As filed with the Securities and Exchange Commission on September 11, 1998.
Registration No. 333-60209
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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Amendment No. 1
to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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BE AEROSPACE, INC.
(Exact name of registrant as specified in its charter)
Delaware 06-1209796
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1400 Corporate Center Way, Wellington, Florida 33414 (561) 791-5000
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Edmund J. Moriarty, Esq.
General Counsel
1400 Corporate Center Way
Wellington, FL 33414
(561) 791-5000 / (561) 791-3966 (fax)
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies of all communications to:
Rohan S. Weerasinghe, Esq. Winthrop G. Minot, Esq.
Shearman & Sterling Ropes & Gray
599 Lexington Avenue One International Place
New York, New York 10022 Boston, Massachusetts 02110
(212) 848-4000 / (212) 848-7179 (fax) (617) 951-7000/(617) 951-7050 (fax)
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Approximate date of commencement of proposed sale to the public: From time
to time or at one time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933 (the "Securities Act") other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
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The registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED September 11, 1998
5,166,675 Shares
[Logo] BE AEROSPACE, INC.
Common Stock
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All of the shares (the "Shares") of Common Stock of BE Aerospace, Inc.,
a Delaware corporation ("B/E" or the "Company"), par value $.01 per share (the
"Common Stock"), offered hereby are being offered by certain stockholders listed
herein (collectively, the "Selling Stockholders"), who may from time to time
offer for sale shares of the Common Stock. The Selling Stockholders received
such shares in connection with the acquisitions of either ASI, ALC or SMR (each
as defined herein). Except as provided by the SMR Acquisition Agreement (as
defined herein), the Company will not receive any proceeds from the sale by the
Selling Stockholders of the Shares. See "Selling Stockholders."
The Selling Stockholders have advised the Company that the Shares of
Common Stock offered hereby may be offered or sold by or for the account of such
Selling Stockholders, from time to time, to purchasers directly, or through
brokers in brokerage transactions on the Nasdaq National Market, or to
underwriters or dealers in negotiated transactions or in a combination of such
methods of sale, at fixed prices which may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. From time to time the Selling Stockholders may
engage in short sales, puts and calls and other transactions in securities of
the Company, or derivatives thereof, and may sell and deliver the Shares in
connection therewith. Brokers, dealers and underwriters that participate in the
distribution of the Common Stock offered hereby may be deemed to be underwriters
under the Securities Act of 1933 as amended, and together with the rules and
regulations thereunder (the "Securities Act"), and any discounts or commissions
received by them from the Selling Stockholders and any profit on the resale of
the Common Stock offered hereby by them may be deemed to be underwriting
discounts and commissions under the Securities Act. The Selling Stockholders may
be deemed to be underwriters under the Securities Act. The Company will bear all
expenses in connection with the offering made hereunder, other than, in the case
of the Selling Stockholders who received their shares in connection with the
acquisitions of ASI or ALC, all applicable stock transfer taxes, brokerage
commissions, underwriting discounts or commissions and fees of such Selling
Stockholders' counsel which will be paid by such Selling Stockholders, pursuant
to the relevant Merger Agreements (as defined herein). The Company has agreed to
indemnify the Selling Stockholders against certain liabilities, including
certain liabilities under the Securities Act, in connection with the
registration and the offering and sale of the Common Stock offered hereby. See
"Plan of Distribution."
The Common Stock is listed on the Nasdaq National Market ("Nasdaq")
under the symbol "BEAV." On September 10, 1998, the last reported sale price of
the Common Stock was $22.75 per share.
If necessary, certain information relating to the Selling Stockholders,
the terms of each sale of Common Stock offered hereby, including the public
offering price, the names of any underwriters or agents, the compensation, if
any, of such underwriters or agents and the other terms in connection with the
sale of the Common Stock, in respect of which this Prospectus is delivered will
be set forth in an accompanying Prospectus Supplement (the "Prospectus
Supplement").
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY
PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED HEREBY, SEE "RISK FACTORS"
BEGINNING ON PAGE 5.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this Prospectus is , 1998.
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No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus or any Prospectus
Supplement and, if given or made, such information or representations must not
be relied upon as having been authorized. This Prospectus and any Prospectus
Supplement does not constitute an offer to sell or the solicitation of an offer
to buy any securities other than the securities to which it relates or an offer
to sell or the solicitation of an offer to buy such securities in any
circumstances in which such offer or solicitation is unlawful. Neither the
delivery of this Prospectus or any Prospectus Supplement nor any sale made
hereunder or thereunder shall, under any circumstances, create any implication
that there has been no change in the affairs of the Company since the date
hereof or thereof or that the information contained herein or therein is correct
as of any time subsequent to the date of such information.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements, and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549; and at the Commission's regional offices at 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center,
13th Floor, New York, New York 10048. Copies of such material can be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. Such material may also be accessed
electronically by means of the Commission's home page on the Internet at
http://www.sec.gov.
The Company has filed with the Commission a registration statement on
Form S-3 (the "Registration Statement") under the Securities Act with respect to
the Common Stock to which this Prospectus relates. This Prospectus does not
contain all the information set forth in the Registration Statement, certain
portions of which have been omitted as permitted by the rules and regulations of
the Commission. For further information with respect to the Company and the
Common Stock, reference is made to the Registration Statement, including the
exhibits thereto. The Registration Statement may be inspected by anyone without
charge at the principal office of the Commission in Washington, D.C., and copies
of all or part of it may be obtained from the Commission upon payment of the
prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed with the Commission
(Commission File No. 000-18348) by the Company are incorporated in this
Prospectus by reference and made a part hereof:
(1) B/E's Annual Report on Form 10-K for the year ended February
28, 1998 (the "1998 10-K"), filed with the Commission on May
29, 1998, as amended by the amendment to the 1998 10-K filed
with the Commission on June 29, 1998.
(2) The Company's Quarterly Report on Form 10-Q for the quarter
ended May 30, 1998, filed with the Commission on July 14,
1998.
(3) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed with the
Commission on March 7, 1990 under Section 12 of the Exchange
Act, including any report or amendment updating such
description.
(4) The Company's Current Reports on Form 8-K filed on April 13,
1998, April 27, 1998, May 8, 1998 and August 24, 1998,
respectively.
All documents subsequently filed by B/E with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and
prior to the termination of the offering of the Common Stock shall be deemed to
be incorporated by reference into this Prospectus and to be a part of this
Prospectus from the date of filing of such document. Any statement contained
herein, or in a document all or a portion of which is incorporated or deemed to
be
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incorporated by reference herein, shall be deemed to be modified or superseded
for purposes of the Registration Statement and this Prospectus to the extent
that a statement contained herein or in any other subsequently filed document
that is also deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of the
Registration Statement or this Prospectus.
This Prospectus incorporates documents by reference which are not
presented herein or delivered herewith. B/E will provide without charge to any
person to whom this Prospectus is delivered, on the written or oral request of
such person, a copy of any or all of the foregoing documents incorporated by
reference, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Written requests
should be directed to: Chief Financial Officer, BE Aerospace, Inc., 1400
Corporate Center Way, Wellington, FL 33414. Telephone requests may be directed
to B/E at (561) 791-5000.
In connection with any underwritten offering of the Shares, the
underwriters and certain persons participating in such offering may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Common Stock, including over-allotment, stabilizing transactions, syndicate
short covering transactions and penalty bids. Such transactions may be effected
on the Nasdaq, in the over-the-counter market or otherwise. Such transactions,
if commenced, may be discontinued at any time.
THE COMPANY
General
B/E is the world's largest manufacturer of commercial and general
aviation aircraft cabin interior products, serving virtually all major airlines
and a wide variety of general aviation customers and airframe manufacturers.
Management believes that the Company has achieved leading global market
positions in each of its major product categories, which include aircraft seats,
food and beverage preparation and storage equipment, galley and other interior
structures, oxygen delivery systems, lighting systems and in-flight
entertainment systems. In addition, B/E provides design, integration,
installation and certification services, offering its customers in-house
capabilities to design, project manage, integrate, test and certify
reconfigurations and modifications to commercial aircraft passenger cabin
interiors and to manufacture related products, including engineering kits and
interface components. B/E also provides upgrade, maintenance and repair services
for its airline customers around the world.
B/E's executive offices are located at 1400 Corporate Center Way,
Wellington, Florida 33414, and its telephone number is (561) 791-5000.
Recent Acquisitions
On March 27, 1998, the Company acquired Aerospace Interiors, Inc.
("ASI") for a total of 201,895 shares of Common Stock, representing a purchase
price of approximately $5.6 million. ASI services, cleans and repairs aircraft
interior parts and products, and is a leading provider of seat repair and
maintenance services performed by non-airline entities. See "Selling
Stockholders."
On April, 14, 1998, the Company acquired Puritan-Bennett Aero Systems
Co. ("PBASCO"), a wholly owned subsidiary of Nellcor Puritan Bennett Inc., for a
cash purchase price of $69.7 million. PBASCO is a leading manufacturer of
commercial aircraft oxygen delivery systems and passenger service unit
components and systems ("PSU") and is a major supplier of air valves, overhead
lights and switches for both commercial and general aviation aircraft.
On April 21, 1998, the Company acquired Aircraft Modular Products
("AMP") for a cash purchase price of $117.3 million. AMP is a leading
manufacturer of cabin interior products for general aviation (business jet) and
commercial-type VIP aircraft, providing a broad line of products including
seating, sidewalls, bulkheads, credenza, closets, galley structures, lavatories,
tables and sofas, as well as related spare parts.
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On July 30, 1998, the Company acquired Aerospace Lighting Corporation
("ALC") for a total of 964,780 shares of Common Stock, representing a purchase
price of approximately $28.1 million. ALC is a market leader in producing
interior fluorescent lighting systems for business and corporate jet aircraft.
See "Selling Stockholders."
On August 7, 1998, the Company acquired the common stock of SMR
Aerospace, Inc., the membership interests of SMR Developers LLC, and the
partnership interests of SMR Associates (together, the "SMR Companies" or "SMR")
for a total aggregate purchase price of approximately $120.0 million, subject to
adjustment (the "SMR Purchase Price"). Pursuant to the SMR Acquisition
Agreement, the Company issued 4,000,000 shares of Common Stock to the SMR
Sellers (as defined herein) and paid the SMR Sellers $2.0 million in cash. The
Company also paid $22.0 million in cash to the employee stock ownership plan
(the "ESOP") of Flight Structures, Inc. ("FSI"), a subsidiary of SMR Aerospace,
Inc., pursuant to a separate Stock Purchase Agreement between the ESOP and B/E,
to purchase the minority equity interest in FSI held by the ESOP, bringing the
total aggregate purchase price paid by B/E for SMR to approximately $142.0
million. To the extent the Net Proceeds (as defined in the SMR Acquisition
Agreement), which include the $2 million in cash already received by the SMR
Sellers, from the sale of the 4,000,000 shares of Common Stock is less than the
SMR Purchase Price, the Company will pay such difference to the SMR Sellers with
funds drawn under the Bank Credit Facility (as defined herein). B/E's
obligations to the SMR Sellers under the SMR Acquisition Agreement are secured
by an irrevocable stand-by letter of credit from The Chase Manhattan Bank in
favor of the SMR Sellers. If such Net Proceeds exceed the SMR Purchase Price,
the SMR Sellers will remit such excess to the Company.
SMR is a leader in providing design, integration, installation and
certification services for commercial aircraft passenger cabin interiors. SMR
provides a broad range of interior reconfiguration services which allow airlines
to change the size of certain classes of service, modify and upgrade the
seating, install telecommunications or entertainment options, relocate galleys,
lavatories, and overhead bins, and install crew rest compartments. SMR is also a
supplier of structural design and integration services, including airframe
modifications for passenger-to-freighter conversions. In addition, SMR provides
a variety of niche products and components that are used to facilitate
reconfigurations and conversions. SMR's services are performed primarily on an
aftermarket basis, and its customers include major airlines, such as United
Airlines, Japan Airlines, British Airways, Air France, Cathay Pacific and
Qantas, as well as Boeing, Airborne Express and Federal Express. See "Selling
Stockholders."
On September 3, 1998, the Company acquired substantially all of the
galley equipment assets and assumed related liabilities of CF Taylor Interiors
Limited and acquired the common stock of CF Taylor (Wales) Limited (collectively
"CF Taylor"), both wholly owned subsidiaries of EIS Group PLC, for a total cash
purchase price of approximately (pound)14.9 million, (approximately $25.1
million, based upon the exchange rate in effect on September 3, 1998). CF Taylor
is a manufacturer of galley equipment for both narrow- and wide-body aircraft,
including galley structures, crew rests and related spare parts.
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RISK FACTORS
Prior to making an investment decision with respect to the Shares of
Common Stock offered hereby, prospective investors should carefully consider the
specific factors set forth below, together with all of the other information
appearing herein, in light of their particular investment objectives and
financial circumstances.
Dependence upon Conditions in the Airline Industry
The Company's principal customers are the world's commercial airlines.
As a result, the Company's business is directly dependent upon the conditions in
the highly cyclical and competitive commercial airline industry. In the late
1980s and early 1990s, the airline industry suffered a severe downturn, which
resulted in record losses and several air carriers seeking protection under
bankruptcy laws. As a consequence, during such period, airlines sought to
conserve cash by reducing or deferring scheduled cabin interior refurbishment
and upgrade programs and by delaying purchases of new aircraft. This led to a
significant contraction in the commercial aircraft cabin interior products
industry and a decline in the Company's business and profitability. The airline
industry has now experienced five consecutive years of profitability including
record profitability in each of the last three calendar years. This financial
turnaround has, in part, been driven by record load factors, rising fare prices
and declining fuel costs. The airlines have substantially restored their balance
sheets through cash generated from operations and debt and equity placements. As
a result, the levels of airline spending on refurbishment and new aircraft
purchases have expanded. However, due to the volatility of the airline industry
there can be no assurance that the current profitability of the airline industry
will continue or that the airlines will maintain or increase expenditures on
cabin interior products for refurbishments or new aircraft.
In addition, the airline industry is undergoing a process of
consolidation and significantly increased competition. Such consolidation could
result in a reduction of future aircraft orders as overlapping routes are
eliminated and airlines seek greater economies through higher aircraft
utilization. Increased airline competition may also result in airlines seeking
to reduce costs by promoting greater price competition from airline cabin
interior products manufacturers, thereby adversely affecting the Company's
revenues and margins.
Recently, turbulence in the financial and currency markets of many
Asian countries has led to uncertainty with respect to the economic outlook for
these countries. Of the Company's $590 million of backlog at May 30, 1998, the
Company had $45 million with Asian carriers deliverable in fiscal 1999 and a
further $76 million deliverable in subsequent fiscal years. Of such Asian
carrier backlog, approximately $36 million was with Japan Airlines, Singapore
Airlines and Cathay Pacific. Although not all carriers have been affected by the
current economic events in the Pacific Rim, certain carriers could cancel or
defer their existing orders and future orders from airlines in these countries
may be adversely affected.
New Product Introductions and Technological Change
Airlines currently are taking delivery of a new generation of aircraft
and demanding increasingly sophisticated cabin interior products. As a result,
the cabin interior configurations of commercial aircraft are becoming more
complex and will require more technologically advanced and integrated products.
For example, airlines increasingly are seeking sophisticated in-flight
entertainment systems, such as the MDDS interactive individual passenger
in-flight entertainment system developed by B/E. The Company expects that
in-flight entertainment systems, including live broadcast television on
narrow-body aircraft, will provide a significant percentage of its future
revenues. Development of the MDDS and related in-flight entertainment systems
required substantial investment by the Company and third parties in research,
development and engineering. The future success of the Company may depend to
some extent on its ability to manufacture successfully and deliver, on a timely
basis, in-flight entertainment products and to have these products perform at
the level expected by B/E's customers and their passengers, as well as the
Company's ability to continue to develop, profitably manufacture and deliver, on
a timely basis, other technologically advanced, reliable high-quality products,
which can be readily integrated into complex cabin interior configurations.
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Competition
The Company competes with a number of established companies that have
significantly greater financial, technological and marketing resources than the
Company. Although the Company has achieved a significant share of the market for
a number of its commercial airline cabin interior products, there can be no
assurance that the Company will be able to maintain this market share. The
ability of the Company to maintain its market share will depend not only on its
ability to remain the supplier of retrofit and refurbishment products and spare
parts on the commercial fleets on which its products are currently in service,
but also on its success in causing its products to be selected for installation
in new aircraft, including next-generation aircraft, expected to be purchased by
the airlines over the next decade, and in avoiding product obsolescence.
The Company's primary competitors in the market for new passenger
entertainment products, including individual seat video and in-flight
entertainment and cabin management systems, are Matsushita Electronics and
Rockwell Collins, each of which has significantly greater technological
capabilities and financial and marketing resources than the Company.
Adverse Consequences of Financial Leverage
The Company has substantial indebtedness and, as a result, significant
debt service obligations. As of May 30, 1998, the Company had approximately
$436.2 million aggregate amount of indebtedness outstanding, representing
approximately 80% of total capitalization. As a result of B/E's acquisition of
the minority equity interest in FSI held by the ESOP, B/E will incur an
additional $22.0 million of indebtedness. The degree of the Company's leverage
could have important consequences to purchasers or holders of its shares of
Common Stock, including: (i) limiting the Company's ability to obtain additional
financing to fund future working capital requirements, capital expenditures,
acquisitions or other general corporate requirements; (ii) requiring a
substantial portion of the Company's cash flow from operations to be dedicated
to debt service requirements, thereby reducing the funds available for
operations and further business opportunities; and (iii) increasing the
Company's vulnerability to adverse economic and industry conditions. In
addition, since any borrowings under the Company's bank credit facilities will
be at variable rates of interest, the Company will be vulnerable to increases in
interest rates. The Company may incur additional indebtedness in the future,
although its ability to do so will be restricted by the indentures governing the
Company's 97/8% Senior Subordinated Notes due 2006 (the "97/8% Notes") and 8%
Senior Subordinated Notes due 2008 (the "8% Notes") and by the terms of its
existing credit facilities with The Chase Manhattan Bank (the "Bank Credit
Facility"). The ability of the Company to make scheduled payments under its
present and future indebtedness will depend on, among other things, the future
operating performance of the Company and the Company's ability to refinance its
indebtedness when necessary. Each of these factors is to a large extent subject
to economic, financial, competitive and other factors beyond the Company's
control.
The Company's bank credit facilities and the indentures governing the
97/8% Notes and 8% Notes contain numerous financial and operating covenants that
will limit the discretion of the Company's management with respect to certain
business matters. These covenants will place significant restrictions on, among
other things, the ability of the Company to incur additional indebtedness, to
create liens or other encumbrances, to make certain payments and investments,
including dividend payments and to sell or otherwise dispose of assets and merge
or consolidate with other entities. The Company's bank credit facilities also
require the Company to meet certain financial ratios and tests. A failure to
comply with the obligations contained in the Company's bank credit facilities,
or the indentures governing the 97/8% Notes and 8% Notes, could result in an
event of default under the Company's Bank Credit Facility, or the aforementioned
indentures, which could permit acceleration of the related debt and acceleration
of debt under other instruments that may contain cross- acceleration or
cross-default provisions.
Customer Delivery Requirements
The commercial aircraft cabin interior products industry is currently
experiencing a period of rapid growth. From February 22, 1997 to May 30, 1998,
the Company has experienced an approximately 42% increase in its backlog. The
ability of the Company to receive new contract awards and to deliver its
existing backlog is dependent upon its (and its suppliers') ability to increase
deliveries to meet the recent surge in demand. Although the Company believes it
has
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sufficient manufacturing capacity to meet customer demand, there can be no
assurance that the Company, or its suppliers, will be able to meet the increased
product delivery requirements.
General Aviation Acquisitions; Ability to Integrate Acquired Businesses;
Additional Capital Requirements
Between 1989 and January 1996, the Company acquired nine companies.
During fiscal 1999, the Company acquired six additional companies, including
ALC, SMR and CF Taylor. Through several recent acquisitions, the Company has
expanded its activities from the commercial to the general aviation market.
There can be no assurance that the Company will be successful in entering the
general aviation market. The Company intends to consider future strategic
acquisitions in the commercial airline and general aviation cabin interior
industries, some of which could be material to the Company. B/E is in
discussions from time to time with one or more third parties regarding possible
acquisitions. As of the date of this Prospectus, except as disclosed herein, the
Company has no agreements or understanding with a prospective acquisition
candidate in respect of a specific transaction. The ability of the Company to
continue to achieve its goals will depend upon its ability to integrate
effectively the recent and any future acquisitions and to achieve cost
efficiencies. Although B/E has been successful in the past in doing so, there
can be no assurance that the Company will continue to be successful. See "The
Company -- Recent Acquisitions."
Depending upon, among other things, the acquisition opportunities
available, the Company may need to raise additional funds. The Company may seek
such additional funds through public offerings or private placements of debt or
equity securities or bank loans. Issuance of additional equity securities by the
Company could result in substantial dilution to stockholders. In the absence of
such financing, the Company's ability to make future acquisitions in accordance
with its business strategy, to absorb adverse operating results, to fund capital
expenditures or to respond to changing business and economic conditions may be
adversely affected, all of which may have a material adverse effect on the
Company's business, results of operations and financial condition.
Regulation
The Federal Aviation Administration (the "FAA") prescribes standards
and licensing requirements for aircraft components, including virtually all
commercial airline and general aviation cabin interior products, and licenses
component repair stations within the United States. Comparable agencies regulate
these matters in other countries. If the Company fails to obtain a required
license for one of its products or services or loses a license previously
granted, the sale of the subject product or service would be prohibited by law
until such license is obtained or renewed. In addition, designing new products
to meet existing FAA requirements and retrofitting installed products to comply
with new FAA requirements can be both expensive and time-consuming.
Risks Associated with the Year 2000 Issue
The "Year 2000" issue is the result of computer programs using two
digits rather than four to define the applicable year. Because of this
programming convention, software, hardware or firmware may recognize a date
using "00" as the year 1900 rather than the year 2000. Use of non-Year 2000
compliant programs could result in system failures, miscalculations or errors
causing disruptions of operations or other business problems, including, among
others, a temporary inability to process transactions and invoices or engage in
similar normal business activities.
B/E Technology Initiatives Program. The Company has experienced
substantial growth as a result of having completed 15 acquisitions since 1989.
Essentially all of the acquired businesses were operating on separate
information systems, using different hardware and software platforms. In fiscal
1997, the Company undertook to examine its systems, both pre-existing and
acquired, for Year 2000 compliance with a view to replacing non-compliant
systems and creating an integrated Year 2000 compliant system. In addition, the
Company has undertaken a comprehensive program to address the Year 2000 issue
with respect to the following non-system areas: (i) network switching, (ii) the
Company's non- information technology systems (such as buildings, plant,
equipment and other infrastructure systems that may contain embedded
microcontroller technology), and (iii) the status of major vendors, third party
network service providers and other
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material service providers (insofar as they relate to the Company's business).
As explained below, the Company's efforts to assess its systems as well as
non-system areas related to Year 2000 compliance involve (i) a wide-ranging
assessment of the Year 2000 problems that may affect the Company, (ii) the
development of remedies to address the problems discovered in the assessment
phase and (iii) testing of the remedies.
Assessment Phase. The Company has identified substantially all of its
major hardware and software platforms in use as well as the relevant non-system
areas described above. The Company has determined its systems requirements on a
company-wide basis and has begun the implementation of an enterprise resource
planning (ERP) system, which is intended to be a single system data base onto
which all the Company's individual systems will be migrated. In relation
thereto, the Company has signed contracts with substantially all of its
significant hardware, software and other equipment vendors and third party
network service providers related to Year 2000 compliance.
Remediation and Testing Phase. In implementing the ERP system, the
Company undertook, and has completed, a remediation and testing phase of all
internal systems, LAN's, WAN's and PBX's. These phases were intended to address
potential Year 2000 problems of the ERP system in relation to both information
technology and non-information technology systems and then to demonstrate that
the ERP software was Year 2000 compliant. ERP system software was selected and
applications implemented by a team of internal users, outside system integrator
specialists and ERP application experts. The ERP system was tested between June
1997 to 1998 by this team of experts. To date, one location has been fully
implemented on the ERP system. This company-wide solution is being deployed to
all other B/E sites in a manner that is designed to meet full implementation for
all non-Year 2000 compliant sites by December 31, 1999.
Contingency Plans. The Company has begun to analyze contingency plans
to handle worst case Year 2000 scenarios that the Company believes reasonably
could occur and, if necessary, intends to develop a timetable for completing
such contingency plans.
Costs Related to the Year 2000 Issue. To date, the Company has incurred
approximately $15 million in costs related to the implementation of the ERP
system. The Company currently estimates the total ERP implementation will cost
approximately $30 million. Implementation costs have and will be capitalized to
the extent permitted under generally accepted accounting principles. The Company
expects that it will incur approximately $8 million related to this program
during calendar 1998 and an additional $7 million during calendar 1999.
Risks Related to the Year 2000 Issue. Although the Company's efforts to
be Year 2000 compliant are intended to minimize the adverse effects of the Year
2000 issue on the Company's business and operations, the actual effects of the
issue will not be known until 2000. Difficulties in implementing the ERP system
or failure by the Company to fully implement the ERP system or the failure of
its major vendors, third party network service providers, and other material
service providers and customers to adequately address their respective Year 2000
issues in a timely manner could have a material adverse effect on the Company's
business, results of operations, and financial condition. The Company's capital
requirements may differ materially from the foregoing estimate as a result of
regulatory, technological and competitive developments (including market
developments and new opportunities) in the Company's industry.
Risks Inherent in International Operations; Risks Associated with the Conversion
by Certain EU Member States to the "Euro"
Foreign operations of B/E accounted for 29% and 26% of total sales for
the three months ended May 30, 1998 and fiscal 1998, respectively, as compared
to 23% and 25% for the three months ended May 31, 1997 and fiscal 1997,
respectively. In addition, the Company has direct investments in a number of
subsidiaries in foreign countries (primarily in Europe). Fluctuations in the
value of foreign currencies affect the dollar value of B/E's net investment in
foreign subsidiaries, with these fluctuations being included in a separate
component of stockholders' equity. Operating results of foreign subsidiaries are
translated into U.S. dollars at average monthly exchange rates. For the three
months ended May 30, 1998 and fiscal 1998, the impact of such transactions on
operating results was not significant; however, B/E reported a cumulative
foreign currency translation amount of $(3.5) million in stockholders' equity at
May 30, 1998 as a result of
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<PAGE>
foreign currency adjustments, and there can be no assurance that the Company
will not incur additional adjustments in future periods. In addition, the U.S.
dollar value of transactions based in foreign currency (collections on foreign
sales or payments for foreign purchases) also fluctuates with exchange rates.
Historically, foreign currency risk has not been material because a substantial
majority of the Company's sales have been denominated in the currency of the
country of product origin and no repatriation of earnings has occurred (or is
anticipated). However, there can be no assurance that a substantial majority of
sales will continue to be denominated in the currency of the country of product
origin or as to the impact of changes in the value the United States dollar or
other currencies. The largest foreign currency exposure results from activity in
Dutch guilders, British pounds and Japanese yen.
B/E has not hedged net foreign investments in the past, although it may
engage in hedging transactions in the future to manage or reduce its foreign
exchange risk. There can be no assurance that B/E's attempts to manage its
foreign currency exchange risk will be successful.
The Company's foreign operations could also be subject to unexpected
changes in regulatory requirements, tariffs and other market barriers and
political and economic instability in the countries where it operates. There can
be no assurance as to the impact of any such events that may occur in the
future. See "Risk Factors -- Dependence upon Conditions in the Airline
Industry."
In addition, the Company may be exposed to certain risks as a result of
the conversion by certain European Union ("EU") member states of their
respective currencies to the "euro" as legal currency on January 1, 1999. The
conversion rates between such EU member states' currencies and the euro will be
fixed by the Council of the EU. Risks related to the conversion to the euro
could include, among other things, effects on pricing due to increased
cross-border price transparency, costs of modifying information systems,
including both software and hardware, costs of relying on third parties whose
systems also require modification, changes in the conduct of business and in the
principal markets for the Company's products and services, effects on, and
continuity of, contracts and currency exchange rate risk. The Company has
analyzed whether the conversion to the euro will materially affect its business
operations. While the Company is uncertain as to the impact of the conversion,
the Company does not expect anticipated costs in connection with the euro
conversion to be material. However, the actual effects of the conversion cannot
be known until the conversion to the euro has taken place and there can be no
assurance that the actual effects of the conversion could not have a material
adverse effect on the Company's business, results of operations, and financial
condition.
Environmental Matters
The Company is subject to regulation by federal, state and local
authorities establishing health and environmental quality standards, and may be
subject to liability or penalties for violations of those standards. The Company
is also subject to laws, ordinances and regulations governing remediation of
contamination at facilities it owns or operates or to which it sends hazardous
substances or wastes for treatment, recycling or disposal. The Company believes
that it is in compliance, in all material respects, with all laws affecting its
business. However, there can be no assurance that the Company will continue to
comply with all such laws, or with amended, new or more stringent laws and
regulations which may be adopted in the future. Any such violation of law may
result in penalties and/or liability in private actions filed by injured
parties. In addition, future discovery of any environmental contamination or
liability at any of the Company's facilities may cause the Company to incur
significant expenses as a result thereof.
Dividend Policy; Restrictions on Payment of Dividends
The Company has never paid a cash dividend and does not plan to pay
cash dividends on its Common Stock in the foreseeable future. The Company's Bank
Credit Facility and the Indentures governing the 97/8% Notes and the 8% Notes
restrict and limit the payment of dividends on the Common Stock. Future
indebtedness may also contain restrictions and limitations on the payment of
dividends on the Common Stock.
Certain Anti-Takeover Provisions
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<PAGE>
The Company's Restated Certificate of Incorporation and By-laws contain
provisions that may have the effect of discouraging a third party from making an
acquisition of the Company by means of a tender offer, proxy contest or
otherwise. The Restated Certificate of Incorporation and By-laws of the Company,
among other things, (i) classify the Board of Directors into three classes, with
directors of each class serving for a staggered three-year period, (ii) provide
that directors may be removed only for cause and only upon the approval of the
holders of at least two-thirds of the voting power of the Company's shares
entitled to vote generally in the election of such directors, (iii) require at
least two-thirds of the voting power of the Company's shares entitled to vote
generally in the election of directors to alter, amend or repeal the provisions
relating to the classified board and removal of directors described above and
(iv) permit the Board of Directors to fill vacancies and newly created
directorships on the Board. Such provisions would make the removal of incumbent
directors more difficult and time-consuming and may have the effect of
discouraging a tender offer or other takeover attempt not previously approved by
the Board of Directors. Under the Company's Restated Certificate of
Incorporation, the Board of Directors of the Company also has the authority to
issue up to 1,000,000 shares of preferred stock in one or more series and to fix
the powers, preferences and rights of any such series without stockholder
approval. The Board of Directors could, therefore, issue, without stockholder
approval, preferred stock with voting and other rights that could adversely
affect the voting power of the holders of Common Stock and could make it more
difficult for a third party to gain control of the Company. In addition, under
certain circumstances, Section 203 of the Delaware General Corporation Law makes
it more difficult for an "interested stockholder" (generally a 15% stockholder)
to effect various business combinations with a corporation for a three-year
period. See "Description of Capital Stock".
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in "Risk Factors" and elsewhere, and
incorporated by reference herein, including statements regarding the business
strategy of the Company, potential strategic acquisitions, the products which
the Company expects to offer, implementation of the Company's Year 2000
readiness program, anticipated development and marketing expenditures and
regulatory reform, effects of the conversion by certain EU member states to the
"euro," the intent, belief or current expectations of the Company, its directors
or its officers, primarily with respect to the future operating performance of
the Company, and other statements contained herein, and incorporated by
reference herein, regarding matters that are not historical facts, are
"forward-looking" statements (as such term is defined in the Private Securities
Litigation Reform Act of 1995). In addition, when used in this Prospectus and
elsewhere, the words "believe," "anticipate," "expect," intend" and similar
expressions are intended to identify forward-looking statements. Because such
statements include risks and uncertainties, actual results may differ materially
from those expressed or implied by such forward-looking statements. Factors that
could cause actual results to differ materially from those expressed or implied
by such forward- looking statements include, but are not limited to, the factors
set forth in "Risk Factors."
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<PAGE>
USE OF PROCEEDS
Except as provided by the SMR Acquisition Agreement, the Company will
not receive any of the proceeds from the sale of the Shares of Common Stock by
the Selling Stockholders. See "Selling Stockholders." Any net proceeds received
by the Company will be used for general corporate purposes, including working
capital requirements to support increased sales, and possible investments in
strategic acquisitions.
SELLING STOCKHOLDERS
General
B/E has recently made several acquisitions and, pursuant to the
provisions of the agreements governing such acquisitions, B/E agreed to register
shares of Common Stock issued as consideration in such acquisitions. Each of the
Selling Stockholders received the Shares of Common Stock offered hereby in
connection with either the acquisition of ASI, ALC or SMR.
The following are brief summaries of certain provisions of the
agreements governing the Company's recent acquisitions of ASI, ALC, and SMR.
Such summaries do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, such agreements which will be filed
as exhibits to the Registration Statement. Capitalized terms are defined in the
respective agreements unless otherwise defined herein. Whenever any term therein
is referred to, such definition is incorporated herein by reference.
The ASI Acquisition
On March 27, 1998, pursuant to the terms of an Agreement and Plan of
Reorganization and Merger dated as of March 27, 1998, by and among B/E, BE
Acquisition Corp., ASI, the Gregory and Deborah Fodell Partnership, Ltd. (the
"Fodell Partnership I"), the Gregory and Deborah Fodell Partnership II, Ltd.
(the "Fodell Partnership II" and collectively with the Fodell Partnership I, the
"ASI Sellers") and Gregory N. Fodell (the "ASI Merger Agreement"), B/E acquired
from the ASI Sellers all of the outstanding stock of ASI (the "ASI
Acquisition"), a company based in Houston, Texas that services, cleans and
repairs aircraft interior parts and products. In exchange, the ASI Sellers
received a total of 201,895 shares of Common Stock, representing a purchase
price of approximately $5.6 million. B/E accounted for the acquisition of ASI as
a pooling of interests. Pursuant to the terms of the ASI Merger Agreement, B/E
agreed to register the shares of Common Stock received by the ASI Sellers.
The shares of Common Stock offered by the ASI Sellers by this
Prospectus were initially issued to the ASI Sellers pursuant to the ASI Merger
Agreement. Gregory N. Fodell is a general partner and limited partner of each of
the ASI Sellers and is currently a Vice President - Major Accounts of B/E
Aerospace Services, Inc., a wholly-owned subsidiary of the Company. Immediately
following the closing under the ASI Merger Agreement, the Fodell Partnership I
beneficially owned 18,354 shares of Common Stock and the Fodell Partnership II
beneficially owned 183,541 shares of Common Stock. The B/E Common Stock
beneficially owned by the ASI Sellers represented approximately 0.7% of the
shares of the Company's Common Stock outstanding on September 9, 1998.
The ALC Acquisition
On July 30, 1998, pursuant to the terms of an Agreement and Plan of
Reorganization and Merger dated as of July 30, 1998, by and among B/E, BE
Aerospace Acquisition Corp, Aerospace Lighting Corp., and Louis J. Francisco,
Elsie M. Francisco, Michael J. Tenzyk, Judith D. Tenzyk, Trustee U/A Gertrude
Brown dated 1/7/92 and Trustee U/A William Brown dated 1/7/92 (together, the
"ALC Sellers") (the "ALC Merger Agreement"), B/E acquired from the ALC Sellers
all of the outstanding stock of Aerospace Lighting Corporation ("ALC"), a
company based in Holbrook, New York, that produces interior fluorescent lighting
systems for business and corporate jet aircraft. In exchange, the ALC Sellers
received a total of 964,780 shares of Common Stock, representing a purchase
price of approximately $28.1 million. B/E accounted
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<PAGE>
for the acquisition of ALC as a pooling of interests. Pursuant to the terms of
the ALC Merger Agreement, B/E agreed to register the shares of Common Stock
received by the ALC Sellers.
The Shares of Common Stock offered by the ALC Sellers by this
Prospectus were originally issued to the ALC Sellers pursuant to the ALC Merger
Agreement. Immediately following the closing under the ALC Merger Agreement,
Louis J. Francisco owned 260,198 shares of Common Stock, Elsie M. Francisco
owned 61,395 shares of Common Stock, Michael J. Tenzyk owned 160,797 shares of
Common Stock, Judith D. Tenzyk owned 160,797 shares of Common Stock, Trustee U/A
Gertrude Brown dated 1/7/92 owned 78,936 shares of Common Stock and Trustees U/A
William Brown Dated 1/7/92 owned 242,657 shares of Common Stock. The Common
Stock received by the ALC Sellers pursuant to the ALC Merger Agreement
constitute all of the shares of the Company's Common Stock held by them. The B/E
Common Stock owned by the ALC Sellers represented approximately 3.3% of the
shares of the Company's Common Stock outstanding on September 9, 1998.
The SMR Acquisition
On August 7, 1998, pursuant to the terms of an Acquisition Agreement
dated as of July 21, 1998, by and among B/E, Oscar J. Mifsud, Patrick L. Ryan,
David B. Smith, the Oscar J. Mifsud Trust - 1998, the Patrick L. Ryan Trust -
1998 and the David B. Smith Trust - 1998 (the several Trusts together, the "SMR
Sellers" and, collectively with the ASI Sellers and the ALC Sellers, the
"Selling Stockholders") (the "SMR Acquisition Agreement" and, together with the
ASI Merger Agreement and the ALC Merger Agreement, the "Merger Agreements"), B/E
acquired from the SMR Sellers all of the outstanding stock of SMR Aerospace,
Inc., all of the outstanding membership interests of SMR Developers LLC, and all
of the outstanding partnership interests of SMR Associates for a total aggregate
purchase price of approximately $120.0 million, subject to adjustment (the "SMR
Purchase Price). Pursuant to the SMR Acquisition Agreement, the Company issued
4,000,000 shares of Common Stock to the SMR Sellers and paid the SMR Sellers
$2.0 million in cash. The Company also paid $22.0 million in cash to the ESOP of
FSI, a subsidiary of SMR Aerospace, Inc., pursuant to a separate Stock Purchase
Agreement between the ESOP and B/E, to purchase the minority equity interest in
FSI held by the ESOP, bringing the total aggregate purchase price paid by B/E
for SMR to approximately $142.0 million. To the extent the Net Proceeds (as
defined in the SMR Acquisition Agreement), which includes the $2.0 million in
cash already received by the SMR Sellers, from the sale of the 4,000,000 shares
of Common Stock is less than the SMR Purchase Price, the Company will pay such
difference to the SMR Sellers with funds drawn under the Bank Credit Facility.
B/E's obligations to the SMR Sellers under the SMR Acquisition Agreement are
secured by an irrevocable stand-by letter of credit from The Chase Manhattan
Bank in favor of the SMR Sellers. If such Net Proceeds exceed the SMR Purchase
Price, the SMR Sellers will remit such excess to the Company. B/E intends to
account for the acquisition of SMR as a purchase. Pursuant to the terms of the
SMR Acquisition Agreement, B/E agreed to register the shares of Common Stock
received by the SMR Sellers.
SMR is a leader in providing design, integration, installation and
certification services for commercial aircraft passenger cabin interiors. SMR
provides a broad range of interior reconfiguration services which allow airlines
to change the size of certain classes of service, modify and upgrade the
seating, install telecommunications or entertainment options, relocate galleys,
lavatories, and overhead bins, and install crew rest compartments. SMR is also a
supplier of structural design and integration services, including airframe
modifications for passenger-to-freighter conversions. In addition, SMR provides
a variety of niche products and components that are used to facilitate
reconfigurations and conversions. SMR's services are performed primarily on an
aftermarket basis, and its customers include major airlines, such as United
Airlines, Japan Airlines, British Airways, Air France, Cathay Pacific and
Qantas, as well as Boeing, Airborne Express and Federal Express.
The shares of Common Stock offered by the SMR Sellers by this
Prospectus were originally issued to the SMR Sellers pursuant to the SMR
Acquisition Agreement. The Common Stock issued to the SMR Sellers constitute all
of the shares of Common Stock that are beneficially owned by the SMR Sellers and
represent approximately 13.7% of the shares of the Company's Common Stock
outstanding on September 9, 1998.
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<PAGE>
Set forth below are the names of each Selling Stockholder, the number
of shares of Common Stock beneficially owned as of September 9, 1998 by each
Selling Stockholder, the number of Shares that may be offered and sold by or on
behalf of each Selling Stockholder hereunder and the amount of Common Stock to
be owned by each Selling Stockholder upon the completion of the Offering if all
Shares offered by such Selling Stockholder are sold. Except as set forth below,
as of September 9, 1998, none of the Selling Stockholders beneficially owns more
than 1% of the outstanding Common Stock and, to the knowledge of the Company,
except for Gregory Fodell, who is an employee of the Company, none of the
Selling Stockholders has had any material relationships with the Company
subsequent to the closings of the respective acquisitions of ASI, ALC and SMR.
Any and all of the Shares listed below under the heading "Shares Offered" may be
offered for sale by or on behalf of the Selling Stockholders. Except as provided
by the Share Disposition Agreement (as defined herein) and the Merger
Agreements, the Selling Stockholders may sell the Shares of Common Stock offered
hereby from time to time and, as a result, no estimate can be given as of the
date hereof as to the amount of Shares of Common Stock that will actually be
offered for sale by the Selling Stockholders or as to the amount of Common Stock
that will be held by the Selling Stockholders upon termination of such offering.
See "Plan of Distribution." Additional information as to the number and
percentage of Shares beneficially owned before the offering by the Selling
Stockholders, the number of Shares to be sold and the number of Shares
beneficially owned after the offering will be set forth in an accompanying
Prospectus Supplement, to the extent necessary.
<TABLE>
<CAPTION>
Shares Beneficially
Owned Shares Beneficially
Prior to Offering Shares Owned After Offering
Selling Stockholders Number Percent Offered Number Percent
-------------------- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
ASI Sellers:
Gregory and Deborah Fodell Partnership, Ltd. 18,354 * 18,354 -- --
Gregory and Deborah Fodell Partnership II, Ltd. 183,541 * 183,541 -- --
ALC Sellers:
Elise M. Francisco 61,395 * 61,395 -- --
Louis J. Francisco 260,198 * 260,198 -- --
Judith D. Tenzyk 160,797 * 160,797 -- --
Michael J. Tenzyk 160,797 * 160,797 -- --
Trustees U/A Gertrude Brown dated 1/7/92 78,937 * 78,937 -- --
Trustees U/A William Brown dated 1/7/92 242,657 * 242,657 -- --
SMR Sellers:
Oscar J. Mifsud Trust - 1998 1,333,334 4.56 1,333,334 -- --
Patrick L. Ryan Trust - 1998 1,333,333 4.56 1,333,333 -- --
David B. Smith Trust - 1998 1,333,333 4.56 1,333,333 -- --
</TABLE>
- ---------------
* The percentage of shares of Common Stock beneficially owned does not exceed
one percent of the outstanding shares of Common Stock as of September 9,
1998.
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<PAGE>
PLAN OF DISTRIBUTION
The Selling Stockholders may sell all or a portion of the Shares of
Common Stock offered hereby in private transactions or in the over-the-counter
market at prices related to the prevailing prices of the shares on the Nasdaq
National Market. The Selling Stockholders may be deemed to be underwriters
within the meaning of the Securities Act. Any Selling Stockholder may effect
such transactions by selling to or through one or more broker-dealers, and such
broker-dealers may receive compensation in the form of underwriting discounts,
concessions or commissions from the Selling Stockholders. The Selling
Stockholders and any broker-dealers that participate in the distribution may
under certain circumstances be deemed to be underwriters within the meaning of
the Securities Act, and any commissions received by such broker-dealers and any
profits realized on the resale of shares by them may be deemed to be
underwriting discounts and commissions under the Securities Act. The Merger
Agreements provide that the Company indemnify the Selling Stockholders against
certain liabilities, including liabilities under the Securities Act. The Merger
Agreements also provide for the indemnification of the Company by the Selling
Stockholders for certain liabilities, including liabilities under the Securities
Act.
The SMR Sellers may sell the shares of Common Stock offered hereby from
time to time subject to the terms of the SMR Acquisition Agreement and the Share
Disposition Agreement (the "Share Disposition Agreement") by and between B/E and
the SMR Sellers dated July 21, 1998, pursuant to which the SMR Sellers agreed to
sell the SMR Shares only on such terms and conditions, and at such times as
directed and approved by B/E. The ASI Sellers and the ALC Sellers may sell
shares of Common Stock offered hereby from time to time subject to the terms of
the ASI Merger Agreement and the ALC Merger Agreement, respectively.
To the extent required under the Securities Act, a supplemental
prospectus will be filed, disclosing (a) the name of any Selling Stockholder;
(b) the name of any broker-dealers effecting the transaction on behalf of the
Selling Stockholder; (c) the number of shares involved; (d) the price at which
such shares are to be sold; (e) the commissions paid or discounts or concessions
allowed to such broker-dealer, where applicable; (f) that such broker-dealer did
not conduct any investigation to verify the information set out or incorporated
by reference in this Prospectus, as supplemented, and (g) other facts material
to the transaction.
Pursuant to the Merger Agreements, the Company has agreed to pay
substantially all fees and expenses incident to the preparation, filing,
amending and supplementing of the Registration Statement of which this
Prospectus is a part and any registration, filing, qualification and other fees
and expenses of complying with state Blue Sky or securities law. In addition, in
connection with the acquisition of SMR, the Company has agreed to pay all
applicable stock transfer taxes, brokerage commissions, underwriting discounts
or commissions and any fees of the SMR Sellers' counsel. In connection with the
acquisitions of ASI and ALC, the ASI Sellers and the ALC Sellers will pay all
applicable stock transfer taxes, brokerage commissions, underwriting discounts
or commissions and any fees of such Selling Stockholders' counsel.
Pursuant to the Merger Agreements, and subject to certain conditions,
the Company has agreed to keep the Registration Statement relating to the
offering and sale by the Selling Stockholders of the shares of Common Stock
continuously effective until a fixed date following the effectiveness of the
Registration Statement or such earlier date as of which all shares of Common
Stock registered hereunder have been disposed of.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
Common Stock
The Company is authorized to issue 50,000,000 shares of Common Stock,
$0.01 par value, of which 23,256,268 shares were outstanding as of July 27,
1998, and held by approximately 516 stockholders of record. Holders of Common
Stock are entitled to one vote per share on all matters to be voted upon by the
stockholders and to receive such dividends as may be declared by the Board of
Directors out of funds legally available therefor. The indentures relating to
the Company's 97/8% Notes and 8% Notes and the Bank Credit Agreement, however,
currently restrict dividend payments by the Company to its stockholders. In the
event of a liquidation, dissolution or winding up of the Company, holders of
Common Stock have the right to a ratable portion of the assets remaining after
payment of liabilities. Holders of Common Stock do not have cumulative voting,
preemptive, redemption or conversion rights. All outstanding shares of Common
Stock are, and the shares to be sold in this offering will be, fully paid and
non-assessable.
Preferred Stock
The Company's Restated Certificate of Incorporation (the "Certificate")
provides, among other things, for the authorization of 1,000,000 shares of
Preferred Stock, $0.01 par value (the "Preferred Stock"). The shares of
Preferred Stock may be issued from time to time at the discretion of the Board
of Directors without stockholder approval. The Board of Directors is authorized
to issue these shares in different classes and series and, with respect to each
class or series, to determine the dividend rate, the redemption provisions,
conversion provisions, liquidation preference and other rights and privileges
not in conflict with the Certificate. No shares of Preferred Stock are
outstanding, and the Company has no immediate plans to issue any Preferred
Stock. While issuance of Preferred Stock could provide needed flexibility in
connection with possible acquisitions and other corporate purposes, such
issuance could also make it more difficult for a third party to acquire a
majority of the outstanding voting stock of the Company or discourage an attempt
to gain control of the Company. In addition, the Board of Directors, without
stockholder approval, can issue shares of Preferred Stock with voting and
conversion rights which could adversely affect the voting power and other rights
of the holders of Common Stock.
Directors' Exculpation and Indemnification
The Certificate provides that no director of the Company shall be
liable to the Company or its stockholders for monetary damages for any breach of
fiduciary duty as a director, except to the extent otherwise required by the
Delaware General Corporation Law (the "DGCL"). The effect of this provision of
the Certificate is to eliminate the rights of the Company and its stockholders
(through stockholders' derivative suits on behalf of the Company) to recover
monetary damages against a director for breach of a fiduciary duty of care as a
director. This provision does not limit or eliminate the rights of the Company
or any stockholder to seek non-monetary relief, such as an injunction or
rescission in the event of a breach of a director's duty of care. In addition,
the Certificate provides that, if the DGCL is amended to authorize the further
elimination or limitation of the liability of a director, then the liability of
the directors shall be eliminated or limited to the fullest extent permitted by
the DGCL, as so amended. These provisions will not alter the liability of
directors under federal or state securities laws. The Certificate also includes
provisions for the indemnification of the Company's directors and officers to
the fullest extent permitted by Section 145 of the DGCL.
Election and Removal of Directors
The Certificate classifies the board of directors into three classes,
as nearly equal in number as possible, so that each director will serve for
three years, with one class of directors being elected each year. The
Certificate also provides that directors may be removed for cause only with the
approval of the holders of at least two-thirds of the voting power of the
Company's shares entitled to vote generally in the election of directors at an
annual meeting or special meeting called for such purpose. In addition, the
Certificate requires at least two-thirds of the voting power of the Company's
shares
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<PAGE>
entitled to vote generally in the election of directors at an annual meeting or
special meeting called for such purpose to alter, amend or repeal the provisions
relating to the classified board and removal of directors described above.
Management believes that the Certificate provisions described in the
preceding paragraph (the "Provisions"), taken together, reduce the possibility
that a third party could effect a change in the composition of the Company's
board of directors without the support of the incumbent board. The Provisions,
however, may have significant effects on the ability of stockholders of the
Company to change the composition of the incumbent board, to benefit from
transactions which are opposed by the incumbent board, to assume control of the
Company or effect a fundamental corporate transaction such as a merger.
Nevertheless, although the Company has not experienced any problems in the past
with the continuity or stability of the board, management believes that the
Provisions help assure the continuity and stability of the Company's policies in
the future, since the majority of the directors at any time will have prior
experience as directors of the Company.
Section 203 of the Delaware General Corporation Law
The Company is subject to the provisions of Section 203 of the DGCL.
That section provides, with certain exceptions, that a Delaware corporation may
not engage in any of a broad range of business combinations with a person or
affiliate, or associate of such person, who is an "interested stockholder" for a
period of three years from the date that such person became an interested
stockholder unless: (i) the transaction resulting in a person becoming an
interested stockholder, or the business combination, is approved by the board of
directors of the corporation before the person becomes an interested
stockholder, (ii) the interested stockholder acquires 85% or more of the
outstanding voting stock of the corporation in the same transaction that makes
it an interested stockholder (excluding shares owned by persons who are both
officers and directors of the corporation, and shares held by certain employee
stock ownership plans); or (iii) on or after the date the person becomes an
interested stockholder, the business combination is approved by the
corporation's board of directors and by the holders of at least 662/3% of the
corporation's outstanding voting stock at an annual or special meeting,
excluding shares owned by the interested stockholder. An "interested
stockholder" is defined as any person that is (i) the owner of 15% or more of
the outstanding voting stock of the corporation or (ii) an affiliate or
associate of the corporation and was the owner of 15% or more of the outstanding
voting stock of the corporation at any time within the three-year period
immediately prior to the date on which it is sought to be determined whether
such person is an interested stockholder.
Transfer Agent and Registrar
The transfer agent and registrar for the Company's Common Stock is
Boston EquiServe L.P., Canton, Massachusetts 02021.
LEGAL MATTERS
Certain legal matters with respect to the validity of the Shares of
Common Stock offered hereby will be passed upon for the Company by Shearman &
Sterling, New York, New York.
EXPERTS
The consolidated financial statements and schedule of the Company
appearing in its annual report on Form 10-K for the fiscal year ended February
28, 1998, have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their reports included therein and incorporated herein by reference.
Such consolidated financial statements and schedule are incorporated herein by
reference in reliance upon such reports given upon the authority of such firm as
experts in accounting and auditing.
The consolidated financial statements of SMR as of December 31, 1997
and 1996 and for the years ended December 31, 1997 and 1996, have been audited
by Zalick, Torok, Kirgesner, Cook & Co., independent auditors, as stated
-16-
<PAGE>
in their reports incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon such reports
given upon the authority of such firm as experts in accounting and auditing.
-17-
<PAGE>
================================================================================
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus or any Prospectus
Supplement and, if given or made, such information or representations must not
be relied upon as having been authorized. This Prospectus and any Prospectus
Supplement does not constitute an offer to sell or the solicitation of an offer
to buy any securities other than the securities to which it relates or an offer
to sell or the solicitation of an offer to buy such securities in any
circumstances in which such offer or solicitation is unlawful. Neither the
delivery of this Prospectus or any Prospectus Supplement nor any sale made
hereunder or thereunder shall, under any circumstances, create any implication
that there has been no change in the affairs of the Company since the date
hereof or thereof or that the information contained herein or therein is correct
as of any time subsequent to the date of such information.
-------------
TABLE OF CONTENTS
Page
----
Prospectus
Available Information.........................................................2
Incorporation of Certain Documents
by Reference..............................................................2
The Company...................................................................3
Risk Factors..................................................................5
Cautionary Statement Regarding
Forward-Looking Statements...............................................10
Use of Proceeds..............................................................11
Selling Stockholders.........................................................11
Plan of Distribution.........................................................14
Description of Capital Stock.................................................15
Legal Matters................................................................16
Experts......................................................................16
================================================================================
================================================================================
BE Aerospace, Inc.
[Logo]
5,166,675 Shares of Common Stock
----------
PROSPECTUS
----------
, 1998
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
Securities and Exchange Commission registration fee............. $ 49,955
Printing........................................................ **
Legal fees and expenses......................................... **
Nasdaq National Market Additional Listing Fee................... 39,038
Accounting fees and expenses.................................... **
Miscellaneous................................................... **
---------
Total.................................................. $ **
=========
- --------------
* Estimated
** To be provided by amendment
Item 15. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law, as amended
("DGCL") provides that a corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding whether civil, criminal or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amount paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any action or
proceeding, had no reasonable cause to believe his conduct was unlawful. Section
145 further provides that a corporation similarly may indemnify any such person
serving in any such capacity who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the right
of the corporation to procure a judgment in its favor, against expenses actually
and reasonably incurred in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation and except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Delaware Court of Chancery or such other
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
Section 102(b)(7) of the DGCL permits a corporation to include in its
certificate of incorporation a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such provision
shall not eliminate or limit the liability of a director: (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL (relating to
unlawful payment of dividends and unlawful stock purchase and redemption) or
(iv) for any transaction from which the director derived an improper personal
benefit.
The Registrant's Restated Certificate of Incorporation (the
"Certificate") provides that the Company's Directors shall be liable to the
Registrant or its stockholders for monetary damages for breach of fiduciary duty
as a director except to the extent that exculpation from liabilities is not
permitted under the DGCL as in effect at the time such liability is determined.
The Registrant's Certificate further provides that the Registrant shall
indemnify its directors and officers to the fullest extent permitted by the
DGCL.
II-1
<PAGE>
The directors and officers of the Company are covered under directors'
and officer's liability insurance policies maintained by the Company.
Item 16. Exhibits and Financial Statement Schedules
Exhibit
Number Description
- ------ -----------
Exhibit 3 Articles of Incorporation and By-Laws
3.1 Amended and Restated Certificate of Incorporation*
3.2 Certificate or Amendment of the Restated Certificate
of Incorporation*
3.3 Amended and Restated By-Laws*
Exhibit 4 Instruments defining the rights of security
holders, including debentures
4.1 Specimen Common Stock Certificate*
4.2 Form of Note for the Registrant's Series B 9-7/8%
Senior Subordinated Notes*
4.3 Indenture dated January 24, 1996 between Fleet
National Bank, as trustee, and the Registrant
relating to the Registrant's 9-7/8% Senior
Subordinated Notes and Series B 9-7/8% Senior
Subordinated Notes*
4.4 Indenture dated February 13, 1998 for the
Registrant's issue of 8% Senior Subordinated Notes*
4.5 Form of Note for the Registrant's 8% Senior
Subordinated Notes*
4.6 Form of Stockholders' Agreement by and among the
Registrant, Summit Ventures II, L.P., Summit
Investors II, L.P. and Wedbush Capital Partners*
Exhibit 5
5.1 Opinion of Shearman & Sterling
Exhibit 10(i) Material Contracts
10.1 Supply Agreement dated as of April 17, 1990 between
the Registrant and Applied Extrusion Technologies,
Inc.*
10.2 Amended and Restated Credit Agreement (the "Chase
Credit Agreement"), dated as of May 18, 1994 among
the Registrant, the banks named therein and The Chase
Manhattan Bank, N.A. as Agent*
10.3 Amendment No. 1 dated May 18, 1994 to the Chase
Credit Agreement*
10.4 Second Amended and Restated Chase Credit Agreement
dated January 19, 1996*
10.5 Third Amended and Restated Chase Credit Agreement
dated May 29, 1997*
10.6 Fourth Amended and Restated Chase Credit Agreement
dated April 3, 1998*
10.6(a) Fifth Amended and Restated Credit Agreement dated
August 7,1998
10.7 Receivables Sales Agreement dated January 24, 1996
among the Registrant, First Trust of Illinois, N.A.
and Centrally Held Eagle Receivables Program, Inc.*
10.8 Escrow Agreement dated January 24, 1996 among the
Registrant, Eagle Industrial Product Corporation and
First Trust of Illinois, N.A. as Escrow Agent*
10.9 Acquisition Agreement dated as of December 14, 1995
by and among the Registrant, Eagle Industrial
Products Corporation, Eagle Industries, Inc. and
Great American Management and Investment, Inc.*
10.10 Asset Purchase Agreement dated as of April 16, 1998
by and between Stanford Aerospace Group, Inc. and the
Registrant*
10.11 Stock Purchase Agreement dated as of March 31, 1998
by and between the Registrant and Puritan Bennet
Corporation*
10.12 Acquisition Agreement dated July 21, 1998 among the
Registrant and Sellers named therein*
Exhibit 10(ii) Leases
10.13 Lease dated May 15, 1992 between McDonnell Douglas
Company, as lessor, and the Registrant, as lessee,
relating to the Irvine, California property*
10.14 Lease dated September 1, 1992 relating to the
Wellington, Florida property*
II-2
<PAGE>
10.15 Chesham, England Lease dated October 1, 1973 between
Drawheath Limited and the Peninsular and Oriental
Steam Navigation Company (assigned in February 1985)*
10.16 Utrecht, The Netherlands Lease dated December 15,
1988 between the Pension Fund Foundation for Food
Supply Commodity Boards and Inventum*
10.17 Utrecht, The Netherlands Lease dated January 31, 1992
between G.W. van de Grift Onroerend Goed B.V. and
Inventum*
10.18 Lease dated October 25, 1993 relating to the property
in Longwood, Florida*
Exhibit 10(iii) Executive Compensation Plans and Arrangements
10.19 Amended and Restated 1989 Stock Option Plan
10.20 Directors' 1991 Stock Option Plan*
10.21 1990 Stock Option Agreement with Richard G.
Hamermesh*
10.22 1990 Stock Option Agreement with B. Martha Cassidy
10.23 1990 Stock Option Agreement with Jim C. Cowart*
10.24 1990 Stock Option Agreement with Petros A.
Palandjian*
10.25 1990 Stock Option Agreement with Hansjorg Wyss*
10.26 1991 Stock Option Agreement with Amin J. Khoury*
10.27 1991 Stock Option Agreement with Jim C. Cowart*
10.28 1992 Stock Option Agreement with Amin J. Khoury*
10.29 1992 Stock Option Agreement with Jim C. Cowart*
10.30 1992 Stock Option Agreement with Paul W. Marshall*
10.31 1992 Stock Option Agreement with David Lahar*
10.32 United Kingdom 1992 Employee Share Option Scheme*
10.33 1994 Employee Stock Purchase Plan*
10.34 Amended and Restated Employment Agreement dated as of
May 29, 1998 between the Registrant and Amin J.
Khoury*
10.35 Amended and Restated Employment Agreement dated as of
May 29, 1998 between the Registrant and Robert J.
Khoury*
10.36 Employment Agreement dated as of March 1, 1992
between the Registrant and Marco Lanza (the "Lanza
Agreement")*
10.37 Amendment No. 1 dated as of January 1, 1996 to the
Lanza Agreement*
10.38 Employment Agreement dated as of April 1, 1992
between the Registrant and G. Bernard Jewell*
10.39 Amended and Restated Employment Agreement dated as of
May 29, 1998 between the Registrant and Thomas P.
McCaffrey*
10.40 Amended and Restated Employment Agreement dated as of
May 29, 1998 between the Registrant and Paul E.
Fulchino*
10.41 BE Aerospace, Inc. Savings and Profit Sharing Plan
and Trust -- Financial Statements for the Ten Months
Ended December 31, 1995 and the Year Ended February
28, 1995, Supplemental Schedules and Independent
Auditors' Report*
10.42 BE Aerospace, Inc. 1994 Employee Stock Purchase Plan
Financial Statements as of February 29, 1996 and
February 26, 1995; and for the Year Ended February
29, 1996 and the period from May 15, 1994 (inception)
to February 28, 1995 and Independent Auditors'
Report*
Exhibit 23 Consent of Experts and Counsel
23.1 Consent of Independent Accountants -- Deloitte &
Touche LLP
23.2 Consent of Shearman & Sterling (Included in Exhibit
5.1)
23.3 Consent of Independent Accountants -- Zalick, Torok,
Kirgesner, Cook & Co.
II-3
<PAGE>
Exhibit 24 Power of Attorney
24.1 Power of Attorney (Included on page II-6)
Exhibit 99
99.1 Agreement and Plan of Reorganization and Merger dated
March 27, 1998 by and among the Registrant, BE
Acquisition Corp., Aerospace Interiors, Inc., Gregory
and Deborah Fodell Partnership, Ltd., Gregory and
Deborah Fodell Partnership II, Ltd. And Gregory N.
Fodell
99.2 Agreement and Plan of Reorganization and Merger dated
as of July 30, 1998 by and among the Registrant, BE
Aerospace Acquisition Corp., Aerospace Lighting
Corp., and Louis J. Francisco, Elsie M. Francisco,
Michael J. Tenzyk, Judith D. Tenzyk, Trustees U/A
Gertrude Brown dated 1/7/92 and Trustee U/A William
Brown dated 1/7/92.
- -------------------
* Previously filed and incorporated by reference herein. See Exhibit Index.
Item 17. Undertakings
The undersigned Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act, unless the information required to be included in
such post-effective amendment is contained in a periodic report filed
by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act and incorporated herein by reference;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement, unless the information required to be
included in such post-effective amendment is contained in a periodic
report filed by the Registrant pursuant to Section 13 or Section 15(d)
of the Exchange Act and incorporated herein by reference.
Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the
low or high and of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table
in the effective registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any securities being registered which remain unsold at the termination of the
offering.
(4) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's Annual Report pursuant to Section 13(a) or 15(d) of the Exchange
Act that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the
II-4
<PAGE>
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(5) The undersigned registrant hereby undertakes to deliver or cause to
be delivered with the prospectus, to each person to whom the prospectus is sent
or given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act; and, where
interim financial information is required to be presented by Article 3 of
Regulation S-X is not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such financial information.
(6) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the provisions described in Item 15, or otherwise,
the registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Company has
duly caused this Amendment to the Registration Statement on Form S-3 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Wellington and the State of Florida, on the 11th day of September, 1998.
BE AEROSPACE, INC.
By: *
------------------------------------
Title: Chairman of the Board of Directors
Pursuant to the requirements of the Securities Act, this Amendment to
the Registration Statement has been signed by the following persons in the
capacities indicated below on the 11th day of September, 1998.
Signature Title
* Chairman of the Board of Directors
- --------------------------
Amin J. Khoury
* Vice Chairman of the Board of Directors and
- -------------------------- Chief Executive Officer (principal executive
Robert J. Khoury officer)
* President, Chief Operating Officer and Director
- --------------------------
Paul E. Fulchino
* Corporate Senior Vice President of
- -------------------------- Administration, Chief Financial Officer and
Thomas P. McCaffrey Assistant Secretary (principal financial and
accounting officer)
* Director
- --------------------------
Jim C. Cowart
* Director
- --------------------------
Richard G. Hamermesh
* Director
- --------------------------
Brian H. Rowe
* Director
- --------------------------
Hansjorg Wyss
*By: /s/ Thomas P. McCaffrey
------------------------
Thomas P. McCaffrey
Attorney-in-fact
II-6
<PAGE>
Exhibit Index
Exhibit
Number Description
- ------ -----------
Exhibit 3 Articles of Incorporation and By-Laws
3.1 Amended and Restated Certificate of Incorporation(1)
3.2 Certificate or Amendment of the Restated Certificate
of Incorporation(2)
3.3 Amended and Restated By-Laws(14)
Exhibit 4 Instruments defining the rights of security holders,
including debentures
4.1 Specimen Common Stock Certificate(1)
4.2 Form of Note for the Registrant's Series B 9-7/8%
Senior Subordinated Notes(3)
4.3 Indenture dated January 24, 1996 between Fleet
National Bank, as trustee, and the Registrant
relating to the Registrant's 9-7/8% Senior
Subordinated Notes and Series B 9-7/8% Senior
Subordinated Notes(3)
4.4 Indenture dated February 13, 1998 for the
Registrant's issue of 8% Senior Subordinated Notes(4)
4.5 Form of Note for the Registrant's 8% Senior
Subordinated Notes(4)
4.6 Form of Stockholders' Agreement by and among the
Registrant, Summit Ventures II, L.P., Summit
Investors II, L.P. and Wedbush Capital Partners(5)
Exhibit 5
5.1 Opinion of Shearman & Sterling*
Exhibit 10(i) Material Contracts
10.1 Supply Agreement dated as of April 17, 1990 between
the Registrant and Applied Extrusion Technologies,
Inc.(1)
10.2 Amended and Restated Credit Agreement (the "Chase
Credit Agreement"), dated as of May 18, 1994 among
the Registrant, the banks named therein and The Chase
Manhattan Bank, N.A. as Agent(6)
10.3 Amendment No. 1 dated May 18, 1994 to the Chase
Credit Agreement(7)
10.4 Second Amended and Restated Chase Credit Agreement
dated January 19, 1996(3)
10.5 Third Amended and Restated Chase Credit Agreement
dated May 29, 1997(4)
10.6 Fourth Amended and Restated Chase Credit Agreement
dated April 3, 1998(4)
10.6(a) Fifth Amended and Restated Credit Agreement dated
August 7,1998*
10.7 Receivables Sales Agreement dated January 24, 1996
among the Registrant, First Trust of Illinois, N.A.
and Centrally Held Eagle Receivables Program, Inc.(3)
10.8 Escrow Agreement dated January 24, 1996 among the
Registrant, Eagle Industrial Product Corporation and
First Trust of Illinois, N.A. as Escrow Agent(3)
10.9 Acquisition Agreement dated as of December 14, 1995
by and among the Registrant, Eagle Industrial
Products Corporation, Eagle Industries, Inc. and
Great American Management and Investment, Inc.(8)
i
<PAGE>
10.10 Asset Purchase Agreement dated as of April 16, 1998
by and between Stanford Aerospace Group, Inc. and the
Registrant(9)
10.11 Stock Purchase Agreement dated as of March 31, 1998
by and between the Registrant and Puritan Bennet
Corporation(10)
10.12 Acquisition Agreement dated July 21, 1998 among the
Registrant and Sellers named therein(16)
Exhibit 10(ii) Leases
10.13 Lease dated May 15, 1992 between McDonnell Douglas
Company, as lessor, and the Registrant, as lessee,
relating to the Irvine, California property(2)
10.14 Lease dated September 1, 1992 relating to the
Wellington, Florida property(2)
10.15 Chesham, England Lease dated October 1, 1973 between
Drawheath Limited and the Peninsular and Oriental
Steam Navigation Company (assigned in February
1985)(14)
10.16 Utrecht, The Netherlands Lease dated December 15,
1988 between the Pension Fund Foundation for Food
Supply Commodity Boards and Inventum(14)
10.17 Utrecht, The Netherlands Lease dated January 31, 1992
between G.W. van de Grift Onroerend Goed B.V. and
Inventum(14)
10.18 Lease dated October 25, 1993 relating to the property
in Longwood, Florida(6)
Exhibit 10(iii) Executive Compensation Plans and Arrangements
10.19 Amended and Restated 1989 Stock Option Plan(11)
10.20 Directors' 1991 Stock Option Plan(11)
10.21 1990 Stock Option Agreement with Richard G.
Hamermesh(11)
10.22 1990 Stock Option Agreement with B. Martha
Cassidy(11)
10.23 1990 Stock Option Agreement with Jim C. Cowart(11)
10.24 1990 Stock Option Agreement with Petros A.
Palandjian(11)
10.25 1990 Stock Option Agreement with Hansjorg Wyss(11)
10.26 1991 Stock Option Agreement with Amin J. Khoury(11)
10.27 1991 Stock Option Agreement with Jim C. Cowart(11)
10.28 1992 Stock Option Agreement with Amin J. Khoury(11)
10.29 1992 Stock Option Agreement with Jim C. Cowart(11)
10.30 1992 Stock Option Agreement with Paul W. Marshall(11)
10.31 1992 Stock Option Agreement with David Lahar(11)
10.32 United Kingdom 1992 Employee Share Option Scheme(2)
10.33 1994 Employee Stock Purchase Plan(12)
10.34 Amended and Restated Employment Agreement dated as of
May 29, 1998 between the Registrant and Amin J.
Khoury(15)
10.35 Amended and Restated Employment Agreement dated as of
May 29, 1998 between the Registrant and Robert J.
Khoury(15)
10.36 Employment Agreement dated as of March 1, 1992
between the Registrant and Marco Lanza (the "Lanza
Agreement")(14)
10.37 Amendment No. 1 dated as of January 1, 1996 to the
Lanza Agreemen(13)
10.38 Employment Agreement dated as of April 1, 1992
between the Registrant and G. Bernard Jewell(14)
ii
<PAGE>
10.39 Amended and Restated Employment Agreement dated as of
May 29, 1998 between the Registrant and Thomas P.
McCaffrey(15)
10.40 Amended and Restated Employment Agreement dated as of
May 29, 1998 between the Registrant and Paul E.
Fulchino(15)
10.41 BE Aerospace, Inc. Savings and Profit Sharing Plan
and Trust -- Financial Statements for the Ten Months
Ended December 31, 1995 and the Year Ended February
28, 1995, Supplemental Schedules and Independent
Auditors' Report(14)
10.42 BE Aerospace, Inc. 1994 Employee Stock Purchase Plan
Financial Statements as of February 29, 1996 and
February 26, 1995; and for the Year Ended February
29, 1996 and the period from May 15, 1994 (inception)
to February 28, 1995 and Independent Auditors'
Report(14)
Exhibit 23 Consent of Experts and Counsel
23.1 Consent of Independent Accountants -- Deloitte &
Touche LLP*
23.2 Consent of Shearman & Sterling (Included in Exhibit
5.1)
23.3 Consent of Independent Accountants -- Zalik, Torok,
Kirgesner, Cook & Co.*
Exhibit 24 Power of Attorney
24.1 Power of Attorney (Included on page II-6)
Exhibit 99
99.1 Agreement and Plan of Reorganization and Merger dated
March 27, 1998 by and among the Registrant, BE
Acquisition Corp., Aerospace Interiors, Inc., Gregory
and Deborah Fodell Partnership, Ltd., Gregory and
Deborah Fodell Partnership II, Ltd. And Gregory N.
Fodell*
99.2 Agreement and Plan of Reorganization and Merger dated
as of July 30, 1998 by and among the Registrant, BE
Aerospace Acquisition Corp., Aerospace Lighting
Corp., and Louis J. Francisco, Elsie M. Francisco,
Michael J. Tenzyk, Judith D. Tenzyk, Trustees U/A
Gertrude Brown dated 1/7/92 and Trustee U/A William
Brown dated 1/7/92.*
- -------------------
* Filed herein.
(1) Incorporated by reference to the Company's Registration Statement on
Form S-1, as amended (No. 33-33689), filed with the Commission on March
7, 1990.
(2) Incorporated by reference to the Company's Registration Statement on
Form S-1, as amended (No. 33-54146), filed with the Commission on
November 3, 1992.
(3) Incorporated by reference to the Company's Registration Statement on
Form S-4 (No. 333- 00433), filed with the Commission on January 26,
1996.
(4) Incorporated by reference to the Company's Registration Statement on
Form S-4 (No. 333- 47649), filed with the Commission on March 10, 1998.
(5) Incorporated by reference to the Company's Registration Statement on
Form S-2 (No. 33- 66490), filed with the Commission on July 23, 1993.
(6) Incorporated by reference to the Company's Annual Report on Form 10-K
as amended for the Fiscal year ended February 26, 1994, filed with the
Commission on May 25, 1994.
iii
<PAGE>
(7) Incorporated by reference to the Company's Annual Report on Form 10-K
as amended for the Fiscal year ended February 25, 1995, filed with the
Commission on May 26, 1995.
(8) Incorporated by reference to the Company's Current Report on Form 8-K
dated December 14, 1995, filed with the Commission on December 28,
1995.
(9) Incorporated by reference to the Company's Current Report on Form 8-K
dated May 8, 1998, filed with the Commission on May 8, 1998.
(10) Incorporated by reference to the Company's Current Report on Form 8-K
dated March 31, 1998, filed with the Commission on April 27, 1998.
(11) Incorporated by reference to the Company's Registration Statement on
Form S-8 (No. 33- 48119), filed with the Commission on May 26, 1992.
(12) Incorporated by reference to the Company's Registration Statement on
Form S-8 (No. 33- 82894), filed with the Commission on August 16, 1994.
(13) Incorporated by reference to the Company's Current Report on Form 8-K
dated March 26, 1996, filed with the Commission on April 5, 1996.
(14) Incorporated by reference to the Company's Annual Report on Form 10-K
as amended for the Fiscal year ended February 28, 1998, filed with the
Commission on May 29, 1998.
(15) Incorporated by reference to the Company's Quarterly Report on Form
10-Q for the quarter ended May 30, 1998, filed with the Commission on
July 14, 1998.
(16) Incorporated by reference to the Company's Current Report on Form 8-K
dated August 24, 1998, filed with the Commission on August 24, 1998.
Conformed Copy
Exhibit 5.1
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022-6069
September 1, 1998
BE Aerospace, Inc.
1400 Corporate Center Way
Wellington, Florida 33414
Ladies and Gentlemen:
We have acted as counsel to BE Aerospace, Inc., a Delaware
corporation (the "Company"), in connection with the preparation of the
Registration Statement on Form S-3 of the Company, filed with the Securities and
Exchange Commission on July 30, 1998 (the "Registration Statement"), relating to
the registration under the Securities Act of 1933, as amended, of 5,166,675
shares of the Company's Common Stock, par value $.01 per share (the "Shares"),
to be offered from time to time by certain selling stockholders in the manner
described in the prospectus contained in the Registration Statement (the
"Prospectus").
We have examined the Registration Statement and originals, or
copies certified or otherwise identified to our satisfaction, of such other
documents and corporate records as we have deemed necessary as a basis for the
opinion set forth herein. We have relied as to factual matters on certificates
or other documents furnished by the Company or its officers and by governmental
authorities and upon such other documents and data that we have deemed
appropriate. In such examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
legal capacity of all persons executing such documents, the conformity to
original documents of all documents submitted to us as copies and the truth and
correctness of any representations and warranties contained therein.
The opinion expressed below is limited to the General
Corporation Law of Delaware. We express no opinion herein concerning any other
law.
<PAGE>
2
Based on such examination and review and subject to the
foregoing, we are of the opinion that the Shares have been duly authorized and
are validly issued, fully paid and non-assessable.
We consent to the use of this opinion as an Exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the Prospectus.
Very truly yours,
/s/ Shearman & Sterling
Execution Counterpart
************************************************************
BE AEROSPACE, INC.
-----------------------------
FIFTH AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of October 29, 1993
Amended and Restated as of August 7, 1998
------------------------------
THE CHASE MANHATTAN BANK,
as Administrative Agent
NATIONSBANK, N.A.,
as Documentation Agent
************************************************************
<PAGE>
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it
is attached but is inserted for convenience of reference only.
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<S> <C>
Section 1. Definitions and Accounting Matters...........................................1
1.01 Certain Defined Terms........................................................1
1.02 Accounting Terms and Determinations.........................................21
1.03 Classes and Types of Loans..................................................21
Section 2. Commitments, Loans, Notes and Prepayments...................................22
2.01 Loans.......................................................................22
2.02 Borrowings..................................................................23
2.03 Letters of Credit...........................................................23
2.04 Changes of Commitments......................................................30
2.05 Commitment Fee..............................................................31
2.06 Lending Offices.............................................................32
2.07 Several Obligations; Remedies Independent...................................32
2.08 Evidence of Debt............................................................32
2.09 Optional Prepayments and Conversions or Continuations of Loans..............32
2.10 Mandatory Prepayments and Reductions of Commitments.........................33
Section 3. Payments of Principal and Interest..........................................35
3.01 Repayment of Loans..........................................................35
3.02 Interest....................................................................35
Section 4. Payments; Pro Rata Treatment; Computations; Etc.............................36
4.01 Payments....................................................................36
4.02 Pro Rata Treatment..........................................................37
4.03 Computations................................................................38
4.04 Minimum Amounts.............................................................38
4.05 Certain Notices.............................................................38
4.06 Non-Receipt of Funds by the Administrative Agent............................39
4.07 Sharing of Payments, Etc....................................................40
Section 5. Yield Protection, Etc.......................................................41
5.01 Additional Costs............................................................41
5.02 Limitation on Types of Loans................................................43
5.03 Illegality..................................................................44
5.04 Treatment of Affected Loans.................................................44
5.05 Compensation................................................................45
5.06 Additional Costs in Respect of Letters of Credit............................45
5.07 U.S. Taxes..................................................................46
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Section 6. Conditions Precedent........................................................47
6.01 Conditions to Effectiveness.................................................47
6.02 Initial and Subsequent Extensions of Credit.................................49
Section 7. Representations and Warranties..............................................50
7.01 Corporate Existence.........................................................50
7.02 Financial Condition.........................................................50
7.03 Litigation..................................................................50
7.04 No Breach...................................................................51
7.05 Action......................................................................51
7.06 Approvals...................................................................51
7.07 Use of Credit...............................................................51
7.08 ERISA.......................................................................52
7.09 Taxes.......................................................................52
7.10 Investment Company Act......................................................52
7.11 Public Utility Holding Company Act..........................................52
7.12 Material Agreements and Liens...............................................52
7.13 Environmental Matters.......................................................53
7.14 Capitalization..............................................................54
7.15 Subsidiaries, Etc...........................................................55
7.16 Title to Assets.............................................................55
7.17 Compliance with Law.........................................................56
7.18 True and Complete Disclosure................................................56
7.19 Year 2000...................................................................56
Section 8. Covenants of the Company....................................................57
8.01 Financial Statements, Etc...................................................57
8.02 Litigation..................................................................60
8.03 Existence, Etc..............................................................60
8.04 Insurance...................................................................61
8.05 Prohibition of Fundamental Changes..........................................61
8.06 Limitation on Liens.........................................................61
8.07 Indebtedness................................................................63
8.08 Investments.................................................................64
8.09 Restricted Payments.........................................................65
8.10 Leverage Ratio..............................................................65
8.11 Adjusted Net Worth..........................................................66
8.12 Interest Coverage Ratio.....................................................66
8.13 [Intentionally Omitted.]....................................................67
8.14 Lines of Business...........................................................67
8.15 Transactions with Affiliates................................................67
8.16 Use of Proceeds.............................................................68
8.17 Certain Obligations Respecting Subsidiaries.................................68
8.18 Modifications of Certain Documents..........................................69
8.19 Environmental Matters.......................................................69
</TABLE>
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8.20 Security for Loans..........................................................70
8.21 Redemption of Senior Subordinated Indebtedness..............................70
Section 9. Events of Default...........................................................70
Section 10. The Administrative Agent....................................................73
10.01 Appointment, Powers and Immunities..........................................73
10.02 Reliance by Administrative Agent............................................74
10.03 Defaults....................................................................74
10.04 Rights as a Lender..........................................................75
10.05 Indemnification.............................................................75
10.06 Non-Reliance on Administrative Agent and Other Lenders......................76
10.07 Failure to Act..............................................................76
10.08 Resignation or Removal of Administrative Agent..............................76
10.09 Consents under Basic Documents..............................................77
10.10 Collateral Sub-Agents.......................................................77
10.11 Documentation Agent.........................................................77
Section 11. Miscellaneous...............................................................77
11.01 Waiver......................................................................77
11.02 Notices.....................................................................78
11.03 Expenses, Etc...............................................................78
11.04 Amendments, Etc.............................................................79
11.05 Successors and Assigns......................................................80
11.06 Assignments and Participations..............................................80
11.07 Survival....................................................................82
11.08 Captions....................................................................82
11.09 Counterparts................................................................83
11.10 Governing Law; Submission to Jurisdiction...................................83
11.11 Waiver of Jury Trial........................................................83
11.12 Treatment of Certain Information; Confidentiality...........................83
11.13 Amended and Restated Security Agreement.....................................84
</TABLE>
<PAGE>
Annex 1 - Commitments
Annex 2 Pledged Stock
Annex 3 Pledged Membership Interests
SCHEDULE I - Material Agreements and Liens
SCHEDULE II - Hazardous Materials
SCHEDULE III - Subsidiaries and Investments
SCHEDULE IV - Approvals and Compliance
SCHEDULE V - Existing Letters of Credit
SCHEDULE VI - Taxes
SCHEDULE VII - Transactions with Affiliates
EXHIBIT A-1 - Form of Security Agreement
EXHIBIT A-2 - Form of In-Flight Guarantee and Security Agreement
EXHIBIT B - Form of Confidentiality Agreement
EXHIBIT C - Form of Series C Letter of Credit
(iv)
<PAGE>
FIFTH AMENDED AND RESTATED CREDIT AGREEMENT dated as of October
29, 1993, amended and restated as of August 7, 1998, among: BE AEROSPACE, INC.,
a corporation duly organized and validly existing under the laws of the State of
Delaware (the "Company"); each of the lenders that is a signatory hereto
identified under the caption "LENDERS" on the signature pages hereto or which,
pursuant to Section 11.06(b) hereof, shall become a "Lender" hereunder
(individually, a "Lender" and, collectively, the "Lenders"); and THE CHASE
MANHATTAN BANK, a New York banking corporation, as agent for the Lenders (in
such capacity, together with its successors in such capacity, the
"Administrative Agent").
The Company, certain Lenders and the Administrative Agent are
party to a Fourth Amended and Restated Credit Agreement dated as of October 29,
1993, amended and restated as of April 3, 1998 (as modified and supplemented and
in effect immediately prior to the Amendment Effective Date referred to below,
the "Existing Credit Agreement"). The Company has requested that the Lenders and
the Administrative Agent agree to amend and restate the Existing Credit
Agreement, and the Lenders and the Administrative Agent are willing to amend and
restate the Existing Credit Agreement, all on the terms and conditions herein
set forth.
Accordingly, the parties hereto agree to amend and restate the
Existing Credit Agreement so that, as amended and restated, it reads in its
entirety as provided herein.
Section 1. Definitions and Accounting Matters.
1.01 Certain Defined Terms.
As used herein, the following terms shall have the following
meanings (all terms defined in this Section 1.01 or in other provisions of this
Agreement in the singular to have the same meanings when used in the plural and
vice versa):
"Acquisition" shall mean any transaction, or any series of
related transactions, by which the Company and/or any of its Subsidiaries (a)
acquires any ongoing business or all or substantially all of the assets of any
Person, whether through purchase of assets, merger or otherwise, (b) directly or
indirectly acquires control of at least a majority (in number of votes) of the
securities of a corporation which have ordinary voting power for the election of
directors or (c) directly or indirectly acquires control of a majority ownership
interest in any partnership, joint venture or similar arrangement. The terms
"Acquire" and "Acquired" used as a verb shall have a correlative meaning.
"Adjusted Net Worth" shall mean, as at any date, the sum of (a)
total stockholders' equity of the Company and its Subsidiaries (determined on a
consolidated basis without duplication in accordance with GAAP) plus (b) the
aggregate amount of Restricted Payments made since November 29, 1997 in respect
of the purchase, redemption, retirement or other acquisition of any shares of
any class of stock of the Company permitted under Section 8.09 hereof plus (c)
the fair market value of any shares of capital stock of the Company (determined
as of the date such shares are issued) issued after November 29, 1997 which are
utilized in any
<PAGE>
- 2 -
business combination accounted for using pooling of interest accounting plus (d)
an amount not to exceed $35,000,000 in the aggregate of the after-tax amount
(calculated using the then effective corporate Federal tax rate, regardless of
the after-tax amount determined in accordance with GAAP) of any nonrecurring
noncash write-offs of intangible assets since November 29, 1997 plus (e) the
amount of any purchased research and development and related acquisition costs
of a target company to the extent such costs are or have been expensed after
November 29, 1997.
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in a form supplied by the Administrative Agent.
"Affiliate" shall mean any Person that directly or indirectly
controls, or is under common control with, or is controlled by, the Company and,
if such Person is an individual, any member of the immediate family (including
parents, spouse, children and siblings) of such individual and any trust whose
principal beneficiary is such individual or one or more members of such
immediate family and any Person who is controlled by any such member or trust.
As used in this definition, "control" (including, with its correlative meanings,
"controlled by" and "under common control with") shall mean possession, directly
or indirectly, of power to direct or cause the direction of management or
policies (whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise), provided that, in any event, any
Person that owns directly or indirectly securities having 5% or more of the
voting power for the election of directors or other governing body of a
corporation or 5% or more of the partnership or other ownership interests of any
other Person (other than as a limited partner of such other Person) will be
deemed to control such corporation or other Person. Notwithstanding the
foregoing, (a) no individual shall be an Affiliate solely by reason of his or
her being a director, officer or employee of the Company or any of its
Subsidiaries and (b) none of the Subsidiaries of the Company shall be
Affiliates.
"Amendment Effective Date" shall mean the date on which all of
the conditions set forth in Section 6.01 hereof shall have been satisfied or
waived by the Lenders and the Administrative Agent.
"Applicable Lending Office" shall mean, for each Lender and for
each Type of Loan, the "Lending Office" of such Lender (or of an affiliate of
such Lender) designated for such Type of Loan in the Administrative
Questionnaire submitted by such Lender or such other office of such Lender (or
of an affiliate of such Lender) as such Lender may from time to time specify to
the Administrative Agent and the Company as the office by which its Loans of
such Type are to be made and maintained.
<PAGE>
- 3 -
"Applicable Margin" shall mean with respect to Base Rate Loans
and Eurodollar Loans, the rate for such Type of Loan for each level period set
forth in the schedule below:
Applicable Margin
Level Period Base Rate Loans Eurodollar Loans
- ----------------------------- ---------------------- ----------------------
Level I Period 0.00% 0.500%
Level II Period 0.00% 0.750%
Level III Period 0.00% 0.875%
Level IV Period 0.00% 1.000%
Level V Period 0.00% 1.250%
Level VI Period 0.25% 1.500%
Level VII Period 0.75% 2.000%
provided that notwithstanding anything herein to the contrary, the Applicable
Margin shall not be less than the rate for a Level VI Period from the Amendment
Effective Date until the earlier of (i) the third Business Day following of the
receipt of the financial statements under Section 8.01(b) as at and for the
fiscal quarter ending on the Fiscal Date in November, 1998 and (ii) the
termination of the Series C Commitments and the repayment in full of the Series
C Loans.
"B/E Services" shall mean B/E Aerospace Services, Inc., a
Delaware corporation and Wholly Owned Subsidiary of the Company.
"Bankruptcy Code" shall mean the Federal Bankruptcy Code of 1978,
as amended from time to time.
"Base Rate" shall mean, for any day, a rate per annum equal to
the higher of (a) the Federal Funds Rate for such day plus 1/2 of 1% and (b) the
Prime Rate for such day. Each change in any interest rate provided for herein
based upon the Base Rate resulting from a change in the Base Rate shall take
effect at the time of such change in the Base Rate.
"Base Rate Loans" shall mean Loans that bear interest at rates
based upon the Base Rate.
"Basic Documents" shall mean, collectively, this Agreement, the
Notes, the Letter of Credit Documents and the Security Documents.
"Business Day" shall mean any day (a) on which commercial banks
are not authorized or required to close in New York City and (b) if such day
relates to a borrowing of, a payment or prepayment of principal of or interest
on, a Conversion of or into, or an Interest Period for, a Eurodollar Loan or a
notice by the Company with respect to any such borrowing, payment, prepayment,
Conversion or Interest Period, which is also a day on which dealings in Dollar
deposits are carried out in the London interbank market.
<PAGE>
- 4 -
"Calculation Period" shall mean, as at any date, the period of
four consecutive complete fiscal quarters of the Company ending on or most
recently ended prior to such date for which financial statements have been
delivered pursuant to Sections 7.02(a), 8.01(a), 8.01(b) or 8.01(h) hereof.
"Capital Lease Obligations" shall mean, for any Person, all
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP (including Statement of Financial
Accounting Standards No. 13 of the Financial Accounting Standards Board), and,
for purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP (including such
Statement No. 13).
"Casualty Event" shall mean, with respect to any Property of any
Person, any loss of or damage to, or any condemnation or other taking of, such
Property for which such Person or any of its Subsidiaries receives insurance
proceeds, or proceeds of a condemnation award or other compensation.
"Chase" shall mean The Chase Manhattan Bank.
"Class" shall have the meaning assigned to such term in Section
1.03 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
"Collateral Account" shall have the meaning assigned to such term
in Section 4.01 of the Security Agreement.
"Commitment Fee Rate" shall mean (a) 0.2000% for any Level I
Period, (b) 0.2250% for any Level II Period, (c) 0.2500% for any Level III
Period, (d) 0.2750% for any Level IV Period, (e) 0.3250% for any Level V Period,
(f) 0.3750% for any Level VI Period and (e) 0.5000% for any Level VII Period,
provided that notwithstanding anything herein to the contrary, the Commitment
Fee Rate shall not be less than the rate for a Level VI Period from the
Amendment Effective Date until the earlier of (i) the third Business Day
following of the receipt of the financial statements under Section 8.01(b) as at
and for the fiscal quarter ending on the Fiscal Date in November, 1998 and (ii)
the termination of the Series C Commitments and the repayment in full of the
Series C Loans.
"Commitments" shall mean the Series A Commitments, the Series B
Commitments and the Series C Commitments.
"Continue", "Continuation" and "Continued" shall refer to the
continuation pursuant to Section 2.09 hereof of a Eurodollar Loan from one
Interest Period to the next Interest Period.
<PAGE>
- 5 -
"Convert", "Conversion" and "Converted" shall refer to a
conversion pursuant to Section 2.09 hereof of one Type of Loans into another
Type of Loans, which may be accompanied by the transfer by a Lender (at its sole
discretion) of a Loan from one Applicable Lending Office to another.
"Default" shall mean an Event of Default or an event that with
notice or lapse of time or both would become an Event of Default.
"Disposition" shall mean any sale, assignment, transfer or other
disposition of any Property (whether now owned or hereafter acquired) by the
Company or any of its Subsidiaries to any Person excluding any sale, assignment,
transfer or other disposition of inventory in the ordinary course of business
and on ordinary business terms; provided that the term "Disposition" shall not
include (i) any Equity Issuance (as such term is defined in this Section 1.01
without giving effect to the proviso therein), (ii) any sale, assignment,
transfer or other disposition of Property by any Subsidiary of the Company to
the Company or to any other Subsidiary of the Company, in each case for
consideration that is not in excess of the fair market value of such Property as
determined in good faith by the chief financial officer of the Company or (iii)
any sale, assignment, transfer or other disposition of Property by the Company
or any Subsidiary of the Company to a joint venture, subject to the proviso in
Section 8.08(h) hereof. The creation of any Lien on any Property permitted under
Section 8.06 hereof shall not constitute a "Disposition" of such Property. The
term "Dispose" shall have a correlative meaning.
"Dollars" and "$" shall mean lawful money of the United States of
America.
"Domestic Subsidiary" shall mean any Subsidiary of the Company
that is incorporated under the law of any State of the United States of America.
"EBITDA" shall mean, for any period of four consecutive fiscal
quarters of the Company, for the Company and its Subsidiaries (determined on a
consolidated basis without duplication in accordance with GAAP), net operating
earnings (calculated before depreciation and amortization expense, non-recurring
non-cash write-offs of assets (to the extent deducted in computing net operating
earnings), Interest Expense, taxes and extraordinary and unusual items) for such
period.
"Environmental Claim" shall mean, with respect to any Person, (a)
any written notice, claim, demand or other communication (collectively, a
"claim") by any other Person alleging or asserting such Person's liability for
investigatory costs, cleanup costs, governmental response costs, damages to
natural resources or other Property, personal injuries, fines or penalties
arising out of, based on or resulting from (i) the presence, or Release into the
environment, of any Hazardous Material at any location, whether or not owned by
such Person, or (ii) circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law. The term "Environmental Claim"
shall include, without limitation, any written claim by any governmental
authority for enforcement, cleanup, removal, response, remedial or other actions
or damages pursuant to any applicable Environmental Law, and any written claim
by any third party seeking damages, contribution, indemnification, cost
recovery,
<PAGE>
- 6 -
compensation or injunctive relief resulting from the presence of Hazardous
Materials or arising from alleged injury or threat of injury to health, safety
or the environment.
"Environmental Laws" shall mean any and all present and future
Federal, state, local and foreign laws, rules or regulations, and any orders or
decrees, in each case as now or hereafter in effect, relating to the regulation
or protection of human health, safety or the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or toxic or hazardous substances or wastes into the indoor or outdoor
environment, including, without limitation, ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals or toxic or
hazardous substances or wastes.
"Equity Issuance" shall mean (a) any issuance or sale by the
Company or any of its Subsidiaries after the Restatement Date of (i) any capital
stock, (ii) any warrants or options exercisable in respect of capital stock
(other than any warrants or options issued to directors, officers, employees,
agents, consultants or advisors of the Company or any of its Subsidiaries and
any capital stock of the Company issued upon the exercise of such warrants or
options) or (iii) any other security or instrument representing an equity
interest (or the right to obtain any equity interest) in the issuing or selling
Person or (b) the receipt by the Company or any of its Subsidiaries after
November 29, 1997 of any capital contribution (whether or not evidenced by any
equity security issued by the recipient of such contribution); provided that
Equity Issuance shall not include (x) any such issuance or sale by any
Subsidiary of the Company to the Company or any Wholly Owned Subsidiary of the
Company, (y) any capital contribution by the Company or any Wholly Owned
Subsidiary of the Company to any Subsidiary of the Company or (z) any such
issuance or sale by the Company in connection with a permitted Acquisition under
Section 8.05(b).
"Equity Rights" shall mean, with respect to any Person, any
outstanding subscriptions, options, warrants, commitments, preemptive rights or
agreements of any kind (including, without limitation, any stockholders' or
voting trust agreements) for the issuance, sale, registration or voting of, or
outstanding securities convertible into, any additional shares of capital stock
of any class, or partnership or other ownership interests of any type in, such
Person.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or business
that is a member of any group of organizations (i) described in Section 414(b)
or (c) of the Code of which the Company is a member and (ii) solely for purposes
of potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11)
of the Code and the lien created under Section 302(f) of ERISA and Section
412(n) of the Code, described in Section 414(m) or (o) of the Code of which the
Company is a member.
"Eurodollar Base Rate" shall mean, with respect to any Eurodollar
Loan for any Interest Period therefor, the arithmetic mean (rounded upwards, if
necessary, to the nearest 1/100
<PAGE>
- 7 -
of 1%) of the respective rates per annum quoted by each Reference Lender at
approximately 11:00 a.m. London time (or as soon thereafter as practicable) on
the date two Business Days prior to the first day of such Interest Period for
the offering by such Reference Lender to leading banks in the London interbank
market of Dollar deposits having a term comparable to such Interest Period and
in an amount comparable to the principal amount of the Eurodollar Loan to be
made by such Reference Lender for such Interest Period. If any Reference Lender
is not participating in any Eurodollar Loan during any Interest Period therefor,
the Eurodollar Base Rate for such Loan for such Interest Period shall be
determined by reference to the amount of the Eurodollar Loan to be made by Chase
for such Interest Period.
"Eurodollar Loans" shall mean Loans the interest rates on which
are determined on the basis of rates referred to in the definition of
"Eurodollar Base Rate" in this Section 1.01.
"Eurodollar Rate" shall mean, for any Eurodollar Loan for any
Interest Period therefor, a rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) determined by the Administrative Agent to be equal to
the Eurodollar Base Rate for such Loan for such Interest Period divided by 1
minus the Reserve Requirement for such Loan for such Interest Period.
"Event of Default" shall have the meaning assigned to such term
in Section 9 hereof.
"Existing Credit Agreement" shall have the meaning assigned to
such term in the recitals hereto.
"Existing Lenders" shall mean the lenders party to the Existing
Credit Agreement.
"Existing Letters of Credit" shall have the meaning assigned to
such term in Section 2.03(A)(l) hereof.
"Federal Funds Rate" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (a) if the day for which such rate is to
be determined is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day and (b) if such rate is not so
published for any Business Day, the Federal Funds Rate for such Business Day
shall be the average rate charged to Chase on such Business Day on such
transactions as determined by the Administrative Agent.
"Fiscal Date" shall mean the last day of each fiscal quarterly
period of the Company.
"Foreign Subsidiary" shall mean each Subsidiary of the Company
other than any Domestic Subsidiary.
<PAGE>
- 8 -
"Funded Debt" shall mean, for any Person: (a) all Indebtedness of
such Person that should be reflected on a balance sheet of such Person in
accordance with GAAP, (b) all Indebtedness of any other Person that should be
reflected on a balance sheet of such other Person in accordance with GAAP and
that is secured by a Lien on the Property of, is supported by a letter of credit
issued for account of, or is Guaranteed by, such Person and (c) in respect of
the Company, the amount of the Series C Letter of Credit.
"GAAP" shall mean generally accepted accounting principles
applied on a basis consistent with those which, in accordance with the last
sentence of Section 1.02(a) hereof, are to be used in making the calculations
for purposes of determining compliance with this Agreement.
"GE Lease Agreement" shall mean the Master Lease Agreement dated
as of October 20, 1997 between the Company and General Electric Capital
Corporation, for itself and as Agent for Certain Participants.
"Guarantee" shall mean a guarantee, an endorsement, a contingent
agreement to purchase or to furnish funds for the payment or maintenance of, or
otherwise to be or become contingently liable under or with respect to, the
Indebtedness, other obligations, net worth, working capital or earnings of any
Person, or a guarantee of the payment of dividends or other distributions upon
the stock or equity interests of any Person, or an agreement to purchase, sell
or lease (as lessee or lessor) Property, products, materials, supplies or
services primarily for the purpose of enabling a debtor to make payment of such
debtor's obligations or an agreement to assure a creditor against loss, and
including, without limitation, causing a bank or other financial institution to
issue a letter of credit or other similar instrument for the benefit of another
Person, but excluding endorsements for collection or deposit in the ordinary
course of business. The terms "Guarantee" and "Guaranteed" used as a verb shall
have a correlative meaning.
"Hazardous Material" shall mean, collectively, (a) any petroleum
or petroleum products, flammable explosives, radioactive materials, asbestos in
any form that is or could become friable, urea formaldehyde foam insulation, and
transformers or other equipment that contain dielectric fluid containing
polychlorinated biphenyls (PCB's), (b) any chemicals or other materials or
substances which are now or hereafter become defined as or included in the
definition of "hazardous substances", "hazardous wastes", "hazardous materials",
"extremely hazardous wastes", "restricted hazardous wastes", "toxic substances",
"toxic pollutants", "contaminants", "pollutants" or words of similar import
under any Environmental Law and (c) any other chemical or other material or
substance, exposure to which is now or hereafter prohibited, limited or
regulated under any Environmental Law.
"Indebtedness" shall mean, for any Person: (a) obligations
created, issued or incurred by such Person for borrowed money (whether by loan,
the issuance and sale of debt securities or the sale of Property to another
Person subject to an understanding or agreement, contingent or otherwise, to
repurchase such Property from such Person); (b) obligations of such Person to
pay the deferred purchase or acquisition price of Property or services, other
than trade accounts payable (other than for borrowed money) arising, and accrued
expenses incurred, in the ordinary course of business so long as such trade
accounts payable are payable within 90 days of
<PAGE>
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the date the respective goods are delivered or the respective services are
rendered; (c) Indebtedness of others secured by a Lien on the Property of such
Person, whether or not the respective indebtedness so secured has been assumed
by such Person; (d) obligations of such Person in respect of letters of credit
or similar instruments issued or accepted by banks and other financial
institutions for account of such Person; (e) Capital Lease Obligations of such
Person; and (f) Indebtedness of others Guaranteed by such Person.
"In-Flight" shall mean In-Flight Entertainment, LLC, a Delaware
limited liability company and Wholly Owned Subsidiary of the Company.
"In-Flight Guarantee and Security Agreement" shall mean the
Amended and Restated Guarantee and Security Agreement dated as of November 19,
1997, amended and restated as of April 3, 1998, between In-Flight and the
Administrative Agent, substantially in the form of Exhibit A-2 hereto, as the
same shall be modified, supplemented and in effect from time to time.
"Information Memorandum" shall mean the Confidential Information
Memorandum dated July, 1998 distributed to the Lenders.
"Interest Coverage Ratio" shall mean, as at any date the ratio of
(i) EBITDA for the relevant Calculation Period to (ii) Interest Expense for such
Calculation Period; provided that, from and after the date of any Acquisition
occurring after February 28, 1998 until four full fiscal quarters of the Company
have elapsed since the date of such Acquisition, the Interest Coverage Ratio
shall be calculated on a pro forma basis (reflecting, inter alia, any amount
attributable to any operating expense that will be eliminated or cost reduction
that will be realized (in each case, net of any operating expense or other cost
increase) in connection with such Acquisition, as determined in good faith by
the chief financial officer of the Company in accordance with GAAP and the
rules, regulations and guidelines of the Securities and Exchange Commission, as
if such elimination of operating expense or the realization of such cost
reductions were achieved at the beginning of such four-quarter period) as though
such Acquisition had occurred, and any Funded Debt incurred or assumed by the
Company or any of its Subsidiaries in connection with, or in anticipation of,
such Acquisition had been incurred or assumed, on the first day of such
Calculation Period.
"Interest Expense" shall mean, for any period, the sum, for the
Company and its Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), of the following: (a) all interest in
respect of Indebtedness accrued or capitalized during such period (whether or
not actually paid during such period) plus (b) the net amounts payable (or minus
the net amounts receivable) under Interest Rate Protection Agreements accrued
during such period (whether or not actually paid or received during such period)
minus (c) interest income during such period.
"Interest Period" shall mean, with respect to any Eurodollar
Loan, each period commencing on the date such Eurodollar Loan is made or
Converted from a Base Rate Loan or the last day of the next preceding Interest
Period for such Loan and ending on the numerically corresponding day in the
first, second, third or sixth calendar month thereafter, as the Company may
select as provided in Section 4.05 hereof, except that each Interest Period that
commences
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on the last Business Day of a calendar month (or on any day for which there is
no numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar month.
Notwithstanding the foregoing: (i) no Interest Period for any Series A Loan may
end after the Series A Commitment Termination Date; (ii) no Interest Period for
any Series B Loan may commence before and end after any Series B Principal
Payment Date unless, after giving effect thereto, the aggregate principal amount
of the Series B Loans having Interest Periods that end after such Series B
Principal Payment Date shall be equal to or less than the aggregate principal
amount of the Series B Loans scheduled to be outstanding after giving effect to
the payments of principal required to be made on such Series B Principal Payment
Date; (iii) no Interest Period for any Series C Loan may end after the Series C
Commitment Termination Date; (iv) each Interest Period that would otherwise end
on a day which is not a Business Day shall end on the next succeeding Business
Day (or, if such next succeeding Business Day falls in the next succeeding
calendar month, on the next preceding Business Day); and (v) notwithstanding
clauses (i), (ii) and (iii) above, no Interest Period shall have a duration of
less than one month and, if the Interest Period for any Eurodollar Loan would
otherwise be a shorter period, such Eurodollar Loan shall not be available
hereunder for such period.
"Interest Rate Protection Agreement" shall mean, for any Person,
an interest rate swap, cap or collar agreement or similar arrangement between
such Person and one or more financial institutions providing for the transfer or
mitigation of interest risks either generally or under specific contingencies.
For purposes hereof, the "credit exposure" at any time of any Person under an
Interest Rate Protection Agreement to which such Person is a party shall be
determined at such time in accordance with the standard methods of calculating
credit exposure under similar arrangements as prescribed from time to time by
the Administrative Agent, taking into account potential interest rate movements
and the respective termination provisions and notional principal amount and term
of such Interest Rate Protection Agreement.
"Investment" shall mean, for any Person: (a) the acquisition
(whether for cash, Property, services or securities or otherwise) of capital
stock, bonds, notes, debentures, partnership or other ownership interests or
other securities of, or capital contribution to, any other Person or any
agreement to make any such acquisition or capital contribution (including,
without limitation, any "short sale" or any sale of any securities at a time
when such securities are not owned by the Person entering into such short sale);
(b) the making of any deposit with, or advance, loan or other extension of
credit to, any other Person (including the purchase of Property from another
Person subject to an understanding or agreement, contingent or otherwise, to
resell such Property to such Person, but excluding any such advance, loan or
extension of credit having a term not exceeding 90 days representing the
purchase price of inventory or supplies sold by such Person in the ordinary
course of business); (c) the entering into of any Guarantee of, or other
contingent obligation with respect to, Indebtedness or other liability of any
other Person and (without duplication) any amount committed to be advanced, lent
or extended to such Person; or (d) the entering into of any Interest Rate
Protection Agreement.
"Issuing Lender" shall mean Chase, as the issuer of Letters of
Credit under Section 2.03 hereof, together with its successors and assigns in
such capacity.
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"Letter of Credit" shall mean a Series A Letter of Credit or the
Series C Letter of Credit.
"Letter of Credit Interest" shall mean the Series A Letter of
Credit Interest or the Series C Letter of Credit Interest.
"Letter of Credit Liabilities" shall mean the Series A Letter of
Credit Liabilities or the Series C Letter of Credit Liabilities.
"Level I Period" shall mean any period during which (a) no Event
of Default shall have occurred and be continuing, and (b) the Leverage Ratio is
less than 2.25 to 1; "Level II Period" shall mean any period, other than a Level
I Period, during which (a) no Event of Default shall have occurred and be
continuing and (b) the Leverage Ratio is greater than or equal to 2.25 to 1 but
less than 2.75 to 1; "Level III Period" shall mean any period, other than a
Level I Period or a Level II Period, during which (a) no Event of Default shall
have occurred and be continuing and (b) the Leverage Ratio is greater than or
equal to 2.75 to 1 but less than 3.25 to 1; "Level IV Period" shall mean any
period, other than a Level I Period, a Level II Period or a Level III Period
during which (a) no Event of Default shall have occurred and be continuing and
(b) the Leverage Ratio is greater than or equal to 3.25 to 1 but less than 3.75
to 1; "Level V Period" shall mean any period, other than a Level I Period, a
Level II Period, a Level III Period or Level IV Period during which (a) no Event
of Default shall have occurred and be continuing and (b) the Leverage Ratio is
greater than or equal to 3.75 to 1 but less than 4.25 to 1; "Level VI Period"
shall mean any period that is not a Level I Period, a Level II Period, a Level
III Period, a Level IV Period or a Level V Period during which (a) no Event of
Default shall have occurred and be continuing and (b) the Leverage Ratio is
greater than or equal to 4.25 to 1 but less than 4.75; and "Level VII Period"
shall mean any period that is not a Level I Period, a Level II Period, a Level
III Period, a Level IV Period, a Level V Period or a Level VI Period. Any change
in the Applicable Margin for any Type of Loan or any change in the Commitment
Fee by reason of a change in the Leverage Ratio shall become effective on the
third Business Day following receipt by the Administrative Agent of the
financial statements of the Company and its Subsidiaries delivered as required
by Sections 8.01(a), (b) or (h) hereof; provided that failure to deliver such
financial statements as required by Sections 8.01(a), (b) or (h) hereof shall
result in the Applicable Margin and Commitment Fee Rate being at the rates set
forth opposite Level VII Period.
"Leverage Ratio" shall mean, as at any date, the ratio of Total
Funded Debt at such date to EBITDA for the relevant Calculation Period; provided
that, from and after the date of any Acquisition occurring after February 28,
1998 until four full fiscal quarters of the Company shall have elapsed since the
date of such Acquisition, the Leverage Ratio shall be calculated on a pro forma
basis (reflecting, inter alia, any amount attributable to any operating expense
that will be eliminated or cost reduction that will be realized (in each case,
net of any operating expense or other cost increase) in connection with such
Acquisition, as determined in good faith by the chief financial officer of the
Company in accordance with GAAP and the rules, regulations and guidelines of the
Securities and Exchange Commission, as if such elimination of operating expense
or the realization of such cost reductions were achieved at the beginning of
such four-quarter period") as though such Acquisition had occurred, any Funded
Debt incurred
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or assumed by the Company or any of its Subsidiaries in connection with, or in
anticipation of, such Acquisition had been incurred or assumed, on the first day
of such Calculation Period.
"Lien" shall mean, with respect to any Property, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in respect of
such Property. For purposes of this Agreement and the other Basic Documents, a
Person shall be deemed to own subject to a Lien any Property that it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
(other than an operating lease) relating to such Property.
"Loans" shall mean the Series A Loans, the Series B Loans and the
Series C Loans.
"Majority Lenders" shall mean Majority Series A Lenders, Majority
Series B Lenders and Majority Series C Lenders.
"Majority Series A Lenders" shall mean Series A Lenders having
more than 50% of the aggregate amount of the Series A Commitments or, if the
Series A Commitments shall have terminated, Lenders holding more than 50% of the
sum of (a) the aggregate unpaid principal amount of the Series A Loans plus (b)
the aggregate amount of all Letter of Credit Liabilities.
"Majority Series B Lenders" shall mean Series B Lenders having
more than 50% of the aggregate amount of the Series B Commitments or, if the
Series B Commitments shall have terminated, Lenders holding more than 50% of the
aggregate unpaid principal amount of the Series B Loans.
"Majority Series C Lenders" shall mean Series C Lenders having
more than 50% of the aggregate amount of the Series C Commitments or, if the
Series C Commitments shall have terminated, Lenders holding more than 50% of the
aggregate unpaid principal amount of the Series C Loans.
"Margin Stock" shall mean "margin stock" within the meaning of
Regulations U and X.
"Material Adverse Effect" shall mean a material adverse effect on
(a) the Property, business, operations, financial condition, prospects,
liabilities or capitalization of the Company and its Subsidiaries taken as a
whole, (b) the ability of the Company to perform its obligations under any of
the Basic Documents to which it is a party, (c) the validity or enforceability
of any of the Basic Documents, (d) the rights and remedies of the Lenders and
the Administrative Agent under any of the Basic Documents or (e) the timely
payment of the principal of or interest on the Loans or the Reimbursement
Obligations or other amounts payable in connection therewith.
"Material Subsidiary" shall mean at any date any Subsidiary of
the Company whose total assets equal or exceed 2% of the total assets of the
Company and its Subsidiaries on
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a consolidated basis as at the most recent Fiscal Date; provided that,
notwithstanding the above, each of B/E Services and Royal Inventum B.V. shall at
all times constitute a Material Subsidiary of the Company so long as it is a
Subsidiary of the Company.
"Multiemployer Plan" shall mean a multiemployer plan defined as
such in Section 3(37) of ERISA to which contributions have been made by the
Company or any ERISA Affiliate and which is covered by Title IV of ERISA.
"Net Available Proceeds" shall mean:
(i) in the case of any Disposition, the amount of Net Cash
Payments received in connection with such Disposition;
(ii) in the case of any Casualty Event, the aggregate amount of
proceeds of insurance, condemnation awards and other compensation
received by the Company and its Subsidiaries in respect of such Casualty
Event net of (A) reasonable expenses incurred by the Company and its
Subsidiaries in connection therewith and (B) contractually required
repayments of Indebtedness to the extent secured by a Lien on such
Property and any income and transfer taxes payable by the Company or any
of its Subsidiaries in respect of such Casualty Event;
(iii) in the case of any Equity Issuance, the aggregate amount of
all cash received by the Company and its Subsidiaries in respect of such
Equity Issuance net of reasonable expenses incurred by the Company and
its Subsidiaries in connection therewith; and
(iv) in the case of any Reversion, the aggregate amount of all
cash received by the Company or any of its Subsidiaries in respect of
such Reversion net of (A) reasonable expenses incurred by the Company
and its Subsidiaries in connection therewith and (B) any income and
excise taxes payable by the Company or any of its Subsidiaries in
respect of such Reversion.
"Net Cash Payments" shall mean, with respect to any Disposition,
the aggregate amount of all cash payments, and the fair market value of any
non-cash consideration, received by the Company and its Subsidiaries directly or
indirectly in connection with such Disposition; provided that (a) Net Cash
Payments shall be net of (i) the amount of any legal, accounting and other
professional fees, title and recording tax expenses, commissions and other fees
and expenses paid by the Company and its Subsidiaries in connection with such
Disposition and (ii) any Federal, state and local income or other taxes
estimated to be payable by the Company and its Subsidiaries as a result of such
Disposition (but only to the extent that such estimated taxes are in fact paid
to the relevant Federal, state or local governmental authority within three
months of date of such Disposition or the Company or any of its Subsidiaries
uses any applicable tax benefit available to it as set forth on its balance
sheet to reduce such estimated taxes payable within such three month period),
(b) Net Cash Payments shall not include any cash payments of less than $100,000
from any one Disposition or a series of related Dispositions, and (c) Net Cash
Payments shall be net of any repayments by the Company or any of its
Subsidiaries of Indebtedness to the extent that (i) such Indebtedness is secured
by a Lien on the Property that is
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the subject of such Disposition and (ii) the transferee of (or holder of a Lien
on) such Property requires that such Indebtedness be repaid as a condition to
the purchase of such Property.
"Notes" shall mean the promissory notes (if any) executed and
delivered by the Company pursuant to Section 2.08(d) hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Permitted Investments" shall mean any Investment in (i) direct
obligations of the United States of America or any agency thereof, or
obligations guaranteed by the United States of America, or of any agency
thereof; (ii) commercial paper rated at least A-1 by S&P or P-1 by Moody's;
(iii) time deposits with, including certificates of deposit issued by, any
office located in the United States of America of any bank or trust company
which is organized under the laws of the United States of America or any state
thereof and has capital, surplus and undivided profits aggregating at least
$1,000,000,000; (iv) shares of any money market or mutual fund not less than 80%
of the assets of which are invested solely in securities or obligations of the
type described in clauses (i) through (iii) above and (v) repurchase agreements
with respect to securities described in clause (i) above entered into with an
office of a bank or trust company meeting the criteria specified in clause (iii)
above, provided in each case that such Investment matures within one year from
the date of acquisition thereof by the Company or a Subsidiary of the Company.
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, trust, unincorporated
organization or government (or any agency, instrumentality or political
subdivision thereof).
"Plan" shall mean an employee benefit plan established or
maintained by the Company or any ERISA Affiliate and that is covered by Title IV
of ERISA, other than a Multiemployer Plan.
"Post-Default Rate" shall mean, in respect of any principal of
any Loan, any Reimbursement Obligation or any other amount under this Agreement,
any Note or any other Basic Document that is not paid when due (whether at
stated maturity, by acceleration, by optional or mandatory prepayment or
otherwise), a rate per annum during the period from and including the due date
to but excluding the date on which such amount is paid in full equal to 2% plus
the Base Rate as in effect from time to time plus the Applicable Margin for Base
Rate Loans (provided that, if the amount so in default is principal of a
Eurodollar Loan and the due date thereof is a day other than the last day of the
Interest Period therefor, the "Post-Default Rate" for such principal shall be,
for the period for and including such due date to but excluding the last day of
the Interest Period, 2% plus the interest rate for such Loan as provided in
Section 3.02 hereof and, thereafter, the rate provided for above in this
definition).
"Prime Rate" shall mean the rate of interest from time to time
announced by Chase at the Principal Office as its prime commercial lending rate.
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"Principal Office" shall mean the principal office of Chase,
located on the date hereof at 270 Park Avenue, New York, New York 10017.
"Property" shall mean any right or interest in or to property of
any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Quarterly Dates" shall mean the quarterly anniversaries of the
Restatement Date; provided that, if any such date is not a Business Day, the
Quarterly Date shall be the next succeeding Business Day (or, if such next
succeeding Business Day falls in the next succeeding calendar month, the next
preceding Business Day).
"Recapture Date" shall mean the last day of the Recapture Period.
"Recapture Period" shall mean each period (a) commencing on the
later of (i) the Restatement Date and (ii) the day immediately following the
last day of the immediately preceding Recapture Period, and (b) ending on the
date on which the Company and/or its Subsidiaries receives Net Available
Proceeds which, together with all Net Available Proceeds received since the
first day of such Recapture Period, equal or exceeds in the aggregate
$1,000,000.
"Reference Lenders" shall mean Chase and NationsBank, N.A.
"Regulations A, D, U and X" shall mean, respectively, Regulations
A, D, U and X of the Board of Governors of the Federal Reserve System (or any
successor), as the same may be modified and supplemented and in effect from time
to time.
"Regulatory Change" shall mean, with respect to any Lender, any
change after the date of this Agreement in Federal, state or foreign law or
regulations (including, without limitation, Regulation D) or the adoption or
making after such date of any interpretation, directive or request applying to a
class of banks including such Lender of or under any Federal, state or foreign
law or regulations (whether or not having the force of law and whether or not
failure to comply therewith would be unlawful) by any court or governmental or
monetary authority charged with the interpretation or administration thereof.
"Reimbursement Obligations" shall mean the Series A Reimbursement
Obligations and the Series C Reimbursement Obligations.
"Release" shall mean any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment, including, without limitation,
the movement of Hazardous Materials through ambient air, soil, surface water,
groundwater, wetlands, land or subsurface strata. The terms "Release" and
"Released" used as a verb shall have a correlative meaning.
"Reserve Requirement" shall mean, for any Interest Period for any
Eurodollar Loan, the average maximum rate at which reserves (including, without
limitation, any marginal, supplemental or emergency reserves) are required to be
maintained during such Interest Period
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under Regulation D by member banks of the Federal Reserve System in New York
City with deposits exceeding one billion Dollars against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the effect
of the foregoing, the Reserve Requirement shall include any other reserves
required to be maintained by such member banks by reason of any Regulatory
Change with respect to (i) any category of liabilities that includes deposits by
reference to which the Eurodollar Base Rate is to be determined as provided in
the definition of "Eurodollar Base Rate" in this Section 1.01 or (ii) any
category of extensions of credit or other assets that includes Eurodollar Loans.
"Restatement Date" shall mean August 7, 1998.
"Restricted Payment" shall mean, with respect to any Person, (a)
dividends (in cash, Property or obligations) on, or other payments or
distributions on account of, or the setting apart of money for a sinking or
other analogous fund for, or the purchase, redemption, retirement or other
acquisition of, any shares of any class of stock of such Person or of any
warrants (other than of shares of common stock, warrants or options of such
Person as payment for the exercise price of options or warrants to purchase
common stock of such Person having a fair market value equal to such exercise
price), options or other rights to acquire the same (or to make any payments to
any other Person, such as "phantom stock" payments, where the amount thereof is
calculated with reference to the fair market or equity value of such Person or
any of its Subsidiaries), but excluding dividends payable solely in shares of
common stock or in options, warrants or other rights to purchase such common
stock of such Person or (b) any payment (whether made by such Person or any of
its Subsidiaries) on account of the purchase, redemption, prepayment, defeasance
or other acquisition or retirement of value of any Indebtedness (such
Indebtedness, "Retired Indebtedness") that is subordinated in right of payment
to the prior payment of the Loans, except any such payment made from the
proceeds of (x) the issuance of any equity securities or (y) any additional
unsecured Indebtedness that does not rank senior in right of payment to, and
does not mature or have any mandatory prepayment, which does not include
required prepayments as a result of a change of control or asset sale, prior to
the maturity of, such Retired Indebtedness.
"Reversion" shall mean the termination by the Company or any of
its Subsidiaries of a Plan which results in a payment to the Company or any of
its Subsidiaries of any part of the over-funded portion of such Plan.
"Securities Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
"Security Agreement" shall mean the Amended and Restated Security
Agreement dated as of October 29, 1998, amended and restated as of April 3,
1998, between the Company and the Administrative Agent, substantially in the
form of Exhibit A-1 hereto, as the same shall be modified, supplemented and in
effect from time to time.
"Security Documents" shall mean, collectively, the Security
Agreement and the In-Flight Guarantee and Security Agreement.
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"Senior Subordinated Indentures" shall mean the Senior
Subordinated 1996 Indenture and the Senior Subordinated 1998 Indenture.
"Senior Subordinated 1996 Indenture" shall mean the Indenture
dated as of February 1, 1996 between the Company and Fleet National Bank
Connecticut, N.A., as Trustee, as the same shall be modified and supplemented
and in effect from time to time.
"Senior Subordinated 1998 Indenture" shall mean the Indenture
dated as of February 13, 1998 between the Company and United States Trust
Company of New York as Trustee, as the same shall be modified and supplemented
and in effect from time to time.
"Series A Commitment" shall mean, for each Series A Lender, the
obligation of such Lender to make Series A Loans, and to participate in Series A
Letters of Credit, in an aggregate amount at any one time outstanding up to but
not exceeding the amount set opposite the name of such Lender on Annex 1 hereto
under the caption "Series A Commitment" (as the same may be reduced from time to
time pursuant to Section 2.04 hereof or increased or reduced from time to time
pursuant to Section 11.06 hereof). The original aggregate principal amount of
the Series A Commitments is $100,000,000.
"Series A Commitment Percentage" shall mean, with respect to any
Series A Lender, the ratio of (a) the amount of the Series A Commitment of such
Lender to (b) the aggregate amount of the Series A Commitments of all of the
Lenders.
"Series A Commitment Termination Date" shall mean April 3, 2004;
provided that if such day is not a Business Day, the Series A Commitment
Termination Date shall be the immediately preceding Business Day.
"Series A Lenders" shall mean (a) on the Amendment Effective
Date, the Lenders having Series A Commitments as indicated on Annex 1 hereto and
(b) thereafter, the Lenders from time to time holding Series A Loans and Series
A Commitments after giving effect to any assignments thereof permitted by
Section 11.06 hereof.
"Series A Letter of Credit" shall mean any letter of credit
issued pursuant to Section 2.03(A) hereof.
"Series A Letter of Credit Documents" shall mean, with respect to
any Series A Letter of Credit, collectively, any application therefor and any
other agreements, instruments, guarantees or other documents (whether general in
application or applicable only to such Series A Letter of Credit) governing or
providing for (a) the rights and obligations of the parties concerned or at risk
with respect to such Series A Letter of Credit or (b) any collateral security
for any of such obligations, each as the same may be modified and supplemented
and in effect from time to time.
"Series A Letter of Credit Interest" shall mean, for each Series
A Lender, such Lender's participation interest (or, in the case of the Issuing
Lender, the Issuing Lender's retained interest) in the Issuing Lender's
liability under Series A Letters of Credit and such Lender's rights
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and interests in Series A Reimbursement Obligations and fees, interest and other
amounts payable in connection with Series A Letters of Credit and Series A
Reimbursement Obligations.
"Series A Letter of Credit Liability" shall mean, without
duplication, at any time and in respect of any Series A Letter of Credit, the
sum of (a) the undrawn amount of such Series A Letter of Credit plus (b) the
aggregate unpaid principal amount of all Series A Reimbursement Obligations of
the Company at such time due and payable in respect of all drawings made under
such Series A Letter of Credit. For purposes of this Agreement, a Series A
Lender (other than the Issuing Lender) shall be deemed to hold a Series A Letter
of Credit Liability in an amount equal to its participation interest in the
related Series A Letter of Credit under Section 2.03(A) hereof, and the Issuing
Lender shall be deemed to hold a Series A Letter of Credit Liability in an
amount equal to its retained interest in the related Series A Letter of Credit
after giving effect to the acquisition by the Series A Lenders other than the
Issuing Lender of their participation interests under said Section 2.03(A).
"Series A Loans" shall mean the loans provided for by Section
2.01(a) hereof, which may be Base Rate Loans and/or Eurodollar Loans.
"Series A Notes" shall mean the promissory notes (if any)
provided for by Section 2.08(d) hereof and all promissory notes delivered in
substitution or exchange therefor, in each case as the same shall be modified
and supplemented and in effect from time to time.
"Series A Reimbursement Obligations" shall mean, at any time, the
obligations of the Company then outstanding, or which may thereafter arise in
respect of all Series A Letters of Credit then outstanding, to reimburse amounts
paid by the Issuing Lender in respect of any drawings under a Series A Letter of
Credit.
"Series B Commitment" shall mean, for each Series B Lender, the
obligation of such Lender to make Series B Loans in an aggregate amount at any
one time outstanding up to but not exceeding the amount set opposite the name of
such Lender on Annex 1 hereto under the caption "Series B Commitment" (as the
same may be reduced from time to time pursuant to Section 2.04 hereof or
increased or reduced from time to time pursuant to Section 11.06 hereof). The
original aggregate principal amount of the Series B Commitments is $100,000,000.
"Series B Commitment Termination Date" shall mean April 2, 1999;
provided that if such day is not a Business Day, the Series B Commitment
Termination Date shall be the immediately preceding Business Day.
"Series B Lenders" shall mean (a) on the Amendment Effective
Date, the Lenders having Series B Commitments as indicated on Annex 1 hereto and
(b) thereafter, the Lenders from time to time holding Series B Loans and Series
B Commitments after giving effect to any assignments thereof permitted by
Section 11.06 hereof.
"Series B Loans" shall mean the loans provided for by Section
2.01(b) hereof, which may be Base Rate Loans and/or Eurodollar Loans.
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"Series B Notes" shall mean the promissory notes (if any)
provided for by Section 2.08(d) hereof and all promissory notes delivered in
substitution or exchange therefor, in each case as the same shall be modified
and supplemented and in effect from time to time.
"Series B Principal Payment Date" shall mean any Quarterly Date
on which payments of principal of Series B Loans are scheduled to be made
pursuant to Section 3.01(b) hereof.
"Series C Commitment" shall mean, for each Series C Lender, the
obligation of such Lender to make Series C Loans, and to participate in the
Series C Letter of Credit, in an aggregate amount at any one time outstanding up
to but not exceeding the amount set opposite the name of such Lender on Annex 1
hereto under the caption "Series C Commitment" (as the same may be reduced from
time to time pursuant to Section 2.04 hereof or increased or reduced from time
to time pursuant to Section 11.06 hereof). The original aggregate principal
amount of the Series C Commitments is $120,000,000.
"Series C Commitment Percentage" shall mean, with respect to any
Series C Lender, the ratio of (a) the amount of the Series C Commitment of such
Lender to (b) the aggregate amount of the Series C Commitments of all of the
Lenders.
"Series C Commitment Termination Date" shall mean April 2, 1999;
provided that if such day is not a Business Day, the Series C Commitment
Termination Date shall be the immediately preceding Business Day.
"Series C Lenders" shall mean (a) on the Amendment Effective
Date, the Lenders having Series C Commitments as indicated on Annex 1 hereto and
(b) thereafter, the Lenders from time to time holding Series C Loans and Series
C Commitments after giving effect to any assignments thereof permitted by
Section 11.06 hereof.
"Series C Letter of Credit" shall mean the letter of credit
issued pursuant to Section 2.03(B) hereof.
"Series C Letter of Credit Documents" shall mean, with respect to
the Series C Letter of Credit, collectively, any application therefor and any
other agreements, instruments, guarantees or other documents (whether general in
application or applicable only to the Series C Letter of Credit) governing or
providing for (a) the rights and obligations of the parties concerned or at risk
with respect to the Series C Letter of Credit or (b) any collateral security for
any of such obligations, each as the same may be modified and supplemented and
in effect from time to time.
"Series C Letter of Credit Interest" shall mean, for each Series
C Lender, such Lender's participation interest (or, in the case of the Issuing
Lender, the Issuing Lender's retained interest) in the Issuing Lender's
liability under the Series C Letter of Credit and such Lender's rights and
interests in Series C Reimbursement Obligations and fees, interest and other
amounts payable in connection with the Series C Letter of Credit and Series C
Reimbursement Obligations.
<PAGE>
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"Series C Letter of Credit Liability" shall mean, without
duplication, at any time and in respect of the Series C Letter of Credit, the
sum of (a) the undrawn amount of the Series C Letter of Credit plus (b) the
aggregate unpaid principal amount of all Series C Reimbursement Obligations of
the Company at such time due and payable in respect of all drawings made under
the Series C Letter of Credit. For purposes of this Agreement, a Series C Lender
(other than the Issuing Lender) shall be deemed to hold a Series C Letter of
Credit Liability in an amount equal to its participation interest in the Series
C Letter of Credit under Section 2.03(B) hereof, and the Issuing Lender shall be
deemed to hold a Series C Letter of Credit Liability in an amount equal to its
retained interest in the related Series C Letter of Credit after giving effect
to the acquisition by the Series C Lenders other than the Issuing Lender of
their participation interests under said Section 2.03(B).
"Series C Loans" shall mean the loans provided for by Section
2.01(c) hereof, which may be Base Rate Loans and/or Eurodollar Loans.
"Series C Notes" shall mean the promissory notes (if any)
provided for by Section 2.08(d) hereof and all promissory notes delivered in
substitution or exchange therefor, in each case as the same shall be modified
and supplemented and in effect from time to time.
"Series C Reimbursement Obligations" shall mean, at any time, the
obligations of the Company then outstanding, or which may thereafter arise in
respect of the Series C Letter of Credit then outstanding, to reimburse amounts
paid by the Issuing Lender in respect of any drawings under the Series C Letter
of Credit.
"SMR" shall mean SMR Aerospace, Inc., an Ohio corporation.
"Specified Subsidiary" shall mean each Subsidiary of the Company
identified as a "Specified Subsidiary" on Schedule III hereto, but only until
all (or, in the case of a Subsidiary that is not a Domestic Subsidiary, 65%) of
its shares that are owned by the Company become subject to the Lien of the
Security Agreement or are otherwise pledged to the Administrative Agent for the
benefit of the Lenders pursuant to documentation in form and substance
reasonably satisfactory to the Majority Lenders.
"Subsidiary" shall mean, for any Person, any corporation,
partnership or other entity of which at least a majority of the securities or
other ownership interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions of such corporation, partnership or other entity (irrespective of
whether or not at the time securities or other ownership interests of any other
class or classes of such corporation, partnership or other entity shall have or
might have voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by such Person or one or more
Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person. "Wholly Owned Subsidiary" shall mean any such corporation,
partnership or other entity of which all of the equity securities or other
ownership interests (other than, in the case of a corporation, directors'
qualifying shares) are so owned or controlled.
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"Total Funded Debt" shall mean, as at any date, the sum, for the
Company and its Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), of all Funded Debt.
"Type" shall have the meaning assigned to such term in Section
1.03 hereof.
1.02 Accounting Terms and Determinations.
-----------------------------------
(a) Except as otherwise expressly provided herein, all accounting
terms used herein shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered to the
Lenders hereunder shall (unless otherwise disclosed to the Lenders in writing at
the time of delivery thereof in the manner described in subsection (b) below) be
prepared, in accordance with generally accepted accounting principles applied on
a basis consistent with those used in the preparation of the latest financial
statements furnished to the Lenders hereunder (which, prior to the delivery of
the first financial statements under Section 8.01 hereof, shall mean the audited
financial statements as at February 28, 1998 referred to in Section 7.02
hereof). All calculations made for the purposes of determining compliance with
this Agreement shall (except as otherwise expressly provided herein) be made by
application of generally accepted accounting principles applied on a basis
consistent with those used in the preparation of the latest annual or quarterly
financial statements furnished to the Lenders pursuant to Section 8.01 hereof
(or, prior to the delivery of the first financial statements under Section 8.01
hereof, used in the preparation of the audited financial statements as at
February 28, 1998, referred to in Section 7.02 hereof) unless (i) the Company
shall have objected to determining such compliance on such basis at the time of
delivery of such financial statements or (ii) the Majority Lenders shall so
object in writing within 30 days after delivery of such financial statements, in
either of which events such calculations shall be made on a basis consistent
with those used in the preparation of the latest financial statements as to
which such objection shall not have been made (which, if objection is made in
respect of the first financial statements delivered under Section 8.01 hereof,
shall mean the audited financial statements as at February 28, 1998 referred to
in Section 7.02 hereof).
(b) The Company shall deliver to the Lenders at the same time as
the delivery of any annual or quarterly financial statement under Section 8.01
hereof (i) a description in reasonable detail of any material variation between
the application of accounting principles employed in the preparation of such
statement and the application of accounting principles employed in the
preparation of the next preceding annual or quarterly financial statements as to
which no objection has been made in accordance with the last sentence of
subsection (a) above and (ii) reasonable estimates of the difference between
such statements arising as a consequence thereof.
(c) To enable the ready and consistent determination of
compliance with the covenants set forth in Section 8 hereof, the fiscal year of
the Company shall end on the last Saturday in February of each year, and the
last days of the first three fiscal quarters shall fall on the last Saturday in
each of May, August and November of each year, respectively.
1.03 Classes and Types of Loans. Loans, Letters of Credit, Letter
of Credit Liabilities and Reimbursement Obligations hereunder are distinguished
by "Class" and by
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"Type". The "Class" of a Loan (or of a Commitment to make a Loan) refers to
whether such Loan is a Series A Loan, a Series B Loan or a Series C Loan, each
of which constitutes a Class. The "Type" of a Loan refers to whether such Loan
is a Base Rate Loan or a Eurodollar Loan, each of which constitutes a Type.
Loans may be identified by both Class and Type. A Class of Letter of Credit,
Letter of Credit Liabilities or Reimbursement Obligations refers to whether such
Letter of Credit, Letter of Credit Liability or Reimbursement Obligation is
under the Series A Commitments or the Series C Commitments.
Section 2. Commitments, Loans, Notes and Prepayments.
-----------------------------------------
2.01 Loans.
-----
(a) Series A Loans. Each Series A Lender severally agrees, on the
terms and conditions of this Agreement, to make loans to the Company in Dollars
to but not including the Series A Commitment Termination Date in an aggregate
principal amount at any one time outstanding up to but not exceeding the amount
of the Series A Commitment of such Lender as in effect from time to time (such
Loans, together with the "Series A Loans" made under the Existing Credit
Agreement, being herein called "Series A Loans"), provided that in no event
shall the aggregate principal amount of all Series A Loans, together with the
aggregate amount of all Series A Letter of Credit Liabilities, exceed the
aggregate amount of the Series A Commitments. Subject to the terms and
conditions of this Agreement, the Company may borrow, repay and reborrow the
amount of the Series A Commitments by means of Base Rate Loans and Eurodollar
Loans and may Convert Series A Loans of one Type into Series A Loans of another
Type (as provided in Section 2.09 hereof). Series A Loans outstanding under the
Existing Credit Agreement will continue as Series A Loans under this Agreement.
(b) Series B Loans. Each Series B Lender severally agrees, on the
terms and conditions of this Agreement, to make loans to the Company in Dollars
to but not including the Series B Commitment Termination Date in an aggregate
principal amount up to but not exceeding the amount of the Series B Commitment
of such Lender as in effect from time to time (such Loans being herein called
"Series B Loans"). Subject to the terms and conditions of this Agreement, the
Company may borrow the amount of the Series B Commitments by means of Base Rate
Loans and Eurodollar Loans and may Convert Series B Loans of one Type into
Series B Loans of another Type (as provided in Section 2.09 hereof) or Continue
Series B Loans of one Type as Series B Loans of the same Type (as provided in
Section 2.09 hereof). Series B Loans may be prepaid, but they may not be
reborrowed once prepaid. Series B Loans outstanding under the Existing Credit
Agreement will continue as Series B Loans under this Agreement.
(c) Series C Loans. Each Series C Lender severally agrees, on the
terms and conditions of this Agreement, to make loans to the Company in Dollars
from the date of issuance of the Series C Letter of Credit to but not including
the Series C Commitment Termination Date in an aggregate principal amount at any
one time outstanding up to but not exceeding the amount of the Series C
Commitment of such Lender as in effect from time to time (the "Series C Loans"),
provided that in no event shall the aggregate principal amount of all Series C
Loans, together with the aggregate amount of all Series C Letter of Credit
Liabilities, exceed the
<PAGE>
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aggregate amount of the Series C Commitments. Subject to the terms and
conditions of this Agreement, the Company may borrow, repay and reborrow the
amount of the Series C Commitments by means of Base Rate Loans and Eurodollar
Loans and may Convert Series C Loans of one Type into Series C Loans of another
Type (as provided in Section 2.09 hereof).
(d) Limit on Eurodollar Loans. No more than ten separate Interest
Periods in respect of Eurodollar Loans of either Class from each Lender may be
outstanding at any one time.
2.02 Borrowings. The Company shall give the Administrative Agent
(which shall promptly notify the Lenders) notice of each borrowing hereunder as
provided in Section 4.05 hereof. Not later than 1:00 p.m. New York time on the
date specified for each borrowing hereunder, each Lender shall make available
the amount of the Loan or Loans to be made by it on such date to the
Administrative Agent, to the account of the Administrative Agent most recently
designated by it for such purpose by notice to the Lenders, in immediately
available funds, for account of the Company. The amount so received by the
Administrative Agent shall, subject to the terms and conditions of this
Agreement, be made available to the Company by depositing the same, in
immediately available funds, in an account of the Company maintained with Chase
at the Principal Office designated by the Company.
2.03 Letters of Credit.
-----------------
(A) Series A Letters of Credit. Subject to the terms and conditions of
this Agreement, the Series A Commitments may be utilized, upon the request of
the Company, in addition to the Series A Loans provided for by Section 2.01(a)
hereof, by the issuance by the Issuing Lender of letters of credit
(collectively, "Series A Letters of Credit") for account of the Company or any
of its Subsidiaries (as specified by the Company), provided that in no event
shall (i) the aggregate amount of all Series A Letter of Credit Liabilities,
together with the aggregate principal amount of the Series A Loans, exceed the
aggregate amount of the Series A Commitments as in effect from time to time,
(ii) the outstanding aggregate amount of all Series A Letter of Credit
Liabilities exceed $15,000,000 and (iii) the expiration date of any Series A
Letter of Credit extend beyond the earlier of the Series A Commitment
Termination Date and the date twelve months following the issuance of such
Series A Letter of Credit. The following additional provisions shall apply to
Series A Letters of Credit:
(a) The Company shall give the Administrative Agent at least
three Business Days' irrevocable prior notice (effective upon receipt)
specifying the Business Day (which shall be no later than thirty days preceding
the Series A Commitment Termination Date) each Series A Letter of Credit is to
be issued and the account party or parties therefor and describing in reasonable
detail the proposed terms of such Series A Letter of Credit (including the
beneficiary thereof) and the nature of the transactions or obligations proposed
to be supported thereby (including whether such Series A Letter of Credit is to
be a commercial letter of credit or a standby letter of credit). Upon receipt of
any such notice, the Administrative Agent shall advise the Issuing Lender of the
contents thereof.
(b) On each day during the period commencing with the issuance by
the Issuing Lender of any Series A Letter of Credit and until such Series A
Letter of Credit shall have
<PAGE>
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expired or been terminated, the Series A Commitment of each Series A Lender
shall be deemed to be utilized for all purposes of this Agreement in an amount
equal to such Lender's Series A Commitment Percentage of the then undrawn face
amount of such Series A Letter of Credit. Each Series A Lender (other than the
Issuing Lender) agrees that, upon the issuance of any Series A Letter of Credit
hereunder, it shall automatically acquire a participation in the Issuing
Lender's liability under such Series A Letter of Credit in an amount equal to
such Lender's Series A Commitment Percentage of such liability, and each Series
A Lender (other than the Issuing Lender) thereby shall absolutely,
unconditionally and irrevocably assume, as primary obligor and not as surety,
and shall be unconditionally obligated to the Issuing Lender to pay and
discharge when due, its Series A Commitment Percentage of the Issuing Lender's
liability under such Series A Letter of Credit.
(c) Upon receipt from the beneficiary of any Series A Letter of
Credit of any demand for payment under such Series A Letter of Credit, the
Issuing Lender shall promptly notify the Company (through the Administrative
Agent) of the amount to be paid by the Issuing Lender as a result of such demand
and the date on which payment is to be made by the Issuing Lender to such
beneficiary in respect of such demand. Notwithstanding the identity of the
account party of any Series A Letter of Credit, the Company hereby
unconditionally agrees to pay and reimburse the Administrative Agent for account
of the Issuing Lender for the amount of each demand for payment under such
Series A Letter of Credit at or prior to the date on which payment is to be made
by the Issuing Lender to the beneficiary thereunder, without presentment,
demand, protest or other formalities of any kind.
(d) Forthwith upon its receipt of a notice referred to in clause
(c) of this Section 2.03(A), the Company shall advise the Administrative Agent
whether or not the Company intends to borrow hereunder to finance its obligation
to reimburse the Issuing Lender for the amount of the related demand for payment
and, if it does, submit a notice of such borrowing as provided in Section 4.05
hereof. In the event that the Company fails to so advise the Administrative
Agent, or if the Company fails to reimburse the Issuing Lender for a demand for
payment under a Series A Letter of Credit by the date of such payment, the
Administrative Agent shall give each Series A Lender prompt notice of the amount
of the demand for payment, specifying such Lender's Series A Commitment
Percentage of the amount of the related demand for payment.
(e) Each Series A Lender (other than the Issuing Lender) shall
pay to the Administrative Agent for account of the Issuing Lender at the
Principal Office in Dollars and in immediately available funds, the amount of
such Lender's Series A Commitment Percentage of any payment under a Series A
Letter of Credit upon notice by the Issuing Lender (through the Administrative
Agent) to such Series A Lender requesting such payment and specifying such
amount; provided that such Series A Lender shall not be obligated to reimburse
the Issuing Bank if such payment is the result of the willful misconduct or
gross negligence of the Issuing Bank in determining that the request or demand
for such payment complied with the terms of such Series A Letter of Credit. Each
such Series A Lender's obligation to make such payments to the Administrative
Agent for account of the Issuing Lender under this clause (e), and the Issuing
Lender's right to receive the same, shall be absolute and unconditional and
shall not be affected by any circumstance whatsoever, including, without
limitation, (i) the failure of any other Series
<PAGE>
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A Lender to make its payment under this clause (e), the financial condition of
the Company (or any other account party), the existence of any Default or (ii)
the termination of the Commitments. Each such payment to the Issuing Lender
shall be made without any offset, abatement, withholding or reduction
whatsoever. If any Series A Lender shall default in its obligation to make any
such payment to the Administrative Agent for account of the Issuing Lender, for
so long as such default shall continue the Administrative Agent shall at the
request of the Issuing Bank withhold from any payments received by the
Administrative Agent under this Agreement or any Note for account of such Series
A Lender the amount so in default and the Administrative Agent shall pay the
same to the Issuing Lender in satisfaction of such defaulted obligation.
(f) Upon the making of each payment by a Series A Lender to the
Issuing Lender pursuant to clause (e) above in respect of any Series A Letter of
Credit, such Lender shall, automatically and without any further action on the
part of the Administrative Agent, the Issuing Lender or such Lender, acquire (i)
a participation in an amount equal to such payment in the Series A Reimbursement
Obligation owing to the Issuing Lender by the Company hereunder and under the
Series A Letter of Credit Documents relating to such Series A Letter of Credit
and (ii) a participation in a percentage equal to such Lender's Series A
Commitment Percentage in any interest or other amounts payable by the Company
hereunder and under such Series A Letter of Credit Documents in respect of such
Series A Reimbursement Obligation (other than the commissions, charges, costs
and expenses payable to the Issuing Lender pursuant to clause (g) of this
Section 2.03(A)). Upon receipt by the Issuing Lender from or for account of the
Company of any payment in respect of any Series A Reimbursement Obligation or
any such interest or other amount (including by way of setoff or application of
proceeds of any collateral security) the Issuing Lender shall promptly pay to
the Administrative Agent for account of each Series A Lender entitled thereto,
such Series A Lender's Series A Commitment Percentage of such payment, each such
payment by the Issuing Lender to be made in the same money and funds in which
received by the Issuing Lender. In the event any payment received by the Issuing
Lender and so paid to the Series A Lenders hereunder is rescinded or must
otherwise be returned by the Issuing Lender, each Series A Lender shall, upon
the request of the Issuing Lender (through the Administrative Agent), repay to
the Issuing Lender (through the Administrative Agent) the amount of such payment
paid to such Lender, with interest as specified in clause (j) of this Section
2.03(A).
(g) The Company shall pay to the Administrative Agent for account
of the Series A Lenders in respect of each Series A Letter of Credit a letter of
credit fee in an amount equal to the product of the Applicable Margin for
Eurodollar Loans times the daily average undrawn amount of such Series A Letter
of Credit for the period from and including the date of issuance of such Series
A Letter of Credit to and including the date such Series A Letter of Credit is
drawn in full, expires or is terminated (such fee to be non-refundable, to be
paid in arrears on each Quarterly Date and on the Series A Commitment
Termination Date and to be calculated, for any day, after giving effect to any
payments made under such Series A Letter of Credit on such day). In addition,
the Company shall pay to the Administrative Agent for account of the Issuing
Lender all commissions, charges, costs and expenses in the amounts customarily
charged by the Issuing Lender from time to time in like circumstances with
respect to the issuance of each Series A Letter of Credit and drawings and other
transactions relating thereto.
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(h) Promptly following the end of each calendar month, the
Issuing Lender shall deliver (through the Administrative Agent) to each Series A
Lender and the Company a notice describing the aggregate amount of all Series A
Letters of Credit outstanding at the end of such month. Upon the request of any
Series A Lender from time to time, the Issuing Lender shall deliver any other
information reasonably requested by such Lender with respect to each Series A
Letter of Credit then outstanding.
(i) The issuance by the Issuing Lender of each Series A Letter of
Credit shall, in addition to the conditions precedent set forth in Section 6
hereof, be subject to the conditions precedent that (i) such Series A Letter of
Credit shall be in such form, contain such terms and support such transactions
as shall be satisfactory to the Issuing Lender consistent with its then current
practices and procedures with respect to letters of credit of the same type and
(ii) the Company shall have executed and delivered such applications, agreements
and other instruments relating to such Series A Letter of Credit as the Issuing
Lender shall have reasonably requested consistent with its then current
practices and procedures with respect to letters of credit of the same type,
provided that in the event of any conflict between any such application,
agreement or other instrument and the provisions of this Agreement or any
Security Document, the provisions of this Agreement and the Security Documents
shall control.
(j) To the extent that any Series A Lender fails to pay any
amount required to be paid pursuant to clause (e) or (f) of this Section 2.03(A)
on the due date therefor, such Lender shall pay interest to the Issuing Lender
(through the Administrative Agent) on such amount from and including such due
date to but excluding the date such payment is made (i) during the period from
and including such due date to but excluding the date three Business Days
thereafter, at a rate per annum equal to the Federal Funds Rate (as in effect
from time to time) and (ii) thereafter, at a rate per annum equal to the Base
Rate (as in effect from time to time) plus 2%.
(k) The issuance by the Issuing Lender of any modification or
supplement to any Series A Letter of Credit hereunder shall be subject to the
same conditions applicable under this Section 2.03(A) to the issuance of new
Series A Letters of Credit, and no such modification or supplement shall be
issued hereunder unless either (x) the respective Series A Letter of Credit
affected thereby would have complied with such conditions had it originally been
issued hereunder in such modified or supplemented form or (y) each Series A
Lender shall have consented thereto.
(l) Pursuant to Section 2.03 of the Existing Credit Agreement,
Chase has issued the letters of credit identified on Schedule V hereto (the
"Existing Letters of Credit"). Each Series A Lender hereby agrees that each
Existing Letter of Credit shall constitute, on and after the Amendment Effective
Date, a Series A Letter of Credit for all purposes of this Agreement.
The Company hereby indemnifies and holds harmless each Series A Lender and the
Administrative Agent from and against any and all claims and damages, losses,
liabilities, costs or expenses which such Lender or the Administrative Agent may
incur (or which may be claimed against such Lender or the Administrative Agent
by any Person whatsoever) by reason of or in connection with the execution and
delivery or transfer of or payment or refusal to pay by
<PAGE>
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the Issuing Lender under any Series A Letter of Credit; provided that the
Company shall not be required to indemnify any Lender or the Administrative
Agent for any claims, damages, losses, liabilities, costs or expenses to the
extent, but only to the extent, caused by (x) the willful misconduct or gross
negligence of the Issuing Lender in determining whether a request presented
under any Series A Letter of Credit complied with the terms of such Series A
Letter of Credit or (y) in the case of the Issuing Lender, such Lender's failure
to pay under any Series A Letter of Credit after the presentation to it of a
request strictly complying with the terms and conditions of such Series A Letter
of Credit. Nothing in this Section 2.03(A) is intended to limit the other
obligations of the Company, any Lender or the Administrative Agent under this
Agreement.
(B) Series C Letter of Credit. Subject to the terms and conditions of
this Agreement, the Series C Commitments may be utilized, upon the request of
the Company, in addition to the Series C Loans provided for by Section 2.01(c)
hereof, by the issuance by the Issuing Lender of a letter of credit (the "Series
C Letter of Credit") for account of the Company in connection with, and at the
closing of, the Acquisition of the stock of SMR in substantially the form of
Exhibit C hereto, provided that in no event shall the aggregate amount of all
Series C Letter of Credit Liabilities, together with the aggregate principal
amount of the Series C Loans, exceed the aggregate amount of the Series C
Commitments as in effect from time to time. The following additional provisions
shall apply to Series C Letters of Credit:
(a) The Company shall give the Administrative Agent at least one
Business Day's irrevocable prior notice (effective upon receipt) specifying the
Business Day the Series C Letter of Credit is to be issued. Upon receipt of any
such notice, the Administrative Agent shall advise the Issuing Lender of the
contents thereof.
(b) On each day during the period commencing with the issuance by
the Issuing Lender of the Series C Letter of Credit and until the Series C
Letter of Credit shall have expired or been terminated, the Series C Commitment
of each Series C Lender shall be deemed to be utilized for all purposes of this
Agreement in an amount equal to such Lender's Series C Commitment Percentage of
the then undrawn amount of the Series C Letter of Credit. Each Series C Lender
(other than the Issuing Lender) agrees that, upon the issuance of the Series C
Letter of Credit hereunder, it shall automatically acquire a participation in
the Issuing Lender's liability under the Series C Letter of Credit in an amount
equal to such Lender's Series C Commitment Percentage of such liability, and
each Series C Lender (other than the Issuing Lender) thereby shall absolutely,
unconditionally and irrevocably assume, as primary obligor and not as surety,
and shall be unconditionally obligated to the Issuing Lender to pay and
discharge when due, its Series C Commitment Percentage of the Issuing Lender's
liability under the Series C Letter of Credit.
(c) Upon receipt from the beneficiary of the Series C Letter of
Credit of any demand for payment under the Series C Letter of Credit, the
Issuing Lender shall promptly notify the Company (through the Administrative
Agent) of the amount to be paid by the Issuing Lender as a result of such demand
and the date on which payment is to be made by the Issuing Lender to such
beneficiary in respect of such demand. The Company hereby unconditionally agrees
to pay and reimburse the Administrative Agent for account of the Issuing Lender
for the amount of such demand for payment under the Series C Letter of Credit on
the date on which payment is made
<PAGE>
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by the Issuing Lender to the beneficiary thereunder, without presentment,
demand, protest or other formalities of any kind.
(d) Forthwith upon its receipt of a notice referred to in clause
(c) of this Section 2.03(B), the Company shall advise the Administrative Agent
whether or not the Company intends to borrow hereunder to finance its obligation
to reimburse the Issuing Lender for the amount of the demand for payment and, if
it does, submit a notice of such borrowing as provided in Section 4.05 hereof
(for which purpose a default in the payment of Indebtedness supported by the
Series C Letter of Credit will be deemed not to be a Default hereunder). In the
event that the Company fails to so advise the Administrative Agent, or if the
Company fails to reimburse the Issuing Lender for such demand for payment under
the Series C Letter of Credit by the date of such payment, the Administrative
Agent shall give each Series C Lender prompt notice of the amount of the demand
for payment, specifying such Lender's Series C Commitment Percentage of the
amount of the related demand for payment.
(e) Each Series C Lender (other than the Issuing Lender) shall
pay to the Administrative Agent for account of the Issuing Lender at the
Principal Office in Dollars and in immediately available funds, the amount of
such Lender's Series C Commitment Percentage of any payment under the Series C
Letter of Credit upon notice by the Issuing Lender (through the Administrative
Agent) to such Series C Lender requesting such payment and specifying such
amount; provided that such Series C Lender shall not be obligated to reimburse
the Issuing Bank if such payment is the result of the willful misconduct or
gross negligence of the Issuing Bank in determining that the request or demand
for such payment complied with the terms of the Series C Letter of Credit. Each
such Series C Lender's obligation to make such payments to the Administrative
Agent for account of the Issuing Lender under this clause (e), and the Issuing
Lender's right to receive the same, shall be absolute and unconditional and
shall not be affected by any circumstance whatsoever, including, without
limitation, (i) the failure of any other Series C Lender to make its payment
under this clause (e), the financial condition of the Company, the existence of
any Default or (ii) the termination of the Series C Commitments. Such payment to
the Issuing Lender shall be made without any offset, abatement, withholding or
reduction whatsoever. If any Series C Lender shall default in its obligation to
make such payment to the Administrative Agent for account of the Issuing Lender,
for so long as such default shall continue the Administrative Agent shall at the
request of the Issuing Bank withhold from any payments received by the
Administrative Agent under this Agreement or any Note for account of such Series
C Lender the amount so in default and the Administrative Agent shall pay the
same to the Issuing Lender in satisfaction of such defaulted obligation.
(f) Upon the making of such payment by a Series C Lender to the
Issuing Lender pursuant to clause (e) above in respect of the Series C Letter of
Credit, such Lender shall, automatically and without any further action on the
part of the Administrative Agent, the Issuing Lender or such Lender, acquire (i)
a participation in an amount equal to such payment in the Series C Reimbursement
Obligation owing to the Issuing Lender by the Company hereunder and under the
Series C Letter of Credit Documents relating to the Series C Letter of Credit
and (ii) a participation in a percentage equal to such Lender's Series C
Commitment Percentage in any interest or other amounts payable by the Company
hereunder and under such Series C Letter of Credit Documents in respect of such
Series C Reimbursement Obligation (other than the
<PAGE>
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commissions, charges, costs and expenses payable to the Issuing Lender pursuant
to clause (g) of this Section 2.03(B)). Upon receipt by the Issuing Lender from
the Company of any payment in respect of any Series C Reimbursement Obligation
or any such interest or other amount (including by way of setoff or application
of proceeds of any collateral security) the Issuing Lender shall promptly pay to
the Administrative Agent for account of each Series C Lender entitled thereto,
such Series C Lender's Series C Commitment Percentage of such payment, each such
payment by the Issuing Lender to be made in the same money and funds in which
received by the Issuing Lender. In the event any payment received by the Issuing
Lender and so paid to the Series C Lenders hereunder is rescinded or must
otherwise be returned by the Issuing Lender, each Series C Lender shall, upon
the request of the Issuing Lender (through the Administrative Agent), repay to
the Issuing Lender (through the Administrative Agent) the amount of such payment
paid to such Lender, with interest as specified in clause (j) of this Section
2.03(B).
(g) The Company shall pay to the Administrative Agent for account
of the Series C Lenders in respect of the Series C Letter of Credit a letter of
credit fee in an amount equal to the product of the Applicable Margin for
Eurodollar Loans times the daily average undrawn amount of the Series C Letter
of Credit for the period from and including the date of issuance of the Series C
Letter of Credit to and including the date the Series C Letter of Credit is
drawn in full, expires or is terminated (such fee to be non-refundable, to be
paid in arrears on each Quarterly Date and on the Series C Commitment
Termination Date and to be calculated, for any day, after giving effect to any
payments made under the Series C Letter of Credit on such day). In addition, the
Company shall pay to the Administrative Agent for account of the Issuing Lender
all commissions, charges, costs and expenses in the amounts customarily charged
by the Issuing Lender from time to time in like circumstances with respect to
the issuance of the Series C Letter of Credit and drawings and other
transactions relating thereto.
(h) Promptly following the end of each calendar month, the
Issuing Lender shall deliver (through the Administrative Agent) to each Series C
Lender and the Company a notice describing the aggregate amount of the Series C
Letter of Credit outstanding at the end of such month. Upon the request of any
Series C Lender from time to time, the Issuing Lender shall deliver any other
information reasonably requested by such Lender with respect to the Series C
Letter of Credit.
(i) The issuance by the Issuing Lender of the Series C Letter of
Credit shall, in addition to the conditions precedent set forth in Section 6
hereof, be subject to the condition precedent that the Company shall have
executed and delivered such applications, agreements and other instruments
relating to the Series C Letter of Credit as the Issuing Lender shall have
reasonably requested consistent with its then current practices and procedures
with respect to letters of credit of the same type, provided that in the event
of any conflict between any such application, agreement or other instrument and
the provisions of this Agreement or any Security Document, the provisions of
this Agreement and the Security Documents shall control.
(j) To the extent that any Series C Lender fails to pay any
amount required to be paid pursuant to clause (e) or (f) of this Section 2.03(B)
on the due date therefor, such Lender shall pay interest to the Issuing Lender
(through the Administrative Agent) on such amount from and including such due
date to but excluding the date such payment is made (i) during the period
<PAGE>
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from and including such due date to but excluding the date three Business Days
thereafter, at a rate per annum equal to the Federal Funds Rate (as in effect
from time to time) and (ii) thereafter, at a rate per annum equal to the Base
Rate (as in effect from time to time) plus 2%.
(k) The issuance by the Issuing Lender of any modification or
supplement to the Series C Letter of Credit hereunder shall be subject to the
same conditions applicable under this Section 2.03(B) to the issuance of the
Series C Letter of Credit, and no such modification or supplement shall be
issued hereunder unless each Series C Lender shall have consented thereto.
The Company hereby indemnifies and holds harmless each Series C Lender and the
Administrative Agent from and against any and all claims and damages, losses,
liabilities, costs or expenses which such Lender or the Administrative Agent may
incur (or which may be claimed against such Lender or the Administrative Agent
by any Person whatsoever) by reason of or in connection with the execution and
delivery or transfer of or payment or refusal to pay by the Issuing Lender under
the Series C Letter of Credit; provided that the Company shall not be required
to indemnify any Lender or the Administrative Agent for any claims, damages,
losses, liabilities, costs or expenses to the extent, but only to the extent,
caused by (x) the willful misconduct or gross negligence of the Issuing Lender
in determining whether a request presented under the Series C Letter of Credit
complied with the terms of the Series C Letter of Credit or (y) in the case of
the Issuing Lender, such Lender's failure to pay under the Series C Letter of
Credit after the presentation to it of a request strictly complying with the
terms and conditions of the Series C Letter of Credit. Nothing in this Section
2.03(B) is intended to limit the other obligations of the Company, any Lender or
the Administrative Agent under this Agreement.
2.04 Changes of Commitments.
----------------------
(a) Series A Commitments.
--------------------
(i) The Series A Commitments shall terminate on the Series A
Commitment Termination Date.
(ii) The Company shall have the right at any time or from time to
time (x) so long as no Series A Loans or Series A Letter of Credit
Liabilities are outstanding, to terminate the Series A Commitments and
(y) to reduce the aggregate unused amount of the Series A Commitments
(for which purpose use of the Series A Commitments shall be deemed to
include the aggregate amount of Series A Letter of Credit Liabilities);
provided that (A) the Company shall give notice of each such termination
or reduction as provided in Section 4.05 hereof and (B) each partial
reduction shall be in an aggregate amount at least equal to $5,000,000
or in multiples of $1,000,000 in excess thereof.
(b) Series B Commitments.
--------------------
(i) The Series B Commitments shall terminate on the Series B
Commitment Termination Date.
<PAGE>
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(ii) The Company shall have the right at any time or from time to
time (x) so long as no Series B Loans are outstanding, to terminate the
Series B Commitments and (y) to reduce the aggregate amount of the
Series B Commitments; provided that (A) the Company shall give notice of
each such termination or reduction as provided in Section 4.05 hereof;
(B) each partial reduction shall be in an aggregate amount at least
equal to $5,000,000 or in multiples of $1,000,000 in excess thereof; and
(C) to the extent that, after giving effect to any such reduction, the
aggregate principal amount of the Series B Loans would exceed the Series
B Commitments, the Company shall prepay the Series B Loans.
(c) Series C Commitments.
--------------------
(i) The Series C Commitments shall terminate on the Series C
Commitment Termination Date.
(ii) The Company shall have the right at any time or from time to
time (x) so long as no Series C Loans or Series C Letter of Credit
Liabilities are outstanding, to terminate the Series C Commitments and
(y) to reduce the aggregate unused amount of the Series C Commitments
(for which purpose use of the Series C Commitments shall be deemed to
include the aggregate amount of Series C Letter of Credit Liabilities);
provided that (A) the Company shall give notice of each such termination
or reduction as provided in Section 4.05 hereof and (B) each partial
reduction shall be in an aggregate amount at least equal to $5,000,000
or in multiples of $1,000,000 in excess thereof.
(d) All Commitments. The Commitments once terminated or reduced
may not be reinstated.
2.05 Commitment Fee. The Company shall pay to the Administrative
Agent for account of (i) each Series A Lender a commitment fee on the daily
average unused amount of such Lender's Series A Commitment (for which purpose
Series A Letter of Credit Liabilities shall be deemed to be a use of any
Lender's Series A Commitment), (ii) each Series B Lender a commitment fee on the
daily average unused amount of such Lender's Series B Commitment and (iii) each
Series C Lender a commitment fee on the daily average unused amount of such
Lender's Series C Commitment (for which purpose Series C Letter of Credit
Liabilities shall be deemed to be a use of any Lender's Series C Commitment), in
each case for the period from and including the Amendment Effective Date to but
not including the date such Commitment is terminated, at a rate per annum equal
to the Commitment Fee Rate. Accrued commitment fee shall be payable on each
Quarterly Date and on the date the relevant Commitments are terminated.
2.06 Lending Offices. The Loans of each Type made by each Lender
shall be made and maintained at such Lender's Applicable Lending Office for
Loans of such Type.
2.07 Several Obligations; Remedies Independent. The failure of
any Lender to make any Loan to be made by it on the date specified therefor
shall not relieve any other Lender of its obligation to make its Loan on such
date, but neither any Lender nor the Administrative
<PAGE>
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Agent shall be responsible for the failure of any other Lender to make a Loan to
be made by such other Lender, and no Lender shall have any obligation to the
Administrative Agent (except as provided in Section 4.06 hereof) or any other
Lender for the failure by such Lender to make any Loan required to be made by
such Lender.
2.08 Evidence of Debt.
----------------
(a) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the Indebtedness of the Company to
such Lender resulting from each Loan made or continued hereunder by such Lender,
including the amounts of principal and interest payable and paid to such Lender
from time to time hereunder.
(b) The Administrative Agent shall maintain accounts in which it
shall record (i) the amount of each Loan made or continued hereunder, the Class
and Type thereof and the Interest Period applicable thereto, (ii) the amount of
any principal or interest due and payable or to become due and payable from the
Company to each Lender hereunder and (iii) the amount of any sum received by the
Administrative Agent hereunder for the account of the Lenders and each Lender's
share thereof.
(c) The entries made in the accounts maintained pursuant to
paragraph (a) or (b) of this Section 2.08 shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Company
to repay the Loans in accordance with the terms of this Agreement.
(d) Any Lender may request that Loans made or continued by it
hereunder be evidenced by a promissory note(s). In such event, the Company, at
its own expense, shall prepare, execute and deliver to such Lender a promissory
note(s) payable to the order of such Lender (or, if requested by such Lender, to
such Lender and its registered assigns) and in a form approved by the
Administrative Agent and such note(s) shall be evidence of such Loans (and all
amounts payable in respect thereof).
2.09 Optional Prepayments and Conversions or Continuations of
Loans. Subject to Sections 4.04 and 5.05 hereof, the Company shall have the
right to prepay Loans, or to Convert Loans of one Type into Loans of another
Type or Continue Loans of one Type as Loans of the same Type, at any time or
from time to time, provided that the Company shall give the Administrative Agent
notice of each such prepayment, Conversion or Continuation as provided in
Section 4.05 hereof (and, upon the date specified in any such notice of
prepayment, the amount to be prepaid shall become due and payable hereunder) and
provided further that any prepayment of the principal of the Series B Loans
shall be applied to reduce the then remaining installments thereof on a pro rata
basis (based on the then remaining principal amount of each such installment).
Notwithstanding the foregoing, and without limiting the rights and remedies of
the Lenders under Section 9 hereof, in the event that any Event of Default shall
have occurred and be continuing, the Administrative Agent may (and at the
request of the Majority Lenders shall) suspend the right of the Company to
Convert any Loan into a Eurodollar Loan, or to Continue any Loan as a Eurodollar
Loan, in which event all Loans shall be Converted (on the
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last day(s) of the respective Interest Periods therefor) or Continued, as the
case may be, as Base Rate Loans.
2.10 Mandatory Prepayments and Reductions of Commitments.
---------------------------------------------------
(a) Series C Commitments. If the amount of the Series C Letter of
Credit is reduced, the aggregate amount of the Series C Commitments shall
automatically reduce by an equal amount. Upon the expiry or drawing under the
Series C Letter of Credit, the aggregate amount of the Series C Commitments
shall automatically reduce in the amount, if any, by which (i) the amount of the
Series C Letter of Credit immediately prior to such expiry or drawing exceeds
(ii) the amount of the drawing, if any.
(b) Casualty Events. Unless the Company or any of its
Subsidiaries, as the case may be, shall have irrevocably committed to repair or
replace any Property of the Company or such Subsidiary affected by a Casualty
Event, on the date 30 days following the receipt by the Company of the proceeds
of insurance, condemnation award or other compensation in respect of such
Casualty Event affecting such Property (or upon such earlier date as the Company
or such Subsidiary, as the case may be, shall have determined not to repair or
replace the Property affected by such Casualty Event), the Company shall prepay
the Loans (and/or provide cover for Letter of Credit Liabilities as specified in
clause (f) below), and the Commitments shall be subject to automatic reduction,
in an aggregate amount, if any, equal to 75% of the Net Available Proceeds of
such Casualty Event not theretofore applied to the repair or replacement of such
Property (or reserved by the Company for application to such purposes), such
prepayment and reduction to be effected in each case in the manner and to the
extent specified in clause (e) of this Section 2.10. Nothing in this clause (b)
shall be deemed to limit any obligation of the Company or any of its
Subsidiaries pursuant to any of the Security Documents to remit to a collateral
or similar account (including, without limitation, the Collateral Account)
maintained by the Administrative Agent pursuant to any of the Security Documents
the proceeds of insurance, condemnation award or other compensation received in
respect of any Casualty Event.
(c) Recapture of Proceeds from Asset Sales. In the event of a
Disposition, the Company shall deposit 75% of the Net Available Proceeds
therefrom into the Collateral Account no later than five Business Days after
receipt thereof; provided that prior to such deposit the Company may invest such
Net Available Proceeds, or after such deposit the Company may withdraw such Net
Available Proceeds from the Collateral Account within 270 days after such
Disposition so long as immediately thereafter such Net Available Proceeds are
invested, in Property to be used by the Company or any of its Subsidiaries in
the lines of business in which the Company or any of its Subsidiaries is engaged
as of the Restatement Date or in any business related thereto. No later than 270
days following the occurrence of any such Disposition, the Company will deliver
to the Lenders a statement, certified by the chief financial officer of the
Company, in form and detail satisfactory to the Administrative Agent, of the
amount of the Net Available Proceeds of such Disposition not applied as
contemplated by the immediately preceding sentence and, on the first Recapture
Date thereafter, the Company shall withdraw the remaining Net Available Proceeds
from the Collateral Account and prepay the Loans (and/or provide cover for
Letter of Credit Liabilities as specified in clause (f) below), and the
Commitments shall be subject to automatic reduction, in an aggregate amount
equal to 75% of
<PAGE>
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the Net Available Proceeds received or which become available for prepayment or
reduction during such Recapture Period ending on such Recapture Date, such
prepayment and reduction to be effected in each case in the manner and to the
extent specified in clause (e) of this Section 2.10. In addition to the
foregoing, to the extent the remaining 25% of the Net Available Proceeds from
such Disposition would become "Excess Proceeds" (as defined in the Senior
Subordinated Indenture[s]) under clause (b) of Section 1016 of the Senior
Subordinated Indenture[s] (the "Remainder Amount"), the Company shall,
immediately prior to such Remainder Amount becoming "Excess Proceeds" as
aforesaid, prepay the Loans (and/or provide cover for Letter of Credit
Liabilities as specified in clause (f) below), and the Commitments shall be
subject to automatic reduction, in an aggregate amount equal to such Remainder
Amount, such prepayment and reduction to be effected in each case in the manner
and to the extent specified in clause (e) of this Section 2.10. Nothing in this
Section 2.10(c) shall be deemed to excuse or otherwise limit the obligation of
the Company to obtain the consent of the Majority Lenders pursuant to Section
8.05 hereof to any Disposition not otherwise permitted hereunder.
(d) Reversions. Without limiting the obligation of the Company
under Section 8.01(c) hereof, upon any Reversion the Company shall prepay the
Loans (and/or provide cover for Letter of Credit Liabilities as specified in
clause (f) below), and the Commitments shall be subject to automatic reduction,
in an aggregate amount equal to 75% of the Net Available Proceeds thereof, such
prepayment and reduction to be effected in each case in the manner and to the
extent specified in clause (e) of this Section 2.10.
(e) Application. Prepayments and reductions of Commitments
described in clauses (b) through (d) of this Section 2.10 shall be effected as
follows:
(i) first, the Series B Loans shall be prepaid in an amount equal
to the prepayment or reduction specified in such clauses (such
prepayments shall be applied first to Base Rate Loans and then to
Eurodollar Loans) and shall be applied to the installments of the Series
B Loans on a pro rata basis (based on the then remaining principal
amount of each such installment); and
(ii) second, any excess over the amount referred to in the
foregoing clause (i) shall automatically reduce the Series A Commitments
(and to the extent that, after giving effect to such reduction, the
aggregate principal amount of Series A Loans, together with the
aggregate amount of all Series A Letter of Credit Liabilities, would
exceed the Series A Commitments, the Company shall, first, prepay Series
A Loans (such prepayments shall be applied first to Base Rate Loans and
then to Eurodollar Loans) and, second, provide cover for Series A Letter
of Credit Liabilities as specified in clause (f) below, in an aggregate
amount equal to such excess).
(f) Cover for Letter of Credit Liabilities. In the event that the
Company shall be required pursuant to this Section 2.10 to provide cover for
Series A Letter of Credit Liabilities, the Company shall effect the same by
paying to the Administrative Agent immediately available funds in an amount
equal to the required amount, which funds shall be retained by the
Administrative Agent in the Collateral Account (as provided therein as
collateral security in the first instance for the Series A Letter of Credit
Liabilities) until such time as the Series A Letters
<PAGE>
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of Credit shall have been terminated and all of the Series A Letter of Credit
Liabilities paid in full.
Section 3. Payments of Principal and Interest.
----------------------------------
3.01 Repayment of Loans.
------------------
(a) The Company hereby promises to pay to the Administrative
Agent for account of each Series A Lender the entire outstanding principal
amount of such Lender's Series A Loans, and each Series A Loan shall mature, on
the Series A Commitment Termination Date.
(b) Subject to Sections 2.09 and 2.10 hereof, the Company hereby
promises to pay to the Administrative Agent for account of each Series B Lender
the principal amount of each of such Lender's Series B Loans in twenty (20)
consecutive quarterly installments, commencing on the Quarterly Date falling
approximately three (3) months after the Series B Commitment Termination Date
and on each of the nineteen (19) Quarterly Dates thereafter, the first eight (8)
of which shall each be in an amount equal to 2.5% of the initial principal
amount of such Series B Loan, the next four (4) of which shall each be in an
amount equal to 4% of the initial principal amount of such Series B Loan, the
next four (4) of which shall each be in an amount equal to 7% of the initial
principal amount of such Series B Loan, and the last four (4) of which shall
each be in an amount equal to 9% of the initial principal amount of such Series
B Loan.
(c) The Company hereby promises to pay to the Administrative
Agent for account of each Series C Lender the entire outstanding principal
amount of such Lender's Series C Loans, and each Series C Loan shall mature, on
the Series C Commitment Termination Date.
3.02 Interest. The Company hereby promises to pay to the
Administrative Agent for account of each Lender interest on the unpaid principal
amount of each Loan made by such Lender for the period from and including the
date of such Loan to but excluding the date such Loan shall be paid in full, at
the following rates per annum:
(a) during such periods as such Loan is a Base Rate Loan, the
Base Rate (as in effect from time to time) plus the Applicable Margin (if any)
and
(b) during such periods as such Loan is a Eurodollar Loan, for
each Interest Period relating thereto, the Eurodollar Rate for such Loan for
such Interest Period plus the Applicable Margin.
Notwithstanding the foregoing, the Company hereby promises to pay to the
Administrative Agent for account of each Lender interest at the applicable
Post-Default Rate on any principal of any Loan made by such Lender, on any
Reimbursement Obligation held by such Lender and on any other amount payable by
the Company hereunder or under the Notes held by such Lender to or for account
of such Lender, which shall not be paid in full when due (whether at stated
maturity, by acceleration, by mandatory prepayment or otherwise), for the period
from and including the due date thereof to but excluding the date the same is
paid in full. Accrued interest on each Loan shall be payable (i) in the case of
a Base Rate Loan, quarterly on the Quarterly
<PAGE>
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Dates, (ii) in the case of a Eurodollar Loan, on the last day of each Interest
Period therefor and, if such Interest Period is longer than three months, at
three-month intervals following the first day of such Interest Period, and (iii)
in the case of any Loan, upon the payment or prepayment thereof or the
Conversion of such Loan to a Loan of another Type (but only on the principal
amount so paid, prepaid or Converted), except that interest payable at the
Post-Default Rate shall be payable from time to time on demand. Promptly after
the determination of any interest rate provided for herein or any change
therein, the Administrative Agent shall give notice thereof to the Lenders to
which such interest is payable and to the Company.
Section 4. Payments; Pro Rata Treatment; Computations; Etc.
------------------------------------------------
4.01 Payments.
--------
(a) Except to the extent otherwise provided herein, all payments
of principal, interest, Reimbursement Obligations and other amounts to be made
by the Company under this Agreement and the Notes, and, except to the extent
otherwise provided therein, all payments to be made by the Company under any
other Basic Document, shall be made in Dollars, in immediately available funds,
without deduction, set-off or counterclaim, to the Administrative Agent to the
account of the Administrative Agent most recently designated by it for such
purpose by notice to the Company, not later than 1:00 p.m. New York time on the
date on which such payment shall become due (each such payment made after such
time on such due date to be deemed to have been made on the next succeeding
Business Day).
(b) Any Lender for whose account any such payment is to be made
may (but shall not be obligated to) debit the amount of any such payment that is
not made by such time to any ordinary deposit account of the Company with such
Lender (with notice to the Company and the Administrative Agent).
(c) The Company shall, at the time of making each payment under
this Agreement or any Note for account of any Lender, specify to the
Administrative Agent (which shall so notify the intended recipient(s) thereof)
the Loans, Reimbursement Obligations or other amounts payable by the Company
hereunder to which such payment is to be applied (and in the event that the
Company fails to so specify, or if an Event of Default has occurred and is
continuing, the Administrative Agent may distribute such payment to the Lenders
for application in such manner as it or the Majority Lenders, subject to Section
4.02 hereof, may determine to be appropriate).
(d) Except to the extent otherwise provided in the last sentence
of Sections 2.03(A)(e) and 2.03(B)(e) hereof, each payment received by the
Administrative Agent under this Agreement or any Note for account of any Lender
shall be paid by the Administrative Agent promptly to such Lender, in
immediately available funds, for account of such Lender's Applicable Lending
Office for the Loan or other obligation in respect of which such payment is
made.
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(e) If the due date of any payment under this Agreement or any
Note would otherwise fall on a day that is not a Business Day, such date shall
be extended to the next succeeding Business Day, and interest shall be payable
for any principal so extended for the period of such extension.
4.02 Pro Rata Treatment. Except to the extent otherwise provided
herein: (a) each borrowing of Loans of a particular Class from the Lenders under
Section 2.01 hereof shall be made from the relevant Lenders, each payment of
commitment fee under Section 2.05 hereof in respect of Commitments of a
particular Class shall be made for account of the relevant Lenders, and each
termination or reduction of the amount of the Commitments of a particular Class
under Section 2.04 hereof and under Section 2.10(e) hereof shall be applied to
the respective Commitments of such Class of the relevant Lenders, pro rata
according to the amounts of their respective Commitments of such Class; (b) the
making, Conversion and Continuation of Series A Loans, Series B Loans and Series
C Loans of a particular Type (other than Conversions provided for by Section
5.04 hereof) shall be made pro rata among the relevant Lenders according to the
amounts of their respective Series A, Series B and Series C Commitments (in the
case of making of Loans) or their respective Series A, Series B and Series C
Loans (in the case of Conversions and Continuations of Loans) and the then
current Interest Period for each Eurodollar Loan shall be coterminous; (c) each
payment or prepayment of principal of Series A Loans, Series B Loans or Series C
Loans by the Company shall be made for account of the relevant Lenders pro rata
in accordance with the respective unpaid principal amounts of the Loans of such
Class held by them; and (d) each payment of interest on Series A Loans, Series B
Loans and Series C Loans by the Company shall be made for account of the
relevant Lenders pro rata in accordance with the amounts of interest on such
Loans then due and payable to the respective Lenders.
4.03 Computations. Interest on Eurodollar Loans and Reimbursement
Obligations and commitment fee and letter of credit fee shall be computed on the
basis of a year of 360 days and actual days elapsed (including the first day but
excluding the last day) occurring in the period for which payable and interest
on Base Rate Loans shall be computed on the basis of a year of 365 or 366 days,
as the case may be, and actual days elapsed (including the first day but
excluding the last day) occurring in the period for which payable.
Notwithstanding the foregoing, for each date that the Base Rate is calculated by
reference to the Federal Funds Rate, interest on Base Rate Loans shall be
computed on the basis of a year of 360 days and actual days elapsed.
4.04 Minimum Amounts. Except for mandatory prepayments made
pursuant to Section 2.10 hereof and Conversions or prepayments made pursuant to
Section 5.04 hereof, (i) each borrowing, Conversion and partial prepayment of
principal of Series A Loans shall be in multiples of $1,000,000, (ii) each
borrowing, Conversion or partial prepayment of principal of Series B Loans shall
be in multiples of $1,000,000 and (iii) each borrowing, Conversion or partial
prepayment of principal of Series C Loans shall be in multiples of $100,000
(borrowings, Conversions or prepayments of or into Loans of different Types, or,
in the case of Eurodollar Loans, having different Interest Periods at the same
time hereunder to be deemed separate borrowings, Conversions and prepayments for
purposes of the foregoing, one for each Type or Interest Period). Anything in
this Agreement to the contrary notwithstanding, the aggregate
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principal amount of Eurodollar Loans having the same Interest Period shall be in
an amount at least equal to $5,000,000 or in multiples of $1,000,000 in excess
thereof and, if any Eurodollar Loans would otherwise be in a lesser principal
amount for any period, such Loans shall be Base Rate Loans during such period.
4.05 Certain Notices. Notices by the Company to the
Administrative Agent of terminations or reductions of the Commitments, of
borrowings, Conversions, Continuations and optional prepayments of Loans and of
Classes of Loans and of Types of Loans and of the duration of Interest Periods
shall be irrevocable and shall be effective only if received by the
Administrative Agent not later than 10:00 a.m. New York time on the number of
Business Days prior to the date of the relevant termination, reduction,
borrowing, Conversion, Continuation or prepayment or the first day of such
Interest Period specified below:
Number of Business Notice Days Prior
- --------------------------------------------- ----------------------
Termination or reduction 3
of Commitments
Borrowing or prepayment of, 1
or Conversions into,
Base Rate Loans
Borrowing or prepayment of, 3
Conversions into, Continuations
as, or duration of Interest
Period for, Eurodollar Loans
provided that a notice to borrow Base Rate Loans to finance the Series C
Reimbursement Obligations may be given on a same day basis.
Each such notice of termination or reduction shall specify the amount and the
Class of the Commitments to be terminated or reduced. Each such notice of
borrowing, Conversion, Continuation or optional prepayment shall specify the
Class of Loans to be borrowed, Converted, Continued or prepaid and the amount
(subject to Section 4.04 hereof) and Type of each Loan to be borrowed,
Converted, Continued or prepaid and the date of borrowing, Conversion,
Continuation or optional prepayment (which shall be a Business Day). Each such
notice of the duration of an Interest Period shall specify the Loans to which
such Interest Period is to relate. The Administrative Agent shall promptly
notify the Lenders of the contents of each such notice. In the event that the
Company fails to select the Type of Loan, or the duration of any Interest Period
for any Eurodollar Loan, within the time period and otherwise as provided in
this Section 4.05, such Loan (if outstanding as a Eurodollar Loan) will be
automatically Converted into a Base Rate Loan on the last day of the then
current Interest Period for such Loan or (if outstanding as a Base Rate Loan)
will remain as, or (if not then outstanding) will be made as, a Base Rate Loan.
4.06 Non-Receipt of Funds by the Administrative Agent. Unless the
Administrative Agent shall have been notified by a Lender or the Company (the
"Payor") prior to the date on which the Payor is to make payment to the
Administrative Agent of (in the case of a
<PAGE>
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Lender) the proceeds of a Loan to be made by such Lender, or a participation in
a Letter of Credit drawing to be acquired by such Lender, hereunder or (in the
case of the Company) a payment to the Administrative Agent for account of one or
more of the Lenders hereunder (such payment being herein called the "Required
Payment"), which notice shall be effective upon receipt, that the Payor does not
intend to make the Required Payment to the Administrative Agent, the
Administrative Agent may assume that the Required Payment has been made and may,
in reliance upon such assumption (but shall not be required to), make the amount
thereof available to the intended recipient(s) on such date; and, if the Payor
has not in fact made the Required Payment to the Administrative Agent, the
recipient(s) of such payment shall, on demand, repay to the Administrative Agent
the amount so made available together with interest thereon in respect of each
day during the period commencing on the date (the "Advance Date") such amount
was so made available by the Administrative Agent until the date the
Administrative Agent recovers such amount at a rate per annum equal to the
Federal Funds Rate for such day and, if such recipient(s) shall fail promptly to
make such payment, the Administrative Agent shall be entitled to recover such
amount, on demand, from the Payor, together with interest as aforesaid, provided
that if neither the recipient(s) nor the Payor shall return the Required Payment
to the Administrative Agent within three Business Days of the Advance Date,
then, retroactively to the Advance Date, the Payor and the recipient(s) shall
each be obligated to pay interest on the Required Payment as follows:
(i) if the Required Payment shall represent a payment to be made
by the Company to the Lenders, the Company and the recipient(s) shall
each be obligated retroactively to the Advance Date to pay interest in
respect of the Required Payment at the Post-Default Rate (and, in case
the recipient(s) shall return the Required Payment to the Administrative
Agent, without limiting the obligation of the Company under Section 3.02
hereof to pay interest to such recipient(s) at the Post-Default Rate in
respect of the Required Payment) and
(ii) if the Required Payment shall represent proceeds of a loan
to be made by the Lenders to the Company, the Payor and the Company
shall each be obligated retroactively to the Advance Date to pay
interest in respect of the Required Payment at the rate of interest
provided for such Required Payment pursuant to Section 3.02 hereof (and,
in case the Company shall return the Required Payment to the
Administrative Agent, without limiting any claim the Company may have
against the Payor in respect of the Required Payment).
<PAGE>
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4.07 Sharing of Payments, Etc.
-------------------------
(a) The Company agrees that, in addition to (and without
limitation of) any right of set-off, banker's lien or counterclaim a Lender may
otherwise have, each Lender shall be entitled, at its option, to offset balances
held by it for account of the Company at any of its offices, in Dollars or in
any other currency, against any principal of or interest on any of such Lender's
Loans, Reimbursement Obligations or any other amount payable to such Lender
hereunder, that is not paid when due (regardless of whether such balances are
then due to the Company), in which case it shall promptly notify the Company and
the Administrative Agent thereof, provided that such Lender's failure to give
such notice shall not affect the validity thereof.
(b) If any Lender shall obtain from the Company payment of any
principal of or interest on any Loan or Letter of Credit Liability of any Class
owing to it or payment of any other amount under this Agreement or any other
Basic Document through the exercise of any right of set-off, banker's lien or
counterclaim or similar right or otherwise (other than from the Administrative
Agent as provided herein), and, as a result of such payment, such Lender shall
have received a greater percentage of the principal of or interest on the Loans
or Letter of Credit Liabilities of such Class or such other amounts then due
hereunder or thereunder by the Company to such Lender than the percentage
received by any other Lender, it shall promptly purchase from such other Lenders
participations in (or, if and to the extent specified by such Lender, direct
interests in) the Loans or Letter of Credit Liabilities of such Class or such
other amounts, respectively, owing to such other Lenders (or in interest due
thereon, as the case may be) in such amounts, and make such other adjustments
from time to time as shall be equitable, to the end that all the Lenders shall
share the benefit of such excess payment (net of any expenses that may be
incurred by such Lender in obtaining or preserving such excess payment) pro rata
in accordance with the unpaid principal of and/or interest on the Loans or
Letter of Credit Liabilities of such Class or such other amounts, respectively,
owing to each of the Lender. To such end all the Lenders shall make appropriate
adjustments among themselves (by the resale of participations sold or otherwise)
if such payment is rescinded or must otherwise be restored.
(c) The Company agrees that any Lender so purchasing such a
participation (or direct interest) may exercise all rights of set-off, banker's
lien, counterclaim or similar rights with respect to such participation as fully
as if such Lender were a direct holder of Loans or other amounts (as the case
may be) owing to such Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to exercise
any such right or shall affect the right of any Lender to exercise, and retain
the benefits of exercising, any such right with respect to any other
indebtedness or obligation of the Company. If, under any applicable bankruptcy,
insolvency or other similar law, any Lender receives a secured claim in lieu of
a set-off to which this Section 4.07 applies, such Lender shall, to the extent
practicable, exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders entitled under this Section 4.07 to
share in the benefits of any recovery on such secured claim.
<PAGE>
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Section 5. Yield Protection, Etc.
----------------------
5.01 Additional Costs.
----------------
(a) The Company shall pay directly to each Lender from time to
time such amounts as such Lender may determine to be necessary to compensate
such Lender for any costs that such Lender determines are attributable to its
making or maintaining of any Eurodollar Loans or its obligation to make any
Eurodollar Loans hereunder, or any reduction in any amount receivable by such
Lender hereunder in respect of any of such Loans or such obligation (such
increases in costs and reductions in amounts receivable being herein called
"Additional Costs"), resulting from any Regulatory Change that:
(i) changes the basis of taxation of any amounts payable to such
Lender under this Agreement or its Notes in respect of any of such Loans
(other than taxes imposed on or measured by the overall net income of
such Lender or of its Applicable Lending Office for any of such Loans by
the jurisdiction in which such Lender has its principal office or such
Applicable Lending Office); or
(ii) imposes or modifies any reserve, special deposit or similar
requirements (other than the Reserve Requirement utilized in the
determination of the Eurodollar Rate for such Loan) relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of, such Lender (including, without limitation, any of such
Loans or any deposits referred to in the definition of "Eurodollar Base
Rate" in Section 1.01 hereof), or any commitment of such Lender
(including, without limitation, the Commitments of such Lender
hereunder); or
(iii) imposes any other condition affecting this Agreement or its
Notes (or any of such extensions of credit or liabilities) or its
Commitments.
If any Lender requests compensation from the Company under this Section 5.01(a),
the Company may, by notice to such Lender (with a copy to the Administrative
Agent), suspend the obligation of such Lender thereafter to make or Continue
Eurodollar Loans, or to Convert Base Rate Loans into Eurodollar Loans, until the
Regulatory Change giving rise to such request ceases to be in effect (in which
case the provisions of Section 5.04 hereof shall be applicable), provided that
such suspension shall not affect the right of such Lender to receive the
compensation so requested.
(b) Without limiting the effect of the provisions of paragraph
(a) of this Section 5.01, in the event that, by reason of any Regulatory Change,
any Lender either (i) incurs Additional Costs based on or measured by the excess
above a specified level of the amount of a category of deposits or other
liabilities of such Lender that includes deposits by reference to which the
interest rate on Eurodollar Loans is determined as provided in this Agreement or
a category of extensions of credit or other assets of such Lender that includes
Eurodollar Loans or (ii) becomes subject to restrictions on the amount of such a
category of liabilities or assets that it may hold, then, if such Lender so
elects by notice to the Company (with a copy to the Administrative Agent), the
obligation of such Lender to make or Continue, or to Convert Base
<PAGE>
- 42 -
Rate Loans into, Eurodollar Loans hereunder shall be suspended until such
Regulatory Change ceases to be in effect (in which case the provisions of
Section 5.04 hereof shall be applicable).
(c) Without limiting the effect of the foregoing provisions of
this Section 5.01 (but without duplication), the Company shall pay directly to
each Lender from time to time on request such amounts as such Lender may
determine to be necessary to compensate such Lender (or, without duplication,
the bank holding company of which such Lender is a subsidiary) for any costs
that it determines are attributable to the maintenance by such Lender (or any
Applicable Lending Office or such bank holding company), pursuant to any law or
regulation or any interpretation, directive or request (whether or not having
the force of law and whether or not failure to complete therewith would be
unlawful) of any court or governmental or monetary authority (i) following any
Regulatory Change or (ii) implementing any risk-based capital guideline or other
requirement (whether or not having the force of law and whether or not the
failure to comply therewith would be unlawful) heretofore or hereafter issued by
any government or governmental or supervisory authority implementing at the
national level the Basle Accord (including, without limitation, the Final
Risk-Based Capital Guidelines of the Board of Governors of the Federal Reserve
System (12 C.F.R. Part 208, Appendix A; 12 C.F.R. Part 225, Appendix A) and the
Final Risk-Based Capital Guidelines of the Office of the Comptroller of the
Currency (12 C.F.R. Part 3, Appendix A)), of capital in respect of its
Commitments or Loans (such compensation to include, without limitation, an
amount equal to any reduction of the rate of return on assets or equity of such
Lender (or any Applicable Lending Office or such bank holding company) to a
level below that which such Lender (or any Applicable Lending Office or such
bank holding company) could have achieved but for such law, regulation,
interpretation, directive or request). For purposes of this Section 5.01(c) and
Section 5.06 hereof, "Basle Accord" shall mean the proposals for risk-based
capital framework described by the Basle Committee on Banking Regulations and
Supervisory Practices in its paper entitled "International Convergence of
Capital Measurement and Capital Standards" dated July 1988, as amended, modified
and supplemented and in effect from time to time or any replacement thereof.
(d) Each Lender shall notify the Company of any event occurring
after the Amendment Effective Date entitling such Lender to compensation under
paragraph (a) or (c) of this Section 5.01 as promptly as practicable, but in any
event within 45 days, after such Lender obtains actual knowledge thereof;
provided that (i) if any Lender fails to give such notice within 45 days after
it obtains actual knowledge of such an event, such Lender shall, with respect to
compensation payable pursuant to this Section 5.01 in respect of any costs
resulting from such event, only be entitled to payment under this Section 5.01
for costs incurred from and after the date 45 days prior to the date that such
Lender does give such notice and (ii) each Lender will designate a different
Applicable Lending Office for the Loans of such Lender affected by such event if
such designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the sole opinion of such Lender, be
disadvantageous to such Lender, except that such Lender shall have no obligation
to designate an Applicable Lending Office located in the United States of
America. Each Lender will furnish to the Company a certificate setting forth the
basis and amount of each request by such Lender for compensation under paragraph
(a) or (c) of this Section 5.01. Determinations and allocations by any Lender
for purposes of this Section 5.01 of the effect of any Regulatory Change
pursuant to paragraph (a) or (b) of this Section 5.01, or of the effect of
capital maintained pursuant to paragraph (c) of this Section 5.01,
<PAGE>
- 43 -
on its costs or rate of return of maintaining Loans or its obligation to make
Loans, or on amounts receivable by it in respect of Loans, and of the amounts
required to compensate such Lender under this Section 5.01, shall be conclusive,
provided that such determinations and allocations are made on a reasonable
basis.
5.02 Limitation on Types of Loans. Anything herein to the
contrary notwithstanding, if, on or prior to the determination of any Eurodollar
Base Rate for any Interest Period:
(a) the Administrative Agent reasonably determines, which
determination shall be conclusive, that quotations of interest rates for the
relevant deposits referred to in the definition of "Eurodollar Base Rate" in
Section 1.01 hereof are not being provided in the relevant amounts or for the
relevant maturities for purposes of determining rates of interest for Eurodollar
Loans as provided herein; or
(b) if the related Loans are Series A Loans, the Majority Series
A Lenders or, if the related Loans are Series B Loans, the Majority Series B
Lenders or, if the related Loans are Series C Loans, the Majority Series C
Lenders reasonably determine, which determination shall be conclusive, and
notify the Administrative Agent that the relevant rates of interest referred to
in the definition of "Eurodollar Base Rate" in Section 1.01 hereof upon the
basis of which the rate of interest for Eurodollar Loans for such Interest
Period is to be determined are not likely adequately to cover the cost to such
Lenders of making or maintaining Eurodollar Loans for such Interest Period;
then the Administrative Agent shall give the Company and each Lender prompt
notice thereof and, so long as such condition remains in effect, the Lenders
shall be under no obligation to make additional Eurodollar Loans, to Continue
Eurodollar Loans or to Convert Base Rate Loans into Eurodollar Loans, and the
Company shall, on the last day(s) of the then current Interest Period(s) for the
outstanding Eurodollar Loans, either prepay such Loans or Convert such Loans
into Base Rate Loans in accordance with Section 2.09 hereof.
5.03 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to honor its obligation to make or maintain Eurodollar
Loans hereunder, then such Lender shall promptly notify the Company thereof
(with a copy to the Administrative Agent) and such Lender's obligation to make
or Continue, or to Convert Loans of any other Type into, Eurodollar Loans shall
be suspended until such time as such Lender may again make and maintain
Eurodollar Loans (in which case the provisions of Section 5.04 hereof shall be
applicable).
5.04 Treatment of Affected Loans. If the obligation of any Lender
to make Eurodollar Loans or to Continue, or to Convert Base Rate Loans into,
Eurodollar Loans shall be suspended pursuant to Section 5.01 or 5.03 hereof,
such Lender's Eurodollar Loans shall be automatically Converted into Base Rate
Loans on the last day(s) of the then current Interest Period(s) for Eurodollar
Loans (or, in the case of a Conversion required by Section 5.01(b) or 5.03
hereof, on such earlier date as such Lender may specify to the Company with a
copy to the Administrative Agent) and, unless and until such Lender gives notice
as provided below that
<PAGE>
- 44 -
the circumstances specified in Section 5.01 or 5.03 hereof that gave rise to
such Conversion no longer exist:
(a) to the extent that such Lender's Eurodollar Loans have been
so Converted, all payments and prepayments of principal that would otherwise be
applied to such Lender's Eurodollar Loans shall be applied instead to its Base
Rate Loans; and
(b) all Loans that would otherwise be made or Continued by such
Lender as Eurodollar Loans shall be made or Continued instead as Base Rate
Loans, and all Base Rate Loans of such Lender that would otherwise be Converted
into Eurodollar Loans shall remain as Base Rate Loans.
If such Lender gives notice to the Company with a copy to the Administrative
Agent that the circumstances specified in Section 5.01 or 5.03 hereof that gave
rise to the Conversion of such Lender's Eurodollar Loans pursuant to this
Section 5.04 no longer exist (which such Lender agrees to do promptly upon such
circumstances ceasing to exist) at a time when Eurodollar Loans made by other
Lenders are outstanding, such Lender's Base Rate Loans shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Eurodollar Loans, to the extent necessary so that, after giving
effect thereto, all Loans held by the Lenders holding Eurodollar Loans and by
such Lender are held pro rata (as to principal amounts, Types and Interest
Periods) in accordance with their respective Commitments.
5.05 Compensation.
The Company shall pay to the Administrative Agent for account of each Lender,
upon the request of such Lender through the Administrative Agent, such amount or
amounts as shall be sufficient (in the reasonable opinion of such Lender) to
compensate it for any loss, cost or expense incurred by it that such Lender
determines is attributable to:
(a) any payment, mandatory or optional prepayment or Conversion
of a Eurodollar Loan made by such Lender for any reason (including, without
limitation, the acceleration of the Loans pursuant to Section 9 hereof) on a
date other than the last day of the Interest Period for such Loan; or
(b) any failure by the Company for any reason (including, without
limitation, the failure of any of the conditions precedent specified in Section
6 hereof to be satisfied) to borrow a Eurodollar Loan from such Lender on the
date for such borrowing specified in the relevant notice of borrowing given
pursuant to Section 2.02 hereof.
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
that otherwise would have accrued on the principal amount so paid, prepaid or
Converted or not borrowed for the period from the date of such payment,
prepayment, Conversion or failure to borrow to the last day of the then current
Interest Period for such Loan (or, in the case of a failure to borrow, the
Interest Period for such Loan that would have commenced on the date specified
for such borrowing) at the applicable rate of interest for such Loan provided
for herein over (ii) the amount of interest
<PAGE>
- 45 -
that otherwise would have accrued on such principal amount at a rate per annum
equal to the interest component of the amount such Lender would have bid in the
London interbank market for Dollar deposits of leading banks in amounts
comparable to such principal amount and with maturities comparable to such
period (as reasonably determined by such Lender).
5.06 Additional Costs in Respect of Letters of Credit. Without
limiting the obligations of the Company under Section 5.01 hereof (but without
duplication), if as a result of any Regulatory Change or any risk-based capital
guideline or other requirement heretofore or hereafter issued by any government
or governmental or supervisory authority implementing at the national level the
Basle Accord there shall be imposed, modified or deemed applicable any tax,
reserve, special deposit, capital adequacy or similar requirement against or
with respect to or measured by reference to Letters of Credit issued or to be
issued hereunder and the result shall be to increase the cost to any Lender or
Lenders of issuing (or purchasing or maintaining participations in) or
maintaining its obligation hereunder to issue (or purchase participations in)
any Letter of Credit hereunder or reduce any amount receivable by any Lender
hereunder in respect of any Letter of Credit (which increases in cost, or
reductions in amount receivable, shall be the result of such Lender's or
Lenders' reasonable allocation of the aggregate of such increases or reductions
resulting from such event), then, upon demand by such Lender or Lenders (through
the Administrative Agent), the Company shall pay immediately to the
Administrative Agent for account of such Lender or Lenders, from time to time as
specified by such Lender or Lenders (through the Administrative Agent), such
additional amounts as shall be sufficient to compensate such Lender or Lenders
(through the Administrative Agent) for such increased costs or reductions in
amount. A statement as to such increased costs or reductions in amount incurred
by any such Lender or Lenders, submitted by such Lender or Lenders to the
Company shall be conclusive in the absence of manifest error as to the amount
thereof, provided that the determination of such increased costs or reductions
are made on a reasonable basis.
5.07 U.S. Taxes.
----------
(a) The Company agrees to pay to each Lender that is not a U.S.
Person such additional amounts as are necessary in order that the net payment of
any amount due to such non-U.S. Person hereunder after deduction for or
withholding in respect of any U.S. Taxes imposed with respect to such payment
(or in lieu thereof, payment of such U.S. Taxes by such non-U.S. Person), will
not be less than the amount stated herein to be then due and payable, provided
that the foregoing obligation to pay such additional amounts shall not apply:
(i) to any payment to a Lender hereunder unless such Lender is,
on the Amendment Effective Date (or on the date it becomes a Lender as
provided in Section 11.06(b) hereof) and on the date of any change in
the Applicable Lending Office of such Lender, either entitled to submit
a Form 1001 (relating to such Lender and entitling it to a complete
exemption from withholding on all interest to be received by it
hereunder in respect of the Loans) or Form 4224 (relating to all
interest to be received by such Lender hereunder in respect of the
Loans), or
(ii) to any U.S. Taxes imposed solely by reason of the failure by
such non-U.S. Person to comply with applicable certification,
information, documentation or
<PAGE>
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other reporting requirements concerning the nationality, residence,
identity or connections with the United States of America of such
non-U.S. Person if such compliance is required by statute or regulation
of the United States of America as a precondition to relief or exemption
from such U.S. Taxes.
For the purposes of this Section 5.07(a), (w) "Form 1001" shall mean Form 1001
(Ownership, Exemption, or Reduced Rate Certificate) of the Department of the
Treasury of the United States of America, (x) "Form 4224" shall mean Form 4224
(Exemption from Withholding of Tax on Income Effectively Connected with the
Conduct of a Trade or Business in the United States) of the Department of the
Treasury of the United States of America (or in relation to either such Form
such successor and related forms as may from time to time be adopted by the
relevant taxing authorities of the United States of America to document a claim
to which such Form relates), (y) "U.S. Person" shall mean a citizen, national or
resident of the United States of America, a corporation, partnership or other
entity created or organized in or under any laws of the United States of
America, or any estate or trust that is subject to Federal income taxation
regardless of the source of its income and (z) "U.S. Taxes" shall mean any
present or future tax, assessment or other charge or levy imposed by or on
behalf of the United States of America or any taxing authority thereof or
therein.
(b) Within 30 days after paying any amount to the Administrative
Agent or any Lender from which it is required by law to make any deduction or
withholding, and within 30 days after it is required by law to remit such
deduction or withholding to any relevant taxing or other authority, the Company
shall deliver to the Administrative Agent for delivery to such non-U.S. Person
evidence satisfactory to such Person of such deduction, withholding or payment
(as the case may be).
Section 6. Conditions Precedent.
--------------------
6.01 Conditions to Effectiveness. The effectiveness of the
amendment and restatement of the Existing Credit Agreement provided for hereby
is subject to the receipt by the Administrative Agent of the following
documents, each of which shall be satisfactory to the Administrative Agent (and
to the extent specified below, to each Lender) in form and substance:
(a) Corporate Documents. The following documents, each certified
as indicated below:
(i) a copy of the charter, as amended and in effect, of the
Company certified as of a recent date by the Secretary of State of the
State of Delaware (or, if there have been no modifications to such
charter from the copy thereof delivered by the Company pursuant to the
Existing Credit Agreement, a certificate of the Secretary or an
Assistant Secretary of the Company to that effect), and a certificate
from such Secretary of State dated as of a recent date as to the good
standing of and charter documents filed by the Company;
(ii) a certificate of the Secretary or an Assistant Secretary of
the Company, dated the Amendment Effective Date and certifying (A) that
attached thereto is a true and
<PAGE>
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complete copy of the by-laws of the Company as amended and in effect at
all times from the date on which the resolutions referred to in clause
(B) below were adopted to and including the date of such certificate (or
if there have been no modifications to such by-laws from the copy
thereof delivered by the Company pursuant to the Existing Credit
Agreement, a certificate of the Secretary or an Assistant Secretary of
the Company to that effect), (B) that attached thereto is a true and
complete copy of resolutions duly adopted by the board of directors of
the Company authorizing the execution, delivery and performance of the
amendment and restatement of the Existing Credit Agreement and such
other of the Basic Documents to which the Company is or is intended to
be a party and the extensions of credit hereunder, and that such
resolutions have not been modified, rescinded or amended and are in full
force and effect, (C) that the charter of the Company has not been
amended since the date of the certification thereto furnished pursuant
to clause (i) above, and (D) as to the incumbency and specimen signature
of each officer of the Company executing the amendment and restatement
of the Existing Credit Agreement and such other of the Basic Documents
to which the Company is intended to be a party and each other document
to be delivered by the Company from time to time in connection therewith
(and the Administrative Agent and each Lender may conclusively rely on
such certificate until it receives notice in writing from the Company to
the contrary); and
(iii) a certificate of another officer of the Company as to the
incumbency and specimen signature of the Secretary or Assistant
Secretary, as the case may be, of the Company.
(b) Officer's Certificate. A certificate of a senior officer of
the Company, dated the Amendment Effective Date, to the effect that (i) no
Default shall have occurred and be continuing and (ii) the representations and
warranties made by the Company in Section 7 hereof, and in each of the other
Basic Documents, are true and correct on and as of the Amendment Effective Date
with the same force and effect as if made on and as of such date (or, if any
such representation or warranty is expressly stated to have been made as of a
specific date, as of such specific date).
(c) Opinion of Counsel to the Company. An opinion, dated the
Amendment Effective Date, of Ropes & Gray, counsel to the Company, in form and
substance satisfactory to the Administrative Agent (and the Company hereby
instructs such counsel to deliver such opinions to the Lenders and the
Administrative Agent).
(d) Opinion of Special New York Counsel to Chase. An opinion,
dated the Amendment Effective Date, of Milbank, Tweed, Hadley & McCloy, special
New York counsel to Chase, in form and substance satisfactory to the
Administrative Agent.
(e) Financial Information. True, correct and complete copies of
the financial statements, projections and other information referred to in
Section 7.02 hereof.
<PAGE>
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(f) Approvals and Consents. Evidence that all necessary
governmental and third party filings, licenses, permits, consents and approvals
have been obtained by the Company and are in full force and effect on the
Amendment Effective Date.
(g) Payment of Fees and Expenses. Evidence that the reasonable
fees and expenses of Milbank, Tweed, Hadley & McCloy, special New York counsel
to Chase in connection with the negotiation, preparation, execution and delivery
of the amendment and restatement of the Existing Credit Agreement and the Notes
and the other Basic Documents and the extensions of credit hereunder (to the
extent that statements for such fees and expenses have been delivered to the
Company) shall have been paid in full.
(h) Governmental Proceedings; Etc. Evidence that no litigation or
similar proceeding is threatened by any governmental agency or authority or any
other person with respect to the execution and delivery of the amendment and
restatement of the Existing Credit Agreement, the Notes and the other Basic
Documents, and the consummation of the transactions herein or therein
contemplated which, in each case, the Lenders shall reasonably determine is
likely to have a material adverse effect on (i) the assets, business,
operations, or condition (financial or otherwise) or prospects of the Company
and its Subsidiaries taken as a whole or (ii) the timely payment of the Loans
and interest thereon or the enforceability of the Basic Documents or the rights
and remedies thereunder.
(i) Leverage Ratio. A certificate of a senior officer of the
Company, dated the Amendment Effective Date, setting forth the Leverage Ratio as
at the Amendment Effective Date.
(j) Security Documents. Written confirmation from In-Flight that
In-Flight consents to this Agreement and agrees that references in the In-flight
Guarantee and Security Agreement to the "Credit Agreement" include this
Agreement and that all references to the "Guaranteed Obligations" shall include
obligations of the Company in respect of Series C Loans and Series C
Reimbursement Obligations, together with stock certificates representing all of
the shares not previously delivered of the Persons listed on Annex 2 hereto.
(k) Other Documents. Such other documents as the Administrative
Agent or any Lender or special New York counsel to Chase may reasonably request.
6.02 Initial and Subsequent Extensions of Credit. The obligation
of the Lenders to make any Loan or otherwise extend any credit to the Company
upon the occasion of each borrowing or other extension of credit hereunder
(including the initial borrowing) is subject to the further conditions precedent
that:
(a) Both immediately prior to the making of such Loan or other
extension of credit and also after giving effect thereto and to the intended use
thereof: (i) no Default shall have occurred and be continuing; (ii) the
representations and warranties made by the Company in Section 7 hereof, and in
each of the other Basic Documents, shall be true and correct on and as of the
date of the making of such Loan or other extension of credit with the same force
and effect as if made on and as of such date (or, if any such representation or
warranty is expressly stated to
<PAGE>
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have been made as of a specific date, as of such specific date). Each notice of
borrowing or request for the issuance of a Letter of Credit by the Company
hereunder shall constitute a certification by the Company to the effect set
forth in the preceding sentence (both as of the date of such notice or request
and, unless the Company otherwise notifies the Administrative Agent prior to the
date of such borrowing or issuance, as of the date of such borrowing or
issuance); and
(b) The Administrative Agent shall have received a certificate of
a senior financial officer of the Company setting forth in reasonable detail the
computations necessary to demonstrate that both immediately prior to the making
of such Loan or other extension of credit and immediately after giving effect
thereto, the Company is or will be in compliance with Section 1010 of the Senior
Subordinated Indentures.
Section 7. Representations and Warranties. The Company represents
and warrants to the Lenders that:
7.01 Corporate Existence. Each of the Company and its
Subsidiaries: (a) is a corporation, partnership or other entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization; (b) has all requisite corporate or other power, and has all
material governmental licenses, authorizations, consents and approvals necessary
to own its assets and carry on its business as now being or as proposed to be
conducted; and (c) is qualified to do business and is in good standing in all
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary and where failure so to qualify could have a Material
Adverse Effect.
7.02 Financial Condition.
-------------------
(a) The Company has heretofore furnished to each of the Lenders
(i) the consolidated balance sheet of the Company and its Subsidiaries as at
February 28, 1998 and the related consolidated statements of operations,
stockholders' equity and cash flows of the Company and its Subsidiaries for the
fiscal year ended on said date, with the opinion thereon of Deloitte & Touche,
and (ii) the consolidated balance sheet of the Company and its Subsidiaries as
at May 30, 1998 and the related consolidated statements of earnings,
stockholders' equity and cash flows of the Company and its Subsidiaries for the
fiscal quarter ended on such date. All such financial statements present fairly,
in all material respects, the financial position of the Company and its
Subsidiaries as at, and the results of operations for the fiscal year and fiscal
quarter, ended on said date, all in accordance with generally accepted
accounting principles and practices applied on a consistent basis (subject, in
the case of such financial statements as at May 30, 1998, to normal year-end
audit adjustments). Neither the Company nor any of its Subsidiaries has on the
Restatement Date any material contingent liabilities, liabilities for taxes,
unusual forward or long-term commitments or unrealized or anticipated losses
from any unfavorable commitments, except as referred to or reflected or provided
for in said balance sheets as at said dates or in Part A of Schedule I hereto.
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(b) Since February 28, 1998, there has been no material adverse
change in the financial condition, operations, business or prospects of the
Company and its Subsidiaries from that set forth in said financial statements as
at said date.
7.03 Litigation. Except as disclosed to the Lenders in writing
prior to the Amendment Effective Date, there are no legal or arbitral
proceedings, or any proceedings by or before any governmental or regulatory
authority or agency, now pending or (to the knowledge of the Company) threatened
against the Company or any of its Subsidiaries which, if adversely determined,
could have a Material Adverse Effect.
7.04 No Breach. None of the execution and delivery of this
Agreement and the Notes and the other Basic Documents, the consummation of the
transactions herein and therein contemplated or compliance with the terms and
provisions hereof and thereof will conflict with or result in a breach of, or
require any consent under, the charter or by-laws of the Company, or any
applicable law or regulation, or any order, writ, injunction or decree of any
court or governmental authority or agency, or any agreement or instrument to
which the Company or any of its Subsidiaries is a party (including, without
limitation, the Senior Subordinated Indentures) or by which any of them or any
of their Property is bound or to which any of them is subject, or constitute a
default under any such agreement or instrument, or (except for Liens created
pursuant to the Security Documents) result in the creation or imposition of any
Lien upon any Property of the Company or any of its Subsidiaries pursuant to the
terms of any such agreement or instrument.
7.05 Action. The Company has all necessary corporate power,
authority and legal right to execute, deliver and perform its obligations under
each of the Basic Documents; the execution, delivery and performance by the
Company of each of the Basic Documents have been duly authorized by all
necessary corporate action on its part (including, without limitation, any
required shareholder approvals); and this Agreement has been duly and validly
executed and delivered by the Company and constitutes, and each of the Notes and
the other Basic Documents to which it is a party when executed and delivered (in
the case of the Notes, for value) will constitute, its legal, valid and binding
obligation, enforceable against the Company in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws of general applicability affecting the enforcement of
creditors' rights and the application of general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
7.06 Approvals. No authorizations, approvals or consents of, and
no filings or registrations with, any governmental or regulatory authority or
agency, or any securities exchange, are necessary for the execution, delivery or
performance by the Company of the Basic Documents to which it is a party or for
the legality, validity or enforceability hereof or thereof, except for filings
and recordings in respect of the Liens created pursuant to the Security
Documents.
7.07 Use of Credit. Neither the Company nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose, whether immediate, incidental
or ultimate, of buying or carrying Margin Stock, and no
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part of the proceeds of any extension of credit hereunder will be used to buy or
carry any Margin Stock.
7.08 ERISA. Each Plan, and, to the knowledge of the Company, each
Multiemployer Plan, is in compliance in all material respects with, and has been
administered in all material respects in compliance with, the applicable
provisions of ERISA, the Code and any other Federal or State law, and no event
or condition has occurred and is continuing as to which the Company would be
under an obligation to furnish a report to the Lenders under Section 8.01(f)
hereof.
7.09 Taxes. The Company and its Domestic Subsidiaries are members
of an affiliated group of corporations filing consolidated returns for Federal
income tax purposes, of which the Company is the "common parent" (within the
meaning of Section 1504 of the Code) of such group. The Company and its Domestic
Subsidiaries have filed all Federal income tax returns and all other material
tax returns that are required to be filed by them and have paid all taxes due
pursuant to such returns or pursuant to any assessment received by the Company
or any of its Domestic Subsidiaries. The charges, accruals and reserves on the
books of the Company and its Subsidiaries in respect of taxes and other
governmental charges are, in the opinion of the Company, adequate. Except as set
forth in Schedule VI hereto, the Company has not given or been requested to give
a waiver of the statute of limitations relating to the payment of Federal,
state, local and foreign taxes or other impositions.
7.10 Investment Company Act. Neither the Company 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.
7.11 Public Utility Holding Company Act. Neither the Company nor
any of its Subsidiaries is a "holding company", or an "affiliate" of a "holding
company" or a "subsidiary company" of a "holding company", within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
7.12 Material Agreements and Liens.
-----------------------------
(a) Part A of Schedule I hereto is a complete and correct list,
as of the Restatement Date, of each credit agreement, loan agreement, indenture,
purchase agreement, guarantee, letter of credit or other arrangement providing
for or otherwise relating to any Indebtedness or any extension of credit (or
commitment for any extension of credit) to, or guarantee by, the Company or any
of its Subsidiaries the aggregate principal or face amount of which equals or
exceeds (or may equal or exceed) $1,000,000, and the aggregate principal or face
amount outstanding or that may become outstanding under each such arrangement is
correctly described in Part A of said Schedule I.
(b) Part B of Schedule I hereto is a complete and correct list,
as of the Restatement Date, of each Lien securing Indebtedness the aggregate
principal or face amount of which equals or exceeds $1,000,000 of any Person and
covering any Property of the Company or any of its Subsidiaries, and the
aggregate amount of such Indebtedness secured (or which may be
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secured) by each such Lien and the Property covered by each such Lien is
correctly described in Part B of said Schedule I.
7.13 Environmental Matters. Except as set forth in Schedule II
hereto, each of the Company and its Subsidiaries has obtained all environmental,
health and safety permits, licenses and other authorizations required under all
Environmental Laws to carry on its business as now being or as proposed to be
conducted, except to the extent failure to have any such permit, license or
authorization would not have a Material Adverse Effect. All of the permits,
licenses and authorizations that have been obtained are in full force and effect
and each of the Company and its Subsidiaries is in compliance with the terms and
conditions thereof, and is also in compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in any applicable Environmental Law or in any
regulation, code, plan, order, decree, judgment, injunction, notice or demand
letter issued, entered, promulgated or approved thereunder, except to the extent
failure to comply therewith would not have a Material Adverse Effect.
In addition, except as set forth in Schedule II hereto:
(a) To the Company's knowledge after due inquiry, no written
notice, notification, demand, request for information, citation, summons or
order has been issued, no complaint has been filed, no penalty has been assessed
and no investigation or review is pending or threatened by any governmental or
other entity with respect to any alleged failure by the Company or any of its
Subsidiaries to have any environmental, health or safety permit, license or
other authorization required under any Environmental Law in connection with the
conduct of the business of the Company or any of its Subsidiaries or with
respect to any generation, treatment, storage, recycling, transportation,
discharge or disposal, or any Release of any Hazardous Materials generated by
the Company or any of its Subsidiaries.
(b) Neither the Company nor any of its Subsidiaries owns,
operates or leases a treatment, storage or disposal facility requiring a permit
under the Resource Conservation and Recovery Act of 1976, as amended, or under
any comparable state or local statute; and
(i) to the Company's knowledge after due inquiry, no PCB
Transformers (as defined in the Toxic Substances Control Act, 15 U.S.C.
ss.1601, et seq., as amended, and the regulations relating thereto) are
present at any site or facility owned, operated or leased by the Company
or any of its Subsidiaries;
(ii) to the Company's knowledge after due inquiry, no asbestos or
asbestos-containing materials is present at any site or facility owned,
operated or leased by the Company or any of its Subsidiaries;
(iii) to the Company's knowledge after due inquiry, there are no
underground storage tanks or surface impoundments for Hazardous
Materials, active or abandoned, at any site or facility owned, operated
or leased by the Company or any of its Subsidiaries; and
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(iv) to the Company's knowledge after due inquiry, no Hazardous
Materials have been Released by the Company or any of its Subsidiaries
at, on or under any site or facility now owned, operated or leased by
the Company or any of its Subsidiaries in a reportable quantity
established by any Environmental Law.
(c) To the Company's knowledge after due inquiry, neither the
Company nor any of its Subsidiaries has transported or arranged for the
transportation of any Hazardous Material to any location that is listed on the
National Priorities List ("NPL") under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), listed for
possible inclusion on the NPL by the Environmental Protection Agency, or listed
in the Comprehensive Environmental Response and Liability Information System, as
provided for by 40 C.F.R. ss. 300.5 ("CERCLIS"), or on any similar state or
local list or that is the subject of Federal, state or local enforcement actions
or other investigations that may lead to Environmental Claims against the
Company or any of its Subsidiaries.
(d) No Liens are presently recorded with the appropriate land
records under or pursuant to any Environmental Laws on any site or facility
owned, operated or leased by the Company or any of its Subsidiaries, and to the
Company's knowledge no government action has been taken or is in process that
could subject any such site or facility to such Liens. Neither the Company nor
any of its Subsidiaries would be required to place any notice or restriction
relating to the presence of Hazardous Materials at any site or facility owned by
it in any deed to the real property on which such site or facility is located.
(e) There have been no environmental investigations, written
studies, audits, tests, reviews or other analyses conducted by or that are in
the possession of the Company or any of its Subsidiaries in relation to any site
or facility now or previously owned, operated or leased by the Company or any of
its Subsidiaries which have not been made available to the Lenders.
7.14 Capitalization. The authorized capital stock of the Company
consists, on the Restatement Date, of an aggregate of 51,000,000 shares
consisting of (i) 50,000,000 shares of common stock, par value $0.01 per share,
of which 22,891,918 shares were, as at February 28, 1998 duly and validly issued
and outstanding, each of which shares is fully paid and nonassessable and (ii)
1,000,000 shares of preferred stock, par value $0.01 per share, of which no
shares were outstanding as at February 28, 1998. As of the Restatement Date the
Company is registered with the Securities and Exchange Commission under the
Securities Exchange Act, and its shares of common stock are publicly owned and
traded on the NASDAQ National Market System. As of the Restatement Date, (x)
except for options to purchase 2,902,001 shares of the common stock of the
Company, there are no outstanding Equity Rights with respect to the Company and
(y) there are no outstanding obligations of the Company or any of its
Subsidiaries to repurchase, redeem, or otherwise acquire any shares of capital
stock of the Company nor are there any outstanding obligations of the Company or
any of its Subsidiaries to make payments to any Person, such as "phantom stock"
payments, where the amount thereof is calculated with reference to the fair
market value or equity value of the Company or any of its Subsidiaries.
<PAGE>
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7.15 Subsidiaries, Etc.
------------------
(a) Set forth in Part A of Schedule III hereto is a complete and
correct list, as of the Restatement Date, of all of the Subsidiaries of the
Company, together with, for each such Subsidiary, (i) the jurisdiction of
organization of such Subsidiary, (ii) each Person holding ownership interests in
such Subsidiary, (iii) the nature of the ownership interests held by each such
Person and the percentage of ownership of such Subsidiary represented by such
ownership interests and (iv) the total book value of the assets of each such
Subsidiary as of May 30, 1998 (or, in the case of Subsidiaries acquired after
May 30, 1998, such other date as specified in Part A of Schedule III hereto).
Except as disclosed in Part A of Schedule III hereto, (x) each of the Company
and its Subsidiaries owns, free and clear of Liens (other than Liens created
pursuant to the Security Documents), and has the unencumbered right to vote, all
outstanding ownership interests in each Person shown to be held by it in Part A
of Schedule III hereto, (y) all of the issued and outstanding capital stock of
each such Person organized as a corporation is validly issued, fully paid and
nonassessable and (z) there are no outstanding Equity Rights with respect to
such Person.
(b) Set forth in Part B of Schedule III hereto is a complete and
correct list, as of the Restatement Date, of all Investments (other than
Investments disclosed in Part A of said Schedule III hereto) of $1,000,000 or
more held by the Company or any of its Subsidiaries in any Person and, for each
such Investment, (x) the identity of the Person or Persons in which such
Investment has been made, (y) the nature of such Investment and (z) the amount
of such Investment. Except as disclosed in Part B of Schedule III hereto, each
of the Company and its Subsidiaries owns, free and clear of all Liens (other
than Liens created pursuant to the Security Documents), all such Investments.
(c) Except as set forth in Schedule III hereto, none of the
Subsidiaries of the Company is, on the Restatement Date, subject to any
indenture, agreement, instrument or other arrangement of the type described in
the last sentence of Section 8.17 hereof.
7.16 Title to Assets. The Company owns and has on the Restatement
Date, and will own and have on the Amendment Effective Date, good and marketable
title (subject only to Liens permitted by Section 8.06 hereof) to the Properties
shown to be owned in the most recent financial statements referred to in Section
7.02 hereof (other than Properties disposed of in the ordinary course of
business or otherwise permitted to be disposed of pursuant to Section 8.05
hereof). The Company owns and has on the Restatement Date, and will own and have
on the Amendment Effective Date, good and marketable title to, and enjoys on the
Restatement Date, and will enjoy on the Amendment Effective Date, peaceful and
undisturbed possession of, all Properties (subject only to Liens permitted by
Section 8.06 hereof) that are necessary for the operation and conduct of its
businesses.
7.17 Compliance with Law. Except as set forth in Schedule IV
hereto, each of the Company and its Subsidiaries is in compliance with all
applicable laws, rules, regulations and orders of, and all applicable
restrictions imposed by, all governmental authorities or bodies, domestic or
foreign, in respect of the conduct of its business and the ownership of its
Property (including Environmental Laws), except such noncompliance as would not,
in the aggregate,
<PAGE>
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have a Material Adverse Effect on the business, properties, assets, operations,
condition (financial or otherwise), or prospects of the Company and its
Subsidiaries, taken as a whole.
7.18 True and Complete Disclosure. The information, reports,
financial statements, exhibits and schedules furnished in writing by or on
behalf of the Company to the Administrative Agent or any Lender prior to the
Amendment Effective Date in connection with the negotiation, preparation or
delivery of this Agreement and the other Basic Documents or included herein or
therein or delivered pursuant hereto or thereto, when taken as a whole (together
with the Information Memorandum which the Lenders acknowledge contains
projections based on certain assumptions therein stated) do not contain any
untrue statement of material fact or omit to state any material fact necessary
to make the statements herein or therein, in light of the circumstances under
which they were made, not misleading. All written information furnished on or
after the Amendment Effective Date by the Company and its Subsidiaries to the
Administrative Agent and the Lenders in connection with this Agreement and the
other Basic Documents and the transactions contemplated hereby and thereby will
be true, complete and accurate in every material respect, or (in the case of
projections) based on reasonable estimates, on the date as of which such
information is stated or certified. There is no fact known to the Company that
could have a Material Adverse Effect that has not been disclosed herein, in the
other Basic Documents or in a report, financial statement, exhibit, schedule,
disclosure letter or other writing furnished to the Lenders for use in
connection with the transactions contemplated hereby or thereby.
7.19 Year 2000. Substantially all reprogramming required to
permit the proper functioning, in and following the year 2000, of (i) the
Company's computer systems and (ii) equipment containing embedded microchips
(including systems and equipment supplied by others or with which the Company's
systems interface) and the testing of all such systems and equipment, as so
reprogrammed, will be materially completed by July 1, 1999. The cost to the
Company of such reprogramming and testing and of the reasonable foreseeable
consequences of year 2000 to the Company (including, without limitation,
reprogramming errors and the failure of others' systems or equipment) will not
result in a Default or a Material Adverse Effect. Nothing herein shall preclude
the Company from making the foregoing representation after the making of an
Acquisition of any Person that is not in compliance with the above, so long as
the Company has prepared a plan prior to such Acquisition that sets forth, in
the reasonable judgment of the chief financial officer of the Company, the
action that the Company has taken or proposes to take to bring such Person into
compliance with the above.
Section 8. Covenants of the Company. The Company covenants and
agrees with the Lenders and the Administrative Agent that, so long as any
Commitment, Loan or Letter of Credit Liability is outstanding and until payment
in full of all amounts payable by the Company hereunder:
8.01 Financial Statements, Etc. The Company shall deliver to each
of the Lenders:
(a) as soon as available and in any event within 60 days after
the end of each of the first three quarterly fiscal periods of each fiscal year
of the Company, consolidated
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statements of earnings, stockholders' equity and cash flows of the Company and
its Subsidiaries, for such period and for the period from the beginning of the
respective fiscal year to the end of such period, setting forth in each case in
comparative form the corresponding consolidated figures for the corresponding
period in the preceding fiscal year, and the related consolidated balance sheet
of the Company and its Subsidiaries, as at the end of such period, setting forth
in comparative form the corresponding consolidated figures for the last day of
the preceding fiscal year, accompanied by a certificate of a senior financial
officer of the Company, which certificate shall state that said consolidated
financial statements present fairly, in all material respects, the consolidated
financial condition and results of operations of the Company and its
Subsidiaries, in accordance with generally accepted accounting principles,
consistently applied, as at the end of, and for, such period (subject to normal
year-end audit adjustments);
(b) as soon as available and in any event within 105 days after
the end of each fiscal year of the Company, consolidated and consolidating
statements of operations and stockholders' equity of the Company and its
Subsidiaries, and consolidated statements of cash flows of the Company and its
Subsidiaries, for such fiscal year and the related consolidated and
consolidating balance sheets of the Company and its Subsidiaries as at the end
of such fiscal year, setting forth in each case in comparative form the
corresponding consolidated and consolidating figures for the preceding fiscal
year, and accompanied, (i) in the case of said consolidated statements and
balance sheet of the Company, by an opinion thereon of independent certified
public accountants of recognized national standing, which opinion shall state
that said consolidated financial statements present fairly, in all material
respects, the consolidated financial condition and results of operations of the
Company and its Subsidiaries as at the end of, and for, such fiscal year in
accordance with generally accepted accounting principles, and a report of such
accountants stating that, in making the examination necessary for their opinion,
nothing came to their attention, except as specifically stated, that caused them
to believe that the Company had failed to comply with Sections 8.09, 8.10, 8.11
and 8.12 hereof, or any other provisions hereof, insofar as they relate to
accounting matters, and (ii) in the case of said consolidating statements and
balance sheets, by a certificate of a senior financial officer of the Company
which certificate shall state that said consolidating financial statements
fairly present the respective individual unconsolidated financial condition and
results of operations of the Company and of each of its Subsidiaries, in each
case in accordance with generally accepted accounting principles, consistently
applied, as at the end of, and for, such fiscal year;
(c) as soon as available and in any event within 105 days after
the end of each fiscal year of the Company, statements of information concerning
net sales, operating earnings, depreciation and amortization of each division of
the Company and its Subsidiaries (including, without limitation, the Seating
Products Division, Galley Products Division, In-Flight Entertainment Division
and Service Division) for such period setting forth in each case in comparative
form the corresponding figures for the preceding fiscal year;
(d) promptly upon their becoming available, copies of all
registration statements and regular periodic reports, if any, which the Company
shall have filed with the Securities and Exchange Commission (or any
governmental agency substituted therefor) or any national securities exchange;
<PAGE>
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(e) promptly upon the mailing thereof to the shareholders of the
Company generally, copies of all financial statements, reports and proxy
statements so mailed;
(f) as soon as possible, and in any event within ten days after
the Company knows or has reason to believe that any of the events or conditions
specified below with respect to any Plan or Multiemployer Plan has occurred or
exists, a statement signed by a senior financial officer of the Company setting
forth details respecting such event or condition and the action, if any, that
the Company or its ERISA Affiliate proposes to take with respect thereto (and a
copy of any report or notice required to be filed with or given to PBGC by the
Company or an ERISA Affiliate with respect to such event or condition):
(i) any reportable event, as defined in Section 4043(b) of ERISA
and the regulations issued thereunder, with respect to a Plan, as to
which PBGC has not by regulation waived the requirement of Section
4043(a) of ERISA that it be notified within 30 days of the occurrence of
such event (provided that a failure to meet the minimum funding standard
of Section 412 of the Code or Section 302 of ERISA, including, without
limitation, the failure to make on or before its due date a required
installment under Section 412(m) of the Code or Section 302(e) of ERISA,
shall be a reportable event regardless of the issuance of any waivers in
accordance with Section 412(d) of the Code); and any request for a
waiver under Section 412(d) of the Code for any Plan;
(ii) the distribution under Section 4041 of ERISA of a notice of
intent to terminate any Plan or any action taken by the Company or an
ERISA Affiliate to terminate any Plan;
(iii) the institution by PBGC of proceedings under Section 4042
of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by the Company or any ERISA
Affiliate of a notice from a Multiemployer Plan that such action has
been taken by PBGC with respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal from a Multiemployer Plan
by the Company or any ERISA Affiliate that results in liability under
Section 4201 or 4204 of ERISA (including the obligation to satisfy
secondary liability as a result of a purchaser default) or the receipt
by the Company or any ERISA Affiliate of notice from a Multiemployer
Plan that it is in reorganization or insolvency pursuant to Section 4241
or 4245 of ERISA or that it intends to terminate or has terminated under
Section 4041A of ERISA;
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against the Company or any ERISA Affiliate to enforce
Section 515 of ERISA, which proceeding is not dismissed within 30 days;
and
(vi) the adoption of an amendment to any Plan that, pursuant to
Section 401(a)(29) of the Code or Section 307 of ERISA, would result in
the loss of tax-exempt status of the trust of which such Plan is a part
if the Company or an ERISA
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Affiliate fails to timely provide security to the Plan in accordance
with the provisions of said Sections;
(g) promptly after the Company knows or has reason to believe
that any Default has occurred, a notice of such Default describing the same in
reasonable detail and, together with such notice or as soon thereafter as
possible, a description of the action that the Company has taken or proposes to
take with respect thereto;
(h) Within 10 Business Days after the date of any Acquisition and
at the time of delivery of the financial statements for the first four Fiscal
Dates thereafter, pro forma consolidated statements of earnings of the Company
and its Subsidiaries for the relevant Calculation Period and related pro forma
consolidated balance sheet items necessary for the pro forma calculation of
compliance with the covenants in this Agreement of the Company and its
Subsidiaries as of the last day of each fiscal quarter of the Company occurring
during such Calculation Period, prepared as though such Acquisition had
occurred, and any Funded Debt incurred or assumed by the Company or any of its
Subsidiaries in connection with such Acquisition had been incurred or assumed,
on the first day of such Calculation Period;
(i) with the delivery of the financial statements pursuant to
Sections 8.01(a) and 8.01(b) hereof, a statement of a senior financial officer
of the Company (A) listing each Disposition by the Company and its Subsidiaries
that occurred during the quarterly fiscal period ending on the date of such
financial statements if the Net Available Proceeds thereof exceeded $100,000 and
(B) setting forth in reasonable detail the Net Available Proceeds of each such
Disposition and the aggregate Net Available Proceeds since the first day of the
then current Recapture Period; and
(j) from time to time such other information regarding the
financial condition, operations, business or prospects of the Company or any of
its Subsidiaries (including, without limitation, any Plan or Multiemployer Plan
and any reports or other information required to be filed under ERISA) as any
Lender or the Administrative Agent may reasonably request.
The Company will furnish to each Lender, at the time it furnishes each set of
financial statements pursuant to paragraph (a), (b) or (h) above, a certificate
of a senior financial officer of the Company (i) to the effect that no Default
has occurred and is continuing (or, if any Default has occurred and is
continuing, describing the same in reasonable detail and describing the action
that the Company has taken or proposes to take with respect thereto) and (ii)
setting forth in reasonable detail (x) the computations necessary to determine
whether the Company is in compliance with Sections 8.07(e), 8.07(h), 8.08(f),
8.08(h), 8.09, 8.10, 8.11 and 8.12 hereof, and (y) the Interest Coverage Ratio
and the Leverage Ratio as of the end of the respective quarterly fiscal period,
fiscal year or Calculation Period.
8.02 Litigation. The Company will promptly give to each Lender
notice of all legal or arbitral proceedings, and of all proceedings by or before
any governmental or regulatory authority or agency, and any material development
in respect of such legal or other proceedings, affecting the Company or any of
its Subsidiaries, except proceedings which, if adversely determined, would not
have a Material Adverse Effect. Without limiting the generality of the
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foregoing, the Company will give to each Lender notice of the assertion of any
Environmental Claim by any Person against, or with respect to the activities of,
the Company or any of its Subsidiaries and notice of any alleged violation of or
non-compliance with any Environmental Laws or any permits, licenses or
authorizations, other than any Environmental Claim or alleged violation which,
if adversely determined, would not have a Material Adverse Effect.
8.03 Existence, Etc. The Company will, and will cause each of its
Subsidiaries to:
(a) preserve and maintain its legal existence and all of its
material rights, privileges, licenses and franchises (provided that nothing in
this Section 8.03 shall prohibit any transaction expressly permitted under
Section 8.05 hereof);
(b) comply with the requirements of all applicable laws, rules,
regulations and orders of governmental or regulatory authorities if failure to
comply with such requirements could have a Material Adverse Effect;
(c) pay and discharge all taxes, assessments and governmental
charges or levies imposed on it or on its income or profits or on any of its
Property prior to the date on which penalties attach thereto, except for any
such tax, assessment, charge or levy the payment of which is being contested in
good faith and by proper proceedings and against which adequate reserves are
being maintained;
(d) maintain all of its Properties used or useful in its business
in good working order and condition, ordinary wear and tear excepted;
(e) keep adequate records and books of account, in which complete
entries will be made in accordance with generally accepted accounting principles
consistently applied; and
(f) permit representatives of any Lender or the Administrative
Agent, during normal business hours, to examine, copy and make extracts from its
books and records, to inspect any of its Properties, and to discuss its business
and affairs with its officers, all to the extent reasonably requested by such
Lender or the Administrative Agent (as the case may be).
8.04 Insurance. The Company will, and will cause each of its
Subsidiaries to, keep insured by financially sound and reputable insurers all
Property of a character usually insured by corporations engaged in the same or
similar business similarly situated against loss or damage of the kinds and in
the amounts customarily insured against by such corporations and carry such
other insurance as is usually carried by such corporations.
8.05 Prohibition of Fundamental Changes. The Company will not,
nor will it permit any of its Subsidiaries to, enter into any transaction of
merger or consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution) or Dispose of all or
substantially all of its Property. The Company will not, nor will it permit any
of its Subsidiaries to, to make any Acquisition except for Investments permitted
under Section 8.08 hereof. Notwithstanding the foregoing provisions of this
Section 8.05:
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(a) any Subsidiary of the Company may be merged or consolidated
with or into: (i) the Company if the Company shall be the continuing or
surviving corporation or (ii) any other such Subsidiary; provided that (x) if
any such transaction shall be between a Subsidiary and a Wholly Owned
Subsidiary, the Wholly Owned Subsidiary shall be the continuing or surviving
corporation;
(b) subject to Section 8.14 hereof, the Company or any Subsidiary
of the Company may make any Acquisition; provided that immediately prior to and
after giving effect to any such Acquisition, (i) no Default shall have occurred
and be continuing and (ii) not more than $50,000,000 of the proceeds of the
Series A Loans then outstanding shall have been applied, directly by the Company
or indirectly through a Subsidiary, for the purposes specified in clause (1)(ii)
of Section 8.16 hereof; and
(c) the Company or any Subsidiary of the Company may make any
Acquisition from any Subsidiary of the Company in each case for consideration
that is not in excess of the fair market value of the Property acquired in such
Acquisition as determined in good faith by the chief financial officer of the
Company.
8.06 Limitation on Liens. The Company will not, nor will it
permit any of its Domestic Subsidiaries to, create, incur, assume or suffer to
exist any Lien upon any of its Property, whether now owned or hereafter
acquired, except:
(a) Liens created pursuant to the Security Documents;
(b) Liens outstanding on the Restatement Date and listed in Part
B of Schedule I hereto;
(c) Liens imposed by any governmental authority for taxes,
assessments or charges not yet due or which are being contested in good faith
and by appropriate proceedings if, unless the amount thereof is not material
with respect to it or its financial condition, adequate reserves with respect
thereto are maintained on the books of the Company or the affected Domestic
Subsidiaries, as the case may be, in accordance with GAAP;
(d) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business which
are not overdue for a period of more than 30 days or which are being contested
in good faith and by appropriate proceedings and Liens securing judgments but
only to the extent, for an amount and for a period not resulting in an Event of
Default under Section 9(h) hereof;
(e) pledges or deposits under worker's compensation, unemployment
insurance and other social security legislation;
(f) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature incurred
in the ordinary course of business;
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(g) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and encumbrances
consisting of zoning restrictions, easements, licenses, restrictions on the use
of Property or minor imperfections in title thereto which, in the aggregate, are
not material in amount, and which do not in any case materially detract from the
value of the Property subject thereto or interfere with the ordinary conduct of
the business of the Company or any of its Domestic Subsidiaries;
(h) Liens on Property of any corporation which becomes a Domestic
Subsidiary of the Company after the Restatement Date, provided that such Liens
are in existence at the time such corporation becomes a Domestic Subsidiary of
the Company and were not created in anticipation thereof;
(i) subject to the restrictions contained in the Security
Documents, Liens upon real and/or tangible personal Property and/or software and
license rights with respect to software (including, without limitation, software
and license rights with respect to software under the GE Lease Agreement)
acquired after the Restatement Date (by purchase, construction or otherwise) by
the Company or any of its Domestic Subsidiaries other than in connection with
any Acquisition by the Company or any of its Domestic Subsidiaries, each of
which Liens either (A) existed on such Property before the time of its
acquisition and was not created in anticipation thereof, or (B) was created
solely for the purpose of securing Indebtedness representing, or incurred to
finance, refinance or refund, the cost (including the cost of construction) of
such Property; provided that no such Lien shall extend to or cover any Property
of the Company or such Domestic Subsidiary other than the Property so acquired
and improvements thereon; and provided, further, that the principal amount of
Indebtedness secured by any such Lien shall at no time exceed 100% of the fair
market value (as determined in good faith by a senior financial officer of the
Company) of such Property at the time it was acquired (by purchase, construction
or otherwise);
(j) additional Liens upon real and/or tangible personal Property
of the Company or any of its Domestic Subsidiaries created after the Restatement
Date, provided that the aggregate Indebtedness secured thereby and incurred on
and after the Restatement Date shall not exceed $20,000,000 in the aggregate at
any one time outstanding; and
(k) any extension, renewal or replacement of the foregoing,
provided, however, that the Liens permitted hereunder shall not be spread to
cover any additional Indebtedness or Property (other than a substitution of like
Property).
8.07 Indebtedness. The Company will not, nor will it permit any
of its Subsidiaries to, create, incur or suffer to exist any Indebtedness
except:
(a) Indebtedness to the Lenders hereunder;
(b) Indebtedness outstanding or committed on the Restatement Date
and, if equal to or in excess of $1,000,000, listed in Part A of Schedule I
hereto and any extension, renewal or replacement thereof;
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(c) Indebtedness of Subsidiaries of the Company to the Company to
the extent contemplated by Section 8.08(d) hereof;
(d) Indebtedness of the Company to its Subsidiaries and
Indebtedness of Subsidiaries of the Company to other Subsidiaries of the
Company;
(e) Indebtedness of the Company and its Subsidiaries secured by
Liens permitted under Sections 8.06(i) and 8.06(j) hereof;
(f) Guarantees by any Subsidiary of the Company of Indebtedness
of the Company or any Subsidiary of the Company;
(g) unsecured Indebtedness that has no regularly scheduled
maturity or mandatory prepayments on or before the Series A Commitment
Termination Date, that does not include required prepayments (including, without
limitation, as a result of a change of control or asset sale) on terms less
favorable to the Lenders than the Senior Subordinated Indentures, and that is
subordinated in right of payment to the Loans at least to the extent provided in
the Senior Subordinated Indentures; and
(h) additional unsecured Indebtedness of the Company and its
Subsidiaries up to but not exceeding in the aggregate $40,000,000 at any one
time outstanding; provided that any such Indebtedness of any such individual
Subsidiary may not exceed $10,000,000 in the aggregate at any one time
outstanding.
8.08 Investments. The Company will not, nor will it permit any of
its Subsidiaries to, make or permit to remain outstanding any Investments
except:
(a) Investments outstanding on the Restatement Date and
identified in Schedule III Part B hereto;
(b) operating deposit accounts with banks;
(c) Permitted Investments;
(d) Investments by the Company in Subsidiaries of the Company in
the ordinary course of business; provided that (i) the aggregate amount of the
Investments by the Company or any of its Subsidiaries in the Specified
Subsidiaries shall not exceed $5,000,000 at any one time outstanding and (ii)
the aggregate amount of Customer Obligations (as defined in paragraph (h) below)
that are not fully secured (whether by a perfected Lien on, or an indefeasible
title retention to, the products so sold or leased, or otherwise) plus the
aggregate fair market value of all Property (whether now owned or hereafter
acquired) of the Company or any of its Subsidiaries (as determined in good faith
by the chief financial officer of the Company) sold, assigned, transferred or
otherwise disposed of on or after April 3, 1998 to any Minority-Owned Entities
(as defined in paragraph (h) below) plus the aggregate book value (at the time
of its transfer) of all Property (not including cash and not including any
Property that is subject to a
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Lien in favor of the Administrative Agent for the benefit of the Lenders)
transferred by the Company to any one or more Subsidiaries since April 3, 1998
shall not exceed in the aggregate at any one time outstanding the greater of (x)
$25,000,000 and (y) 5% of Adjusted Net Worth as of the most recent Fiscal Date
for which financial statements have been provided hereunder;
(e) subject to the proviso to clause (d) above, Investments by
Subsidiaries of the Company in other Subsidiaries of the Company and in the
Company in the ordinary course of business;
(f) Interest Rate Protection Agreements so long as the aggregate
credit exposure under all Interest Rate Protection Agreements calculated at the
time any Interest Rate Protection Agreement is entered into does not exceed
$10,000,000;
(g) Investments permitted by clause (b) of the last sentence of
Section 8.05 hereof; and
(h) Investments of the Company and its Subsidiaries (i) in
corporations, companies, limited liability companies, partnerships and other
entities in each case that are not, or do not thereby become, Subsidiaries of
the Company ("Minority-Owned Entities") or (ii) representing obligations of
customers owing to the Company and its Subsidiaries in respect of the deferred
purchase price of products or services sold or the leasing of products to
customers ("Customer Obligations"), in each case in the ordinary course of
business of the Company and its Subsidiaries as provided for in Section 8.14
hereof and on such terms as the management of the Company may determine in its
reasonable business judgment, provided that the aggregate amount of such
Customer Obligations that are not fully secured (whether by a perfected Lien on,
or an indefeasible title retention to, the products so sold or leased, or
otherwise) plus the aggregate fair market value of all Property (whether now
owned or hereafter acquired) of the Company or any of its Subsidiaries (as
determined in good faith by the chief financial officer of the Company) sold,
assigned, transferred or otherwise disposed of on or after April 3, 1998 to any
such Minority-Owned Entities plus the aggregate book value (at the time of its
transfer) of all Property (not including cash and not including Property that is
subject to a Lien in favor of the Administrative Agent for the benefit of the
Lenders) transferred by the Company to any one or more Subsidiaries since April
3, 1998 shall not exceed in the aggregate at any one time outstanding the
greater of (x) $25,000,000 and (y) 5% of Adjusted Net Worth as of the most
recent Fiscal Date for which financial statements have been provided hereunder.
8.09 Restricted Payments. The Company will not, nor will it
permit any of its Subsidiaries to, declare or make any Restricted Payment at any
time; provided that (i) the Company may make Restricted Payments in an amount up
to but not exceeding (A) $25,000,000 in the aggregate plus (B) in any fiscal
year of the Company, an aggregate amount up to but not exceeding 25% of the net
earnings of the Company for the immediately preceding fiscal year ("Available
Net Earnings"), provided that any portion of Available Net Earnings not used for
Restricted Payments in any fiscal year (the "Carry-Over Amount") may be used for
Restricted Payments in the immediately succeeding fiscal year only, for which
purpose Restricted Payments in any fiscal year shall be deemed to have been made
first from Available Net Earnings, and only thereafter from any Carry-Over
Amount, such Restricted Payments set forth in clauses (i)(A) and
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(B) hereof not to exceed $50,000,000 in the aggregate, and (ii) any Subsidiary
of the Company may make Restricted Payments to the Company from time to time.
8.10 Leverage Ratio. The Company will not permit the Leverage
Ratio to exceed the following respective ratios at any time during the following
respective periods:
Period Ratio
------ -----
From (but not including) the
Fiscal Date in November 1997
through the Fiscal Date in
August 1998. 5.25 to 1
From (but not including) the
Fiscal Date in August 1998
through the Fiscal Date in
February 1999 4.90 to 1
From (but not including) the
Fiscal Date in February 1999
through the Fiscal Date in
February 2000 4.50 to 1
From (but not including) the
Fiscal Date in February 2000
through the Fiscal Date in
February 2001 4.00 to 1
Thereafter.... 3.50 to 1
8.11 Adjusted Net Worth. The Company will not at any date permit
Adjusted Net Worth to be less than the sum of (a) $150,000,000 plus (b) 75% of
the aggregate amount of Net Available Proceeds of Equity Issuances received
after November 29,1997 plus (c) 75% of the sum of consolidated net earnings of
the Company and its Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP) for each fiscal quarter of the Company
ending after November 29, 1997; provided that consolidated net earnings for any
fiscal quarter in which there is a consolidated net loss shall be deemed to be
zero.
8.12 Interest Coverage Ratio. The Company will not permit the
Interest Coverage Ratio to be less than the following respective ratios during
the following respective periods:
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Period Ratio
------ -----
From (but not including) the
Fiscal Date in November 1997
through the Fiscal Date in
August 1998. 2.00 to 1
From (but not including) the
Fiscal Date in August 1998
through the Fiscal Date in
February 1999 2.25 to 1
From (but not including) the
Fiscal Date in February 1999
through the Fiscal Date in
February 2000 2.50 to 1
From (but not including) the
Fiscal Date in February 2000
through the Fiscal Date in
February 2001 2.75 to 1
Thereafter.... 3.00 to 1
8.13 [Intentionally Omitted.]
8.14 Lines of Business. Neither the Company nor any of its
Subsidiaries shall engage to any substantial extent in any line or lines of
business activity other than the business of designing, manufacturing,
distributing, selling, leasing and servicing products used in the interior of
airplanes, buses and trains and servicing and acting as a broker in the sales
and leases of such products together with any other business reasonably related
to the foregoing.
8.15 Transactions with Affiliates. Except as set forth in
Schedule VII hereto or as expressly permitted by this Agreement, the Company
will not, nor will it permit any of its Subsidiaries to, directly or indirectly:
(a) make any Investment in an Affiliate; (b) transfer, sell, lease, assign or
otherwise dispose of any Property to an Affiliate; (c) merge into or consolidate
with or purchase or acquire Property from an Affiliate; or (d) enter into any
other transaction directly or indirectly with or for the benefit of an Affiliate
(including, without limitation, guarantees and assumptions of obligations of an
Affiliate); provided that (x) any Affiliate who is an individual may serve as a
director, officer or employee of the Company or any of its Subsidiaries and
receive reasonable compensation for his or her services in such capacity and (y)
the Company and its Subsidiaries may enter into transactions (other than
extensions of credit by the Company or any of its Subsidiaries to an Affiliate)
providing for the leasing of Property, the rendering or receipt of services or
the purchase or sale of inventory and other Property in the ordinary course of
business if the monetary or business consideration arising therefrom would be
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substantially as advantageous to the Company and its Subsidiaries as the
monetary or business consideration which would obtain in a comparable
transaction with a Person not an Affiliate.
8.16 Use of Proceeds. The Company will use the proceeds of (1)
the Series A Loans hereunder solely (i) to finance ongoing working capital and
other capital requirements of the Company and (ii) to finance Acquisitions and
to refinance Series C Loans outstanding on the Series C Commitment Termination
Date (in compliance with all applicable legal and regulatory requirements), (2)
the Series B Loans hereunder solely to finance Acquisitions (subject to clause
(b) of the last sentence of Section 8.05) and (3) the Series C Loans solely to
finance Series C Reimbursement Obligations; provided that neither the
Administrative Agent nor any Lender shall have any responsibility as to the use
of any of such proceeds; and provided further that no more than $50,000,000 of
the Series A Commitments may be used for the purposes set forth in clause
(1)(ii) above.
8.17 Certain Obligations Respecting Subsidiaries.
(a) The Company will, and will cause each of its Subsidiaries to,
take such action from time to time as shall be necessary to ensure that the
Company and each of its Subsidiaries at all times owns (subject only to the Lien
of the Security Documents) at least the same percentage of the issued and
outstanding shares of each class of stock or partnership or other ownership
interest of each of its Subsidiaries as is owned on the Restatement Date (or,
with respect to any Subsidiary acquired or organized after the date hereof, as
of the date of such acquisition or organization). Without limiting the
generality of the foregoing, none of the Company nor any of its Subsidiaries
shall sell, transfer, pledge or otherwise dispose of any shares of stock or
partnership or other ownership interest in any Subsidiary owned by them, nor
permit any Subsidiary to issue any shares of stock of any class or partnership
or other ownership interest whatsoever to any Person (other than to the Company
or the immediate parent of such Subsidiary which is a Wholly Owned Subsidiary of
the Company). In the event that (a) any such additional shares of stock or
partnership or other ownership interest shall be issued by any such Subsidiary
or (b) the Company shall directly or indirectly create any new Material
Subsidiary or Acquire any additional Material Subsidiary and shall thereby
become the owner, directly or indirectly, of the shares of capital stock or
partnership or other ownership interest of such new or additional Material
Subsidiary, the Company agrees forthwith to deliver to the Administrative Agent
pursuant to security documents satisfactory to the Banks, any shares,
certificates of ownership, membership interests or other evidence of ownership,
or other securities received as a result therefrom (together with undated stock
or other powers executed in blank) and shall give, execute, deliver, file and/or
record any financing statement, notice, instrument, document, agreement or other
papers that may be necessary or desirable (in the judgment of the Administrative
Agent) to create, preserve or validate the security interest created therein,
including, without limitation, causing any or all of the Collateral (as defined
in the Security Agreement and the In-Flight Guarantee and Security Agreement,
respectively) to be transferred of record into the name of the Administrative
Agent; provided that if any such Material Subsidiary is organized under the laws
of a jurisdiction other than the United States of America or a State thereof,
the Company need not pledge to the Administrative Agent more than 65% of the
capital stock, partnership or other ownership interest in such Material
Subsidiary.
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(b) The Company will not permit any of its Subsidiaries to enter
into, after the Restatement Date, any indenture, agreement, instrument or other
arrangement that, directly or indirectly, prohibits or restrains, or has the
effect of prohibiting or restraining, or imposes materially adverse conditions
upon, the incurrence or payment of Indebtedness, the granting of Liens, the
declaration or payment of dividends, the making of loans, advances or
Investments or the sale, assignment, transfer or other disposition of Property.
8.18 Modifications of Certain Documents. The Company will not
consent to (i) any modification, supplement or waiver of any of the provisions
of the Senior Subordinated Indentures or (ii) to the creation of any class of
preferred stock that has a mandatory dividend or redemption date prior to the
Series A Commitment Termination Date; provided that any Senior Subordinated
Indenture may be amended in connection with, and to facilitate, the purchase,
redemption, prepayment, defeasance or other retirement in full of the
Indebtedness issued pursuant thereto, which purchase, redemption, prepayment,
defeasance or other retirement is permitted hereunder.
8.19 Environmental Matters.
(a) The Company will, and will cause each of its Subsidiaries to,
comply with all Environmental Laws applicable to the Company and each of its
Subsidiaries, except to the extent that failure to comply with such laws would
not have a Material Adverse Effect, and shall obtain, at or prior to the time
required by applicable Environmental Laws, all environmental, health and safety
permits, licenses and other authorizations necessary for its operations and
maintain such authorizations in full force and effect.
(b) If the Company discovers evidence of the presence of any
Hazardous Materials in any amount that is required to be reported under
Environmental Law, the Company will promptly clean-up such Hazardous Materials
or take such other remedial action as is (a) required by law or (b) deemed
necessary by the Company in its reasonable determination, such determination to
be based in part on the advice of independent environmental consultants
acceptable to the Company and the Administrative Agent.
(c) The Company shall promptly furnish to the Administrative
Agent all written notices of any Environmental Claims received by the Company or
any of its Subsidiaries with respect to any alleged violation of or
non-compliance with any Environmental Laws or any permits, licenses or
authorizations issued thereunder in connection with the ownership, operation or
use of any site or facility or the operation of their businesses or the presence
or Release of Hazardous Substances, which Environmental Claim if determined
adversely to the Company would have a Material Adverse Effect.
8.20 Security for Loans. The Company shall, no later than 90 days
following the request by the Majority Lenders, file in each governmental office
or agency in each appropriate jurisdiction as owner of record of each of the
Foreign Trademarks identified on Annex 4 to the Security Agreement.
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8.21 Redemption of Senior Subordinated Indebtedness. Except as
permitted by Section 8.09 hereof, the Company will not prepay, redeem, effect a
defeasance or covenant defeasance or otherwise retire any of the Indebtedness
issued pursuant to the Senior Subordinated Indentures.
Section 9. Events of Default. If one or more of the following
events (herein called "Events of Default") shall occur and be continuing:
(a) The Company shall (i) default in the payment of any principal
of any Loan or any Reimbursement Obligation when due (whether at stated maturity
or upon mandatory or optional prepayment) or (ii) default in the payment of any
interest on any Loan, any fee or any other amount payable by it hereunder or
under any other Basic Document when due (whether at stated maturity or upon
mandatory or optional prepayment or otherwise) and such default shall have
continued unremedied for three or more Business Days; or
(b) The Company or any of its Subsidiaries shall default in the
payment when due of any principal of or interest on any of its other
Indebtedness aggregating $5,000,000 or more, or in the payment when due of any
amount aggregating $5,000,000 or more under any Interest Rate Protection
Agreement; or any event specified in any note, agreement, indenture or other
document evidencing or relating to any such Indebtedness or any event specified
in any Interest Rate Protection Agreement shall occur if the effect of such
event is to cause, or (with the giving of any notice or the lapse of time or
both) to permit the holder or holders of such Indebtedness (or a trustee or
agent on behalf of such holder or holders) to cause, such Indebtedness to become
due, or to be prepaid in full (whether by redemption, purchase, offer to
purchase or otherwise), prior to its stated maturity or to have the interest
rate thereon reset to a level so that securities evidencing such Indebtedness
trade at a level specified in relation to the par value thereof or, in the case
of an Interest Rate Protection Agreement, to permit the payments owing under
such Interest Rate Protection Agreement to be liquidated in an amount
aggregating $5,000,000 or more; or
(c) Any representation, warranty or certification made or deemed
made herein or in any other Basic Document (or in any modification or supplement
hereto or thereto) by the Company, or any certificate furnished to any Lender or
the Administrative Agent pursuant to the provisions hereof or thereof shall
prove to have been false or misleading in any material respect as of the time
made or furnished; or
(d) The Company shall default in the performance of any of its
obligations under any of Sections 8.01(g), 8.05, 8.06, 8.07, 8.08, 8.09, 8.10,
8.11 or 8.12 hereof or the Company shall default in the performance of any of
its obligations under Section 5.02 of the Security Agreement; or the Company
shall default in the performance of any of its other obligations in this
Agreement or any other Basic Document and such default shall continue unremedied
for a period of thirty days after notice thereof to the Company by the
Administrative Agent or any Lender (through the Administrative Agent); or
In-Flight shall default in the performance of any of its obligations under
Section 6.02 of the In-Flight Guarantee and Security Agreement; or
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(e) The Company or any of its Subsidiaries shall admit in writing
its inability to, or be generally unable to, pay its debts as such debts become
due; or
(f) The Company or any of its Subsidiaries shall (i) apply for or
consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee, examiner or liquidator of itself or of all or a substantial
part of its Property, (ii) make a general assignment for the benefit of its
creditors, (iii) commence a voluntary case under the Bankruptcy Code, (iv) file
a petition seeking to take advantage of any other law relating to bankruptcy,
insolvency, reorganization, liquidation, dissolution, arrangement or winding-up,
or composition or readjustment of debts, (v) fail to controvert in a timely and
appropriate manner, or acquiesce in writing to, any petition filed against it in
an involuntary case under the Bankruptcy Code or (vi) take any corporate action
for the purpose of effecting any of the foregoing; or
(g) A proceeding or case shall be commenced, without the
application or consent of the Company or any of its Subsidiaries, in any court
of competent jurisdiction, seeking (i) its reorganization, liquidation,
dissolution, arrangement or winding-up, or the composition or readjustment of
its debts, (ii) the appointment of a receiver, custodian, trustee, examiner,
liquidator or the like of the Company or such Subsidiary or of all or any
substantial part of its Property, or (iii) similar relief in respect of the
Company or such Subsidiary under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and such
proceeding or case shall continue undismissed, or an order, judgment or decree
approving or ordering any of the foregoing shall be entered and continue
unstayed and in effect, for a period of 60 or more days; or an order for relief
against the Company or such Subsidiary shall be entered in an involuntary case
under the Bankruptcy Code; or
(h) A final judgment or judgments for the payment of money in
excess of $5,000,000 in the aggregate (exclusive of judgment amounts fully
covered by insurance where the insurer has admitted liability in respect of such
judgment) or in excess of $20,000,000 in the aggregate (regardless of insurance
coverage) shall be rendered by one or more courts, administrative tribunals or
other bodies having jurisdiction against the Company or any of its Subsidiaries
and the same shall not be discharged (or provision shall not be made for such
discharge), or a stay of execution thereof shall not be procured, within 30 days
from the date of entry thereof and the Company or the relevant Subsidiary shall
not, within said period of 30 days, or such longer period during which execution
of the same shall have been stayed, appeal therefrom and cause the execution
thereof to be stayed during such appeal; or
(i) An event or condition specified in Section 8.01(f) hereof
shall occur or exist with respect to any Plan or Multiemployer Plan and, as a
result of such event or condition, together with all other such events or
conditions, the Company or any ERISA Affiliate shall incur or in the opinion of
the Majority Lenders shall be reasonably likely to incur a liability to a Plan,
a Multiemployer Plan or PBGC (or any combination of the foregoing) which would
constitute, in the determination of the Majority Lenders, a Material Adverse
Effect; or
(j) A reasonable basis shall exist for the assertion against the
Company or any of its Subsidiaries of (or there shall have been asserted against
the Company or any of its Subsidiaries) claims or liabilities, whether accrued,
absolute or contingent, based on or arising
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from the generation, storage, transport, handling or disposal of Hazardous
Materials by the Company or any of its Subsidiaries or Affiliates, or any
predecessor in interest of the Company or any of its Subsidiaries or Affiliates,
or relating to any site or facility owned, operated or leased by the Company or
any of its Subsidiaries or Affiliates, which claims or liabilities (insofar as
they are payable by the Company or any of its Subsidiaries but after deducting
any portion thereof which is reasonably expected to be paid by other
creditworthy Persons jointly and severally liable therefor), in the judgment of
the Majority Lenders are reasonably likely to be determined adversely to the
Company or any of its Subsidiaries, and the amount thereof is, singly or in the
aggregate, reasonably likely to have a Material Adverse Effect; or
(k) Any "person" or "group" (as such terms are defined in
Sections 13(d) and 14(d) of the Securities Exchange Act (other than Amin or
Robert Khoury, their lineal descendants or trusts established by such Persons
for their respective lineal descendants)) 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 shares that any
such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of 30%
or more of the aggregate voting rights of the outstanding capital stock of the
Company (on a fully diluted basis); or during any consecutive 25-month 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 the
stockholders of the Company was approved by a vote of 66-2/3% of the directors
then still in office who were either directors at the beginning of such period
or whose election 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; or
(l) Except for expiration in accordance with its terms, any of
the Security Documents shall be terminated or shall cease to be in full force
and effect, for whatever reason;
THEREUPON: (1) in the case of an Event of Default other than one referred to in
clause (f) or (g) of this Section 9 with respect to the Company, the
Administrative Agent may, by notice to the Company, terminate the Commitments
and/or declare the principal amount then outstanding of, and the accrued
interest on, the Loans, the Reimbursement Obligations and all other amounts
payable by the Company hereunder and under the Notes (including, without
limitation, any amounts payable under Section 5.05 or 5.06 hereof) to be
forthwith due and payable (provided that (x) if so requested by the Majority
Series A Lenders, the Administrative Agent shall take such action with respect
to the Series A Commitments and/or the Series A Loans, Series A Reimbursement
Obligations and such interest and other amounts to the extent owed to the Series
A Lenders, (y) if so requested by the Majority Series B Lenders, the
Administrative Agent shall take such action with respect to the Series B
Commitments and the Series B Loans and such interest and other amounts to the
extent owed to the Series B Lenders) and (z) if so requested by the Majority
Series C Lenders, the Administrative Agent shall take such action with respect
to the Series C Commitments and/or the Series C Loans, Series C Reimbursement
Obligations and such interest and other amounts to the extent owed to the Series
C Lenders, whereupon such amounts shall be immediately due and payable without
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Company; and (2) in the case of the occurrence of
an Event of Default referred to in clause (f) or (g) of this Section 9 with
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respect to the Company, the Commitments shall automatically be terminated and
the principal amount then outstanding of, and the accrued interest on, the
Loans, the Reimbursement Obligations and all other amounts payable by the
Company hereunder and under the Notes (including, without limitation, any
amounts payable under Section 5.05 or 5.06 hereof) shall automatically become
immediately due and payable without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by the
Company.
In addition, upon the occurrence and during the continuance of
any Event of Default (if the Administrative Agent has declared the principal
amount then outstanding of, and accrued interest on, the Series A Loans and all
other amounts payable by the Company hereunder and under the Notes to be due and
payable), the Company agrees that it shall, if requested by the Administrative
Agent, or the Majority Series A Lenders (in the case of Series A Letters of
Credit) or the Majority Series C Lenders (in the case of Series C Letters of
Credit) through the Administrative Agent (and, in the case of any Event of
Default referred to in clause (f) or (g) of this Section 9 with respect to the
Company, forthwith, without any demand or the taking of any other action by the
Administrative Agent or such Lenders) provide cover for such Series A or Series
C Letter of Credit Liabilities by paying to the Administrative Agent immediately
available funds in an amount equal to the then aggregate undrawn face amount of
all such Letters of Credit, which funds shall be held by the Administrative
Agent in the Collateral Account as collateral security in the first instance for
such Series A or Series C Letter of Credit Liabilities and be subject to
withdrawal only as therein provided.
Section 10. The Administrative Agent.
10.01 Appointment, Powers and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Administrative Agent to act as its agent
hereunder and under the other Basic Documents with such powers as are
specifically delegated to the Administrative Agent by the terms of this
Agreement and of the other Basic Documents, together with such other powers as
are reasonably incidental thereto. The Administrative Agent (which term as used
in this sentence and in Section 10.05 and the first sentence of Section 10.06
hereof shall include reference to its affiliates and its own and its affiliates'
officers, directors, employees and agents): (a) shall have no duties or
responsibilities except those expressly set forth in this Agreement and in the
other Basic Documents, and shall not by reason of this Agreement or any other
Basic Document be a trustee for any Lender; (b) shall not be responsible to the
Lenders for any recitals, statements, representations or warranties contained in
this Agreement or in any other Basic Document, or in any certificate or other
document referred to or provided for in, or received by any of them under, this
Agreement or any other Basic Document, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement, any
Note or any other Basic Document or any other document referred to or provided
for herein or therein or for any failure by the Company or any other Person to
perform any of its obligations hereunder or thereunder; (c) shall not be
required to initiate or conduct any litigation or collection proceedings
hereunder or under any other Basic Document; and (d) shall not be responsible
for any action taken or omitted to be taken by it hereunder or under any other
Basic Document or under any other document or instrument referred to or provided
for herein or therein or in connection herewith or therewith, except for its own
gross negligence or willful misconduct.
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The Administrative Agent may deem and treat the payee of any Note as the holder
thereof for all purposes hereof unless and until a notice of the assignment or
transfer thereof shall have been filed with the Administrative Agent, together
with the consent of the Company to such assignment or transfer (to the extent
provided in Section 11.06(b) hereof).
10.02 Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely upon any certification, notice or other communication
(including, without limitation, any thereof by telephone, telecopy, telex,
telegram or cable) believed by it to be genuine and correct and to have been
signed or sent by or on behalf of the proper Person or Persons, and upon advice
and statements of legal counsel, independent accountants and other experts
selected by the Administrative Agent. As to any matters not expressly provided
for by this Agreement or any other Basic Document, the Administrative Agent
shall in all cases be fully protected in acting, or in refraining from acting,
hereunder or thereunder in accordance with instructions given by the Majority
Lenders or, if provided herein, in accordance with the instructions given by the
Majority Series A Lenders, the Majority Series B Lenders, the Majority Series C
Lenders or all of the Lenders as is required in such circumstance, and such
instructions of such Lenders and any action taken or failure to act pursuant
thereto shall be binding on all of the Lenders.
10.03 Defaults. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of a Default unless the
Administrative Agent has received notice from a Lender or the Company specifying
such Default and stating that such notice is a "Notice of Default". In the event
that the Administrative Agent receives such a notice of the occurrence of a
Default, the Administrative Agent shall give prompt notice thereof to the
Lenders. The Administrative Agent shall (subject to Section 10.07 hereof) take
such action with respect to such Default as shall be directed by the Majority
Lenders or, if provided herein, the Majority Series A Lenders, the Majority
Series B Lenders or the Majority Series C Lenders, provided that, unless and
until the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default as it shall deem
advisable in the best interest of the Lenders except to the extent that this
Agreement expressly requires that such action be taken, or not be taken, only
with the consent or upon the authorization of the Majority Lenders, the Majority
Series A Lenders, the Majority Series B Lenders, the Majority Series C Lenders
or all of the Lenders.
10.04 Rights as a Lender. With respect to its Commitments and the
Loans made by it, Chase (and any successor acting as Administrative Agent) in
its capacity as a Lender hereunder shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were not
acting as the Administrative Agent, and the term "Lender" or "Lenders" shall,
unless the context otherwise indicates, include the Administrative Agent in its
individual capacity. Chase (and any successor acting as Administrative Agent)
and its affiliates may (without having to account therefor to any Lender) accept
deposits from, lend money to, make investments in and generally engage in any
kind of banking, trust or other business with the Company (and any of its
Subsidiaries or Affiliates) as if it were not acting as the Administrative
Agent, and Chase and its affiliates may accept fees and other consideration
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from the Company for services in connection with this Agreement or otherwise
without having to account for the same to the Lenders.
10.05 Indemnification. The Lenders agree to indemnify the
Administrative Agent (to the extent not reimbursed under Section 11.03 hereof,
but without limiting the obligations of the Company under said Section 11.03,
and including in any event any payments under any indemnity that the
Administrative Agent is required to issue to any bank referred to in Section
4.02 of the Security Agreement or Section 5.02 of the In-Flight Guarantee and
Security Agreement to which remittances in respect of Accounts, as defined
therein, are to be made) ratably in accordance with the aggregate principal
amount of the Loans and Reimbursement Obligations held by the Lenders (or, if no
Loans or Reimbursement Obligations are at the time outstanding, ratably in
accordance with their respective Commitments), for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever that may be imposed
on, incurred by or asserted against the Administrative Agent (including by any
Lender) arising out of or by reason of any investigation in or in any way
relating to or arising out of this Agreement or any other Basic Document or any
other documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby (including, without limitation, the
costs and expenses that the Company is obligated to pay under Section 11.03
hereof, and including also any payments under any indemnity that the
Administrative Agent is required to issue to any bank referred to in Section
4.02 of the Security Agreement or Section 5.02 of the In-Flight Guarantee and
Security Agreement to which remittances in respect of Accounts, as defined
therein, are to be made, but excluding, unless a Default has occurred and is
continuing, normal administrative costs and expenses incident to the performance
of its agency duties hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents, provided that no Lender shall be liable
for any of the foregoing to the extent they arise from the gross negligence or
willful misconduct of the party to be indemnified.
10.06 Non-Reliance on Administrative Agent and Other Lenders.
Each Lender agrees that it has, independently and without reliance on the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Company and its Subsidiaries and decision to enter into this Agreement and that
it will, independently and without reliance upon the Administrative Agent or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement. The Administrative Agent shall
not be required to keep itself informed as to the performance or observance by
the Company of this Agreement or any of the other Basic Documents or any other
document referred to or provided for herein or therein or to inspect the
Properties or books of the Company or any of its Subsidiaries. Except for
notices, reports and other documents and information expressly required to be
furnished to the Lenders by the Administrative Agent hereunder, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the affairs, financial
condition or business of the Company or any of its Subsidiaries (or any of their
affiliates) that may come into the possession of the Administrative Agent or any
of its affiliates.
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10.07 Failure to Act. Except for action expressly required of the
Administrative Agent hereunder and under the other Basic Documents, the
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder and thereunder unless it shall receive further
assurances to its satisfaction from the Lenders of their indemnification
obligations under Section 10.05 hereof against any and all liability and expense
that may be incurred by it by reason of taking or continuing to take any such
action.
10.08 Resignation or Removal of Administrative Agent. Subject to
the appointment and acceptance of a successor Administrative Agent as provided
below, the Administrative Agent may resign at any time by giving notice thereof
to the Lenders and the Company, and the Administrative Agent may be removed at
any time with or without cause by the Majority Lenders. Upon any such
resignation or removal, the Majority Lenders shall have the right to appoint a
successor Administrative Agent. If no successor Administrative Agent shall have
been so appointed by the Majority Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent's giving of
notice of resignation or the Majority Lenders' removal of the retiring
Administrative Agent, then the retiring Administrative Agent may, on behalf of
the Lenders, after consultations with the Company, appoint a successor
Administrative Agent, that shall be a bank which has an office in New York, New
York with a combined capital and surplus of at least $500,000,000. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent, and the retiring Administrative Agent
shall be discharged from its duties and obligations hereunder. After any
retiring Administrative Agent's resignation or removal hereunder as
Administrative Agent, the provisions of this Section 10 shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as the Administrative Agent.
10.09 Consents under Basic Documents. Except as otherwise
provided in Section 11.04 hereof with respect to this Agreement, the
Administrative Agent may, with the prior consent of the Majority Lenders (but
not otherwise), (i) consent to any modification, supplement or waiver under any
of the Basic Documents or (ii) agree to additional Indebtedness being secured
under the Security Documents if the proceeds of such Indebtedness are used by
the Company directly or indirectly to finance any Acquisition; provided that,
without the consent of each Lender, the Administrative Agent shall not (except
as provided herein or in the Security Documents) release any collateral or
otherwise terminate any Lien under the Security Documents, or (except as
otherwise provided in clause (ii) above) agree to additional obligations being
secured by such collateral security (unless the Lien for such additional
obligations shall be junior to the Lien in favor of the other obligations
secured by such Security Documents), except that no such consent shall be
required, and the Administrative Agent is hereby authorized, to release any Lien
covering Property which (a) is the subject of a Disposition of Property
permitted hereunder or to which the Majority Lenders have consented, (b)
consists of the membership interests in In-Flight to which release the Majority
Lenders have consented or (c) consists of shares of any Subsidiary of the
Company that is no longer a Material Subsidiary.
10.10 Collateral Sub-Agents. Each Lender by its execution and
delivery of this Agreement agrees, as contemplated by Section 4.03 of the
Security Agreement and Section 5.02
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of the In-Flight Guarantee and Security Agreement, that, in the event it shall
hold any Permitted Investments referred to therein, such Permitted Investments
shall be held in the name and under the control of such Lender, and such Lender
shall hold such Permitted Investments as a collateral sub-agent for the
Administrative Agent thereunder. The Company by its execution and delivery of
this Agreement hereby consents to the foregoing.
10.11 Documentation Agent. The Documentation Agent identified on
the front cover page of this Agreement shall have no duties or responsibilities
hereunder other than as a Bank hereunder.
Section 11. Miscellaneous.
11.01 Waiver. No failure on the part of the Administrative Agent
or any Lender to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power or privilege under this Agreement or any Note
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege under this Agreement or any Note preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The remedies provided herein are cumulative and not exclusive of any
remedies provided by law.
11.02 Notices. All notices, requests and other communications
provided for herein and under the Security Documents (including, without
limitation, any modifications of, or waivers or consents under, this Agreement)
shall be given or made in writing (including, without limitation, by telecopy)
delivered to the intended recipient at (i) in the case of the Company and the
Administrative Agent, the "Address for Notices" specified below its name on the
signature pages hereof) and (ii) in the case of each of the Lenders, the address
(or telecopy number) set forth in its Administrative Questionnaire; or, as to
any party, at such other address as shall be designated by such party in a
notice to each other party. Except as otherwise provided in this Agreement, all
such communications shall be deemed to have been duly given when transmitted by
telecopier or personally delivered or, in the case of a mailed notice, upon
receipt, in each case given or addressed as aforesaid.
11.03 Expenses, Etc. The Company agrees to pay or reimburse each
of the Lenders and the Administrative Agent for paying: (a) all reasonable
out-of-pocket costs and expenses of the Administrative Agent (including, without
limitation, the reasonable fees and expenses of Milbank, Tweed, Hadley & McCloy,
special New York counsel to Chase), in connection with (i) the negotiation,
preparation, execution and delivery of this Agreement and the other Basic
Documents and the extension of credit hereunder and (ii) any modification,
supplement or waiver of any of the terms of this Agreement or any of the other
Basic Documents; (b) all reasonable costs and expenses of the Lenders and the
Administrative Agent (including, without limitation, reasonable counsels' fees)
in connection with (i) any Default and any enforcement or collection proceedings
resulting therefrom or in connection with the negotiation of any restructuring
or "work-out" (whether or not consummated), or the obligations of the Company
hereunder and (ii) the enforcement of this Section 11.03; and (c) all transfer,
stamp, documentary, intangibles or other similar taxes, assessments or charges
levied by any
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governmental or revenue authority in respect of this Agreement or any of the
other Basic Documents or any other document referred to herein or therein and
all costs, expenses, taxes, assessments and other charges incurred in connection
with any filing, registration, recording or perfection of any security interest
contemplated by any Basic Document or any other document referred to therein.
The Company hereby agrees (i) to indemnify the Administrative
Agent and each Lender and their respective directors, officers, employees,
attorneys and agents from, and hold each of them harmless against, any and all
losses, liabilities, claims, damages or expenses incurred by any of them
(including, without limitation, any and all losses, liabilities, claims, damages
or expenses incurred by the Administrative Agent to any Lender, whether or not
the Administrative Agent or any Lender is a party thereto) arising out of or by
reason of any investigation or litigation or other proceedings (including any
threatened investigation or litigation or other proceedings) relating to the
extensions of credit hereunder or any actual or proposed use by the Company or
any of its Subsidiaries of the proceeds of any of the extensions of credit
hereunder, including, without limitation, the reasonable fees and disbursements
of counsel incurred in connection with any such investigation or litigation or
other proceedings (but excluding any such losses, liabilities, claims, damages
or expenses incurred by reason of the gross negligence or willful misconduct of
the Person to be indemnified) and (ii) not to assert any claim against the
Administrative Agent, any Lender, any of their affiliates, or any of their
respective directors, officers, employees, attorneys and agents, on any theory
of liability, for special, indirect, consequential or punitive damages arising
out of or otherwise relating to any of the transactions contemplated herein or
in any other Basic Document. Without limiting the generality of the foregoing,
the Company will (x) indemnify the Administrative Agent for any payments that
the Administrative Agent is required to make under any indemnity issued to any
bank referred to in Section 4.02 of the Security Agreement or Section 5.02 of
the In-Flight Guarantee and Security Agreement to which remittances in respect
to Accounts, as defined therein, are to be made and (y) indemnify the
Administrative Agent and each Lender from, and hold the Administrative Agent and
each Lender harmless against, any losses, liabilities, claims, damages or
expenses described in the preceding sentence (but excluding, as provided in the
preceding sentence, any loss, liability, claim, damage or expense incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified) arising under any Environmental Law as a result of the past,
present or future operations of the Company or any of its Subsidiaries (or any
predecessor in interest to the Company or any of its Subsidiaries), or the past,
present or future condition of any site or facility owned, operated or leased by
the Company or any of its Subsidiaries (or any such predecessor in interest), or
any Release or threatened Release of any Hazardous Materials from any such site
or facility, including any such Release or threatened Release which shall occur
during any period when the Administrative Agent or any Lender shall be in
possession of any such site or facility following the exercise by the
Administrative Agent or any Lender of any of its rights and remedies hereunder
or under any of the Security Documents but only to the extent that such Release
or threatened Release is directly or indirectly attributable to facts,
circumstances or Releases of Hazardous Materials existing prior to the date of
such possession.
11.04 Amendments, Etc. Except as otherwise expressly provided in
this Agreement, any provision of this Agreement may be modified or supplemented
only by an
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instrument in writing signed by the Company, the Administrative Agent and the
Majority Lenders, or by the Company and the Administrative Agent acting with the
consent of the Majority Lenders, and any provision of this Agreement may be
waived by the Majority Lenders or by the Administrative Agent acting with the
consent of the Majority Lenders; provided that: (a) no modification, supplement
or waiver shall, unless by an instrument signed by all of the Lenders or by the
Administrative Agent acting with the consent of all of the Lenders: (i)
increase, or extend the term of any of the Commitments, or extend the time or
waive any requirement for the reduction or termination of any of the
Commitments, (ii) extend the date fixed for the payment of principal of or
interest on any Loan, the Reimbursement Obligations or any fee hereunder, (iii)
reduce the amount of any such payment of principal, (iv) reduce the rate at
which interest is payable thereon or any fee is payable hereunder, (v) alter the
rights or obligations of the Company to prepay Loans, (vi) alter the terms of
this Section 11.04, (vii) modify the definition of the term "Majority Lenders",
"Majority Series A Lenders", "Majority Series B Lenders" or "Majority Series C
Lenders", or modify in any other manner the number or percentage of the Lender
required to make any determinations or waive any rights hereunder or to modify
any provision hereof, or (viii) waive any of the conditions precedent set forth
in Section 6 hereof; (b) any modification or supplement of Section 10 hereof
shall require the consent of the Administrative Agent; and (c) notwithstanding
the above, (i) Sections 2.01(a), 2.03(A), 2.04(a) and 2.05(i), may be modified
or supplemented only by an instrument in writing signed by the Company, the
Administrative Agent and the Series A Lenders, or by the Company and the
Administrative Agent acting with the consent of the Series A Lenders, and any
such provision may be waived by the Series A Lenders or by the Administrative
Agent acting with the consent of the Series A Lenders, (ii) Sections 2.01(b),
2.04(b) and 2.05(ii) may be modified or supplemented only by an instrument in
writing signed by the Company, the Administrative Agent and the Series B
Lenders, or by the Company and the Administrative Agent acting with the consent
of the Series B Lenders, and any such provision may be waived by the Series B
Lenders or by the Administrative Agent acting with the consent of the Series B
Lenders, (iii) Sections 2.01(c), 2.03(B), 2.04(c) and 2.05(iii), may be modified
or supplemented only by an instrument in writing signed by the Company, the
Administrative Agent and the Series C Lenders, or by the Company and the
Administrative Agent acting with the consent of the Series C Lenders, and any
such provision may be waived by the Series C Lenders or by the Administrative
Agent acting with the consent of the Series C Lenders and (iv) Section 5.06 may
be modified or supplemented only by an instrument in writing signed by the
Company, the Administrative Agent and the Series A Lenders and Series C Lenders,
or by the Company and the Administrative Agent acting with the consent of the
Series A Lenders and Series C Lenders, and any such provision may be waived by
the Series A Lenders and Series C Lenders or by the Administrative Agent acting
with the consent of the Series A Lender and Series C Lenders.
11.05 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
11.06 Assignments and Participations.
------------------------------
(a) The Company may not assign any of its rights or obligations
hereunder or under the Notes without the prior consent of all of the Lenders and
the Administrative Agent.
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(b) Each Lender may assign any of its Loans, its Notes, its
Commitments, and, if such Lender is a Series A Lender or Series C Lender, its
Letter of Credit Interest (but only with the consent of the Company and the
Administrative Agent and, in the case of a Series A Commitment, Series A Letter
of Credit Interest or Series C Letter of Credit Interest, the Issuing Lender,
which consents in the case of the Company and the Administrative Agent shall not
be unreasonably withheld or delayed); provided that (i) no such consent by the
Company, the Administrative Agent or the Issuing Lender shall be required in the
case of any assignment by Chase of its Series C Commitment, Series C Letter of
Credit Interest or Series C Loans so long as Chase continues to hold a Series C
Commitment in excess of $25,000,000, (ii) no such consent by the Company or the
Administrative Agent shall be required in the case of any assignment to another
Lender or an affiliate thereof; (iii) any such partial assignment shall be in an
amount at least equal to $5,000,000; (iv) unless the Company and the
Administrative Agent shall otherwise consent (which consents shall not be
unreasonably withheld or delayed), each such assignment by a Lender of its
Series A Loans, Series A Note, Series A Commitment or Series A Letter of Credit
Interest shall be made in such manner so that the same percentage of its Series
A Loans, Series A Note, Series A Commitment and Series A Letter of Credit
Interest, Series B Loans, Series B Note and Series B Commitment is assigned to
the respective assignee; (v) unless the Company and the Administrative Agent
shall otherwise consent (which consents shall not be unreasonably withheld or
delayed), each such assignment by a Lender of its Series B Loans, Series B Note
or Series B Commitment shall be made in such manner so that the same percentage
of its Series B Loans, Series B Note and Series B Commitment, Series A Loans,
Series A Note, Series A Commitment and Series A Letter of Credit Interest is
assigned to the respective assignee and (vi) unless the Company and the
Administrative Agent shall otherwise consent (which consents shall not be
unreasonably withheld or delayed), each such assignment by a Lender of its
Series C Loans, Series C Note, Series C Commitment or Series C Letter of Credit
Interest shall be made in such manner so that the same percentage of its Series
C Loans, Series C Note, Series C Commitment and Series C Letter of Credit
Interest is assigned to the respective assignee. Upon execution and delivery by
the assignee to the Company, the Administrative Agent and the Issuing Lender of
an instrument in writing pursuant to which such assignee agrees to become a
"Lender" hereunder (if not already a Lender) having the Commitment(s), Loans,
and, if applicable, Letter of Credit Interest specified in such instrument, and
upon consent thereto by the Company, the Administrative Agent and the Issuing
Lender, to the extent required above, the assignee shall have, to the extent of
such assignment (unless otherwise provided in such assignment with the consent
of the Company, the Administrative Agent and the Issuing Lender), the
obligations, rights and benefits of a Lender hereunder holding the
Commitment(s), Loans and, if applicable, Letter of Credit Interest (or portions
thereof) assigned to it (in addition to the Commitment(s), Loans and Letter of
Credit Interest, if any, theretofore held by such assignee) and the assigning
Lender shall, to the extent of such assignment, be released from the
Commitment(s) (or portion(s) thereof) so assigned. Upon each such assignment the
assigning Lender shall pay the Administrative Agent an assignment fee of $3,000.
(c) A Lender may sell or agree to sell to one or more other
Persons a participation in all or any part of any Loans or Letter of Credit
Interest held by it, or in its Commitments, in which event each purchaser of a
participation (a "Participant") shall be entitled to the rights and benefits of
the provisions of Section 8.01(j) hereof with respect to its participation in
such Loans,
<PAGE>
- 79 -
Letter of Credit Interest and Commitments as if (and the Company shall be
directly obligated to such Participant under such provisions as if) such
Participant were a "Lender" for purposes of said Section, but, except as
otherwise provided in Section 4.07(c) hereof, shall not have any other rights or
benefits under this Agreement or any Note or any other Basic Document (the
Participant's rights against such Lender in respect of such participation to be
those set forth in the agreements executed by such Lender in favor of the
Participant). All amounts payable by the Company to any Lender under Section 5
hereof in respect of Loans, Letter of Credit Interest held by it, and its
Commitments, shall be determined as if such Lender had not sold or agreed to
sell any participations in such Loans, Letter of Credit Interest and
Commitments, and as if such Lender were funding each of such Loan, Letter of
Credit Interest and Commitments in the same way that it is funding the portion
of such Loan, Letter of Credit Interest and Commitments in which no
participations have been sold. In no event shall a Lender that sells a
participation agree with the Participant to take or refrain from taking any
action hereunder or under any other Basic Document except that such Lender may
agree with the Participant that it will not, without the consent of the
Participant, agree to (i) increase or extend the term, or extend the time or
waive any requirement for the reduction or termination, of such Lender's related
Commitment, (ii) extend the date fixed for the payment of principal of or
interest on the related Loan or Loans, Reimbursement Obligations or any portion
of any fee hereunder payable to the Participant, (iii) reduce the amount of any
such payment of principal, (iv) reduce the rate at which interest is payable
thereon, or any fee hereunder payable to the Participant, to a level below the
rate at which the Participant is entitled to receive such interest or fee, (v)
alter the rights or obligations of the Company to prepay the related Loans or
(vi) consent to any modification, supplement or waiver hereof or of any of the
other Basic Documents to the extent that the same, under Section 10.10 or 11.04
hereof, requires the consent of each Lender.
(d) In addition to the assignments and participations permitted
under the foregoing provisions of this Section 11.06, any Lender may assign and
pledge all or any portion of its Loans and its Notes to any Federal Reserve Bank
as collateral security pursuant to Regulation A and any Operating Circular
issued by such Federal Reserve Bank. No such assignment shall release the
assigning Lender from its obligations hereunder.
(e) A Lender may furnish any information concerning the Company
or any of its Subsidiaries in the possession of such Lender from time to time to
assignees and participants (including prospective assignees and participants),
subject, however, to the provisions of Section 11.12(b) hereof.
(f) Anything in this Section 11.06 to the contrary
notwithstanding, no Lender may assign or participate any interest in any Loan or
Reimbursement Obligation held by it hereunder to the Company or any of its
Affiliates or Subsidiaries without the prior written consent of each Lender.
11.07 Survival. The obligations of the Company under Sections
5.01, 5.05, 5.06, 5.07 and 11.03 hereof and the obligations of the Lenders under
Sections 10.05 and 11.12 hereof shall survive the repayment of the Loans and
Reimbursement Obligations and the termination of the Commitments. In addition,
each representation and warranty made, or deemed to be made by a notice of any
extension of credit (whether by means of a Loan or a Letter of Credit), herein
or
<PAGE>
- 80 -
pursuant hereto shall survive the making of such representation and warranty,
and no Lender shall be deemed to have waived, by reason of making any extension
of credit hereunder (whether by means of a Loan or a Letter of Credit), any
Default which may arise by reason of such representation or warranty proving to
have been false or misleading, notwithstanding that such Lender or the
Administrative Agent may have had notice or knowledge or reason to believe that
such representation or warranty was false or misleading at the time such
extension of credit was made.
11.08 Captions. The table of contents and captions and section
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Agreement.
11.09 Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
11.10 Governing Law; Submission to Jurisdiction. This Agreement
and the Notes shall be governed by, and construed in accordance with, the law of
the State of New York. The Company hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and of the Supreme Court of the State of New York sitting in New York
County (including its Appellate Division), and any other appellate court in the
State of New York, for the purposes of all legal proceedings arising out of or
relating to this Agreement or the transactions contemplated hereby. The Company
irrevocably waives, to the fullest extent permitted by applicable law, any
objection which it may now or hereafter have to the laying of the venue of any
such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum.
11.11 Waiver of Jury Trial. EACH OF THE COMPANY, THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
11.12 Treatment of Certain Information; Confidentiality.
(a) The Company acknowledges that from time to time financial
advisory, investment banking and other services may be offered or provided to
the Company or one or more of its Subsidiaries (in connection with this
Agreement or otherwise) by any Lender or by one or more subsidiaries or
affiliates of such Lender and the Company hereby authorizes each Lender to share
any information delivered to such Lender by the Company and its Subsidiaries
pursuant to this Agreement, or in connection with the decision of such Lender to
enter into this Agreement, to any such subsidiary or affiliate, it being
understood that any such subsidiary or affiliate receiving such information
shall be bound by the provisions of clause (b) below as if it were a Lender
hereunder.
<PAGE>
- 81 -
(b) Each Lender and the Administrative Agent agrees (on behalf of
itself and each of its affiliates, directors, officers, employees and
representatives) to use reasonable precautions to keep confidential, in
accordance with their customary procedures for handling confidential information
of this nature and in accordance with safe and sound banking practices, any
non-public information supplied to it by the Company pursuant to this Agreement
which is identified by the Company as being confidential at the time the same is
delivered to the Lenders or the Administrative Agent, provided that nothing
herein shall limit the disclosure of any such information (i) to the extent
required by statute, rule, regulation or judicial process, (ii) to counsel for
any of the Lenders or the Administrative Agent, (iii) to bank examiners,
auditors or accountants, (iv) to the Administrative Agent or any other Lender
(or to Chase Securities Inc.), (v) in connection with any litigation to which
any one or more of the Lenders or the Administrative Agent is a party, (vi) to a
subsidiary or affiliate of such Lender as provided in clause (a) above or (vii)
to any assignee or participant (or prospective assignee or participant) so long
as such assignee or participant (or prospective assignee or participant) first
executes and delivers to the respective Lender a Confidentiality Agreement
substantially in the form of Exhibit B hereto; provided, further, that (x)
unless specifically prohibited by applicable law or court order, each Lender and
the Administrative Agent shall, prior to disclosure thereof, notify the Company
of any request for disclosure of any such non-public information (A) by any
governmental agency or representative thereof (other than any such request in
connection with an examination of the financial condition of such Lender by such
governmental agency) or (B) pursuant to legal process and (y) in no event shall
any Lender or the Administrative Agent be obligated or required to return any
materials furnished by the Company.
11.13 Amended and Restated Security Agreement. The Company hereby
confirms that all references in the Security Agreement to the "Credit Agreement"
mean this Agreement as modified and supplemented and in effect from time to time
and that, as of the Amendment Effective Date, Annex 1 to the Security Agreement
is amended to read in its entirety as Annex 2 hereto and Annex 7 to the Security
Agreement is amended to read in its entirety as Annex 3 hereto.
<PAGE>
- 82 -
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered as of the day and year first above written.
BE AEROSPACE, INC.
By
----------------------------
Title:
Address for Notices:
BE Aerospace, Inc.
1400 Corporate Center Way
Wellington, Florida 33414
Attention: Jeffrey P. Holtzman,
Vice President and Treasurer
Telecopier No.: (561) 791-3966
Telephone No.: (561) 791-5000
with a copy to:
Ropes & Gray
One International Place
Boston, MA 02110
Attention: Winthrop G. Minot, Esq.
Telecopier No.: (617) 951-7050
Telephone No.: (617) 951-7000
<PAGE>
- 83 -
LENDERS
THE CHASE MANHATTAN BANK
By
-------------------------
Title:
NATIONSBANK, N.A.
By
-------------------------
Title:
CREDIT LYONNAIS ATLANTA AGENCY
By
-------------------------
Title:
LASALLE BUSINESS CREDIT, INC.
By
-------------------------
Title:
<PAGE>
- 84 -
THE LONG-TERM CREDIT BANK
OF JAPAN, LTD.
By
-------------------------
Title:
THE FUJI BANK AND TRUST COMPANY
By
-------------------------
Title:
WACHOVIA BANK, N.A.
By
-------------------------
Title:
AMSOUTH BANK
By
-------------------------
Title:
THE BANK OF NEW YORK
By
-------------------------
Title:
<PAGE>
- 85 -
DG BANK DEUTSCHE
GENOSSENSCHAFTSBANK,
CAYMAN ISLAND BRANCH
By
-------------------------
Title:
By
-------------------------
Title:
FIRST UNION NATIONAL BANK
By
-------------------------
Title:
SUNTRUST BANK, SOUTH FLORIDA, N.A.
By
-------------------------
Title:
ABN AMRO BANK N.V.
By
-------------------------
Title:
By
-------------------------
Title:
<PAGE>
- 86 -
THE CHASE MANHATTAN BANK,
as Administrative Agent
By
-------------------------
Title:
Address for Notices to
Chase as Administrative Agent:
The Chase Manhattan Bank
Loan and Agency Services Group
1 Chase Manhattan Plaza
New York, New York 10081
<PAGE>
<TABLE>
Annex 1
<CAPTION>
Series A Series B Series C Total
Bank Commitment Commitment Commitments Commitments
- ---- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
The Chase Manhattan Bank $ 11,000,000 $ 11,000,000 $ 15,000,000 $ 37,000,000
NationsBank, N.A. $ 10,000,000 $ 10,000,000 $ 15,000,000 $ 35,000,000
Credit Lyonnais Atlanta Agency $ 9,500,000 $ 9,500,000 $ 9,000,000 $ 28,000,000
LaSalle Business Credit, Inc. $ 9,500,000 $ 9,500,000 $ 12,000,000 $ 31,000,000
The Long-Term Credit Bank $ 9,500,000 $ 9,500,000 $ 9,000,000 $ 28,000,000
of Japan, Ltd.
The Fuji Bank and Trust Company $ 9,500,000 $ 9,500,000 $ 12,000,000 $ 31,000,000
Wachovia Bank, N.A. $ 9,500,000 $ 9,500,000 $ 12,000,000 $ 31,000,000
Amsouth Bank $ 6,000,000 $ 6,000,000 $ 0 $ 12,000,000
The Bank of New York $ 6,000,000 $ 6,000,000 $ 9,000,000 $ 21,000,000
DG Bank Deutsche Genossenschaftsbank $ 6,000,000 $ 6,000,000 $ 9,000,000 $ 21,000,000
Cayman Island Branch
First Union National Bank $ 6,000,000 $ 6,000,000 $ 12,000,000 $ 24,000,000
SunTrust Bank, South Florida, N.A. $ 6,000,000 $ 6,000,000 $ 6,000,000 $ 18,000,000
ABN Amro Bank N.V. $ 1,500,000 $ 1,500,000 $ 0 $ 3,000,000
------------ ------------ ------------ ------------
Totals $100,000,000 $100,000,000 $120,000,000 $320,000,000
</TABLE>
<PAGE>
SCHEDULE I
Material Agreements and Liens
[See Sections 7.12 and 8.07(b)]
Part A - Material Agreements
-------------------
1. Indenture dated as of February 13, 1998 between the Company, as
issuer, and the United States Trust Company of New York, as
trustee, in connection with $250,000,000 of 8% Senior Subordinated
Notes of the Company.
2. Loan agreement dated February 24, 1993 between the Company's
subsidiary B/E Aerospace (UK) Limited, a Northern Ireland
corporation, ("BEA-UK") and Barclays Bank PLC ("Barclays"), as
amended, providing for an overdraft facility in the aggregate
principal amount of (pound)5,000,000.
3. Guarantee dated February 24, 1993 by the Company to Barclays
Limited to (pound)2,750,000 of the indebtedness of B/E Aerospace
(UK) Limited described in Item 2 above.
4. Loan agreement between Royal Inventum B.V. and InG Bank dated July
14, 1993 in the aggregate principal amount of Dfl. 2,000,000.
5. Acquisition Agreement among the Company, Elinor T. Nordskog and
Nordskog Industries, Inc. dated July 27, 1993. (Acquisition
purchase price adjustments unknown).
6. Capitalized lease obligations B/E Aerospace (UK) Limited for
machinery and equipment in the aggregate amount of $600,000.
7. Indebtedness of BE Aerospace (Netherlands) B.V. to the Company in
an aggregate principal amount not in excess of Dfls. 49,385,000.
8. Indenture dated as of January 24, 1996 between the Company and
First National Bank of Connecticut, as trustee, in connection with
$100,000,000 of 9-7/8% Senior Subordinated Notes due 2006.
9. Acquisition Agreement dated as of December 14, 1995, among the
Company, Burns Aerospace Corporation, Eagle Industrial Products
Corporation, Eagle Industries, Inc. and Great American Management
and Investment, Inc. (Acquisition purchase price adjustment
unknown.)
10. Agreement and Plan of Reorganization and Merger by and among BE
Aerospace, Inc., BE Acquisition Corp., Aerospace Interiors, Inc.,
Gregory and Deborah
<PAGE>
- 2 -
Fodell Partnership, Ltd., Gregory and Deborah Fodell Partnership
II, Ltd. and Gregory N. Fodell dated March 27, 1998 ($5.6 million).
11. Stock Purchase Agreement dated as of March 31, 1998 by and between
Puritan-Bennett Aero Systems Corp. and BE Aerospace, Inc. ($69.7
million, subject to purchase price adjustments).
12. Re-Formation Agreement dated as of February 10, 1998 among the
Company, In-Flight, Harris Corporation, In-Flight Phone Corporation
and B/E Harris LiveTV, LLC.
13. Amended and Restated Limited Liability Company Agreement dated as
of February 10, 1998 of B/E Harris LiveTV, LLC.
14. Fifth Amended and Restated Credit Agreement dated as of October 29,
1993 amended and restated as of August 7, 1998 between BE
Aerospace, Inc. and The Chase Manhattan Bank.
15. Amended and Restated Security Agreement dated as of October 29,
1993, amended and restated as of April 3, 1998 between BE
Aerospace, Inc. and The Chase Manhattan Bank.
16. Amended and Restated Guarantee and Security Agreement dated as of
November 19, 1997 amended and restated as of August 7, 1998 between
In-Flight Entertainment, LLC and The Chase Manhattan Bank.
17. Asset Purchase Agreement dated as of April 16, 1998 between
Stanford Aerospace Group, Inc. and BE Aerospace, Inc. ($117.3
million).
18. Agreement and Plan of Reorganization and Merger dated as of July
30, 1998 by and among BE Aerospace, Inc., BE Aerospace Acquisition
Corp., Aerospace Lighting Corporation and the Stockholders of
Aerospace Lighting Corporation ($31.3 million).
19. Acquisition Agreement dated as of July 21, 1998 by and among BE
Aerospace, Inc. and the SMR Sellers for the outstanding stock of
SMR Aerospace, Inc. ($142 million).
<PAGE>
- 3 -
Part B - Liens
-----
BE Aerospace, Inc.
- ------------------
1. California
a. UCC - Secretary of State
(i) 1st Source Bank, filed September 3, 1993, file number
93180963. Certain leased machining equipment
(ii) The Chase Manhattan Bank, filed November 3, 1993, file
number 93221435. Blanket filing.
(iii) UJB Leasing Corporation, filed December 1, 1994, file
number 9435361073. Miscellaneous equipment.
(iv) Hewlett-Packard Company Finance and Remark, filed December
4, 1994, file number 9435560656. Miscellaneous equipment.
(v) British Airways PLC, filed May 20, 1996, file number
9614460354. Miscellaneous equipment.
(vi) Hewlett-Packard Company Finance and Remark, filed May 6,
1997, file number 9712861105. Certain leased equipment and
related tangible and intangible property.
(vii) Pullman Bank & Trust Company, filed August 20, 1997, file
number 9723460500. Certain leased equipment and related
tangible property.
(viii) Telogy, Inc., filed December 15, 1997, file number
975360190. Certain leased equipment.
2. Connecticut
-----------
a. UCC - Secretary of State
(i) The Chase Manhattan Bank, filed November 3, 1993, file
number 1034166; Blanket; Amendment filed February 1, 1996,
file number 1678686 (Debtor address change); Partial
Release filed December 16, 1996, file number 1741071
(miscellaneous equipment).
<PAGE>
- 4 -
(ii) UJB Leasing Corporation, filed August 23, 1994, file
number 1070220. Miscellaneous leased equipment.
(iii) UJB Leasing Corporation, filed September 8, 1994, file
number 1574243. Miscellaneous leased equipment.
(iv) UJB Leasing Corporation, filed January 23, 1995, file
number 1600177. Miscellaneous Leased Equipment.
(v) Bankers Leasing Association, Inc., filed December 20,
1996, file number 1739286. Miscellaneous office equipment.
(vi) General Electric Capital Corporation, filed March 5, 1997,
file number 1754332. Leased aircraft.
3. Florida
-------
a. UCC - Secretary of State
(i) NationsBanc Leasing Corporation, filed March 22, 1993,
file number 9360950. Certain leased equipment;
Continuation, filed March 3, 1998, file number 9846659.
(ii) The Chase Manhattan Bank, filed November 4, 1993, file
number 930000227345, Blanket; Amendment filed January 31,
1996, file number 960000020922 (Debtor address change);
Partial Release filed December 16, 1996, file number
960000262425 (miscellaneous equipment); Partial Release
filed December 3, 1997, file number 970000271483
(miscellaneous equipment); Amendment filed December 11,
1997, file number 970000277923.
(iii) UJB Leasing Corporation, filed September 6, 1994, file
number 940180451. Miscellaneous leased equipment.
(iv) United Jersey Bank, filed September 7, 1994, file number
940182527. Miscellaneous leased equipment.
(v) General Electric Capital Corporation filed March 5, 1997,
file number 97047206. Leased aircraft.
(vi) General Electric Capital Corporation filed December 3,
1997, file number 970271431. Leased computer system.
(vii) General Electric Capital Corporation filed March 11, 1998,
file number 98054023. Leased computer equipment.
<PAGE>
- 5 -
b. UCC - Palm Beach County Clerk of Circuit Court, Florida
(i) General Electric Capital Corporation filed December 3,
1997, file number 97-430801. Leased computer system.
(ii) General Electric Capital Corporation filed March 12, 1998,
file number 98-086001. Leased computer equipment.
4. North Carolina
--------------
a. UCC - Secretary of State
(i) The Chase Manhattan Bank N.A. filed January 30, 1996, file
number 1304283, blanket; partial release filed December 3,
1997, file number 001520696.
(ii) General Electric Capital Corporation filed June 23, 1997,
file number 1467282, leased machinery.
(iii) General Electric Capital Corporation filed December 3,
1997, file number 001528953. Leased computer system.
b. UCC - Forsyth County, North Carolina
(i) The Chase Manhattan Bank, filed January 29, 1996, file
number 215975, blanket; partial release filed December 3,
1997, file number 224501.
(ii) General Electric Capital Corporation filed December 3,
1997, file number 224500. Leased computer system.
(iii) General Electric Capital Corporation filed March 11, 1998,
file number 226702. Leased computer system.
In-Flight Entertainment, LLC
- ----------------------------
1. California
----------
a. UCC - Secretary of State
(i) The Chase Manhattan Bank, filed December 11, 1997, file
number 9734960163. Blanket filing.
<PAGE>
- 6 -
2. In-Flight Entertainment, LLC, doing business as BE Aerospace, Inc.
a. UCC - California Secretary of State
(i) The Chase Manhattan Bank, filed December 11, 1997, file
number 9734960155. Blanket filing.
3. In-Flight Entertainment, LLC, doing business as In-Flight Entertainment
a. UCC - California Secretary of State
(i) The Chase Manhattan Bank, filed December 11, 1997, file
number 9734960171. Blanket filing.
B/E Aerospace (UK) Limited
- --------------------------
The Indebtedness of B/E Aerospace (UK) Limited identified in Section 2
of Part A of this Schedule I is cross-collateralized in the U.K. by the
following:
1. A Debenture over the assets of B/E Aerospace (UK) Limited on Barclays'
standard form dated 19th November 1982.
2. The Company's guarantee referred to in Section 4 of Part A of this Schedule
I.
3. A Letter of Set Off allowing Barclays' to combine any account, Sterling or
Currency dated May 8, 1989.
<PAGE>
SCHEDULE II
Hazardous Materials
-------------------
[See Section 7.13]
1. Litchfield, CT, facility historically did not have state or federal
clean Water Act permits authorizing discharge of wastewater to the
Bantam River. The discharge has been substantially eliminated as of this
date.
2. Litchfield, CT, facility may not have required air permits for air
emissions associated with paint booths and adhesive operations. A
request for determination of the need for permits has been made to the
state officials.
3. In 1992, the Garden Grove, CA, facility paid a $45,000 penalty for
violation of air pollution regulations.
4. The Route 209 facility of Pullman in Bantam, CT, is an interim status
facility under RCRA. There appears to be documentary evidence that waste
from the Route 209 facility may have been transshipped through the
Litchfield, CT, facility, raising potential issues of RCRA compliance
relating to the Litchfield, CT facility.
5. Asbestos-containing materials may be present in the Litchfield, CT,
facility. A preliminary investigation has been completed and does not
indicate any large-scale concerns.
6. Hazardous Materials have been detected in the soils and groundwater at
the Litchfield, CT facility. A groundwater assessment is ongoing under
the supervision of the CTDEP. The latest groundwater monitoring reports
show that contaminant levels in groundwater meet applicable standards.
7. Certain sites to which the Company and its Subsidiaries may have sent
waste which are listed on CERCLIS, or any similar state or local list or
are under investigation by governmental agencies are set forth in
Exhibits 3-2, 3-3, 3-4 and 3-5 of the ICF Kaiser, Engineers report
entitled "Environmental Assessment of PTC Aerospace and Aircraft
Products Companies Final Report" dated February 14, 1992 and, with
respect to the Burns Aerospace facility, in a report entitled "Phase I
Environmental Due Diligence Examination of the Burns Aerospace
Corporation, Winston-Salem, North Carolina, dated January 1994, prepared
by ENSR Consulting and Engineering".
8. The Litchfield, CT, facility has two utility-owned transformers, one
contains less than 50 ppm PCBs. The other contains 63 ppm PCBs.
9. Hazardous waste from the Altamonte Springs, Florida facility was sent to
the Chemical Conservation Corporation landfill in Valdosta, Georgia
which is on the CERCLIS list.
<PAGE>
- 2 -
10. Hazardous waste from the Altamonte Springs, Florida site may have been
disposed of at the Seabord Chemical site in North Carolina, which is
being remediated under consent order with the State of North Carolina.
11. Certain wells upgradient of the Anaheim, California site have been
impacted by dichlorodifluoromethane (refrigerant) and trichloroethane
(degreaser), both of which are believed to have been used by the
predecessor of Acurex.
12. At a facility in Santa Ana, California which EECO Incorporated, a former
owner of part of the BE Avionics business, owned and later leased, there
may have been some seepage into the soil of toxic materials involved in
metal plating, including arsenic. The Company purchased the BE Avionics
business from EECO in a 1989 asset acquisition, and EECO has
subsequently filed for bankruptcy protection and is no longer in
operation. The BE Avionics business was never conducted in the affected
facility.
13. Certain of the ovens manufactured by Nordskog prior to 1981 contain
asbestos.
14. Hazardous waste originating from the Burns Aerospace, Winston-Salem,
North Carolina facility may have been shipped to the Seaboard Chemical
site in North Carolina which is listed on CERCLIS. In 1991, a letter was
received from the North Carolina Department of Environment, Health and
National Resources indicating that Fairchild Burns Company was a de
minimis contributor of waste to that site. By letter dated February 26,
1992 Burns Aerospace Corporation notified Fairchild Industries, from
whom it had acquired the Winston-Salem facility, that Fairchild
Industries was responsible for that liability.
15. In May, 1994, the Company received notice that it was considered a de
minimis PRP with respect to the Frontier Chemical Site in Niagara Falls,
NY relating to a shipment of waste from the Litchfield, CT facility in
1992. The Company joined a group of de minimis PRPs that performed
certain actions under an Administrative Consent Order with EPA. The
Company believes that it has fully settled its liability with respect to
the site through payment to the group.
16. The roof at the Chesham, UK facility may contain asbestos cement-root
sheeting.
Compliance Issues
- -----------------
PTC Aerospace, Litchfield, CT
- -----------------------------
(1) Facility is listed on the CERCLIS Data Base.
(2) Pursuant to a Notice of Violation issued by the Connecticut DEP in
March, 1992, the Facility has implemented a RCRA closure plan and has
upgraded record keeping and training functions.
<PAGE>
- 3 -
PTC Aerospace, Garden Grove, CA
- -------------------------------
(1) Oily compressor blowdown is discharged directly to the ground.
(2) Facility does not comply with state RCRA regulations governing
generators of less than 1,000 kilograms of hazardous waste per month.
(3) Facility does not comply with state OSHA requirements governing a
written respiratory protection program, personnel training and record
keeping, personnel medical monitoring, and other worker safety and
health requirements.
(4) Facility may require NPDES storm water discharge permit.
Aircraft Products Company, Delray Beach, FL
- -------------------------------------------
(1) Facility has not applied for an air emissions permit or conditional
exemption from the State for its air emission sources.
(2) Paint booth filters, empty drums, and solvent-contaminated rags are
disposed of as nonhazardous solid wastes.
(3) Not all hazardous waste drums were properly labeled.
(4) Unused chemicals are stored onsite that are no longer used in the
production process and should be disposed of as hazardous waste.
(5) Plant does not have a written respiratory protection program or a
hearing conservation program, although such protection is provided to
employees.
(6) Plant may require an NPDES storm water discharge permit.
Aircraft Products Company, Jacksonville, FL
- -------------------------------------------
(1) Facility has no data to indicate that its nonhazardous solid wastes,
which include solvent-contaminated rags, are properly disposed of as
nonhazardous waste.
(2) The facility qualifies currently as a large quantity generator of
regulated hazardous wastes but does not comply with the RCRA
requirements applicable to these generators or to the storage of wastes
onsite for less than 90 days.
(3) Unused chemicals are stored onsite that are no longer used in the
production process and should be disposed of as nonhazardous waste.
<PAGE>
- 4 -
(4) Areas designed for hazardous waste drum storage are not posted as such
or signs are obscured.
(5) Plant personnel with responsibility to handle hazardous wastes have not
received the requisite health and safety training.
(6) Containers of hazardous materials are not consistently labeled as to the
hazards they may present to worker health and safety.
(7) Plant does not have a written respiratory protection program nor are
employees fit tested to wear respirators as required by OSHA.
(8) Plant may require an NPDES storm water discharge permit.
Nordskog Industries, Inc., Van Nuys, CA
- ---------------------------------------
(1) Several facilities to which hazardous waste may have been shipped for
disposal are on the CERCLIS data base, as noted in Table 1 of the June
4, 1993 Draft Phase I Environmental Site Assessment.
(2) There may be a compliance issue concerning the mixing of hazardous and
non-hazardous wastes prior to 1984.
(3) The facility has had historical problems meeting effluent standards for
metal finishing. Wastewater is treated in an on-site clarifier prior to
discharge to the municipal sewer.
(4) Nordskog received a Notice to Comply dated July 21, 1993 from the South
Coast Air Quality Management District requiring Nordskog to (i) keep
more detailed usage records as required by Rule 109, including all "VOC"
and vapor pressure information, (ii) use only HLVP or 65% efficient
spray equipment, (iii) use only closed containers for all solvents, and
(iv) use only Rule 1171 and 1124 compliance cleaning solvents.
Status of Mountain View, CA Property
- ------------------------------------
The Prudential Insurance Company of America ("Prudential") is the owner
of property known as 485 Clyde Avenue (Building 1), Mountain View, California
(the "Property"). Acurex Corporation ("Acurex") owned the Property in the early
1970s and then entered into a sale-leaseback arrangement with Prudential in
connection with the Property. The Property itself sits on part of a very large
contamination plume said to result from discharges into the soil and groundwater
from a nearby Hewlett Packard manufacturing facility. As of the date hereof, the
Company believes that the municipal authorities in Mountain View do not intend
to commence an environmental clean-up in connection with the plume and do not
intend to permit any owner of property on or contiguous with the plume to
commence a clean-up of such owner's property.
<PAGE>
- 5 -
In 1992, pursuant to an Amended and Restated Agreement and Plan of
Merger (the "Merger Agreement") among Acurex, Xeruca, Inc. and others, the lease
was assigned from Acurex to Xeruca. The Merger Agreement included an indemnity
from Xeruca to Acurex for, among other things, those liabilities associated with
the Property. In connection with the expiration of the lease for the Property on
July 13, 1993, Prudential requested that Acurex execute an indemnification
agreement whereby Xeruca would agree to clean-up the Property (if and when
permitted by the municipal authorities) and provide a general indemnity for
matters related to the clean-up while Acurex would agree to guarantee Xeruca's
performance and indemnify Prudential for Xeruca's failure to perform its
obligations. Acurex refused to enter into this agreement, and Prudential
threatened to sue Acurex to compel it to acknowledge such alleged
indemnification obligations.
This dispute between Acurex and Prudential was resolved by an Agreement
made as of August 27, 1993 (the "Settlement Agreement") among Prudential, Xeruca
and Acurex. Pursuant to the Settlement Agreement, Xeruca agreed to indemnify
Prudential with respect to environmental claims related to the Property. In
addition, Acurex assigned to Prudential the benefit of the indemnification
provisions from Xeruca under the Merger Agreement with respect to environmental
claims related to the Property. As a result of the Settlement Agreement, Acurex
is now a co-beneficiary with Prudential of Xeruca's indemnification obligations
and Prudential has released and forever discharged Acurex from any and all
claims that Acurex is obligated to sign an indemnification agreement with
Prudential.
No lawsuit is currently pending or threatened against Acurex in
connection with the Property.
Burns Aerospace - Winston-Salem, NC
- -----------------------------------
Contaminants have been detected in the soil and groundwater at the former
Burns-Aerospace facility at levels that may require remediation under the
regulations of the North Carolina Department of Environmental Health and Natural
Resources. Initial conditions at the site at the time of purchase are described
in a report entitled "Site Characterization Report" dated January 19, 1996,
prepared by Groundwater Technology. Further site assessment work is being
conducted by the Company that includes groundwater and soils testing. The
Company has informed the Seller of the facility, Eagle Industries, that the
environmental remedial costs are subject to the indemnification claims of the
purchase contract. Certain other compliance issues at the facility are
identified in a report entitled "Environmental Survey and Compliance
Evaluation," prepared by Environmental Quality Management, dated February 21,
1996.
<PAGE>
SCHEDULE III
Subsidiaries and Investments
[See Sections 7.17 and 8.08(a)]
Part A - Subsidiaries
------------
<TABLE>
<CAPTION>
Book Value
Jurisdiction of Assets
of (in millions)
Subsidiary Organization Owners Ownership as of 5/30/98
- ---------- ------------ ------ --------- -------------
<S> <C> <C> <C> <C>
1BE Aerospace Barbados Acurex 100% Non-material
International, Ltd. ("N.M.")
BE Aerospace (UK) England BEA 100% $107
Holdings Limited
("BEA-Holdings")
BE Aerospace (UK) Northern Ireland BEA Holdings 100% $107
Limited ("BEA-UK")
------
1Fort Hill Aircraft Northern Ireland BEA-UK 100% N.M.
Limited ("AFL")
---
1AFI Holdings Limited Northern Ireland BEA-UK 100% N.M.
1Burns Aerospace France BEA 100% N.M.
S.A.R.L.
1BE Aerospace France BEA 98.00% N.M.
(France) S.A.R.L. K.A.D. 1.00%
Companies, Inc. 1.00%
Marc Leveille
(director)
BE Aerospace Delaware BEA 100% N.M.
(U.S.A.), Inc.
Puritan-Bennett California BEA 100% $43
Aero Systems Corp.
</TABLE>
<PAGE>
- 2 -
<TABLE>
<CAPTION>
Book Value
Jurisdiction of Assets
of (in millions)
Subsidiary Organization Owners Ownership as of 5/30/97
- ---------- ------------ ------ --------- -------------
<S> <C> <C> <C> <C>
BE Intellectual Delaware BEA 100% $ 3
Property, Inc.
BE Aerospace Netherlands BEA 90% $37
(Netherlands) B.V. BEA (U.S.A.) 10%
("BEA-Neth")
Royal Inventum B.V. Netherlands BEA-Neth 96.60%* $36
BE Aerospace (Sales Netherlands BEA-Neth 100% N.M.
and Services) B.V.
Acurex Corporation Delaware BEA 100% $63
("Acurex")
B/E Aerospace Delaware BEA 100% $11
Services, Inc.
B/E Advanced Thermal Delaware BEA 100% $ 1
Technologies, Inc.
1Nordskog California BEA 100% N.M.
Industries, Inc.
Aerospace Interiors, Texas BEA 100% $ 3
Inc.
In-Flight Entertain- Delaware BEA 100% $64
ment, LLC
Aerospace Lighting New York BEA 100% $3**
Corporation
SMR Aerospace, Inc. Ohio BEA 100% $44**
</TABLE>
<PAGE>
- 3 -
- ----------------
1 Specified Subsidiary as defined in the Credit Agreement.
* The balance of these shares were lost prior to the sale of the shares of
this entity to BEA.
** Book value of assets as of December 31, 1997.
Part B - Investments
In addition to the Investments set forth in Part A above, as of the
date hereof the Company has the following outstanding Investments:
a. an Investment in a Middle East sales office in an amount not to
exceed $200,000;
b. cash and money market funds in the amount, as of July 31, 1998 of
approximately $20 million.
<PAGE>
SCHEDULE IV
Approvals and Compliance
------------------------
[See Section 7.17]
None, except compliance with certain Environmental Laws disclosed
in the materials set forth in Schedule II hereto.
<PAGE>
SCHEDULE V
Existing Letters of Credit
--------------------------
[See Section 2.03]
Letters of Credit Outstanding:
<TABLE>
<CAPTION>
Issue Date Amount ($) LC# Expiry Date Beneficiary
---------- ---------- --- ----------- -----------
<S> <C> <C> <C> <C>
December 11, 1995 534,000.00 P-258984 December 11, 1998 National Union Fire Ins. Co.
January 10, 1995 800,000.00 P-754546 January 10, 1999 National Union Fire Ins. Co.
January 22, 1996 1,400,000.00 P-259114 January 31, 1999 Eagle Industries
March 25, 1992 307,817.00 P-751178 February 28, 1999 National Union Fire Ins. Co.
March 16, 1995 505,000.00 P-754750 March 16, 1999 National Union fire Ins. Co.
December 20, 1993 313,719.00 P-753306 May 1, 1999 CA Self Insurance Plans
May 30, 1996 786,380.00 P-259468 May 29, 1999 National Union Fire Ins. Co.
Total Letters of Credit 4,646,916.00
Outstanding:
</TABLE>
<PAGE>
SCHEDULE VI
Taxes
-----
[See Section 7.09]
Jurisdiction Tax Year Extended To
------------ -------- -----------
Federal 2/25/95 1/3/99
Connecticut 7/29/91 - 2/26/94 12/31/98
<PAGE>
SCHEDULE VII
Transactions with Affiliates
----------------------------
[See Section 8.15]
[None.]
<PAGE>
EXHIBIT C
FORM OF STANDBY LETTER OF CREDIT
The Chase Manhattan Bank
Global Trade Services Group
P.O. Box 44, Church Street Station Cable Address: CHAMANBANK New York
New York, NY 10008-0044
DATE: AUGUST __, 1998
Irrevocable Standby Letter
Of Credit Number P-374721
Applicant:
BE AEROSPACE
1400 Corporate Center Way
Wellington, Florida 33414
Beneficiaries:
Oscar J. Mifsud and Patrick L. Ryan and David B. Smith and
Oscar J. Misfud Trust - Patrick L. Ryan Trust - David B. Smith Trust -
1998 1998 1998
541 Leeds Gate Lane 624 Tamarac Trail 520 West Point Drive
Wadsworth, OH 44281 Wadsworth, OH 44281 Akron, OH 44333
Attn: Oscar Mifsud Attn: Patrick L. Ryan Attn: David B. Smith
Telecopier: 330-335-3216 Telecopier: 330-336-0228 Telecopier: 330-665-5302
We hereby notify Oscar J. Mifsud, Oscar J. Misfud Trust - 1998, Patrick L. Ryan,
Patrick L. Ryan Trust - 1998, and David B. Smith, David B. Smith Trust - 1998
that we have issued our Irrevocable Standby Letter of Credit Number P-374721 in
your favor by order and for account of:
BE AEROSPACE
1400 Corporate Center Way
Wellington, Florida 33414
Up to an aggregate amount of One Hundred Twenty Million U.S. Dollars and no
cents ($120,000,000.00)
Available by a single beneficiaries' draft at sight drawn on The Chase Manhattan
Bank, New York, New York 10041.
<PAGE>
- 2 -
ACCOMPANIED BY:
A signed certification by all of the beneficiaries that: (1) "The date is
December 31, 1998 and BE Aerospace, Inc., of 1400 Corporate Center Way,
Wellington, Florida 33414 has failed to pay the amounts owed to the
beneficiaries pursuant to Section 2 of the Share Disposition Agreement dated as
of August 7, 1998 among Oscar J. Mifsud, Oscar J. Mifsud Trust - 1998, Patrick
L. Ryan, Patrick L. Ryan Trust - 1998, David B. Smith, David B. Smith Trust -
1998 and BE Aerospace and the amount of the draft accompanying this
certification is not in excess of the amount owed by BE Aerospace to the
beneficiaries thereunder" or (2) "BE Aerospace, Inc. of 1400 Corporate Center
Way, Wellington, Florida 33414 has filed a petition for reorganization or other
relief under the Federal Bankruptcy laws and the amount of the draft
accompanying this certification is not in excess of the amount owed by BE
Aerospace to the beneficiaries pursuant to Section 2 of the Share Disposition
Agreement dated as of August 7, 1998 among Oscar J. Mifsud, Oscar J. Mifsud
Trust - 1998, Patrick L. Ryan, Patrick L. Ryan Trust- 1998, David B. Smith,
David B. Smith Trust - 1998 and BE Aerospace."
The available amount hereunder shall be reduced by the amount which the
beneficiaries certify to us has been paid by BE Aerospace to the beneficiaries
pursuant to Section 2 of the Share Disposition Agreement dated as of August 7,
1998 among Oscar J. Mifsud, Oscar J. Mifsud Trust - 1998, Patrick L. Ryan,
Patrick L. Ryan Trust - 1998, David B. Smith, David B.
Smith Trust - 1998 and BE Aerospace.
Draft must be drawn and presented at this office at 55 Water Street, Trade
Services, Room 1708, New York, New York 10041 not later than January 19, 1999.
The draft drawn hereunder must be marked: "Drawn under The Chase Manhattan Bank,
New York Letter of Credit Number P-374721" and indicate the date hereof.
We hereby engage with the beneficiary that the draft drawn under and in
compliance with the terms of this credit will be duly honored.
This Letter of Credit shall be governed by the law of the State of New York, and
shall be subject to the Uniform Customs and Practice for Documentary Credits
(1993 Revision) International Chamber of Commerce Publication No. 500 (the
"UCP") and, in the event of any conflict between the law of the State of New
York and the UCP, the UCP shall control.
THE CHASE MANHATTAN BANK
By
---------------------------
Authorized Signatory
<PAGE>
<TABLE>
<CAPTION>
ANNEX 2
PLEDGED STOCK
- -------------------------------- ----------------------- ------------------------------- ---------------------------------
Issuer Certificate Nos. Registered Owner Number of Shares
- -------------------------------- ----------------------- ------------------------------- ---------------------------------
- -------------------------------- ----------------------- ------------------------------- ---------------------------------
<S> <C> <C> <C>
Flight Equipment and 26 BE Avionics, Inc. (now known 350,000 ordinary shares, 1 (British
Engineering Limited as BE Aerospace, Inc.) Pound) par value
- -------------------------------- ----------------------- ------------------------------- ---------------------------------
- -------------------------------- ----------------------- ------------------------------- ---------------------------------
BE Aerospace (Netherlands) B.V. 1-23 BE Aerospace, Inc. 23 shares of capital stock,
(uncertificated dfl. 1,000 par value
shares)
- -------------------------------- ----------------------- ------------------------------- ---------------------------------
- -------------------------------- ----------------------- ------------------------------- ---------------------------------
BE Aerospace (USA), Inc. 2 BE Aerospace, Inc. 65 shares of common stock, par
value $0.01
- -------------------------------- ----------------------- ------------------------------- ---------------------------------
- -------------------------------- ----------------------- ------------------------------- ---------------------------------
Acurex Inc. 2 BE Aerospace, Inc. 100 shares of common stock, par
value $0.01
- -------------------------------- ----------------------- ------------------------------- ---------------------------------
- -------------------------------- ----------------------- ------------------------------- ---------------------------------
B/E Services, Inc. 1 BE Aerospace, Inc. 1,000 shares of common stock,
par value $0.01
- -------------------------------- ----------------------- ------------------------------- ---------------------------------
- -------------------------------- ----------------------- ------------------------------- ---------------------------------
Aerospace Interiors, Inc. 1 BE Aerospace, Inc. 1,000 shares of common stock,
par value $0.01
- -------------------------------- ----------------------- ------------------------------- ---------------------------------
- -------------------------------- ----------------------- ------------------------------- ---------------------------------
Puritan-Bennett Aero Systems 43 BE Aerospace, Inc. 77,500 shares of common stock,
Co. par value $0.01
- -------------------------------- ----------------------- ------------------------------- ---------------------------------
- -------------------------------- ----------------------- ------------------------------- ---------------------------------
BE Intellectual Property, Inc. 1 BE Aerospace, Inc. 100 shares of common stock, par
value $0.01
- -------------------------------- ----------------------- ------------------------------- ---------------------------------
- -------------------------------- ----------------------- ------------------------------- ---------------------------------
Aerospace Lighting Corporation 49 BE Aerospace, Inc. 660 shares of common stock,
without par value
- -------------------------------- ----------------------- ------------------------------- ---------------------------------
- -------------------------------- ----------------------- ------------------------------- ---------------------------------
SMR Aerospace, Inc. 7 BE Aerospace, Inc. 300 shares of common stock, par
value $0.01
- -------------------------------- ----------------------- ------------------------------- ---------------------------------
- -------------------------------- ----------------------- ------------------------------- ---------------------------------
64 637,332.78 shares of common
Flight Structures, Inc. BE Aerospace, Inc. stock
- -------------------------------- ----------------------- ------------------------------- ---------------------------------
</TABLE>
<PAGE>
EXHIBIT A-1
AMENDED AND RESTATED SECURITY AGREEMENT
AMENDED AND RESTATED SECURITY AGREEMENT dated as of October
29, 1993, AMENDED AND RESTATED AS OF April 3, 1998, between BE AEROSPACE, INC.,
a corporation duly organized and validly existing under the laws of Delaware
(the "Company"); and THE CHASE MANHATTAN BANK, as agent for certain lenders or
other financial institutions or entities party, as lenders, to the Credit
Agreement referred to below (in such capacity, together with its successors in
such capacity, the "Administrative Agent").
The Company, certain lenders and the Administrative Agent are
parties to a Credit Agreement dated as of October 29, 1993 amended and restated
as of April 3, 1998 (as modified and supplemented and in effect from time to
time, the "Credit Agreement"), providing, subject to the terms and conditions
thereof, for extensions of credit (by making of loans and issuing letters of
credit) to be made by said lenders to the Company.
The Company and the Administrative Agent are party to a
Revolving Credit Security Agreement and a Term Loan Security Agreement, each
dated October 29, 1993.
To induce said lenders to enter into the Credit Agreement and
to extend credit thereunder, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company has agreed
to amend and restate the foresaid Revolving Credit Security Agreement and Term
Loan Security Agreement so that, as so amended and restated, they are combined
into one document and read in their entirety as herein provided. Accordingly,
the parties hereto agree as follows:
Section 1. Definitions. Terms defined in the Credit Agreement
are used herein as defined therein. In addition, as used herein:
"Accounts" shall have the meaning ascribed thereto in Section
3(d) hereof.
"Collateral" shall have the meaning ascribed thereto in
Section 3 hereof.
"Collateral Account" shall have the meaning ascribed thereto
in Section 4.01 hereof.
<PAGE>
"Copyright Collateral" shall mean all Copyrights, whether now
owned or hereafter acquired by the Company, including each Copyright
identified in Annex 2 hereto.
"Copyrights" shall mean all copyrights, copyright
registrations and applications for copyright registrations, including,
without limitation, all renewals and extensions thereof, the right to
recover for all past, present and future infringements thereof, and all
other rights of any kind whatsoever accruing thereunder or pertaining
thereto.
"Documents" shall have the meaning ascribed thereto in Section
3(j) hereof.
"Equipment" shall have the meaning ascribed thereto in Section
3(h) hereof.
"Instruments" shall have the meaning ascribed thereto in
Section 3(e) hereof.
"Intellectual Property" shall mean all Copyright Collateral,
all Patent Collateral and all Trademark Collateral, together with (a)
all inventions, processes, production methods, proprietary information,
know-how and trade secrets; (b) all licenses or user or other
agreements granted to the Company with respect to any of the foregoing,
in each case whether now or hereafter owned or used including, without
limitation, the licenses or other agreements with respect to the
Copyright Collateral, the Patent Collateral or the Trademark
Collateral, listed in Annex 5 hereto; (c) all information, customer
lists, identification of suppliers, data, plans, blueprints,
specifications, designs, drawings, recorded knowledge, surveys,
engineering reports, test reports, manuals, materials standards,
processing standards, performance standards, catalogs, computer and
automatic machinery software and programs; (d) all field repair data,
sales data and other information relating to sales or service of
products now or hereafter manufactured; (e) all accounting information
and all media in which or on which any information or knowledge or data
or records may be recorded or stored and all computer programs used for
the compilation or printout of such information, knowledge, records or
data; (f) all licenses, consents, permits, variances, certifications
and approvals of governmental agencies now or hereafter held by the
Company; and (g) all causes of action, claims and warranties now or
hereafter owned or acquired by the Company in respect of any of the
items listed above.
"Inventory" shall have the meaning ascribed thereto in Section
3(f) hereof.
"Issuers" shall mean, collectively, (a) the respective
corporations identified on Annex 1 hereto under the caption "Issuer"
and (b) to the extent not otherwise identified on Annex 1 hereto, each
other Subsidiary of the Company.
"LLC Agreements" shall have the meaning ascribed thereto in
Section 3(m) hereof.
-2-
<PAGE>
"LLC Collateral" shall have the meaning ascribed thereto in
Section 3(m) hereof.
"LLC Issuers" shall mean the respective limited liability
companies identified on Annex 7 hereto.
"Motor Vehicles" shall mean motor vehicles, tractors, trailers
and other like property, whether or not the title thereto is governed
by a certificate of title or ownership.
"Patent Collateral" shall mean all Patents, whether now owned
or hereafter acquired by the Company, including each Patent identified
in Annex 3 hereto.
"Patents" shall mean all patents and patent applications,
including, without limitation, the inventions and improvements
described and claimed therein together with the reissues, divisions,
continuations, renewals, extensions and continuations-in-part thereof,
all income, royalties, damages and payments now or hereafter due and/or
payable under and with respect thereto, including, without limitation,
damages and payments for past or future infringements thereof, the
right to sue for past, present and future infringements thereof, and
all rights corresponding thereto throughout the world.
"Pledged Membership Interests" shall have the meaning ascribed
thereto in Section 3(m) hereof.
"Pledged Stock" shall have the meaning ascribed thereto in
Section 3(a) hereof.
"Secured Obligations" shall mean, collectively, (a) the
principal of and interest on the Loans made by the Lenders to, and the
Note(s) held by each Lender of, the Company and all other amounts from
time to time owing to the Lenders or the Administrative Agent by the
Company under the Basic Documents including, without limitation, all
Reimbursement Obligations and interest thereon and (b) all obligations
of the Company to the Lenders and the Administrative Agent hereunder.
"Stock Collateral" shall mean, collectively, the Collateral
described in clauses (a) through (c) of Section 3 hereof and the
proceeds of and to any such property and, to the extent related to any
such property or such proceeds, all books, correspondence, credit
files, records, invoices and other papers.
"Trademark Collateral" shall mean all Trademarks, whether now
owned or hereafter acquired by the Company, including each Trademark
identified in Annex 4 hereto. Notwithstanding the foregoing, the
Trademark Collateral does not and shall not include any Trademark which
would be rendered invalid, abandoned, void or unenforceable by reason
of its being included as part of the Trademark Collateral.
"Trademarks" shall mean all trade names, trademarks and
service marks, logos, trademark and service mark registrations, and
applications for trademark and service
-3-
<PAGE>
mark registrations, including, without limitation, all renewals of
trademark and service mark registrations, all rights corresponding
thereto throughout the world, the right to recover for all past,
present and future infringements thereof, all other rights of any kind
whatsoever accruing thereunder or pertaining thereto, together, in
each case, with the product lines and goodwill of the business
connected with the use of, and symbolized by, each such trade name,
trademark and service mark.
"Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect from time to time in the State of New York.
Section 2. Representations and Warranties. The Company
represents and warrants to the Revolving Credit Lenders and the Agent that:
(a) The Company is the sole beneficial owner of the Collateral
and no Lien exists or will exist upon the Collateral at any time (and
no right or option to acquire the same exists in favor of any other
Person), except for Liens permitted under Section 8.06 of the Credit
Agreement and except for the pledge and security interest in favor of
the Agent for the benefit of the Lenders created or provided for
herein, which pledge and security interest constitute a first priority
perfected pledge and security interest in and to all of the Collateral
(other than Intellectual Property registered or otherwise located
outside of the United States of America).
(b) The Pledged Stock represented by the certificates
identified in Annex 1 hereto is, and all other Pledged Stock in which
the Company shall hereafter grant a security interest pursuant to
Section 3 hereof will be, duly authorized, validly existing, fully paid
and non-assessable and none of such Pledged Stock is or will be subject
to any contractual restriction, or any restriction under the charter or
by-laws of the respective Issuer, upon the transfer of such Pledged
Stock (except for any such restriction contained herein or in the
Credit Agreement).
(c) The Pledged Stock represented by the certificates
identified in Annex 1 hereto constitutes at least 65% of the issued and
outstanding shares of capital stock of any class of the Issuers
beneficially owned by the Company on the date hereof (whether or not
registered in the name of the Company) and said Annex 1 correctly
identifies, as at the date hereof, the respective Issuers of such
Pledged Stock, the respective class and par value of the shares
comprising such Pledged Stock and the respective number of shares (and
registered owners thereof) represented by each such certificate.
(d) Annex 2, 3 and 4 hereto set forth a complete and correct
list of all Copyrights, Patents and Trademarks owned by the Company on
the date hereof; except pursuant to licenses and other user agreements
entered into by the Company in the ordinary course of business, which
are listed in Annex 5 hereto, the Company owns and possesses the right
to use, and has done nothing to authorize or enable any other Person to
use, any
-4-
<PAGE>
Copyright, Patent or Trademark listed in said Annex 2, 3 and 4, and
all registrations listed in said Annex 2, 3 and 4 are valid and in
full force and effect; except as may be set forth in said Annex 5, the
owns and possesses the right to use all Copyrights, Patents and
Trademarks.
(e) Annex 5 hereto sets forth a complete and correct list of
all licenses and other user agreements included in the Intellectual
Property on the date hereof.
(f) To the Company's knowledge, (i) except as set forth in
Annex 5 hereto, there is no violation by others of any right of the
Company with respect to any Copyright, Patent or Trademark listed in
Annex 2, 3 and 4 hereto and (ii) the Company is not infringing in any
respect upon any Copyright, Patent or Trademark of any other Person;
and no proceedings have been instituted or are pending against the
Company or, to the Company's knowledge, threatened, and no claim
against the Company has been received by the Company, alleging any such
violation, except as may be set forth in said Annex 5.
(g) The Company does not own any Trademarks registered in the
United States of America to which the last sentence of the definition
of Trademark Collateral applies.
(h) Any goods now or hereafter produced by the Company or any
of its Subsidiaries included in the Collateral have been and will be
produced in compliance with the requirements of the Fair Labor
Standards Act, as amended.
(i) the Pledged Membership Interests, and all other Pledged
Membership Interests in which the Company shall hereafter grant a
security interest pursuant to Section 3 hereof, will be duly
authorized, validly existing, fully paid and non-assessable and none of
such Pledged Membership Interests is or will be subject to any
contractual restriction, upon the transfer of such Pledged Membership
Interests (except for any such restriction contained herein).
(j) the Pledged Membership Interests constitute all of the
ownership interests in the LLC Issuers held by the Company on the date
hereof (whether or not registered in the name of the Company), and the
Company is the registered owner of all such ownership interests."
Section 3. Collateral. As collateral security for the prompt
payment in full when due (whether at stated maturity, by acceleration or
otherwise) of the Secured Obligations, the Company hereby pledges and grants to
the Administrative Agent, for the benefit of the Lenders as hereinafter
provided, a security interest in all of the Company's right, title and interest
in the following property, whether now owned by the Company or hereafter
acquired and whether now existing or hereafter coming into existence (all being
collectively referred to herein as "Collateral"):
-5-
<PAGE>
(a) the shares of capital stock of the Issuers represented by
the certificates identified in Annex 1 hereto and, subject to the
limitation set forth in Section 5.04(a)(1) hereof, all other shares of
capital stock of whatever class of the Issuers, now or hereafter owned
by the Company, in each case together with the certificates evidencing
the same (collectively, the "Pledged Stock");
(b) all shares, securities, moneys or property representing a
dividend on any of the Pledged Stock, or representing a distribution or
return of capital upon or in respect of the Pledged Stock, or resulting
from a split-up, revision, reclassification or other like change of the
Pledged Stock or otherwise received in exchange therefor, and any
subscription warrants, rights or options issued to the holders of, or
otherwise in respect of, the Pledged Stock;
(c) without affecting the obligations of the Company under any
provision prohibiting such action hereunder or under the Credit
Agreement, in the event of any consolidation or merger in which the
Issuer is not the surviving corporation, all shares of each class of
the capital stock of the successor corporation formed by or resulting
from such consolidation or merger (the Pledged Stock, together with all
other certificates, shares, securities, properties or moneys as may
from time to time be pledged hereunder pursuant to clause (a) or (b)
above and this clause (c) being herein collectively called the "Stock
Collateral");
(d) all accounts and general intangibles (each as defined in
the Uniform Commercial Code) of the Company constituting any right to
the payment of money, including (but not limited to) all moneys due and
to become due to the Company in respect of any loans or advances or for
Inventory or Equipment or other goods sold or leased or for services
rendered, all moneys due and to become due to the Company under any
guarantee (not including a letter of credit) of the purchase price of
Inventory or Equipment sold by the Company and all tax refunds (such
accounts, general intangibles and moneys due and to become due being
herein called collectively "Accounts");
(e) all instruments, chattel paper or letters of credit (each
as defined in the Uniform Commercial Code) of the Company evidencing,
representing, arising from or existing in respect of, relating to,
securing or otherwise supporting the payment of, any of the Accounts,
including (but not limited to) promissory notes, drafts, bills of
exchange and trade acceptances (herein collectively called
"Instruments");
(f) all inventory (as defined in the Uniform Commercial Code)
of the Company, including Motor Vehicles held by the Company for lease
(including lease to Subsidiaries of the Company), fuel, tires and other
spare parts, all goods obtained by the Company in exchange for such
inventory, and any products made or processed from such inventory
including all substances, if any, commingled therewith or added thereto
(herein collectively called "Inventory");
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(g) all Intellectual Property and all other accounts or
general intangibles of the Company not constituting Intellectual
Property or Accounts;
(h) all equipment (as defined in the Uniform Commercial Code)
of the Company, including all Motor Vehicles (herein collectively
called "Equipment");
(i) each contract and other agreement of the Company relating
to the sale or other disposition of Inventory or Equipment;
(j) all documents of title (as defined in the Uniform
Commercial Code) or other receipts of the Company covering, evidencing
or representing Inventory or Equipment (herein collectively called
"Documents");
(k) all rights, claims and benefits of the Company against any
Person arising out of, relating to or in connection with Inventory or
Equipment purchased by the Company, including, without limitation, any
such rights, claims or benefits against any Person storing or
transporting such Inventory or Equipment;
(l) the balance from time to time in the Collateral Account;
(m) the ownership interests of the Company in the LLC Issuers
identified in Annex 7 hereto, all certificates (if any) representing or
evidencing such ownership interests, and all right, title and interest
in, to and under the limited liability company agreements (the "LLC
Agreements") of such LLC Issuers (including without limitation all of
the right, title and interest (if any) as a member to participate in
the operation or management of the LLC Issuers and all of its ownership
interests under the LLC Agreements), and all present and future rights
of the Company to receive payment of money or other distribution of
payments arising out of or in connection with its ownership interests
and its rights under the LLC Agreements, now or hereafter owned by the
Company, in each case together with any certificates evidencing the
same (collectively, the "Pledged Membership Interests" and, together
with the Collateral pledged hereunder pursuant to clauses (n) through
(r) being herein collectively called the "LLC Collateral");
(n) any and all moneys, and any and all rights to receive such
moneys, due or to become due to the Company now or in the future by way
of a distribution made to the Company in its capacity as a member of
any of the LLC Issuers or otherwise pursuant to the LLC Agreements;
(o) any other property or assets, and any and all rights to
receive such property or assets, of any of the LLC Issuers to which the
Company now or in the future may be entitled in its capacity as a
member of such LLC Issuers;
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(p) any other claim which the Company now has or may in the
future acquire in its capacity as a member of any of the LLC Issuers
against any such LLC Issuer and its property or arising out of or for
breach of or default under the LLC Agreements or otherwise relating to
the property of any of the LLC Issuers;
(q) all rights to terminate, amend, supplement, modify or
waive performance under the LLC Agreements, to perform thereunder and
to compel performance and to otherwise exercise all remedies
thereunder;
(r) all other tangible and intangible property of the Company,
including, without limitation, all proceeds, products, offspring,
accessions, rents, profits, income, benefits, substitutions and
replacements of and to any of the property of the Company described in
the preceding clauses of this Section 3 (including, without limitation,
any proceeds of insurance thereon) and, to the extent related to any
property described in said clauses or such proceeds, products and
accessions, all books, correspondence, credit files, records, invoices
and other papers, including without limitation all tapes, cards,
computer runs and other papers and documents in the possession or under
the control of the Company or any computer bureau or service company
from time to time acting for the Company.
Section 4. Cash Proceeds of Collateral.
4.01 Collateral Account. The Administrative Agent may
establish with Chase a cash collateral account (the "Collateral Account"), which
may be a "securities account" (within the meaning of Section 8-501 of the
Uniform Commercial Code), in the name and under the sole control of the
Administrative Agent into which there shall be deposited from time to time the
cash proceeds of any of the Collateral (including proceeds of insurance thereon)
required to be delivered to the Administrative Agent pursuant hereto and into
which the Company may from time to time deposit any additional amounts which it
wishes to pledge to the Administrative Agent for the benefit of the Lenders as
additional collateral security hereunder. The balance from time to time in the
Collateral Account shall constitute part of the Collateral hereunder and shall
not constitute payment of the Secured Obligations until applied as hereinafter
provided. Except as expressly provided in the next sentence, the Administrative
Agent shall remit the collected balance outstanding to the credit of the
Collateral Account to or upon the order of the Company as the Company shall from
time to time instruct; provided that the Net Available Proceeds from
Dispositions deposited in the Collateral Account (but not the investment
earnings thereof) shall remain in the Collateral Account until withdrawn as
permitted or required by Section 2.10(c) of the Credit Agreement. However, at
any time following the occurrence and during the continuance of an Event of
Default, the Administrative Agent may (and, if instructed by the Lenders as
specified in Section 10.03 of the Credit Agreement, shall) in its (or their)
discretion apply or cause to be applied (subject to collection) the balance from
time to time outstanding to the credit of the Collateral Account to the payment
of the Secured Obligations in the manner specified in Section 5.09 hereof. The
balance from time to time in the Collateral
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Account shall be subject to withdrawal only as provided herein and in Section
2.10(c) of the Credit Agreement.
4.02 Proceeds of Accounts. At any time after the occurrence
and during the continuance of an Event of Default, the Company shall, upon the
request of the Administrative Agent, instruct all account debtors and other
Persons obligated in respect of all Accounts to make all payments in respect of
the Accounts either (a) directly to the Administrative Agent (by instructing
that such payments be remitted to a post office box which shall be in the name
and under the control of the Administrative Agent) or (b) to one or more other
banks in the United States of America (by instructing that such payments be
remitted to a post office box which shall be in the name and under the control
of the Administrative Agent) under arrangements, in form and substance
satisfactory to the Administrative Agent pursuant to which the Company shall
have irrevocably instructed such other bank (and such other bank shall have
agreed) to remit all proceeds of such payments directly to the Administrative
Agent for deposit into the Collateral Account. All payments made to the
Administrative Agent, as provided in the preceding sentence, shall be
immediately deposited in the Collateral Account. In addition to the foregoing,
the Company agrees that, at any time after the occurrence and during the
continuance of an Event of Default, if the proceeds of any Collateral hereunder
(including the payments made in respect of Accounts) shall be received by it,
the Company shall as promptly as possible deposit such proceeds into the
Collateral Account. Until so deposited, all such proceeds shall be held in trust
by the Company for and as the property of the Administrative Agent and shall not
be commingled with any other funds or property of the Company.
4.03 Investment of Balance in Collateral Account. Amounts on
deposit in the Collateral Account shall be invested from time to time in such
Permitted Investments as the Company (or, after the occurrence and during the
continuance of a Default, the Administrative Agent) shall determine, which
Permitted Investments shall if the Collateral Account is a "securities account"
(within the meaning of Section 8-501 of the Uniform Commercial Code) be credited
to the Collateral Account and otherwise shall be held in the name and be under
the control of the Administrative Agent and may be credited to the Collateral
Account; provided that (i) at any time after the occurrence and during the
continuance of an Event of Default, the Administrative Agent may (and, if
instructed by the Lenders as specified in Section 10.03 of the Credit Agreement,
shall) in its (or their) discretion at any time and from time to time elect to
liquidate any such Permitted Investments and to apply or cause to be applied the
proceeds thereof to the payment of the Secured Obligations in the manner
specified in Section 5.09 hereof and (ii) if requested by the Company, such
Permitted Investments may be held in the name and under the control of one or
more of the Lenders (and in that connection each Lender, pursuant to Section
10.10 of the Credit Agreement, has agreed that such Permitted Investments shall
be held by such Lender as a collateral sub-Administrative Agent for the
Administrative Agent hereunder).
4.04 Cover for Letter of Credit Liabilities. Amounts deposited
into the Collateral Account as cover for Letter of Credit Liabilities under the
Credit Agreement pursuant to Section 2.10(f) or Section 9 thereof shall be held
by the Administrative Agent in a separate
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sub-account (designated "Letter of Credit Liabilities Sub-Account") and all
amounts held in such sub-account shall constitute collateral security first for
the Letter of Credit Liabilities outstanding from time to time and second as
collateral security for the other Secured Obligations hereunder.
Section 5. Further Assurances; Remedies. In furtherance of the
grant of the pledge and security interest pursuant to Section 3 hereof, the
Company hereby agrees with each Lender and the Administrative Agent as follows:
5.01 Delivery and Other Perfection. The Company shall:
(a) (i) with respect to any Pledged Membership Interests
acquired, received or hereafter held by the Company, take such action
as the Agent shall deem necessary or appropriate to perfect the pledge
and security interest granted by Section 3 of this Agreement in such
Pledged Membership Interests, including without limitation (a) to the
extent that they constitute Securities (as defined in Section
8-102(a)(15) of the Uniform Commercial Code) which are not represented
by a certificate, cause the LLC Issuer of such Pledged Membership
Interests to either register the Agent as the registered owner thereof
or agree that it will comply with Instructions (as defined in Section
8-102(a)(12) of the Uniform Commercial Code) originated by the Agent
with respect to such Pledged Membership Interests without further
consent by the Company and (b) to the extent that they constitute
Securities (as defined in Section 8-102(a)(15) of the Uniform
Commercial Code) which are represented by a certificate, deliver to the
Agent any such certificates representing the Pledged Membership
Interests and (ii) subject to Section 5.04(a)(1) hereof, if any of the
above-described shares, securities, moneys or property required to be
pledged by the Company under clauses (a), (b) and (c) of Section 3
hereof are received by the Company, forthwith either (x) transfer and
deliver to the Administrative Agent such shares or securities so
received by the Company (together with the certificates for any such
shares and securities duly endorsed in blank or accompanied by undated
stock powers duly executed in blank), all of which thereafter shall be
held by the Administrative Agent, pursuant to the terms of this
Agreement, as part of the Collateral or (y) take such other action as
the Administrative Agent shall deem necessary or appropriate to duly
record the Lien created hereunder in such shares, securities, moneys or
property in said clauses (a), (b) and (c);
(b) deliver and pledge to the Administrative Agent any and all
Instruments, endorsed and/or accompanied by such instruments of
assignment and transfer in such form and substance as the
Administrative Agent may request; provided, that so long as no Default
shall have occurred and be continuing, the Company may retain for
collection in the ordinary course any Instruments received by the
Company in the ordinary course of business and the Administrative Agent
shall, promptly upon request of the Company, make appropriate
arrangements for making any other Instrument pledged by the Company
available to the Company for purposes of presentation, collection or
renewal
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(any such arrangement to be effected, to the extent deemed appropriate
by the Administrative Agent, against trust receipt or like document);
(c) give, execute, deliver, file and/or record any financing
statement, notice, instrument, document, agreement or other papers that
may be necessary or desirable (in the judgment of the Administrative
Agent) to create, preserve, perfect or validate the security interest
granted pursuant hereto or to enable the Administrative Agent to
exercise and enforce its rights hereunder with respect to such pledge
and security interest, including, without limitation, causing any or
all of the Stock Collateral to be transferred of record into the name
of the Administrative Agent or its nominee (and the Administrative
Agent agrees that if any Stock Collateral is transferred into its name
or the name of its nominee, the Administrative Agent will thereafter
promptly give to the Company copies of any notices and communications
received by it with respect to the Stock Collateral), provided that
notices to account debtors in respect of any Accounts or Instruments
shall be subject to the provisions of clause (i) below;
(d) from time to time as requested by any Lender, cause the
Administrative Agent to be listed as the lienholder of any Equipment
covered by a certificate of title or ownership and within 120 days of
such request deliver evidence of the same to the Administrative Agent;
(e) keep full and accurate books and records relating to the
Collateral, and stamp or otherwise mark such books and records in such
manner as the Administrative Agent may reasonably require in order to
reflect the security interests granted by this Agreement;
(f) furnish to the Administrative Agent from time to time
(but, unless a Default shall have occurred and be continuing, no more
frequently than quarterly) statements and schedules further identifying
and describing the Copyright Collateral, the Patent Collateral and the
Trademark Collateral and such other reports in connection with the
Copyright Collateral, the Patent Collateral and the Trademark
Collateral, as the Administrative Agent may reasonably request, all in
reasonable detail;
(g) promptly upon request of the Administrative Agent,
following receipt by the Administrative Agent of any statements,
schedules or reports pursuant to clause (f) above, modify this
Agreement by amending Annex 2, 3 and/or 4 hereto to include any
Copyright, Patent or Trademark which becomes part of the Collateral
under this Agreement;
(h) permit representatives of the Administrative Agent, upon
reasonable notice, at any time during normal business hours to inspect
and make abstracts from its books and records pertaining to the
Collateral, and permit representatives of the Administrative Agent to
be present at the Company's place of business to receive copies of all
communications and remittances relating to the Collateral, and forward
copies of any
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notices or communications received by the Company with respect to the
Collateral, all in such manner as the Administrative Agent may
require;
(i) upon the occurrence and during the continuance of any Event
of Default, upon request of the Administrative Agent, promptly notify
(and the Company hereby authorizes the Administrative Agent so to
notify) each account debtor in respect of any Accounts or Instruments
that such Collateral has been assigned to the Administrative Agent
hereunder, and that any payments due or to become due in respect of
such Collateral are to be made directly to the Administrative Agent.
5.02 Other Financing Statements and Liens. Except as otherwise
permitted under Section 8.06 of the Credit Agreement, without the prior written
consent of the Administrative Agent (granted with the authorization of the
Lenders as specified in Section 10.09 of the Credit Agreement), the Company
shall not file or suffer to be on file, or authorize or permit to be filed or to
be on file, in any jurisdiction, any financing statement or like instrument with
respect to the Collateral in which the Administrative Agent is not named as the
sole secured party for the benefit of the Lenders.
5.03 Preservation of Rights. The Administrative Agent shall
not be required to take steps necessary to preserve any rights against prior
parties to any of the Collateral.
5.04 Special Provisions Relating to Certain Collateral.
(a) Stock Collateral.
(1) The Company will cause the Stock Collateral to constitute
at all times 100% of the total number of shares of each class of capital stock
of each Issuer then outstanding; provided that if any such Issuer is organized
under the laws of jurisdiction other than the United States of America or a
State thereof, the Company need only cause the Stock Collateral of such Issuer
to constitute not less than 65% of the total number of shares of each class of
capital stock of such Issuer then outstanding.
(2) So long as no Event of Default shall have occurred and be
continuing, the Company shall have the right to exercise all voting, consensual
and other powers of ownership pertaining to the Stock Collateral for all
purposes not inconsistent with the terms of this Agreement, the Credit
Agreement, the Notes or any other instrument or agreement referred to herein or
therein, provided that the Company agrees that it will not vote the Stock
Collateral in any manner that is inconsistent with the terms of this Agreement,
the Credit Agreement, the Notes or any such other instrument or agreement; and
the Administrative Agent shall execute and deliver to the Company or cause to be
executed and delivered to the Company all such proxies, powers of attorney,
dividend and other orders, and all such instruments, without recourse, as the
Company may reasonably request for the purpose of enabling the Company to
exercise the rights and powers which it is entitled to exercise pursuant to this
Section 5.04(a)(2).
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(3) Unless and until an Event of Default has occurred and is
continuing, the Company shall be entitled to receive and retain any dividends on
the Stock Collateral paid in cash out of earned surplus.
(4) If any Event of Default shall have occurred, then so long
as such Event of Default shall continue, and whether or not the Administrative
Agent or any Lender exercises any available right to declare any Secured
Obligations due and payable or seeks or pursues any other relief or remedy
available to it under applicable law or under this Agreement, the Credit
Agreement, the Notes or any other agreement relating to such Secured
Obligations, all dividends and other distributions on the Stock Collateral shall
be paid directly to the Administrative Agent and retained by it in the
Collateral Account as part of the Stock Collateral, subject to the terms of this
Agreement, and, if the Administrative Agent shall so request in writing, the
Company agrees to execute and deliver to the Administrative Agent appropriate
additional dividend, distribution and other orders and documents to that end,
provided that if such Event of Default is cured, any such dividend or
distribution theretofore paid to the Administrative Agent shall, upon request of
the Company (except to the extent theretofore applied to the Secured
Obligations), be returned by the Administrative Agent to the Company.
(b) Intellectual Property.
(1) For the purpose of enabling the Administrative Agent to
exercise rights and remedies under Section 5.05 hereof at such time as the
Administrative Agent shall be lawfully entitled to exercise such rights and
remedies, and for no other purpose, the Company hereby grants to the
Administrative Agent, to the extent assignable, an irrevocable, non-exclusive
license (exercisable without payment of royalty or other compensation to the
Company) to use, assign, license or sublicense any of the Intellectual Property
now owned or hereafter acquired by the Company, wherever the same may be
located, including in such license reasonable access to all media in which any
of the licensed items may be recorded or stored and to all computer programs
used for the compilation or printout thereof.
(2) Notwithstanding anything contained herein to the contrary,
but subject to the provisions of Section 8.05 of the Credit Agreement which
limit the right of the Company to dispose of its property, so long as no Event
of Default shall have occurred and be continuing, the Company will be permitted
to exploit, use, enjoy, protect, license, sublicense, assign, sell, dispose of
or take other actions with respect to the Intellectual Property in the ordinary
course of the business of the Company. In furtherance of the foregoing, unless
an Event of Default shall have occurred and be continuing the Administrative
Agent shall from time to time, upon the request of the Company, execute and
deliver any instruments, certificates or other documents, in the form so
requested, which the Company shall have certified are appropriate (in its
judgment) to allow it to take any action permitted above (including
relinquishment of the license provided pursuant to clause (1) immediately above
as to any specific Intellectual Property). Further, upon the payment in full of
all of the Secured Obligations and cancellation or termination of the
Commitments and Letter of Credit Liabilities or earlier expiration of this
Agreement or release of the Collateral, the Administrative Agent shall grant
back to the Company the license granted
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pursuant to clause (1) immediately above. The exercise of rights and remedies
under Section 5.05 hereof by the Administrative Agent shall not terminate the
rights of the holders of any licenses or sublicenses theretofore granted by the
Company in accordance with the first sentence of this clause (2).
(c) LLC Collateral.
(1) The Company will cause the LLC Collateral to constitute at
all times 100% of the aggregate ownership and membership interests of each LLC
Issuer then outstanding.
(2) So long as no Event of Default shall have occurred and be
continuing, the Company shall have the right to exercise all voting, consensual
and other powers of ownership pertaining to the LLC Collateral for all purposes
not inconsistent with the terms of this Agreement, the Credit Agreement, the
Notes or any other instrument or agreement referred to herein or therein,
provided that the Company agrees that it will not vote the LLC Collateral in any
manner that is inconsistent with the terms of this Agreement, the Credit
Agreement, the Notes or any such other instrument or agreement; and the Agent
shall execute and deliver to the Company or cause to be executed and delivered
to the Company all such proxies, powers of attorney, dividend and other orders,
and all such instruments, without recourse, as the Company may reasonably
request for the purpose of enabling the Company to exercise the rights and
powers that they are entitled to exercise pursuant to this Section 5.04(c).
(3) Unless and until an Event of Default has occurred and is
continuing, the Company shall be entitled to receive and retain any
distributions and dividends payable in respect of the LLC Collateral.
(4) If any Event of Default shall have occurred, then so long
as such Event of Default shall continue, and whether or not the Agent or any
Lender exercises any available right to declare any Secured Obligations due and
payable or seeks or pursues any other relief or remedy available to it under
applicable law or under this Agreement, the Credit Agreement, the Notes or any
other agreement relating to such Secured Obligations, all distributions and
dividends on the LLC Collateral, whether consisting of cash, checks and other
near-cash items, shall be paid directly to the Agent and retained by it as part
of the Collateral, subject to the terms of this Agreement, and, if the Agent
shall so request in writing, the Company agrees to execute and deliver to the
Agent appropriate additional dividend, distribution and other orders and
documents to that end, and if the Company shall receive any such amounts, it
shall hold the same in trust for the Agent and deliver the same forthwith to the
Agent in the exact form received, duly indorsed by the Company to the Agent, if
required; provided that if such Event of Default is cured, any such dividend or
distribution theretofore paid to the Agent shall, upon request of the Company
(except to the extent theretofore applied to the Secured Obligations), be
returned by the Agent to the Company.
5.05 Events of Default, Etc. During the period during which an
Event of Default shall have occurred and be continuing:
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(a) the Company shall, at the request of the Administrative
Agent, assemble the Collateral owned by it at such place or places,
reasonably convenient to both the Administrative Agent and the Company,
designated in the Administrative Agent's request;
(b) the Administrative Agent may make any reasonable
compromise or settlement deemed desirable with respect to any of the
Collateral and may extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of, any of the Collateral;
(c) the Administrative Agent shall have all of the rights and
remedies with respect to the Collateral of a secured party under the
Uniform Commercial Code (whether or not said Code is in effect in the
jurisdiction where the rights and remedies are asserted) and such
additional rights and remedies to which a secured party is entitled
under the laws in effect in any jurisdiction where any rights and
remedies hereunder may be asserted, including, without limitation, the
right, to the maximum extent permitted by law, to exercise all voting,
consensual and other powers of ownership pertaining to the Collateral
as if the Administrative Agent were the sole and absolute owner thereof
(and the Company agrees to take all such action as may be appropriate
to give effect to such right);
(d) the Administrative Agent in its discretion may, in its
name or in the name of the Company or otherwise, demand, sue for,
collect or receive any money or property at any time payable or
receivable on account of or in exchange for any of the Collateral, but
shall be under no obligation to do so; and
(e) the Administrative Agent may, upon ten Business Days'
prior written notice to the Company of the time and place, with respect
to the Collateral or any part thereof which shall then be or shall
thereafter come into the possession, custody or control of the
Administrative Agent, the Lenders or any of their respective agents,
sell, lease, assign or otherwise dispose of all or any part of such
Collateral, at such place or places as the Administrative Agent deems
best, and for cash or for credit or for future delivery (without
thereby assuming any credit risk), at public or private sale, without
demand of performance or notice of intention to effect any such
disposition or of the time or place thereof (except such notice as is
required above or by applicable statute and cannot be waived), and the
Administrative Agent or any Lender or anyone else may be the purchaser,
lessee, assignee or recipient of any or all of the Collateral so
disposed of at any public sale (or, to the extent permitted by law, at
any private sale) and thereafter hold the same absolutely, free from
any claim or right of whatsoever kind, including any right or equity of
redemption (statutory or otherwise), of the Company, any such demand,
notice and right or equity being hereby expressly waived and released.
In the event of any sale, assignment, or other disposition of any of
the Trademark Collateral, the goodwill connected with and symbolized by
the Trademark Collateral subject to such disposition
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shall be included, and the Company shall supply to the Administrative
Agent or its designee, for inclusion in such sale, assignment or other
disposition, all Intellectual Property relating to such Trademark
Collateral. The Administrative Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed
for the sale, and such sale may be made at any time or place to which
the sale may be so adjourned.
The proceeds of each collection, sale or other disposition under this Section
5.05, including by virtue of the exercise of the license granted to the
Administrative Agent in Section 5.04(b) hereof, shall be applied in accordance
with Section 5.09 hereof.
The Company recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, and applicable state
securities laws, the Administrative Agent may be compelled, with respect to any
sale of all or any part of the Collateral, to limit purchasers to those who will
agree, among other things, to acquire the Collateral for their own account, for
investment and not with a view to the distribution or resale thereof. The
Company acknowledges that any such private sales may be at prices and on terms
less favorable to the Administrative Agent than those obtainable through a
public sale without such restrictions, and, notwithstanding such circumstances,
agrees that any such private sale shall be deemed to have been made in a
commercially reasonable manner and that the Administrative Agent shall have no
obligation to engage in public sales and no obligation to delay the sale of any
Collateral for the period of time necessary to permit the Administrative Agent
or issuer thereof to register it for public sale.
5.06 Deficiency. If the proceeds of sale, collection or other
realization of or upon the Collateral pursuant to Section 5.05 hereof are
insufficient to cover the costs and expenses of such realization and the payment
in full of the Secured Obligations, the Company shall remain liable for any
deficiency.
5.07 Removals, Etc. Without at least 30 days' prior written
notice to the Administrative Agent, the Company shall not (i) maintain any of
its books and records with respect to the Collateral at any office or maintain
its principal place of business at any place, or permit any Inventory or
Equipment to be located anywhere, other than at the address indicated beneath
the signature of the Company to the Credit Agreement or at one of the locations
identified in Part A of Annex 6 hereto or in transit from one of such locations
to another or (ii) change its name, or the name under which it does business,
from the name shown on the signature pages hereto; provided, however, that the
Company may do business in the states and under the names specified in Part B of
Annex 6 hereto.
5.08 Private Sale. The Administrative Agent and the Lenders
shall incur no liability as a result of the sale of the Collateral, or any part
thereof, at any private sale pursuant to Section 5.05 hereof conducted in a
commercially reasonable manner. The Company hereby waives any claims against the
Administrative Agent or any Lender arising by reason of the fact that the price
at which the Collateral may have been sold at such a private sale was less than
the
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price which might have been obtained at a public sale or was less than the
aggregate amount of the Secured Obligations, even if the Administrative Agent
accepts the first offer received and does not offer the Collateral to more than
one offeree.
5.09 Application of Proceeds. Except as otherwise herein
expressly provided and except as provided below in this Section 5.09, the
proceeds of any collection, sale or other realization of all or any part of the
Collateral pursuant hereto, and any other cash at the time held by the
Administrative Agent under Section 4 hereof or this Section 5, shall be applied
by the Administrative Agent:
First, to the payment of the costs and expenses of such
collection, sale or other realization, including reasonable
out-of-pocket costs and expenses of the Administrative Agent and the
reasonable fees and expenses of its agents and counsel, and all
reasonable expenses incurred and advances made by the Administrative
Agent in connection therewith;
Next, to the payment in full of the Secured Obligations, in
each case equally and ratably in accordance with the respective amounts
thereof then due and owing or as the Lenders holding the same may
otherwise agree; and
Finally, to the payment to the Company, or its successors or
assigns, or as a court of competent jurisdiction may direct, of any
surplus then remaining.
Notwithstanding the foregoing, the proceeds of any cash or other amounts held in
the "Letter of Credit Liabilities Sub-Account" of the Collateral Account
pursuant to Section 4.04 hereof shall be applied first to the Letter of Credit
Liabilities outstanding from time to time and second to the other Secured
Obligations in the manner provided above in this Section 5.09.
As used in this Section 5, "proceeds" of Collateral shall mean cash, securities
and other property realized in respect of, and distributions in kind of,
Collateral, including any thereof received under any reorganization, liquidation
or adjustment of debt of the Company or any issuer of or obligor on any of the
Collateral.
5.10 Attorney-in-Fact. Without limiting any rights or powers
granted by this Agreement to the Administrative Agent while no Event of Default
has occurred and is continuing, upon the occurrence and during the continuance
of any Event of Default the Administrative Agent is hereby appointed the
attorney-in-fact of the Company for the purpose of carrying out the provisions
of this Section 5 and taking any action and executing any instruments which the
Administrative Agent may deem necessary or advisable to accomplish the purposes
hereof, which appointment as attorney-in-fact is irrevocable and coupled with an
interest. Without limiting the generality of the foregoing, so long as the
Administrative Agent shall be entitled under this Section 5 to make collections
in respect of the Collateral, the Administrative Agent shall have the right and
power to receive, endorse and collect all checks made payable to
-17-
<PAGE>
the order of the Company representing any dividend, payment or other
distribution in respect of the Collateral or any part thereof and to give full
discharge for the same.
5.11 Perfection. Prior to or concurrently with the execution
and delivery of this Agreement, the Company shall (i) file such financing
statements and other documents in such offices as the Administrative Agent may
request to perfect the security interests granted by Section 3 of this
Agreement, (ii) cause the Administrative Agent (to the extent requested by any
Lender) to be listed as the lienholder on all certificates of title or ownership
relating to Motor Vehicles owned by the Company, (iii) deliver to the
Administrative Agent all certificates identified in Annex 1 hereto, accompanied
by undated stock powers duly executed in blank and (iv) in the case of the
Pledged Membership Interests, take such action as the Agent shall deem necessary
or appropriate to perfect the pledge and security interest granted by Section 3
of this Agreement in such Pledged Membership Interests, including without
limitation (x) to the extent that they constitute Securities (as defined in
Section 8-102(a)(15) of the Uniform Commercial Code) which are not represented
by a certificate, cause the LLC Issuer of such Pledged Membership Interests to
either register the Agent as the registered owner thereof or agree that it will
comply with Instructions (as defined in Section 8-102(a)(12) of the Uniform
Commercial Code) originated by the Agent with respect to such Pledged Membership
Interests without further consent by the Company and (y) to the extent that they
constitute Securities (as defined in Section 8-102(a)(15) of the Uniform
Commercial Code) which are represented by a certificate, deliver to the Agent
any such certificates representing the Pledged Membership Interests.
5.12 Termination. When all Secured Obligations shall have been
paid in full and the Commitments of the Lenders under the Credit Agreement and
all Letter of Credit Liabilities shall have expired or been terminated, this
Agreement shall terminate, and the Administrative Agent shall forthwith cause to
be assigned, transferred and delivered, against receipt but without any
recourse, warranty or representation whatsoever, any remaining Collateral and
money received in respect thereof, to or on the order of the Company and to be
released and canceled all licenses and rights referred to in Section 5.04(b)
hereof. The Administrative Agent shall also execute and deliver to the Company
upon such termination such Uniform Commercial Code termination statements,
certificates for terminating the Liens on the Motor Vehicles and such other
documentation as shall be reasonably requested by the Company to effect the
termination and release of the Liens on the Collateral.
5.13 Expenses. The Company agrees to pay to the Administrative
Agent all reasonable out-of-pocket expenses (including reasonable expenses for
legal services of every kind) of, or incident to, the enforcement of any of the
provisions of this Section 5, or performance by the Administrative Agent of any
obligations of the Company in respect of the Collateral which the Company has
failed or refused to perform, or any actual or attempted sale, or any exchange,
enforcement, collection, compromise or settlement in respect of any of the
Collateral, and for the care of the Collateral and defending or asserting rights
and claims of the Administrative Agent in respect thereof, by litigation or
otherwise, including expenses of
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<PAGE>
insurance, and all such expenses shall be Secured Obligations to the
Administrative Agent secured under Section 3 hereof.
5.14 Further Assurances. The Company agrees that, from time to
time upon the written request of the Administrative Agent, the Company will
execute and deliver such further documents and do such other acts and things as
the Administrative Agent may reasonably request in order fully to effect the
purposes of this Agreement.
5.15 Release of Motor Vehicles. So long as no Event of Default
shall have occurred and be continuing, upon the request of the Company, the
Administrative Agent shall execute and deliver to the Company such instruments
as the Company shall reasonably request to remove the notation of the
Administrative Agent as lienholder on any certificate of title for any Motor
Vehicle; provided that any such instruments shall be delivered, and the release
effective only upon receipt by the Administrative Agent of a certificate from
the Company stating that the Motor Vehicle the lien on which is to be released
is to be sold or has suffered a casualty loss (with title thereto passing to the
casualty insurance company therefor in settlement of the claim for such loss).
Section 6. Miscellaneous.
6.01 No Waiver. No failure on the part of the Administrative
Agent or any of its agents to exercise, and no course of dealing with respect
to, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise by the
Administrative Agent or any of its agents of any right, power or remedy
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies herein are cumulative and are not
exclusive of any remedies provided by law.
6.02 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the law of the State of New York.
6.03 Notices. All notices, requests, consents and demands
hereunder shall be in writing and telexed, telecopied or delivered to the
intended recipient at its "Address for Notices" specified pursuant to Section
11.02 of the Credit Agreement and shall be deemed to have been given at the
times specified in said Section 11.02.
6.04 Waivers, Etc. The terms of this Agreement may be waived,
altered or amended only by an instrument in writing duly executed by the Company
and the Administrative Agent (with the consent of the Lenders as specified in
Section 10.09 of the Credit Agreement). Any such amendment or waiver shall be
binding upon the Administrative Agent and each Lender, each holder of any of the
Secured Obligations and the Company.
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<PAGE>
6.05 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the respective successors and assigns of the
Company, the Administrative Agent, the Lenders and each holder of any of the
Secured Obligations (provided, however, that the Company shall not assign or
transfer its rights hereunder without the prior written consent of the
Administrative Agent).
6.06 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and either of the parties hereto may execute this Agreement by
signing any such counterpart.
6.07 Agents. The Administrative Agent may employ agents and
attorneys-in-fact in connection herewith and shall not be responsible for the
negligence or misconduct of any such agents or attorneys-in-fact selected by it
in good faith.
6.08 Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Administrative
Agent and the Lenders in order to carry out the intentions of the parties hereto
as nearly as may be possible and (ii) the invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Security Agreement to be duly executed and delivered as of the day and year
first above written.
BE AEROSPACE, INC.
By
--------------------------------
Title:
THE CHASE MANHATTAN BANK
as Administrative Agent
By
--------------------------------
Title:
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<PAGE>
<TABLE>
<CAPTION>
ANNEX 1
PLEDGED STOCK
[See Section 2(b) and (c).]
- ------------------------------- ------------------- ------------------------ ------------------------------------
Certificate Nos.
Issuer Registered Owner Number of Shares
- ------------------------------- ------------------- ------------------------ ------------------------------------
- ------------------------------- ------------------- ------------------------ ------------------------------------
<S> <C> <C> <C>
BE Avionics, Inc. (now
Flight Equipment and known as BE Aerospace, 325,000 ordinary shares ,(pound)1 par
Engineering Limited 26 Inc.) value
- ------------------------------- ------------------- ------------------------ ------------------------------------
- ------------------------------- ------------------- ------------------------ ------------------------------------
1-23
BE Aerospace (Netherlands) (uncertificated BE Aerospace, Inc. 23 shares of capital stock, dfl.
B.V. shares) 1,000 par value
- ------------------------------- ------------------- ------------------------ ------------------------------------
- ------------------------------- ------------------- ------------------------ ------------------------------------
BE Aerospace (USA), Inc. BE Aerospace, Inc. 65 shares of common stock, par
2 value $0.01
- ------------------------------- ------------------- ------------------------ ------------------------------------
- ------------------------------- ------------------- ------------------------ ------------------------------------
BE Aerospace, Inc. 100 shares of common stock, par
Acurex Inc. 2 value $0.01
- ------------------------------- ------------------- ------------------------ ------------------------------------
- ------------------------------- ------------------- ------------------------ ------------------------------------
BE Aerospace, Inc. 1,000 shares of common stock, par
B/E Services, Inc. 1 value $0.01
- ------------------------------- ------------------- ------------------------ ------------------------------------
</TABLE>
<PAGE>
ANNEX 2
LIST OF COPYRIGHTS, COPYRIGHT REGISTRATIONS AND
APPLICATIONS FOR COPYRIGHT REGISTRATIONS
[See Section 2(d).]
Title Date Filed Registration No. Effective Date
- ---------------------------------------------------------------
<PAGE>
ANNEX 3
LIST OF PATENTS AND PATENT APPLICATIONS
[See Section 2(d).]
File Patent Country Registration No. Date
- ---------------------------------------------------------
<PAGE>
ANNEX 4
LIST OF TRADE NAMES, TRADEMARKS, SERVICES MARKS,
TRADEMARK AND SERVICE MARK REGISTRATIONS AND
APPLICATIONS FOR TRADEMARK AND SERVICE MARK REGISTRATIONS
[See Section 2(d).]
U.S. Trademarks
---------------
Application (A)
Registration (R) Registration
Mark or Series No. (S) or Filing Date
<PAGE>
Foreign Trademarks
------------------
Application (A) Registration or
Mark Registration (R) Country Filing Date (F)
<PAGE>
ANNEX 5
LIST OF CONTRACTS, LICENSES AND OTHER AGREEMENTS
[See Section 2(d), (e) and (f).]
<PAGE>
ANNEX 6
LIST OF LOCATIONS AND TRADE NAMES
[See Section 5.07.]
Part A - List of Locations
Part B - Trade Names/State
<PAGE>
ANNEX 7
<TABLE>
<CAPTION>
PLEDGED MEMBERSHIP INTERESTS
=========================== -------------------------- ---------------------------- ===========================
Certificate Nos. Percentage of Ownership
LLC Issuer (if any) Registered Owner Interest
=========================== ========================== ============================ ===========================
<S> <C> <C> <C>
In-Flight Entertainment,
LLC None BE Aerospace, Inc. 100%
=========================== ========================== ============================ ===========================
</TABLE>
<PAGE>
EXHIBIT A-2
AMENDED AND RESTATED GUARANTEE AND SECURITY AGREEMENT
AMENDED AND RESTATED GUARANTEE AND SECURITY AGREEMENT dated as
of November 19, 1997, amended and restated as of April 3, 1998, between
In-Flight Entertainment, LLC, a limited liability company duly organized and
validly existing under the laws of Delaware (the "Guarantor"); and THE CHASE
MANHATTAN BANK, as agent for the lenders or other financial institutions or
entities party, as lenders, to the Credit Agreement referred to below (in such
capacity, together with its successors in such capacity, the "Administrative
Agent").
BE Aerospace, Inc., a Delaware corporation (the "Company"),
certain lenders (the "Lenders") and the Administrative Agent are parties to a
Credit Agreement dated as of October 29, 1993, as amended and restated as of
April 3, 1998 (as modified and supplemented and in effect from time to time, the
"Credit Agreement"), providing, subject to the terms and conditions thereof, for
extensions of credit (by making of loans and issuing letters of credit) to be
made by said Lenders to the Company.
To induce the Lenders to enter into the Credit Agreement and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Guarantor has agreed to guarantee the Guaranteed
Obligations (as hereinafter defined), and to pledge and grant a security
interest in the Collateral (as so defined) as security for the Secured
Obligations (as so defined). Accordingly, the parties hereto agree as follows:
Section 1. Definitions. Terms defined in the Credit Agreement
(as amended by Amendment No. 1) are used herein as defined therein. In addition,
as used herein:
"Accounts" shall have the meaning ascribed thereto in Section
4(a) hereof.
"Collateral" shall have the meaning ascribed thereto in
Section 4 hereof.
"Collateral Account" shall have the meaning ascribed thereto
in Section 5.01 hereof.
"Copyright Collateral" shall mean all Copyrights, whether now
owned or hereafter acquired by the Guarantor, including each Copyright
identified in Annex 1 hereto.
"Copyrights" shall mean all copyrights, copyright
registrations and applications for copyright registrations, including,
without limitation, all renewals and extensions
<PAGE>
thereof, the right to recover for all past, present and future
infringements thereof, and all other rights of any kind whatsoever
accruing thereunder or pertaining thereto.
"Documents" shall have the meaning ascribed thereto in Section
4(g) hereof.
"Equipment" shall have the meaning ascribed thereto in Section
4(e) hereof.
"Guaranteed Obligations" shall have the meaning ascribed
thereto in Section 2.01 hereof.
"Instruments" shall have the meaning ascribed thereto in
Section 4(b) hereof.
"Intellectual Property" shall mean, collectively, all
Copyright Collateral, all Patent Collateral and all Trademark
Collateral, together with (a) all inventions, processes, production
methods, proprietary information, know-how and trade secrets; (b) all
licenses or user or other agreements granted to the Guarantor with
respect to any of the foregoing, in each case whether now or hereafter
owned or used including, without limitation, the licenses or other
agreements with respect to the Copyright Collateral, the Patent
Collateral or the Trademark Collateral, listed in Annex 4 hereto; (c)
all information, customer lists, identification of suppliers, data,
plans, blueprints, specifications, designs, drawings, recorded
knowledge, surveys, engineering reports, test reports, manuals,
materials standards, processing standards, performance standards,
catalogs, computer and automatic machinery software and programs; (d)
all field repair data, sales data and other information relating to
sales or service of products now or hereafter manufactured; (e) all
accounting information and all media in which or on which any
information or knowledge or data or records may be recorded or stored
and all computer programs used for the compilation or printout of such
information, knowledge, records or data; (f) all licenses, consents,
permits, variances, certifications and approvals of governmental
agencies now or hereafter held by the Guarantor; and (g) all causes of
action, claims and warranties now or hereafter owned or acquired by the
Guarantor in respect of any of the items listed above.
"Inventory" shall have the meaning ascribed thereto in Section
4(c) hereof.
"LiveTV LLC" shall mean B/E Harris LiveTV LLC, a Delaware
limited liability company.
"LiveTV LLC Agreement" shall mean the Limited Liability
Company Agreement of B/E Harris LiveTV LLC.
"Motor Vehicles" shall mean motor vehicles, tractors, trailers
and other like property, whether or not the title thereto is governed
by a certificate of title or ownership.
-2-
<PAGE>
"Patent Collateral" shall mean all Patents, whether now owned
or hereafter acquired by the Guarantor, including each Patent
identified in Annex 2 hereto.
"Patents" shall mean all patents and patent applications,
including, without limitation, the inventions and improvements
described and claimed therein together with the reissues, divisions,
continuations, renewals, extensions and continuations-in-part thereof,
all income, royalties, damages and payments now or hereafter due and/or
payable under and with respect thereto, including, without limitation,
damages and payments for past or future infringements thereof, the
right to sue for past, present and future infringements thereof, and
all rights corresponding thereto throughout the world.
"Secured Obligations" shall mean, collectively, (a) all
obligations of the Guarantor in respect of its Guarantee under Section
2 hereof and (b) all other obligations of the Guarantor to the Lenders
and the Administrative Agent hereunder.
"Trademark Collateral" shall mean all Trademarks, whether now
owned or hereafter acquired by the Guarantor, including each Trademark
identified in Annex 3 hereto. Notwithstanding the foregoing, the
Trademark Collateral does not and shall not include any Trademark that
would be rendered invalid, abandoned, void or unenforceable by reason
of its being included as part of the Trademark Collateral.
"Trademarks" shall mean all trade names, trademarks and
service marks, logos, trademark and service mark registrations, and
applications for trademark and service mark registrations, including,
without limitation, all renewals of trademark and service mark
registrations, all rights corresponding thereto throughout the world,
the right to recover for all past, present and future infringements
thereof, all other rights of any kind whatsoever accruing thereunder or
pertaining thereto, together, in each case, with the product lines and
goodwill of the business connected with the use of, and symbolized by,
each such trade name, trademark and service mark.
"Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect from time to time in the State of New York.
Section 2. The Guarantee.
2.01 The Guarantee. The Guarantor hereby guarantees to each
Lender and the Administrative Agent and their respective successors and assigns
the prompt payment in full when due (whether at stated maturity, by acceleration
or otherwise) of the principal of and interest on the Loans made by the Lenders
to, and the Note(s) held by each Lender of, the Company and all other amounts
from time to time owing to the Lenders or the Administrative Agent by the
Company under the Credit Agreement and under the Basic Documents and all
Reimbursement Obligations and interest thereon, in each case strictly in
accordance with the terms thereof (such obligations being herein collectively
called the "Guaranteed Obligations").
-3-
<PAGE>
The Guarantor hereby further agrees that if the Company shall fail to pay in
full when due (whether at stated maturity, by acceleration or otherwise) any of
the Guaranteed Obligations, the Guarantor will promptly pay the same, without
any demand or notice whatsoever, and that in the case of any extension of time
of payment or renewal of any of the Guaranteed Obligations, the same will be
promptly paid in full when due (whether at extended maturity, by acceleration or
otherwise) in accordance with the terms of such extension or renewal.
2.02 Obligations Unconditional. The obligations of the
Guarantor under Section 2.01 hereof are absolute and unconditional irrespective
of the value, genuineness, validity, regularity or enforceability of the Credit
Agreement, the Basic Documents or any other agreement or instrument referred to
herein or therein, or any substitution, release or exchange of any other
guarantee of or security for any of the Guaranteed Obligations, and, to the
fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever that might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor, it being the intent of this
Section 2.02 that the obligations of the Guarantor hereunder shall be absolute
and unconditional under any and all circumstances. Without limiting the
generality of the foregoing, it is agreed that the occurrence of any one or more
of the following shall not alter or impair the liability of the Guarantor
hereunder which shall remain absolute and unconditional as described above:
(i) at any time or from time to time, without notice to the
Guarantor, the time for any performance of or compliance with any of
the Guaranteed Obligations shall be extended, or such performance or
compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of the
Credit Agreement or the Basic Documents or any other agreement or
instrument referred to herein or therein shall be done or omitted;
(iii) the maturity of any of the Guaranteed Obligations shall
be accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under the Credit
Agreement or the Basic Documents or any other agreement or instrument
referred to herein or therein shall be waived or any other guarantee of
any of the Guaranteed Obligations or any security therefor shall be
released or exchanged in whole or in part or otherwise dealt with; or
(iv) any lien or security interest granted to, or in favor of,
the Administrative Agent or any Lender or Lenders as security for any
of the Guaranteed Obligations shall fail to be perfected.
The Guarantor hereby expressly waives diligence, presentment, demand of payment,
protest and all notices whatsoever, and any requirement that the Administrative
Agent or any Lender exhaust any right, power or remedy or proceed against the
Company under the Credit Agreement or the Basic Documents or any other agreement
or instrument referred to herein or therein, or against
-4-
<PAGE>
any other Person under any other guarantee of, or security for, any of the
Guaranteed Obligations.
2.03 Reinstatement. The obligations of the Guarantor under
this Section 2 shall be automatically reinstated if and to the extent that for
any reason any payment by or on behalf of the Company in respect of the
Guaranteed Obligations is rescinded or must be otherwise restored by any holder
of any of the Guaranteed Obligations, whether as a result of any proceedings in
bankruptcy or reorganization or otherwise, and the Guarantor agrees that it will
indemnify the Administrative Agent and each Lender on demand for all reasonable
costs and expenses (including, without limitation, fees of counsel) incurred by
the Administrative Agent or such Lender in connection with such rescission or
restoration, including any such costs and expenses incurred in defending against
any claim alleging that such payment constituted a preference, fraudulent
transfer or similar payment under any bankruptcy, insolvency or similar law.
2.04 Subrogation. The Guarantor hereby agrees that until the
payment and satisfaction in full of all Guaranteed Obligations and the
expiration or termination of the Commitments and all Letter of Credit
Liabilities of the Lenders under the Credit Agreement it shall not exercise any
right or remedy arising by reason of any performance by it of its guarantee in
Section 2.01 hereof, whether by subrogation or otherwise, against the Company or
any other guarantor of any of the Guaranteed Obligations or any security for any
of the Guaranteed Obligations.
2.05 Remedies. The Guarantor agrees that, as between the
Guarantor and the Lenders, the obligations of the Company under the Credit
Agreement and the Basic Documents may be declared to be forthwith due and
payable as provided in Section 9 of the Credit Agreement (and shall be deemed to
have become automatically due and payable in the circumstances provided in said
Section 9) for purposes of Section 2.01 hereof notwithstanding any stay,
injunction or other prohibition preventing such declaration (or such obligations
from becoming automatically due and payable) as against the Company and that, in
the event of such declaration (or such obligations being deemed to have become
automatically due and payable), such obligations (whether or not due and payable
by the Company) shall forthwith become due and payable by the Guarantor for
purposes of said Section 2.01.
2.06 Instrument for the Payment of Money. The Guarantor hereby
acknowledges that the guarantee in this Section 2 constitutes an instrument for
the payment of money, and consents and agrees that any Lender or the
Administrative Agent, at its sole option, in the event of a dispute by the
Guarantor in the payment of any moneys due hereunder, shall have the right to
bring motion-action under New York CPLR Section 3213.
2.07 Continuing Guarantee. The guarantee in this Section 2 is
a continuing guarantee, and shall apply to all Guaranteed Obligations whenever
arising.
-5-
<PAGE>
2.08 General Limitation on Guarantee Obligations. In any
action or proceeding involving any state corporate law, or any state or Federal
bankruptcy, insolvency, reorganization or other law affecting the rights of
creditors generally, if the obligations of the Guarantor under Section 2.01
hereof would otherwise be held or determined to be void, invalid or
unenforceable, or subordinated to the claims of any other creditors, on account
of the amount of its liability under said Section 2.01, then, notwithstanding
any other provision hereof to the contrary, the amount of such liability shall,
without any further action by the Guarantor, the Administrative Agent, the
Lenders or any other Person, be automatically limited and reduced to the highest
amount that is valid and enforceable and not subordinated to the claims of other
creditors as determined in such action or proceeding.
Section 3. Representations and Warranties. The Guarantor
represents and warrants to the Lenders and the Administrative Agent that:
3.01 Action. The Guarantor has all necessary power and
authority to execute, deliver and perform its obligations under this Agreement;
the execution, delivery and performance by the Guarantor of this Agreement have
been duly authorized by all necessary action on its part; and this Agreement has
been duly and validly executed and delivered by the Guarantor and constitutes
its legal, valid and binding obligation, enforceable in accordance with its
terms except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws of general applicability affecting
the enforcement of creditors' rights and the application of general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
3.02 Approvals. No authorizations, approvals or consents of,
and no filings or registrations with, any governmental or regulatory authority
or agency, or any securities exchange are necessary for the execution, delivery
or performance by the Guarantor of this Agreement or for the validity or
enforceability hereof, except for filings and recordings of the Liens created
pursuant to this Agreement.
3.03 Collateral.
(a) When the Guarantor acquires any rights therein, the
Guarantor will be the sole beneficial owner of the Collateral and no
Lien will exist upon the Collateral at any time (and no right or option
to acquire the same will exist in favor of any other Person), except
for Liens permitted under Section 8.06 of the Credit Agreement and
except for the pledge and security interest in favor of the
Administrative Agent for the benefit of the Lenders created or provided
for herein, which pledge and security interest constitute a first
priority perfected pledge and security interest in and to all of the
Collateral (other than Intellectual Property registered or otherwise
located outside of the United States of America).
-6-
<PAGE>
(b) Annexes 1, 2 and 3 hereto, respectively, set forth a
complete and correct list of all Copyrights, Patents and Trademarks
owned by the Guarantor on the date hereof; except pursuant to licenses
and other user agreements entered into by the Guarantor in the ordinary
course of business, that are listed in Annex 4 hereto, the Guarantor
owns and possesses the right to use, and has done nothing to authorize
or enable any other Person to use, any Copyright, Patent or Trademark
listed in said Annexes 1, 2 and 3, and all registrations listed in said
Annexes 1, 2 and 3 are valid and in full force and effect; except as
may be set forth in said Annex 4, the Guarantor owns and possesses the
right to use all Copyrights, Patents and Trademarks.
(c) Annex 4 hereto sets forth a complete and correct list of
all licenses and other user agreements included in the Intellectual
Property on the date hereof.
(d) To the Guarantor's knowledge, (i) except as set forth in
Annex 4 hereto, there is no violation by others of any right of the
Guarantor with respect to any Copyright, Patent or Trademark listed in
Annexes 1, 2 and 3 hereto, respectively, and (ii) the Guarantor is not
infringing in any respect upon any Copyright, Patent or Trademark of
any other Person; and no proceedings have been instituted or are
pending against the Guarantor or, to the Guarantor's knowledge,
threatened, and no claim against the Guarantor has been received by the
Guarantor, alleging any such violation, except as may be set forth in
said Annex 4.
(e) The Guarantor does not own any Trademarks registered in
the United States of America to which the last sentence of the
definition of Trademark Collateral applies.
(f) Any goods now or hereafter produced by the Guarantor
included in the Collateral have been and will be produced in compliance
with the requirements of the Fair Labor Standards Act, as amended.
Section 4. Collateral. As collateral security for the prompt
payment in full when due (whether at stated maturity, by acceleration or
otherwise) of the Secured Obligations, the Guarantor hereby pledges and grants
to the Administrative Agent, for the benefit of the Lenders as hereinafter
provided, a security interest in all of the Guarantor's right, title and
interest in the following property, whether now owned by the Guarantor or
hereafter acquired and whether now existing or hereafter coming into existence
(all being collectively referred to herein as "Collateral"):
(a) all accounts and general intangibles (each as defined in
the Uniform Commercial Code) of the Guarantor constituting any right to
the payment of money, including (but not limited to) all moneys due and
to become due to the Guarantor in respect of any loans or advances or
for Inventory or Equipment or other goods sold or leased or for
services rendered, all moneys due and to become due to the Guarantor
under any guarantee (not including a letter of credit) of the purchase
price of Inventory or
-7-
<PAGE>
Equipment sold by the Guarantor and all tax refunds (such accounts,
general intangibles and moneys due and to become due being herein
called collectively "Accounts");
(b) all instruments, chattel paper or letters of credit (each
as defined in the Uniform Commercial Code) of the Guarantor evidencing,
representing, arising from or existing in respect of, relating to,
securing or otherwise supporting the payment of, any of the Accounts,
including (but not limited to) promissory notes, drafts, bills of
exchange and trade acceptances (herein collectively called
"Instruments");
(c) all inventory (as defined in the Uniform Commercial Code)
of the Guarantor, including Motor Vehicles held by the Guarantor for
lease (including lease to Subsidiaries of the Guarantor), fuel, tires
and other spare parts, all goods obtained by the Guarantor in exchange
for such inventory, and any products made or processed from such
inventory including all substances, if any, commingled therewith or
added thereto (herein collectively called "Inventory");
(d) all Intellectual Property and all other accounts or
general intangibles not constituting Intellectual Property or Accounts;
(e) all equipment (as defined in the Uniform Commercial Code)
of the Guarantor, including all Motor Vehicles (herein collectively
called "Equipment");
(f) each contract and other agreement of the Guarantor
relating to the sale or other disposition of Inventory or Equipment;
(g) all documents of title (as defined in the Uniform
Commercial Code) or other receipts of the Guarantor covering,
evidencing or representing Inventory or Equipment (herein collectively
called "Documents");
(h) all rights, claims and benefits of the Guarantor against
any Person arising out of, relating to or in connection with Inventory
or Equipment purchased by the Guarantor, including, without limitation,
any such rights, claims or benefits against any Person storing or
transporting such Inventory or Equipment;
(i) the balance from time to time in the Collateral Account;
and
(j) all other tangible and intangible personal property of the
Guarantor, including, without limitation, all proceeds, products,
offspring, accessions, rents, profits, income, benefits, substitutions
and replacements of and to any of the property of the Guarantor
described in the preceding clauses of this Section 4 (including,
without limitation, any proceeds of insurance thereon) and, to the
extent related to any property described in said clauses or such
proceeds, products and accessions, all books, correspondence, credit
files, records, invoices and other papers, including without limitation
all tapes, cards, computer runs and other papers and documents in the
possession or under the control of the
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Guarantor or any computer bureau or service company from time to time
acting for the Guarantor.
Notwithstanding the foregoing, the Collateral does not and shall not
include:
(i) any ownership interest in, or right, title or interest of
the Guarantor as a member in LiveTV LLC, but shall include (w) any and
all moneys, and any and all rights to receive such moneys, due or to
become due to the Guarantor now or in the future by way of distribution
made to the Guarantor in its capacity as a member of LiveTV LLC or
otherwise pursuant to the LiveTV LLC Agreement, (x) any other property
or assets, and any and all rights to receive such property or assets,
of LiveTV LLC to which the Guarantor now or in the future may be
entitled in its capacity as a member of LiveTV LLC, (y) any other claim
which the Guarantor now has or may acquire in its capacity as a member
of LiveTV LLC against LiveTV LLC and its property or arising out of or
for breach or default under the LiveTV Limited Liability Agreement and
(z) all proceeds of and to any of the foregoing clauses (w) through
(y); and
(ii) the assets to be transferred to LiveTV LLC, including,
without limitation, rights and claims of the Company against In-Flight
Phone Corporation transferred to the Guarantor, whether asserted or
unasserted with respect to matters prior to the formation of LiveTV LLC
and the rights to certain technology, trademarks and trade names
licensed to the Guarantor by the Company and to be licensed by the
Guarantor to LiveTV LLC.
Section 5. Cash Proceeds of Collateral.
5.01 Collateral Account. The Administrative Agent may
establish with Chase a cash collateral account (the "Collateral Account"), which
may be a "securities account" (within the meaning of Section 8-501 of the
Uniform Commercial Code), in the name and under the sole control of the
Administrative Agent into which there shall be deposited from time to time the
cash proceeds of any of the Collateral (including proceeds of insurance thereon)
required to be delivered to the Administrative Agent pursuant hereto and into
which the Guarantor may from time to time deposit any additional amounts that it
wishes to pledge to the Administrative Agent for the benefit of the Lenders as
additional collateral security hereunder. The balance from time to time in the
Collateral Account shall constitute part of the Collateral hereunder and shall
not constitute payment of the Secured Obligations until applied as hereinafter
provided. Except as expressly provided in the next sentence, the Administrative
Agent shall remit the collected balance outstanding to the credit of the
Collateral Account to or upon the order of the Guarantor as the Guarantor shall
from time to time instruct. However, at any time following the occurrence and
during the continuance of an Event of Default, the Administrative Agent may
(and, if instructed by the Lenders as specified in Section 10.03 of the Credit
Agreement, shall) in its (or their) discretion apply or cause to be applied
(subject to collection) the balance from time to time outstanding to the credit
of the Collateral Account to the payment of the Secured Obligations in
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<PAGE>
the manner specified in Section 6.09 hereof. The balance from time to time in
the Collateral Account shall be subject to withdrawal only as provided herein.
5.02 Proceeds of Accounts. At any time after the occurrence
and during the continuance of an Event of Default, the Guarantor shall, upon the
request of the Administrative Agent, instruct all account debtors and other
Persons obligated in respect of all Accounts to make all payments in respect of
the Accounts either (a) directly to the Administrative Agent (by instructing
that such payments be remitted to a post office box which shall be in the name
and under the control of the Administrative Agent) or (b) to one or more other
banks in the United States of America (by instructing that such payments be
remitted to a post office box which shall be in the name and under the control
of the Administrative Agent) under arrangements, in form and substance
satisfactory to the Administrative Agent pursuant to which the Guarantor shall
have irrevocably instructed such other bank (and such other bank shall have
agreed) to remit all proceeds of such payments directly to the Administrative
Agent for deposit into the Collateral Account. All payments made to the
Administrative Agent, as provided in the preceding sentence, shall be
immediately deposited in the Collateral Account. In addition to the foregoing,
the Guarantor agrees that, at any time after the occurrence and during the
continuance of an Event of Default, if the proceeds of any Collateral hereunder
(including the payments made in respect of Accounts) shall be received by it,
the Guarantor shall as promptly as possible deposit such proceeds into the
Collateral Account. Until so deposited, all such proceeds shall be held in trust
by the Guarantor for and as the property of the Administrative Agent and shall
not be commingled with any other funds or property of the Guarantor.
5.03 Investment of Balance in Collateral Account. Amounts on
deposit in the Collateral Account shall be invested from time to time in such
Permitted Investments as the Guarantor (or, after the occurrence and during the
continuance of a Default, the Administrative Agent) shall determine, which
Permitted Investments shall if the Collateral Account is a "securities account"
(within the meaning of Section 8-501 of the Uniform Commercial Code) be credited
to the Collateral Account and otherwise shall be held in the name and be under
the control of the Administrative Agent, provided that (i) at any time after the
occurrence and during the continuance of an Event of Default, the Administrative
Agent may (and, if instructed by the Lenders as specified in Section 10.03 of
the Credit Agreement, shall) in its (or their) discretion at any time and from
time to time elect to liquidate any such Permitted Investments and to apply or
cause to be applied the proceeds thereof to the payment of the Secured
Obligations in the manner specified in Section 6.09 hereof and (ii) if requested
by the Guarantor, such Permitted Investments may be held in the name and under
the control of one or more of the Lenders (and in that connection each Lender,
pursuant to Section 10.10 of the Credit Agreement) has agreed that such
Permitted Investments shall be held by such Lender as a collateral sub-agent for
the Administrative Agent hereunder).
5.04 Cover for Letter of Credit Liabilities. Amounts deposited
into the Collateral Account as cover for Letter of Credit Liabilities under the
Credit Agreement pursuant to Section 2.10(f) or Section 9 thereof shall be held
by the Administrative Agent in a separate sub-account (designated "Letter of
Credit Liabilities Sub-Account") and all amounts held in such
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<PAGE>
sub-account shall constitute collateral security first for the Letter of Credit
Liabilities outstanding from time to time and second as collateral security for
the other Secured Obligations hereunder.
Section 6. Further Assurances; Remedies. In furtherance of the
grant of the pledge and security interest pursuant to Section 4 hereof, the
Guarantor hereby agrees with each Lender and the Administrative Agent as
follows:
6.01 Delivery and Other Perfection. The Guarantor shall:
(a) deliver and pledge to the Administrative Agent any and all
Instruments, endorsed and/or accompanied by such instruments of
assignment and transfer in such form and substance as the
Administrative Agent may request; provided, that so long as no Default
shall have occurred and be continuing, the Guarantor may retain for
collection in the ordinary course any Instruments received by the
Guarantor in the ordinary course of business and the Administrative
Agent shall, promptly upon request of the Guarantor, make appropriate
arrangements for making any Instrument pledged by the Guarantor
available to the Guarantor for purposes of presentation, collection or
renewal (any such arrangement to be effected, to the extent deemed
appropriate by the Administrative Agent, against trust receipt or like
document);
(b) give, execute, deliver, file and/or record any financing
statement, notice, instrument, document, agreement or other papers that
may be necessary or desirable (in the judgment of the Administrative
Agent) to create, preserve, perfect or validate the security interest
granted pursuant hereto or to enable the Administrative Agent to
exercise and enforce its rights hereunder with respect to such pledge
and security interest, provided that notices to account debtors in
respect of any Accounts or Instruments shall be subject to the
provisions of clause (h) below;
(c) from time to time as requested by any Lender, cause the
Administrative Agent to be listed as Lienholder of any Equipment
covered by a certificate of title or ownership, and within 120 days of
such request deliver evidence of the same to the Administrative Agent;
(d) keep full and accurate books and records relating to the
Collateral, and stamp or otherwise mark such books and records in such
manner as the Administrative Agent may reasonably require in order to
reflect the security interests granted by this Agreement;
(e) furnish to the Administrative Agent from time to time
(but, unless a Default shall have occurred and be continuing, no more
frequently than quarterly) statements and schedules further identifying
and describing the Copyright Collateral, the Patent Collateral and the
Trademark Collateral, and such other reports in connection with the
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Copyright Collateral, the Patent Collateral and the Trademark
Collateral, as the Administrative Agent may reasonably request, all in
reasonable detail;
(f) promptly upon request of the Administrative Agent,
following receipt by the Administrative Agent of any statements,
schedules or reports pursuant to clause (e) above, modify this
Agreement by amending Annexes 1, 2 and/or 3 hereto, as the case may be,
to include any Copyright, Patent or Trademark which becomes part of the
Collateral under this Agreement;
(g) permit representatives of the Administrative Agent, upon
reasonable notice, at any time during normal business hours to inspect
and make abstracts from its books and records pertaining to the
Collateral, and permit representatives of the Administrative Agent to
be present at the Guarantor's place of business to receive copies of
all communications and remittances relating to the Collateral, and
forward copies of any notices or communications received by the
Guarantor with respect to the Collateral, all in such manner as the
Administrative Agent may require; and
(h) upon the occurrence and during the continuance of any
Event of Default, upon request of the Administrative Agent, promptly
notify (and the Guarantor hereby authorizes the Administrative Agent so
to notify) each account debtor in respect of any Accounts or
Instruments that such Collateral has been assigned to the
Administrative Agent hereunder, and that any payments due or to become
due in respect of such Collateral are to be made directly to the
Administrative Agent.
6.02 Other Financing Statements and Liens. Except as otherwise
permitted under Section 8.06 of the Credit Agreement, without the prior written
consent of the Administrative Agent (granted with the authorization of the
Lenders as specified in Section 10.09 of the Credit Agreement), the Guarantor
shall not file or suffer to be on file, or authorize or permit to be filed or to
be on file, in any jurisdiction, any financing statement or like instrument with
respect to the Collateral in which the Administrative Agent is not named as the
sole secured party for the benefit of the Lenders.
6.03 Preservation of Rights. The Administrative Agent shall
not be required to take steps necessary to preserve any rights against prior
parties to any of the Collateral.
6.04 Special Provisions Relating to Certain Collateral.
(a) Intellectual Property.
(1) For the purpose of enabling the Administrative Agent to
exercise rights and remedies under Section 6.05 hereof at such time as the
Administrative Agent shall be lawfully entitled to exercise such rights and
remedies, and for no other purpose, the Guarantor hereby grants to the
Administrative Agent, to the extent assignable, an irrevocable, non-exclusive
license (exercisable without payment of royalty or other compensation to the
Guarantor) to use,
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<PAGE>
assign, license or sublicense any of the Intellectual Property now owned or
hereafter acquired by the Guarantor, wherever the same may be located, including
in such license reasonable access to all media in which any of the licensed
items may be recorded or stored and to all computer programs used for the
compilation or printout thereof.
(2) Notwithstanding anything contained herein to the contrary,
but subject to the provisions of Section 8.05 of the Credit Agreement which
limit the right of the Company and its Subsidiaries to dispose of their
property, so long as no Event of Default shall have occurred and be continuing,
the Guarantor will be permitted to exploit, use, enjoy, protect, license,
sublicense, assign, sell, dispose of or take other actions with respect to the
Intellectual Property in the ordinary course of the business of the Guarantor.
In furtherance of the foregoing, unless an Event of Default shall have occurred
and be continuing the Administrative Agent shall from time to time, upon the
request of the Guarantor, execute and deliver any instruments, certificates or
other documents, in the form so requested, that the Guarantor shall have
certified are appropriate (in its judgment) to allow it to take any action
permitted above (including relinquishment of the license provided pursuant to
clause (1) immediately above as to any specific Intellectual Property). Further,
upon the payment in full of all of the Secured Obligations and cancellation or
termination of the Commitments and Letter of Credit Liabilities or earlier
expiration of this Agreement or release of the Collateral, the Administrative
Agent shall grant back to the Guarantor the license granted pursuant to clause
(1) immediately above. The exercise of rights and remedies under Section 6.05
hereof by the Administrative Agent shall not terminate the rights of the holders
of any licenses or sublicenses theretofore granted by the Guarantor in
accordance with the first sentence of this clause (2).
6.05 Events of Default, Etc. During the period during which an
Event of Default shall have occurred and be continuing:
(a) the Guarantor shall, at the request of the Administrative
Agent, assemble the Collateral owned by it at such place or places,
reasonably convenient to both the Administrative Agent and the
Guarantor, designated in its request;
(b) the Administrative Agent may make any reasonable
compromise or settlement deemed desirable with respect to any of the
Collateral and may extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of, any of the Collateral;
(c) the Administrative Agent shall have all of the rights and
remedies with respect to the Collateral of a secured party under the
Uniform Commercial Code (whether or not said Code is in effect in the
jurisdiction where the rights and remedies are asserted) and such
additional rights and remedies to which a secured party is entitled
under the laws in effect in any jurisdiction where any rights and
remedies hereunder may be asserted, including, without limitation, the
right, to the maximum extent permitted by law, to exercise all voting,
consensual and other powers of ownership pertaining to the Collateral
as if the Administrative Agent were the sole and absolute owner thereof
(and
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<PAGE>
the Guarantor agrees to take all such action as may be appropriate to
give effect to such right);
(d) the Administrative Agent in its discretion may, in its
name or in the name of the Guarantor or otherwise, demand, sue for,
collect or receive any money or property at any time payable or
receivable on account of or in exchange for any of the Collateral, but
shall be under no obligation to do so; and
(e) the Administrative Agent may, upon ten Business Days prior
written notice to the Guarantor of the time and place, with respect to
the Collateral or any part thereof that shall then be or shall
thereafter come into the possession, custody or control of the
Administrative Agent, the Lenders or any of their respective agents,
sell, lease, assign or otherwise dispose of all or any part of such
Collateral, at such place or places as the Administrative Agent deems
best, and for cash or for credit or for future delivery (without
thereby assuming any credit risk), at public or private sale, without
demand of performance or notice of intention to effect any such
disposition or of the time or place thereof (except such notice as is
required above or by applicable statute and cannot be waived), and the
Administrative Agent or any Lender or anyone else may be the purchaser,
lessee, assignee or recipient of any or all of the Collateral so
disposed of at any public sale (or, to the extent permitted by law, at
any private sale) and thereafter hold the same absolutely, free from
any claim or right of whatsoever kind, including any right or equity of
redemption (statutory or otherwise), of the Guarantor, any such demand,
notice and right or equity being hereby expressly waived and released.
In the event of any sale, assignment, or other disposition of any of
the Trademark Collateral, the goodwill connected with and symbolized by
the Trademark Collateral subject to such disposition shall be included,
and the Guarantor shall supply to the Administrative Agent or its
designee, for inclusion in such sale, assignment or other disposition,
all Intellectual Property relating to such Trademark Collateral. The
Administrative Agent may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to
time by announcement at the time and place fixed for the sale, and such
sale may be made at any time or place to which the sale may be so
adjourned.
The proceeds of each collection, sale or other disposition under this Section
6.05, including by virtue of the exercise of the license granted to the
Administrative Agent in Section 6.04(b) hereof, shall be applied in accordance
with Section 6.09 hereof.
The Guarantor recognizes that, by reason of certain
prohibitions contained in the Securities Act of 1933, as amended, and applicable
state securities laws, the Administrative Agent may be compelled, with respect
to any sale of all or any part of the Collateral, to limit purchasers to those
who will agree, among other things, to acquire the Collateral for their own
account, for investment and not with a view to the distribution or resale
thereof. The Guarantor acknowledges that any such private sales may be at prices
and on terms less favorable to the Administrative Agent than those obtainable
through a public sale without such restrictions, and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have
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<PAGE>
been made in a commercially reasonable manner and that the Administrative Agent
shall have no obligation to engage in public sales and no obligation to delay
the sale of any Collateral for the period of time necessary to permit the
respective Issuer or issuer thereof to register it for public sale.
6.06 Deficiency. If the proceeds of sale, collection or other
realization of or upon the Collateral pursuant to Section 6.05 hereof are
insufficient to cover the costs and expenses of such realization and the payment
in full of the Secured Obligations, the Guarantor shall remain liable for any
deficiency.
6.07 Removals, Etc. Without at least 30 days prior written
notice to the Administrative Agent, the Guarantor shall not (i) maintain any of
its books and records with respect to the Collateral at any office or maintain
its principal place of business at any place, or permit any Inventory or
Equipment to be located anywhere, other than at the address indicated beneath
its signature hereto or at one of the locations identified in Part A of Annex 5
hereto or in transit from one of such locations to another or (ii) change its
corporate name, or the name under which it does business, from the name shown on
the signature pages hereto; provided, however, that the Guarantor may do
business in the states and under the names specified in Part B of Annex 5
hereto.
6.08 Private Sale. The Administrative Agent and the Lenders
shall incur no liability as a result of the sale of the Collateral, or any part
thereof, at any private sale pursuant to Section 6.05 hereof conducted in a
commercially reasonable manner. The Guarantor hereby waives any claims against
the Administrative Agent or any Lender arising by reason of the fact that the
price at which the Collateral may have been sold at such a private sale was less
than the price that might have been obtained at a public sale or was less than
the aggregate amount of the Secured Obligations, even if the Administrative
Agent accepts the first offer received and does not offer the Collateral to more
than one offeree.
6.09 Application of Proceeds. Except as otherwise herein
expressly provided and except as provided below in this Section 6.09, the
proceeds of any collection, sale or other realization of all or any part of the
Collateral pursuant hereto, and any other cash at the time held by the
Administrative Agent under Section 5 hereof or this Section 6, shall be applied
by the Administrative Agent:
First, to the payment of the costs and expenses of such
collection, sale or other realization, including reasonable
out-of-pocket costs and expenses of the Administrative Agent and the
reasonable fees and expenses of its agents and counsel, and all
reasonable expenses incurred and advances made by the Administrative
Agent in connection therewith;
Next, to the payment in full of the Secured Obligations, in
each case equally and ratably in accordance with the respective amounts
thereof then due and owing or as the Lenders holding the same may
otherwise agree; and
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<PAGE>
Finally, to the payment to the Guarantor, or its successors or
assigns, or as a court of competent jurisdiction may direct, of any
surplus then remaining.
Notwithstanding the foregoing, the proceeds of any cash or other amounts held in
the "Letter of Credit Liabilities Sub-Account" of the Collateral Account
pursuant to Section 5.04 hereof shall be applied first to the Letter of Credit
Liabilities outstanding from time to time and second to the other Secured
Obligations in the manner provided above in this Section 6.09.
As used in this Section 6, "proceeds" of Collateral shall mean
cash, securities and other property realized in respect of, and distributions in
kind of, Collateral, including any thereof received under any reorganization,
liquidation or adjustment of debt of the Guarantor or any issuer of or obligor
on any of the Collateral.
6.10 Attorney-in-Fact. Without limiting any rights or powers
granted by this Agreement to the Administrative Agent while no Event of Default
has occurred and is continuing, upon the occurrence and during the continuance
of any Event of Default the Administrative Agent is hereby appointed the
attorney-in-fact of the Guarantor for the purpose of carrying out the provisions
of this Section 6 and taking any action and executing any instruments that the
Administrative Agent may deem necessary or advisable to accomplish the purposes
hereof, which appointment as attorney-in-fact is irrevocable and coupled with an
interest. Without limiting the generality of the foregoing, so long as the
Administrative Agent shall be entitled under this Section 6 to make collections
in respect of the Collateral, the Administrative Agent shall have the right and
power to receive, endorse and collect all checks made payable to the order of
the Guarantor representing any dividend, payment or other distribution in
respect of the Collateral or any part thereof and to give full discharge for the
same.
6.11 Termination. When all Secured Obligations shall have been
paid in full and the Commitments of the Lenders under the Credit Agreement and
all Letter of Credit Liabilities shall have expired or been terminated, this
Agreement shall terminate, and the Administrative Agent shall forthwith cause to
be assigned, transferred and delivered, against receipt but without any
recourse, warranty or representation whatsoever, any remaining Collateral and
money received in respect thereof, to or on the order of the Guarantor and to be
released and canceled all licenses and rights referred to in Section 6.04(a)
hereof. The Administrative Agent shall also execute and deliver to the Guarantor
upon such termination such Uniform Commercial Code termination statements,
certificates for terminating the Liens on the Motor Vehicles and such other
documentation as shall be reasonably requested by the Guarantor to effect the
termination and release of the Liens on the Collateral.
6.12 Further Assurances. The Guarantor agrees that, from time
to time upon the written request of the Administrative Agent, the Guarantor will
execute and deliver such further documents and do such other acts and things as
the Administrative Agent may reasonably request in order fully to effect the
purposes of this Agreement.
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<PAGE>
6.13 Release of Motor Vehicles. So long as no Event of Default
shall have occurred and be continuing, upon the request of the Guarantor, the
Administrative Agent shall execute and deliver to the Guarantor such instruments
as the Guarantor shall reasonably request to remove the notation of the
Administrative Agent as lienholder on any certificate of title for any Motor
Vehicle; provided that any such instruments shall be delivered, and the release
effective only upon receipt by the Administrative Agent of a certificate from
the Guarantor stating that the Motor Vehicle the lien on which is to be released
is to be sold or has suffered a casualty loss (with title thereto passing to the
casualty insurance company therefor in settlement of the claim for such loss).
Section 7. Miscellaneous.
7.01 No Waiver. No failure on the part of the Administrative
Agent or any of its agents to exercise, and no course of dealing with respect
to, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise by the
Administrative Agent or any of its agents of any right, power or remedy
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies herein are cumulative and are not
exclusive of any remedies provided by law.
7.02 Notices. All notices, requests, consents and demands
hereunder shall be in writing and telexed, telecopied or delivered to the
intended recipient at the "Address for Notices" specified beneath its name on
the signature pages hereof or, as to either party, at such other address as
shall be designated by such party in a notice to the other party. Except as
otherwise provided in this Agreement, all such communications shall be deemed to
have been duly given when transmitted by telecopier or personally delivered or,
in the case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
7.03 Expenses. The Guarantor agrees to reimburse each of the
Lenders and the Administrative Agent for all reasonable out-of-pocket costs and
expenses of the Lenders and the Administrative Agent (including, without
limitation, the reasonable fees and expenses of legal counsel) in connection
with (i) any Default and any enforcement or collection proceeding resulting
therefrom, including, without limitation, all manner of participation in or
other involvement with (w) performance by the Administrative Agent of any
obligations of the Guarantor in respect of the Collateral that the Guarantor has
failed or refused to perform, (x) bankruptcy, insolvency, receivership,
foreclosure, winding up or liquidation proceedings, or any actual or attempted
sale, or any exchange, enforcement, collection, compromise or settlement in
respect of any of the Collateral, and for the care of the Collateral and
defending or asserting rights and claims of the Administrative Agent in respect
thereof, by litigation or otherwise, including expenses of insurance, (y)
judicial or regulatory proceedings and (z) workout, restructuring or other
negotiations or proceedings (whether or not the workout, restructuring or
transaction contemplated thereby is consummated) and (ii) the enforcement of
this Section 7.03,
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<PAGE>
and all such costs and expenses shall be Secured Obligations entitled to the
benefits of the collateral security provided pursuant to Section 4 hereof.
7.04 Amendments, Etc. The terms of this Agreement may be
waived, altered or amended only by an instrument in writing duly executed by the
Guarantor and the Administrative Agent (with the consent of the Majority Lenders
as specified in Section 10.09 of the Credit Agreement). Any such amendment or
waiver shall be binding upon the Administrative Agent and each Lender, each
holder of any of the Secured Obligations and the Guarantor.
7.05 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the respective successors and assigns of the
Guarantor, the Administrative Agent, the Lenders and each holder of any of the
Secured Obligations (provided, however, that the Guarantor shall not assign or
transfer its rights hereunder without the prior written consent of the
Administrative Agent).
7.06 Captions. The captions and section headings appearing
herein are included solely for convenience of reference and are not intended to
affect the interpretation of any provision of this Agreement.
7.07 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and either of the parties hereto may execute this Agreement by
signing any such counterpart.
7.08 Governing Law; Submission to Jurisdiction. This Agreement
shall be governed by, and construed in accordance with, the law of the State of
New York. The Guarantor hereby submits to the nonexclusive jurisdiction of the
United States District Court for the Southern District of New York and of the
Supreme Court of the State of New York sitting in New York County (including its
Appellate Division), and of any other appellate court in the State of New York,
for the purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. The Guarantor hereby
irrevocably waives, to the fullest extent permitted by applicable law, any
objection that it may now or hereafter have to the laying of the venue of any
such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum.
7.09 Waiver of Jury Trial. EACH OF THE GUARANTOR, THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
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<PAGE>
7.10 Agents and Attorneys-in-Fact. The Administrative Agent
may employ agents and attorneys-in-fact in connection herewith and shall not be
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith.
7.11 Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Administrative
Agent and the Lenders in order to carry out the intentions of the parties hereto
as nearly as may be possible and (ii) the invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Guarantee and Security Agreement to be duly executed and delivered as of the day
and year first above written.
IN-FLIGHT ENTERTAINMENT, LLC
By: BE Aerospace, Inc., Member
By
--------------------------
Title:
Address for Notices:
In-Flight Entertainment, LLC
17481 Red Hill Avenue
Irvine, California 92614
Attn: Thomas P. McCaffrey
<PAGE>
THE CHASE MANHATTAN BANK,
as Administrative Agent
By
-------------------------
Title:
Address for Notices:
The Chase Manhattan Bank, as
Administrative Agent
270 Park Avenue
38th Floor
New York, New York 10017
Attention: Matthew H. Massie
with a copy to:
The Chase Manhattan Bank
Agent Bank Services Group
8th Floor
1 Chase Manhattan Plaza
New York, New York 10081
Attention: Frank Giacalone
<PAGE>
ANNEX 1
LIST OF COPYRIGHTS, COPYRIGHT REGISTRATION AND
APPLICATIONS FOR CORPYRIGHT REGISTRATIONS
Title Date Filed Registration No. Effective Date
- ---------------------------------------------------------------------------
[None]
<PAGE>
ANNEX 2
LIST OF PATENTS AND PATENT APPLICATIONS
File Patent Country Registration No. Date
- ----------------------------------------------------------------------------
[None]
<PAGE>
ANNEX 3
LIST OF TRADE NAMES, TRADEMARKS, SERVICES MARKS,
TRADEMARK AND SERVICE MARK REGISTRATIONS AND
APPLICATIONS FOR TRADEMARK AND SERVICE MARK REGISTRATIONS
U.S. Trademarks
---------------
Application (A)
Registration (R) Registration
Mark or Series No. (S) or Filing Date
- ------------------------------------------------------------------------------
[None]
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Foreign Trademarks
------------------
Application (A) Registration or
Mark Registration (R) Country Filing Date (F)
- ----------------------------------------------------------------------------
[None]
<PAGE>
ANNEX 4
LIST OF CONTRACTS, LICENSES AND OTHER AGREEMENTS
[None]
<PAGE>
ANNEX 5
LIST OF LOCATIONS
Part A - List of Locations.
Part B - Trade Names/State
Trade Name State
BE Aerospace, Inc. California
In-Flight Entertainment California
<PAGE>
EXHIBIT B
[Form of Confidentiality Agreement]
CONFIDENTIALITY AGREEMENT
[Date]
[Insert Name and
Address of Prospective
Participant or Assignee]
Re: Fourth Amended and Restated Credit Agreement dated as
of October 29, 1993 and amended and restated as of
April 3, 1998 (as so amended and restated, the
"Credit Agreement"), between BE Aerospace, Inc. (the
"Company"), the lenders named therein and The Chase
Manhattan Bank, as Administrative Agent.
Ladies and Gentlemen:
As a Lender party to the Credit Agreement, we have agreed with
the Company pursuant to Section 11.12 of the Credit Agreement to use reasonable
precautions to keep confidential, except as otherwise provided therein, all
non-public information identified by the Company as being confidential at the
time the same is delivered to us pursuant to the Credit Agreement.
As provided in said Section 11.12, we are permitted to provide
you, as a prospective [holder of a participation in the Loans (as defined in the
Credit Agreement)] [assignee Lender], with certain of such non-public
information subject to the execution and delivery by you, prior to receiving
such non-public information, of a Confidentiality Agreement in this form. Such
information will not be made available to you until your execution and return to
us of this Confidentiality Agreement.
Accordingly, in consideration of the foregoing, you agree (on
behalf of yourself and each of your affiliates, directors, officers, employees
and representatives) that (A) such information will not be used by you except in
connection with the proposed [participation][assignment] mentioned above and (B)
you shall use reasonable precautions, in accordance with your customary
procedures for handling confidential information and in accordance with safe and
sound banking practices, to keep such information confidential, provided that
nothing herein shall limit the disclosure of any such information (i) to the
extent required by statute, rule, regulation or judicial process, (ii) to your
counsel or to counsel for any
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of the Lenders or the Administrative Agent, (iii) to bank examiners, auditors or
accountants, (iv) to the Administrative Agent or any other Lender (or to Chase
Securities Inc.), (v) in connection with any litigation to which you or any one
or more of the Lenders or the Administrative Agent are a party, (vi) to a
subsidiary or affiliate of yours as provided in Section 11.12(a) of the Credit
Agreement or (vii) to any assignee or participant (or prospective assignee or
participant) so long as such assignee or participant (or prospective assignee or
participant) first executes and delivers to you a Confidentiality Agreement
substantially in the form hereof; provided, further, that (x) unless
specifically prohibited by applicable law or court order, you agree, prior to
disclosure thereof, to notify the Company of any request for disclosure of any
such non-public information (A) by any governmental agency or representative
thereof (other than any such request in connection with an examination of your
financial condition by such governmental agency) or (B) pursuant to legal
process and (y) that in no event shall you be obligated to return any materials
furnished to you pursuant to this Confidentiality Agreement.
Please indicate your agreement to the foregoing by signing as
provided below the enclosed copy of this Confidentiality Agreement and returning
the same to us.
Very truly yours,
[INSERT NAME OF LENDER]
By
--------------------------
The foregoing is agreed to as of the date of this letter.
[INSERT NAME OF PROSPECTIVE
PARTICIPANT OR ASSIGNEE]
By
------------------------
Conformed Copy
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-60209 of B/E Aerospace, Inc. on Form S-3 of our
report dated April 15, 1998, appearing in and incorporated by reference in the
Annual Report on Form 10-K of B/E Aerospace, Inc. for the year ended February
28, 1998 and to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Costa Mesa, California
September 8, 1998
Exhibit 23.2
CONSENT OF SHEARMAN & STERLING
[INCLUDED IN EXHIBIT 5.1]
Conformed Copy
Exhibit 23.3
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated February 7, 1998, except for Note 20,
as to which the date is August 7, 1998, relating to the consolidated and
combined financial statements of SMR Aerospace, Inc. (an S Corporation), its
affiliates, and subsidiaries, which appears in the Form 8-K of B/E Aerospace,
Inc. dated August 7, 1998 and to the reference to our Firm under the caption
"Experts" in the Form S-3.
/s/ Zalik, Torok, Kirgesner, Cook & Co.
Cleveland, Ohio
September 10, 1998
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
BY AND AMONG
BE AEROSPACE, INC.,
BE ACQUISITION CORP.,
AEROSPACE INTERIORS, INC.,
GREGORY AND DEBORAH FODELL PARTNERSHIP, LTD.,
GREGORY AND DEBORAH FODELL PARTNERSHIP II, LTD.
AND
GREGORY N. FODELL
MARCH 27, 1998
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TABLE OF CONTENTS
1. Definitions............................................................1
1.1. Rules of Construction......................................9
2. The Merger............................................................10
2.1. Constituent Corporations; Surviving Corporation...........10
2.2. Articles of Incorporation and By-Laws of the Surviving
Corporation.............................................10
2.3. Directors and Officers of the Surviving Corporation.......10
2.4. Conversion of the Shares..................................10
2.5. The Closing...............................................11
2.6. Deliveries at the Closing.................................11
2.7. Surrender of Shares; Stock Transfer Books.................11
2.8. Further Assurances........................................12
3. Representations and Warranties of the Sellers.........................12
3.1. Organization of the Company...............................12
3.2. Capitalization and Ownership of the Company...............13
3.3. Authorization of Transaction..............................13
3.4. Noncontravention..........................................14
3.5. Brokers' Fees.............................................14
3.6. Title to Assets...........................................14
3.7. All Assets Necessary to Conduct Business..................14
3.8. Subsidiaries..............................................15
3.9. Financial Statements......................................15
3.10. Indebtedness; Guarantees..................................15
3.11. Absence of Changes........................................15
3.12. Absence of Undisclosed Liabilities........................17
3.13. Legal and Other Compliance................................18
3.14. No Material Adverse Change................................18
3.15. Taxes.....................................................18
3.16. Property, Plant and Equipment.............................20
3.17. Intellectual Property.....................................22
3.18. Inventories...............................................24
3.19. Contracts.................................................25
3.20. Notes and Accounts Receivable.............................26
3.21. Powers of Attorney........................................27
3.22. Insurance and Risk Management.............................27
3.23. Litigation................................................28
3.24. Product Warranties; Defects; Liability....................28
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3.25. Employees.................................................28
3.26. Employee Benefits.........................................29
3.27. Environment, Health, and Safety...........................31
3.28. Affiliated Transactions...................................33
3.29. Government Contracts......................................33
3.30. Distributors, Customers, Suppliers........................33
3.31. No Illegal Payments.......................................34
3.32. Books and Records.........................................34
3.33. Consents..................................................34
3.34. Disclosure................................................34
3.35. Officers and Employees....................................34
3.36. Investment Intent; Related Matters, including Securities
Law Matters.............................................35
4. Representations and Warranties of the Buyer and Acquisition...........36
4.1. Organization of the Buyer.................................36
4.2. Authorization of Transaction..............................36
4.3. Noncontravention..........................................36
4.4. Brokers' Fees.............................................36
4.5. Investment Intent.........................................36
4.6. Status of B/E Common Stock................................37
4.7. Information Concerning Buyer..............................37
4.8. No Reliance...............................................37
5. Covenants.............................................................37
5.1. General...................................................37
5.2. Notices and Consents......................................37
5.3. Operation of Business.....................................37
5.4. Preservation of Business..................................38
5.5. Full Access...............................................38
5.6. Notice of Developments....................................38
5.7. Exclusivity...............................................38
5.8. Title Insurance...........................................38
5.9. Access to Records after Closing...........................38
5.10. Escrow of Shares Pending Resolution of Certain
Pre-Closing Matters.....................................39
5.11. Pooling of Interests Accounting Treatment.................41
5.12. Plan of Reorganization and other Tax Matters..............41
5.13. Registration Rights.......................................42
5.14. Insurance...............................................49
5.15. Future Assurances.........................................49
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6. Conditions to Obligation to Close.....................................50
6.1. Conditions to Obligation of the Buyer.....................50
6.2. Conditions to Obligations of the Sellers..................52
7. Confidentiality.......................................................53
8. Noncompetition........................................................53
9. Indemnification.......................................................54
9.1. Survival of Representations and Warranties................54
9.2. Indemnity by Sellers......................................54
9.3. [Reserved]................................................55
9.4. Indemnity by Buyer........................................55
9.5. Matters Involving Third Parties...........................55
9.6. Other Indemnification Provisions..........................57
9.7. Exclusive Remedy. ........................................57
10. Termination...........................................................57
10.1. Termination of Agreement..................................57
10.2. Effect of Termination.....................................58
11. Miscellaneous.........................................................58
11.1. Press Releases and Public Announcements...................58
11.2. No Third Party Beneficiaries..............................58
11.3. Entire Agreement..........................................58
11.4. Succession and Assignment.................................58
11.5. Counterparts..............................................58
11.6. Headings..................................................58
11.7. Notices...................................................58
11.8. Governing Law.............................................60
11.9. Amendments and Waivers....................................60
11.10.Severability..............................................60
11.11.Expenses..................................................60
11.12.Construction..............................................60
11.13.Incorporation of Exhibits and Schedules...................61
11.14.Specific Performance......................................61
11.15.Arbitration...............................................61
11.16.Waiver of Jury Trial......................................62
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Exhibits
A - Letter of Instruction to Escrow Agent
B - Articles of Merger
C - Financial Statements
D - Form of Employment, Consulting and Noncompetition Agreement
E - Form of Opinion of Bracewell & Patterson, counsel to the Company and the
Sellers
F - Form of Opinion of Ropes & Gray, counsel to the Buyer
Schedules
Disclosure Schedule -- Exceptions to Representations and Warranties
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AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
This Agreement and Plan of Reorganization and Merger (the "Agreement") is
entered into on March 27, 1998, by and among (i) BE AEROSPACE, INC., a Delaware
corporation (the "Buyer"), (ii) BE ACQUISITION CORP., a Texas corporation and a
wholly-owned subsidiary of the Buyer ("Acquisition"), (iii) AEROSPACE INTERIORS,
INC., a Texas corporation (the "Company"), (iv) GREGORY AND DEBORAH FODELL
PARTNERSHIP, LTD. and GREGORY AND DEBORAH FODELL PARTNERSHIP II, LTD.
(collectively, the "Stockholders"), the holders of all of the outstanding
capital stock of the Company (the "Shares") and (v) Gregory N. Fodell ("Mr.
Fodell" and collectively with the Stockholders, the "Sellers"). The Buyer,
Acquisition, the Company and the Sellers are collectively referred to herein as
the "Parties."
RECITALS
1. This Agreement contemplates a transaction in which Acquisition will be
merged with and into the Company as a result of which the Company will be the
surviving corporation and a wholly-owned subsidiary of Buyer, upon the terms and
subject to the conditions set forth herein and pursuant to the Business
Corporation Act of the State of Texas (the "Texas BCA"). The Parties intend that
this transaction will constitute a "reorganization" described in ss.
368(a)(2)(E) of the Code (as hereinafter defined) and that the Buyer will be
able to account for the acquisition on a "pooling of interests" method (as such
term is used in Accounting Principles Board Opinion No. 16).
2. Mr. Fodell is a general partner and limited partner of each of the
Stockholders and thereby has control of, and a substantial portion of the
economic interest in, such entities and, as a result, will receive a substantial
portion of the economic benefits of the transactions contemplated hereby. Buyer
has informed Mr. Fodell that Buyer would not be willing to enter into this
Agreement without Mr. Fodell being a party hereto on the terms and conditions
set forth herein, and Mr. Fodell wishes to induce the Buyer to enter into this
Agreement and consummate the transactions contemplated hereby.
AGREEMENT
Therefore, in consideration of the premises and the mutual promises herein
made, and in consideration of the representations, warranties, and covenants
herein contained, the Parties agree as follows.
1. Definitions.
"Acquisition" has the meaning set forth in the preamble.
<PAGE>
"Affiliate" means, as to the Company (or, if another Person is specified, as
to such other specified Person), (i) each Person directly or indirectly
controlling, controlled by or under direct or indirect common control with the
Company (or such specified Person), including without limitation, in the case of
the Company, each Seller, (ii) any Person who is or has been within two years of
the time in question an officer, director or direct or indirect beneficial
holder of at least 5% of any class of the outstanding capital stock of any
Person referred to in clause (i) above and the members of the immediate family
of each such officer, director or holder (and, if such specified Person is a
natural person, of such specified Person), and (iii) each Person of which the
Company (or such specified Person) or an Affiliate (as defined in clauses (i) or
(ii) above) thereof shall, directly or indirectly, beneficially own at least 5%
of any class of outstanding capital stock or other evidence of beneficial
interest.
"Affiliated Group" means any affiliated group within the meaning of Code ss.
1504(a) or any similar group defined under a similar provision of state, local,
or foreign Law.
"Aggregate Merger Consideration Amount" means $5,605,772.82.
"Agreement" has the meaning set forth in the preamble.
"Articles of Merger" means the articles of merger attached as Exhibit B
hereto.
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that could reasonably be expected to form the
basis for any specified consequence.
"B/E Common Stock" means the common stock of the Buyer, par value $0.01 per
share.
"B/E Shares" has the meaning set forth in ss. 2.4.
"Buyer" has the meaning set forth in the preamble.
"Certificates" has the meaning set forth in ss. 2.7(a).
"Chemical Substance" means any chemical substance, including but not limited
to any (i) pollutant, contaminant, irritant, chemical, raw material,
intermediate, product, by-product, slag, construction debris; (ii) industrial,
solid, liquid or gaseous toxic or hazardous substance, material or waste, (iii)
petroleum or any fraction thereof; (iv) asbestos or asbestos-containing
material; (v) polychlorinated biphenyl; (vi) chlorofluoracarbons; and (vii)
other substance, material or waste, which is identified or regulated under any
Environmental Law or Safety Law, as now and hereinafter in effect, or other
comparable laws.
"Class A Common Stock" has the meaning set forth in ss. 3.2.
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"Class B Common Stock" has the meaning set forth in ss. 3.2.
"Closing" has the meaning set forth in ss. 2.5.
"Closing Date" has the meaning set forth in ss. 2.5.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the preamble.
"Company Common Stock" has the meaning set forth in ss. 3.2.
"Confidential Information" means any and all material information concerning
the affairs of any Party or its Affiliates other than that information which is
already generally known by or readily obtainable by the public through no fault
of another Party.
"Contractual Obligation" means, with respect to any Person, any contract,
agreement, deed, mortgage, lease, license, indenture, commitment, undertaking,
arrangement or understanding, written or oral, or other document or instrument,
including, without limitation, any document or instrument evidencing or
otherwise relating to any indebtedness but excluding the Charter and By-laws of
such Person, to which or by which such Person is a party or otherwise subject or
bound or to which or by which any property or right of such Person is subject or
bound.
"Controlled Group of Corporations" has the meaning set forth in Code ss.
1563.
"Deferred Intercompany Transaction" has the meaning set forth in Treas. Reg.
ss. 1.1502- 13.
"Disclosing Party" has the meaning set forth in ss. 7.
"Disclosure Schedule" has the meaning set forth in ss. 3.
"Effective Date" means the date on which the Effective Time occurs.
"Effective Time" means the time at which the Articles of Merger shall be
duly filed in the office of the Secretary of State of the State of Texas, which
in any event shall be as soon as practicable immediately following the Closing.
"Employee Benefit Plan" means any (a) nonqualified deferred compensation or
retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c)
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qualified defined benefit retirement plan or arrangement which is an Employee
Pension Benefit Plan (including any Multiemployer Plan), (d) Employee Welfare
Benefit Plan or material fringe benefit plan or program or (e) profit sharing,
bonus, stock option, stock purchase, equity, stock appreciation, deferred
compensation, incentive, severance plan or other benefit plan.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA ss. 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA ss. 3(1).
"Environment" means soil, land surface or subsurface strata, real property,
surface waters (including navigable waters, ocean waters, streams, ponds,
drainage basins and wetlands), groundwater, water body sediments, drinking water
supply, stream sediments, ambient air (including indoor air), plant and animal
life and any other environmental medium or natural resource.
"Environmental Laws" mean the Comprehensive Environmental Response,
Compensation and Liability Act, the Resource Conservation and Recovery Act, the
Clean Air Act, and the Clean Water Act, each, as amended or hereinafter in
effect and any other federal, state, local or foreign Law or legal requirement,
as now or hereinafter in effect, relating to: (a) the Release, containment,
removal, remediation, response, cleanup or abatement of any sort of any Chemical
Substance; (b) the manufacture, generation, formulation, processing, labeling,
distribution, introduction into commerce, use, treatment, handling, storage,
recycling, disposal or transportation of any Chemical Substance; (c) exposure of
persons, including employees, to any Chemical Substance; (d) the physical
structure, use or condition of a building, facility, fixture or other structure,
including, without limitation, those relating to the management, use, storage,
disposal, cleanup or removal of asbestos, asbestos-containing materials,
polychlorinated biphenyls or any other Chemical Substance; (e) the pollution,
protection or clean up of the Environment; or (f) noise.
"Environmental Liabilities and Costs" means all Losses incurred: (i) to
comply with any Environmental Law; (ii) as a result of a Release of any Chemical
Substance; or, (iii) as a result of any environmental conditions present at,
created by or arising out of the past or present operations of Sellers or the
Company through the Closing Date or of any prior owner or operator of a facility
or site at which Sellers or the Company now operate or have previously operated.
"Environmental Permit" means any Permit or authorization from any
governmental authority required under, issued pursuant to, or authorized by any
Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
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"Escrow Agent" has the meaning set forth in ss. 5.10.
"Escrowed Shares" has the meaning set forth in ss. 2.4.
"Extremely Hazardous Substance" has the meaning set forth in ss. 302 of the
Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"Fiduciary" has the meaning set forth in ERISA ss. 3(21).
"Financial Statements" has the meaning set forth in ss. 3.9.
"Formula Price Per Share" means $27.765625.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Indebtedness" has the meaning set forth in ss. 3.10.
"Indemnified Party" has the meaning set forth in ss. 9.5(a).
"Indemnifying Party" has the meaning set forth in ss. 9.5(a).
"Intellectual Property" means the entire right, title and interest in and to
all proprietary rights of every kind and nature, including patents, copyrights,
Trademarks, mask works, trade secrets and proprietary information, all
applications for any of the foregoing, and any license or agreements granting
rights related to the foregoing (i) subsisting in, covering, reading on,
directly applicable to or existing in the Products or the Technology; (ii) that
are owned, licensed or controlled in whole or in part by the Company and relate
to the business of the Company; or (iii) that are used in or necessary to the
development, manufacture, sales, marketing or testing of the Products.
"Knowledge" means actual knowledge after reasonable investigation and, when
used with respect to the Sellers or the Company, shall include the knowledge of
each member of the Management Group.
"Laws" means all laws, rules, regulations, codes, injunctions, judgments,
orders, decrees, rulings, interpretations, constitution, ordinance, common law,
or treaty, of any federal, state, local municipal and foreign, international, or
multinational government or administration and related agencies.
"Liability" means any liability or obligation (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether
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liquidated or unliquidated, whether incurred or consequential and whether due or
to become due), including any liability for Taxes.
"Lien" means any mortgage, pledge, lien, security interest, charge, claim,
equitable interest, encumbrance, restriction on transfer, conditional sale or
other title retention device or arrangement (including, without limitation, a
capital lease), transfer for the purpose of subjection to the payment of any
Indebtedness, or restriction on the creation of any of the foregoing, whether
relating to any property or right or the income or profits therefrom; provided,
however, that the term "Lien" shall not include (i) statutory liens for Taxes to
the extent that the payment thereof is not in arrears or otherwise due, (ii)
encumbrances in the nature of zoning restrictions, easements, rights or
restrictions of record on the uses of real property if the same do not detract
from the value of the property encumbered thereby or impair the use of such
property in the business of the Company as currently conducted or proposed to be
conducted, (iii) statutory or common law liens to secure landlords, lessors or
renters under leases or rental agreements confined to the premises rented to the
extent that no payment or performance under any such lease or rental agreement
is in arrears or is otherwise due, (iv) deposits or pledges made in connection
with, or to secure payment of, worker's compensation, unemployment insurance,
old age pension programs mandated under applicable Laws or other social security
regulations and (v) statutory or common law liens in favor of carriers,
warehousemen, mechanics and materialmen, statutory or common law liens to secure
claims for labor, materials or supplies and other like liens, which secure
obligations to the extent that payment thereof is not in arrears or otherwise
due in the case of (i) - (v), which have been incurred in the Ordinary Course of
Business.
"Losses" has the meaning set forth in ss. 9.2.
"Management Group" has the meaning set forth in ss. 3.35.
"Material Adverse Effect" means any adverse effect on the business, assets,
operations, prospects or condition, financial or otherwise, of the Company
which, when considered either singly or in the aggregate together with all other
such effects with respect to which such phrase is used in this Agreement,
constitutes a material adverse effect on the business, assets, operations,
prospects or condition, financial or otherwise, of the Company taken as a whole.
"Merger" shall mean the merger of Acquisition with and into the Company,
with the Company being the Surviving Corporation, in accordance with the
provisions of this Agreement and the Articles of Merger.
"Most Recent Balance Sheet" has the meaning set forth in ss. 3.9.
"Most Recent Financial Statements" means the Financial Statements for the
Most Recent Fiscal Year End.
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"Most Recent Fiscal Year End" has the meaning set forth in ss. 3.9.
"Multiemployer Plan" has the meaning set forth in ERISA ss. 3(37).
"Ordinary Course of Business" means the ordinary course of business of the
Company consistent with past custom and practice (including with respect to
quantity and frequency).
"Party" and "Parties" have the meanings set forth in the preamble.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Per-Share Consideration Amount" means an amount equal to (x) the Aggregate
Merger Consideration Amount divided by (y) the aggregate number of shares of
Company Common Stock outstanding at the Effective Time.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"Products" means all current products and services of the Company, any
subsequent versions of such products or services currently being developed, any
products or services currently being developed by the Company which are designed
to supersede, replace or function as a component of such products or services,
and any upgrades, enhancements, improvements and modifications to the foregoing.
"Prohibited Transaction" has the meaning set forth in ERISA ss. 406 and Code
ss. 4975.
"Public Offering" has the meaning set forth in ss. 5.13(a)(ii)
"Registrable Securities" has the meaning set forth in ss. 5.13(a)(i).
"Release" means any actual, threatened or alleged spilling, leaking,
pumping, pouring, emitting, dispersing, emptying, discharging, injecting,
escaping, leaching, dumping, or disposing of any Chemical Substance into the
Environment that may cause an Environmental Liability and Cost (including the
disposal or abandonment of barrels, containers, tanks or other receptacles
containing or previously containing any Chemical Substance).
"Release Date" has the meaning set forth in ss. 5.10(a).
"Reportable Event" has the meaning set forth in ERISA ss. 4043.
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"Safety Laws" means any federal, state, local and foreign Law or legal
requirement relating to health or safety, including the Occupational Safety and
Health Act, as amended, as now or hereinafter in effect relating to (a) exposure
of employees to any Chemical Substance or (b) the physical structure, use or
condition of a building, facility, fixture or other structure, including,
without limitation, those relating to equipment or manufacturing processes, or
the management, use, storage, disposal, cleanup or removal of any Chemical
Substance.
"Safety Liabilities and Costs" means all Losses incurred to comply with any
Safety Law or as a result of any health or safety conditions present at, created
by or arising out of the past or present operations of the Company through the
Closing Date.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Sellers" has the meaning set forth in the preamble.
"Shares" has the meaning set forth in the preamble.
"Subsidiary" means with respect to any Person, (i) any corporation at least
a majority of whose outstanding voting stock is owned, directly or indirectly,
by such Person or by one or more of its Subsidiaries, or by such Person and one
or more of its Subsidiaries; (ii) any general partnership, joint venture or
similar entity, at least a majority of whose outstanding partnership or similar
interests shall at the time be owned by such Person, or by one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries; (iii) any
limited partnership of which such Person or any of its Subsidiaries is a general
partner or at least a majority of whose ownership interests is owned, directly
or indirectly, by such Person or by one or more of its Subsidiaries, or by such
Person and one or more of its Subsidiaries; and (iv) any limited liability
company at least a majority of whose ownership interests is owned, directly or
indirectly, by such Person or by one or more of its Subsidiaries, or by such
Person and one or more of its Subsidiaries. For the purposes of this definition,
"voting stock" or "ownership interests" means shares, interests, participations
or other equivalents in the equity interest (however designated) in such Person
having ordinary voting power for the election of a majority of the directors (or
the equivalent) of such Person other than shares, interests, participations or
other equivalents having such power only by reason of the occurrence of a
contingency.
"Surviving Corporation" has the meaning set forth in ss. 2.1.
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"Tax" or "Taxes" means taxes, fees, levies, duties, tariffs, imposts, and
governmental impositions or charges of any kind in the nature of (or similar to)
taxes, payable to any federal, state, local or foreign taxing authority,
including, without limitation, income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under Code ss. 59A), customs duties, capital
stock, franchise, profits, withholding, social security (or similar, including
FICA), unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Technology" means all inventions, copyrightable works, discoveries,
innovations, know-how, information (including ideas, research and development,
know-how, formulas, compositions, processes and techniques, technical data,
designs, drawings, specifications, customer and supplier lists, pricing and cost
information, business and marketing plans and proposals, documentation, and
manuals), computer software, computer hardware, integrated circuits and
integrated circuit masks , electronic, electrical and mechanical equipment and
all other forms of technology, including improvements, modifications,
derivatives or changes, whether tangible or intangible, embodied in any form,
whether or not protectible or protected by patent, copyright, mask work right,
trade secret law or otherwise.
"Texas BCA" has the meaning set forth in the recitals.
"Third Party Claim" has the meaning set forth in ss. 9.5(a).
"Trademarks" means any trademarks, service marks, trade dress, and logos,
together with all translations, adaptations, derivations, and combinations
thereof and including all goodwill associated therewith.
1.1. Rules of Construction. The following provisions shall be applied
wherever appropriate herein: (a) "herein", "hereby", "hereunder", "hereof" and
other equivalent words shall refer to this Agreement as an entirety and not
solely to the particular portion of this Agreement in which any such word is
used; (b) all definitions set forth herein shall include the singular and the
plural; (c) wherever used herein, any pronoun shall be deemed to include both
the singular and plural and to cover all genders; (d) except as otherwise stated
herein, all references or citations in this Agreement to statutes or regulations
or statutory regulatory provisions, shall, when the context requires, be
considered citations to such statutes, regulations or provisions as in effect
from time to time, including any successor statutes, regulations or provisions
directly or indirectly superseding such statutes, regulations or
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provisions; and (e) any references herein to a particular Section, Article,
Exhibit or Schedule means a Section or Article of, or Schedule or Exhibit to,
this Agreement unless another agreement is specified.
2. The Merger.
2.1. Constituent Corporations; Surviving Corporation. Acquisition and the
Company shall be the constituent corporations to the Merger. Subject to the
terms and conditions of this Agreement, at the Effective Time, Acquisition shall
be merged with and into the Company in accordance with the Texas BCA, and the
Company shall be the surviving corporation of the Merger (the "Surviving
Corporation"). At the Effective Time, the identity and separate existence of
Acquisition shall cease, and the Surviving Corporation shall continue its
corporate existence under the laws of the State of Texas as a wholly-owned
subsidiary of Buyer. Without limiting the generality of the foregoing, from and
after the Effective Time, the Surviving Corporation shall possess all of the
rights, privileges, powers, franchises, properties and other interests of the
Company and Acquisition.
2.2. Articles of Incorporation and By-Laws of the Surviving Corporation.
From and after the Effective Time and thereafter until amended as provided by
law, (i) the Articles of Incorporation of the Surviving Corporation shall be the
Articles of Incorporation of Acquisition, except that the name of the Surviving
Corporation shall be "Aerospace Interiors, Inc." and (ii) the Bylaws of the
Surviving Corporation shall be the By-laws of Acquisition.
2.3. Directors and Officers of the Surviving Corporation. The directors and
officers of the Surviving Corporation immediately following the Merger shall be
the directors and officers of Acquisition immediately prior to the Merger and
all such directors and officers shall hold office until their respective
successors are duly elected and qualified.
2.4. Conversion of the Shares. At the Effective Time by virtue of the Merger
and without any action on the part of Acquisition or any Seller:
(a) Each Share issued and outstanding immediately prior to the Effective
Time (other than any Shares to be canceled pursuant to ss. 2.4(b)) shall be
canceled and shall be converted automatically into the right to receive a
number of shares of B/E Common Stock equal to (w) the Per-Share
Consideration Amount divided by (x) the Formula Price Per Share; provided,
however, that (y) a portion of the shares of B/E Common Stock issuable
pursuant to the Merger in respect of the Shares shall be delivered into
escrow and held as specified in ss. 5.10 (all such shares issuable pursuant
to the Merger, including the Escrowed Shares, being referred to herein as
the "B/E Shares" and said portion of the B/E Shares subject to the escrow
provisions of ss. 5.10 being referred to herein as the "Escrowed Shares")
and the Escrowed Shares shall be distributed to the Sellers only upon
release by the Escrow Agent as provided in ss. 5.10 upon and subject to
resolution of the
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matters referred to in ss. 9.2 and (z) no fractional shares of B/E Common
Stock shall be issued pursuant to the Merger, with each Person otherwise
entitled to such a fractional share being entitled to cash, payable by check
of the Surviving Corporation, in an amount equal to such fractional share
valued at Formula Price Per Share.
(b)Notwithstanding the provisions of paragraph (a) of this ss. 2.4, each
Share held in the treasury of the Company and each Share owned by
Acquisition or by Buyer immediately prior to the Effective Time shall be
canceled without any conversion thereof and no payment or distribution shall
be made with respect thereto.
(c)Each share of Acquisition common stock, par value $.01 per share,
issued and outstanding immediately prior to the Effective Time shall be
converted into and exchanged for one validly issued, fully paid and
nonassessable share of common stock, par value $.01 per share, of the
Surviving Corporation.
2.5. The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Bracewell &
Patterson in Houston, Texas, commencing at 10:00 a.m. Houston time on March 27,
1998 or such other date as the Parties may mutually determine (the "Closing
Date").
2.6. Deliveries at the Closing. At the Closing, (a) the Sellers will deliver
to the Buyer the various certificates, instruments and documents referred to in
ss. 6.1, and (b) the Buyer will deliver the certificates, instruments and
documents referred to in ss. 6.2.
2.7. Surrender of Shares; Stock Transfer Books.
(a) As promptly as practicable after the Effective Time, each holder
(other than the Company, Acquisition or the Buyer, if applicable) of any
outstanding certificate or certificates theretofore representing the Shares
converted in the Merger as described in ss. 2.4(a) shall surrender the same
to the Surviving Corporation for cancellation (the "Certificates"). Upon
surrender of a Certificate to the Surviving Corporation, the holder of such
certificate shall be entitled to receive in exchange therefor a certificate
or certificates representing the number of B/E Shares to which such holder
is entitled pursuant to the Merger (subject to the escrow provisions
contemplated by ss.ss. 2.4 and 5.10) and cash in lieu of any fractional
share otherwise to be so issued. The Buyer shall take all steps necessary to
enable and cause the Surviving Corporation to fulfill promptly its
obligations under this ss. 2.7. Subject to the restrictions on transfer
referred to in the last sentence of ss. 5.10, if the B/E Shares are to be
issued to a Person other than the Person in whose name the surrendered
Certificate is registered on the stock transfer books of the Company, it
shall be a condition of issuance of such B/E Shares that the Certificate so
surrendered shall be endorsed properly or otherwise be in proper form for
transfer and that the Person requesting such payment shall have paid all
transfer and other
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Taxes required by reason of the issuance of B/E Shares pursuant to the
Merger in accordance with ss. 2.4 to a Person other than the registered
holder of the Certificate surrendered or shall have established to the
satisfaction of the Surviving Corporation that such Taxes either have been
paid or are not applicable.
(b) If any Certificate shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed and subject to such other
conditions as the Board of Directors of the Surviving Corporation may
impose, the Surviving Corporation shall cause the Buyer to issue in exchange
for such lost, stolen or destroyed Certificate the B/E Shares deliverable in
respect thereof as determined in accordance herewith (subject to the escrow
provisions contemplated by ss.ss. 2.4 and 5.11). When authorizing such issue
of the B/E Shares in exchange therefor, the Board of Directors of the
Surviving Corporation (or any authorized officer thereof) may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Certificate to give the Surviving
Corporation a bond in such sum as the Board of Directors may direct as
indemnity against any claim that may be made against the Surviving
Corporation with respect to the Certificate alleged to have been lost,
stolen or destroyed.
(c) At the close of business on the Effective Date, the stock transfer
books of the Company shall be closed, and no transfer of Shares shall
thereafter be made on such books. From and after the Effective Time, the
holders of Shares outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to such shares except as otherwise
provided herein or by applicable law.
2.8. Further Assurances. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other acts or things are necessary or
desirable to vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation, its right, title or interest in or to any of the rights, properties
or assets of the Company or Acquisition or otherwise to carry out the purposes
of this Agreement, the Surviving Corporation and its officers and directors
shall be authorized to execute and deliver, in the name and on behalf of the
Company or Acquisition, all such deeds, bills of sale, assignments and
assurances and to do, in the name and on behalf of the Company or Acquisition,
all such other acts and things necessary or desirable to vest, perfect or
confirm any and all right, title or interest in, to or under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out the
purposes of this Agreement.
3. Representations and Warranties of the Sellers. The Sellers jointly and
severally represent and warrant to the Buyer as follows as of the date of this
Agreement:
3.1. Organization of the Company. The Company is a Texas corporation, duly
organized, validly existing, and in good standing under the Laws of the State of
Texas. Copies
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of the articles of incorporation and bylaws of the Company, each as amended to
date, have been heretofore delivered to Buyer and are accurate and complete. The
Company is qualified to do business and is in good standing as a foreign
corporation in each jurisdiction listed in ss. 3.1 of the Disclosure Schedule,
which such jurisdictions are the only jurisdictions where the nature of the
activities conducted by the Company or the character of the property owned,
leased or operated by it make such qualification necessary or appropriate,
except for those jurisdictions where the failure to be so qualified will not
have a Material Adverse Effect.
3.2. Capitalization and Ownership of the Company. The authorized capital
stock of the Company consists of 1,000,000 shares of Class A Common Stock, $0.10
par value per share (the "Class A Common Stock"), and 1,000,000 shares of Class
B Common Stock, $0.10 par value per share (the "Class B Common Stock" and
collectively with the Class A Common Stock, the "Company Common Stock"). As of
the date hereof, there are issued and outstanding (a) 10,000 shares of Class A
Common Stock and 100,000 shares of Class B Common Stock, of which no shares are
held as treasury stock and 10,000 shares of Class A Common Stock and 100,000
shares of Class B Common Stock are held of record and beneficially by the
Persons and in the respective amounts set forth on ss. 3.2 of the Disclosure
Schedule, free and clear of any Liens, except as set forth in ss. 3.2 of the
Disclosure Schedule. All of the outstanding shares of Company Common Stock have
been validly issued, are fully paid and nonassessable. Except as set forth in
ss. 3.2 to the Disclosure Schedule, there are no agreements restricting the
transfer of, or affecting the rights of any holder of, the shares of Company
Common Stock or any other shares of the Company's capital stock, there are no
preemptive rights on the part of any holder of any class of securities of the
Company and no outstanding options, warrants, rights, or other agreements or
commitments of any kind obligating the Company, contingently or otherwise, to
issue or sell any shares of its capital stock or any securities or obligations
convertible into, or exchangeable for, any shares of its capital stock, and no
authorization therefor has been given. Section 3.2 of the Disclosure Schedule
sets forth the names of the record holders of all outstanding options, warrants
or other rights to purchase, sell or otherwise dispose of, or rights to exchange
or convert into, any shares of the Company's capital stock and the number of
shares, exercise prices and expiration dates of such options, warrants or other
rights. None of the outstanding shares of capital stock of the Company was
issued in violation of the Securities Act or the securities or blue sky laws of
any state or jurisdiction, which violation would have a Material Adverse Effect.
Each Stockholder has full right, power and authority to transfer the Shares in
the respective amounts as set forth in ss. 3.2 of the Disclosure Schedule to
Buyer, free and clear of any Liens, other than as set forth in ss. 3.2 of the
Disclosure Schedule.
3.3. Authorization of Transaction. Each of the Sellers and the Company has
the legal capacity, power and authority (including, in the case of the Company,
full corporate power and authority) to execute and deliver this Agreement and to
perform their respective obligations hereunder. All corporate and other actions
or proceedings to be taken by or on the part of the Company or the Sellers to
authorize and permit the execution and delivery by the Company and the Sellers
of this Agreement and the respective instruments required to be
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executed and delivered by the Company and the Sellers pursuant hereto, the
performance by the Company and the Sellers of their respective obligations
hereunder, and the consummation by the Company and the Sellers of the
transactions contemplated herein, have been duly and properly taken. This
Agreement has been duly executed and delivered by each of the Company and the
Sellers and constitutes the legal, valid and binding obligation of each of the
Company and the Sellers, enforceable in accordance with its terms and
conditions.
3.4. Noncontravention. Except as set forth in ss. 3.4 of the Disclosure
Schedule, neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby (including any of the
agreements and instruments required to be delivered pursuant to ss. 2), will (i)
violate any Law or other restriction of any government, governmental agency, or
court to which any of the Company or the Sellers or any of their property is
subject or any provision of the articles of incorporation or by-laws of the
Company or the limited partnership agreements of the Sellers or (ii) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any Contractual Obligation to which any
of the Company or the Sellers is a party or by which any of them is bound or to
which any of their assets is subject (or result in the imposition of any Lien
upon any of their assets). Neither the Company nor the Sellers needs to give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement except for the filing
of the Articles of Merger with the Secretary of State of the State of Texas.
3.5. Brokers' Fees. Except as disclosed in ss. 3.5 of the Disclosure
Schedule, none of the Company or the Sellers has any Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Buyer or the Company
could become liable or obligated.
3.6. Title to Assets. Except as disclosed in ss. 3.6 of the Disclosure
Schedule, the Company has good and marketable title to, or a valid and
subsisting leasehold interest in, and the power to sell the properties and
assets used by it, located on its premises, or reflected on the Most Recent
Balance Sheet or acquired after the date thereof, free and clear of all Liens,
except for properties and assets disposed of in the Ordinary Course of Business
since the date of the Most Recent Balance Sheet.
3.7. All Assets Necessary to Conduct Business. The assets, properties and
rights of the Company reflected in the Most Recent Balance Sheet comprise all of
the assets, properties and rights of every type and description, real, personal,
tangible and intangible used by the Company in, and, in the reasonable opinion
of the management of the Company, necessary to, the conduct of the Company's
business as currently conducted.
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3.8. Subsidiaries. The Company has no Subsidiaries and does not own,
directly or indirectly, any capital stock of any partnership or other ownership
interest in, or any other security issued by, any other Person.
3.9. Financial Statements. Attached hereto as Exhibit C are the following
financial statements (collectively the "Financial Statements"): unaudited
balance sheets and statements of income as of and for the fiscal years ended
December 31, 1994, 1995, 1996 and 1997 (December 31, 1997 being the "Most Recent
Fiscal Year End") and an unaudited consolidated balance sheet as of January 31,
1998 (the January 31, 1998 balance sheet being the "Most Recent Balance Sheet")
for the Company. Except as disclosed in ss. 3.9 of the Disclosure Schedule, the
Financial Statements, are correct and complete and present fairly the financial
condition of the Company as of such dates and the results of operations of the
Company for such periods and are consistent with the books and records of the
Company.
3.10. Indebtedness; Guarantees. Except as set forth in the Most Recent
Balance Sheet, the Company has no indebtedness for borrowed money or for the
deferred purchase price of property or services (other than trade payables and
other accrued current liabilities incurred in the Ordinary Course of Business),
or capital lease obligations, conditional sale or other title retention
agreements ("Indebtedness"). The Company is not a guarantor or otherwise liable
for any Liability or obligation of any other Person.
3.11. Absence of Changes. Since the Most Recent Fiscal Year End and except
as disclosed in ss. 3.11 of the Disclosure Schedule, the Company has conducted
its business only in the Ordinary Course of Business and there has not been:
(a) any sale, lease, transfer, or assignment of any of the Company's
assets, tangible or intangible, other than sales of inventory for a fair
consideration in the Ordinary Course of Business;
(b) any Contractual Obligation (or series of Contractual Obligations)
entered into by the Company other than in the Ordinary Course of Business
and in an amount not in excess of $10,000;
(c) any acceleration, termination, modification, or cancellation of
any Contractual Obligation (or series of Contractual Obligations) to which
the Company is a party or by which it or any of its assets is bound;
(d) any creation or imposition of any Lien upon any of the Company's
assets, tangible or intangible;
(e) any capital expenditure (or series of related capital
expenditures) involving more than $10,000 singly or $50,000 in the
aggregate;
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(f) any capital investment in, any loan to, or any acquisition of the
securities or assets of, any other Person (or series of related capital
investments, loans, and acquisitions);
(g) any issuance of any note, bond, or other debt security or created,
incurred, assumed, or guaranteed any Indebtedness;
(h) any delay or postponement of payment of accounts payable or other
Liabilities outside the Ordinary Course of Business;
(i) any cancellation, compromise, waiver, or release of any right or
claim or Indebtedness (or series of related rights and claims);
(j) any grant of any license or sublicense of any rights or modified
any rights under or with respect to, or entered into any settlement
regarding any infringement of its rights to, any Intellectual Property;
(k) any issuance, sale, or other disposition of any capital stock, or
grant of any options, warrants, or other rights to purchase or obtain
(including upon conversion, exchange, or exercise) any of capital stock;
(l) any dividend or distribution (whether in cash or in kind) or
repurchase, redemption or retirement any of capital stock;
(m) any threat or notification, orally or in writing, that one or more
material distributors, customers or suppliers have terminated or intend to
terminate or are considering terminating its business relationships or have
modified or intend to modify such relationships with the Company in a
manner which is less favorable to the Company or have agreed not to or will
not agree to do business on such terms and subject to conditions at least
as favorable terms and conditions as provided to the Company on the date of
the Most Recent Balance Sheet Date or any actual termination or
modification of such relationships and neither the Sellers nor the Company
have any Knowledge of any Basis for such termination or modification;
(n) any damage, destruction, or loss (whether or not covered by
insurance) to its property in the aggregate in excess of $ 10,000;
(o) any loan to, or any other transaction with, any of the Company's
Affiliates or, outside the Ordinary Course of Business, with any other
employee;
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(p) any employment Contractual Obligation or collective bargaining
agreement, written or oral, or modification of the terms of any existing
such Contractual Obligation or agreement;
(q) any increase, modification or change in the compensation, bonus
structure or benefits of any of the Company's directors, officers,
consultants, agents and employees outside the Ordinary Course of Business;
(r) any adoption, amendment, modification or termination of any
Employee Benefit Plan or other plan, contract, or commitment for the
benefit of any director, officer, consultant, agent or employee of the
Company (or taken any such action with respect to any other Employee
Benefit Plan);
(s) any payment pursuant to any Employee Benefit Plan or other plan,
contract or commitment for the benefit of any director, officer,
consultant, agent or employee of the Company;
(t) any modification or change in the employment terms for any of its
directors, officers, consultants, agents or employees outside the Ordinary
Course of Business;
(u) any pledge to make or any charitable or other capital contribution
and no such contribution was made;
(v) any other occurrence, event, incident, action, failure to act, or
transaction outside the Ordinary Course of Business involving the Company
which could reasonably be expected to have a Material Adverse Effect;
(w) any Contractual Obligation entered into pursuant to which a party
thereto is entitled to a commission based on sales to or revenues or
profits derived from one or more customers, success fees, finders fees or
other compensation related to sales; and
(x) any commitment to any of the foregoing by any of the Company or
the Sellers.
3.12. Absence of Undisclosed Liabilities. The Company has no Liability
(and, to the Knowledge of the Sellers, there is no Basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against any Seller giving rise to any Liability of the
Company), except for (i) Liabilities disclosed in the Disclosure Schedule or not
required to be disclosed in the Disclosure Schedule because of a materiality
qualifier in a representation or warranty; (ii) Liabilities set forth on the
face of the Most Recent Balance Sheet (rather than in any notes thereto) and
(iii) Liabilities which have arisen after the date of
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the Most Recent Balance Sheet in the Ordinary Course of Business (none of which
Liabilities referred to under subsection (iii) of this ss. 3.12 results from,
arises out of, relates to, is in the nature of, or was caused by any breach of
contract, breach of warranty, tort, infringement, or violation of Law, and none
of which could lead to a Material Adverse Effect).
3.13. Legal and Other Compliance. Except as disclosed in ss. 3.13 of the
Disclosure Schedule, the Company is, and at all times prior to the date of this
Agreement has been, in compliance in all material respects with all applicable
Laws the violation of which could have a Material Adverse Effect and no action,
suit, proceeding, hearing, investigation, charge, complaint, claim, demand, or
notice has been filed or commenced against the Company alleging any failure so
to comply. Except as disclosed in ss. 3.13 of the Disclosure Schedule, neither
the transfer of the Shares to the Buyer and consummation of the transactions
contemplated hereby nor use of any of the properties of the Company nor the
conduct of its business conflicts with the rights of any other Person or
violates, or with the giving of notice or the passage of time or both will
violate, conflict with or result in a default, right to accelerate or loss of
rights under, any terms or provisions of any of its charter or by-laws or any
Lien, Contractual Obligation or Law to which the Company is a party or by which
it or any of its assets may be bound or affected. None of the Company or the
Sellers has Knowledge of any proposed governmental taking or condemnation which
would be applicable to the Company's business, operations or properties and
which could lead to a Material Adverse Effect.
3.14. No Material Adverse Change. Since the date of the Most Recent
Financial Statements, there has not been any change which has resulted in a
Material Adverse Effect and to the Knowledge of the Sellers no event has
occurred or circumstances exists that may reasonably be expected to result in
such a Material Adverse Effect.
3.15. Taxes.
(a) The Company has filed all Tax Returns that it was required to
file. All such Tax Returns were correct and complete. All Taxes owed by the
Company (whether or not shown on any Tax Return) have been paid. Except as
disclosed in ss. 3.15 of the Disclosure Schedule, the Company currently is
not the beneficiary of any extension of time within which to file any Tax
Return. No claim has ever been made by an authority in a jurisdiction where
the Company does not file Tax Returns that the Company may be subject to
taxation by that jurisdiction. There are no Liens on any of the assets of
the Company that arose in connection with any failure (or alleged failure)
to pay any Tax.
(b) The Company has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party.
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(c) There is no dispute, audit, investigation, proceeding or claim
concerning any Liability with respect to Taxes of the Company either (i)
claimed or raised by any authority in writing or (ii) as to which any of
the Company or the Sellers has Knowledge based upon contact with any such
authority. Except as set forth in ss. 3.15 of the Disclosure Schedule, (i)
no federal, state, local, and foreign income Tax Returns filed with respect
to the Company have been audited and (ii) none are currently open or the
subject of audit. The Sellers have delivered to the Buyer correct and
complete copies of all federal income Tax Returns, examination reports and
statements of deficiencies assessed against or agreed to by any of the
Company for the last three taxable years.
(d) The Company has not waived any statute of limitations in respect
of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency. Except as set forth in ss. 3.15 of the Disclosure
Schedule, there are no powers of attorney with respect to Taxes of the
Company currently in force.
(e) The Company is not nor has it been a party to any Tax allocation
or sharing agreement or a member of an Affiliated Group filing a
consolidated federal income Tax Return. The Company does not have any
Liability for the Taxes of any Person other than the Company under Treas.
Reg. ss. 1.1502-6 (or any similar provision of state, local or foreign
Law), as a transferee or successor, by contract, or otherwise.
(f) The Company has not filed a consent under Code ss. 341(f)
concerning collapsible corporations. The Company has not made any payments,
nor is it obligated to make any payments, nor is it a party to any
agreement that under certain circumstances could obligate it to make any
payments that will not be deductible under Code ss.ss. 162, 280G or 404.
The Company has not been a United States real property holding corporation
within the meaning of Code ss. 897(c)(2) during the applicable period
specified in Code ss. 897(c)(1)(A)(ii). The Company has disclosed on its
federal income Tax Returns all positions taken therein that could give rise
to a substantial understatement of federal income Tax within the meaning of
the Code ss. 6662.
(g) Section 3.15 of the Disclosure Schedule sets forth the following
information with respect to the Company as of the most recent practicable
date, (i) the Tax basis of the Company in its assets; (ii) the amount of
any net operating loss, net capital loss, unused investment or other
credit, unused foreign Tax, excess charitable contribution adjustments
under Code ss. 481 and other Tax attributes of the Company; and (iii) the
amount of any deferred gain or loss allocable to the Company arising out of
any Deferred Intercompany Transaction.
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(h) The unpaid Taxes of the Company (A) did not, as of the date of the
Most Recent Balance Sheet, exceed the reserve for Tax Liability (rather
than any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) set forth on the face of the Most
Recent Balance Sheet (rather than in any notes thereto) and (B) do not
exceed that reserve as adjusted for the passage of time through the Closing
Date in accordance with the past custom and practice of the Company.
3.16. Property, Plant and Equipment.
(a) Section 3.16(a)(i) of the Disclosure Schedule lists all real
property that Company owns. Except as set forth in ss. 3.16(a)(ii), with
respect to each such parcel of owned real property:
(i) the Company has good and marketable title to the parcel of
real property, free and clear of any Lien;
(ii) there are no pending or, to the Knowledge of the Sellers,
threatened condemnation proceedings, lawsuits, or administrative
actions relating to the property which would adversely affect the use,
occupancy, or value thereof;
(iii) the legal description for the parcel contained in the deed
thereof describes such parcel fully and adequately, and the buildings
and improvements are located within the boundary lines of such parcels
of land, are not in violation of applicable setback requirements,
zoning laws, and ordinances (and none of the properties or buildings
or improvements thereon are subject to "permitted non-conforming use"
or "permitted non-conforming structure" classifications), and do not
encroach on any easement, the land does not serve any adjoining
property for any purpose and the property is not located within any
flood plain or subject to any similar type restriction for which any
permits or licenses necessary to the use thereof have not been
obtained;
(iv) each facility on such parcel has received all approvals of
governmental authorities (including licenses and permits) required in
connection with the ownership or operation thereof and have been
operated and maintained in accordance with applicable laws, rules, and
regulations;
(v) there are no leases, subleases, licenses, concessions, or
other agreements, written or oral, granting to any party or parties
the right of use or occupancy of the parcel or any portion thereof;
(vi) there are no outstanding options or rights of first refusal
to purchase such parcel or any portion thereof or interest therein;
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(vii) there are no parties (other than the Company) in possession
of such parcel;
(viii) each facility located on such parcel is supplied with
utilities and other services necessary for the operation of such
facility, including gas, electricity, water, telephone, sanitary
sewer, and storm sewer, all of which services are adequate in
accordance with all applicable laws, ordinances, rules and regulations
and are provided via public roads or via permanent, irrevocable,
appurtenant easements benefitting such parcel; and
(ix) each parcel abuts and has direct vehicular access to a
public road, or has access to a public road via a permanent,
irrevocable, exclusive, unrestricted appurtenant easement benefitting
such parcel, and access to the property is provided by paved public
right-of-way with adequate curb cuts available.
(b) Section 3.16(b) of the Disclosure Schedule lists all real property
leased or subleased to the Company. The Company has delivered to the Buyer
correct and complete copies of the leases and subleases listed in ss.
3.16(b) of the Disclosure Schedule and such leases and subleases have not
been amended or modified since the date thereof. With respect to each lease
and sublease listed in ss. 3.16(b) of the Disclosure Schedule:
(i) the lease or sublease is legal, valid, binding, enforceable,
and in full force and effect;
(ii) none of the Sellers or the Company, or to their Knowledge,
any other party to the lease or sublease is in breach or default, and
no event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination, modification, or
acceleration thereunder;
(iii) no party to the lease or sublease has repudiated any
provision thereof;
(iv) there are no disputes, oral or written agreements, or
forbearance programs in effect as to the lease or sublease;
(v) with respect to each sublease, the representations and
warranties set forth in subsections (i) through (iv) above are true
and correct with respect to the underlying lease;
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(vi) the Company has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold;
(vii) all facilities leased or subleased thereunder have received
all approvals of governmental authorities (including licenses and
permits) required in connection with the operation thereof and have
been operated and maintained in accordance with applicable Laws; and
(viii) all facilities leased or subleased thereunder are supplied
with utilities and other services necessary for the operation of said
facilities.
(c) The Company owns or leases all buildings, real property,
improvements, machinery, equipment, and other tangible assets necessary for
the conduct of its business as presently conducted. Each such tangible
asset is free from defects (patent and latent), has been maintained in
accordance with normal industry practice, is in satisfactory operating
condition and repair (subject to normal wear and tear), and is suitable,
adequate and sufficient for the purposes for which it presently is used and
presently is proposed to be used.
3.17. Intellectual Property.
(a) The Company owns or has the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property necessary or
desirable for the operation of the business of the Company as presently
conducted and as presently proposed to be conducted. Subject to obtaining
all necessary consents as disclosed in ss. 3.33 of the Disclosure Schedule,
each item of Intellectual Property owned or used by the Company in the
business immediately prior to the Closing hereunder will be owned or
available for use by the Buyer on identical terms and conditions
immediately subsequent to the Closing hereunder. Except as disclosed in ss.
3.17(a) of the Disclosure Schedule, the Company has taken all necessary and
desirable action to maintain and protect each item of Intellectual Property
that the Company owns or uses.
(b) Except as disclosed in ss. 3.17(b) of the Disclosure Schedule, the
Company has not interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of third
parties, and there has never been any charge, complaint, claim, demand, or
notice alleging any such interference, infringement, misappropriation, or
violation (including any claim that the Company must license or refrain
from using any Intellectual Property rights of any third party). To the
Knowledge of the Sellers and the Company, no third party has interfered
with, infringed upon, misappropriated, or otherwise come into conflict with
any Intellectual Property rights of the Company.
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(c) Section 3.17(c) of the Disclosure Schedule identifies each patent
or registration which has been issued to the Company with respect to the
Company's Intellectual Property, identifies each pending patent application
or application for registration which has been made with respect to the
Company's Intellectual Property, and identifies each license, agreement, or
other permission which the Company has granted to any third party with
respect to any of the Intellectual Property (together with any exceptions).
The Company has delivered to the Buyer correct and complete copies of all
such patents, registrations, applications, licenses, agreements, and
permissions (as amended to date) and has made available to the Buyer
correct and complete copies of all other written documentation evidencing
ownership and prosecution (if applicable) of each such item. Section
3.17(c) of the Disclosure Schedule also identifies each trade name or
unregistered trademark or servicemark used by the Company. With respect to
each item of Intellectual Property required to be identified in ss. 3.17(c)
of the Disclosure Schedule:
(i) except as disclosed in ss. 3.17(c) of the Disclosure
Schedule, the Company possesses all right, title, and interest in and
to the item, free and clear of any Lien, license, or other
restriction;
(ii) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(iii) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the Knowledge of
the Sellers or the Company, is threatened, which challenges the
legality, validity, enforceability, use, or ownership of the item; and
(iv) the Company has not agreed to indemnify any Person for or
against any interference, infringement, misappropriation, or other
conflict with respect to the item.
(d) Section 3.17(d) of the Disclosure Schedule identifies each item of
Intellectual Property that any third party owns and that the Company uses
pursuant to license, sublicense, agreement, or permission. The Company has
delivered to the Buyer correct and complete copies of all such licenses,
sublicenses, agreements, and permissions (as amended to date). With respect
to each item of Intellectual Property required to be identified in ss.
3.17(d) of the Disclosure Schedule:
(i) the license, sublicense, agreement, or permission covering
the item is legal, valid, binding, enforceable, and in full force and
effect;
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(ii) subject to obtaining necessary consents as disclosed in ss.
3.33 of the Disclosure Schedule, the license, sublicense, agreement,
or permission will continue to be legal, valid, binding, enforceable,
and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby (including the
assignments and assumptions referred to in ss. 2);
(iii) no party to the license, sublicense, agreement, or
permission is in breach or default, and no event has occurred which
with notice or lapse of time would constitute a breach or default or
permit termination, modification, or acceleration thereunder;
(iv) to the Knowledge of the Sellers and the Company, no party to
the license, sublicense, agreement, or permission has repudiated any
provision thereof;
(v) with respect to each sublicense, the representations and
warranties set forth in subsections (i) through (v) above are true and
correct with respect to the underlying license;
(vi) the underlying item of Intellectual Property is not subject
to any outstanding injunction, judgment, order, decree, ruling, or
charge;
(vii) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the Knowledge of
the Sellers and the Company, is threatened, which challenges the
legality, validity, or enforceability of the underlying item of
Intellectual Property; and
(viii) the Company has not granted any sublicense or similar
right with respect to the license, sublicense, agreement, or
permission.
(e) To the Knowledge of the Sellers and the Company, the Buyer will
not interfere with, infringe upon, misappropriate, or otherwise come into
conflict with, any Intellectual Property rights of third parties as a
result of the continued operation of the Company's business as presently
conducted.
3.18. Inventories. Section 3.18 of the Disclosure Schedule lists all of the
inventory that is owned by Persons other than the Company, which is currently
being held by the Company for the benefit of such Persons. The inventory owned
by the Company consists of raw materials and supplies, manufactured and
purchased parts, goods in process, and finished goods, substantially all of
which is merchantable and fit or suitable and usable for the production or
completion of merchantable products for sale in the Ordinary Course of Business,
and none of which is slow-moving, obsolete, below standard quality, damaged, or
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defective, subject only to the reserve for inventory writedown set forth on the
face of the Most Recent Balance Sheet (rather than in any notes thereto) as
adjusted for the passage of time through the Closing Date and the past custom
and practice of the Company. The inventory, taken as a whole, as reflected in
the Most Recent Balance Sheet and books and records of the Company is reflected
on the basis of a complete physical count and is valued at the lower of cost (on
a first-in, first-out basis) or market, consistently applied. Since the Most
Recent Balance Sheet Date, no inventory has been sold or disposed of except
through sales in the Ordinary Course of Business.
3.19. Contracts. Section 3.19 of the Disclosure Schedule lists the
following Contractual Obligations (including the Contractual Obligations listed
on ss.ss. 3.11, 3.16 and 3.17 of the Disclosure Schedule, but excluding any
Contractual Obligations that are terminable by the Company on not more than 30
days notice without penalty) to which the Company is a party:
(a) any Contractual Obligation (or group of Contractual Obligations)
for the lease of personal property to or from any Person providing for
lease payments in excess of $ 10,000;
(b) any Contractual Obligation (or group of related Contractual
Obligations) for the purchase or sale of raw materials, commodities,
supplies, products, or other personal property, or for the furnishing or
receipt of services, the performance of which will extend over a period of
more than one year or involves consideration in excess of $ 10,000;
(c) any Contractual Obligation concerning a partnership, limited
liability company or joint venture;
(d) any Contractual Obligation (or group of related Contractual
Obligations) under which it has created, incurred, assumed, or guaranteed
any Indebtedness in excess of $ 10,000 or under which it has imposed a Lien
on any of its assets, tangible or intangible;
(e) any Contractual Obligation concerning confidentiality or
noncompetition;
(f) any Contractual Obligation relating to the Company, its assets,
liabilities or business between or among the Company and its Affiliates;
(g) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors, officers,
consultants, agents or employees;
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(h) any collective bargaining agreement;
(i) any Contractual Obligation providing for the employment or
consultancy with any individual on a full-time, part-time, consulting or
other basis in excess of $ 10,000 or providing severance or retirement
benefits;
(j) any Contractual Obligation under which it has advanced or loaned
any amount to any of its stockholders, Affiliates, directors, officers,
consultants, agents or employees other than in the Ordinary Course of
Business;
(k) any Contractual Obligation under which the consequences of a
default or termination could have a Material Adverse Effect;
(l) any other Contractual Obligation (or group of related Contractual
Obligations) the performance of which involves consideration in excess of $
10,000; or
(m) any Contractual Obligation pursuant to which a party thereto is
entitled to a commission based on sales to or revenues or profits derived
from one or more customers, success fees, finders fees or other
compensation related to sales.
The Company has delivered to the Buyer a correct and complete copy of each
written Contractual Obligation listed in ss. 3.19 of the Disclosure Schedule (as
amended to date) and a written summary setting forth the terms and conditions of
each oral Contractual Obligation referred to in ss. 3.19 of the Disclosure
Schedule. Except as disclosed in ss. 3.19 of the Disclosure Schedule, with
respect to each such Contractual Obligation, to the Knowledge of the Sellers and
the Company (i) the Contractual Obligation is legal, valid, binding,
enforceable, and in full force and effect; (ii) subject to the Buyer obtaining
the necessary consents disclosed in ss. 3.33 of the Disclosure Schedule, the
Contractual Obligation will continue to be legal, valid, binding, enforceable,
and in full force and effect on identical terms following the consummation of
the transactions contemplated hereby; (iii) no party is in breach or material
default, and no event has occurred which with notice or lapse of time would
constitute a breach or default, or permit termination, modification, or
acceleration, under the Contractual Obligation; and (iv) no party has repudiated
any provision of the Contractual Obligation.
3.20. Notes and Accounts Receivable. All notes and accounts receivable of
the Company are reflected properly on its books and records, are valid
receivables, arose from bona fide transactions in the Ordinary Course of
Business subject to no setoffs or counterclaims except as recorded as accounts
payable are current and collectible and will be collected in accordance with
their terms at their recorded amounts without having to or threaten to resort to
any collection efforts or legal proceedings outside the ordinary course of
business, except as reflected as net of allowance for bad debts on the face of
the Most Recent
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Balance Sheet (rather than in any notes thereto or reserve therefor) as adjusted
for the passage of time in accordance with the past practice and custom of the
Company. The Company has delivered to Buyer as ss. 3.20 of the Disclosure
Schedule a true and correct list of all receivables which have been deemed
uncollectible and are not reflected in the Most Recent Balance Sheet.
3.21. Powers of Attorney. Except pursuant to this Agreement and the
Exhibits hereto and as disclosed in ss. 3.21 of the Disclosure Schedule, there
are no outstanding powers of attorney executed on behalf of the Company, in
respect of the Company, its assets, liabilities or business.
3.22. Insurance and Risk Management. Section 3.22 of the Disclosure
Schedule sets forth the following information with respect to each insurance
policy (including policies providing property, casualty, liability, and workers'
compensation coverage and bond and surety arrangements) to which the business
operations of the Company have been a party, a named insured, or otherwise the
beneficiary of coverage from the period from January 31, 1997 to the date
hereof:
(a) the name, address, and telephone number of the agent;
(b) the name of the insurer, the name of the policyholder, and the
name of each covered insured;
(c) the policy number, the period of coverage and premium; and
(d) a description of any retrospective premium adjustments or other
loss- sensitive premium arrangements.
With respect to each such insurance policy (other than those which have expired
in accordance with their terms): (i) the policy is legal, valid, binding,
enforceable, and in full force and effect; (ii) the transactions contemplated
hereby will not result in the cancellation or modification of such policies;
(iii) neither the Company nor, to the Knowledge of the Sellers and the Company,
any other party to the policy is in breach or default (including with respect to
the payment of premiums or the giving of notices), and no event has occurred
which, with notice or the lapse of time, would constitute such a breach or
default, or permit termination, modification, or acceleration, under the policy;
(iv) the Company has delivered true and complete copies of all policies and
related indemnity or premium payment agreements to Buyer; (v) the policy has not
been amended or modified and no riders have been issued in respect of such
policies referred to in (vi) above without the consent of the Buyer; and (vii)
no party to the policy has repudiated any provision thereof. Section 3.22 of the
Disclosure Schedule describes any self-insurance arrangements affecting the
Company.
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3.23. Litigation. Except as disclosed in ss. 3.23 of the Disclosure
Schedule, there are no judicial or administrative actions, claims, suits,
proceedings or investigations pending or, to the Sellers' and the Company's
Knowledge, threatened, that have a material risk of resulting in a Material
Adverse Effect, or that question the validity of this Agreement or of any action
taken or to be taken pursuant to or in connection with the provisions of this
Agreement nor, to the Knowledge of the Company and the Sellers, is there any
Basis for any such action, claim, suit, proceeding or investigation. There are
no judgments, orders, decrees, citations, fines or penalties heretofore assessed
against the Company affecting any of its assets, business or operations under
any federal, state or local Law.
3.24. Product Warranties; Defects; Liability. Each product manufactured,
sold, leased, or delivered by the Company has been in conformity in all material
respects with all applicable federal, state, local or foreign Laws, Contractual
Obligations and all express and implied warranties, and the Company has no
Liability (and to the Knowledge of the Sellers there is no Basis for any present
or future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand giving rise to any Liability) for replacement or repair thereof
or other damages in connection therewith, subject only to the reserve for
product warranty claims set forth on the face of the Most Recent Balance Sheet
(rather than in any notes thereto) which such reserve is adequate to address all
such Liabilities. Except as disclosed in ss. 3.24 of the Disclosure Schedule, no
product manufactured, sold, leased, or delivered by the Company is subject to
any guaranty, warranty, or other indemnity beyond the applicable standard terms
and conditions of sale or lease. Section 3.24 of the Disclosure Schedule
includes copies of the standard terms and conditions of sale or lease for the
Company (containing applicable guaranty, warranty, and indemnity provisions).
The Company has no Liability (and to the Knowledge of the Sellers there is no
Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against the Company giving
rise to any Liability) arising out of any injury to individuals or property as a
result of the ownership, possession, or use of any product manufactured, sold,
leased, or delivered by the Company and there has been no inquiry or
investigation made in respect thereof by any Person including any governmental
or administrative agency other than such Liability for which the Company has
obtained insurance coverage pursuant to insurance policies listed in ss. 3.22 of
the Disclosure Schedule which such policies will remain in full force and effect
without modification or increase in premium as a result of the transactions
contemplated hereby.
3.25. Employees. To the Knowledge of the Company and the Sellers, no
executive, key employee, or group of employees has any plans to terminate
employment with the Company, provided that such persons are offered employment
following the Closing on terms that are substantially the same as, or better
than, the terms of their existing employment. The Company has not experienced
any labor disputes or work stoppage due to labor disagreements. The Company is
in compliance with all applicable Laws respecting employment and employment
practices and terms and conditions of employment. The Company is not nor has
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it ever been a party to any collective bargaining agreements and the Company has
not been the subject of any organizational activity.
3.26. Employee Benefits.
(a) Section 3.26 of the Disclosure Schedule lists each Employee
Benefit Plan that the Company maintains or to which the Company contributes
relating to current or former employees, officers or directors of the
Company.
(i) Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) materially complies in form and in
operation in all respects with the applicable requirements of ERISA,
the Code, and other applicable Laws.
(ii) All required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports, PBGC-1's, and Summary Plan
Descriptions) have been filed or distributed appropriately with
respect to each such Employee Benefit Plan. The requirements of Part 6
of Subtitle B of Title I of ERISA and of Code ss. 4980B have been met
with respect to each such Employee Benefit Plan which is an Employee
Welfare Benefit Plan subject to such Part.
(iii) All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been paid
to each such Employee Benefit Plan which is an Employee Pension
Benefit Plan and all contributions for any period ending on or before
the Closing Date which are not yet due have been paid to each such
Employee Pension Benefit Plan or accrued in accordance with the past
custom and practice of the Company. All premiums or other payments for
all periods ending on or before the Closing Date have been paid with
respect to each such Employee Benefit Plan which is an Employee
Welfare Benefit Plan.
(iv) Each such Employee Benefit Plan which is an Employee Pension
Benefit Plan intended to be qualified under Code ss. 401(a) is so
qualified.
(v) The market value of assets under each such Employee Benefit
Plan which is an Employee Pension Benefit Plan (other than any
Multiemployer Plan) equals or exceeds the present value of all vested
and nonvested Liabilities thereunder determined in accordance with
PBGC methods, factors, and assumptions applicable to an Employee
Pension Benefit Plan terminating on the date for determination.
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(vi) The Company has delivered to the Buyer correct and complete
copies of the plan documents and summary plan descriptions, the most
recent determination letter received from the Internal Revenue
Service, the most recent Form 5500 Annual Report, and all related
trust agreements, insurance contracts, and other funding agreements
which implement each such Employee Benefit Plan.
(b) With respect to each Employee Benefit Plan that any of the Company
and the Controlled Group of Corporations which includes the Company
maintains or ever has maintained or to which any of them contributes, ever
has contributed, or ever has been required to contribute:
(i) Except as disclosed in ss. 3.26(b)(i) of the Disclosure
Schedule, no such Employee Benefit Plan which is an Employee Pension
Benefit Plan (other than any Multiemployer Plan) has been completely
or partially terminated or been the subject of a Reportable Event as
to which notices would be required to be filed with the PBGC. No
proceeding by the PBGC to terminate any such Employee Pension Benefit
Plan (other than any Multiemployer Plan) has been instituted or
threatened.
(ii) There have been no Prohibited Transactions with respect to
any such Employee Benefit Plan. No Fiduciary has any Liability for
breach of fiduciary duty or any other failure to act or comply in
connection with the administration or investment of the assets of any
such Employee Benefit Plan. No action, suit, proceeding, hearing, or
investigation with respect to the administration or the investment of
the assets of any such Employee Benefit Plan (other than routine
claims for benefits) is pending or threatened. Neither the Sellers nor
the Company has any Knowledge of any Basis for any such action, suit,
proceeding, hearing, or investigation.
(iii) The Company has not incurred, and none of the Sellers has
any reason to expect that the Company will incur, any Liability to the
PBGC (other than PBGC premium payments) or otherwise under Title IV of
ERISA (including any withdrawal Liability) or under the Code with
respect to any such Employee Benefit Plan which is an Employee Pension
Benefit Plan.
(c) None of the Company or the other members of the Controlled Group
of Corporations that has ever included the Company contributes to, ever has
contributed to, or ever has been required to contribute to any
Multiemployer Plan or has any Liability (including withdrawal Liability)
under any Multiemployer Plan.
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(d) The Company does not maintain or contribute to nor has it ever
maintained or contributed to, or ever been required to contribute to any
Employee Welfare Benefit Plan providing medical, health, or life insurance
or other welfare-type benefits for current or future retired or terminated
employees, their spouses, or their dependents (other than in accordance
with Code ss. 4980B).
(e) At or prior to the Closing, the Company will have terminated all
Employee Benefit Plans and Employee Welfare Benefit Plans, and the Buyer
shall incur no Liability as a result of such terminations or in respect
thereto.
(f) The transactions contemplated by this Agreement shall not alone or
upon the occurrence of any additional or subsequent event, result in any
payment of severance or otherwise, or acceleration, vesting or increase in
benefits under any Employee Benefit Plan for the benefits of any current or
former director, officer or employee of the Company.
3.27. Environment, Health, and Safety.
(a) Except as disclosed in ss. 3.27 of the Disclosure Schedule:
(i) the Company is and has been in compliance with all applicable
Environmental Laws and Safety Laws the violation of which could have a
Material Adverse Effect;
(ii) the Company has obtained, and is and has been in material
compliance with the conditions of, all Environmental Permits required
for the continued conduct of the business of the Company in the manner
now conducted and presently proposed to be conducted;
(iii) the Company has filed all required applications, notices
and other documents necessary to effect the timely renewal or issuance
of all Environmental Permits for the continued conduct of the business
of the Company in the manner now conducted and presently proposed to
be conducted;
(iv) there are no past or present events, conditions or
circumstances related to environmental or health and safety matters
that are likely to have a Material Adverse Effect or which would
interfere with compliance with any Environmental Law or Permit or
Safety Law;
(v) there are no circumstances or conditions present at or
arising out of the present or, to the Knowledge of the Sellers, former
assets, properties, leaseholds, businesses or operations of the
Company in respect of off-site
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storage, transportation or disposal of, or any off-site Release of, a
Chemical Substance which reasonably may be expected to give rise to
any Environmental Liabilities and Costs;
(vi) there are no circumstances or conditions present at or
arising out of the present or former assets, properties, leaseholds,
businesses or operations of the Company, including but not limited to
any on-site Storage, use, disposal or Release of a Chemical Substance,
which reasonably may be expected to give rise to any Environmental
Liabilities and Costs or Safety Liability and Costs;
(vii) none of the Company or the Sellers or the present or past
assets, properties, business, leaseholds or operations of the Company
has received or is subject to, or within the past three years has been
subject to, any outstanding order, decree, judgment, complaint,
agreement, claim, citation, or notice or is subject to any ongoing
judicial or administrative proceeding indicating that the Company, the
Sellers or the past and present assets of the Company are or may be:
(A) in violation of any Environmental Law; (B) in violation of any
Safety Laws; (C) responsible for the on-site or off-site storage or
Release of any Chemical Substance; or, (D) liable for any
Environmental Liabilities and Costs or Safety Liabilities and Costs;
(viii) none of the Company or the Sellers have any reason to
believe that the Company will become subject to a matter identified in
subsection (vii); and, no investigation or review with respect to such
matters is pending or, to the Knowledge of the Company or the Sellers,
is threatened, nor has any authority or other third-party indicated an
intention to conduct the same;
(ix) neither the business of the Company nor any of its
properties or assets is subject to, or as a result of the transactions
contemplated by this Agreement will be subject to, the requirements of
any Environmental Laws which require notice, disclosure, cleanup or
approval prior to transfer of the shares or the business of the
Company or which will impose Liens on any such asset or property or
otherwise interfere with or affect the business of the Company;
(x) Section 3.27 of the Disclosure Schedule lists all property
presently or previously leased, owned or operated by the Company and
identifies all such property (and the area within that property) that
has been used by the Company or, to the Knowledge of the Sellers, by
any other Person (including a prior owner or operator) for the storage
or disposal of Chemical Substances;
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(xi) Section 3.27 of the Disclosure Schedule lists all off-site
locations, including, without limitation, commercial waste disposal
facilities or municipal landfills, to which or at which Chemical
Substances originating from the Company, or its assets, properties or
business have been sent (or otherwise have come to be located) in
amounts that would require a waste manifest under the Resource
Conservation and Recovery Act of 1976 as now in effect for treatment,
storage, disposal, reuse or recycling;
(xii) Section 3.27 of the Disclosure Schedule sets forth a list
of all underground storage tanks owned or operated at any time by the
Company and except as disclosed in ss. 3.27 of the Disclosure
Schedule, no such tank is leaking or has leaked at any time in the
past, and there is no pollution or contamination of the Environment
caused by or contributed to or threatened by a Release of a Chemical
Substance from any such tank; and
(xiii) Section 3.27 of the Disclosure Schedule lists all
environmental audits, inspections, assessments, investigations or
similar reports in the Company's possession or of which the Sellers or
the Company have Knowledge relating to the assets, properties, or
business of the Company or the compliance of the same with applicable
Environmental Laws and Safety Laws.
(b) For purposes of this ss. 3.27 only, all references to the
"Company" are intended to include any and all other entities to which, to
the Knowledge of the Sellers, the Company may be considered a successor
under applicable Environmental Laws. The representations and warranties in
this ss. 3.27 are the only representations and warranties with respect to
Environmental Laws or Environmental Liabilities and Costs, or Safety Laws
or Safety Liabilities and Costs notwithstanding any other language in this
Agreement of general applicability.
3.28. Affiliated Transactions. Except as set forth in ss. 3.28 of the
Disclosure Schedule, the Company is not a party to or bound by any Contractual
Obligation with any of the Stockholders or any of its Affiliates or any member
of their family and none of the Stockholders, directors or officers of the
Company or any of its Affiliates or members of their family owns or otherwise
has any rights to or interests in any asset, tangible or intangible, which is
used in the business of the Company.
3.29. Government Contracts. Except as set forth in ss. 3.29 of the
Disclosure Schedule, the Company has not been and is not a party to any
Contractual Obligation with any federal, state or local government agency.
3.30. Distributors, Customers, Suppliers. Section 3.30 of the Disclosure
Schedule sets forth a complete and accurate list of (i) all of the distributors
for the Company's products
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indicating the specific product, existing Contractual Obligation, if any, with
each such distributor and the volume of products distributed, (ii) the ten
largest customers (by dollar volume) of the Company during the Most Recent
Fiscal Year, indicating the existing Contractual Obligation with each such
customer by product and (iii) all suppliers of significant materials or services
to the Company, including, without limitation, manufacturing subcontractors,
indicating the Contractual Obligation for continued supply from such Person.
3.31. No Illegal Payments, Etc. None of the Sellers or the Company nor any
of their directors, officers, consultants, employees or agents, has (a) directly
or indirectly given or agreed to give any illegal gift, contribution, payment or
similar benefit to any supplier, customer, governmental official or employee or
other Person who was, is or may be in a position to help or hinder the Company
(or assist in connection with any actual or proposed transaction) or made or
agreed to make any illegal contribution, or reimbursed any illegal political
gift or contribution made by any other Person, to any candidate for federal,
state, local or foreign public office (i) which might subject any of the Company
to any damage or penalty in any civil, criminal or governmental litigation or
proceeding or (ii) the non- continuation of which has had or might have a
Material Adverse Effect or (b) established or maintained any unrecorded fund or
asset or made any false entries on any books or records for any purpose.
3.32. Books and Records. Except as disclosed in ss. 3.32 of the Disclosure
Schedule; the books and all corporate (including minute books and stock record
books) and financial records of the Company are complete and correct in all
material respects and have been maintained in accordance with applicable sound
business practices, Laws and other requirements.
3.33. Consents. Section 3.33 of the Disclosure Schedule sets forth a true,
correct and complete list of the identities of any Person whose consent or
approval is required and the matter or Contractual Obligation to which such
consent relates in connection with the transactions contemplated by this
Agreement.
3.34. Disclosure. The representations and warranties contained in this ss.
3 (including the Disclosure Schedule and any other schedules and exhibits
required to be delivered by Sellers to Buyer pursuant to this Agreement) and any
certificate furnished or to be furnished by Sellers to Buyer do not contain and
will not contain any untrue statement of a material fact, and the Disclosure
Schedule does not omit to state any material fact necessary in order to make the
statements and information contained in the Disclosure Schedule not misleading.
3.35. Officers and Employees. Other than Gregory Fodell, Brian Zaitz, Glen
Souder, Jeff Maynard and David Kleb (the "Management Group"), there are no other
officers, consultants, agents or principal employees of the Company who have
Knowledge of, or possess material information concerning, the financial matters,
the operations of, or the
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conduct of business of, the Company that differs from or is in addition to the
Knowledge of such information in the possession of the Management Group.
3.36. Investment Intent; Related Matters, including Securities Law Matters.
(a) Each Seller is acquiring the shares of B/E Common Stock to be
acquired by such Seller hereunder as a result of the Merger for such
Seller's own account, for investment, and not with a view to, or for sale
in connection with, any distribution thereof within the meaning of the
Securities Act, in a manner which is or would be in violation of any
applicable Law, including, without limitation, the Securities Act.
(b) Such Seller understands and agrees that the shares of B/E Common
Stock to be acquired by such Seller pursuant to the Merger will not be
registered or qualified under the Securities Act or state "blue-sky" or
other securities laws and therefore cannot be resold unless such resale is
registered under the Securities Act and applicable state laws or unless an
exemption from such registration requirement is available.
(c) Such Seller is able to bear the economic risk of holding the shares
of B/E Common Stock to be acquired by such Seller pursuant to the Merger
for an indefinite period of time and is experienced and has such knowledge
and experience in financial and business matters that such Seller is
capable of evaluating the risks and merits of acquiring the shares of B/E
Common Stock. Such Seller acknowledges that the shares of B/E Common Stock
to be acquired by such Seller pursuant to the Merger will bear a legend to
the effect that transfers are restricted unless (i) the transfer is exempt
from the registration requirements under the Securities Act and the Buyer
receives an opinion of counsel satisfactory to the Buyer to that effect or
(ii) the transfer is made pursuant to an effective registration statement
under the Securities Act.
(d) Such Seller understands that, except as provided in ss. 5.13, the
Buyer is under no obligation to effect a registration of any shares of B/E
Common Stock under the Securities Act.
(e) Such Seller has been provided access to such information and
documents regarding the Buyer as such Seller has requested and has been
afforded an opportunity to ask questions of and receive answers from
representatives of the Buyer concerning the terms and conditions of this
Agreement and the business, assets and condition, financial and otherwise,
of the Buyer.
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4. Representations and Warranties of the Buyer and Acquisition. The Buyer and
Acquisition jointly and severally represent and warrant to the Sellers as
follows as of the date of this Agreement:
4.1. Organization of the Buyer. Each of Buyer and Acquisition is a
corporation duly organized, validly existing, and in good standing under the
Laws of the State of Delaware and Texas, respectively.
4.2. Authorization of Transaction. Each of Buyer and Acquisition has full
power and authority (including full corporate power and authority) to execute
and deliver this Agreement and to perform its respective obligations hereunder.
All corporate and other actions or proceedings to be taken by or on the part of
Buyer or Acquisition to authorize and permit the execution and delivery by Buyer
and Acquisition of this Agreement and the respective instruments required to be
executed and delivered by Buyer and Acquisition pursuant hereto, the performance
by Buyer and Acquisition of their respective obligations hereunder, and the
consummation by the Buyer and acquisition of the transactions contemplated
herein, have been duly and properly taken. This Agreement has been duly executed
and delivered by each of the Buyer and Acquisition and constitutes the valid and
legally binding obligation of the Buyer and Acquisition, enforceable in
accordance with its terms and conditions.
4.3. Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby will (i)
violate any Law or other restriction of any government, governmental agency, or
court to which the Buyer or Acquisition is subject or any provision of their
respective charter or bylaws or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any Contractual Obligation to which the Buyer or Acquisition is a party or
by which it is bound or to which any of their assets are subject. Neither the
Buyer nor Acquisition needs to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or governmental
agency in order for the Parties to consummate the transactions contemplated by
this Agreement, except for the filing of the Articles of Merger with the
Secretary of State of the State of Texas and listing of the B/E Shares on the
Nasdaq National Market.
4.4. Brokers' Fees. Neither Buyer nor Acquisition has any Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which the Sellers
could become liable or obligated.
4.5. Investment Intent. Buyer is acquiring the Shares for its own account
and not with a view to their distribution within the meaning of ss. 2(11) of the
Securities Act.
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4.6. Status of B/E Common Stock. When issued to the Sellers pursuant to the
Merger, the shares of B/E Common Stock so issued will be duly authorized,
validly issued, fully paid and nonassessable.
4.7. Information Concerning Buyer. The Buyer's Registration Statement on
Form S-4 as filed with the Securities and Exchange Commission on March 9, 1998,
copies of which have been furnished to the Sellers, as of its date did not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein not misleading; and
since March 9, 1998, there has been no material adverse change in the business,
assets, operations, prospects or condition, financial or otherwise, of the Buyer
and its Subsidiaries, taken as a whole.
4.8. No Reliance. In executing this Agreement and consummating the
transactions contemplated hereby, Buyer has not relied upon any representation,
warranty, statement or other information made or provided by the Company, the
Sellers or any of their employees, agents or other representatives that is not
contained in this Agreement, the Disclosure Schedules or the certificates or
other documents required to be delivered by the Company or the Sellers pursuant
to this Agreement.
5. Covenants. The Parties agree as follows:
5.1. General. Each of the Parties will use its best efforts to take all
action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
ss. 6).
5.2. Notices and Consents. The Company and Sellers have given any notices
to third parties, and will each use their best efforts to obtain any third party
consents, that are required in connection with the transactions contemplated by
this Agreement, as set forth in ss. 3.33 to the Disclosure Schedule.
5.3. Operation of Business. The Company will not engage in any practice,
take any action, or enter into any transaction outside the Ordinary Course of
Business. Without limiting the generality of the foregoing, the Company (i) will
not (A) issue, sell or otherwise dispose of any of its capital stock or grant
any options, warranties or other rights to purchase or obtain (including upon
conversion, exchange or exercise) any of its capital stock, declare, set aside,
or pay any dividend or make any distribution with respect to its capital stock
or redeem, purchase, or otherwise acquire any of its capital stock, (B)
otherwise engage in any practice, take any action, or enter into any transaction
of the sort described in ss. 3.11, and (ii) will (A) keep available to Buyer the
services of the Company's present officer's, employees, agents and independent
contractors and (B) preserve for the benefit of Buyer the goodwill of the
Company's customers, suppliers, landlords and others having business relations
with it.
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5.4. Preservation of Business. The Company will keep its business and
properties substantially intact, including its present operations, physical
facilities, working conditions, and relationships with lessors, licensors,
suppliers, customers, and employees.
5.5. Full Access. The Company will permit representatives of the Buyer to
have full access at all reasonable times, and in a manner so as not to interfere
with the normal business operations of the Company, to all premises, properties,
personnel, books, records (including Tax records), contacts, and documents of or
pertaining to the Company.
5.6. Notice of Developments. Each Party will give prompt written notice to
the other Party of any development causing a breach of any of its own
representations and warranties in ss. 3 and ss. 4. No disclosure by any Party
pursuant to this ss. 5.6, however, shall be deemed to amend or supplement the
Disclosure Schedule or to prevent or cure any misrepresentations, breach of
warranty, or breach of covenant.
5.7. Exclusivity. Neither the Company nor the Sellers will (and the Company
will not cause or permit any of its officers, directors, agents or Affiliates
to) (i) solicit, initiate, or encourage the submission of any proposal or offer
from any Person relating or enter into or consummate any transaction relating to
the acquisition of any capital stock or other voting securities, or any
substantial portion of the assets (other than sales of inventory for a fair
value in the Ordinary Course of Business), including any acquisition structured
as a merger, consolidation, or share exchange or (ii) participate in any
discussions or negotiations regarding, furnish any information with respect to,
assist or participate in, or facilitate in any other manner any effort or
attempt by any Person to do or seek any of the foregoing. The Company will
notify the Buyer immediately if any Person makes any proposal, offer, inquiry,
or contact with respect to any of the foregoing.
5.8. Title Insurance. The Sellers will deliver to the Buyer the most recent
title insurance policies and all riders and endorsements thereto for each parcel
of real estate that the Company owns.
5.9. Access to Records after Closing. For a period of five years after the
Closing Date, the Sellers and their representatives shall have reasonable access
to all of the books and records of the Company to the extent that such access
may reasonably be required by the Sellers in connection with matters relating to
or affected by the operations of the Company prior to the Closing Date. Such
access shall be afforded by Buyer upon receipt of reasonable advance notice and
during normal business hours. Sellers shall be solely responsible for any costs
or expenses incurred by them pursuant to this ss. 5.10. If Buyer shall desire to
dispose of any of such books and records prior to the expiration of such
five-year period, Buyer shall, prior to such disposition, give the Sellers a
reasonable opportunity, at Sellers' expense, to segregate and remove such books
and records as Sellers may select.
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5.10. Escrow of Shares Pending Resolution of Certain Pre-Closing Matters.
Upon consummation of the Merger, Boston Equiserve, as transfer agent and escrow
agent (the "Escrow Agent"), will hold certificates issued in the name of each of
the Stockholders representing a portion, rounded to the nearest whole share, of
the B/E Shares having a value (calculating the value per share at the Formula
Price Per Share) in the aggregate of $499,975 (the "Escrow Amount") in a
separate account subject to a global stop order and the Escrowed Shares shall be
held and either released to the Sellers or surrendered to the Buyer according to
the provisions of this ss.5.10 and the Letter of Instruction in the form
attached hereto as Exhibit A to be delivered to the Escrow Agent. The Escrowed
Shares of each Seller shall be applied to indemnify and hold harmless the Buyer
and its Affiliates against and in respect of any and all Losses specified in ss.
9.2 for which the Buyer and its Affiliates are entitled to indemnification
pursuant to the provisions of ss. 9, the amount of such indemnification to be
determined as provided in ss. 9; provided, however, that, subject to ss. 9.2,
Buyer's recourse against Sellers shall not be limited by the existence or amount
of the escrow provided hereunder. Each Seller shall be entitled to vote such
Escrowed Shares as are, from time to time, held for such Seller's account as
Escrowed Shares and to receive any dividend or distribution thereon (other than
dividends or distributions in the form of capital stock of the Buyer or
otherwise falling within the definition of "Escrowed Shares" hereunder, which
shall be delivered to the Escrow Agent and held as part of the Escrowed Shares).
(a) Term of Escrow. Except as provided in ss. 5.10(b), the Escrowed
Shares shall be released from escrow on the earlier of (i) the date twenty
(20) days following the date on which the Buyer's independent auditors
shall deliver their signed report on their audit of the Buyer's financial
statements for the fiscal year ending February 27, 1999, or (ii) the date
one year from the Closing Date (such earlier date being hereinafter
sometimes referred to as the "Release Date").
(b) Sale of Shares. In the event that the Sellers notify Buyer of their
intent to sell or transfer any of the Escrowed Shares, the Buyer and
Sellers shall negotiate in good faith an escrow agreement reasonably
satisfactory to both parties to provide for the escrow of the proceeds from
any such sale or transfer in accordance with the terms of this Agreement,
including without limitation this ss. 5.10, until the Release Date.
(c) Formula for Number of Escrowed Shares to be Returned to the Buyer.
The number of Escrowed Shares to be returned to the Buyer in respect of
each Loss for which it is entitled to indemnity hereunder shall be computed
by dividing the dollar amount of the Sellers' liability in respect of such
Loss by the dollar amount of the Formula Per Share Price (subject to
appropriate adjustment in the event of a stock dividend on, or stock split
or combination of shares or other recapitalization of, or in respect of,
the Escrowed Shares or in the event that other securities or property have
been deposited in escrow in connection with any merger, consolidation or
liquidation of
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the Buyer); and such Escrowed Shares to be so returned to the Buyer shall
be allocated among the Sellers in proportion to their then respective
interests in the Escrowed Shares.
(d) Certification of Losses, Return of Shares to the Buyer and Delivery
of Balance to the Sellers.
(i) The Buyer may, from time to time, following written notice to and
with the written consent of the Sellers given prior to the Release
Date, apply all or any part of the Escrowed Shares to the payment,
reimbursement, settlement or discharge of any Loss that has occurred or
will or may occur by instructing the Escrow Agent to return such
Escrowed Shares to the Buyer; provided, however, that such notice shall
specify the circumstances of such asserted Loss and the number of
Escrowed Shares to be applied in respect thereof.
(ii) The Buyer shall defer instructing the Escrow Agent to return
Escrowed Shares to it if within 10 days after delivery of the notice to
the Sellers referred to in ss. 5.10(c)(i):
(x) it has received written notice from the Sellers claiming that
any Losses claimed are not subject to indemnification pursuant to
ss. 9.2, in which case such dispute shall be referred to
arbitration in accordance with ss. 11.15; or
(y) it has received written notice stating that the Sellers
dispute and intend to defend the Liability, claim or action
giving rise to such Loss or potential Loss, provided that, and
for so long as, such defense is being conducted by such the
Sellers at the expense of the Sellers and in a manner reasonably
deemed by the Buyer to be satisfactory and effective to protect
the Buyer against such Loss.
(iii) Promptly after the Release Date, but in no event more than
ten days after such date, the Escrowed Shares, or any balance thereof
held by the Escrow Agent as to which notice shall not have been given
by the Buyer as aforesaid on or prior to the Release Date, shall be
delivered to the Sellers; and such Escrowed Shares to be so returned
shall be allocated among the Sellers in proportion to their then
respective interests in the Escrowed Shares. Any Escrowed Shares held
by the Escrow Agent on the Release Date the application of which to an
indemnifiable Loss has been deferred pursuant to clause (ii) of this
paragraph (c) shall, upon final determination or settlement of the Loss
being determined or contested (or, in the event that the Buyer has
provided the notice to Sellers provided for in clause (i) of this
paragraph (c) and no dispute is raised pursuant to clause (ii) of this
paragraph
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(c), upon determination of the amount of such Loss by the Buyer), be
applied thereto and any balance delivered to the Sellers in proportion
to their then respective interests in the Escrowed Shares.
5.11. Pooling of Interests Accounting Treatment. The Company and the
Sellers acknowledge that the Buyer intends to account for the Merger and the
consummation of the transactions contemplated hereby as a "pooling of interests"
under generally accepted accounting principles and principles applied by the
SEC, all as from time to time in effect. The Company and each Seller
acknowledge, represent, warrant and agree that (a) the Company is not and has
never been a division or more than 50% owned Subsidiary of any corporation nor
been part of an acquisition which was later rescinded, (b) neither the Company
nor such Seller has taken, within the previous two years, or will take, prior to
the Closing, any action (i) to change the equity interest of the voting common
stock of the Company (or amended the terms of any securities of the Company or
of any Contractual Obligation relating thereto) in contemplation of the
transactions contemplated by this Agreement, including, without limitation, any
additional issuance, exchange or retirement of any securities of the Company,
(ii) to permit the Company to reacquire any shares of its voting common stock or
(iii) to permit the Company or any Subsidiary of the Company to dispose of a
significant portion of its assets in contemplation of the transactions
contemplated by this Agreement, (c) none of the Sellers has entered into any
agreement that would restrict any such Person's voting rights with respect to
the B/E Shares to be issued pursuant to the Merger in accordance with ss. 2.4,
(d) the ratio of the interest in the Company of each holder of Company Common
Stock to each other holder of Company Common Stock will not be changed by the
consummation of the transactions contemplated by this Agreement and (e) neither
the Company nor any Seller has at any time since January 1, 1996 acquired any
shares of B/E Common Stock, nor will any Seller acquire any shares of B/E Common
Stock prior to the Closing. In addition, each Seller agrees that such Seller
will not sell or otherwise dispose of any of the B/E Shares to be received by
such Seller, or in any other way reduce such Seller's risk relative to such B/E
Shares, prior to the date on which the Buyer files with the SEC or makes
publicly available financial results covering at least 30 days of post-merger
combined operations, and that the certificates evidencing the B/E Shares shall
bear a legend setting forth the foregoing restriction in the manner required by
the corporate laws of the State of Delaware.
5.12. Plan of Reorganization and other Tax Matters.
(a) This Agreement shall constitute a "plan of reorganization" for
purposes of Section 368 of the Code.
(b) Each Seller hereby waives (and releases the Company, the Buyer,
Acquisition and their respective Affiliates from) any claims or Liabilities
relating to or arising from, any and all Taxes imposed upon such Seller or
any of its Affiliates in the event that the Merger and the consummation of
the other transactions contemplated hereby
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are determined not to constitute a reorganization which is Tax-free under
Section 368 of the Code.
(c) The parties hereto shall, and shall cause the Company to, provide
such necessary information as any other party hereto may reasonably request
in connection with the preparation of such party's Tax Returns, or to
respond to or contest any audit, prosecute any claim for refund or credit
or otherwise satisfy any legal requirement relating to Taxes and the
Company.
(d) The obligations of the parties set forth in this Agreement relating
to Taxes shall, except as otherwise agreed in writing, be unconditional and
absolute and shall remain in effect without limitation as to time or amount
of recovery by the Buyer, Acquisition and the Sellers.
(e) There shall be withheld from any amount payable hereunder such
amounts as may be required to be withheld under applicable law.
(f) The Sellers shall be liable for, shall hold the Buyer and the
Company harmless against, and agree to pay all sales, transfer, stamp,
value added, use, real property transfer and similar Taxes incurred in
connection with the transactions contemplated by this Agreement.
(g) At Closing, the Sellers shall obtain an opinion from their counsel
that the Merger and the consummation of the other transactions contemplated
hereby will qualify as a Tax-free reorganization pursuant to ss. 368(a) of
the Code.
5.13. Registration Rights.
(a) General.
(i) Within 120 days after the Closing, the Buyer shall file (and shall
use reasonable efforts to cause to become effective as soon as
practicable following the date on which the Buyer files with the SEC or
makes publicly available financial results covering at least 30 days of
post-Merger combined operations of the Buyer and the Company) a
registration statement on Form S-3 under the Securities Act, covering
the Registrable Securities, which registration statement shall be kept
in effect in the manner and for the period specified in ss.
5.13(c)(ii). As used herein, the term "Registrable Securities" shall
mean (i) the B/E Shares at any time outstanding and that are owned by
any of the Sellers, (ii) any shares of common stock or other securities
issued as (or issuable upon the conversion or exercise of any warrant,
right, class of common stock or other security which is issued as) a
dividend or other distribution with respect to, or in exchange by the
Buyer
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generally for, or in replacement by the Buyer generally of, such B/E
Shares, and (iii) any securities issued in exchange for such B/E Shares
in any merger or reorganization of the Buyer; provided, however, that
once issued, such B/E Shares and other securities shall cease to be
Registrable Securities when (x) a registration statement with respect
to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in
accordance with such registration statement, (y) they shall have been
sold pursuant to Rule 144 or shall no longer be subject to restriction
on resale due to the termination of the holding period requirements (as
in effect from time to time) of Rule 144, or (z) they shall have ceased
to be outstanding.
(ii) Whenever the Buyer proposes to register any of its Common Stock
for its own or others' account under the Securities Act for a public
offering (each a "Public Offering"), the Buyer shall furnish each
Seller prompt notice of its intent to do so. Upon the request of any
Seller given by written notice to the Buyer in accordance with ss. 11.7
hereof within ten (10) business days after the giving of such notice,
the Buyer will use reasonable efforts to cause to be included in such
registration all of the Registrable Securities which the Sellers
request to be included in the Public Offering. Notwithstanding the
foregoing provisions of this clause (ii): (x) if the Buyer is advised
in writing by any managing underwriter of the securities being offered
pursuant to any Public Offering that the Registrable Securities to be
sold by the Sellers exercising incidental ("piggyback") rights to
include in such Public Offering is greater than the number of
Registrable Securities which can be included in such Public Offering
without adversely affecting such Public Offering, the Buyer may reduce
pro rata (based upon the number of Registrable Securities requested to
be included by the Sellers exercising such "piggyback" rights) the
number of Registrable Securities offered for the accounts of such
Seller to a number of Registrable Securities deemed satisfactory by
such managing underwriter and (y) no holder of Registrable Securities
shall have any right of participation or otherwise with respect to any
Public Offering on Form S-4 or Form S-8 or any similar form then in
effect.
(iii) Notwithstanding clause (ii) above, on one occasion only the
Buyer may postpone taking action with respect to the registration
statement referred to above or may require that the Sellers cease
making sales under an effective registration statement for a reasonable
period of time (not exceeding sixty (60) days), if, in the good faith
opinion of the Buyer, effecting the registration or allowing such sales
would adversely affect a material financing, acquisition, disposition
of assets or stock, merger or other comparable transaction or would
require the Buyer to make public disclosure of information the public
disclosure of which could reasonably be expected to have a material
adverse effect upon the Buyer.
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(b) Expenses. The Buyer shall pay all expenses incident to the Buyer's
performance of or compliance with its obligations under this ss. 5.13 to
effect the registration of Registrable Securities required hereunder,
including, without limitation, all registration, filing, securities
exchange listing and NASDAQ fees, all registration, filing, qualification
and other fees and expenses of complying with securities or blue sky laws,
all word processing, duplicating and printing expenses, messenger, shipping
and delivery expenses, the fees and disbursement of counsel for the Company
and of its independent public accountants, including the expenses of any
special audits or "cold comfort" letters required by or incident to such
performance and compliance, but excluding any legal fees and expenses of
counsel retained by the holders of the Registrable Securities being
registered, and further excluding any underwriting discounts and
commissions and transfer taxes, if any, in respect of Registrable
Securities, which discounts, commissions and taxes in respect of
Registrable Securities shall be payable by the holders thereof (in the case
of an underwritten offering and the underwriter's fees, expenses, discounts
or commissions, pro rata among such holders in proportion to the number of
Registrable Securities being sold by them).
(c) Further Obligations. Without limiting the foregoing, the Buyer
will:
(i) prepare and file with the SEC, the registration statement on Form
S-3 to effect such registration (including such audited financial
statements as may be required by the Securities Act) and use its
reasonable efforts to cause such registration statements to become
effective in the time frame outlined in ss. 5.13(a).
(ii) prepare and file with the SEC such amendments and supplements to
the registration statement referred to above and any prospectus used in
connection therewith as may be necessary to maintain the effectiveness
of such registration statement and to comply in all material respects
with the requirements of the Securities Act with respect to the
disposition of all Registrable Securities included in such registration
statement, in accordance with the intended methods of disposition
thereof, until the earlier of (i) such time as all of such securities
have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such
registration statement or (ii) one hundred twenty (120) days after such
registration statement becomes effective and in the event that any
Registrable Securities remain unsold at the end of such period, the
Buyer may file a post-effective amendment to the registration statement
for the purpose of removing such Registrable Securities from registered
status;
(iii) promptly notify each holder of Registrable Securities and the
underwriter or underwriters, if any:
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(w) when such registration statement or any prospectus used in
connection therewith, or any amendment or supplement thereto, has been
filed and, with respect to such registration statement or any
post-effective amendment thereto, when the same has become effective;
(x) of any written request by the SEC for amendments or supplements
to such registration statement or prospectus or for supplemental
information;
(y) of the notification to the Buyer by the SEC of its initiation
of any proceeding with respect to the issuance by the SEC of, or of the
issuance by the SEC of, any stop order suspending the effectiveness of
such registration statement; and
(z) of the receipt by the Buyer of any notification with respect to
the suspension of the qualification of any Registrable Securities for
sale under the applicable securities or blue sky laws of any
jurisdiction;
(iv) furnish to each holder of Registrable Securities included in the
registration statement such number of conformed copies of the
registration statement and of each amendment and supplement thereto (in
each case including all exhibits and documents incorporated by
reference), such number of copies of the prospectus contained in such
registration statement (including each preliminary prospectus and any
prospectus supplement) and any other prospectus filed under Rule 424
promulgated under the Securities Act relating to such holder's
Registrable Securities, and such other documents, as such seller may
reasonably request to facilitate the disposition of such holder's
Registrable Securities;
(v) use reasonable efforts to register or qualify all Registrable
Securities included in the registration statement under such other
securities or blue sky laws of such jurisdictions as each holder
thereof shall reasonably request which request is made within ten (10)
days following the original filing of the registration statement and to
keep such registration or qualification in effect for so long as the
registration statement remains in effect, and take any other action
which may be reasonably necessary or advisable to enable such holder to
consummate the disposition in such jurisdictions of the Registrable
Securities owned by such holder, except that the Buyer shall not for
any such purpose be required (i) to qualify generally to do business as
a foreign corporation in any jurisdiction wherein it would not but for
the requirements of this paragraph (e) be obligated to be so qualified,
(ii) to consent to general service of process in any such jurisdiction
or (iii) to subject itself to taxation in any such jurisdiction by
reason of such registration or qualification; and
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(vi) use its reasonable efforts to obtain withdrawal of any order
suspending the effectiveness of a registration statement, or the
lifting any suspension of qualification (or exemption from
qualification) of the offer and sale of any of the Registration
Securities in any jurisdiction.
The Buyer may require each Person whose Registrable Securities are being
registered to, and each such holder, as a condition to including
Registrable Securities in such registration, shall, furnish the Buyer and
any underwriters with such information and affidavits regarding such holder
and the distribution of such securities as the Buyer and such underwriters
may from time to time reasonably request in writing and to otherwise
cooperate in connection with such registration. At any time during the
effectiveness of the registration statement covering Registrable Securities
offered by a holder, if such holder becomes aware of any change materially
affecting the accuracy of the information contained in such registration
statement or the prospectus (as then amended or supplemented) relating to
such holder, it will promptly notify the Buyer of such change.
Upon receipt of any notice from the Buyer of the happening of any event as
a result of which any prospectus included in such registration statement,
as then in effect, includes an untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, each holder of Registrable Securities will
forthwith discontinue such holder's disposition of Registrable Securities
pursuant to the registration statement until such holder receives copies of
a supplemented or amended prospectus from the Buyer and, if so directed by
the Buyer, shall deliver to the Buyer (at the Buyer's expense) all copies,
other than permanent file copies, then in such holder's possession of the
prospectus relating to such Registrable Securities current at the time of
receipt of such notice. In the event the Buyer shall give any such notice
(or in the event that the Buyer exercises it right under ss. 5.13(a)(iii)
to require cessation for up to 60 days of sales under an effective
registration statement), the period referred to in paragraph (ii) of this
ss. 5.13(c) shall be extended by a number of days equal to the number of
days during the period from the giving of such notice from the Buyer to
stop trading to the date when the copies of the supplemented or amended
prospectus are sent to holders whose Registrable Securities are included in
such registration statement (or, in the case of a cessation of trading
under ss. 5.13(a)(iii) a number of days equal to the period of time the
Buyer so causes cessation of trading under such registration statement). In
the event that the SEC issues a stop order suspending the effectiveness of
any registration statement filed under this ss. 5.13, the period referred
to in paragraph (ii) of this ss. 5.13(c) shall also be extended by a number
of days equal to the number of days during which such stop order is in
effect.
(d) Indemnification.
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(i) The Buyer shall, to the full extent permitted by law, indemnify
and hold harmless each seller of Registrable Securities included in the
registration statement filed pursuant to this ss. 5.13, its directors,
officers, and partners, and each other Person, if any, who controls any
such seller within the meaning of the Securities Act, against any
Losses to which such seller or any such director, officer, partner or
controlling Person may become subject under the Securities Act or
otherwise, insofar as such Losses (or claims, actions, suits,
proceedings, arbitration or investigations in respect thereof) arise
out of or are based upon any untrue statement of any material fact
contained in such registration statement, any preliminary prospectus,
final prospectus or prospectus supplement contained therein or filed
with the SEC, or any amendment or supplement thereto, or any omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a prospectus,
in the light of the circumstances under which they were made) not
misleading; provided, that the Buyer shall not be liable in any such
case to the extent that any such Loss (or any claim, action, suit,
proceeding, arbitration or investigation in respect thereof) arises out
of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in any such registration statement,
preliminary prospectus, final prospectus, amendment or supplement in
reliance upon and in conformity with information furnished to the Buyer
by such seller. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such seller or
any such director, officer, partner or controlling Person, and shall
survive the transfer of such securities by such seller.
(ii) Each Person whose Registrable Securities are included or are to
be included in the registration statement filed pursuant to this ss.
5.13, as a condition to including such holder's Registrable Securities
in each registration statement, shall to the full extent permitted by
law, indemnify and hold harmless the Buyer, its directors and officers,
and each other Person, if any, who controls the Buyer within the
meaning of the Securities Act, against any Losses to which the Buyer or
any such director or officer or controlling Person may become subject
under the Securities Act or otherwise, insofar as such Losses (or
claims, actions, suits, proceedings, arbitrations or investigations in
respect thereof) arise out of or are based upon any untrue statement of
any material fact contained in any such registration statement, any
preliminary prospectus, final prospectus or prospectus supplement
contained therein or filed with the SEC, or any amendment or supplement
thereto, or any omission to state therein a material fact required to
be stated therein or necessary to make the statements therein (in the
case of a prospectus, in the light of the circumstances under which
they were made) not misleading, if such untrue statement or omission
was made in reliance upon and in conformity with written information
furnished to the Buyer by such seller
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specifically stating that it is for use in the preparation of such
registration statement, preliminary prospectus, final prospectus,
amendment or supplement. Notwithstanding any contrary provision of ss.
9.2, the indemnification obligation of the Sellers under this ss.
5.13(c) shall in no way be limited to (and the Buyer shall not be
constrained to seek in response to any failure to provide indemnity
pursuant to this ss. 5.13(d)) recourse against Escrowed Shares. The
foregoing indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of the Buyer or any such
director, officer or controlling Person and shall survive the transfer
of such securities by such seller. Such holders shall also indemnify
each other Person who participates (including as an underwriter) in the
offering or sale of Registrable Securities, their officers and
directors and each other Person, if any, who controls any such
participating Person within the meaning of the Securities Act to the
same extent as provided above with respect to the Buyer.
(iii) Promptly after receipt by any party of notice of the
commencement of any action or proceeding involving a claim referred to
in the preceding paragraph (i) or (ii) of this ss. 5.13(d), such party
shall, if a claim in respect thereof is to be made against another
party pursuant to such paragraphs, give written notice to the latter of
the commencement of such action, provided that any failure of any
Person to give notice as provided herein shall not relieve any other
Person of its obligations under the preceding paragraph of this ss.
5.13(d), except to the extent that such other Person is actually
prejudiced by such failure. In case any such action is brought, the
party obligated to indemnify pursuant to the foregoing provisions of
this ss. 5.13(d) shall be entitled to participate in and, unless, in
the reasonable judgment of any indemnified party, a conflict of
interest between such indemnified party and any indemnifying party
exists with respect to such claim, to assume the defense thereof,
jointly with any other indemnifying party similarly notified to the
extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for
any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs of
investigation; provided that the indemnified party may participate in
such defense at the indemnified party's expense. No indemnifying party
shall consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to each indemnified party of a release from
all liability in respect to such claim or litigation without the
consent of the indemnified party. No indemnifying party shall be
subject to any liability for any settlement made without its consent,
which consent shall not be unreasonably withheld.
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(iv) If the indemnity and reimbursement obligation provided for in any
paragraph of this ss. 5.13(d) is unavailable or insufficient to hold
harmless a party entitled to indemnification hereunder in respect of
any Losses (or claims, actions, suits, proceedings, arbitrations or
investigations with respect thereto) for which indemnification is
provided therein, the party obligated to indemnify hereunder shall
contribute to the amount paid or payable by the indemnified party as a
result of such Losses (or claims, actions, suits, proceedings,
arbitration or investigations) in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand
and the indemnified party on the other hand in connection with
statements or omissions which resulted in such Losses, as well as any
other relevant equitable considerations. Relative fault shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by
the indemnifying party or the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The parties
hereto agree that it would not be just and equitable if contributions
pursuant to this paragraph were to be determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in the first sentence of this
paragraph. No Person guilty of fraudulent misrepresentation (within the
meaning of ss. 11(f) of the Securities Act) shall be entitled to
contribution from any Person not guilty of such fraudulent
misrepresentation.
5.14. Insurance. After the Closing, the Buyer shall use commercially
reasonable efforts to obtain representation and warranty insurance (the
"Insurance") for coverage in the amount of $1 million reasonably satisfactory to
the Parties and the Sellers agree to use reasonable efforts in assisting the
Buyer in obtaining such insurance.
5.15. Future Assurances. At any time and from time to time after the
Closing, at the request of Buyer and without further consideration, Sellers will
execute and deliver such other instruments of sale, transfer, conveyance,
assignment and confirmation and take such action as Buyer may reasonably
determine is necessary to transfer, convey and assign to Buyer, and to confirm
Buyer's title to or interest in the Company, to put Buyer in actual possession
and operating control thereof and to assist Buyer in exercising all rights with
respect thereto. The Sellers hereby constitute and appoint Buyer and its
successors and assigns as their true and lawful attorneys in fact in connection
with the transactions contemplated by this instrument, with full power of
substitution, in the name and stead of the Sellers but on behalf of and for the
benefit of the Buyer and its successors and assigns, to demand and receive any
and all of the assets, properties, rights and business hereby conveyed,
assigned, and transferred or intended so to be, and to give receipt and releases
for and in respect of the same and any part thereof, and from time to time to
institute and prosecute, in the name of the Sellers or otherwise, for the
benefit of the Buyer or its successors and assigns, proceedings at law, in
equity, or
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otherwise, which the Buyer or its successors or assigns reasonably deem proper
in order to collect or reduce to possession or endorse any of the assets of the
Company and to do all acts and things in relation to the assets which the Buyer
or its successors or assigns reasonably deem desirable.
6. Conditions to Obligation to Close.
6.1. Conditions to Obligation of the Buyer. The obligation of the Buyer to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(a) Representations and Warranties. The representations and warranties
set forth in ss. 3 shall be true and correct when made and shall be deemed
to have been made again at and as of the Closing Date and shall then be
true and correct;
(b) Performance by Sellers. The Sellers shall have performed and
complied with all of their covenants, agreements and obligations hereunder
through the Closing;
(c) Consents. The Sellers shall have procured all of the governmental
approvals, consents or authorizations and third party consents specified in
ss. 3.33 and ss. 5.2;
(d) Absence of Litigation. No action, suit, or proceeding shall be
pending or threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would
(i) prevent consummation of any of the transactions contemplated by this
Agreement, (ii) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation, (iii) affect adversely
the right of the Buyer to own the Shares, to operate the former businesses
of the Company (and no such injunction, judgment, order, decree, ruling, or
charge shall be in effect);
(e) Employment Agreement. Gregory Fodell shall have entered into an
Employment Agreement substantially in the form of Exhibit D hereto and the
same shall be in full force and effect;
(f) No Loss of Material Distributors, Customers or Suppliers. None of
the Sellers or the Company shall have been threatened or notified, orally
or in writing, by one or more material distributors, customers or suppliers
that such Persons have, and such Persons shall not have, terminated or
intend to terminate or are considering terminating their respective
business relationships with the Company or are modifying such relationships
with the Company in a manner which is less favorable to the Company or have
agreed not to or will not agree to do business with Buyer on and after the
Closing on such terms and subject to conditions at least as favorable as
provided to
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the Company prior to Closing and the Sellers have no Knowledge of any facts
which would form the Basis therefor;
(g) Certificates. The Sellers shall have delivered to the Buyer a
certificate to the effect that each of the conditions specified above in
ss.ss. 6.1(a)-(f), and (j)-(l) are satisfied in all respects;
(h) Opinion. The Buyer shall have received from counsel to the Company
and the Sellers an opinion in form and substance as set forth in Exhibit E
attached hereto, addressed to the Buyer, and dated as of the Closing Date;
(i) Due Diligence. The Buyer shall have completed to its satisfaction
its due diligence investigation of the Company, including, without
limitation, a Phase I study of the land and facility at 419 Van Molan,
Houston, Texas;
(j) No Material Adverse Change. There shall not have been any change
which has resulted in a Material Adverse Effect and no event has occurred
or circumstance exists that may result in such a Material Adverse Effect;
(k) Stockholder Approval. All stockholder approvals necessary for the
consummation of the transactions contemplated hereby shall have been
obtained and shall be in full force and effect;
(l) Resignations. The Buyer shall have received the resignations, dated
as of the Closing Date, of each officer and director of the Company;
(m) Affidavit. Each of the Sellers shall have delivered to Buyer an
affidavit (in form and substance reasonably satisfactory to Buyer) meeting
the requirements necessary to establish that the Sellers are eligible for
the exemption from withholding provided by Code ss. 1445(b)(2);
(n) Pooling Treatment. The Buyer shall be satisfied that there is not a
material risk that the transactions contemplated hereby may not be
accounted for by the Buyer as a pooling of interests; and
(o) All Necessary Actions. All actions to be taken by Sellers in
connection with the consummation of the transactions contemplated hereby
and all certificates, opinions, instruments and other documents required to
effect the transactions contemplated hereby will be reasonably satisfactory
in form and substance to the Buyer.
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The Buyer may waive any condition specified in this ss. 6.1 if it executes a
writing so stating at or prior to the Closing and such waiver shall not be
considered a waiver of any other provision in this Agreement unless the writing
specifically so states.
6.2. Conditions to Obligations of the Sellers. The obligation of the
Sellers to consummate the transactions to be performed by them in connection
with the Closing is subject to satisfaction of the following conditions:
(a) Representations and Warranties. The representations and warranties
set forth in ss. 4 shall be true and correct at and as of the Closing Date;
(b) Performance by Buyer. The Buyer shall have performed and complied
with all of its covenants hereunder through the Closing;
(c) Absence of Litigation. No action, suit, or proceeding shall be
pending or threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would
(i) prevent consummation of any of the transactions contemplated by this
Agreement or (ii) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation (and no such injunction,
judgment, order, decree, ruling, or charge shall be in effect);
(d) Certificates. The Buyer shall have delivered to the Company a
certificate to the effect that each of the conditions specified above in
ss. 6.2(a)-(c) is satisfied in all respects;
(e) Opinion. The Company and the Sellers shall have received from
counsel to the Buyer an opinion in form and substance as set forth in
Exhibit F attached hereto, addressed to the Company, and dated as of the
Closing Date;
(f) Tax Opinion. The Sellers shall have received from their counsel an
opinion that the Merger and the consummation of the other transactions
contemplated hereby will qualify as a Tax-free reorganization pursuant to
ss. 368(a) of the Code; and
(g) All Necessary Actions. All actions to be taken by Buyer in
connection with the consummation of the transactions contemplated hereby
and all certificates, opinions, instruments and other documents required to
effect the transactions contemplated hereby will be reasonably satisfactory
in form and substance to Sellers.
The Sellers may waive any condition specified in this ss. 6.2 if they execute a
writing so stating at or prior to the Closing and such waiver shall not be
considered a waiver of any other provision in this Agreement unless the writing
specifically so states.
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7. Confidentiality. Each of the Parties will treat and hold as confidential all
of the Confidential Information relating to the other Parties or to the Company
or its assets, properties or business, will refrain from using or disclosing to
any Person any such Confidential Information (except to their respective
counsel, accountants and representatives in connection with this Agreement), and
will deliver promptly to the Party who provided the Confidential Information
(or, at the request and option of that Party, destroy) all tangible embodiments
(and all copies) of such Confidential Information which are in his, her or its
possession. In the event that any of the Parties is requested or required (by
oral question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar process) to
disclose any Confidential Information, such Party will notify the Party who
disclosed such Confidential Information (the "Disclosing Party") promptly of the
request or requirement so that the Disclosing Party may seek an appropriate
protective order or waive compliance with the provisions of this ss. 7. If, in
the absence of a protective order or the receipt of a waiver hereunder, any of
the Parties is, on the advice of counsel, compelled to disclose any Confidential
Information of another Party to any tribunal or else stand liable for contempt,
that such Party may disclose the Confidential Information to the tribunal;
provided, however, that such Party shall use its best efforts to obtain, at the
request of the Disclosing Party, an order or other assurance that confidential
treatment will be accorded to such portion of the Confidential Information
required to be disclosed as the Disclosing Party shall designate. Each of the
Sellers also hereby covenants and agrees that on and after the Closing, such
Seller shall maintain the confidentiality of any Confidential Information
relating to the assets, properties or business of the Company. The Buyer shall
have no further obligation under this ss. 7 after the Closing.
8. Noncompetition. (a) Each Seller agrees that, in consideration of the purchase
by Buyer hereunder, it shall not, on or prior to the date which is five (5)
years after the Closing Date, directly or indirectly, run, own, manage, operate,
control, be employed by, provide consulting services to, be an officer or
director of, participate in, lend his, her or its name to, invest in or be
connected in any manner with the management, ownership, operation or control of
any business, venture or activity which competes with the business (including
parts and accessories therefor) being conducted at the Closing Date by the
Company or relating to products performing functions similar to those of the
Products; provided, however, no Seller shall be considered to be in default of
this ss. 8 solely by virtue of holding for portfolio purposes as a passive
investor not more than five percent (5%) of the issued and outstanding equity
securities of a corporation, if equity securities of the same class and type of
such corporation or quoted on a stock exchange or an over-the-counter market
within the United States.
(b) Each of the Sellers further agrees that for a period of five (5) years
after the Closing Date such Seller will not directly or indirectly, without the
prior written consent of Buyer, recruit, offer employment, employ, engage as a
consultant, lure or entice away or in any other manner persuade or attempt to
persuade any person who is an employee of the Company, the Buyer or any
Subsidiary, group, or division of Buyer or any Affiliate thereof
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leave the employ of Buyer unless such person has been terminated by the Buyer or
an Affiliate of Buyer.
9. Indemnification.
9.1. Survival of Representations and Warranties. All of the representations
and warranties of the Sellers (except for those contained in ss.ss. 3.2
(Capitalization and Ownership of the Company), 3.3 (Authorization of
Transaction), 3.5 (Brokers Fees), 3.15 (Taxes) and 3.27 (Environment, Health and
Safety)) contained herein or in any document certificate or other instrument
required to be delivered hereunder shall survive the Closing and continue in
full force and effect until two years after Closing (the "Survival Period"). The
representations and warranties of Sellers contained in ss. 3.27 shall survive
the Closing and shall continue in full force and effect for a period of six
years thereafter. The representations and warranties of Sellers contained in
ss.ss. 3.2, 3.3, 3.5 and 3.15 shall survive the Closing and shall continue in
full force and effect without limit as to time (subject to any applicable
statutes of limitations and any extensions or waivers thereof). The liability of
any Party to any other Party for breach of any representations or warranties
contained in this Agreement shall be limited to claims for which the Party
asserting such claim shall deliver notice to the Party against whom such claim
is made prior to the expiration of the Survival Period. All of the
representations and warranties of the Buyer contained in ss. 4 shall survive the
Closing and shall continue in full force and effect until three years after the
Closing. All covenants and indemnities of any Party in this Agreement or in any
document or certificate delivered hereunder shall, unless otherwise specifically
provided therein, remain in full force and effect forever.
9.2. Indemnity by Sellers. The Sellers hereby agree to jointly and
severally indemnify, defend and hold harmless Buyer, Acquisition and the Company
and each of their directors, officers and Affiliates against and in respect of
all Liabilities, obligations, judgments, Liens, injunctions, charges, orders,
decrees, rulings, damages, dues, assessments, Taxes, losses, fines, penalties,
expenses, fees, costs, amounts paid in settlement (including reasonable
attorneys' and expert witness fees and disbursements in connection with
investigating, defending or settling any action or threatened action), arising
out of any claim, damages, complaint, demand, cause of action, audit,
investigation, hearing, action, suit or other proceeding asserted or initiated
or otherwise existing in respect of any matter (collectively, the "Losses") that
results from (a) the inaccuracy or breach of any representation or warranty made
by Sellers herein, or resulting from any misrepresentation or breach of warranty
or from any misrepresentation in or omission from any schedule, document,
certificate or other instrument required to be furnished by Sellers hereunder;
provided, however, that for purposes of this ss. 9.2(a) all qualifications in
the representations and warranties as to materiality, including without
limitation Material Adverse Effect, shall be determined as follows (i) with
respect to any individual item of Loss or related items of Loss, if such item or
items exceed $10,000 and (ii) if the aggregate dollar amount of Losses which
would otherwise be indemnifiable pursuant to ss. 9.2(a) exceeds $100,000, in
which case the
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Sellers will be liable for all Losses and Sellers' liability under ss. 9.2(a);
provided, further, that the foregoing limitations shall not apply to any Losses
resulting from representations set forth in ss. 3 which were fraudulently made
or any breach or inaccuracy of the representations and warranties contained in
ss.ss. 3.2, 3.3, 3.5, 3.15 or 3.27 and (b) nonfulfillment of any agreement or
covenant of Sellers contained herein or in any agreement or instrument required
to be entered into in connection herewith. Sellers' liability under ss. 9.2(a)
in respect of Losses shall not exceed (c) in the event that the Buyer obtains
the Insurance, $1,500,000 and (d) in the event that the Buyer does not obtain
the Insurance, $2,000,000; provided, further, that in the event that the Buyer
does not obtain the Insurance, the Sellers shall not be responsible for the
first $100,000 of indemnifiable Losses in excess of $500,000. The foregoing
limitation shall not apply to any Losses resulting from representations set
forth in ss. 3 which were fraudulently made or any breach or inaccuracy of the
representations and warranties contained in ss.ss. 3.2, 3.3, 3.5, 3.15 or 3.27.
The amounts payable by the Sellers pursuant to this ss. 9.2 shall be net of any
proceeds actually received by the Buyer from the Insurance. Buyer shall provide
Sellers written notice for any claim made in respect of the indemnification
provided in this ss. 9.2, whether or not arising out of a claim by a third
party.
9.3. [Reserved].
9.4. Indemnity by Buyer. Buyer hereby agrees to indemnify, defend and hold
harmless Sellers and their respective directors, officers and Affiliates against
and in respect of all Liabilities, obligations, judgments, liens, injunctions,
charges, orders, decrees, rulings, damages, dues, assessments, Taxes, losses,
fines, penalties, damages, expenses, fees, costs, amounts paid in settlement
(including reasonable attorneys' and expert witness fees and disbursements in
connection with investigating, defending or settling any action or threatened
action) arising out of any claim, complaint, demand, cause of action, audit,
investigation, hearing, action, suit or other proceeding asserted or initiated
in respect of any matter that results from the inaccuracy of any representation
or warranty made by Buyer herein, or resulting from any misrepresentation,
breach of warranty or nonfulfillment of any agreement or covenant of Buyer
contained herein or in any agreement or instrument required to be entered into
in connection herewith or from any misrepresentation in or omission from any
schedule, document, certificate or other instrument required to be furnished by
Buyer hereunder or any Liabilities of the Company or the Surviving Corporation
other than those for which indemnification by the Sellers is expressly provided
herein.
9.5. Matters Involving Third Parties.
(a) If any third party shall notify any Party (the "Indemnified Party")
with respect to any matter (a "Third Party Claim") which may give rise to a
claim for indemnification against any other Party (the "Indemnifying
Party") under this ss. 9, then the Indemnified Party shall promptly notify
each Indemnifying Party thereof in writing; provided, however, that no
delay on the part of the Indemnified Party in notifying any
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Indemnifying Party shall relieve the Indemnifying Party from any obligation
hereunder unless (and then solely to the extent) the Indemnifying Party
thereby is prejudiced.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (i) the
Indemnifying Party notifies the Indemnified Party in writing within 15 days
after the Indemnified Party has given notice of the Third Party Claim that
the Indemnifying Party will indemnify the Indemnified Party from and
against the entirety of any Losses the Indemnified Party may suffer
resulting from, arising out of, relating to, in the nature of, or caused by
the Third Party Claim, (ii) the Indemnifying Party provides the Indemnified
Party with evidence acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend against the
Third Party Claim and fulfill its indemnification obligations hereunder,
(iii) the Third Party Claim involves only money damages and does not seek
an injunction or other equitable relief, (iv) settlement of, or an adverse
judgment with respect to, the Third Party Claim is not, in the good faith
judgment of the Indemnified Party, likely to establish a precedential
custom or practice adverse to the continuing business interests of the
Indemnified Party, and (v) the Indemnifying Party conducts the defense of
the Third Party Claim actively and diligently.
(c) So long as the Indemnifying Party is conducting the defense of the
Third Party Claim in accordance with ss. 9.5(b), (i) the Indemnified Party
may retain separate co-counsel at its sole cost and expense and participate
in the defense of the Third Party Claim, (ii) the Indemnified Party will
not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (which consent shall not unreasonably be withheld), and
(iii) the Indemnifying Party will not consent to the entry of any judgment
or enter into any settlement with respect to the Third Party Claim unless
written agreement is obtained releasing the Indemnified Party from all
liability thereunder.
(d) In the event any of the conditions in ss. 9.5(b) is or becomes
unsatisfied, however, (i) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with
respect to, the Third Party Claim in any manner it may deem appropriate
(and the Indemnified Party need not consult with, or obtain any consent
from, any Indemnifying Party in connection therewith), (ii) the
Indemnifying Parties will reimburse the Indemnified Party promptly and
periodically for the costs of defending against the Third Party Claim
(including attorneys' fees and expenses), and (iii) the Indemnifying
Parties will remain responsible for any Losses the Indemnified Party may
suffer resulting from, arising out of, relating to, in the nature of, or
caused by the Third Party Claim to the fullest extent provided in this ss.
9.
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9.6. Other Indemnification Provisions. Each of the Sellers hereby agrees
that he or it will not make any claim for indemnification against any of the
Buyer, the Company or any of their Subsidiaries and other Affiliates solely by
reason of the fact that he or it was a director, officer, employee, or agent of
the Company or was serving at the request of any such entity as a partner,
trustee, director, officer, employee, or agent of another entity (whether such
claim is for judgments, damages, penalties, fines, costs, amounts paid in
settlement, Losses, expenses, or otherwise and whether such claim is pursuant to
any statute, charter document, bylaw, agreement, or otherwise) with respect to
any action, suit, proceeding, complaint, claim, or demand brought by the Buyer
or the Company against such Seller (whether such action, suit, proceeding,
complaint, claim, or demand is pursuant to this Agreement, applicable Law, or
otherwise).
9.7. Exclusive Remedy. This Agreement shall provide the sole and exclusive
remedy for any and all Losses sustained or incurred by Buyer, the Company or
Sellers or their respective successors and assigns other than for equitable
actions and fraud.
10. Termination.
10.1. Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:
(a) the Parties may terminate this Agreement by mutual written consent
at any time prior to the Closing;
(b) the Buyer may terminate this Agreement by giving written notice to
the Sellers at any time prior to the Closing (i) in the event the Sellers
have breached any representation, warranty, or covenant contained in this
Agreement in any material respect, the Buyer or Acquisition has notified
the Sellers of the breach, and the breach has continued without cure for a
period of 30 days after the notice of breach or (ii) if the Closing shall
not have occurred on or before April 30, 1998 by reason of the failure of
any condition precedent under ss. 6.1 (unless the failure results primarily
from the Buyer itself breaching any representation, warranty, or covenant
contained in this Agreement); and
(c) the Sellers or the Company may terminate this Agreement by giving
written notice to the Buyer at any time prior to the Closing (i) in the
event the Buyer has breached any representation, warranty, or covenant
contained in this Agreement in any material respect, the Sellers or the
Company has notified the Buyer of the breach, and the breach has continued
without cure for a period of 30 days after the notice of breach or (ii) if
the Closing shall not have occurred on or before April 30, 1998 by reason
of the failure of any condition precedent under ss. 6.2 (unless the failure
results primarily
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<PAGE>
from the Company itself breaching any representation, warranty, or covenant
contained in this Agreement).
10.2. Effect of Termination. If any Party terminates this Agreement
pursuant to ss. 10.1, all rights and obligations of the Parties hereunder shall
terminate without any Liability of any Party to any other Party (except for any
Liability of any Party then in breach), other than the provisions of ss.ss. 7,
11.1 and 11.7.
11. Miscellaneous.
11.1. Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement prior to the Closing without the prior approval of the other
Party; provided, however, that any Party may make any public disclosure it
believes in good faith is required by applicable Law or any listing or trading
agreement concerning its publicly-traded securities (in which case the
disclosing Party will provide the other Party with the opportunity to review in
advance the disclosure).
11.2. No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
11.3. Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement between the Parties and supersedes any
prior understandings, agreements, or representations by or between the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
11.4. Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party.
11.5. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
11.6. Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.7. Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication
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hereunder shall be deemed duly given (i) upon confirmation of facsimile, (ii)
one business day following the date sent when sent by overnight delivery and
(iii) five business days following the date mailed when mailed by registered or
certified mail return receipt requested and postage prepaid at the following
address:
If to the Sellers:
Gregory N. Fodell
16202 Crystal Creek
Spring, TX 77379
Copy to:
Bracewell & Patterson, L.L.P.
711 Louisiana Street, 26th Floor
Houston, TX 77002-2781
Attn: Charles Still, Esq.
If to the Buyer or Acquisition:
BE Aerospace, Inc.
1400 Corporate Center Way
Wellington, FL 33414
Attn: Thomas P. McCaffrey or Edmund J. Moriarty
With a copy to:
B/E Aerospace Services, Inc.
230 West Blueridge Avenue
Orange, CA 92865
Attn: Sam G. Ayoub
Copy to:
Ropes & Gray
One International Place
Boston, MA 02110
Attn: Winthrop G. Minot, Esq.
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<PAGE>
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
11.8. Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic Laws of the State of Texas without giving effect to
any choice or conflict of law provision or rule (whether of the State of Texas
or any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Texas.
11.9. Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Sellers. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
11.10. Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
11.11. Expenses. Each of the Buyer and the Sellers will bear his or its own
costs and expenses (including legal and accounting fees and expenses) and the
Sellers will bear all of the costs and expenses (including legal and accounting
fees and expenses) of the Company incurred in connection with this Agreement and
the transactions contemplated hereby. The Company also agrees that it has not
paid any amount to any third party, and will not pay any amount to any third
party, with respect to any of the costs and expenses of the Company and the
Sellers (including any of their legal fees and expenses) in connection with this
Agreement or any of the transactions contemplated hereby.
11.12. Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or Law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall
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mean including without limitation. Nothing in the Disclosure Schedule shall be
deemed adequate to disclose an exception to a representation or warranty made
herein unless the Disclosure Schedule identifies the exception with
particularity and describes the relevant facts in detail. Without limiting the
generality of the foregoing, the mere listing (or inclusion of a copy) of a
document or other item shall not be deemed adequate to disclose an exception to
a representation or warranty made herein (unless the representation or warranty
has to do with the existence of the document or other item itself). The Parties
intend that each representation, warranty, and covenant contained herein shall
have independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
11.13. Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
11.14. Specific Performance. Each of the Parties acknowledges and agrees
that the other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter in addition to any other remedy to which it may be
entitled, at law or in equity.
11.15. Arbitration.
(a) Generally. Except solely as set forth in ss. 11.14 and ss.
11.15(c), each dispute, difference, controversy or claim arising in
connection with or related or incidental to, or question occurring under,
this Agreement or the subject matter hereof shall be finally settled under
the Commercial Arbitration Rules of the American Arbitration Association
(the "AAA") by an arbitral tribunal composed of three arbitrators, at least
one of whom shall be an attorney experienced in corporate transactions,
appointed by agreement of the Parties in accordance with said Rules. In the
event the Parties fail to agree upon a panel of arbitrators from the first
list of potential arbitrators proposed by the AAA, the AAA will submit a
second list in accordance with said Rules. In the event the Parties shall
have failed to agree upon a full panel of arbitrators from said second
list, any remaining arbitrators to be selected shall be appointed by the
AAA in accordance with said Rules. If, at the time of the arbitration, the
Parties agree in writing to submit the dispute to a single arbitrator, said
single arbitrator shall be appointed by agreement of the parties in
accordance with the
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foregoing procedure, or, failing such agreement, by the AAA in accordance
with said Rules. The foregoing arbitration proceedings may be commenced by
any Party by notice to all other Parties.
(b) Place of Arbitration. The venue of such arbitration shall be Los
Angeles, California or any other place mutually agreed to by Buyer and
Sellers.
(c) Recourse to Courts. Subject to ss. 11.14, the Parties hereby
exclude any right of appeal to any court on the merits of the dispute. The
provisions of this ss. 11.15 may be enforced in any court having
jurisdiction over the award or any of the Parties or any of their
respective assets, and judgment on the award (including without limitation
equitable remedies) granted in any arbitration hereunder may be entered in
any such court. Nothing contained in this ss. 11.15 shall prevent any Party
from seeking interim measures of protection in the form of pre-award
attachment of assets or preliminary or temporary equitable relief.
(d) Decision of Arbitral Tribunal. In the event of a dispute between
the Parties hereunder, each Party shall present an offer of settlement
which shall address all issues in dispute such that adoption of such offer
of settlement would conclusively settle all items then in dispute. The
arbitral tribunal shall be limited in its decision to choosing between the
offers of settlement presented to it. The decision of the arbitral tribunal
shall be final and binding on the Parties and non-appealable. The Party
whose offer of settlement is not chosen by the arbitral tribunal shall pay
all of the expenses of the arbitration.
11.16. Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW
WHICH CANNOT BE WAIVED, THE SELLERS HEREBY WAIVE, AND COVENANT THAT THEY WILL
NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY
JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION ARISING OUT OF OR PASSED UPON THIS AGREEMENT OR THE SUBJECT MATTER
HEREOF, WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER SOUNDING IN TORT
OR CONTRACT OR OTHERWISE.
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*****
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the
date first above written.
BE AEROSPACE, INC.
By: ______________________________
Title: ____________________________
BE ACQUISITION CORP.
By: ______________________________
Title: ____________________________
AEROSPACE INTERIORS, INC.
By: ______________________________
Title: ____________________________
GREGORY AND DEBORAH FODELL
PARTNERSHIP, LTD.
By: Gregory N. Fodell, as General Partner
----------------------------------
By: Deborah Fodell, as General Partner
----------------------------------
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<PAGE>
GREGORY AND DEBORAH FODELL
PARTNERSHIP II, LTD.
By: Gregory N. Fodell, as General Partner
----------------------------------
By: Deborah Fodell, as General Partner
----------------------------------
----------------------------------
GREGORY N. FODELL
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<PAGE>
Conformed Copy
Exhibit 99.2
<PAGE>
AGREEMENT AND PLAN OF
REORGANIZATION AND MERGER
by and among
BE Aerospace, Inc.,
BE Aerospace Acquisition Corp.,
Aerospace Lighting Corporation
and
The Stockholders of
Aerospace Lighting Corporation
JULY 30, 1998
<PAGE>
TABLE OF CONTENTS
1. Definitions............................................................1
1.1. Rules of Construction.....................................10
2. The Merger............................................................10
2.1. Constituent Corporations; Surviving Corporation...........10
2.2. Certificate of Incorporation and Bylaws of the Surviving
Corporation.............................................10
2.3. Directors and Officers of the Surviving Corporation.......10
2.4. Conversion of the Shares..................................11
2.5. Sellers' Representatives..................................11
2.6. The Closing...............................................12
2.7. Surrender of Shares; Stock Transfer Books.................12
2.8. Further Assurances........................................13
3. Representations and Warranties of the Sellers.........................13
3.1. Organization of the Company...............................13
3.2. Capitalization and Ownership of the Company...............14
3.3. Authorization of Transaction..............................14
3.4. Noncontravention..........................................15
3.5. Brokers' Fees.............................................15
3.6. Title to Assets...........................................15
3.7. Subsidiaries..............................................16
3.8. Financial Statements......................................16
3.9. Indebtedness; Guarantees..................................17
3.10. Absence of Changes........................................17
3.11. Absence of Undisclosed Liabilities........................19
3.12. Legal and Other Compliance................................20
3.13. No Material Adverse Change................................20
3.14. Taxes.....................................................20
3.15. Property, Plant and Equipment.............................22
3.16. Intellectual Property.....................................23
3.17. Inventories...............................................25
3.18. Contracts.................................................26
3.19. Notes and Accounts Receivable.............................27
3.20. Powers of Attorney........................................28
3.21. Insurance and Risk Management.............................28
3.22. Litigation................................................28
3.23. Product Warranties; Defects; Liability....................28
3.24. Employees.................................................29
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3.25. Employee Benefits.........................................29
3.26. Environment, Health, and Safety...........................30
3.27. Affiliated Transactions...................................32
3.28. Government Contracts......................................33
3.29. Distributors, Customers, Suppliers........................33
3.30. No Illegal Payments.......................................33
3.31. Books and Records.........................................33
3.32. Disclosure................................................34
3.33. Investment Intent; Related Matters, Including Securities
Law Matters.............................................34
4. Representations and Warranties of the Buyer and Acquisition...........35
4.1. Organization of the Buyer.................................35
4.2. Authorization of Transaction..............................35
4.3. Noncontravention..........................................35
4.4. Brokers' Fees.............................................36
4.5. Investment Intent.........................................36
4.6. Status of B/E Common Stock................................36
4.7. Information Concerning Buyer..............................36
4.8. Capitalization of Acquisition.............................36
5. Covenants.............................................................36
5.1. Access to Records after Closing...........................36
5.2. Escrow of Shares Pending Resolution of Certain
Pre-Closing Matters.....................................37
5.3. Pooling of Interests Accounting Treatment.................38
5.4. Plan of Reorganization and other Tax Matters..............38
5.5. Registration Rights.......................................40
5.6. Compliance With New York Law..............................49
6. Deliveries at Closing.................................................49
6.1. Deliveries by Sellers.....................................49
6.2. Deliveries of the Buyer...................................50
7. Confidentiality.......................................................50
8. Noncompetition........................................................50
9. Indemnification.......................................................51
9.1. Survival of Representations and Warranties................51
Indemnity by Sellers..................................................52
9.3. Indemnity by Buyer........................................53
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9.5. Matters Involving Third Parties...........................54
9.6. Other Indemnification Provisions..........................55
10. Miscellaneous.........................................................55
10.1. Press Releases and Public Announcements.............55
10.2. No Third Party Beneficiaries........................55
10.3. Entire Agreement....................................55
10.4. Succession and Assignment...........................56
10.5. Counterparts........................................56
10.6. Headings............................................56
10.7. Notices.............................................56
10.8. Governing Law; Submission to Jurisdiction...........57
10.9. Amendments and Waivers..............................58
10.10. Severability........................................58
10.11. Expenses............................................58
10.12. Construction........................................58
10.13. Incorporation of Exhibits and Schedules.............59
10.14. Specific Performance................................59
10.15. Arbitration.........................................59
10.16. Waiver of Jury Trial................................60
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Exhibits
A - Form of Escrow Agreement
B - Certificate of Merger
C - Financial Statements
D - Form of Consulting Agreement
E - Form of Severance and Non-Competition Agreement
F - Form of Opinion of Winthrop, Stimson, Putnam & Roberts, counsel to the
Company and the Sellers
G - Form of Opinion of Ropes & Gray, counsel to the Buyer
Schedules
Disclosure Schedule -- Exceptions to Representations and Warranties
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<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
This Agreement and Plan of Reorganization and Merger (the "Agreement") is
entered into on July 30, 1998, by and among (i) BE AEROSPACE, INC., a Delaware
corporation (the "Buyer"), (ii) BE AEROSPACE ACQUISITION CORP., a New York
corporation and a wholly-owned subsidiary of the Buyer ("Acquisition"), (iii)
AEROSPACE LIGHTING CORPORATION, a New York corporation (the "Company"), and (vi)
the holders (the "Sellers") of all of the outstanding capital stock of the
Company (the "Shares"), all of whom are signatories hereto. The Buyer,
Acquisition, the Company and the Sellers are collectively referred to herein as
the "Parties."
This Agreement contemplates a transaction in which Acquisition will be
merged with and into the Company as a result of which the Company will be the
surviving corporation and a wholly-owned subsidiary of Buyer, upon the terms and
subject to the conditions set forth herein and pursuant to the Business
Corporation Law of the State of New York (the "New York Business Corporation
Law"). The Parties intend that this transaction will constitute a
"reorganization" described in ss. 368(a) of the Code (as hereinafter defined)
and that the Buyer will be able to account for the acquisition of the Company by
Buyer on a "pooling of interests" method (as such term is used in Accounting
Principles Board Opinion No. 16).
AGREEMENT
Therefore, in consideration of the premises and the mutual promises herein
made, and in consideration of the representations, warranties, and covenants
herein contained, the Parties agree as follows.
1. Definitions.
"AAA" has the meaning set forth in ss. 10.15(a).
"Acquisition" has the meaning set forth in the preamble.
"Affiliate" means, as to the Company (or, if another Person is specified,
as to such other specified Person), (i) each Person directly or indirectly
controlling, controlled by or under direct or indirect common control with the
Company (or such specified Person), including without limitation, in the case of
the Company, each Subsidiary of the Company and each Seller, (ii) any Person who
is or has been within two years of the time in question an officer, director or
direct or indirect beneficial holder of at least 5% of any class of the
outstanding capital stock of any Person referred to in clause (i) above and the
members of the immediate family of each such officer, director or holder (and,
if such specified Person is a natural person, of such specified Person), and
(iii) each Person of which the Company (or such specified Person) or an
Affiliate (as defined in clauses (i) or (ii) above) thereof shall, directly
<PAGE>
or indirectly, beneficially own at least 5% of any class of outstanding capital
stock or other evidence or type of beneficial interest.
"Affiliated Group" means any affiliated group within the meaning of Code
ss. 1504(a) or any similar group defined under a similar provision of Law.
"Aggregate Merger Consideration Amount" means $28,073,654.
"Aggregate Deductible" has the meaning set forth in ss. 9.2.
"Aggregate Threshold" has the meaning set forth in ss. 9.2.
"Agreement" has the meaning set forth in the preamble.
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could reasonably be expected to
form the basis for any specified consequence.
"B/E Common Stock" means the common stock of the Buyer, par value $0.01 per
share.
"B/E Shares" has the meaning set forth in ss. 2.4.
"Blackout Period" has the meaning set forth in ss. 5.5.
"Buyer" has the meaning set forth in the preamble.
"Certificate of Merger" means the certificate of merger attached as Exhibit
B hereto.
"Certificates" has the meaning set forth in ss. 2.7(a).
"Chemical Substance" means any chemical substance, including but not
limited to any (i) pollutant, contaminant, irritant, chemical, raw material,
intermediate, product, by-product, slag, construction debris; (ii) industrial,
solid, liquid or gaseous toxic or hazardous substance, material or waste; (iii)
petroleum or any fraction thereof; (iv) asbestos or asbestos-containing
material; (v) polychlorinated biphenyl; (vi) chlorofluoracarbons; and (vii)
other substance, material or waste, which is identified or regulated under any
Environmental Law or Safety Law, as in effect from time to time to the date
hereof, or other comparable Laws as in effect from time to time to the date
hereof.
"Closing" has the meaning set forth in ss. 2.6.
"Closing Date" means the date of this Agreement.
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"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the preamble.
"Company Common Stock" has the meaning set forth in ss. 3.2.
"Confidential Information" means any and all material information
concerning the affairs of any Party or its Affiliates other than that
information which is already generally known by or readily obtainable by the
public through no fault of another Party.
"Contractual Obligation" means, with respect to any Person, any legally
binding contract, agreement, deed, mortgage, lease, license, indenture,
commitment, undertaking, arrangement or understanding, written or oral, or other
document or instrument, including, without limitation, any document or
instrument evidencing or otherwise relating to any indebtedness but excluding
the charter and by-laws of such Person, to which or by which such Person is a
party or otherwise subject or bound or to which or by which any property or
right of such Person is subject or bound.
"Controlled Group of Corporations" has the meaning set forth in Code ss.
1563.
"Deferred Intercompany Transaction" has the meaning set forth in Treas.
Reg. ss. 1.1502-13.
"Disclosure Schedule" has the meaning set forth in ss. 3.
"Effective Date" means the date on which the Effective Time occurs.
"Effective Time" means the time at which the Certificate of Merger shall be
duly filed in the office of the Secretary of State of the State of New York.
"Employee Benefit Plan" means any (a) nonqualified deferred compensation or
retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), (d) Employee Welfare Benefit Plan or other fringe benefit
plan or program or (e) profit sharing, bonus, stock option, stock purchase,
equity, stock appreciation, deferred compensation, incentive, severance plan or
other benefit plan.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA ss.
3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA ss.
3(1).
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"Environment" means soil, land surface or subsurface strata, real
property, surface waters (including navigable waters, ocean waters, streams,
ponds, drainage basins and wetlands), groundwater, water body sediments,
drinking water supply, stream sediments, ambient air (including indoor air),
plant and animal life and any other environmental medium or natural resource.
"Environmental Laws" mean the Comprehensive Environmental Response,
Compensation and Liability Act, the Resource Conservation and Recovery Act, the
Clean Air Act, and the Clean Water Act, each as from time to time in effect to
the date hereof and any other Law, as from time to time in effect to the date
hereof, relating to: (a) the Release, containment, removal, remediation,
response, cleanup or abatement of any sort of any Chemical Substance; (b) the
manufacture, generation, formulation, processing, labeling, distribution,
introduction into commerce, use, treatment, handling, storage, recycling,
disposal or transportation of any Chemical Substance; (c) exposure of persons,
including employees, to any Chemical Substance; (d) the management, use,
storage, disposal, cleanup or removal of asbestos, asbestos-containing
materials, polychlorinated biphenyls or any other Chemical Substance; (e) the
pollution, protection or clean up of the Environment; or (f) noise.
"Environmental Liabilities and Costs" means all Losses incurred by the
Buyer or the Company: (i) for the Company to comply with any Environmental Law;
(ii) as a result of a Release of any Chemical Substance; or (iii) as a result of
any environmental conditions created by or arising out of the past or present
operations of Sellers or the Company or any Subsidiary of the Company through
the Closing Date or any environmental conditions present at any facility or site
now or previously owned by the Company.
"Environmental Permit" means any permit or authorization from any
governmental authority required under, issued pursuant to, or authorized by any
Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as from
time to time in effect to the date hereof.
"Escrow Agent" has the meaning set forth in ss. 5.2.
"Escrow Agreement" means the escrow agreement executed on the date hereof
in the form of Exhibit A hereto.
"Escrowed Shares" has the meaning set forth in ss. 2.4.
"Extremely Hazardous Substance" has the meaning set forth in ss. 302 of the
Emergency Planning and Community Right-to-Know Act of 1986, as amended from time
to time in effect to the date hereof.
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"Fiduciary" has the meaning set forth in ERISA ss. 3(21).
"Financial Statements" has the meaning set forth in ss. 3.8.
"Formula Price Per Share" means the amount that is equal to the arithmetic
average of the closing sale prices of a share of B/E Common Stock as reported on
the NASDAQ National Market System for the twenty consecutive trading days ending
on July 23, 1998.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Indebtedness" has the meaning set forth in ss. 3.9.
"Indemnified Party" has the meaning set forth in ss. 9.5(a).
"Indemnifying Party" has the meaning set forth in ss. 9.5(a).
"Individual Deductible" has the meaning set forth in ss. 9.2.
"Individual Threshold" has the meaning set forth in ss. 9.2.
"Intellectual Property" means the entire right, title and interest in and
to all proprietary rights of every kind and nature, including patents,
copyrights, Trademarks, mask works, trade secrets and proprietary information,
all applications for any of the foregoing, and any license or agreements
granting rights related to the foregoing (i) subsisting in, covering, reading
on, directly applicable to or existing in the Products or the Technology, (ii)
that are owned, licensed or controlled in whole or in part by the Company or any
Subsidiary of the Company and relate to the business of the Company or any
Subsidiary of the Company, or (iii) that are used in or necessary to the
development, manufacture, sales, marketing or testing of the Products.
"Knowledge" means actual knowledge after reasonable investigation and, when
used with respect to the Sellers or the Company, shall mean the knowledge of
each of Michael Tenzyk, Fred Buckholtz, William Brown, Louis Francisco, Scott
Bohan, Gerard Stoehr, Joseph Westrick, William Reisenauer, and Allan Rosen;
provided, however, that reasonable investigation shall not require investigation
of third parties external to the Company, their activities or their documents.
"Laws" means all laws, rules, regulations, codes, injunctions, judgments,
orders, decrees, rulings, interpretations, constitution, ordinance, common law,
treaty, or any other legal requirement of any federal, state, local municipal
and foreign, international, or multinational government or administration and
related agencies.
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"Liability" means any liability or obligation (whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated and
whether incurred or consequential), including, without limitation, any liability
for Taxes.
"Lien" means any mortgage, pledge, lien, security interest, charge, claim,
equitable interest, encumbrance, restriction on transfer, conditional sale or
other title retention device or arrangement (including, without limitation, a
capital lease), transfer for the purpose of subjection to the payment of any
Indebtedness, or restriction on the creation of any of the foregoing, whether
relating to any property or right or the income or profits therefrom; provided,
however, that the term "Lien" shall not include any of the following: (i)
statutory liens for Taxes to the extent that the payment thereof is not in
arrears or otherwise due, (ii) encumbrances in the nature of zoning
restrictions, easements, rights or restrictions of record on the uses of real
property if the same do not detract from the value of the property encumbered
thereby or impair the use of such property in the business of the Company and
its Subsidiaries as currently conducted, (iii) statutory or common law liens to
secure landlords, lessors or renters under leases or rental agreements confined
to the premises rented to the extent that no payment or performance under any
such lease or rental agreement is in arrears or is otherwise due, (iv) deposits
or pledges made in connection with, or to secure payment of, worker's
compensation, unemployment insurance, old age pension programs mandated under
applicable Laws or other social security regulations and (v) statutory or common
law liens in favor of carriers, warehousemen, mechanics and materialmen,
statutory or common law liens to secure claims for labor, materials or supplies
and other like liens, which secure obligations to the extent that payment
thereof is not in arrears or otherwise due, to the extent incurred in the
Ordinary Course of Business.
"Losses" has the meaning set forth in ss. 9.2.
"Material Adverse Effect" means any adverse effect on the business, assets,
operations or condition, financial or otherwise, of the Company or any of its
Subsidiaries which, when considered either singly or in the aggregate together
with all other such effects with respect to which such phrase is used in this
Agreement, constitutes a material adverse effect on the business, assets,
operations or condition, financial or otherwise, of the Company and its
Subsidiaries taken as a whole.
"Merger" shall mean the merger of Acquisition with and into the Company,
with the Company being the Surviving Corporation, in accordance with the
provisions of this Agreement and the Certificate of Merger.
"Most Recent Balance Sheet" means the unaudited consolidated balance sheet
for the Company and its Subsidiaries as of June 30, 1998 referred to in ss. 3.8.
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"Most Recent Financial Statements" means the audited Financial Statements
for the Most Recent Fiscal Year End.
"Most Recent Fiscal Year End" has the meaning set forth in ss. 3.8.
"Multiemployer Plan" has the meaning set forth in ERISA ss. 3(37).
"New York Business Corporation Law" has the meaning set forth in the
recitals.
"Ordinary Course of Business" means the ordinary course of business of the
Company and its Subsidiaries consistent with past custom and practice (including
with respect to quantity and frequency taking into account the then current
level of business of the Company and its Subsidiaries taken as a whole).
"Original Disclosing Party" has the meaning set forth in ss. 7.
"Party" and "Parties" have the meanings set forth in the preamble.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Per-Share Consideration Amount" means an amount equal to (x) the Aggregate
Merger Consideration Amount divided by (y) the aggregate number of shares of
Company Common Stock outstanding at the Effective Time.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"Products" means all past and current products and services of the Company
and, to the extent that they are currently being developed by the Company, (i)
any subsequent versions of such products or services, (ii) any products or
services which are designed to supersede, replace or function as a component of
such products or services, and (iii) any upgrades, enhancements, improvements
and modifications to the foregoing.
"Prohibited Transaction" has the meaning set forth in ERISA ss. 406 and
Code ss. 4975.
"Public Offering" has the meaning set forth in ss. 5.5(a)(ii).
"Registrable Securities" has the meaning set forth in ss. 5.5(a)(i).
"Release" means any actual or threatened spilling, leaking, pumping,
pouring, emitting, dispersing, emptying, discharging, injecting, escaping,
leaching, dumping, or disposing of any
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Chemical Substance into the Environment by the Company or its operations that
has caused or could reasonably be expected to cause an Environmental Liability
and Cost (including the disposal or abandonment of barrels, containers, tanks or
other receptacles containing or previously containing any Chemical Substance).
"Release Date" has the meaning set forth in ss. 5.2(a).
"Reportable Event" has the meaning set forth in ERISA ss. 4043.
"Safety Laws" means any Law relating to health or safety, including without
limitation the Occupational Safety and Health Act, as amended, each as from time
to time in effect to the date hereof relating to (a) exposure of employees to
any Chemical Substance or (b) the management, use, storage, disposal, cleanup or
removal of any Chemical Substance.
"Safety Liabilities and Costs" means all Losses incurred by the Buyer or
the Company for the Company to comply with any Safety Law or as a result of any
health or safety conditions created by or arising out of the past or present
operations of the Company or any of its Subsidiaries through the Closing Date.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Sellers" has the meaning set forth in the preamble.
"Sellers' Litigation Representative" has the meaning set forth in ss. 2.5.
"Sellers' Representative" has the meaning set forth in ss. 2.5.
"Shares" has the meaning set forth in the preamble.
"Subsidiary" means with respect to any Person, (i) any corporation at least
a majority of whose outstanding voting stock is owned, directly or indirectly,
by such Person or by one or more of its Subsidiaries, or collectively by such
Person and one or more of its Subsidiaries; (ii) any general partnership, joint
venture or similar entity, at least a majority of whose outstanding partnership
or similar interests shall at the time be owned by such Person or by one or more
of its Subsidiaries, or collectively by such Person and one or more of its
Subsidiaries; (iii) any limited partnership of which such Person or any of its
Subsidiaries is a general partner or at least a majority of whose ownership
interests is owned, directly or indirectly, by such Person or by one or more of
its Subsidiaries, or collectively by such Person and one or more of its
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Subsidiaries; and (iv) any limited liability company at least a majority of
whose ownership interests is owned, directly or indirectly, by such Person or by
one or more of its Subsidiaries, or collectively by such Person and one or more
of its Subsidiaries. For the purposes of this definition, "voting stock" or
"ownership interests" means shares, interests, participations or other
equivalents in the equity interest (however designated) in such Person having
ordinary voting power for the election of a majority of the directors (or the
equivalent) of such Person other than shares, interests, participations or other
equivalents having such power only by reason of the occurrence of a contingency
which has not occurred and which is not reasonably likely to occur.
"Surviving Corporation" has the meaning set forth in ss. 2.1.
"Tax" or "Taxes" means taxes, fees, levies, duties, tariffs, imposts and
governmental impositions or charges of any kind in the nature of (or similar to)
taxes, payable to any federal, state, local, or foreign taxing authority,
including, without limitation, income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under Code ss. 59A), customs duties, capital
stock, franchise, profits, withholding, social security (or similar, including
FICA), unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Technology" means all inventions, copyrightable works, discoveries,
innovations, know-how, ideas, research and development, formulas, compositions,
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, business and
marketing plans, proposals, documentation, manuals, computer software, computer
hardware, integrated circuits and integrated circuit masks, electronic,
electrical and mechanical equipment and all other forms of technology, including
improvements, modifications, derivatives or changes, whether tangible or
intangible, embodied in any form, whether or not protectible or protected by
patent, copyright, mask work right, trade secret law or otherwise.
"Third Party Claim" has the meaning set forth in ss. 9.5(a).
"Trademarks" means any trademarks, service marks, trade dress, and logos,
together with all translations, adaptations, derivations, and combinations
thereof and including all goodwill associated therewith.
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1.1. Rules of Construction. The following provisions shall be applied
wherever appropriate herein: (a) "herein", "hereby", "hereunder", "hereof" and
other equivalent words shall refer to this Agreement as an entirety and not
solely to the particular portion of this Agreement in which any such word is
used; (b) all definitions set forth herein shall include the singular and the
plural; (c) wherever used herein, any pronoun shall be deemed to include both
the singular and plural and to cover all genders; (d) all accounting terms not
specifically defined herein shall be construed in accordance with GAAP; (e)
except as otherwise stated herein, all references or citations in this Agreement
to statutes or regulations or statutory regulatory provisions, shall, when the
context requires and unless otherwise indicated, be considered citations to such
statutes, regulations or provisions as in effect from time to time, including
any successor statutes, regulations or provisions directly or indirectly
superseding such statutes, regulations or provisions; and (f) any references
herein to a particular Section, Article, Exhibit or Schedule means a Section or
Article of, or Schedule or Exhibit to, this Agreement unless another agreement
is specified.
2. The Merger.
2.1. Constituent Corporations; Surviving Corporation. Acquisition and the
Company, which was originally formed under the New York Business Corporation Law
under the name "Avialume Corp.," shall be the constituent corporations to the
Merger. Subject to the terms and conditions of this Agreement, at the Effective
Time, Acquisition shall be merged with and into the Company in accordance with
the New York Business Corporation Law, and the Company shall be the surviving
corporation of the Merger (the "Surviving Corporation"). At the Effective Time,
the identity and separate existence of Acquisition shall cease, and the
Surviving Corporation shall continue its corporate existence under the laws of
the State of New York as a wholly-owned subsidiary of Buyer. Without limiting
the generality of the foregoing, from and after the Effective Time, the
Surviving Corporation shall possess all of the rights, privileges, powers,
franchises, properties and other interests of the Company and Acquisition.
2.2. Certificate of Incorporation and Bylaws of the Surviving Corporation.
From and after the Effective Time and thereafter until amended as provided by
Law, (i) the Certificate of Incorporation of the Surviving Corporation shall be
the Certificate of Incorporation of Acquisition, except that the name of the
Surviving Corporation shall be "Aerospace Lighting Corporation", and (ii) the
bylaws of the Surviving Corporation shall be the bylaws of Acquisition.
2.3. Directors and Officers of the Surviving Corporation. The directors and
officers of the Surviving Corporation immediately following the Merger shall be
the directors and officers of Acquisition immediately prior to the Merger and
all such directors and officers shall hold office until their respective
successors are duly elected and qualified.
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2.4. Conversion of the Shares. At the Effective Time by virtue of the
Merger and without any action on the part of Acquisition or any Seller:
(a) Each Share issued and outstanding immediately prior to the Effective
Time (other than any Shares to be canceled pursuant to ss. 2.4(b)) shall be
canceled and shall be converted automatically into the right to receive a
number of shares of B/E Common Stock equal to (w) the Per-Share
Consideration Amount divided by (x) the Formula Price Per Share; provided,
however, that (y) a portion of the shares of B/E Common Stock issuable
pursuant to the Merger in respect of the Shares shall be delivered into
escrow and held as specified in ss. 5.2 (all such shares issuable pursuant
to the Merger, including the Escrowed Shares being referred to herein as
the "B/E Shares" and said portion of the B/E Shares subject to the escrow
provisions of ss. 5.2 being referred to herein as the "Escrowed Shares")
and the Escrowed Shares shall be distributed, to the Sellers only upon
release by the Escrow Agent as provided in ss. 5.2 upon and subject to
resolution of the matters referred to in ss. 9.2 and (z) no fractional
shares of B/E Common Stock shall be issued pursuant to the Merger, with
each Person otherwise entitled to such a fractional share being entitled to
cash, payable by check of the Surviving Corporation, in an amount equal to
such fractional share valued at the Formula Price Per Share.
(b) Notwithstanding the provisions of ss. 2.4(a), each Share held in the
treasury of the Company and each Share owned by Acquisition or by Buyer
immediately prior to the Effective Time shall be canceled without any
conversion thereof and no payment or distribution shall be made with
respect thereto.
(c) Each share of Acquisition common stock, par value $.01 per share,
issued and outstanding immediately prior to the Effective Time shall be
converted into and exchanged for one validly issued, fully paid and
nonassessable share of common stock, par value $.01 per share, of the
Surviving Corporation.
2.5. Sellers' Representatives. Each individual listed on ss. 2.5 of the
Disclosure Schedule hereby is irrevocably appointed attorney-in-fact and
authorized and empowered to act, for and on behalf of the Seller or Sellers
listed opposite his name on such Schedule (with full power of substitution in
the premises) under the escrow provisions of ss. 5.2, the Escrow Agreement, the
registration rights provisions of ss. 5.5, the notice provisions of this
Agreement and such other matters (other than any amendment or modification of
this Agreement pursuant to ss. 10.9) as are reasonably necessary for the
consummation of the transactions contemplated hereby (each of the above named
representatives, as well as any subsequent representatives of the Sellers
appointed by such representatives or after such representative's death or
incapacity appointed by the Sellers being referred to herein as a "Seller's
Representative" and collectively as the "Sellers' Representatives"); provided,
however, that Michael J. Tenzyk is appointed as the agent for all of the Sellers
with respect to matters concerning Third Party Litigation pursuant to ss. 9.5
(the "Sellers' Litigation Representative"). By their execution hereof, each of
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Michael Tenzyk, Louis J. Francisco and William Brown hereby accepts such
appointment and agrees to act as Seller's Representative hereunder. Each of
Buyer and Acquisition and their respective Affiliates (including, after the
Closing, the Company) shall be entitled to rely on such appointment and treat
each Seller's Representative as the duly appointed attorney-in-fact of the
Sellers set forth opposite such Person's name in ss. 2.5 of the Disclosure
Schedule. Each Seller who executes this Agreement or votes in favor of the
Merger pursuant to the terms hereof, by such execution or vote, confirms such
appointment and authority and acknowledges and agrees that such appointment is
irrevocable and coupled with an interest, it being understood that the
willingness of the Buyer to enter into this Agreement is based, in part, on the
appointment of such representatives to act on behalf of the Sellers.
2.6. The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the New York Conference Center of
Ropes & Gray, 885 Third Avenue, New York, New York, commencing at 10:00 a.m. New
York time on the date of this Agreement (the "Closing Date").
2.7. Surrender of Shares; Stock Transfer Books.
(a) At the Effective Time, each holder (other than the Company,
Acquisition or the Buyer, if applicable) of any outstanding certificate or
certificates theretofore representing the Shares converted in the Merger as
described in ss. 2.4(a) (the "Certificates") shall surrender the same to
the Surviving Corporation for cancellation. Upon surrender of a Certificate
to the Surviving Corporation, the holder of such certificate shall receive
in exchange therefor a certificate or certificates representing the number
of B/E Shares to which such holder is entitled pursuant to the Merger
(subject to the escrow provisions contemplated by ss.ss. 2.4 and 5.2) and
cash in lieu of any fractional share otherwise to be so issued. Subject to
the restrictions on transfer referred to in the last sentence of ss. 5.2,
if the B/E Shares are to be issued to a Person other than the Person in
whose name the surrendered Certificate is registered on the stock transfer
books of the Company, it shall be a condition of issuance of such B/E
Shares that the Certificate so surrendered shall be endorsed properly or
otherwise be in proper form for transfer and that the Person requesting
such payment shall have paid all transfer and other Taxes required by
reason of the issuance of B/E Shares pursuant to the Merger in accordance
with ss. 2.4 to a Person other than the registered holder of the
Certificate surrendered or shall have established to the satisfaction of
the Surviving Corporation that such Taxes either have been paid or are not
applicable.
(b) If any Certificate shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed and subject to such other
conditions as the Board of Directors of the Surviving Corporation may
impose, the Surviving Corporation shall cause the Buyer to issue in
exchange for such lost, stolen or destroyed Certificate the B/E Shares
deliverable in
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respect thereof as determined in accordance herewith (subject to the escrow
provisions contemplated by ss.ss. 2.4 and 5.2). When authorizing such issue
of the B/E Shares in exchange therefor, the Board of Directors of the
Surviving Corporation (or any authorized officer thereof) may, in its
discretion and as a condition precedent to the issuance thereof, require
the owner of such lost, stolen or destroyed Certificate to give the
Surviving Corporation a bond in such sum as the Board of Directors may
direct as indemnity against any claim that may be made against the
Surviving Corporation with respect to the Certificate alleged to have been
lost, stolen or destroyed.
(c) At the close of business on the Effective Date, the stock transfer
books of the Company shall be closed, and no transfer of Shares shall
thereafter be made on such books. From and after the Effective Time, the
holders of Shares outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to such shares except as otherwise
provided herein or by applicable Law.
2.8. Further Assurances. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other acts or things are necessary or
desirable to vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation, its right, title or interest in or to any of the rights, properties
or assets of the Company or Acquisition or otherwise to carry out the purposes
of this Agreement, the Surviving Corporation and its officers and directors
shall be authorized to execute and deliver, in the name and on behalf of the
Company or Acquisition, all such deeds, bills of sale, assignments and
assurances and to do, in the name and on behalf of the Company or Acquisition,
all such other acts and things necessary or desirable to vest, perfect or
confirm any and all right, title or interest in, to or under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out the
purposes of this Agreement.
3. Representations and Warranties of the Sellers. The Sellers severally (and not
jointly or jointly and severally) represent and warrant to the Buyer that the
statements contained in this ss. 3 are correct and complete as of the date of
this Agreement, except as set forth in the corresponding section of the
disclosure schedule accompanying this Agreement (collectively, the "Disclosure
Schedule"). The Disclosure Schedule will be arranged in paragraphs corresponding
to the lettered and numbered paragraphs contained in this ss. 3.
3.1. Organization of the Company. The Company is a New York corporation,
duly organized under the Laws of the State of New York as then in effect, and is
validly existing and in good standing under the Laws of the State of New York as
now in effect and has the requisite corporate power and authority to carry on
its business and now conducted and to own and lease its properties. Copies of
the certificate of incorporation and bylaws of the Company, each as amended to
date, have been heretofore delivered to Buyer and are accurate and complete. The
Company is qualified to do business and is in good standing as a foreign
corporation in each jurisdiction listed in ss. 3.1 of the Disclosure Schedule,
which such
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jurisdictions are the only jurisdictions where the nature of the activities
conducted by the Company or the character of the property owned, leased or
operated by it make such qualification necessary or appropriate. The minute book
(containing the records of meetings of stockholders, the board of directors and
any committees of the board of directors) of the Company is a correct and
complete record of actions taken, and copies thereof have been made available to
Buyer. The Company is not in default under or in violation of any provision of
its certificate of incorporation or bylaws.
3.2. Capitalization and Ownership of the Company. The authorized capital
stock of the Company consists of 1,000 shares of common stock, no par value per
share (the "Company Common Stock"). Each holder of Company Common Stock is
entitled to one vote per share of Company Common Stock owned by such holder. As
of the date hereof, there are issued (a) 810 shares of Company Common Stock, of
which 150 shares are held as treasury stock and 660 shares are outstanding and
held of record and beneficially by the Persons and in the respective amounts set
forth on ss. 3.2 of the Disclosure Schedule, free and clear of any Liens. All of
the outstanding shares of Company Common Stock have been validly issued, are
fully paid and nonassessable. There are no agreements restricting the transfer
of, or affecting the rights of any holder of, the shares of Company Common Stock
or any other shares of the Company's capital stock, there are no preemptive
rights on the part of any holder of any class of securities of the Company and
no outstanding options, warrants, rights, or other agreements or commitments of
any kind obligating the Company, contingently or otherwise, to issue or sell any
shares of its capital stock or any securities or obligations convertible into,
or exchangeable for, any shares of its capital stock, and no authorization
therefor has been given. Section 3.2 of the Disclosure Schedule sets forth the
names of the record holders of all outstanding options, warrants or other rights
to purchase, sell or otherwise dispose of, or rights to exchange or convert
into, any shares of the Company's capital stock and the number of shares,
exercise prices and expiration dates of such options, warrants or other rights.
None of the outstanding shares of capital stock of the Company was issued in
violation of the Securities Act or the securities or blue sky Laws of any state
or other jurisdiction, as the same were then in effect. Each Seller has full
right, power and authority to transfer the Shares in the respective amounts as
set forth in ss. 3.2 of the Disclosure Schedule to Buyer, free and clear of any
Liens, and no Person, other than the Sellers, has any right, title or interest
in the Company or any of its Subsidiaries or any profits, earnings, cash flows,
equity, gains or losses with respect thereto.
3.3. Authorization of Transaction. Each of the Sellers and the Company has
the legal capacity, power and authority (including, in the case of the Company,
full corporate power and authority) to execute and deliver this Agreement and to
perform their respective obligations hereunder. All corporate and other actions
or proceedings to be taken by or on the part of the Company or the Sellers to
authorize and permit the execution and delivery by Company and the Sellers of
this Agreement and the respective instruments required to be executed and
delivered by the Company and the Sellers pursuant hereto, the performance by
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the Company and the Sellers of their respective obligations hereunder, and the
consummation by the Company and the Sellers of the transactions contemplated
herein, have been duly and properly taken by the Sellers and the Company. This
Agreement has been duly executed and delivered by each of the Company and the
Sellers and constitutes the legal, valid and binding obligation of each of the
Company and the Sellers, enforceable in accordance with its terms and
conditions, except to the extent that enforceability may be limited by
bankruptcy, insolvency and other similar Laws affecting the enforcement of
creditors' rights generally.
3.4. Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including transfer of the Shares and any of the agreements and instruments
required to be delivered pursuant to ss. 2 and ss. 6), will (i) violate any
provision of the charter or bylaws of the Company or any of its Subsidiaries,
(ii) violate any Law or other restriction of any government, governmental agency
or court to which any of the Company, its Subsidiaries or the Sellers or any of
their property is subject or (iii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice or
consent under any Contractual Obligation to which any of the Company, its
Subsidiaries or the Sellers is a party or by which any of them is bound or to
which any of their assets is subject (or result in the imposition of any Lien
upon any of their assets). None of the Company, its Subsidiaries or the Sellers
needs to give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in order for the
Parties to consummate the transactions contemplated by this Agreement, except
for the filing of the Certificate of Merger with the Secretary of State of the
State of New York.
3.5. Brokers' Fees. None of the Company, its Subsidiaries or the Sellers
has any Liability to pay any fees or commissions to any broker, finder, or agent
with respect to the transactions contemplated by this Agreement for which the
Buyer or the Company or any of its Subsidiaries could become liable or
obligated.
3.6. Title to Assets. The Company and each of its Subsidiaries has good
and marketable title to, or a valid and subsisting leasehold interest in, and,
in the case of owned property and assets, the power to sell the properties and
assets used by it, located on its premises, or reflected on the Most Recent
Balance Sheet or acquired after the date thereof, free and clear of all Liens,
except for properties and assets disposed of in the Ordinary Course of Business
since the date of the Most Recent Balance Sheet and other assets having a net
book value in the aggregate at the time of disposition of not more than $5,000
and a fair market value in the aggregate at the time of disposition of not more
than $50,000. Each such tangible asset is free from patent defects, has been
maintained in accordance with normal industry practice, is in satisfactory
operating condition and repair (subject to normal wear and tear), and is
suitable, adequate and sufficient for the purposes for which it presently is
used.
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3.7. Subsidiaries. Section 3.7 of the Disclosure Schedule sets forth for
each of the Company's Subsidiaries (i) its name and jurisdiction of
incorporation, (ii) the number of shares of authorized capital stock of each
class of its capital stock, (iii) the number of issued and outstanding shares of
each class of its capital stock, the names of the record and beneficial holders
thereof, and the number of shares held by each such holder, (iv) the number of
shares of its capital stock held in treasury and (v) its directors and officers.
Each Subsidiary is a corporation duly organized under the Laws of the
jurisdiction of its incorporation as then in effect, and is validly existing and
in good standing under the Laws of the jurisdiction of its incorporation as the
same are now in effect. Each Subsidiary is duly authorized to conduct business
and is in good standing as a foreign corporation in each jurisdiction listed in
ss. 3.7 of the Disclosure Schedule, which such jurisdictions are the only
jurisdictions where the nature of the activities conducted by it or the
character of the property owned, leased or operated by it make such
qualification necessary or appropriate. Each Subsidiary has full corporate power
and authority and all licenses, permits, and authorizations necessary to carry
on the businesses in which it is engaged and to own and use the properties owned
and used by it. The Company has delivered to the Buyer correct and complete
copies of the charter and bylaws of each Subsidiary (each as amended to date).
All of the issued and outstanding shares of capital stock of each Subsidiary
have been duly authorized and are validly issued, fully paid, and nonassessable.
The Company owns of record and beneficially all of the outstanding shares of
each Subsidiary, free and clear of any Taxes, Liens, options, warrants, purchase
rights, contracts and commitments. There are no outstanding or authorized
options, warrants, purchase rights, subscription rights, conversion rights,
exchange rights, or other contracts or commitments that could require any of the
Company or any of its Subsidiaries to sell, transfer, or otherwise dispose of
any capital stock of any of its Subsidiaries or that could require any
Subsidiary to issue, sell, or otherwise cause to become outstanding any of its
own capital stock (other than pursuant to this Agreement). There are no
outstanding stock appreciation, phantom stock, profit participation, or similar
rights with respect to any Subsidiary. There are no voting trusts, proxies, or
other agreements or understandings with respect to the voting of any capital
stock of any Subsidiary. The minute books (containing the records of meetings of
stockholders, the board of directors and any committees of the board of
directors), the stock certificate books, and the stock record books of each
Subsidiary are all correct and complete records of actions taken, and copies
thereof have been made available to Buyer. None of the Subsidiaries of the
Company is in default under or in violation of any provision of its charter or
bylaws. None of the Company or its Subsidiaries controls directly or indirectly
or has any direct or indirect equity participation in or ownership interest in
any Person which is not a Subsidiary of the Company.
3.8. Financial Statements. Attached hereto as Exhibit C are the following
financial statements (collectively the "Financial Statements"): (i) audited
consolidated and unaudited consolidating balance sheets and statements of
income, changes in stockholders' equity, and cash flow as of and for the fiscal
years ended December 31, 1995, 1996 and 1997 (December 31, 1997 being the "Most
Recent Fiscal Year End") for the Company and its Subsidiaries, and
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(ii) unaudited consolidated and consolidating balance sheets and statements of
income, changes in stockholders' equity, and cash flow as of and for the fiscal
quarters ended (and portions of the fiscal year then ended) March 31 and June
30, 1998 for the Company and its Subsidiaries. The Financial Statements have
been prepared in accordance with GAAP applied on a consistent basis throughout
the periods covered thereby, are correct and complete in all material respects
and present fairly the financial condition of the Company and its Subsidiaries
as of such dates and the results of operations of the Company and its
Subsidiaries for such periods and are consistent in all material respects with
the books and records of the Company and its Subsidiaries.
3.9. Indebtedness; Guarantees. Except as set forth in the Most Recent
Balance Sheet, neither the Company, nor any of its Subsidiaries had as of the
date of the Most Recent Balance Sheet any indebtedness for borrowed money or for
the deferred purchase price of property or services (other than trade payables
and other accrued current liabilities incurred in the Ordinary Course of
Business), or capital lease obligations, conditional sale or other title
retention agreements ("Indebtedness"). Neither the Company, nor any of its
Subsidiaries is a guarantor or otherwise liable for any Liability or obligation
of any other Person other than with respect to the endorsement of checks for
deposit in the Ordinary Course of Business.
3.10. Absence of Changes. Since June 30, 1998, the Company has conducted
its business only in the Ordinary Course of Business and there has not been:
(a) any sale, lease, transfer, or assignment of any of the assets of
the Company or any of its Subsidiaries, tangible or intangible, having a
net book value in the aggregate at the time of disposition in excess of
$5,000 or a fair market value in the aggregate at the time of disposition
in excess of $50,000, other than sales of inventory for a fair
consideration in the Ordinary Course of Business;
(b) any Contractual Obligation (or series of Contractual
Obligations) entered into by the Company or any of its Subsidiaries other
than in the Ordinary Course of Business and in an amount not in excess of
$10,000 individually;
(c) any acceleration, termination, modification, or cancellation of
any material Contractual Obligation of the Company or any of its
Subsidiaries (or series of Contractual Obligations), except for
expirations of such Contractual Obligations in accordance with their
respective terms, to which the Company or any of its Subsidiaries is a
party or by which it or any of its assets is bound;
(d) any capital expenditure (or series of related capital
expenditures) involving more than $10,000 in the aggregate;
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(e) any capital investment in, any loan to, or any acquisition of
the securities or assets of, any other Person (or series of related
capital investments, loans, and acquisitions other than extensions of
credit in the Ordinary Course of Business);
(f) other than as disclosed in ss. 3.9 of the Disclosure Schedule
any issuance of any note, bond, or other debt security or created,
incurred, assumed, or guaranteed any Indebtedness in excess of $10,000 in
the aggregate;
(g) any delay or postponement of payment of accounts payable or
other Liabilities outside the Ordinary Course of Business;
(h) any cancellation, compromise, waiver, or release of any right or
claim or Indebtedness (or series of related rights and claims) outside of
the Ordinary Course of Business;
(i) any grant of any license or sublicense of any rights or modified
any rights under or with respect to, or entered into any settlement
regarding any infringement of its rights to, any Intellectual Property;
(j) any issuance, sale, or other disposition of any capital stock,
or grant of any options, warrants, or other rights to purchase or obtain
(including upon conversion, exchange, or exercise) any of capital stock;
(k) any dividend or distribution (whether in cash or in kind) or
repurchase, redemption or retirement any of capital stock;
(l) any threat or notification in writing or, to the Knowledge of
the Sellers and the Company, orally, that one or more distributors,
customers or suppliers listed in ss. 3.29 of the Disclosure Schedule have
terminated or intend to terminate or are considering terminating its
business relationships or have modified or intend to modify such
relationships with the Company or any of its Subsidiaries in a manner
which is materially less favorable to the Company or any of its
Subsidiaries or have agreed not to or will not agree to do business on
such terms and subject to conditions at least as favorable terms and
conditions as provided to the Company and its Subsidiaries on the date of
the Most Recent Balance Sheet Date or any actual termination or adverse
modification of such relationships.
(m) any damage, destruction, or loss (whether or not covered by
insurance) to its property in excess of $10,000 in the aggregate;
(n) any loan to, or any other transaction with, any of the Company's
Affiliates or, outside the Ordinary Course of Business, with any other
employee;
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(o) any employment Contractual Obligation or collective bargaining
agreement, written or oral, or modification of the terms of any existing
such Contractual Obligation or agreement;
(p) any increase, modification or change in the compensation, bonus
structure or benefits of any directors, officers, consultants, agents and
employees of the Company or any of its Subsidiaries outside the Ordinary
Course of Business;
(q) any adoption, amendment, modification or termination of any
Employee Benefit Plan or other plan, contract, or commitment for the
benefit of any director, officer, consultant, agent or employee of the
Company or any of its Subsidiaries;
(r) any payment pursuant to any Employee Benefit Plan or other plan,
contract or commitment for the benefit of any director, officer,
consultant, agent or employee of the Company or any of its Subsidiaries
inconsistent with the terms thereof;
(s) any modification or change in the employment terms for any of
its directors, officers, consultants, agents or employees outside the
Ordinary Course of Business;
(t) any pledge to make any charitable contribution and no such
contribution was made;
(u) any modification or change in the application of GAAP from the
manner in which it was applied in the Most Recent Financial Statements;
(v) any other occurrence, event, incident, action, failure to act or
transaction outside the Ordinary Course of Business with respect to the
Company or any of its Subsidiaries and involving the expenditures by the
Company or its Subsidiaries in excess of $25,000 in the aggregate or any
material future actions by the Company or any of its Subsidiaries;
(w) any Contractual Obligation entered into pursuant to which a
party thereto is entitled to a commission based on sales to or revenues or
profits derived from one or more customers, or success fees, finders fees
or other compensation related to sales; or
(x) any legally binding commitment to any of the foregoing by any of
the Company, its Subsidiaries or the Sellers.
3.11. Absence of Undisclosed Liabilities. Neither the Company nor any of
its Subsidiaries has any Liability (and, to the Knowledge of the Sellers, there
is no Basis for any
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present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against the Company or any of its Subsidiaries
giving rise to any such Liability of the Company or any of its Subsidiaries),
except for (i) Liabilities disclosed in the Disclosure Schedule or not required
to be disclosed in the Disclosure Schedule because of a materiality qualifier or
a dollar limitation or threshold in a representation or warranty, (ii)
Liabilities set forth on the face of the Most Recent Balance Sheet (rather than
in any notes thereto), (iii) Liabilities which have arisen after the date of the
Most Recent Balance Sheet in the Ordinary Course of Business and (iv)
Liabilities that result from or arise out of circumstances, events, facts or
occurrences that are the subject matter of any other representation or warranty
contained in ss.3 of this Agreement.
3.12. Legal and Other Compliance. The Company and each of its Subsidiaries
is, and at all times prior to the date of this Agreement has been, in compliance
in all material respects with all applicable material Laws (as then in effect or
as now in effect, as applicable), and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against the Company or any of its Subsidiaries alleging any failure so
to comply.
3.13. No Material Adverse Change. Since the date of the Most Recent
Financial Statements, there has not been any change which has resulted in a
Material Adverse Effect and, to the Knowledge of the Sellers and the Company, no
event has occurred and no circumstances exist that could reasonably be expected
to result in a Material Adverse Effect.
3.14. Taxes.
(a) The Company and each of its Subsidiaries has filed all Tax
Returns that it was required to file. All such Tax Returns were correct
and complete. All Taxes due and payable by the Company and each of its
Subsidiaries (whether or not shown on any Tax Return) have been paid.
Neither the Company nor any of its Subsidiaries currently is the
beneficiary of any extension of time within which to file any Tax Return.
No claim has been made in the last five years by an authority in a
jurisdiction where the Company or any of its Subsidiaries does not file
Tax Returns that they may be subject to taxation by that jurisdiction.
There are no Liens on any of the assets of the Company or any of its
Subsidiaries that arose in connection with any failure (or alleged
failure) to pay any Tax other than liens for Taxes that are (i) being
contested in good faith by appropriate proceedings and have been reserved
in accordance with GAAP and (ii) set forth on ss. 3.14 of the Disclosure
Schedule.
(b) The Company and each of its Subsidiaries have withheld and paid
all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party.
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(c) There is no dispute, audit, investigation, proceeding or claim
concerning any Liability with respect to Taxes of the Company or any of
its Subsidiaries either (i) claimed or raised by any authority in writing
or (ii) as to which any of the Company or the Sellers has Knowledge based
upon contact with any such authority. All federal, state, local, and
foreign income Tax Returns filed with respect to the Company and each of
its Subsidiaries have been audited and closed or are Tax Returns with
respect to which the applicable statute of limitations has run, and none
of the foregoing are currently open or the subject of audit. The Company
or the Sellers have made available to the Buyer correct and complete
copies of all federal income Tax Returns, examination reports and
statements of deficiencies assessed against or agreed to by any of the
Company or any of its Subsidiaries for the last five taxable years.
(d) Neither the Company nor any of its Subsidiaries has waived any
statute of limitations in respect of Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency or has granted any
power of attorney with respect to Taxes which is currently in force.
(e) Neither the Company nor any of its Subsidiaries is or has been a
party to any Tax allocation or sharing agreement or a member of an
Affiliated Group filing a consolidated federal income Tax Return (other
than a group the common parent of which was the Company). Neither the
Company nor any of its Subsidiaries has any Liability for the Taxes of any
Person other than the Company and its Subsidiaries under Treas. Reg. ss.
1.1502-6 (or any similar provision of Law as now in effect), as a
transferee or successor, by contract, or otherwise.
(f) Neither the Company nor any of its Subsidiaries has filed a
consent under Code ss. 341(f) concerning collapsible corporations. Neither
the Company nor any of its Subsidiaries has made any payments, nor is it
obligated to make any payments, nor is it a party to any agreement that
under certain circumstances could obligate it to make any payments that
will not be deductible under Code ss.ss. 162, 280G or 404. Neither the
Company nor any of its Subsidiaries has been a United States real property
holding corporation within the meaning of Code ss. 897(c)(2) during the
applicable period specified in Code ss. 897(c)(1)(A)(ii).
(g) The unpaid Taxes of the Company and its Subsidiaries (i) did
not, as of the date of the Most Recent Balance Sheet, exceed the reserve
for Tax Liability (other than any reserve for deferred Taxes established
to reflect timing differences between book and Tax income) set forth on
the face of the Most Recent Balance Sheet (rather than in any notes
thereto) and (ii) do not exceed that reserve as adjusted for the passage
of time through the Closing Date in accordance with the past custom and
practice of the Company.
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(h) The Company has been an S corporation, within the meaning of the
Code and for all state and local Tax Law purposes, except in those states
and localities that do not recognize S corporation status, at all times
since January 1, 1998 and has filed all forms and taken all actions
necessary to maintain such status. Neither the Company nor any Seller has
taken any action, or omitted to take any action, which action or omission
could result in the loss of S corporation status for such period prior to
the Closing Date, other than the loss of such status anticipated to occur
as a result of the Merger pursuant to this Agreement.
(i) Each Subsidiary of the Company is and has at all times been
properly classified as a domestic international sales corporation within
the meaning of ss. 922 of the Code.
3.15. Property, Plant and Equipment.
(a) Neither the Company nor any of its Subsidiaries owns any real
property.
(b) Section 3.15(b) of the Disclosure Schedule lists all real
property leased or subleased to the Company or any of its Subsidiaries.
The Company has made available to the Buyer correct and complete copies of
the leases and subleases listed in ss. 3.15(b) of the Disclosure Schedule
and such leases and subleases have not been amended or modified since the
date thereof. With respect to each lease and sublease listed in ss.
3.15(b) of the Disclosure Schedule:
(i) the lease or sublease is legal, valid, binding and
enforceable against the Company, and, to the Knowledge of the
Sellers and the Company, in full force and effect, except to the
extent that enforceability may be limited by bankruptcy, insolvency
and other similar Laws affecting the enforcement of creditors'
rights generally;
(ii) neither the Company nor any of the Company's
Subsidiaries, or to the Knowledge of the Company or the Sellers, any
other party to the lease or sublease is in breach or default, and no
event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination, modification,
or acceleration thereunder;
(iii) neither the Company nor any of its Subsidiaries nor, to
the Knowledge of the Company and the Sellers, any other party to the
lease or sublease has repudiated any provision thereof;
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(iv) there are no disputes, oral or written agreements, or
forbearance programs in effect as to the lease or sublease;
(v) neither the Company nor any Subsidiary of the Company has
assigned, transferred, conveyed, mortgaged, deeded in trust, or
encumbered any interest in the leasehold or subleasehold;
(vi) the Company and its Subsidiaries have received all
approvals of governmental authorities (including licenses and
permits) for all facilities leased or subleased by the Company
required to be obtained by the Company in connection with the
operation of the business of the Company thereon; and
(vii) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for the
operation of said facilities as currently operated.
3.16. Intellectual Property.
(a) The Company and its Subsidiary own or, to the Knowledge of the
Sellers and the Company, have the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property necessary
for the operation of the business of the Company and its Subsidiaries as
presently conducted and as presently proposed to be conducted with respect
to the Products listed in ss. 3.16(a) of the Disclosure Schedule. Section
3.16(a) of the Disclosure Schedule lists each Product which is currently
being developed by the Company or any of its Subsidiaries. Other than with
respect to Intellectual Property used under a license, the Company has
taken commercially reasonable action to maintain and protect each item of
Intellectual Property that the Company or any of its Subsidiaries owns.
(b) With respect to the Intellectual Property owned by the Company,
neither the Company nor any of its Subsidiaries has interfered with,
infringed upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of third parties, and there has never been
any written (or, to the Knowledge of the Company and the Sellers, any
other) charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation (including any
claim that the Company or any of its Subsidiaries must license or refrain
from using any Intellectual Property rights of any third party). To the
Knowledge of the Sellers and the Company, no third party has interfered
with, infringed upon, misappropriated, or otherwise come into conflict
with any Intellectual Property rights of the Company or any of its
Subsidiaries.
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(c) Section 3.16(c)(i) of the Disclosure Schedule identifies each
patent or registration which has been issued to the Company or any of its
Subsidiaries with respect to the Intellectual Property of the Company or
any of its Subsidiaries, identifies each pending patent application or
application for registration which has been made with respect to the
Intellectual Property of the Company or any of its Subsidiaries, and
identifies each license, agreement, or other permission which the Company
or any of its Subsidiaries has granted to any third party with respect to
any of such Intellectual Property (together with any exceptions). The
Company has made available to the Buyer correct and complete copies of all
such patents, registrations, applications, licenses, agreements, and
permissions (as amended to date) and has made available to the Buyer
correct and complete copies of all other written documentation evidencing
ownership and prosecution (if applicable) of each such item. Section
3.16(c)(ii) of the Disclosure Schedule also identifies each trade name or
unregistered trademark or servicemark used by the Company or any of its
Subsidiaries. With respect to each item of Intellectual Property required
to be identified in ss. 3.16(c)(i) of the Disclosure Schedule:
(i) the Company and its Subsidiaries possess all right, title,
and interest in and to the item, free and clear of any Lien,
license, or other restriction;
(ii) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(iii) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the Knowledge
of the Sellers or the Company, is threatened, which challenges the
legality, validity, enforceability, use, or ownership of the item;
and
(iv) except in the Ordinary Course of Business, neither the
Company nor any of its Subsidiaries has agreed to indemnify any
Person for or against any interference, infringement,
misappropriation, or other conflict with respect to the item.
(d) Section 3.16(d) of the Disclosure Schedule identifies each item
of Intellectual Property that any third party owns and that the Company or
any of its Subsidiaries uses pursuant to license, sublicense, agreement,
or permission. The Company has made available to the Buyer correct and
complete copies of all such licenses, sublicenses, agreements, and
permissions (as amended to date). With respect to each item of
Intellectual Property required to be identified in ss. 3.16(d) of the
Disclosure Schedule:
(i) the license, sublicense, agreement, or permission covering
the item is legal, valid, binding and enforceable against the
Company, and, to the
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Knowledge of the Sellers and the Company, in full force and effect,
except to the extent that enforceability may be limited by
bankruptcy, insolvency and other similar Laws affecting the
enforcement of creditors' rights generally;
(ii) the license, sublicense, agreement, or permission will
continue to be legal, valid, binding and enforceable against the
Company, and, to the Knowledge of the Sellers and the Company, in
full force and effect on identical terms immediately following the
consummation of the transactions contemplated hereby, subject to the
terms and conditions thereof and except to the extent that
enforceability may be limited by bankruptcy, insolvency and other
similar Laws affecting the enforcement of creditors' rights
generally;
(iii) neither the Company nor any of its Subsidiaries nor, to
the Knowledge of the Company and the Sellers, any other party to the
license, sublicense, agreement, or permission is in breach or
default, and no event has occurred which with notice or lapse of
time would constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(iv) to the Knowledge of the Sellers and the Company, no party
to the license, sublicense, agreement, or permission has repudiated
any provision thereof;
(v) to the Knowledge of the Sellers and the Company, the
underlying item of Intellectual Property is not subject to any
outstanding injunction, judgment, order, decree, ruling, or charge;
(vi) to the Knowledge of the Sellers and the Company, no
action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand is pending or, to the Knowledge of the Sellers and
the Company, is threatened, which challenges the legality, validity,
or enforceability of the underlying item of Intellectual Property;
and
(vii) neither the Company nor any of its Subsidiaries has
granted any sublicense or similar right with respect to the license,
sublicense, agreement, or permission.
The representations and warranties in this ss. 3.16 are the only
representations and warranties with respect to Intellectual Property,
notwithstanding any other language of general applicability in this
Agreement.
3.17. Inventories. Section 3.17 of the Disclosure Schedule lists all of
the inventory that is owned by Persons other than the Company and which is
currently being held by the
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Company for the benefit of other Persons. The inventory, taken as a whole, as
reflected in the Most Recent Balance Sheet and books and records of the Company
and its Subsidiaries is reflected on the basis of a complete physical count as
of December 31, 1997 as updated by the Company's cycle counts and is valued at
the lower of cost (on a first-in, first-out basis) or market in accordance with
GAAP, consistently applied. Since the Most Recent Balance Sheet Date, no
inventory has been sold or disposed of except through sales in the Ordinary
Course of Business.
3.18. Contracts. Section 3.18 of the Disclosure Schedule lists the
following Contractual Obligations (excluding any Contractual Obligations that
are terminable by the Company or any of its Subsidiaries on not more than 30
days notice without penalty) to which the Company or any of its Subsidiaries is
a party:
(a) any Contractual Obligation (or group of Contractual Obligations)
for the lease of personal property to or from any Person providing for
lease payments in excess of $25,000 annually;
(b) any Contractual Obligation (or group of related Contractual
Obligations) for the purchase or sale of raw materials, commodities,
supplies, products, or other personal property, or for the furnishing or
receipt of services, the performance of which will extend over a period of
more than one year or involves consideration in excess of $25,000;
(c) any Contractual Obligation creating or making the Company or any
of its Subsidiaries a party in a partnership, limited liability company or
joint venture;
(d) any Contractual Obligation (or group of related Contractual
Obligations) under which it has created, incurred, assumed, or guaranteed
any Indebtedness in excess of $10,000 or under which it has imposed a Lien
on any of its assets, tangible or intangible, except for the endorsement
of checks for deposit in the Ordinary Course of Business;
(e) any Contractual Obligation concerning confidentiality or
noncompetition;
(f) any material Contractual Obligation relating to the Company or
any of its Subsidiaries, their assets, liabilities or business between or
among the Company and its Affiliates (other than between the Company and
any of the Company's Subsidiaries);
(g) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors, officers,
consultants, agents or employees;
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(h) any collective bargaining agreement;
(i) any Contractual Obligation providing for the employment or
consultancy with any individual on a full-time, part-time, consulting or
other basis in excess of $10,000 or providing severance or retirement
benefits in excess of $25,000 in the aggregate;
(j) any Contractual Obligation under which it has advanced or loaned
any amount to any of its stockholders, Affiliates, directors, officers,
consultants, agents or employees other than in the Ordinary Course of
Business;
(k) any other Contractual Obligation (or group of related
Contractual Obligations) the performance of which involves consideration
in excess of $10,000; or
(l) any Contractual Obligation pursuant to which a party thereto is
entitled to a commission based on sales to or revenues or profits derived
from one or more customers, or success fees, finders fees or other
compensation related to sales.
The Company has made available to the Buyer a correct and complete copy of each
written Contractual Obligation listed in ss. 3.18 of the Disclosure Schedule and
a written summary setting forth the terms and conditions of each oral
Contractual Obligation referred to in ss. 3.18 of the Disclosure Schedule. With
respect to each such Contractual Obligation: (i) to the Knowledge of the Company
and the Sellers, (a) the Contractual Obligation is legal, valid, binding and
enforceable against the Company, except to the extent that enforceability may be
limited by bankruptcy, insolvency and other similar Laws affecting the
enforcement of creditors' rights generally, and, to the Knowledge of the Sellers
and the Company, in full force and effect, and (b) the Contractual Obligation
will continue to be legal, valid, binding, enforceable, and in full force and
effect on identical terms immediately following the consummation of the
transactions contemplated hereby; (ii) none of the Company, any of its
Subsidiaries, any Seller or (to the Knowledge of the Company and the Sellers)
any other party thereto is in breach or default, and no event has occurred which
with notice or lapse of time would constitute a breach or default, or permit
termination, modification, or acceleration, under the Contractual Obligation;
and (iii) none of the Company, any of its Subsidiaries, any Sellers or (to the
Knowledge of the Company and the Sellers) any other party thereto has repudiated
any provision of the Contractual Obligation.
3.19. Notes and Accounts Receivable. All notes and accounts receivable of
the Company and each of its Subsidiaries are reflected properly on its books and
records in accordance with GAAP without regard to any concept of materiality
other than one based solely on such accounts receivable. The Company has
delivered to Buyer as ss. 3.19 of the Disclosure Schedule a true and correct
list of all receivables which have been deemed by the Company uncollectible and
are not reflected in the Most Recent Balance Sheet.
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3.20. Powers of Attorney. Except pursuant to this Agreement and the
Exhibits hereto, there are no outstanding powers of attorney executed on behalf
of the Company or any of its Subsidiaries, in respect of the Company or any of
its Subsidiaries, their assets, liabilities or business.
3.21. Insurance and Risk Management. Section 3.21 of the Disclosure
Schedule sets forth a list of each insurance policy (including policies
providing property, casualty, liability, and workers' compensation coverage and
bond and surety arrangements) to which the business operations of the Company or
any of its Subsidiaries is a party, a named insured, or otherwise the
beneficiary of coverage. With respect to each such insurance policy (other than
those which have expired in accordance with their terms) to the Knowledge of the
Sellers and the Company: (i) the policy is legal, valid, binding and enforceable
against the Company, except to the extent that enforceability may be limited by
bankruptcy, insolvency and other similar Laws affecting the enforcement of
creditors; rights generally, and in full force and effect; (ii) the transactions
contemplated hereby will not result in the cancellation or modification of such
policies; (iii) neither the Company nor any of its Subsidiaries any other party
to the policy is in breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred which, with notice
or the lapse of time, would constitute such a breach or default, or permit
termination, modification, or acceleration, under the policy; (iv) the Company
has made available true and complete copies of all policies and related
indemnity or premium payment agreements to Buyer; (v) no party to the policy has
repudiated any provision thereof. Section 3.21 of the Disclosure Schedule
describes any self-insurance arrangements with respect to the Company or any of
its Subsidiaries.
3.22. Litigation. There are no judicial or administrative actions, claims,
suits, proceedings or investigations pending or, to the Sellers' and the
Company's Knowledge, threatened, affecting the Company, any of its Subsidiaries
or any of their assets, or that question the validity of this Agreement or of
any action taken or to be taken pursuant to or in connection with the provisions
of this Agreement nor, to the Knowledge of the Company and the Sellers, is there
any Basis for any such action, claim, suit, proceeding or investigation that
question the validity of this Agreement or of any action taken or to be taken
pursuant to or in connection with the provisions of this Agreement. There are no
judgments, orders, decrees, citations, fines or penalties heretofore assessed
against the Company or any of its Subsidiaries affecting any of its assets,
business or operations under any Law as in effect from time to time to the date
hereof.
3.23. Product Warranties; Defects; Liability. No Product manufactured,
sold, leased, or delivered by the Company is subject to any guaranty, warranty,
or other indemnity beyond the applicable standard terms and conditions of sale
or lease other than those that arise in accordance with applicable Law. Section
3.23 of the Disclosure Schedule includes copies of the standard terms and
conditions of sale for the Company (containing applicable guaranty,
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warranty, and indemnity provisions). The representations and warranties in this
ss. 3.23 are the only representations and warranties with respect to Product
warranties, Product defects and Product Liabilities, notwithstanding any other
language of general applicability in this Agreement.
3.24. Employees. To the Knowledge of the Company and the Sellers, no
executive, key employee or group of employees has any plans to terminate
employment with the Company or any of its Subsidiaries. Neither the Company nor
any of its Subsidiaries has experienced any material labor disputes or any work
stoppages due to labor disagreements. The Company and each of its Subsidiaries
is in compliance in all material respects with all applicable Laws as in effect
as of the date hereof respecting employment and employment practices and terms
and conditions of employment. Neither the Company nor any of its Subsidiaries is
or has ever been a party to any collective bargaining agreements and, to the
Knowledge of the Sellers and the Company, neither the Company nor any of its
Subsidiaries has been the subject of any organizational activity.
3.25. Employee Benefits.
(a) Section 3.25 of the Disclosure Schedule lists each Employee
Benefit Plan that the Company or any of its Subsidiaries maintains or to
which the Company or any of its Subsidiaries contributes relating to
current or former employees, officers or directors of the Company or any
of its Subsidiaries or any of their dependents or beneficiaries.
(i) Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in operation in
all respects with the applicable requirements of ERISA, the Code,
and other applicable Laws.
(ii) All required reports and descriptions (including, without
limitation, Form 5500 Annual Reports, Summary Annual Reports,
PBGC-1's, and Summary Plan Descriptions) have been filed or
distributed appropriately with respect to each such Employee Benefit
Plan. The requirements of Part 6 of Subtitle B of Title I of ERISA
and of Code ss. 4980B have been met with respect to each such
Employee Benefit Plan which is an Employee Welfare Benefit Plan
subject to such Part.
(iii) All contributions (including all employer contributions
and employee salary reduction contributions) which are due have been
paid to each such Employee Benefit Plan which is an Employee Pension
Benefit Plan and all contributions for any period ending on or
before the Closing Date which are not yet due have been paid to each
such Employee Pension Benefit Plan or accrued in accordance with the
past custom and practice of the Company and its
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Subsidiaries. All premiums or other payments for all periods ending
on or before the Closing Date have been paid with respect to each
such Employee Benefit Plan which is an Employee Welfare Benefit
Plan.
(iv) Each such Employee Benefit Plan which is an Employee
Pension Benefit Plan intended to be qualified under Code ss. 401(a)
is so qualified.
(v) The Company has made available to the Buyer correct and
complete copies of the plan documents and summary plan descriptions,
and where applicable the most recent determination letter received
from the Internal Revenue Service, the most recent Form 5500 Annual
Report, and all related trust agreements, insurance contracts, and
other funding agreements which implement each such Employee Benefit
Plan.
(b) Neither the Company nor any past or current member of the
Controlled Group of Corporations which includes the Company has ever
maintained or been required to contribute to any Employee Pension Benefit
Plan subject to Title IV of ERISA.
(c) Neither the Company nor any of its Subsidiaries maintains or
contributes to nor has it ever maintained or contributed to, or ever been
required to contribute to any Employee Welfare Benefit Plan providing
medical, health, or life insurance or other welfare-type benefits for
current or future retired or terminated employees, their spouses, or their
dependents (other than in accordance with Code ss. 4980B).
(d) The transactions contemplated by this Agreement shall not alone
or upon the occurrence of any additional or subsequent event, result in
any payment of severance or otherwise, or acceleration, vesting or
increase in benefits under any Employee Benefit Plan for the benefits of
any current or former director, officer or employee of the Company or any
of its Subsidiaries.
3.26. Environment, Health, and Safety.
(a) Except as disclosed in ss. 3.26 of the Disclosure Schedule:
(i) the Company and each of its Subsidiaries is and has been
in compliance in all material respects with all applicable
Environmental Laws and Safety Laws;
(ii) the Company and each of its Subsidiaries has obtained,
and is and has been in material compliance with the conditions of,
all Environmental
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Permits required for the continued conduct of the business of the
Company and its Subsidiaries in the manner now conducted;
(iii) the Company and each of its Subsidiaries has filed all
required applications, notices and other documents necessary to
effect the timely renewal or issuance of all Environmental Permits
for the continued conduct immediately after the Closing of the
business of the Company and its Subsidiaries in the manner now
conducted;
(iv) there are no past or present events, conditions or
circumstances caused by the Company or its operations related to
environmental or health and safety matters or Environmental Laws or
Permits or Safety Laws which could reasonably be expected to have a
Material Adverse Effect or which could reasonably be expected to
interfere in any material respect with compliance with any
Environmental Law or Permit or Safety Law;
(v) there are no circumstances or conditions caused by the
Company or its operations present at or arising out of the present
or former assets, properties, leaseholds, businesses or operations
of the Company or any of its Subsidiaries, including but not limited
to any off-site or on-site storage, transportation, use, disposal or
Release of a Chemical Substance, which could reasonably be expected
to give rise to any Environmental Liabilities and Costs;
(vi) none of the Company, its Subsidiaries or the Sellers or
the present or, to the Knowledge of the Sellers or the Company,
past, assets, properties, business, leaseholds or operations of the
Company or any of its Subsidiaries has received within the past
three years or is subject to, or within the past three years has
been subject to, any outstanding written, or to the Knowledge of the
Sellers and the Company, oral, order, decree, judgment, complaint,
agreement, claim, citation, or notice or is subject to any ongoing
judicial or administrative proceeding indicating that any of the
Company, its Subsidiaries, the Sellers or the past and present
assets of the Company are or may be: (A) in violation of any
Environmental Law; (B) in violation of any Safety Laws in any
material respect; (C) responsible for the on-site or off-site
storage or Release of any Chemical Substance; or, (D) liable for any
Environmental Liabilities and Costs or Safety Liabilities and Costs;
(vii) no investigation or review with respect to such matters
is pending or, to the Knowledge of the Company or the Sellers, is
threatened, nor has any authority or other third party indicated to
the Company in writing an intention to conduct the same;
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(viii) neither the business of the Company or any of its
Subsidiaries nor any of their properties or assets is subject to, or
as a result of the transactions contemplated by this Agreement will
be subject to, the requirements of any Environmental Laws which
require notice, disclosure, cleanup or approval prior to transfer of
the shares or the business of the Company or any of its Subsidiaries
or which will impose Liens on any such asset or property;
(ix) Section 3.26 of the Disclosure Schedule lists all
property presently leased, owned or operated by the Company or any
of its Subsidiaries and identifies all such property (and the area
within that property) that has been used by the Company or any of
its Subsidiaries for the storage or disposal of Chemical Substances;
(x) Section 3.26 of the Disclosure Schedule lists all of the
Persons that the Company currently engages to dispose of Chemical
Substances originating from the Company or any of its Subsidiaries,
or their assets, properties or business;
(xi) Section 3.26 of the Disclosure Schedule sets forth a list
of all underground storage tanks owned or operated by the Company or
any of its Subsidiaries, and no such tank is leaking or has leaked
at any time in the past; and
(xii) Section 3.26 of the Disclosure Schedule lists all
written environmental audits, inspections, assessments,
investigations or similar reports in the possession of the Company
or any of its Subsidiaries or of which the Sellers or the Company
have Knowledge relating to the assets, properties, or business of
the Company or any of its Subsidiaries or the compliance of the same
with applicable Environmental Laws and Safety Laws.
(b) For purposes of this ss. 3.26 only, all references to the
"Company" are intended to include any and all other entities to which the
Company or any of its Subsidiaries may be considered a successor for
purposes of liability under applicable Environmental Laws. The
representations and warranties in this ss. 3.26 are the only
representations and warranties with respect to Environmental Laws or
Environmental Liabilities and Costs, or Safety Laws or Safety Liabilities
and Costs notwithstanding any other language in this Agreement of general
applicability.
3.27. Affiliated Transactions. Neither the Company nor any of its
Subsidiaries is a party to or bound by any Contractual Obligation with any of
the Sellers or any of its other Affiliates or any member of their family and
none of the Sellers, directors or officers of the Company or any of its
Affiliates or members of their family owns or otherwise has any rights
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to or interests in any asset, tangible or intangible, which is used in or
necessary for the business of the Company or any of its Subsidiaries as it is
currently conducted. All transactions between the Company and its Subsidiaries
(on the one hand) and Affiliates of the Company other than its Subsidiaries (on
the other hand) have been on an arms'-length basis and have not resulted in any
understatement or overstatement of the revenues, expenses, cash flows, profits,
assets or liabilities of the Company or any of its Subsidiaries compared to
those which would have been obtained had all such transactions been with third
parties which were not Affiliates of the Company.
3.28. Government Contracts. Neither the Company nor any of its
Subsidiaries has been or is a party to any material Contractual Obligation with
any federal, state or local government agency.
3.29. Distributors, Customers, Suppliers. Section 3.29 of the Disclosure
Schedule sets forth a complete and accurate list of (i) the top ten (in dollar
volume) distributors for the Products of the Company or any of its Subsidiaries
indicating the specific Product, existing Contractual Obligation, if any, with
each such distributor and the volume of Products distributed, (ii) the ten
largest customers (by dollar volume) of the Company and its Subsidiaries during
the Most Recent Fiscal Year, indicating the existing Contractual Obligation with
each such customer by Product, and (iii) the top ten (in dollar volume)
suppliers of materials or services to the Company and its Subsidiaries,
including, without limitation, manufacturing sub-contractors, indicating the
Contractual Obligation for continued supply from such Person.
3.30. No Illegal Payments, Etc. None of the Sellers or the Company or any
of its Subsidiaries nor, to the Knowledge of the Sellers, any of their
directors, officers, consultants, employees, agents or other Affiliates has (a)
directly or indirectly given or agreed to give any illegal gift, contribution,
payment or similar benefit to any supplier, customer, governmental official or
employee or other Person who was, is or may be in a position to help or hinder
the Company or any of its Subsidiaries (or assist in connection with any actual
or proposed transaction) or made or agreed to make any illegal contribution, or
reimbursed any illegal political gift or contribution made by any other Person,
to any candidate for federal, state, local or foreign public office (i) which
might subject any of the Company or its Subsidiaries to any damage or penalty in
any civil, criminal or governmental litigation or proceeding or (ii) the
non-continuation of which has had or might have a Material Adverse Effect or (b)
established or maintained any unrecorded fund or asset or made any intentionally
false entries on any books or records for any purpose.
3.31. Books and Records. The books and all corporate (including minute
books and stock record books) and financial records of the Company and each of
its Subsidiaries are complete and correct in all material respects and have been
maintained in accordance in all material respects with applicable Laws as in
effect from time to time to the date hereof.
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3.32. Disclosure. The representations and warranties contained in this ss.
3 (including the Disclosure Schedule and any other schedules and exhibits
required to be delivered by Sellers to Buyer pursuant to this Agreement) do not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements and information contained in this
ss. 3 in light of the circumstances in which they were made not misleading. The
information with respect to customers, aircrafts and products set forth in ss.
3.32(a) of the Disclosure Schedules does not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make such
information in light of the circumstances in which they were made not
misleading.
3.33. Investment Intent; Related Matters, Including Securities Law
Matters.
(a) Each Seller is acquiring the shares of B/E Common Stock to be
acquired by such Seller hereunder as a result of the Merger for such
Seller's own account, for investment, and not with a view to, or for sale
in connection with, any distribution thereof within the meaning of the
Securities Act, in a manner which is or would be in violation of any
applicable Law as the same is now in effect, including, without
limitation, the Securities Act.
(b) Such Seller understands and agrees that the shares of B/E Common
Stock to be acquired by such Seller pursuant to the Merger will not be
registered or qualified under the Securities Act or state "blue-sky" or
other securities Laws and therefore cannot be resold unless such resale is
registered under the Securities Act and applicable state Laws or unless an
exemption from such registration requirement is available.
(c) Such Seller is able to bear the economic risk of holding the
shares of B/E Common Stock to be acquired by such Seller pursuant to the
Merger for an indefinite period of time and is experienced and has such
Knowledge and experience in financial and business matters that such
Seller is capable of evaluating the risks and merits of acquiring the
shares of B/E Common Stock. Such Seller acknowledges that the shares of
B/E Common Stock to be acquired by such Seller pursuant to the Merger will
bear a legend to the effect that transfers are restricted unless (i) the
transfer is exempt from the registration requirements under the Securities
Act and the Buyer receives an opinion of counsel satisfactory to the Buyer
to that effect or (ii) the transfer is made pursuant to an effective
registration statement under the Securities Act.
(d) Such Seller understands that, except as provided in ss. 5.5, the
Buyer is under no obligation to effect a registration of any shares of B/E
Common Stock under the Securities Act.
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(e) Such Seller has been provided access to such information and
documents regarding the Buyer as such Seller has requested and has been
afforded an opportunity to ask questions of and receive answers from
representatives of the Buyer concerning the terms and conditions of this
Agreement and the business, assets and condition, financial and otherwise,
of the Buyer.
(f) Such Seller is an "accredited investor" within the definition
set forth in Rule 501(a) of the Securities Act with respect to the shares
of B/E Common Stock to be acquired by such Seller pursuant to the Merger.
4. Representations and Warranties of the Buyer and Acquisition. The Buyer and
Acquisition represent and warrant to the Sellers that the statements contained
in this ss. 4 are correct and complete as of the date of this Agreement.
4.1. Organization of the Buyer. Each of Buyer and Acquisition is a
corporation duly organized, validly existing, and in good standing under the
Laws of the State of Delaware and New York, respectively.
4.2. Authorization of Transaction. Each of Buyer and Acquisition has full
power and authority (including full corporate power and authority) to execute
and deliver this Agreement and to perform its respective obligations hereunder.
All corporate and other actions or proceedings to be taken by or on the part of
Buyer or Acquisition to authorize and permit the execution and delivery by Buyer
and Acquisition of this Agreement and the respective instruments required to be
executed and delivered by Buyer and Acquisition pursuant hereto, the performance
by Buyer and Acquisition of their respective obligations hereunder, and the
consummation by Buyer and Acquisition of the transactions contemplated herein,
have been duly and properly taken. This Agreement has been duly executed and
delivered by each of Buyer and Acquisition and constitutes the valid and legally
binding obligation of the Buyer and Acquisition, enforceable in accordance with
its terms and conditions, except to the extent that enforceability may be
limited by bankruptcy, insolvency and other similar Laws affecting the
enforcement of creditors' rights generally.
4.3. Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby will (i)
violate any Law or other restriction of any government, governmental agency, or
court to which the Buyer or Acquisition is subject or any provision of their
respective charter or bylaws or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any Contractual Obligation to which the Buyer or Acquisition is a party or
by which it is bound or to which any of their assets are subject. Neither the
Buyer nor Acquisition needs to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or governmental
agency in order for the Parties to consummate the transactions
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contemplated by this Agreement, except for the filing of the Certificate of
Merger with the Secretary of State of the State of New York and listing of the
B/E Shares on the NASDAQ National Market.
4.4. Brokers' Fees. Neither Buyer nor Acquisition has any Liability to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Sellers could become
liable or obligated.
4.5. Investment Intent. Buyer is acquiring the Shares for its own account
and not with a view to their distribution within the meaning of ss. 2(11) of the
Securities Act.
4.6. Status of B/E Common Stock. When issued to the Sellers pursuant to
the Merger, the shares of B/E Common Stock to be so issued will be duly
authorized, validly issued, fully paid and nonassessable.
4.7. Information Concerning Buyer. Each of the Buyer's Registration
Statement on Form S-4 as filed with the SEC on March 9, 1998, the Buyer's Annual
Report on Form 10-K for its fiscal year ended February 28, 1998, as amended (the
"10-K"), the Buyer's Quarterly Report on Form 10-Q for the quarter ended May 30,
1998 (the "10-Q"), and the Buyer's Registration Statement on From S-3 filed with
the SEC on July 30, 1998 (the "S-3"), each as filed with the SEC, copies of
which have been furnished to the Sellers, as of its date did not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained therein not misleading; and since the
date of the filing of the S-3 there has been no material adverse change in the
business, assets, operations or condition, financial or otherwise, of the Buyer
and its Subsidiaries, taken as a whole that have not been disclosed in this
Agreement or other publicly available documents concerning the Buyer filed since
the date on which the S-3 was filed.
4.8. Capitalization of Acquisition. The authorized capital stock of
Acquisition consists of 3,000 shares of common stock, $.01 par value per share
("Acquisition Common Stock"). Each holder of the Acquisition Common Stock is
entitled to one vote per share of Acquisition Common Stock owned by such holder.
As of the date hereof, there are issued and outstanding 1,000 shares of
Acquisition Common Stock, all of which is held of record and beneficially by the
Buyer.
5. Covenants. The Parties agree as follows:
5.1. Access to Records after Closing. For a period of five years after the
Closing Date, the Sellers and their representatives shall have reasonable access
to all of the books and records of the Company and its Subsidiaries to the
extent that such access may reasonably be required by the Sellers in connection
with matters relating to or affected by the operations of the Company and its
Subsidiaries prior to the Closing Date. Such access shall be afforded by
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Buyer upon receipt of reasonable advance notice and during normal business
hours. Sellers shall be solely responsible for any costs or expenses incurred by
them pursuant to this ss. 5.1. If Buyer shall desire to dispose of any of such
books and records prior to the expiration of such five-year period, Buyer shall,
prior to such disposition, give the Sellers a reasonable opportunity, at
Sellers' expense, to segregate and remove such books and records as Sellers may
select.
5.2. Escrow of Shares Pending Resolution of Certain Pre-Closing Matters.
Upon consummation of the Merger, Buyer shall deliver to The Bank of New York, as
escrow agent (the "Escrow Agent"), a certificate for and in the name of each
Seller representing 5% of the aggregate number of B/E Shares issued in the
Merger to such Seller rounded to the nearest whole share. The Escrowed Shares
shall be held and either released to the Sellers or surrendered to the Buyer
according to the provisions of this ss. 5.2 and the Escrow Agreement. The
Escrowed Shares of each Seller shall be applied to indemnify and hold harmless
the Buyer and its Affiliates against and in respect of any and all Losses
specified in ss. 9.2 for which the Buyer and its Affiliates are entitled to
indemnification pursuant to the provisions of ss. 9, the amount of such
indemnification to be determined as provided in ss. 9. With respect to claims
for Losses indemnifiable by the Sellers pursuant to ss. 9.2 made prior to the
Release Date, Buyer agrees to apply the Escrowed Shares (or any remaining
portion hereof) to the satisfaction of such claims prior to proceeding against
any other assets of the Sellers; provided, however, that, subject to the
provisions of ss. 9.2, Buyer's recourse against Sellers shall not be limited by
the existence or amount of the escrow provided hereunder. Each Seller shall be
entitled to vote such Escrowed Shares as are, from time to time, held for such
Seller's account as Escrowed Shares provided that any dividend or distribution
thereon, including without limitation, dividends or distributions in the form of
capital stock of the Buyer or otherwise falling within the definition of
"Escrowed Shares" hereunder, shall be delivered to the Escrow Agent and held as
part of the Escrowed Shares.
(a) Term of Escrow. Except as provided in ss. 5.2(b) and the Escrow
Agreement, the Escrowed Shares shall be released from escrow on the
earlier of (i) the date twenty (20) days following the date on which the
Buyer's independent auditors shall deliver their signed report on their
audit of the Buyer's financial statements for the fiscal year ending
February 27, 1999, or (ii) the date one year from the Closing Date (such
earlier date being hereinafter sometimes referred to as the "Release
Date").
(b) Sale of Shares. Subject to the last sentence of ss. 5.3, each
Seller shall be entitled to sell such Escrowed Shares as are, from time to
time, held for such Seller's account as Escrowed Shares. Upon any such
sale, the proceeds therefrom shall be delivered to the Escrow Agent and
held together with any remaining Escrowed Shares in accordance with the
provisions of this ss. 5.2. Reference in this Agreement and in the Escrow
Agreement to "Escrowed Shares" shall include the proceeds of any sale of
any Escrowed Shares.
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5.3. Pooling of Interests Accounting Treatment. The Company and the
Sellers acknowledge that the Buyer intends to account for the Merger and the
consummation of the transactions contemplated hereby as a "pooling of interests"
under generally accepted accounting principles and principles applied by the
SEC, all as from time to time in effect. The Company and each Seller
acknowledge, represent, warrant and agree that (a) the Company is not and has
never been a division or more than 50% owned Subsidiary of any corporation nor
been part of an acquisition which was later rescinded, (b) neither the Company
nor such Seller has taken, within the previous two years, any action (i) to
change the equity interest of the voting common stock of the Company (or amended
the terms of any securities of the Company or of any Contractual Obligation
relating thereto) in contemplation of the transactions contemplated by this
Agreement, including, without limitation, any additional issuance, exchange or
retirement of any securities of the Company, (ii) to permit the Company to
reacquire any shares of its voting common stock or (iii) to permit the Company
or any Subsidiary of the Company to dispose of a significant portion of its
assets in contemplation of the transactions contemplated by this Agreement, (c)
none of the Sellers has entered into any agreement that would restrict any such
Person's voting rights with respect to the B/E Shares to be issued pursuant to
the Merger in accordance with ss. 2.4, (d) the ratio of the interest in the
Company of each holder of Company Common Stock to each other holder of Company
Common Stock will not be changed by the consummation of the transactions
contemplated by this Agreement and (e) neither the Company nor any Seller has at
any time since January 1, 1996 acquired any shares of B/E Common Stock. In
addition, and notwithstanding the provisions of ss. 5.5, each Seller agrees that
such Seller will not sell or otherwise dispose of any of the B/E Shares to be
received by such Seller, or in any other way reduce such Seller's risk relative
to such B/E Shares, prior to the date on which the Buyer files with the SEC or
makes publicly available financial results covering at least 30 days of
post-merger combined operations, and that the certificates evidencing the B/E
Shares shall bear a legend setting forth the foregoing restriction in the manner
required by the corporate Laws of the State of Delaware.
5.4. Plan of Reorganization and other Tax Matters.
(a) This Agreement shall constitute a "plan of reorganization" for
purposes of ss. 368 of the Code.
(b) Neither any of the Sellers nor the Company nor the Buyer shall,
nor shall any of them cause or permit any of their Affiliates to, take any
actions or make any omissions that will, or could reasonably be expected
to, adversely affect the status of the Merger as a reorganization within
the meaning of ss. 368 of the Code. Each Seller hereby waives (and
releases the Company, the Buyer, Acquisition and their respective
Affiliates from) any claims or Liabilities relating to or arising from,
any and all Taxes imposed upon such Seller or any of its Affiliates as a
result of any action or inaction on
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the part of any Seller before or after the Merger (or any action or
inaction of the Company or any of its Subsidiaries prior to the Merger)
that causes the Merger not to constitute a reorganization which is
tax-free under ss. 368 of the Code. Each Seller hereby acknowledges that
it has consulted with the Sellers' Representative and the Sellers' tax
adviser, Ernst & Young, LLP, concerning the tax consequences of the Merger
and, except for the covenant in the first sentence of this ss. 5.4(b),
neither the Buyer nor the Company is making any representation nor
advising any of the Sellers of the Tax consequences of any transaction
contemplated by this Agreement.
(c) The parties hereto shall, and shall cause the Company to cooperate
with the other parties (including providing reasonable access to employees
and books and records) and to provide such necessary information as any
other party hereto may reasonably request in connection with the
preparation of such party's Tax Returns, or to respond to or contest any
audit, prosecute any claim for refund or credit or otherwise satisfy any
legal requirement relating to Taxes and the Company. Any such information
shall be kept confidential except as may otherwise be necessary in
connection with filing any such Tax Return, responding to or contesting
any audit, prosecuting any such claim or otherwise satisfying such legal
requirement.
(d) The Sellers shall have right to represent the interests of the
Company and any Subsidiary in any Tax audit or administrative or court
proceeding relating to any Taxes of the Company or any Subsidiary for any
Tax periods ending on or prior to the Effective Date, provided that none
of the Sellers, the Company or any of their Affiliates shall compromise or
settle any Tax claim or consent or agree to any Tax liability relating to
the Company or any Subsidiary for any period ending on or prior to the
Effective Date without Buyer's consent (which consent shall not be
unreasonably withheld or delayed), to the extent that such compromise,
settlement, consent or agreement may affect the liability of Buyer, the
Company or any Subsidiary, or any of their Affiliates, for Taxes for any
period (or portion thereof) ending after the Effective Date. The Buyer
shall have the right to represent the interests of the Company and any
Subsidiary in any Tax audit or administrative or court proceeding relating
to any Taxes of the Company or any Subsidiary for any period ending after
the Effective Date, provided that none of the Buyer, the Company or any
Subsidiary, or any of their Affiliates, shall compromise or settle any Tax
claim or consent or agree to any Tax liability relating the Company or any
Subsidiary for any period ending after the Effective Date without the
Sellers' Representatives' consent (which consent shall not be unreasonably
withheld or delayed), to the extent that such compromise, settlement,
consent or agreement may affect the liability of the Sellers, the Company
or any Subsidiary, or any of their Affiliates, for Taxes for any period
(or portion thereof) ending on or prior to the Effective Date. Each of the
Buyer and the Sellers shall promptly notify the other party in writing
upon receipt of notice of any pending or threatened Tax
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audit or assessment relating to the income, properties or operations of
the Company or any Subsidiary for which the other party could be liable.
(e) Subject to ss. 9, the Sellers shall pay or reimburse the Buyer for
any Taxes (including any Taxes imposed under section 1374 of the Code) of
the Company or any of its Subsidiaries or for which the Company or any of
its Subsidiaries may be liable, for all periods ending on or prior to the
Closing Date to the extent such Taxes are not reflected in the reserve for
Tax liabilities (excluding any reserves for deferred Taxes).
(f) The Sellers shall prepare, or cause to be prepared, and, subject
to Buyer's prior review and approval (which shall not be unreasonably
withheld or delayed) timely file or cause to be filed all Tax Returns of
the Company and any Subsidiary that relate to Tax Periods ending on or
before the Effective Date.
5.5. Registration Rights.
(a) General.
(i) Initial Registration. On or prior to the Closing Date, the Buyer
shall file (and shall use its best efforts to cause to become
effective as soon as practicable thereafter) a registration statement
on Form S-3 under the Securities Act, covering the Registrable
Securities, which registration statement shall be kept in effect in
the manner and for the period specified in ss. 5.5(c)(ii). As used
herein, the term "Registrable Securities" shall mean (i) the B/E
Shares at any time outstanding and that are owned by any of the
Sellers, (ii) any shares of common stock or other securities issued as
(or issuable upon the conversion or exercise of any warrant, right,
class of common stock or other security which is issued as) a dividend
or other distribution with respect to, or in exchange by the Buyer
generally for, or in replacement by the Buyer generally of, such B/E
Shares, and (iii) any securities issued in exchange for such B/E
Shares in any merger or reorganization of the Buyer; provided,
however, that once issued, such B/E Shares and other securities shall
cease to be Registrable Securities when (x) a registration statement
with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement, (y) they
shall have been sold pursuant to Rule 144 or shall no longer be
subject to restriction on resale due to the termination of the holding
period requirements (as in effect from time to time) of Rule 144, or
(z) they shall have ceased to be outstanding.
(ii) Piggyback Registration Rights. Whenever the Buyer proposes to
register any of its Common Stock for its own or others' accounts under
the Securities Act for a public offering (each a "Public Offering"),
the Buyer shall furnish each Seller
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prompt notice of its intent to do so. Upon the request of any Seller
given by written notice to the Buyer in accordance with ss. 10.7
within ten (10) business days after the giving of such notice, the
Buyer will use its best efforts to cause to be included in such
registration all of the Registrable Securities which the Sellers
request to be included in the Public Offering. Notwithstanding the
foregoing provisions of this clause (ii): (x) if the Buyer is advised
in writing by any managing underwriter of the securities being offered
pursuant to any Public Offering that, in its opinion, the number of
securities for accounts other than the Company's to be included in
such Public Offering exceeds the number which can be sold in such
Public Offering without adversely affecting such Public Offering, the
Buyer may reduce pro rata (based upon the number of Registrable
Securities requested to be included by the Sellers exercising such
"piggyback" rights and in the same proportion that the number of
securities offered for the accounts of others other than the Sellers
is reduced in such Public Offering) the number of Registrable
Securities offered for the accounts of such Seller to a number of
Registrable Securities deemed satisfactory by such managing
underwriter and (y) no holder of Registrable Securities shall have any
right of participation or otherwise with respect to any Public
Offering on Form S-4 or Form S-8 or any similar form then in effect.
(iii) Notwithstanding the foregoing provisions of this ss. 5.5(a):
(A) The Buyer may postpone or interrupt taking action with
respect to any registration statement referred to above or may
require, on ten business days' prior written notice to the
Sellers' Representatives, that the Sellers cease making sales
under an effective registration statement, (1) in the case of a
registration statement filed pursuant to ss. 5.5(a)(i), for a
reasonable period of time, (not exceeding sixty (60) days) at any
time during the ninety (90) days after the date on which the
Buyer files with the SEC or makes publicly available financial
results covering at least 30 days of post-merger combined
operations of the Buyer and the Company, and (2) in the case of
any registration statement filed pursuant to ss. 5.5(a), for two
reasonable time periods no less than 30 days apart (not exceeding
two sixty (60) day periods (each, a "Blackout Period")) at any
time after the expiration of the ninety (90) days referred to in
clause (1) above (which ninety (90) day period shall be extended
by the actual number of days that the Sellers are required to
cease making sales pursuant to clause (1) above) in each case,
if, in the good faith opinion of the Buyer, effecting the
registration or allowing such sales would materially adversely
affect a public offering, material financing, acquisition,
disposition of assets or stock, merger or other comparable
transaction or would require the Buyer to make public disclosure
of information the public disclosure of which could reasonably be
expected to
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have a material adverse effect upon the Buyer; provided, however,
that Buyer may elect to terminate or withdraw the registration
statement during either of the Blackout Periods provided for in
clause (2) above and provided further that if Buyer so elects to
terminate or withdraw such registration statement, Buyer agrees
to file, and to use best efforts to cause to become effective, a
new registration statement for the Registrable Securities prior
to the expiration of such Blackout Period;
(B) Each Seller will, in connection with any underwritten
offering of the Buyer's securities (provided that such Seller is
then participating in such underwriting), at the request of the
underwriter, agree not to effect any public sale or distribution
of the Buyer's securities held by such Seller during the period
beginning seven days prior to and ending 60 days after the
effectiveness of the registration statement for such offering,
except as part of such underwritten offering; and
(C) In the event that the Buyer proposes to make a Public
Offering with respect to which the Sellers will have rights under
ss. 5.5(a)(ii), the Sellers shall have the right to provide the
underwriters with a notice (which notice shall be provided to the
underwriters no later than three days after the receipt from such
underwriters of request with respect thereto) indicating the
number of Registrable Securities and a minimum price per share
(the "Minimum Price") at which the Sellers will sell such
Registrable Securities in such Public Offering and if the Sellers
provide such notice to the Underwriters and such Minimum Price is
met or exceeded the Sellers shall include such number of
Registrable Securities (subject to the restrictions set forth in
ss. 5.5(a)(ii)(x)) in such Public Offering.
(iv) Notwithstanding any provision of this ss. 5.5, Sellers
acknowledge and agree that any sale by them of Registrable Securities
is subject to the limitations of the last sentence of ss. 5.3.
(b) Expenses. The Buyer shall pay all expenses incident to the Buyer's
performance of or compliance with its obligations under this ss. 5.5 to
effect the registration of Registrable Securities required hereunder,
including, without limitation, all registration, filing, securities
exchange listing and NASDAQ fees, all registration, filing, qualification
and other fees and expenses of complying with federal, state and other
securities or blue sky Laws, all word processing, duplicating and printing
expenses, messenger, shipping, telephone and delivery expenses, the fees
and disbursement of counsel for the Buyer and of its independent public
accountants, including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and
compliance, and fees and expenses of other Persons
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retained by the Buyer in connection with the registration of the
Registrable Securities but excluding any legal fees and expenses of
counsel retained by the holders of the Registrable Securities being
registered, and further excluding any underwriting discounts and
commissions and transfer taxes, if any, in respect of Registrable
Securities, which discounts, commissions and taxes in respect of
Registrable Securities shall be payable by the holders thereof (in the
case of an underwritten offering and the underwriter's fees, expenses,
discounts or commissions, pro rata among such holders in proportion to the
number of Registrable Securities being sold by them).
(c) Further Obligations. Without limiting the foregoing, the Buyer
will:
(i) prepare, and file with the SEC, the registration statement on
Form S-3 to effect such registration (including such audited financial
statements as may be required by the Securities Act) and use its best
efforts to cause such registration statements to become effective in
the time frame outlined in ss. 5.5(a).
(ii) prepare, and file with the SEC, such amendments and supplements
to the registration statement referred to above and any prospectus
used in connection therewith as may be necessary to maintain the
effectiveness of such registration statement and to comply in all
material respects with the requirements of the Securities Act with
respect to the disposition of all Registrable Securities included in
such registration statement, in accordance with the intended methods
of disposition thereof, until the earlier of (i) such time as all of
such securities have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof set forth in
such registration statement or (ii) with respect to any registration
statement filed pursuant to ss. 5.5(a)(i), the date one year from the
Closing Date; and, in the event that any Registrable Securities remain
unsold at the end of any such period, the Buyer may file a
post-effective amendment to the registration statement for the purpose
of removing such Registrable Securities from registered status;
(iii) prior to filing any registration statement hereunder or any
amendment or supplement thereto, the Buyer shall provide the Sellers'
Representative with a copy of such registration statement, amendment
or supplement and shall obtain the consent of the Sellers'
Representative, which consent shall not be unreasonably withheld or
delayed, to the inclusion of any information to be included in such
registration statement, amendment or supplement for which Sellers have
indemnification obligations pursuant to ss. 5.5(d)(ii); provided that
if Sellers' Representative fails to notify Buyer that it objects to
any such reference within five business days after receipt by Sellers
of such copy to any such information, Sellers shall be deemed for all
purposes to have consented thereto;
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(iv) promptly notify in writing each holder of Registrable
Securities and the underwriter or underwriters, if any:
(v) upon discovery that, or upon the happening of any event as a
result of which, the prospectus included in the registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made;
(w) when such registration statement or any prospectus used in
connection therewith, or any amendment or supplement thereto, has been
filed and, with respect to such registration statement or any
post-effective amendment thereto, when the same has become effective;
(x) of any written request by the SEC or any other regulatory
body or other body having jurisdiction over the securities for
amendments or supplements to such registration statement or prospectus
or for supplemental information;
(y) of the notification to the Buyer by the SEC of its initiation
of any proceeding with respect to the issuance by the SEC of, or of
the issuance by the SEC of, any stop order suspending the
effectiveness of such registration statement; and
(z) of the receipt by the Buyer of any notification with respect
to the suspension of the qualification of any Registrable Securities
for sale under the applicable securities or blue sky Laws of any
jurisdiction;
(v) furnish to each holder of Registrable Securities included in the
registration statement such number of conformed copies of the
registration statement and of each amendment and supplement thereto
(in each case including all exhibits and documents incorporated by
reference), such number of copies of the prospectus contained in such
registration statement (including each preliminary prospectus and any
prospectus supplement) and any other prospectus filed under Rule 424
promulgated under the Securities Act relating to such holder's
Registrable Securities, and such other documents, as such seller may
reasonably request to facilitate the disposition of such holder's
Registrable Securities;
(vi) use best efforts to register or qualify all Registrable
Securities included in the registration statement under such other
securities or blue sky Laws of such jurisdictions as each holder
thereof shall reasonably request which request is made within ten (10)
days following the original filing of the registration statement and
to keep such registration or qualification in effect for so long as
the registration
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statement remains in effect, and take any other action which may be
reasonably necessary or advisable to enable such holder to consummate
the disposition in such jurisdictions of the Registrable Securities
owned by such holder, except that the Buyer shall not for any such
purpose be required (a) to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it would not but for
the requirements of this paragraph (vi) be obligated to be so
qualified, (b) to consent to general service of process in any such
jurisdiction or (c) to subject itself to taxation in any such
jurisdiction by reason of such registration or qualification;
(vii) use its best efforts to list all Registrable Securities
covered by the Registration Statement on each securities exchange and
inter-dealer quotations system on which similar securities of the
Buyer are then listed; and
(viii) use its best efforts to obtain withdrawal of any order
suspending the effectiveness of a registration statement, or the
lifting any suspension of qualification (or exemption from
qualification) of the offer and sale of any of the Registration
Securities in any jurisdiction.
With a view to making available to the Sellers the benefits of Rule 144
promulgated under the Securities Act and any successor rule or regulation
("Rule 144"), the Buyer will (i) make and keep public information
available as those terms are understood and defined in Rule 144, (ii)
furnish to any Seller forthwith upon request (A) a statement by the
Company as to its compliance with the reporting requirements of Rule 144
and (B) a copy of the most recent annual or quarterly report of the
Company.
The Buyer may require each Person whose Registrable Securities are being
registered to, and each such holder, as a condition to including
Registrable Securities in such registration, shall, furnish the Buyer and
any underwriters with such information and affidavits regarding such
holder and the distribution of such securities as the Buyer and such
underwriters may from time to time reasonably request in writing and to
otherwise cooperate in connection with such registration. At any time
during the effectiveness of the registration statement covering
Registrable Securities offered by a holder, if such holder becomes aware
of any change materially affecting the accuracy of the information
contained in such registration statement or the prospectus (as then
amended or supplemented) relating to such holder, such holder will
promptly notify the Buyer of such change.
Upon receipt of any notice from the Buyer of the happening of any event as
a result of which any prospectus included in such registration statement,
as then in effect, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, each holder of
Registrable
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Securities will forthwith discontinue such holder's disposition of
Registrable Securities pursuant to the registration statement until such
holder receives copies of a supplemented or amended prospectus from the
Buyer and, if so directed by the Buyer, shall deliver to the Buyer (at the
Buyer's expense) all copies, other than permanent file copies, then in
such holder's possession of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice. In the event the
Buyer shall give any such notice (or in the event that the Buyer exercises
its right under ss. 5.5(a)(iv) to require cessation of sales under an
effective registration statement), the period referred to in paragraph
(ii) of this ss. 5.5(c) shall be extended by a number of days equal to the
number of days during the period from the giving of such notice from the
Buyer to stop trading to the date when the copies of the supplemented or
amended prospectus are sent to holders whose Registrable Securities are
included in such registration statement (or, in the case of a cessation of
trading under ss. 5.5(a)(iv) a number of days equal to the period of time
the Buyer so causes cessation of trading under such registration
statement). In the event that the SEC issues a stop order suspending the
effectiveness of any registration statement filed under this ss. 5.5, the
period referred to in paragraph (ii) of this ss. 5.5(c) shall also be
extended by a number of days equal to the number of days during which such
stop order is in effect.
(d) Indemnification.
(i) The Buyer shall, to the full extent permitted by law, indemnify
and hold harmless each seller of Registrable Securities included in
any registration statement filed pursuant to this ss. 5.5, its
directors, officers, and partners, and each other Person, if any, who
controls any such seller within the meaning of the Securities Act,
against any Losses to which such seller or any such director, officer,
partner or controlling Person may become subject under the Securities
Act or otherwise, insofar as such Losses (or claims, actions, suits,
proceedings, arbitration or investigations in respect thereof) arise
out of or are based upon any untrue statement of any material fact
contained in such registration statement, any preliminary prospectus,
final prospectus or prospectus supplement contained therein or filed
with the SEC, or any amendment or supplement thereto, or any omission
or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in the
case of a prospectus, in the light of the circumstances under which
they were made) not misleading; provided, that the Buyer shall not be
liable in any such case to the extent that any such Loss (or any
claim, action, suit, proceeding, arbitration or investigation in
respect thereof) arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any
such registration statement, preliminary prospectus, final prospectus,
amendment or supplement in reliance upon and in conformity with
information furnished in writing to the Buyer for inclusion in such
registration statement by such Seller. Such indemnity shall
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remain in full force and effect regardless of any investigation made
by or on behalf of such seller or any such director, officer, partner
or controlling Person, and shall survive the transfer of such
securities by such seller.
(ii) Each Person whose Registrable Securities are included or are to
be included in any registration statement filed pursuant to this ss.
5.5, as a condition to including such holder's Registrable Securities
in each registration statement, shall to the full extent permitted by
law, indemnify and hold harmless the Buyer, its directors and
officers, and each other Person, if any, who controls the Buyer within
the meaning of the Securities Act, against any Losses to which the
Buyer or any such director or officer or controlling Person may become
subject under the Securities Act or otherwise, insofar as such Losses
(or claims, actions, suits, proceedings, arbitrations or
investigations in respect thereof) arise out of or are based upon any
untrue statement of any material fact contained in any such
registration statement, any preliminary prospectus, final prospectus
or prospectus supplement contained therein or filed with the SEC, or
any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein (in the case of a
prospectus, in the light of the circumstances under which they were
made) not misleading, if such untrue statement or omission was made in
reliance upon and in conformity with information furnished in writing
to the Buyer for inclusion in such registration statement by such
Seller. Notwithstanding any contrary provision of ss. 9.2, the
indemnification obligation of the Sellers under this ss. 5.5(d) shall
in no way be limited to (and the Buyer shall not be constrained to
seek in response to any failure to provide indemnity pursuant to this
ss. 5.5(d)) recourse against Escrowed Shares. The foregoing indemnity
shall remain in full force and effect regardless of any investigation
made by or on behalf of the Buyer or any such director, officer or
controlling Person and shall survive the transfer of such securities
by such seller. Such holders shall also indemnify each other Person
who participates (including as an underwriter) in the offering or sale
of Registrable Securities, their officers and directors and each other
Person, if any, who controls any such participating Person within the
meaning of the Securities Act to the same extent as provided above
with respect to the Buyer.
(iii) Promptly after receipt by any party of notice of the
commencement of any action or proceeding involving a claim referred to
in the preceding paragraph (i) or (ii) of this ss. 5.5(d), such party
shall, if a claim in respect thereof is to be made against another
party pursuant to such paragraphs, give written notice to the latter
of the commencement of such action, provided that any failure of any
Person to give notice as provided herein shall not relieve any other
Person of its obligations under the preceding paragraph of this ss.
5.5(d), except to the extent that such other Person is actually
prejudiced by such failure. In case any such action is brought,
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the party obligated to indemnify pursuant to the foregoing provisions
of this ss. 5.5(d) shall be entitled to participate in and, unless, in
the reasonable judgment of any indemnified party, a conflict of
interest between such indemnified party and any indemnifying party
exists with respect to such claim, to assume the defense thereof,
jointly with any other indemnifying party similarly notified to the
extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to
such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other
than reasonable costs of investigation; provided that the indemnified
party may participate in such defense at the indemnified party's
expense. No indemnifying party shall consent to entry of any judgment
or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to
each indemnified party of a release from all liability in respect to
such claim or litigation without the consent of the indemnified party.
No indemnifying party shall be subject to any liability for any
settlement made without its consent, which consent shall not be
unreasonably withheld.
(iv) If the indemnity and reimbursement obligation provided for in
any paragraph of this ss. 5.5(d) is unavailable or insufficient to
hold harmless a party entitled to indemnification hereunder in respect
of any Losses (or claims, actions, suits, proceedings, arbitrations or
investigations with respect thereto) for which indemnification is
provided therein, the party obligated to indemnify hereunder shall
contribute to the amount paid or payable by the indemnified party as a
result of such Losses (or claims, actions, suits, proceedings,
arbitration or investigations) in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand
and the indemnified party on the other hand in connection with
statements or omissions which resulted in such Losses, as well as any
other relevant equitable considerations. Relative fault shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by
the indemnifying party or the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The parties
hereto agree that it would not be just and equitable if contributions
pursuant to this paragraph were to be determined by pro rata
allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the first
sentence of this paragraph. Notwithstanding anything herein to the
contrary, no participating holder of Registrable Securities shall be
required to contribute any amount in excess of the amount by which the
net proceeds of the offering (before deducting expenses, if any)
received by such participating holder exceeds the
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amount of any damages that such participating 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 ss. 11(f) of the
Securities Act) shall be entitled to contribution from any Person not
guilty of such fraudulent misrepresentation.
5.6. Compliance With New York Law. Buyer hereby agrees that it shall, to
the extent that any non-compliance would subject any Seller to any Liability
therefor, comply in all respects with Section 630 of New York Business
Corporation Law, with respect to liability of shareholders for wages due to
laborers, servants or employees.
6. Deliveries at Closing.
6.1. Deliveries by Sellers. The Sellers shall deliver to the Buyer and
Acquisition at the Closing, the following documents and instruments:
(a) Certificate of Merger. The Certificate of Merger;
(b) Escrow Agreement. An Escrow Agreement substantially in the form of
Exhibit A hereto;
(c) Consulting Agreement. A Consulting Agreement substantially in the
form of Exhibit D hereto between the Buyer and Michael Tenzyk shall be
duly executed and in full force and effect;
(d) Severance and Noncompetition Agreement. A Severance and
Noncompetition Agreement substantially in the form of Exhibit E hereto
between the Buyer and Michael Tenzyk shall be duly executed and in full
force and effect;
(e) Opinion. An opinion of counsel to the Company and the Sellers
dated as of the Closing Date and addressed to the Buyer and Acquisition in
form and substance as set forth in Exhibit F attached hereto;
(f) Resignations. Resignations, dated as of the Closing Date, of each
officer and director of the Company and of any of the Company's
Subsidiaries;
(g) Pooling Treatment. A letter, in form and substance satisfactory to
the Buyer, from Ernst & Young, LLP to the effect that such transactions
may be accounted for by the Buyer as a pooling of interests; and
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(h) Certificates. Such other certificates and documents as Buyer has
reasonably requested, including, without limitation, all of the shares of
the Company Common Stock delivered pursuant to the Merger in accordance
with ss.2 of this Agreement.
6.2. Deliveries of the Buyer. The Buyer shall deliver to the Sellers at
the Closing, the following documents and instruments:
(a) Opinion. An opinion of counsel to the Buyer and Acquisition dated
as of the Closing Date and addressed to the Sellers in form and substance
as set forth in Exhibit G attached hereto; and
(b) Certificates. Such other certificates and documents as Sellers
have reasonably requested, including, without limitation, certificates
representing the B/E Shares to be issued pursuant to the Merger in
accordance with ss. 2 of this Agreement.
7. Confidentiality. Each of the Parties will treat and hold as confidential all
of the Confidential Information relating to the other Parties or to the Company
or any of its Subsidiaries or their assets, properties or business, will refrain
from using or disclosing to any Person any such Confidential Information (except
to their respective counsel, accountants and representatives in connection with
this Agreement), and will deliver promptly to the Party who provided the
Confidential Information (or, at the request and option of that Party, destroy)
all tangible embodiments (and all copies) of such Confidential Information which
are in his, her or its possession. In the event that any of the Parties is
requested or required (by oral question or request for information or documents
in any legal proceeding, interrogatory, subpoena, civil investigative demand, or
similar process) to disclose any Confidential Information, such Party will
notify the Party who originally disclosed such Confidential Information (the
"Original Disclosing Party") promptly of the request or requirement so that the
Original Disclosing Party may seek an appropriate protective order or waive
compliance with the provisions of this ss. 7. If, in the absence of a protective
order or the receipt of a waiver hereunder, any of the Parties is, on the advice
of counsel, compelled to disclose any Confidential Information of another Party
to any tribunal that such Party may disclose the Confidential Information to the
tribunal; provided, however, that such Party shall use its best efforts to
obtain, at the request and expense of the Original Disclosing Party, an order or
other assurance that confidential treatment will be accorded to such portion of
the Confidential Information required to be disclosed as the Original Disclosing
Party shall designate. Each of the Sellers also hereby covenants and agrees that
on and after the Closing, such Seller shall maintain the confidentiality of any
Confidential Information relating to the assets, properties or business of the
Company and any of its Subsidiaries. The Buyer shall have no further obligation
under this ss. 7 after the Closing.
8. Noncompetition. (a) Each Seller agrees that, in consideration of the purchase
by Buyer hereunder, it shall not, on or prior to the date which is three (3)
years after the Closing Date,
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directly or indirectly, run, own, manage, operate, control, be employed by,
provide consulting services to, be an officer or director of, participate in,
lend his, her or its name to, invest in or be connected in any manner with the
management, ownership, operation or control of any business, venture or activity
which competes with the business (including parts and accessories therefor)
being conducted at the Closing Date by the Company or any of its Subsidiaries or
relating to Products performing functions similar to those of the Products;
provided, however, no Seller shall be considered to be in default of this ss. 8
solely by virtue of holding for portfolio purposes as a passive investor not
more than five percent (5%) of the issued and outstanding equity securities of a
corporation, if equity securities of the same class and type of such corporation
or quoted on a stock exchange or an over-the-counter market within the United
States.
(b) Each of the Sellers further agrees that for a period of five (5) years
after the Closing Date such Seller will not directly or indirectly, without the
prior written consent of Buyer, recruit, offer employment, employ, engage as a
consultant, lure or entice away or in any other manner persuade or attempt to
persuade any person who is an employee of the Company, any of the Company's
Subsidiaries, the Buyer or any Subsidiary, group, or division of Buyer or any
Affiliate thereof leave such employment unless such person has been terminated
by the Buyer or an Affiliate of Buyer.
9. Indemnification.
9.1. Survival of Representations and Warranties. All of the
representations and warranties of the Sellers (except for those contained in
ss.ss. 3.1 (first sentence only, relating to the organization and existence of
the Company), 3.2 (Capitalization and Ownership of the Company), 3.3
(Authorization of Transaction), 3.5 (Brokers Fees), 3.7 (Subsidiaries, except
for the first and third sentences thereof), 3.14 (Taxes), 3.26 (Environment,
Health and Safety) and 3.33 (Investment Intent; Related Matters, Including
Securities Law Matters)) contained herein (it being understood that the second
sentence of ss.5.3 is considered a representation and warranty by the Sellers
and the Company) or in any document certificate or other instrument required to
be delivered hereunder shall survive the Closing and continue in full force and
effect until 30 days after the Buyer has filed its Annual Report on Form 10-K
for the fiscal year ending in February, 2000 (the "Survival Period"). The
representations and warranties of Sellers contained in ss.ss. 3.1, 3.2, 3.3, 3.7
and ss. 3.26 shall survive the Closing and those contained in ss.ss. 3.1 (first
sentence only), 3.2 , 3.3 and 3.7 (except for the first and third sentences
thereof) shall continue in full force and effect for a period of five years
thereafter and those contained in ss. 3.26 shall continue in full force and
effect for a period of three years thereafter. The representations and
warranties of Sellers contained in ss.ss. 3.5, 3.14 and 3.33 shall survive the
Closing and shall continue in full force and effect without limit as to time
(subject to any applicable statutes of limitations and any extensions or waivers
thereof). The termination of any such representation and warranty, however,
shall not affect any claim for breaches of representations or warranties if
written notice thereof is given to the breaching
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party or parties prior to such termination date. All of the representations and
warranties of the Buyer contained in ss. 4 shall survive the Closing and shall
continue in full force and effect until three years after the Closing Date. All
covenants and indemnities of any Party in this Agreement or in any document or
certificate delivered hereunder shall, unless otherwise specifically provided
therein, remain in full force and effect forever.
9.2. Indemnity by Sellers. Each Seller hereby agrees severally (and not
jointly, or jointly and severally) to indemnify, defend and hold harmless Buyer,
Acquisition and the Company and each of their directors, officers and Affiliates
(individually a "Buyer Indemnitee" and collectively the "Buyer Indemnitees")
against and in respect of all Liabilities, obligations, judgments, Liens,
injunctions, charges, orders, decrees, rulings, damages, dues, assessments,
Taxes, losses, fines, penalties, expenses, fees, costs, amounts paid in
settlement (including reasonable attorneys' and expert witness fees and
disbursements in connection with investigating, defending or settling any action
or threatened action), arising out of any claim, damages, complaint, demand,
cause of action, audit, investigation, hearing, action, suit or other proceeding
asserted or initiated or otherwise existing in respect of any matter (each a
"Loss" and collectively, the "Losses") that results from (a) the inaccuracy or
breach of any representation or warranty made by such Seller herein or from any
misrepresentation in or omission from any schedule, document, certificate or
other instrument required to be furnished by Sellers hereunder, provided that
for purposes of this clause (a) breaches of all representations and warranties
shall be determined as follows (i) with respect to any individual item of Loss
or related items of Loss, if such item or items exceed $25,000 (the "Individual
Threshold"), then all Losses (without regard to time) that result from, arise
out of or relate to the circumstances, events, facts or occurrences surrounding
such individual item or related items of Loss or Losses of a similar nature in
excess of $10,000 (the "Individual Deductible") shall count toward the Aggregate
Deductible and the Aggregate Threshold, (ii) if the aggregate dollar amount of
Losses which would otherwise be indemnifiable pursuant to this clause (a)
exceeds $300,000 (the "Aggregate Threshold"), in which case the Sellers will be
liable for all Losses under this clause (a) in excess of $200,000 (the
"Aggregate Deductible"), and (iii) the foregoing limitations shall not apply to
any Losses resulting from representations set forth in ss. 3 which were
fraudulently made or any breach or inaccuracy of the representations and
warranties contained in ss.ss. 3.1 (first sentence only), 3.2, 3.3, 3.5, 3.7
(except for the first and third sentences thereof), or 3.33 and (b)
nonfulfillment of any agreement or covenant of such Seller contained herein or
in any agreement or instrument required to be entered into in connection
herewith; provided, however, that Sellers' liability under this clause (b) in
respect of Losses resulting from non-fulfillment of the agreement and covenant
contained in ss. 5.4(e) shall be subject to the Individual Threshold, Individual
Deductible, Aggregate Threshold and Aggregate Deductible set forth above;
provided, further, that Sellers shall not be liable for a breach of the covenant
in the last sentence of ss. 5.3 and any Losses thereunder arising from any
action taken by any Seller with respect to the B/E Shares to which the Buyer
specifically consents in writing. Sellers' liability under clause (a) of the
immediately preceding sentence in respect of Losses shall not exceed in the
aggregate $1,500,000, provided that the foregoing
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limitation shall not apply to any Losses resulting from representations set
forth in ss. 3 which were fraudulently made or any breach or inaccuracy of the
representations and warranties contained in ss.ss. 3.1 (first sentence only),
3.2, 3.3, 3.5, 3.7 (except for the first and third sentences thereof), 3.14,
3.26 or 3.33. Sellers' liability under clause (a) of this paragraph in respect
of Losses resulting from breach or inaccuracy of the representations and
warranties contained in ss. 3.14 and under clause (b) in respect of Losses
resulting from non-fulfillment of the agreement and covenant contained in ss.
5.4(e) shall not exceed $5,000,000. Sellers' liability under clause (a) of this
paragraph in respect of Losses resulting from breach or inaccuracy of the
representations and warranties contained in ss. 3.26 shall not exceed
$3,000,000. Sellers' liability under clause (b) of this paragraph in respect of
Losses resulting from nonfulfillment of the agreement and covenant of the
Sellers in the last sentence of ss. 5.3 shall not exceed the Aggregate Merger
Consideration. The amounts payable by the Sellers pursuant to this ss. 9.2 shall
be (i) net of any Tax benefit actually realized by the Buyer (on a with or
without basis) and increased by any increased Tax cost incurred by the Buyer as
a result of the Sellers' indemnification payment and (ii) net of any insurance
proceeds (reduced by any applicable increases in premiums) if and when actually
received by Buyer (it being understood that Buyer shall use commercially
reasonable efforts to obtain recovery from an insurer with which Buyer has
insurance covering such Loss, provided that nothing contained herein shall limit
Buyer's ability to simultaneously pursue its right to indemnification
hereunder). Buyer shall provide Sellers written notice for any claim made in
respect of the indemnification provided in this ss. 9.2, whether or not arising
out of a claim by a third party.
9.3. Indemnity by Buyer. Buyer hereby agrees to indemnify, defend and hold
harmless Sellers and their respective directors, officers and Affiliates
(individually a "Seller Indemnitee" and collectively the "Seller Indemnitees")
against and in respect of all Losses that result from the inaccuracy or breach
of any representation or warranty made by Buyer or Acquisition herein, any
misrepresentation in or omission from any schedule, document, certificate or
other instrument required to be furnished by Buyer or Acquisition hereunder or
from any breach or nonfulfillment of any agreement or covenant of Buyer or
Acquisition contained any agreement or instrument required to be entered into in
connection herewith. Sellers shall provide Buyer written notice for any claim
made in respect of the indemnification provided in this ss. 9.3, whether or not
arising out of a claim by a third party.
9.4. Exclusive Remedy. This Agreement shall provide the sole and exclusive
remedy for any and all Losses sustained or incurred by any Buyer Indemnitee or
Seller Indemnitee or their respective successors and assigns other than for
fraud and equitable actions with respect to ss.ss. 7, 8 and 10.15. The parties
recognize that there may be a duty to mitigate damages with respect to Losses
under applicable Law.
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9.5. Matters Involving Third Parties.
(a) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give
rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this ss. 9, then the Indemnified Party shall
promptly notify each Indemnifying Party thereof in writing; provided,
however, that no delay on the part of the Indemnified Party in notifying
any Indemnifying Party shall relieve the Indemnifying Party from any
obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced.
(b) Subject to ss. 5.4(d), the Indemnifying Party or Parties and the
Indemnified Party will have the right to jointly control the defense
against the Third Party Claim if the Third Party Claim involves only money
damages and does not seek an injunction or other non-monetary relief;
provided, however, that if in the good faith judgment of the Indemnified
Party the Third Party Claim is likely to involve potential Losses of $5
million or greater, the Indemnified Party shall have the right to
determine any matters as to which the parties are unable to agree with
respect to the defense of the Third Party Claim; provided, further, that
neither the Indemnified Party nor the Indemnifying Party or Parties will
consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim that would give rise to Liability for or
otherwise affect the other party without the prior written consent of the
other parties, which consent shall not be unreasonably withheld or delayed
and in the event that no response to any such request for consent to
judgment or settlement is received within five business days after receipt
by such other party of the notice with respect thereto, such party shall
be deemed for all purposes to have consented thereto. In connection with
such joint defense of any Third Party Claim pursuant to ss. 9.5(a), the
Indemnifying Party or Parties and the Indemnified Party agree that they
shall regularly consult with each other and cooperate with each other in
the defense, compromise or settlement of such Third Party Claim and shall
make available to each other and their counsel its books, records and
employees whose assistance, testimony or presence is necessary to assist
in evaluating and defending any such action, suit or proceeding. With
respect to Third Party Claims with respect to which the parties shall
jointly control the defense, the Sellers' Litigation Representative is
hereby appointed the sole and exclusive representative in connection with
the defense of such Third Party Claim and any indemnification obligations
of the Sellers with respect thereto.
(c) In the event that the Third Party Claim involves a claim for
injunctive or other equitable relief, the Indemnified Party may retain its
own counsel and defend against the Third Party Claim in any manner it may
deem appropriate and the Indemnified Party need not consult with any
Indemnifying Party in connection therewith; provided, however, that the
Indemnified Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim that would give
rise to a
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Liability for or otherwise affect the Indemnifying Party or Parties
without the prior written consent of the Indemnifying Party or Parties,
which consent shall not be unreasonably withheld or delayed and in the
event that no response to any such request for consent to judgment or
settlement is received within five business days after receipt by such
other party of the notice with respect thereto, the Indemnifying Party or
Parties shall be deemed for all purposes to have consented thereto. The
Indemnifying Party or Parties will reimburse the Indemnified Party
promptly upon admission or determination of the Indemnified Party's claim
for indemnification for the costs of defending against the Third Party
Claim (including reasonable attorneys' fees and expenses), and the
Indemnifying Parties will remain responsible for any Losses the
Indemnified Party may suffer resulting from, arising out of, relating to,
in the nature of, or caused by the Third Party Claim to the fullest extent
provided in this ss. 9.
9.6. Other Indemnification Provisions. Each of the Sellers hereby agrees
that he or it will not make any claim for indemnification against any of the
Buyer, the Company or any of their Subsidiaries and other Affiliates solely by
reason of the fact that he or it was a director, officer, employee, or agent of
the Company or was serving at the request of any such entity as a partner,
trustee, director, officer, employee, or agent of another entity (whether such
claim is for judgments, damages, penalties, fines, costs, amounts paid in
settlement, Losses, expenses, or otherwise and whether such claim is pursuant to
any statute, charter document, bylaw, agreement, or otherwise) with respect to
any action, suit, proceeding, complaint, claim, or demand brought by the Buyer
or the Company against such Seller (whether such action, suit, proceeding,
complaint, claim, or demand is pursuant to this Agreement, applicable Law, or
otherwise).
10. Miscellaneous.
10.1. Press Releases and Public Announcements. Neither the Sellers nor the
Company nor any of their Affiliates or representatives shall issue any press
release or make any public announcement relating to the subject matter of this
Agreement or the transactions contemplated hereby without the prior written
consent of the Buyer.
10.2. No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
10.3. Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement between the Parties and supersedes
any prior understandings, agreements, or representations by or between the
Parties, written or oral, to the extent they related in any way to the subject
matter hereof.
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10.4. Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party.
10.5. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
10.6. Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.7. Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed to have been received (i) upon
confirmation of facsimile, (ii) one business day following the date sent when
sent by overnight delivery and (iii) five business days following the date
mailed when mailed by registered or certified mail return receipt requested and
postage prepaid at the following address:
If to the Sellers:
Michael J. Tenzyk, as Sellers' Representative
for Michael J. Tenzyk and Judith D. Tenzyk, and as the Sellers'
Litigation Representative for each of the Sellers
12 Broadview Avenue
Bellport, NY 11713
William Brown, as Sellers' Representative for Trustees U/A William
Brown dated 1/7/92 and Trustees U/A Gertrude Brown dated 1/7/92 21
Cathay Road East Rockaway, NY 11518
Louis J. Francisco, as Sellers' Representative
for Louis J. Francisco and Elise M. Francisco
108 S. Carll Avenue
Babylon, NY 11702
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Copy to:
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, NY 1004
Facsimile: (212) 858-1500
Attn: Kenneth E. Adelsberg, Esq.
If to the Buyer or Acquisition:
BE Aerospace, Inc.
1400 Corporate Center Way
Wellington, FL 33414
Facsimile: (561) 791-3966
Attn: Thomas P. McCaffrey or Edmund J. Moriarity, Esq.
With a copy to:
Ropes & Gray
One International Place
Boston, MA 02110
Facsimile: (212) 951-7050
Attn: Winthrop G. Minot, Esq.
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
10.8. Governing Law; Submission to Jurisdiction. This Agreement shall be
governed by and construed in accordance with the domestic substantive Laws of
the State of New York without giving effect to any choice or conflict of law
provision or rule (whether of the State of New York or any other jurisdiction)
that would cause the application of the domestic substantive laws of any
jurisdiction other than the State of New York. Subject to ss. 10.15 the Parties
hereby submit to the nonexclusive jurisdiction of the United States District
Court for the Southern District of New York and of the Supreme Court of New York
sitting in New York County (including its Appellate Division), and any other
appellate court in the State of New York for the purposes of all legal
proceedings arising out of or relating to this Agreement
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or the transactions contemplated hereby. The Parties irrevocably waive, to the
fullest extent permitted by applicable law, any objection which it my now or
hereafter have to the laying the venue of any such proceeding brought in such a
court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum. Notwithstanding the foregoing, any dispute
relating to the provisions of ss. 10.15 shall be governed by the American
Arbitration Act as then in effect.
10.9. Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Sellers. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
10.10. Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
10.11. Expenses. Each of the Buyer and the Sellers will bear his or its
own costs and expenses (including legal and accounting fees and expenses).
Sellers hereby covenant and agree that the expenses of the Company incurred in
connection with this Agreement and the transactions contemplated hereby
(including, without limitation, bonuses to management and fees and expenses of
counsel and advisers) shall not exceed $2,226,346.
10.12. Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any Law shall be deemed also
to refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise. The word "including" shall mean including without
limitation. The mere listing (or inclusion of a copy) of a document or other
item shall not be deemed adequate to disclose an exception to a representation
or warranty made herein (unless the representation or warranty has to do with
the existence of the document or other item itself). The Parties intend that
each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
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10.13. Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
10.14. Specific Performance. Each of the Parties acknowledges and agrees
that the other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Party shall be entitled to an injunction or injunctions to prevent
breaches of ss.ss. 7, 8 and 10.15 of this Agreement and to enforce specifically
those sections of this Agreement and the terms and provisions hereof in any
action instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter in addition to any other remedy to
which it may be entitled, at law or in equity.
10.15. Arbitration.
(a) Generally. Except solely as set forth in ss. 10.14 and ss.
10.15(c), each dispute, difference, controversy or claim arising in
connection with or related or incidental to, or question occurring under,
this Agreement or the subject matter hereof shall be finally settled under
the Commercial Arbitration Rules of the American Arbitration Association
(the "AAA") by an arbitral tribunal composed of three arbitrators, at
least one of whom shall be an attorney experienced in corporate
transactions, appointed by agreement of the Parties in accordance with
said Rules. In the event the Parties fail to agree upon a panel of
arbitrators from the first list of potential arbitrators proposed by the
AAA, the AAA will submit a second list in accordance with said Rules. In
the event the Parties shall have failed to agree upon a full panel of
arbitrators from said second list, any remaining arbitrators to be
selected shall be appointed by the AAA in accordance with said Rules. If,
at the time of the arbitration, the Parties agree in writing to submit the
dispute to a single arbitrator, said single arbitrator shall be appointed
by agreement of the parties in accordance with the foregoing procedure,
or, failing such agreement, by the AAA in accordance with said Rules. The
foregoing arbitration proceedings may be commenced by any Party by notice
to all other Parties.
(b) Place of Arbitration. The venue of such arbitration shall be New
York, New York, or any other place mutually agreed to by Buyer and
Sellers.
(c) Recourse to Courts. Subject to ss. 10.14, the Parties hereby
exclude any right of appeal to any court on the merits of the dispute. The
provisions of this ss. 10.15 may be enforced in any court having
jurisdiction over the award or any of the Parties or any of their
respective assets, and judgment on the award (including without limitation
equitable remedies) granted in any arbitration hereunder may be entered in
any such court. Nothing contained in this ss. 10.15 shall prevent any
Party from seeking interim
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measures of protection in the form of pre-award attachment of assets or
preliminary or temporary equitable relief.
(d) Decision of Arbitral Tribunal. In the event of a dispute between
the Parties hereunder, each Party shall present an offer of settlement
which shall address all issues in dispute such that adoption of such offer
of settlement would conclusively settle all items then in dispute. The
arbitral tribunal shall be limited in its decision to choosing between the
offers of settlement presented to it. The decision of the arbitral
tribunal shall be final and binding on the Parties and non-appealable. The
Party whose offer of settlement is not chosen by the arbitral tribunal
shall pay all of the expenses of the arbitration, which, in the event the
Sellers are held responsible for any such expenses prior to the Release
Date, shall be subject to satisfaction by application of the Escrowed
Shares pursuant to the provisions of ss. 5.2 and the Escrow Agreement.
10.16. Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE
LAW WHICH CANNOT BE WAIVED, EACH OF THE SELLERS, THE BUYER, ACQUISITION AND THE
COMPANY HEREBY WAIVE, AND COVENANT THAT HE OR IT WILL NOT ASSERT (WHETHER AS
PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN
RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF OR
PASSED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, WHETHER NOW EXISTING OR
HEREAFTER ARISING AND WHETHER SOUNDING IN TORT OR CONTRACT OR OTHERWISE.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the
date first above written.
BE AEROSPACE, INC.
By:
------------------------------
Title:
---------------------------
BE AEROSPACE ACQUISITION CORP.
By:
------------------------------
Title:
---------------------------
<PAGE>
AEROSPACE LIGHTING CORPORATION
By:
------------------------------
Title:
---------------------------
---------------------------------
Louis J. Francisco
---------------------------------
Elise M. Francisco
---------------------------------
Michael J. Tenzyk
---------------------------------
Judith D. Tenzyk
TRUSTEES U/A WILLIAM BROWN
dated 1/7/92
---------------------------------
William Brown, as Trustee
TRUSTEES U/A GERTRUDE BROWN,
U/A dated 1/7/92
---------------------------------
Gertrude Brown, as Trustee
---------------------------------
Michael J. Tenzyk, as Sellers'
Representative for Michael J. Tenzyk and
Judith D. Tenzyk and as the Sellers'
Litigation Representative
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----------------------------------
Louis J. Francisco, as Sellers'
Representative for Louis J. Francisco and
Elsie M. Francisco
----------------------------------
William Brown, as Sellers' Representative
for Trustees U/A William Brown dated 1/7/92
and Trustees' U/A Gertrude Brown, dated
1/7/92
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