Loans and, if Eurodollar Loans, the initial Interest Period to be
applicable thereto. The Agent shall promptly give each Bank notice of such
proposed Borrowing, of such Bank's proportionate share thereof and of the
other matters required by the immediately preceding sentence to be
specified in the Notice of Borrowing.
(b) (i) Whenever the Borrower desires to make a Borrowing of
Swingline Loans hereunder, an Authorized Officer of the Borrower shall give
the Swingline Bank not later than 1:00 P.M. (New York time) on the date
that a Swingline Loan is to be made, written notice (or telephonic notice
confirmed in writing) of each Swingline Loan to be made hereunder. Each
such notice shall be irrevocable and specify in each case (A) the date of
Borrowing (which shall be a Business Day) and (B) the aggregate principal
amount of Swingline Loans to be made pursuant to such Borrowing.
(ii) Mandatory Borrowings shall be made upon the notice
specified in Section 1.01(c), with the Borrower irrevocably agreeing, by
its incurrence of any Swingline Loan, to the making of the Mandatory
Borrowings as set forth in Section 1.01(c).
(c) Without in any way limiting the obligation of the Borrower
to confirm in writing any telephonic notice of any Borrowing of Loans, the
Agent or the Swingline Bank, as the case may be, may act without liability
upon the basis of telephonic notice of such Borrowing, believed by the
Agent or the Swingline Bank, as the case may be, in good faith to be from
an Authorized Officer of the Borrower prior to receipt of written
confirmation. In each such case, the Borrower hereby waives the right to
dispute the Agent's and the Swingline Bank's record of the terms of such
telephonic notice of such Borrowing of Loans.
1.04 Disbursement of Funds. No later than 12:00 Noon (New York
time) on the date specified in each Notice of Borrowing (or (x) in the case
of Swingline Loans, no later than the close of business on the date
specified pursuant to Section 1.03(b)(i) or (y) in case of Mandatory
Borrowings, not later than 12:00 Noon (New York time) on the date specified
in Section 1.01(c)), each Bank will make available its pro rata portion
(based on the Percentages of the Banks) of each Borrowing requested to be
made on such date (or in the case of Swingline Loans, the Swingline Bank
shall make available the full amount thereof). All such amounts shall be
made available in Dollars and in immediately available funds at the Payment
Office of the Agent, and the Agent will make available to the Borrower at
the Payment Office, in Dollars and in immediately available funds, the
aggregate of the amounts so made available by the Banks (prior to 1:00 P.M.
(New York time)) on such day, to the extent of funds actually received by
the Agent prior to 12:00 Noon (New York time) on such day. Unless the
Agent shall have been notified by any Bank prior to the date of Borrowing
that such Bank does not intend to make available to the Agent such Bank's
portion of any Borrowing to be made on such date, the Agent may assume that
such Bank has made available such amount to the Agent on such date of
Borrowing and the Agent may, in reliance upon such assumption, make
available to the Borrower a corresponding amount. If such corresponding
amount is not in fact made available to the Agent by such Bank, the Agent
shall be entitled to recover such corresponding amount on demand from such
Bank. If such Bank does not pay such corresponding amount forthwith upon
the Agent's demand therefor, the Agent shall promptly notify the Borrower
and the Borrower shall pay such corresponding amount to the Agent within
three Business Days following such notice. The Agent shall also be
entitled to recover on demand from such Bank or the Borrower, as the case
may be, interest on such corresponding amount in respect of each day from
the date such corresponding amount was made available by the Agent to the
Borrower until the date such corresponding amount is recovered by the
Agent, at a rate per annum equal to (i) if recovered from such Bank, the
overnight Federal Funds Rate and (ii) if recovered from the Borrower, the
rate of interest applicable to the respective Borrowing, as determined
pursuant to Section 1.08. Nothing in this Section 1.04 shall be deemed to
relieve any Bank from its obligation to make Revolving Loans hereunder or
to prejudice any rights which the Borrower may have against any Bank as a
result of any failure by such Bank to make Revolving Loans hereunder.
1.05 Notes.(a) The Borrower's obligation to pay the principal
of, and interest on, the Loans made by each Bank shall be evidenced (i) if
Revolving Loans, by a promissory note duly executed and delivered by the
Borrower substantially in the form of Exhibit B-1, with blanks
appropriately completed in conformity herewith (each, a "Revolving Note"
and, collectively, the "Revolving Notes") and (ii) if Swingline Loans, by a
promissory note duly executed and delivered by the Borrower substantially
in the form of Exhibit B-2, with blanks appropriately completed in
conformity herewith (the "Swingline Note").
(b) The Revolving Note issued to each Bank shall (i) be
executed by the Borrower, (ii) be payable to the order of such Bank or its
registered assigns and be dated the Initial Borrowing Date, (iii) be in a
stated principal amount equal to the Commitment of such Bank and be payable
in the principal amount of the Revolving Loans evidenced thereby from time
to time, (iv) mature on the Final Maturity Date, (v) bear interest as
provided in the appropriate clause of Section 1.08 in respect of the Base
Rate Loans and Eurodollar Loans, as the case may be, evidenced thereby,
(vi) be subject to voluntary repayment as provided in Section 4.01 and
mandatory repayment as provided in Section 4.02 and (vii) be entitled to
the benefits of this Agreement and the other Credit Documents.
(c) The Swingline Note issued to the Swingline Bank shall (i)
be executed by the Borrower, (ii) be payable to the order of the Swingline
Bank or its registered assigns and be dated the Initial Borrowing Date,
(iii) be in a stated principal amount equal to the Maximum Swingline Amount
and be payable in the principal amount of the outstanding Swingline Loans
evidenced thereby from time to time, (iv) mature on the Swingline Expiry
Date, (v) bear interest as provided in the appropriate clause of Section
1.08 in respect of the Base Rate Loans evidenced thereby, (vi) be subject
to voluntary repayment as provided in Section 4.01 and mandatory repayment
as provided in Section 4.02 and (vii) be entitled to the benefits of this
Agreement and the other Credit Documents.
(d) Each Bank will note on its internal records the amount of
each Loan made by it and each payment in respect thereof and will prior to
any transfer of any of its Notes endorse on the reverse side thereof the
outstanding principal amount of Loans evidenced thereby. Failure to make
any such notation shall not affect the Borrower's obligations in respect of
such Loans.
1.06 Conversions. The Borrower shall have the option to
convert, on any Business Day occurring after the Initial Borrowing Date,
all or a portion equal to at least the applicable Minimum Borrowing Amount
of the outstanding principal amount of Loans made pursuant to one or more
Borrowings of one or more Types of Loans into a Borrowing of another Type
of Loan, provided that (i) except as otherwise provided in Section 1.10(b),
Eurodollar Loans may be converted into Base Rate Loans only on the last day
of an Interest Period applicable to the Loans being converted and no
partial conversion of a Borrowing of Eurodollar Loans shall reduce the
outstanding principal amount of such Eurodollar Loans made pursuant to a
single Borrowing to less than the Minimum Borrowing Amount applicable
thereto, (ii) Base Rate Loans may only be converted into Eurodollar Loans
if no Default under Sections 10.01 or 10.05 and no Event of Default is in
existence on the date of conversion, (iii) unless the Agent has determined
that the Syndication Date has occurred, prior to the 60th day after the
Initial Borrowing Date, conversions of Base Rate Loans into Eurodollar
Loans may only be made within 5 days after the Initial Borrowing Date and
so long as any such conversion is effective on the first day of the first
Interest Period referred to in clause (y) of Section 1.01(a)(i) and so long
as such conversion does not result in a greater number of Borrowings of
Eurodollar Loans prior to the 60th day after the Initial Borrowing Date as
are permitted under Section 1.01(a)(i), (iv) no conversion pursuant to this
Section 1.06 shall result in a greater number of Borrowings of Eurodollar
Loans than is permitted under Section 1.02 and (v) Swingline Loans may not
be converted pursuant to this Section 1.06. Each such conversion shall be
effected by the Borrower by giving the Agent at its Notice Office prior to
11:00 A.M. (New York time) at least three Business Days' prior written
notice (each, a "Notice of Conversion") specifying the Revolving Loans to
be so converted, the Borrowing(s) pursuant to which such Revolving Loans
were made and, if to be converted into Eurodollar Loans, the Interest
Period to be initially applicable thereto. The Agent shall give each Bank
prompt notice of any such proposed conversion affecting any of its
Revolving Loans.
1.07 Pro Rata Borrowings. All Borrowings of Revolving Loans
under this Agreement shall be incurred from the Banks pro rata on the basis
of their Commitments; provided that all Borrowings of Revolving Loans made
pursuant to a Mandatory Borrowing shall be incurred by the Borrower from
the Banks pro rata on the basis of their Percentages. It is understood
that no Bank shall be responsible for any default by any other Bank of its
obligation to make Revolving Loans hereunder and that each Bank shall be
obligated to make the Revolving Loans provided to be made by it hereunder,
regardless of the failure of any other Bank to make its Revolving Loans
hereunder.
1.08 Interest. (a) The Borrower agrees to pay interest in
respect of the unpaid principal amount of each Base Rate Loan made to the
Borrower from the date the proceeds thereof are made available to the
Borrower until the earlier of (i) the maturity (whether by acceleration or
otherwise) of such Base Rate Loan and (ii) the conversion of such Base Rate
Loan to a Eurodollar Loan pursuant to Section 1.06, at a rate per annum
which shall be equal to the sum of the Applicable Margin plus the Base Rate
in effect from time to time.
(b) The Borrower agrees to pay interest in respect of the
unpaid principal amount of each Eurodollar Loan made to the Borrower from
the date the proceeds thereof are made available to the Borrower until the
earlier of (i) the maturity (whether by acceleration or otherwise) of such
Eurodollar Loan and (ii) the conversion of such Eurodollar Loan to a Base
Rate Loan pursuant to Section 1.06, 1.09 or 1.10, as applicable, at a rate
per annum which shall, during each Interest Period applicable thereto, be
equal to the sum of the Applicable Margin plus the Eurodollar Rate for such
Interest Period.
(c) Overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan and any other overdue amount
payable hereunder shall, in each case, bear interest at a rate per annum
equal to the greater of (x) 2% per annum in excess of the rate otherwise
applicable to Base Rate Loans from time to time and (y) the rate which is
2% in excess of the rate then borne by such Loans, in each case with such
interest to be payable on demand.
(d) Accrued (and theretofore unpaid) interest shall be payable
(i) in respect of each Base Rate Loan, quarterly in arrears on each
Quarterly Payment Date, (ii) in respect of each Eurodollar Loan, on the
last day of each Interest Period applicable thereto and, in the case of an
Interest Period in excess of three months, on each date occurring at three
month intervals after the first day of such Interest Period and (iii) in
respect of each Loan, on any repayment or prepayment (except voluntary and
mandatory prepayments of Swingline Loans and Revolving Loans maintained as
Base Rate Loans where the Total Commitment has not been, and is not then
being, terminated (on the amount repaid or prepaid), at maturity (whether
by acceleration or otherwise) and, after such maturity, on demand.
(e) Upon each Interest Determination Date, the Agent shall
determine the Eurodollar Rate for the respective Interest Period or
Interest Periods and shall promptly notify the Borrower and the Banks
thereof. Each such determination shall, absent manifest error, be final
and conclusive and binding on all parties hereto.
1.09 Interest Periods. At the time it gives any Notice of
Borrowing or Notice of Conversion in respect of the making of, or
conversion into, any Eurodollar Loan (in the case of the initial Interest
Period applicable thereto) or on the third Business Day prior to the
expiration of an Interest Period applicable to such Eurodollar Loan (in the
case of any subsequent Interest Period), the Borrower shall have the right
to elect, by having an Authorized Officer of the Borrower give the Agent
notice thereof, the interest period (each, an "Interest Period") applicable
to such Eurodollar Loan, which Interest Period shall, at the option of the
Borrower (but otherwise subject to the provisions of Section 1.01(a)(i)(y)
and 1.06(iii)), be a one, two, three or six-month period or, to the extent
approved by all Banks, a nine-month or twelve-month period; provided that:
(i) all Eurodollar Loans comprising a Borrowing shall at all
times have the same Interest Period;
(ii) the initial Interest Period for any Eurodollar Loan shall
commence on the date of Borrowing of such Eurodollar Loan (including
the date of any conversion thereto from a Revolving Loan of a
different Type) and each Interest Period occurring thereafter in
respect of such Eurodollar Loan shall commence on the day on which
the next preceding Interest Period applicable thereto expires;
(iii) if any Interest Period relating to a Eurodollar Loan
begins on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period, such
Interest Period shall end on the last Business Day of such calendar
month;
(iv) if any Interest Period would otherwise expire on a day
which is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day; provided, however, that if any Interest
Period for a Eurodollar Loan would otherwise expire on a day which 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 next preceding Business Day;
(v) no Interest Period may be selected at any time when a
Default under Section 10.01 or 10.05 or any Event of Default is then
in existence; and
(vi) no Interest Period in respect of any Borrowing of
Revolving Loans shall be selected which extends beyond the Final
Maturity Date.
If upon the expiration of any Interest Period applicable to a
Borrowing of Eurodollar Loans, the Borrower has failed to elect, or is not
permitted to elect, a new Interest Period to be applicable to such
Eurodollar Loans as provided above, the Borrower shall be deemed to have
elected to convert such Eurodollar Loans into Base Rate Loans effective as
of the expiration date of such current Interest Period.
1.10 Increased Costs, Illegality, etc. (a) In the event that
any Bank shall have determined (which determination shall, absent manifest
error, be final and conclusive and binding upon all parties hereto but,
with respect to clause (i) below, may be made only by the Agent):
(i) on any Interest Determination Date that, by reason of any
changes arising after the date of this Agreement affecting the
interbank Eurodollar market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for
in the definition of Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with
respect to any Eurodollar Loan because of (x) any change since the
date of this Agreement in any applicable law or governmental rule,
regulation, order, guideline or request (whether or not having the
force of law) or in the interpretation or administration thereof and
including the introduction of any new law or governmental rule,
regulation, order, guideline or request, such as, for example, but
not limited to: (A) a change in the basis of taxation of payment to
any Bank of the principal of or interest on the Notes or any other
amounts payable hereunder (except for changes with respect to any tax
imposed on, or measured by, the net income or net profits of such
Bank pursuant to the laws of the jurisdiction in which such Bank is
organized or in which such Bank's principal office or applicable
lending office is located or any subdivision thereof or therein), or
(B) a change in official reserve requirements, but, in all events,
excluding reserves required under Regulation D to the extent included
in the computation of the Eurodollar Rate and/or (y) other
circumstances (other than an adverse change in the credit quality of
a given Bank) since the date of this Agreement affecting such Bank or
the interbank Eurodollar market or the position of such Bank in such
market; or
(iii) at any time, that the making or continuance of any
Eurodollar Loan has been made (x) unlawful by any law or governmental
rule, regulation or order, (y) impossible by compliance by any Bank
in good faith with any governmental request, order or guideline
(whether or not having force of law) or (z) impracticable as a result
of a contingency occurring after the date of this Agreement which
materially and adversely affects the interbank Eurodollar market;
then, and in any such event, such Bank (or the Agent, in the case of clause
(i) above) shall promptly give notice (by telephone confirmed in writing)
to the Borrower and, except in the case of clause (i) above, to the Agent
of such determination (which notice the Agent shall promptly transmit to
each of the other Banks). Thereafter (x) in the case of clause (i) above,
Eurodollar Loans shall no longer be available until such time as the Agent
notifies the Borrower and the Banks that the circumstances giving rise to
such notice by the Agent no longer exist, and any Notice of Borrowing or
Notice of Conversion given by the Borrower with respect to Eurodollar Loans
which have not yet been incurred (including by way of conversion) shall be
deemed, in the case of a Notice of Borrowing, to instead constitute a
Notice of Borrowing for a Borrowing of Base Rate Loans in a like principal
amount as the Eurodollar Loans requested or, in the case of a Notice of
Conversion, rescinded by the Borrower, (y) in the case of clause (ii) above
the Borrower shall pay to such Bank, upon written demand therefor, such
additional amounts (in the form of an increased rate of, or a different
method of calculating, interest or otherwise as such Bank in its sole
discretion shall determine) as shall be required to compensate such Bank
for such increased costs or reductions in amounts received or receivable
hereunder (a written notice as to the additional amounts owed to such Bank,
showing the basis for the calculation thereof, submitted to the Borrower by
such Bank in good faith shall, absent manifest error, be final and
conclusive and binding on all the parties hereto, although the failure to
give any such notice shall not release or diminish any of the Borrower's
obligations to pay additional amounts pursuant to this Section 1.10(a) upon
the subsequent receipt of such notice) and (z) in the case of clause (iii)
above, the Borrower shall take one of the actions specified in Section
1.10(b) as promptly as possible and, in any event, within the time period
required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may
(and in the case of a Eurodollar Loan affected by the circumstances
described in Section 1.10(a)(iii) shall) either (x) if the affected
Eurodollar Loan is then being made initially or pursuant to a conversion,
cancel the respective Borrowing by giving the Agent telephonic notice
(confirmed in writing) on the same date that the Borrower was notified by
the affected Bank or the Agent pursuant to Section 1.10(a)(ii) or (iii), or
(y) if the affected Eurodollar Loan is then outstanding, upon at least
three Business Days' written notice to the Agent, require the affected Bank
to convert such Eurodollar Loan into a Base Rate Loan, provided that, (i)
any unaffected Bank shall continue to be obligated to extend its portion of
the respective Borrowing as Eurodollar Loans (unless the respective
Borrowing is cancelled or the Borrower elects to convert same into Base
Rate Loans) and (ii) if more than one Bank is affected at any time, then
all affected Banks must be treated the same pursuant to this Section
1.10(b).
(c) If at any time any Bank determines that the introduction
after the date of this Agreement of, or any change after the date of this
Agreement in, any applicable law or governmental rule, regulation, order,
guideline, directive or request (whether or not having the force of law)
concerning capital adequacy, or any change in interpretation or
administration thereof by any governmental authority, central bank or
comparable agency, will have the effect of increasing the amount of capital
required or expected to be maintained by such Bank or any corporation
controlling such Bank based on the existence of such Bank's Commitment
hereunder or its obligations hereunder, then the Borrower shall pay to such
Bank, upon its written demand therefor, such additional amounts as shall be
required to compensate such Bank or such other corporation for the
increased cost to such Bank or such other corporation or the reduction in
the rate of return to such Bank or such other corporation as a result of
such increase of capital. Each Bank, upon determining that any additional
amounts will be payable pursuant to this Section 1.10(c), will give prompt
written notice thereof to the Borrower (a copy of which shall be sent by
such Bank to the Agent), which notice shall show the basis for calculation
of such additional amounts, although the failure to give any such notice
shall not release or diminish any of the Borrower's obligations to pay
additional amounts pursuant to this Section 1.10(c) upon the subsequent
receipt of such notice. A Bank's reasonable good faith determination of
compensation owing under this Section 1.10(c) shall, absent manifest error,
be final and conclusive and binding on all the parties hereto.
1.11 Compensation. The Borrower shall compensate each Bank,
upon its written request (which request shall set forth the basis for
requesting such compensation), for all losses, expenses and liabilities
(including, without limitation, any loss, expense or liability incurred by
reason of the liquidation or reemployment of deposits or other funds
required by such Bank to fund its Eurodollar Loans but excluding any loss
of anticipated profit) which such Bank may sustain: (i) if for any reason
(other than a default by such Bank or the Agent) a Borrowing of, or
conversion from or into, Eurodollar Loans does not occur on a date
specified therefor in a Notice of Borrowing or Notice of Conversion
(whether or not withdrawn by the Borrower or deemed withdrawn pursuant to
Section 1.10(a)); (ii) if any repayment (including any repayment made
pursuant to Section 4.01 or 4.02 or as a result of an acceleration of the
Loans pursuant to Section 10 or as a result of a replacement of a Bank
pursuant to Section 1.13 or 13.12(b)) or conversion of any of the
Borrower's Eurodollar Loans occurs on a date which is not the last day of
an Interest Period with respect thereto; (iii) if any prepayment of any of
the Borrower's Eurodollar Loans is not made on any date specified in a
notice of prepayment given by the Borrower; or (iv) as a consequence of (x)
any other default by the Borrower to repay its Loans when required by the
terms of this Agreement or any Note held by such Bank or (y) any election
made pursuant to Section 1.10(b). A Bank's basis for requesting
compensation pursuant to this Section 1.11 and a Bank's calculation of the
amount thereof, shall, absent manifest error, be final and conclusive and
binding on all parties hereto.
1.12 Change of Lending Office. Each Bank agrees that on the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii)
or (iii), Section 1.10(c), Section 2.06 or Section 4.04 with respect to
such Bank, it will, if requested by the Borrower, use reasonable efforts
(subject to overall policy considerations of such Bank) to designate
another lending office for any Revolving Loans or Letters of Credit
affected by such event, provided that such designation is made on such
terms that such Bank and its lending office suffer no economic, legal or
regulatory disadvantage, with the object of avoiding the consequence of the
event giving rise to the operation of such Section. Nothing in this
Section 1.12 shall affect or postpone any of the obligations of the
Borrower or the right of any Bank provided in Sections 1.10, 2.06 and 4.04.
1.13 Replacement of Banks. If any Bank (x) becomes a
Defaulting Bank, (y) refuses to consent to certain proposed changes,
waivers, discharges or terminations with respect to this Agreement which
have been approved by the Required Banks as provided in Section 13.12(b) or
(z) is owed increased costs under Section 1.10(a)(ii) or (iii), Section
1.10(c), Section 2.06 or Section 4.04 in a material amount in excess of
those being generally charged by the other Banks, the Borrower shall have
the right, in accordance with the requirements of Section 13.04(b), if no
Default or Event of Default will exist immediately after giving effect to
the respective replacement, to either replace such Bank (the "Replaced
Bank") with one or more Eligible Transferee or Eligible Transferees
(collectively, the"Replacement Bank"), none of whom shall constitute a
Defaulting Bank at the time of such replacement and each of whom shall be
reasonably acceptable to the Agent; provided, that:
(i) at the time of any replacement pursuant to this Section
1.13, the Replacement Bank shall enter into one or more Assignment
and Assumption Agreements pursuant to Section 13.04(b) (and with all
fees payable pursuant to said Section 13.04(b) to be paid by the
Replacement Bank) pursuant to which the Replacement Bank shall
acquire the Commitment and all outstanding Revolving Loans of, and
participations in Letters of Credit by, the Replaced Bank and, in
connection therewith, shall pay to (x) the Replaced Bank in respect
thereof, an amount equal to the sum of (A) an amount equal to the
principal of, and all accrued interest on, all outstanding Revolving
Loans of the Replaced Bank, (B) an amount equal to all Unpaid
Drawings that have been funded by (and not reimbursed to) such
Replaced Bank, together with all then unpaid interest with respect
thereto at such time and (C) an amount equal to all accrued, but
theretofore unpaid, Fees owing to the Replaced Bank pursuant to
Section 3.01, (y) the respective Issuing Bank, an amount equal to
such Replaced Bank's Percentage (in each case for this purpose,
determined as if the adjustment described in clause (y) of the
immediately succeeding sentence had been made with respect to such
Replaced Bank) of any Unpaid Drawing (which at such time remains an
Unpaid Drawing) with respect to Letters of Credit issued by such
Issuing Bank to the extent such amount was not theretofore funded by
such Replaced Bank and (z) the Swingline Bank, an amount equal to
such Replaced Bank's Percentage (in each case for this purpose,
determined as if the adjustment described in clause (y) of the
immediately succeeding sentence had been made with respect to such
Replaced Bank) of any Mandatory Borrowing to the extent such amount
was not theretofore funded by such Replaced Bank; and
(ii) all obligations of the Borrower owing to the Replaced Bank
(other than those (a) specifically described in clause (i) above in
respect of which the assignment purchase price has been, or is
concurrently being, paid or (b) relating to the Revolving Loans
and/or the Commitment of the respective Replaced Bank which will
remain outstanding after giving effect to the respective replacement)
shall be paid in full to such Replaced Bank concurrently with such
replacement.
Upon the execution of the respective Assignment and Assumption Agreements,
the payment of amounts referred to in clauses (i) and (ii) above,
recordation of the assignment on the Register by the Agent pursuant to
Section 13.16 and, if so requested by the Replacement Bank, delivery to the
Replacement Bank of the appropriate Revolving Note or Revolving Notes
executed by the Borrower, (x) the Replacement Bank shall become a Bank
hereunder and the Replaced Bank shall cease to constitute a Bank hereunder,
except with respect to indemnification provisions under this Agreement
(including, without limitation, Sections 1.10, 1.11, 2.06, 4.04, 13.01 and
13.06), which shall survive as to such Replaced Bank and (y) the
Percentages of the Banks shall be automatically adjusted at such time to
give effect to such replacement.
SECTION 2. Letters of Credit.
-----------------
2.01 Letters of Credit. (a) Subject to and upon the terms and
conditions herein set forth, the Borrower may request an Issuing Bank, at
any time and from time to time on and after the Initial Borrowing Date and
prior to the third Business Day (or the 30th day in the case of Trade
Letters of Credit) preceding the Final Maturity Date to issue, (x) for the
account of the Borrower and for the benefit of any holder (or any trustee,
agent or other similar representative for any such holders) of L/C
Supportable Indebtedness, irrevocable standby letters of credit in a form
customarily used by such Issuing Bank or in such other form as has been
approved by such Issuing Bank (each such standby letter of credit, a
"Standby Letter of Credit") in support of such L/C Supportable Indebtedness
and (y) for the account of the Borrower and for the benefit of sellers of
goods to the Borrower or any Subsidiary Guarantor in the ordinary course of
business, irrevocable sight trade letters of credit in a form customarily
used by such Issuing Bank or in such other form as has been approved by
such Issuing Bank (each such trade letter of credit, a "Trade Letter of
Credit", and each such Standby Letter of Credit and Trade Letter of Credit,
a "Letter of Credit" and, collectively, the "Letters of Credit"). All
Letters of Credit shall be denominated in Dollars.
(b) Subject to and upon the terms and conditions set forth
herein, each Issuing Bank hereby agrees that it will, at any time and from
time to time on and after the Initial Borrowing Date and prior to the third
Business Day (or the 30th day in the case of Trade Letters of Credit)
preceding the Final Maturity Date, following its receipt of the respective
Letter of Credit Request, issue for the account of the Borrower one or more
Letters of Credit, (x) in the case of Trade Letters of Credit, in support
of trade obligations of the Borrower or any Subsidiary Guarantor that arise
in the ordinary course of business or (y) in the case of Standby Letters of
Credit, in support of such L/C Supportable Indebtedness as is permitted to
remain outstanding without giving rise to a Default or Event of Default
hereunder; provided that the respective Issuing Bank shall be under no
obligation to issue any Letter of Credit if at the time of such issuance:
(i) any order, judgment or decree of any governmental
authority or arbitrator shall purport by its terms to enjoin or
restrain such Issuing Bank from issuing such Letter of Credit or any
requirement of law applicable to such Issuing Bank or any request or
directive (whether or not having the force of law) from any
governmental authority with jurisdiction over such Issuing Bank shall
prohibit, or request that such Issuing Bank refrain from, the
issuance of letters of credit generally or such Letter of Credit in
particular or shall impose upon such Issuing Bank with respect to
such Letter of Credit any restriction or reserve or capital
requirement (for which such Issuing Bank is not otherwise
compensated) not in effect on the date hereof, or any unreimbursed
loss, cost or expense which was not applicable, in effect or known to
such Issuing Bank as of the date hereof and which such Issuing Bank
in good faith deems material to it;
(ii) such Issuing Bank shall have received written notice from
the Required Banks prior to the issuance of such Letter of Credit of
the type described in the last sentence of Section 2.03(b); or
(iii) a Bank Default exists, unless such Issuing Bank has
entered into arrangements satisfactory to it and the Borrower to
eliminate such Issuing Bank's risk with respect to the Bank which is
the subject of the Bank Default, including by cash collateralizing
such Bank's Percentage of the Letter of Credit Outstandings.
(c) Notwithstanding the foregoing, (i) no Letter of Credit
shall be issued the Stated Amount of which, when added to the Letter of
Credit Outstandings (exclusive of Unpaid Drawings which are repaid on the
date of, and prior to the issuance of, the respective Letter of Credit) at
such time, would exceed either (x) $10,000,000 or (y) when added to the
aggregate principal amount of all Revolving Loans and Swingline Loans then
outstanding, an amount equal to the Total Available Commitment then in
effect, (ii)(x) each Standby Letter of Credit shall by its terms terminate
on or before the date which occurs 12 months after the date of the issuance
thereof (although any such Standby Letter of Credit may be extendable for
successive periods of up to 12 months, but not beyond the third Business
Day preceding the Final Maturity Date, on terms acceptable to the
respective Issuing Bank) and (y) each Trade Letter of Credit shall by its
terms terminate on or before the date occurring not later than 360 days
after such Trade Letter of Credit's date of issuance and (iii) (x) no
Standby Letter of Credit shall have an expiry date occurring later than the
third Business Day preceding the Final Maturity Date and (y) no Trade
Letter of Credit shall have an expiry date occurring later than 30 days
prior to the Final Maturity Date.
2.02 Minimum Stated Amount. The Stated Amount of each Letter
of Credit shall be not less than $50,000 or such lesser amount as is
acceptable to the respective Issuing Bank.
2.03 Letter of Credit Requests. (a) Whenever the Borrower
desires that a Letter of Credit be issued for its account, the Borrower
shall give the Agent and the respective Issuing Bank at least 5 days' (or
such shorter period as is acceptable to such Issuing Bank in any given
case) written notice prior to the proposed date of issuance (which shall be
a Business Day). Each notice shall be in the form of Exhibit C (each, a
"Letter of Credit Request").
(b) The making of each Letter of Credit Request shall be deemed
to be a representation and warranty by the Borrower that such Letter of
Credit may be issued in accordance with, and will not violate the
requirements of, Section 2.01(c). Unless the respective Issuing Bank has
received notice from the Required Banks before it issues a Letter of Credit
that one or more of the applicable conditions specified in Section 5 or 6,
as the case may be, are not then satisfied, or that the issuance of such
Letter of Credit would violate Section 2.01(c), then such Issuing Bank may
issue the requested Letter of Credit for the account of the Borrower in
accordance with such Issuing Bank's usual and customary practices.
2.04 Letter of Credit Participations. (a) Immediately upon
the issuance by any Issuing Bank of any Letter of Credit, such Issuing Bank
shall be deemed to have sold and transferred to each Bank, other than such
Issuing Bank (each such Bank, in its capacity under this Section 2.04, a
"Participant"), and each such Participant shall be deemed irrevocably and
unconditionally to have purchased and received from such Issuing Bank,
without recourse or warranty, an undivided interest and participation, to
the extent of such Participant's Percentage, in such Letter of Credit, each
substitute letter of credit, each drawing made thereunder and the
obligations of the Borrower under this Agreement with respect thereto, and
any security therefor or guaranty pertaining thereto. Upon any change in
the Commitments or Percentages of the Banks pursuant to Section 1.13 or
13.04, it is hereby agreed that, with respect to all outstanding Letters of
Credit and Unpaid Drawings, there shall be an automatic adjustment to the
participations pursuant to this Section 2.04 to reflect the new Percentages
of the assignor and assignee Bank or of all Banks, as the case may be.
(b) In determining whether to pay under any Letter of Credit,
such Issuing Bank shall have no obligation relative to the other Banks
other than to confirm that any documents required to be delivered under
such Letter of Credit appear to have been delivered and that they appear to
substantially comply on their face with the requirements of such Letter of
Credit. Any action taken or omitted to be taken by any Issuing Bank under
or in connection with any Letter of Credit issued by it if taken or omitted
in the absence of gross negligence or willful misconduct, shall not create
for such Issuing Bank any resulting liability to the Borrower or any Bank.
(c) In the event that any Issuing Bank makes any payment under
any Letter of Credit issued by it and the Borrower shall not have
reimbursed such amount in full to such Issuing Bank pursuant to Section
2.05(a), such Issuing Bank shall promptly notify the Agent, which shall
promptly notify each Participant of such failure, and each Participant
shall promptly and unconditionally pay to the Agent for the account of such
Issuing Bank the amount of such Participant's Percentage of such
unreimbursed payment in Dollars and in same day funds. If the Agent so
notifies, prior to 11:00 A.M. (New York time) on any Business Day, any
Participant required to fund a payment under a Letter of Credit, such
Participant shall make available to the Agent at the Payment Office of the
Agent for the account of the respective Issuing Bank in Dollars such
Participant's Percentage of the amount of such payment on such Business Day
in same day funds. If and to the extent such Participant shall not have so
made its Percentage of the amount of such payment available to the Agent
for the account of the respective Issuing Bank, such Participant agrees to
pay to the Agent for the account of such Issuing Bank, forthwith on demand
such amount, together with interest thereon, for each day from such date
until the date such amount is paid to the Agent for the account of such
Issuing Bank at the overnight Federal Funds Rate. The failure of any
Participant to make available to the Agent for the account of the
respective Issuing Bank its Percentage of any payment under any Letter of
Credit issued by it shall not relieve any other Participant of its
obligation hereunder to make available to the Agent for the account of such
Issuing Bank its Percentage of any such Letter of Credit on the date
required, as specified above, but no Participant shall be responsible for
the failure of any other Participant to make available to the Agent for the
account of such Issuing Bank such other Participant's Percentage of any
such payment.
(d) Whenever any Issuing Bank receives a payment of a
reimbursement obligation as to which the Agent has received for the account
of such Issuing Bank any payments from the Participants pursuant to clause
(c) above, such Issuing Bank shall pay to the Agent and the Agent shall
promptly pay each Participant which has paid its Percentage thereof, in
Dollars and in same day funds, an amount equal to such Participant's share
(based on the proportionate aggregate amount funded by such Participant to
the aggregate amount funded by all Participants) of the principal amount of
such reimbursement obligation and interest thereon accruing after the
purchase of the respective participations.
(e) Each Issuing Bank shall, promptly after each issuance of,
or amendment or modification to, a Standby Letter of Credit issued by it,
give the Agent, each Participant and the Borrower written notice of the
issuance of, or amendment or modification to, such Letter of Credit, which
notice shall be accompanied by a copy of such Standby Letter of Credit and
each such amendment or modification thereto.
(f) Each Issuing Bank (other than BTCo) shall deliver to the
Agent, promptly on the first Business Day of each week, by facsimile
transmission, a report setting forth the aggregate daily Stated Amount
available to be drawn under the outstanding Trade Letters of Credit issued
by such Issuing Bank for the previous week. The Agent shall, within 10
days after the last Business Day of each calendar month, deliver to each
Participant a report setting forth for such preceding calendar month the
aggregate daily Stated Amount available to be drawn under all outstanding
Trade Letters of Credit during such calendar month.
(g) The obligations of the Participants to make payments to the
Agent for the account of the respective Issuing Bank with respect to
Letters of Credit issued by it shall be irrevocable and not subject to any
qualification or exception whatsoever and shall be made in accordance with
the terms and conditions of this Agreement under all circumstances,
including, without limitation, any of the following circumstances:
(i) any lack of validity or enforceability of this Agreement
or any of the Credit Documents;
(ii) the existence of any claim, setoff, defense or other right
which any Credit Party or any of its Subsidiaries may have at any
time against a beneficiary named in a Letter of Credit, any
transferee of any Letter of Credit (or any Person for whom any such
transferee may be acting), the Agent, any Bank, any Issuing Bank, any
Participant, or any other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions contemplated herein
or any unrelated transactions (including any underlying transaction
between any Credit Party or any of its Subsidiaries and the
beneficiary named in any such Letter of Credit);
(iii) any draft, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue
or inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Credit
Documents; or
(v) the occurrence of any Default or Event of Default.
2.05 Agreement to Repay Letter of Credit Drawings. (a) The
Borrower hereby agrees to reimburse the respective Issuing Bank, by making
payment to the Agent in immediately available funds at the Payment Office
(or by making the payment directly to such Issuing Bank at such location as
may otherwise have been agreed upon by the Borrower and such Issuing Bank),
for any payment or disbursement made by such Issuing Bank under any Letter
of Credit issued by it (each such amount so paid until reimbursed, an
"Unpaid Drawing"), not later than the second Business Day after the Agent
or the Issuing Bank notifies the Borrower of such payment or disbursement,
with interest on the amount so paid or disbursed by such Issuing Bank, to
the extent not reimbursed prior to 12:00 Noon (New York time) on the date
of such payment or disbursement, from and including the date paid or
disbursed to but excluding the date such Issuing Bank is reimbursed by the
Borrower therefor at a rate per annum which shall be the Base Rate in
effect from time to time plus the Applicable Margin for Base Rate Loans,
provided, however, to the extent such amounts are not reimbursed prior to
12:00 Noon (New York time) on the third Business Day following notice to
the Borrower by the Agent or the respective Issuing Bank of such payment or
disbursement, interest shall thereafter accrue on the amounts so paid or
disbursed by such Issuing Bank (and until reimbursed by the Borrower) at a
rate per annum which shall be the Base Rate in effect from time to time
plus the Applicable Margin for Base Rate Loans plus 2%, in each such case,
with interest to be payable on demand; provided further, that it is
understood and agreed, however, that the notices referred to above in this
clause (a) and in the immediately preceding proviso shall not be required
to be given if a Default or an Event of Default under Section 10.05 shall
have occurred and be continuing (in which case the Unpaid Drawings shall be
due and payable immediately without presentment, demand, protest or notice
of any kind (all of which are hereby waived by each Credit Party) and shall
bear interest at the rate provided in the foregoing proviso on and after
the third Business Day following the respective Drawing). The respective
Issuing Bank shall give the Borrower prompt notice of each Drawing under
any Letter of Credit, provided that the failure to give any such notice
shall in no way affect, impair or diminish the Borrower's obligations
hereunder.
(b) The obligation of the Borrower under this Section 2.05 to
reimburse the respective Issuing Bank with respect to Unpaid Drawings
(including, in each case, interest thereon) shall be absolute and
unconditional under any and all circumstances and irrespective of any
setoff, counterclaim or defense to payment which any Credit Party may have
or have had against any Bank (including in its capacity as Issuing Bank or
as Participant), including, without limitation, any defense based upon the
failure of any drawing under a Letter of Credit (each, a "Drawing") to
conform to the terms of such Letter of Credit or any nonapplication or
misapplication by the beneficiary of the proceeds of such Drawing; the
respective Issuing Bank's only obligation to the Borrower being to confirm
that any documents required to be delivered under such Letter of Credit
appear to have been delivered and that they appear to substantially comply
on their face with requirements of such Letter of Credit; provided,
however, that the Borrower shall not be obligated to reimburse such Issuing
Bank for any wrongful payment made by such Issuing Bank under a Letter of
Credit issued by it as a result of acts or omissions constituting willful
misconduct or gross negligence on the part of such Issuing Bank. Any
action taken or omitted to be taken by any Issuing Bank under or in
connection with any Letter of Credit if taken or omitted in the absence of
gross negligence or willful misconduct, shall not create for such Issuing
Bank any resulting liability to the Borrower.
2.06 Increased Costs. If at any time after the date of this
Agreement any Issuing Bank or any Participant determines that the
introduction of or any change in any applicable law, rule, regulation,
order, guideline or request or in the interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof, or compliance by any Issuing Bank or any
Participant with any request or directive by any such authority (whether or
not having the force of law) shall either (i) impose, modify or make
applicable any reserve, deposit, capital adequacy or similar requirement
against Letters of Credit issued by any Issuing Bank or participated in by
any Participant, or (ii) impose on any Issuing Bank or any Participant any
other conditions relating, directly or indirectly, to this Agreement or any
Letter of Credit, and the result of any of the foregoing is to increase the
cost to any Issuing Bank or any Participant of issuing, maintaining or
participating in any Letter of Credit, or reduce the amount of any sum
received or receivable by any Issuing Bank or any Participant hereunder or
reduce the rate of return on its capital with respect to Letters of Credit,
then, upon demand to the Borrower by any Issuing Bank or any Participant (a
copy of which demand shall be sent by such Issuing Bank or such Participant
to the Agent), the Borrower shall pay to such Issuing Bank or such
Participant such additional amount or amounts as will compensate such Bank
for such increased cost or reduction in the amount receivable or reduction
on the rate of return on its capital. Any Issuing Bank or any Participant,
upon determining that any additional amounts will be payable pursuant to
this Section 2.06, will give prompt written notice thereof to the Borrower,
which notice shall include a certificate submitted to the Borrower by such
Issuing Bank or such Participant (a copy of which certificate shall be sent
by such Issuing Bank or such Participant to the Agent), setting forth the
basis for the calculation of such additional amount or amounts necessary to
compensate such Issuing Bank or such Participant, although failure to give
any such notice shall not release or diminish the Borrower's obligations to
pay additional amounts pursuant to this Section 2.06. The certificate
required to be delivered pursuant to this Section 2.06 shall, absent
manifest error, be final, conclusive and binding on the Borrower.
SECTION 3. Fees; Reductions of Commitment.
------------------------------
3.01 Fees. (a) The Borrower agrees to pay to the Agent for
distribution to each Non-Defaulting Bank a commitment commission (the
"Commitment Commission") for the period from the Effective Date to but not
including the Final Maturity Date (or such earlier date as the Total
Commitment shall have been terminated), computed at a rate equal to the
Applicable Commitment Commission Percentage on the daily average Unutilized
Commitment of such Non-Defaulting Bank as in effect from time to time.
Accrued Commitment Commission shall be due and payable in arrears on each
Quarterly Payment Date and on the Final Maturity Date or such earlier date
upon which the Total Commitment is terminated.
(b) The Borrower agrees to pay to the Agent for distribution to
each Non-Defaulting Bank with a Commitment (based on their respective
Percentages) a fee in respect of each Letter of Credit issued hereunder
(the "Letter of Credit Fee"), for the period from and including the date of
issuance of such Letter of Credit to and including the date of termination
of such Letter of Credit, computed at a rate per annum equal to (i) in the
case of a Standby Letter of Credit, the Applicable Margin for Eurodollar
Loans on the daily Stated Amount of such Standby Letter of Credit and (ii)
in the case of a Trade Letter of Credit, the Trade L/C Percentage on the
daily Stated Amount of such Trade Letter of Credit. Accrued Letter of
Credit Fees shall be due and payable quarterly in arrears on each Quarterly
Payment Date and upon the termination of the Total Commitment or the first
day thereafter upon which no Letters of Credit remain outstanding.
(c) The Borrower agrees to pay to the respective Issuing Bank,
for its own account, upon each payment under, issuance of, or amendment to,
any Letter of Credit, such amount as shall at the time of such event be the
administrative charge which such Issuing Bank is generally imposing in
connection with such occurrence with respect to letters of credit.
(d) The Borrower agrees to pay to the Agent, for its own
account, such other fees as have been agreed to in writing by the Borrower
and the Agent.
3.02 Voluntary Termination of Unutilized Commitments. (a)
Upon at least three Business Days' prior notice to the Agent at its Notice
Office (which notice the Agent shall promptly transmit to each of the
Banks), the Borrower shall have the right, at any time or from time to
time, without premium or penalty, to terminate the Total Unutilized
Commitment, in whole or in part, provided that (i) any partial reduction to
the Total Unutilized Commitment pursuant to this Section 3.02 shall be in
an amount of at least $500,000, and, if greater, in an integral multiple of
$100,000, (ii) any reduction to the Total Unutilized Commitment prior to
the Initial Borrowing Date may only be made in connection with a
termination in full of the Total Commitment, (iii) each such reduction
shall apply proportionately to permanently reduce the Commitment of each
Bank, and (iv) the reduction to the Total Unutilized Commitment shall in no
case be in an amount which would cause the Commitment of any Bank to be
reduced (as required by the preceding clause (iii)) by an amount which
exceeds the remainder of (x) the Unutilized Commitment of such Bank as in
effect immediately before giving effect to such reduction minus (y) such
Bank's Percentage of the aggregate principal amount of Swingline Loans then
outstanding. If at the time of any reduction to the Total Unutilized
Commitment pursuant to the preceding provisions of this Section 3.02(a) the
amount of the Blocked Commitment is in excess of $0, the Borrower may
specify (in its notice of the reduction to the Total Unutilized Commitment
pursuant to this Section 3.02(a)) that the amount of the reduction shall
also apply to reduce the amount of the Blocked Commitment as then in effect
(in which case the amount of the Blocked Commitment shall be so reduced) by
an amount equal to the lesser of (x) the amount of the Blocked Commitment
as in effect prior to the reduction pursuant to this sentence and (y) the
amount of the reduction to the Total Unutilized Commitment then being
effected pursuant to this Section 3.02(a).
(b) In the event of certain refusals by a Bank to consent to
certain proposed changes, waivers, discharges or terminations with respect
to this Agreement which have been approved by the Required Banks as
provided in Section 13.12(b), the Borrower may, upon five Business Days'
written notice to the Agent at its Notice Office (which notice the Agent
shall promptly transmit to each of the Banks) terminate all of the
Commitment of such Bank so long as all Revolving Loans, together with
accrued and unpaid interest, Fees and all other amounts owing to such Bank
are repaid concurrently with the effectiveness of such termination (at
which time Schedule I shall be deemed modified to reflect such changed
amounts), and at such time, such Bank shall no longer constitute a "Bank"
for purposes of this Agreement, except with respect to indemnifications
under this Agreement (including, without limitation, Sections 1.10, 1.11,
2.06, 4.04, 13.01 and 13.06), which shall survive as to such repaid Bank.
3.03 Mandatory Reduction of Commitments. (a) The Total
Commitment (and the Commitment of each Bank) shall terminate on November
30, 1996 unless the Initial Borrowing Date has occurred on or before such
date.
(b) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, the Total Commitment (and the Commitment of
each Bank) shall terminate in its entirety on the Final Maturity Date.
(c) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, on each date after the Effective Date upon
which the Borrower or any of its Subsidiaries receives any proceeds from
any incurrence by the Borrower or any of its Subsidiaries of Indebtedness
for borrowed money (other than Indebtedness for borrowed money permitted to
be incurred pursuant to Section 9.04 as such Section is in effect on the
Effective Date), the Total Commitment shall be reduced by an amount equal
to 100% of the Net Cash Proceeds therefrom.
(d) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, on each date on and after the Effective Date
on which the Borrower or any of its Subsidiaries receives any proceeds from
any Recovery Event, the Total Commitment shall be reduced by an amount
equal to 100% of the proceeds of such Recovery Event (net of reasonable
costs including, without limitation, reasonable legal costs and expenses,
and the estimated marginal increase in income taxes which will be payable
by the Borrower or any of its Subsidiaries in connection with such Recovery
Event); provided that (x) so long as no Default under Section 10.01 or
10.05 and no Event of Default then exists and such proceeds do not exceed
$7,500,000, such proceeds shall not be required to be so applied on such
date to the extent that an Authorized Officer of the Borrower has delivered
a certificate to the Agent on or prior to such date stating that such
proceeds shall be used or shall be committed to be used to replace or
restore any properties or assets in respect of which such proceeds were
paid within a period specified in such certificate not to exceed 180 days
after the date of receipt of such proceeds with respect to such Recovery
Event (which certificate shall set forth the estimates of the proceeds to
be so expended) and (y) so long as no Default under Section 10.01 or 10.05
and no Event of Default then exists and to the extent that (a) the amount
of such proceeds exceeds $7,500,000, (b) the amount of such proceeds equals
100% of the cost of replacement or restoration of the properties or assets
in respect of which such proceeds were paid as determined by the Borrower
and as supported by such estimates or bids from contractors or
subcontractors or such other supporting information as the Agent may
reasonably request, (c) an Authorized Officer of the Borrower has delivered
to the Agent a certificate on or prior to the date the application would
otherwise be required pursuant to this Section 3.03(d) in the form
described in clause (x) above and also certifying its determination as
required by preceding clause (b) and certifying the sufficiency of business
interruption insurance as required by succeeding clause (d), and (d) an
Authorized Officer of the Borrower has delivered to the Agent such evidence
as the Agent may reasonably request in form and substance reasonably
satisfactory to the Agent establishing that the Borrower has sufficient
business interruption insurance and that the Borrower will be receiving
regular payments thereunder in such amounts and at such times as are
necessary to satisfy all obligations and expenses of the Borrower
(including, without limitation, all debt service requirements, including
pursuant to this Agreement) without any delay or extension thereof, for the
period from the date of the respective casualty, condemnation or other
event giving rise to the Recovery Event and continuing through the
completion of the replacement or restoration of respective properties or
assets, then the entire amount of the proceeds of such Recovery Event and
not just the portion in excess of $7,500,000 shall be deposited with the
Agent pursuant to a cash collateral arrangement reasonably satisfactory to
the Agent whereby such proceeds shall be disbursed to the Borrower from
time to time as needed to pay actual costs incurred by it in connection
with the replacement or restoration of the respective properties or assets
(pursuant to such certification requirements as may be established by the
Agent), provided further that at any time while a Default exists under
either of Sections 10.01 or 10.05 or any Event of Default has occurred and
is continuing (other than an Event of Default existing solely as a result
of the violation of either or both of Sections 9.08 and 9.09, but in each
case only if, and to the extent, that the violation of said covenant has
occurred as a result of the underlying event giving rise to the Recovery
Event), the Required Banks may direct the Agent (in which case the Agent
shall, and is hereby authorized by the Borrower to, follow said directions)
to apply any or all proceeds then on deposit in such collateral account to
the repayment of Obligations hereunder in the same manner as proceeds would
be applied pursuant to the Security Agreement, and provided further, that
if all or any portion of such proceeds not required to be applied to reduce
the Total Commitment pursuant to the second preceding proviso (whether
pursuant to clause (x) or (y) thereof) are either (A) not so used or
committed to be so used within 180 days after the date of the respective
Recovery Event or (B) if committed to be used within 180 days after the
date of receipt of such net proceeds and not so used within 18 months after
the date of the respective Recovery Event then, in either such case, such
remaining portion not used or committed to be used in the case of preceding
clause (A) and not used in the case of preceding clause (B) shall be
applied on the date which is 180 days after the date of the respective
Recovery Event in the case of clause (A) above or the date occurring 18
months after the date of the respective Recovery Event in the case of
clause (B) above as a mandatory reduction in the Total Commitment.
(e) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, the Total Commitment shall be reduced (x) on
the Receivables Facility Transaction Date, by an amount equal to the
Initial Receivables Facility Proceeds received on such date by the Borrower
and the Designated Credit Parties and (y) on each date after the
Receivables Facility Transaction Date upon which Attributed Receivables
Facility Indebtedness is incurred, by the amount (if any) by which the
aggregate Attributed Receivables Facility Indebtedness at such time exceeds
the Receivables Facility Threshold Amount as then in effect.
(f) Each reduction to the Total Commitment pursuant to this
Section 3.03 shall be applied proportionately to reduce the Commitment of
each Bank.
SECTION 4. Prepayments; Payments; Taxes.
----------------------------
4.01 Voluntary Prepayments. (a) The Borrower shall have the
right to prepay the Loans, without premium or penalty, in whole or in part
at any time and from time to time on the following terms and conditions:
(i) an Authorized Officer of the Borrower shall give the Agent
prior to 12:00 Noon (New York time) at its Notice Office (x) at least
one Business Day's prior written notice (or telephonic notice
promptly confirmed in writing) of the Borrower's intent to prepay
Base Rate Loans (or, in the case of Swingline Loans, same day written
notice, so long as such notice is given prior to 1:00 P.M. (New York
time)) and (y) at least three Business Days' prior written notice (or
telephonic notice promptly confirmed in writing) of the Borrower's
intent to prepay Eurodollar Loans, whether Revolving Loans or
Swingline Loans shall be prepaid, the amount of such prepayment and
the Types of Loans to be prepaid and, in the case of Eurodollar
Loans, the specific Borrowing or Borrowings pursuant to which made,
which notice the Agent shall promptly transmit to each of the Banks;
(ii) each prepayment shall be in an aggregate principal amount
of at least $500,000 and, if greater, in an integral multiple of
$100,000 (or, in the case of Swingline Loans, $10,000 and, if
greater, in an integral multiple of $5,000), provided, that if any
partial prepayment of Eurodollar Loans made pursuant to any Borrowing
shall reduce the outstanding Eurodollar Loans made pursuant to such
Borrowing to an amount less than the Minimum Borrowing Amount
applicable thereto, then such Borrowing shall be converted at the end
of the then current Interest Period into a Borrowing of Base Rate
Loans and any election of an Interest Period with respect thereto
given by the Borrower shall have no force or effect;
(iii) each prepayment in respect of any Loans made pursuant to a
Borrowing shall, except as provided in clause (v) below and Section
4.01(b), be applied pro rata among such Loans;
(iv) any prepayment of Eurodollar Loans pursuant to this
Section 4.01(a) may only be made on the last day of an Interest
Period applicable thereto; and
(v) at the Borrower's election in connection with any
prepayment of Revolving Loans pursuant to this Section 4.01, such
prepayment shall not be applied to any Revolving Loan of a Defaulting
Bank.
(b) In the event of certain refusals by a Bank to consent to
certain proposed changes, waivers, discharges or terminations with respect
to this Agreement which have been approved by the Required Banks as
provided in Section 13.12(b), the Borrower shall have the right, upon five
Business Days' prior written notice to the Agent at its Notice Office
(which notice the Agent shall promptly transmit to each of the Banks) to
repay all Revolving Loans, together with accrued and unpaid interest, Fees,
and other amounts owing to such Bank in accordance with, and subject to the
requirements of, said Section 13.12(b), so long as (A) in the case of the
repayment of Revolving Loans of any Bank pursuant to this Section 4.01(b),
the Commitment of such Bank is terminated concurrently with such repayment
(at which time Schedule I shall be deemed modified to reflect the changed
Commitments) and (B) the consents required by Section 13.12(b) in
connection with the repayment pursuant to this Section 4.01(b) have been
obtained.
4.02 Mandatory Repayments and Cash Collateralizations. (a) On
any day on which the sum of the aggregate outstanding principal amount of
the Revolving Loans, Swingline Loans and the Letter of Credit Outstandings
exceeds the Total Available Commitment as then in effect, the Borrower
shall prepay on such day principal of Swingline Loans and after the
Swingline Loans have been repaid in full, the principal of Revolving Loans
in an amount equal to such excess. If, after giving effect to the
prepayment of all outstanding Swingline Loans and all outstanding Revolving
Loans, the aggregate amount of the Letter of Credit Outstandings exceeds
the Total Available Commitment as then in effect, the Borrower shall pay to
the Agent at the Payment Office on such date an amount of cash or Cash
Equivalents equal to the amount of such excess (up to a maximum amount
equal to the Letter of Credit Outstandings at such time), such cash or Cash
Equivalents to be held as security for all obligations of the Borrower to
Banks hereunder in a cash collateral account to be established by the
Agent.
(b) With respect to each repayment of Loans required by this
Section 4.02, the Borrower may designate the Types of Loans of the
respective Tranche which are to be repaid and, in the case of Eurodollar
Loans, the specific Borrowing or Borrowings of Revolving Loans pursuant to
which made, provided that: (i) repayments of Eurodollar Loans pursuant to
this Section 4.02 may only be made on the last day of an Interest Period
applicable thereto unless all Eurodollar Loans with Interest Periods ending
on such date of required repayment and all Base Rate Loans of the
respective Tranche have been paid in full; (ii) if any repayment of
Eurodollar Loans made pursuant to a single Borrowing shall reduce the
outstanding Eurodollar Loans made pursuant to such Borrowing to an amount
less than the Minimum Borrowing Amount applicable thereto, such Borrowing
shall be converted at the end of the then current Interest Period into a
Borrowing of Base Rate Loans; and (iii) each repayment of Loans made
pursuant to a Borrowing shall be applied pro rata among such Loans. In the
absence of a designation by the Borrower as described in the preceding
sentence, the Agent shall, subject to the above, make such designation in
its sole discretion.
(c) Notwithstanding anything to the contrary contained in this
Agreement, (i) all then outstanding Swingline Loans shall be repaid in full
on the Swingline Expiry Date and (ii) all Revolving Loans then outstanding
shall be repaid in full on the Final Maturity Date.
4.03 Method and Place of Payment. Except as otherwise
specifically provided herein, all payments under this Agreement or any Note
shall be made to the Agent for the account of the Bank or Banks entitled
thereto not later than 12:00 Noon (New York time) (or 1:00 P.M. (New York
time) in the case of Swingline Loans) on the date when due and shall be
made in Dollars in immediately available funds at the Payment Office of the
Agent. Whenever any payment to be made hereunder or under any Note shall
be stated to be due on a day which is not a Business Day, the due date
thereof shall be extended to the next succeeding Business Day and, with
respect to payments of principal, interest shall be payable at the
applicable rate during such extension.
4.04 Net Payments; Taxes. (a) All payments made by any Credit
Party hereunder or under any Note will be made without setoff, counterclaim
or other defense. Except as provided in Section 4.04(b), all such payments
will be made free and clear of, and without deduction or withholding for,
any present or future taxes, levies, imposts, duties, fees, assessments or
other charges of whatever nature now or hereafter imposed by any
jurisdiction or by any political subdivision or taxing authority thereof or
therein with respect to such payments (but excluding, except as provided in
the second succeeding sentence, any tax imposed on or measured by the net
income or net profits of a Bank, pursuant to the laws of the jurisdiction
in which it is organized or the jurisdiction in which the principal office
or applicable lending office of such Bank is located or any subdivision
thereof or therein) and all interest, penalties or similar liabilities with
respect to such non-excluded taxes, levies, imposts, duties, fees,
assessments or other charges (all such non-excluded taxes, levies, imposts,
duties, fees, assessments or other charges being referred to collectively
as "Taxes"). If any Taxes are so levied or imposed, the Borrower agrees to
pay the full amount of such Taxes, and such additional amounts as may be
necessary so that every payment of all amounts due under this Agreement or
under any Note, after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for herein or in such
Note. If any amounts are payable in respect of Taxes pursuant to the
preceding sentence, the Borrower agrees to reimburse each Bank, upon the
written request of such Bank, for taxes imposed on or measured by the net
income or net profits of such Bank pursuant to the laws of the jurisdiction
in which such Bank is organized or in which the principal office or
applicable lending office of such Bank is located or under the laws of any
political subdivision or taxing authority of any such jurisdiction in which
such Bank is organized or in which the principal office or applicable
lending office of such Bank is located and for any withholding of income or
similar taxes as such Bank shall determine are payable by, or withheld
from, such Bank in respect of such amounts so paid to or on behalf of such
Bank pursuant to the preceding sentence and in respect of any amounts paid
to or on behalf of such Bank pursuant to this sentence. The Borrower will
furnish to the Agent within 45 days after the date the payment of any Taxes
is due pursuant to applicable law certified copies of tax receipts
evidencing such payment by the Borrower. The Borrower agrees to indemnify
and hold harmless each Bank, and reimburse such Bank upon its written
request, for the amount of any Taxes so levied or imposed and paid by such
Bank.
(b) Each Bank that is not a United States person (as such term
is defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax
purposes agrees to deliver to the Borrower and the Agent on or prior to the
Effective Date, or in the case of a Bank that is an assignee or transferee
of an interest under this Agreement pursuant to Section 1.13 or 13.04
(unless the respective Bank was already a Bank hereunder immediately prior
to such assignment or transfer), on the date of such assignment or transfer
to such Bank, (i) two accurate and complete original signed copies of
Internal Revenue Service Form 4224 or 1001 (or successor forms) certifying
to such Bank's entitlement to a complete exemption from United States
withholding tax with respect to payments to be made under this Agreement
and under any Note, or (ii) if the Bank is not a "bank" within the meaning
of Section 881(c)(3)(A) of the Code and cannot deliver either Internal
Revenue Service Form 1001 or 4224 pursuant to clause (i) above, (x) a
certificate substantially in the form of Exhibit D (any such certificate, a
"Section 4.04(b)(ii) Certificate") and (y) two accurate and complete
original signed copies of Internal Revenue Service Form W-8 (or successor
form) certifying to such Bank's entitlement to a complete exemption from
United States withholding tax with respect to payments of interest to be
made under this Agreement and under any Note. In addition, each Bank
agrees that from time to time after the Effective Date, when a lapse in
time or change in circumstances renders the previous certification obsolete
or inaccurate in any material respect, it will deliver to the Borrower and
the Agent two new accurate and complete original signed copies of Internal
Revenue Service Form 4224 or 1001, or Form W-8 and a Section 4.04(b)(ii)
Certificate, as the case may be, and such other forms as may be required in
order to confirm or establish the entitlement of such Bank to a continued
exemption from or reduction in United States withholding tax with respect
to payments under this Agreement and any Note, or it shall immediately
notify the Borrower and the Agent of its inability to deliver any such Form
or Certificate, in which case such Bank shall not be required to deliver
any such Form or Certificate pursuant to this Section 4.04(b).
Notwithstanding anything to the contrary contained in Section 4.04(a), but
subject to Section 13.04(b) and the immediately succeeding sentence, (x)
the Borrower shall be entitled, to the extent it is required to do so by
law, to deduct or withhold income or similar taxes imposed by the United
States (or any political subdivision or taxing authority thereof or
therein) from interest, Fees or other amounts payable hereunder for the
account of any Bank which is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax
purposes to the extent that such Bank has not provided to the Borrower U.S.
Internal Revenue Service Forms that establish a complete exemption from
such deduction or withholding and (y) the Borrower shall not be obligated
pursuant to Section 4.04(a) to gross-up payments to be made to a Bank in
respect of income or similar taxes imposed by the United States if (I) such
Bank has not provided to the Borrower the Internal Revenue Service Forms
required to be provided to the Borrower pursuant to this Section 4.04(b) or
(II) in the case of a payment, other than interest, to a Bank described in
clause (ii) above, to the extent that such Forms do not establish a
complete exemption from withholding of such taxes. Notwithstanding
anything to the contrary contained in the preceding sentence or elsewhere
in this Section 4.04 and except as set forth in Section 13.04(b), the
Borrower agrees to pay additional amounts and to indemnify each Bank in the
manner set forth in Section 4.04(a) (without regard to the identity of the
jurisdiction requiring the deduction or withholding) in respect of any
Taxes deducted or withheld by it as described in the immediately preceding
sentence as a result of any changes after the Effective Date (or, if later,
the date such Bank became party to this Agreement) in any applicable law,
treaty, governmental rule, regulation, guideline or order, or in the
interpretation thereof, relating to the deducting or withholding of such
Taxes.
(c) If the Borrower pays any additional amount under this
Section 4.04 to a Bank and such Bank determines in its sole discretion that
it has actually received or realized in connection therewith any refund or
any reduction of, or credit against, its Tax liabilities in or with respect
to the taxable year in which the additional amount is paid, such Bank shall
pay to the Borrower an amount that the Bank shall, in its sole discretion,
determine is equal to the net benefit, after tax, which was obtained by the
Bank in such year as a consequence of such refund, reduction or credit.
SECTION 5. Conditions Precedent to Credit Events on the Initial
Borrowing Date. The obligation of each Bank to make Revolving Loans and
the Swingline Bank to make Swingline Loans, and the obligation of each
Issuing Bank to issue Letters of Credit, on the Initial Borrowing Date, is
subject at the time of the making of such Loans or the issuance of such
Letters of Credit to the satisfaction of the following conditions:
5.01 Execution of Agreement; Notes. On or prior to the Initial
Borrowing Date (i) the Effective Date shall have occurred and (ii) there
shall have been delivered to (x) the Agent for the account of each of the
Banks, the appropriate Revolving Note executed by the Borrower and (y) the
Swingline Bank, the Swingline Note executed by the Borrower, in each case
in the amount, maturity and as otherwise provided herein.
5.02 Officer's Certificate. On the Initial Borrowing Date, the
Agent shall have received a certificate, dated the Initial Borrowing Date
and signed on behalf of the Borrower by the President or any Vice President
of the Borrower, stating all of the conditions in Sections 5.03, 5.07
through 5.12, inclusive, 5.16, 5.21, 6.01, 6.02 and 6.03 have been
satisfied on such date.
5.03 Fees, etc. On the Initial Borrowing Date, the Borrower
shall have paid to the Agent and the Banks all costs, fees and expenses
(including, without limitation, legal fees and expenses) payable to the
Agent and the Banks to the extent then due.
5.04 Opinions of Counsel. On the Initial Borrowing Date, the
Agent shall have received (i) from Mayer, Brown & Platt, special counsel to
the Credit Parties, an opinion addressed to the Agent, the Collateral Agent
and each of the Banks and dated the Initial Borrowing Date covering the
matters set forth in Exhibit E-1 and such other matters incident to the
transactions contemplated hereby as the Agent may reasonably request, (ii)
from Bryan, Cave, special counsel to the Credit Parties, an opinion
addressed to the Agent, the Collateral Agent and each of the Banks and
dated the Initial Borrowing Date covering the matters set forth in Exhibit
E-2 and such other matters incident to the transactions contemplated hereby
as the Agent may reasonably request, (iii) from counsel rendering such
opinions, reliance letters addressed to the Agent and each of the Banks and
dated the Initial Borrowing Date with respect to all legal opinions
delivered in connection with the Acquisition, with such legal opinions to
be in form and substance satisfactory to the Agent and (iv) from local
counsel satisfactory to the Agent, opinions each of which (x) shall be
addressed to the Agent, the Collateral Agent and each of the Banks and
dated the Initial Borrowing Date, (y) shall be required to be in form and
substance satisfactory to the Agent and (z) shall cover the perfection of
the security interests granted pursuant to the Security Documents and such
other matters incident to the transactions contemplated herein as the Agent
may reasonably request.
5.05 Corporate Documents; Proceedings; etc. (a) On the
Initial Borrowing Date, the Agent shall have received a certificate, dated
the Initial Borrowing Date, signed by the President or any Vice President
of each Credit Party, and attested to by the Secretary or any Assistant
Secretary of such Credit Party, in the form of Exhibit F with appropriate
insertions, together with copies of the certificate of incorporation and
by-laws (or equivalent organizational documents) of such Credit Party and
the resolutions of such Credit Party referred to in such certificate, and
the foregoing shall be acceptable to the Agent and the Required Banks.
(b) All corporate and legal proceedings and all instruments and
agreements in connection with the transactions contemplated by this
Agreement and the other Documents shall be satisfactory in form and
substance to the Agent and the Required Banks, and the Agent shall have
received all information and copies of all documents and papers, including
records of corporate proceedings, governmental approvals, good standing
certificates and bring-down telegrams or facsimiles, if any, which the
Agent may have requested in connection therewith, such documents and papers
where appropriate to be certified by proper corporate or governmental
authorities.
(c) On the Initial Borrowing Date and after giving effect to
the Transaction, the capital structure (including, without limitation, the
terms of any capital stock, options, warrants or other securities issued by
Parent or any of its Subsidiaries) and management of Parent and its
Subsidiaries shall be in form and substance satisfactory to the Agent and
the Required Banks.
5.06 Employee Benefit Plans; Shareholders' Agreements;
Management Agreements; Employment Agreements; Collective Bargaining
Agreements; Debt Agreements; Tax Sharing Agreements; Material Contracts.
On or prior to the Initial Borrowing Date, there shall have been delivered
to the Agent true and correct copies, certified as true and complete by an
appropriate officer of the Borrower of:
(i) all "employee benefit plans" as defined in Section 3(3) of
ERISA, any profit sharing plans and deferred compensation plans, and
any other plans or arrangements for the benefit of employees of
Parent or any of its Subsidiaries (collectively, the "Employee
Benefit Plans");
(ii) all agreements (including, without limitation,
shareholders' agreements, subscription agreements and registration
rights agreements) entered into by Parent or any of its Subsidiaries
governing the terms and relative rights of its capital stock and any
agreements entered into by shareholders relating to any such entity
with respect to its capital stock (collectively, the "Shareholders'
Agreements");
(iii) all agreements with members of, or with respect to, the
management of Parent or any of its Subsidiaries (collectively, the
"Management Agreements");
(iv) any employment agreements entered into by Parent or any of
its Subsidiaries (collectively, the "Employment Agreements");
(v) all collective bargaining agreements applying or relating
to any employee of Parent or any of its Subsidiaries (collectively,
the "Collective Bargaining Agreements");
(vi) all agreements evidencing or relating to Indebtedness of
Parent or any of its Subsidiaries which is to remain outstanding
after giving effect to the incurrence of Loans on the Initial
Borrowing Date (collectively, the "Debt Agreements");
(vii) tax sharing, tax allocation and other similar agreements
entered into by Parent or any of its Subsidiaries, including, without
limitation, the Existing Tax Sharing Agreement (collectively, the
"Tax Sharing Agreements"); and
(viii) all other material contracts and licenses of Parent and
any of its subsidiaries (collectively, the "Material Contracts");
all of which Employee Benefit Plans, Shareholders' Agreements, Management
Agreements, Employment Agreements, Collective Bargaining Agreements, Debt
Agreements, Tax Sharing Agreements and Material Contracts shall be in form
and substance satisfactory to the Agent and the Required Banks and shall be
in full force and effect on the Initial Borrowing Date.
5.07 Adverse Change. Since December 31, 1995, nothing shall
have occurred (and the Banks shall have become aware of no facts,
conditions or other information not previously known) which the Agent or
the Required Banks shall reasonably determine could have a material adverse
effect as of the Initial Borrowing Date (i) on the Transaction, (ii) on the
rights or remedies of the Agent or the Banks, or on the ability of any
Credit Party to perform their respective obligations to the Agent and the
Banks or (iii) on the performance, business, operations, property, assets,
nature of assets, liabilities, condition (financial or otherwise) or
prospects of the Acquired Business, Parent, the Borrower, Parent and its
Subsidiaries taken as a whole or the Borrower and its Subsidiaries taken as
a whole.
5.08 Litigation. On the Initial Borrowing Date, no litigation
by any entity (private or governmental) shall be pending or threatened with
respect to (i) the Transaction, the making of the Loans, the issuance of
Letters of Credit, this Agreement, the other Documents or any documentation
executed in connection herewith or with respect to the Transaction or the
transactions contemplated hereby or thereby or with respect to any Existing
Indebtedness or (ii) which the Agent or the Required Banks shall reasonably
determine could have a materially adverse effect on (x) the Transaction or
on the rights or remedies of the Agent or the Banks, or on the ability of
the Credit Parties to perform their respective obligations to the Agent and
the Banks or (y) on the performance, business, operations, property,
assets, nature of assets, liabilities, condition (financial or otherwise)
or prospects of the Acquired Business, Parent, the Borrower, Parent and its
Subsidiaries taken as a whole or the Borrower and its Subsidiaries taken as
a whole.
5.09 Approvals, etc. On or prior to the Initial Borrowing
Date, (i) all necessary governmental (domestic and foreign) and third party
approvals in connection with the Credit Documents and otherwise referred to
herein or therein shall have been obtained and remain in full force and
effect and evidence thereof shall have been provided to the Agent, (ii) all
necessary material governmental (domestic and foreign) and third party
approvals in connection with the Transaction, the transactions contemplated
by the Documents (other than the Credit Documents) and otherwise referred
to therein shall have been obtained and remain in full force and effect and
evidence thereof shall have been provided to the Agent, and (iii) all
applicable waiting periods shall have expired without any action being
taken by any competent authority which restrains, prevents or imposes
materially adverse conditions upon the consummation of the Transaction, the
making of the Loans, the issuance of Letters of Credit and the transactions
contemplated by the Documents or otherwise referred to herein or therein.
Additionally, there shall not exist any judgment, order, injunction or
other restraint issued or filed or a hearing seeking injunctive relief or
other restraint pending or notified prohibiting or imposing materially
adverse conditions upon the Transaction or the making of the Loans, the
issuance of Letters of Credit or the transactions contemplated by the
Documents.
5.10 Issuance of Senior Unsecured Notes. (a) On or prior to
the Initial Borrowing Date, (i) Parent shall have received gross cash
proceeds of at least $170,000,000 from the issuance of the Senior Unsecured
Notes (it being understood that such cash proceeds shall include all
amounts directly applied to pay underwriting and placement commissions and
discounts and related fees), (ii) Parent shall have loaned on a
subordinated basis and pursuant to the Parent Subordinated Intercompany
Note as referred to in Section 5.23, the amount of the net cash proceeds
from the issuance of the Senior Unsecured Notes to the Borrower, (iii) the
Borrower shall have utilized the full amount of the subordinated
intercompany loan referred to in preceding clause (iii) to make payments
owing in connection with the Transaction prior to, or concurrently with,
the utilization of any proceeds of Loans for such purpose and (v) the
amount of such proceeds from the issuance of the Senior Unsecured Notes,
when aggregated with up to $5 million of Revolving Loans incurred on the
Initial Borrowing Date, shall be sufficient to effect the Acquisition and
the Refinancing and to pay all fees and expenses arising in connection with
Transaction.
(b) On or prior to the Initial Borrowing Date, the Agent shall
have received true and correct copies of the Senior Unsecured Note
Documents, certified as such by an appropriate officer of the Borrower,
each of which shall have been duly authorized, executed and delivered by
all parties thereto and shall be in full force and effect and in form and
substance satisfactory to the Agent and the Required Banks. The terms and
conditions of the Senior Unsecured Notes (including, without limitation,
amortization, maturities, interest rates, limitations on cash interest
payable, guaranty provisions, security therefor, covenants, defaults,
remedies, redemption provisions and change of control provisions), shall be
in form and substance satisfactory to the Agent and the Required Banks.
5.11 Consummation of the Acquisition and the Merger. (a) On
or prior to the Initial Borrowing Date, there shall have been delivered to
the Agent and the Banks true and correct copies of all Acquisition
Documents and all Merger Documents, certified as such by an officer of the
Borrower, and all terms and conditions of the Acquisition Documents and all
Merger Documents shall be in form and substance satisfactory to the Agent
and the Required Banks and shall not be amended without the consent of the
Required Banks. Each of the Acquisition and the Merger, including all of
the terms and conditions thereof, shall have been duly approved by the
board of directors and (if required by applicable law) the shareholders of
Parent, MK Group, the Borrower, Acquisition Corp., Imperial, Scott and
Gear, and all Acquisition Documents and all Merger Documents shall have
been duly executed and delivered by the parties thereto and shall be in
full force and effect. The representations and warranties set forth in the
Acquisition Documents and the Merger Documents shall be true and correct in
all material respects as if made on and as of the Initial Borrowing Date,
and each of the conditions precedent to (i) Acquisition Corp.'s obligation
to consummate the Acquisition as set forth in the Acquisition Documents and
(ii) Parent's and MK Group's obligations to consummate the Merger shall
have been satisfied to the satisfaction of the Agent and the Required Banks
or waived with the consent of the Agent and the Required Banks.
(b) On the Initial Borrowing Date and concurrently with the
Credit Events then occurring, the Acquisition shall have been consummated
in accordance with all applicable law and the Acquisition Documents
(without giving effect to any amendment or modification thereof or waiver
with respect thereto unless consented to by the Agent and the Required
Banks). The total consideration (excluding the payment of fees and
expenses) in connection with the Acquisition shall not exceed the Purchase
Price. On the Initial Borrowing Date and immediately after giving effect
to the Acquisition, Acquisition Corp. shall have contributed (as an equity
contribution or in return for one or more Transaction Intercompany Notes as
described in Section 5.23(b)) that portion of the Acquired Business
acquired from Scott and Gear to Scott Acquisition Sub. and Gear Acquisition
Sub., respectively, in accordance with all applicable law (the "Asset
Contribution").
(c) On the Initial Borrowing Date and concurrently with the
Credit Events then occurring, the Merger shall have been consummated in
compliance with the Merger Documents and all applicable laws. No cash
consideration shall be payable in connection with the Merger.
Additionally, on the Initial Borrowing Date, (i) the certificate of merger
with respect to the Merger shall have been filed with the Secretaries of
State of the States of Delaware and Illinois and (ii) Parent shall have
contributed (as a common equity contribution) all of the capital stock of
Merkle to the Borrower in accordance with all applicable law (the "MK Stock
Contribution").
5.12 Refinancing of Existing Credit Agreement. (a) On the
Initial Borrowing Date and concurrently with the Credit Events then
occurring, (i) the total commitments under the Existing Credit Agreement
shall have been terminated, and all loans thereunder shall have been repaid
in full, together with interest thereon, (ii) all other amounts owing
pursuant to the Existing Credit Agreement shall have been repaid in full,
(iii) the Existing Credit Agreement shall have been terminated and (iv) the
Agent shall have received evidence in form, scope and substance
satisfactory to it and the Required Banks that the matters set forth in
this Section 5.12 have been satisfied on such date. On the Initial
Borrowing Date and concurrently with the Credit Events then occurring, the
creditors under the Existing Credit Agreement shall have terminated and
released all security interests and Liens on the capital stock of MK Group
or any of its Subsidiaries, or any other assets owned by MK Group or any of
its Subsidiaries granted in connection with the Existing Credit Agreement.
The Agent shall have received such releases of security interests in and
Liens on the capital stock of MK Group or any of its Subsidiaries, or any
other assets owned by MK Group and its Subsidiaries, as may have been
requested by the Agent or the Required Banks, which releases shall be in
form and substance satisfactory to the Agent and the Required Banks.
Without limiting the foregoing, there shall have been delivered (w) proper
termination statements (Form UCC-3 or the appropriate equivalent) for
filing under the UCC of each jurisdiction where a financing statement (Form
UCC-1 or the appropriate equivalent) was filed with respect to MK Group or
any of its Subsidiaries in connection with the security interests created
with respect to the Existing Credit Agreement and the documentation related
thereto, (x) termination or reassignment of any security interest in, or
Lien on, any patents, trademarks, copyrights, or similar interests of MK
Group or any of its Subsidiaries on which filings have been made, (y)
terminations of all mortgages, leasehold mortgages and deeds of trust
created with respect to property of MK Group or any of its Subsidiaries, in
each case, to secure the obligations under the Existing Credit Agreement,
all of which shall be in form and substance satisfactory to the Agent and
the Required Banks, and (z) all collateral owned by MK Group or any of its
Subsidiaries in the possession of Bankers Trust Company, in its capacity as
agent under the Existing Credit Agreement or collateral agent under any
related security document or any other agent, collateral agent or trustee
for the creditors under the Existing Credit Agreement.
5.13 Pledge Agreement. On the Initial Borrowing Date, each of
the Borrower and each Domestic Subsidiary of the Borrower shall have duly
authorized, executed and delivered a Pledge Agreement in the form of
Exhibit G (as modified, supplemented or amended from time to time, the
"Pledge Agreement") and shall have delivered to the Collateral Agent, as
Pledgee, all the Pledged Securities referred to therein then owned by such
Credit Party, (x) endorsed in blank in the case of promissory notes
constituting Pledged Securities and (y) together with executed and undated
irrevocable stock powers, in the case of capital stock constituting Pledged
Securities, and the Pledge Agreement shall be in full force and effect.
5.14 Security Agreement. On the Initial Borrowing Date, each
of the Borrower and each Domestic Subsidiary of the Borrower shall have
duly authorized, executed and delivered a Security Agreement in the form of
Exhibit H (as modified, supplemented or amended from time to time, the
"Security Agreement") covering all of such Credit Party's present and
future Security Agreement Collateral, in each case together with:
(a) proper Financing Statements (Form UCC-1 or the appropriate
local equivalent) fully executed for filing under the UCC or the
appropriate local equivalent of each jurisdiction as may be necessary
or, in the opinion of the Collateral Agent, desirable to perfect the
security interests purported to be created by the Security Agreement;
(b) certified copies of Requests for Information or Copies
(Form UCC-11), or equivalent reports, of a recent date listing all
effective financing statements that name any Credit Party, Imperial,
Scott or Gear or any division or other operating unit of such Credit
Party, Imperial, Scott or Gear, as debtor and that are filed in the
jurisdictions referred to in clause (a) above, together with copies
of such other financing statements (none of which shall cover the
Collateral except to the extent evidencing Permitted Liens or in
respect of which the Collateral Agent shall have received termination
statements (Form UCC-3 or the equivalent) or such other termination
statements as shall be required by local law) fully executed for
filing;
(c) evidence of the completion of all other recordings and
filings of, or with respect to, the Security Agreement as may be
necessary or, in the opinion of the Collateral Agent, desirable to
perfect the security interests intended to be created by the Security
Agreement; and
(d) evidence that all other actions necessary or, in the
opinion of the Collateral Agent, desirable to perfect and protect the
security interests purported to be created by the Security Agreement
have been taken;
and the Security Agreement shall be in full force and effect.
5.15 Subsidiary Guaranty. On the Initial Borrowing Date, each
Domestic Subsidiary of the Borrower shall have duly authorized, executed
and delivered the Subsidiary Guaranty in the form of Exhibit I hereto (as
modified, supplemented or amended from time to time, the "Subsidiary
Guaranty"), and the Subsidiary Guaranty shall be in full force and effect.
5.16 Stockholders' Agreement, Subscription Agreements,
Consulting Agreements, Affiliate Leases, etc. On or prior to the Initial
Borrowing Date, the Agent and the Banks shall have received true and
correct copies of each of the JII Services Agreement, the Stockholders'
Agreement, the Management Subscription Agreement, the Director Indemnity
Agreement, each Intercompany Management Consulting Agreement, each M&G
Holdings Management Consulting Agreement, each TJC Management Services
Agreement and each Affiliate Lease, certified as such by an officer of the
Borrower, each of which shall have been duly authorized, executed and
delivered by the respective parties thereto and shall be in full force and
effect and in form and substance satisfactory (including all terms and
conditions thereof), satisfactory to the Agent and the Required Banks.
5.17 Consent Letter. On the Initial Borrowing Date, the Agent
shall have received a letter from CT Corporation System, presently located
at 1633 Broadway, New York, New York 10019, substantially in the form of
Exhibit J, indicating its consent to its appointment by each Credit Party
as its agent to receive service of process as specified in Section 13.08
and, if applicable, in the Guaranties.
5.18 Solvency Certificate; Environmental Assessments; and
Insurance Certificates. On or prior to the Initial Borrowing Date, there
shall have been delivered to the Agent:
(a) a solvency certificate addressed to the Agent and each of
the Banks and dated the Initial Borrowing Date from any Authorized
Officer of the Borrower, which solvency certificate shall be in the
form of Exhibit K (appropriately completed), expressing opinions of
value and other appropriate factual information regarding the
solvency of the Borrower (on a stand-alone basis) and the Borrower
and its Subsidiaries (on a consolidated basis), in each case after
giving effect to the Transaction and the incurrence of all financings
contemplated herein;
(b) evidence of insurance (including, without limitation,
business interruption insurance) complying with the requirements of
Section 8.03 for the business and properties of the Borrower and its
Subsidiaries (including, without limitation, the Acquired Business),
in scope, form and substance satisfactory to the Agent and the
Required Banks and naming each of the Collateral Agent, the Agent and
each Bank as an additional insured and the Collateral Agent, on
behalf of the Secured Creditors, as mortgagee/secured party and loss
payee, and stating that such insurance shall not be cancelled or
materially changed without at least 30 days' prior written notice by
the insurer to the Collateral Agent.
5.19 Existing Indebtedness. On the Initial Borrowing Date and
after giving effect to the Transaction and the Loans incurred on the
Initial Borrowing Date, neither Parent nor any of its Subsidiaries shall
have any preferred stock or Indebtedness outstanding except for (i) the
Loans, (ii) the Senior Unsecured Notes (which shall constitute Indebtedness
of Parent only), (iii) Indebtedness existing pursuant to the Earnout
Agreement, (iv) Indebtedness of Merkle in an aggregate principal amount not
to exceed $90 million represented by the Existing Seller Installment Note,
(v) Indebtedness of Merkle in an aggregate principal amount not to exceed
$5 million represented by the Existing Seller Subordinated Note, (vi)
Indebtedness existing pursuant to the Existing Seller Letter of Credit, the
Existing Seller Letter of Credit Collateral Agreement and the Existing
Seller Letter of Credit Agreement, (vii) Indebtedness of the Borrower
pursuant to the Parent Subordinated Intercompany Note, (viii) Indebtedness
pursuant to one or more Transaction Intercompany Notes and (ix) certain
intercompany indebtedness and other indebtedness as is listed on Schedule
VI (with the Indebtedness described in this clause (x) being herein called
"Scheduled Existing Indebtedness" and, together with the Indebtedness
described in clauses, (iv), (v) and (vi) above being herein called the
"Existing Indebtedness"), which Scheduled Existing Indebtedness shall not
exceed $25,000,000 in aggregate principal amount. On and as of the Initial
Borrowing Date, all of the Existing Indebtedness shall remain outstanding
after giving effect to the Transaction and the other transactions
contemplated hereby without any default or events of default existing
thereunder or arising as a result of the Transaction and the other
transactions contemplated hereby (except to the extent amended or waived by
the parties thereto on terms and conditions satisfactory to the Agent and
the Required Banks), and there shall not be any amendments or modifications
to the Debt Agreements other than as requested or approved by the Agent or
the Required Banks. On and as of the Initial Borrowing Date, the Agent and
the Required Banks shall be satisfied with the amount of and the terms and
conditions of all Existing Indebtedness.
5.20 Financial Statements; Pro Forma Financial Information;
Projections. (a) On or prior to the Initial Borrowing Date, the Banks
shall have received all of the financial statements referred to in Section
7.05(a) and such financial statements (i) shall be in form and substance
satisfactory to the Agent and the Required Banks and (ii) shall not
disclose any material adverse differences in the financial condition of the
Acquired Business or Parent and its Subsidiaries taken as a whole from that
previously disclosed to the Agent and the Required Banks.
(b) On or prior to the Initial Borrowing Date, the Banks shall
have received detailed consolidated financial projections, certified by the
Chief Financial Officer of the Borrower, for Parent and its Subsidiaries,
which include the projected results of the Acquired Business, and after
giving effect to the Transaction and the related financing therefor
(including the Loans and the Senior Unsecured Notes) and the other
transactions contemplated hereby, for the ten fiscal years ended after the
Initial Borrowing Date (the "Projections"), which Projections, and the
supporting assumptions and explanations thereto, shall be reasonably
satisfactory in form and substance to the Agent and the Required Banks and
shall be as set forth on Schedule IV hereto.
5.21 Existing Tax Sharing Agreement. On the Initial Borrowing
Date, each of the Borrower, Acquisition Corp., Scott Acquisition Sub. and
Gear Acquisition Sub. shall have executed and delivered a counterpart to
the Existing Tax Sharing Agreement or an amendment thereto, in any such
case so as to become a party to the Existing Tax Sharing Agreement and the
Agent and the Banks shall have received true and correct copies of such
counterparts or amendments (as well as the Existing Tax Sharing Agreement),
certified as such by an officer of the Borrower, each of which shall be in
full force and effect.
5.22 Existing Seller Letter of Credit Agreement. On or prior
to the Initial Borrowing Date, Parent and Merkle shall have executed and
delivered an amendment to the Existing Seller Letter of Credit Agreement in
form and substance satisfactory to the Agent and the Required Banks.
5.23 Intercompany Notes. (a) On the Initial Borrowing Date,
the Borrower shall have executed and delivered to Parent a subordinated
promissory note in the aggregate principal amount of $170 million in the
form attached hereto as Exhibit S (the "Parent Subordinated Intercompany
Note"), which promissory note shall (i) mature on November 15, 2006, (ii)
be voluntarily prepayable by the Borrower at its option (except that any
voluntary prepayment of the Parent Subordinated Intercompany Note to be
used by Parent to repay the outstanding principal of the Senior Unsecured
Notes shall be accompanied by the amount of premium to be used by Parent in
connection with such principal repayment of outstanding Senior Unsecured
Notes), (iii) contain no mandatory prepayment or acceleration provisions
and (iv) bear interest at the same rate as is payable with respect to the
Senior Unsecured Notes.
(b) In connection with the Transaction, and as consideration in
connection therewith, each of Merkle, Scott Acquisition Sub., Gear
Acquisition Sub., and/or Acquisition Corp. may execute and deliver to the
Borrower (or to Acquisition Corp. in the case of the promissory notes
issued by Scott Acquisition Sub. and Gear Acquisition Sub.) one or more
promissory notes, in each case so long as the respective such promissory
note is pledged to the Collateral Agent pursuant to the terms of the Pledge
Agreement (with each such promissory note being herein called a
"Transaction Intercompany Note" and, collectively, the "Transaction
Intercompany Notes").
SECTION 6. Conditions Precedent to All Credit Events. The
obligation of each Bank to make Revolving Loans (including Revolving Loans
made on the Initial Borrowing Date but excluding Mandatory Borrowings made
thereafter, which shall be made as provided in Section 1.01(c)) and of the
Swingline Bank to make Swingline Loans, and the obligation of an Issuing
Bank to issue any Letter of Credit, is subject, at the time of each such
Credit Event (except as hereinafter indicated), to the satisfaction of the
following conditions:
6.01 No Default; Representations and Warranties. At the time
of each such Credit Event and also after giving effect thereto (i) there
shall exist no Default or Event of Default and (ii) all representations and
warranties contained herein and in the other Credit Documents shall be true
and correct in all material respects with the same effect as though such
representations and warranties had been made on the date of the making of
such Credit Event (it being understood and agreed that any representation
or warranty which by its terms is made as of a specified date shall be
required to be true and correct in all material respects only as of such
specified date).
6.02 Adverse Change, etc. Nothing shall have occurred (and the
Banks shall have become aware of no facts or conditions not previously
known) which could reasonably be expected to have a material adverse effect
on (x) the rights or remedies of the Banks or the Agent, (y) on the ability
of the Borrower or any other Credit Party to perform its obligations to the
Banks or (z) on the performance, business, operations, property, assets,
nature of assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower, the Borrower and its Subsidiaries taken as a
whole or the Parent and its Subsidiaries taken as a whole.
6.03 Litigation. At the time of each such Credit Event and
also after giving effect thereto, no litigation by any entity (private or
governmental) shall be pending or threatened with respect to this Agreement
or any other Document or the transactions contemplated hereby or thereby or
which could reasonably be expected to have a materially adverse effect on
the performance, business, operations, property, assets, nature of assets,
liabilities, condition (financial or otherwise) or prospects of the
Borrower, the Borrower and its Subsidiaries taken as a whole or the Parent
and its Subsidiaries taken as a whole.
6.04 Notice of Borrowing; Letter of Credit Request. (a) Prior
to the making of each Loan (other than a Swingline Loan or a Mandatory
Borrowing), the Agent shall have received a Notice of Borrowing meeting the
requirements of Section 1.03(a). Prior to the making of each Swingline
Loan, the Swingline Bank shall have received the notice referred to in
Section 1.03(b)(i).
(b) Prior to the issuance of each Letter of Credit, the Agent
and the respective Issuing Bank shall have received a Letter of Credit
Request meeting the requirements of Section 2.03(a).
The occurrence of the Initial Borrowing Date and the acceptance
of the benefits or proceeds of each Credit Event shall constitute a
representation and warranty by the Borrower to the Agent and each of the
Banks that all the conditions specified in Section 5 and in this Section 6
and applicable to such Credit Event exist as of that time. All of the
Notes, certificates, legal opinions and other documents and papers referred
to in Section 5 and in this Section 6, unless otherwise specified, shall be
delivered to the Agent at the Notice Office for the account of each of the
Banks and, except for the Notes, in sufficient counterparts for each of the
Banks and shall be in form and substance reasonably satisfactory to the
Banks.
SECTION 7. Representations and Warranties. In order to induce
the Banks to enter into this Agreement and to make the Loans, and issue (or
participate in) the Letters of Credit as provided herein, the Borrower
makes the following representations, warranties and agreements, in each
case after giving effect to the Transaction, all of which shall survive the
execution and delivery of this Agreement and the Notes and the making of
the Loans and issuance of the Letters of Credit, with the occurrence of
each Credit Event on or after the Initial Borrowing Date being deemed to
constitute a representation and warranty that the matters specified in this
Section 7 are true and correct on and as of the Initial Borrowing Date and
on the date of each such Credit Event (it being understood and agreed that
any representation or warranty which by its terms is made as of a specified
date shall be required to be true and correct in all material respects only
as of such specified date):
7.01 Corporate Status. The Borrower and each of its
Subsidiaries (i) is a duly organized and validly existing corporation in
good standing under the laws of the jurisdiction of its organization, (ii)
has the corporate power and authority to own its property and assets and to
transact the business in which it is engaged and presently proposes to
engage and (iii) is duly qualified and is authorized to do business and is
in good standing in each jurisdiction where the conduct of its business
requires such qualifications except for failures to be so qualified which,
individually or in the aggregate, could not reasonably be expected to have
a material adverse effect on the performance, business, operations,
property, assets, nature of assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower or the Borrower and its
Subsidiaries taken as a whole.
7.02 Corporate Power and Authority. Each Credit Party has the
corporate power and authority to execute, deliver and perform the terms and
provisions of each of the Documents to which it is a party and has taken
all necessary corporate action to authorize the execution, delivery and
performance by it of each of such Documents. Each Credit Party has duly
executed and delivered each of the Documents to which it is a party, and
each of such Documents constitutes the legal, valid and binding obligation
of such Credit Party enforceable in accordance with its terms, except to
the extent that the enforceability thereof may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization or other
similar laws generally affecting creditors' rights and by equitable
principles (regardless of whether enforcement is sought in equity or at
law).
7.03 No Violation. Neither the execution, delivery or
performance by any Credit Party of the Documents to which it is a party,
nor compliance by it with the terms and provisions thereof, nor
consummation of the Transaction or the other transactions contemplated
herein or therein, (i) will contravene any provision of any applicable law,
statute, rule or regulation or any applicable order, writ, injunction or
decree of any court or governmental instrumentality, (ii) will conflict or
be inconsistent with or result in any breach of any of the terms,
covenants, conditions or provisions of, or constitute a default under, or
result in the creation or imposition of (or the obligation to create or
impose) any Lien (except pursuant to the Security Documents and, after same
have been entered into, the Receivables Facility Documents) upon any of the
properties or assets of (x) the Borrower or any of its Subsidiaries
pursuant to the terms of any indenture, mortgage, deed of trust, credit
agreement or loan agreement, or any other agreement, contract or
instrument, to which the Borrower or any of its Subsidiaries is a party
(including, without limitation, the Existing Indebtedness) or by which it
or any of its property or assets is bound or to which it may be subject or
(y) Parent pursuant to the terms of any Senior Unsecured Note Document or
(iii) will violate any provision of the certificate of incorporation or
by-laws (or equivalent organizational documents) of Parent or any of its
Subsidiaries.
7.04 Governmental Approvals. (a) No order, consent, approval,
license, authorization or validation of, or filing, recording or
registration with (except as have been obtained or made prior to the date
when required and which remain in full force and effect), or exemption by,
any governmental or public body or authority, or any subdivision thereof,
is required to authorize, or is required in connection with, (i) the
execution, delivery and performance of any Credit Document or (iii) the
legality, validity, binding effect or enforceability of any such Credit
Document.
(b) No material order, consent, approval, license,
authorization or validation of, or filing, recording or registration with
(except as have been obtained or made prior to the date when required and
which remain in full force and effect), or exemption by, any governmental
or public body or authority, or any subdivision thereof, is required to
authorize, or is required in connection with, (i) the Transaction, (ii) the
execution, delivery and performance of any Document (other than any Credit
Document) or (iii) the legality, validity, binding effect or enforceability
of any such Document (other than any Credit Document).
7.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; Projections; etc. (a) (I) Each of (i) the audited combined
balance sheet of MK, Mercury and Elmco as of December 31, 1994 and the
combined statements of income, cash flows and retained earnings for the
fiscal years ended December 31, 1993 and 1994 and for the period commencing
January 1, 1995 and ending September 22, 1995 and (ii) the unaudited
combined balance sheet of MK, Mercury and Elmco at June 30, 1995 and the
related combined statements of income, cash flows and retained earnings of
MK, Mercury and Elmco for the six-month period ended as of said date,
copies of which have heretofore been delivered to each Bank, present fairly
the financial position of the respective entities on a combined basis at
the dates of said statements and the results of operations for the periods
covered thereby. All financial statements referred to in the preceding
sentence have been prepared in accordance with generally accepted
accounting principles and practices consistently applied except, in the
case of the financial statements for the periods ended September 22, 1995
and June 30, 1995, for the absence of footnotes and reserves (other than
those directly related to balance sheet assets) and normal year-end audit
adjustments.
(II) Each of (i) the audited balance sheets of the BCM Acquired
Business as of March 31, 1995 and December 31, 1995 and the related
statements of divisional operations and cash flows for the fiscal year or
the nine-month period, as the case may be, ended as of said dates, which
financial statements have been examined by Ernst & Young, certified public
accountants, who delivered an unqualified opinion with respect thereto and
(ii) the unaudited balance sheet of the BCM Acquired Business as of March
8, 1996 and the unaudited statements of divisional operations and cash
flows for the period commencing January 1, 1996 and ending March 8, 1996,
copies of which financial statements have heretofore been delivered to each
Bank, present fairly the financial position of the BCM Acquired Business at
the dates of said statements and the results of operations for the periods
covered thereby. All financial statements referred to in the preceding
sentence have been prepared in accordance with GAAP and practices
consistently applied except, in the case of the financial statements for
the period ended March 8, 1996, for the absence of footnotes and reserves
(other than those directly related to balance sheet assets) and normal
year-end audit adjustments.
(III) The audited consolidated balance sheets of Imperial for
the fiscal years ended December 31, 1994 and 1995 and the unaudited
consolidated balance sheet of Imperial at June 30, 1996 and the related
consolidated statements of income, cash flows and shareholder's equity of
Imperial for the fiscal years or six-month period, as the case may be,
ended as of said dates, which annual financial statements have been
examined by Ernst & Young LLP, certified public accountants, who delivered
an unqualified opinion with respect thereto and copies of which have
heretofore been delivered to each Bank, present fairly the financial
position of the respective entities on a consolidated basis at the dates of
said statements and the results of operations for the periods covered
thereby. All financial statements referred to in the preceding sentence
have been prepared in accordance with generally accepted accounting
principles and practices consistently applied except, in the case of the
June 30, 1996 financial statements, for the absence of footnotes and
reserves (other than those directly related to balance sheet assets) and
normal year-end audit adjustments.
(IV) Each of (i) the audited consolidated balance sheet of
Parent as of December 31, 1995 and the consolidated statements of income,
cash flows and changes in shareholder's equity for the period commencing
September 23, 1995 and ending December 31, 1995, which financial statements
have been examined by Ernst & Young, certified public accountants, who
delivered an unqualified opinion with respect thereto and (ii) the
unaudited consolidated balance sheet of Parent at June 30, 1996 and the
related consolidated statements of income, cash flows and changes in
shareholder's equity for the six-month period ended as of said date, copies
of which have heretofore been delivered to each Bank, present fairly the
financial position of the Parent on a consolidated basis at the dates of
said statements and the results of operations for the periods covered
thereby. All financial statements referred to in the preceding sentence
have been prepared in accordance with generally accepted accounting
principles and practices consistently applied except, in the case of the
June 30, 1996 financial statements, for the absence of footnotes and
reserves (other than those directly related to balance sheet assets) and
normal year-end audit adjustments.
(V) Each of (i) the unaudited pro forma (both immediately
before and after giving effect to the Transaction, the related financing
thereof (including, without limitation, the Loans and the Senior Unsecured
Notes) and the other transactions contemplated hereby and thereby)
condensed balance sheet of Parent and its Subsidiaries as of June 30, 1996,
prepared on a basis consistent with the Projections, and (ii) the pro forma
condensed statement of operations of Parent and its Subsidiaries for (x)
the fiscal years ended December 31, 1993, 1994 and 1995, (y) the six-month
periods ended June 30, 1995 and 1996 and (z) the twelve-month period ended
June 30, 1996, copies of which have heretofore been delivered to each Bank,
present a good faith estimate of the pro forma financial condition of
Parent and its Subsidiaries on a consolidated basis at the dates of said
statements and the pro forma results of operations for the periods covered
thereby (in each case both immediately before and after giving effect to
the Transaction, and the related financing thereof (including the Loans and
the Senior Unsecured Notes)).
(VI) As of the Initial Borrowing Date, since December 31, 1995
(but after giving effect to the Transaction and the BCM Transaction as if
same had occurred on such date), there has been no material adverse change
in the performance, business, operations, property, assets, nature of
assets, liabilities, condition (financial or otherwise) or prospects of the
Acquired Business, the Borrower, the Borrower and its Subsidiaries taken as
a whole or the Parent and its Subsidiaries taken as a whole.
(b) On and as of the Initial Borrowing Date, on a pro forma
basis after giving effect to the Transaction and all other transactions
contemplated by the Documents and to all Indebtedness (including, without
limitation, the Loans) being incurred or assumed, and Liens created by each
Credit Party in connection therewith, with respect to each of the Borrower
(on a stand-alone basis) and the Borrower and its Subsidiaries (on a
consolidated basis) (x) the sum of the assets, at a fair valuation, of each
of the Borrower (on a stand-alone basis) and the Borrower and its
Subsidiaries (on a consolidated basis) will exceed its debts, (y) it has
not incurred and does not intend to incur, nor believes that it will incur,
debts beyond its ability to pay such debts as such debts mature and (z) it
will have sufficient capital with which to conduct its business. For
purposes of this Section 7.05(b) "debt" means any liability on a claim, and
"claim" means (i) right to payment whether or not such a right is reduced
to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured or
(ii) right to an equitable remedy for breach of performance if such breach
gives rise to a payment, whether or not such right to an equitable remedy
is reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured.
(c) Except as fully disclosed in the financial statements
delivered pursuant to Section 7.05(a), there were as of the Initial
Borrowing Date no material liabilities or obligations with respect to
Parent or any of its Subsidiaries or the Acquired Business of any nature
whatsoever (whether absolute, accrued, contingent or otherwise and whether
or not due). As of the Initial Borrowing Date, the Borrower knows of no
basis for the assertion against it or Parent of any liability or obligation
of any nature that is not fully disclosed in the financial statements
delivered pursuant to Section 7.05(a) which, either individually or in the
aggregate, could reasonably be expected to be material to the Acquired
Business, Parent, the Borrower or the Borrower and its Subsidiaries taken
as a whole. As of the Initial Borrowing Date (and after giving effect to
the Transaction and the other transactions contemplated by the Documents),
none of Parent or any of its Subsidiaries will have any outstanding
Indebtedness or preferred stock other than the Loans , the Senior Unsecured
Notes, Indebtedness existing under the Earnout Agreement and the Existing
Indebtedness.
(d) On and as of the Initial Borrowing Date, the Projections
set forth on Schedule IV hereto, which include the projected results of the
Acquired Business and the BCM Acquired Business and which have been
delivered to the Agent and the Banks on or prior to the Initial Borrowing
Date, have been prepared on a basis consistent with the pro forma financial
statements referred to in Section 7.05(a)(V), and are based on good faith
estimates and assumptions made by management of the Borrower, and there are
no statements or conclusions in any of the Projections which are based upon
or include information known to the Borrower or any of its Subsidiaries to
be misleading or which fail to take into account material information
regarding the matters reported therein. On the Initial Borrowing Date, the
Borrower believes that the Projections were reasonable and attainable.
7.06 Litigation. There are no actions, suits or proceedings
pending or threatened (i) with respect to the Transaction or any Credit
Document or (ii) that could reasonably be expected to materially and
adversely affect (a) the performance, business, operations, property,
assets, nature of assets, liabilities, condition (financial or otherwise)
or prospects of the Borrower or the Borrower and its Subsidiaries taken as
a whole or (b) the rights or remedies of the Agent or the Banks or on the
ability of any Credit Party to perform its obligations to them hereunder
and under the other Credit Documents to which it is, or will be, a party.
Additionally, there does not exist any judgment, order or injunction
prohibiting or imposing material adverse conditions upon the occurrence of
any Credit Event.
7.07 True and Complete Disclosure. All factual information
(taken as a whole) furnished by or on behalf of the Borrower or any of its
Subsidiaries in writing to the Agent or any Bank (including, without
limitation, all information contained in the Documents) for purposes of or
in connection with this Agreement, the other Documents or any transaction
contemplated herein or therein is, and all other such factual information
(taken as a whole) hereafter furnished by or on behalf of any such Persons
in writing to the Agent or any Bank will be, true and accurate in all
material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any fact necessary to
make such information (taken as a whole) not misleading at such time in
light of the circumstances under which such information was provided.
7.08 Use of Proceeds; Margin Regulations. (a) Up to, but not
more than, $5 million of the proceeds of Loans shall be utilized to effect
the Acquisition and the Refinancing and to pay fees and expenses incurred
in connection with the Transaction. All other proceeds of Loans made
pursuant to this Agreement may be utilized for the general corporate and
working capital purposes of the Borrower and its Subsidiaries (including to
finance Permitted Transactions in accordance with the requirements of
Section 8.15).
(b) No part of any Credit Event (or the proceeds thereof) will
be used to purchase or carry any Margin Stock or to extend credit for the
purpose of purchasing or carrying any Margin Stock. Neither the making of
any Loan nor the use of the proceeds thereof nor the occurrence of any
other Credit Event will violate or be inconsistent with the provisions of
Regulation G, T, U or X of the Board of Governors of the Federal Reserve
System.
7.09 Tax Returns and Payments. All Federal, state and other
returns, statements, forms and reports for taxes (the "Returns") required
to be filed by or with respect to the income, properties or operations of
the Acquired Business and of the Borrower and/or any of its Subsidiaries
have been timely filed with the appropriate taxing authority. The Returns
accurately reflect all liability for taxes of the Acquired Business and of
the Borrower and its Subsidiaries, as the case may be, for the periods
covered thereby. The Acquired Business and the Borrower and each of its
Subsidiaries have paid all taxes and assessments payable by them other than
those which are not yet due and payable, and other than those contested in
good faith by appropriate proceedings and for which adequate reserves have
been established in accordance with GAAP. There is no material action,
suit, proceeding, investigation, audit, or claim now pending or threatened
by any authority regarding any taxes relating to the Acquired Business or
to the Borrower or any of its Subsidiaries. As of the Initial Borrowing
Date, neither the Acquired Business nor the Borrower or any of its
Subsidiaries has entered into an agreement or waiver or been requested to
enter into an agreement or waiver extending any statute of limitations
relating to the payment or collection of taxes of the Acquired Business or
the Borrower or any of its Subsidiaries, or is aware of any circumstances
that would cause the taxable years or other taxable periods of the Acquired
Business or the Borrower or any of its Subsidiaries not to be subject to
the normally applicable statute of limitations. Neither the Acquired
Business nor the Borrower or any of its Subsidiaries has provided, with
respect to itself or property held by it, any consent under Section 341 of
the Code.
7.10 Compliance with ERISA. Each Plan is in substantial
compliance with ERISA and the Code; no Reportable Event has occurred with
respect to a Plan; no Plan is insolvent or in reorganization; no Plan has
an Unfunded Current Liability; no Plan has an accumulated or waived funding
deficiency or has applied for an extension of any amortization period
within the meaning of Section 412 of the Code; all contributions required
to be made with respect to a Plan have been timely made; neither the
Borrower nor any Subsidiary of the Borrower nor any ERISA Affiliate has
incurred any material liability to or on account of a Plan pursuant to
Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or
4212 of ERISA or Section 401(a)(29), 4971, 4975 or 4980 of the Code or
expects to incur any liability (including any indirect, contingent, or
secondary liability) under any of the foregoing Sections with respect to
any Plan; no proceedings have been instituted to terminate or appoint a
trustee to administer any Plan; no condition exists which presents a
material risk to the Borrower or any Subsidiary of the Borrower or any
ERISA Affiliate of incurring a liability to or on account of a Plan
pursuant to the foregoing provisions of ERISA and the Code; using actuarial
assumptions and computation methods consistent with Part 1 of subtitle E of
Title IV of ERISA, the annual aggregate liabilities of the Borrower and its
Subsidiaries and its ERISA Affiliates to all Plans which are multiemployer
plans (as defined in Section 4001(a)(3) of ERISA) in the event of a
complete withdrawal therefrom, as of the close of the most recent fiscal
year of each such Plan ended prior to the date of the most recent Credit
Event, would not exceed $5,000,000; no lien imposed under the Code or ERISA
on the assets of the Borrower or any Subsidiary of the Borrower or any
ERISA Affiliate exists or is likely to arise on account of any Plan; and
the Borrower and its Subsidiaries may cease contributions to or terminate
any employee benefit plan maintained by any of them without incurring any
material liability.
7.11 Security Documents. (a) The provisions of the Security
Agreement are effective to create in favor of the Collateral Agent for the
benefit of the Secured Creditors a legal, valid and enforceable security
interest in all right, title and interest of the Credit Parties in the
Security Agreement Collateral described therein, and the Security Agreement
creates a perfected first lien on, and security interest in, all right,
title and interest in all of the Security Agreement Collateral described
therein, subject to no other Liens (other than Permitted Liens). The
recordation of the Assignment of Security Interest in Certain U.S. Patents
and Trademarks in the form attached to the Security Agreement in the United
States Patent and Trademark Office, together with filings on Form UCC-1
made pursuant to the Security Agreement, will be effective, under
applicable law, to perfect the security interest granted to the Collateral
Agent in the trademarks and patents covered by the Security Agreement and
the recordation of the Assignment of Security Interest in Certain U.S.
Copyrights in the form attached to the Security Agreement with the United
States Copyright Office, together with filings on Form UCC-1 made pursuant
to the Security Agreement, will be effective under federal law to perfect
the security interest granted to the Collateral Agent in the copyrights
covered by the Security Agreement. Each of the Credit Parties party to the
Security Agreement has good and valid title to all of its Security
Agreement Collateral described therein, free and clear of all Liens except
those described above in this clause (a).
(b) The security interests created in favor of the Collateral
Agent, as Pledgee, for the benefit of the Secured Creditors under the
Pledge Agreement constitute first priority perfected security interests in
the Pledged Securities described in the Pledge Agreement, subject to no
security interests of any other Person. No filings or recordings are
required in order to perfect (or maintain the perfection or priority of)
the security interests created in the Pledged Securities and the proceeds
thereof under the Pledge Agreement.
(c) On and after the execution and delivery thereof, each of
the Additional Security Documents will create, as security for the
obligations purported to be secured thereby, a valid and enforceable
perfected security interest in and Lien on all of the Collateral subject
thereto, in favor of the Collateral Agent (or such other trustee as may be
required or desired under local law) for the benefit of the Secured
Creditors, superior to and prior to the rights of all third persons and
subject to no other Liens (other than Permitted Encumbrances and Permitted
Liens).
7.12 Representations and Warranties in Documents. All
representations and warranties set forth in the other Documents were true
and correct in all material respects at the time as of which such
representations and warranties were made (or deemed made) and shall be true
and correct in all material respects as of the Initial Borrowing Date as if
such representations or warranties were made on and as of such date, unless
stated to relate to a specific earlier date, in which case such
representations or warranties shall be true and correct in all material
respects as of such earlier date.
7.13 Properties. The Borrower and each of its Subsidiaries has
good and marketable title to, or a validly subsisting leasehold interest
in, all properties owned or leased by it, including all property reflected
in the consolidated balance sheets and the pro forma balance sheet referred
to in Section 7.05(A)(V) (except as sold or otherwise disposed of since the
date of such balance sheets in the ordinary course of business), free and
clear of all Liens, other than (i) as referred to in the balance sheets or
in the notes thereto or in the pro forma balance sheet or (ii) Permitted
Liens. On the Effective Date, Schedule III sets forth a true and complete
description of all Real Property owned or leased by the Borrower and/or its
Subsidiaries and sets forth the direct owner or lessee thereof and the type
of interest therein held by the Borrower or such Subsidiary.
7.14 Capitalization. On the Initial Borrowing Date and after
giving effect to the Transaction and the other transactions contemplated
hereby, the authorized capital stock of the Borrower shall consist of
10,000 shares of common stock, $0.01 par value per share (such authorized
shares of common stock, together with any subsequently authorized shares of
common stock of the Borrower, the "Borrower Common Stock"), of which 100
shares are issued and outstanding and owned by Parent. All such
outstanding shares have been duly and validly issued, are fully paid and
nonassessable and free of preemptive rights. The Borrower does not have
outstanding any securities convertible into or exchangeable for its capital
stock or outstanding any rights to subscribe for or to purchase, or any
options for the purchase of, or any agreement providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to, its capital stock.
7.15 Subsidiaries. (a) Prior to the consummation of the
Transaction, (i) Parent has no Subsidiaries other than the Borrower and its
Subsidiaries, (ii) MK Group has no Subsidiaries other than Merkle and its
Subsidiaries, (iii) the Borrower has no Subsidiaries other than Acquisition
Corp. and its Subsidiaries, (iv) Merkle has no Subsidiaries other than
Barber-Colman and (v) Acquisition Corp. has no Subsidiaries other than
Scott Acquisition Sub. and Gear Acquisition Sub.
(b) On and as of the Initial Borrowing Date and after giving
effect to the consummation of the Transaction, Parent has no Subsidiaries
other than the Borrower and its Subsidiaries, and the Borrower has no
Subsidiaries other than those Subsidiaries listed on Schedule V. Schedule
V correctly sets forth, as of the Initial Borrowing Date and after giving
effect to the Transaction, the percentage ownership (direct and indirect)
of the Borrower in each class of capital stock of each of its Subsidiaries
and also identifies the direct owner thereof. All outstanding shares of
capital stock of each Subsidiary of the Borrower have been duly and validly
issued, are fully paid and non-assessable and have been issued free of
preemptive rights. No Subsidiary of the Borrower has outstanding any
securities convertible into or exchangeable for its capital stock or
outstanding any right to subscribe for or to purchase, or any options or
warrants for the purchase of, or any agreement providing for the issuance
(contingent or otherwise) of or any calls, commitments or claims of any
character relating to, its capital stock or any stock appreciation or
similar rights.
7.16 Compliance with Statutes, etc. Each of the Borrower and
its Subsidiaries is in compliance with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business and
the ownership of its property (including applicable statutes, regulations,
orders and restrictions relating to environmental standards and controls),
except such noncompliances as could not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the
performance, business, operations, property, assets, nature of assets,
liabilities, condition (financial or otherwise) or prospects of the
Borrower or the Borrower and its Subsidiaries taken as a whole.
7.17 Investment Company Act. Neither the Borrower nor any of
its Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of
1940, as amended.
7.18 Public Utility Holding Company Act. Neither the Borrower
nor any of its Subsidiaries is a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company"
or of a "subsidiary company" of a "holding company" within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
7.19 Environmental Matters. (a) Each of the Borrower and its
Subsidiaries has complied with, and on the date of each Credit Event will
be in compliance with, all applicable Environmental Laws and the
requirements of any permits issued under such Environmental Laws and
neither the Borrower nor any of its Subsidiaries is liable for any material
penalties, fines or forfeitures for failure to comply with any of the
foregoing. There are no pending, past or threatened Environmental Claims
against the Borrower or any of its Subsidiaries or any Real Property owned
or operated by the Borrower or any of its Subsidiaries. There are no
facts, circumstances, conditions or occurrences on any Real Property owned
or operated by the Borrower or any of its Subsidiaries or on any property
adjoining or in the vicinity of any such Real Property that could
reasonably be expected (i) to form the basis of an Environmental Claim
against the Borrower or any of its Subsidiaries or any such Real Property
or (ii) to cause any such Real Property to be subject to any restrictions
on the ownership, occupancy, use or transferability of such Real Property
by the Borrower or any of its Subsidiaries under any applicable
Environmental Law.
(b) Hazardous Materials have not at any time been generated,
used, treated or stored on, or transported to or from, or Released on or
from, any Real Property owned or operated by the Borrower or any of its
Subsidiaries except in compliance with all applicable Environmental Laws
and reasonably required in connection with the operation, use and
maintenance of any such Real Property by the Borrower's or such
Subsidiary's business. There are not now and never have been any
underground storage tanks located on any Real Property owned or operated by
the Borrower or any of its Subsidiaries.
(c) Notwithstanding anything to the contrary in this Section
7.19, the representations made in this Section 7.19 shall only be untrue if
the aggregate effect of all failures and noncompliance of the types
described above could reasonably be expected to have a material adverse
effect on the performance, business, operations, property, assets, nature
of assets, liabilities, condition (financial or otherwise) or prospects of
the Borrower or the Borrower and its Subsidiaries taken as a whole.
7.20 Labor Relations. Neither the Borrower nor any of its
Subsidiaries is engaged in any unfair labor practice that could reasonably
be expected to have a material adverse effect on the performance, business,
operations, property, assets, nature of assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower or the Borrower and
its Subsidiaries taken as a whole. There is (i) no unfair labor practice
complaint pending or threatened against the Borrower or any of its
Subsidiaries before the National Labor Relations Board and no grievance or
arbitration proceeding arising out of or under any collective bargaining
agreement is so pending or threatened against the Borrower or any of its
Subsidiaries, (ii) no strike, labor dispute, slowdown or stoppage is
pending or threatened against the Borrower or any of its Subsidiaries and
(iii) no union representation question exists with respect to the employees
of the Borrower or any of its Subsidiaries, except (with respect to any
matter specified in clause (i), (ii) or (iii) above, either individually or
in the aggregate) such as could not reasonably be expected to have a
material adverse effect on the performance, business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of the
Borrower or the Borrower and its Subsidiaries taken as a whole.
7.21 Patents, Licenses, Franchises and Formulas. Each of the
Borrower and its Subsidiaries owns all patents, trademarks, permits,
service marks, trade names, copyrights, licenses, franchises and formulas,
or rights with respect to the foregoing, and has obtained assignments of
all leases and other rights of whatever nature, in each case reasonably
necessary for the present conduct of its business, without any known
conflict with the rights of others which, or the failure to obtain which,
as the case may be, would result in a material adverse effect on the
performance, business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower or of the Borrower
and its Subsidiaries taken as a whole.
7.22 Indebtedness. Schedule VI sets forth a true and complete
list of all Indebtedness of Parent and its Subsidiaries as of the Initial
Borrowing Date and which is to remain outstanding after giving effect to
the Transaction and the incurrence of Loans on such date (exclusive of
Indebtedness pursuant to this Agreement, the Parent Subordinated
Intercompany Note, the Transaction Intercompany Notes, the Senior Unsecured
Notes, the Earnout Agreement, the Existing Seller Installment Note, the
Existing Seller Letter of Credit, the Existing Seller Letter of Credit
Collateral Agreement, the Existing Seller Letter of Credit Agreement and
the Existing Seller Subordinated Note), which Scheduled Existing
Indebtedness shall not exceed $25,000,000 and, in each case showing the
aggregate principal amount thereof (and the aggregate amount of any undrawn
commitments with respect thereto) and the name of the respective borrower
and any other entity which directly or indirectly guaranteed such debt as
of the Initial Borrowing Date. None of the Existing Indebtedness was
incurred in connection with, or in contemplation of, the Transaction or the
other transactions contemplated hereby.
7.23 Transaction. At the time of consummation thereof, each
element of the Transaction shall have been consummated in accordance with
the terms of the Documents and all applicable laws. At the time of
consummation thereof, all material consents and approvals of, and filings
and registrations with, and all other actions in respect of, all
governmental agencies, authorities or instrumentalities required in order
to make or consummate the Transaction in accordance with the terms of the
Documents and all applicable laws have been obtained, given, filed or taken
and are or will be in full force and effect (or effective judicial relief
with respect thereto has been obtained). All applicable waiting periods
with respect thereto have or, prior to the time when required, will have,
expired without, in all such cases, any action being taken by any competent
authority, which restrains, prevents, or imposes material adverse
conditions upon the consummation of any element of the Transaction.
Additionally, there does not exist any judgment, order or injunction
prohibiting or imposing material adverse conditions upon the consummation
of any element of the Transaction, the occurrence of any Credit Event, or
the performance by any Credit Party of its obligations under the Documents.
All actions taken by any Credit Party pursuant to or in furtherance of the
Transaction have been taken in all material respects in compliance with the
respective Documents and all applicable laws.
7.24 Special Purpose Corporations. (a) Parent was formed to
effect the Transaction and, prior to the consummation thereof, had no
significant assets or liabilities (other than the capital stock of the
Borrower and those liabilities under the Merger Documents).
(b) The Borrower was formed to effect the Acquisition and the
Refinancing and, prior to the consummation thereof, had no significant
assets or liabilities (other than the capital stock of Acquisition Corp.
and those liabilities under the Acquisition Documents).
(c) Acquisition Corp. was formed to effect the Acquisition and,
prior to the consummation thereof, had no significant assets or liabilities
(other than the capital stock of Scott Acquisition Sub. and Gear
Acquisition Sub. and those liabilities under the Acquisition Documents).
(d) Scott Acquisition Sub. and Gear Acquisition Sub. were
formed to effect the Asset Contribution and, prior to the consummation
thereof, had no significant assets or liabilities.
7.25 Subordinated Notes. The subordination provisions of the
Existing Seller Subordinated Note and of the Parent Subordinated
Intercompany Note are enforceable against the holders thereof, and the
Loans and all other Obligations hereunder (including, without limitation,
pursuant to the Guaranties) and under the other Credit Documents are within
the definition of "Senior Indebtedness" included in such subordination
provisions.
7.26 Insurance. Set forth on Schedule VII hereto is a true,
correct and complete summary of all insurance carried by each Credit Party
on and as of the Initial Borrowing Date, with the amounts insured set forth
therein.
SECTION 8. Affirmative Covenants. The Borrower hereby
covenants and agrees that on and after the Effective Date and until the
Total Commitment and all Letters of Credit have terminated and the Loans,
Notes and Unpaid Drawings, together with interest, Fees and all other
Obligations incurred hereunder and thereunder, are paid in full:
8.01 Information Covenants. The Borrower will furnish to the
Agent and each of the Banks:
(a) Monthly Reports. Within 30 days after the end of each
fiscal month of the Borrower, the consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at the end of such
month and the related consolidated statements of income for such
month and for the elapsed portion of the fiscal year ended with the
last day of such month, in each case, beginning with the monthly
financial statements delivered for January, 1997, setting forth
comparative figures for the corresponding month in the prior fiscal
year (provided that the comparative figures for the months ending
January, 1997 through and including December, 1997, will only include
a comparison of Consolidated EBITDA), all of which shall be certified
by an Authorized Officer of the Borrower, subject to the absence of
footnotes and reserves (other than those directly related to balance
sheet assets) and normal year-end audit adjustments.
(b) Quarterly Financial Statements. Within 45 days after the
close of the first three quarterly accounting periods in each fiscal
year of the Borrower, (i) the consolidated balance sheets of Parent
and its consolidated Subsidiaries as at the end of such quarterly
accounting period and the related consolidated and consolidating
statements of income and consolidated statements of cash flows, in
each case for such quarterly accounting period and for the elapsed
portion of the fiscal year ended with the last day of such quarterly
accounting period, in each case, beginning with the quarterly
financial statements delivered for the first quarter of the fiscal
year ended in 1997, setting forth comparative figures for the related
periods in the prior fiscal year (provided that the comparative
figures, in the case of quarterly statements for the fiscal quarters
ending March, 1997, through and including December, 1997, will only
include a comparison of Consolidated EBITDA) and the budgeted figures
for such quarterly periods as set forth in the respective budget
delivered pursuant to Section 8.01(d), all of which shall be
certified by an Authorized Officer of the Borrower, subject to the
absence of footnotes and reserves (other than those directly related
to balance sheet assets) and normal year-end audit adjustments and
(ii) management's discussion and analysis of the important
operational and financial developments during the fiscal quarter and
year-to-date periods.
(c) Annual Financial Statements. Within 120 days after the
close of each fiscal year of the Borrower, (i) the consolidated
balance sheets of Parent and its consolidated Subsidiaries as at the
end of such fiscal year and the related consolidated and
consolidating statements of income and consolidated statement of cash
flows and stockholder's equity for such fiscal year setting forth
comparative figures for the preceding fiscal year and comparative
budgeted figures for such fiscal year as set forth in the respective
budget delivered pursuant to Section 8.01(d), and certified, in the
case of the consolidated statements, by Ernst & Young LLP or such
other independent certified public accountants of recognized national
standing acceptable to the Agent, together with a signed opinion of
such accounting firm (which opinion shall not be qualified in any
respect) stating that such financial statements present fairly in all
material respects the financial position of Parent and its
consolidated Subsidiaries as at the dates indicated and the results
of its operations and changes in its financial position for the
periods indicated in conformity with GAAP applied on a basis
consistent with prior years and that the examination by such
accounting firm in connection with such financial statements has been
made in accordance with generally accepted auditing standards, and
that in the course of its regular audit of the financial statements
of Parent and its Subsidiaries, such accounting firm obtained no
knowledge of any Default or Event of Default under any of Sections
9.08 or 9.09 which has occurred or, if in the opinion of such
accounting firm such a Default or Event of Default has occurred and
is continuing, a statement as to the nature thereof, and (ii)
management's discussion and analysis of the important operational and
financial developments during such fiscal year.
(d) Budgets. No later than 60 days after the commencement of
each fiscal year of the Borrower, budgets in form satisfactory to the
Agent (including, in any event, budgeted statements of cash flow and
budgeted debt and cash balances) for such fiscal year prepared in
reasonable detail, of the Borrower and its Subsidiaries, accompanied
by the statement of an Authorized Officer of the Borrower to the
effect that the budget is a reasonable estimate for the period
covered thereby.
(e) Officer's Certificates. At the time of the delivery of the
financial statements provided for in Sections 8.01(b) and (c), a
certificate of an Authorized Officer of the Borrower to the effect
that no Default or Event of Default has occurred and is continuing
or, if any Default or Event of Default has occurred and is
continuing, specifying the nature and extent thereof, which
certificate shall also set forth (A) the Leverage Ratio, together
with the calculations required to establish such ratio and (B) the
calculations required to establish whether the Borrower and its
Subsidiaries were in compliance with the provisions of Sections 3.03
and 9.02 through 9.10, inclusive, at the end of such fiscal quarter
or year, as the case may be.
(f) Notice of Default or Litigation. Promptly, and in any
event within three Business Days after an officer of the Borrower or
any of its Subsidiaries obtains knowledge thereof, notice of (i) the
occurrence of any event which constitutes a Default or an Event of
Default, (ii) any litigation or governmental investigation or
proceeding pending or threatened (x) against the Borrower or any of
its Subsidiaries which could reasonably be expected to materially and
adversely affect the performance, business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects
of the Borrower or the Borrower and its Subsidiaries taken as a
whole, (y) with respect to any material Indebtedness of the Borrower
or any of its Subsidiaries or (z) with respect to any Document and
(iii) any other event which could reasonably be expected to
materially and adversely affect the performance, operations,
property, business, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower or the Borrower and its
Subsidiaries taken as a whole.
(g) Management Letters. Promptly after receipt thereof by the
Borrower or any of its Subsidiaries, a copy of any "management
letter" received by the Borrower or any of its Subsidiaries from its
certified public accountants and the management's responses thereto.
(h) Other Reports and Filings. Promptly, copies of all
financial information, proxy materials and other information and
reports, if any, which the Parent or any of its Subsidiaries shall
file with the Securities and Exchange Commission or any successor
thereto (the "SEC") and copies of all notices and reports which
Parent or any of its Subsidiaries shall deliver to holders of its
Indebtedness (including any holder of the Existing Seller Installment
Note, the Existing Seller Subordinated Note or the Senior Unsecured
Notes) pursuant to the terms of the documentation governing such
Indebtedness (or any trustee, agent or other representative
therefor).
(i) Environmental Matters. Promptly upon, and in any event
within ten Business Days after, an officer of the Borrower or any of
its Subsidiaries obtains knowledge thereof, notice of any of the
following environmental matters (including all reasonably related
claims or liabilities) which could reasonably be expected to result
in a remedial cost to the Borrower and its Subsidiaries in excess of
$3,500,000:
(i) any pending or threatened Environmental Claim
against the Borrower or any of its Subsidiaries or any Real
Property owned or operated by the Borrower or any of its
Subsidiaries;
(ii) any condition or occurrence on or arising from any
Real Property owned or operated by the Borrower or any of its
Subsidiaries that (a) results in non-compliance by the Borrower
or any of its Subsidiaries with any applicable Environmental Law
or (b) could reasonably be expected to form the basis of an
Environmental Claim against the Borrower or any of its
Subsidiaries or any such Real Property;
(iii) any condition or occurrence on any Real Property
owned or operated by the Borrower or any of its Subsidiaries
that could reasonably be expected to cause such Real Property to
be subject to any restrictions on the ownership, occupancy, use
or transferability by the Borrower or any of its Subsidiaries of
such Real Property under any Environmental Law; and
(iv) the taking of any removal or remedial action in
response to the actual or alleged presence of any Hazardous
Material on any Real Property owned or operated by the Borrower
or any of its Subsidiaries as required by any Environmental Law
or any governmental or other administrative agency; provided
that in any event the Borrower shall deliver to each Bank all
notices received by it or any of its Subsidiaries from any
government or governmental agency under, or pursuant to,
Environmental Law.
All such notices shall describe in reasonable detail the nature of
the claim, investigation, condition, occurrence or removal or
remedial action and the Borrower's or such Subsidiary's response or
proposed response thereto. In addition, the Borrower and any of its
Subsidiaries will provide the Agent with copies of all material
communications with any government or governmental agency relating to
Environmental Laws, all material communications with any Person
relating to Environmental Claims, and such detailed reports of any
Environmental Claim as may be requested by the Agent or the Required
Banks.
(j) Annual Meetings with Banks. At the request of the Agent,
the Borrower shall within 120 days after the close of each fiscal
year of the Borrower, hold a meeting (at a mutually agreeable
location and time) with all of the Banks at which meeting shall be
reviewed the financial results of the previous fiscal year and the
financial condition of Parent and its Subsidiaries and the budgets
presented for the current fiscal year of the Borrower and its
Subsidiaries.
(k) Receivables Facility Transaction Date. The Borrower shall
provide the Agent 15 Business Days' prior written notice of the
Receivables Facility Transaction Date.
(l) Other Information. From time to time, such other
information or documents (financial or otherwise) with respect to
Parent or its Subsidiaries as the Agent or any Bank (through the
Agent) may reasonably request.
8.02 Books, Records and Inspections. The Borrower will, and
will cause each of its Subsidiaries to, keep proper books of record and
account in which full, true and correct entries in conformity with GAAP and
all requirements of law shall be made of all dealings and transactions in
relation to its business and activities. The Borrower will, and will cause
each of its Subsidiaries to, permit officers and designated representatives
of the Agent or any Bank to visit and inspect, at the Agent's or such
Bank's own expense, as the case may be, during regular business hours, upon
reasonable advance notice and under guidance of officers of the Borrower or
such Subsidiary, any of the properties of the Borrower or any of its
Subsidiaries, and to examine the books of account of the Borrower and any
of its Subsidiaries and discuss the affairs, finances and accounts of the
Borrower and any of its Subsidiaries with, and be advised as to the same
by, its and their respective officers and independent accountants, all at
such times and intervals and to such extent as the Agent or any Bank may
reasonably request.
8.03 Maintenance of Property; Insurance. (a) The Borrower
will, and will cause each of its Subsidiaries to (i) keep all property
necessary in its business in good working order and condition, (ii)
maintain, with financially sound and reputable insurance companies,
insurance on all its property (including all property acquired pursuant to
the Acquisition but excluding property insurance on motor vehicles at any
time owned by the Borrower and its Subsidiaries) in at least such amounts
and against at least such risks as is consistent and in accordance with
industry practice and (iii) furnish to the Agent and each Bank, upon
written request, full information as to the insurance carried. In addition
to the requirements of the immediately preceding sentence, the Borrower
will at all times cause insurance of the types described in Schedule VII to
be maintained (with the same scope of coverage as that described in
Schedule VII) at levels which are at least as great as the respective
amount described opposite the respective type of insurance on Schedule VII
under the column headed "Minimum Amount Required to Be Maintained".
Subject to the exclusion for motor vehicles described above, such insurance
shall include physical damage insurance on all real and personal property
(whether now owned or hereafter acquired) on an all risk basis, covering
the full repair and replacement costs of all such property and business
interruption insurance for the actual loss sustained. The provisions of
this Section 8.03 shall be deemed supplemental to, but not duplicative of,
the provisions of any Security Documents that require the maintenance of
insurance.
(b) The Borrower will, and will cause each of its Subsidiaries
to, at all times keep the respective property of the Borrower and its
Subsidiaries insured in favor of the Collateral Agent, and all policies
(including Mortgage Policies) or certificates with respect to such
insurance (and any other insurance maintained by, or on behalf of, the
Borrower or any Subsidiary of the Borrower) (i) shall be endorsed to the
Collateral Agent's satisfaction for the benefit of the Collateral Agent
(including, without limitation, by naming the Collateral Agent as
mortgagee/secured party and loss payee in respect of casualty loss policies
and naming the Collateral Agent, the Agent and each Bank as an additional
insured with respect to all liability policies), (ii) shall state that such
insurance policies shall not be cancelled or materially changed without at
least 30 days' prior written notice thereof by the respective insurer to
the Collateral Agent and (iii) shall be deposited with the Collateral
Agent.
(c) If the Borrower or any of its Subsidiaries shall fail to
maintain all insurance in accordance with this Section 8.03, or if the
Borrower or any of its Subsidiaries shall fail to so name the Collateral
Agent, the Agent and/or each Bank as an additional insured, mortgagee or
loss payee, as the case may be, or so deposit all certificates with respect
thereto, the Agent and/or the Collateral Agent shall have the right (but
shall be under no obligation) to procure such insurance, and the Borrower
agrees to reimburse the Agent or the Collateral Agent, as the case may be,
for all costs and expenses of procuring such insurance.
8.04 Corporate Franchises. The Borrower will, and will cause
each of its Subsidiaries to, do or cause to be done, all things necessary
to preserve and keep in full force and effect its existence and its
material rights, franchises, licenses and patents; provided, however, that
nothing in this Section 8.04 shall prevent (i) transactions permitted in
accordance with the applicable requirements of Section 9.02 or (ii) the
withdrawal by the Borrower or any of its Subsidiaries of its qualification
as a foreign corporation in any jurisdiction where such withdrawal could
not reasonably be expected to have a material adverse effect on the
performance, business, operations, property, assets, nature of assets,
liabilities, condition (financial or otherwise) or prospects of the
Borrower or the Borrower and its Subsidiaries taken as a whole.
8.05 Compliance with Statutes, etc. The Borrower will, and
will cause each of its Subsidiaries to, comply with all applicable
statutes, regulations and orders of, and all applicable restrictions
imposed by, all governmental bodies, domestic or foreign, in respect of the
conduct of its business and the ownership of its property, except such
noncompliances as could not, individually or in the aggregate, reasonably
be expected to have a material adverse effect on the performance, business,
operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower or the Borrower and its
Subsidiaries taken as a whole or a material adverse effect on the ability
of any Credit Party to perform its obligations under any Credit Document to
which it is a party.
8.06 Compliance with Environmental Laws. (a) The Borrower
will comply, and will cause each of its Subsidiaries to comply, in all
material respects with all Environmental Laws applicable to the ownership
or use of its Real Property now or hereafter owned or operated by the
Borrower or any of its Subsidiaries, will promptly pay or cause to be paid
all costs and expenses incurred in connection with such compliance, and
will keep or cause to be kept all such Real Property free and clear of any
Liens imposed pursuant to such Environmental Laws. Neither the Borrower
nor any of its Subsidiaries will generate, use, treat, store, Release or
dispose of, or permit the generation, use, treatment, storage, Release or
disposal of Hazardous Materials on any Real Property now or hereafter owned
or operated by the Borrower or any of its Subsidiaries, or transport or
permit the transportation of Hazardous Materials to or from any such Real
Property except for Hazardous Materials used or stored at any such Real
Properties in compliance (excluding non-compliances which, individually and
in the aggregate, could not reasonably be expected to have a material
adverse effect on the performance, business, operations, property, assets,
nature of assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower or the Borrower and its Subsidiaries taken as a
whole) with all applicable Environmental Laws and reasonably required in
connection with the operation, use and maintenance of any such Real
Property.
(b) At the written request of the Agent or the Required Banks,
which request shall specify in reasonable detail the basis therefor, at any
time and from time to time, the Borrower will provide, at its sole cost and
expense, an environmental site assessment report concerning any Real
Property now or hereafter owned or operated by the Borrower or any of its
Subsidiaries, prepared by an environmental consulting firm approved by the
Agent, addressing the matters in clause (i), (ii) or (iii) below which
gives rise to such request (or, in the case of a request pursuant to
following clause (i), addressing such matter as may be requested by the
Agent or the Required Banks) and estimating the range of the potential
costs of any removal, remedial or other corrective action in connection
with any such matter, provided that in no event shall such request be made
unless (i) an Event of Default has occurred and is continuing, (ii) the
Banks receive notice under Section 8.01(i) for any event for which notice
is required to be delivered for any such Real Property or (iii) the Agent
or the Required Banks reasonably believe that there was a breach of any
representation, warranty or covenant contained in Section 7.19 or 8.06(a).
If the Borrower fails to provide the same within 60 days after such request
was made, the Agent may order the same, and the Borrower shall grant and
hereby grants, to the Agent and the Banks and their agents access to such
Real Property and specifically grants, the Agent and the Banks and their
agents an irrevocable non-exclusive license, subject to the rights of
tenants, to undertake such an assessment, all at the Borrower's expense.
8.07 ERISA. As soon as possible and, in any event, within 10
days after the Borrower, any Subsidiary of the Borrower or any ERISA
Affiliate knows or has reason to know of the occurrence of any of the
following, the Borrower will deliver to each of the Banks a certificate of
the Chief Financial Officer of the Borrower setting forth details as to
such occurrence and the action, if any, that the Borrower, such Subsidiary
or such ERISA Affiliate is required or proposes to take, together with any
notices required or proposed to be given to or filed with or by the
Borrower, such Subsidiary, such ERISA Affiliate, the PBGC, a Plan
participant or the Plan administrator with respect thereto: that a
Reportable Event has occurred; that an accumulated funding deficiency has
been incurred or an application may be or has been made to the Secretary of
the Treasury for a waiver or modification of the minimum funding standard
(including any required installment payments) or an extension of any
amortization period under Section 412 of the Code with respect to a Plan;
that a contribution required to be made to a Plan has not been timely made;
that a Plan has been or may be terminated, reorganized, partitioned or
declared insolvent under Title IV of ERISA; that a Plan has an Unfunded
Current Liability giving rise to a lien under ERISA or the Code; that
proceedings may be or have been instituted to terminate or appoint a
trustee to administer a Plan; that a proceeding has been instituted
pursuant to Section 515 of ERISA to collect a delinquent contribution to a
Plan; that the Borrower, any Subsidiary of the Borrower or any ERISA
Affiliate will or may incur any liability (including any indirect,
contingent, or secondary liability) to or on account of the termination of
or withdrawal from a Plan under Section 4062, 4063, 4064, 4069, 4201, 4204
or 4212 of ERISA or with respect to a Plan under Section 401(a)(29), 4971,
4975 or 4980 of the Code or Section 409 or 502(i) or 502(l) of ERISA; or
that the Borrower, or any Subsidiary of the Borrower may incur any material
liability pursuant to any employee welfare benefit plan (as defined in
Section 3(1) of ERISA) that provides benefits to retired employees or other
former employees (other than as required by Section 601 of ERISA) or any
employee pension benefit plan (as defined in Section 3(2) of ERISA) (except
for distributions under discretionary tax-qualified profit sharing plans).
The Borrower will deliver to each of the Banks a complete copy of the
annual report (Form 5500) of each Plan (including, to the extent required,
the related financial and actuarial statements and opinions and other
supporting statements, certifications, schedules and information) required
to be filed with the Internal Revenue Service. In addition to any
certificates or notices delivered to the Banks pursuant to the first
sentence hereof, copies of annual reports and any material notices received
by the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate with
respect to any Plan shall be delivered to the Banks no later than 10 days
after the date such report has been filed with the Internal Revenue Service
or such notice has been received by the Borrower, such Subsidiary or such
ERISA Affiliate, as applicable.
8.08 End of Fiscal Years; Fiscal Quarters. The Borrower shall
cause (i) each of its, and its Parent's and each of its Subsidiaries',
fiscal years to end on December 31, and (ii) each of its, and each of its
Parent's and its Subsidiaries, to maintain fiscal quarters consistent
therewith.
8.09 Performance of Obligations. The Borrower will, and will
cause each of its Subsidiaries to, perform all of its obligations under the
terms of each mortgage, deed of trust, indenture, loan agreement or credit
agreement and each other material agreement, contract or instrument by
which it is bound, except such non-performances as could not, individually
or in the aggregate, reasonably be expected to have a material adverse
effect on the performance, business, operations, property, assets, nature
of assets, liabilities, condition (financial or otherwise) or prospects of
the Borrower or the Borrower and its Subsidiaries taken as a whole.
8.10 Payment of Taxes. The Borrower will, and will cause each
of its Subsidiaries to, pay and discharge all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or
profits, or upon any properties belonging to it, in each case on a timely
basis, and all lawful claims for sums that have become due and payable
which, if unpaid, might become a lien or charge upon any properties of the
Borrower or any such Subsidiary; provided that neither the Borrower nor any
such Subsidiary shall be required to pay any such tax, assessment, charge,
levy or claim which is being contested in good faith and by proper
proceedings if it has maintained adequate reserves with respect thereto in
accordance with GAAP.
8.11 Additional Security; Further Assurances; etc. (a) The
Borrower will, and will cause each of its Wholly-Owned Domestic
Subsidiaries to, grant to the Collateral Agent, for the benefit of the
Secured Creditors, security interests and mortgages in such assets and
properties of the Borrower or such Wholly-Owned Domestic Subsidiary (other
than Excluded Collateral) as are not covered by the Security Documents, and
as may be requested from time to time by the Agent or the Required Banks
(collectively, the "Additional Security Documents"). All such security
interests and mortgages shall be granted pursuant to documentation
reasonably satisfactory in form and substance to the Agent and shall
constitute valid and enforceable perfected security interests and mortgages
superior to and prior to the rights of all third Persons and subject to no
other Liens except for Permitted Liens or Permitted Encumbrances. The
Additional Security Documents or instruments related thereto shall have
been duly recorded or filed in such manner and in such places as are
required by law to establish, perfect, preserve and protect the Liens in
favor of the Collateral Agent required to be granted pursuant to the
Additional Security Documents and all taxes, fees and other charges payable
in connection therewith shall have been paid in full. Notwithstanding the
foregoing, this Section 8.11(a) shall not apply to (I) any Leasehold (other
than any MK Leasehold) from any lessor if (i) the fair market value of such
Leasehold (as determined in good faith by senior management of the
Borrower) is less than $5,000,000 or (ii) the Borrower or such Wholly-Owned
Subsidiary, as the case may be, shall be required to pay any consideration
or expenses (other than de minimis amounts) or incur any material
obligation or suffer any undue burden in connection with the grant of a
security interest in such Leasehold and (II) any MK Leasehold which by its
terms prevents the respective lessee from granting a security interest
therein, provided that each of Merkle and BCM Holdings shall use its
reasonable efforts to obtain memoranda of lease (in recordable form) and
consents to leasehold mortgages in respect of the MK Leaseholds and, in the
event Merkle or BCM Holdings is successful in its effort to obtain any such
memorandum or consent, Merkle or BCM Holdings, as the case may be, shall
deliver to the Collateral Agent (i) a fully executed counterpart of
Mortgage in form and substance satisfactory to the Collateral Agent,
together with evidence that a counterpart of such Mortgage has been
delivered to the title insurance company insuring the lien on such Mortgage
for recording in all places to the extent necessary or, in the opinion of
the Collateral Agent, desirable to effectively create a valid and
enforceable first priority mortgage lien on such MK Leasehold in favor of
the Collateral Agent (or such other trustee as may be required or desired
under local law) for the benefit of the Secured Creditors and (ii) a
Mortgage Policy on such MK Leasehold issued by such title insurer
satisfactory to the Collateral Agent in amounts satisfactory to the
Collateral Agent, assuring the Collateral Agent that the Mortgage on such
MK Leasehold is a valid and enforceable first priority mortgage lien on
such MK Leasehold, free and clear of all defects and encumbrances except
Permitted Encumbrances and such Mortgage Policy (w) shall otherwise be in
form and substance satisfactory to the Collateral Agent, (x) shall include
(as appropriate) an endorsement for future advances under this Agreement
and the Notes and for any other matter that the Collateral Agent may
request, (y) shall not include an exception for mechanics' liens or
creditors' rights and (z) shall provide for affirmative insurance and such
reinsurance (including direct access agreements) as the Collateral Agent
may request. The parties hereto agree and understand that if a security
interest is not required to be granted in the respective Leasehold by
reason of the provisions of the preceding sentence, no Default or Event of
Default shall arise under this Agreement as a result of any failure to
grant said security interest.
(b) The Borrower will, and will cause each of its Subsidiaries
to, at the expense of the Borrower, make, execute, endorse, acknowledge,
file and/ or deliver to the Collateral Agent from time to time such
vouchers, invoices, schedules, confirmatory assignments, conveyances,
financing statements, transfer endorsements, powers of attorney,
certificates, real property surveys, reports and other assurances or
instruments and take such further steps relating to the Collateral covered
by any of the Security Documents as the Collateral Agent may reasonably
require pursuant to this Section 8.11. Furthermore, the Borrower shall
cause to be delivered to the Collateral Agent such opinions of counsel,
Required Appraisals satisfying the requirements of applicable law, mortgage
policies, title insurance and other related documents as may be reasonably
requested by the Collateral Agent to assure itself that this Section 8.11
has been complied with.
(c) The Borrower agrees that each action required by preceding
clauses (a) and (b) of this Section 8.11 shall be completed as soon as
possible, but in no event later than 90 days of the date such action is
requested to be taken by the Agent or the Required Banks.
(d) To the extent the Borrower (directly or indirectly)
creates, establishes or acquires any Subsidiary after the Initial Borrowing
Date in accordance with the other provisions of this Agreement (including,
without limitation, pursuant to a Permitted Transaction), (w) each such new
Wholly-Owned Domestic Subsidiary (and each Non-Wholly-Owned Domestic
Subsidiary, to the extent same will be consolidated with the Borrower for
federal income tax purposes) shall be required to become a party to the
Existing Tax Sharing Agreement by executing a counterpart thereof or by
entering into an amendment thereto satisfactory to the Agent, (x) each such
Wholly-Owned Domestic Subsidiary (but including the Receivables Entity)
shall be required to become a party to the Subsidiary Guaranty by executing
a counterpart thereof or by entering into an amendment thereto satisfactory
to the Agent, (y) each such Non-Wholly-Owned Domestic Subsidiary (but
including the Receivables Entity) shall be required to become a party to
the Non-Wholly-Owned Subsidiary Guaranty by executing a counterpart thereof
or by entering into an amendment thereto satisfactory to the Agent and (z)
each such Wholly-Owned Domestic Subsidiary shall be required to become a
party to each of the Security Agreement and the Pledge Agreement by
executing a counterpart thereof or by entering into an amendment thereto
satisfactory to the Agent and all of the capital stock or other equity
interests of such new Subsidiary owned by the Borrower or any of its
Wholly-Owned Domestic Subsidiaries and all of the capital stock or other
equity interests owned by such new Subsidiary (subject, in the case of the
capital stock of a Foreign Subsidiary owned by such new Subsidiary, to the
provisions of Section 8.16 and the terms of the Pledge Agreement which
limit the percentage of voting stock of Foreign Subsidiaries required to be
pledged) shall be pledged to the Collateral Agent for the benefit of the
Secured Creditors pursuant to the Pledge Agreement. In connection with the
foregoing, to the extent requested by the Agent or the Collateral Agent,
such Subsidiary shall be required to deliver such relevant documentation
(including opinions of counsel, UCC-1 Financing Statements and officer's
certificates) of the type described in Section 5 as the respective
Subsidiary would have delivered if it were a Credit Party on the Initial
Borrowing Date. The Borrower agrees that each action required to be taken
pursuant to this clause (d) shall be completed contemporaneously with the
creation, establishment or acquisition of such Subsidiary. In addition to
the foregoing, all other Pledged Securities acquired after the Effective
Date by any Credit Party which is a party to the Pledge Agreement shall, to
the extent required by the Pledge Agreement, be delivered to the Collateral
Agent for pledge pursuant to the Pledge Agreement. All security interests
created by each such new Subsidiary becoming party to the Security
Documents shall (except as otherwise consented to by the Agent and the
Banks) constitute valid and enforceable perfected security interests,
subject to the provisions of the respective Security Document prior to the
rights of all third Persons and subject to no other Liens except Permitted
Liens. The Security Documents and other instruments related thereto shall
be duly recorded or filed in such manner and in such places as are required
by law to establish, perfect, preserve and protect the Liens, in favor of
the Collateral Agent for the benefit of the Secured Creditors, required to
be granted pursuant to the respective Security Documents and all taxes,
fees and other charges payable in connection therewith shall be paid in
full by the Borrower.
(e) At any time and from time to time to the extent that the
Banks, the Agent or the Collateral Agent request in order to fulfill the
requirements of any applicable statute, regulation or order of any
governmental body, to preserve, protect, enforce or realize upon the
security interests granted to the Secured Creditors pursuant to the
Security Documents, the Borrower will, and will cause each of its
Subsidiaries to, cooperate with and promptly take all actions necessary to
assist the Banks, the Agent and the Collateral Agent, including, without
limitation, to make, execute, acknowledge, file and/or deliver to the
Banks, the Agent or the Collateral Agent, as the case may be, such
information, documents, certificates, reports and other assurances or
instruments, which the Banks, the Agent or the Collateral Agent, as the
case may be, deems appropriate or advisable to comply with such statutes,
regulations or orders so as to preserve, protect, enforce or realize upon
such security interests granted to the Secured Creditors.
(f) In the event that the Agent or the Required Banks at any
time after the Effective Date determine in their sole discretion (whether
as a result of a position taken by an applicable bank regulatory agency or
official, or otherwise) that real estate appraisals satisfying the
requirements set forth in 12 C.F.R., Part 34-Subpart C, or any successor or
similar statute, rule, regulation, guideline or order (any such appraisal a
"Required Appraisal") are or were required to be obtained, or should be
obtained, in connection with any Mortgaged Property or Mortgaged
Properties, then, within 60 days after receiving written notice thereof
from the Agent or the Required Banks, as the case may be, the Borrower
shall cause such Required Appraisal to be delivered, at the expense of the
Borrower, to the Agent, which Required Appraisal, and the respective
appraiser, shall be satisfactory to the Agent.
8.12 Maintenance of Corporate Separateness. The Borrower will,
and will cause each of its Subsidiaries to, satisfy customary corporate
formalities, including the maintenance of corporate records. Furthermore,
neither the Borrower nor any of its Subsidiaries shall take any action, or
conduct its affairs in a manner, which is likely to result in the corporate
existence of the Borrower or any Subsidiary of the Borrower being ignored,
or in the assets and liabilities of the Borrower or any Subsidiary of the
Borrower being substantively consolidated with those of any other Person in
a bankruptcy, reorganization or other insolvency proceeding.
8.13 Use of Proceeds. All proceeds of the Loans shall be used
as provided in Section 7.08.
8.14 UCC Searches. On or prior to the 90th day following the
Initial Borrowing Date, the Borrower shall, or shall cause its Subsidiaries
to, deliver to the Agent (at the Borrower's own cost) copies of UCC-11's,
or equivalent reports, verifying that all financing statements necessary
or, in the opinion of the Collateral Agent desirable, to perfect the
security interest purported to be created by the Security Documents shall
have been properly recorded and filed.
8.15 Permitted Transactions. (a) Subject to the provisions of
this Section 8.15 applicable thereto and the requirements contained in the
definition of Permitted Acquisition or Permitted Acquisition Investment, as
the case may be, the Borrower and its Subsidiaries may from time to time
after the Initial Borrowing Date effect Permitted Transactions, so long as:
(i) the Borrower or such Subsidiary shall have given the Agent
and the Banks at least 10 Business Days (or such shorter period as
the Required Banks may agree) prior written notice of any such
Permitted Transaction (each such notice, a "Permitted Transaction
Notice"), which notice shall (v) contain the estimated date such
Permitted Transaction is scheduled to be consummated, (w) attach a
true and correct copy of any theretofore executed purchase agreement,
letter of intent, or similar agreement executed by the Borrower or
such Subsidiary and the seller in connection with such Permitted
Transaction (or to the extent such agreements have not yet been
executed, drafts thereof to the extent then available in a form
suitable, as determined by the Borrower, for distribution to the
Banks), (x) contain the estimated purchase price of such Permitted
Transaction and the intended method of financing thereof, (y) contain
a description of the stock, assets, Permitted Earn-Out Debt,
Permitted Debt, Incentive Arrangements and/or Permitted Acquired Debt
expected to be incurred, acquired or assumed in connection with such
Permitted Transaction and (z) to the extent the Borrower is, at the
time the notice is given, in a position to make a reasonable estimate
thereof, contain the Borrower's estimate of any Restructuring Costs
anticipated to be incurred in connection with the respective
Permitted Transaction;
(ii) not later than 5 Business Days after the consummation of
the respective Permitted Transaction, the Borrower shall have
certified to the Agent and the Banks (u) the amount of cash to be
paid in respect of such Permitted Transaction, including for this
purpose any amounts to be placed in escrow or similar arrangements by
the Borrower or such Subsidiary and the amount of any post-closing
adjustment as then estimated by the Borrower which would increase the
amount of cash to be paid in respect of such Permitted Transaction
(but ignoring any post-closing adjustment which the Borrower
estimates will result in a reduction to the amount of cash to be
paid), and the sources thereof, (v) without duplication of the
amounts described in preceding clause (u), the Borrower's good faith
estimate of the amount of fees and expenses which will be payable by
the Borrower or such Subsidiary in respect of such Permitted
Transaction (including, without limitation, any amounts payable
pursuant to the TJC Management Services Agreements in connection
therewith), (w) the description of all Permitted Debt and/or
Permitted Acquired Debt to be incurred, acquired or assumed in
connection with such Permitted Transaction and the aggregate
principal amounts thereof, (x) the description of all Incentive
Arrangements and Permitted Earn-Out Debt to be issued in connection
with such Permitted Transaction, (y) the Borrower's estimate of the
maximum amount of all Restructuring Costs which it believes are
reasonably likely to be incurred in the 12 months following the
respective Permitted Transaction and as a result thereof or in
connection therewith (such amount, as certified with respect to any
Permitted Transaction, being herein called the "Certified
Restructuring Cost Reserve" with respect thereto) and (z) that,
except as described above, (A) there are no other amounts or
consideration which will be payable in connection with the respective
Permitted Transaction at the time of the consummation thereof, and
(B) there are no other material (in relation to the size of the
respective Permitted Transaction) amounts which could reasonably be
expected to be payable after the consummation of the respective
Permitted Transaction by the Borrower, such Subsidiary or any of
their respective Subsidiaries in connection with the respective
Permitted Transaction or pursuant to any of the documentation
executed in connection therewith;
(iii) with respect to each Permitted Acquisition, the Permitted
Transaction Cost thereof shall not exceed $25,000,000;
(iv) with respect to each Permitted Acquisition Investment, the
Permitted Transaction Cost thereof shall not exceed the Permitted
Investment Amount;
(v) with respect to each Permitted Transaction, the
consideration paid therefor shall consist solely of the items
described in preceding clause (ii) and the certificate delivered
pursuant thereto;
(vi) with respect to each Permitted Transaction, no Default or
Event of Default shall be in existence at the time of the
consummation of such Permitted Transaction or immediately after
giving effect thereto;
(vii) all representations and warranties contained herein and in
the other Credit Documents shall be true and correct in all material
respects with the same effect as though such representations and
warranties had been made on and as of the date of such Permitted
Transaction (both before and after giving effect thereto), unless
stated to relate to a specific earlier date, in which case such
representations and warranties shall be true and correct in all
material respects as of such earlier date;
(viii) as soon as available but not later than 5 days after the
execution thereof, a copy of the executed purchase agreement or
similar agreement with respect to such Permitted Transaction;
(ix) the Borrower shall have certified to the Agent and the
Banks that the proposed Permitted Transaction shall not be reasonably
likely to result in material increased tax (after taking into account
payments to be received under the Existing Tax Sharing Agreement (and
the respective newly-acquired Subsidiary's ability to pay same)),
ERISA, environmental or other contingent liabilities (excluding
pursuant to Incentive Arrangements and Permitted Earn-Out Debt as
described in the certificate delivered pursuant to preceding clause
(ii) and Restructuring Costs consistent with the Certified
Restructuring Cost Reserve for the respective Permitted Transaction
as certified pursuant to preceding clause (ii)) on the Borrower or on
the Borrower and its Subsidiaries taken as a whole;
(x) recalculations are made by the Borrower of compliance with
the covenants contained in Sections 9.08 and 9.09 for the period of
four consecutive fiscal quarters (taken as one accounting period)
most recently ended prior to the date of such Permitted Transaction
(each, a "Calculation Period"), on a Pro Forma Basis as if the
respective Permitted Transaction (as well as all other Permitted
Transactions theretofore consummated after the first day of such
Calculation Period) had occurred on the first day of such Calculation
Period, and such recalculations shall show that all such covenants
would have been complied with if the Permitted Transaction had
occurred on the first day of such Calculation Period;
(xi) the Borrower in good faith believes, based on calculations
made by the Borrower, on a Pro Forma Basis after giving effect to the
respective Permitted Transaction, that the financial covenants
contained in such Sections 9.08 and 9.09 will continue to be met for
the one-year period following the date of the consummation of the
respective Permitted Transaction; and
(xii) not later than the date of the consummation of the
respective Permitted Transaction, the Borrower shall furnish the
Agent and the Banks an officer's certificate executed by an
Authorized Officer of the Borrower, certifying on behalf of the
Borrower as to compliance with the requirements of preceding clauses
(i) through (xi) and containing the pro forma calculations required
by preceding clauses (x) and (xi).
(b) At the time of each Permitted Transaction involving the
creation or acquisition of a Subsidiary, or the acquisition of capital
stock or other equity interest of any Person, all capital stock or other
equity interests thereof created or acquired in connection with such
Permitted Transaction (to the extent owned by the Borrower or one or more
of its Domestic Subsidiaries) shall be pledged to the Collateral Agent for
the benefit of the Secured Creditors pursuant to the Pledge Agreement in
accordance with requirements of Section 8.11.
(c) The Borrower shall cause each Subsidiary which is formed to
effect, or is acquired pursuant to, a Permitted Transaction to comply with,
and to execute and deliver, all of the documentation required by, Sections
8.11 and 9.13, to the satisfaction of the Agent.
(d) The consummation of each Permitted Transaction shall be
deemed to be a representation and warranty by the Borrower that the
certifications by it (or by one or more of its Authorized Officers)
pursuant to Section 8.15(a) are true and correct and that all conditions
thereto have been satisfied and that same is permitted in accordance with
the terms of this Agreement, which representation and warranty shall be
deemed to be a representation and warranty for all purposes hereunder,
including without limitation, Sections 6 and 10.
8.16 Foreign Subsidiaries Security. (a) If following a change
in the relevant sections of the Code or the regulations, rules, rulings,
notices or other official pronouncements issued or promulgated thereunder,
counsel for the Borrower acceptable to the Agent and the Required Banks
does not within 30 days after a request from the Agent or the Required
Banks deliver evidence, in form and substance satisfactory to the Agent and
the Required Banks, with respect to any Foreign Subsidiary which has not
already had all of its stock or promissory notes pledged pursuant to the
Pledge Agreement, that a pledge (x) of 65% or more of the total combined
voting power of all classes of capital stock of such Foreign Subsidiary
entitled to vote and (y) of any promissory note issued by such Foreign
Subsidiary to the Borrower or any of its Domestic Subsidiaries, in any such
case would cause the undistributed earnings of such Foreign Subsidiary as
determined for Federal income tax purposes to be treated as a deemed
dividend to such Foreign Subsidiary's United States parent for Federal
income tax purposes, then in the case of a failure to deliver the evidence
described above, that portion of such Foreign Subsidiary's outstanding
capital stock or any promissory notes so issued by such Foreign Subsidiary,
in each case not theretofore pledged pursuant to the Pledge Agreement shall
be pledged to the Collateral Agent for the benefit of the Secured Creditors
pursuant to the Pledge Agreement (or another pledge agreement in
substantially similar form, if needed).
(b) If following a change in the relevant sections of the Code
or the regulations, rules, rulings, notices or other official
pronouncements issued or promulgated thereunder, counsel for the Borrower
acceptable to the Agent delivers evidence, in form and substance
satisfactory to the Agent and the Required Banks, with respect to any
Foreign Subsidiary which has had any portion of its stock or promissory
notes pledged pursuant to the Pledge Agreement, that a pledge (x) of any
portion of the total combined voting power of all classes of capital stock
of such Foreign Subsidiary entitled to vote and (y) of any promissory note
issued by such Foreign Subsidiary to the Borrower or any of its Domestic
Subsidiaries, in any such case would cause the undistributed earnings of
such Foreign Subsidiary as determined for Federal income tax purposes to be
treated as a deemed dividend to such Foreign Subsidiary's United States
parent for Federal income tax purposes, then the Collateral Agent shall
release that portion of such Foreign Subsidiary's outstanding capital stock
or any promissory notes so issued by such Foreign Subsidiary, in each case
pledged pursuant to the Pledge Agreement, as may be required to ensure that
the undistributed earnings of such Foreign Subsidiary shall not be treated
as a deemed dividend to such Foreign Subsidiary's United States parent for
Federal income tax purposes.
8.17 Receivables Facility Transaction. At any time after the
Effective Date, the Borrower and/or one or more other Designated Credit
Parties may enter into a Receivables Facility (which complies with the
definition of Receivables Facility contained herein) to provide off-balance
sheet financing to the Borrower for the sale of Receivables Facility Assets
to a Receivables Entity (which shall be established in accordance with, and
meet the requirements of, the definition of Receivables Entity contained
herein), so long as (x) on the Receivables Facility Transaction Date all
requirements of this Section 8.17 have been satisfied and the Receivables
Facility and related transactions comply with the respective defined terms
as used in this Section 8.17 and (y) in the case of any replacement or
modification of the Receivables Facility after the entering into thereof,
same shall satisfy the requirements of Section 9.10. The Borrower hereby
agrees that, at the time it initially establishes the Receivables Facility
it shall (and that it shall only enter into the Receivables Facility if),
on the Receivables Facility Transaction Date, (i) have caused to be
delivered to the Agent and the Required Banks true and correct copies of
all Receivables Facility Documents, certified as such by an officer of the
Borrower, and all of the terms and conditions of the Receivables Facility
Documents shall be in form and substance reasonably satisfactory to the
Agent and the Required Banks, (ii) the Receivables Facility Transaction,
including all of the terms and conditions thereof, shall have been duly
approved by the board of directors of the Borrower, and all Receivables
Facility Documents shall be in full force and effect, (iii) each of the
conditions precedent to the consummation of the transactions contemplated
by the Receivables Facility Documents shall have been satisfied and not
waived except with the consent of the Agent and the Required Banks to the
reasonable satisfaction of the Agent and the Required Banks, (iv) each of
the representations and warranties of the Designated Credit Parties and the
Receivables Entity contained in the Receivables Facility Documents shall be
true and correct in all material respects, (v) the transactions
contemplated by the Receivables Facility Documents shall have been
consummated in all material respects in accordance with all applicable law
and the Receivables Facility Documents, (vi) no Default or Event of Default
shall be in effect upon the Receivables Facility Transaction Date (either
before or after giving effect to the transactions contemplated by the
Receivables Facility Documents) and (vii) the Borrower and/or the other
Designated Credit Parties shall have received the Receivables Facility
Proceeds and used the same to make any prepayment and/or satisfy any cash
collateral requirement required under Section 4.02(a) as a result of the
reduction to the Total Commitment on such date under Section 3.03(f).
SECTION 9. Negative Covenants. The Borrower hereby covenants
and agrees that on and after the Effective Date and until the Total
Commitment and all Letters of Credit have terminated and the Loans, Notes
and Unpaid Drawings, together with interest, Fees and all other Obligations
incurred hereunder and thereunder, are paid in full:
9.01 Liens. The Borrower will not, and will not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon
or with respect to any property or assets (real or personal, tangible or
intangible) of the Borrower or any of its Subsidiaries, whether now owned
or hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such
property or assets (including sales of accounts receivable with recourse to
the Borrower or any Subsidiary of the Borrower), or assign any right to
receive income or permit the filing of any financing statement under the
UCC or any other similar notice of Lien under any similar recording or
notice statute, provided that the provisions of this Section 9.01 shall not
prevent the creation, incurrence, assumption or existence of the following
(Liens described below are herein referred to as "Permitted Liens"):
(i) inchoate Liens for taxes, assessments or governmental
charges or levies not yet due and payable or Liens for taxes,
assessments or governmental charges or claims being contested in good
faith and by appropriate proceedings for which adequate reserves, if
applicable, have been established in accordance with GAAP;
(ii) Liens in respect of property or assets of the Borrower or
any of its Subsidiaries imposed by law, which were incurred in the
ordinary course of business and do not secure Indebtedness for
borrowed money, such as carriers', warehousemen's, materialmen's and
mechanics' liens and other similar Liens arising in the ordinary
course of business, and (x) which do not in the aggregate materially
detract from the value of the Borrower's or such Subsidiary's
property or assets or materially impair the use thereof in the
operation of the business of the Borrower or such Subsidiary or (y)
which are being contested in good faith by appropriate proceedings,
which proceedings have the effect of preventing the forfeiture or
sale of the property or assets subject to any such Lien;
(iii) Liens in existence on the Effective Date which are listed,
and the property subject thereto described, in Schedule VIII, but
only to the respective date, if any, set forth in such Schedule VIII
for the removal and termination of any such Liens, but no renewals or
extensions of such Liens shall be permitted;
(iv) Permitted Encumbrances;
(v) Liens created pursuant to the Credit Documents;
(vi) Liens created by leases or subleases granted by the
Borrower or any of its Subsidiaries to other Persons in the ordinary
course of business not materially interfering with the conduct of the
business of the Borrower or any of its Subsidiaries;
(vii) Liens upon assets of the Borrower or any of its
Subsidiaries subject to Capitalized Lease Obligations to the extent
such Capitalized Lease Obligations are permitted by Section
9.04(iii), provided that (x) such Liens only serve to secure the
payment of Indebtedness arising under such Capitalized Lease
Obligation and (y) the Lien encumbering the asset giving rise to the
Capitalized Lease Obligation does not encumber any other asset of the
Borrower or any of its Subsidiaries;
(viii) Liens (including extensions, renewals and replacements
thereof) upon property acquired (the "Acquired Property") after the
Effective Date, provided that (w) any such Lien is created solely for
the purpose of securing Indebtedness representing, or issued to
finance, refinance or refund, the cost (including the cost of
construction) of the Acquired Property, (x) the principal amount of
the Indebtedness secured by such Lien does not exceed 100% of the
cost of the Acquired Property, (y) such Lien does not extend to or
cover any property other than the Acquired Property and any
improvements on such Acquired Property, and (z) the issuance of the
Indebtedness to purchase the Acquired Property is permitted under
Section 9.04(iii);
(ix) easements, rights-of-way, restrictions, encroachments and
other similar charges or encumbrances, and minor title deficiencies,
in each case not securing Indebtedness and not materially interfering
with the conduct of the business of the Borrower or any of its
Subsidiaries;
(x) Liens arising from precautionary UCC financing statement
filings regarding operating leases entered into by the Borrower or
any of its Subsidiaries in the ordinary course of business;
(xi) statutory and common law landlords' liens under leases to
which the Borrower or any of its Subsidiaries is a party;
(xii) Liens (other than Liens created or imposed under ERISA) on
the property of the Borrower or any of its Subsidiaries incurred or
deposits made in the ordinary course of business but not incurred in
connection with Indebtedness for borrowed money, in connection with
(x) workers' compensation, unemployment insurance and other types of
social security, or (y) securing the performance of tenders,
statutory obligations, surety bonds, bids, leases, statutory bonds,
government contracts, performance and return-of-money bonds, warranty
and other similar obligations incurred in the ordinary course of
business (exclusive of obligations in respect of the payment for
borrowed money) or (z) deposits made in the ordinary course of
business to secure liability for premiums to insurance carriers,
provided that the aggregate amount of deposits, cash and fair market
value of the property encumbered by liens described in clauses (y)
and (z) hereof at any time pursuant to this clause (xii) shall not
exceed $3,000,000 in the aggregate;
(xiii) inchoate Liens arising from judgments, decrees or
attachments in circumstances not constituting an Event of Default
under Section 10.09, provided that no cash or other property shall be
pledged by the Borrower or any of its Subsidiaries as security
therefor;
(xiv) Liens on property or assets acquired pursuant to a
Permitted Acquisition, or on property or assets of a Subsidiary of
the Borrower in existence at the time such Subsidiary is acquired
pursuant to a Permitted Transaction, in each case securing Permitted
Acquired Debt, provided that (x) such Liens do not attach to the
capital stock of any Subsidiary of the Borrower and (y) such Liens
existed prior to, and were not incurred in contemplation of, such
Permitted Transaction and do not attach to any other asset of the
Borrower or any of its Subsidiaries;
(xv) Liens created pursuant to the Existing Seller Letter of
Credit Collateral Agreement consisting of cash and Cash Equivalents
of Merkle in an amount not to exceed $90,000,000 and any investment
income with respect thereto (prior to the distribution of same
pursuant to the Existing Seller Letter of Credit Collateral
Agreement) securing the reimbursement obligations of Merkle in
respect of the Existing Seller Letter of Credit (with such collateral
being herein called the "Existing Seller Letter of Credit Cash
Collateral");
(xvi) Liens arising pursuant to Permitted Sale-Leaseback
Transactions to the extent permitted by Section 9.02(xi), so long as
such Liens do not attach to any assets of the Borrower or any of its
Subsidiaries other than those which are the subject of such Permitted
Sale-Leaseback Transaction;
(xvii) Liens securing refinancing Indebtedness incurred pursuant
to Section 9.04(xvi), so long as such Indebtedness is incurred in
compliance with said Section, the Liens secure only the respective
issue of refinancing Indebtedness and the Liens extend only to the
property originally subject to Liens securing the Indebtedness being
refinanced or renewed pursuant to said Section 9.04(xvi);
(xviii) Liens created for the benefit of the MK Sellers in the
Elmco Refund;
(xix) Liens (x) granted by the Designated Credit Parties in
favor of the Receivables Entity consisting of UCC-1 financing
statements filed to effect the sale of Receivables Facility Assets
pursuant to the Receivables Facility Documents, (y) granted by the
Receivables Entity on those Receivables Facility Assets acquired by
it pursuant to the Receivables Facility Documents to the extent that
such Liens are created by the Receivables Facility Documents and (z)
consisting of the right of setoff granted to any financial
institution acting as a lockbox bank in connection with the
Receivables Facility;
(xx) Liens in favor of customs and revenue authorities arising
as a matter of law to secure payment of customs duties in connection
with the importation of goods; and
(xxi) additional Liens incurred by the Borrower and its
Subsidiaries, so long as the value of the property subject to such
Liens, and any Indebtedness and other obligations secured thereby, do
not exceed $10,000,000.
9.02 Consolidation, Merger, Purchase or Sale of Assets, etc.
The Borrower will not, and will not permit any of its Subsidiaries to, wind
up, liquidate or dissolve its affairs or enter into any transaction of
merger or consolidation, or convey, sell, lease or otherwise dispose of all
or any part of its property or assets, or enter into any partnerships,
joint ventures, sale-leaseback transactions, or purchase or otherwise
acquire (in one or a series of related transactions) any part of the
property or assets (other than purchases or other acquisitions of
inventory, materials and equipment in the ordinary course of business) of
any Person or agree to do any of the foregoing at any future time, except
that:
(i) Capital Expenditures (including payments in respect of
Capitalized Lease Obligations, but excluding Capital Expenditures
which may arise as a result of the purchase of any capital stock or
equity interests in any other Person or by means of a purchase of
assets constituting a business, division or product line of any
Person, which expenditures may only be made pursuant to Permitted
Transactions effected in accordance with the relevant provisions of
this Agreement) by the Borrower and its Subsidiaries shall be
permitted so long as same do not cause a violation of any of the
other provisions of this Agreement;
(ii) the Borrower and any of its Subsidiaries may sell, lease
(as lessor) or otherwise dispose of assets (other than in a Permitted
Sale-Leaseback Transaction and excluding capital stock of
Subsidiaries) which, in the reasonable opinion of such Person, are
obsolete, uneconomic or no longer useful in the conduct of such
Person's business, provided that (w) each such sale or disposition
shall be for an amount at least equal to the fair market value
thereof (as determined in good faith by senior management of the
Borrower), (x) each such sale results in consideration at least 75%
of which (taking the amount of cash and the fair market value, as
determined by the Borrower in good faith, of any non-cash
consideration, although in the case of any non-cash consideration
received in the form of indebtedness, the amount thereof shall be
deemed to be the greater of such fair market value thereof or
principal amount thereof) shall be in the form of cash (although, for
purposes of this clause (x), there shall be treated as cash
consideration the amount of any trade payables and the principal
amount of Indebtedness for borrowed money assumed by the respective
purchaser of assets), (y) the aggregate Net Cash Proceeds of all
assets sold or otherwise disposed of pursuant to this clause (ii)
after the Effective Date shall not exceed $5,000,000 in the aggregate
and (z) the Net Cash Proceeds from each Asset Sale pursuant to this
clause (ii) shall be used to make any prepayment under Section 4.02
as a result of the required reduction, if any, to the Total Available
Commitment or shall be reinvested to the extent permitted by the
terms of the definition of Blocked Commitment.
(iii) Investments may be made to the extent permitted by Section
9.05;
(iv) each of the Borrower and each of its Subsidiaries may
lease (as lessee) real or personal property in the ordinary course of
business so long as any such lease does not create a Capitalized
Lease Obligation, except to the extent permitted by clause (i) of
this Section 9.02;
(v) Restricted Payments may be paid to the extent permitted by
Section 9.03;
(vi) the Acquisition, the Merger, the Asset Contribution and
the MK Stock Contribution shall be permitted;
(vii) each of the Borrower and its Subsidiaries may make sales
of inventory in the ordinary course of business;
(viii) the Borrower and its Subsidiaries may effect Permitted
Transactions in accordance with the requirements of Section 8.15;
(ix) any Wholly-Owned Domestic Subsidiary of the Borrower
(other than the Receivables Entity) may be merged or consolidated
with and into, or be liquidated or dissolved voluntarily into, the
Borrower or any other Wholly-Owned Domestic Subsidiary of the
Borrower (other than the Receivables Entity); provided that (w) no
Default or Event of Default then exists or would result therefrom,
(x) the surviving corporation of any such merger with the Borrower is
the Borrower, (y) any such Wholly-Owned Domestic Subsidiary which is
so merged or consolidated with and into, or liquidated or dissolved
voluntarily into, the Borrower or another Wholly-Owned Domestic
Subsidiary of the Borrower shall not have any material indebtedness
or other material liabilities (contingent or otherwise), and (z) the
security interests, if any, granted to the Collateral Agent for the
benefit of the Secured Creditors pursuant to the Security Documents
in the assets of such Subsidiary so merged shall remain in full force
and effect and perfected (to at least the same extent as in effect
immediately prior to such merger, consolidation or liquidation);
(x) any Subsidiary of the Borrower may convey or otherwise
transfer all or any part of its business, properties or assets (but
not any indebtedness or other liabilities (contingent or otherwise))
to the Borrower or any Wholly-Owned Domestic Subsidiary of the
Borrower (other than the Receivables Entity); provided that the
security interests granted to the Collateral Agent for the benefit of
the Secured Creditors pursuant to the Security Documents in the
assets so transferred shall remain in full force and effect and
perfected (to at least the same extent as in effect immediately prior
to such transfer);
(xi) the Borrower or any of its Subsidiaries may effect
Permitted Sale-Leaseback Transactions in accordance with the
definition thereof; provided that the sum (without duplication) of
(w) the aggregate amount of all proceeds received by the Borrower and
its Subsidiaries from all Permitted Sale-Leaseback Transactions
consummated on and after the Effective Date plus (x) the aggregate
outstanding amount of Indebtedness evidenced by all Capitalized Lease
Obligations (excluding Indebtedness evidenced by Capitalized Lease
Obligations arising from Permitted Sale-Leaseback Transactions the
proceeds of which were included pursuant to preceding clause (w))
incurred on and after the Effective Date plus (y) the aggregate
outstanding principal amount of all purchase money Indebtedness
secured by Liens permitted under Section 9.01(viii) incurred on and
after the Effective Date, plus (z) the aggregate outstanding
principal amount of all Refinancing Indebtedness incurred in respect
of Indebtedness originally incurred pursuant to this clause (xi) or
any refinancing thereof, shall not exceed $10,000,000;
(xii) on and after the Receivables Facility Transaction Date,
the Designated Credit Parties may (x) contribute cash to the
Receivables Entity the proceeds of which are used to acquire
Receivables Facility Assets from the Designated Credit Parties and
(y) transfer and reacquire Receivables Facility Assets to and from
the Receivables Entity, in each case pursuant to, and in accordance
with the terms of, the Receivables Facility Documents;
(xiii) on and after the Receivables Facility Transaction Date,
the Receivables Entity may transfer and reacquire Receivables
Facility Assets (to the extent acquired from Designated Credit
Parties as provided in clause (xii) above) pursuant to, and in
accordance with the terms of, the Receivables Facility Documents;
(xiv) the surrender or waiver of contract rights or the
settlement, release or surrender of contract, tort or other claims of
any kind shall be permitted, in each case in the good faith business
judgment of the Borrower or its respective Subsidiary;
(xv) each of the Borrower and its Subsidiaries may sell assets
to any Person, provided that (x) the aggregate sale proceeds from all
assets subject to such sales pursuant to this clause (xv) shall not
exceed $5,000,000 in any fiscal year, (y) each such sale results in
consideration at least 75% of which (taking the amount of cash and
the fair market value, as determined by the Borrower in good faith,
of any non-cash consideration, although in the case of any non-cash
consideration received in the form of indebtedness, the amount
thereof shall be deemed to be the greater of such fair market value
thereof or principal amount thereof) shall be in the form of cash
(although, for purposes of this clause (x), there shall be treated as
cash consideration the amount of any trade payables and the principal
amount of Indebtedness for borrowed money assumed by the respective
purchaser of assets), and (z) the Net Cash Proceeds from each Asset
Sale pursuant to this clause (xiv) shall be used to make the
prepayment, if any, required by Section 4.02 as a result of the
reduction, if any, to the Total Available Commitment or shall be
reinvested to the extent permitted by the terms of the definition of
Blocked Commitment.
To the extent the Required Banks or all the Banks (as shall be required by
Section 13.12) waive the provisions of this Section 9.02 with respect to
the sale of any Collateral, or any Collateral is sold or otherwise disposed
of (excluding transfers to the Borrower or a Subsidiary thereof, unless
transferred to the Receivables Entity in accordance with preceding clauses
(xii) and/or (xiii)) as permitted by this Section 9.02, (i) such Collateral
shall be sold or otherwise transferred or disposed of free and clear of the
Liens created by the Security Documents and (ii) if such Collateral
includes all of the capital stock held by the Credit Parties in a
Subsidiary of one or more of the Credit Parties, such capital stock shall
be released from the Pledge Agreement and such Subsidiary, to the extent
party to a Guaranty, shall be released therefrom, and the Agent and the
Collateral Agent shall be authorized to take any actions deemed appropriate
in order to effect the foregoing.
9.03 Restricted Payments. The Borrower will not, and will not
permit any of its Subsidiaries to, authorize, declare, make or pay any
Restricted Payment, except that the following shall be permitted (with
calculations of compliance with this Section 9.03 to take into effect the
provisions of Section 9.05(v)):
(i) any Subsidiary of the Borrower (x) may pay cash Dividends
to the Borrower or any Wholly-Owned Subsidiary of the Borrower and
(y) if such Subsidiary is a Non-Wholly-Owned Subsidiary of the
Borrower, may pay cash Dividends to its shareholders generally so
long as the Borrower or its respective Subsidiary which owns the
equity interest or interests in the Subsidiary paying the cash
Dividends receives at least its proportionate share thereof (based
upon its relative holdings of equity interests in the Subsidiary
paying such cash Dividends and taking into account the relative
preferences, if any, of the various classes of equity interests in
such Subsidiary);
(ii) the Borrower may pay cash Dividends to Parent for the
purpose of paying, so long as the proceeds thereof are promptly used
by Parent to pay, its normal operating expenses in the ordinary
course of business (including, without limitation, professional fees
and expenses) and other similar corporate overhead costs and
expenses;
(iii) on the Business Day immediately preceding the date on
which a scheduled principal and/or interest payment is due on any
outstanding Shareholder Subordinated Note originally issued to any
officer, former employee, employee or director (or their estates) of
Parent, the Borrower or any of the Borrower's Subsidiaries (or, in
the event that a Default or Event of Default shall then exist, on the
first Business Day when no Default or Event of Default shall be
continuing), the Borrower may make cash Dividends to Parent, which in
turn shall immediately utilize the full amount of such cash Dividends
to pay cash Dividends to M&G Holdings, in an amount not to exceed the
aggregate amount of the accrued and unpaid principal and/or interest
with respect to such scheduled payment date as provided in such
Shareholder Subordinated Notes, so long as (x) on the Business Day
immediately after the receipt of such cash Dividend, M&G Holdings
utilizes the full amount thereof to make such required principal
and/or interest payment on such Shareholder Subordinated Notes to the
extent then due and payable in accordance with the terms of such
Shareholder Subordinated Notes, (y) the aggregate amount of all cash
Dividends paid by the Borrower pursuant to this clause (iii) on and
after the Effective Date shall not exceed an amount equal to the
remainder of (1) $5,000,000 less (2) the aggregate amount of all cash
Dividends paid by the Borrower pursuant to Section 9.03(iv) on and
after the Effective Date and (z) no Default or Event of Default then
exists or would result therefrom;
(iv) the Borrower may make cash Dividends to Parent, which in
turn shall immediately utilize the full amount of such cash Dividends
to pay cash Dividends to M&G Holdings, for the purpose of redeeming
or repurchasing, and so long as M&G Holdings promptly, and in any
event by the immediately succeeding Business Day, utilizes the full
amount of such cash Dividends to redeem or repurchase, M&G Holdings
Common Stock (or options or warrants to purchase such M&G Holdings
Common Stock) from officers, former employees, employees and
directors (or their estates) solely of Parent, the Borrower or any of
the Borrower's Subsidiaries upon the death, permanent disability,
retirement or termination of employment at the Parent and its
Subsidiaries of such Person to the extent required to be made in
accordance with the terms of the Management Subscription Agreement,
provided that (x) no Default or Event of Default then exists or would
result therefrom, (y) the amount of such cash Dividends shall not
exceed the amount necessary to make the required redemption or
repurchase payment in accordance with the terms of the Management
Subscription Agreement and (z) notwithstanding the preceding clause
(y), the aggregate amount of all cash Dividends paid by the Borrower
pursuant to this Section 9.03(iv) on and after the Effective Date
shall not exceed an amount equal to the remainder of (1) $5,000,000
less (2) the aggregate amount of all cash Dividends paid by the
Borrower pursuant to Section 9.03(iii) on and after the Effective
Date;
(v) the Borrower may make cash Dividends to (A) Parent, (B)
Parent, which in turn shall immediately utilize the full amount of
such cash Dividends to pay cash Dividends to M&G Holdings and/or (C)
Parent, which in turn shall immediately utilize the full amount of
such cash Dividends to pay cash Dividends to M&G Holdings, which in
turn shall immediately utilize the full amount of such cash Dividends
to pay cash Dividends to Jordan, in each case for the purpose of
paying, and so long as Parent, M&G Holdings or Jordan, as the case
may be, promptly utilizes the full amount of such cash Dividends to
pay, director fees of Parent, M&G Holdings or Jordan, provided that
such cash Dividends shall not exceed the Borrower's allocated share
of such director fees, such allocation to be determined in good faith
by the Borrower; provided further, that the aggregate amount of
Dividends payable under this clause (v) shall not exceed $250,000 in
any fiscal year of the Borrower;
(vi) the Borrower may make cash Dividends to (A) Parent, (B)
Parent, which in turn shall immediately utilize the full amount of
such cash Dividends to pay cash Dividends to M&G Holdings and (C)
Parent, which in turn shall immediately utilize the full amount of
such cash Dividends to pay cash Dividends to M&G Holdings, which in
turn shall immediately utilize the full amount of such cash Dividends
to pay cash Dividends to Jordan, in each case for the purpose of and
so long as Parent, M&G Holdings or Jordan, as the case may be,
promptly utilizes the full amount of such cash Dividends to (w) fund
indemnity payments required by Parent's, M&G Holdings' or Jordan's
certificate of incorporation or by-laws or director indemnity
agreements of Parent, M&G Holdings or Jordan existing on the date
hereof, in each case to the extent then due and payable, (x) pay
filing, registration and reporting fees and expenses, and fees and
expenses associated with state qualifications and other state,
federal or regulatory compliance matters, in each case to the extent
then due and payable, (y) fund expense reimbursement and indemnity
payments under the Intercompany Management Consulting Agreements and
the TJC Management Services Agreement for TJC, in each case to the
extent then due and payable and (z) pay, or reimburse Parent, M&G
Holdings or Jordan for payment of, normal operating expenses incurred
in the ordinary course of business (including, without limitation,
accounting and insurance expenses) and not otherwise covered by this
Section 9.03(vi), in each case to the extent then due and payable;
provided that (x) the aggregate amount of cash Dividends paid by the
Borrower for the purposes described in clause (w) above and any
indemnity payment under clause (y) above in any fiscal year of the
Borrower shall not exceed $5,000,000 and (y) such cash Dividends
shall not exceed the Borrower's allocated share of such payments
owing pursuant to this Section 9.03(vi), such allocation to be
determined in good faith by the Borrower;
(vii) whether or not same constitute Dividends, the payments
expressly permitted to be made pursuant to clauses (vi) through
(xii), inclusive, of Section 9.06(y) shall be permitted;
(viii) the Borrower may repurchase, redeem or otherwise make
payments in respect of Incentive Arrangements established by the
Borrower after the Effective Date to its executives and/or officers
or to the sellers of a Permitted Acquired Business in connection with
a Permitted Transaction, in each case in accordance with the terms of
such Incentive Arrangements, provided that (x) no Default or Event of
Default then exists or would result therefrom, (y) the terms of each
such Incentive Arrangement provide that payments thereunder may only
be made to the extent not prohibited by the terms of this Agreement
(or any refinancing or successive refinancings hereof) as in effect
from time to time, and (z) the aggregate amount of all cash payments
paid by the Borrower pursuant to this Section 9.03(viii) shall not
exceed, in any fiscal year of the Borrower, the product of the
aggregate Acquired EBITDA of all Permitted Acquired Businesses
(theretofore acquired in Permitted Acquisitions effected before the
last day of such fiscal year) for such fiscal year (provided that if
the respective Permitted Acquired Business was acquired after the
first day of the respective fiscal year, the Acquired EBITDA related
thereto shall only be included for periods after the acquisition
thereof was consummated) multiplied by 3; provided that cash payments
of the type described in this clause (viii) may be made in excess of
the amounts otherwise provided above in this clause (viii) (as
determined without regard to this proviso), so long as the aggregate
amount of all cash payments made pursuant to this proviso after the
Effective Date does not exceed $5,000,000;
(ix) the Borrower may (I) make cash interest payments to Parent
under, and in respect of, the Parent Subordinated Intercompany Note
(at the rate provided therein), so long as the amount of interest so
paid does not exceed the amount of interest then owing with respect
to the Senior Unsecured Notes and so long as Parent promptly, and in
any event by the immediately succeeding Business Day, utilizes the
full amount of such cash interest payments to pay interest as and
when due with respect to the Senior Unsecured Notes then outstanding,
to the extent required to be made in accordance with the terms of the
Senior Unsecured Note Indenture, provided that (w) the amount of such
cash interest payments shall not exceed the amount necessary to make
the required interest payment in accordance with the terms of the
Senior Unsecured Note Indenture, (x) the aggregate principal amount
of the Senior Unsecured Notes at any time outstanding, and the
interest rate payable in respect thereof, shall not have increased
(excluding increases as a result of the accrual of Additional
Interest under, and in accordance with, the terms of the Senior
Unsecured Note Documents as originally in effect) from the respective
amount or rate, as the case may be, in effect on the Initial
Borrowing Date less, in the case of the principal amount outstanding,
the aggregate amount of repayments of principal of the Senior
Unsecured Notes made after the Initial Borrowing Date and (z) no such
payment may be made at any time following the occurrence and during
the continuance of any Event of Default under Section 10.01, 10.03
(due to a breach of Section 9.03, 9.08 or 9.09), 10.04, 10.05, 10.09
or 10.10 and (II) pay cash Dividends to Parent, which in turn shall
immediately use the full amount of such cash Dividends for the
purpose of paying the fees and expenses hereinafter described and so
long as Parent promptly, and in any event by the immediately
succeeding Business Day, utilizes the full amount of such cash
Dividends to pay fees and expenses (but not to make indemnity
payments) owing to the trustee and/or the paying agent under, and in
accordance with the terms of, the Senior Unsecured Note Indenture,
provided that no such payment shall be made at any time following the
occurrence and during the continuance of any Event of Default under
Section 10.01, 10.03 (due to a breach of Section 9.03, 9.08 or 9.09),
10.04, 10.05, 10.09 or 10.10;
(x) on and after April 30, 2001, the Borrower may make cash
Dividends to Parent, which in turn shall immediately utilize the full
amount of such cash Dividends for the purpose of paying, and so long
as Parent promptly, and in any event by the immediately succeeding
Business Day, utilizes the full amount of such cash Dividends to pay
amounts as and when due under the Earnout Agreement, to the extent
required to be made in accordance with the terms of the Earnout
Agreement, provided that the amount of such cash Dividend shall not
exceed the amount necessary to make the required payment in
accordance with the terms of Earnout Agreement; and
(xi) the Borrower may use the amount of any cash contribution
to its common equity capital received by it from Parent for such
purpose (so long as such amount is used within five Business Days
after the receipt thereof by the Borrower for such purpose) to make
repayments of principal (and payments of related premium, if any) on
the Parent Subordinated Intercompany Note, so long as the amount of
such payment made by the Borrower to Parent is promptly, and in any
event within five Business Days, utilized by Parent to make
repayments of the principal of Senior Unsecured Notes (and any
related required payment of premium in connection therewith) in
accordance with the provisions thereof, provided, that no such
payment may be made at any time following the occurrence and during
the continuance of any Event of Default under Section 10.01, 10.03
(due to a breach of Section 9.03, 9.08 or 9.09) 10.04, 10.05, 10.09
or 10.10; and
(xii) Borrower may declare and pay, or otherwise effect,
additional Dividends, provided, the aggregate amount of such
Dividends declared pursuant to this clause (xii) after the Effective
Date shall not exceed $2,500,000.
9.04 Indebtedness. The Borrower will not, and will not permit
any of its Subsidiaries to, contract, create, incur, assume or suffer to
exist any Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and the
other Credit Documents;
(ii) Scheduled Existing Indebtedness to the extent the same is
listed on Schedule VI, but no refinancings or renewals thereof;
(iii) Indebtedness of the Borrower or any of its Subsidiaries
(a) evidenced by Capitalized Lease Obligations entered into after the
Effective Date, so long as the Liens arising as a result thereof are
permitted pursuant to Section 9.01 and (b) incurred in connection
with purchase money Liens permitted under Section 9.01(viii),
provided that the sum (without duplication) of (w) the aggregate
outstanding amount of such Indebtedness evidenced by all Capitalized
Lease Obligations (excluding Indebtedness evidenced by Capitalized
Lease Obligations arising from Permitted Sale-Leaseback Transactions
the proceeds of which were included pursuant to following clause (y))
incurred on and after the Effective Date plus (x) the aggregate
outstanding principal amount of all such purchase money Indebtedness
incurred on and after the Effective Date plus (y) the aggregate
amount of all proceeds received by the Borrower and its Subsidiaries
from all Permitted Sale-Leaseback Transactions consummated on and
after the Effective Date, plus (z) the aggregate outstanding
principal amount of all Refinancing Indebtedness incurred in respect
of Indebtedness originally incurred pursuant to this clause (iii) or
any refinancing thereof shall not exceed $10,000,000;
(iv) current liabilities of the Borrower and the Borrower's
Subsidiaries incurred in the ordinary course of business not incurred
through or in connection with (i) the borrowing of money or (ii) the
obtaining of credit except for credit on an open account basis
customarily extended and in fact extended in connection with normal
purchases of goods and services;
(v) Indebtedness constituting Intercompany Loans to the extent
permitted by Section 9.05;
(vi) Indebtedness under Other Hedging Agreements providing
protection against fluctuations in currency values in connection with
the Borrower's or any of its Subsidiaries' operations so long as
management of the Borrower or such Subsidiary, as the case may be,
has determined that the entering into of such Other Hedging
Agreements are bona fide hedging activities (and are not for
speculative purposes) and are in the ordinary course of business and
consistent with their past practices;
(vii) Indebtedness of Merkle incurred under the Existing Seller
Subordinated Note in an aggregate principal amount not to exceed
$5,000,000 (as reduced by any repayments of principal thereof) plus
additional Indebtedness of Merkle incurred under the Existing Seller
Subordinated Note representing accrued and unpaid interest thereon in
accordance with the terms of the Existing Seller Subordinated Note;
(viii) prior to December 31, 1996 (or, if earlier, the maturity
date of the Existing Seller Installment Note (whether by acceleration
or otherwise)) Indebtedness of Merkle incurred under the Existing
Seller Installment Note in an aggregate principal amount not to
exceed $90,000,000 (as reduced by any repayments of principal
thereof);
(ix) prior to December 31, 1996 (or, if earlier, the
termination of the Existing Seller Letter of Credit), Indebtedness of
Merkle representing reimbursement obligations in respect of the
Existing Seller Letter of Credit;
(x) Permitted Acquired Debt of any Subsidiary of the Borrower
acquired pursuant to a Permitted Transaction, so long as (w) the
aggregate principal amount of such Permitted Acquired Debt was
reflected in the certification of the Permitted Transaction Cost of
such Permitted Transaction delivered pursuant to Section 8.15(a)(ii),
(x) the respective Permitted Transaction was effected in accordance
with the requirements of said Section 8.15, (y) the respective
Indebtedness meets the requirements of the definition of "Permitted
Acquired Debt" contained herein and (z) the aggregate principal
amount of all Permitted Acquired Debt and all Permitted Debt incurred
or acquired after the Effective Date at no time outstanding shall
exceed $5.0 million;
(xi) Permitted Earn-Out Debt of the Borrower incurred by it in
connection with any Permitted Transaction effected in accordance with
the requirements of Section 8.15, so long as such Indebtedness
conforms to the requirements of the definition of "Permitted Earn-Out
Debt" contained herein;
(xii) Permitted Debt of the Borrower incurred in connection with
a Permitted Transaction, so long as (w) the aggregate principal
amount of such Permitted Debt was included within the Permitted
Transaction Cost as certified pursuant to Section 8.15(a)(ii), (x)
the respective Permitted Transaction was effected in accordance with
the requirements of said Section 8.15, (y) the Indebtedness meets the
requirements of the definition of "Permitted Debt" contained herein
and (z) the aggregate principal amount all Permitted Acquired Debt
and all Permitted Debt incurred or acquired after the Effective Date
at no time outstanding shall exceed $5.0 million;
(xiii) Indebtedness which may be deemed to exist as a result of
the Elmco Refund Obligation and/or the Net Asset Adjustment;
(xiv) Indebtedness which may be deemed to exist pursuant to any
performance, surety, statutory, appeal or similar bond obtained in
the ordinary course of business (so long as any such bond is obtained
by the Borrower or any of its Subsidiaries in respect of its own
obligations and such bond is not guaranteed by any other Person);
(xv) Indebtedness of the Borrower or any of its Subsidiaries
which may be deemed to exist in connection with agreements providing
for indemnification, purchase price adjustments and similar
obligations in connection with acquisitions or sales of assets and/or
businesses effected in accordance with the requirements of this
Agreement (so long as any such obligations are those of the Person
making the respective acquisition or sale, and are not guaranteed by
any other Person);
(xvi) Refinancing Indebtedness in respect of any Indebtedness
originally incurred as permitted by Section 9.04(iii), (x) or (xii)
so long as (a) such Indebtedness has a Weighted Average Life to
Maturity greater than the Weighted Average Life to Maturity of the
Indebtedness being refinanced, (b) such refinancing or renewal does
not (i) increase the amount of such Indebtedness outstanding
immediately prior to such refinancing or renewal or (ii) add
guarantors, obligors or security from that which applied to such
Indebtedness being refinanced or renewed, (c) such refinancing or
renewal Indebtedness has substantially the same subordination
provisions, if any, as applied to the Indebtedness being renewed or
refinanced, (d) in the case of Refinancing Indebtedness in respect of
Indebtedness originally incurred as permitted by Section 9.04(x), all
other terms of such refinancing or renewal (including, without
limitation, with respect to the amortization schedules, redemption
provisions, maturities, covenants, defaults and remedies), are not,
taken as a whole, materially less favorable to the respective
borrower than those previously existing with respect to the
Indebtedness being refinancing or renewed and (e) in the case of
Refinancing Indebtedness in respect of Indebtedness originally
incurred as permitted by Section 9.04(xii), such Refinancing
Indebtedness shall contain such terms and provisions as would be
required to qualify as Permitted Debt in accordance with the proviso
contained in the definition thereof;
(xvii) Indebtedness of the Borrower and its Subsidiaries
representing payment obligations pursuant to the Earnout Agreement;
and
(xviii) Indebtedness which may be deemed to exist pursuant to the
Receivables Facility;
(xix) unsecured Indebtedness of the Borrower pursuant to the
Parent Subordinated Intercompany Note, provided that the aggregate
principal amount thereof at no time exceeds either (x) $170 million
less the aggregate amount of principal repayments made in respect of
such promissory note after the Effective Date (which may only be made
in accordance with the provisions of Section 9.03(xi)) or (y) the
aggregate principal amount of outstanding Senior Unsecured Notes at
such time;
(xx) Indebtedness evidenced by one or more Transaction
Intercompany Notes, so long as each such note is pledged pursuant to
the Pledge Agreement; and
(xxi) additional Indebtedness of the Borrower and its
Subsidiaries not otherwise permitted hereunder and not exceeding
$15,000,000 in aggregate principal amount at any time outstanding.
9.05 Advances, Investments and Loans. The Borrower will not,
and will not permit any of its Subsidiaries to, directly or indirectly,
lend money or credit or make advances to any Person, or purchase or acquire
any stock, obligations or securities of, or any other interest in, or make
any capital contribution to, any other Person, or purchase or own a futures
contract or otherwise become liable for the purchase or sale of currency or
other commodities at a future date in the nature of a futures contract, or
hold any cash or Cash Equivalents (each of the foregoing, an "Investment"
and, collectively, "Investments"), except that the following shall be
permitted:
(i) the Borrower and its Subsidiaries may acquire and hold
accounts receivables owing to any of them, if created or acquired in
the ordinary course of business and payable or dischargeable in
accordance with customary terms;
(ii) the Borrower and its Subsidiaries may acquire and hold
cash and Cash Equivalents;
(iii) the Borrower may make intercompany loans and advances to
any of its 80%-Owned Subsidiaries that is a Subsidiary Guarantor, any
Subsidiary of the Borrower (other than the Receivables Entity) may
make intercompany loans and advances to the Borrower, and any
Subsidiary of the Borrower may make intercompany loans and advances
to any Wholly-Owned Subsidiary of the Borrower that is a Subsidiary
Guarantor; provided that (A) each Intercompany Loan made by a
Subsidiary of the Borrower (other than a Wholly-Owned Subsidiary
which is a Subsidiary Guarantor) to the Borrower or any Subsidiary
Guarantor shall contain the subordination provisions set forth on
Exhibit N, (B) each Intercompany Loan shall be evidenced by an
Intercompany Note, (C) each Intercompany Note (other than
Intercompany Notes issued by Foreign Subsidiaries to the Borrower or
any Wholly-Owned Subsidiary of the Borrower that is a Subsidiary
Guarantor, except to the extent otherwise required pursuant to
Section 8.16) shall be pledged to the Collateral Agent pursuant to
the Pledge Agreement to the extent required thereby and (D) each
Intercompany Loan made to a Subsidiary shall only be used for working
capital purposes and other general corporate purposes of such
Subsidiary;
(iv) the Acquisition, the Merger, the Asset Contribution and
the MK Stock Contribution shall be permitted in accordance with the
provisions of Section 5;
(v) to the extent the Borrower is at any time permitted to pay
a cash Dividend for the respective purpose permitted pursuant to any
of Sections 9.03(ii), (iii), (iv), (v) or (vi), the Borrower may, in
lieu of making such payment by way of Dividend, make the respective
payment (so long as used for the same purpose and so long as such
payment would otherwise comply in all respects with the relevant
requirements of Section 9.03) by way of advance to the Person to whom
it would otherwise have paid the Dividend pursuant to relevant
provisions of Section 9.03; provided that for all purposes of this
Agreement (including for purposes of determining compliance with
Section 9.03), all payments made pursuant to this Section 9.05(v)
shall be deemed to be Dividends made pursuant to the relevant clause
of 9.03;
(vi) the Borrower and its Subsidiaries (other than the
Receivables Entity) may enter into Other Hedging Agreements to the
extent permitted by Section 9.04(vi);
(vii) the Borrower may make cash equity contributions to any
direct Wholly-Owned Subsidiary of the Borrower that is a Subsidiary
Guarantor and any Wholly-Owned Subsidiary of the Borrower may make
cash equity contributions to any of its respective direct
Wholly-Owned Subsidiaries that are Subsidiary Guarantors;
(viii) the Borrower and its Subsidiaries may acquire and hold
Investments consisting of non-cash consideration received from sales
of assets effected in accordance with the requirements of Sections
9.02(ii) and 9.02(xv);
(ix) the Borrower may establish Subsidiaries to the extent
permitted by Section 9.13;
(x) the Borrower and any of its Subsidiaries (other than the
Receivables Entity) may effect Permitted Acquisitions in accordance
with the requirements of, and to the extent permitted by, Section
8.15 and the definition thereof;
(xi) the Borrower and any of its Subsidiaries (other than the
Receivables Entity) may make Permitted Acquisition Investments in
accordance with the requirements of, and to the extent permitted by,
Section 8.15 and the definition thereof;
(xii) the Borrower and its Subsidiaries (other than the
Receivables Entity) may make Permitted Investments in accordance with
the definition thereof; provided that (x) no Default or Event of
Default then exists or would result therefrom, (y) with respect to
each Permitted Investment, the aggregate amount of such Permitted
Investment (including for this purpose all cash contributed, loaned,
advanced or otherwise transferred by the Borrower or any Subsidiary
of the Borrower, as the case may be, in connection with such
Permitted Investment), made shall not exceed the Permitted Investment
Amount at such time (prior to giving effect to such Permitted
Investment) and (z) in addition to the requirements of preceding
clause (y), in no event shall the aggregate amount of Investments
outstanding pursuant to this clause (xii) at any time (calculated
without regard to any write-downs or write-offs thereof) exceed
$5,000,000 in the aggregate;
(xiii) transactions expressly permitted pursuant to Sections 9.02
and 9.03 shall, to the extent constituting Investments, be permitted
pursuant to this Section 9.05 to the extent provided in such Section
9.02 or 9.03, as the case may be;
(xiv) the Borrower may hold the Existing Seller Letter of Credit
Cash Collateral for the purpose permitted by Section 9.01(xv) in
accordance with such Section 9.01(xv) and the Existing Seller Letter
of Credit Collateral Agreement, and may make investments thereof from
time to time in accordance with the requirements of the Existing
Seller Letter of Credit Collateral Agreement as originally in effect;
(xv) the Borrower may extend credit to Management Investors of
Parent or any of its Subsidiaries for the sole purpose of such
Management Investors purchasing M&G Holdings Common Stock; provided
that (x) the aggregate amount of all extensions of credit made
pursuant to this Section 9.05(xv) shall not exceed at any time
outstanding $750,000 and (y) to the extent cash is loaned to one or
more Management Investors pursuant to this Section 9.05(xv), such
cash shall be immediately used to purchase shares of M&G Holdings
Common Stock, and M&G Holdings shall immediately use the proceeds
received by it to make a capital contribution to the Parent, which in
turn shall immediately contribute such amount to the Borrower;
(xvi) the Borrower and its Subsidiaries may make loans and
advances in the ordinary course of business to their respective
employees for moving, travel and emergency expenses and other similar
expenses, so long as the aggregate principal amount thereof at any
time outstanding (determined without regard to any write-downs or
write-offs of such loans and advances) shall not exceed $1,000,000;
(xvii) any Investment which may be deemed to exist as a result of
(x) any Contingent Obligation expressly permitted pursuant to Section
9.04 or (y) as a result of any payments made pursuant to the Existing
Tax Sharing Agreement (so long as such payments are not made more
than 10 days in advance of the time when required to be made pursuant
to the Existing Tax Sharing Agreement) in accordance with Section
9.06(y)(vi);
(xviii) the Borrower and the other Designated Credit Parties may
make an initial cash capital contribution to the Receivables Entity
on the Receivables Facility Transaction Date as provided in the
Receivables Facility Documents, so long as the Receivables Entity
uses all of the proceeds of such contribution on such date to
purchase Receivables Facility Assets from the Borrower and the other
Designated Credit Parties, and the Borrower and/or such other
Designated Credit Parties may hold the capital stock of the
Receivables Entity issued to them so long as such capital stock has
been duly pledged and delivered to the Collateral Agent pursuant to
the Pledge Agreement;
(xix) on or after the Receivables Facility Transaction Date, the
Receivables Entity may invest Receivables Facility Assets pursuant
to, and in accordance with the terms of, the Receivables Facility
Documents; and
(xx) the loans and advances evidenced by the Transaction
Intercompany Notes may be made, so long as each such Transaction
Intercompany Note is pledged to the Collateral Agent pursuant to the
terms of the Pledge Agreement.
9.06 Transactions with Affiliates. The Borrower will not, and
will not permit any of its Subsidiaries to, enter into any transaction or
series of related transactions with any Affiliate (other than the Borrower
or a Wholly-Owned Subsidiary thereof) of Parent or any of its Subsidiaries,
(x) other than in the ordinary course of business and on terms and
conditions substantially as favorable to the Borrower or such Subsidiary as
would reasonably be obtained by the Borrower or such Subsidiary at that
time in a comparable arm's-length transaction with a Person other than an
Affiliate; provided, however, that for a transaction or series of related
transactions with an aggregate value of $2,500,000 or more, the board of
directors of the Borrower shall have received an opinion from a nationally
recognized investment banking firm that such transaction is on terms no
less favorable than those that might reasonably have been obtained in a
comparable transaction at such time on a arm's-length basis from a Person
that is not an Affiliate and (y) except that the following transactions,
whether or not such transactions would otherwise be permitted by this
Section 9.06, shall be permitted:
(i) Dividends may be paid to the extent provided in Section
9.03;
(ii) loans may be made and other transactions may be entered
into by the Borrower and the Borrower's Subsidiaries to the extent
permitted by Sections 9.04 and 9.05;
(iii) the Borrower and its Subsidiaries may enter into
employment arrangements with executive officers and senior management
employees in the ordinary course of business;
(iv) customary fees, not to exceed $100,000 in the aggregate
during any fiscal year for all payments made pursuant to this clause
(iv), may be paid to directors of the Borrower and its Subsidiaries;
(v) the Transaction shall be permitted in accordance with the
provisions of Section 5 and the Documents;
(vi) so long as the Borrower is a member of the same
consolidated group as Jordan for federal income tax purposes,
payments required pursuant to the Existing Tax Sharing Agreement, as
in effect on the Initial Borrowing Date and delivered to the Banks
pursuant to Section 5.21, and as entered into by each newly-acquired
or created Subsidiary in accordance with the requirements of Section
8.15 or 9.13, as the case may be, shall be permitted, in each case so
long as the respective such payment does not give rise to an Event of
Default pursuant to Section 10.12;
(vii) the Borrower may make a payment on behalf of Parent on the
Initial Borrowing Date, of a one-time consulting fee in connection
with the Transaction pursuant to Section 2(b) of the TJC Management
Services Agreement referred to in clause (i) of the definition
thereof, to TJC in an aggregate amount not to exceed $2,250,000;
(viii) the Borrower and its Subsidiaries may pay consulting fees,
on a quarterly basis, in arrears, in the amounts required pursuant to
the terms of (x) its respective Intercompany Management Consulting
Agreement to M&G Holdings and (y) the JII Services Agreement to
Jordan, in each case for providing consulting services to Parent and
its Subsidiaries under the Intercompany Management Consultant
Agreements, provided that the aggregate amount of such fees payable
with respect to any fiscal quarter shall not exceed an amount equal
to 1% of the Borrower's gross sales (as determined on a consolidated
basis for the Borrower and its consolidated Subsidiaries);
(ix) so long as no Default under Section 10.01 or 10.05 and no
Event of Default under any of Sections 10.03 (as a result of a
violation of any of the covenants contained in Sections 9.08 and/or
9.09), 10.01 or 10.05 exists at the time of payment thereof or would
exist immediately after giving effect thereto, the Borrower and its
Subsidiaries may pay consulting fees in the amounts required pursuant
to the terms of each TJC Management Services Agreement to TJC for
providing investment services to Parent and its Subsidiaries under
the TJC Management Services Agreements when and as due, so long as
the aggregate amount of fees paid by the Borrower and its
Subsidiaries pursuant to this clause (ix) does not exceed the sum of
(x) 2% of the aggregate consideration paid or received by the
Borrower or any of its Subsidiaries in connection with any
acquisition or divestiture and (y) 1% of the amount of any financing
obtained by the Borrower and its Subsidiaries after the date hereof;
(x) the Borrower may enter into and make payments under the
Affiliate Leases as originally in effect or as modified from time to
time in accordance with the requirements of this Agreement;
(xi) the Borrower and its Subsidiaries may enter into and make
payments under the Directors Indemnity Agreement; and
(xii) the Borrower and its Subsidiaries may pay the amounts
required to be paid pursuant to the terms of the Earnout Agreement
when and as due.
Without limiting the foregoing provisions of this Section 9.06, in no event
shall any management, consulting or similar fees be paid or payable by the
Borrower or any of its Subsidiaries to any Person except as specifically
provided in this Section 9.06.
9.07 Changes in Business. (a) The Borrower and its
Subsidiaries will not engage in any business other than the business
engaged in by the Acquired Business and Merkle and its Subsidiaries as of
the Effective Date and Related Businesses.
(b) Notwithstanding anything to the contrary contained in this
Agreement, prior to the consummation of the Transaction, none of the
Borrower, Acquisition Corp., Scott Acquisition Sub. or Gear Acquisition
Sub. shall engage in any business.
(c) Notwithstanding anything to the contrary contained in this
Agreement, the Receivables Entity will not engage in any business other
than purchasing Receivables Facility Assets from the Designated Credit
Parties and the related transactions pursuant to the terms of the
Receivables Facility Documents.
9.08 Consolidated Interest Coverage Ratio. The Borrower will
not permit the Consolidated Interest Coverage Ratio for any Test Period
ending during a period described below to be less than the ratio set forth
opposite such period below:
Period Ratio
------ -----
From and including Initial Borrowing Date through
and including December 30, 1997 1.35:1.0
From and including December 31, 1997 through and
including December 30, 1998 1.45:1.0
From and including December 31, 1998 through and
including December 30, 1999 1.55:1.0
From and including December 31, 1999 through and
including December 30, 2000 1.65:1.0
Thereafter 1.75:1.0
Notwithstanding anything contrary contained above or elsewhere in this
Agreement, (i) all calculations of compliance with this Section 9.08 shall
be made on a Pro Forma Basis for any Permitted Transactions effected during
the relevant Test Period and (x) if the respective Test Period begins prior
to the Initial Borrowing Date, for the Transaction as if same had occurred
on the first day of the respective Test Period and (y) if the respective
Test Period ends after January 1, 1996 and begins prior to the BCM
Acquisition Date, for the consummation of the BCM Transaction as if same
had occurred on the first day of the respective Test Period and (ii) in no
event shall the Consolidated Interest Coverage Ratio be less than 1.5:1.0
upon the consummation of, and after giving effect on a Pro Forma Basis to,
any Permitted Transaction effected after the Initial Borrowing Date.
9.09 Leverage Ratio. The Borrower will not permit the Leverage
Ratio as described on the last day of any Test Period ending during a
period described below to exceed the ratio set forth opposite the
respective period below:
Period Ratio
------ -----
From and including Initial Borrowing Date through
and including December 30, 1997 6.15:1.0
From and including December 31, 1997 through and
including December 30, 1998 6.10:1.0
From and including December 31, 1998 through and
including December 30, 1999 5.95:1.0
From and including December 31, 1999 through and
including December 30, 2000 5.60:1.0
Thereafter 5.30:1.0
Notwithstanding anything contrary contained above or elsewhere in this
Agreement, (i) all calculations of compliance with this Section 9.09 shall
be made on a Pro Forma Basis for any Permitted Transactions effected during
the relevant Test Period and (x) if the respective Test Period begins prior
to the Initial Borrowing Date, for the Transaction as if same had occurred
on the first day of the respective Test Period and (y) if the respective
Test Period ends after January 1, 1996 and begins prior to the BCM
Acquisition Date, for the consummation of the BCM Transaction as if same
had occurred on the first day of the respective Test Period and (ii) in no
event shall the Leverage Ratio be greater than 6.0:1.0 upon the
consummation of, and after giving effect on a Pro Forma Basis to, any
Permitted Transaction effected after the Initial Borrowing Date.
9.10 Limitation on Modifications of Certain Indebtedness;
Modifications of Certificate of Incorporation, By-Laws and Certain
Agreements; etc. The Borrower will not, and will not permit any of its
Subsidiaries to:
(i) amend or modify (or permit the amendment or modification of)
any of the terms or provisions of (x) any Acquisition Document
(including the Earnout Agreement), any Merger Document, the Existing
Seller Subordinated Note, any Existing Seller Subordinated Note
Document, the Existing Seller Installment Note, the Existing
Indebtedness, any Debt Agreement, or any agreement (including,
without limitation, any purchase agreement, indenture, loan agreement
or security agreement) relating thereto, except for Permitted
Amendments or (y) the Parent Subordinated Intercompany Note;
(ii) make (or give any notice in respect of) any voluntary or
optional payment or prepayment on or redemption or acquisition for
value (including, without limitation, by way of depositing with the
trustee with respect thereto monies or securities before due for the
purpose of paying when due) or exchange of, or any voluntary
prepayment of, or any redemption as a result of any equity issuance,
asset sale, change of control or similar event of, or set-off any
amounts against, any Existing Seller Subordinated Note;
(iii) make any interest or principal or other payment with respect
to any Existing Seller Subordinated Note or the Parent Subordinated
Intercompany Note which is not permitted to be paid to the holder
thereof in accordance with the subordination provisions applicable
thereto or, in the case of the Parent Subordinated Intercompany Note,
violates the provisions of Section 9.03;
(iv) amend, modify or change its Certificate of Incorporation
(including, without limitation, by the filing or modification of any
certificate of designation) (other than a certificate of merger with
respect to the Merger) or By-Laws, or similar organizational
document, except for such amendments to the Certificate of
Incorporation or By-Laws or such other organizational document of the
Borrower or any of its Subsidiaries which do not in any way adversely
affect the interests of any Bank in its capacity as such;
(v) amend, modify, change or terminate the Existing Tax Sharing
Agreement, except for such amendments, modifications or changes which
solely add new parties thereto, including, without limitation, new
Subsidiaries of the Borrower in accordance with Sections 8.11 and
9.13 or which are not adverse to the interests of any Bank, or enter
into any new Tax Sharing Agreement;
(vi) enter into any new Management Agreement or amend, modify or
change the JII Services Agreement, any Intercompany Management
Consulting Agreement, the TJC Management Services Agreement or the
Directors Indemnity Agreement, except amendments, modifications or
changes to any such agreement which are not adverse to any Bank, do
not violate or breach, and are not inconsistent with, any of the
terms of this Agreement and which do not, and will not, involve the
payment by the Borrower or any of its Subsidiaries of any amounts
which could give rise to a violation of this Agreement and do not
result in the Borrower or any of its Subsidiaries incurring then or
at any time in the future any liability or monetary obligation which
could give rise to a violation of this Agreement or which is in
excess of that which is in existence on the Effective Date (it being
understood that new directors may be added as parties to the
Directors Indemnity Agreement);
(vii) amend, modify, change or terminate any Affiliate Lease, except
for such amendments, modifications or changes which are not adverse
to any Bank in its capacity as such, do not violate or breach, and
are not inconsistent with, any of the terms of the Agreement;
(viii) amend, modify or change any provision of, or any agreement
relating to, Permitted Acquired Debt, Permitted Debt or Permitted
Earn-Out Debt or alter the non-recourse nature of any such Permitted
Acquired Debt or provide for any guaranty or other direct or indirect
assurances of payment by the Borrower or any Subsidiary of the
Borrower or provide any security therefor (other then in connection
with Liens permitted under Section 9.01(xiv) securing Permitted
Acquired Debt) and, except for amendments, modifications or changes
which are not adverse to any Bank, and do not violate or breach, and
are not inconsistent with, any of the terms of this Agreement;
(ix) amend, modify or change, terminate or enter into any new
Shareholders' Agreement, or any other agreement with respect to its
capital stock, including warrants and warrant agreements, except
amendments, modifications, changes, terminations and new agreements
which are not adverse to any Bank, do not violate or breach, and are
not inconsistent with, any of the terms of this Agreement and which
do not, and will not, involve the payment by the Borrower or any of
its Subsidiaries of any amounts which could give rise to a violation
of this Agreement and do not result in the Borrower or any of its
Subsidiaries incurring then or at any time in the future any
liability or monetary obligation which could give rise to a violation
of this Agreement;
(x) amend, modify or change, terminate or enter into any new
Employee Benefit Plan or Employment Agreement, except in the case of
this clause (x) if the aggregate cost to the Borrower and its
Subsidiaries as a result of such amendments, modifications, changes,
terminations and new agreements could not reasonably be expected to
have a material adverse effect on the performance, business, assets,
liabilities, operations, properties, condition (financial or
otherwise) or prospects of the Borrower or the Borrower and its
Subsidiaries taken as a whole; or
(xi) at any time after the Receivables Facility Transaction Date,
amend or modify, or permit the amendment or modification of, any
provision of any Receivables Facility Document, in each case unless
the Receivables Amendment Conditions are satisfied in connection
therewith.
9.11 Limitation on Certain Restrictions on Subsidiaries. The
Borrower will not, and will not permit any of its Subsidiaries to, directly
or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any Subsidiary
of the Borrower to (a) pay dividends or make any other distributions on its
capital stock or any other interest or participation in its profits owned
by the Borrower or any of its Subsidiaries, or pay any Indebtedness owed to
the Borrower or any Subsidiary of the Borrower, (b) make loans or advances
to the Borrower or any Subsidiary of the Borrower or (c) transfer any of
its properties or assets to the Borrower or any Subsidiary of the Borrower,
except in each case for such encumbrances or restrictions existing under or
by reason of (i) applicable law, (ii) this Agreement and the other Credit
Documents, (iii) customary provisions restricting subletting or assignment
of any lease governing a leasehold interest of the Borrower or any
Subsidiary of the Borrower, (iv) customary provisions restricting
assignment of any agreement entered into by the Borrower or any Subsidiary
of the Borrower in the ordinary course of business, (v) restrictions on the
transfer of any assets subject to a Lien permitted by this Agreement, (vi)
the Senior Unsecured Note Documents (as in effect on the Effective Date),
(vii) any agreement or instrument governing Permitted Acquired Debt, which
encumbrance or restriction is not applicable to any Person or the
properties or assets of any Person, other than the Person or the properties
or assets of the Person acquired pursuant to the respective Permitted
Transaction and so long as the respective encumbrances or restrictions were
not created (or made more restrictive) in connection with or in
anticipation of the respective Permitted Transaction, and any refinancings
of Permitted Acquired Debt permitted pursuant to Section 9.04(xvi) may
contain restrictions or encumbrances which are not more restrictive than
those contained in the Indebtedness being refinanced, (viii) any
Indebtedness permitted by Section 9.04 (other than Permitted Acquired Debt)
to the extent the restrictions contained in such Indebtedness are not more
restrictive than those contained in this Agreement and (ix) restrictions on
the Receivables Entity, and with respect to the Receivables and Receivables
Related Assets, set forth in the Receivables Facility Documents.
9.12 Limitation on Issuance of Capital Stock. The Borrower
will not, and will not permit any of its Subsidiaries to, issue (including
by way of sales of treasury stock) any capital stock (including preferred
stock), or any options or warrants to purchase, or securities convertible
into, capital stock, except (i) for transfers and replacements of then
outstanding shares of capital stock, (ii) for stock splits, stock dividends
and additional issuances which do not decrease the percentage ownership of
the Borrower or any of its Subsidiaries in any class of the capital stock
of the Borrower or any of its Subsidiaries, (iii) the issuances of capital
stock of an entity to the Borrower or any of its Subsidiaries in connection
with the creation of a new Subsidiary created in compliance with Section
9.13, (iv) other than with respect to the Borrower, to qualify directors to
the extent required by applicable law and (v) any Subsidiary created to
effect, or acquired pursuant to, a Permitted Acquisition may be, or become
in connection with the respective Permitted Acquisition, an 80%-Owned
Subsidiary, and in connection therewith such Subsidiary may issue capital
stock to Persons other than the Borrower and its Subsidiaries so long as it
remains such an 80%-Owned Subsidiary and such issuances do not violate any
other provision of this Agreement. All capital stock issued in accordance
with this Section 9.12 shall be delivered to the Collateral Agent for
pledge pursuant to a Pledge Agreement to the extent required thereby.
9.13 Limitation on Creation of Subsidiaries. The Borrower will
not, and will not permit any of its Subsidiaries to, establish, create or
acquire any Subsidiary; provided, that the Borrower and its Subsidiaries
shall be permitted to (a) establish, create or acquire Subsidiaries in
connection with Permitted Transactions to the extent otherwise permitted by
this Agreement so long as in each such case, such new Subsidiary shall take
all actions to the extent required pursuant to Section 8.11; and (b)
establish or create any Wholly-Owned Domestic Subsidiary, in each such case
so long as (i) the capital stock of such new Wholly-Owned Domestic
Subsidiary held by the Borrower or a Wholly-Owned Domestic Subsidiary is
pledged pursuant to, and to the extent required by, Section 8.11 and the
Pledge Agreement and the certificates representing such stock, together
with stock powers duly executed in blank, are delivered to the Collateral
Agent, (ii) such new Wholly-Owned Domestic Subsidiary (except if such
Person is the Receivables Entity) executes a counterpart of the Subsidiary
Guaranty, the Pledge Agreement and the Security Agreement, (iii) such new
Wholly-Owned Domestic Subsidiary executes a counterpart of the Existing Tax
Sharing Agreement or enters into an amendment thereto in form satisfactory
to the Agent, and (iv) such new Wholly-Owned Domestic Subsidiary shall take
all other actions required pursuant to Section 8.11. In addition, each
such new Subsidiary shall execute and deliver, or cause to be executed and
delivered, all other relevant documentation of the type described in
Section 5 as such new Subsidiary (other than the Receivables Entity) would
have had to deliver if such new Subsidiary were a Credit Party on the
Effective Date.
SECTION 10. Events of Default. Upon the occurrence of any of
the following specified events (each, an "Event of Default"):
10.01 Payments. The Borrower shall (i) default in the payment
when due of any principal of any Loan or any Note, (ii) default in the
payment of any Unpaid Drawing for three or more Business Days after the
date the respective Drawing was made or, if no Default or Event of Default
exists pursuant to Section 10.05, for three or more Business Days after the
receipt by the Borrower of notice of the respective Drawing by the Agent or
the Issuing Bank or (iii) default, and such default shall continue
unremedied for three or more Business Days, in the payment when due of any
interest on any Loan or Note or Unpaid Drawing, or any Fees or any other
amounts owing hereunder or under any other Credit Document; or
10.02 Representations, etc. Any representation, warranty or
statement made by any Credit Party herein or in any other Credit Document
or in any certificate delivered pursuant hereto or thereto shall prove to
be untrue in any material respect on the date as of which made or deemed
made; or
10.03 Covenants. Any Credit Party shall (i) default in the due
performance or observance by it of any term, covenant or agreement
contained in Section 8.01(f)(i), 8.08 or Section 9 or (ii) default in the
due performance or observance by it of any other term, covenant or
agreement contained in this Agreement and such default shall continue
unremedied for a period of 30 days after written notice to the Borrower by
the Agent or any Bank; or
10.04 Default Under Other Agreements. (a) (i) The Borrower or
any of its Subsidiaries shall (x) default in any payment of any
Indebtedness (other than the Obligations) beyond the period of grace, if
any, provided in the instrument or agreement under which such Indebtedness
was created, or (y) default in the observance or performance of any
agreement or condition relating to any Indebtedness (other than the
Obligations) or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur or condition
exist, the effect of which default or other event or condition is to cause,
or to permit the holder or holders of such Indebtedness (or a trustee or
agent on behalf of such holder or holders) to cause (determined without
regard to whether any notice is required), any such Indebtedness to become
due prior to its stated maturity (with the occurrences described in
preceding clause (y) to include any early amortization or termination event
or other similar event with respect to the Receivables Facility if such
occurrence has substantially the same effect as is otherwise provided above
with respect to outstanding Indebtedness pursuant to this clause (y)), or
(ii) any Indebtedness (other than the Obligations, but including Attributed
Receivables Facility Indebtedness) of the Borrower or any of its
Subsidiaries shall be declared to be due and payable, or required to be
prepaid other than by a regularly scheduled required prepayment, prior to
the stated maturity thereof, provided that it shall not be a Default or
Event of Default under this Section 10.04(a) unless the aggregate principal
amount of all Indebtedness as described in preceding clauses (i) and (ii)
is at least $7,500,000; or (b) (i) Parent shall (x) default in any payment
of any Indebtedness beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness was created or (y)
default in the observance or performance of any agreement or condition
relating to any Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is
to cause, or to permit the holder or holders of such Indebtedness (or a
trustee or agent on behalf of such holder or holders) to cause (determined
without regard to whether any notice is required), any such Indebtedness to
become due prior to its stated maturity, or (ii) any Indebtedness of Parent
shall be declared to be due and payable, or required to be prepaid other
than by a regularly scheduled required prepayment, prior to the stated
maturity thereof, provided that it shall not be a Default or Event of
Default under this Section 10.04(b) unless the aggregate principal amount
of all Indebtedness as described in preceding clauses (i) and (ii) is at
least $20,000,000; or
10.05 Bankruptcy, etc. M&G Holdings, Parent, Borrower or any
of the Borrower's Subsidiaries (excluding Insignificant Subsidiaries) shall
commence a voluntary case concerning itself under Title 11 of the United
States Code entitled "Bankruptcy," as now or hereafter in effect, or any
successor thereto (the "Bankruptcy Code") or shall consent to the filing of
any petition against it under any such law; or an involuntary case is
commenced against M&G Holdings, Parent, Borrower or any of the Borrower's
Subsidiaries (excluding Insignificant Subsidiaries) and the petition is not
controverted within 10 days, or is not dismissed within 60 days, after
commencement of the case; or a custodian (as defined in the Bankruptcy
Code) is appointed for, or takes charge of, all or substantially all of the
property of M&G Holdings, Parent, Borrower or any of the Borrower's
Subsidiaries (excluding Insignificant Subsidiaries); or M&G Holdings,
Parent, Borrower or any of the Borrower's Subsidiaries (excluding
Insignificant Subsidiaries) commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to M&G Holdings, Parent,
Borrower or any of the Borrower's Subsidiaries (excluding Insignificant
Subsidiaries); or there is commenced against M&G Holdings, Parent, Borrower
or any of the Borrower's Subsidiaries (excluding Insignificant
Subsidiaries) any such proceeding which remains undismissed for a period of
60 days; or M&G Holdings, Parent, Borrower or any of the Borrower's
Subsidiaries (excluding Insignificant Subsidiaries) is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any
such case or proceeding is entered; or M&G Holdings, Parent, Borrower or
any of the Borrower's Subsidiaries (excluding Insignificant Subsidiaries)
suffers any appointment of any custodian or the like for it or any
substantial part of its property to continue undischarged or unstayed for a
period of 60 days; or M&G Holdings, Parent, Borrower or any of the
Borrower's Subsidiaries (excluding Insignificant Subsidiaries) makes a
general assignment for the benefit of creditors; or any partnership and/or
corporate action is taken by M&G Holdings, Parent, Borrower or any of the
Borrower's Subsidiaries (excluding Insignificant Subsidiaries) for the
purpose of effecting any of the foregoing; or
10.06 ERISA. (a) Any Plan shall fail to satisfy the minimum
funding standard required for any plan year or part thereof or a waiver of
such standard or extension of any amortization period is sought or granted
under Section 412 of the Code, any Plan shall have had or is likely to have
a trustee appointed to administer such Plan, any Plan is, shall have been
or is likely to be terminated or to be the subject of termination
proceedings under ERISA, any Plan shall have an Unfunded Current Liability,
a contribution required to be made to a Plan has not been timely made, the
Borrower or any Subsidiary of the Borrower or any ERISA Affiliate has
incurred or is likely to incur a liability to or on account of a Plan under
Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or
4212 of ERISA or Section 401(a)(29), 4971, 4975 or 4980 of the Code, or the
Borrower or any of its Subsidiaries has incurred or is likely to incur
liabilities pursuant to one or more employee welfare benefit plans (as
defined in Section 3(1) of ERISA) that provide benefits to retired
employees or other former employees (other than as required by Section 601
of ERISA) or employee pension benefit plans (as defined in Section 3(2) of
ERISA); (b) there shall result from any such event or events the imposition
of a lien, the granting of a security interest, or a liability or a
material risk of incurring a liability; (c) which lien, security interest
or liability, individually and/or in the aggregate, in the opinion of the
Required Banks, will have a material adverse effect upon the business,
operations, property, assets, nature of assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower and its Subsidiaries
taken as a whole; or
10.07 Security Documents. At any time after the execution and
delivery thereof, any of the Security Documents shall cease to be in full
force and effect, or shall cease to give the Collateral Agent for the
benefit of the Secured Creditors the Liens, rights, powers and privileges
purported to be created thereby (including, without limitation, a perfected
security interest in, and Lien on, all of the Collateral), in favor of the
Collateral Agent, superior to and prior to the rights of all third Persons
(except as permitted by Section 9.01), and subject to no other Liens
(except as permitted by Section 9.01), or any Credit Party shall default in
the due performance or observance of any term, covenant or agreement on its
part to be performed or observed pursuant to any of the Security Documents
and such default shall continue beyond any grace period specifically
applicable thereto pursuant to the terms of such Security Document; or
10.08 Guaranties. Any Guaranty or any provision thereof shall
cease to be in full force or effect as to the relevant Subsidiary
Guarantor, or any Subsidiary Guarantor or Person acting by or on behalf of
such Subsidiary Guarantor shall deny or disaffirm such Subsidiary
Guarantor's obligations under the relevant Guaranty, or any Subsidiary
Guarantor shall default in the due performance or observance of any term,
covenant or agreement on its part to be performed or observed pursuant to
the relevant Guaranty; or
10.09 Judgments. One or more judgments or decrees shall be
entered against the Borrower or any of its Subsidiaries (excluding
Insignificant Subsidiaries) involving in the aggregate for the Borrower and
such Subsidiaries a liability (not fully covered by a reputable and solvent
insurance company or not paid) and such judgments and decrees either shall
be final and non-appealable or shall not be vacated, discharged or stayed
or bonded pending appeal for any period of 60 consecutive days, and the
aggregate amount of all such judgments exceeds $7,500,000; or
10.10 Change of Control. A Change of Control shall occur; or
10.11 Senior Unsecured Notes; Parent Subordinated Intercompany
Note. At any time after the Effective Date and for any reason whatsoever
(w) any amendment or modification, other than one or more Permitted
Amendments, is made to the Senior Unsecured Note Documents, (x) any
repayment of principal is made with respect to any Senior Unsecured Note
unless, prior to such repayment, an amount of cash equal to the aggregate
principal amount so repaid (and any premium related thereto) has been
contributed by Parent to the common equity of the Borrower and then
utilized by the Borrower to prepay the principal of the Parent Subordinated
Intercompany Note (and any premium related thereto) in accordance with the
provisions of Section 9.03(xi), (y) the aggregate principal amount of the
Parent Subordinated Intercompany Note at any time exceeds, or for any
period of 30 or more days is less than, the aggregate principal amount of
Senior Unsecured Notes then outstanding or (z) any Person other than Parent
owns, or otherwise acquires a beneficial interest in, the Parent
Subordinated Intercompany Note; or
10.12 Certain Tax Payments. For any taxable year ending after
the Effective Date with respect to which the Borrower and any of its
Subsidiaries are included in a consolidated federal income tax return, or a
consolidated, combined or unitary state or local tax return with any Person
(including without limitation Jordan, M&G Holdings and/or Parent) other
than the Borrower and its Subsidiaries, the Borrower and its Subsidiaries
shall pay with respect to such year an amount of federal income tax or
state or local tax, as the case may be, that exceeds, in the aggregate, the
amount of such tax that the Borrower and its Subsidiaries would have been
obligated to pay if the Borrower and its Subsidiaries had filed a separate
consolidated federal income tax return or a separate consolidated, combined
or unitary state or local tax return, as the case may be, for such year and
all prior taxable years ending after the Effective Date (with the Borrower
as the common parent of such affiliated group) and included in such
separate consolidated, combined or unitary tax return, in addition to items
of income, gain, loss, deduction and credit generated by such corporations,
any and all deductions, losses and credits generated by Parent, but none of
the income or gain generated by Parent, other than income from payments of
interest, if any, from Borrower (to the extent offset by deductions, losses
and credits generated by Parent); provided that notwithstanding the
foregoing, there shall be no default under this Section 10.12 unless the
aggregate amount of such excess payments outstanding at any time (i.e.,
theretofore paid and not reimbursed to the Borrower by Parent or one or
more of the Parent's Affiliates (exclusive of the Borrower and its
Subsidiaries and Persons controlled by the Borrower)) exceed $250,000;
then, and in any such event, and at any time thereafter, if any Event of
Default shall then be continuing, the Agent, upon the written request of
the Required Banks, shall by written notice to the Borrower, take any or
all of the following actions, without prejudice to the rights of the Agent,
any Bank or the holder of any Note to enforce its claims against any Credit
Party (provided, that, if an Event of Default specified in Section 10.05
shall occur with respect to the Borrower, the result which would occur upon
the giving of written notice by the Agent to the Borrower as specified in
clauses (i) and (ii) below shall occur automatically without the giving of
any such notice): (i) declare the Total Commitment terminated, whereupon
all of the Commitments of each Bank shall forthwith terminate immediately
and any Commitment Commission shall forthwith become due and payable
without any other notice of any kind; (ii) declare the principal of and any
accrued interest in respect of all Loans and the Notes and all Obligations
(including Unpaid Drawings) owing hereunder and thereunder to be, whereupon
the same shall become, forthwith due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived
by each Credit Party; (iii) terminate any Letter of Credit, which may be
terminated, in accordance with its terms; (iv) direct the Borrower to pay
(and the Borrower agrees that upon receipt of such notice, or upon the
occurrence of an Event of Default specified in Section 10.05 with respect
to the Borrower, it will pay) to the Agent at the Payment Office such
additional amount of cash, to be held as security by the Agent, as is equal
to the aggregate Stated Amount of all Letters of Credit issued for the
account of the Borrower and then outstanding; (v) enforce, as Collateral
Agent, any or all of the Liens and security interests created pursuant to
the Security Documents; and (vi) apply any cash collateral as provided in
Section 4.02.
SECTION 11. Definitions and Accounting Terms.
--------------------------------
11.01 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Acquired Business" shall mean the businesses, assets and
liabilities acquired by Acquisition Corp. from Imperial, Scott and Gear
pursuant to the Acquisition Documents.
"Acquired EBITDA" shall mean, for any period, that portion of
the Consolidated EBITDA of the Borrower and its Subsidiaries for such
period which, as determined in good faith by the Borrower, is attributable
to Permitted Acquired Businesses theretofore acquired in Permitted
Acquisitions effected prior to the date of the respective determination of
such Acquired EBITDA; provided that Acquired EBITDA shall not include any
amounts in respect of any Permitted Acquired Business for any period prior
to the acquisition thereof in a Permitted Acquisition by the Borrower
and/or one or more of its Subsidiaries.
"Acquired Property" shall have the meaning provided in Section
9.01(viii).
"Acquisition" shall mean the acquisition by Acquisition Corp. of
the Acquired Business from Imperial, Scott and Gear pursuant to, and in
accordance with the terms of, the Acquisition Documents.
"Acquisition Agreement" shall mean the Asset Purchase Agreement,
dated as of November 7, 1996, among Acquisition Corp., Imperial, Scott and
Gear, as amended to the Effective Date and as the same may be further
modified, amended or supplemented from time to time in accordance with the
terms hereof and thereof.
"Acquisition Corp." shall mean The New Imperial Electric
Company, a Delaware corporation and a Wholly-Owned Subsidiary of the
Borrower.
"Acquisition Documents" shall mean the Acquisition Agreement,
the Earnout Agreement and all other agreements, instruments and documents
entered into in connection with the Acquisition.
"Additional Interest" shall mean the Liquidated Damages as
defined in, and payable in accordance with the terms of, the Senior
Unsecured Note Indenture.
"Additional Security Documents" shall have the meaning provided
in Section 8.11.
"Adjusted Certificate of Deposit Rate" shall mean, on any day,
the sum (rounded to the nearest 1/100 of 1%) of (1) the rate obtained by
dividing (x) the most recent weekly average dealer offering rate for
negotiable certificates of deposit with a three-month maturity in the
secondary market as published in the most recent Federal Reserve System
publication entitled "Select Interest Rates," published weekly on Form H.15
as of the date hereof, or if such publication or a substitute containing
the foregoing rate information shall not be published by the Federal
Reserve System for any week, the weekly average offering rate determined by
the Agent on the basis of quotations for such certificates received by it
from three certificate of deposit dealers in New York of recognized
standing or, if such quotations are unavailable, then on the basis of other
sources reasonably selected by the Agent, by (y) a percentage equal to 100%
minus the stated maximum rate of all reserve requirements as specified in
Regulation D applicable on such day to a three-month certificate of deposit
of a member bank of the Federal Reserve System in excess of $100,000
(including, without limitation, any marginal, emergency, supplemental,
special or other reserves), plus (2) the then daily net annual assessment
rate as estimated by the Agent for determining the current annual
assessment payable by the Agent to the Federal Deposit Insurance
Corporation for insuring three-month certificates of deposit.
"Affiliate" shall mean, with respect to any Person, any other
Person (i) directly or indirectly controlling (including, but not limited
to, all directors, officers and partners of such Person) controlled by, or
under direct or indirect common control with, such Person or (ii) that
directly or indirectly owns more than 5% of any class of the voting
securities or capital stock of or equity interests in such Person. A
Person shall be deemed to control another Person if such Person possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of such other Person, whether through the ownership
of voting securities, by contract or otherwise.
"Affiliate Leases" shall mean and include each of (i) the
Industrial Building Lease, dated as of September 22, 1995, between FJM
Realty, Inc. and the Borrower, with respect to the property located at 1776
Winthrop Drive, Des Plaines, Illinois, (ii) the Industrial Building Lease,
dated as of September 22, 1995 between Bradrock Realty, Inc. and the
Borrower, with respect to the property located at 70 East Bradrock Drive,
Des Plaines, Illinois, (iii) the Industrial Building Lease, dated as of
September 22, 1995 between Ridge Industries, Inc. and the Borrower, with
respect to the property located at 1300 Peebles Drive, Richland Center,
Wisconsin, and (iv) the Industrial Building Lease, dated as of September
22, 1995 between Bradrock Realty, Inc. and the Borrower, with respect to
the property located at 72-74 East Bradrock Drive, Des Plaines, Illinois,
in each case as such Affiliate Lease is in effect on the Original Effective
Date and as the same may be amended, modified or supplemented from time to
time in accordance with the terms hereof and thereof.
"Agent" shall mean Bankers Trust Company, in its capacity as
Agent for the Banks hereunder, and shall include any successor to the Agent
appointed pursuant to Section 12.09.
"Agreement" shall mean this Credit Agreement, as modified,
supplemented, amended, restated, extended, renewed, refinanced or replaced
from time to time.
"Applicable Commitment Commission Percentage" shall mean, at any
time, a percentage per annum equal to 1/2 of 1%; provided, that from and
after the Start Date occurring after the last day of the first fiscal
quarter of the Borrower ended at least one year after the Initial Borrowing
Date to and including the corresponding End Date, the Applicable Commitment
Commission Percentage shall be the respective percentage per annum set
forth in clause (A) or (B) below if, but only if, as of the Test Date the
following conditions in clause (A) or (B) below are met:
(A) 3/8 of 1% if, but only if, as of the Test Date for such
Start Date the Leverage Ratio (calculated on a Pro Forma Basis for
all Permitted Transactions which actually occurred during the
relevant Test Period) for the Test Period ended on such Test Date
shall be equal to or greater than 4.75:1.0 but less than 5.0:1.0; or
(B) 1/4 of 1% if, but only if, as of the Test Date for such
Start Date the Leverage Ratio (calculated on a Pro Forma Basis for
all Permitted Transactions which actually occurred during the
relevant Test Period) for the Test Period ended on such Test Date is
less than 4.75:1.0.
The Leverage Ratio shall be determined for the relevant Test Period, in
each case taken as one accounting period, by delivery of an officer's
certificate of the Borrower to the Banks pursuant to Section 8.01(e), which
certificate shall set forth the calculation of the Leverage Ratio. The
Applicable Commitment Commission Percentage so determined shall apply,
except as set forth below, from the date on which such officer's
certificate is delivered to the Agent to the earlier of (x) the date on
which the next certificate is delivered to the Agent pursuant to Section
8.01(e) and (y) the 45th day following the first day of the fiscal quarter
immediately following the delivery of such certificate to the Agent.
Notwithstanding anything to the contrary contained above, the Applicable
Commitment Commission Percentage shall be 1/2 of 1% if no officer's
certificate has been delivered to the Banks pursuant to Section 8.01(e)
which sets forth the Leverage Ratio for the relevant Test Period or the
financial statements upon which any such calculations are based have not
been delivered, until such a certificate and/or financial statements are
delivered. Notwithstanding anything to the contrary contained above in
this definition, the Applicable Commitment Commission Percentage shall be
1/2 of 1% per annum at any time that a Default under Section 10.01 or 10.05
or any Event of Default shall exist.
"Applicable Margin" shall mean a percentage equal to (i) in the
case of Base Rate Loans, 1.50% less the then applicable Interest Reduction
Discount and (ii) in the case of Eurodollar Loans, 2.50% less the then
applicable Interest Reduction Discount.
"Asset Contribution" shall have the meaning provided in Section
5.11(b).
"Asset Sale" shall mean any sale, transfer or other disposition
by the Borrower or any of its Subsidiaries to any Person other than the
Borrower or any of its Subsidiaries of any asset (including, without
limitation, any capital stock, limited liability company interests,
partnership interests or other securities of another Person) of the
Borrower or any of its Subsidiaries other than (u) transfers of Receivables
Facility Assets as permitted by Sections 9.02(xii) and (xiii), (v) any
granting of licenses in the ordinary course of business of the Borrower and
its Subsidiaries, (w) any surrender of claims not involving the sale of an
asset, (x) any sale, transfer or disposition of Cash Equivalents, (y) any
sale, transfer or disposition of inventory, Receivables and Receivables
Related Assets in the ordinary course of business of the Borrower and its
Subsidiaries and (z) any sale, transfer or disposition of assets generating
Net Cash Proceeds from such transaction in an amount which does not exceed
$1,000,000).
"Asset Sale Calculation Period" shall have the meaning provided
in Section 8.18.
"Asset Sale Certificate" shall have the meaning provided in the
definition of Blocked Commitment.
"Assignment and Assumption Agreement" shall mean the Assignment
and Assumption Agreement substantially in the form of Exhibit P
(appropriately completed).
"Attributed Receivables Facility Indebtedness" at any time shall
mean the principal amount of Indebtedness which would be outstanding at
such time under the Receivables Facility if same were structured as a
secured lending agreement rather than a purchase agreement.
"Authorized Officer" of any Credit Party shall mean, with
respect to (i) the delivery of Notices of Borrowing, Notices of Conversion,
Letter of Credit Requests and similar notices, any person or persons that
have or have been authorized by the board of directors of the Borrower to
deliver such notices pursuant to this Agreement and that has or have
appropriate signature cards on file with the Agent, the Swingline Lender
and each Issuing Bank and (ii) the delivery of financial information and
officer's certificates pursuant to this Agreement, mean any of the Chief
Executive Officer, the President, the Chief Financial Officer, any
Vice-President or Treasurer of such Credit Party. The Agent shall have no
duty to ascertain whether any Person purporting to be an Authorized Officer
has been authorized by the board of directors of any Credit Party and shall
not, in the absence of gross negligence or willful misconduct on its part,
be held liable for acting under this Agreement upon its belief that any
such Person is as an Authorized Officer. Furthermore, for purposes of this
Agreement and the related Credit Documents, the actions of any Person
believed to be an Authorized Officer by the Agent as discussed above shall
be fully binding upon the Credit Parties.
"Available Commitment" for each Bank shall mean, at any time,
such Bank's Commitment less such Bank's Percentage of the Blocked
Commitment, if any, at such time.
"Bank" shall mean each financial institution listed on Schedule
I, as well as any Person which becomes a "Bank" hereunder pursuant to
13.04(b).
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any Borrowing
(including a Mandatory Borrowing) or Unpaid Drawing in violation of this
Agreement or (ii) a Bank having notified in writing the Borrower and/or the
Agent that it does not intend to comply with its obligations under Section
1.01(a), (b) or (c), or Section 2.04.
"Bankruptcy Code" shall have the meaning provided in Section
10.05.
"Barber-Colman" shall mean BCM Holdings, Inc., an Illinois
corporation and a Wholly-Owned Subsidiary of Merkle.
"Base Rate" at any time shall mean the higher of (i) the rate
which is of 1% in excess of the Adjusted Certificate of Deposit Rate,
(ii) of 1% in excess of Federal Funds Rate and (iii) the Prime Lending
Rate.
"Base Rate Loan" shall mean (i) each Swingline Loan and (ii)
each Revolving Loan designated or deemed designated as such by the Borrower
at the time of the incurrence thereof or conversion thereto.
"BCM Acquired Business" shall have the meaning provided such
term in the Existing Credit Agreement.
"BCM Acquired Debt" shall have the meaning provided such term in
the Existing Credit Agreement.
"BCM Acquisition Date" shall mean the First Amendment Effective
Date as such term is defined in the Existing Credit Agreement.
"BCM Restructuring Costs" shall have the meaning provided such
term in the Existing Credit Agreement.
"BCM Transaction" shall have the meaning provided such term in
the Existing Credit Agreement.
"Blocked Commitment" shall mean initially, $0; provided that on
each date on and after the Effective Date upon which the Borrower or any of
its Subsidiaries receives Cash Proceeds from any Asset Sale, the Blocked
Commitment shall be increased by an amount equal to 75% of the Net Cash
Proceeds therefrom; provided further, that so long as no Default under
Section 10.01 or 10.05 and no Event of Default then exists, if on the date
of the receipt of the Net Cash Proceeds of the respective Asset Sale, the
Borrower shall have furnished to the Agent an officer's certificate
executed by an Authorized Officer of the Borrower (an "Asset Sale
Certificate"), setting forth the calculations of the Leverage Ratio for the
period of four consecutive fiscal quarters (taken as one accounting period)
most recently ended prior to such Asset Sale (the "Asset Sale Calculation
Period"), on a Pro Forma Basis as provided in the definition thereof
contained herein (including, giving pro forma effect to the respective
Asset Sale), and such calculations shall demonstrate a Leverage Ratio of
less than 2.5:1, the Blocked Commitment shall not be required to be so
increased by the Net Cash Proceeds of such Asset Sale; provided further,
that, in circumstances where the immediately preceding proviso is not
applicable, (x) so long as no Default under Section 10.01 or 10.05 and no
Event of Default then exists, the Blocked Commitment shall not be required
to be so increased by the Net Cash Proceeds of any Asset Sale pursuant to
Section 9.02(ii) on the date of receipt thereof to the extent that the
Borrower has delivered a certificate to the Agent on or prior to such date
stating that it intends to reinvest such Net Cash Proceeds in like or
substantially similar equipment, materials or tangible properties or assets
within 180 days after the respective date of sale, provided, that if all or
any portion of the Net Cash Proceeds of the respective Asset Sale are not
in fact so utilized within 180 days after the respective date of sale, then
on such 180th day after the date of the respective sale, the Blocked
Commitment shall be increased by the amount of Net Cash Proceeds not
actually applied for the purposes permitted by this clause (x) as otherwise
required above by the first proviso to this definition without regard to
this clause (x) and (y) so long as no Default under Section 10.01 or 10.05
and no Event of Default then exists, the Blocked Commitment shall not be
required to be so increased by the Net Cash Proceeds of any Asset Sale
pursuant to Section 9.02(xv) on the date of receipt thereof to the extent
that the Borrower has delivered a certificate to the Agent on or prior to
such date stating that such Net Cash Proceeds shall be used to purchase
assets used or to be used in the business referred to in Section 9.07(a)
(including, without limitation, capital stock of a corporation engaged in
any such business) within 540 days following the date of such Asset Sale
(which certificate shall set forth the estimates of the proceeds to be so
expended), provided that if all or any portion of the Net Cash Proceeds of
the respective Asset Sale are not in fact so utilized within such 540 day
period, then on such 540th day after the date of the respective Asset Sale,
the Blocked Commitment shall be increased by the amount of Net Cash
Proceeds not actually applied for the purposes permitted by this clause (y)
as otherwise required above by the first proviso to this definition without
regard to this clause (y). Notwithstanding anything to the contrary
contained above, the Blocked Commitment shall be reduced (but at no time to
an amount less than $0) (x) from time to time as (and in the amounts)
provided in the last sentence of Section 3.02(a) and (y) to $0 on any date,
so long as no Default under Section 10.01 or 10.05 and no Event of Default
exists on such date, if the Borrower delivers to the Agent a certificate
executed by an Authorized Officer of the Borrower, setting forth the
calculations of the Leverage Ratio for the period of four consecutive
fiscal quarters (taking as one accounting period) most recently ended prior
to the date of the delivery of such certificate, on a Pro Forma Basis as
provided in the definition thereof contained herein (including, giving pro
forma effect to all Asset Sales which have occurred prior to the delivery
of such certificate), and such calculations demonstrate a Leverage Ratio of
less than 2.5:1.
"Borrower" shall mean the meaning provided in the first
paragraph of this Agreement.
"Borrower Common Stock" shall have the meaning provided in
Section 7.14(b).
"Borrowing" shall mean the borrowing of one Type of Loan from
all the Banks having Commitments (or from the Swingline Bank, in the case
of Swingline Loans) on a given date (or resulting from a conversion or
conversions on such date) having in the case of Eurodollar Loans the same
Interest Period, provided that Base Rate Loans incurred pursuant to Section
1.10(b) shall be considered part of the related Borrowing of Eurodollar
Loans.
"BTCo" shall mean Bankers Trust Company in its individual
capacity and any successor corporation thereto by merger, consolidation or
otherwise.
"Business Day" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day except Saturday, Sunday and any day
which shall be in New York City or Chicago, Illinois a legal holiday or a
day on which banking institutions are authorized or required by law or
other government action to close and (ii) with respect to all notices and
determinations in connection with, and payments of principal and interest
on, Eurodollar Loans, any day which is a Business Day described in clause
(i) above and which is also a day for trading by and between banks in the
interbank Eurodollar market.
"Calculation Period" shall have the meaning provided in Section
8.15(a)(x).
"Capital Expenditures" shall mean, with respect to any Person,
all expenditures by such Person which should be capitalized in accordance
with generally accepted accounting principles, including all such
expenditures with respect to fixed or capital assets (including, without
limitation, expenditures for maintenance and repairs which should be
capitalized in accordance with generally accepted accounting principles)
and the amount of Capitalized Lease Obligations incurred by such Person.
"Capitalized Lease Obligations" of any Person shall mean all
rental obligations which, under GAAP, are or will be required to be
capitalized on the books of such Person, in each case taken at the amount
thereof accounted for as indebtedness in accordance with GAAP.
"Cash Equivalents" shall mean, as to any Person, (i) securities
issued or directly and fully guaranteed or insured by the United States or
any agency or instrumentality thereof (provided that the full faith and
credit of the United States is pledged in support thereof) having
maturities of not more than six months from the date of acquisition, (ii)
time deposits, certificates of deposit and bankers' acceptances of any Bank
or any commercial bank having, or which is the principal banking subsidiary
of a bank holding company organized under the laws of the United States,
any State thereof, the District of Columbia or any foreign jurisdiction
having capital, surplus and undivided profits aggregating in excess of
$500,000,000 and having a long-term unsecured debt rating of at least "A"
or the equivalent thereof from S&P's or "A2" or the equivalent thereof from
Moody's, with maturities of not more than six months from the date of
acquisition by such Person, (iii) repurchase agreements with a term of not
more than 30 days, involving securities of the types described in preceding
clause (i), and entered into with commercial banks meeting the requirements
of preceding clause (ii), (iv) commercial paper issued by any Person
incorporated in the United States rated at least A-1 or the equivalent
thereof by S&P's or at least P-1 or the equivalent thereof by Moody's and
in each case maturing not more than six months after the date of
acquisition by such Person, (v) investments in money market funds
substantially all of whose assets are comprised of securities of the types
described in clauses (i) through (iv) above and (vi) demand deposit
accounts maintained in the ordinary course of business.
"Cash Proceeds" shall mean, with respect to any Asset Sale, the
aggregate cash payments (including any cash received by way of deferred
payment, pursuant to a note, receivable or otherwise, in connection with
such Asset Sale, but only as and when so received) received by the Borrower
or any of the Borrower's Subsidiaries from such Asset Sale.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from
time to time, 42 U.S.C. 9601 et seq.
"Certified BCM Restructuring Cost Reserve" shall have the
meaning provided such term in the Existing Credit Agreement.
"Certified Restructuring Cost Reserve" shall have the meaning
provided in Section 8.15(a)(ii).
"Change of Control" shall mean and include the occurrence of any
of the following events: (i) at any time the Jordan Affiliates (x) shall
cease to own directly at least 51% on a fully diluted basis of the Voting
Stock of Jordan, (y) shall cease to own directly at least 51% on a fully
diluted basis of all outstanding equity interests (excluding any Excluded
Preferred Stock) of Jordan or (z) shall cease to have the power (or shall
cease to exercise the power) to elect a majority of the board of directors
of Jordan, (ii) at any time Jordan or Jordan Affiliates (w) shall cease to
own directly at least 51% on a fully diluted basis of the Voting Stock of
M&G Holdings, (x) shall cease to own directly at least 51% on a fully
diluted basis of all outstanding equity interests (excluding any Excluded
Preferred Stock) of M&G Holdings, (y) shall pledge, hypothecate, encumber
or otherwise create, incur, assume or suffer to exist any Lien upon or with
respect to any capital stock of M&G Holdings owned by it, or (z) shall
cease to have the power (or shall cease to exercise the power) to elect a
majority of the board of directors of M&G Holdings, (iii) at any time M&G
Holdings (x) shall cease to own directly 51% on a fully diluted basis of
the economic and voting interests in all of the capital stock of Parent,
(y) shall pledge, hypothecate, encumber or otherwise create, incur, assume
or suffer to exist any Lien upon or with respect to any capital stock of
Parent, or (z) shall cease to have the power (or shall cease to exercise
the power) to elect a majority of the board of directors of each of the
Parent, (iv) the Parent shall (w) cease to have the power (directly or
indirectly) to elect a majority of the board of directors of each of its
Subsidiaries, (x) cease to own 100% on a fully diluted basis of the
economic and voting interests in all of the capital stock of the Borrower,
(y) cease to own the Parent Subordinated Intercompany Note or (z) pledge,
hypothecate, encumber or otherwise create, incur or suffer to exist any
Lien upon or with respect to any capital stock of the Borrower or the
Parent Subordinated Intercompany Note, or (v) any "change of control" or
similar provision or event under the Existing Seller Subordinated Note or
the Senior Unsecured Note Indenture shall occur.
"Claims" shall have the meaning provided in the definition of
"Environmental Claims."
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and ruling issued
thereunder. Section references to the Code are to the Code, as in effect
at the date of this Agreement, and to any subsequent provisions of the
Code, amendatory thereof, supplemental thereto or substituted therefor.
"Collateral" shall mean all property (whether real or personal)
with respect to which any security interests have been granted (or
purported to be granted) pursuant to any Security Document, including,
without limitation, all Pledge Agreement Collateral, all Security Agreement
Collateral, all Mortgaged Properties and all cash and Cash Equivalents
delivered as collateral pursuant to any Credit Document. Notwithstanding
anything to the contrary contained above, Collateral shall not include any
assets so long as same constitute Excluded Collateral in accordance with
the definition thereof contained herein.
"Collateral Agent" shall mean the Agent acting as collateral
agent for the Secured Creditors pursuant to the Security Documents.
"Collective Bargaining Agreements" shall have the meaning
provided in Section 5.06.
"Commitment" shall mean, for each Bank, the amount set forth
opposite such Bank's name in Schedule I hereto directly below the column
entitled "Commitment," as the same may be (x) reduced from time to time
pursuant to Sections 3.02, 3.03 and/or 10 or (y) adjusted from time to time
as a result of assignments to or from such Bank pursuant to 1.13 or
13.04(b).
"Commitment Commission" shall have the meaning provided in
Section 3.01(a).
"Consolidated EBITDA" shall mean, for any given period, the sum
of, without duplication, Consolidated Net Income for such period, plus (a)
any provision for taxes based on income or profits to the extent such
income or profits were included in computing such Consolidated Net Income,
plus (b) Consolidated Interest Expense, to the extent deducted in computing
such Consolidated Net Income, plus (c) the amortization of all intangible
assets, to the extent such amortization was deducted in computing such
Consolidated Net Income (including, but not limited to, inventory
write-ups, goodwill, debt and financing costs, and Incentive Arrangements),
plus (d) any non-capitalized transaction costs incurred in connection with
financings or acquisitions (including, but not limited to, financing and
refinancing fees, to the extent deducted in computing such Consolidated Net
Income, including those in connection with the Transaction), plus (e) all
depreciation and all other non-cash charges (including, without limitation,
those charges relating to purchase accounting adjustments and LIFO
adjustments), to the extent deducted in computing such Consolidated Net
Income, plus (f) any interest income, to the extent such income was not
included in computing such Consolidated Net Income, plus (g) all dividend
payments on preferred stock if paid in stock to the extent deducted in
computing such Consolidated Net Income, plus (h) any extraordinary or
non-recurring charge or expense arising out of the implementation of SFAS
106 or SFAS 109 to the extent deducted in computing such Consolidated Net
Income plus (i) the portion of Net Income attributable to the minority
interests in Subsidiaries of the Borrower to the extent received in cash
and not included in calculating Consolidated Net Income, plus (j) net
losses in respect of any discontinued operations, to the extent deducted in
computing Consolidated Net Income. Notwithstanding anything to the
contrary contained above, Consolidated EBITDA shall be adjusted (to the
extent not already adjusted as provided above) (x) to exclude the effects
of any extraordinary gains or losses or gains or losses from sales of
assets other than inventory sold in the ordinary course of business, to the
extent such amounts are otherwise included in Consolidated Net Income for
such period and (y) shall not give effect to any other non-cash gains,
losses or expenses otherwise included in such Consolidated Net Income.
"Consolidated Indebtedness" shall mean, at any time, and without
duplication, the sum of (A) the aggregate amount of Parent Indebtedness at
such time and (B) all Indebtedness of the Borrower and its consolidated
Subsidiaries for borrowed money, purchase money Indebtedness, all
obligations evidenced by notes or bonds, and with respect to Capitalized
Leases, as well as any other items which would be required to be accounted
for as debt of the Borrower and its consolidated Subsidiaries on the
Borrower's consolidated balance sheet in accordance with GAAP; provided,
that (u) Indebtedness under the Earnout Agreement and any Incentive
Arrangement shall not be included in Consolidated Indebtedness, (v) to the
extent not already reflected pursuant to preceding clause (B), Consolidated
Indebtedness shall be deemed to include all Attributed Receivables Facility
Indebtedness then outstanding, (w) Indebtedness outstanding in respect of
the Senior Unsecured Notes shall be excluded pursuant to preceding clause
(A) to the extent Indebtedness pursuant to the Parent Subordinated
Intercompany Note has already been included pursuant to preceding clause
(B), (x) for purposes of calculating the Leverage Ratio, the amount of
Consolidated Indebtedness shall be the amount thereof outstanding on the
last day of the respective Test Period, except that the amount of Revolving
Loans outstanding on any such date shall instead be deemed to be the daily
average outstanding principal amount of Revolving Loans during the fiscal
quarter ended on the respective Test Date (although if any Permitted
Transactions were effected during said fiscal quarter and financed in whole
or in part with Revolving Loans, the calculation of the average outstanding
Revolving Loans during such fiscal quarter shall be made on a Pro Forma
Basis), (y) to the extent the Existing Seller Installment Note is fully
supported by the Existing Seller Letter of Credit, and so long as same is
fully collateralized by the Existing Seller Letter of Credit Cash
Collateral, the Existing Seller Installment Note and Existing Seller Letter
of Credit shall not be included in Consolidated Indebtedness regardless of
whether a different treatment is required in accordance with GAAP and (z)
in any event the aggregate principal amount of all Loans (subject to
preceding clause (x) in the case of Revolving Loans), the Existing Seller
Subordinated Note, the Parent Subordinated Intercompany Note and any
Permitted Acquired Debt or Permitted Debt shall be included in the
Consolidated Indebtedness.
"Consolidated Interest Coverage Ratio" shall mean, for any
period, the ratio of (x) Consolidated EBITDA for such period to (y)
Consolidated Interest Expense for such period.
"Consolidated Interest Expense" shall mean, for any period, the
aggregate of the interest expense in respect of all Indebtedness of the
Borrower and its Subsidiaries for such period, on a consolidated basis,
determined in accordance with GAAP (including amortization of original
issue discount of any such Indebtedness, all non-cash interest payments,
the interest portion of any deferred payment obligation, the interest
component of capital lease obligations and, except as otherwise provided
below, the amortization of deferred financing fees if such amortization
would otherwise be included in interest expense); provided that there shall
be excluded from Consolidated Interest Expense the amortization of any
deferred financing costs incurred in connection with this Agreement, the
reimbursement agreement with respect to the Existing Seller Letter of
Credit, the Existing Seller Installment Note, the Existing Seller
Subordinated Note, the Parent Subordinated Intercompany Note and
Indebtedness otherwise permitted under this Agreement, in each case to the
extent included in such Consolidated Interest Expense. Notwithstanding
anything to the contrary contained above or required by GAAP, Consolidated
Interest Expense shall also include (and, to the extent such amounts are
not already included, Consolidated Interest Expense shall be increased by
the amount of) the amount of all Dividends paid (or deemed paid) during the
respective period pursuant to Section 9.03(iii) to the extent such
Dividends are used to pay interest on Shareholder Subordinated Notes, (ii)
the amount of Receivables Facility Financing Costs during the respective
period and (iii) the amount of Parent Interest Expense during the
respective period, to the extent in excess of the amount of interest
expense of Borrower relating to the Parent Subordinated Intercompany Note
already reflected in Consolidated Interest Expense for such period without
regard to this sentence.
"Consolidated Net Income" shall mean, for any period, the after
tax Net Income (or loss) of the Borrower and its Subsidiaries for such
period determined on a consolidated basis in accordance with GAAP;
provided, however, that (A) there shall be excluded (without duplication)
(i) income (or loss) of any Person (other than a consolidated Subsidiary of
such Person) in which any other Person (other than such Person or any of
its consolidated Subsidiaries) has a joint interest, except to the extent
of the amount of dividends or other distributions actually paid to such
Person or (subject to subclause (iii) below) any of its consolidated
Subsidiaries by such other Person during such period, (ii) except as
otherwise expressly required for calculations being made on a Pro Forma
Basis, the income (or loss) of any Person during such period accrued prior
to the date it becomes a consolidated Subsidiary of such Person or is
merged into or consolidated with such Person or any of its consolidated
Subsidiaries, (iii) the income of any consolidated Subsidiary of the
Borrower to the extent attributable to minority interests held directly or
indirectly therein by Persons other than the Borrower and its Wholly-Owned
Subsidiaries, and (iv) the income of any consolidated Subsidiary of the
Borrower during such period to the extent that the declaration or payment
of dividends or similar distributions by that consolidated Subsidiary of
such income is not at the time permitted by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to that Subsidiary or the
Borrower or any of its other Subsidiaries, (B) to the extent Consolidated
Net Income for any period would otherwise be reduced by the amount of fees
and expenses paid in connection with the Transaction, fees and expenses
paid, and/or BCM Restructuring Costs incurred, in connection with the BCM
Transaction, or fees and expenses and/or Restructuring Costs incurred with
respect to any Permitted Transaction, such amounts shall be added back in
determining Consolidated Net Income but, in the case of such items relating
to Permitted Transactions, only to the extent such amounts do not exceed
the respective amounts included within the Permitted Transaction Cost of
the respective Permitted Transaction as certified by the Borrower in
connection therewith pursuant to Section 8.15(a)(ii)(v) and (y) and, in the
case of such items relating to the BCM Transaction, only to the extent such
amounts do not exceed the respective amounts in connection therewith
certified by Merkle pursuant to Section 9.02(xii)(c)(w) and (y) of the
Existing Credit Agreement, (C) to the extent same have not already reduced
Consolidated Net Income for the respective period, the amount of all
Restricted Payments paid (or deemed paid) during the respective period
pursuant to any of Sections 9.03(ii), (v), (vi), and (ix)(II) and all
amounts paid during the respective period pursuant to any of Section
9.06(y)(iv), (vi), (viii), (x) and (xi) shall be deducted, (D)
notwithstanding any contrary treatment which would otherwise be required
pursuant to GAAP, payments made pursuant to either of Sections 9.06(y)(vii)
and/or (ix) shall not be deducted in determining Consolidated Net Income,
(E) Parent Interest Expense (but only to the extent in excess of the
interest expense of the Borrower in respect of the Parent Subordinated
Intercompany Note to the extent already deducted in determining
Consolidated Net Income) shall be deducted in determining Consolidated Net
Income and (F) notwithstanding any contrary treatment which would otherwise
be required pursuant to GAAP, extraordinary or nonrecurring charges
relating to any premium or penalty paid, write-off or deferred financing
costs or other financial recapitalization charges in connection with
redeeming or retiring any Indebtedness prior to its stated maturity shall
not be deducted in determining Consolidated Net Income.
"Contingent Obligation" shall mean, as to any Person, any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("primary
obligations") of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including, without limitation, any
obligation of such Person, whether or not contingent, (i) to purchase any
such primary obligation or any property constituting direct or indirect
security therefor, (ii) to advance or supply funds (x) for the purchase or
payment of any such primary obligation or (y) to maintain working capital
or equity capital of the primary obligor or otherwise to maintain the net
worth or solvency of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of
any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation or (iv) otherwise to assure or hold
harmless the holder of such primary obligation against loss in respect
thereof; provided, however, that the term Contingent Obligation shall not
include endorsements of instruments for deposit or collection in the
ordinary course of business. The amount of any Contingent Obligation shall
be deemed to be an amount equal to the stated or determinable amount of the
primary obligation in respect of which such Contingent Obligation is made
or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such Person is required to perform
thereunder) as determined by such Person in good faith.
"Credit Documents" shall mean this Agreement and, after the
execution and delivery thereof pursuant to the terms of this Agreement,
each Note, each Letter of Credit, each Security Document, each Guaranty,
each Additional Security Document and each additional guaranty or security
document or instrument executed pursuant to Sections 8.11, 8.15 and/or
9.13.
"Credit Event" shall mean the making of any Loan or the issuance
of any Letter of Credit.
"Credit Party" shall mean the Borrower and each Subsidiary
Guarantor.
"Debt Agreements" shall have the meaning provided in Section
5.06.
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a
Bank Default is in effect.
"Designated Credit Parties" shall mean the Borrower and those
Subsidiary Guarantors that are from time to time party to the Receivables
Facility Documents.
"Director Indemnity Agreement" shall mean the Director
Indemnification Agreement, dated as of November 7, 1996, by and among M&G
Holdings, Parent, Merkle, the Borrower, Merkle, Acquisition Corp., Scott
Acquisition Sub., Gear Acquisition Sub. and each of the indemnitees whose
names are set forth therein, as in effect on the Effective Date and as
amended, modified or supplemented from time to time in accordance with the
terms hereof and thereof.
"Dividends" with respect to any Person shall mean that such
Person has declared or paid a dividend or returned any equity capital to
its stockholders or partners or authorized or made any other distribution,
payment or delivery of property (other than common stock of such Person) or
cash to its stockholders or partners as such, or redeemed, retired,
purchased or otherwise acquired, directly or indirectly, for a
consideration any shares of any class of its capital stock or any
partnership interests outstanding on or after the Effective Date (or any
options or warrants issued by such Person with respect to its capital
stock), or set aside any funds for any of the foregoing purposes, or shall
have permitted any of its Subsidiaries to purchase or otherwise acquire for
a consideration any shares of any class of the capital stock or any
partnership interests of such Person outstanding on or after the Effective
Date (or any options or warrants issued by such Person with respect to its
capital stock). Without limiting the foregoing, "Dividends" with respect
to any Person shall also include all payments made or required to be made
by such Person with respect to any Incentive Arrangements and any stock
appreciation rights, "phantom" stock plans, equity incentive or achievement
plans or any similar plans or setting aside of any funds for the foregoing
purposes.
"Documents" shall mean the Credit Documents, the Acquisition
Documents, the Merger Documents, the Refinancing Documents, the Senior
Unsecured Note Documents and, on and after the Receivables Facility
Transaction Date, the Receivables Facility Documents.
"Dollars" and the sign "$" shall each mean freely transferable
lawful money of the United States.
"Domestic Subsidiary" shall mean each Subsidiary of the Borrower
which is not a Foreign Subsidiary.
"Drawing" shall have the meaning provided in Section 2.05.
"Earnout" shall mean the contingent payment payable pursuant to
the Earnout Agreement in an amount equal to 50% of the cumulative EBITDA
(as defined in the Earnout Agreement) of Acquisition Corp., Scott
Acquisition Sub. and Gear Acquisition Sub. earned during the five fiscal
years ended December 31, 1996 through December 31, 2000 in excess of
$50,000,000.
"Earnout Agreement" shall mean the Earnout Agreement, dated as
of November 7, 1996, among Jordan, Parent, the Borrower, Acquisition Corp.,
Scott Acquisition Sub. and Gear Acquisition Sub., as the same may be
amended, modified or supplemented from time to time pursuant to the terms
hereof and thereof.
"Effective Date" shall have the meaning provided in Section
13.10.
"80%-Owned Subsidiary" shall mean any Subsidiary of the Borrower
which either (x) is a Wholly-Owned Subsidiary of the Borrower or (y) is not
a Wholly-Owned Subsidiary of the Borrower, but is a Subsidiary wherein the
Borrower and its Wholly-Owned Subsidiaries own at least 80% of the equity
interests therein and in which no portion of the capital stock (or other
equity interests) of such Subsidiary not owned by the Borrower or its
Wholly-Owned Subsidiaries shall be owned by any Person other than Jordan,
Jordan Affiliates and/or management of the respective such Subsidiary.
"Eligible Transferee" shall mean and include a commercial bank,
financial institution or other institutional "accredited investor" as
defined in Regulation D of the Securities Act.
"Elmco" shall mean Elmco Industries, Inc., an Illinois
corporation.
"Elmco Refund" shall mean the refund, or any right to receive
the refund, of the payment Elmco made prior to the Original Effective Date
pursuant to Code Section 7519(b), which refund is referenced in Section
6.06(l) of the Acquisition Agreement (as defined in the Existing Credit
Agreement).
"Elmco Refund Obligation" shall mean the assignment by Merkle
of, and the obligation of Merkle to pay the amount of the Elmco Refund
actually received to, the MK Sellers pursuant to Section 6.06(l) of the
Acquisition Agreement (as defined in the Existing Credit Agreement).
"Employee Benefit Plans" shall have the meaning provided in
Section 5.06.
"Employment Agreements" shall have the meaning provided in
Section 5.06.
"End Date" shall have the meaning provided in the definition of
Interest Reduction Discount.
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, notices of non-compliance or violation, investigations,
orders or proceedings relating in any way to any Environmental Law or any
permit issued, or any approval given, under any such Environmental Law
(hereinafter, "Claims"), including, without limitation, (a) any and all
Claims by governmental or regulatory authorities for enforcement, cleanup,
removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law, and (b) any and all Claims by any third party
seeking damages, contribution, indemnification, cost recovery, compensation
or injunctive relief resulting from Hazardous Materials or arising from
alleged injury or threat of injury to health, safety or the environment.
"Environmental Law" shall mean any applicable Federal, state,
foreign or local statute, law, rule, regulation, ordinance, code, binding
and enforceable guideline, binding and enforceable written policy and rule
of common law now or hereafter in effect and in each case as amended, and
any judicial or administrative interpretation thereof, including any
judicial or administrative order, consent decree or judgment relating to
the environment, employee health and safety or Hazardous Materials,
including, without limitation, CERCLA; RCRA; the Federal Water Pollution
Control Act, 33 U.S.C. 2601 et seq., the Clean Air Act, 42 U.S.C. 7401
et seq.; the Safe Drinking Water Act, 42 U.S.C. 3803 et seq.; the Oil
Pollution Act of 1990, 33 U.S.C. 2701 et seq.; the Emergency Planning and
the Community Right-to-Know Act of 1986, 42 U.S.C. 11001 et seq., the
Hazardous Material Transportation Act, 49 U.S.C. 1801 et seq. and the
Occupational Safety and Health Act, 29 U.S.C. 651 et seq. (to the extent
it regulates occupational exposure to Hazardous Materials); and any state
and local or foreign counterparts or equivalents, in each case as amended
from time to time.
"Equity Financing Documents" shall have the meaning provided in
the Existing Credit Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder. Section references to ERISA are to ERISA, as in
effect at the date of this Agreement and any subsequent provisions of
ERISA, amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section
3(9) of ERISA) which together with Parent or a Subsidiary of Parent or the
Guarantors would be deemed to be a "single employer" (i) within the meaning
of Section 414(b),(c), (m) or (o) of the Code or (ii) as a result of
Parent, or a Subsidiary of Parent, or the Guarantors being or having been a
general partner of such person.
"Eurodollar Loan" shall mean each Loan designated as such by the
Borrower at the time of the incurrence thereof or conversion thereto.
"Eurodollar Rate" shall mean with respect to each Interest
Period for a Eurodollar Loan, (a) the offered quotation to first-class
banks in the interbank Eurodollar market by BTCo for Dollar deposits of
amounts in immediately available funds comparable to the outstanding
principal amount of the Eurodollar Loan of BTCo with maturities comparable
to the Interest Period applicable to such Eurodollar Loan commencing two
Business Days thereafter as of 10:00 A.M. (New York time) on the date which
is two Business Days prior to the commencement of such Interest Period,
divided (and rounded off to the nearest 1/16 of 1% or, if there is no
nearest 1/16 of 1%, to the next highest 1/16 of 1%) by (b) a percentage
equal to 100% minus the then stated maximum rate of all reserve
requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves required by applicable law)
applicable to any member bank of the Federal Reserve System in respect of
Eurocurrency funding or liabilities as defined in Regulation D (or any
successor category of liabilities under Regulation D).
"Event of Default" shall have the meaning provided in Section
10.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
"Excluded Collateral" shall mean and include each of (i) any
Leasehold in which a security interest is not required to be granted by
reason of the penultimate sentence of Section 8.11(a), (ii) Real Property
owned by any Credit Party if the fair market value of such Real Property
(as determined in good faith by senior management of the Borrower) is less
than $5,000,000, (iii) motor vehicles and other equipment the ownership of
which is evidenced by a "certificate of title" under relevant law owned by
any Credit Party, (iv) any assets of a Foreign Subsidiary of the Borrower
or otherwise located outside the United States (including its states and
territories), (v) any capital stock of, or promissory notes payable by, a
Foreign Subsidiary to the extent (and only to the extent) that such capital
stock or promissory notes, as the case may be, are not required to be
pledged pursuant to the exclusions contained in the Pledge Agreement as
originally in effect, (vi) so long as the Existing Seller Letter of Credit
remains outstanding, the Existing Seller Letter of Credit Cash Collateral
and any investments from time to time made pursuant to the Existing Seller
Letter of Credit Collateral Agreement, and (vii) the Elmco Tax Refund and
any rights with respect thereto.
"Excluded Preferred Stock" shall mean, with respect to any
Person, any preferred stock issued by such Person which (i) is not Voting
Stock of such Person, (ii) bears dividends at a contractually established
rate, and does not participate with any class of common stock in the
payment of dividends in excess of said stated rate, (iii) matures or is
redeemable at the option of the issuer after a given period of time as
provided therein and (iv) is not convertible into common stock or other
Voting Stock.
"Existing Credit Agreement" shall mean the Credit Agreement,
dated as of September 22, 1995, among Parent, Merkle, the institutions from
time to time party thereto, and Bankers Trust Company, as Agent, as in
effect on the Effective Date.
"Existing Indebtedness" shall have the meaning provided in
Section 5.19.
"Existing Seller Installment Note" shall mean the promissory
note issued in connection with the Original Acquisition by Merkle to the MK
Sellers as partial consideration for the Original Acquired Business having
a principal amount not to exceed $90,000,000, in the form of Exhibit Q, and
which promissory note shall mature no later than December 31, 1996 and be
supported by the Existing Seller Letter of Credit.
"Existing Seller Letter of Credit" shall mean a standby letter
of credit issued by BTCo for the account of Merkle in support of the
obligations of Merkle under the Existing Seller Installment Note issued by
Merkle, which letter of credit shall have a face amount not to exceed
$90,000,000.
"Existing Seller Letter of Credit Agreement" shall mean the
Letter of Credit Agreement, dated as of September 22, 1995, between Parent,
Merkle and BTCo, as amended, modified or supplemented from time to time.
"Existing Seller Letter of Credit Cash Collateral" shall have
the meaning provided in Section 9.01(xv).
"Existing Seller Letter of Credit Collateral Agreement" shall
mean the Letter of Credit Cash Collateral Agreement, dated as of September
22, 1995, between Merkle and BTCo, as amended, modified or supplemented
from time to time.
"Existing Seller Subordinated Note" shall mean 9% Existing
Seller Subordinated Note due December 31, 2003 issued by Merkle in favor of
MK Sellers as partial consideration for the purchase price of the Original
Acquired Business in an aggregate principal amount of $5,000,000, in the
form attached hereto as Exhibit O, as in effect on the Original Effective
Date and as the same may be amended, modified or supplemented from time to
time pursuant to the terms hereof and thereof.
"Existing Seller Subordinated Note Documents" shall mean and
include the Existing Seller Subordinated Note and each of the other
documents, instruments and other agreements entered into and relating to
the issuance by Merkle of the Existing Seller Subordinated Note, as in
effect on the Original Effective Date and as amended, modified or
supplemented from time to time in accordance with the terms hereof and
thereof.
"Existing Tax Sharing Agreement" shall mean the Tax Sharing
Agreement, dated as of June 28, 1994, among Jordan and each of the other
parties thereto, as in effect on the Effective Date and as the same may be
amended, modified or supplemented from time to time in accordance with the
terms hereof and thereof, including, without limitation, as amended on the
Initial Borrowing Date to add the Borrower, Acquisition Corp., Scott
Acquisition Sub. and Gear Acquisition Sub. as parties thereto.
"Federal Funds Rate" shall mean, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average
of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for
such day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is
not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Agent from
three Federal Funds brokers of recognized standing selected by the Agent.
"Fees" shall mean all amounts payable pursuant to or referred to
in Section 3.01.
"Final Maturity Date" shall mean the fifth anniversary of the
Initial Borrowing Date.
"Foreign Subsidiary" shall mean each Subsidiary of the Borrower
that is incorporated under the laws of any jurisdiction other than the
United States of America, any State thereof, or any territory thereof.
"GAAP" shall have the meaning provided in section 13.07(a).
"Gear" shall mean Gear Research, Inc., a Delaware corporation
and a direct Wholly-Owned Subsidiary of Imperial.
"Gear Acquisition Sub" shall mean New Gear Research, Inc., a
Delaware corporation and a direct Wholly-Owned Subsidiary of Acquisition
Corp.
"Gear Intercompany Note" shall have the meaning provided in
Section 5.23(c).
"Guaranty" shall mean the Subsidiary Guaranty and, after the
execution and delivery thereof, the Non-Wholly-Owned Subsidiary Guaranty
and each other guaranty executed pursuant to Sections 8.11, 8.15 and/or
9.13.
"Hazardous Materials" shall mean (a) oil as defined by the Oil
Pollution Act of 1990, 33 U.S.C. 2701 et seq., (b) any petrochemical or
petroleum products, radioactive materials, asbestos in any form that is or
could become friable, urea formaldehyde foam insulation, transformers or
other equipment that contain dielectric fluid containing levels of
polychlorinated biphenyls, and radon gas; (c) any chemicals, materials or
substances defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "restricted
hazardous materials," "extremely hazardous wastes," "restrictive hazardous
wastes," "toxic substances," "toxic pollutants," "contaminants" or
"pollutants," or words of similar meaning and regulatory effect under any
applicable Environmental Law; or (d) any other chemical, material or
substance, exposure to which is prohibited, limited or regulated by any
governmental authority.
"Imperial" shall mean Imperial Electric Company, an Ohio
corporation and a direct Wholly-Owned Subsidiary of Jordan.
"Incentive Arrangements" shall mean (x) any stock appreciation
rights, "phantom" stock plans, employment agreements, non-competition
agreements, earn out agreements and other equity incentive and bonus plans
and similar arrangements made by the Borrower and its Subsidiaries in
connection with a Permitted Transaction or the retention of executives or
officers by the Borrower and its Subsidiaries and (y) all Permitted
Earn-Out Debt issued in connection with Permitted Transactions.
"Indebtedness" shall mean, as to any Person, without
duplication, (i) all indebtedness (including principal, interest, fees and
charges) of such Person for borrowed money or for the deferred purchase
price of property or services, (ii) the maximum amount available to be
drawn under all letters of credit issued for the account of such Person and
all unpaid drawings in respect of such letters of credit, (iii) all
Indebtedness of the types described in clause (i), (ii), (iv), (v), (vi) or
(vii) of this definition secured by any Lien on any property owned by such
Person, whether or not such Indebtedness has been assumed by such Person
(to the extent of the value of the respective property), (iv) Capitalized
Lease Obligations, (v) all obligations of such person to pay a specified
purchase price for goods or services, whether or not delivered or accepted,
i.e., take-or-pay and similar obligations, (vi) all Contingent Obligations
of such Person, and (vii) all obligations under any Other Hedging Agreement
or under any similar type of agreement or arrangement. In addition, all
Attributed Receivables Facility Indebtedness shall constitute Indebtedness.
"Initial Borrowing Date" shall mean the date occurring on or
after the Effective Date on which the initial Borrowing of Loans hereunder
occurs.
"Initial Receivables Facility Proceeds" shall mean the amount of
cash proceeds to be initially received by the Borrower and/or the other
Designated Credit Parties from the sale of Receivables Facility Assets to
the Receivables Entity pursuant to the Receivables Facility.
"Insignificant Subsidiary" shall mean any Subsidiary of the
Borrower which has assets of not greater than $5,000,000 in the aggregate
and which, if aggregated with all other Subsidiaries of the Borrower with
respect to which an event described under Section 10.05 and/or 10.09 has
occurred and is continuing, would have assets of not greater than
$5,000,000.
"Intercompany Loan" shall mean any loan or advance made by the
Borrower or any Subsidiary of the Borrower to the extent permitted by
Section 9.05(iii).
"Intercompany Management Consulting Agreements" shall mean and
include each of (i) the Management Consulting Agreement, dated as of
September 22, 1995, by and between M&G Holdings and Merkle, as in effect on
the Original Effective Date and (ii) the Management Consulting Agreement,
dated as of September 22, 1995, by and between M&G Holdings and Parent, as
in effect on the Original Effective Date, in each case as the same may be
amended, modified or supplemented from time to time in accordance with the
terms hereof and thereof.
"Intercompany Notes" shall mean promissory notes, in the form of
Exhibit M, evidencing Intercompany Loans.
"Interest Determination Date" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
"Interest Period" shall have the meaning provided in Section
1.09.
"Interest Rate Protection Agreement" shall mean any interest
rate swap agreement, interest rate cap agreement, interest rate collar
agreement, interest rate hedging agreement, interest rate floor agreement
or other similar agreement or arrangement designed to protect a person
against fluctuations in interest rates.
"Interest Reduction Discount" shall mean initially zero and from
and after the first day of any Margin Reduction Period (the "Start Date")
to and including the last day of such Margin Reduction Period (the "End
Date"), the Interest Reduction Discount shall be the respective percentage
per annum set forth in clause (A) or(B) below if, but only if, as of the
last day of the most recent Test Period of the Borrower ended immediately
prior to such Start Date (the "Test Date") the conditions in clause (A) or
(B) below are met:
(A) 1/4 of 1% if, but only if, as of the Test Date for such
Start Date the Leverage Ratio for the Test Period ended on such Test
Date shall be equal to or greater than 4.75:1.0 but less than
5.0:1.0; or
(B) 1/2 of 1% if, but only if, as of the Test Date for such
Start Date the Leverage Ratio for the Test Period ended on such Test
Date shall be less than 4.75:1.0.
The Leverage Ratio shall be determined for the relevant Test Period, in
each case taken as one accounting period, by delivery of an officer's
certificate of the Borrower to the Banks pursuant to Section 8.01(e), which
certificate shall set forth the calculation of the Leverage Ratio. The
Interest Reduction Discount so determined shall apply, except as set forth
below, from the date on which such officer's certificate is delivered to
the Agent to the earlier of (x) the date on which the next certificate is
delivered to the Agent pursuant to Section 8.01(e) and (y) the 45th day
following the first day of the fiscal quarter immediately following the
delivery of such certificate to the Agent. Notwithstanding anything to the
contrary contained above, the Interest Reduction Discount shall be zero if
no officer's certificate has been delivered to the Banks pursuant to
Section 8.01(e) which sets forth the Leverage Ratio for the relevant Test
Period or the financial statements upon which any such calculations are
based have not been delivered, until such a certificate and/or financial
statements are delivered. Notwithstanding anything to the contrary above
in this definition, the Interest Reduction Discount shall be zero at all
times when there shall exist a Default under Section 10.01 or 10.05 or any
Event of Default. It is understood and agreed that the Interest Reduction
Discount as provided above shall in no event be cumulative and only the
Interest Reduction Discount available pursuant to either clause (A) or (B),
if any, contained in this definition shall be applicable.
"Investment" shall have the meaning provided in Section 9.05.
"Issuing Bank" shall mean BTCo and any Bank which at the request
of the Borrower and with the consent of the Agent agrees, in such Bank's
sole discretion, to become an Issuing Bank for the purpose of issuing
Letters of Credit pursuant to Section 2. The sole Issuing Bank on the
Initial Borrowing Date is BTCo.
"JI Partners" shall mean the JI Partners, an Illinois general
partnership.
"JII Services Agreement" shall mean the Management Services and
Administration Agreement, dated as of November 7, 1996, between Jordan and
Parent, in the form delivered to the Agent and Banks on the Effective Date,
as the same may be amended, modified or supplemented from time to time
pursuant to the terms thereof and hereof.
"Jordan" shall mean Jordan Industries, Inc., a Delaware
corporation.
"Jordan Affiliates" shall mean and include each of (i) TJC,
Jordan/Zalaznick Capital Company, JI Partners Limited Partnership, Jordan,
Mezzanine Capital Income Trust and Leucadia Investors, Inc.; (ii) partners,
principals, directors, officers and employees of the Persons referred to in
clause (i) hereof; (iii) The John W. Jordan II Revocable Trust, The Jordan
Family Trust and/or any other trusts established by John W. Jordan II so
long as the beneficiaries thereof include only his spouse, parents,
siblings or direct lineal descendants and so long as John W. Jordan II
possesses the power to direct or cause the direction of the voting of such
trusts; and (iv) any other trust established by the Persons referred to in
clause (ii) hereof, so long as the beneficiaries thereof include only the
spouse, siblings, parents, or direct lineal descendants of such Person and
such Person possesses the power to direct or cause the direction of the
voting of such trust.
"L/C Supportable Indebtedness" shall mean (i) obligations of any
Credit Party incurred in the ordinary course of business with respect to
insurance obligations and workers' compensation, surety bonds and other
similar statutory obligations and (ii) such other obligations of the
Borrower or any Subsidiary Guarantor as are permitted to remain outstanding
hereunder without giving rise to any violation of this Agreement.
"Leaseholds" of any Person means all the right, title and
interest of such Person as lessee or licensee in, to and under leases or
licenses of land, improvements and/or fixtures.
"Letter of Credit" shall have the meaning provided in Section
2.01(a).
"Letter of Credit Fee" shall have the meaning provided in
Section 3.01(b).
"Letter of Credit Outstandings" shall mean, at any time, the sum
of (i) the aggregate Stated Amount of all outstanding Letters of Credit and
(ii) the amount of all Unpaid Drawings.
"Letter of Credit Request" shall have the meaning provided in
Section 2.03(a).
"Leverage Ratio" shall mean, as determined on the last day of
any fiscal quarter or fiscal year, the ratio of (x) Consolidated
Indebtedness as determined on the last day of such fiscal quarter or fiscal
year to (y) Consolidated EBITDA for the Test Period then last ended;
provided that for purposes of any calculation of the Leverage Ratio in
connection with the delivery of an Asset Sale Certificate or other
certificate in accordance with the requirements of the definition of
Blocked Commitment, Consolidated Indebtedness shall not include Parent
Indebtedness and it shall not include Indebtedness pursuant to the Parent
Subordinated Intercompany Note. All calculations of the Leverage Ratio
shall be made on a Pro Forma Basis.
"Lien" shall mean any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other) or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other
title retention agreement, any financing or similar statement or notice
filed under the UCC or any other similar recording or notice statute, and
any lease having substantially the same effect as any of the foregoing).
"Loan" shall mean each Revolving Loan and each Swingline Loan.
"M&G Holdings" shall mean Motors and Gears Holdings, Inc., a
Delaware corporation and the surviving corporation of the merger of M&G
Holdings, Inc. with and into same.
"M&G Holdings Common Stock" shall mean the common stock, $.01
par value per share, of M&G Holdings.
"M&G Holdings Management Consulting Agreements" shall mean and
include each of (i) the Management Consulting Agreement, dated as of
September 22, 1995, between TJC, M&G Holdings and Parent, as amended on
November 7, 1996 to include Parent as a party thereto, in the form
delivered to the Agent and the Banks on the Effective Date and (ii) the
Management Consulting Agreement, dated as of September 22, 1995, between
Jordan and M&G Holdings, in the form delivered to the Agent and the Banks
on the Original Effective Date.
"Management Agreements" shall have the meaning provided in
Section 5.06.
"Management Investors" shall mean (i) any officer or managerial
employee of Parent or any of its Subsidiaries who acquires M&G Holdings
Common Stock from M&G Holdings pursuant to the Management Subscription
Agreement or the Stockholders' Agreement, (ii) the JI Partners and (ii) the
directors of M&G Holdings.
"Management Subscription Agreement" shall mean and include each
of (i) the Management Subscription Agreement, dated as of September 22,
1995, by and among M&G Holdings and the stockholders whose names are set
forth therein, in the form delivered to the Agent and the Banks on the
Initial Borrowing Date, provided that future Management Investors may
become party thereto by executing a counterpart thereof after the Initial
Borrowing Date and (ii) the Management Subscription Agreement, dated as of
November 7, 1996, by and among M&G Holdings and Ron Sansom, in the form
delivered to the Agent and the Banks on the Initial Borrowing Date.
"Mandatory Borrowings" shall have the meaning provided in
Section 1.01(c).
"Margin Reduction Period" shall mean each period which shall
commence on a date on which the officer's certificate is delivered to the
Agent pursuant to Section 8.01(e) to the earlier of (x) the date on which
the certificate for the next fiscal quarter is delivered to the Agent
pursuant to Section 8.01(e) and (y) the 45th day following the first day of
the fiscal quarter immediately following the delivery of such certificate
to the Agent, provided that the first Margin Reduction Period shall
commence no earlier than the date of the delivery of the financial
statements pursuant to Section 8.01(b) for the first fiscal quarter of the
Parent ended at least one year after the Initial Borrowing Date.
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Contracts" shall have the meaning provided in Section
5.06.
"Maximum Swingline Amount" shall mean $2,000,000.
"Mercury" shall have the meaning provided in the Existing Credit
Agreement.
"Merger" shall mean the merger of MK Group with and into Parent
pursuant to the Merger Documents, with Parent as the surviving corporation
of such merger, as the direct Wholly-Owned Subsidiary of M&G Holdings,
Inc., an Illinois corporation.
"Merger Documents" shall mean the Merger Agreement, dated as of
November 1, 1996, between Parent and MK Group, the certificate of merger
and all other agreements, instruments and documents entered into in
connection with the Merger, as the same may be amended, modified or
supplemented from time to time pursuant to the terms hereof and thereof.
"Merkle" shall mean Merkle-Korff Industries, Inc., an Illinois
corporation, and, prior to the consummation of the Merger and the MK Stock
Contribution, a Wholly-Owned Subsidiary of MK Group and, after giving
effect to the consummation of the Merger and the MK Stock Contribution, a
Wholly-Owned Subsidiary of the Borrower.
"MK" shall mean Merkle as such term is defined in the Existing
Credit Agreement.
"MK Group" shall mean MK Group, Inc., an Illinois corporation.
"MK Leaseholds" shall mean and include the Leaseholds of (i)
Merkle as lessee under the Affiliate Leases and (ii) BCM Holdings as lessee
under [name lease].
"MK Sellers" shall mean the Sellers as such term is defined in
the Existing Credit Agreement.
"MK Stock Contribution" shall have the meaning provided in
Section 5.11(c).
"Minimum Borrowing Amount" shall mean (i) for Revolving Loans
(x) maintained as Base Rate Loans, $100,000 and, if greater, in integral
multiples of $100,000 and (y) maintained as Eurodollar Loans, $1,000,000
and, if greater, in integral multiples of $100,000 and (ii) for Swingline
Loans, $10,000 and, if greater, in integral multiples of $5,000.
"Moody's" shall mean Moody's Investors Service, Inc.
"Mortgage" shall mean each mortgage, deed of trust or deed to
secure debt required to be delivered with respect to any Real Property
pursuant to the terms of this Agreement, together with any assignment of
leases and rents to be executed in connection therewith.
"Mortgage Policy" shall mean each mortgage title insurance
policy (and all endorsements thereto) for each Mortgaged Property required
to be delivered pursuant to this Agreement.
"Mortgaged Property" shall mean each Real Property owned or
leased by the Borrower or any of its Subsidiaries and required to be
mortgaged pursuant to Section 8.11 of this Agreement.
"Net Asset Adjustment" shall mean the adjustment to the Purchase
Price (as defined in the Existing Credit Agreement) contained in Section
1.06 of the Acquisition Agreement (as defined in the Existing Credit
Agreement), so long as such adjustment in no event results in an increase
to such Purchase Price of more than $2,500,000.
"Net Cash Proceeds" shall mean, with (i) respect to any Asset
Sale, the Cash Proceeds resulting therefrom net of (w) cash expenses of
sale (including, without limitation, reasonable brokerage and attorneys'
fees, if any, and payment of principal, premium and interest of
Indebtedness other than the Loans required to be repaid as a result of such
Asset Sale), (x) estimated marginal increase in income taxes paid or
payable by the Borrower's consolidated group with respect to the fiscal
year in which such sale occurs as a result thereof, (y) any amounts
required to be escrowed in connection with the respective Asset Sale,
provided that upon the release of any such escrowed amounts to the Borrower
or any of its Subsidiaries, such released proceeds shall be treated as Net
Cash Proceeds of the respective Asset Sale, and (z) any reserves and
holdbacks in good faith established by the Borrower in connection with any
liabilities assumed by it in connection with the respective Asset Sale, so
long as determined in accordance with GAAP and reasonably expected to be
utilized within the 12 months following the date of the respective Asset
Sale, provided that on the date which occurs 12 months after the respective
Asset Sale, to the extent any such reserves or holdbacks remain, the amount
thereof shall be deemed to constitute Net Cash Proceeds from the respective
Asset Sale, and (ii) with respect to any issuance of debt or equity, the
cash proceeds (including any cash received by way of deferred payment
pursuant to a promissory note, receivable or otherwise, but only as and
when received) received from such event, net of transaction costs
(including, as applicable, any underwriting, brokerage or other customary
commissions and reasonable legal and other fees and expenses associated
therewith) incurred in connection therewith.
"Net Income" shall mean, with respect to any person, the net
income (loss) of such person, determined in accordance with GAAP,
excluding, however, any gain or loss, together with any related provision
for taxes, realized in connection with any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions).
"Non-Defaulting Bank" shall mean and include each Bank other
than a Defaulting Bank.
"Non-Wholly-Owned Domestic Subsidiary" shall mean, as to any
Person, any Non-Wholly-Owned Subsidiary of such Person which is a Domestic
Subsidiary.
"Non-Wholly-Owned Subsidiary" shall mean each Subsidiary other
than a Wholly-Owned Subsidiary.
"Non-Wholly-Owned Subsidiary Guaranty" shall mean, after the
execution and delivery thereof, the Non-Wholly-Owned Subsidiary Guaranty
entered into by each Non-Wholly-Owned Domestic Subsidiary of the Borrower
pursuant to Section 8.11, in the form of Exhibit L hereto, as the same may
be amended, modified or supplemented from time to time.
"Note" shall mean each Revolving Note and the Swingline Note.
"Notice of Borrowing" shall have the meaning provided in Section
1.03.
"Notice of Conversion" shall have the meaning provided in
Section 1.06.
"Notice Office" shall mean the office of the Agent located at
130 Liberty Street, New York, New York 10006, Attention: Mary Kay Coyle,
or such other office as the Agent may hereafter designate in writing as
such to the other parties hereto.
"Obligations" shall mean all amounts, direct or indirect,
contingent or absolute, of every type or description, and at any time
existing, owing to the Agent, the Collateral Agent or any Bank pursuant to
the terms of this Agreement or any other Credit Document.
"Original Acquired Business" shall mean the Acquired Business as
defined in the Existing Credit Agreement.
"Original Acquisition" shall mean the Acquisition as defined in
the Existing Credit Agreement.
"Original Effective Date" shall mean the Effective Date under,
and as defined in, the Existing Credit Agreement.
"Other Hedging Agreements" shall mean any foreign exchange
contracts, currency swap agreements, commodity agreements or other similar
agreements or arrangements designed to protect against the fluctuations in
currency values.
"Parent" shall mean Motors & Gears, Inc., a Delaware
corporation, as successor by Merger to MK Group.
"Parent Indebtedness" shall mean, at any time, (x) all
Indebtedness of Parent for borrowed money, purchase money Indebtedness, all
obligations evidenced by notes or bonds and any other items which would be
required to be accounted for as debt of Parent on Parent's consolidating
balance sheet in accordance with GAAP and (y) all Contingent Obligations of
Parent in respect of obligations of any other Persons (other than the
Borrower and its Subsidiaries); provided that Parent Indebtedness shall not
include Indebtedness of any Subsidiary of Parent with respect to which (x)
Parent is neither a co-obligor nor has any Contingent Obligation or (y) the
sole recourse to Parent is contractually limited to the Parent's equity
interests in the respective Subsidiary of Parent (which may not be the
Borrower) which has directly incurred the respective Indebtedness.
"Parent Interest Expense" shall mean, for any period, the
aggregate of the interest expense in respect of all Indebtedness of the
Parent (but not of its Subsidiaries except to the extent same also
constitutes Indebtedness of the Parent) for such period, determined in
accordance with GAAP (including amortization of original issue discount of
any such Indebtedness, all non-cash interest payments, the interest portion
of any deferred payment obligation, the interest component of capital lease
obligations and, except as otherwise provided below, the amortization of
deferred financing fees if such amortization would otherwise be included in
interest expense); provided that there shall be excluded from Parent
Interest Expense the amortization of any deferred financing costs incurred
in connection with the Senior Unsecured Notes. Notwithstanding anything to
the contrary contained above or otherwise required by GAAP, Parent Interest
Expense shall include all interest expense in respect of Senior Unsecured
Notes.
"Parent Subordinated Intercompany Note" shall have the meaning
provided in Section 5.23(a).
"Participant" shall have the meaning provided in Section 2.04.
"Payment Office" shall mean the office of the Agent located at
130 Liberty Street, New York, New York 10006, or such other office as the
Agent may hereafter designate in writing as such to the other parties
hereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Percentage" of any Bank at any time shall mean a fraction
(expressed as a percentage) the numerator of which is the Commitment of
such Bank at such time and the denominator of which is the Total Commitment
at such time, provided that if the Percentage of any Bank is to be
determined after the Total Commitment has been terminated, then the
Percentages of the Banks shall be determined immediately prior (and without
giving effect) to such termination.
"Permitted Acquired Business" shall mean the business, division
or product line of any Person, including the capital stock of any such
Person, acquired in connection with a Permitted Transaction.
"Permitted Acquired Debt" shall mean Indebtedness of a
Subsidiary of the Borrower acquired after the Initial Borrowing Date
pursuant to a Permitted Transaction, to the extent such indebtedness was
outstanding prior to the consummation of the Permitted Transaction and
remains outstanding as Indebtedness of the respective Subsidiary after
giving effect thereto, provided that (i) such Indebtedness was not incurred
in connection with or in anticipation of such Permitted Transaction or the
respective Person becoming Subsidiary of the Borrower, (ii) such
Indebtedness does not constitute Indebtedness of the Borrower or any of
their Subsidiaries other than the respective Subsidiary acquired pursuant
to the respective Permitted Transaction and shall not be secured by any
assets of any Person other than assets of the Subsidiary so acquired
serving as security therefor at the time of the respective Permitted
Transaction and (iii) no Person other than the respective Subsidiary shall
have any liability (contingent or otherwise) with respect to any Permitted
Acquired Debt.
"Permitted Acquisition" shall mean the acquisition by the
Borrower or any 80%-Owned Subsidiary of the Borrower (other than the
Receivables Entity) of assets constituting a business, division or product
line of any Person not already a Subsidiary of the Borrower or such
Subsidiary or at least 80% of the capital stock of any such Person,
although any such acquisition shall only be a Permitted Acquisition so long
as (A) the consideration therefor consists solely of cash (including from
proceeds of Revolving Loans), Permitted Debt, Permitted Acquired Debt
and/or Permitted Earn-Out Debt, (B) the assets acquired will be used solely
in, or the business of the Person whose stock is acquired consists solely
of, any or all of the same business lines permitted by Section 9.07, and
(C) those acquisitions that are structured as stock acquisitions shall be
effected through a purchase of no less than 80% of the capital stock of
such Person by the Borrower or such Subsidiary or through a merger between
such Person and a newly-formed direct Subsidiary of the Borrower or such
Subsidiary, as the case may be, so that after giving effect to the
respective acquisition the Permitted Acquired Business is owned by an
80%-Owned Subsidiary and (D) all requirements of Section 8.15 with respect
to Permitted Acquisitions are met with respect thereto. Notwithstanding
anything to the contrary contained above or in Section 8.15, an acquisition
not otherwise meeting all the requirements set forth in the definition of
Permitted Acquisition above or in Section 8.15 may be consummated as a
"Permitted Acquisition" for all purposes of this Agreement, but only so
long as the Required Banks specifically consent in writing to such
acquisition and agree in writing that such acquisition shall constitute a
Permitted Acquisition for purposes of this Agreement.
"Permitted Acquisition Investment" shall mean the acquisition
(not pursuant to a Permitted Acquisition) by the Borrower or any Subsidiary
of the Borrower (other than the Receivables Entity) of common equity
interests (or similar equity interests), constituting less than 80% of the
outstanding common equity interests (or similar equity interests), of any
Person not already a Subsidiary of the Borrower or such Subsidiary,
although such acquisition shall only be a Permitted Acquisition Investment
so long as (A) the consideration therefor consists solely of cash
(including from proceeds from Revolving Loans), Permitted Debt, Permitted
Acquired Debt and/or Permitted Earn-Out Debt and (B) the business of the
Person whose common equity interests (or similar equity interests) are
acquired, shall be one of the business lines permitted by Section 9.07.
Notwithstanding anything to the contrary contained in the immediately
preceding sentence, an investment shall be a Permitted Acquisition
Investment only if all requirements of Section 8.15 applicable to Permitted
Acquisition Investments are met with respect thereto.
"Permitted Amendments" shall mean amendments to the Existing
Indebtedness, the Debt Agreements, the Senior Unsecured Note Documents, the
Acquisition Documents, the Merger Documents or the Equity Financing
Agreements or any agreement relating to any of the foregoing (but not to
the Existing Seller Subordinated Note, the Existing Seller Installment
Note, the Earnout Agreement or any agreements relating thereto): (i) to
cure ambiguity, defect or inconsistency, (ii) to make changes that would
provide additional benefits or rights to the Agent or the Banks or (iii) to
make changes that would not otherwise adversely affect any Bank in its
capacity as such.
"Permitted Debt" shall mean subordinated Indebtedness of the
Borrower incurred in connection with a Permitted Transaction and in
accordance with Section 8.15 which Permitted Debt and all terms thereof
shall be in form and substance reasonably satisfactory to the Agent,
provided, that in any event, unless the Required Banks otherwise expressly
consent in writing prior to the incurrence thereof, (i) no such
Indebtedness shall be guaranteed by the Borrower or any of its
Subsidiaries, (ii) no such Indebtedness shall be secured by any asset of
the Borrower or any of its Subsidiaries, (iii) any such Indebtedness shall
be subordinated to the Obligations at least to the same extent as the
Existing Seller Subordinated Note is subordinated in accordance with the
terms thereof and (iv) each issue of Permitted Debt shall contain terms
which, in the aggregate, are at least as favorable to the Banks as those
contained in the Existing Seller Subordinated Note. The incurrence of
Permitted Debt shall be deemed to be a representation and warranty by the
Borrower that all conditions thereto have been satisfied and that same is
permitted in accordance with the terms of this Agreement, which
representation and warranty shall be deemed to be a representation and
warranty for all purposes hereunder, including, without limitation,
Sections 6 and 10.
"Permitted Earn-Out Debt" shall mean Indebtedness of the
Borrower or any of its Subsidiaries incurred in connection with a Permitted
Transaction and in accordance with Sections 8.15 and 9.04(x), which
Indebtedness is unguaranteed and not secured by any assets of the Borrower
or any of its Subsidiaries (including, without limitation, the assets so
acquired) and is only payable by the Borrower in the event certain future
performance goals are achieved with respect to the assets acquired;
provided that, such Indebtedness shall only constitute Permitted Earn-Out
Debt to the extent the terms of such Indebtedness expressly provide that
payments thereunder may only be made to the extent not prohibited by the
terms of this Agreement or any refinancing (or successive refinancings
hereof) as in effect from time to time.
"Permitted Encumbrances" shall mean, with respect to any
Mortgaged Property, such exceptions to title as are set forth in the
Mortgage Policy or title commitment delivered with respect thereto, all of
which exceptions must be acceptable on the date of delivery of such
Mortgage Policy or title commitment to the Agent in its reasonable
discretion.
"Permitted Investment" shall mean any loans, advances or capital
contributions made by the Borrower or any Subsidiary of the Borrower to any
Subsidiary of the Borrower which is not an 80%-Owned Subsidiary.
"Permitted Investment Amount" shall mean, at any time an amount
which initially shall be $5,000,000 and which shall be decreased (without
duplication) (x) on the date of the consummation of each Permitted
Acquisition Investment, by the Permitted Transaction Cost thereof and (y)
on the date of the making of each Permitted Investment, by the amount of
the respective such Investment; provided that to the extent a Permitted
Investment is reduced by cash returns received in respect thereof (but for
purposes of this proviso not to exceed the original amount of the
respective Permitted Investment), from and after the date of the receipt of
any such cash returns, the Permitted Investment Amount shall be increased
by the amount of cash so received.
"Permitted Liens" shall have the meaning provided in Section
9.01.
"Permitted Sale-Leaseback Transaction" shall mean any sale by
the Borrower or any of its Subsidiaries of which equipment or machinery
first acquired by the Borrower or such Subsidiary after the Initial
Borrowing Date which equipment or machinery, as the case may be, is then
leased back to the respective seller, provided that (i) the proceeds of the
respective sale shall be entirely cash and in an amount at least equal to
75% of the aggregate amount expended by the Borrower and its Subsidiaries
in so acquiring such equipment or machinery, (ii) such sale and leaseback
is effected within 180 days of the acquisition by the Borrower or such
Subsidiary of the Borrower of such equipment or machinery, and (iii) the
respective transaction is otherwise effected in accordance with the
applicable requirements of Section 9.02(xi).
"Permitted Transaction" shall mean and include each Permitted
Acquisition and each Permitted Acquisition Investment.
"Permitted Transaction Cost" shall mean, with respect to any
Permitted Transaction, the sum of (i) the amount of cash to be paid in
respect thereof, as certified by the Borrower pursuant to Section
8.15(a)(ii)(u) in connection with the respective Permitted Transaction,
(ii) the aggregate amount of fees and expenses estimated by the Borrower to
be payable in connection with the respective Permitted Transaction, as
certified by the Borrower pursuant to Section 8.15(a)(ii)(v), (iii) the
aggregate principal amount of all Permitted Debt and/or Permitted Acquired
Debt incurred, acquired or assumed in connection with such Permitted
Transaction and (iv) the Certified Restructuring Cost Reserve with respect
to such Permitted Transaction.
"Permitted Transaction Notice" shall have the meaning set forth
in Section 8.15(a)(i).
"Person" shall mean any individual, partnership, joint venture,
firm, corporation, association, trust or other enterprise or any government
or political subdivision or any agency, department or instrumentality
thereof.
"Plan" shall mean any multiemployer or single-employer plan as
defined in Section 4001 of ERISA, which is maintained or contributed to by
(or to which there is an obligation to contribute of), the Borrower or a
Subsidiary of the Borrower or an ERISA Affiliate, and each such plan for
the five-year period immediately following the latest date on which, the
Borrower or a Subsidiary of the Borrower or an ERISA Affiliate maintained,
contributed to or had an obligation to contribute to such plan.
"Pledge Agreement" shall have the meaning provided in Section
5.13 and shall include after the execution and delivery thereof any pledge
agreement required to be delivered pursuant to Sections 8.11, 8.15 and/or
9.13.
"Pledge Agreement Collateral" shall mean all "Collateral" as
defined in the Pledge Agreement.
"Pledged Securities" shall have the meaning provided in the
Pledge Agreement.
"Pledgee" shall have the meaning provided in the Pledge
Agreement.
"Prime Lending Rate" shall mean the rate which BTCo announces
from time to time as its prime lending rate, the Prime Lending Rate to
change when and as such prime lending rate changes. The Prime Lending Rate
is a reference rate and does not necessarily represent the lowest or best
rate actually charged to any customer. BTCo may make commercial loans or
other loans at rates of interest at, above or below the Prime Lending Rate.
"Pro Forma Basis" shall mean, in connection with any calculation
of compliance with any financial covenant or financial term (whether
pursuant to Section 8.15 or the respective financial covenant or financial
term), the calculation thereof after giving effect on a pro forma basis to
(w) if the relevant period to be tested includes any period occurring prior
to the BCM Acquisition Date, the consummation of the BCM Transaction as if
same had occurred on the first day of such period, (x) if the relevant
period to be tested includes any period occurring prior to the Initial
Borrowing Date, the consummation of the Transaction as if same had occurred
on the first day of such period, (y) in the case of any calculation of the
Consolidated Interest Coverage Ratio or the Leverage Ratio (except for
purposes of Section 8.15), any Permitted Transaction which was consummated
during the respective Test Period and (z) for purposes of all calculations
pursuant to Section 8.15 and of the Blocked Commitment, the Permitted
Transaction or Asset Sale, as the case may be, then being consummated as
well as any other Permitted Transaction and/or Asset Sale consummated after
the first day of the relevant Calculation Period and on or prior to the
date of the respective Permitted Transaction or Asset Sale, as the case may
be, then being effected, with the following rules to apply in connection
therewith:
(i) all Indebtedness (including, without limitation, all
Permitted Acquired Debt, Permitted Debt, BCM Acquired Debt, the
Senior Unsecured Notes and Indebtedness evidenced by Loans) incurred
to finance any Permitted Transaction or, to the extent the respective
Calculation Period, Asset Sale Calculation Period or Test Period
includes periods prior to the Initial Borrowing Date or the BCM
Acquisition Date, to finance the Transaction or the BCM Transaction,
as the case may be, shall be deemed to have been incurred on the
first day of the respective Calculation Period, Asset Sale
Calculation Period or Test Period and remain outstanding through the
date of the consummation of the respective Permitted Transaction (and
thereafter in the case of projections pursuant to Section
8.15(a)(xi)) or Transaction or BCM Transaction;
(ii) all Indebtedness assumed to be outstanding pursuant to
preceding clause (i) shall be deemed to have borne interest at (x)
the rate applicable thereto, in the case of fixed rate Indebtedness,
or (y) at the rates which would have been applicable thereto during
the respective period when same was deemed outstanding, in the case
of floating rate Indebtedness (although interest expense with respect
to any Indebtedness for periods while same was actually outstanding
during the respective period shall be calculated using the actual
rates applicable thereto while same was actually outstanding);
provided that for purposes of calculations pursuant to Section
8.15(a)(xi), all Indebtedness (whether actually outstanding or deemed
outstanding) bearing interest at a floating rate of interest shall be
tested on the basis of the rates applicable at the time the
determination is made pursuant to said clause (xi);
(iii) in making calculations pursuant to preceding clause (z) of
this definition, all Indebtedness permanently repaid (and in the case
of any repayment of revolving indebtedness, to the extent the
commitments with respect thereto have been permanently reduced) with
the proceeds of the respective Asset Sale shall be deemed to have
been repaid on the first day of the respective Calculation Period or
Asset Sale Calculation Period, as the case may be;
(iv) in making any determination of Consolidated EBITDA, pro
forma effect shall be given to the Transaction, the BCM Transaction
and any Permitted Transaction or, in the case of determinations
pursuant to preceding clause (z), Asset Sale for the periods
described above, taking into account (x) fees payable as described in
Section 9.06(y)(viii) as if such fees were payable with respect to
pro forma net sales from the first day of the respective period, (y)
in the case of the BCM Transaction, cost savings and expenses which
would otherwise be accounted for as an adjustment pursuant to Article
11 of Regulation S-X under the Securities Act, as if such cost
savings and expenses were realized on the first day of the respective
period, but, in the case of any such cost savings, only so long as
the BCM Restructuring Costs incurred (or the anticipated BCM
Restructuring Costs if not yet incurred) to achieve such cost savings
are reasonably consistent with the Certified BCM Restructuring Cost
Reserve to be taken in connection with the BCM Transaction as
certified pursuant to Section 9.02(xii)(c) of the Existing Credit
Agreement and (z) in the case of any Permitted Transaction, cost
savings and expenses which would otherwise be accounted for as an
adjustment pursuant to Article 11 of Regulation S-X under the
Securities Act, as if such cost savings or expenses were realized on
the first day of the respective period, but, in the case of any such
cost savings, only so long as the Restructuring Costs incurred (or
the anticipated Restructuring Costs if not yet incurred) to achieve
such cost savings are reasonably consistent with the Certified
Restructuring Cost Reserve to be taken in connection with the
Permitted Transaction as certified pursuant to Section 8.15(a)(ii).
"Projections" shall have the meaning provided in Section
5.20(b).
"Purchase Price" shall mean the sum of (i) cash in an amount not
to exceed $75,000,000, subject to the adjustment of the purchase price
provided in Sections 1.03 and 1.04 of the Acquisition Agreement plus (ii)
the Earnout plus (iii) the assumption of liabilities in an aggregate
principal amount not to exceed $10,000,000.
"Quarterly Payment Date" shall mean the 15th day of each March,
June, September and December commencing with December 15, 1996.
"RCRA" shall mean the Resource Conservation and Recovery Act, as
the same may be amended from time to time, 42 U.S.C. 6901 et seq.
"Real Property" of any Person shall mean all the right, title
and interest of such Person in and to land, improvements and fixtures,
including Leaseholds.
"Receivables" shall mean all accounts receivable (including,
without limitation, all rights to payment created by or arising from sales
of goods, leases of goods or the rendition of services rendered no matter
how evidenced whether or not earned by performance).
"Receivables Amendment Conditions" means, with respect to any
amendment, modification, supplement, refinancing or replacement of the
Receivables Facility or the respective Receivables Facility Documents, the
requirements that the following shall be true after giving effect to such
amendment, modification, supplement, refinancing or replacement:
(a) no such amendments, modifications, supplements,
refinancing or replacement shall impose any condition or
requirement on the Borrower or any of its Subsidiaries
that is more restrictive in any material respect than
those in existence on the Receivables Facility Transaction
Date in the documentation originally approved pursuant to
Section 8.17;
(b) such amendments, modifications, supplements, refinancing
and/or replacement shall not be adverse to the interest of
the Banks; and
(c) all such amendments, modifications, supplements,
refinancing or replacement shall otherwise be in form and
substance reasonably satisfactory to the Agent.
"Receivables Entity" shall mean a Wholly-Owned Subsidiary of the
Borrower which engages in no activities other than in connection with the
financing of accounts receivable of the Designated Credit Parties and which
is designated (as provided below) as the Receivables Entity (a) no portion
of the Indebtedness or any other obligations (contingent or otherwise) of
which (i) is guaranteed by Parent or any other Subsidiary of Parent
(excluding guarantees of obligations (other than the principal of, and
interest on, Indebtedness)) pursuant to Standard Securitization
Undertakings, (ii) is recourse to or obligates Parent or any other
Subsidiary of Parent in any way other than pursuant to Standard
Securitization Undertakings or (iii) subjects any property or asset of
Parent or any other Subsidiary of Parent, directly or indirectly,
contingently or otherwise, to the satisfaction thereof, other than pursuant
to Standard Securitization Undertakings, (b) with which neither Parent nor
any of its Subsidiaries has any contract, agreement, arrangement or
understanding (other than pursuant to the Receivables Facility Documents
(including with respect to fees payable in the ordinary course of business
in connection with the servicing of accounts receivable and related
assets)) on terms less favorable to Parent or such Subsidiary than those
that might be obtained at the time from persons that are not Affiliates of
Parent, and (c) to which neither Parent nor any other Subsidiary of Parent
has any obligation to maintain or preserve such entity's financial
condition or cause such entity to achieve certain levels of operating
results. Any such designation shall be evidenced to the Agent by filing
with the Agent an officer's certificate of the Borrower certifying that, to
the best of such officer's knowledge and belief after consultation with
counsel, such designation complied with the foregoing conditions.
"Receivables Facility" shall mean a facility providing for the
sale by the Borrower and/or one or more other Designated Credit Parties of
Receivables Facility Assets (thereby providing off-balance sheet financing
to the Borrower and the respective Designated Credit Parties) to the
Receivables Entity, which in turn shall sell interests in the respective
Receivables Facility Assets to the third-party investors pursuant to the
Receivables Facility Documents (with the Receivables Entity to issue
investor certificates, purchased interest certificates or other similar
documentation evidencing interests in the Receivables Facility Assets) in
return for the cash used by the Receivables Entity to purchase the
Receivables Facility Assets from the Borrower and/or the respective
Designated Credit Parties.
"Receivables Facility Assets" shall mean Receivables (whether
now existing or arising in the future) of the Borrower and its Subsidiaries
which are transferred to the Receivables Entity pursuant to the Receivables
Facility and any related Receivables Related Assets which are also so
transferred to the Receivables Entity and all proceeds thereof.
"Receivables Facility Documents" shall mean all documents and
agreements entered into in connection with the Receivables Facility, as
such documents and agreements may be amended, modified, supplemented,
refinanced or replaced from time to time so long as the Receivables
Amendment Conditions are satisfied in connection therewith.
"Receivables Facility Financing Costs" shall mean, for any
period, the total consolidated interest and fee expense of the Borrower and
its Subsidiaries which would have existed for such period pursuant to the
Receivables Facility if same were structured as a secured lending
arrangement rather than as a facility for the sale of Receivables Facility
Assets.
"Receivables Facility Threshold Amount" shall, on the
Receivables Facility Transaction Date, equal the amount applied on such
date to reduce the Total Commitment pursuant to Section 3.03(e)(x);
provided that, on each date upon which a commitment reduction is required
pursuant to Section 3.03(e)(y) as a result of the incurrence of Attributed
Receivables Facility Indebtedness in excess of the Receivables Facility
Threshold Amount as theretofore in effect, the Receivables Facility
Threshold Amount shall be increased (on the date of, after giving effect
to, the respective mandatory commitment reduction) by the amount of the
commitment reduction required on such date pursuant to Section 3.03(e)(y)
as a result of the respective incurrence of Attributed Receivables Facility
Indebtedness.
"Receivables Facility Transaction" shall mean the entering into
of the Receivables Facility and the consummation of the related
transactions contemplated by the Receivables Facility Documents.
"Receivables Facility Transaction Date" shall mean the date of
the entering into of the Receivables Facility in accordance with the
requirements of Section 8.17.
"Receivables Related Assets" shall mean, with respect to any
Person, all of the following property and interests in property of such
Person, whether now existing or existing in the future or hereafter
acquired or arising and in each case to the extent relating to the
respective Receivables of such Person: (i) all unpaid seller's or lessor's
rights (including, without limitation, recession, replevin, reclamation and
stoppage in transit, relating to any of the foregoing or arising
therefrom), (ii) all rights to any goods or merchandise represented by any
of the foregoing (including, without limitation, returned or repossessed
goods), (iii) all reserves and credit balances with respect to any such
Receivable or the respective account debtor, (iv) all letters of credit,
security or guarantees of any of the foregoing, (v) all insurance policies
or reports relating to any of the foregoing, (vi) all collection or deposit
accounts relating to any of the foregoing, (vii) all proceeds of any of the
foregoing, and (viii) all books and records relating to any of the
foregoing.
"Recovery Event" shall mean the receipt by the Borrower or any
of its Subsidiaries of any cash insurance proceeds or condemnation award
(excluding the proceeds of any business interruption insurance) payable (i)
by reason of theft, loss, physical destruction or damage or any other
similar event with respect to any property or asset of the Borrower or any
of its Subsidiaries, or (ii) by reason of any condemnation, taking, seizing
or similar event with respect to any property or asset of the Borrower or
any of its Subsidiaries or (iii) under any policy of property or casualty
(or substantially similar) insurance required to be maintained under
Section 8.03 with respect to any property or
asset of the Borrower or any of its Subsidiaries.
"Refinancing" shall mean the refinancing of the Existing Credit
Agreement on the Initial Borrowing Date pursuant to the requirements of
Section 5.12.
"Refinancing Documents" shall mean the documents entered into in
connection with the Refinancing.
"Refinancing Indebtedness" shall mean (i) Indebtedness of the
Borrower and its Subsidiaries issued or given in exchange for, or the
proceeds of which are used to, extend, refinance, renew, replace,
substitute or refund Indebtedness permitted under this Agreement or any
Indebtedness issued to so extend, refinance, renew, replace, substitute or
refund any such Indebtedness, and (ii) any additional Indebtedness issued
to pay premiums and fees in connection with clause (i).
"Register" shall have the meaning provided in Section 13.16.
"Regulation D" shall mean Regulation D of the Board of Governors
of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing reserve requirements.
"Regulation G" shall mean Regulation G of the Board of Governors
of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Regulation T" shall mean Regulation T of the Board of Governors
of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Regulation U" shall mean Regulation U of the Board of Governors
of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of Governors
of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Related Business" means any business conducted by the Acquired
Business and Merkle and its Subsidiaries on the Effective Date and any
business in the motion control industry (including, without limitation,
gears and gear drives, controls and sensors, drives and drive systems and
couplings) and any and all related businesses in support of, or reasonably
related or substantially similar to, any such business.
"Release" shall mean disposing, discharging, injecting,
spilling, pumping, leaking, leaching, dumping, emitting, escaping,
emptying, seeping, placing, pouring and the like, into or upon any land or
water or air, or otherwise entering into the indoor or outdoor environment
or into or out of any Real Property, including the movement of Hazardous
Materials through or in the air, soil, service water, ground water or
property.
"Replaced Bank" shall have the meaning provided in Section 1.13.
"Replacement Bank" shall have the meaning provided in Section
1.13.
"Reportable Event" shall mean an event described in Section
4043(c) of ERISA with respect to a Plan other than those events as to which
the 30-day notice period is waived under subsection .13, .14, .16, .18, .19
or .20 of PBGC Regulation Section 2615.
"Required Appraisal" shall have the meaning provided in Section
8.11.
"Required Banks" shall mean Non-Defaulting Banks, the sum of
whose Commitments (or after the termination thereof, outstanding Revolving
Loans and Percentage of outstanding Swingline Loans and Letter of Credit
Outstandings) represent an amount greater than 50% of the sum of all
Commitments of all Non-Defaulting Banks (or after the termination thereof,
the sum of the then total outstanding Revolving Loans of Non-Defaulting
Banks and the aggregate Percentages of all Non-Defaulting Banks of the
total outstanding Swingline Loans and Letter of Credit Outstandings at such
time).
"Restricted Payment" shall mean (i) the authorization,
declaration or payment of any Dividend with respect to the Borrower or any
of its Subsidiaries and (ii) the payment by the Borrower or any of its
Subsidiaries of any principal, interest on, or any other amount owing with
respect to, any advance or loan made by or owing by such Person to Parent
or any Subsidiary (other than the Borrower and its Subsidiaries) of Parent.
"Restructuring Costs" shall mean, as relates to any Permitted
Transaction, nonrecurring charges arising out of the restructuring,
consolidation, severance or discontinuance of the operations of any
entities or businesses acquired pursuant to the respective Permitted
Transactions either alone or together with the Borrower and its other
Subsidiaries, in each case to the extent incurred within eighteen months
following the respective Permitted Transaction.
"Returns" shall have the meaning provided in Section 7.09.
"Revolving Loans" shall have the meaning provided in Section
1.01(a).
"Revolving Note" shall have the meaning provided in Section
1.05(a).
"Sale/Leaseback Transaction" means an arrangement (including,
without limitation, any Permitted Sale-Leaseback Transaction) relating to
property now owned or hereafter acquired whereby the Borrower or a
Subsidiary thereof, transfers such property to a Person and the Borrower or
a Subsidiary thereof leases it from such Person.
"S&P" shall mean Standard & Poor's Ratings Services, a division
of McGraw-Hill, Inc.
"Scheduled Existing Indebtedness" shall have the meaning
provided in Section 5.19.
"Scott" shall mean Scott Motors Company, a Delaware corporation
and a direct Wholly-Owned Subsidiary of Imperial.
"Scott Acquisition Sub" shall mean The New Scott Motors Company,
a Delaware corporation and a direct Wholly-Owned Subsidiary of Acquisition
Corp.
"Scott Intercompany Note" shall have the meaning provided in
Section 5.23(b).
"SEC" shall have the meaning provided in Section 8.01(h).
"Section 4.04(b)(ii) Certificate" shall have the meaning
provided in Section 4.04(b).
"Secured Creditors" shall have the meaning provided in the
respective Security Documents.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Security Agreement" shall have the meaning provided in Section
5.14 and shall include after the execution and delivery thereof any
security agreement required to be delivered pursuant to Sections 8.11, 8.15
and/or 9.13.
"Security Agreement Collateral" shall mean all "Collateral" as
defined in the Security Agreement.
"Security Documents" shall mean the Pledge Agreement, the
Security Agreement, each Additional Security Document, if any (including,
without limitation, each Mortgage, if any, executed and delivered pursuant
to Section 8.11), and any other security documents executed and delivered
pursuant to the requirements of Sections 8.11, 8.15 and/or 9.13.
"Senior Unsecured Note Indenture" shall mean the Indenture,
dated as of November 7, 1996, entered into by and between Parent and Fleet
National Bank, as trustee thereunder, as in effect on the Initial Borrowing
Date and as the same may be amended, modified or supplemented from time to
time in accordance with the terms thereof.
"Senior Unsecured Notes" shall mean Parent's 10-3/4% Series A
Senior Notes due 2006, as in effect on the Initial Borrowing Date and as
the same may be amended, modified or supplemented from time to time
pursuant to the terms thereof.
"Senior Unsecured Note Documents" shall mean and included each
of the documents and other agreements entered into (including, without
limitation, the Senior Unsecured Note Indenture) relating to the issuance
by the Parent of the Senior Unsecured Notes, as in effect on the Initial
Borrowing Date and as the same may be entered into, modified, supplemented
or amended from time to time pursuant to the terms thereof.
"Shareholder Subordinated Note" shall mean an unsecured junior
subordinated note issued by M&G Holdings (and not guaranteed or supported
in any way by Parent or any Subsidiary of Parent) to Management Investors,
in the form of Exhibit R, with such changes thereto as are satisfactory to
the Agent and the Required Banks.
"Shareholders' Agreements" shall have the meaning provided in
Section 5.06.
"Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by Parent, the Borrower
or any Subsidiary of the Borrower in connection with the Receivables
Facility which are customary in an off-balance-sheet accounts receivable
transaction.
"Standby Letter of Credit" shall have the meaning provided in
Section 2.01(a).
"Start Date" shall have the meaning provided in the definition
of Interest Reduction Discount.
"Stated Amount" of each Letter of Credit shall, at any time,
mean the maximum amount available to be drawn thereunder (in each case
determined without regard to whether any conditions to drawing could then
be met).
"Stockholders' Agreement" shall mean the Stockholders'
Agreement, dated as of September 22, 1995, by and among M&G Holdings,
Jordan and the other Jordan Investors (as defined therein), in the form
delivered to the Agent and the Banks on the Initial Borrowing Date;
provided that future Management Investors may become party thereto by
executing a counterpart thereof after the Initial Borrowing Date.
"Subsidiary" shall mean, as to any Person, (i) any corporation
more than 50% of whose stock of any class or classes having by the terms
thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class
or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time owned by such
Person and/or one or more Subsidiaries of such Person and (ii) any
partnership, association, joint venture or other entity in which such
Person and/or one or more Subsidiaries of such Person has more than a 50%
equity interest at the time. Unless the context otherwise requires, all
references herein to "Subsidiaries" shall be to Subsidiaries of the
Borrower.
"Subsidiary Guarantor" shall mean each Domestic Subsidiary of
the Borrower which is a party to the Subsidiary Guaranty or the
Non-Wholly-Owned Subsidiary Guaranty.
"Subsidiary Guaranty" shall have the meaning provided in Section
5.15 and shall include, after the execution and delivery thereof, any
similar guaranty required to be delivered pursuant to Sections 8.11, 8.15
and/or 9.13.
"Swingline Bank" shall mean BTCo, in its capacity as the lender
of Swingline Loans.
"Swingline Expiry Date" shall mean the date which is five
Business Days prior to the Final Maturity Date.
"Swingline Loans" shall have the meaning provided in Section
1.01(b).
"Swingline Note" shall have the meaning provided in Section
1.05(a).
"Syndication Date" shall mean that date upon which the Agent
determines in its sole discretion (and notifies the Borrower) that the
primary syndication (and resultant addition of institutions as Banks
pursuant to Section 13.04) has been completed.
"Tax Sharing Agreements" shall have the meaning provided in
Section 5.06.
"Taxes" shall have the meaning provided in Section 4.04(a).
"Test Date" shall have the meaning provided in the definition of
Interest Reduction Discount.
"Test Period" shall mean each period of four consecutive fiscal
quarters then last ended, in each case taken as one accounting period.
Notwithstanding anything to the contrary contained above or otherwise
required by GAAP, in the case of any Test Period ending prior to the first
anniversary of the Initial Borrowing Date, such period shall be a one year
period ending on the last day of a fiscal quarter ended after the Initial
Borrowing Date, and such Test Period shall include (x) the actual results
of the Borrower and its Subsidiaries from and after the date of the
consummation of the Transaction and (y) the historical pro forma financial
results of the Borrower and its Subsidiaries for that portion of the Test
Period occurring prior to the Initial Borrowing Date, with said historical
pro forma financial results to be consistent with the pro forma financial
statements delivered pursuant to Section 7.05(a)(V) and taking into effect
the pro forma adjustments for periods prior to the Initial Borrowing Date
described in the definition of Pro Forma Basis contained herein.
"TJC" shall mean TJC Management Corporation, a Delaware
corporation.
"TJC Management Services Agreements" shall mean and include each
of (i) the Management Consulting Agreement, dated as of September 22, 1995,
by and between TJC and Parent and (ii) the Management Consulting Agreement,
dated as of September 22, 1995, by and between TJC and Merkle, in each case
as in effect on the Initial Borrowing Date and as the same may be amended,
modified or supplemented from time to time in accordance with the terms
hereof and thereof.
"Total Available Commitment" shall mean at any time, the Total
Commitment less the Blocked Commitment, if any, at such time.
"Total Commitment" shall mean, at any time, the sum of the
Commitments of each of the Banks.
"Total Unutilized Commitment" shall mean, at any time, an amount
equal to the remainder of (x) the then Total Commitment then in effect,
less (y) the sum of the aggregate principal amount of Revolving Loans and
Swingline Loans then outstanding plus the then aggregate amount of Letter
of Credit Outstandings.
"Trade L/C Percentage" shall mean the remainder of the
Applicable Margin for Eurodollar Loans less 1.00%.
"Trade Letter of Credit" shall have the meaning set forth in
Section 2.01(a).
"Tranche" shall mean the respective facility and commitments
utilized in making Loans hereunder, with there being two separate Tranches,
i.e., Revolving Loans and Swingline Loans.
"Transaction" shall mean, collectively, (i) the consummation of
the Acquisition, (ii) the consummation of the Merger, (iii) the Asset
Contribution, (iv) the MK Stock Contribution, (v) the issuance by Parent of
the Senior Unsecured Notes, (vi) the Refinancing, (vii) the incurrence of
the Loans and the issuance of Letters of Credit hereunder on the Initial
Borrowing Date, (viii) the payment of Transaction Fees and Expenses in
connection with the foregoing, (ix) the issuance by the Borrower of the
Parent Subordinated Intercompany Note, (x) the issuance by Scott
Acquisition Sub. and Gear Acquisition Sub. of the Scott Intercompany Note
and the Gear Intercompany Note, respectively, and (xi) such other
transactions contemplated by the Documents.
"Transaction Fees and Expenses" shall mean all fees and expenses
incurred in connection with and arising out of the Transaction.
"Transaction Intercompany Note" shall have the meaning provided
in Section 5.23(b).
"Type" shall mean the type of Revolving Loan determined with
regard to the interest option applicable thereto, i.e., whether a Base Rate
Loan or a Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as from time to
time in effect in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan means the amount, if
any, by which the actuarial present value of the accumulated plan benefits
under the Plan as of the close of its most recent plan year exceeds the
fair market value of the assets allocable thereto, each determined in
accordance with Statement of Financial Accounting Standards No. 35, based
upon the actuarial assumptions used by the Plan's actuary in the most
recent annual valuation of the Plan.
"United States" and "U.S." shall each mean the United States of
America.
"Unpaid Drawing" shall have the meaning provided for in Section
2.05.
"Unutilized Commitment" with respect to any Bank, at any time,
shall mean such Bank's Commitment at such time less the sum of (i) the
aggregate outstanding principal amount of Revolving Loans made by such Bank
and (ii) such Bank's Percentage of the total Letter of Credit Outstandings
at such time.
"Voting Stock" shall mean, with respect to any corporation, the
outstanding stock of all classes (or equivalent interest) which ordinarily,
in the absence of contingencies, entitles holders thereof to vote for the
election of directors (or Persons performing similar functions) of such
corporation, even though the right so to vote has been suspended by the
happening of such a contingency.
"Weighted Average Life to Maturity" shall mean, when applied to
any Indebtedness at any date, the number of years obtained by dividing (i)
the then outstanding principal amount of such Indebtedness into (ii) the
sum of the product(s) obtained by multiplying (a) the amount of each then
remaining installment, sinking fund, serial maturity or other required
payment of principal, including payment at final maturity, in respect
thereof, by (b) the number of years (calculated to the nearest one-twelfth)
which will elapse between such date and the making of such payment.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock (other than director's qualifying
shares) is at the time owned by such Person and/or one or more Wholly-Owned
Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more
Wholly-Owned Subsidiaries of such Person has a 100% equity interest at such
time.
"Wholly-Owned Domestic Subsidiary" shall mean, as to any Person,
any Wholly-Owned Subsidiary of such Person which is a Domestic Subsidiary.
"Wholly-Owned Foreign Subsidiary" shall mean, as to any Person,
any Wholly-Owned Subsidiary of such Person which is a Foreign Subsidiary.
SECTION 12. The Agent.
---------
12.01 Appointment. The Banks hereby designate Bankers Trust
Company as Agent (for purposes of this Section 12, the term "Agent" shall
include BTCo in its capacity as Collateral Agent pursuant to the Security
Documents) to act as specified herein and in the other Credit Documents.
Each Bank hereby irrevocably authorizes, and each holder of any Note by the
acceptance of such Note shall be deemed irrevocably to authorize, the Agent
to take such action on its behalf under the provisions of this Agreement,
the other Credit Documents and any other instruments and agreements
referred to herein or therein and to exercise such powers and to perform
such duties hereunder and thereunder as are specifically delegated to or
required of the Agent by the terms hereof and thereof and such other powers
as are reasonably incidental thereto. The Agent may perform any of its
duties hereunder by or through its respective officers, directors, agents,
employees or affiliates.
12.02 Nature of Duties. The Agent shall not have any duties or
responsibilities except those expressly set forth in this Agreement and the
Security Documents. Neither the Agent nor any of its respective officers,
directors, agents, employees or affiliates shall be liable for any action
taken or omitted by it or them hereunder or under any other Credit Document
or in connection herewith or therewith, unless caused by its or their gross
negligence or willful misconduct. The duties of the Agent shall be
mechanical and administrative in nature; the Agent shall not have by reason
of this Agreement or any other Credit Document a fiduciary relationship in
respect of any Bank or the holder of any Note; and nothing in this
Agreement or any other Credit Document, expressed or implied, is intended
to or shall be so construed as to impose upon the Agent any obligations in
respect of this Agreement or any other Credit Document except as expressly
set forth herein or therein.
12.03 Lack of Reliance on the Agent. Independently and without
reliance upon the Agent, each Bank and the holder of each Note, to the
extent it deems appropriate, has made and shall continue to make (i) its
own independent investigation of the financial condition and affairs of
Parent and its Subsidiaries in connection with the making and the
continuance of the Loans and the taking or not taking of any action in
connection herewith and (ii) its own appraisal of the creditworthiness of
Parent and its Subsidiaries and, except as expressly provided in this
Agreement, the Agent shall not have any duty or responsibility, either
initially or on a continuing basis, to provide any Bank or the holder of
any Note with any credit or other information with respect thereto, whether
coming into its possession before the making of the Loans or at any time or
times thereafter. Neither the Agent nor any of its affiliates nor any of
their respective officers, directors, agents or employees shall be
responsible to any Bank or the holder of any Note for, or be required or
have any duty to ascertain, inquire or verify the accuracy of, (i) any
recitals, statements, information, representations or warranties herein or
in any document, certificate or other writing delivered in connection
herewith, (ii) the execution, effectiveness, genuineness, validity,
enforceability, perfection, collectibility, priority or sufficiency of this
Agreement or any other Credit Document, (iii) the financial condition of
Parent or any of its Subsidiaries, (iv) the performance or observance of
any of the terms, provisions or conditions of this Agreement or any other
Credit Document, (v) the satisfaction of any of the conditions precedent
set forth in Section 5 or 6, or (vi) the existence or possible existence of
any Default or Event of Default.
12.04 Certain Rights of the Agent. If the Agent shall request
instructions from the Required Banks with respect to any act or action
(including failure to act) in connection with this Agreement or any other
Credit Document, the Agent shall be entitled to refrain from such act or
taking such action unless and until the Agent shall have received
instructions from the Required Banks, and the Agent shall not incur
liability to any Person by reason of so refraining. Without limiting the
foregoing, no Bank or the holder of any Note shall have any right of action
whatsoever against the Agent as a result of the Agent acting or refraining
from acting hereunder or under any other Credit Document in accordance with
the instructions of the Required Banks.
12.05 Reliance. The Agent shall be entitled to rely, and shall
be fully protected (and shall have no liability to any person) in relying,
upon any note, writing, resolution, notice, statement, certificate, telex,
teletype or facsimile message, cablegram, radiogram, order or other
document or telephone message signed, sent or made by any Person that the
Agent believed to be the proper Person, and, with respect to all legal
matters pertaining to this Agreement and any other Credit Document and its
duties hereunder and thereunder, upon advice of counsel selected by the
Agent.
12.06 Indemnification. To the extent the Agent is not
reimbursed and indemnified by the Borrower or the Guarantors, the Banks
will reimburse and indemnify the Agent, in proportion to their respective
"percentages" as used in determining the Required Banks, for and against
any and all liabilities, obligations, losses, damages, penalties, claims,
actions, judgments, costs, expenses or disbursements of whatsoever kind or
nature which may be imposed on, asserted against or incurred by the Agent
in performing its respective duties hereunder or under any other Credit
Document, in any way relating to or arising out of this Agreement or any
other Credit Document; provided that no Bank shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from
the Agent's gross negligence or willful misconduct.
12.07 The Agent in its Individual Capacity. With respect to
its obligation to make Loans or issue or participate in Letter of Credit
under this Agreement, the Agent shall have the rights and powers specified
herein for a "Bank" and may exercise the same rights and powers as though
it were not performing the duties specified herein; and the term "Banks,"
"Required Banks," "holders of Notes" or any similar terms shall, unless the
context clearly otherwise indicates, include the Agent in its individual
capacity. The Agent may accept deposits from, lend money to, and generally
engage in any kind of banking, trust or other business with any Credit
Party or any Affiliate of any Credit Party as if they were not performing
the duties specified herein, and may accept fees and other consideration
from any Credit Party for services in connection with this Agreement and
otherwise without having to account for the same to the Banks.
12.08 Holders. The Agent may deem and treat the payee of any
Note as the owner thereof for all purposes hereof unless and until a
written notice of the assignment, transfer or endorsement thereof, as the
case may be, shall have been filed with the Agent. Any request, authority
or consent of any Person who, at the time of making such request or giving
such authority or consent, is the holder of any Note shall be conclusive
and binding on any subsequent holder, transferee, assignee or indorsee, as
the case may be, of such Note or of any Note or Notes issued in exchange
therefor.
12.09 Resignation by the Agent. (a) The Agent may resign from
the performance of all its functions and duties hereunder and/or under the
other Credit Documents at any time by giving 15 Business Days' prior
written notice to the Banks. Such resignation shall take effect upon the
appointment of a successor Agent pursuant to clauses (b) and (c) below or
as otherwise provided below.
(b) Upon any such notice of resignation, the Required Banks
shall appoint a successor Agent hereunder or thereunder who shall be a
commercial bank or trust company reasonably acceptable to the Borrower.
(c) If a successor Agent shall not have been so appointed
within such 15 Business Day period, the Agent, with the consent of the
Borrower (which consent will not be unreasonably withheld or delayed),
shall then appoint a commercial bank or trust company as successor Agent
who shall serve as Agent hereunder or thereunder until such time, if any,
as the Required Banks appoint a successor Agent as provided above.
(d) If no successor Agent has been appointed pursuant to clause
(b) or (c) above by the 20th Business Day after the date such notice of
resignation was given by the Agent, the Agent's resignation shall become
effective and the Banks shall thereafter perform all the duties of the
Agent hereunder and/or under any other Credit Document until such time, if
any, as the Required Banks appoint a successor Agent as provided above.
SECTION 13. Miscellaneous.
-------------
13.01 Payment of Expenses, etc. The Borrower shall: (i)
whether or not the transactions herein contemplated are consummated, pay
all reasonable out-of-pocket costs and expenses of the Agent (including,
without limitation, the reasonable fees and disbursements of White & Case
and local counsel and all appraisal fees, trustee's fees, documentary and
recording taxes, title insurance and recording, filing and other expenses)
in connection with the preparation, execution and delivery of this
Agreement and the other Credit Documents and the documents and instruments
referred to herein and therein and any amendment, waiver or consent
relating hereto or thereto, of the Agent in connection with its syndication
efforts with respect to this Agreement and of the Agent and each of the
Banks in connection with the enforcement of this Agreement and the other
Credit Documents and the documents and instruments referred to herein and
therein (including, without limitation, the reasonable fees and
disbursements of counsel for the Agent and, following and during the
continuation of an Event of Default in connection with the enforcement of
this Agreement and the other Credit Documents, for each of the Banks) and
expenses incurred in connection with any reorganization or proposed
reorganization of Parent or any of its Subsidiaries; (ii) pay and hold each
of the Agent and each of the Banks harmless from and against any and all
present and future stamp, excise and other similar taxes with respect to
the foregoing matters and save each of the Agent and each of the Banks
harmless from and against any and all liabilities with respect to or
resulting from any delay or omission (other than to the extent attributable
to such Bank) to pay such taxes; and (iii) indemnify the Agent and each
Bank, and each of their respective officers, directors, employees,
representatives and agents from and hold each of them harmless against any
and all liabilities, obligations (including removal or remedial actions),
losses, damages, penalties, claims, actions, judgments, suits, costs,
expenses and disbursements (including attorneys' and consultants' fees and
disbursements) incurred by, imposed on or assessed against any of them as a
result of, or arising out of, or in any way related to, or by reason of,
(a) any investigation, litigation or other proceeding (whether or not the
Agent or any Bank is a party thereto) related to the entering into and/or
performance of this Agreement or any other Credit Document or the use of
any Letter of Credit or the proceeds of any Loans hereunder or the
consummation of any transactions contemplated herein (including, without
limitation, the Transaction) or in any other Credit Document or the
exercise of any of their rights or remedies provided herein or in the other
Credit Documents, or (b) the actual or alleged presence of Hazardous
Materials in the air, surface water or groundwater or on the surface or
subsurface of any Real Property owned, leased or at any time operated by
any Credit Party or any of its Subsidiaries, the Release, generation,
storage, transportation, handling or disposal of Hazardous Materials at any
location, whether or not owned, leased or operated by any Credit Party or
any of its Subsidiaries, the non-compliance of any Real Property with
foreign, federal, state and local laws, regulations, and ordinances
(including applicable permits thereunder) applicable to any Real Property,
or any Environmental Claim asserted against any Credit Party, any of its
Subsidiaries, its operations or any Real Property owned based or at any
time operated by any Credit Party or any of its Subsidiaries, including, in
each case, without limitation, the fees and disbursements of counsel and
other consultants incurred in connection with any such investigation,
litigation or other proceeding (but excluding any losses, liabilities,
claims, damages or expenses to the extent incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified). To the
extent that the undertaking to indemnify, pay or hold harmless the Agent or
any Bank set forth in the preceding sentence may be unenforceable because
it is violative of any law or public policy, the Borrower shall make the
maximum contribution to the payment and satisfaction of each of the
indemnified liabilities which is permissible under applicable law.
13.02 Right of Setoff. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence and during the
continuance of an Event of Default, each Bank is hereby authorized at any
time or from time to time, without presentment, demand, protest or other
notice of any kind to any Credit Party or any of its Subsidiaries or to any
other Person, any such notice being hereby expressly waived, to set off and
to appropriate and apply any and all deposits (general or special) and any
other Indebtedness at any time held or owing by such Bank (including,
without limitation, by branches and agencies of such Bank wherever located)
to or for the credit or the account of any Credit Party or any of its
Subsidiaries against and on account of the Obligations and liabilities of
such Credit Party or such Subsidiary to such Bank under this Agreement or
under any of the other Credit Documents, including, without limitation, all
interests in Obligations purchased by such Bank pursuant to Section
13.06(b), and all other claims of any nature or description arising out of
or connected with this Agreement or any other Credit Document, irrespective
of whether or not such Bank shall have made any demand hereunder and
although said Obligations, liabilities or claims, or any of them, shall be
contingent or unmatured.
13.03 Notices. Except as otherwise expressly provided herein,
all notices and other communications provided for hereunder shall be in
writing (including telegraphic, telex, telecopier or cable communication)
and mailed, telegraphed, telexed, telecopied, cabled or delivered: if to
the Borrower, at such Person's address specified opposite its signature
below; if to any Bank, at its address specified opposite its name on
Schedule II below; and if to the Agent, at its Notice Office; or, as to any
Credit Party or the Agent, at such other address as shall be designated by
such party in a written notice to the other parties hereto and, as to each
Bank, at such other address as shall be designated by such Bank in a
written notice to the Borrower and the Agent. All such notices and
communications shall, when mailed, telegraphed, telexed, telecopied, or
cabled or sent by overnight courier, be effective when deposited in the
mails, delivered to the telegraph company, cable company or overnight
courier, as the case may be, or sent by telex or telecopier, except that
notices and communications to the Agent shall not be effective until
received by the Agent.
13.04 Benefit of Agreement. (a) This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto; provided, however,
no Credit Party may assign or transfer any of its rights, obligations or
interest hereunder or under any other Credit Document without the prior
written consent of the Banks and, provided further, that, although any Bank
may transfer, assign or grant participations in its rights hereunder, such
Bank shall remain a "Bank" for all purposes hereunder (and may not transfer
or assign all or any portion of its Commitments hereunder except as
provided in Section 13.04(b)) and the transferee, assignee or participant,
as the case may be, shall not constitute a "Bank" hereunder and, provided
further, that no Bank shall transfer or grant any participation under which
the participant shall have rights to approve any amendment to or waiver of
this Agreement or any other Credit Document except to the extent such
amendment or waiver would (i) extend the final scheduled maturity of any
Loan, Note or Letter of Credit (unless such Letter of Credit is not
extended beyond the Final Maturity Date) in which such participant is
participating, or reduce the rate or extend the time of payment of interest
or Fees thereon (except in connection with a waiver of applicability of any
post-default increase in interest rates) or reduce the principal amount
thereof, or increase the amount of the participant's participation over the
amount thereof then in effect (it being understood that a waiver of any
Default or Event of Default or of a mandatory reduction in the Total
Commitment shall not constitute a change in the terms of such
participation, and that an increase in any Commitment or Loan shall be
permitted without the consent of any participant if the participant's
participation is not increased as a result thereof), (ii) consent to the
assignment or transfer by the Borrower of any of its rights and obligations
under this Agreement or (iii) release all or substantially all of the
Collateral under all of the Security Documents (except as expressly
provided in the Credit Documents) supporting the Obligations hereunder in
which such participant is participating. In the case of any such
participation, the participant shall not have any rights under this
Agreement or any of the other Credit Documents (the participant's rights
against such Bank in respect of such participation to be those set forth in
the agreement executed by such Bank in favor of the participant relating
thereto) and all amounts payable by the Borrower hereunder shall be
determined as if such Bank had not sold such participation.
(b) Notwithstanding the foregoing, any Bank (or any Bank
together with one or more other Banks) may (x) assign all or a portion of
its Commitment (and related outstanding Obligations hereunder) to its
parent company and/or any affiliate of such Bank which is at least 50%
owned by such Bank or its parent company or to one or more Banks or (y)
assign all, or if less than all, a portion equal to at least $5,000,000 in
the aggregate for the assigning Bank or assigning Banks, of such
Commitments (and related outstanding Obligations hereunder) to one or more
Eligible Transferees, each of which assignees shall become a party to this
Agreement as a Bank by execution of an Assignment and Assumption Agreement,
provided that, (i) at such time Schedule I shall be deemed modified to
reflect the Commitments of such new Bank and of the existing Banks, (ii)
new Notes will be issued, at the Borrower's expense, to such new Bank and
to the assigning Bank upon the request of such new Bank or assigning Bank,
such new Notes to be in conformity with the requirements of Section 1.05
(with appropriate modifications) to the extent needed to reflect the
revised Commitments, (iii) the consent of BTCo shall be required in
connection with any such assignment pursuant to clause (y) above (which
consents shall not be unreasonably withheld), (iv) the consent of the
Borrower and each Issuing Bank shall be required in connection with any
assignment of Commitments pursuant to clause (y) above (which consent shall
not be unreasonably withheld), and (v) the Agent shall receive at the time
of each such assignment, from the assigning or assignee Bank, the payment
of a non-refundable assignment fee of $3,500; and provided further, that
such transfer or assignment shall not be effective until recorded by the
agent on the Register pursuant to Section 13.16. To the extent of any
assignment pursuant to this Section 13.04(b), the assigning Bank shall be
relieved of its obligations hereunder with respect to its assigned
Commitments. At the time of each assignment pursuant to this Section
13.04(b) to a Person which is not already a Bank hereunder and which is not
a United States person (as such term is defined in Section 7701(a)(30) of
the Code) for Federal income tax purposes, the respective assignee Bank
shall provide to the Borrower and the Agent the appropriate Internal
Revenue Service Forms (and, if applicable, a Section 4.04(b)(ii)
Certificate described in Section 4.04(b)). To the extent that an
assignment of all or any portion of a Bank's Commitments and related
outstanding Obligations pursuant to Section 1.13 or this Section 13.04(b)
would, at the time of such assignment, result in increased costs under
Section 1.10, 1.11, 2.06 or 4.04 from those being charged by the respective
assigning Bank prior to such assignment, then the Borrower shall not be
obligated to pay such increased costs (although the Borrower shall be
obligated to pay any other increased costs of the type described above
resulting from changes after the date of the respective assignment).
(c) Nothing in this Agreement shall prevent or prohibit any
Bank from pledging its Loans and Notes hereunder to a Federal Reserve Bank
in support of borrowings made by such Bank from such Federal Reserve Bank.
13.05 No Waiver; Remedies Cumulative. No failure or delay on
the part of the Agent or any Bank or any holder of any Note in exercising
any right, power or privilege hereunder or under any other Credit Document
and no course of dealing between the Borrower or any other Credit Party and
the Agent or any Bank or the holder of any Note shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or under any other Credit Document preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege hereunder or thereunder. The rights, powers and remedies herein
or in any other Credit Document expressly provided are cumulative and not
exclusive of any rights, powers or remedies which the Agent or any Bank or
the holder of any Note would otherwise have. No notice to or demand on any
Credit Party in any case shall entitle any Credit Party to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Agent or any Bank or the holder of any Note to
any other or further action in any circumstances without notice or demand.
13.06 Payments Pro Rata. (a) Except as otherwise provided in
this Agreement, the Agent agrees that promptly after its receipt of each
payment from or on behalf of any Credit Party in respect of any Obligations
of such Credit Party, it shall distribute such payment to the Banks (other
than any Bank that has consented in writing to waive its pro rata share of
any such payment) pro rata based upon their respective shares, if any, of
the Obligations with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any
amount hereunder (whether by voluntary payment, by realization upon
security, by the exercise of the right of setoff or banker's lien, by
counterclaim or cross action, by the enforcement of any right under the
Credit Documents, or otherwise), which is applicable to the payment of the
principal of, or interest on, the Loans, Unpaid Drawings, Commitment
Commission or Letter of Credit Fees, of a sum which with respect to the
related sum or sums received by other Banks is in a greater proportion than
the total of such Obligation then owed and due to such Bank bears to the
total of such Obligation then owed and due to all of the Banks immediately
prior to such receipt, then such Bank receiving such excess payment shall
purchase for cash without recourse or warranty from the other Banks an
interest in the Obligations of the respective Credit Party to such Banks in
such amount as shall result in a proportional participation by all the
Banks in such amount; provided that if all or any portion of such excess
amount is thereafter recovered from such Bank, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery,
but without interest.
(c) Notwithstanding anything to the contrary contained herein,
the provisions of the preceding Sections 13.06(a) and (b) shall be subject
to the express provisions of this Agreement which require, or permit,
differing payments to be made to Non-Defaulting Banks as opposed to
Defaulting Banks.
13.07 Calculations; Computations. (a) The financial
statements to be furnished to the Banks pursuant hereto shall be made and
prepared in accordance with generally accepted accounting principles in the
United States consistently applied throughout the periods involved (except
as set forth in the notes thereto or as otherwise disclosed in writing by
the Borrower to the Banks); provided that, (w) except as otherwise
specifically provided herein, all computations of the Applicable Commitment
Commission Percentage, the Interest Reduction Discount and all computations
determining compliance with Section 9 shall utilize accounting principles
and policies in conformity with those used to prepare the pro forma
financial statements delivered to the Banks pursuant to Section 7.05(a)(V)
(with the foregoing generally accepted accounting principles, subject to
the preceding proviso, herein called "GAAP"), (x) any interest income
earned with respect to funds from time to time on deposit pursuant to the
Existing Seller Letter of Credit Collateral Agreement shall not be included
for purposes of any of the financial covenants as income of the Borrower or
its Subsidiaries, (y) any interest expense with respect to the Existing
Seller Installment Note shall not be included in Consolidated Interest
Expense, and shall not reduce Consolidated Net Income, to the extent such
interest expense is offset by earnings with respect to funds deposited
pursuant to the Existing Seller Letter of Credit Collateral Agreement and
Consolidated Interest Expense shall not include, and Consolidated Net
Income shall not be reduced by, fees owing pursuant to the Existing Seller
Letter of Credit (or the agreement pursuant to which same was issued) to
the extent such fees are paid (whether directly to the issuer of the
Existing Seller Letter of Credit or by way of reimbursement to the
Borrower) by the MK Sellers (although such payments by the MK Sellers shall
likewise not be included in Consolidated Net Income) and (z) to the extent
expressly required pursuant to the provisions of this Agreement, certain
calculations shall be made on a Pro Forma Basis.
(b) All computations of interest, Commitment Commission and
Fees hereunder shall be made on the basis of a year of 360 days for the
actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest, Commitment Commission or
Fees are payable.
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER
OF JURY TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL,
EXCEPT AS OTHERWISE PROVIDED IN CERTAIN OF THE MORTGAGES, BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF
THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, THE BORROWER HEREBY IRREVOCABLY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. THE BORROWER HEREBY IRREVOCABLY
DESIGNATES, APPOINTS AND EMPOWERS CT CORPORATION SYSTEM, WITH OFFICES ON
THE DATE HEREOF AT 1633 BROADWAY, NEW YORK, NEW YORK 10019 AS ITS DESIGNEE,
APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS
BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL
PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH
ACTION OR PROCEEDING. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND AGENT
SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, THE BORROWER AGREES TO
DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT IN NEW YORK CITY ON THE TERMS
AND FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE AGENT UNDER THIS
AGREEMENT. THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO THE BORROWER AT ITS ADDRESS SET FORTH OPPOSITE
ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH
MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT UNDER THIS
AGREEMENT, ANY BANK OR THE HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST ANY CREDIT PARTY IN ANY OTHER JURISDICTION.
(b) THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID
ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT
OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE
(a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR
CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) THE BORROWER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
13.09 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument. A set of counterparts executed by all the parties hereto shall
be lodged with the Borrower and the Agent.
13.10 Effectiveness. This Agreement shall become effective on
the date (the "Effective Date") on which the Borrower and each of the Banks
shall have signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered the same to the Agent at its Notice
Office or, in the case of the Banks, shall have given to the Agent
telephonic (confirmed in writing), written or telex notice (actually
received) at such office that the same has been signed and mailed to it.
The Agent will give the Borrower and each Bank prompt written notice of the
occurrence of the Effective Date.
13.11 Headings Descriptive. The headings of the several
sections and subsections of this Agreement are inserted for convenience
only and shall not in any way affect the meaning or construction of any
provision of this Agreement.
13.12 Amendment or Waiver; etc. (a) Neither this Agreement
nor any other Credit Document nor any terms hereof or thereof may be
changed, waived, discharged or terminated unless such change, waiver,
discharge or termination is in writing signed by the respective Credit
Parties party thereto and the Required Banks, provided that no such change,
waiver, discharge or termination shall, without the consent of each Bank
(other than a Defaulting Bank) (with Obligations being directly affected
thereby), (i) extend the final scheduled maturity of any Loan or Note or
extend the stated maturity of any Letter of Credit beyond the Final
Maturity Date, or reduce the rate (except in connection with a waiver of
any post-default increase in interest rate) or extend the time of payment
of interest or Fees thereon, or reduce the principal amount thereof (except
to the extent repaid in cash), it being understood that any amendment to,
or modification of, any financial definition shall not constitute a
reduction for any purpose of this Section 13.12, (ii) release all or
substantially all of the Collateral (except as expressly provided in the
Credit Documents) under all the Security Documents, (iii) amend, modify or
waive any provision of this Section 13.12, (iv) reduce the percentage
specified in the definition of Required Banks (it being understood that,
with the consent of the Required Banks, additional extensions of credit
pursuant to this Agreement may be included in the determination of the
Required Banks on substantially the same basis as the extensions of
Commitments are included on the Effective Date) or (v) consent to the
assignment or transfer by the Borrower of any of its rights and obligations
under this Agreement; provided further, that no such change, waiver,
discharge or termination shall (v) increase the Commitments of any Bank
over the amount thereof then in effect without the consent of such Bank (it
being understood that waivers or modifications of conditions precedent,
covenants, Defaults or Events of Default or of a mandatory reduction in the
Total Commitment shall not constitute an increase of the Commitment of any
Bank, and that an increase in the available portion of any Commitment of
any Bank shall not constitute an increase in the Commitment of such Bank),
(w) without the consent of the Swingline Bank, amend, modify or waive any
provision relating to the rights or obligations of the Swingline Bank or
with respect to Swingline Loans (including, without limitation, the
obligations of the other Banks to fund Mandatory Borrowings), (x) without
the consent of each Issuing Bank, amend, modify or waive any provision of
Section 2 or alter its rights or obligations with respect to Letters of
Credit issued by it, (y) without the consent of the Agent, amend, modify or
waive any provision of Section 12 as same applies to the Agent or any other
provision as same relates to the rights or obligations of the Agent and (z)
without the consent of the Collateral Agent, amend, modify or waive any
provision relating to the rights or obligations of the Collateral Agent.
(b) If, in connection with any proposed change, waiver,
discharge or termination to any of the provisions of this Agreement as
contemplated by clauses (i) through (vi), inclusive, of the first proviso
to Section 13.12(a), the consent of the Required Banks is obtained but the
consent of one or more of such other Banks whose consent is required is not
obtained, then the Borrower shall have the right, so long as all
non-consenting Banks whose individual consent is required are treated as
described in either clauses (A) or (B) below, to either (A) replace each
such non-consenting Bank or Banks with one or more Replacement Banks
pursuant to Section 1.13 so long as at the time of such replacement, each
such Replacement Bank consents to the proposed change, waiver, discharge
or termination or (B) terminate such non-consenting Bank's Commitment and
repay all outstanding Revolving Loans of, and other unpaid Obligations
owing to, such Bank in accordance with Sections 3.02(b) and/or 4.01(b),
provided that, unless the Commitments are terminated, and Revolving Loans
repaid, pursuant to preceding clause (B) are immediately replaced in full
at such time through the addition of new Banks or the increase of the
Commitments and/or outstanding Revolving Loans of existing Banks (who in
each case must specifically consent thereto), then in the case of any
action pursuant to preceding clause (B), the Required Banks (determined
before giving effect to the proposed action) shall specifically consent
thereto, provided further, that in any event the Borrower shall not have
the right to replace a Bank, terminate its Commitment or repay its
Revolving Loans solely as a result of the exercise of such Bank's rights
(and the withholding of any required consent by such Bank) pursuant to the
second proviso to Section 13.12(a).
13.13 Survival. All indemnities set forth herein including,
without limitation, in Sections 1.10, 1.11, 2.06, 4.04, 13.01, 13.06 and
13.16 shall, survive the execution, delivery and termination of this
Agreement, the Notes and any Letters of Credit, and the making and
repayment of the Loans.
13.14 Domicile of Loans. Each Bank may transfer and carry its
Loans at, to or for the account of any office, Subsidiary or Affiliate of
such Bank. Notwithstanding anything to the contrary contained herein, to
the extent that a transfer of Loans pursuant to this Section 13.14 would,
at the time of such transfer, result in increased costs under Section 1.10,
1.11, 2.06 or 4.04 from those being charged by the respective Bank prior to
such transfer, then the Borrower shall not be obligated to pay such
increased costs (although the Borrower shall be obligated to pay any other
increased costs of the type described above resulting from changes after
the date of the respective transfer).
13.15 Confidentiality. (a) Subject to the provisions of
clause (b) of this Section 13.15, each Bank agrees that it will use its
best efforts not to disclose without the prior consent of the Borrower
(other than to its employees, auditors, advisors or counsel or to another
Bank if the Bank or such Bank's holding or parent company in its sole
discretion determines that any such party should have access to such
information, provided such Persons shall be subject to the provisions of
this Section 13.15 to the same extent as such Bank) any information with
respect to any Credit Party or any of their respective Subsidiaries which
is now or in the future furnished pursuant to this Agreement or any other
Credit Document and which is designated by the Borrower to the Banks in
writing as confidential, provided that any Bank may disclose any such
information (a) as has become generally available to the public, (b) as may
be required or appropriate in any report, statement or testimony submitted
to any municipal, state or Federal regulatory body having or claiming to
have jurisdiction over such Bank or to the Federal Reserve Board or the
Federal Deposit Insurance Corporation or similar organizations (whether in
the United States or elsewhere) or their successors, (c) as may be required
or appropriate in respect to any summons or subpoena or in connection with
any litigation, (d) in order to comply with any law, order, regulation or
ruling applicable to such Bank, (e) to the Agent or the Collateral Agent
and (f) to any prospective or actual transferee or participant in
connection with any contemplated transfer or participation of any of the
Notes or Commitments or any interest therein by such Bank, provided, that
such prospective transferee agrees to provisions substantially the same as
those contained in this Section.
(b) Each Credit Party hereby acknowledges and agrees that each
Bank may share with any of its affiliates any information related to any
Credit Party or any of its respective Subsidiaries (including, without
limitation, any nonpublic customer information regarding the
creditworthiness of any Credit Party or any of their respective
Subsidiaries), provided such Persons shall be subject to the provisions of
this Section 13.15 to the same extent as such Bank.
13.16 Register. The Borrower hereby designates the Agent to
serve as the Borrower's agent, solely for purposes of this Section 13.16,
to maintain a register (the "Register") on which it will record the
Commitments from time to time of each of the Banks, the Loans made by each
of the Banks and each repayment in respect of the principal amount of the
Loans of each Bank. Failure to make any such recordation, or any error in
such recordation shall not affect the Borrower's obligations in respect of
such Loans. With respect to any Bank, the transfer of the Commitments of
such Bank and the rights to the principal of, and interest on, any Loan
made pursuant to such Commitments shall not be effective until such
transfer is recorded on the Register maintained by the Agent with respect
to ownership of such Commitments and Loans and prior to such recordation
all amounts owing to the transferor with respect to such Commitments and
Loans shall remain owing to the transferor. The registration of assignment
or transfer of all or part of the Commitments and the Loans shall be
recorded by the Agent on the Register only upon the acceptance by the Agent
of a properly executed and delivered Assignment and Assumption Agreement
pursuant to Section 13.04(b). Coincident with the delivery of such an
Assignment and Assumption Agreement to the Agent for acceptance and
registration of assignment or transfer of all or part of a Loan, or as soon
thereafter as practicable, the assigning or transferor Bank shall surrender
the Note evidencing such Loan, and thereupon one or more new Notes in the
same aggregate principal amount shall be issued to the assigning or
transferor Bank and/or the new Bank. The Borrower agrees to indemnify the
Agent from and against any and all losses, claims, damages and liabilities
of whatsoever nature which may be imposed on, asserted against or incurred
by the Agent in performing its duties under this Section 13.16.
* * *
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date
first above written.
1751 Lake Cook Road, Suite 550 MOTORS AND GEARS
Deerfield, Illinois 60015 INDUSTRIES, INC.
Attention: Thomas C. Spielberger
By /s/ Jonathan F. Boucher
-------------------------------
Title: Vice President
with copies to:
Jonathan F. Boucher
The Jordan Company
9 West 57th Street, 40th Floor
New York, New York 10019
and
James B. Carlson, Esq.
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
BANKERS TRUST COMPANY,
Individually and as Agent
By /s/ Patricia Hogan
--------------------------
Title: Vice President
<PAGE>
EXHIBIT 10.4
- ------------------------------------------------------------------------------
SECURITY AGREEMENT
among
MOTORS AND GEARS INDUSTRIES, INC.
VARIOUS SUBSIDIARIES OF MOTORS AND GEARS INDUSTRIES, INC.
and
BANKERS TRUST COMPANY,
as Collateral Agent
Dated as of November 7, 1996
- -----------------------------------------------------------------------------
SECURITY AGREEMENT
------------------
SECURITY AGREEMENT, dated as of November 7, 1996 (as amended,
modified or supplemented from time to time, the "Agreement"), among each of
the undersigned (each, an "Assignor" and, collectively, the "Assignors")
and BANKERS TRUST COMPANY, as Collateral Agent (the "Collateral Agent"),
for the benefit of the Secured Creditors (as defined below). Except as
otherwise defined herein, terms used herein and defined in the Credit
Agreement (as defined below) shall be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, Motors and Gears Industries, Inc. (the "Borrower"), various
financial institutions from time to time party thereto (the "Banks') and
Bankers Trust Company, as Agent (the "Agent", and together with the Banks
and the Collateral Agent, the "Bank Creditors"), have entered into a Credit
Agreement, dated as of November 7, 1996, providing for the making of Loans
to the Borrower and the issuance of, and participation in, Letters of
Credit for the account of the Borrower as contemplated therein (as used
herein, the term "Credit Agreement" means the Credit Agreement described
above in this paragraph as so amended, modified, extended, renewed,
replaced, restated, supplemented, restructured or refinanced from time to
time, and including any agreement extending the maturity of, refinancing or
restructuring (including, but not limited to, the inclusion of additional
borrowers thereunder that are Subsidiaries of the Borrower and whose
obligations are guaranteed by the Borrower thereunder or any increase in
the amount borrowed) all, or any portion of, the Indebtedness under such
agreement or any successor agreements; provided, that with respect to any
agreement providing for the refinancing of Indebtedness under the Credit
Agreement, such agreement shall only be treated as, or as part of, the
Credit Agreement hereunder if (i) either (A) all obligations under the
Credit Agreement being refinanced shall be paid in full at the time of such
refinancing, and all commitments under the refinanced Credit Agreement
shall have terminated in accordance with their terms or (B) the Required
Banks shall have consented in writing to the refinancing Indebtedness being
treated, along with their Indebtedness, as Indebtedness pursuant to the
Credit Agreement, (ii) the refinancing Indebtedness shall be permitted to
be incurred under the Credit Agreement being refinanced (if such Credit
Agreement is to remain outstanding) and (iii) a notice to the effect that
the refinancing Indebtedness shall be treated as issued under the Credit
Agreement shall be delivered by the Borrower to the Collateral Agent);
WHEREAS, the Borrower may from time to time enter into one or more
(i) interest rate protection agreements (including, without limitation,
interest rate swaps, caps, floors, collars and similar agreements), (ii)
foreign exchange contracts, currency swap agreements, commodity agreements
or other similar agreements or arrangements designed to protect against the
fluctuations in currency values and/or (iii) other types of hedging
agreements from time to time (each such agreement or arrangement with an
Other Creditor (as hereinafter defined), an "Interest Rate Protection
Agreement or Other Hedging Agreement"), with Bankers Trust Company in its
individual capacity ("BTCo"), any Bank or a syndicate of financial
institutions organized by BTCo or any such Bank, or an affiliate of BTCo or
any such Bank (BTCo, any such Bank or Banks or affiliate or affiliates of
BTCo or such Bank or Banks (even if BTCo or any such Bank ceases to be a
Bank under the Credit Agreement for any reason) and any such institution
that participates in such Interest Rate Protection Agreements or Other
Hedging Agreements and their subsequent successors and assigns
collectively, the "Other Creditors", and together with the Bank Creditors,
the "Secured Creditors");
WHEREAS, pursuant to a Guaranty, each Subsidiary Guarantor will have,
after the execution and delivery thereof, jointly and severally guaranteed
the payment when due of all obligations and liabilities of the Borrower
under or with respect to the Credit Documents and each Interest Rate
Protection Agreement or Other Hedging Agreement with one or more Other
Creditors;
WHEREAS, it is a condition precedent to the making of Loans to the
Borrower and the issuance of, and participation in, Letters of Credit for
the account of the Borrower under the Credit Agreement and to the Other
Creditors entering into Interest Rate Protection Agreements or Other
Hedging Agreements that each Assignor shall have executed and delivered to
the Collateral Agent this Agreement; and
WHEREAS, each Assignor desires to execute this Agreement to satisfy
the condition described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to each
Assignor, the receipt and sufficiency of which are hereby acknowledged,
each Assignor hereby makes the following representations and warranties to
the Collateral Agent and hereby covenants and agrees with the Collateral
Agent as follows:
ARTICLE I
SECURITY INTERESTS
1.1 Grant of Security Interests. (a) As security for the prompt and
complete payment and performance when due of all of the Obligations, each
Assignor does hereby assign and transfer unto the Collateral Agent, and
does hereby pledge and grant to the Collateral Agent for the benefit of the
Secured Creditors, a continuing security interest of first priority in, all
of the right, title and interest of such Assignor in, to and under all of
the following, whether now existing or hereafter from time to time
acquired:
(i) each and every Receivable;
(ii) all Contracts, together with all Contract Rights arising
thereunder;
(iii) all Inventory;
(iv) the Cash Collateral Account and any other cash collateral
account
established for any Assignor for the benefit of the Secured Creditors
and all moneys, securities and instruments deposited or required to
be deposited in such Cash Collateral Account;
(v) all Equipment;
(vi) all Marks, together with the registrations and right to
all renewals
thereof, and the goodwill of the business of such Assignor symbolized
by the Marks;
(vii) all Patents and Copyrights and all reissues, renewals and
extensions thereof;
(viii) all computer programs of such Assignor and all
intellectual property rights therein and all other proprietary
information of such Assignor, including, but not limited to, trade
secrets and Trade Secret Rights;
(ix) all insurance policies;
(x) all other Goods, General Intangibles, Chattel Paper,
Documents and Instruments and other assets of such Assignor (other
than the Pledged Securities); and
(xi) all Proceeds and products of any and all of the foregoing
(all of the above, collectively, the "Collateral").
Notwithstanding anything to the contrary contained above, the term
"Collateral" shall not include any Collateral to the extent that, and for
so long as, such Collateral constitutes Excluded Collateral in accordance
with the definition thereof. To the extent that any Collateral
constituting Excluded Collateral no longer constitutes Excluded Collateral,
each respective Assignor shall, in accordance with the terms of the Credit
Agreement, take all actions required hereby and thereby to grant a security
interest in such Collateral as and when required by the Credit Agreement.
(b) The security interest of the Collateral Agent under this
Agreement extends to all Collateral of the kind which is the subject of
this Agreement which any Assignor may acquire at any time during the
continuation of this Agreement.
1.2 Power of Attorney. Each Assignor hereby constitutes and
appoints the Collateral Agent its true and lawful attorney, irrevocably,
with full power after the occurrence of and during the continuance of an
Event of Default (in the name of such Assignor or otherwise) to act,
require, demand, receive, compound and give acquittance for any and all
monies and claims for monies due or to become due to such Assignor under or
arising out of the Collateral, to endorse any checks or other instruments
or orders in connection therewith and to file any claims or take any action
or institute any proceedings which the Collateral Agent may deem to be
necessary or advisable to accomplish the purposes of this Agreement, which
appointment as attorney is coupled with an interest.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Assignor represents, warrants and covenants, which
representations, warranties and covenants shall survive execution and
delivery of this Agreement, as follows:
2.1 Necessary Filings. All filings, registrations and recordings
necessary or appropriate to create, preserve, protect and perfect the
security interest granted by such Assignor to the Collateral Agent hereby
in respect of the Collateral have been accomplished and the security
interest granted to the Collateral Agent pursuant to this Agreement in and
to the Collateral constitutes a perfected security interest therein prior
to the rights of all other Persons therein and subject to no other Liens
(other than Permitted Liens) and is entitled to all the rights, priorities
and benefits afforded by the Uniform Commercial Code or other relevant law
as enacted in any relevant jurisdiction to perfected security interests.
2.2 No Liens. Such Assignor is, and as to Collateral acquired by it
from time to time after the date hereof such Assignor will be, the owner of
all Collateral free from any Lien, security interest, encumbrance or other
right, title or interest of any Person (other than Permitted Liens and
Liens created under this Agreement) and such Assignor shall defend the
Collateral against all claims and demands of all Persons at any time
claiming the same or any interest therein adverse to the Collateral Agent.
2.3 Other Financing Statements. As of the date hereof, there is no
financing statement (or similar statement or instrument of registration
under the law of any jurisdiction) covering or purporting to cover any
interest of any kind in the Collateral (other than (x) those created under
this Agreement and (y) as may be filed in connection with Liens permitted
pursuant to Section 9.01(iii) of the Credit Agreement), and so long as the
Total Commitment has not been terminated or any Note or Letter of Credit
remains outstanding or any of the Obligations remain unpaid or any Interest
Rate Protection Agreement or Other Hedging Agreement remains in effect or
any Obligations are owed with respect thereto, such Assignor will not
execute or authorize to be filed in any public office any financing
statement (or similar statement or instrument of registration under the law
of any jurisdiction) or statements relating to the Collateral, except
financing statements filed or to be filed in respect of and covering the
security interests granted hereby by such Assignor or as permitted by the
Credit Agreement.
2.4 Chief Executive Office; Records. The chief executive office of
such Assignor is located at the address or addresses indicated on Annex A
hereto. Such Assignor will not move its chief executive office except to
such new location as such Assignor may establish in accordance with the
last sentence of this Section 2.4. The originals of all documents
evidencing all Receivables and Contract Rights and Trade Secret Rights of
such Assignor and the only original books of account and records of such
Assignor relating thereto are, and will continue to be, kept at such chief
executive office or at such new locations as such Assignor may establish in
accordance with the last sentence of this Section 2.4. All Receivables and
Contract Rights and Trade Secret Rights of such Assignor are, and will
continue to be, maintained at, and controlled and directed (including,
without limitation, for general accounting purposes) from, the office
locations described above or such new location established in accordance
with the last sentence of this Section 2.4. No Assignor shall establish
new locations for such offices until (i) it shall have given to the
Collateral Agent not less than 30 days' prior written notice of its
intention to do so, clearly describing such new location and providing such
other information in connection therewith as the Collateral Agent may
reasonably request, (ii) with respect to such new location, it shall have
taken all action, satisfactory to the Collateral Agent, to maintain the
security interest of the Collateral Agent in the Collateral intended to be
granted hereby at all times fully perfected and in full force and effect,
(iii) at the request of the Collateral Agent, it shall have furnished an
opinion of counsel acceptable to the Collateral Agent to the effect that
all financing or continuation statements and amendments or supplements
thereto have been filed in the appropriate filing office or offices, and
(iv) the Collateral Agent shall have received evidence that all other
actions (including, without limitation, the payment of all filing fees and
taxes, if any, payable in connection with such filings) have been taken, in
order to perfect (and maintain the perfection and priority of) the security
interest granted hereby.
2.5 Location of Inventory and Equipment. All Inventory and
Equipment held on the date hereof by each Assignor is located at one of the
locations shown on Annex B hereto. Each Assignor agrees that all Inventory
and Equipment now held or subsequently acquired by it shall be kept at (or
shall be in transport to) any one of the locations shown on Annex B hereto,
or such new location as such Assignor may establish in accordance with the
last sentence of this Section 2.5, except as permitted to be sold in
accordance with the terms hereof and in the Credit Agreement. Any Assignor
may establish a new location for Inventory and Equipment only if (i) it
shall have given to the Collateral Agent not less than 30 days' prior
written notice of its intention so to do, clearly describing such new
location and providing such other information in connection therewith as
the Collateral Agent may reasonably request, (ii) with respect to such new
location, it shall have taken all action satisfactory to the Collateral
Agent to maintain the security interest of the Collateral Agent in the
Collateral intended to be granted hereby at all times fully perfected and
in full force and effect, (iii) at the request of the Collateral Agent, it
shall have furnished an opinion of counsel acceptable to the Collateral
Agent to the effect that all financing or continuation statements and
amendments or supplements thereto have been filed in the appropriate filing
office or offices, and (iv) the Collateral Agent shall have received
evidence that all other actions (including, without limitation, the payment
of all filing fees and taxes, if any, payable in connection with such
filings) have been taken, in order to perfect (and maintain the perfection
and priority of) the security interest granted hereby.
2.6 Recourse. This Agreement is made with full recourse to each
Assignor and pursuant to and upon all the warranties, representations,
covenants and agreements on the part of such Assignor contained herein, in
the other Credit Documents, in the Interest Rate Protection Agreements or
Other Hedging Agreements and otherwise in writing in connection herewith or
therewith.
2.7 Trade Names; Change of Name. No Assignor has or operates in any
jurisdiction under, or previously has had or has operated in any
jurisdiction within the five year period preceding the date of this
Agreement under, any trade names, fictitious names or other names except
its legal name and such other trade or fictitious names as are listed on
Annex C hereto. No Assignor shall change its legal name or assume or
operate in any jurisdiction under any trade, fictitious or other name
except those names listed on Annex C hereto in the jurisdictions listed
with respect to such names and new names (including, without limitation,
any names of divisions or operations) and/or jurisdictions established in
accordance with the last sentence of this Section 2.7. No Assignor shall
assume or operate in any jurisdiction under any new trade, fictitious or
other name or operate under any existing name in any additional
jurisdiction until (i) it shall have given to the Collateral Agent not less
than 30 days' prior written notice of its intention so to do, clearly
describing such new name and/or jurisdiction and, in the case of a new
name, the jurisdictions in which such new name shall be used and providing
such other information in connection therewith as the Collateral Agent may
reasonably request, (ii) with respect to such new name and/or jurisdiction,
it shall have taken all action to maintain the security interest of the
Collateral Agent in the Collateral intended to be granted hereby at all
times fully perfected and in full force and effect, (iii) at the request of
the Collateral Agent, it shall have furnished an opinion of counsel
acceptable to the Collateral Agent to the effect that all financing or
continuation statements and amendments or supplements thereto have been
filed in the appropriate filing office or offices, and (iv) the Collateral
Agent shall have received evidence that all other actions (including,
without limitation, the payment of all filing fees and taxes, if any,
payable in connection with such filings) have been taken, in order to
perfect (and maintain the perfection and priority of) the security interest
granted hereby.
ARTICLE III
SPECIAL PROVISIONS CONCERNING
RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS
3.1 Additional Representations and Warranties. As of the time when
each of its Receivables arises, each Assignor shall be deemed to have
represented and warranted that such Receivable, and all records, papers and
documents relating thereto (if any) are genuine and in all respects what
they purport to be, and that all papers and documents (if any) relating
thereto (i) will represent the genuine legal, valid and binding obligation
of the account debtor evidencing indebtedness unpaid and owed by the
respective account debtor arising out of the performance of labor or
services or the sale or lease and delivery of the inventory, materials,
equipment or merchandise listed therein, or both, (ii) will be the only
original writings evidencing and embodying such obligation of the account
debtor named therein (other than copies created for general accounting
purposes), (iii) will evidence true and valid obligations, enforceable in
accordance with their respective terms and (iv) will be in compliance and
will conform in all material respects with all applicable federal, state
and local laws and applicable laws of any relevant foreign jurisdiction.
3.2 Maintenance of Records. Each Assignor will keep and maintain at
its own cost and expense satisfactory and complete records of its
Receivables and Contracts, including, but not limited to, originals or
copies of all documentation (including each Contract) with respect thereto,
records of all payments received, all credits granted thereon, all
merchandise returned and all other dealings therewith, and such Assignor
will make the same available on such Assignor's premises to the Collateral
Agent for inspection, at such Assignor's own cost and expense, at any and
all reasonable times and intervals as the Collateral Agent may request.
Upon the occurrence and during the continuance of an Event of Default and
at the request of the Collateral Agent, such Assignor shall, at its own
cost and expense, deliver all tangible evidence of its Receivables and
Contract Rights (including, without limitation, all documents evidencing
the Receivables and all Contracts) and such books and records to the
Collateral Agent or to its representatives (copies of which evidence and
books and records may be retained by such Assignor). If the Collateral
Agent so directs, such Assignor shall legend, in form and manner
satisfactory to the Collateral Agent, the Receivables and the Contracts, as
well as books, records and documents of such Assignor evidencing or
pertaining to such Receivables and Contracts with an appropriate reference
to the fact that such Receivables and Contracts have been assigned to the
Collateral Agent and that the Collateral Agent has a security interest
therein.
3.3 Direction to Account Debtors; Contracting Parties; etc. Upon
the occurrence and during the continuance of an Event of Default, and if
the Collateral Agent so directs any Assignor, such Assignor agrees (x) to
cause all payments on account of the Receivables and Contracts to be made
directly to the Cash Collateral Account, (y) that the Collateral Agent may,
at its option, directly notify the obligors with respect to any Receivables
and/or under any Contracts to make payments with respect thereto as
provided in preceding clause (x), and (z) that the Collateral Agent may
enforce collection of any such Receivables and Contracts and may adjust,
settle or compromise the amount of payment thereof, in the same manner and
to the same extent as such Assignor. Without notice to or assent by any
Assignor, the Collateral Agent may apply any or all amounts then in, or
thereafter deposited in, the Cash Collateral Account which application
shall be effected in the manner provided in Section 7.4 of this Agreement.
The costs and expenses (including attorneys' fees) of collection, whether
incurred by the Assignor or the Collateral Agent, shall be borne by the
relevant Assignor.
3.4 Modification of Terms; etc. No Assignor shall rescind or cancel
any indebtedness evidenced by any Receivable or under any Contract, or
modify any term thereof or make any adjustment with respect thereto, or
extend or renew the same, or compromise or settle any material dispute,
claim, suit or legal proceeding relating thereto, or sell any Receivable or
Contract, or interest therein, without the prior written consent of the
Collateral Agent, except as permitted by Section 3.5. Each Assignor will
duly fulfill all obligations on its part to be fulfilled under or in
connection with the Receivables and Contracts and will do nothing to impair
the rights of the Collateral Agent in the Receivables or Contracts.
3.5 Collection. Each Assignor shall endeavor to cause to be
collected from the account debtor named in each of its Receivables or
obligor under any Contract, as and when due (including, without limitation,
amounts, services or products which are delinquent, such amounts, services
or products to be collected in accordance with generally accepted lawful
collection procedures) any and all amounts, services or products owing
under or on account of such Receivable or Contract, and apply forthwith
upon receipt thereof all such amounts, services or products as are so
collected to the outstanding balance of such Receivable or under such
Contract, except that, prior to the occurrence of an Event of Default, any
Assignor may allow in the ordinary course of business as adjustments to
amounts, services or products owing under its Receivables and Contracts (i)
an extension or renewal of the time or times of payment or exchange, or
settlement for less than the total unpaid balance, which such Assignor
finds appropriate in accordance with reasonable business judgment and (ii)
a refund or credit due as a result of returned or damaged merchandise or
improperly performed services. The costs and expenses (including, without
limitation, attorneys' fees) of collection, whether incurred by an Assignor
or the Collateral Agent, shall be borne by the relevant Assignor.
3.6 Instruments. If any Assignor owns or acquires any Instrument
constituting Collateral, such Assignor will within 10 days notify the
Collateral Agent thereof, and upon request by the Collateral Agent will
promptly deliver such Instrument to the Collateral Agent appropriately
endorsed to the order of the Collateral Agent as further security
hereunder.
3.7 Further Actions. Each Assignor will, at its own expense, make,
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent
from time to time such vouchers, invoices, schedules, confirmatory
assignments, conveyances, financing statements, transfer endorsements,
powers of attorney, certificates, reports and other assurances or
instruments and take such further steps relating to its Receivables,
Contracts, Instruments and other property or rights covered by the security
interest hereby granted, as the Collateral Agent may require.
ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS
4.1 Additional Representations and Warranties. Each Assignor
represents and warrants that it is the true, lawful, sole and exclusive
owner of the Marks listed in Annex D hereto and that said listed Marks
constitute all the Marks that such Assignor presently owns or uses in
connection with its business and include all the United States federal
registrations or applications registered in the United States Patent and
Trademark Office. Each Assignor represents and warrants that it owns all
Marks that it uses. Each Assignor further warrants that it has no
knowledge as of the date hereof, of any third party claim that any aspect
of such Assignor's present or contemplated business operations infringes or
will infringe any rights in any trademark, service mark or trade name.
Each Assignor represents and warrants that it is the beneficial and record
owner of all trademark registrations and applications listed in Annex D
hereto and that said registrations are valid, subsisting and have not been
cancelled and that such Assignor is not aware of any third-party claim that
any of said registrations is invalid or unenforceable, or that there is any
reason that any of said applications will not pass to registration. Each
Assignor represents and warrants that upon the recordation of an Assignment
of Security Interest in United States Trademarks and Patents in the form of
Annex G hereto in the United States Patent and Trademark Office, together
with filings on Form UCC-1 pursuant to this Agreement, all filings,
registrations and recordings necessary or appropriate to perfect the
security interest granted to the Collateral Agent in the United States
Marks covered by this Agreement under federal law will have been
accomplished. Each Assignor agrees to execute such an Assignment of
Security Interest in United States Trademark and Patents covering all
right, title and interest in each United States Mark, and the associated
goodwill, of such Assignor, and to record the same. Each Assignor hereby
grants to the Collateral Agent an absolute power of attorney to sign, upon
the occurrence and during the continuance of an Event of Default, any
document which may be required by the U.S. Patent and Trademark Office or
secretary of state or equivalent governmental agency of any State of the
United States or any foreign jurisdiction in order to effect an absolute
assignment of all right, title and interest in each Mark, and record the
same.
4.2 Licenses and Assignments. Each Assignor hereby agrees not to
divest itself of any right under any Mark absent prior written approval of
the Collateral Agent, except as otherwise permitted by this Agreement or
the Credit Agreement.
4.3 Infringements. Each Assignor agrees, promptly upon learning
thereof, to notify the Collateral Agent in writing of the name and address
of, and to furnish such pertinent information that may be available with
respect to, (i) any party who such Assignor believes is infringing or
diluting or otherwise violating in any respect any of such Assignor's
rights in and to any Mark, or (ii) with respect to any party claiming that
such Assignor's use of any Mark violates in any material respect any
property right of that party. Each Assignor further agrees, unless
otherwise agreed by the Collateral Agent, diligently to prosecute any
Person infringing any Mark.
4.4 Preservation of Marks. Each Assignor agrees to use its Marks in
interstate or foreign commerce, as the case may be, during the time in
which this Agreement is in effect, sufficiently to preserve such Marks as
valid and subsisting trademarks or service marks under the laws of the
United States or the relevant foreign jurisdiction.
4.5 Maintenance of Registration. Each Assignor shall, at its own
expense, diligently process all documents required by the Trademark Act of
1946, as amended, 15 U.S.C. 1051 et seq. to maintain trademark
registrations, including but not limited to affidavits of continued use and
applications for renewals of registration in the United States Patent and
Trademark Office for all of its registered Marks pursuant to 15 U.S.C.
1058, 1059 and 1065 and any foreign equivalent thereof, and shall pay all
fees and disbursements in connection therewith and shall not abandon any
such filing of affidavit of use or any such application of renewal prior to
the exhaustion of all administrative and judicial remedies without prior
written consent of the Collateral Agent. Each Assignor agrees to notify
the Collateral Agent at least two (2) months prior to the dates on which
the affidavits of use or the applications for renewal registration are due
with respect to any registered Mark that the affidavits of use or the
renewal is being processed.
4.6 Future Registered Marks. If any registration for any Mark
issues hereafter to any Assignor as a result of any application now or
hereafter pending before the United States Patent and Trademark Office,
within 30 days of receipt of such certificate, such Assignor shall deliver
to the Collateral Agent a copy of such certificate, and an assignment for
security in such Mark, to the Collateral Agent and at the expense of such
Assignor, confirming the assignment for security in such Mark to the
Collateral Agent hereunder, the form of such security to be substantially
the same as the form hereof or in such other form as may be satisfactory to
the Collateral Agent.
4.7 Remedies. If an Event of Default shall occur and be continuing,
the Collateral Agent may, by written notice to the relevant Assignor, take
any or all of the following actions: (i) declare the entire right, title
and interest of such Assignor in and to each of the Marks, together with
all trademark rights and rights of protection to the same and the goodwill
of such Assignor's business symbolized by said Marks and the right to
recover for post infringements thereof, vested in the Collateral Agent for
the benefit of the Secured Creditors, in which event such rights, title and
interest shall immediately vest, in the Collateral Agent for the benefit of
the Secured Creditors, and the Collateral Agent shall be entitled to
exercise the power of attorney referred to in Section 4.1 to execute, cause
to be acknowledged and notarized and to record said absolute assignment
with the applicable agency; (ii) take and use or sell the Marks and the
goodwill of such Assignor's business symbolized by the Marks and the right
to carry on the business and use the assets of such Assignor in connection
with which the Marks have been used;. and (iii) direct such Assignor to
refrain, in which event such Assignor shall refrain, from using the Marks
in any manner whatsoever, directly or indirectly, and, if requested by the
Collateral Agent, change such Assignor's corporate name to eliminate
therefrom any use of any Mark and execute such other and further documents
that the Collateral Agent may request to further confirm this and to
transfer ownership of the Marks and registrations and any pending trademark
applications therefor in the United States Patent and Trademark Office or
any equivalent government agency or office in any foreign jurisdiction to
the Collateral Agent.
ARTICLE V
SPECIAL PROVISIONS CONCERNING
PATENTS, COPYRIGHTS AND TRADE SECRETS
5.1 Additional Representations and Warranties. Each Assignor
represents and warrants that it is the true and lawful exclusive owner of
all rights in (i) all trade secrets and proprietary information necessary
to operate the business of such Assignor (the "Trade Secret Rights'), (ii)
the Patents listed in Annex E hereto and (iii) the Copyrights listed in
Annex F hereto, that said Patents constitute all the patents and
applications for patents that such Assignor now owns and that are necessary
in the conduct of the business of such Assignor and that such Copyrights
constitute all registrations of copyrights and applications for copyright
registrations that the Assignor now owns and that are necessary in the
conduct of the business of such Assignor. Each Assignor further represents
and warrants that it has the exclusive right to use and practice under all
Patents and Copyrights that it owns, uses or practices under and has the
exclusive right to exclude others from using or practicing under any
Patents its owns, uses or practices under. Each Assignor further warrants
that, as of the date hereof it has no knowledge of any third party claim
that any aspect of such Assignor's present or contemplated business
operations infringes or will infringe any rights in any patent or copyright
or such Assignor has misappropriated any trade secret or proprietary
information. Each Assignor represents and warrants that upon the
recordation of an Assignment of Security Interest in United States
Trademarks and Patents in the form of Annex G hereto in the United States
Patent and Trademark Office and the recordation of an Assignment of
Security Interest in United States Copyrights in the form of Annex H hereto
in the United States Copyright Office, together with filings on Form UCC-1
pursuant to this Agreement, all filings, registrations and recordings
necessary or appropriate to perfect the security interest granted to the
Collateral Agent in the United States Patents and United States Copyrights
covered by this Agreement under federal law will have been accomplished.
Each Assignor agrees to execute such an Assignment of Security Interest in
United States Trademarks and Patents covering all right, title and interest
in each United States Patent of such Assignor and to record the same, and
to execute such an Assignment of Security Interest in United States
Copyrights covering all right, title and interest in each United States
Copyright of such Assignor and to record the same. Each Assignor hereby
grants to the Collateral Agent an absolute power of attorney to sign, upon
the occurrence and during the continuance of any Event of Default, any
document which may be required by the U.S. Patent and Trademark Office or
equivalent governmental agency in any foreign jurisdiction or the U.S.
Copyright Office or equivalent governmental agency in any foreign
jurisdiction in order to effect an absolute assignment of all right, title
and interest in each Patent and Copyright, and to record the same.
5.2 Licenses and Assignments. Each Assignor hereby agrees not to
divest itself of any right under any Patent or Copyright absent prior
written approval of the Collateral Agent, except as otherwise permitted by
this Agreement or the Credit Agreement.
5.3 Infringements. Each Assignor agrees, promptly upon learning
thereof, to furnish the Collateral Agent in writing with all pertinent
information available to such Assignor with respect to infringement,
contributing infringement or active inducement to infringe in any Patent or
Copyright or to any claim that the practice of any Patent or the use of any
Copyright violates any property right of a third party, or with respect to
any misappropriation of any Trade Secret Right or any claim that practice
of any Trade Secret Right violates any property right of a third party.
Each Assignor further agrees, absent direction of the Collateral Agent to
the contrary, diligently to prosecute any Person infringing any Patent or
Copyright or any Person misappropriating any Trade Secret Right.
5.4 Maintenance of Patents and Copyrights. At its own expense, each
Assignor shall make timely payment of all post-issuance fees required
pursuant to 35 U.S.C. 41 and any foreign equivalent thereof to maintain
in force rights under each Patent, and to apply as permitted pursuant to
applicable law for any renewal of each Copyright absent prior written
consent of the Collateral Agent.
5.5 Prosecution of Patent or Copyright Application. At its own
expense, each Assignor shall diligently prosecute all applications for
Patents listed in Annex E hereto and for Copyrights listed in Annex F
hereto and shall not abandon any such application prior to exhaustion of
all administrative and judicial remedies, absent written consent of the
Collateral Agent.
5.6 Other Patents and Copyrights. Within 30 days of the acquisition
or issuance of a Patent or of a Copyright registration, or of filing of an
application for a Patent or Copyright registration, the relevant Assignor
shall deliver to the Collateral Agent a copy of said Copyright registration
or Patent or certificate or registration of, or application therefor, as
the case may be, with an assignment for security as to such Patent or
Copyright, as the case may be, to the Collateral Agent and at the expense
of such Assignor, confirming the assignment for security, the form of such
assignment for security to be substantially the same as the form hereof or
in such other form as may be satisfactory to the Collateral Agent.
5.7 Remedies. If an Event of Default shall occur and be continuing,
the Collateral Agent may by written notice to the relevant Assignor, take
any or all of the following actions: (i) declare the entire right, title,
and interest of such Assignor in each of the Patents and Copyrights vested
in the Collateral Agent for the benefit of the Secured Creditors, in which
event such right, title, and interest shall immediately vest in the
Collateral Agent for the benefit of the Secured Creditors, in which case
the Collateral Agent shall be entitled to exercise the power of attorney
referred to in Section 5.1 to execute, cause to be acknowledged and
notarized and to record said absolute assignment with the applicable
agency; (ii) take and practice or sell the Patents, Copyrights and Trade
Secret Rights; and (iii) direct such Assignor to refrain, in which event
such Assignor shall refrain, from practicing the Patents and using the
Copyrights and/or Trade Secret Rights directly or indirectly, and such
Assignor shall execute such other and further documents as the Collateral
Agent may request further to confirm this and to transfer ownership of the
Patents, Copyrights and Trade Secret Rights to the Collateral Agent for the
benefit of the Secured Creditors.
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL
6.1 Protection of Collateral Agent's Security. Each Assignor will
do nothing to impair the rights of the Collateral Agent in the Collateral.
Each Assignor will at all times keep its Inventory and Equipment insured in
favor of the Collateral Agent, at such Assignor's own expense to the extent
and in the manner provided in the Credit Agreement; all policies or
certificates with respect to such insurance (and any other insurance
maintained by such Assignor); (i) shall be endorsed to the Collateral
Agent's satisfaction for the benefit of the Collateral Agent (including,
without limitation, by naming the Collateral Agent as loss payee and naming
each of the Banks, the Agent and the Collateral Agent as additional
insureds); (ii) shall state that such insurance policies shall not be
cancelled or revised without 30 days' prior written notice thereof by the
insurer to the Collateral Agent; and (iii) certified copies of such
policies or certificates shall be deposited with the Collateral Agent. If
any Assignor shall fail to insure its Inventory and Equipment in accordance
with the preceding sentence, or if any Assignor shall fail to so endorse
and deposit all policies or certificates with respect thereto, the
Collateral Agent shall have the right (but shall be under no obligation) to
procure such insurance and such Assignor agrees to promptly reimburse the
Collateral Agent for all costs and expenses of procuring such insurance.
The Collateral Agent shall, at the time such proceeds of such insurance are
distributed to the Secured Creditors, apply such proceeds in accordance
with Section 7.4. Each Assignor assumes all liability and responsibility in
connection with the Collateral acquired by it -and the liability of such
Assignor to pay the Obligations shall in no way be affected or diminished
by reason of the fact that such Collateral may be lost, destroyed, stolen,
damaged or for any reason whatsoever unavailable to such Assignor.
6.2 Warehouse Receipts Non-Negotiable. Each Assignor agrees that if
any warehouse receipt or receipt in the nature of a warehouse receipt is
issued with respect to any of its Inventory, such warehouse receipt or
receipt in the nature thereof shall not be "negotiable" (as such term is
used in Section 7-104 of the Uniform Commercial Code as in effect in any
relevant jurisdiction or under other relevant law).
6.3 Further Actions. Each Assignor will, at its own expense, make,
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent
from time to time such lists, descriptions and designations of its
Collateral, warehouse receipts, receipts in the nature of warehouse
receipts, bills of lading, documents of title, vouchers, invoices,
schedules, confirmatory assignments, conveyances, financing statements,
transfer endorsements, powers of attorney, certificates, reports and other
assurances or instruments and take such further steps relating to the
Collateral and other property or rights covered by the security interest
hereby granted, which the Collateral Agent deems reasonably appropriate or
advisable to perfect, preserve or protect its security interest in the
Collateral, including, without limitation, any Collateral which previously
constituted Excluded Collateral.
6.4 Financing Statements. Each Assignor agrees to execute and
deliver to the Collateral Agent such financing statements, in form
acceptable to the Collateral Agent, as the Collateral Agent may from time
to time request or as are necessary or desirable in the opinion of the
Collateral Agent to establish and maintain a valid, enforceable, first
priority perfected security interest in the Collateral as provided herein
and the other rights and security contemplated hereby all in accordance
with the Uniform Commercial Code as enacted in any and all relevant
jurisdictions or any other relevant law. Each Assignor will pay any
applicable filing fees, recordation taxes and related expenses relating to
its Collateral. Each Assignor hereby authorizes the Collateral Agent to
file any such financing statements without the signature of such Assignor
where permitted by law.
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
7.1 Remedies; Obtaining the Collateral Upon Default. Each Assignor
agrees that, if any Event of Default shall have occurred and be continuing,
then and in every such case, the Collateral Agent, in addition to any
rights now or hereafter existing under applicable law, shall have all
rights as a secured creditor under the Uniform Commercial Code in all
relevant jurisdictions and may also:
(i) personally, or by agents or attorneys, immediately take
possession of the Collateral or any part thereof, from such Assignor
or any other Person who then has possession of any part thereof with
or without notice or process of law, and for that purpose may enter
upon such Assignor's premises where any of the Collateral is located
and remove the same and use in connection with such removal any and
all services, supplies, aids and other facilities of such Assignor;
(ii) instruct the obligor or obligors on any agreement,
instrument or other obligation (including, without limitation, the
Receivables and the Contracts) constituting the Collateral to make
any payment required by the terms of such agreement, instrument or
other obligation directly to the Collateral Agent;
(iii) withdraw all monies, securities and instruments in the
Cash Collateral Account for application to the Obligations in
accordance with Section 7.4;
(iv) sell, assign or otherwise liquidate any or all of the
Collateral or any part thereof in accordance with Section 7.2, or
direct the relevant Assignor to sell, assign or otherwise liquidate
any or all of the Collateral or any part thereof, and, in each case,
take possession of the proceeds of any such sale or liquidation;
(v) take possession of the Collateral or any part thereof, by
directing the relevant Assignor in writing to deliver the same to the
Collateral Agent at any place or places designated by the Collateral
Agent, in which event such Assignor shall at its own expense:
(x) forthwith cause the same to be moved to the place or
places so designated by the Collateral Agent and there delivered
to the Collateral Agent;
(y) store and keep any Collateral so delivered to the
Collateral Agent at such place or places pending further action
by the Collateral Agent as provided in Section 7.2; and
(z) while the Collateral shall be so stored and kept,
provide such guards and maintenance services as shall be
necessary to protect the same and to preserve and maintain them
in good condition; and
(vi) license or sublicense, whether on an exclusive or
nonexclusive basis, any Marks, Patents or Copyrights included in the
Collateral for such term and on such conditions and in such manner as
the Collateral Agent shall in its sole judgment determine;
it being understood that each Assignor's obligation so to deliver the
Collateral is of the essence of this Agreement and that, accordingly, upon
application to a court of equity having jurisdiction, the Collateral Agent
shall be entitled to a decree requiring specific performance by such
Assignor of said obligation.
7.2 Remedies; Disposition of the Collateral. Any Collateral
repossessed by the Collateral Agent under or pursuant to Section 7.1 and
any other Collateral whether or not so repossessed by the Collateral Agent,
may be sold, assigned, leased or otherwise disposed of under one or more
contracts or as an entirety, and without the necessity of gathering at the
place of sale the property to be sold, and in general in such manner, at
such time or times, at such place or places and on such terms as the
Collateral Agent may, in compliance with any mandatory requirements of
applicable law, determine to be commercially reasonable. Any of the
Collateral may be sold, leased or otherwise disposed of, in the condition
in which the same existed when taken by the Collateral Agent or after any
overhaul or repair at the expense of the relevant Assignor which the
Collateral Agent shall determine to be commercially reasonable. Any such
disposition which shall be a private sale or other private proceedings
permitted by such requirements shall be made upon not less than 10 days'
written notice to the relevant Assignor specifying the time at which such
disposition is to be made and the intended sale price or other
consideration therefor, and shall be subject, for the 10 days after the
giving of such notice, to the right of the relevant Assignor or any nominee
of such Assignor to acquire the Collateral involved at a price or for such
other consideration at least equal to the intended sale price or other
consideration so specified. Any such disposition which shall be a public
sale permitted by such requirements shall be made upon not less than 10
days' written notice to the relevant Assignor specifying the time and place
of such sale and, in the absence of applicable requirements of law, shall
be by public auction (which may, at the Collateral Agent's option, be
subject to reserve), after publication of notice of such auction not less
than 10 days prior thereto in two newspapers in general circulation to be
selected by the Collateral Agent. To the extent permitted by any such
requirement of law, the Collateral Agent may bid for and become the
purchaser of the Collateral or any item thereof, offered for sale in
accordance with this Section without accountability to the relevant
Assignor. If, under mandatory requirements of applicable law, the
Collateral Agent shall be required to make disposition of the Collateral
within a period of time which does not permit the giving of notice to the
relevant Assignor as hereinabove specified, the Collateral Agent need give
such Assignor only such notice of disposition as shall be reasonably
practicable in view of such mandatory requirements of applicable law. Each
Assignor agrees to do or cause to be done all such other acts and things as
may be reasonably necessary to make such sale or sales of all or any
portion of the Collateral of such Assignor valid and binding and in
compliance with any and all applicable laws, regulations, orders, writs,
injunctions, decrees or awards of any and all courts, arbitrations or
governmental instrumentalities, domestic or foreign, having jurisdiction
over any such sale or sales, all at such Assignor's expense.
Notwithstanding anything to the contrary contained herein, Assignee shall
give to the respective Assignors three Business Days' prior notice of any
foreclosure effected on any Inventory, Equipment or Goods constituting
Collateral under this Agreement.
7.3 Waiver of Claims. Except as otherwise provided in this
Agreement, EACH ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE
COLLATERAL AGENT'S TAKING POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION
OF ANY OF THE COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR
NOTICE AND HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH
RIGHT WHICH SUCH ASSIGNOR WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR
ANY STATUTE OF THE UNITED STATES OR OF ANY STATE, and such Assignor hereby
further waives, to the extent permitted by law:
(i) all damages occasioned by such taking of possession except
any damages which are the direct result of the Collateral Agent's
gross negligence or willful misconduct;
(ii) all other requirements as to the time, place and terms of
sale or other requirements with respect to the enforcement of the
Collateral Agent's rights hereunder; and
(iii) all rights of redemption, appraisement, valuation, stay,
extension or moratorium now or hereafter in force under any
applicable law in order to prevent or delay the enforcement of this
Agreement or the absolute sale of the Collateral or any portion
thereof, and each Assignor, for itself and all who may claim under
it, insofar as it or they now or hereafter lawfully may, hereby
waives the benefit of all such laws.
Any sale of, or the grant of options to purchase, or any other realization
upon, any Collateral shall operate to divest all right, title, interest,
claim and demand, either at law or in equity, of the relevant Assignor
therein and thereto, and shall be a perpetual bar both at law and in equity
against such Assignor and against any and all Persons claiming or
attempting to claim the Collateral so sold, optioned or realized upon, or
any part thereof, from, through and under such Assignor.
7.4 Application of Proceeds. (a) All moneys collected by the
Collateral Agent upon any sale or other disposition of the Collateral (or,
to the extent the Pledge Agreement or Mortgages require proceeds of
collateral thereunder to be applied in accordance with the provisions of
this Agreement, the Pledgee or Mortgagee under such other Security
Documents), together with all other moneys received by the Collateral Agent
hereunder, shall be applied as follows:
(i) first, to the payment of all Obligations owing the
Collateral Agent of the type described in clauses (iii) and (iv) of
the definition of "Obligations";
(ii) second, to the extent proceeds remain after the
application pursuant to the preceding clause (i), an amount equal to
the outstanding Primary Obligations shall be paid to the Secured
Creditors as provided in Section 7.4(e), with each Secured Creditor
receiving an amount equal to its outstanding Primary Obligations or,
if the proceeds are insufficient to pay in full all such Primary
Obligations, its Pro Rata Share of the amount remaining to be
distributed;
(iii) third, to the extent proceeds remain after the
application pursuant to the preceding clauses (i) and (ii), an amount
equal to the outstanding Secondary Obligations shall be paid to the
Secured Creditors as provided in Section 7.4(e), with each Secured
Creditor receiving an amount equal to its outstanding Secondary
Obligations or, if the proceeds are insufficient to pay in full all
such Secondary Obligations, its Pro Rata Share of the amount
remaining to be distributed; and
(iv) fourth, to the extent proceeds remain after the
application pursuant to the preceding clauses (i) through (iii),
inclusive, and following the termination of this Agreement pursuant
to Section 10.8(a) hereof, to the relevant Assignor or to whomever
may be lawfully entitled to receive such surplus.
(b) For purposes of this Agreement (x) "Pro Rata Share" shall mean,
when calculating a Secured Creditor's portion of any distribution or
amount, that amount (expressed as a percentage) equal to a fraction the
numerator of which is the then unpaid amount of such Secured Creditor's
Primary Obligations or Secondary Obligations, as the case may be, and the
denominator of which is the then outstanding amount of all Primary
Obligations or Secondary Obligations, as the case may be, (y) "Primary
Obligations" shall mean (i) in the case of the Credit Document Obligations,
all principal of, and interest on, all Loans under the Credit Agreement,
all Unpaid Drawings theretofore made (together with all interest accrued
thereon), the aggregate Stated Amounts of all Letters of Credit issued (or
deemed issued) under the Credit Agreement, and all Fees and (ii) in the
case of the Other Obligations, all amounts due under the Interest Rate
Protection Agreements or Other Hedging Agreements (other than indemnities,
fees (including, without limitation, attorneys' fees) and similar
obligations and liabilities) and (z) "Secondary Obligations" shall mean all
Obligations other than Primary Obligations.
(c) When payments to Secured Creditors are based upon their
respective Pro Rata Shares, the amounts received by such Secured Creditors
hereunder shall be applied (for purposes of making determinations under
this Section 7.4 only) (i) first, to their Primary Obligations and (ii)
second, to their Secondary Obligations. If any payment to any Secured
Creditor of its Pro Rata Share of any distribution would result in
overpayment to such Secured Creditor, such excess amount shall instead be
distributed in respect of the unpaid Primary Obligations or Secondary
Obligations, as the case may be, of the other Secured Creditors, with each
Secured Creditor whose Primary Obligations or Secondary Obligations, as the
case may be, have not been paid in full to receive an amount equal to such
excess amount multiplied by a fraction the numerator of which is the unpaid
Primary Obligations or Secondary Obligations, as the case may be, of such
Secured Creditor and the denominator of which is the unpaid Primary
Obligations or Secondary Obligations, as the case may be, of all Secured
Creditors entitled to such distribution.
(d) Each of the Secured Creditors agrees and acknowledges that if
the Bank Creditors are to receive a distribution on account of undrawn
amounts with respect to Letters of Credit issued (or deemed issued) under
the Credit Agreement (which shall only occur after all outstanding Loans
and Unpaid Drawings with respect to such Letters of Credit have been paid
in full), such amounts shall be paid to the Agent under the Credit
Agreement and held by it, for the equal and ratable benefit of the Bank
Creditors, as cash security for the repayment of Obligations owing to the
Bank Creditors as such. If any amounts are held as cash security pursuant
to the immediately preceding sentence, then upon the termination of all
outstanding Letters of Credit, and after the application of all such cash
security to the repayment of all Obligations owing to the Bank Creditors
after giving effect to the termination of all such Letters of Credit, if
there remains any excess cash, such excess cash shall be returned by the
Agent to the Collateral Agent for distribution in accordance with Section
7.4(a) hereof.
(e) Except as set forth in Section 7.4(d), all payments required to
be made hereunder shall be made (x) if to the Bank Creditors, to the Agent
under the Credit Agreement for the account of the Bank Creditors, and (y)
if to the Other Creditors, to the trustee, paying agent or other similar
representative (each, a "Representative") for the Other Creditors or, in
the absence of such a Representative, directly to the Other Creditors.
(f) For purposes of applying payments received in accordance with
this Section 7.4, the Collateral Agent shall be entitled to rely upon (i)
the Agent under the Credit Agreement and (ii) the Representative for the
Other Creditors or, in the absence of such a Representative, upon the Other
Creditors for a determination (which the Agent, each Representative for any
Secured Creditors and the Secured Creditors agree (or shall agree) to
provide upon request of the Collateral Agent) of the outstanding Primary
Obligations and Secondary Obligations owed to the Bank Creditors or the
Other Creditors, as the case may be. Unless it has actual knowledge
(including by way of written notice from a Bank Creditor or an Other
Creditor) to the contrary, the Agent and each Representative, in furnishing
information pursuant to the preceding sentence, and the Collateral Agent,
in acting hereunder, shall be entitled to assume that no Secondary
Obligations are outstanding. Unless it has actual knowledge (including by
way of written notice from an Other Creditor) to the contrary, the
Collateral Agent, in acting hereunder, shall be entitled to assume that no
Interest Rate Protection Agreements or Other Hedging Agreements are in
existence.
(g) It is understood and agreed that each of the Assignors shall
remain liable to the extent of any deficiency between the amount of the
proceeds of the Collateral hereunder and the aggregate amount of the sums
referred to in clause (a) of this Section with respect to the relevant
Assignor.
7.5 Remedies Cumulative. Each and every right, power and remedy
hereby specifically given to the Collateral Agent shall be in addition to
every other right, power and remedy specifically given under this
Agreement, the Interest Rate Protection Agreements or Other Hedging
Agreements or the other Credit Documents now or hereafter existing at law,
in equity or by statute and each and every right, power and remedy whether
specifically herein given or otherwise existing may be exercised from time
to time or simultaneously and as often and in such order as may be deemed
expedient by the Collateral Agent. All such rights, powers and remedies
shall be cumulative and the exercise or the beginning of the exercise of
one shall not be deemed a waiver of the right to exercise any other or
others. No delay or omission of the Collateral Agent in the exercise of
any such right, power or remedy and no renewal or extension of any of the
Obligations shall impair any such right, power or remedy or shall be
construed to be a waiver of any Default or Event of Default or an
acquiescence therein. No notice to or demand on any Assignor in any case
shall entitle it to any other or further notice or demand in similar or
other circumstances or constitute a waiver of any of the rights of the
Collateral Agent to any other or further action in any circumstances
without notice or demand. In the event that the Collateral Agent shall
bring any suit to enforce any of its rights hereunder and shall be entitled
to judgment, then in such suit the Collateral Agent may recover expenses,
including attorneys' fees, and the amounts thereof shall be included in
such judgment.
7.6 Discontinuance of Proceedings. In case the Collateral Agent
shall have instituted any proceeding to enforce any right, power or remedy
under this Agreement by foreclosure, sale, entry or otherwise, and such
proceeding shall have been discontinued or abandoned for any reason or
shall have been determined adversely to the Collateral Agent, then and in
every such case the relevant Assignor, the Collateral Agent and each holder
of any of the Obligations shall be restored to their former positions and
rights hereunder with respect to the Collateral subject to the security
interest created under this Agreement, and all rights, remedies and powers
of the Collateral Agent shall continue as if no such proceeding had been
instituted.
ARTICLE VIII
INDEMNITY
8.1 Indemnity. (a) Each Assignor jointly and severally agrees to
indemnify, reimburse and hold the Collateral Agent, each other Secured
Creditor and their respective successors, permitted assigns, employees,
agents and servants (hereinafter in this Section 8.1 referred to
individually as an "Indemnitee," and, collectively, as "Indemnities")
harmless from any and all liabilities, obligations, damages, injuries,
penalties, claims, demands, actions, suits, judgments and any and all
costs, expenses or disbursements (including attorneys' fees and expenses)
(for the purposes of this Section 8.1 the foregoing are collectively called
"expenses") of whatsoever kind and nature imposed on, asserted against or
incurred by any of the Indemnities in any way relating to or arising out of
this Agreement, any Interest Rate Protection Agreement or Other Hedging
Agreement, any other Credit Document or any other document executed in
connection herewith or therewith or in any other way connected with the
administration of the transactions contemplated hereby or thereby or the
enforcement of any of the terms of, or the preservation of any rights under
any thereof, or in any way relating to or arising out of the manufacture,
ownership, ordering, purchase, delivery, control, acceptance, lease,
financing, possession, operation, condition, sale, return or other
disposition, or use of the Collateral (including, without limitation,
latent or other defects, whether or not discoverable), the violation of the
laws of any country, state or other governmental body or unit, any tort
(including, without limitation, claims arising or imposed under the
doctrine of strict liability, or for or on account of injury to or the
death of any Person (including any Indemnitee), or property damage), or
contract claim; provided that no Indemnitee shall be indemnified pursuant
to this Section 8. 1 (a) for losses, damages or liabilities to the extent
caused by the gross negligence or willful misconduct of such Indemnitee.
Each Assignor agrees that upon written notice by any. Indemnitee of the
assertion of such a liability, obligation, damage, injury, penalty, claim,
demand, action,. suit or judgment, the relevant Assignor shall assume full
responsibility for the defense thereof. Each Indemnitee agrees to use its
best efforts to promptly notify the relevant Assignor of any such assertion
of which such Indemnitee has knowledge.
(b) Without limiting the application of Section 8.1(a), each
Assignor agrees, jointly and severally, to pay, or reimburse the Collateral
Agent for any and all fees, costs and expenses of whatever kind or nature
incurred in connection with the creation, preservation or protection of the
Collateral Agent's Liens on, and security interest in, the Collateral,
including, without limitation, all fees and taxes in connection with the
recording or filing of instruments and documents in public offices, payment
or discharge of any taxes or Liens upon or in respect of the Collateral,
premiums for insurance with respect to the Collateral and all other fees,
costs and expenses in connection with protecting, maintaining or preserving
the Collateral and the Collateral Agent's interest therein, whether through
judicial proceedings or otherwise, or in defending or prosecuting any
actions, suits or proceedings arising out of or relating to the Collateral.
(c) Without limiting the application of Section 8.1(a) or (b), each
Assignor agrees, jointly and severally, to pay, indemnify and hold each
Indemnitee harmless from and against any loss, costs, damages and expenses
which such Indemnitee may suffer, expend or incur in consequence of or
growing out of any misrepresentation by any Assignor in this Agreement, any
Interest Rate Protection Agreement or Other Hedging Agreement, any other
Credit Document or in any writing contemplated by or made or delivered
pursuant to or in connection with this Agreement, any Interest Rate
Protection Agreement or Other Hedging Agreement or any other Credit
Document.
(d) If and to the extent that the obligations of any Assignor under
this Section 8.1 are unenforceable for any reason, such Assignor hereby
agrees to make the maximum contribution to the payment and satisfaction of
such obligations which is permissible under applicable law.
8.2 Indemnity Obligations Secured by Collateral; Survival. Any
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of each Assignor contained in this Article VIII shall
continue in full force and effect notwithstanding the full payment of all
the Notes issued under the Credit Agreement, the termination of all
Interest Rate Protection Agreements or Other Hedging Agreements and Letters
of Credit, and the payment of all other Obligations and notwithstanding the
discharge thereof.
ARTICLE IX
DEFINITIONS
The following terms shall have the meanings herein specified. Such
definitions shall be equally applicable to the singular and plural forms of
the terms defined.
"Agent" shall have the meaning provided in the recitals to this
Agreement.
"Agreement" shall have the meaning provided in the preamble to this
Agreement.
"Assignor" shall have the meaning provided in the preamble to this
Agreement.
"Bank Creditors" shall have the meaning provided in the recitals to
this Agreement.
"Banks" shall have the meaning provided in the recitals to this
Agreement.
"Cash Collateral Account" shall mean a non-interest bearing cash
collateral account maintained with, and in the sole dominion and control
of, the Collateral Agent for the benefit of the Secured Creditors.
"Chattel Paper" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Class" shall have the meaning provided in Section 10.2 of this
Agreement.
"Collateral" shall have the meaning provided in Section 1.1(a) of
this Agreement.
"Collateral Agent" shall have the meaning provided in the preamble to
this Agreement.
"Contract Rights" shall mean all rights of any Assignor (including,
without limitation, all rights to payment) under each Contract.
"Contracts" shall mean all contracts between any Assignor and one or
more additional parties (including, without limitation, any Interest Rate
Protection Agreements or Other Hedging Agreements), but excluding those
Contracts to the extent that the terms thereof expressly prohibit the
assignment of, or granting of a security interest in, such Assignor's
rights and obligations thereunder.
"Copyrights" shall mean any U.S. or foreign copyright owned by any
Assignor, including any registrations of any Copyrights, in the U.S.
Copyright Office or the equivalent thereof in any foreign country, as well
as any application for a U.S. or foreign copyright registration now or
hereafter made with the U.S. Copyright Office or the equivalent thereof in
any foreign jurisdiction by any Assignor.
"Credit Agreement" shall have the meaning provided in the recitals to
this Agreement.
"Credit Document Obligations" shall have the meaning provided in the
definition of "Obligations" in this Article IX.
"Default" shall mean any event which, with notice or lapse of time,
or both, would constitute an Event of Default.
"Documents" shall have the meaning provided in the Uniform Commercial
Code as in effect on the date hereof in the State of New York.
"Equipment" shall mean any "equipment," as such term is defined in
the Uniform Commercial Code as in effect on the date hereof in the State of
New York, now or thereafter owned by any Assignor and, in any event, shall
include, but shall not be limited to, all machinery, equipment,
furnishings, movable trade fixtures and vehicles now or hereafter owned by
any Assignor and any and all additions, substitutions and replacements of
any of the foregoing, wherever located, together with all attachments,
components, parts, equipment and accessories installed thereon or affixed
thereto.
"Event of Default" shall mean any Event of Default under, and as
defined in, the Credit Agreement or any payment default under any Interest
Rate Protection Agreement or Other Hedging Agreement and shall in any
event, without limitation, include any payment default on any of the
Obligations after the expiration of any applicable grace period.
"Excluded Collateral" shall have the meaning provided in the Credit
Agreement.
"General Intangibles" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Goods" shall have the meaning provided in the Uniform Commercial
Code as in effect on the date hereof in the State of New York.
"Indemnitee" shall have the meaning provided in Section 8.1 of this
Agreement.
"Instrument" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Interest Rate Protection Agreement or Other Hedging Agreement" shall
have the meaning provided in the recitals to this Agreement.
"Inventory" shall mean merchandise, inventory and goods, and all
additions, substitutions and replacements thereof, wherever located,
together with all goods, supplies, incidentals, packaging materials,
labels, materials and any other items used or usable in manufacturing,
processing, packaging or shipping same; in all stages of production -- from
raw materials through work-in-process to finished goods -- and all products
and proceeds of whatever sort and wherever located and any portion thereof
which may be returned, rejected, reclaimed or repossessed by the Collateral
Agent from any Assignor's customers, and shall specifically include all
"inventory" as such term is defined in the Uniform Commercial Code as in
effect on the date hereof in the State of New York, now or hereafter owned
by any Assignor.
"Liens" shall mean any security interest, mortgage, pledge, lien,
claim, charge, encumbrance, title retention agreement, lessor's interest in
a financing lease or analogous instrument, in, of, or on any Assignor's
property.
"Marks" shall mean all right, title and interest in and to any U.S.
or foreign trademarks, service marks and trade names now held or hereafter
acquired by any Assignor, including any registration or application for
registration of any trademarks and service marks in the United States
Patent and Trademark Office, or the equivalent thereof in any State of the
United States or in an foreign country, and any trade dress including
logos, designs, trade names, company names, business names, fictitious
business names and other business identifiers in connection with which any
of these registered or unregistered marks are used.
"Obligations" shall mean (i) the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of all
obligations and liabilities (including, without limitation, indemnities,
fees and interest thereon) of each Assignor owing to the Bank Creditors,
now existing or hereafter incurred under, arising out of or in connection
with any Credit Document to which such Assignor is a party (including all
such obligations and indebtedness under any Guaranty to which such Assignor
is a party) and the due performance and compliance by each Assignor with
the terms, conditions and agreements of each such Credit Document (all such
obligations or liabilities under this clause (i), except to the extent
consisting of obligations or indebtedness with respect to Interest Rate
Protection Agreements or Other Hedging Agreements, being herein
collectively called the "Credit Document Obligations'); (ii) the full and
prompt payment when due (whether at the stated maturity, by acceleration or
otherwise) of all obligations and liabilities (including, without
limitation, indemnities, fees and interest thereon) of each Assignor owing
to the Other Creditors, now existing or hereafter incurred under, arising
out of or in connection with any Interest Rate Protection Agreement or
Other Hedging Agreement, whether such Interest Rate Protection Agreement or
Other Hedging Agreement is now in existence or hereafter arising,
including, in the case of each Subsidiary Guarantor, all obligations under
its respective Guaranty, in each case, in respect of Interest Rate
Protection Agreements or Other Hedging Agreements, and the due performance
and compliance by such Assignor with all of the terms, conditions and
agreements contained in any such Interest Rate Protection Agreement or
Other Hedging Agreement (all such obligations and indebtedness under this
clause (ii) being herein collectively called the "Other Obligations");
(iii) any and all sums advanced by the Collateral Agent in order to
preserve the Collateral or preserve its security interest in the
Collateral; (iv) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations, or liabilities of each
Assignor referred to in clauses (i), (ii) and (iii) after an Event of
Default shall have occurred and be continuing, the reasonable expenses of
re-taking, holding, preparing for sale or lease, selling or otherwise
disposing of or realizing on the Collateral, or of any exercise by the
Collateral Agent of its rights hereunder, together with reasonable
attorneys' fees and court costs; and (v) all amounts paid by any Indemnitee
as to which such Indemnitee has the right to reimbursement under Section
8.1 of this Agreement. It is acknowledged and agreed that the
"Obligations" shall include extensions of credit of the types described
above, whether outstanding on the date of this Agreement or extended from
time to time after the date of this Agreement.
"Other Creditors" shall have the meaning provided in the recitals to
this Agreement.
"Other Obligations" shall have the meaning provided in the definition
of "Obligations" in this Article IX.
"Patents" shall mean any U.S. or foreign patent to which any Assignor
now or hereafter has title and any divisions or continuations thereof, as
well as any application for a U.S. or foreign patent now or hereafter made
by any Assignor.
"Pledged Securities" shall have the meaning provided in the Pledge
Agreement.
"Primary Obligations" shall have the meaning provided in Section
7.4(b) of this Agreement.
"Proceeds" shall have the meaning provided in the Uniform Commercial
Code as in effect in the State of New York on the date hereof or under
other relevant law and, in any event, shall include, but not be limited to,
(i) any and all proceeds of any insurance, indemnity, warranty or guaranty
payable to the Collateral Agent or any Assignor from time to time with
respect to any of the Collateral, (ii) any and all payments (in any form
whatsoever) made or due and payable to any Assignor from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any governmental
authority (or any person acting under color of governmental authority) and
(iii) any and all other amounts from time to time paid or payable under or
in connection with any of the Collateral.
"Pro Rata Share" shall have the meaning provided in Section 7.4(b) of
this Agreement.
"Receivables" shall mean any "account" as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by any Assignor and, in any event, shall
include, but shall not be limited to, all of such Assignor's rights to
payment for, or exchange of, goods sold or leased or services performed or
product exchanged by such Assignor, whether now in existence or arising
from time to time hereafter, including, without limitation, rights
evidenced by an account, note, contract, barter arrangement, security
agreement, chattel paper, or other evidence of indebtedness or security,
together with (a) all security pledged, assigned, hypothecated or granted
to or held by such Assignor to secure the foregoing, (b) all of any
Assignor's right, title and interest in and to any goods or services, the
sale or exchange of which gave rise thereto, (c) all guarantees,
endorsements and indemnifications on, or of, any of the foregoing, (d) all
powers of attorney for the execution of any evidence of indebtedness or
security or other writing in connection therewith, (e) all books, records,
ledger cards, and invoices relating thereto, (f) all evidences of the
filing of financing statements and other statements and the registration of
other instruments in connection therewith and amendments thereto, notices
to other creditors or secured parties, and certificates from filing or
other registration officers, (g) all credit information, reports and
memoranda relating thereto and (h) all other writings related in any way to
the foregoing; provided that on and after the Receivables Facility
Transaction Date, the term Receivable shall not include any Receivable that
is transferred to the Receivables Entity pursuant to the Receivables
Facility Documents, unless and until the respective such Receivable is
transferred back to one or more Assignors.
"Representative" shall have the meaning provided in Section 7.4(e) of
this Agreement.
"Requisite Creditors" shall have the meaning provided in Section 10.2
of this Agreement.
"Secondary Obligations" shall have the meaning provided in Section
7.4(b) of this Agreement.
"Secured Creditors" shall have the meaning provided in the recitals
to this Agreement.
"Termination Date" shall have the meaning provided in Section 10.8 of
this Agreement.
"Trade Secret Rights" shall have the meaning provided in Section 5.1
of this Agreement.
ARTICLE X
MISCELLANEOUS
10.1 Notices. Except as otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be deemed to have been duly given or made when delivered to
the party to which such notice, request, demand or other communication is
required or permitted to be given or made under this Agreement, addressed:
(a) if to any Assignor, at it address set forth opposite its
signature below;
(b) if to the Collateral Agent:
Bankers Trust Company
One Bankers Trust Plaza
New York, New York 10006
Attention: Mary Kay Coyle
Telephone No.: (212) 250-2500
Facsimile No.: (212) 250-7200
(c) if to any Bank Creditor (other than the Collateral Agent),
at such address as such Bank Creditor shall have specified in the
Credit Agreement; and
(d) if to any Other Creditor, at such address as such Other
Creditor shall have specified in writing to each Assignor and the
Collateral Agent;
or at such other address as shall have been furnished in writing by any
Person described above to the party required to give notice hereunder.
10.2 Waiver; Amendment. None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by each Assignor directly and
adversely affected thereby and the Collateral Agent (with the consent of
(x) the Required Banks (or all the Banks if required by Section 13.12 of
the Credit Agreement) at all times prior to the time at which all Credit
Document Obligations have been paid in full and all Commitments under the
Credit Agreement have been terminated or (y) the holders of at least a
majority of the outstanding Other Obligations at all times after the time
on which all Credit Document Obligations have been paid in full and all
Commitments under the Credit Agreement have been terminated; provided, that
any change, waiver, modification or variance affecting the rights and
benefits of a single Class (as defined below) of Secured Creditors (and not
all Secured Creditors in a like or similar manner) shall require the
written consent of the Requisite Creditors (as defined below) of such Class
of Secured Creditors. For the purpose of this Agreement the term "Class'
shall mean each class of Secured Creditors, i.e., whether (x) the Bank
Creditors as holders of the Credit Document Obligations or (y) the Other
Creditors as the holders of the Other Obligations. For the purpose of this
Agreement, the term "Requisite Creditors' of any Class shall mean each of
(x) with respect to the Credit Document Obligations, the Required Banks and
(y) with respect to the Other Obligations, the holders of at least a
majority of all obligations outstanding from time to time under the
Interest Rate Protection Agreements or Other Hedging Agreements.
10.3 Obligations Absolute. The obligations of each Assignor
hereunder shall remain in full force and effect without regard to, and
shall not be impaired by, (a) any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or the like of such
Assignor; (b) any exercise or non-exercise, or any waiver of, any right,
remedy, power or privilege under or in respect of this Agreement, any other
Credit Document or any Interest Rate Protection Agreement or Other Hedging
Agreement; or (c) any renewal, extension, amendment or modification of or
addition or supplement to or deletion from any Credit Document or any
Interest Rate Protection Agreement or Other Hedging Agreement or any
security for any of the Obligations; (d) any waiver, consent, extension,
indulgence or other action or inaction under or in respect of any such
agreement or instrument including, without limitation, this Agreement; (e)
any furnishing of any additional security to the Collateral Agent or its
assignee or any acceptance thereof or any release of any security by the
Collateral Agent or its assignee; or (f) any limitation on any party's
liability or obligations under any such instrument or agreement or any
invalidity or unenforceability, in whole or in part, of any such instrument
or agreement or any term thereof; whether or not any Assignor shall have
notice or knowledge of any of the foregoing. The rights and remedies of
the Collateral Agent herein provided are cumulative and not exclusive of
any rights or remedies which the Collateral Agent would otherwise have.
10.4 Successors and Assigns. This Agreement shall be binding upon
each Assignor and its successors and assigns and shall inure to the benefit
of the Collateral Agent and. its successors and assigns; provided, that no
Assignor may transfer or assign any or all of its rights or obligations
hereunder without the prior written consent of the Collateral Agent. All
agreements, statements, representations and warranties made by each
Assignor herein or in any certificate or other instrument delivered by such
Assignor or on its behalf under this Agreement shall be considered to have
been relied upon by the Secured Creditors and shall survive the execution
and delivery of this Agreement, the other Credit Documents and the Interest
Rate Protection Agreements or Other Hedging Agreements regardless of any
investigation made by the Secured Creditors or on their behalf.
10.5 Headings Descriptive. The headings of the several sections of
this Agreement are inserted for convenience only and shall not in any way
affect the meaning or construction of any provision of this Agreement.
10.6 Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
10.7 Assignor's Duties. It is expressly agreed, anything herein
contained to the contrary notwithstanding, that each Assignor shall remain
liable to perform all of the obligations, if any, assumed by it with
respect to the Collateral and the Collateral Agent shall not have any
obligations or liabilities with respect to any Collateral by reason of or
arising out of this Agreement, nor shall the Collateral Agent be required
or obligated in any manner to perform or fulfill any of the obligations of
each Assignor under or with respect to any Collateral.
10.8 Termination; Release. (a) After the Termination Date (as
defined below), this Agreement shall terminate (provided that all
indemnities set forth herein including, without limitation, in Section 8.1
hereof shall survive such termination) and the Collateral Agent, at the
request and expense of the respective Assignor, will promptly execute and
deliver to such Assignor a proper instrument or instruments (including
Uniform Commercial Code termination statements on form UCC-3) acknowledging
the satisfaction and termination of this Agreement, and will duly assign,
transfer and deliver to such Assignor (without recourse and without any
representation or warranty) such of the Collateral as may be in the
possession of the Collateral Agent and as has not theretofore been sold or
otherwise applied or released pursuant to this Agreement. As used in this
Agreement, "Termination Date" shall mean the date upon which the Total
Commitment and all Interest Rate Protection Agreements or Other Hedging
Agreements have been terminated, no Note is outstanding (and all Loans have
been paid in full), all Letters of Credit have been terminated and all
other Obligations then owing have been paid in full.
(b) In the event that any part of the Collateral is sold (x) at any
time prior to the time at which all Credit Document Obligations have been
paid in full and all Commitments under the Credit Agreement have been
terminated, in connection with a sale permitted by Section 9.02 of the
Credit Agreement or is otherwise released at the direction of the Required
Banks (or all the Banks if required by Section 13.12 of the Credit
Agreement) or (y) at any time thereafter, to the extent permitted by the
Interest Rate Protection Agreements or Other Hedging Agreements, and in the
case of clauses (x) and (y), the proceeds of such sale or sales or from
such release are applied in accordance with the terms of the Credit
Agreement or such Interest Rate Protection Agreements or Other Hedging
Agreements, as the case may be, to the extent required to be so applied,
the Collateral Agent, at the request and expense of such Assignor, will
duly assign, transfer and deliver to such Assignor (without recourse and
without any representation or warranty) such of the Collateral as is then
being (or has been) so sold or released and as may be in the possession of
the Collateral Agent and has not theretofore been released pursuant to this
Agreement.
(c) At any time that the respective Assignor desires that Collateral
be released as provided in the foregoing Section 10.8(a) or (b), it shall
deliver to the Collateral Agent a certificate signed by an Authorized
Officer stating that the release of the respective Collateral is permitted
pursuant to Section 10.8(a) or (b). If requested by the Collateral Agent
(although the Collateral Agent shall have no obligation to make any such
request), the relevant Assignor shall furnish appropriate legal opinions
(from counsel, which may be in-house counsel, reasonably acceptable to the
Collateral Agent) to the effect set forth in the immediately preceding
sentence. The Collateral Agent shall have no liability whatsoever to any
Secured Creditor as the result of any release of Collateral by it as
permitted by this Section 10.8.
10.9 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all
of which shall together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be lodged with the
Borrower and the Collateral Agent.
10.10 The Collateral Agent. The Collateral Agent will hold in
accordance with this Agreement all items of the Collateral at any time
received under this Agreement. It is expressly understood and agreed that
the obligations of the Collateral Agent as holder of the Collateral and
interests therein and with respect to the disposition thereof, and
otherwise under this Agreement, are only those expressly set forth in this
Agreement. The Collateral Agent shall act hereunder on the terms and
conditions set forth in Section 12 of the Credit Agreement.
10.11 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 without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
10.12 Limited Obligations. It is the desire and intent of each
Assignor and the Secured Creditors that this Agreement shall be enforced
against each Assignor to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which enforcement is
sought. Notwithstanding anything to the contrary contained herein, in
furtherance of the foregoing, it is noted that the obligations of each
Subsidiary Guarantor constituting an Assignor have been limited as provided
in its respective Guaranty.
10.13 Additional Assignors. It is understood and agreed that any
Subsidiary of the Borrower that is required to execute a counterpart of
this Agreement after the date hereof pursuant to the Credit Agreement shall
automatically become an Assignor hereunder by executing a counterpart
hereof and delivering the same to the Collateral Agent.
* * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date
first above written.
Address:
1751 Lake Cook Road, Suite 550 MOTORS AND GEARS INDUSTRIES, INC.,
Deerfield, Illinois 60015 as an Assigner
Attention: Thomas C. Spielberger
Telephone: (708) 267-4430 By /s/ Jonathan F. Boucher
Facsimile: (708) 945-9645 Title: Vice President
with copies to:
Jonathan F. Boucher
The Jordan Company
9 West 57th Street, 40th Floor
New York, New York 10019
and
James B. Carlson
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
1776 Winthrop Drive MERKLE-KORFF INDUSTRIES, INC.
Des Plaines, IL 60018
By /s/ Jonathan F. Boucher
Title: Vice President
1776 Winthrop Drive BCM HOLDINGS, INC.
Des Plaines, IL 60018
By /s/ Jonathan F. Boucher
Title: Vice President
84 Ira Avenue THE NEW IMPERIAL ELECTRIC COMPANY
Akron, OH 44309
By /s/ Jonathan F. Boucher
Title: Vice President
1117 LaVelle Road THE NEW SCOTT MOTORS COMPANY
Alamagordo, NM 88310
By /s/ Jonathan F. Boucher
Title: Vice President
4329 Eastern Avenue, S.E. NEW GEAR RESEARCH, INC.,
Grand Rapids, MI 49508
By /s/ Jonathan F. Boucher
Title: Vice President
Accepted and Agreed to:
BANKERS TRUST COMPANY,
as Agent for the Banks
By /s/ Patricia Hogan
Title: Vice President
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
SECURITY INTERESTS
1.1. Grant of Security Interests..................................... 2
1.2. Power of Attorney............................................... 4
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
2.1. Necessary Filings............................................... 4
2.2. No Liens........................................................ 4
2.3. Other Financing Statements...................................... 4
2.4. Chief Executive Office; Records................................. 5
2.5. Location of Inventory and Equipment............................. 5
2.6. Recourse........................................................ 6
2.7. Trade Names; Change of Name..................................... 6
ARTICLE III
SPECIAL PROVISIONS CONCERNING
RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS
3.1. Additional Representations and Warranties....................... 7
3.2. Maintenance of Records.......................................... 7
3.3. Direction to Account Debtors; Contracting Parties; etc.......... 7
3.4. Modification of Terms; etc...................................... 8
3.5. Collection...................................................... 8
3.6. Instruments..................................................... 8
3.7. Further Actions................................................. 8
ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS
4.1. Additional Representations and Warranties....................... 9
4.2. Licenses and Assignments........................................ 9
4.3. Infringements................................................... 10
4.4. Preservation of Marks........................................... 10
4.5. Maintenance of Registration..................................... 10
4.6. Future Registered Marks......................................... 10
4.7. Remedies........................................................ 10
ARTICLE V
SPECIAL PROVISIONS CONCERNING
PATENTS, COPYRIGHTS AND TRADE SECRETS
5.1. Additional Representations and Warranties....................... 11
5.2. Licenses and Assignments........................................ 12
5.3. Infringements................................................... 12
5.4. Maintenance of Patents and Copyrights........................... 12
5.5. Prosecution of Patent or Copyright Application.................. 12
5.6. Other Patents and Copyrights.................................... 12
5.7. Remedies........................................................ 13
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL
6.1. Protection of Collateral Agent's Security....................... 13
6.2. Warehouse Receipts Non-Negotiable............................... 14
6.3. Further Actions................................................. 14
6.4. Financing Statements............................................ 14
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
7.1. Remedies; Obtaining the Collateral Upon Default................. 14
7.2. Remedies; Disposition of the Collateral......................... 16
7.3. Waiver of Claims................................................ 17
7.4. Application of Proceeds......................................... 17
7.5. Remedies Cumulative............................................. 20
7.6. Discontinuance of Proceedings................................... 20
ARTICLE VIII
INDEMNITY
8.1. Indemnity....................................................... 20
8.2. Indemnity Obligations Secured by Collateral; Survival........... 22
ARTICLE IX
DEFINITIONS........................... 22
ARTICLE X
MISCELLANEOUS
10.1.Notices......................................................... 27
10.2.Waiver; Amendment............................................... 27
10.3.Obligations Absolute............................................ 28
10.4.Successors and Assigns.......................................... 28
10.5.Headings Descriptive............................................ 29
10.6.Governing Law................................................... 29
10.7.Assignor's Duties............................................... 29
10.8.Termination; Release............................................ 29
10.9.Counterparts.................................................... 30
10.10.The Collateral Agent........................................... 30
10.11.Severability................................................... 30
10.12.Limited Obligations............................................ 30
10.13.Additional Assignors........................................... 31
ANNEX A Schedule of Chief Executive Offices/Record Locations
ANNEX B Schedule of Inventory and Equipment Locations
ANNEX C Schedule of Trade, Fictitious and Other Names
ANNEX D Schedule of Marks
ANNEX E Schedule of Patents and Applications
ANNEX F Schedule of Copyrights and Applications
ANNEX G Assignment of Security Interest in Patents and Trademarks
ANNEX H Assignment of Security Interest in Copyrights
<PAGE>
EXHIBIT 10.5
PLEDGE AGREEMENT
----------------
PLEDGE AGREEMENT, dated as of November 7, 1996 (as amended, modified
or supplemented from time to time, the "Agreement"), made by each of the
undersigned (each, a "Pledgor" and collectively, the "Pledgors"), in favor
of BANKERS TRUST COMPANY, as Collateral Agent (the "Pledgee"), for the
benefit of the Secured Creditors (as defined below). Except as otherwise
defined herein, terms used herein and defined in the Credit Agreement (as
defined below) shall be used herein as therein defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Motors and Gears Industries, Inc. (the "Borrower"), various
financial institutions from time to time party thereto (the "Banks"), and
Bankers Trust Company, as Agent (the "Agent", and together with the Banks
and the Pledgee, the "Bank Creditors"), have entered into a Credit
Agreement, dated as of November 7, 1996, providing for the making of Loans
to the Borrower and the issuance of, and participation in, Letters of
Credit for the account of the Borrower as contemplated therein (as used
herein, the term "Credit Agreement" means the Credit Agreement described
above in this paragraph as amended, modified, extended, renewed, replaced,
restated, supplemented, restructured or refinanced from time to time, and
including any agreement extending the maturity of, refinancing or
restructuring (including, but not limited to, the inclusion of additional
borrowers thereunder that are Subsidiaries of the Borrower and whose
obligations are guaranteed by the Borrower thereunder or any increase in
the amount borrowed) all, or any portion of, the Indebtedness under such
agreement or any successor agreements; provided, that with respect to any
agreement providing for the refinancing of Indebtedness under the Credit
Agreement, such agreement shall only be treated as, or as part of, the
Credit Agreement hereunder if (i) either (A) all obligations under the
Credit Agreement being refinanced shall be paid in full at the time of such
refinancing, and all commitments under the refinanced Credit Agreement
shall have terminated in accordance with their terms or (B) the Required
Banks shall have consented in writing to the refinancing Indebtedness being
treated, along with their Indebtedness, as Indebtedness pursuant to the
Credit Agreement, (ii) the refinancing Indebtedness shall be permitted to
be incurred under the Credit Agreement being refinanced (if such Credit
Agreement is to remain outstanding) and (iii) a notice to the effect that
the refinancing Indebtedness shall be treated as issued under the Credit
Agreement shall be delivered by the Borrower to the Collateral Agent);
WHEREAS, the Borrower may from time to time enter into one or more (i)
interest rate protection agreements (including, without limitation,
interest rate swaps, caps, floors, collars and similar agreements), (ii)
foreign exchange contracts, currency swap agreements, commodity agreements
or other similar agreements or arrangements designed to protect against the
fluctuations in currency values and/or (iii) other types of hedging
agreements from time to time (each such agreement or arrangement with an
Other Creditor (as hereinafter defined), an "Interest Rate Protection
Agreement or Other Hedging Agreement"), with Bankers Trust Company in its
individual capacity ("BTCo"), any Bank or a syndicate of financial
institutions organized by BTCo or any such Bank, or an affiliate of BTCo or
any such Bank (BTCo, any such Bank or Banks or affiliate or affiliates of
BTCo or such Bank or Banks (even if BTCo or any such Bank subsequently
ceases to be a Bank under the Credit Agreement for any reason) and any such
institution that participates in such Interest Rate Protection Agreements
or Other Hedging Agreements, and their subsequent successors and assigns,
collectively, the "Other Creditors", and together with the Bank Creditors,
the "Secured Creditors");
WHEREAS, pursuant to a Guaranty, each Subsidiary Guarantor will have,
after execution and delivery thereof, jointly and severally guaranteed the
payment when due of all obligations and liabilities of the Borrower under
or with respect to the Credit Documents and each Interest Rate Protection
Agreement or Other Hedging Agreement with one or more Other Creditors;
WHEREAS, it is a condition precedent to the making of Loans to the
Borrower and the issuance of, and participation in, Letters of Credit for
the account of the Borrower under the Credit Agreement and to the Other
Creditors entering into Interest Rate Protection Agreements or Other
Hedging Agreements that each Pledgor shall have executed and delivered to
the Pledgee this Agreement; and
WHEREAS, each Pledgor desires to execute this Agreement to satisfy the
conditions described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to each
Pledgor, the receipt and sufficiency of which are hereby acknowledged, each
Pledgor hereby makes the following representations and warranties to the
Pledgee and hereby covenants and agrees with the Pledgee as follows:
1. SECURITY FOR OBLIGATIONS. This Agreement is made by each Pledgor
for the benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations and
liabilities (including, without limitation, indemnities, fees and
interest thereon) of such Pledgor owing to the Bank Creditors, now
existing or hereafter incurred under, arising out of or in connection
with any Credit Document to which such Pledgor is a party (including
all such obligations and indebtedness under any Guaranty to which
such Pledgor is a party) and the due performance and compliance by
such Pledgor with the terms, conditions and agreements contained in
each such Credit Document (all such obligations and liabilities under
this clause (i), except to the extent consisting of obligations or
indebtedness with respect to Interest Rate Protection Agreements or
Other Hedging Agreements, being herein collectively called the
"Credit Document Obligations");
(ii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations and
liabilities (including, without limitation, indemnities, fees and
interest thereon) of such Pledgor owing to the Other Creditors, now
existing or hereafter incurred under, arising out of or in connection
with any Interest Rate Protection Agreement or Other Hedging
Agreement, whether such Interest Rate Protection Agreement or Other
Hedging Agreement is now in existence or hereafter arising,
including, in the case of each Subsidiary Guarantor, all obligations
under its respective Guaranty, in each case, in respect of Interest
Rate Protection Agreements or Other Hedging Agreements, and the due
performance and compliance by such Pledgor with all of the terms,
conditions and agreements contained in each such Interest Rate
Protection Agreement or Other Hedging Agreement (all such obligations
and indebtedness under this clause (ii) being herein collectively
called the "Other Obligations");
(iii) any and all sums advanced by the Pledgee in order to
preserve the Collateral (as hereinafter defined) or preserve its
security interest in the Collateral (as hereinafter defined);
(iv) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations, or liabilities referred
to in clauses (i), (ii) and (iii) above, after an Event of Default
(such term, as used in this Agreement, shall mean any Event of
Default under, and as defined in, the Credit Agreement or any payment
default under any Interest Rate Protection Agreement or Other Hedging
Agreement and shall in any event include, without limitation, any
payment default (after the expiration of any applicable grace period)
on any of the Obligations (as hereinafter defined)) shall have
occurred and be continuing, the reasonable expenses of retaking,
holding, preparing for sale or lease, selling or otherwise disposing
or realizing on the Collateral, or of any exercise by the Pledgee of
its rights hereunder, together with reasonable attorneys' fees and
court costs; and
(v) all amounts paid by any Indemnitee to which such Indemnitee
has the right to reimbursement under Section 11 of this Agreement;
all such obligations, liabilities, sums and expenses set forth in clauses
(i) through (v) of this Section 1 being herein collectively called the
"Obligations"; it being acknowledged and agreed that the "Obligations"
shall include extensions of credit of the types described above, whether
outstanding on the date of this Agreement or extended from time to time
after the date of this Agreement.
2. DEFINITION OF STOCK, NOTES, SECURITIES, ETC. As used herein: (i)
the term "Stock" shall mean (x) with respect to corporations incorporated
under the law of the United States or any State or territory thereof (each,
a "Domestic Corporation"), all of the issued and outstanding shares of
stock of any corporation at any time owned by each Pledgor of any Domestic
Corporation and all certificates and instruments evidencing the same and
(y) with respect to corporations not Domestic Corporations (each, a
"Foreign Corporation"), all of the issued and outstanding shares of stock
at any time owned by each Pledgor of any Foreign Corporation and all
certificates and instruments evidencing the same, provided that, except as
provided in the last sentence of this Section 2, such Pledgor shall not be
required to pledge hereunder more than 65% of the total combined voting
power of all classes of capital stock of any Foreign Corporation entitled
to vote; (ii) the term "Notes" shall mean (x) all Intercompany Notes at any
time issued to each Pledgor and (y) all other promissory notes from time to
time issued to, or held by, each Pledgor; provided that, except as provided
in the last sentence of this Section 2, such Pledgor shall not be required
to pledge hereunder (and the term "Notes" shall not include) any promissory
notes issued to such Pledgor by any Subsidiary of such Pledgor which is a
Foreign Corporation; and (iii) the term "Securities" shall mean all of the
Stock and Notes. Each Pledgor represents and warrants that on the date
hereof (i) each Subsidiary of such Pledgor, and the direct ownership
thereof, is listed on Annex A hereto; (ii) the Stock held by such Pledgor
consists of the number and type of shares of the stock of the corporations
as described in Annex B hereto; (iii) such Stock constitutes that
percentage of the issued and outstanding capital stock of the issuing
corporation as is set forth in Annex B hereto; (iv) the Notes held by such
Pledgor consist of the promissory notes described in Annex C hereto where
such Pledgor is listed as the lender; (v) such Pledgor is the holder of
record and sole beneficial owner of the Stock and Notes held by such
Pledgor and there exist no options or preemptive rights in respect of any
such Stock; and (vi) on the date hereof, such Pledgor owns no other
Securities. From time to time, to the extent provided in Section 8.16 of
the Credit Agreement, (a) the 65% limitation set forth in clause (i)(y) and
the limitation in the proviso of clause (ii), in each case of the first
sentence of this Section 2 and in Section 3.2 hereof, shall no longer be
applicable and (b) such Pledgor shall duly pledge and deliver to the
Pledgee such additional Securities not theretofore required to be pledged
hereunder and (c) the Pledgee shall release Securities pledged hereunder.
3. PLEDGE OF SECURITIES, ETC.
3.1. Pledge. To secure the Obligations and for the purposes set
forth in Section 1, each Pledgor hereby: (i) grants to the Pledgee a
security interest in all of the Collateral (as hereinafter defined) owned
by the Pledgor; (ii) pledges and deposits as security with the Pledgee the
Securities owned by such Pledgor on the date hereof, and delivers to the
Pledgee certificates or instruments therefor, duly endorsed in blank in the
case of Notes and accompanied by undated stock powers duly executed in
blank by such Pledgor in the case of Stock, or such other instruments of
transfer as are acceptable to the Pledgee; and (iii) assigns, transfers,
hypothecates, mortgages, charges and sets over to the Pledgee all of such
Pledgor's right, title and interest in and to such Securities (and in and
to all certificates or instruments evidencing such Securities), to be held
by the Pledgee, upon the terms and conditions set forth in this Agreement.
3.2. Subsequently Acquired Securities. If any Pledgor shall acquire
(by purchase, stock dividend or otherwise) any additional Securities at any
time or from time to time after the date hereof, the Pledgor will forthwith
pledge and deposit such Securities (or certificates or instruments
representing such Securities) as security with the Pledgee and deliver to
the Pledgee certificates therefor or instruments thereof, duly endorsed in
blank in the case of Notes and accompanied by undated stock powers duly
executed in blank in the case of Stock, or such other instruments of
transfer as are acceptable to the Pledgee, and will promptly thereafter
deliver to the Pledgee a certificate executed by any of the Chairman of the
Board, the Chief Financial Officer, the President, a Vice Chairman, any
Vice President or the Treasurer of such Pledgor describing such Securities
and certifying that the same have been duly pledged with the Pledgee
hereunder. Subject to the last sentence of Section 2 hereof, no Pledgor
shall be required at any time to pledge hereunder (x) any Stock which is
more than 65% of the total combined voting power of all classes of capital
stock of any Foreign Corporation entitled to vote or (y) any promissory
notes issued to such Pledgor by any Subsidiary of such Pledgor which is a
Foreign Corporation.
3.3. Uncertificated Securities. Notwithstanding anything to the
contrary contained in Sections 3.1 and 3.2, if any Securities (whether or
not now owned or hereafter acquired) are uncertificated securities, the
respective Pledgor shall promptly notify the Pledgee thereof, and shall
promptly take all actions required to perfect the security interest of the
Pledgee under applicable law (including, in any event, under Sections 8-313
and 8-321 of the New York UCC, if applicable). Each Pledgor further agrees
to take such actions as the Pledgee deems necessary or desirable to effect
the foregoing and to permit the Pledgee to exercise any of its rights and
remedies hereunder, and agrees to provide an opinion of counsel reasonably
satisfactory to the Pledgee with respect to any such pledge of
uncertificated Securities promptly upon request of the Pledgee.
3.4. Definition of Pledged Stock, Pledged Notes, Pledged Securities
and Collateral. All Stock at any time pledged or required to be pledged
hereunder is hereinafter called the "Pledged Stock", all Notes at any time
pledged or required to be pledged hereunder are hereinafter called the
"Pledged Notes", all of the Pledged Stock and Pledged Notes together are
hereinafter called the "Pledged Securities", which together with all
proceeds thereof, including any securities and moneys received and at the
time held by the Pledgee hereunder, is hereinafter called the "Collateral".
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee shall
have the right to appoint one or more sub-agents for the purpose of
retaining physical possession of the Pledged Securities, which may be held
(in the discretion of the Pledgee) in the name of the Pledgor, endorsed or
assigned in blank or in favor of the Pledgee or any nominee or nominees of
the Pledgee or a sub-agent appointed by the Pledgee.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until an
Event of Default shall have occurred and be continuing, each Pledgor shall
be entitled to exercise any and all voting and other consensual rights
pertaining to the Pledged Securities and to give consents, waivers or
ratifications in respect thereof; provided, that no vote shall be cast or
any consent, waiver or ratification given or any action taken which would
violate or be inconsistent with any of the terms of this Agreement, any
other Credit Document or any Interest Rate Protection Agreement or Other
Hedging Agreement (collectively, the "Secured Debt Agreements"), or which
would have the effect of impairing the position or interests of the Pledgee
or any Secured Creditor. All such rights of such Pledgor to vote and to
give consents, waivers and ratifications shall cease in case an Event of
Default shall occur and be continuing, and Section 7 hereof shall become
applicable.
6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless an Event of Default
shall have occurred and be continuing, all cash dividends payable in
respect of the Pledged Stock and all payments in respect of the Pledged
Notes shall be paid to the respective Pledgor; provided, that all cash
dividends payable in respect of the Pledged Stock which are determined by
the Pledgee to represent in whole or in part an extraordinary, liquidating
or other distribution in return of capital shall be paid, to the extent so
determined to represent an extraordinary, liquidating or other distribution
in return of capital, to the Pledgee and retained by it as part of the
Collateral. The Pledgee shall also be entitled to receive directly, and to
retain as part of the Collateral:
(i) all other or additional stock or other securities or
property (other than cash) paid or distributed by way of dividend or
otherwise in respect of the Pledged Stock;
(ii) all other or additional stock or other securities or
property (including cash) paid or distributed in respect of the
Pledged Stock by way of stock-split, spin-off, split-up,
reclassification, combination of shares or similar rearrangement; and
(iii) all other or additional stock or other securities or
property (including cash) which may be paid in respect of the
Collateral by reason of any consolidation, merger, exchange of stock,
conveyance of assets, liquidation or similar corporate
reorganization.
Nothing contained in this Section 6 shall limit or restrict in any way the
Pledgee's right to receive proceeds of the Collateral in any form in
accordance with Section 3 of this Agreement. All dividends, distributions
or other payments which are received by any Pledgor contrary to the
provisions of this Section 6 and Section 7 shall be received in trust for
the benefit of the Pledgee, shall be segregated from other property or
funds of such Pledgor and shall be forthwith paid over to the Pledgee as
Collateral in the same form as so received (with any necessary
endorsement).
7. REMEDIES IN CASE OF EVENT OF DEFAULT. In case an Event of
Default shall have occurred and be continuing, the Pledgee shall be
entitled to exercise all of the rights, powers and remedies (whether vested
in it by this Agreement or by any other Secured Debt Agreement or by law)
for the protection and enforcement of its rights in respect of the
Collateral, and the Pledgee shall be entitled, without limitation, to
exercise the following rights, which each Pledgor hereby agrees to be
commercially reasonable:
(i) to receive all amounts payable in respect of the Collateral
payable to such Pledgor under Section 6;
(ii) to transfer all or any part of the Pledged Securities into
the Pledgee's name or the name of its nominee or nominees;
(iii) to accelerate any Pledged Note which may be accelerated in
accordance with its terms, and take any other action to collect upon
any Pledged Note (including, without limitation, to make any demand
for payment thereon);
(iv) to vote all or any part of the Pledged Stock (whether or not
transferred into the name of the Pledgee) and give all consents,
waivers and ratifications in respect of the Collateral and otherwise
act with respect thereto as though it were the outright owner thereof
(each Pledgor hereby irrevocably constituting and appointing the
Pledgee the proxy and attorney-in-fact of such Pledgor, with full
power of substitution to do so); and
(v) at any time or from time to time to sell, assign and
deliver, or grant options to purchase, all or any part of the
Collateral, or any interest therein, at any public or private sale,
without demand of performance, advertisement or notice of intention
to sell (except as set forth in the proviso below) or of the time or
place of sale or adjournment thereof or to redeem or otherwise (all
of which are hereby waived by each Pledgor), for cash, on credit or
for other property, for immediate or future delivery without any
assumption of credit risk, and for such price or prices and on such
terms as the Pledgee in its absolute discretion may determine;
provided, that at least 10 days' notice of the time and place of any
such sale shall be given to such Pledgor.
Each purchaser at any such sale shall hold the property so sold absolutely
free from any claim or right on the part of each Pledgor, and each Pledgor
hereby waives and releases to the fullest extent permitted by law any right
or equity of redemption with respect to the Collateral, whether before or
after sale hereunder, and all rights, if any, of marshalling the Collateral
and any other security for the Obligations or otherwise. At any such sale,
unless prohibited by applicable law, the Pledgee on behalf of the Secured
Creditors may bid for and purchase all or any part of the Collateral so
sold free from any such right or equity of redemption. Neither the Pledgee
nor any Secured Creditor shall be liable for failure to collect or realize
upon any or all of the Collateral or for any delay in so doing nor shall
any of them be under any obligation to take any action whatsoever with
regard thereto. Notwithstanding anything to the contrary contained herein,
Pledgee shall give to the respective Pledgors three Business Days' prior
notice of any foreclosure effected on any Pledged Securities of such
Pledgor pursuant to the terms of this Agreement.
8. REMEDIES, ETC., CUMULATIVE. Each right, power and remedy of the
Pledgee provided for in this Agreement or any other Secured Debt Agreement
or now or hereafter existing at law or in equity or by statute shall be
cumulative and concurrent and shall be in addition to every other such
right, power or remedy. The exercise or beginning of the exercise by the
Pledgee or any Secured Creditor of any one or more of the rights, powers or
remedies provided for in this Agreement or any other Secured Debt Agreement
or now or hereafter existing at law or in equity or by statute or otherwise
shall not preclude the simultaneous or later exercise by the Pledgee or any
Secured Creditor of all such other rights, powers or remedies, and no
failure or delay on the part of the Pledgee or any Secured Creditor to
exercise any such right, power or remedy shall operate as a waiver thereof.
No notice to or demand on any Pledgor in any case shall entitle such
Pledgor to any other or further notice or demand in similar other
circumstances or constitute a waiver of any of the rights of the Pledgee or
any Secured Creditor to any other or further action in any circumstances
without demand or notice.
9. APPLICATION OF PROCEEDS. (a) All moneys collected by the
Pledgee upon any sale or other disposition of the Collateral pursuant to
the terms of this Agreement, together with all other moneys received by the
Pledgee hereunder, shall be applied to the payment of the Obligations in
the manner provided in Section 7.4 of the Security Agreement.
(b) It is understood and agreed that the Pledgors shall remain
jointly and severally liable to the extent of any deficiency between the
amount of the proceeds of the Collateral hereunder and the aggregate amount
of the Obligations.
10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by
the Pledgee hereunder (whether by virtue of the power of sale herein
granted, pursuant to judicial process or otherwise), the receipt of the
Pledgee or the officer making the sale shall be a sufficient discharge to
the purchaser or purchasers of the Collateral so sold, and such purchaser
or purchasers shall not be obligated to see to the application of any part
of the purchase money paid over to the Pledgee or such officer or be
answerable in any way for the misapplication or nonapplication thereof.
11. INDEMNITY. Each Pledgor jointly and severally agrees (i) to
indemnify and hold harmless the Pledgee, each Secured Creditor and their
respective successors, assigns, employees and agents (hereunder referred to
individually as, an "Indemnitee" and, collectively, as "Indemnities") from
and against any and all claims, demands, losses, judgments and liabilities
of whatsoever kind or nature, and (ii) to reimburse each Indemnitee for all
costs and expenses, including attorneys' fees, growing out of or resulting
from this Agreement or the exercise by any Indemnitee of any right or
remedy granted to it hereunder or under any other Secured Debt Agreement
except, with respect to clauses (i) and (ii) above, for those arising from
such Indemnitee's gross negligence or willful misconduct. In no event
shall any Indemnitee hereunder be liable, in the absence of gross
negligence or willful misconduct on its part, for any matter or thing in
connection with this Agreement other than to account for moneys actually
received by it in accordance with the terms hereof. If and to the extent
that the obligations of the Pledgors under this Section 11 are
unenforceable for any reason, each Pledgor hereby agrees to make the
maximum contribution to the payment and satisfaction of such obligations
which is permissible under applicable law. The indemnity obligations of
each Pledgor contained in this Section 11 shall continue in full force and
effect notwithstanding the full payment of all the Notes issued under the
Credit Agreement, the termination of all Interest Rate Protection
Agreements or Other Hedging Agreements and Letters of Credit and the
payment of all other Obligations and notwithstanding the discharge thereof.
12. FURTHER ASSURANCES; POWER OF ATTORNEY. (a) Each Pledgor agrees
that it will join with the Pledgee in executing and, at such Pledgor's own
expense, file and refile under the UCC such financing statements,
continuation statements and other documents in such offices as the Pledgee
may deem necessary or appropriate and wherever required or permitted by law
in order to perfect and preserve the Pledgee's security interest in the
Collateral and hereby authorizes the Pledgee to file financing statements
and amendments thereto relative to all or any part of the Collateral
without the signature of such Pledgor where permitted by law, and agrees to
do such further acts and things and to execute and deliver to the Pledgee
such additional conveyances, assignments, agreements and instruments as the
Pledgee may reasonably require or deem advisable to carry into effect the
purposes of this Agreement or to further assure and confirm unto the
Pledgee its rights, powers and remedies hereunder.
(b) Each Pledgor hereby appoints the Pledgee, such Pledgor's
attorney-in-fact, with full authority in the place and stead of such
Pledgor and in the name of such Pledgor or otherwise, from time to time
after the occurrence and during the continuance of an Event of Default, in
the Pledgee's discretion to take such actions and to execute any instrument
which the Pledgee may deem necessary or advisable to accomplish the
purposes of this Agreement.
13. THE PLEDGEE AS COLLATERAL AGENT. The Pledgee will hold in
accordance with this Agreement all items of the Collateral at any time
received under this Agreement. It is expressly understood and agreed that
the obligations of the Pledgee as holder of the Collateral and interests
therein and with respect to the disposition thereof, and otherwise under
this Agreement, are only those expressly set forth in this Agreement. The
Pledgee shall act hereunder on the terms and conditions set forth herein
and in Section 12 of the Credit Agreement.
14. TRANSFER BY PLEDGORS. Except for sales of Collateral permitted
(i) prior to the date all Credit Document Obligations have been paid in
full and all Commitments under the Credit Agreement have been terminated,
pursuant to the Credit Agreement, and (ii) thereafter, pursuant to the
other Secured Debt Agreements, no Pledgor will sell or otherwise dispose
of, grant any option with respect to, or mortgage, pledge or otherwise
encumber any of the Collateral or any interest therein (except in
accordance with the terms of this Agreement).
15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PLEDGORS. (a) Each
Pledgor represents, warrants and covenants that:
(i) it is the legal, record and beneficial owner of, and has
good and marketable title to, all Securities pledged by it hereunder,
subject to no pledge, lien, mortgage, hypothecation, security
interest, charge, option or other encumbrance whatsoever, except the
liens and security interests created by this Agreement;
(ii) it has full power, authority and legal right to pledge all
the Securities pledged by it pursuant to this Agreement;
(iii) this Agreement has been duly authorized, executed and
delivered by such Pledgor and constitutes a legal, valid and binding
obligation of such Pledgor enforceable in accordance with its terms;
(iv) no consent of any other party (including, without
limitation, any stockholder, member, limited or general partner or
creditor of such Pledgor or any of its Subsidiaries) and no consent,
license, permit, approval or authorization of, exemption by, notice
or report to, or registration, filing or declaration with, any
governmental authority is required to be obtained by such Pledgor in
connection with (a) the execution, delivery or performance of this
Agreement, (b) the validity or enforceability of this Agreement, (c)
the perfection or enforceability of the Pledgee's security interest
in the Collateral or (d) except for compliance with or as may be
required by applicable securities laws, the exercise by the Pledgee
of any of its rights or remedies provided herein;
(v) the execution, delivery and performance of this Agreement
does not violate any provision of any applicable law or regulation or
of any order, judgment, writ, award or decree of any court,
arbitrator or domestic or foreign governmental authority, or of the
certificate of incorporation, certificate of formation or by-laws, as
the case may be, of such Pledgor or of any securities issued by such
Pledgor or any of its Subsidiaries, or of any indenture, mortgage,
lease, deed of trust, credit agreement, loan agreement, agreement or
other instrument to which such Pledgor or any of its Subsidiaries is
a party or which purports to be binding upon such Pledgor or any of
its Subsidiaries or upon any of their respective assets and will not
result in the creation or imposition of any lien or encumbrance on
any of the assets of such Pledgor or any of its Subsidiaries except
as contemplated by this Agreement;
(vi) all the shares of Stock have been duly and validly issued,
are fully paid and nonassessable and are subject to no options to
purchase or similar rights;
(vii) each of the Pledged Notes constitute, or, when executed by
the obligor thereof, will constitute, the legal, valid and binding
obligation of such obligor, enforceable in accordance with its terms;
and
(viii) the pledge, assignment and delivery to the Pledgee of the
Securities pursuant to this Agreement, creates a valid and perfected
first security interest in such Securities and the proceeds thereof,
subject to no prior lien or encumbrance or to any agreement
purporting to grant to any third party a lien or encumbrance on the
property or assets of such Pledgor which would include the
Securities.
(b) Each Pledgor covenants and agrees that it will defend the
Pledgee's right, title and security interest in and to the Securities and
the proceeds thereof against the claims and demands of all persons
whomsoever; and such Pledgor covenants and agrees that it will have like
title to and right to pledge any other property at any time hereafter
pledged to the Pledgee as Collateral hereunder and will likewise defend the
right thereto and security interest therein of the Pledgee and the Secured
Creditors.
(c) Each Pledgor covenants and agrees that it will take no action
which would violate any of the terms of any Secured Debt Agreement.
16. PLEDGORS' OBLIGATIONS ABSOLUTE, ETC. The obligations of each
Pledgor under this Agreement shall be absolute and unconditional and shall
remain in full force and effect (subject to the provisions of Section 18
hereof) without regard to, and shall not be released, suspended,
discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever, including, without limitation: (i) any renewal,
extension, amendment or modification of or addition or supplement to or
deletion from any Secured Debt Agreement or any other instrument or
agreement referred to therein, or any assignment or transfer of any
thereof; (ii) any waiver, consent, extension, indulgence or other action or
inaction under or in respect of any such agreement or instrument or this
Agreement; (iii) any furnishing of any additional security to the Pledgee
or its assignee or any acceptance thereof or any release of any security by
the Pledgee or its assignee; (iv) any limitation on any party's liability
or obligations under any such instrument or agreement or any invalidity or
unenforceability, in whole or in part, of any such instrument or agreement
or any term thereof; or (v) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like proceeding
relating to such Pledgor or any Subsidiary of such Pledgor, or any action
taken with respect to this Agreement by any trustee or receiver, or by any
court, in any such proceeding, whether or not such Pledgor shall have
notice or knowledge of any of the foregoing.
17. REGISTRATION, ETC. (a) If an Event of Default shall have
occurred and be continuing and any Pledgor shall have received from the
Pledgee a written request or requests that such Pledgor cause any
registration, qualification or compliance under any Federal or state
securities law or laws to be effected with respect to all or any part of
the Pledged Stock, such Pledgor as soon as practicable and at its expense
will use its best efforts to cause such registration to be effected (and be
kept effective) and will use its best efforts to cause such qualification
and compliance to be effected (and be kept effective) as may be so
requested and as would permit or facilitate the sale and distribution of
such Pledged Stock, including, without limitation, registration under the
Securities Act of 1933 as then in effect (or any similar statute then in
effect), appropriate qualifications under applicable blue sky or other
state securities laws and appropriate compliance with any other government
requirements; provided, that the Pledgee shall furnish to such Pledgor such
information regarding the Pledgee as such Pledgor may request in writing
and as shall be required in connection with any such registration,
qualification or compliance. Such Pledgor will cause the Pledgee to be
kept reasonably advised in writing as to the progress of each such
registration, qualification or compliance and as to the completion thereof,
will furnish to the Pledgee such number of prospectuses, offering circulars
or other documents incident thereto as the Pledgee from time to time may
reasonably request, and will indemnify the Pledgee and all others
participating in the distribution of the Pledged Stock against all claims,
losses, damages and liabilities caused by any untrue statement (or alleged
untrue statement) of a material fact contained therein (or in any related
registration statement, notification or the like) or by any omission (or
alleged omission) to state therein (or in any related registration
statement, notification or the like) a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as the same may have been caused by an untrue statement or omission
based upon information furnished in writing to such Pledgor by the Pledgee
expressly for use therein.
(b) If at any time when the Pledgee shall determine to exercise its
right to sell all or any part of the Pledged Securities pursuant to Section
7, and such Pledged Securities or the part thereof to be sold shall not,
for any reason whatsoever, be effectively registered under the Securities
Act of 1933, as then in effect, the Pledgee may, in its sole and absolute
discretion, sell such Pledged Securities or part thereof by private sale in
such manner and under such circumstances as the Pledgee may deem necessary
or advisable in order that such sale may legally be effected without such
registration. Without limiting the generality of the foregoing, in any
such event the Pledgee, in its sole and absolute discretion: (i) may
proceed to make such private sale notwithstanding that a registration
statement for the purpose of registering such Pledged Securities or part
thereof shall have been filed under such Securities Act; (ii) may approach
and negotiate with a single possible purchaser to effect such sale; and
(iii) may restrict such sale to a purchaser who will represent and agree
that such purchaser is purchasing for its own account, for investment, and
not with a view to the distribution or sale of such Pledged Securities or
part thereof. In the event of any such sale, the Pledgee shall incur no
responsibility or liability for selling all or any part of the Pledged
Securities at a price which the Pledgee, in its sole and absolute
discretion, may in good faith deem reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might be
realized if the sale were deferred until after registration as aforesaid.
18. TERMINATION, RELEASE. (a) After the Termination Date (as
defined below), this Agreement shall terminate (provided that all
indemnities set forth herein including, without limitation, in Section 11
hereof shall survive any such termination) and the Pledgee, at the request
and expense of the respective Pledgor, will promptly execute and deliver to
such Pledgor a proper instrument or instruments acknowledging the
satisfaction and termination of this Agreement, and will duly assign,
transfer and deliver to such Pledgor (without recourse and without any
representation or warranty) such of the Collateral as may be in the
possession of the Pledgee and as has not theretofore been sold or otherwise
applied or released pursuant to this Agreement. As used in this Agreement,
"Termination Date" shall mean the date upon which the Total Commitment and
all Interest Rate Protection Agreements or Other Hedging Agreements have
been terminated, no Note is outstanding (and all Loans have been paid in
full), all Letters of Credit have been terminated, and all other
Obligations then owing have been paid in full.
(b) In the event that any part of the Collateral is sold (x) at any
time prior to the time at which all Credit Document Obligations have been
paid in full and all Commitments under the Credit Agreement have been
terminated, in connection with a sale permitted by Section 9.02 of the
Credit Agreement or is otherwise released at the direction of the Required
Banks (or all the Banks if required by Section 13.12 of the Credit
Agreement) or (y) at any time thereafter, to the extent permitted by the
other Secured Debt Agreements, and in the case of clause (x) and (y), and
the proceeds of such sale or sales or from such release are applied in
accordance with the terms of the Credit Agreement or such other Secured
Debt Agreement, as the case may be, to the extent required to be so
applied, the Pledgee, at the request and expense of such Pledgor will duly
assign, transfer and deliver to such Pledgor (without recourse and without
any representation or warranty) such of the Collateral as is then being (or
has been) so sold or released and as may be in possession of the Pledgee
and has not theretofore been released pursuant to this Agreement.
(c) At any time that a Pledgor desires that Collateral be released
as provided in the foregoing Section 18(a) or (b), it shall deliver to the
Pledgee a certificate signed by its chief financial officer or another
Authorized Officer stating that the release of the respective Collateral is
permitted pursuant to Section 18(a) or (b). If requested by the Pledgee
(although the Pledgee shall have no obligation to make any such request),
the relevant Pledgor shall furnish appropriate legal opinions (from
counsel, which may be in-house counsel, reasonably acceptable to the
Pledgee) to the effect set forth in the immediately preceding sentence.
The Pledgee shall have no liability whatsoever to any Secured Creditor as
the result of any release of Collateral by it as permitted by this Section
18.
19. NOTICES, ETC. All notices and other communications hereunder
shall be in writing and shall be delivered or mailed by first class mail,
postage prepaid, addressed:
(a) if to any Pledgor, at its address set forth opposite its
signature below;
(b) if to the Pledgee, at:
Bankers Trust Company
One Bankers Trust Plaza
New York, New York 10006
Attention: Mary Kay Coyle
Telephone No.: (212) 250-2500
Facsimile No.: (212) 250-7200
(c) if to any Bank (other than the Pledgee), at such address as such
Bank shall have specified in the Credit Agreement; and
(d) if to any Other Creditor, at such address as such Other Creditor
shall have specified in writing to each Pledgor and the Pledgee;
or at such other address as shall have been furnished in writing by any
Person described above to the party required to give notice hereunder.
20. WAIVER; AMENDMENT. None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by each Pledgor directly and
adversely affected thereby and the Pledgee (with the written consent of (x)
the Required Banks (or all the Banks if required by Section 13.12 of the
Credit Agreement) at all times prior to the time at which all Credit
Document Obligations have been paid in full and all Commitments under the
Credit Agreement have been terminated, and (y) the holders of at least a
majority of the outstanding Other Obligations at all times after the time
on which all Credit Document Obligations have been paid in full and all
Commitments under the Credit Agreement have been terminated; provided, that
any change, waiver, modification or variance affecting the rights and
benefits of a single Class (as defined below) of Secured Creditors (and not
all Secured Creditors in a like or similar manner) shall require the
written consent of the Requisite Creditors (as defined below) of such
Class. For the purpose of this Agreement, the term "Class" shall mean each
class of Secured Creditors, i.e., whether (i) the Bank Creditors as holders
of the Credit Document Obligations or (ii) the Other Creditors as holders
of the Other Obligations. For the purpose of this Agreement, the term
"Requisite Creditors" of any Class shall mean each of (i) with respect to
the Credit Document Obligations, the Required Banks and (ii) with respect
to the Other Obligations, the holders of at least a majority of all
obligations outstanding from time to time under the Interest Rate
Protection Agreements or Other Hedging Agreements.
21. MISCELLANEOUS. This Agreement shall create a continuing
security interest in the Collateral and shall (i) remain in full force and
effect, subject to release and/or termination as set forth in Section 18,
(ii) be binding upon each Pledgor, its successors and assigns; provided,
however, that no Pledgor shall assign any of its rights or obligations
hereunder without the prior written consent of the Pledgee (and the prior
written consent of the Required Banks or, to the extent required by Section
13.12 of the Credit Agreement, each of the Banks), and (iii) inure,
together with the rights and remedies of the Pledgee hereunder, to the
benefit of the Pledgee, the Secured Creditors and their respective
successors, transferees and assigns. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK. The
headings of the several sections and subsections in this Agreement are for
purposes of reference only and shall not limit or define the meaning
hereof. This Agreement may be executed in any number of counterparts, each
of which shall be an original, but all of which together shall constitute
one instrument. In the event that any provision of this Agreement shall
prove to be invalid or unenforceable, such provision shall be deemed to be
severable from the other provisions of this Agreement which shall remain
binding on all parties hereto.
22. RECOURSE. This Agreement is made with full recourse to the
Pledgors and pursuant to and upon all the representations, warranties,
covenants and agreements on the part of the Pledgors contained herein and
in the other Secured Debt Agreements and otherwise in writing in connection
herewith or therewith.
23. ADDITIONAL PLEDGORS. It is understood and agreed that any
Subsidiary of the Borrower that is required to execute a counterpart of
this Agreement after the date hereof pursuant to the Credit Agreement shall
automatically become a Pledgor hereunder by executing a counterpart hereof
and delivering the same to the Pledgee.
24. LIMITED OBLIGATIONS. It is the desire and intent of each
Pledgor and the Secured Creditors that this Agreement shall be enforced
against each Pledgor to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which enforcement is
sought. Notwithstanding anything to the contrary contained herein, in
furtherance of the foregoing, it is noted that the obligations of each
Pledgor constituting a Subsidiary Guarantor have been limited as provided
in its respective Guaranty.
IN WITNESS WHEREOF, each Pledgor and the Pledgee have caused this
Agreement to be executed by their duly elected officers duly authorized as
of the date first above written.
Address:
1751 Lake Cook Road, Suite 550 MOTORS AND GEARS INDUSTRIES, INC., as a
Deerfield, Illinois 60015 Pledgor
Attention: Thomas C. Spielberger
Telephone: (847) 267-4430
Facsimile: (847) 945-9645 By /s/ Jonathan F. Boucher
Title: Vice President
with copies to:
Jonathan F. Boucher
The Jordan Company
9 West 57th Street, 40th Floor
New York, New York 10019
and
James B. Carlson
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
1776 Winthrop Drive MERKLE-KORFF INDUSTRIES, INC.
Des Plaines, IL 60018
By /s/ Jonathan F. Boucher
Title: Vice President
1776 Winthrop Drive BCM HOLDINGS, INC.
Des Plaines, IL 60018
By /s/ Jonathan F. Boucher
Title: Vice President
84 Ira Avenue THE NEW IMPERIAL ELECTRIC COMPANY
Akron, OH 44309
By /s/ Jonathan F. Boucher
Title: Vice President
1117 LaVelle Road THE NEW SCOTT MOTORS COMPANY
Alamagordo, MN 88310
By /s/ Jonathan F. Boucher
Title: Vice President
4329 Eastern Avenue, S.E. NEW GEAR RESEARCH, INC.,
Grand Rapids, MI 49508
By /s/ Jonathan F. Boucher
Title: Vice President
Accepted and Agreed to:
BANKERS TRUST COMPANY,
as Agent for the Banks
By /s/ Patricia Hogan
Title: Vice President
<PAGE>
EXHIBIT 10.6
REVOLVING NOTE
--------------
U.S. $75,000,000 New York, New York
November 7, 1996
FOR VALUE RECEIVED, MOTORS AND GEARS INDUSTRIES, INC., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of
BANKERS TRUST COMPANY (the "Bank"), in lawful money of the United States of
America in immediately available funds, at the Payment Office (as defined
in the Agreement) initially located at 130 Liberty Street, New York, New
York 10006 on the Final Maturity Date (as defined in the Agreement) the
principal sum of SEVENTY-FIVE MILLION DOLLARS or, if less, the unpaid
principal amount of all Revolving Loans (as defined in the Agreement) made
by the Bank pursuant to the Agreement, payable at such times and in such
amounts as are specified in the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount of each Revolving Loan made by the Bank in like money at said office
from the date hereof until paid at the rates and at the times provided in
Section 1.08 of the Agreement.
This Note is one of the Revolving Notes referred to in the Credit
Agreement, dated as of November 7, 1996, among the Borrower, the financial
institutions from time to time party thereto (including the Bank) and
Bankers Trust Company, as Agent (as amended, modified or supplemented from
time to time, the "Agreement") and is entitled to the benefits thereof and
of the other Credit Documents (as defined in the Agreement). This Note is
secured by the Security Documents (as defined in the Agreement) and is
entitled to the benefits of the Guaranties (as defined in the Agreement).
As provided in the Agreement, this Note is subject to voluntary prepayment
and mandatory repayment prior to the Final Maturity Date, in whole or in
part, and Revolving Loans may be converted from one Type (as defined in the
Agreement) into another Type to the extent provided in the Agreement.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may
be declared to be due and payable in the manner and with the effect
provided in the Agreement.
The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
MOTORS AND GEARS INDUSTRIES, INC.
By /s/ Jonathan F. Boucher
Title: Vice President
<PAGE>
EXHIBIT 10.7
TJC MANAGEMENT CONSULTING AGREEMENT
THIS TJC MANAGEMENT CONSULTING AGREEMENT (this "Agreement") is
executed as of the 7th day of November, 1996 by and among TJC MANAGEMENT
CORPORATION, a Delaware corporation (the "Consultant") and MOTORS AND GEARS
HOLDINGS, INC., a Delaware corporation, MOTORS AND GEARS, INC., a Delaware
corporation, MOTORS AND GEARS INDUSTRIES, INC., a Delaware corporation,
MERKLE-KORFF INDUSTRIES, INC., an Illinois corporation, BCM HOLDINGS, INC.,
an Illinois corporation, THE NEW IMPERIAL ELECTRIC COMPANY, a Delaware
corporation, THE NEW SCOTT MOTORS COMPANY, a Delaware corporation, and NEW
GEAR RESEARCH, INC., a Delaware corporation (each individually and
collectively referred to herein as the "Company").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Consultant has and/or, has access to personnel who are
highly skilled in the field of rendering advice to businesses and financial
advice to the Company;
WHEREAS, the Board of Directors of the Company has been made fully
aware of the relationships of certain members of the Company's Board of
Directors to the Consultant;
WHEREAS, the Company's Board of Directors has reviewed in detail and
discussed the terms and provisions of this Agreement and the fairness of
this Agreement and whether more favorable agreements for the Company could
be obtained from unaffiliated third parties; and
WHEREAS, on the basis of its review of this Agreement, the Board of
Directors of the Company deemed it advisable and in the best interests of
the Company and necessary to the conduct, promotion, and attainment of the
business objectives of the Company that the Company retain Consultant to
provide business and financial advice to the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein set forth, the parties hereto do hereby
agree as follows:
1. The Company hereby retains the Consultant, through the
Consultant's own personnel or through personnel available to the
Consultant, to render consulting services from time to time to the Company
and its direct and indirect subsidiaries (whether now existing or hereafter
acquired) in connection with their financial and business affairs, their
relationships with their lenders, stockholders and other third-party
associates or affiliates, and the expansion of their businesses.
Consultant shall render such services to the Company and/or its direct and
indirect subsidiaries in good faith and in accordance with professional
standards and applicable law. The term of this Agreement shall commence
the date hereof and continue until November 7, 2006, unless extended, or
sooner terminated, as provided in paragraph 5 below. The Consultant's
personnel shall be reasonably available to the Company's managers, auditors
and other personnel for consultation and advice, subject to Consultant's
reasonable convenience and scheduling. Services may be rendered at the
Consultant's offices or at such other locations selected by the Consultant
as the Company and the Consultant shall from time to time agree.
2. a. Subject to Section 4 hereof, the Company shall pay to the
Consultant, (i) an investment banking and sponsorship fee of up to two
percent (2%) of the aggregate consideration paid (including
non-competition, earnout, contingent purchase price, incentive arrangements
and similar payments) (A) by the Company and/or its direct and indirect
subsidiaries in connection with the acquisition by the Company and/or its
direct and indirect subsidiaries of all or substantially all of the
outstanding capital stock, warrants, options or other rights to acquire or
sell capital stock, or all or substantially all of the business or assets
of another individual, corporation, partnership or other business entity or
(B) to the Company in connection with the sale by the Company of all or
substantially all of the Company's and/or its direct and indirect
subsidiaries' outstanding capital stock, warrants, options, or other rights
to acquire or sell stock, or all or substantially all of the business or
assets of the Company and/or its direct and indirect subsidiaries (each of
the transactions described in clauses (A) and (B), a "Transaction"),
including, but not limited to, any Transaction negotiated for the Company
and/or its direct and indirect subsidiaries involving any affiliate of the
Company or the Consultant, including, but not limited to, any Transaction
involving, The Jordan Company, Jordan Industries, Inc. ("Jordan
Industries"), MCIT PLC, Jordan/Zalaznick Capital Company, Leucadia National
Corporation or any affiliates of any of the foregoing (collectively, the
"Jordan Affiliates"); and (ii) a financial consulting fee of up to one
percent (1%) of the amount obtained or made available pursuant to any debt,
equity or other financing (including without limitation, any refinancing)
by the Company and/or its direct and indirect subsidiaries with the
assistance of Consultant, including, but not limited to, any financing
obtained for the Company and/or its direct and indirect subsidiaries from
one or more of the Jordan Affiliates. However, the amount of such fees
payable in each such Transaction will be no less favorable to the Company
than those that could be obtained from comparable, unaffiliated third
parties, and will be subject to separate discussion and approval, in
connection with each such Transaction, by a majority of the directors who
are disinterested directors in relation to Consultant and its affiliates.
Notwithstanding and in addition to the foregoing, if the Consultant renders
services to the Company outside the ordinary course of business, the
Company shall pay an additional amount equal to the value of such
extraordinary services rendered by the Consultant as may be separately
agreed to between the Consultant and the Company.
b. In recognition of the services rendered by the Consultant in
connection with the evaluation, negotiation, financing and closing of the
Company's (i) offering of $170,000,000 aggregate principal amount of Series
A Senior Notes due 2006, (ii) acquisition, through its indirect subsidiary,
New Imperial Electric Company, of all the net business assets of The
Imperial Electric Company, The Scott Motor Company and Gear Research, Inc.
on even date herewith and (iii) new revolving credit facility with Bankers
Trust Company, as agent, and the other lenders thereunder, the Company will
pay Consultant a fee of $2,250,000 and no further fees in connection with
such Transaction pursuant to Section 2a and 2b.
3. The Company shall reimburse Consultant for out-of-pocket expenses
(including, without limitation, an allocable amount of the Consultant's
overhead expenses, as determined by the Consultant in its sole discretion)
incurred by the Consultant and its personnel in performing services
hereunder to the Company and its direct and indirect subsidiaries which
shall be promptly reimbursed to it by the Company upon the Consultant's
rendering of a statement therefor, together with supporting data as the
Company shall reasonably require.
4. Notwithstanding the foregoing, the Company shall not be required
to pay the fees under Section 2, (a) if and to the extent expressly
prohibited by the provisions of any credit, stock, financing or other
agreements or instruments binding upon the Company and/or its direct and
indirect subsidiaries or properties, (b) if the Company has not paid
interest on any interest payment date or has postponed or not made any
principal payments with respect to any of their indebtedness on any
scheduled payment dates, or (c) if the Company has not paid dividends on
any dividend payment date as set forth in its certificate of incorporation
or as declared by its Board of Directors, or has postponed or not made any
redemptions on any redemption date as set forth in its certificate of
incorporation or any certificate of designation with respect to its
preferred stock, if any. Any payments otherwise owed hereunder, which are
not made for any of the above-mentioned reasons, shall not be cancelled but
rather accrue, and shall be payable by the Company promptly when, and to
the extent, that the Company is no longer prohibited from making such
payments and when the Company has become current with respect to such
principal or interest payments, has become current with respect to such
dividends and has made such redemptions with respect to such preferred
stock, if any. Any payment required hereunder which is not paid when due
shall bear interest at the rate of ten percent (12.75%) per annum. This
Section 4 shall not, in any event, restrict or limit the Company's
obligations under Sections 3, 8 and 9, which will be absolute and not
subject to set-off but will not include fees and third party operating
expenses.
5. This Agreement shall be automatically renewed for successive
one-year terms starting on the tenth anniversary of the date hereof unless
either party hereto, within sixty (60) days prior to the scheduled renewal
date, notifies the other party as to its election to terminate this
Agreement. Notwithstanding the foregoing, this Agreement may be terminated
by not less than ninety (90) days' prior written notice from the Company to
the Consultant at any time after (i) substantially all of the stock or
substantially all of the assets of the Company are sold to an entity
unaffiliated with the Consultant and/or a majority of the Company's
stockholders immediately prior to such sale, (ii) the Company is merged or
consolidated into another entity unaffiliated with the Consultant and/or a
majority of the Company's stockholders immediately prior to such merger and
the Company is not the survivor of such transaction or (iii) a public
offering of the voting securities of the Company has commenced,
6. The Consultant shall have no liability to the Company on account
of (i) any advice which it renders to the Company or any of its direct or
indirect subsidiaries, provided the Consultant believed in good faith that
such advice was useful or beneficial to the Company or any of its direct or
indirect subsidiaries at the time it was rendered, or (ii) the Consultant's
inability to obtain financing or achieve other results desired by the
Company (or any of its direct or indirect subsidiaries) or Consultant's
failure to render services to the Company or any of its direct or indirect
subsidiaries at any particular time or from time to time, or (iii) the
failure of any Transaction to meet the financial, operating, or other
expectations of the Company or any of its direct or indirect subsidiaries.
The Company's and any of its direct or indirect subsidiaries' sole remedy
for any claim under this Agreement shall be termination of this Agreement.
7. Notwithstanding anything contained in this Agreement to the
contrary, the Company acknowledges and agrees for itself and on behalf of
its direct and indirect subsidiaries that the Consultant, the Jordan
Affiliates and their shareholders, employees, directors and affiliates
intend to engage and participate in acquisitions and business transactions
outside of the scope of the relationship created by this Agreement and
neither the Consultant, any of the Jordan Affiliates nor any of their
shareholders, employees, directors or affiliates shall be under any
obligation whatsoever to make such acquisitions or business transactions
through the Company or any of its direct or indirect subsidiaries or offer
such acquisitions or business transactions to the Company or any of its
direct or indirect subsidiaries.
8. The Company will, and will cause each of its direct and indirect
subsidiaries to, indemnify and hold harmless to the fullest extent
permitted by applicable law the Consultant, its affiliates and associates,
each of the Jordan Affiliates, and each of the respective owners, partners,
officers, directors, employees and agents of each of the foregoing, from
and against any loss, liability, damage, claim or expenses (including the
fees and expenses of counsel) arising as a result or in connection with
this Agreement, the Consultant's services hereunder or other activities on
behalf of the Company and its direct and indirect subsidiaries.
9. Any payments paid by the Company under this Agreement shall not
be subject to set-off and shall be increased by the amount, if any, of any
taxes (other than income taxes) or other governmental charges levied in
respect of such payments, so that the Consultant is made whole for such
taxes or charges.
10. a. This Agreement sets forth the entire understanding of the
parties with respect to the Consultant's rendering of services to the
Company. This Agreement may not be modified, waived, terminated or amended
except expressly by an instrument in writing signed by the Consultant and
the Company.
b. This Agreement may be assigned by either party hereto without the
consent of the other party; provided, however, such assignment shall not
relieve such party from its obligations hereunder. Any assignment of this
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns. In furtherance and not in
limitation of the foregoing, the Company acknowledges and agrees that the
Consultant may assign at its sole discretion its right to receive any
payment or portion of any payment required hereunder to Jordan Industries;
provided, that the Consultant provides written confirmation to the Company
that the Consultant and the Board of Directors of Jordan Industries agree
to such payment assignment.
c. In the event that any provision of this Agreement shall be held
to be void or unenforceable in whole or in part, the remaining provisions
of this Agreement and the remaining portion of any provision held void or
unenforceable in part shall continue in full force and effect.
d. Except as otherwise specifically provided herein, notice given
hereunder shall be deemed sufficient if delivered personally or sent by
registered or certified mail to the address of the party for whom intended
at the principal executive offices of such party, or at such other address
as such party may hereinafter specify by written notice to the other party.
e. To the extent not expressly prohibited by the provisions of any
credit, stock, financing or other agreements or instruments binding upon
the Company and its direct and indirect subsidiaries, each direct and
indirect subsidiary of the Company shall be jointly and severally liable
and obligated hereunder with respect to each obligation, responsibility and
liability of the Company, as if a direct obligation of such subsidiary.
f. No waiver by either party of any breach of any provision of this
Agreement shall be deemed a continuing waiver or a waiver of any preceding
or succeeding breach of such provision or of any other provision herein
contained.
g. The Consultant and its personnel shall, for purposes of this
Agreement, be independent contractors with respect to the Company.
h. Except as provided by that certain Termination Agreement, of even
date herewith, by and among certain of the parties hereto, this Agreement
sets forth the entire understanding of the Company and the Consultant, and
supersedes all prior agreements, arrangements and communications, whether
oral or written, with respect to the subject matter hereof.
i. If at any time after the date upon which this Agreement is
executed, the Company acquires or creates one or more subsidiary
corporations (a "Subsequent Subsidiary"), the Company shall cause such
Subsequent Subsidiary to be subject to this Agreement and all references
herein to the Company's "direct and indirect subsidiaries" shall be
interpreted to include all Subsequent Subsidiaries.
j. This Agreement shall be governed by the internal laws (and not
the law of conflicts) of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
TJC MANAGEMENT CORPORATION
By: /s/ Jonathan F. Boucher
-----------------------------
Name: Jonathan F. Boucher
Title: Vice President
MOTORS AND GEARS HOLDINGS, INC.
By: /s/ Jonathan F. Boucher
-----------------------------
Name: Jonathan F. Boucher
Title: Vice President
MOTORS AND GEARS, INC.
By: /s/ Jonathan F. Boucher
------------------------------
Name: Jonathan F. Boucher
Title: Vice President
MOTORS AND GEARS INDUSTRIES, INC.
By: /s/ Jonathan F. Boucher
-----------------------------
Name: Jonathan F. Boucher
Title: Vice President
MERKLE-KORFF INDUSTRIES, INC.
By: /s/ Jonathan F. Boucher
-----------------------------
Name: Jonathan F. Boucher
Title: Vice President
BCM HOLDINGS, INC.
By: /s/ Jonathan F. Boucher
-----------------------------
Name: Jonathan F. Boucher
Title: Vice President
THE NEW IMPERIAL ELECTRIC COMPANY
By: /s/ Jonathan F. Boucher
-----------------------------
Name: Jonathan F. Boucher
Title: Vice President
THE NEW SCOTT MOTORS COMPANY
By: /s/ Jonathan F. Boucher
-----------------------------
Name: Jonathan F. Boucher
Title: Vice President
NEW GEAR RESEARCH, INC.
By: /s/ Jonathan F. Boucher
------------------------------
Name: Jonathan F. Boucher
Title: Vice President
<PAGE>
EXHIBIT 10.8
JII MANAGEMENT SERVICES AGREEMENT
THIS JII MANAGEMENT SERVICES AGREEMENT (this "Agreement"), is
executed as of the 7th day of November, 1996, by and among JORDAN
INDUSTRIES, INC., an Illinois corporation (the "Consultant"), and MOTORS
AND GEARS HOLDINGS, INC., a Delaware corporation ("Holdings"), MOTORS AND
GEARS, INC., a Delaware corporation, MOTORS AND GEARS INDUSTRIES, INC., a
Delaware corporation, MERKLE-KORFF INDUSTRIES, INC., an Illinois
corporation, BCM HOLDINGS, INC., an Illinois corporation, THE NEW IMPERIAL
ELECTRIC COMPANY, a Delaware corporation, THE NEW SCOTT MOTORS COMPANY, a
Delaware corporation, and NEW GEAR RESEARCH, INC., a Delaware corporation
(each individually and collectively referred to herein as the "Companies").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Consultant has and/or, has access to personnel who are
highly skilled in the field of rendering advice to businesses and financial
advice to the Companies;
WHEREAS, the Boards of Directors of the Companies have been made
fully aware of the relationships of certain members of the Companies' Board
of Directors to the Consultant;
WHEREAS, the Companies' Boards of Directors have reviewed in detail
and discussed the terms and provisions of this Agreement and the fairness
of this Agreement and whether more favorable agreements for the Companies
could be obtained from unaffiliated third parties; and
WHEREAS, on the basis of their review of this Agreement, the Boards
of Directors of the Companies deemed it advisable and in the best interests
of the Companies and necessary to the conduct, promotion, and attainment of
the business objectives of the Companies that the Companies retain
Consultant to provide business and financial advice to the Companies.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein set forth, the parties hereto do hereby
agree as follows:
1. The Companies hereby retain the Consultant, through the
Consultant's own personnel or through personnel available to the
Consultant, to make certain management and advisory services available from
time to time to the Companies and their direct and indirect subsidiaries
(whether now existing or hereafter acquired), including the resources of
its acquisition, business development and international expansion and
accounting staffs. Consultant shall render such services to the Companies
and their direct and indirect subsidiaries in good faith and in accordance
with professional standards and applicable law. The term of this Agreement
shall commence the date hereof and continue until November 7, 2006, unless
extended, or sooner terminated, as provided in paragraph 4 below. The
Consultant's personnel shall be reasonably available to the Companies'
managers, auditors and other personnel for consultation and advice, subject
to Consultant's reasonable convenience and scheduling. Services may be
rendered at the Consultant's offices or at such other locations selected by
the Consultant as the Companies and the Consultant shall from time to time
agree.
2. Subject to the terms and restrictions, if any, in the Companies'
credit, debt and financing agreements, the Companies agree to pay the
Consultant a quarterly fee equal to one percent (1%) of the Companies' and
their direct and indirect subsidiaries' net sales, without duplication,
during the preceding calendar quarter, payable on the 30th day of March,
June, September and December of each year, starting with a pro-rata payment
on December 31, 1996 for the period from the date hereof through December
31, 1996.
3. Subject to the terms and restrictions, if any, in the Companies'
credit, debt and financing agreements, any payment required hereunder which
is not paid when due shall bear interest at the rate of twelve and three
quarters percent (12.75%) per annum.
4. The Companies shall reimburse the Consultant for out-of-pocket
expenses (including, without limitation, an allocable amount of the
Consultant's overhead expenses, as determined by the Consultant in its sole
discretion) incurred by the Consultant and its personnel in performing
services hereunder to the Companies and their direct and indirect
subsidiaries which shall be promptly reimbursed to it by the Companies upon
the Consultant's rendering of a statement therefor, together with
supporting data as the Companies shall reasonably require.
5. This Agreement shall be automatically renewed for successive
one-year terms starting on the tenth anniversary of the date hereof unless
either party hereto, within sixty (60) days prior to the scheduled renewal
date, notifies the other party as to its election to terminate this
Agreement. Notwithstanding the foregoing, this Agreement may be terminated
by not less than ninety (90) days' prior written notice from the Companies
to the Consultant at any time after (i) substantially all of the stock or
substantially all of the assets of the Companies are sold to an entity
unaffiliated with the Consultant and/or a majority of the Companies'
stockholders immediately prior to such sale, (ii) the Companies are merged
or consolidated into another entity unaffiliated with the Consultant and/or
a majority of the Companies' stockholders immediately prior to such merger
and the Companies are not the survivor of such transaction or (iii) a
public offering of the voting securities of the Company has commenced.
6. The Consultant shall have no liability to the Companies or any of
their direct or indirect subsidiaries on account of (i) any advice which it
renders to the Companies or any of their direct or indirect subsidiaries,
provided the Consultant believed in good faith that such advice was useful
or beneficial to the Companies or any of their direct or indirect
subsidiaries at the time it was rendered, or (ii) the Consultant's
inability to obtain results desired by the Companies (or any of their
direct or indirect subsidiaries) or Consultant's failure to render services
to the Companies or any of their direct or indirect subsidiaries at any
particular time or from time to time. The Companies' and their direct and
indirect subsidiary's sole remedy for any claim under this Agreement shall
be termination of this Agreement.
7. Notwithstanding anything contained in this Agreement to the
contrary, the Companies acknowledge and agree for themselves and on behalf
of their direct and indirect subsidiaries that the Consultant and its
shareholders, employees, directors and affiliates intend to engage and
participate in acquisitions and business transactions outside of the scope
of the relationship created by this Agreement and neither the Consultant
nor any of its shareholders, employees, directors or affiliates shall be
under any obligation whatsoever to make such acquisitions or business
transactions through the Companies (or any of their direct or indirect
subsidiaries) or offer such acquisitions or business transactions to the
Companies or any of their direct or indirect subsidiaries.
8. The Companies will, and will cause each of its direct and
indirect subsidiaries to, indemnify and hold harmless to the fullest extent
permitted by applicable law the Consultant, Jordan Industries, Inc.,
Leucadia National Corporation, The Jordan Company, MCIT PLC,
Jordan/Zalaznick Capital Company, TJC Management Corporation and Jordan
Zalaznick Advisers, Inc., and affiliates and associates of each of the
foregoing, and each of their respective owners, partners, officers,
directors, employees and agents, from and against any loss, liability,
damage, claim or expenses (including the fees and expenses of counsel)
arising as a result or in connection with this Agreement, the Consultant's
services hereunder or other activities on behalf of the Companies and any
of their direct and subsidiaries. The above indemnification does not
include fees and third party operating expenses incurred by Consultant in
performing consulting services hereunder.
9. Payments made by the Companies under this Agreement shall not be
subject to set-off and shall be increased by the amount, if any, of any
taxes (other than income taxes) or other governmental charges levied in
respect of such payments, so that the Consultant is made whole for such
taxes or charges.
10. a. This Agreement sets forth the entire understanding of the
parties with respect to the Consultant's rendering of services to the
Companies. This Agreement may not be modified, waived, terminated or
amended except expressly by an instrument in writing signed by the
Consultant and the Companies.
b. This Agreement may not be assigned by the Companies without the
consent of the Consultant, but may be assigned by the Consultant to any
affiliate of the Consultant, as the term "affiliate" is defined in Rule
144(a) promulgated under the Securities Act of 1933, as amended. Any
permitted assignment of this Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and assigns.
c. In the event that any provision of this Agreement shall be held
to be void or unenforceable in whole or in part, the remaining provisions
of this Agreement and the remaining portion of any provision held void or
unenforceable in part shall continue in full force and effect.
d. Except as otherwise specifically provided herein, notice given
hereunder shall be deemed sufficient if delivered personally or sent by
registered or certified mail to the address of the party for whom intended
at the principal executive offices of such party, or at such other address
as such party may hereinafter specify by written notice to the other party.
e. To the extent not expressly prohibited by the provisions of any
credit, stock, financing or other agreements or instruments binding upon
the Companies and their direct and indirect subsidiaries, each direct and
indirect subsidiary of the Companies shall be jointly and severally liable
and obligated hereunder with respect to each obligation, responsibility and
liability of the Companies, as if a direct obligation of such subsidiary.
f. No waiver by either party of any breach of any provision of this
Agreement shall be deemed a continuing waiver or a waiver of any preceding
or succeeding breach of such provision or of any other provision
hereinafter contained.
g. The Consultant and its personnel shall, for purposes of this
Agreement, be independent contractors with respect to the Companies.
h. Except as provided by that certain Termination Agreement, of even
date herewith, by and among certain of the parties hereto, this Agreement
sets forth the entire understanding of the Companies and the Consultant,
and supersedes all prior agreements, arrangements and communications,
whether oral or written, with respect to the subject matter hereof.
i. If at any time after the date upon which this Agreement is
executed, any of the Companies acquire or create one or more subsidiary
corporations (a "Subsequent Subsidiary"), the Companies shall cause such
Subsequent Subsidiary to be subject to this Agreement and all references
herein to the Companies' "direct and indirect subsidiaries" shall be
interpreted to include all Subsequent Subsidiaries.
j. This Agreement shall be governed by the internal laws (and not
the law of conflicts) of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
JORDAN INDUSTRIES, INC.
By: /s/ Jonathan F. Boucher
------------------------------
Name: Jonathan F. Boucher
Title: Vice President-Chief Financial Officer
MOTORS AND GEARS HOLDINGS, INC.
By: /s/ Jonathan F. Boucher
------------------------------
Name: Jonathan F. Boucher
Title: Vice President
MOTORS AND GEARS, INC.
By: /s/ Jonathan F. Boucher
------------------------------
Name: Jonathan F. Boucher
Title: Vice President
MOTORS AND GEARS INDUSTRIES, INC.
By: /s/ Jonathan F. Boucher
------------------------------
Name: Jonathan F. Boucher
Title: Vice President
BCM HOLDINGS, INC.
By: /s/ Jonathan F. Boucher
------------------------------
Name: Jonathan F. Boucher
Title: Vice President
THE NEW IMPERIAL ELECTRIC COMPANY
By: /s/ Jonathan F. Boucher
------------------------------
Name: Jonathan F. Boucher
Title: Vice President
THE NEW SCOTT MOTORS COMPANY
By: /s/ Jonathan F. Boucher
------------------------------
Name: Jonathan F. Boucher
Title: Vice President
NEW GEAR RESEARCH, INC.
By: /s/ Jonathan F. Boucher
------------------------------
Name: Jonathan F. Boucher
Title: Vice President
MERKLE-KORFF INDUSTRIES, INC.
By: /s/ Jonathan F. Boucher
------------------------------
Name: Jonathan F. Boucher
Title: Vice President
<PAGE>
EXHIBIT 99
FOR IMMEDIATE RELEASE
For Further Information Contact:
Thomas C. Spielberger
Jordan Industries, Inc.
1751 Lake Cook Road, Suite 550
Deerfield, Illinois 60015
Telephone: (847) 945-5591
November 7, 1996 -- Jordan Industries, Inc. ("JII") announced today that
its subsidiary, Motors and Gears, Inc. ("Motors and Gears"), has completed
its offering of $170.0 million aggregate principal amount of Series A
Senior Notes due 2006. The aggregate principal amount of the offering was
increased from an original $150.0 million to $170.0 million, and the Senior
Notes were priced at par to yield 10 % per annum.
The Senior Notes were sold pursuant to a private placement to certain
initial purchasers who, in turn, offered the Senior Notes to qualified
institutional buyers and certain accredited investors. Motors and Gears is
a "non-restricted" subsidiary of JII and indirectly owns Merkle-Korff
Industries, Inc. and Barber Colman Motors Company which are also
"non-restricted" subsidiaries of JII. In connection with the issuance of
the Senior Notes, Motors and Gears acquired the businesses and net assets
of JII's "restricted" subsidiaries, Imperial Electric Company, Scott Motors
Company and Gear Research, Inc. for $75.0 million in cash, the assumption
of and/or refinancing of approximately $5.1 million in liabilities and a
contingent earnout agreement.
Motors and Gears used the proceeds of the issuance of the Senior Notes to:
(i) fund the cash portion of the purchase price payable by Motors and Gears
in connection with its acquisition of the businesses and net assets of
Imperial Electric Company, Scott Motor Company and Gear Research, Inc. from
JII and (ii) repay certain indebtedness under Merkle-Korff's existing
credit agreement. In connection with the issuance of the Senior Notes,
Merkle-Korff refinanced its existing credit facility and certain
subsidiaries of Motors and Gears entered into a new revolving credit
facility providing for revolving loans of up to $75.0 million.
JII applied the net proceeds received from Motors and Gears to repay senior
indebtedness.
The Senior Notes were not registered under the Securities Act of 1933, as
amended, and may not be offered or sold in the United States absent
registration or an applicable exemption from the registration requirements
of the Securities Act of 1933, as amended. This press release shall not
constitute an offer or the solicitation of an offer to buy nor shall there
be any sale of Senior Notes in any State in which such offer, solicitation
or sale would be unlawful prior to registration or qualification under the
securities laws of any State.
Motors and Gears is a leading domestic manufacturer of specialty purpose
electric motors, gearmotors, gearboxes and gears for a wide variety of
consumer, commercial and industrial markets.
JII is a private holding company which owns and manages a diversified group
of operating companies.
Jordan Industries, Inc.
