SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): AUGUST 24, 1999
BENCHMARK ELECTRONICS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
TEXAS 1-10560 74-2211011
- ---------------------------- ----------- -------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
3000 TECHNOLOGY DRIVE, ANGLETON, TEXAS 77515
---------------------------------------- ----------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (409) 849-6550
--------------
<PAGE>
ITEM 2 ACQUISITION OR DISPOSITION OF ASSETS.
On August 24, 1999, Benchmark Electronics, Inc. (the "Company" or
"Benchmark") completed its previously announced acquisition (the "Acquisition")
from J. M. Huber Corporation (the "Seller") of all of the outstanding capital
stock of (a) AVEX Electronics, Inc., an Alabama corporation and a wholly owned
subsidiary of the Seller ("AVEX"), and (b) Kilbride Holdings B.V., a Netherlands
corporation ("Holdings"), a wholly owned subsidiary of Seller. AVEX and Holdings
together constitute the operating and holding companies through which AVEX has
conducted its global contract manufacturing business. AVEX and Holdings have
manufacturing plants or design centers in the United States in Huntsville,
Alabama and Pulaski, Tennessee, and elsewhere in Campinas, Brazil, Csongrad,
Hungary, Guadalajara, Mexico, Cork, Ireland, East Kilbride, Scotland, Singapore,
and Katrineholm, Sweden.
In consideration of the capital stock of AVEX and Holdings, Benchmark paid
$254,455,000 in cash (subject to a post-closing working capital adjustment) and
issued one million shares of its common stock, $.10 par value ("Common Stock"),
to the Seller. Benchmark and the Seller have agreed for federal income tax
purposes to allocate the purchase price pursuant to treasury Section
1.338(h)(10)-1(f).
The stock purchase agreement between Benchmark and Seller contains certain
representations, warranties, covenants (including noncompetition and
nonsolicitation provisions applicable to the Seller) and conditions and certain
indemnification provisions. The agreement provides that the representations,
warranties and indemnification obligations of the Seller survive for certain
periods and terminate thereafter.
Benchmark and the Seller have entered into a Registration Rights
Agreement, which provides for the registration under the securities laws of
resales of the shares of Common Stock issued to the Seller at closing. The
Registration Rights Agreement requires Benchmark (i) to file with the Securities
and Exchange Commission (the "Commission") within 90 days after closing, or a
reasonable time-period thereafter, a shelf registration statement covering
resales of the Common Stock received by the Seller, (ii) to use its best efforts
to cause such shelf registration statement to become effective within 120 days
of closing and (iii) to maintain such shelf registration statement for a period
of two years thereafter.
To finance a portion of the cash consideration for the Acquisition,
refinance existing senior debt and provide for future working capital needs,
Benchmark on August 24, 1999 entered into a new Credit Agreement with Chase Bank
of Texas, National Association (the "Agent"), as administrative agent for a
syndicate of financial institutions. The Credit Agreement provides for (a) a
$125 million revolving credit facility (the "Revolving Credit Facility"), and
(b) a $100 million term loan (the "Term Loan" and, together with the Revolving
Credit Facility, the "Facility") to be used for the Acquisition.
-2-
<PAGE>
Each of the Revolving Credit Facility and the Term Loan matures, and the
outstanding principal amount is due, on September 30, 2004. Amounts outstanding
under the Revolving Credit Facility may not exceed the lesser of $125 million
and the borrowing base, which consists of (a) 75% of eligible accounts
receivable of Benchmark and its domestic divisions, plus (b) 45% of the value of
eligible inventory of Benchmark and its domestic divisions, plus (c) 50% of the
eligible fixed assets of Benchmark and its domestic divisions, plus (d) until
October, 2001, an amount equal to the lesser of (i) $40,000,000 and (ii) the sum
of (A) 65% of the net book value of the accounts receivable of certain of
Benchmark's foreign subsidiaries (other than Unrestricted Subsidiaries), (B) 35%
of the net book value of the inventory of certain of Benchmark's foreign
subsidiaries (other than Unrestricted Subsidiaries), and (C) 40% of the net book
value of the fixed assets of certain of Benchmark's foreign subsidiaries (other
than Unrestricted Subsidiaries). However, the amount attributable to the net
book value of the accounts receivable, inventory and fixed assets of Benchmark's
foreign subsidiaries may not represent more than 20% of the borrowing base in
the aggregate. The Revolving Credit Facility also may be used for letters of
credit of up to $20 million.
The Revolving Credit Facility and the Term Loan are secured by the (a)
pledge of all of the capital stock of Benchmark's domestic subsidiaries, (b)
pledge of 65% of the capital stock of Benchmark's foreign subsidiaries, (c)
pledge of all of the accounts receivable, inventory and fixed assets of
Benchmark and its domestic subsidiaries, and (iv) mortgages on Benchmark's
facilities located in Angleton, Texas, Huntsville, Alabama, Pulaski, Tennessee
and Winona, Minnesota.
The Term Loan must be repaid in twenty consecutive quarterly installments
beginning December 31, 1999, with a quarterly installment of $3,000,000.
Thereafter, quarterly installments of $4,000,000, $4,500,000, $5,000,000, and
$5,500,000 are due during the years 2000, 2001, 2002 and 2003, respectively. The
final three installments of $7,000,000 each are due on the last day of March,
June and September 2004, respectively.
Interest on the Revolving Credit Facility and the Term Loan accrues, at
Benchmark's option, at either the Bank's Eurodollar rate plus from 1.25% to 2.5%
per annum or the Base Rate, which is the higher of the Bank's prime rate and the
federal funds rate, plus from 0% to 1.0% per annum. The margin on the Eurodollar
rate fluctuates with Benchmark's ratio of debt to earnings before interest,
taxes, depreciation and amortization ("EBITDA"). Benchmark is required to pay a
commitment fee of .37% or .50% (depending on Benchmark's ratio of debt to
EBITDA) per annum on the unused portion of the Revolving Credit Facility.
The Credit Agreement includes customary affirmative and negative
covenants, including financial covenants requiring Benchmark to maintain a
minimum tangible net worth, minimum current, fixed charge coverage and interest
coverage ratios and a maximum debt to EBITDA ratio. The Credit Agreement also
restricts Benchmark's ability to incur additional indebtedness and to pay
dividends.
-3-
<PAGE>
The balance of the cash portion of the purchase price was provided from
cash on hand and from the gross proceeds of the sale by the Company in a capital
markets transaction of $80.2 million in aggregate principal amount of its 6%
Convertible Subordinated Notes due 2006 (the "Notes"). The Notes were issued
pursuant to an Indenture dated August 13, 1999 with Harris Trust Company of New
York, as trustee. Interest on the Notes is payable semiannually on February 15
and August 15 of each year, commencing February 15, 2000. The Notes, which are
not subject to a sinking fund or mandatory redemption provision, mature on
August 15, 2006. The Notes are convertible at the option of the holder into
Common Stock commencing 90 days after the issuance date at a conversion price of
$40.20, subject to adjustment in certain events specified in the Indenture.
Benchmark has the option to convert the Notes into shares of Common Stock at the
conversion price then in effect if, on or after August 19, 2002, the closing
price of the Common Stock on the New York Stock Exchange ("NYSE") has equaled or
exceeded 150% of the conversion price for at least 20 out of 30 consecutive
trading days on the NYSE.
After February 15, 2001 and prior to August 19, 2002, the Notes may be
redeemed at the option of the Company at a redemption price equal to 104.286% of
the principal amount thereof, plus accrued and unpaid interest to the redemption
date, if the closing price of the Common Stock shall have equaled or exceeded
150% of the conversion price then in effect for at least 20 out of 30
consecutive trading days on the NYSE. In addition, the Notes may be redeemed at
the option of the Company at any time on and after August 19, 2002 at the
following redemption prices (expressed as percentages of the principal amount),
plus accrued and unpaid interest to the redemption date:
REDEMPTION REDEMPTION
YEAR PRICE YEAR PRICE
---- ---------- ---- ----------
2002 103.429% 2004 101.714%
2003 102.571% 2005 100.867%
Upon the occurrence of a Change of Control (as defined in the Indenture)
or a Termination of Trading (as defined in the Indenture), each holder of Notes
will have the right to require the Company to repurchase all or part of the
holder's Notes at a price equal to 100% of the principal amount thereof, plus
accrued and unpaid interest. A Change of Control will be deemed to have occurred
when: (i) any person or group becomes the beneficial owner of shares
representing more than 50% of the combined voting power of the then outstanding
securities entitled to vote generally in the election of directors (the "Voting
Stock"); (ii) the Company consolidates with or merges into any other
corporation, or another corporation merges into the Company, and the outstanding
Common Stock of the Company is reclassified into or exchanged for any other
property or security, unless the stockholders of the Company immediately before
such transaction own, directly or indirectly immediately following such
transaction, at least a majority of the combined voting power of the then
outstanding voting securities entitled to vote generally in elections of
directors of the corporation resulting from such transaction in substantially
the same respective proportions as their
-4-
<PAGE>
ownership of the Voting Stock immediately prior to such transaction; (iii) the
Company (or the Company and its subsidiaries, taken as a whole) sells, assigns,
conveys, leases or transfers all or substantially all of the assets of the
Company (or of the Company and its subsidiaries, taken as a whole) other than to
one or more wholly owned subsidiaries of the Company; or (iv) any time the
Continuing Directors (as defined in the Indenture) do not constitute a majority
of the board of directors of the Company (or, if applicable, a successor
corporation to the Company). A Termination of Trading will be deemed to have
occurred if the Common Stock (or other common stock into which the Notes are
then convertible) is neither listed for trading on the NYSE or another national
securities exchange, nor approved for trading on the Nasdaq National Market or
other established automated over-the-counter trading market in the United
States. A "Continuing Director" is defined in the Indenture to mean, as of the
date of determination, any member of the Board of Directors of the Company who
was a member of the Board of Directors on the date of the Indenture or was
nominated for election or elected to the Board of Directors with the approval of
a majority of the Continuing Directors who were members of such Board of
Directors at the time of such nomination or election.
The Notes are general unsecured obligations of the Company and are
subordinated in right of payment to all existing and future Senior Debt (as
defined in the Indenture) of the Company and rank pari passu in right of payment
with all other existing and future debt and other liabilities of the Company
that are not subordinated by their express terms to the Notes. As defined in the
Indenture, the term "Senior Debt" means the principal of, premium (if any) and
interest on, and other amounts due in respect of indebtedness of the Company,
whether outstanding on the date of the Indenture or thereafter created
(including the Facility), incurred, assumed or guaranteed by the Company
(including all deferrals, renewals, extensions, refinancings and refundings of,
or amendments, modifications or supplements to, any of the foregoing), unless,
in the instrument creating or evidencing such indebtedness or pursuant to which
such indebtedness is outstanding, it is expressly provided that such
indebtedness is not senior in right of payment to the Notes. However, Senior
Debt does not include (i) amounts owned by the Company for compensation to
employees, or for goods services or materials purchased in the ordinary course
of business, (ii) indebtedness of the Company or a subsidiary other than such
indebtedness that would be subject to a prior claim by the lenders under the
Facility, or (iii) any liability for federal, state, local or other taxes owed
or owing by the Company. As of June 30, 1999 and after giving effect to the
Acquisition, the Company would have had $176.8 million of debt that would have
constituted Senior Debt.
The Indenture requires that the Company comply with certain covenants,
including filing with the Commission and furnishing to the trustee all quarterly
and annual reports required to be filed with the Commission, maintaining its
corporate existence, paying all taxes (except those contested in good faith by
appropriate proceedings and for which adequate reserves have been established in
accordance with generally accepted accounting principles), and taking the
necessary steps so as not to become an "investment company" within the meaning
of the Investment Company Act of 1940, as amended. In addition, the Indenture
provides that the Company will not consolidate
-5-
<PAGE>
or merge with or into any person, continue in a new jurisdiction or sell,
assign, transfer, lease convey, or otherwise dispose of all or substantially all
of its properties or assets unless: (i) the Company is the surviving
corporation; (ii) the corporation which survives the consolidation or merger
assumes all of the obligations of the Company pursuant to a supplemental
indenture; (iii) the Company or the surviving company delivers to the trustee an
opinion of counsel to the effect that the holders of securities will not
recognize a gain or loss for U.S. Federal income tax purposes as a result of the
transaction; (iv) the sale, assignment, transfer, lease, conveyance or other
disposition of all or substantially all of the Company's properties or assets is
as an entirety to one corporation, which will assume all of the obligations of
the Company pursuant to a supplemental indenture; (v) immediately after such
transaction no default or event of default exists; and (vi) the Company or the
surviving corporation shall have delivered to the trustee an officers'
certificate and an opinion of counsel, each stating that the transaction and the
supplemental indenture, if required, comply with the Indenture and that all
conditions precedent in the Indenture have been satisfied.
Pursuant to a Registration Agreement, the Company has agreed for the
benefit of the holders of the Notes and Common Stock to be issued upon
conversion thereof that (i) it will, at its cost, within 90 days after the first
date on which any Notes are issued (the "Notes Closing Date"), file a shelf
registration statement with the Commission with respect to resales of the Notes
and the Common Stock issuable upon conversion thereof, (ii) it will use its best
efforts to cause such shelf registration statement to be declared effective
under the Securities Act within 150 days after the Notes Closing Date and (iii)
it will keep the shelf registration statement continuously effective under the
Securities Act until the earliest of (a) the second anniversary of the Notes
Closing Date, (b) the date on which the Notes or the Common Stock issuable upon
conversion thereof may be sold by non-affiliates of the Company pursuant to
paragraph (k) of Rule 144 (or any successor provision) promulgated by the
Commission under the Securities Act and (c) the date as of which all the Notes
or the Common Stock issuable upon conversion thereof have been sold pursuant to
the shelf registration statement.
If the shelf registration statement (i) is not filed with the Commission
on or prior to 90 days, or has not been declared effective by the Commission
within 150 days, after the Notes Closing Date, or (ii) is filed and declared
effective but shall thereafter cease to be effective (without being succeed
immediately by a replacement shelf registration statement filed and declared
effective) or usable for the offer and sale of Transfer Restricted Securities
(as defined in the Registration Agreement) for a period of time (including any
Suspension Period, as defined in the Registration Agreement) which shall exceed
60 days in the aggregate in any 12-month period during the period beginning on
the Notes Closing Date and ending on or prior to the second anniversary of the
Notes Closing Date, the Company will pay liquidated damages to each holder of
Transfer Restricted Securities which has complied with its obligations under the
Registration Agreement. The amount of Liquidated Damages payable during any
period in which a Registration Default (as defined in the Registration
Agreement) shall have occurred and be continuing is that amount which is equal
to one-quarter of one percent (25 basis points) per annum per $1,000 principal
amount of Notes or $2.50 per annum
-6-
<PAGE>
per 24.875622 shares of Common Stock (subject to adjustment in the event of a
stock split, stock recombination, stock dividend and the like) constituting
Transfer Restricted Securities for the first 90 days during which a Registration
Default has occurred and is continuing and 50 basis points per annum per $1,000
principal amount of Notes or $5.00 per annum per 24.875622 shares of Common
Stock (subject to adjustment as set forth above) constituting Transfer
Restricted Securities for any additional days during which such Registration
Default has occurred and is continuing. Following the cure of a Registration
Default, liquidated damages will cease to accrue with respect to such
Registration Default.
We make "forward-looking statements" within the "safe harbor" provision of
the Private Securities Litigation Reform Act of 1955 throughout this Current
Report on Form 8-k. You can identify these statements by forward-looking words
such as "may," "intend," "will," "expect," "anticipate," "believe," "estimate,"
"should," "strategy," "position," "plan" and "continue" or the negatives of
those words or other variations on them or by comparable terminology. We have
based these statements on our current expectations about future events. Although
we believe that our expectations reflected in or suggested by our
forward-looking statements are reasonable, we cannot assure you that these
expectations will be achieved. Our actual results may differ materially from
what we currently expect. Important factors which could cause our actual results
to differ materially from the forward-looking statements in this report include,
without limitation, the completion of the pending acquisition of AVEX and, if
completed, the termination by one of AVEX's largest customers of its turnkey
manufacturing agreement with AVEX as a result of our purchase of AVEX, the
integration of the operations of AVEX and the incurrence of operating losses at
AVEX after its acquisition by us; the loss of a major customer; changes in
customer concentration; the absence of long-term sales contracts; dependence on
the growth of the enterprise computer, telecommunications, medical device,
industrial control, and testing and instrumentation and, upon completion of the
AVEX acquisition, the networking/servers and high-end video/audio/entertainment,
industries; risks associated with our international operations; availability of
customer specified components; dependence on certain key executives;
environmental laws; Year 2000 problems; fluctuations in quarterly results; stock
price volatility; and competition from other providers of electronics
manufacturing services. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual outcomes
may vary materially from those indicated.
You should read this report (including the information incorporated by
reference into this report) completely and with the understanding that our
actual future results may be materially different from what we expect. We may
not update these forward-looking statements, even though our situation will
change in the future. All forward-looking statements attributable to us are
expressly qualified by these cautionary statements.
-7-
<PAGE>
ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of businesses acquired.
Audited combined financial statements of AVEX Electronics, Inc., its
subsidiaries and certain related companies (all ultimately wholly
owned by J. M. Huber Corporation) as of December 31, 1998 and 1997
and for each of the years in the three year period ended December
31, 1998, (Incorporated by reference to Exhibit 99.1 to the Form 8-K
of Benchmark Electronics, Inc. dated August 2, 1999.)
Unaudited combined financial statements of AVEX Electronics, Inc.,
its subsidiaries and certain related companies (all ultimately
wholly owned by J. M. Huber Corporation) as of June 30, 1999 and
1997 and for each of the six-month periods ended June 30, 1999 and
1998. (Incorporated by reference to Exhibit 99.2 to the Form 8-K of
Benchmark Electronics, Inc. dated August 2, 1999.)
(b) Pro Forma Financial Statements of Benchmark.
Unaudited pro forma condensed combined financial statements of
Benchmark Electronics, Inc. as of and for the six-month period ended
June 30, 1999 and for the year ended December 31, 1998, which give
effect to the acquisition of AVEX by Benchmark under the purchase
method of accounting.
(c) Exhibits.
The following materials are filed as exhibits to this Current Report
on Form 8-K.
EXHIBIT
NUMBER DESCRIPTION
------- -----------
2 Amended and Restated Stock Purchase Agreement
dated as of August 12, 1998 by and between
Benchmark Electronics, Inc. and J. M. Huber
Corporation.
99.1 Credit Agreement dated as of August 24, 1999
by and among Benchmark Electronics, Inc.,
the lenders party
-8-
<PAGE>
thereto and Chase Bank of Texas, National
Association, as administrative agent.
99.2 Registration Rights Agreement dated as of August 24,
1999 by and between Benchmark Electronics, Inc. and
J. M. Huber Corporation.
99.3 Indenture dated as of August 13, 1999 by and between
Benchmark Electronics, Inc. and Harris Trust
Company of New York, as trustee.
99.4 Registration Agreement dated as of August 9, 1999 by
and among Benchmark Electronics, Inc., Salomon
Smith Barney Inc. and Chase Securities Inc.
-9-
<PAGE>
S I G N A T U R E
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BENCHMARK ELECTRONICS, INC.
Dated: September 8, 1999 By: /S/ DONALD E. NIGBOR
Donald E. Nigbor
President
-10-
<PAGE>
ITEM 7(b)
PRO FORMA FINANCIAL STATEMENTS OF BENCHMARK
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined financial statements
give effect to the proposed acquisition by Benchmark of all the outstanding
capital stock of AVEX and Holdings, the related borrowings under a credit
facility (the Facility) and borrowings under a capital markets transaction
completed by Benchmark on August 13, 1999 (Notes). The AVEX acquisition is
subject to customary conditions including approval from various governmental
agencies.
The AVEX acquisition will be accounted for under the purchase method of
accounting. The assets acquired and liabilities assumed will be recorded at
their fair values. The unaudited pro forma condensed combined financial
statements are based on the historical financial statements of Benchmark and
AVEX and the estimates and assumptions set forth below and in the notes to the
unaudited pro forma condensed combined financial statements. The unaudited pro
forma condensed balance sheet as of June 30, 1999 is presented as if the AVEX
acquisition had occurred on that date. The unaudited pro forma condensed
combined statements of operations for the year ended December 31, 1998, and the
six month period ended June 30, 1999, assume that the AVEX acquisition occurred
at the beginning of the earliest period presented.
The unaudited pro forma condensed combined financial statements should be
read in conjunction with the historical financial statements of Benchmark and
AVEX. The unaudited pro forma condensed combined financial statements do not
purport to represent what Benchmark's financial position or results of
operations would actually have been if the AVEX acquisition had been consummated
on the indicated dates, nor are they necessarily indicative of Benchmark's
financial position or results of operations for any future period. The results
of operations for the six months ended June 30, 1999, are not necessarily
indicative of the results to be expected for the entire year or any other
interim period.
The pro forma adjustments are based on preliminary assumptions and
estimates made by Benchmark management. The information necessary to account for
the AVEX acquisition in accordance with generally accepted accounting principles
is incomplete at this time. Accordingly, the unaudited pro forma condensed
combined financial statements assume that the recorded amounts of AVEX's assets
and liabilities approximate their fair values. The actual allocation of the
consideration paid for AVEX may differ from that reflected in the unaudited pro
forma condensed combined financial statements after a more extensive review of
the fair values of the assets acquired and liabilities assumed has been
completed. Accordingly, the allocation of the purchase price and the resultant
amortization of the excess purchase price, which are based on preliminary
estimates, may differ from the final purchase price allocation and amortization
periods.
THE AVEX ACQUISITION
The Stock Purchase Agreement provides that Benchmark will acquire AVEX for
a total purchase price of $255 million in cash and one million shares of
Benchmark Common Stock. In addition, the final purchase price is subject to an
adjustment for working capital changes, of which an estimate is reflected in the
pro forma adjustments.
Financing for the AVEX acquisition is expected to be provided through the
Facility and the Notes.
AVEX incurred a net loss of $9.7 million during the first six months of
1999 and $84.2 million during 1998. AVEX has taken a number of actions intended
to reduce its fixed and other costs and reverse this trend, including the
closure of two facilities in areas having relatively high labor costs and the
redeployment of the capital assets used in those facilities to plants in areas
having lower labor costs, resulting in improved manufacturing utilization; the
rationalization of its sales organization and the elimination of approximately
916 employee and contractor positions; and the redefinition of AVEX's customer
strategy to focus on fewer, more strategic accounts, with a reduction in the
total number of customers.
1
<PAGE>
As a result of some of the foregoing actions, AVEX recorded charges to
operations in 1998 totaling $33.4 million, including restructuring charges of
$15.7 million and the write down of various assets of $17.7 million.
Approximately $7.4 million of the restructuring charge relates to the severance
and related cost associated with the elimination of approximately 916 contractor
and employee positions. AVEX also closed its San Jose, California manufacturing
facility and discontinued a design center. As a result, the restructuring charge
also included a $6.0 million write down to fair value of certain equipment and
leasehold improvements, $2.0 million related to the write off of certain prepaid
assets. The write down of various assets totaling $17.7 million, which included
adjustments to inventory, accounts receivable and other assets, is included in
cost of sales and selling, general and administrative expenses. In the
preparation of the unaudited pro forma condensed combined financial statements,
the $7.8 million of charges related to the closing of the San Jose, California
facility have been excluded as a pro forma adjustment. These charges relate to a
facility not a part of AVEX at the time Benchmark expects to close the AVEX
acquisition. The remaining charges of $25.6 million have been included in the
Unaudited Pro Forma Condensed Combined Financial Statements.
The Unaudited Pro Forma Condensed Combined Financial Statements reflect
savings that will be realized from the elimination of certain redundant
executive headquarter costs and the termination of intercompany services
previously provided by the Seller to AVEX under an intercompany agreement,
offset by the costs Benchmark will incur to replace the services provided by
Seller. No adjustments have been made to reflect other identified actions that
could result in potential cost savings but which cannot be quantified at this
time.
2
<PAGE>
BENCHMARK ELECTRONICS, INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
----------------------- ---------------------------
BENCHMARK AVEX ADJUSTMENTS COMBINED
---------- ---------- ------------ ----------
(IN THOUSANDS)
ASSETS
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents.......... $ 44,863 $ 11,552 $(44,863)a $ --
(11,552)b
Accounts receivable, net........... 87,932 135,599 -- 223,531
Income taxes receivable............ 581 -- -- 581
Inventories........................ 90,437 115,941 -- 206,378
Prepaid expenses and other
assets.......................... 4,723 11,563 -- 16,286
Deferred tax asset................. 2,515 -- -- 2,515
---------- ---------- ------------ ----------
Total current assets....... 231,051 274,655 (56,415) 449,291
Net property, plant and equipment.... 53,084 77,258 -- 130,342
Goodwill, net........................ 47,087 -- -- 47,087
Excess purchase price to be
allocated.......................... -- -- 121,726b 121,726
Other assets......................... 9,513 4,605 7,000a 21,118
---------- ---------- ------------ ----------
$340,735 $ 356,518 $ 72,311 $769,564
========== ========== ============ ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
Current portion of long-term
debt............................ $ 19 $ -- $ 8,420a $ 8,439
Notes payable...................... -- 29,599 (29,599)b --
Accounts payable................... 53,392 126,010 -- 179,402
Accrued liabilities................ 9,378 34,645 -- 44,023
Income taxes payable............... -- 1,106 -- 1,106
Notes payable to parent............ -- 226,899 (226,899)b --
---------- ---------- ------------ ----------
Total current
liabilities.............. 62,789 418,259 (248,078) 232,970
Revolving lines of credit............ -- -- 21,626a 21,626
Long-term debt, less current
portion............................ 30,111 -- 116,580a 146,691
Convertible debt..................... -- -- 75,000a 75,000
Deferred tax liability............... 4,697 26 -- 4,723
Other long term liability............ -- 9,443 -- 9,443
Due to parent........................ -- 1,919 (1,919)b --
---------- ---------- ------------ ----------
Total liabilities.......... 97,597 429,647 (36,791) 490,453
Shareholders' equity (deficit):
Common shares...................... 1,520 1 100a 1,620
(1)b
Additional paid-in capital......... 164,296 41,662 35,873a 200,169
(41,662)b
Retained earnings.................. 77,442 (111,566) 111,566b 77,442
Accumulated other comprehensive
loss............................ -- (3,226) 3,226b --
Less treasury shares, at cost...... (120) -- -- (120)
---------- ---------- ------------ ----------
Total shareholders' equity
(deficit)................ 243,138 (73,129) 109,102 279,111
---------- ---------- ------------ ----------
$340,735 $ 356,518 $ 72,311 $769,564
========== ========== ============ ==========
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
statements.
3
<PAGE>
BENCHMARK ELECTRONICS, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
---------------------- --------------------------
BENCHMARK AVEX ADJUSTMENTS COMBINED
--------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Sales................................ $524,065 $ 841,045 -- $ 1,365,110
Cost of sales........................ 472,354 857,407 -- 1,329,761
--------- ---------- ----------- ------------
Gross profit.................... 51,711 (16,362) -- 35,349
Selling, general & administrative
expenses........................... 17,680 44,365 (4,955)c 57,090
Amortization of goodwill and excess
purchase price to be allocated..... 3,311 -- 8,115 d 11,426
Restructuring charges................ 15,687 (7,805)e 7,882
--------- ---------- ----------- ------------
Income (loss) from operations........ 30,720 (76,414) 4,645 (41,049)
Interest and other income............ 563 (116) 447
Interest expense..................... (4,393) (11,012) 11,012 g (21,800)
(1,293)h
(16,114)i
--------- ---------- ----------- ------------
Income (loss) before taxes........... 26,890 (87,542) (1,750) (62,402)
Income taxes......................... 10,517 (3,348) (595)j (21,217)
(27,791)k
--------- ---------- ----------- ------------
Net income (loss)............... $ 16,373 $ (84,194) $ 26,636 $ (41,185)
========= ========== =========== ============
Earnings (loss) per common
share -- Basic..................... $ 1.41 $ (3.27)
Earnings (loss) per common
share -- Diluted................... $ 1.35 $ (3.27)
Weighted average number of shares
outstanding -- Basic............... 11,594 1,000 l 12,594
Weighted average number of shares
outstanding -- Diluted............. 12,098 496 l 12,594
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
statements.
4
<PAGE>
BENCHMARK ELECTRONICS, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
------------------------- -----------------------
BENCHMARK AVEX ADJUSTMENTS COMBINED
------------ ---------- ----------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Sales................................... $309,167 $ 505,916 -- $815,083
Cost of sales........................... 277,623 485,659 -- 763,282
------------ ---------- ----------- --------
Gross profit....................... 31,544 20,257 -- 51,801
Selling, general & administrative
expenses.............................. 10,628 17,610 (2,319)c 26,319
400 e
Amortization of goodwill and excess
purchase price to be allocated........ 1,819 -- 4,058 d 5,877
------------ ---------- ----------- --------
Income from operations............. 19,097 2,647 (2,139) 19,605
Interest and other income
(expense) -- net...................... (50) 262 (153)f 59
Interest expense........................ (2,315) (11,553) 11,553 g (11,018)
(646)h
(8,057)i
------------ ---------- ----------- --------
Income (loss) before taxes.............. 16,732 (8,644) 558 8,646
Income taxes............................ 6,090 1,091 218 j 3,372
(4,027)k
------------ ---------- ----------- --------
Net income (loss).................. $ 10,642 $ (9,735) $ 4,367 $ 5,274
============ ========== =========== ========
Earnings per common share -- Basic...... $ 0.87 $ 0.40
Earnings per common share -- Diluted.... $ 0.80 $ 0.37
Weighted average number of shares
outstanding -- Basic.................. 12,209 1,000 l 13,209
Weighted average number of shares
outstanding -- Diluted................ 13,256 1,000 l 14,256
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
statements.
5
<PAGE>
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS
Adjustments have been made to the unaudited pro forma condensed combined
financial statements to reflect the following:
(a) The Stock Purchase Agreement provides that Benchmark will acquire AVEX for
a total purchase price of $255 million in cash and one million shares of
Benchmark Common Stock. In addition, the final purchase price is subject
to an adjustment for working capital changes, of which an estimate is
reflected in the pro forma adjustments.
Total consideration (in thousands)
Purchase price:
Cash.................................... $ 255,000
1,000,000 shares of Benchmark common
stock (valued at $35.97 per share).... 35,973
Change in working capital............... 1,389
----------
Total consideration..................... 292,362
Plus:
Transaction and financing costs......... 10,100
----------
Total acquisition and financing
costs............................. $ 302,462
==========
Source of funds (in thousands)
Cash on hand............................ $ 44,863
Debt.................................... 221,626
Equity.................................. 35,973
----------
Total.............................. $ 302,462
==========
Debt financing (in thousands)
Term Loan A............................. $ 100,000
Revolving Credit Facility............... 46,626
Notes................................... 75,000
----------
Total.............................. $ 221,626
==========
(b) The excess of the total purchase price over the estimated fair value of
the net assets acquired is the excess purchase price to be allocated. The
calculation of excess purchase price to be allocated is based on the
following assumptions and calculation (in thousands):
Total consideration..................... $ 292,362
Transaction costs....................... 3,100
----------
Total purchase price.................... 295,462
AVEX net book deficit at June 30,
1999.................................. 73,129
AVEX cash and cash equivalents not
acquired.............................. 11,552
AVEX due to parent not assumed.......... (228,818)
AVEX notes payable not assumed.......... (29,599)
----------
Excess purchase price to be allocated... $ 121,726
==========
6
<PAGE>
(c) To eliminate the historical costs related to (i) certain redundant
executive headquarter costs (ii) the termination of intercompany services
previously provided by the Seller to AVEX under an intercompany
arrangement that included fees based on the estimated utilization of
Seller's resources; (iii) AVEX's domestic defined benefit pension plan,
which plan and the obligations thereunder are not being continued by
Benchmark; offset by (iv) the costs that Benchmark will incur to replace
the Seller's intercompany services arrangement. A summary of such
adjustments follows (in thousands):
FOR THE PERIOD ENDED
--------------------------
DECEMBER 31, JUNE 30,
1998 1999
------------ --------
Redundant executive headquarter
costs......................... $ (455) $ (228)
Historical intercompany service
fee........................... (4,400) (1,800)
Historical cost of pension plan
not continued................. (1,100) (791)
Benchmark replacement of
intercompany services
arrangement................... 1,000 500
------------ --------
Total.................... $ (4,955) $ (2,319)
============ ========
(d) To record amortization of excess purchase price to be allocated over an
estimated useful life of 15 years.
(e) To eliminate the 1998 write down of certain assets related to AVEX's San
Jose, California facility which are not being acquired by Benchmark, as
described above. In 1999, to eliminate a reduction to the aforementioned
write down included in AVEX's historical financial statements.
(f) To reduce interest income related to cash balances utilized in funding a
portion of the AVEX acquisition.
(g) To eliminate intercompany interest expense with the Seller and interest on
AVEX notes payable not assumed under the Stock Purchase Agreement.
(h) To record amortization of debt issuance costs over the life of the
applicable debt instruments.
(i) To record interest expense at 7.75%, 7.75% and 6.0% on the amounts
outstanding under the Revolving Credit Facility, Term Loan A and the
Notes, respectively, based on current interest rates. A change in the
interest rate of 1/8 of a percent would result in a change in annual
interest expense related to the amounts outstanding under the Revolving
Credit Facility and Term Loan A of approximately $183,000.
(j) To record income tax adjustments related to the above pro forma
adjustments.
(k) To adjust AVEX historical income tax expense or benefit as if AVEX was
included in the consolidated federal income tax return of Benchmark. In
the historical combined financial statements of AVEX, federal income taxes
were provided as if AVEX filed a separate income tax return.
(l) The following information reconciles the number of shares used to compute
historical and pro forma earnings (loss) per common share (in thousands):
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED
----------------------------------------
DECEMBER 31, JUNE 30,
1998 1999
------------------ ------------------
BASIC DILUTED BASIC DILUTED
------ -------- ------ --------
<S> <C> <C> <C> <C>
Benchmark historical................. 11,594 12,098 12,209 13,256
Common shares to be issued in AVEX
acquisition........................ 1,000 1,000 1,000 1,000
Elimination of Benchmark stock
options -- antidilutive
on a pro forma basis in 1998....... -- (504) -- --
------ -------- ------ --------
12,594 12,594 13,209 14,256
====== ======== ====== ========
</TABLE>
For both 1998 and 1999, the effect of the if-converted method for the Notes
is antidilutive and 2.5 million of potential common shares have not been
considered in computing diluted earnings per common share.
7
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
2 Amended and Restated Stock Purchase Agreement dated as
of August 12, 1998 by and between Benchmark Electronics,
Inc. and J. M. Huber Corporation.
99.1 Credit Agreement dated as of August 24, 1999 by and
among Benchmark Electronics, Inc., the lenders party
thereto and Chase Bank of Texas, National Association,
as administrative agent.
99.2 Registration Rights Agreement dated as of August 24,
1999 by and between Benchmark Electronics, Inc. and J.
M. Huber Corporation.
99.3 Indenture dated as of August 13, 1999 by and between
Benchmark Electronics, Inc. and Harris Trust Company of
New York, as trustee.
99.4 Registration Agreement dated as of August 9, 1999 by and
among Benchmark Electronics, Inc., Salomon Smith Barney
Inc. and Chase Securities Inc.
-11-
EXHIBIT 2
AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
This AMENDED AND RESTATED STOCK PURCHASE AGREEMENT, dated as of August
12, 1999, by and among J.M. Huber Corporation, a New Jersey corporation
("Seller"), and Benchmark Electronics, Inc., a Texas corporation ("PURCHASER").
W I T N E S S E T H
WHEREAS, Purchaser and Seller have entered into the Stock Purchase
Agreement dated as of July 1, 1999, as supplemented by the Bid Letter Agreement
of even date therewith (such Stock Purchase Agreement, as so supplemented, being
the "STOCK PURCHASE AGREEMENT"), pursuant to which Purchaser (or a Subsidiary of
Purchaser designated in writing to Seller at least three (3) Business Days prior
to the Closing) will acquire, and Seller will sell, all of the outstanding
capital stock of AVEX and Kilbride Holdings (previously referred to as AVEX
Holdings), upon the terms and subject to the conditions set forth herein; and
WHEREAS, Purchaser and Seller have entered into the Supplemental and
Amendatory Agreement (the "AMENDMENT AGREEMENT") dated as of July 30, 1999,
pursuant to which the Stock Purchase Agreement has been supplemented and
amended; and
WHEREAS, Seller and Purchaser wish to amend and restate the Stock Purchase
Agreement, as supplemented and amended by the Amendment Agreement.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained herein, and intending to be
legally bound hereby, the parties hereto agree that, effective upon the
execution and delivery hereof by Seller and Purchaser, the Stock Purchase
Agreement (as supplemented and amended by the Amendment Agreement) shall be
amended and restated to read in its entirety as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 CERTAIN DEFINITIONS. As used in this Agreement, the following
terms when capitalized have the respective meanings set forth below:
"ACTIVE EMPLOYEES" means all employees of the AVEX Group who are actively
at work on the Closing Date and shall include all employees of the AVEX Group
who are not actively at work on the Closing Date due to a short-term absence
(including due to
<PAGE>
vacation, holiday, illness or injury of shorter duration than seven days, jury
duty or death leave) in accordance with applicable policies of the AVEX Group.
"AFFILIATE" means, with respect to any Entity, any other Entity who
directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with, such Entity. The term "CONTROL"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of an Entity whether through the
ownership of voting securities, by contract or otherwise and the terms
"CONTROLLED" and "CONTROLLING" have meanings correlative thereto.
"AGREEMENT" means this Amended and Restated Stock Purchase Agreement and
the exhibits and schedules thereto.
"AMENDMENT AGREEMENT" has the meaning set forth in the second recital of
this Agreement.
"ANTITRUST DIVISION" has the meaning set forth in Section 5.8.
"ASSUMED INDEBTEDNESS" means an amount equal to the sum of any and all
liabilities assumed by Purchaser at Closing relative to the notes payable
balance, current installments of long-term debt balance, or the long-term debt
balance for the AVEX Group, as of the Closing Date, that is prepayable without
penalty on the Closing Date, as set forth in SCHEDULE 1.1.1.
"AVEX" means AVEX Electronics Inc., an Alabama corporation and a
wholly-owned subsidiary of Seller.
"AVEX BENEFIT PLAN" means all Employee Benefit Plans and all other
employee benefit arrangements (including retirement and pension plans or schemes
subject to applicable foreign law) or payroll practices, including severance
pay, sick leave, vacation pay, salary continuation for disability, scholarship
programs, stock option or restricted stock plans (a) maintained by Seller, any
of the AVEX Group or any ERISA Affiliate of either (whether formal or informal,
whether for the benefit of a single individual or for more than one individual
or for current or former employees or their beneficiaries) for the benefit of
any Active Employee or Former Employee or any of the employees or former
employees of Seller or any of its Affiliates assigned to any of the AVEX Group,
or (b) to which or under which Seller or any of the AVEX Group or any ERISA
Affiliate of either has contributed to, or provided benefits under, or is
obligated to (or reasonably could be expected to be obligated to) make
contributions to, or provide benefits under, with respect to any Active Employee
or Former Employee or any current or former employee of Seller assigned to any
of the AVEX Group.
"AVEX EMPLOYEES" has the meaning set forth in Section 3.12(b).
"AVEX GROUP" means AVEX, Kilbride Holdings and the Subsidiaries of AVEX
and Kilbride Holdings; and the term "ANY OF THE AVEX GROUP" refers to AVEX,
Kilbride
-2-
<PAGE>
Holdings or any Subsidiary of AVEX or Kilbride Holdings; and the term "EACH
MEMBER OF THE AVEX GROUP" refers to each of AVEX, Kilbride Holdings and their
Subsidiaries.
"AVEX GROUP FINANCIAL STATEMENTS" has the meaning set forth in Section 3.6
"AVEX STOCK" means all of the capital stock of AVEX.
"BENCHMARK HOLDINGS" means Benchmark BV Holdings, Inc., a Delaware
corporation.
"BENCHMARK STOCK" means the New York Stock Exchange-listed voting common
stock of Purchaser, par value $0.10 per share, bearing trading symbol: BHE.
"BUSINESS" has the meaning set forth in Section 5.12(a).
"BUSINESS DAY" means a day, other than a Saturday or Sunday, on which
commercial banks in New York, New York and in Houston, Texas are open for the
general transaction of business.
"CLAIMS" means all actions, causes of action, suits, hearings,
controversies, trespasses, damages, judgments, executions, claims,
investigations, prosecutions and demands whatsoever, in law or equity,
regardless of when made or asserted and regardless of whether fixed or
contingent.
"CLOSING" means the effective time of the sale of the AVEX Stock and
Kilbride Holdings Stock, which for all purposes shall be 11:59 P.M. local time
in New York, New York on August 24, 1999, and "DAY OF THE CLOSING" and "CLOSING
DATE" shall be deemed to refer to such day.
"CLOSING CASH CONSIDERATION" means $255,000,000.00 minus the amount of any
Net Debt.
"CLOSING WORKING CAPITAL" means the net working capital of the AVEX Group
as of the Closing Date determined in accordance with the method of calculation
set forth in SCHEDULE 1.1.2.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended, and as may be amended from time to time.
"CODE" means the United States Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated thereunder, and as may be amended from
time to time.
"CONFIDENTIALITY AGREEMENT" has the meaning set forth in Section 5.1(b).
"CONTINUED EMPLOYEES" has the meaning set forth in Section 5.9(a).
"CONTRACTS" has the meaning set forth in Section 3.15.
-3-
<PAGE>
"COPYRIGHTS" means all registered and unregistered copyrights and
applications for copyright registration in every country of the world.
"DAMAGES" shall refer to any and all out-of-pocket costs, Claims, damages,
liabilities, obligations, judgments, settlements, awards, demands, offsets,
defenses, counterclaims, expenses and attorneys' fees and penalties, if any,
incurred by a party hereunder.
"DISPUTED ITEMS" has the meaning set forth in Section 2.2(d)(ii).
"ELECTION" has the meaning set forth in Section 5.4(a)(i).
"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 (including any Multiemployer Plan), which is an Employee Pension
Benefit Plan, (d) Employee Welfare Benefit Plan or (e) material fringe benefit
plan or program, that is sponsored or contributed to by Seller or any of the
AVEX Group for the benefit of any current or former employee of any of the AVEX
Group.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(1).
"ENCUMBRANCE" means any title defect, conflicting claim of ownership,
order, decree, judgment, stipulation, settlement, attachment, restriction, right
of first refusal, option, covenant, reservation, lease or any other encumbrance
of any nature whatsoever.
"ENTITY" means an individual, partnership, corporation, limited liability
company, joint stock company, unincorporated organization or association, trust,
joint venture, association or other organization, whether or not a legal entity,
or a Governmental Authority.
"ENVIRONMENTAL CLAIM" means any Claim asserted against, resulting to,
imposed upon, or incurred by Seller or, following the Closing, any of the AVEX
Group, directly or indirectly, by reason of or resulting from any noncompliance
with any Environmental Law by any of the AVEX Group prior to the Closing.
"ENVIRONMENTAL LAWS" means any law, domestic or foreign, regulating or
pertaining to the protection of natural resources, the environment and public
health including the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA") (42 U.S.C. 9601 ET SEQ.), the Hazardous Materials
Transportation Act (49 U.S.C. 1801 ET SEQ.), the Resource Conservation and
Recovery Act (42 U.S.C. 6901 ET SEQ.), the Clean Water Act (33 U.S.C. 1251 ET
SEQ.), the Clean Air Act (42 U.S.C. 7401
-4-
<PAGE>
ET SEQ.), the Toxic Substances Control Act (15 U.S.C. 7401 ET SEQ.), the
Emergency Planning and Community Right-to-Know Act (42 U.S.C. 11001 ET SEQ.),
the Oil Pollution Act (33 U.S.C. 2701 ET SEQ.), and the regulations promulgated
pursuant thereto, and any substantively similar state or local statutes, and the
regulations and guidelines promulgated pursuant thereto, as such laws have been
amended or supplemented through the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and as may be amended from time to time.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) under common control with any Entity within the meaning of Section
414(b), (c), (m), or (o) of the Code.
"ESTIMATED WORKING CAPITAL" means the estimated net working capital of the
AVEX Group based upon the Reference Balance Sheet and calculated as set forth in
SCHEDULE 1.1.2.
"EXCLUDED ASSETS AND LIABILITIES" means all assets and liabilities of the
AVEX Group that are listed on SCHEDULE 1.1.3 hereto.
"FACTORING ARRANGEMENT" means the Factoring Agreement and the Receivables
Servicing Agreement, each dated February 5, 1998, between AVEX Electronics
Limited and J.M. Huber Finance Corporation
"FINAL CLOSING WORKING CAPITAL SCHEDULE" has the meaning set forth in
Section 2.2(d).
"FOREIGN CONTINUING EMPLOYEES" has the meaning set forth in Section 5.9(e)
"FORMER EMPLOYEE" has the meaning set forth in Section 5.9(a).
"FTC" has the meaning set forth in Section 5.8.
"GAAP" means generally accepted accounting principles as in effect in the
United States on the date of this Agreement, applied on a consistent basis and
in a manner consistent with the methodology heretofore employed by the AVEX
Group in the preparation of its financial statements.
"GOVERNMENT COMMITMENT" means any contract or other agreement to which any
of the AVEX Group and any Governmental Authority are parties.
"GOVERNMENTAL AUTHORITY" means any national, federal, state, provincial,
county, municipal or local government, foreign or domestic, or the government of
any political subdivision of any of the foregoing, or any entity, authority,
agency, ministry or other similar body exercising executive, legislative,
judicial, regulatory or administrative authority or functions of or pertaining
to government, including any authority or other quasi-governmental entity
established to perform any of such functions.
-5-
<PAGE>
"GUARANTEES" has the meaning set forth in Section 2.3(c).
"HAZARDOUS DISCHARGE" means the presence of, or any emission, spill,
release, or discharge (whether on Owned Real Property, on property adjacent to
the Owned Real Property, or at any other location or disposal site) of Hazardous
Materials used, stored, generated, treated, or disposed of at the Owned Real
Property.
"HAZARDOUS MATERIALS" means any wastes, substances, or materials (whether
solids, liquids or gases) that are deemed hazardous, toxic pollutants, or
contaminants, including, without limitation, substances defined as "hazardous
wastes," "hazardous substances," "toxic substances," "radioactive materials," or
other similar designations in any Environmental Laws. "Hazardous Materials"
includes polychlorinated biphenyls (PCBs), asbestos, and petroleum and petroleum
products (including crude oil or any fraction thereof).
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"HUBER EQUITY" means Huber Equity Corp., a Delaware corporation and
indirect wholly-owned Subsidiary of Seller.
"INACTIVE EMPLOYEES" has the meaning set forth in Section 5.9(a).
"INCOME TAX" means any federal, state, local, or foreign income tax,
including any interest, penalty, or addition thereto, whether disputed or not.
"INCOME TAX RETURN" means any return, declaration, report, claim for
refund, or information return or statement relating to Income Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
"INDEMNIFICATION AGREEMENT" means the Indemnification Agreement dated as
of August 10, 1999 between Seller and Purchaser.
"INTELLECTUAL PROPERTY" means Copyrights, Know-How, Patents and Trademarks
"INTERIM FINANCIAL SCHEDULES" has the meaning set forth in Section 3.6.
"JMH VISION" means JMH Vision B.V., a Netherlands corporation and
wholly-owned Subsidiary of Huber Equity.
"JMH VISION SUBSIDIARIES" means the Subsidiaries of JMH Vision identified
as such in SCHEDULE 3.1 hereto.
"KILBRIDE HOLDINGS" means Kilbride Holdings B.V., a Netherlands
corporation and wholly-owned Subsidiary of JMH Vision.
"KILBRIDE HOLDINGS STOCK" means all of the capital stock of Kilbride
Holdings.
-6-
<PAGE>
"KNOW-HOW" means all technical information, trade secrets, design rights,
specifications, manuals, reports, documents, drawings, procedures, processes,
devices, software and source code, software documentation, flow charts,
recording media, research and development data, notebooks, marketing
information, customer and supplier lists, other tangible embodiments of
information, and proprietary rights other than Copyrights, Patents, and
Trademarks, in every country of the world.
"KPMG" means KPMG LLP Certified Public Accountants, in its role as
Seller's auditors.
"LEASED REAL PROPERTY" has the meaning set forth in Section 3.17(b).
"LIEN" means any mortgage, pledge, hypothecation, title retention
agreement, security interest, Encumbrance, lien or charge of any kind.
"MATERIAL ADVERSE CHANGE" means a material adverse change to the business,
results of operations or financial condition of the AVEX Group taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the business,
results of operations or financial condition of the AVEX Group taken as a whole.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA Section 3(37).
"NET DEBT" means the amount of any Assumed Indebtedness in existence as
of the Closing LESS the amount, if any, of cash and cash equivalents of the AVEX
Group as of the opening of business on the Closing Date.
"OWNED REAL PROPERTY" has the meaning set forth in Section 3.17(a).
"PATENTS" means all unexpired utility and design patents, design
registrations, and utility models, and all pending applications therefor
(including all divisions, continuations, continuations-in-part, reexaminations,
extensions, renewals or reissues thereof), and all similar rights and
applications therefor, in every country of the world.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
entity.
"PERMITTED ENCUMBRANCE" means mechanics', carriers', workmen's,
repairmen's or other like Liens arising or incurred in the ordinary and usual
course of business, and other imperfections of title or encumbrances, if any,
which, either in any case or in the aggregate, do not materially detract from
the value of the property subject thereto or materially impair the operation of
the business of the AVEX Group; and (in the case of real property and interests
in real property) easements, covenants, encroachments, rights-of-way and other
restrictions of record, Liens for Taxes, assessments and other governmental
charges which are not due and payable, or which may thereafter be paid without
penalty, zoning and other similar restrictions, other recorded easements or
rights-of-way or other restrictions, in any event which are of a type against
which title
-7-
<PAGE>
companies ordinarily will provide insurance at standard rates and which do not,
either in any case or in the aggregate, materially impair the use, as presently
conducted, of the facilities used in the business of the AVEX Group. Permitted
Encumbrances shall also include, with respect to particular assets, the Liens
listed in any Schedule hereto as encumbering such assets.
"PROPOSED CLOSING WORKING CAPITAL SCHEDULE" has the meaning set forth in
Section 2.2(d).
"PURCHASE PRICE" has the meaning set forth in Section 2.2(b).
"REFERENCE BALANCE SHEET" means the consolidated balance sheet of the AVEX
Group, estimated as of June 30, 1999 and prepared in accordance with GAAP,
attached as SCHEDULE 1.1.4 hereto.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement,
in the form of Exhibit A hereto, between Purchaser and Seller.
"REPORT" has the meaning set forth in Section 5.8.
"SELECTED ACCOUNTING FIRM" means one of the "Big Five" public accounting
firms, which shall be selected jointly by Seller and Purchaser for purposes of
Section 2.2(d) and which shall not be a firm that Seller or Purchaser or any of
their respective Affiliates uses or contemplates retaining within one year after
the date of selection for any substantial engagement having a purpose other than
the performance of services pursuant to Section 2.2(d).
"STOCK PURCHASE AGREEMENT" has the meaning set forth in the first recital
of this Agreement.
"SUBSIDIARY" means, with respect to any Entity (other than AVEX or
Kilbride Holdings), any corporation, partnership, association or other business
entity of which (i) if a corporation or other business entity (except a
partnership), a majority of the total voting power of shares of stock or other
interests entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof is at the time owned
or controlled, directly or indirectly, by that Entity or one or more of the
other Subsidiaries of that Entity or a combination thereof, or (ii) if a
partnership, association or other business entity, a majority of the partnership
or other similar ownership interests thereof is at the time owned or controlled,
directly or indirectly, by any Entity or one or more Subsidiaries of that Entity
or a combination thereof. With respect to AVEX or Kilbride Holdings, the term
Subsidiary means the entities listed in SCHEDULE 3.1 as being Subsidiaries of
AVEX and Kilbride Holdings, respectively.
"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.
-8-
<PAGE>
"TAX SHARING AGREEMENT" means any tax sharing or similar agreement
(whether written or unwritten) among Seller or any of its Affiliates and any of
the AVEX Group.
"TAXES" means all taxes, charges, fees, levies, imposts, duties, and other
assessments, including any income, alternative, minimum or add-on tax, gross
income, gross receipts, sales, use, transfer, stamp duties, ad valorem,
value-added, franchise, registration, title, license, capital, paid-up capital,
profits, withholding, payroll, intangible tax, employment, excise, severance,
occupation, premium, real property, personal property, federal highway use,
commercial rent, transaction, environmental, or windfall profit tax, custom,
duty or other tax, governmental fee or other like assessment or charge of any
kind whatsoever, whether federal, state, local or foreign, together with any
interest, penalties, or additions thereto.
"TERMINATION DATE" means September 30, 1999.
"TO THE KNOWLEDGE" of (or "TO THE BEST KNOWLEDGE") of (i) Seller shall
mean to the actual awareness of any of the individuals listed on SCHEDULE 1.1.5
hereto and (ii) Purchaser shall mean to the actual awareness of any of the
individuals listed on SCHEDULE 1.1.6 hereto, and "HAS NO KNOWLEDGE OF," as
applied to a party, shall mean that none of the individuals listed on such
party's Schedule, as the case may be, has any actual awareness of the matter in
question. No person may deny having actual awareness by reason of such person
having deliberately failed to review available information.
"TRADEMARKS" means all registered and unregistered trademarks, service
marks, trade dress, trade names, including all registrations and applications
for registration of any of the foregoing, in every country of the world.
"WARN ACT" means the Workers Adjustment and Retraining Notification Act,
29 U.S.C. Sec. 2101 et seq.
"YEAR 2000 PROBLEM" has the meaning set forth in Section 3.23.
Section 1.2 INTERPRETATION. Unless otherwise indicated to the contrary
herein by the context or use thereof: (i) the words, "herein," "hereto,"
"hereof" and words of similar import refer to this Agreement as a whole and not
to any particular Section or paragraph hereof; (ii) the word "including" means
"including, but not limited to"; (iii) masculine gender shall also include the
feminine and neuter genders, and vice versa; and (iv) words importing the
singular shall also include the plural, and vice versa.
ARTICLE II
THE CLOSING
Section 2.1 CLOSING. The closing of the transactions contemplated hereby
shall take place at the offices of Arnold & Porter, 399 Park Avenue, New York,
New York at 10:00 A.M. on the date that is the later to occur of (a) August 24,
1999 and (b) the date which is three Business Days after the date on which all
Closing conditions set forth in
-9-
<PAGE>
Article VII hereof are first satisfied, or such other date, time and place upon
which Seller and Purchaser may agree.
Section 2.2 PURCHASE OF SHARES.
(a) Upon the terms and subject to the conditions of this Agreement, at
the Closing, Purchaser shall purchase from Seller for the Purchase Price, and
Seller shall sell to Purchaser for the Purchase Price, all of the AVEX Stock and
Kilbride Holdings Stock, and Seller shall deliver to Purchaser the certificates
representing the AVEX Stock and Kilbride Holdings Stock endorsed, respectively,
to Purchaser (or a Subsidiary of Purchaser designated in writing to Seller at
least three (3) Business Days prior to the Closing) and Benchmark Holdings, or
accompanied by duly executed stock powers, so as to transfer and assign to
Purchaser (or its designated Subsidiary) and Benchmark Holdings, respectively,
good and valid title to the AVEX Stock and the Kilbride Holdings Stock, and to
constitute Purchaser (or its designated Subsidiary) as the sole shareholder of
AVEX and Benchmark Holdings as the sole shareholder of Kilbride Holdings.
(b) The Purchase Price shall be the Closing Cash Consideration PLUS or
MINUS the adjustment set forth in Section 2.2(d), PLUS one million shares of
Benchmark Stock.
(c) (i) At the Closing, Purchaser shall pay to an account, designated
in writing by Seller at least three days prior to the Closing, an amount equal
to the Closing Cash Consideration. Such payment shall be made to Seller by wire
transfer of immediately available funds for the account of Seller and JMH
Vision, as their interests may appear.
(ii) At the Closing, Purchaser shall also deliver to Seller
certificates representing one million shares of Benchmark Stock, issued in the
name of Seller, free and clear of any Liens. Each certificate representing such
shares of Benchmark Stock initially shall be stamped or otherwise imprinted with
a legend substantially in the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR
SALE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID
ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
APPLICABLE EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.
Upon the effectiveness of a registration statement covering such shares of
Benchmark Stock pursuant to the Registration Rights Agreement or in the event
Seller is able to sell such shares privately or publicly without registration
under the Securities Act, Purchaser agrees to promptly, but no later than three
(3) Business Days thereafter, issue or cause the issuance of new certificates
representing such Benchmark Stock to Seller without such legend. Nothing herein
shall limit the right of Seller to pledge these securities pursuant to a bona
fide margin account or lending arrangement, and nothing herein shall require
Purchaser to take any action to facilitate any such pledge.
-10
<PAGE>
(d) (i) As soon as practicable after the Closing, Seller and KPMG, with
the cooperation of Purchaser and the AVEX Group, shall review those assets and
liabilities (other than Excluded Assets and Liabilities) constituting items of
working capital, for the purpose of preparing a preliminary working capital
schedule (the "PROPOSED CLOSING WORKING CAPITAL SCHEDULE") as of the Closing
Date. The Proposed Closing Working Capital Schedule shall be prepared in
accordance with GAAP. As promptly as practicable, but no later than 90 days
after Closing, KPMG shall deliver to Seller and Purchaser its Proposed Closing
Working Capital Schedule, together with a report to the effect that the Proposed
Closing Working Capital Schedule presents fairly the Closing Working Capital in
all material respects in accordance with GAAP or in accordance with the terms of
this Agreement.
(ii) Within 30 days after delivery of the Proposed Closing Working
Capital Schedule, the parties shall attempt to resolve any items or amounts as
to which Purchaser objects (the "DISPUTED ITEMS"). If during such 30-day period
the parties are able to resolve all Disputed Items, the Proposed Closing Working
Capital Schedule so agreed upon shall be the "FINAL CLOSING WORKING CAPITAL
SCHEDULE". Notwithstanding anything to the contrary in this Section, if the
aggregate of the Disputed Items is less than $100,000, such items shall not be
considered as Disputed Items for the purposes of this Section, and if the
aggregate amount of the Disputed Items is greater than $100,000, the amount of
Disputed Items shall be deemed to include the full amount of all Disputed Items.
(iii) If during such 30-day period any such Disputed Items cannot be
resolved, (A) those items to the extent of the amounts agreed upon by the
parties shall no longer constitute Disputed Items and shall be conclusive for
purposes of preparing the Final Closing Working Capital Schedule and calculation
of the Closing Working Capital and (B) the parties shall promptly thereafter,
but in no event more than 10 days thereafter, cause the Selected Accounting Firm
promptly to review this Agreement and the remaining Disputed Items for purposes
of resolving the remaining Disputed Items and calculating the Closing Working
Capital. In making such calculation, such accounting firm shall make a
determination only of Disputed Items not resolved by the parties and in the case
of all other items of Closing Working Capital shall use the amounts which are
agreed upon by the parties. The Selected Accounting Firm shall deliver to Seller
and Purchaser, as promptly as practicable, a report setting forth its resolution
of the remaining Disputed Items and its calculation of Closing Working Capital.
Such report shall be final and binding upon the parties hereto. The cost of such
review and report shall be borne by each party PRO rata in the proportion that
the aggregate amount of Disputed Items unsuccessfully claimed by such party
bears to the aggregate amount of Disputed Items.
(iv) The Proposed Closing Working Capital Schedule, adjusted to reflect
the Closing Working Capital agreed to by the parties or as calculated by the
Selected Accounting Firm as set forth in clause (iii) above, as the case may be,
shall be the Final Closing Working Capital Schedule which shall be conclusive
for all purposes of this Agreement.
-11-
<PAGE>
(v) If the amount of Closing Working Capital is greater than Estimated
Working Capital, Purchaser shall promptly pay to (or as directed by) Seller the
amount of the difference. If the amount of Closing Working Capital is less than
Estimated Working Capital, Seller shall promptly pay to (or as directed by)
Purchaser the amount of the difference. Any such payment pursuant to this clause
(v) shall be made within 10 days after (A) Purchaser and Seller agree upon the
Closing Working Capital pursuant to clause (iii) or (B) if Disputed Items are
referred to a Selected Accounting Firm pursuant to clause (iii), the delivery of
the report of such firm referred to in clause (iii).
(vi) Any payments pursuant to this Section 2.2(d) shall be made by wire
transfer of immediately available funds to such account of Purchaser or Seller,
as the case may be, as may be designated by such receiving party. The amount of
any payment to be made pursuant to this Section 2.2(d) shall bear interest from
and including the Closing Date to but excluding the date of payment at a rate
per annum equal to the three month London Interbank Offered Rate as published in
the WALL STREET JOURNAL for the Closing Date. Such interest shall be payable at
the same time as the payment to which it relates and shall be calculated daily
on the basis of a year of 365 days and the actual number of days elapsed.
(e) The shares of Benchmark Stock issued and delivered to Seller
pursuant to Section 2.2(c) shall be subject to, and entitled to the benefits of,
the Registration Rights Agreement which will be executed and delivered by the
parties hereto in good faith on the Closing Date.
Section 2.3 INTERCOMPANY AGREEMENTS. (a) At or prior to the Closing,
Seller and the AVEX Group shall terminate all intercompany agreements, including
any Tax Sharing Agreements, between any of the AVEX Group on the one hand, and
Seller and any of its Affiliates other than the AVEX Group, on the other hand
(other than any that constitute or are related to Excluded Assets and
Liabilities), except as listed on SCHEDULE 2.3.1 hereto.
(b) All outstanding receivables sold by AVEX Electronics Limited to
J.M. Huber Finance Corporation under the Factoring Arrangement shall be
purchased by Purchaser from J.M. Huber Finance Corporation on the Closing Date
at a price equal to 100% of the face value thereof adjusted for any discount PRO
RATA to the Closing Date. Payment of such purchase price shall be made directly
to J.M. Huber Finance Corporation on the Closing Date, and such payment
obligation shall be separate and distinct from Purchaser's obligation to pay
Seller the Closing Cash Consideration. (The price paid for such receivables
shall not be taken into consideration for purposes of calculating Closing
Working Capital under Section 2.2(d)).
(c) Purchaser and Seller shall use their best efforts to cancel, as of
the Closing, all guarantees, letters of credit or other similar arrangements
("GUARANTEES") entered into by Seller or its Affiliates (other than any of the
AVEX Group) relating to any of the AVEX Group, including the Guarantees listed
on SCHEDULE 2.3.2. To the extent any of the Guarantees are not so cancelled,
Purchaser shall use its best efforts to cause
-12-
<PAGE>
them to be promptly cancelled, and shall indemnify Seller and its Affiliates
with respect to any liabilities arising under such Guarantees pursuant to
Section 6.2.
Section 2.4 EXCLUDED ASSETS AND LIABILITIES. (a) Seller shall, on or prior
to the Closing Date, cause each of AVEX, Kilbride Holdings and any of their
Subsidiaries to assign or otherwise transfer (by distribution, capital
contribution or otherwise) to Seller or one of its Affiliates (other than any of
the AVEX Group), and shall assume, all of the Excluded Assets and Liabilities.
(b) Neither Purchaser nor any of the AVEX Group shall have any
liability whatsoever for any Excluded Assets and Liabilities, all of which,
subject to the provisions of Section 2.4 hereof, shall have been assumed by
Seller and/or one of its Affiliates (other than any of the AVEX Group) on or
prior to the Closing Date. Seller shall indemnify Purchaser, AVEX Group and
their Affiliates with respect to the Excluded Assets and Liabilities pursuant to
Section 6.1.
Section 2.5 TRANSFER TAXES. Purchaser shall be liable for, and shall pay,
all applicable excise, sales, transfer, documentary, recordation and other
similar taxes, levies, fees and charges, if any (including all real estate
transfer taxes and conveyance and recording fees, if any), that may be imposed
upon, or payable or collectible or incurred in connection with, this Agreement
and the transactions contemplated hereby, up to a maximum of $100,000. Seller
and Purchaser will each pay one half of any such amounts in excess of $100,000.
Purchaser hereto hereby agrees to file all necessary documentation (including,
without limitation, all tax returns) with respect to all such taxes in a timely
manner.
Section 2.6 TAKING OF NECESSARY ACTION; FURTHER ACTION. Seller and
Purchaser shall take all such action as may be necessary or appropriate in order
to effectuate the transactions hereunder as promptly as possible. If, at any
time after the Closing Date, any further action by Seller is necessary or
desirable to carry out the purposes of this Agreement and to vest Purchaser with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises sold hereunder, Seller shall use its commercially
reasonable efforts to take such action.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser that except with
respect to the Excluded Assets and Excluded Liabilities (as to which no
representations or warranties are given):
Section 3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Seller and each
member of the AVEX Group is a corporation duly organized, validly existing and
in good standing under the laws of its respective jurisdiction of incorporation
specified in SCHEDULE 3.1. Each member of the AVEX Group, except for Kilbride
Holdings, with respect to which this representation will be true as of the
Closing, has the corporate
-13
<PAGE>
power and authority and all licenses, permits and authorizations necessary to
own or lease its property and assets and to carry on its business as presently
conducted, and as presently proposed to be conducted, and is duly qualified to
do business as a foreign corporation and is in good standing in each
jurisdiction wherein the nature of its business or the ownership of its assets
makes such qualification necessary, except where the failure to be so qualified
and in good standing would not have a Material Adverse Effect. Seller has
previously provided or made available to Purchaser true and complete copies of
the certificate or articles of incorporation and by-laws, as currently in
effect, of each member of the AVEX Group.
Section 3.2 AUTHORIZATION. Seller has the corporate power and authority to
execute and deliver this Agreement and each other document to be executed in
connection herewith and to perform its obligations hereunder and thereunder, all
of which have been duly authorized by all requisite corporate action. This
Agreement and each other document to be executed in connection herewith has been
duly authorized, executed and delivered by Seller and constitutes a valid and
binding agreement of Seller, enforceable against Seller in accordance with its
terms, except as such may be subject to or limited by bankruptcy, insolvency,
reorganization or other laws relating to or affecting creditors' rights
generally and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
Section 3.3 NON-CONTRAVENTION. Neither the execution and delivery of this
Agreement or any other agreement or document to be delivered hereunder or the
consummation of the transactions contemplated hereby or thereby nor the
fulfillment of and the performance by Seller of its obligations hereunder or
thereunder will (i) contravene any provision contained in the certificate or
articles of incorporation or by-laws of any of Seller or any of the AVEX Group,
(ii) conflict with, violate or result in a breach of, or constitute a material
default under (A) except as set forth in SCHEDULE 3.3, any Contract or (B) any
judgment, order, decree, statute, law, rule or regulation or other restriction
of any Governmental Authority, in each case to which any of Seller or any of
Seller or any of the AVEX Group is a party or by which any of them is bound or
to which any of their respective assets or properties are subject, if any, (iii)
except with respect to Liens granted to Purchaser's financing sources or
otherwise created by Purchaser, result in the creation or imposition of any Lien
on any of the assets or properties of any of the AVEX Group, or (iv) except as
set forth in SCHEDULE 3.3, result in the acceleration of, or permit any Entity
to terminate, modify, cancel, accelerate or declare due and payable prior to its
stated maturity, any obligation of any of the AVEX Group, which in the case of
any of clauses (i) through (iv) above, would have a Material Adverse Effect.
Section 3.4 NO CONSENTS. Except for (i) filings required by the HSR Act
and (ii) filings, notices and approvals set forth in SCHEDULE 3.4, to the
knowledge of Seller, no notice to, filing with, or authorization, registration,
consent or approval of any Governmental Authority or other Entity is necessary
for the execution, delivery or performance of this Agreement or the consummation
of the transactions contemplated hereby or thereby by Seller.
-14-
<PAGE>
Section 3.5 CAPITALIZATION OF THE AVEX GROUP.
(a) The authorized capital stock of AVEX consists of 5,000 authorized
shares of Common Stock, of which 1,000 shares are presently issued and
outstanding and owned beneficially and of record by Seller, and the authorized
capital stock of Kilbride Holdings consists of 41 authorized shares of Common
Stock, each having a nominal value of NLG 1,000, of which 41 shares are issued
and outstanding and owned beneficially and of record by Seller. Except as set
forth in SCHEDULE 3.5(A), AVEX and Kilbride Holdings do not have (i) any shares
of Common Stock reserved for issuance, or (ii) any outstanding or authorized
option, warrant, right, call or commitment relating to its capital stock or any
outstanding securities or obligations convertible into or exchangeable for, or
giving any Entity any right to subscribe for or acquire from it, any shares of
its capital stock. Except as set forth in this Section 3.5(a) or in SCHEDULE
3.5(A), there are no (i) outstanding obligations of any of the AVEX Group to
repurchase, redeem or otherwise acquire any capital stock of any of the AVEX
Group, (ii) authorized or outstanding stock appreciation, phantom stock, profit
participation or similar rights with respect to any of the AVEX Group, or (iii)
voting trusts, proxies or other agreements, to which any of the AVEX Group is a
party, with respect to the voting or transfer of the capital stock of AVEX or
Kilbride Holdings except as otherwise set forth in this Agreement. Except as set
forth in SCHEDULE 3.5(A), there are no preemptive or contractual subscription
rights with respect to any shares of the capital stock of any of the AVEX Group,
and all of the issued and outstanding shares of Common Stock of AVEX and of
Kilbride Holdings are duly authorized and validly issued, fully paid and
nonassessable.
(b) All Subsidiaries of AVEX and Kilbride Holdings (as of the Closing)
and their respective authorized and issued shares are listed on SCHEDULE 3.1.
Except with respect to such Subsidiaries and except as otherwise disclosed in
SCHEDULE 3.5(B), none of the AVEX Group owns any shares of stock or any equity
interest in any Entity, and none of the AVEX Group controls any other Entity by
means of ownership, management contract or otherwise. All of the outstanding
capital stock of, or other ownership interests in, each Subsidiary of Kilbride
Holdings is owned beneficially or of record by Seller, directly or indirectly,
and all such shares are validly issued, fully paid and nonassessable and free
and clear of preemptive subscription or preemptive rights (other than such
rights as may be held by Seller) restrictions on transfer, taxes on Liens,
Encumbrances (except for Permitted Encumbrances) or any other limitation or
restriction. All of the outstanding capital stock of, or other ownership
interests in, Kilbride Holdings as of the Closing Date will be owned
beneficially and of record by Seller , directly or indirectly, and all such
shares will be validly issued, fully paid and nonassessable and free and clear
of any preemptive, subscription or purchase rights (other than such rights as
may be held by Seller), restrictions on transfer, taxes, Liens, Encumbrances or
any other limitation or restriction. Except as otherwise disclosed in SCHEDULE
3.5(B), there are no (i) shares of capital stock reserved for issuance by any of
the AVEX Group, (ii) authorized or outstanding securities of any of the AVEX
Group convertible into or exchangeable for, options, warrants, or other rights
to acquire from any of the AVEX Group, or other contracts, understandings or
arrangements (whether or not contingent) granting to any Entity the right to
subscribe for, or providing for the issuance or sale of, any capital stock
-15-
<PAGE>
or other ownership interest in, or any other securities of, any of the AVEX
Group, (iii) voting trusts, proxies or other agreements among the shareholders
of AVEX or Kilbride Holdings with respect to the voting or transfer of their
Subsidiaries' capital stock, or (iv) outstanding obligations of AVEX or Kilbride
Holdings or any of the Subsidiaries to repurchase, redeem or otherwise acquire
any outstanding shares of capital stock or other ownership interests in any of
the AVEX Group. All of the issued and outstanding shares of capital stock of
each of the Subsidiaries of AVEX and Kilbride Holdings have been duly authorized
and are validly issued, fully paid and nonassessable.
Section 3.6 FINANCIAL STATEMENTS. Seller has made available to Purchaser
the audited combined balance sheets as at December 31, 1997 and December 31,
1998 and the audited combined results of operations and cash flows of the AVEX
Group (excluding Kilbride Holdings) for each of the years in the three-year
period ended December 31, 1998, including the notes thereto, together with the
relevant auditors' report with respect thereto, prepared by KPMG. All of the
foregoing financial statements are hereinafter collectively referred to as the
"AVEX GROUP FINANCIAL STATEMENTS". In addition, attached hereto as Schedule
3.6(a) are the unaudited combined balance sheet of the AVEX Group as at May 31,
1999 and the unaudited combined results of operations of the AVEX Group
(excluding Kilbride Holdings) for the five months ended May 31, 1999
(collectively, the "INTERIM FINANCIAL SCHEDULES"). The AVEX Group Financial
Statements have been prepared from, and are in accordance with, the books and
records of the AVEX Group, are correct and complete in all material respects,
and fairly present the assets and liabilities of the AVEX Group and the combined
financial position and combined results of operations of the AVEX Group as of
the dates and for the periods indicated, in each case in accordance with GAAP.
Except as set forth on Schedule 3.6(b), the Interim Financial Schedules have
been prepared from, and are in accordance with, the books and records of the
AVEX Group, and are correct and complete in all material respects, and fairly
present the assets and liabilities of the AVEX Group and the combined financial
position and combined results of operations of the AVEX Group as of the dates
and for the periods indicated, in each case in accordance with GAAP.
Section 3.7 (a) ABSENCE OF CERTAIN DEVELOPMENTS. Except as set forth in
SCHEDULE 3.7(A), since December 31, 1998, there has not been any Material
Adverse Change.
(b) Except as set forth in SCHEDULE 3.7(B), since December 31, 1998, none
of the AVEX Group has: (i) borrowed or agreed to borrow any funds other than in
the ordinary and usual course of business through existing credit relationships;
(ii) made or committed to make any capital expenditures except for those not in
excess of $500,000 per capital project or $3,000,000 in the aggregate; or (iii)
waived or committed to waive any rights, the waiver of which had or would be
likely to have a Material Adverse Effect.
(c) Except has set forth in SCHEDULE 3.7(C), since December 31, 1998, none
of the AVEX Group has: (i) made or agreed to make any increase in the
compensation payable or to become payable to any employee, except for regularly
scheduled increases in compensation payable or increases in the ordinary and
usual course of business; (ii) made or agreed to make any increase in benefits
under any Employee Benefit Plan,
-16-
<PAGE>
except as may have been required by law, by the provisions of such plan or
otherwise in the ordinary and usual course of business; (iii) failed promptly to
pay and discharge current liabilities, except where disputed in good faith or
where such failure has not and will not have a Material Adverse Effect; or (iv)
mortgaged or pledged any of its properties or otherwise suffered to exist
thereon any Lien or Encumbrance except for Permitted Encumbrances.
Section 3.8 GOVERNMENTAL AUTHORIZATIONS; LICENSES; ETC. Except as set
forth in SCHEDULE 3.8.1, the business of each member of the AVEX Group has been
operated in compliance, in all material respects, with all applicable laws,
rules, regulations, codes, ordinances, orders, policies and guidelines of all
Governmental Authorities, except where the failure to comply would not have a
Material Adverse Effect. Except as set forth in SCHEDULE 3.8.2, each member of
the AVEX Group has, and after giving effect to the transactions contemplated by
this Agreement, will continue to have, all material permits, licenses,
approvals, certificates and other authorizations and has made all notifications,
registrations, certifications and filings with all Governmental Authorities,
necessary for the operation of its business as currently conducted. Except as
set forth in SCHEDULE 3.8.3 there is no action, case, investigation or
proceeding pending or, to the knowledge of Seller, threatened by any
Governmental Authority with respect to (i) any alleged violation by any of the
AVEX Group of any statute, law, rule, regulation, code, ordinance, order, policy
or guideline of any Governmental Authority, or (ii) any alleged failure by any
of the AVEX Group to have any permit, license, approval, certification or other
authorization required in connection with the operation of the business of each
of AVEX, Kilbride Holdings and their Subsidiaries (A) which, if determined
adversely to any of the AVEX Group, would reasonably be expected to result in a
Material Adverse Effect, or (B) seeking to enjoin the transactions contemplated
hereby.
Section 3.9 LITIGATION. Except as set forth in SCHEDULE 3.9, as of the
date hereof, there are no claims, actions, proceedings, or investigations
pending or, to the knowledge of Seller, threatened in writing against Seller or
any of the AVEX Group or any of their officers or directors (in their capacity
as such) before any court or Governmental Authority (i) which, if determined
adversely to Seller or any of the AVEX Group or any such officer or director, as
the case may be, would reasonably be expected to result in a Material Adverse
Effect, or (ii) seeking to enjoin the transactions contemplated hereby.
Section 3.10 TAXES AND TAX PAYMENTS. Except as set forth on
Schedule 3.10:
(a) Seller and each member of the AVEX Group (i) has filed (or there has
been filed on its behalf) all Income Tax Returns and other material Tax Returns
required to have been filed by each of them under applicable law, and all such
Income Tax Returns and other material Tax Returns were true, correct and
complete in all material respects and (ii) has paid all Income Taxes and other
material Taxes that are currently due and payable for all periods through and
including the Closing Date except for those contested in good faith or for which
adequate reserves have been established in accordance with GAAP. Seller has made
available to Purchaser accurate and complete copies of all Income Tax Returns
required to be filed by the AVEX Group (or filed on its behalf) since 1995.
-17-
<PAGE>
(b) Except for ongoing audits of Seller's consolidated Income Tax
Returns, there are no ongoing audits, examinations or other administrative or
court proceedings of any Income Tax Returns or other material Tax Returns of any
of the AVEX Group, and neither AVEX nor Kilbride Holdings nor any of their
Subsidiaries has been notified, formally or informally, by any taxing authority
that any such audit, examination or proceeding is contemplated or pending.
(c) None of Seller or any member of the AVEX Group has executed or filed
with the IRS or any other taxing authority any agreement or other document
extending, or having the effect of extending, or waiving the period of
assessment or collection of any material Taxes for which any member of the AVEX
Group could be liable.
(d) No member of the AVEX Group is a party to, is bound by, or has any
obligation under, any Tax Sharing Agreement.
(e) No member of the AVEX Group has made any payments, is obligated to
make any payments or is a party to any agreement that under certain
circumstances could obligate it to make any payments that will not be deductible
under Code Section 280G or under Code Section 162(m).
(f) With respect to any member of the AVEX Group, there are no pending
requests for rulings from any taxing authority with respect to any Taxes and
there are no powers of attorney granted that are currently in force with respect
to any matter related to Taxes that could affect any member of the AVEX Group.
(g) With respect to any member of the AVEX Group, to the knowledge of
Seller, there are no proposed reassessments by any taxing authority of any
property owned or leased.
(h) None of Seller, AVEX, nor their Subsidiaries has filed a consent
pursuant to the collapsible corporation provisions of Section 341(f) of the Code
(or any corresponding provisions of state or local income tax law) or agreed to
have Section 341(f)(2) of the Code (or any corresponding provision of state or
local income tax law) apply to any disposition of any assets owned by it.
(i) To Seller's knowledge, no claim has been made by any authority in a
jurisdiction where any member of the AVEX Group has not filed Tax returns that
they are subject to taxation by that jurisdiction.
Section 3.11 ENVIRONMENTAL MATTERS. Except as set forth on SCHEDULE 3.11
--------------------- -------------
hereto:
(a) Each member of the AVEX Group has been and is in compliance with all
applicable Environmental Laws, except for such noncompliance as would not
reasonably be expected to have a Material Adverse Effect.
-18-
<PAGE>
(b) None of AVEX, Kilbride Holdings nor any of their respective
Subsidiaries has received any written notice, report or other written
information from any Governmental Authority regarding any violation of
applicable Environmental Laws by, or any liabilities, including any
investigatory, remedial or corrective obligations on the part of, any of the
AVEX Group or their facilities arising under applicable Environmental Laws, the
subject of which would reasonably be expected to have a Material Adverse Effect.
(c) No Hazardous Discharges, conditions, or circumstances exist at any
Owned Real Property, at any Leased Real Property, or at any third-party property
at which any of the AVEX Group has disposed of, released, or caused to be
disposed of or released any Hazardous Materials, except as would not reasonably
be expected to have a Material Adverse Effect.
(d) This Section 3.11 contains the sole and exclusive representations
and warranties of Seller with respect to any environmental, health, or safety
matters, including any arising under any Environmental Laws.
Section 3.12 EMPLOYEE MATTERS. (a) SCHEDULE 3.12(A) contains a true and
complete list as of January 1, 1999 of all the officers and employees currently
employed by each member of the AVEX Group having an annual base salary in fiscal
year 1998 of $100,000 or more, indicating the title of and whether the employee
or officer is covered by an employment, consulting or severance agreement or
other similar types of arrangements, and all the directors of each member of the
AVEX Group.
(b) Except as set forth on SCHEDULE 3.12(B), neither Seller nor any of
the AVEX Group has entered into any collective bargaining agreements with
respect to the employees of each member of the AVEX Group ("AVEX EMPLOYEES"),
there is no labor strike, labor dispute, work slowdown or work stoppage or
lockout pending or, to the knowledge of Seller, threatened against or affecting
any of the AVEX Group, and, to the knowledge of Seller, no union organization
campaign is in progress with respect to any of the AVEX Employees, and no
material question concerning representation exists respecting such employees,
there is no unfair labor practice charge or complaint pending or, to the
knowledge of Seller, threatened against any of the AVEX Group, except for such
agreements, activities, charges or complaints which would not reasonably be
expected to have a Material Adverse Effect.
Section 3.13 EMPLOYEE BENEFIT PLANS.
(a) SCHEDULE 3.13(A) lists all material AVEX Benefit Plans. Seller has
made available to Purchaser complete and correct copies of (i) each AVEX Benefit
Plan (or, in the case of any unwritten Employee Benefit Plans, descriptions
hereof), (ii) the most recent annual report on Form 5500 filed with the Internal
Revenue Service with respect to each AVEX Benefit Plan (if any such report was
required), (iii) the most recent summary plan description for each AVEX Benefit
Plan for which a summary plan description is required and (iv) each trust
agreement relating to any AVEX Benefit Plan.
-19-
<PAGE>
(b) No AVEX Benefit Plan is a Multiemployer Plan and, except as set forth
on SCHEDULE 3.13(B), no AVEX Benefit Plan provides health or other welfare
benefits to Former Employees of the AVEX Group other than (i) as necessary to
comply with COBRA, or (ii) death benefits under an Employee Pension Benefit
Plan. To the extent that such AVEX Benefit Plan provides health or other welfare
benefits to Former Employees of the AVEX Group, such obligations are properly
accrued for under GAAP on an ongoing basis by members of the AVEX Group.
(c) Except as set forth on SCHEDULE 3.13(C), each AVEX Benefit Plan has
been and is maintained and administered in compliance in all material respects
with the applicable requirements of ERISA, the Code, any foreign laws and any
other applicable laws, including, but not limited to, requirements as to the
filing of all reports and the disclosures required to be filed with or furnished
to governmental agencies, participants or beneficiaries. Each AVEX Benefit Plan
which is intended to be qualified under Section 401(a) of the Code has been the
subject of a determination letter from the Internal Revenue Service to the
effect that such AVEX Benefit Plans are qualified and exempt from United States
Federal income taxes under Sections 401(a) and 501(a), respectively, of the
Code, and no such determination letter has been revoked nor, to the knowledge of
Seller, has revocation been threatened.
(d) Except as set forth on SCHEDULE 3.13(D), with respect to each AVEX
Benefit Plan which is an Employee Pension Benefit Plan (i) all required
contributions which are due for all periods ending prior to or as of the Closing
have been made, (ii) all such contributions which are not due as of the Closing
have been properly accrued to the extent required by GAAP, and (iii) none of
Seller nor any of the AVEX Group has incurred any accumulated funding deficiency
(as defined in Section 412 of the Code and Section 302 of ERISA). With respect
to any AVEX Benefit Plan subject to Title IV of ERISA, Seller and the AVEX Group
have not incurred any liability to such Employee Pension Plan or to the PBGC,
other than for payment of premiums, all of which have been paid when due, and
other than any liabilities that, individually or in the aggregate, would not
have a Material Adverse Effect. Except as set forth on SCHEDULE 3.13(D), no
termination or partial termination of any existing AVEX Benefit Plan has
occurred within the last three years, nor has a notice of intent to terminate
any existing AVEX Benefit Plan which is an Employee Pension Benefit Plan been
issued by a member of the AVEX Group. The PBGC has not instituted any
proceedings to terminate any AVEX Benefit Plan. SCHEDULE 3.13(D) sets forth the
unfunded accrued liabilities for each AVEX Benefit Plan that is a "defined
benefit plan," as defined in Section 3(35) of ERISA, which is contained in the
most recently issued valuation actuarial report for each such plan determined on
an ongoing basis and used in calculating the minimum funding requirements under
ERISA. There has been no "reportable event," as defined in Section 4043 of
ERISA, with respect to any AVEX Benefit Plan, for which notice has not been
waived.
(e) Except as set forth on SCHEDULE 3.13(E), no AVEX Benefit Plan is
funded by a trust described in Section 501(c)(9) of the Code.
-20-
<PAGE>
(f) To the extent that any of the foregoing representations in this
Section 3.13 relate to a AVEX Benefit Plan currently maintained or contributed
to for the benefit of AVEX Employees employed in foreign jurisdictions, such
representations are made to the knowledge of Seller.
(g) No member of the AVEX Group nor any other "disqualified person" or
"party in interest," as defined in Section 4975 of the Code and ERISA Section
3(14), respectively, has engaged in any "prohibited transaction," as defined in
Section 4975 of the Code or Section 406 of ERISA that is reasonably likely to
subject AVEX, or any disqualified person or party in interest to the tax or
penalty imposed by Section 4975 of the Code or sanction under Title I of ERISA.
Neither any member of the AVEX Group nor any party in interest or disqualified
person has taken or omitted any action with respect to the AVEX Benefit Plans
which could lead to the imposition of an excise tax under the Code or a penalty
under ERISA which could reasonably be expected to have a Material Adverse
Effect.
(h) Other than routine claims for benefits, there are no actions, audits,
investigations, suits, or claims pending, or to the knowledge of Seller,
threatened against any of the AVEX Benefit Plans or any fiduciary of any of the
AVEX Benefit Plans or against the assets of any of the AVEX Benefit Plans.
(i) Except as set forth on SCHEDULE 3.13(I) or as may be required by
applicable law, the consummation of the transactions contemplated hereby will
not accelerate or increase any liability under any AVEX Benefit Plan because of
an acceleration or increase of any of the rights or benefits to which employees
may be entitled thereunder.
(j) Each member of the AVEX Group has complied in all material respects
with the requirements of COBRA.
Section 3.14 PROPRIETARY RIGHTS. SCHEDULE 3.14.1 (i) identifies U.S.
patents related to the business of the AVEX group and which are owned by Seller
or any member of the AVEX Group, (ii) identifies registered trademarks related
to the business of the AVEX group and which are owned by Seller or any member of
the AVEX Group, (iii) identifies trademark applications related to the business
of AVEX and owned by AVEX, and (iv) identifies each license which any of the
AVEX Group has granted to any third party with respect to its Intellectual
Property. Except as set forth in the SCHEDULE 3.14.1 to the knowledge of Seller,
there is no pending or threatened against any of the AVEX Group any claim by any
third party contesting the validity, enforceability, use or ownership of any of
its Intellectual Property. Trademarks listed in SCHEDULE 3.14.1(II) will be
assigned by Seller to Purchaser using the form disclosed in SCHEDULE 3.14.2.
Patents listed under SCHEDULE 3.14.1(I) shall be assigned by Seller to Purchaser
using the form disclosed in SCHEDULE 3.14.3.
Section 3.15 CONTRACTS.
(a) SCHEDULE 3.15(A) lists all outstanding written contracts (except for
usual and ordinary purchase orders executed in the normal course of business and
except for
-21-
<PAGE>
insurance policies and contracts that will be terminated on the Closing),
agreements, leases, permits or licenses, to which, as of the date hereof, any of
the AVEX Group is a party or is otherwise bound, of the type described below
(the "CONTRACTS"):
(i) all agreements for the purchase by any of the AVEX Group of
machinery, equipment or other personal property other than those that are
for amounts not to exceed $500,000;
(ii)all capitalized leases, pledges, conditional sale or title
retention agreements involving the payment of more than $500,000;
(iii) all agreements between Seller or any of its Affiliates
and any of the AVEX Group;
(iv)all agreements relating to the consignment or lease of
personal property (whether any of the AVEX Group is lessee, sublessee,
lessor or sublessor), other than such agreements that provide for annual
payments of less than $500,000;
(v) all agreements containing commitments of suretyship, guarantee
or indemnification (except for guarantees, warranties and indemnities
provided by any of the AVEX Group in the ordinary course of business and
those having a contract value in the aggregate of $1,000,000 or less);
(vi)all mortgages, indentures, notes, bonds or loan agreements
relating to indebtedness incurred or provided by any of the AVEX Group; and
(vii)any agreement, other than those covered by clauses (i)
through (vi) above or those covered by Section 3.12, 3.16 or 3.17,
involving payment or receipt by any of the AVEX Group of more than
$1,000,000 in the aggregate in any calendar year.
(b) Except as set forth on SCHEDULE 3.15(B), and to the knowledge of
Seller, none of the other parties to any such Contracts is in material default
thereof, and none of such parties has given written notice to any of the AVEX
Group that it intends to terminate or materially alter the provisions of such
Contracts either as a result of transactions contemplated hereby or otherwise,
and none of the AVEX Group has given notice to any other party to any such
Contract that it intends to terminate or materially alter the provisions of any
such Contract.
(c) None of the AVEX Group is in material default, nor has any of the
AVEX Group been given notice of, any default or claimed, purported or alleged
default, under any of the Contracts.
(d) Except as summarized on SCHEDULE 3.15(D), there are no outstanding
written purchase orders or purchase commitments relating to goods or services to
be purchased by any of the AVEX Group within the ordinary and usual course of
business in excess of
-22-
<PAGE>
$1,000,000. To the knowledge of Seller, there are no outstanding purchase orders
or purchase commitments relating to any of the AVEX Group which are not in the
ordinary and usual course of business.
(e) Correct and complete copies of all Contracts, including any
amendments thereto, have been delivered or made available to Purchaser.
Section 3.16 GOVERNMENT COMMITMENTS. SCHEDULE 3.16 lists all Government
Commitments and identifies those Government Commitments which require consent
for assignment to Purchaser. All such consents have been applied for.
Section 3.17 REAL PROPERTY. (a) SCHEDULE 3.17(A) lists all real properties
owned by each member of the AVEX Group. Seller has made available to Purchaser
such information, in writing, concerning the real properties owned by any of the
AVEX Group as Purchaser has requested. Such information is true and complete in
all material respects. Each of the real properties listed on SCHEDULE 3.17(A) is
owned by the member of the AVEX Group listed thereon as the owner thereof (the
"OWNED REAL PROPERTY"), and each such member of the AVEX Group has good,
indefeasible and insurable title to all the Owned Real Property owned by it,
except as set forth on SCHEDULE 3.17(A). All of the Owned Real Property is owned
by each member of the AVEX Group free and clear of all Liens and Encumbrances,
except (i) Permitted Encumbrances, and (ii) such defects, irregularities,
encumbrances and other imperfections of title as normally exist with respect to
property similar in character and that do not and would not, individually or in
the aggregate have or result in a Material Adverse Effect, and (iii) as
disclosed in SCHEDULE 3.17(A).
(b) SCHEDULE 3.17(B) lists all leases of real property under which each
member of the AVEX Group is a tenant, with rental payments in excess of $500,000
per annum under the applicable lease (the "LEASED REAL PROPERTY"), setting forth
the address, landlord and tenant for each parcel of Leased Real Property. AVEX,
Kilbride Holdings or the relevant Subsidiary of either, as the case may be, is a
party to the Leased Real Property pursuant to valid and binding leases therefor
that are in full force and effect and enforceable by AVEX, Kilbride Holdings or
the relevant Subsidiary of either, as the case may be, in accordance with their
respective terms, except where any lack of enforceability, individually or in
the aggregate would not have or result in a Material Adverse Effect. Seller has
previously provided or made available to Purchaser complete and correct copies
of all written leases of Leased Real Property. Except as set forth in SCHEDULE
3.17(B), none of AVEX, Kilbride Holdings nor any of their respective
Subsidiaries has received any written notice of default or event of default
under any lease of Leased Real Property.
(c) The Owned Real Property and the Leased Real Property constitute all
of the real property owned, leased or otherwise utilized in connection with and
material to the business of each member of the AVEX Group.
Section 3.18 PERSONAL PROPERTY. Except as set forth in SCHEDULE 3.18, each
member of the AVEX Group owns or leases, and upon consummation of the
transactions
-23-
<PAGE>
contemplated by this Agreement, each member of the AVEX Group will own or lease,
all tangible personal property required to conduct its business, in all material
respects, in the ordinary and usual course of business and as conducted on the
Closing Date. The machinery and equipment material to the business or operations
of each member of the AVEX Group are in normal operating condition, ordinary
wear and tear and obsolescence excepted, free from any known defects except such
minor defects as do not substantially interfere with the continued use thereof
in the conduct of normal operations. Each member of the AVEX Group has good
title to all its owned tangible personal property, free and clear of all Liens
and Encumbrances, except Permitted Encumbrances, and such Liens, if any, in the
aggregate, do not materially interfere with the use of such property.
Section 3.19 TRANSACTIONS WITH AFFILIATES. Except as set forth on SCHEDULE
3.19, none of the Seller's shareholders, directors, officers or employees nor
any of their respective Affiliates is involved in any business arrangement or
relationship with any of the AVEX Group (whether written or oral), and none of
Seller's shareholders, directors, officers or employees nor any of their
respective Affiliates owns any property or right, tangible or intangible, which
is necessary to the business of any of the AVEX Group.
Section 3.20 INSURANCE. Except as set forth in SCHEDULE 3.20, all policies
of insurance covering the business, operations, or assets of any of the AVEX
Group, or providing for business interruption, personal or product liability
coverage with respect thereto, will be terminated effective as of the Closing
Date. Except as set forth in SCHEDULE 3.20, there are no material claims,
actions, suits or proceedings arising out of or based upon any of such policies
of insurance.
Section 3.21 BROKERS. BT Alex. Brown Incorporated is the Seller's and the
AVEX Group's financial advisor and investment banker in connection with the
transactions contemplated by this Agreement.
Section 3.22 ABSENCE OF CERTAIN COMMERCIAL PRACTICES. To the knowledge of
Seller, no member of the AVEX Group, or any of their respective directors or
officers, and none of the agents, affiliates, or employees, or other persons
acting on behalf of any member of the AVEX Group or any of their respective
directors, officers, agents, affiliates or employees, has (i) given, proposed to
give, or agreed to give any material gift or similar benefit to any governmental
employee or official for the purpose of directly or indirectly furthering the
business of any member of the AVEX Group, and which, if not continued in the
future, could reasonably be expected to have a Material Adverse Effect, or (ii)
used any Huber Group funds for contributions, payments, gifts to, or
entertainment of, government officials, or made any expenditures relating to
political activities in violation of any applicable laws, or established or
maintained any unlawful funds.
Section 3.23 YEAR 2000 MATTERS. The AVEX Group has (i) initiated a review
and assessment of all areas within its business and operations that could be
adversely affected by the "YEAR 2000 PROBLEM" (that is, the risk that computer
applications used by the AVEX Group may be unable to recognize and perform
properly date sensitive functions involving certain dates prior to and at any
date after December 31, 1999), (ii) developed a plan and timeline for addressing
the Year 2000 Problem on a timely basis, and (iii) to
-24-
<PAGE>
date, initiated implementation of that plan. Based on the foregoing, and
provided the plan and timeline for addressing the Year 2000 Problem continue to
be implemented and developed on a timely basis by Purchaser after the Closing,
Seller believes that all computer applications that are material to the AVEX
Group's business and operations are reasonably expected on a timely basis to be
able to perform properly date-sensitive functions for all dates before and after
January 1, 2000 (that is, be "Year 2000 Compliant"), except to the extent that a
failure to do so could not reasonably be expected to have a Material Adverse
Effect. The foregoing statements constitute a YEAR 2000 READINESS DISCLOSURE.
Section 3.24 INVENTORIES AND RECEIVABLES. The inventory of each member of
the AVEX Group as of December 31, 1998 and at May 31, 1999 is reflected in the
AVEX Financial Statements and the Interim Financial Schedules, respectively, as
of such date in accordance with GAAP (subject to the reserves provided for
therein). Except as disclosed in SCHEDULE 3.24 (i) since December 31, 1998, each
member of the AVEX Group has acquired and disposed of inventory only in the
ordinary course of business, (ii) to the knowledge of Seller and subject to the
reserves provided for therein, the booked inventory of the AVEX Group consists
in all material respects of items of a quality salable or usable in the ordinary
course of business (except to the extent returnable to the vendors thereof for
the full purchase price), (iii) no member of the AVEX Group is bound by any
inventory purchase commitment, whether oral or written, formal or informal, that
is not cancelable by such member without penalty on written notice of 60 days or
less, or which was not ordered in connection with a valid purchase order, letter
of intent, instruction, forecast or manufacturing agreement from a customer, and
(iv) subject to normal reserves in accordance with past practice not exceeding
the amounts of such reserves in the AVEX Financial Statements, the accounts
receivable of the AVEX Group are, and as of the Closing Time will be, valid and
are subject to no counterclaim, set-off or other deduction or notice of refusal
to pay (other than those arising from standard procedures and contractual
provisions relating to the retest, repair and replacement of customer returns).
Section 3.25 WARRANTY CLAIMS. Seller has made available to Purchaser
correct and complete copies of all product warranties issued or made by any
member of the AVEX Group in connection with the sale or lease of any product or
the rendition of any service. Seller has made available to Purchaser
descriptions of its standard procedures with regard to the retest, repair and
replacement of customer returns. All existing material warranty, product
liability and similar claims have been properly accrued for or reserved for in
accordance with GAAP in the AVEX Financial Statements and in the Interim
Financial Schedules.
Section 3.26 RELATIONS WITH CUSTOMERS AND SUPPLIERS. Except as disclosed
in SCHEDULE 3.26, to the knowledge of Seller (i) neither the public announcement
nor consummation of the transactions contemplated hereby will cause any customer
or supplier to terminate its business relationship with any member of the AVEX
Group, and (ii) since December 31, 1998, none of the AVEX Group has received
written notice from
-25-
<PAGE>
any of its top 15 customers of a demand for renegotiation of the margin or
mark-up or price redetermination of any material business transaction which has
not been resolved.
Section 3.27 BOOKS AND RECORDS.
(a) The minute books and stock ledgers of each member of the AVEX Group
that have been made available, or will be made available prior to Closing, to
Purchaser or its representatives constitute all of the minute books and stock
ledgers of the members of the AVEX Group.
(b) Each member of the AVEX Group makes and keeps financial books, records
and accounts which, in reasonable detail and in all material respects, are
complete and fairly reflect its transactions and dispositions of its assets and
securities and maintains a system of internal accounting controls sufficient to
provide assurances that (i) transactions involving any member of the AVEX Group
are executed in accordance with management's general or specific authorizations;
(ii) transactions are recorded as necessary (A) to permit the preparation of
financial statements for the AVEX Group in conformity with GAAP or any other
criteria applicable to such statements, and (B) to maintain accountability for
assets; (iii) access to the assets of the members of the AVEX Group is permitted
only in accordance with management's general or specific authorizations; and
(iv) the recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
Section 3.28 INVESTMENT INTENT. Seller is acquiring the Benchmark Stock
specified in Section 2.2(c) solely for investment for its own account and not
with a view to, or for resale in connection with, any distribution thereof
except as permitted by applicable law or pursuant to registration under
applicable securities laws. Purchaser understands that such Benchmark Stock has
not been registered under any federal or state securities or "blue-sky" laws, or
the securities laws of any other jurisdiction, by reason of specified exemptions
therefrom which depend upon, among other things, the bona fide nature of its
investment intent as expressed herein and as explicitly acknowledged hereby, and
that such laws and applicable regulations may prohibit resale or such Benchmark
Stock without registration under such laws unless an applicable examption from
registration is available.
Section 3.29 DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES. Except as
expressly set forth in this Article III, Seller makes no representation or
warranty, express or implied, at law or in equity, in respect of Seller, any of
the AVEX Group or any of their respective assets, liabilities or operations,
including, without limitation, with respect to merchantability or fitness for
any particular purpose, and any such other representations or warranties are
hereby expressly disclaimed. Without limiting the generality of the foregoing,
Seller and the AVEX Group make no representations or warranties with respect to
any projections, estimates or budgets delivered to or made available to
Purchaser of future revenues or results of operations or any component thereof,
future cash flow or future financial condition or with respect to any other
documents made available to Purchaser with respect to the AVEX Group.
-26-
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
Section 4.1 ORGANIZATION. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas and
has the corporate power and authority to own or lease its property and assets
and to carry on its business as presently conducted.
Section 4.2 AUTHORIZATION. Purchaser has the corporate power and authority
to execute and deliver this Agreement and each other agreement or instrument to
be executed in connection herewith and to perform its obligations hereunder and
thereunder. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by the Board of
Directors of Purchaser, and no other corporate proceedings on the part of
Purchaser are necessary to authorize this Agreement and the transactions
contemplated hereby. This Agreement and each other agreement or instrument to be
executed in connection herewith has been duly authorized, executed and delivered
by Purchaser and each agreement constitutes a valid and binding agreement of
Purchaser, enforceable against Purchaser in accordance with its terms, except as
such may be subject to or limited by bankruptcy, insolvency, reorganization or
other laws relating to or affecting creditors' rights generally and by general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
Section 4.3 NON-CONTRAVENTION. The execution, delivery and performance by
Purchaser of this Agreement and the consummation of the transactions
contemplated hereby will not (a) contravene any provision contained in the
articles of incorporation or by-laws of Purchaser, (b) conflict with, violate or
result in a material breach (with or without the lapse of time, the giving of
notice or both) of or constitute a material default (with or without the lapse
of time, the giving of notice or both) under (i) any contract, agreement,
commitment, indenture, mortgage, lease, pledge, note, bond, license, permit or
other instrument or obligation or (ii) any judgment, order, decree, statute,
law, rule or regulation or other restriction of any Governmental Authority, in
each case to which Purchaser is a party or by which it is bound or to which any
of its assets or properties are subject.
Section 4.4 NO CONSENTS. Except for (i) filings under the HSR Act and (ii)
filings and approvals set forth in SCHEDULE 4.4, no notice to, filing with, or
authorization, registration, consent or approval of any Governmental Authority
or other Entity is necessary for the execution, delivery or performance of this
Agreement or the consummation of the transactions contemplated hereby by
Purchaser.
-27-
<PAGE>
Section 4.5 LITIGATION. There are no actions, suits, proceedings, orders
or investigations pending or threatened against or affecting Purchaser at law or
in equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, which, if determined adversely to Purchaser, would reasonably be
expected to have a material adverse effect on Purchaser's performance under this
Agreement or the consummation of the transactions contemplated hereby.
Section 4.6 BROKERS. Except as set forth on SCHEDULE 4.6, no Entity is or
will be entitled to a broker's, finder's, investment banker's, financial
adviser's or similar fee from Purchaser in connection with this Agreement or any
of the transactions contemplated hereby.
Section 4.7 INVESTMENT INTENT. Purchaser is acquiring the AVEX Stock and
Kilbride Holdings Stock solely for investment for its own account and not with a
view to, or for resale in connection with, any distribution thereof. Purchaser
understands that the AVEX Stock and Kilbride Holdings Stock has not been
registered under any federal or state securities or "blue-sky" laws, or the
securities laws of any other jurisdiction, by reason of specified exemptions
therefrom which depend upon, among other things, the bona fide nature of its
investment intent as expressed herein and as explicitly acknowledged hereby, and
that such laws and applicable regulations may prohibit resale of such AVEX Stock
and Kilbride Holdings Stock without registration under such laws unless an
applicable exemption from registration is available.
Section 4.8 FUNDS. Purchaser will, on and after the Closing Date, have the
funds necessary to consummate the stock purchase hereunder and pay the Closing
Cash Consideration and the Purchase Price and the resources necessary to fulfill
its obligations under this Agreement.
ARTICLE V
CERTAIN COVENANTS AND AGREEMENTS
Section 5.1 ACCESS AND INFORMATION.
(a) (i) From and after the date hereof, Seller will, and Seller will
cause each member of the AVEX Group to, provide Purchaser and its agents and
representatives with reasonable access during normal business hours to such of
its premises, properties, contracts, commitments, books, records and other
information of Seller and each member of the AVEX Group, upon reasonable notice,
as Purchaser and its respective agents and representatives shall reasonably
request from time to time. Purchaser agrees to conduct and agrees to cause its
agents and representatives to conduct, any such inquiries with reasonable
discretion and sensitivity to Seller's relationships with its employees,
customers and suppliers. The parties shall cooperate in connection with the
formation of Kilbride Holdings and Seller shall allow Purchaser to review and
comment on all relevant formation documents prior to filing with the appropriate
governmental authorities. The
-28-
<PAGE>
foregoing notwithstanding, none of Purchaser or its representatives or agents
shall contact any employee, customer or supplier of Seller or any of the AVEX
Group regarding Seller or the AVEX Group without the prior written consent of
Seller.
(ii) Following the Closing, Purchaser shall, and shall cause the AVEX
Group and employees to, upon reasonable notice, fully cooperate with Seller and
afford to Seller and its respective counsel, accountants and other authorized
representatives reasonable access during normal business hours to all books,
records, data, facilities, properties and personnel (and permit Seller and its
counsel, accountants and other authorized representatives to make copies of such
books, records and other data), to the extent that such access may be reasonably
requested by Seller to facilitate (A) the preparation by Seller of such tax
returns as may be required to file with respect to the operations of the AVEX
Group or the ownership of and sale of an interest in the AVEX Group or in
connection with any audit, amended return, claim for refund or any proceeding
with respect thereto, (B) the investigation, litigation or final disposition of
any claim which may have been or may be made against Seller or any of its
Affiliates in connection with any of the AVEX Group, (C) the preparation by
Seller of materials necessary for any audit, examination or proceeding and (D)
for any other reasonable business purpose. Seller agrees that it will hold in
confidence all data and information obtained pursuant to this Section 5.1(a)
(other than data and information which is a matter of general or public
knowledge or in the public domain, or was filed as public data or information
with any governmental authority other than as a result of a breach of this
covenant, or is relevant to a judicial proceeding and is disclosed in connection
therewith) and will not disclose such data and information to others without the
prior written consent of Purchaser, except that Seller may provide such data and
information in response to legal process or applicable governmental regulations.
(b) All information disclosed to any other party to this Agreement (or
its representatives), whether before or after the date hereof, pursuant to this
Agreement or in connection with the transactions contemplated by, or the
discussions and negotiations preceding, this Agreement shall be kept
confidential by such other party and its representatives in accordance with the
confidentiality agreement dated May 13, 1999 by and between Seller and Purchaser
(the "CONFIDENTIALITY AGREEMENT") and shall not be used by any Entity, other
than in connection with the transactions contemplated by this Agreement. The
Confidentiality Agreement shall survive the Closing or termination of this
Agreement.
Section 5.2 CONDUCT OF BUSINESS BY SELLER. From the date hereof to the
Closing Date, except as otherwise contemplated or permitted by this Agreement,
Seller will and will cause each member of the AVEX Group to, except as otherwise
expressly provided herein, or consented to in writing by Purchaser (which
consent shall not be unreasonably withheld, delayed or conditioned):
(a) conduct its business only in the ordinary and regular course;
-29-
<PAGE>
(b) maintain its corporate existence and use commercially reasonable
efforts to keep in full force and effect all material rights, franchises and
goodwill relating or obtaining to its business;
(c) use commercially reasonable efforts to preserve its present
relationships with customers, suppliers, contractors and distributors;
(d) perform in all material respects all of its obligations under all
notes, bonds, mortgages, indentures, licenses, contracts, agreements or other
instruments or obligations to which each member of the AVEX Group is a party or
by which any of them or any of their respective properties or assets may be
bound and not enter into, assume or amend any of the foregoing other than in the
ordinary course of business;
(e) promptly inform Purchaser in writing of any material breach of or
change in the representations and warranties contained in Article III hereof;
(f) not pay or declare any dividend, redemption or other distribution
with respect to their respective capital stock, other than such distributions in
respect of any capital stock payable entirely to Seller or a wholly-owned
subsidiary of Seller;
(g) not amend its articles of incorporation or by-laws;
(h) not grant any right to severance or termination pay to, or enter
into any current employment or severance agreement with any employee of any of
the AVEX Group, except as required by applicable law;
(i) not extend any material amount of credit departing from its normal
and customary trade, discount and credit practices;
(j) not guarantee the obligation of any other Entity (other than any
Subsidiary of AVEX or Kilbride Holdings) except by the endorsement of negotiable
instruments for deposit or collection in the ordinary and usual course of
business;
(k) maintain adequate spares and inventory in the ordinary and usual
course of business and shall sell or dispose of inventory only in the ordinary
and usual course of business;
(l) not knowingly take or knowingly omit to be taken any action, which
would have a Material Adverse Effect.
Section 5.3 [Intentionally omitted]
Section 5.4 TAXES.
(A) SECTION 338(H)(10) ELECTION.
(i) Seller and Purchaser shall join in making a timely and effective
election with respect to AVEX, Kilbride Holdings and their Subsidiaries under
Sections
-30-
<PAGE>
338(g) and 338(h)(10) of the Code (the "ELECTION"). Seller and Purchaser shall
report, on their respective tax returns, in connection with the determination of
income, franchise or other taxes measured by net income, the transactions being
undertaken pursuant to this Agreement in a manner consistent with the Election
unless required to do otherwise pursuant to a determination (within the meaning
of Section 1313(a) of the Code). Notwithstanding anything in this Agreement to
the contrary, Seller shall pay any and all federal, state and local income and
franchise taxes, and be entitled to any tax benefits of any losses for federal,
state and local income and franchise tax purposes, for all taxable periods (or
portions thereof) ending on or before the Closing Date, resulting from the
Election.
(ii) Purchaser shall be responsible for the initial preparation of
all forms and documents required in connection with the Election, and Purchaser
and Seller shall timely file all forms required to be filed to make the
Election. Seller shall timely execute and deliver to Purchaser such documents or
forms as are required by any tax laws to complete the Election.
(iii) To the extent permitted by state and local laws, the
principles and procedures of this Section 5.4 shall also apply with respect to a
Section 338(h)(10) election or equivalent or comparable provision under state or
local law, including, without limitation, an election under Section 338(g) of
the Code or equivalent or comparable provision under state or local law. Seller
and Purchaser covenant and agree that to the extent that an election similar to
a Section 338(g) or 338(h)(10) election under the Code is optional under any
state or local law, they shall so elect so as to treat the transactions
contemplated herein as a sale of assets for state and local income and franchise
tax purposes.
(B) TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE. Purchaser shall
prepare or cause to be prepared and file or cause to be filed all Tax returns
for AVEX, Kilbride Holdings and their Subsidiaries for all periods ending on or
prior to the Closing Date which are filed after the Closing Date other than
income Tax returns with respect to periods for which a consolidated, unitary or
combined income Tax return of Seller will include the operations of AVEX,
Kilbride Holdings and their Subsidiaries. Such Tax returns shall be prepared by
Purchaser in a manner consistent with practices followed in prior years with
respect to similar Tax returns except for changes required by changes in law or
fact. Purchaser shall provide draft copies to Seller at least 30 days prior to
the due date (as extended) for such returns and shall permit Seller to review
and comment on each such Tax return described in the preceding sentence prior to
filing and shall make such revisions to such returns as are reasonably requested
by Seller. Seller shall reimburse Purchaser for Taxes of AVEX, Kilbride Holdings
and their Subsidiaries with respect to such periods within fifteen (15) days
after payment by Purchaser or AVEX, Kilbride Holdings and their Subsidiaries of
such Taxes to the extent such Taxes are not reflected in the Closing Working
Capital.
(C) TAX PERIODS BEGINNING BEFORE AND ENDING AFTER THE CLOSING DATE.
Purchaser shall prepare or cause to be prepared and file or cause to be filed
any Tax returns of AVEX, Kilbride Holdings and their Subsidiaries for Tax
periods which begin
-31-
<PAGE>
before the Closing Date and end after the Closing Date. Such Tax returns shall
be prepared by Purchaser in a manner consistent with practices followed in prior
years with respect to similar Tax returns except for changes required by changes
in law or fact. Purchaser shall provide draft copies to Seller at least 30 days
prior to the due date (as extended) for such returns and permit Seller to review
and comment on each such Tax return described in the preceding sentence prior to
filing and shall make such revisions to such returns as are reasonably requested
by Seller. Seller shall pay to Purchaser within fifteen (15) days after the date
on which approved Taxes are paid with respect to such periods an amount equal to
the portion of such Taxes which relates to the portion of such taxable period
ending on the Closing Date to the extent such Taxes are not reflected in the
Closing Working Capital.
For purposes of this Section 5.4, in the case of any Taxes that are
imposed on a periodic basis and are payable for a taxable period that includes
(but does not end on) the Closing Date, the portion of such Tax which relates to
the portion of such taxable period ending on the Closing Date shall (x) in the
case of any Taxes other than Taxes based upon or related to income or receipts
(including value-added taxes and similar taxes such as the Goods and Services
Tax imposed by Singapore) be deemed to be the amount of such Tax for the entire
taxable period multiplied by a fraction the numerator of which is the number of
days in the taxable period ending on the Closing Date and the denominator of
which is the number of days in the entire taxable period, and (y) in the case of
any Tax based upon or related to income or receipts (including value-added taxes
and similar taxes such as the Goods and Services Tax imposed by Singapore) be
deemed equal to the amount which would be payable if the relevant taxable period
ended on the Closing Date. Any credits relating to a taxable period that begins
before and ends after the Closing Date shall be taken into account as though the
relevant taxable period ended on the Closing Date. All determinations necessary
to give effect to the foregoing allocations shall be made in a manner consistent
with prior practice of AVEX, Kilbride Holdings and their Subsidiaries.
(d) REFUNDS AND TAX BENEFITS. Any Tax refunds that are received by
Purchaser or AVEX, Kilbride Holdings and their Subsidiaries and any amounts
credited against Tax to which Purchaser or AVEX, Kilbride Holdings and their
Subsidiaries become entitled, that relate to Tax periods or portions thereof
ending on or before the Closing Date shall be for the account of Seller, and
Purchaser shall pay over to Seller any such refund or the amount of any such
credit within fifteen (15) days after receipt or entitlement thereto. In
addition, to the extent that a claim for refund or a proceeding results in a
payment or credit against Tax by a taxing authority to the Purchaser or AVEX,
Kilbride Holdings and their Subsidiaries, of any amount reflected in the Closing
Working Capital, the Purchaser shall pay such amount to Seller within fifteen
(15) days after receipt or entitlement thereto.
(e) ALLOCATION OF PURCHASE PRICE. (i) Seller and Purchaser agree (x) in
all circumstances to allocate, within three months following the Closing Date,
the portion of the Purchase Price attributable to the sale of the AVEX Stock
hereunder for U.S. federal income tax purposes pursuant to Treas. Reg. Sec.
1.338(h)(10)-l(f), which agreement as to allocation shall be in writing, and (y)
to follow said Purchase Price allocation for
-32-
<PAGE>
purposes of all U.S. federal and, where applicable, state and local income and
franchise tax returns, to the extent said values are relevant for such purposes.
For purposes of this Section 5.4(e), the value of the Benchmark Stock delivered
to Seller pursuant to Section 2.2(c) shall be calculated based upon the average
closing sale price thereof on the Closing Date, or, if the Closing Date is not a
Business Day, on the trading day immediately preceding the Closing Date. In the
event that the parties cannot agree on the proper allocation within the
three-month period described above, the parties will follow the dispute
resolution procedure established in Section 2.2(d) for working capital items by
selecting the Selected Accounting Firm, which will establish the allocation
within one month of the end of the three-month period.
(ii) Unless they are required to be changed by the final and
non-appealable determination of a taxing authority, the agreements in this
Section 5.4 shall remain in effect for a period of one year past the statute of
limitations governing the duration of either party's rights or liabilities in
any particular instance.
Section 5.5 COMMERCIAL EFFORTS; FURTHER ASSURANCES. (a) Subject to the
terms and conditions herein provided, each of the parties hereto shall use its
commercially reasonable efforts to take, or cause to be taken, all action, and
to do, or cause to be done, all things reasonably necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement. Seller and Purchaser will use their
commercially reasonable efforts to obtain consents of all Governmental
Authorities and third parties necessary to the consummation of the transactions
contemplated by this Agreement.
(b) In the event any claim, action, suit, investigation or other
proceeding by any Governmental Authority or other Entity is commenced which
questions the validity or legality of the transactions contemplated hereby or
seeks damages in connection therewith, the parties agree to cooperate and use
commercially reasonable efforts to defend against such claim, action, suit,
investigation or other proceeding and, if an injunction or other order is issued
in any such action, suit or other proceeding, to use commercially reasonable
efforts to have such injunction or other order lifted, and to cooperate
reasonably regarding any other impediment to the consummation of the
transactions contemplated hereby.
(c) Both before and after the Closing, Seller and Purchaser shall
cooperate to assist each member of the AVEX Group in obtaining any
authorizations, consents and acknowledgments that are required under any
Government Commitment to enable each member of the AVEX Group, to be entitled to
continue to receive all payments to come due after the Closing under such
Government Commitment.
Section 5.6 AMENDMENTS TO SCHEDULES; NOTICE OF NONCOMPLIANCE. (i) Each of
Seller and Purchaser agrees that it shall, as soon as reasonably practicable
after it learns of the existence of any facts or circumstances causing any of
the representations and warranties herein made or other information contained
herein, respectively, by Seller or Purchaser (including those representations
and warranties contained in Article III or Article IV), to have been incorrect
when made or to have thereafter become incorrect
-33-
<PAGE>
(whether through its discovery of an inadvertent, good faith error at the time
this Agreement was signed or the happening thereafter of any event or occurrence
or otherwise), deliver to the other one or more amended Schedules to this
Agreement for the purpose of correcting or updating such representations and
warranties or information; and (ii) each party shall give prompt written notice
to the other of any failure of Seller or Purchaser, as the case may be, to
comply with or satisfy any material covenant, condition or agreement to be
complied with or satisfied by it under this Agreement, PROVIDED, that Seller or
Purchaser, as the case may be, shall have 30 days following the giving of a
notice pursuant to this clause (ii) in which to cure or remedy any such failure
to comply with or satisfy any such covenant, condition or agreement, except for
Purchaser's obligation to pay the Purchase Price as specified herein on the
Closing Date.
Section 5.7 PUBLIC ANNOUNCEMENTS. The timing and content of all
announcements regarding any aspect of this Agreement to the financial community,
any Governmental Authority, employees or the general public shall be mutually
agreed upon in advance by Seller and Purchaser; PROVIDED, that each party hereto
may make any such announcement which it in good faith believes, based on advice
of counsel, is necessary or advisable in connection with any requirement of law
or regulation, it being understood and agreed that each party shall promptly
provide the other parties hereto with copies of any such announcement prior
thereto, provided that no such announcement or disclosure will provide financial
information with respect to Seller.
Section 5.8 HART-SCOTT-RODINO ACT; OTHER APPROVALS. (a) Each of Seller and
Purchaser will use its respective commercially reasonable efforts to file with
the Antitrust Division of the Department of Justice (the "ANTITRUST Division")
and the Federal Trade Commission (the "FTC") promptly, and in any event within
10 days following the date hereof the notification and report form (the
"REPORT") required under the HSR Act, with respect to the transactions
contemplated hereby. Each of Seller and Purchaser shall cooperate with each
other to the extent necessary to assist each other in the preparation of its
Report, shall request early termination of the waiting period required by the
HSR Act and, if requested, will promptly amend or furnish additional information
thereunder requested by the Antitrust Division and/or the FTC.
(b) Each of Seller and Purchaser will use its respective commercially
reasonable efforts to obtain the approvals described in SCHEDULE 3.16.
Section 5.9 EMPLOYEE BENEFITS AND RELATED MATTERS.
(a) EMPLOYMENT. Purchaser shall honor any commitment of Seller, the AVEX
Group or, following the Closing, Purchaser, to reemploy any employee of the AVEX
Group who is not actively at work on the Closing due to leave of absence,
disability leave, military leave or layoff with recall rights (collectively,
"INACTIVE EMPLOYEES"). For purposes hereof, Active Employees who immediately
following the Closing continue their employment with the AVEX Group and Inactive
Employees, whether or not they become reemployed by the AVEX Group, shall be
referred to herein collectively as "CONTINUED EMPLOYEES." Subject to any
contractual or legal requirements, Purchaser or any member of the AVEX Group
shall have the right to dismiss or terminate any
-34-
<PAGE>
Continued Employee at any time after Closing, with or without cause, and to
change the terms of employment of any Continued Employee. For purposes hereof,
an employee of the AVEX Group whose employment with the AVEX Group has
terminated for any reason (including retirement) prior to the Closing and who,
as of the Closing, is not employed by the AVEX Group shall be referred to herein
as a "FORMER EMPLOYEE."
(b) SEVERANCE OBLIGATIONS. Seller and Purchaser agree that the
transactions contemplated hereby shall not constitute a severance of employment
of any Continued Employee prior to the consummation of the transactions
contemplated hereby. Pursuant to Section 6.2, Purchaser shall indemnify Seller
from any and all claims made by a Continued Employee or Former Employee for
severance or other separation benefits and from any and all claims based on the
following occurring on or after the Closing: (i) breach of contract; (ii) the
employment or the failure to offer employment to, or the termination of, the
employment of any Continued Employee or Former Employee; or (iii) the
transactions contemplated by this Agreement.
(c) WARN ACT. Purchaser agrees to provide any required notice under the
WARN Act, and any similar statute, and otherwise to comply with any such statute
with respect to any "plant closing" or "mass layoff" (as defined in the WARN
Act) or similar event affecting Continued Employees or Former Employees and
occurring on or after the Closing.
(d) AVEX BENEFIT PLANS. Effective as of the Closing, Purchaser shall
assume, or shall cause the AVEX Group to, assume or retain and be responsible
for any and all liabilities and obligations under all AVEX Benefit Plans.
(e) FOREIGN EMPLOYMENT MATTERS. Effective as of the Closing, Purchaser
shall, or shall cause the AVEX Group to, assume or retain and be responsible for
the employment (including any employment contracts) of the Continued Employees
who are employed outside the United States ("FOREIGN CONTINUING EMPLOYEES").
Purchaser shall assume or retain all obligations and liabilities relating to the
Foreign Continuing Employees' employment (including, but not limited to, any
employment contracts) under local laws and practices without Seller having any
liability to any such employees for severance, redundancy, termination, payment
in lieu of notice, indemnity or other payments to any of such employees.
Section 5.10 BOOKS AND RECORDS; RESIGNATIONS. At the Closing, Seller shall
cause to be delivered to Purchaser (i) all the organizational documents, minute
books, stock ledgers and related items of each member of the AVEX Group,
including, without limitation, all personnel records of the employees who are
going to continue to be employed by the AVEX Group following the Closing; and
(ii) the resignations of all of the directors and officers of each member of the
AVEX Group.
Section 5.11 POWERS OF ATTORNEY; BANK ACCOUNTS. (a) SCHEDULE 5.11 sets
forth a true, complete and correct list of the names and addresses of all
Entities holding a power-of-attorney or signatory authority on behalf of each
member of the AVEX Group with respect to bank accounts and all bank deposits and
accounts, including investment
-35-
<PAGE>
accounts, operating accounts, lockboxes and safe-deposit boxes maintained by
each member of the AVEX Group, the account or box numbers thereof, the names and
addresses of all banks or other financial institutions in which each member of
the AVEX Group has any such account or lockbox or safe-deposit box, with the
names of all Entities authorized to draw on such accounts or deposits or to have
access to such boxes.
(b) On or prior to the Closing Date, Seller and Purchaser shall
cooperate to develop procedures to ensure that all arrangements pursuant to
which funds or receipts of any of the AVEX Group are swept into or otherwise
transferred into any bank or other deposit account maintained by or under the
control of Seller are converted to bank or other deposit accounts maintained by
or under the control of Purchaser. If after Closing the funds held in any
accounts of the AVEX Group are swept into accounts under the control of Seller,
Seller agrees to hold any such funds in trust for the AVEX Group and promptly to
return such funds to the AVEX Group, with interest thereon at the prime rate.
Section 5.12 NONCOMPETITION AND NONSOLICITATION.
(a) In order to induce Purchaser to enter into and consummate the
transactions contemplated by this Agreement, Seller agrees that it will not, and
it will not permit its Subsidiaries and Affiliates to:
(i) for a period of three years from and after the Closing Date, engage in
the business of contract electronics manufacturing (the "BUSINESS"), nor to own
any interest in any enterprise engaged in the Business, within any geographic
area of the world in which, immediately after the Closing Date, Purchaser or the
AVEX Group are engaged in the Business, PROVIDED, HOWEVER, (x) that Seller and
its Subsidiaries shall be permitted to own not more than 10 percent of the
outstanding capital or other equity interests in any such enterprise but only to
the extent that such stock or other equity interests are acquired and held as
investments in the ordinary course of such holder's business or activities and
such holders do not exercise control or participate in the management of any
such enterprise; and (y) Huber and its Subsidiaries shall be permitted to own
any or all of the outstanding capital stock or other equity interests of any
such enterprise if the Business activities are not the primary activities of any
such enterprise and such enterprise disposes of its Business activities within
12 months after Huber's purchase of the outstanding capital stock or other
equity interest of such enterprise; or
(ii) for a period of three years from and after the Closing Date, directly
or through an intermediary, solicit any individual who is an employee of
Purchaser or any member of the AVEX Group to terminate his or her relationship
with Purchaser or such member of the AVEX Group.
(b) Seller agrees and acknowledges that (i) the provisions of Section
5.12(a) are reasonable and necessary for the protection of the Business from and
after the Closing Date, (ii) the breach of Section 5.12(a) by Seller or any of
its Subsidiaries or Affiliates will result in irreparable harm to Purchaser,
(iii) no adequate remedy at law is available to Purchaser for the breach by
Seller or any of its Subsidiaries or Affiliates of Section
-36-
<PAGE>
5.12(a) hereof, and (iv) Purchaser shall be entitled to specific enforcement of
Section 5.12(a), without the necessity of proving actual monetary loss.
Section 5.13 NONSOLICITATION OF OFFERS. Without the prior written
consent of Purchaser, from the date of this Agreement to the earlier of the
Closing Date or the termination of this Agreement, the Seller shall not, and
shall not authorize or permit any of its representatives to, directly or
indirectly (i) solicit, initiate or take any action to facilitate the submission
of inquiries, proposals or offers from any Entity (other than the Purchaser)
relating to any acquisition or purchase of all or part of the shares of capital
stock of any member of the AVEX Group, whether by stock purchase, merger,
consolidation or otherwise, or (ii) enter into or participate in any discussion
or negotiations regarding any of the foregoing, or furnish to any Entity (other
than Purchaser) any information with respect to the AVEX Group or its business,
or otherwise cooperate in any way with, or assist or participate in, facilitate
or encourage, any effort or attempt by any such other Entity to do or seek any
of the foregoing.
Section 5.14 RELEASE. Immediately following the Closing, Purchaser
shall, and shall cause each member of the AVEX Group to, release each of the
persons listed on Schedule 3.12 elected or appointed as director or officer of
each member of the AVEX Group at any time prior to the Closing Date (in his or
her capacity as a director, former director, officer or former officer), such
release to be of all liability such persons in such capacities may have to any
of the AVEX Group or their shareholders.
ARTICLE VI
INDEMNIFICATION
Section 6.1 INDEMNIFICATION BY SELLER.
(a) BREACHES BY SELLER. From and after the Closing, Seller shall
indemnify and hold harmless Purchaser and its Affiliates, any member of the AVEX
Group and each of their directors, officers, employees and agents, from and
against any and all Damages arising out of or based upon or with respect to (i)
any breach of any representation or warranty made by Seller in Article III of
this Agreement, subject, however, to Section 5.6; (ii) any Excluded Asset or
Liability other than deferred taxes; (iii) any Environmental Claims; and (iv)
any failure to perform duly and punctually any covenant, agreement or
undertaking on the part of Seller contained in this Agreement, including any
covenant or agreement concerning employee benefit matters.
(b) LIMITATION. Purchaser shall not be entitled to indemnification under
Section 6.1(a)(i), (iii) and (iv) hereof (i) in respect of any individual claim
for Damages in an amount less than $5,000, (ii) by reason of any breach of any
representation, warranty or covenant made by Seller with respect to any
individual claim for Damages in an amount greater than $5,000 unless and until
the aggregate amount of all such individual claims for Damages in an amount
greater than $5,000 sustained by reason of any breach of any such
representation, warranty or covenant shall exceed an amount
-37-
<PAGE>
equal to one and one half million dollars ($1,500,000) in the aggregate, and
then only in respect of the amount by which Damages exceed one million dollars
($1,000,000). Purchaser's right to indemnification under Section 6.1(a)(ii)
shall not be subject to the limitations contained in the preceding sentence.
(c) TAX INDEMNIFICATION.
(i) Purchaser's sole and exclusive remedies for Damages from and
after the Closing for or in respect of Taxes shall be under this Section 6.1(c).
Seller will be responsible for, will pay or cause to be paid, and will,
indemnify and hold harmless Purchaser and its Affiliates, from and against any
and all Damages for or in respect of each of the following:
(A) any and all Taxes of AVEX or Kilbride Holdings with respect
to any taxable period of AVEX or Kilbride Holdings ending on or before
the Closing Date; and
(B) any and all Taxes allocated to Seller hereunder and not
previously paid.
(ii) With respect to Section 338(h)(10) Election contemplated by
Section 5.4(a) of this Agreement, Seller shall be solely responsible for and
shall have sole control for the conduct of all claims asserted by any Tax
authority for any Tax described in Section 5.4(b) for which Seller has the
responsibility for preparing and filing tax returns in any audit, administrative
and judicial proceeding in any jurisdiction that recognizes the principles and
procedures of Section 338(h)(10) of the Code or equivalent or comparable
provision. Purchaser shall promptly give notice to Seller in the event any such
claim is addressed to Purchaser. If any preceding claim or proceeding is
reasonably expected to have a Material Adverse Effect on any Tax, accounting or
filing position for a Tax period in which Purchaser, AVEX, or the AVEX Group
could be liable for Tax, the parties shall jointly control, participate in and
resolve such claim or proceeding.
(iii) With regard to claims for any Tax described in Section 5.4(b)
that are not covered by Section 6.1(c)(ii) and any Tax described in Section
5.4(c), which are asserted by any jurisdiction that does not recognize the
principles and procedures of Section 338(h) (10) of the Code or equivalent or
comparable provision, Purchaser and Seller shall cooperate and consult with each
other in the conduct of such claims in any audit or proceeding. Purchaser shall
promptly give notice to Seller of any such claim, and provide Seller on a
regular basis with timely reports as to the progress of the audit or proceeding
and any issues arising with respect thereto. Purchaser shall be responsible for
the conduct of any such audit or proceeding. Seller shall have the right at any
time to elect to participate actively in the conduct of any such audit or
proceeding. Purchaser shall not settle or compromise any issue that would give
rise to an indemnity under Section 5.4(b) and (c) without the prior written
consent of Seller which shall not be unreasonably withheld or delayed.
-38-
<PAGE>
(iv) Any liability arising under any Tax sharing, Tax indemnity, Tax
allocation or similar contract to which any of the AVEX Group is a party or is
obligated thereunder, in each case on or prior to the Closing Date, shall be
considered Damages and Seller shall be responsible for, shall pay or cause to be
paid, and shall indemnify and hold harmless Purchaser, as an adjustment to the
Purchase Price, from and against any such Damages.
(v) Any claim for indemnity hereunder may be made at any time prior
to 90 days after the expiration of the applicable Tax statute of limitations
with respect to the relevant taxable period (including all periods of extension,
whether automatic or permissive).
(d) Notwithstanding any other provision of this Agreement, Seller's
maximum liability to Purchaser for Damages pursuant to Section 6.1(a)(i),
6.1(a)(iii) and 6.1(a)(iv) shall be an amount equal to $28,931,000 in the
aggregate; and the indemnification specified in this Section 6.1 shall be
Purchaser's sole and exclusive remedy for the Damages specified in this Section
6.1.
Section 6.2 INDEMNIFICATION BY PURCHASER.
(a) BREACHES BY PURCHASER. Purchaser shall, from and after the Closing,
indemnify and hold harmless Seller and its Affiliates, and each of their
directors, officers, employees and agents, from and against any and all Damages
arising out of or based upon or with respect to (i) any breach of any
representation or warranty made by Purchaser in Article IV of this Agreement,
subject, however, to Section 5.6; (ii) any failure to perform duly and
punctually any covenant, agreement or undertaking on the part of Purchaser
contained in this Agreement; (iii) any material noncompliance with any
Environmental Law by any of the AVEX Group or their successors, transferees or
assigns after the Closing; (iv) any liability under the WARN Act or similar
statute arising from the actions of Purchaser on or after the Closing; (v) any
liabilities arising under the Guarantees referred to in Section 2.3(c); (vi) any
action or inaction by any of the AVEX Group following the Closing (including the
conduct and operation of business after Closing); (vii) any Damage incurred as a
result of any environmental audits conducted by Purchaser prior to the Closing;
and (viii) any claims referred to in Section 5.9(b).
(b) LIMITATION. Seller shall not be entitled to indemnification under
Section 6.2(a) (other than Section 6(a)(v) and (viii))hereof (i) in respect of
any individual claim for Damages in an amount less than $5,000, and (ii) by
reason of any breach of any representation, warranty or covenant made by
Purchaser with respect to any individual claim for Damages in an amount greater
than $5,000 unless and until the aggregate amount of all such individual claims
for Damages in an amount greater than $5,000 sustained by reason of any breach
of any such representation, warranty or covenant shall exceed an amount equal to
one and one half million dollars ($1,500,000) in the aggregate, and then only in
respect of the amount by which Damages exceed one million dollars ($1,000,000).
-39-
<PAGE>
Section 6.3 PROCEDURE. In the event that any third party claim or demand
shall be asserted against any indemnified party under Section 6.1 or 6.2 in
respect of any Damages, the indemnified party shall promptly, and in any event
within 30 days after the receipt of notice of such claim or demand which may
give rise to a claim under this Article VI, if a claim in respect thereof is to
be made against the indemnifying party hereunder, cause written notice thereof
to be given to the indemnifying party; PROVIDED, HOWEVER, that failure to so
notify the indemnifying party shall not relieve the indemnifying party from any
obligations it may have to the indemnified party hereunder, except to the extent
that it is prejudiced by such failure. In the event any claim or demand for
indemnification is made under this Article VI, the indemnifying party shall be
entitled to meaningfully participate therein and, upon delivery by the
indemnifying party to the indemnified party of written notice, the indemnifying
party may assume and control the defense thereof with counsel of its choice, and
thereafter the indemnifying party shall not be liable to such indemnified party
hereunder for any fees of other counsel subsequently accrued by the indemnified
party in connection with the defense thereof. In the event that any claim or
demand is made under this Article VI, the indemnifying party and the indemnified
party shall cooperate fully with each other in connection with the defense,
negotiation or settlement of any such claim or demand. If the indemnifying party
assumes the defense of an action, (a) the indemnified party shall be entitled to
participate therein at its sole cost and expense and (b) no settlement or
compromise thereof may be effected by the indemnified party without the consent
of the indemnifying party. If the indemnifying party does not assume the defense
of an action, no compromise or settlement thereof may be effected at the expense
of the indemnifying party without the consent of the indemnifying party, which
consent shall not be unreasonably withheld or delayed.
Section 6.4 SURVIVAL. Except as otherwise expressly provided in this
Article, the representations and warranties contained in Article III and Article
IV of this Agreement shall survive the Closing hereunder until the expiration of
12 months following the Closing Date, and neither party to this Agreement shall
have any right to indemnification with respect to a breach of a representation
or warranty unless a claim with respect thereto is asserted in writing against
the indemnitor prior to the expiration of 12 months from the Closing Date, but
any claim asserted prior to that time shall survive until finally resolved.
Purchaser's right of indemnification against Excluded Assets and Liabilities
pursuant to Section 6.1(a)(ii) shall survive without regard to time, and
Purchaser's right of indemnification for Taxes pursuant to Section 6.1(c) shall
survive as provided in Section 6.1(c).
Section 6.5 TREATMENT OF INDEMNIFICATION PAYMENTS. Seller and Purchaser
agree to report on their Income Tax Returns any indemnity payment made under
this Agreement as an adjustment to the Purchase Price unless a change in law or
a final determination after the date of execution of this Agreement requires
otherwise.
-40-
<PAGE>
ARTICLE VII
CLOSING; CONDITIONS TO CLOSING.
Section 7.1 CONDITIONS TO THE OBLIGATIONS OF ALL PARTIES. The respective
obligations of each party to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment at or prior to the Closing Date of
each of the following conditions:
(a) CHANGE IN LAW. No statute, rule or regulation shall have been
enacted or issued by any Governmental Authority that makes the consummation of
the transactions contemplated by this Agreement illegal.
(b) INJUNCTION. At the Closing there shall be no effective injunction,
writ or preliminary restraining order or any order of any nature issued and
outstanding by a court or Governmental Authority of competent jurisdiction to
the effect that the transactions contemplated by this Agreement may not be
consummated as herein provided, and no proceeding or lawsuit shall have been
threatened or commenced by any Governmental Authority for the purpose of
obtaining any such injunction, writ or preliminary restraining order.
(c) FILINGS AND CONSENTS. All material consents, authorizations, orders
or approvals of, expirations of waiting periods, and filings or registrations
with any Governmental Authority which are required in connection with the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby shall have been obtained or made and shall be
in full force and effect.
Section 7.2 CONDITIONS TO THE OBLIGATIONS OF PURCHASER. The obligations of
Purchaser to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment prior to or at the Closing Date of each of the
following conditions, any and all of which may be waived, in whole or in part,
by Purchaser to the extent permitted by applicable law:
(a) REPRESENTATIONS AND WARRANTIES. All representations and warranties
made by Seller in this Agreement and the Schedules (as may be amended pursuant
to Section 5.6) hereto shall be true, correct and complete as of the Closing
Date as though such representations and warranties were made as of the Closing
Date (or on the date when made in the case of any representation or warranty
which specifically relates to an earlier date), except for the representations
contained in Sections 3.7(a), 3.15(b) (except for the last clause thereof),
3.15(c) (except for the first clause thereof) and 3.26, which shall be true and
correct as of August 6, 1999 and except, in any such case, for such changes that
have occurred as contemplated by the transactions provided for herein; and
Purchaser shall have received a certificate of a responsible officer of Seller
to such effect; and Seller shall have duly performed or complied with, in all
material respects, all of the covenants, obligations and conditions to be
performed or complied with by it under the terms of this Agreement on or prior
to or at the Closing Date, and Purchaser shall have received a certificate of a
responsible officer of Seller to such effect. No representation shall be
-41-
<PAGE>
deemed to be untrue, incorrect or incomplete in any material respect if the
incorrectness or incompleteness is fully remedied by an adjustment to the
Purchase Price as provided for herein, and no event shall be deemed to be
material to the financial condition of the AVEX Group if the effect of such
event is fully compensated for by such an adjustment.
(b) NO MATERIAL ADVERSE EFFECT. There shall have occurred no event which
has had a Material Adverse Effect during the period January 1, 1999 through
12:01 a.m. on August 7, 1999.
(c) STOCK TRANSFER. The stock of AVEX shall have been transferred to
Purchaser (or a Subsidiary of Purchaser designated in writing to Seller at least
three (3) Business Days prior to the Closing) and the stock of Kilbride Holdings
(which shall hold the stock of the JMH Vision Subsidiaries) shall have been
transferred to Benchmark Holdings.
(d) OPINION OF COUNSEL. Purchaser shall have received an opinion from
counsel to Seller, dated the date of the Closing, in substantially the form of
Exhibit B-1, B-2, and B-3.
(e) TRANSFERS OF EXCLUDED ASSETS AND LIABILITIES. All of the Excluded
Assets and Liabilities shall have been sold, assigned, assumed or otherwise
transferred by the AVEX Group as contemplated by Section 2.4 hereof.
(f) SUN MICROSYSTEMS WAIVER. Sun Microsystems, Inc. ("Sun") shall not,
on or prior to August 6, 1999, have exercised its contractual option to
terminate the Turnkey Purchase Agreement between Sun and AVEX described in
SCHEDULE 3.3.
Section 7.3 CONDITIONS TO THE OBLIGATIONS OF SELLER. The obligations of
Seller to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing Date of each of the
following conditions, any and all of which may be waived in whole or in part by
Seller to the extent permitted by applicable law:
(a) REPRESENTATIONS AND WARRANTIES. All representations and warranties
made by Purchaser in this Agreement and the Schedules hereto shall be true,
correct and complete on the date hereof and as of the Closing Date as though
such representations and warranties were made as of the Closing Date (or on the
date when made in the case of any representation or warranty which specifically
relates to an earlier date), and Seller shall have received a certificate of a
responsible officer of Purchaser to such effect; and Purchaser shall have duly
performed or complied with, in all material respects, all of the covenants,
obligations and conditions to be performed or complied with by each of them
under the terms of this Agreement on or prior to or at the Closing Date, and
Seller shall have received a certificate of a responsible officer of Purchaser
to such effect.
(b) PURCHASE PRICE. Purchaser shall have delivered to Seller the Closing
Cash Consideration and the Benchmark Stock as provided in Section 2.2(c) of this
Agreement.
-42-
<PAGE>
(c) FACTORED RECEIVABLES. Purchaser shall have paid to Seller the amount
due in respect of factored receivables pursuant to Section 2.3(b).
(d) OPINION OF COUNSEL. Seller shall have received an opinion from
counsel to Purchaser, dated the date of the Closing, in substantially the form
of Exhibit C.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 TERMINATION. This Agreement may be terminated at any time
prior to Closing:
(a) by written consent of Seller and Purchaser;
(b) by either Seller or Purchaser, if the sale of AVEX Stock and
Kilbride Holdings Stock contemplated hereby shall not have been consummated on
or before Termination Date;
(c) by Purchaser, in the event that the conditions to its obligations
set forth in Article VII hereof have not been satisfied or waived at or prior to
the Closing Date;
(d) by Seller, in the event that the conditions to its obligations set
forth in Article VII hereof have not been satisfied or waived immediately prior
to the Termination Date;
(e) by either Seller or Purchaser, if any Governmental Authority shall
have issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement and such order, decree, ruling or other action shall have become final
and nonappealable; or
(f) by Purchaser or Seller, in response to the delivery by,
respectively, the Seller or Purchaser of a corrected or updated Schedule to this
Agreement pursuant to Section 5.6 but only if Purchaser or Seller, as the case
may be, reasonably concludes therefrom that the changed facts or circumstances
reflected therein would result in a material diminution of the value expected to
be derived by it as a result of the transactions contemplated by this Agreement
subject, to the final clause of this Section 8.1(f); PROVIDED, HOWEVER, that
neither Purchaser nor Seller shall have the right to terminate this Agreement
until after it has given to the other, within two (2) days of its receipt of any
such revised Schedule, written notice of its intention to do so, and the Seller
or Purchaser, as the case may be, shall have failed to provide, within five (5)
days of delivery of such notice, assurances against such material diminution in
value reasonably acceptable to the other; provided, however, that if such notice
is given within 5 days before the Closing Date, the Closing Date shall be
extended day for day.
Section 8.2 EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 8.1 hereof, all rights and obligations of the parties
hereunder shall terminate and
-43-
<PAGE>
no party shall have any liability to the other party, except as specifically
provided for elsewhere in this Agreement and except that nothing herein will
relieve any party from liability for any willful breach of any representation,
warranty, agreement or covenant contained herein prior to such termination.
Section 8.3 AMENDMENTS. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto, and may
not be amended after the Closing Date.
Section 8.4 WAIVER. At any time prior to the Closing Date, any term,
provision or condition of this Agreement may be waived in writing (or the time
for performance of any of the obligations or other acts of the other parties
hereto may be extended) by the party which is, or the party the shareholders of
which are, entitled to the benefits thereof.
ARTICLE IX
MISCELLANEOUS
Section 9.1 NOTICES. All notices or other communications required or
permitted hereunder shall be in writing and shall be delivered or sent
personally, by facsimile or by certified, registered or express mail, postage
prepaid, and shall be deemed given when so delivered or sent personally or by
facsimile or, if by mail, two days after the date of mailing, as follows:
If to Purchaser:
Benchmark Electronics, Inc.
3000 Technology Drive
Angleton, Texas 77515
Attention: President
with a copy to (which shall not constitute notice to Purchaser):
Bracewell & Patterson L.L.P.
2900 South Tower Pennzoil Place
Houston, Texas 77515
Attention: John R. Brantley
If to Seller:
J.M. Huber Corporation
333 Thornall Street
Edison, New Jersey 08818
Attention: General Counsel
-44-
<PAGE>
with a copy to (which shall not constitute notice to Seller):
Arnold & Porter
399 Park Avenue
New York, New York 10022
Attention: Joseph Handros
or to such other address as any party hereto shall notify the other parties
hereto (as provided above) from time to time.
Section 9.2 EXHIBITS AND SCHEDULES. All exhibits and schedules hereto, or
documents expressly incorporated into this Agreement, are hereby incorporated
into this Agreement and are hereby made a part hereof as if set out in full in
this Agreement.
Section 9.3 EXPENSES. Regardless of whether the transactions provided for
in this Agreement are consummated, except as otherwise provided herein, each
party hereto shall pay its own expenses incident to this Agreement and the
transactions contemplated hereby. No expenses of the transaction will be paid by
or charged to any member of the AVEX Group.
Section 9.4 SPECIFIC PERFORMANCE. The parties agree that the AVEX Stock
and Kilbride Holdings Stock constitute unique property that cannot be readily
obtained on the open market. For this reason, Seller agrees that Purchaser would
be irreparably injured if this Agreement is not specifically enforced.
Therefore, Purchaser shall have the right to seek specific performance of this
Agreement, and Seller agrees to waive the defense in any such suit that
Purchaser has an adequate remedy at law and to interpose no opposition, legal or
otherwise, as to the propriety of specific performance as a remedy. Purchaser's
right to seek specific performance shall be in addition to, and not in lieu of,
any other rights or remedies that may be available to it in the event of
Seller's breach or default hereunder of its covenant and agreement to sell the
AVEX Stock and Kilbride Holdings Stock to Purchaser.
Section 9.5 GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement shall
be governed by, and construed in accordance with, the internal laws of the State
of New York without reference to the choice of law or conflicts of law
principles thereof. Any legal action or proceeding with respect to this
Agreement or any document related hereto may be brought in the courts of the
State of New York or the United States of America located in New York, and, by
execution and delivery of this Agreement, each of Purchaser and Seller hereby
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The parties hereto
hereby irrevocably waive any objection, including, without limitation any FORUM
NON CONVENIENS, which any of them may now or hereafter have to the bringing of
such action or proceeding in such respective jurisdictions.
Section 9.6 ASSIGNMENT; SUCCESSORS AND ASSIGNS; NO THIRD PARTY RIGHTS.
Except as otherwise provided herein, this Agreement may not be assigned, and any
attempted assignment shall be null and void. Subject to the foregoing, this
Agreement shall be
-45-
<PAGE>
binding upon and inure to the benefit of the parties hereto and their respective
successors, permitted assigns and legal representatives. This Agreement shall be
for the sole benefit of the parties to this Agreement and their respective
successors, permitted assigns and legal representatives and is not intended, nor
shall be construed, to give any Entity, other than the parties hereto and their
respective successors, assigns and legal representatives, any legal or equitable
right, remedy or claim hereunder.
Section 9.7 AMENDMENTS; WAIVER. No amendment or waiver of any provision of
this Agreement, nor consent to any departure by any party therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
parties hereto. Any waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
Section 9.8 COUNTERPARTS. This Agreement may be executed in counterparts,
any one of which may be by facsimile followed by the originally executed
document forwarded immediately thereafter to the other parties hereto, each of
which shall be deemed an original agreement, but all of which together shall
constitute one and the same instrument.
Section 9.9 TITLES AND HEADINGS. The titles, captions and table of
contents in this Agreement are for reference purposes only, and shall not in any
way define, limit, extend or describe the scope of this Agreement or otherwise
affect the meaning or interpretation of this Agreement.
Section 9.10 ENTIRE AGREEMENT. This Agreement, including the Exhibits and
Schedules attached hereto, the Confidentiality Agreement, the Indemnification
Agreement and, upon the execution and delivery thereof, the Registration Rights
Agreement, constitute the entire agreement among the parties with respect to the
matters covered hereby and thereby and supersede all previous written, oral or
implied understandings among them with respect to such matters, except for
Section 3(c) of the Amendment Agreement and except to the extent that other
written agreements are expressly referred to herein.
Section 9.11 SEVERABILITY. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
-46-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase
Agreement to be duly executed as of the day and year first above written.
J.M. HUBER CORPORATION
By /S/ PETER T. FRANCIS
Name: Peter T. Francis
Title: Board Chair, President and
Chief Executive Officer
BENCHMARK ELECTRONICS, INC.
By /S/ GAYLA J. DELLY
Name: Gayla J. Delly
Title: Treasurer
-47-
EXHIBIT 99.1
EXECUTION COPY
========================================================================
CREDIT AGREEMENT
dated as of
August 24, 1999
among
BENCHMARK ELECTRONICS, INC.
The Borrowing Subsidiaries
The Lenders Party Hereto,
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
as Administrative Agent, Collateral Agent
and
Issuing Bank
CITICORP USA, INC.,
as Documentation Agent
---------------------------
CHASE SECURITIES INC.,
as Arranger
========================================================================
[CS&M #6700-883]
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINED TERMS..........................................................5
SECTION 1.02. CLASSIFICATION OF LOANS AND BORROWINGS................................30
SECTION 1.03. TERMS GENERALLY.......................................................30
SECTION 1.04. ACCOUNTING TERMS; GAAP................................................30
ARTICLE II
THE CREDITS
SECTION 2.01. COMMITMENTS...........................................................31
SECTION 2.02. LOANS AND BORROWINGS..................................................32
SECTION 2.03. REQUESTS FOR BORROWINGS...............................................32
SECTION 2.04. LETTERS OF CREDIT.....................................................33
SECTION 2.05. FUNDING OF BORROWINGS.................................................36
SECTION 2.06. INTEREST ELECTIONS....................................................37
SECTION 2.07. TERMINATION AND REDUCTION OF COMMITMENTS..............................38
SECTION 2.08. REPAYMENT OF LOANS; EVIDENCE OF DEBT..................................38
SECTION 2.09. AMORTIZATION OF TERM LOANS............................................39
SECTION 2.10. PREPAYMENT OF LOANS...................................................40
SECTION 2.11. FEES..................................................................40
SECTION 2.12. INTEREST..............................................................41
SECTION 2.13. ALTERNATE RATE OF INTEREST............................................42
SECTION 2.14. INCREASED COSTS.......................................................42
SECTION 2.15. BREAK FUNDING PAYMENTS................................................43
SECTION 2.16. TAXES.................................................................44
SECTION 2.17. PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF SET-OFFS...........45
SECTION 2.18. MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS........................46
SECTION 2.19. BORROWING SUBSIDIARIES................................................46
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. ORGANIZATION; POWERS..................................................47
SECTION 3.02. AUTHORIZATION; ENFORCEABILITY.........................................47
SECTION 3.03. GOVERNMENTAL APPROVALS; NO CONFLICTS..................................47
SECTION 3.04. FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE.......................47
SECTION 3.05. PROPERTIES............................................................48
SECTION 3.06. LITIGATION AND ENVIRONMENTAL MATTERS..................................48
SECTION 3.07. COMPLIANCE WITH LAWS AND AGREEMENTS...................................49
SECTION 3.08. INVESTMENT AND HOLDING COMPANY STATUS.................................49
SECTION 3.09. TAXES.................................................................49
SECTION 3.10. ERISA.................................................................49
-i-
<PAGE>
SECTION 3.11. DISCLOSURE............................................................49
SECTION 3.12. SUBSIDIARIES..........................................................49
SECTION 3.13. INSURANCE.............................................................49
SECTION 3.14. LABOR MATTERS.........................................................50
SECTION 3.15. SOLVENCY..............................................................50
SECTION 3.16. SENIOR INDEBTEDNESS...................................................50
SECTION 3.17. YEAR 2000.............................................................50
SECTION 3.18. INTELLECTUAL PROPERTY.................................................50
ARTICLE IV
CONDITIONS
SECTION 4.01. EFFECTIVE DATE........................................................51
SECTION 4.02. EACH CREDIT EVENT.....................................................53
SECTION 4.03. INITIAL CREDIT EVENT FOR EACH BORROWING SUBSIDIARY....................53
ARTICLE V
AFFIRMATIVE COVENANTS
SECTION 5.01. FINANCIAL STATEMENTS AND OTHER INFORMATION............................54
SECTION 5.02. NOTICES OF MATERIAL EVENTS............................................55
SECTION 5.03. INFORMATION REGARDING COLLATERAL......................................55
SECTION 5.04. EXISTENCE; CONDUCT OF BUSINESS........................................56
SECTION 5.05. PAYMENT OF OBLIGATIONS................................................56
SECTION 5.06. MAINTENANCE OF PROPERTIES.............................................56
SECTION 5.07. INSURANCE.............................................................56
SECTION 5.08. BOOKS AND RECORDS; INSPECTION AND AUDIT RIGHTS........................56
SECTION 5.09. COMPLIANCE WITH LAWS..................................................57
SECTION 5.10. USE OF PROCEEDS AND LETTERS OF CREDIT.................................57
SECTION 5.11. ADDITIONAL SUBSIDIARIES...............................................57
SECTION 5.12. FURTHER ASSURANCES....................................................57
SECTION 5.13. INTEREST RATE AND CURRENCY EXCHANGE RATE PROTECTION...................57
SECTION 5.14. OWNERSHIP OF SUBSIDIARIES.............................................58
ARTICLE VI
NEGATIVE COVENANTS
SECTION 6.01. INDEBTEDNESS..........................................................58
SECTION 6.02. LIENS.................................................................59
SECTION 6.03. FUNDAMENTAL CHANGES...................................................60
SECTION 6.04. INVESTMENTS, LOANS, ADVANCES, GUARANTEES AND ACQUISITIONS.............60
SECTION 6.05. ASSET SALES, ETC......................................................61
SECTION 6.06. SALE AND LEASEBACK TRANSACTIONS.......................................62
SECTION 6.07. HEDGING AGREEMENTS....................................................62
SECTION 6.08. RESTRICTED PAYMENTS; CERTAIN PAYMENTS IN RESPECT OF INDEBTEDNESS......62
SECTION 6.09. TRANSACTIONS WITH AFFILIATES..........................................62
SECTION 6.10. RESTRICTIVE AGREEMENTS................................................63
SECTION 6.11. SALES AND ASSIGNMENTS OF INCOME, REVENUES AND RECEIVABLES.............63
SECTION 6.12. AMENDMENT OF MATERIAL DOCUMENTS.......................................63
-ii-
<PAGE>
SECTION 6.13. INTEREST EXPENSE COVERAGE RATIO.......................................63
SECTION 6.14. ADJUSTED LEVERAGE RATIO; LEVERAGE RATIO...............................63
SECTION 6.15. FIXED CHARGE COVERAGE RATIO...........................................63
SECTION 6.16. CURRENT RATIO.........................................................64
SECTION 6.17. MINIMUM TANGIBLE NET WORTH............................................64
ARTICLE VII
EVENTS OF DEFAULT.................................64
ARTICLE VIII
THE ADMINISTRATIVE AGENT..............................66
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. NOTICES...............................................................67
SECTION 9.02. WAIVERS; AMENDMENTS...................................................68
SECTION 9.03. EXPENSES; INDEMNITY; DAMAGE WAIVER....................................69
SECTION 9.04. SUCCESSORS AND ASSIGNS................................................70
SECTION 9.05. SURVIVAL..............................................................72
SECTION 9.06. COUNTERPARTS; INTEGRATION; EFFECTIVENESS..............................72
SECTION 9.07. SEVERABILITY..........................................................72
SECTION 9.08. RIGHT OF SETOFF.......................................................72
SECTION 9.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS............73
SECTION 9.10. WAIVER OF JURY TRIAL..................................................73
SECTION 9.11. HEADINGS..............................................................73
SECTION 9.12. CONFIDENTIALITY.......................................................74
SECTION 9.13. INTEREST RATE LIMITATION..............................................74
SECTION 9.14. RELEASE OF LIENS AND GUARANTEES.......................................74
</TABLE>
SCHEDULES:
Schedule 1.01 -- Guarantors
Schedule 2.01 -- Commitments
Schedule 3.05 -- Real Property
Schedule 3.06 -- Disclosed Matters
Schedule 3.12 -- Subsidiaries
Schedule 3.13 -- Insurance
Schedule 6.01 -- Existing Indebtedness
Schedule 6.02 -- Existing Liens
Schedule 6.05 -- Existing Investments
Schedule 6.10 -- Existing Restrictions
Schedule A -- Mortgaged Property
Schedule B -- Scheduled Indebtedness
Schedule C -- Approved Account Debtors
-iii-
<PAGE>
EXHIBITS:
- --------
Exhibit A -- Form of Assignment and Acceptance
Exhibit B-1 -- Form of Opinion of Bracewell & Patterson, L.L.P., counsel for
the Company
Exhibit B-2 -- Form of Opinion of local counsel
Exhibit B-3 -- Form of Opinion of counsel for Borrowing Subsidiary
Exhibit C -- Form of Perfection Certificate
Exhibit D -- Form of Pledge Agreement
Exhibit E -- Form of Guarantee Agreement
Exhibit F -- Form of Indemnity, Subrogation and Contribution Agreement
Exhibit G -- Form of Security Agreement
Exhibit H -- Form of Borrowing Request
Exhibit I -- Form of Interest Election Request
Exhibit J -- Form of Borrowing Base Report
Exhibit K -- Form of Compliance Certificate
Exhibit L -- Form of Mortgage
Exhibit M -- Form of Issuing Bank Agreement
Exhibit N-1 -- Form of Borrowing Subsidiary Agreement
Exhibit N-2 -- Form of Borrowing Subsidiary Termination
Exhibit O -- Form of Foreign Borrower Supplement
<PAGE>
CREDIT AGREEMENT dated as of August 24, 1999 among BENCHMARK
ELECTRONICS, INC., the Borrowing Subsidiaries from time to time party hereto,
the LENDERS party hereto, CITICORP USA, INC., as Documentation Agent, BANK OF
AMERICA, N.A., BANK ONE, TEXAS, N.A. and SUN TRUST BANK, ATLANTA as Co-Agents
and CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, as Administrative Agent,
Collateral Agent and Issuing Bank.
Pursuant to the Stock Purchase Agreement (such term and each other
capitalized term used but not defined herein having the meaning given to it in
Article I), the Company intends to acquire all the issued and outstanding shares
of capital stock of the Avex Entities. In connection with the Acquisition (a)
the Company will borrow the Term Loans and a principal amount not to exceed
$75,000,000 of the Revolving Loans, (b) the Company will receive the proceeds of
not less than $80,200,000 aggregate principal amount of the Subordinated Notes
and (c) the Company will refinance the Scheduled Indebtedness.
The Company has requested the Lenders to extend credit in the form
of (a) Term Loans on the Effective Date in an aggregate principal amount not in
excess of $100,000,000 and (b) Revolving Loans at any time and from time to time
on or after the Effective Date and prior to the Revolving Maturity Date in an
aggregate principal amount at any time outstanding not in excess of $125,000,000
minus the LC Exposure at such time. The Company has requested the Issuing Banks
to issue Letters of Credit in an aggregate stated amount at any time outstanding
that will not result in the LC Exposure exceeding $20,000,000. The proceeds of
the Term Loans and of Revolving Loans made on the Effective Date are to be used
by the Company solely (i) to finance the Acquisition, (ii) to refinance the
Scheduled Indebtedness and (iii) to pay fees and expenses related to the
Effective Date Transactions. The proceeds of the remaining Revolving Loans are
to be used by the Company and its Subsidiaries to provide working capital and
for other general corporate purposes. The Letters of Credit are to be used to
support obligations incurred by the Company and the Subsidiaries in the ordinary
course of their businesses.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINED TERMS. As used in this Agreement, the
following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"ACCEPTABLE SECURITIES" means subordinated debt securities issued by
the Company that (a) are subordinated to the Obligations on terms not less
favorable to the Lenders than the Subordinated Notes, (b) contain covenants,
events of default and mandatory redemption, repayment, prepayment or repurchase
requirements no less favorable to the Company and the Lenders than those of the
Subordinated Notes, (c) do not mature, and are not subject to any scheduled
amortization, redemption, repayment, prepayment or repurchase requirement, prior
to the date one year after the Term Loan Maturity Date and (d) are not
Guaranteed by any of the Subsidiaries.
"ACCOUNT" means any right to payment for goods sold or leased or for
services rendered whether or not earned by performance.
<PAGE>
6
"ACCOUNT DEBTOR" means, with respect to any Account, the obligor
with respect to such Account.
"ACQUISITION" means the purchase by the Company of all the issued
and outstanding shares of capital stock of the Avex Entities, under and as
provided in the Stock Purchase Agreement.
"ADJUSTED LEVERAGE RATIO" means, on any date, the ratio of (a) Total
Indebtedness as of such date to (b) Consolidated EBITDA for the period of four
consecutive fiscal quarters of the Company and its Restricted Subsidiaries ended
on such date (or, if such date is not the last day of a fiscal quarter, ended on
the last day of the fiscal quarter of the Company most recently ended prior to
such date).
"ADJUSTED LIBO RATE" means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.
"ADMINISTRATIVE AGENT" means Chase, in its capacity as
administrative agent for the Lenders hereunder.
"ADMINISTRATIVE QUESTIONNAIRE" means an Administrative Questionnaire
in a form supplied by the Administrative Agent.
"AFFILIATE" means, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified.
"ALTERNATE BASE RATE" means, for any day, a rate per annum equal to
the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate
in effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect
on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a
change in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate, the Base CD Rate or the Federal Funds Effective Rate, respectively.
"ANGLETON DIRECT MATERIAL PURCHASE PRICE VARIANCE RESERVE" means,
for the Angleton division and all other divisions which directly expense direct
material purchase price variances, an amount equal to the sum of the net
favorable variances (the amount whereby standard cost used to compute Inventory
Value exceeds actual cost incurred) as classified under the Company's and its
Domestic Divisions' current and historical accounting practices for the two
months ending as of the date of the most recently delivered Borrowing Base
Certificate.
"APPLICABLE PERCENTAGE" means, with respect to any Revolving Lender,
the percentage of the total Revolving Commitments represented by such Lender's
Revolving Commitment. If the Revolving Commitments have terminated or expired,
the Applicable Percentages shall be determined based upon the Revolving
Commitments most recently in effect, giving effect to any assignments.
"APPLICABLE RATE" means, for any day with respect to any ABR Loan or
Eurodollar Loan that is (a) a Revolving Loan or a Term Loan, or (b) with respect
to the commitment fees payable hereunder, as the case may be, the applicable
rate per annum set forth below under the relevant table under the caption "ABR
Spread", "Eurodollar Spread" or "Commitment Fee", as the case may be, based upon
the Adjusted Leverage Ratio as of the most recent determination date; PROVIDED
that until the delivery of financial statements under Section 5.01(a) or (b) as
of the end of and for the second fiscal quarter commencing after the Effective
<PAGE>
7
Date, the "Applicable Rate" for all purposes shall be the applicable rate per
annum set forth below in Category 1 in the applicable table below:
REVOLVING LOAN AND TERM LOAN TABLE
ABR EURODOLLAR
ADJUSTED LEVERAGE RATIO: SPREAD SPREAD
- ------------------------ ------ ----------
CATEGORY 1
----------
Greater than 1.000% 2.500%
3.00 to 1.00
CATEGORY 2
----------
Less than or equal to 3.00 to 0.750% 2.250%
1.00 but greater than 2.50 to
1.00
CATEGORY 3
----------
Less than or equal to 2.50 to 0.500% 2.000%
1.00 but greater than 2.00 to
1.00
CATEGORY 4
----------
Less than or equal to 2.00 to 0.125% 1.625%
1.00 but greater than 1.50 to
1.00
CATEGORY 5
----------
Less than or equal to 1.50 to 0.000% 1.250%
1.00
REVOLVING LOAN COMMITMENT FEE TABLE
ADJUSTED LEVERAGE RATIO: COMMITMENT FEE
- ------------------------ --------------
CATEGORY 1
----------
Greater than or equal to 2.00 0.500%
to 1.00
CATEGORY 2
----------
Less than 2.00 to 1.00 0.375%
<PAGE>
8
For purposes of the foregoing, (i) the Adjusted Leverage Ratio shall
be determined as of the end of each fiscal quarter of the Company's fiscal year
based upon the Company's consolidated financial statements delivered pursuant to
Section 5.01(a) or (b) and (ii) each change in the Applicable Rate resulting
from a change in the Adjusted Leverage Ratio shall be effective during the
period commencing on and including the date of delivery to the Administrative
Agent of such consolidated financial statements indicating such change and
ending on the date immediately preceding the effective date of the next such
change; PROVIDED that the Adjusted Leverage Ratio shall be deemed to be in
Category 1 under each of the above tables (A) at any time that an Event of
Default has continued in effect for more than three Business Days following the
Company's receipt of notice thereof from the Administrative Agent and (B) at the
option of the Administrative Agent or at the request of the Required Lenders if
the Company fails to deliver the consolidated financial statements required to
be delivered by it pursuant to Section 5.01(a) or (b), during the period from
the expiration of the time for delivery thereof until such consolidated
financial statements are delivered.
"APPROVED JURISDICTION" means any of the Republic of Ireland,
Scotland, the Kingdom of Sweden or the Republic of Singapore.
"ASSESSMENT RATE" means, for any day, the annual assessment rate in
effect on such day that is payable by a member of the Bank Insurance Fund
classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in dollars at the
offices of such member in the United States; PROVIDED that if, as a result of
any change in any law, rule or regulation, it is no longer possible to determine
the Assessment Rate as aforesaid, then the Assessment Rate shall be such annual
rate as shall be determined by the Administrative Agent to be representative of
the cost of such insurance to the Lenders.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance
entered into by a Lender and an assignee (with the consent of any party whose
consent is required by Section 9.04), and accepted by the Administrative Agent,
in the form of Exhibit A or any other form approved by the Administrative Agent.
"AVEX ENTITIES" means Avex Electronics, Inc, an Alabama corporation,
and Avex Holdings B.V., a Netherlands corporation.
"BASE CD RATE" means the sum of (a) the Three-Month Secondary CD
Rate multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.
"BOARD" means the Board of Governors of the Federal Reserve System
of the United States of America.
"BOARD OF DIRECTORS" means the Board of Directors of the Company or
any committee thereof duly authorized to act on behalf of such Board.
"BORROWER" means the Company or any Borrowing Subsidiary.
"BORROWING" means Loans of the same Class and Type, made, converted
or continued on the same date and, in the case of Eurodollar Loans, as to which
a single Interest Period is in effect.
"BORROWING BASE" means, at any time (subject to adjustment as
provided in Section 5.08 (b)), an amount equal to the sum of (a) 75% of Eligible
Accounts owed to the Company and its Domestic Divisions, (b) 45% of the
Inventory Value of Eligible Inventory of the Company and its Domestic Divisions,
(c) 50% of Eligible Fixed Assets of the Company and its Domestic Divisions and
(d) the Foreign Subsidiary Amount; provided that beginning with the
<PAGE>
9
second month that a completed Borrowing Base Certificate is required to be
delivered under Section 5.01(e) after the date that is the second anniversary of
the Effective Date, the Foreign Subsidiary Amount shall not be included in the
computation of the Borrowing Base. The Borrowing Base at any time shall be
determined by reference to the most recent Borrowing Base Certificate delivered
to the Administrative Agent, absent any error in such Borrowing Base
Certificate.
"BORROWING BASE CERTIFICATE" means a certificate in the form of
Exhibit J or any other form approved by the Administrative Agent, together with
all attachments contemplated thereby.
"BORROWING SUBSIDIARY" means, at any time, each Restricted
Subsidiary incorporated or organized in a State of the United States of America
or an Approved Jurisdiction that has been designated as a Borrowing Subsidiary
by the Company pursuant to Section 2.19 and that has not ceased to be a
Borrowing Subsidiary as provided in such Section.
"BORROWING SUBSIDIARY AGREEMENT" means a Borrowing Subsidiary
Agreement substantially in the form of Exhibit N-1.
"BORROWING SUBSIDIARY TERMINATION" means a Borrowing Subsidiary
Termination substantially in the form of Exhibit N-2.
"BORROWING REQUEST" means a request by a Borrower for a Borrowing in
accordance with Section 2.03, substantially in the form of Exhibit H.
"BUSINESS DAY" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by law
to remain closed; PROVIDED that, when used in connection with a Eurodollar Loan,
the term "BUSINESS DAY" shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.
"CAPITAL EXPENDITURES" means, for any period, all expenditures
(whether paid in cash or accrued as a liability, including the portion of
Capital Lease Obligations originally incurred during such period that are
capitalized on the consolidated balance sheet of the Company) by the Company and
its Restricted Subsidiaries during such period, that, in conformity with GAAP,
are included in "capital expenditures", "additions to property, plant or
equipment" or comparable items in the consolidated financial statements of the
Company, but excluding expenditures for the restoration, repair or replacement
of any fixed or capital asset that was destroyed or damaged, in whole or in
part, in an amount equal to any insurance proceeds received in connection with
such destruction or damage.
"CAPITAL LEASE OBLIGATIONS" of any Person means the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP and any obligations of such Person under any
synthetic lease financing whether or not such obligation is classiffied as a
captial lease under GAAP.
"CASH INTEREST EXPENSE" means, for any period, the sum of all cash
payments of interest and prepayment charges, if any, including, without
limitation, all net amounts payable (or receivable) under interest rate
protection agreements and all imputed interest in respect of capital lease
obligations paid by the Company and its Restricted Subsidiaries on a
consolidated basis during such period.
<PAGE>
10
"CHANGE IN CONTROL" means (a) the acquisition of ownership, directly
or indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof), of Equity
Interests representing more than 50% of either the aggregate ordinary voting
power or the aggregate equity value represented by the issued and outstanding
Equity Interests in the Company; (b) occupation of a majority of the seats
(other than vacant seats) on the Board of Directors by Persons who were neither
(i) nominated by the current Board of Directors nor (ii) appointed by directors
so nominated; or (c) the occurrence of a Designated Event under and as defined
in the Subordinated Note Indenture or a Change of Control or similar event,
however denominated, under the Acceptable Securities or any other Material
Indebtedness.
"CHANGE IN LAW" means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by any Lender or
any Issuing Bank (or, for purposes of Section 2.14(b), by any lending office of
such Lender or by such Lender's or such Issuing Bank's holding company, if any)
with any request, guideline or directive (whether or not having the force of
law) of any Governmental Authority made or issued after the date of this
Agreement.
"CHASE" means Chase Bank of Texas, National Association,
and its successors.
"CLASS", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans
or Term Loans and, when used in reference to any Commitment, refers to whether
such Commitment is a Revolving Commitment or Term Loan Commitment.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time.
"COLLATERAL" means any and all "Collateral", as defined in any
applicable Security Document.
"COLLATERAL AGENT" means Chase, in its capacity as collateral agent
for the Lenders hereunder.
"COLLATERAL AND GUARANTEE REQUIREMENT" means, at any time, that the
following requirements shall be satisfied (to the extent such requirements are
stated to be applicable at the time under clause (a) or (b) below):
(a) at all times on and after the Effective Date:
(i) the Guarantee Agreement (or a supplement thereto) shall
have been executed by the Company and each Domestic Subsidiary
existing at such time, shall have been delivered to the Collateral
Agent and shall be in full force and effect;
(ii) one or more Pledge Agreements (or supplements thereto)
shall have been duly executed and delivered by the Company and each
Domestic Subsidiary existing at such time and directly owning any
outstanding Equity Interests or any Indebtedness, and there shall
have been duly and validly pledged to the Collateral Agent
thereunder, for the ratable benefit of the Secured Parties (A) all
the outstanding Equity Interests (other than Equity Interests in any
Foreign Subsidiary) owned directly by the Company or any Domestic
Subsidiary, (B) 65% of the outstanding voting Equity Interests, and
100% of the outstanding non-voting Equity Interests (or, in each
case, such lesser percentages
<PAGE>
11
as shall be owned by the Company and the Domestic Subsidiaries) in
each Foreign Subsidiary owned in whole or in part directly by the
Company or any Domestic Subsidiary and (C) all Indebtedness that is
owed to the Company or any Domestic Subsidiary; and any
certificates, promissory notes or other instruments representing the
Equity Interests or Indebtedness pledged or subjected to a charge
under the Pledge Agreements, accompanied by stock powers or other
instruments of transfer endorsed in blank, shall be in the actual
possession of the Collateral Agent and all other steps required
under applicable law or requested by the Collateral Agent to ensure
that the Pledge Agreements create valid, first priority, perfected
Liens on all the Collateral subject thereto shall have been taken;
(iii) one or more Security Agreements (or supplements thereto)
shall have been duly executed and delivered by the Company and each
Domestic Subsidiary existing at such time and there shall have been
subjected to security interests thereunder securing the Obligations
all the assets of each such Person in which a security interest can
be created under the UCC, and all documents and instruments,
including UCC financing statements, required by law or reasonably
requested by the Collateral Agent to be filed, registered or
recorded to create the security interests intended to be created by
the Security Agreements and perfect such Liens to the extent
required by, and with the priority required by, the Security
Agreements, shall have been filed, registered or recorded (or
arrangements satisfactory to the Collateral Agent for such filing,
registration or recording shall have been made);
(iv) the Administrative Agent shall have received, on or prior
to the later of the 30th day after the acquisition by the Company or
a Domestic Subsidiary of any Mortgaged Property and the 10th day
after the Effective Date, (A) counterparts of a Mortgage with
respect to such Mortgaged Property duly executed and delivered by
the record owner of such Mortgaged Property, (B) in the case of each
Mortgaged Property located in the United States with a book or fair
market value in excess of $2,000,000, a policy or policies of title
insurance issued by a nationally recognized title insurance company
insuring the Lien of each such Mortgage as a valid first Lien on the
Mortgaged Property described therein, free of any other Liens except
as expressly permitted by Section 6.02, together with such
endorsements, coinsurance and reinsurance as the Administrative
Agent or the Required Lenders may reasonably request, and (C) such
surveys, abstracts, appraisals, legal opinions and other documents
as the Administrative Agent or the Required Lenders may reasonably
request with respect to any such Mortgage or Mortgaged Property;
(v) the Indemnity, Subrogation and Contribution Agreement (or
a supplement thereto) shall have been executed by the Company and
each Domestic Subsidiary party to the Guarantee Agreement or any
Pledge Agreement, Security Agreement or Mortgage, shall have been
delivered to the Collateral Agent and shall be in full force and
effect; and
(vi) each Loan Party shall have obtained all consents and
approvals required to be obtained by it in connection with the
execution and delivery of all Security Documents to which it is a
party, the performance of its obligations thereunder and the
granting by it of the Liens thereunder; and
(b) at all times when there shall be one or more Foreign
Subsidiaries that are Foreign Borrowers under this Agreement:
<PAGE>
12
(i) the Guarantee Agreement (or a supplement thereto) shall
have been executed by each Foreign Subsidiary that is a direct or
indirect parent of any such Foreign Borrower (a "FOREIGN PARENT")
(it being understood that each Foreign Parent will guarantee only
the Obligations of Foreign Borrowers that are its subsidiaries),
shall have been delivered to the Collateral Agent and shall be in
full force and effect;
(ii) one or more Pledge Agreements (or supplements thereto)
shall have been duly executed and delivered by each Foreign Borrower
and each Foreign Parent of such Foreign Borrower existing at such
time and directly owning any outstanding Equity Interests or any
Indebtedness, and there shall have been duly and validly pledged to
the Collateral Agent under the Pledge Agreement, for the ratable
benefit of the Secured Parties, (A) all the Equity Interests in such
Foreign Borrower, each Foreign Parent of such Foreign Borrower and
each Subsidiary directly owned in whole or in part by such Foreign
Borrower or any such Foreign Parent, including any such Equity
Interests owned by the Company and the Domestic Subsidiaries that
are not pledged pursuant to clause (a)(ii) above and (B) all the
Indebtedness that is owed to such Foreign Borrower or a Foreign
Parent (it being understood that the Equity Interests and
Indebtedness referred to in this clause (ii) will secure only the
Obligations of such Foreign Borrower); and any certificates,
promissory notes or other instruments representing such Equity
Interests or Indebtedness, accompanied by stock powers or other
instruments of transfer endorsed in blank, shall be in the actual
possession of the Collateral Agent and all other steps required
under applicable law or requested by the Collateral Agent to ensure
that the Pledge Agreements create valid, first priority, perfected
Liens on all the Collateral subject thereto shall have been taken;
(iii) one or more Security Agreements (or supplements thereto)
shall have been duly executed and delivered by each Foreign Borrower
or Foreign Parent of such Foreign Borrower existing at such time and
there shall have been subjected to security interests thereunder
securing the Obligations of such Foreign Borrower (but not any
obligations of the Company or any Domestic Subsidiary) all the
personal property or fixtures (within the meaning of the UCC) of
such Person in which a security interest can be created under the
laws of each applicable jurisdiction, with such exceptions as the
Collateral Agent may approve in its sole discretion, and without
liability to any party hereto, taking into account the cost and
difficulty involved in creating or perfecting any such security
interest and the benefits to the Lenders that would result
therefrom, and all documents and instruments required by law or
reasonably requested by the Collateral Agent to be filed, registered
or recorded to create the security interests intended to be created
by the Security Agreements and perfect such Liens to the extent
required by, and with the priority required by, the Security
Agreements, shall have been filed, registered or recorded (or
arrangements satisfactory to the Collateral Agent for such filing,
registration or recording shall have been made); and
(iv) the Administrative Agent shall have received (A)
counterparts of a Mortgage with respect to each Mortgaged Property
of each Foreign Borrower or Foreign Parent of such Foreign Borrower,
duly executed and delivered by the record owner of such Mortgaged
Property and securing the Obligations of such Foreign Borrower (but
not any obligations of the Company or any Domestic Subsidiary), and
(B) such surveys, abstracts, appraisals, legal opinions and other
documents as the Administrative Agent or the Required Lenders may
reasonably request with respect to any such Mortgage or Mortgaged
Property.
<PAGE>
13
Notwithstanding any of the foregoing provisions of this definition, if the
Company or any Subsidiary shall be using commercially reasonable efforts to
create or perfect any pledge of Equity Interests in or Indebtedness of any
Foreign Subsidiary, the failure to have created or perfected such pledge shall
not, in and of itself, prevent the Collateral and Guarantee Requirement from
being satisfied until (x) the later of (i) the 90th day after the Effective Date
and (ii) the 90th day after the acquisition of such Collateral by the Company or
a Domestic Subsidiary or (y) if, in the judgment of the Collateral Agent, the
Company is endeavoring in good faith to satisfy the Collateral and Guarantee
Requirement, such later date as may be agreed to by the Collateral Agent.
"COMMITMENT" means a Revolving Commitment, a Foreign Borrower
Commitment or a Term Loan Commitment, or any combination thereof (as the context
requires).
"COMPANY" means Benchmark Electronics, Inc., a Texas corporation.
"CONSOLIDATED EBITDA" means, for any period, the EBITDA of the
Company and its Restricted Subsidiaries for such period determined on a
consolidated basis. Solely for purposes of calculating the Leverage Ratio and
the Adjusted Leverage Ratio, but not for any other purpose, (i) Consolidated
EBITDA for any period of four fiscal quarters during which the Acquisition shall
have occurred shall be computed on a pro forma consolidated basis to include the
EBITDA of the Avex Entities that are Restricted Subsidiaries; PROVIDED that if
any such period of four fiscal quarters shall have begun before January 1, 1999,
the EBITDA of such Avex Entities shall be deemed for such purpose to equal the
EBITDA of such Avex Entities for the period from January 1, 1999, to the end of
such period multiplied by a fraction of which the numerator shall be four and
the denominator shall be the number of fiscal quarters from January 1, 1999 to
the end of such period.
"CONSOLIDATED NET INCOME" means, for any Person for any period, the
net income (or loss) of such person and its subsidiaries during such period,
calculated and consolidated or combined in accordance with GAAP; PROVIDED that
there shall be excluded from such net income (to the extent otherwise included
therein) the following: (i) any non-cash, non-recurring charges, (ii) gains or
losses attributable to Property sales not in the ordinary course of business,
and (iii) the cumulative effect of a change in accounting principles and any
gains or losses attributable to writeups or writedowns of assets.
"CONSOLIDATED NET TANGIBLE ASSETS" means the total assets of the
Company and its Restricted Subsidiaries less, without duplication, (i)
intangible assets including, without limitation, goodwill, research and
development costs, trademarks, trade names, patents, franchises, copyrights,
licenses and like general intangibles, experimental or organizational expense,
unamortized debt discount and expense carried as an asset, all reserves and any
write-up in the book of value of assets made after the closing date (other than
write-ups of assets of a going concern business made within 12 months after the
acquisition of such business), net of accumulated amortization and (ii) all
reserves for depreciation and other asset valuation reserves (but excluding
reserves for federal, state and other income taxes).
"CONSOLIDATED TANGIBLE NET WORTH" means, at any time:
(a) the total assets of the Company and its Restricted Subsidiaries
which would be shown as assets on a consolidated balance sheet of the
Company and its Restricted Subsidiaries as of such time prepared in
accordance with GAAP, after eliminating all amounts properly attributable
to minority interests, if any, in the stock and surplus of Restricted
Subsidiaries, MINUS
(b) the total liabilities of the Company and its Restricted
Subsidiaries which would be shown as liabilities on a consolidated balance
sheet of the Company and its Restricted Subsidiaries as of such time
prepared in accordance with GAAP, MINUS
<PAGE>
14
(c) the net book amount of all assets of the Company and its
Restricted Subsidiaries (after deducting any reserves applicable thereto)
that would be shown as intangible assets on a consolidated balance sheet
of the Company and its Restricted Subsidiaries as of such time prepared in
accordance with GAAP.
"CONTROL" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise.
"CONTROLLING" and "CONTROLLED" have meanings correlative thereto.
"CURRENT ASSETS" means all assets of a Person which under GAAP would
be classified as current assets.
"CURRENT LIABILITIES" means all liabilities of a Person which under
GAAP would be classified as current liabilities, other than current maturities
of Long-Term Indebtedness and the obligation to repay the Revolving Loans.
"CURRENT RATIO" means, on any day, the ratio of (a) the Current
Assets of the Company and its Restricted Subsidiaries to (b) the Current
Liabilities of the Company and its Restricted Subsidiaries, each on a
consolidated basis.
"DEBT SERVICE" means, for any period, the sum of (a) Cash Interest
Expense for such period and (b) scheduled principal payments on Total
Indebtedness for such period.
"DEFAULT" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"DISCLOSED MATTERS" means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.06.
"DOCUMENTATION AGENT" means Citicorp USA, Inc., in its capacity as
Documentation Agent.
"DOLLARS" or "$" refers to lawful money of the United States of
America.
"DOMESTIC DIVISIONS" means all corporate offices, manufacturing and
warehousing facilities of the Company and its Domestic Subsidiaries located
within the continental United States of America.
"DOMESTIC SUBSIDIARIES" means all Subsidiaries incorporated or
organized under the laws of the United States of America, any State thereof or
the District of Columbia.
"EBITDA" means, for any Person for any period, without duplication,
the Consolidated Net Income of such Person for such period PLUS, to the extent
deducted in determining such Consolidated Net Income, Interest Expense,
depreciation, amortization, other non-cash, non-recurring charges and income tax
expense.
"EFFECTIVE DATE" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.02).
"EFFECTIVE DATE TRANSACTIONS" means the Transactions that have
occurred, or that are contemplated or required by this Agreement to have
occurred, on or before the Effective Date and prior to or simultaneously with
the initial Borrowing or issuance of a Letter of Credit hereunder.
<PAGE>
15
"ELIGIBLE ACCOUNT" means, on any date, all Accounts owed to the
Company and its Domestic Divisions on such date that meet the requirements of
this definition. An Account shall not be an Eligible Account unless each of the
following statements is accurate and complete with respect thereto (and the
Company by including such Account in any computation of the Borrowing Base shall
be deemed to represent and warrant to the Administrative Agent, the Issuing Bank
and the Lenders the accuracy and completeness of such statements with respect to
such Account):
(a) Said Account (i) indicates the Company or one of its Domestic
Divisions as sole payee and sole remittance party, (ii) is a binding and
valid obligation of the obligor thereon in full force and effect and (iii)
is denominated in dollars;
(b) Said Account has been invoiced and represents the bona fide sale
and delivery of merchandise, in each case in the ordinary course of
business of the Company or any of its Domestic Divisions in connection
with trade operations;
(c) Said Account is genuine as appearing on its face or as
represented in the books and records of Company or any of its Domestic
Divisions, as applicable;
(d) Said Account is free from claims regarding rescission,
cancelation or avoidance, whether by operation of law or otherwise;
(e) Said Account is net of concessions, offsets or understandings
with the obligor thereon that in any way could reasonably be expected to
adversely affect the payment of said account;
(f) The Account Debtor (i) has not asserted a right of setoff and
(ii) has not disputed its liability (whether by chargeback or otherwise)
or made any claim with respect to the Account or any other Account of the
Company or its Domestic Divisions which has not been resolved;
(g) In the case of any Account arising from invoicing for excess and
obsolete inventory, said account is supported by a purchase order
acknowledging approval and authorization to be invoiced and to make
payment thereon;
(h) Payment of said Account is less than 90 days from the date of
invoicing or less than 60 days past due as determined by the due date
stated on the invoice therefor (or, if said Account is not paid by
reference to an invoice in the ordinary course of business but instead by
reference to the terms of the agreements creating said account, said
Account has not remained unpaid beyond 60 days after the due date
therefor);
(i) The goods giving rise to the Account have been shipped and the
Account does not represent a progress or partial billing or otherwise not
represent a competed sale;
(j) The Account Debtor is not the United States of America or any
department, agency or instrumentality thereof;
(k) If such Account and other Accounts are owed by a creditor of the
Company or any of its Domestic Divisions, the amount of all such Accounts
included as Eligible Accounts shall be the amount by which all such
Accounts exceed the aggregate accounts payable owed by the Company or such
Domestic Subsidiary to such creditor;
(l) The obligor on said Account is not (i) an Affiliate of the
Company or any of the Domestic Divisions, or (ii) an employee of the
Company or any of the Domestic Divisions;
<PAGE>
16
(m) Said account is not payable by an obligor for which 50% or more
of the total accounts owed to the Company or the Domestic Divisions by
such obligor or any of its Affiliates is unpaid more than 90 days past the
invoice date or is more than 60 days past due;
(n) All consents, licenses, approvals or authorizations of, or
registrations or declarations with, any Governmental Authority required to
be obtained, effected or given in connection with the execution, delivery
and performance of said account by each party obligated thereunder have
been duly obtained, effected or given and are in full force and effect;
(o) The obligor on said Account is not the subject of any bankruptcy
or insolvency proceeding, has not had a trustee or receiver appointed for
all or a substantial part of its property and has not made an assignment
for the benefit of creditors, admitted its inability to pay its debts as
they mature or suspended its business;
(p) In the case of an Account arising from a sale of goods, the
subject goods have been sold to an obligor on a true sale basis on open
account, or subject to contract, and not on a bill and hold, consignment,
on approval or on a "sale or return" basis or subject to any other
repurchase or return agreement, no material part of the subject goods has
been returned, rejected, lost or damaged, and said Account is not
evidenced by chattel paper or an instrument of any kind;
(q) The Account Debtor in respect of such Account (i) has its
principal place of business in the United States of America, (ii) has its
principal place of business in a member country of the Organization for
Economic Cooperation and Development and has a senior debt rating of at
least BBB+ by S&P or a comparable rating from another nationally
recognized rating agency, (iii) is listed on Schedule C hereto or (iv) is
otherwise approved by the Required Lenders; and
(r) Said Account is subject to a valid, first priority perfected
security interest in favor of the Collateral Agent securing the
Obligations;
In determining the amounts of Eligible Accounts, the face amounts of all
Accounts shall, to the extent included therein, be reduced by (i) the amount of
all accrued and actual returns, discounts, claims, credits, credits pending,
accrued and actual price adjustments, freight or finance charges or other
allowances (including any amount that the Company or Domestic Subsidiary may be
obligated to rebate to a customer pursuant to the terms of any agreement or
understanding (written or oral)); (ii) the aggregate amount of all reserves,
limits or deductions provided for in this definition and elsewhere in this
Agreement; and (iii) the aggregate amount of all cash received in respect of
Accounts but not yet applied by the Company or the applicable Domestic
Subsidiary to reduce the amount of the Accounts. If any Eligible Account (other
than an Account for which the Account Debtor has a senior debt rating of at
least BBB+ by S&P or a comparable rating from another nationally recognized
rating agency), when added to all other accounts that are obligations of the
same obligor and its Affiliates, results in a total sum that exceeds 15% of the
total balance then due on all gross Accounts receivable (without giving effect
to any reduction in Eligible Accounts pursuant to this proviso), the amount of
said account in excess of 15% of such total balance then due shall be excluded
from Eligible Accounts. In determining the aggregate amount of Accounts from the
same Account Debtor that are unpaid more than 90 days from the date of invoice
or more than 60 days from the due date pursuant to clause (h) above, there shall
be excluded the amount of any net credit balances relating to the Accounts.
"ELIGIBLE FIXED ASSETS" means, at the time of any determination
thereof, the net book value of the Company's and its Domestic Divisions' Fixed
Assets, determined in accordance with GAAP on a basis consistent with the
Company's and its Domestic Subsidiaries' historical
<PAGE>
17
and current accounting practices; PROVIDED that real property for which
appraisals reasonably acceptable to the Administrative Agent have been completed
shall be valued at appraised value (except for the Company's real property
located in Angleton, Texas, which shall be valued at net book value). For
purposes of calculating the Borrowing Base, no Fixed Asset may be included as an
"Eligible Fixed Asset" unless (i) the Company or a Domestic Subsidiary has good
and unencumbered title thereto, (ii) the Administrative Agent on behalf of the
Secured Parties possesses a valid first priority perfected security interest
therein under the Security Documents and (iii) such equipment is in service at
the end of the month for which the Borrowing Base is being determined and is not
construction in progress.
"ELIGIBLE INVENTORY" means, at any date, Inventory of the Company
and its Domestic Divisions, net of any Inventory Reserves, and for which each of
the following statements is accurate and complete (and the Company by including
the Inventory Value of such Inventory in any computation of the Borrowing Base
shall be deemed to represent and warrant to the Administrative Agent, the
Issuing Bank and each Lender the accuracy and completeness of such statements):
(a) No Person other than the Company or its Domestic Divisions has
any direct or indirect ownership interest or title to said Inventory;
(b) Said Inventory is subject to a valid, unencumbered, first
priority perfected security interest in favor of the Collateral Agent
securing the Obligations;
(c) Said Inventory is in good condition, meets all standards imposed
by any Governmental Authority having regulatory authority over it or its
use and/or sale and is currently usable in the normal course of business
of the Company and its Domestic Divisions;
(d) Said Inventory is in the possession of the Company or one of its
Domestic Divisions and is located in the United States or in a contract
warehouse specified on a schedule attached to the Security Agreement and
segregated or otherwise separately identifiable from goods of all others,
if any, stored on the premises;
(e) Said Inventory does not include goods that are used for
demonstrations and display or are held by the Company or its Domestic
Divisions pursuant to a consignment agreement or other agreement whereby
the Company or Domestic Division will not be invoiced for the goods and
payment for the goods will result in a reduced finished good selling
price;
(f) Said Inventory does not represent goods returned or rejected due
to quality issues raised by customers of the Company or its Domestic
Divisions or goods in transit;
(g) Said Inventory is not seconds, thirds, return to vendor, scrap,
stale, defective, obsolete, slow moving or unmerchantable, and otherwise
conforms to the representations and warranties contained in the Loan
Documents;
(h) Said Inventory is not located at an operating facility that the
Company or the applicable Domestic Division plans to close within thirty
(30) days from the date of determination of the most recent Borrowing
Base;
(i) Said inventory is not is not film, packaging and/or shipping
supplies or materials;
(j) The Inventory Value of said Inventory included in the Borrowing
Base is net of any premium or expedite fee that was not approved and will
not be reimbursed
<PAGE>
18
by the customer (other than any such fees to the extent the aggregate
amount thereof included in Inventory Value does not exceed $400,000);
Without limiting the foregoing, Inventory shall not be Eligible Inventory if any
purchase order, invoice or any other document in connection therewith indicates
that any Person other than the Company or Domestic Subsidiary has any ownership
interest therein.
"ENVIRONMENTAL LAWS" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"ENVIRONMENTAL LIABILITY" means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of the Company or any Subsidiary
directly or indirectly resulting from or based upon (a) violation of any
Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the release or threatened release of any Hazardous Materials into
the environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"EQUITY INTERESTS" means any shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person, and any
warrants, options or other rights to acquire any such equity ownership
interests.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that, together with the Company, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA EVENT" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Company or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Company or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)
the incurrence by the Company or any of its ERISA Affiliates of any liability
with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Company or any ERISA Affiliate of
any notice, or the receipt by any Multiemployer Plan from the Company or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA.
"EURODOLLAR", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.
<PAGE>
19
"EVENT OF DEFAULT" has the meaning assigned to such term in Article
VII.
"EXCESS AND OBSOLETE RESERVE" shall equal 50% of the gross amount of
all Raw Materials which are not supported by a specific purchase order from a
customer or Hard Forecast.
"EXCLUDED TAXES" means, with respect to the Administrative Agent,
any Lender, any Issuing Bank or any other recipient of any payment to be made by
or on account of any obligation of a Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction described in clause (a) above and (c) in the case of a
Foreign Lender (other than an assignee pursuant to a request by a Borrower under
Section 2.18(b)), any withholding tax imposed by the United States of America
that (i) is in effect and would apply to amounts payable to such Foreign Lender
at the time such Foreign Lender becomes a party to this Agreement (or designates
a new lending office), except to the extent that such Foreign Lender (or its
assignor, if any) was entitled, at the time of designation of a new lending
office (or assignment), to receive additional amounts from the applicable
Borrower with respect to any withholding tax pursuant to Section 2.16(a), or
(ii) is attributable to such Foreign Lender's failure to comply with Section
2.16(e).
"EXISTING FACILITY" means the Amended and Restated Credit Agreement
dated as of February 26, 1999, among the Company, the Lenders thereunder and
Chase, as Issuing Bank and as Administrative Agent.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"FINANCIAL OFFICER" means the chief financial officer, principal
accounting officer, treasurer or controller of the Company.
"FINISHED GOODS" means completed assemblies which have completed
final testing and are to be sold in the normal course of business and are valued
at standard costs with respect to labor, overhead and direct material costs,
provided that labor and overhead do not comprise more than 25% of the total cost
of the finished assembly.
"FISCAL QUARTER" means the fiscal quarter of the Company, ending on
the last day of each March, June, September and December of each year.
"FIXED ASSETS" means property, plant and equipment.
"FIXED CHARGE COVERAGE RATIO" means, for any period, the ratio of
(i) Consolidated EBITDA plus operating lease and rental expenses and less cash
taxes of the Company and its Restricted Subsidiaries for such period to (ii)
Debt Service plus Capital Expenditures plus operating lease and rental expenses
of the Company and its Restricted Subsidiaries for such period.
"FOREIGN BORROWER" means any Borrowing Subsidiary that is a Foreign
Subsidiary.
<PAGE>
20
"FOREIGN BORROWER COMMITMENT" means, with respect to each Fronting
Lender and Foreign Borrower Supplement, the commitment of such Fronting Lender
to make Revolving Loans under Section 2.01(b) and such Foreign Borrower
Supplement, as such commitment may be (a) reduced from time to time pursuant to
Section 2.08 and (b) reduced or increased from time to time pursuant to
assignments by or to such Fronting Lender pursuant to Section 9.04.
"FOREIGN BORROWER EXPOSURE" means, with respect to any Revolving
Lender at any time, such Revolving Lender's Applicable Percentage of the
aggregate principal amounts of the outstanding Revolving Loans made under
Section 2.01(b).
"FOREIGN BORROWER FRONTING FEE" shall have the meaning specified in
Section 2.11(c)(ii).
"FOREIGN BORROWER PARTICIPATION FEE" shall have the meaning
specified in Section 2.11(c)(i).
"FOREIGN BORROWER SUPPLEMENT" means an agreement in the form of
Exhibit O hereto executed and delivered by one or more Foreign Borrowers, one or
more Fronting Lenders and the Administrative Agent as provided in Section
2.01(d).
"FOREIGN LENDER" means, with respect to any Borrower, any Lender
that is organized under the laws of a jurisdiction other than that in which such
Borrower is located. For purposes of this definition, the United States of
America, each State thereof and the District of Columbia shall be deemed to
constitute a single jurisdiction.
"FOREIGN SUBSIDIARY" means any Subsidiary that is organized under
the laws of a jurisdiction other than the United States of America or any State
thereof or the District of Columbia.
"FOREIGN SUBSIDIARY AMOUNT" means an amount equal to the lesser of
(a) $40,000,000 and (b) the sum of (i) 65% of the net book value of the Accounts
owed to Foreign Subsidiaries (other than Unrestricted Subsidiaries) organized in
Approved Jurisdictions, (ii) 35% of the net book value of the Inventory of
Foreign Subsidiaries (other than Unrestricted Subsidiaries) organized in
Approved Jurisdictions and (iii) 40% of the net book value of Fixed Assets of
Foreign Subsidiaries (other than Unrestricted Subsidiaries) organized in
Approved Jurisdictions; PROVIDED, that if the amount under this clause (b) would
constitute more than 20% of the Borrowing Base (calculated using such amount for
purposes of clause (d) of the definition of "Borrowing Base"), the Foreign
Subsidiary Amount shall be reduced to an amount that constitutes no more than
20% of the Borrowing Base (calculated using such revised amount for purposes of
clause (d) of the definition of "Borrowing Base"). For purposes of computing the
Foreign Subsidiary Amount, (i) the net book value of any Accounts, Inventory or
Fixed Assets at any time shall be deemed to equal the net book value of such
assets at the end of the month prior to the date a completed Borrowing Base
Certificate shall have been delivered under Section 5.01(e) and (ii) amounts
expressed in foreign currencies shall be translated into dollars using the same
practices as are used by the Company in preparing its consolidated financial
statements.
"FRONTING LENDER" means, as to any Foreign Borrower Supplement, each
Revolving Lender that has executed and delivered such Foreign Borrower
Supplement as a Fronting Lender. Any Fronting Lender may, in its discretion,
arrange for one or more Revolving Loans to be made by it under any Foreign
Borrower Supplement to be made by Affiliates of such Fronting Lender, in which
case the term "Fronting Lender" shall include any such Affiliate with respect to
Revolving Loans so made by it.
"GAAP" means generally accepted accounting principles in the United
States of America.
<PAGE>
21
"GOVERNMENTAL AUTHORITY" means the government of the United States
of America, any other nation or any political subdivision thereof, whether state
or local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"GUARANTEE" of or by any Person (the "GUARANTOR") means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "PRIMARY OBLIGOR") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; PROVIDED, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
"GUARANTEE AGREEMENT" means the Guarantee Agreement substantially in
the form of Exhibit E among the Company, the Guarantors from time to time party
thereto and the Collateral Agent for the benefit of the Secured Parties, as the
same may be amended, modified or supplemented from time to time in accordance
with the provisions hereof.
"HARD FORECAST" is communicated in advance or in lieu of a purchase
order from a customer, as stipulated in the customer's contract, and means that
the customer is liable for raw materials purchased on the customer's behalf in
the case that the customer changes or cancels an order.
"HAZARDOUS MATERIALS" means all explosive or radioactive substances
or wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"HEDGING AGREEMENT" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.
"INDEBTEDNESS" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
under conditional sale or other title retention agreements relating to property
acquired by such Person, (d) all obligations of such Person in respect of the
deferred purchase price of property or services, other than accounts payable in
the ordinary course of business, (e) all Indebtedness of others secured by (or
for which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the Indebtedness secured thereby has been assumed, (f)
all Guarantees by such Person of Indebtedness of others, (g) all Capital Lease
Obligations of such Person, (h) all obligations, contingent or otherwise, of
such Person as an account party in respect of letters of credit and letters of
guaranty and (i) all obligations, contingent or otherwise, of such Person in
respect of bankers' acceptances. The Indebtedness of any Person shall include
the Indebtedness of any other entity (including any partnership in which such
Person is a general partner) to the extent such Person is liable therefor as a
result of such Person's ownership interest
<PAGE>
22
in or other relationship with such entity, except to the extent the terms of
such Indebtedness provide that such Person is not liable therefor.
"INDEMNIFIED TAXES" means Taxes other than Excluded Taxes.
"INDEMNITY, SUBROGATION AND CONTRIBUTION AGREEMENT" means the
Indemnity, Subrogation and Contribution Agreement substantially in the form of
Exhibit F among the Company, the Subsidiaries from time to time party thereto
and the Collateral Agent for the benefit of the Secured Parties, as the same may
be amended, modified or supplemented from time to time in accordance with the
provisions hereof.
"INFORMATION MEMORANDUM" means the Confidential Information
Memorandum dated July 1999 relating to the Company and the Transactions.
"INTERCOMPANY INDEBTEDNESS" means any Indebtedness of the Company or
any Subsidiary owed to and held by the Company or any Wholly Owned Subsidiary;
PROVIDED that any subsequent issuance or transfer of any Equity Interest which
results in any such Wholly Owned Subsidiary ceasing to be a Wholly Owned
Subsidiary or any subsequent transfer of such Indebtedness (other than to the
Company or another Wholly Owned Subsidiary) shall be deemed, in each case, to
constitute a new incurrence of Indebtedness other than Intercompany Indebtedness
by the issuer thereof.
"INTEREST COVERAGE RATIO" means, on any day, the ratio of (a)
Consolidated EBITDA less Capital Expenditures for the Rolling Period ending on
the then most recent preceding Quarterly Date to (b) Cash Interest Expense
during such Rolling Period.
"INTEREST ELECTION REQUEST" means a request by a Borrower to convert
or continue a Revolving Borrowing or Term Borrowing in accordance with Section
2.06.
"INTEREST PAYMENT DATE" means (a) with respect to any ABR Loan, the
last day of each March, June, September and December and (b) with respect to any
Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing
of which such Loan is a part and, in the case of a Eurodollar Borrowing with an
Interest Period of more than three months' duration, each day prior to the last
day of such Interest Period that occurs at intervals of three months' duration
after the first day of such Interest Period.
"INTEREST PERIOD" means, with respect to any Eurodollar Borrowing,
the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the calendar month that is one, two, three or
six months thereafter, as the applicable Borrower may elect; PROVIDED, that (a)
if any Interest Period would end on a day other than a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding Business Day and
(b) any Interest Period that commences on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
last calendar month of such Interest Period) shall end on the last Business Day
of the last calendar month of such Interest Period. For purposes hereof, the
date of a Borrowing initially shall be the date on which such Borrowing is made
and thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.
"INVENTORY" means all Raw Materials, Work-in-Process and Finished
Goods held in the normal course of business and as such term is defined in
Section 9.109(4) of the UCC as shown on the Company's perpetual inventory
records or equivalent reporting in accordance with their current and historical
classifications.
"INVENTORY RESERVES" means for the Company and its Domestic
Divisions at any date, an amount equal to the sum of (i) any profits or transfer
price additions accrued in
<PAGE>
23
connection with transfers of such Inventory between the Company and its Domestic
Divisions or among Domestic Divisions of the Company, (ii) any net favorable
direct material variances capitalized on the Company's or its Domestic
Division's balance sheet for financial reporting purposes based on current and
historical accounting practices, (iii) the Angleton Direct Material Purchase
Price Reserve, (iv) the Excess and Obsolete Reserve, (v) the amount which
represents cycle count adjustments or any other amount which represents
inventory shrinkage, (vi) warranty or scrap reserves and (vii) the amount of any
reserve maintained by the Company and its Domestic Divisions which represents
written-down, non-saleable or otherwise obsolete inventory that has not been
otherwise excluded from Eligible Inventory.
"INVENTORY VALUE" means a dollar amount equal to the lesser of (i)
standard cost excluding "Obsolescence Reserve", calculated or summarized on a
basis consistent with the Company's quarterly SEC reporting and with GAAP and
with the Company's current and historical accounting practices and (ii) the
market value of such Inventory; PROVIDED that the portion attributable to labor
and overhead in work-in-process and finished goods does not comprise more than
25% of total cost for these items.
"ISSUING BANKS" means with respect to Letters of Credit issued on or
after the Effective Date, Chase and up to two other Lenders that may become
Issuing Banks hereunder from time to time by entering into Issuing Bank
Agreements with the Company, each in its capacity as an issuer of Letters of
Credit hereunder, and the successors of any such person in such capacity as
provided in Section 2.04(i). Any Issuing Bank may, in its discretion, arrange
for one or more Letters of Credit to be issued by Affiliates of such Issuing
Bank (provided that the Company has approved such Affiliate, such approval not
to be unreasonably withheld), in which case the term "Issuing Bank" shall
include any such Affiliate with respect to Letters of Credit issued by it.
"ISSUING BANK AGREEMENT" means an Issuing Bank Agreement between an
Issuing Bank and the Company substantially in the form of Exhibit M.
"LC DISBURSEMENT" means a payment made by an Issuing Bank pursuant
to a Letter of Credit.
"LC EXPOSURE" means, at any time, the sum of (a) the aggregate
undrawn amount of all outstanding Letters of Credit at such time plus (b) the
aggregate amount of all LC Disbursements that have not yet been reimbursed by or
on behalf of the Borrower at such time. The LC Exposure of any Revolving Lender
at any time shall be its Applicable Percentage of the total LC Exposure at such
time.
"LENDERS" means the Persons listed on Schedule 2.01 and any other
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance.
"LETTER OF CREDIT" means any letter of credit issued pursuant to
this Agreement.
"LEVERAGE RATIO" means, on any date, the ratio of (a) Total
Indebtedness as of such date to (b) Consolidated EBITDA for the period of four
consecutive fiscal quarters of the Company ended on such date (or, if such date
is not the last day of a fiscal quarter, ended on the last day of the fiscal
quarter of the Company most recently ended prior to such date); PROVIDED, that
for purposes of determining the Leverage Ratio, all references in the
definitions of Total Indebtedness and Consolidated EBITDA (and in the
definitions used therein) to Restricted Subsidiaries shall be deemed references
to Subsidiaries.
"LIBO RATE" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Dow Jones Market Service
(or on any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing
<PAGE>
24
rate quotations comparable to those currently provided on such page of such
Service, as determined by the Administrative Agent from time to time for
purposes of providing quotations of interest rates applicable to dollar deposits
in the London interbank market) at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of such Interest Period, as the rate for
dollar deposits with a maturity comparable to such Interest Period. In the event
that such rate is not available at such time for any reason, then the "LIBO
RATE" with respect to such Eurodollar Borrowing for such Interest Period shall
be the rate at which dollar deposits of $5,000,000 and for a maturity comparable
to such Interest Period are offered by the principal London office of the
Administrative Agent in immediately available funds to leading commercial banks
in the London interbank market at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of such Interest Period.
"LIEN" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities. For the purposes of this Agreement and the other Loan Documents, the
Company or any Subsidiary of the Company shall be deemed to be the owner of any
Property which it has acquired or holds subject to a conditional sale agreement,
financing lease or other arrangement pursuant to which title to the Property has
been retained by or vested in some other Person for security purposes.
"LOAN DOCUMENTS" means this Agreement, each Borrowing Subsidiary
Agreement, each Borrowing Subsidiary Termination, each Foreign Borrower
Supplement, the Guarantee Agreement, the Indemnity, Subrogation and Contribution
Agreement, the other Security Documents, any Issuing Bank Agreement, any
promissory note issued pursuant to Section 2.08 and the Borrowing Base
Certificates.
"LOAN PARTIES" means each Borrower and each Subsidiary that is party
to the Guarantee Agreement or any Security Document.
"LOANS" means the loans made by the Lenders to the Borrowers
pursuant to this Agreement.
"LONG-TERM INDEBTEDNESS" means any Indebtedness that, in accordance
with GAAP, constitutes (or, when incurred, constituted) a long-term liability.
"MATERIAL ADVERSE EFFECT" means the result of one or more events,
changes or effects which, individually or in the aggregate, could reasonably be
expected to have a material adverse effect on (a) the business, operations,
assets, liabilities, condition (financial or otherwise) or results of operations
of the Company on an individual basis, or the Company and its Subsidiaries,
taken as a whole (after giving effect to the Transactions) or (b) the validity
or enforceability of any of the documents entered into in connection with the
Transactions (including the Loan Documents) or the rights, remedies and benefits
available to the parties thereunder.
"MATERIAL INDEBTEDNESS" means Indebtedness (other than the Loans and
Letters of Credit), or obligations in respect of one or more Hedging Agreements,
of any one or more of the Company and its Subsidiaries in an aggregate principal
amount exceeding $5,000,000. For purposes of determining Material Indebtedness,
the "principal amount" of the obligations of the Company or any Subsidiary in
respect of any Hedging Agreement at any time shall be the maximum aggregate
amount (giving effect to any netting agreements) that the Company or such
Subsidiary would be required to pay if such Hedging Agreement were terminated at
such time.
"MOODY'S" means Moody's Investors Service, Inc.
<PAGE>
25
"MORTGAGE" means a mortgage, deed of trust, assignment of leases and
rents, leasehold mortgage or other security document granting a Lien on any
Mortgaged Property to secure the Obligations. Each Mortgage shall be
satisfactory in form and substance to the Collateral Agent.
"MORTGAGED PROPERTY" means each parcel of real property and the
improvements thereto owned by any Borrower, any Domestic Subsidiary or any
Foreign Subsidiary that is a direct or indirect parent of a Borrower.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"NET WORTH" means, at any time and from time to time, the net worth
of the Company and its Subsidiaries on a consolidated basis, determined in
accordance with GAAP.
"OBLIGATIONS" means (a) the due and punctual payment by the
Borrowers or the applicable Loan Parties of (i) the principal of and premium, if
any, and interest (including interest accruing during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding) on the Loans, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment
or otherwise, (ii) each payment required to be made by the Borrowers under this
Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral and (iii) all other monetary obligations,
including fees, costs, expenses and indemnities, whether primary, secondary,
direct, contingent, fixed or otherwise (including monetary obligations incurred
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), of
the Loan Parties to the Secured Parties under this Agreement and the other Loan
Documents, (b) the due and punctual payment and performance of all covenants,
agreements, obligations and liabilities of the Loan Parties, monetary or
otherwise, under or pursuant to this Agreement and the other Loan Documents and
(c) the due and punctual payment of all obligations of the Company under each
Hedging Agreement entered into (i) prior to the date hereof with any
counterparty that is a Lender (or an Affiliate thereof) on the date hereof or
(ii) on or after the date hereof with any counterparty that is a Lender (or an
Affiliate thereof) at the time such Hedging Agreement is entered into.
"OTHER TAXES" means any and all present or future recording, stamp,
documentary, excise, transfer, sales, property or similar taxes, charges or
levies arising from any payment made under any Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, any Loan
Document.
"PBGC" means the Pension Benefit Guaranty Corporation referred to
and defined in ERISA and any successor entity performing similar functions.
"PERFECTION CERTIFICATE" means a certificate in the form of Exhibit
C or any other form approved by the Collateral Agent.
"PERMITTED ENCUMBRANCES" means:
(a) Liens imposed by law for taxes that are not yet due or are being
contested in compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, arising in the ordinary
course of business and securing obligations that are not overdue by more
than 90 days or are being contested in compliance with Section 5.04;
<PAGE>
26
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other
social security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature, in each case in the ordinary
course of business;
(e) judgment liens in respect of judgments that do not constitute an
Event of Default under clause (k) of Article VII;
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do not
materially detract from the value of the affected property or interfere
with the ordinary conduct of business of the Company or any Subsidiary;
(g) any obligations or duties affecting any of the property of the
Company or the Subsidiaries to any municipality or public authority with
respect to any franchise, grant, license or permit which do not materially
impair the use of such property for the purposes for which it is held;
(h) Liens arising from precautionary UCC financing statements
regarding operating leases; and
(i) Liens arising out of consignment or similar arrangements for the
sale of goods entered into by the Company or any of its Subsidiaries in
the ordinary course of business.
PROVIDED that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
"PERMITTED INVESTMENTS" means:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America), in
each case maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within one year from
the date of acquisition thereof and having, at such date of acquisition,
the highest credit rating obtainable from S&P or from Moody's;
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within 364 days from the date of acquisition
thereof issued or guaranteed by or placed with, and money market deposit
accounts issued or offered by, any domestic office of any commercial bank
organized under the laws of the United States of America or any State
thereof which (i) has a combined capital and surplus and undivided profits
of not less than $500,000,000 and (ii) has short-term credit ratings of at
least A1 and P1 by S&P and Moody's, respectively;
(d) fully collateralized repurchase agreements with a term of not
more than 30 days for securities described in clause (a) above and entered
into with a financial institution satisfying the criteria described in
clause (c) above; PROVIDED THAT the Company shall take possession of all
securities purchased by the Company or any Subsidiary under repurchase
agreements and shall adhere to customary margin and mark-to-market
procedures with respect to fluctuations in value; and
<PAGE>
27
(e) deposits in money market accounts investing exclusively or
substantially exclusively in investments comprised of clauses (a) through
(d) above.
"PERSON" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"PLAN" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Company or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"PLEDGE AGREEMENTS" means (a) a Pledge Agreement substantially in
the form of Exhibit D among the Company, the Subsidiaries from time to time
party thereto and the Collateral Agent and (b) in connection with pledges of
shares of or other equity interests in Foreign Subsidiaries, other pledge
agreements or similar agreements in form and substance satisfactory to the
Collateral Agent, as the same may be amended, modified or supplemented from time
to time in accordance with the provisions hereof.
"PRIME RATE" means the rate of interest per annum publicly announced
from time to time by Chase as its prime rate in effect at its principal office
in The City of Houston; each change in the Prime Rate shall be effective from
and including the date such change is publicly announced as being effective.
"PROCEEDS" means the net cash proceeds received by the Borrower from
any issuance of the Acceptable Securities after the Effective Date.
"QUALIFIED FOREIGN SUBSIDIARY HOLDING COMPANY" means a Domestic
Subsidiary that does not own any assets other than, or engage in any business or
activity other than the ownership of, Equity Interests of one or more Domestic
or Foreign Subsidiaries and that does not have any Indebtedness or liabilities
other than (a) liabilities incidental to its ownership of such Equity Interests
and (b) liabilities as a Guarantor of the Obligations.
"QUARTERLY DATES" means the last day of each March, June, September
and December in each year.
"RAW MATERIALS" means any raw materials to be used or consumed in
the manufacture of goods to be sold in the normal course of business and shall
be valued at standard costs with respect to direct material purchases.
"REGISTER" has the meaning set forth in Section 9.04.
"RELATED PARTIES" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"REQUIRED LENDERS" means, at any time, Lenders having Revolving
Exposures, Term Loans and unused Commitments representing at least 51% of the
sum of the aggregate Revolving Exposures, outstanding Term Loans and unused
Commitments at such time.
"RESTRICTED PAYMENT" means any dividend or other distribution
(whether in cash, securities or other property) with respect to any Equity
Interests in the Company or any Subsidiary, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancelation or
termination of any Equity Interests in the Company or any Subsidiary.
<PAGE>
28
"RESTRICTED SUBSIDIARY" means (a) any Domestic Subsidiary and (b)
any Foreign Subsidiary that is not an Unrestricted Subsidiary.
"REVOLVING AVAILABILITY PERIOD" means the period from and including
the Effective Date to but excluding the earlier of the Revolving Maturity Date
and the date of termination of the Revolving Commitments.
"REVOLVING COMMITMENT" means, with respect to each Lender, the
commitment, if any, of such Lender to make Revolving Loans and to acquire
participations in Letters of Credit hereunder, expressed as an amount
representing the maximum aggregate amount of such Lender's Revolving Exposure
hereunder, as such commitment may be (a) reduced from time to time pursuant to
Section 2.07 and (b) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 9.04. The initial amount of
each Lender's Revolving Commitment is set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Revolving Commitment, as applicable. The initial aggregate amount of the
Lenders' Revolving Commitments is $125,000,000.
"REVOLVING EXPOSURE" means, with respect to any Lender at any time,
the sum of (a) the outstanding principal amount of such Lender's Revolving
Loans, (b) such Lender's Foreign Borrower Exposure and (c) such Lender's LC
Exposure, in each case at such time.
"REVOLVING LENDER" means a Lender with a Revolving Commitment or, if
the Revolving Commitments have terminated or expired, a Lender with Revolving
Exposure.
"REVOLVING LOAN" means a Loan made pursuant to clause (a) of Section
2.01.
"REVOLVING MATURITY DATE" means September 30, 2004.
"ROLLING PERIOD" means any period of four consecutive Fiscal
Quarters (or, if less, the number of full Fiscal Quarters subsequent to the
Effective Date).
"S&P" means Standard & Poor's Rating Services.
"SCHEDULED INDEBTEDNESS" means all Indebtedness incurred under the
Existing Facility or listed on Schedule B.
"SECURED PARTIES" means the Administrative Agent, the Collateral
Agent, each Lender, the Issuing Bank and each other person to which any of the
Obligations is owed.
"SECURITY AGREEMENTS" means (a) a Security Agreement substantially
in the form of Exhibit G among the Company, the Domestic Subsidiaries from time
to time party thereto and the Collateral Agent for the benefit of the Secured
Parties and (b) in connection with the creation of security interests in the
assets of Foreign Subsidiaries, other security agreements or similar agreements
in form and substance satisfactory to the Collateral Agent, as the same may be
amended, modified or supplemented from time to time in accordance with the
provisions hereof.
"SECURITY DOCUMENTS" means the Security Agreements, the Pledge
Agreements, the Mortgages and each other security agreement or other instrument
or document executed and delivered pursuant to Section 5.11 or 5.12 to secure
any of the Obligations.
"SELLER" means J.M. Huber Corporation, a New Jersey corporation.
"STATUTORY RESERVE RATE" means a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the
<PAGE>
29
Administrative Agent is subject (a) with respect to the Base CD Rate, for new
negotiable nonpersonal time deposits in dollars of over $100,000 with maturities
approximately equal to three months and (b) with respect to the Adjusted LIBO
Rate, for eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of the Board). Such reserve percentages shall
include those imposed pursuant to such Regulation D. Eurodollar Loans shall be
deemed to constitute eurocurrency funding and to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or offsets
that may be available from time to time to any Lender under such Regulation D or
any comparable regulation. The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"STOCK PURCHASE AGREEMENT" means the Amended and Restated Stock
Purchase Agreement dated August 12, 1999, between the Seller and the Company.
"SUBORDINATED INDEBTEDNESS" means Indebtedness that by its terms is
subordinated to any of the Obligations.
"SUBORDINATED NOTES" means the 6% Convertible Subordinated Notes due
2006 issued by the Company in an aggregate principal amount of $80,200,000 under
the Subordinated Note Indenture.
"SUBORDINATED NOTE INDENTURE" means the Indenture dated as of August
13, 1999, between the Company and Harris Trust Company of New York, as trustee.
"SUBSIDIARY" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity of which securities or other ownership interests representing more than
50% of the equity or more than 50% of the ordinary voting power or, in the case
of a partnership, more than 50% of the general partnership interests are, as of
such date, owned, controlled or held by the parent or one or more subsidiaries
of the parent or by the parent and one or more subsidiaries of the parent.
"SUBSIDIARY" means any subsidiary of the Company. For purposes of
the representations and warranties made herein on the Effective Date, the term
"Subsidiary" includes each of the Avex Entities and their subsidiaries.
"TAXES" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"TERM LOAN" means a Loan made by a Lender pursuant to clause (a) of
Section 2.01.
"TERM LOAN COMMITMENT" means, with respect to each Lender, the
commitment, if any, of such Lender to make a Term Loan hereunder on the
Effective Date, expressed as an amount representing the maximum principal amount
of the Term Loan to be made by such Lender hereunder. The amount of each
Lender's Term Loan Commitment is set forth on Schedule 2.01. The aggregate
amount of the Lenders' Term Loan Commitments is $100,000,000.
"TERM LOAN LENDER" means a Lender with a Term Loan Commitment or an
outstanding Term Loan.
"TERM LOAN MATURITY DATE" means September 30, 2004.
<PAGE>
30
"THREE-MONTH SECONDARY CD RATE" means, for any day, the secondary
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day is not a Business Day, the next preceding Business
Day) by the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release H.15(519) during the
week following such day) or, if such rate is not so reported on such day or such
next preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately 10:00 a.m., New York City time, on such day (or, if
such day is not a Business Day, on the next preceding Business Day) by the
Administrative Agent from three negotiable certificate of deposit dealers of
recognized standing selected by it.
"TOTAL INDEBTEDNESS" means, as of any date, the sum of (a) the
aggregate principal amount of Indebtedness of the Company and its Restricted
Subsidiaries outstanding as of such date, in the amount that would be reflected
on a balance sheet prepared as of such date on a consolidated basis in
accordance with GAAP, plus (b) the aggregate principal amount of Indebtedness of
the Company and its Restricted Subsidiaries outstanding as of such date that is
not required to be reflect on a balance sheet in accordance with GAAP,
determined on a consolidated basis; PROVIDED that, for purposes of clause (b)
above, the term "Indebtedness" shall not include contingent obligations of the
Company or any Restricted Subsidiary as an account party in respect of any
letter of credit or letter of guaranty unless such letter of credit or letter of
guaranty supports an obligation that constitutes Indebtedness.
"TRANSACTIONS" means the Acquisition, the repayments of Indebtedness
required under Section 4.01, the execution, delivery and performance of the Loan
Documents, the Borrowings and issuances of Letters of credit hereunder and the
creation of the Liens created by the Security Documents.
"TYPE", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate
Base Rate.
"UCC" means the Uniform Commercial Code as from time to time in
effect in the State of Texas or, where applicable as to specific Collateral, any
other relevant state.
"UNRESTRICTED SUBSIDIARY" means (i) any Foreign Subsidiary of the
Company that at the time of determination shall have been designated as an
Unrestricted Subsidiary by the Company in the manner provided below (and shall
not subsequently have been designated as a Restricted Subsidiary) and (ii) any
subsidiary of an Unrestricted Subsidiary. The Company may from time to time
designate any Foreign Subsidiary (other than a Foreign Subsidiary that,
immediately after such designation, shall hold any Indebtedness of or Equity
Interest in the Company or any Restricted Subsidiary) as an Unrestricted
Subsidiary, and may designate any Unrestricted Subsidiary as a Restricted
Subsidiary so long as, immediately after giving effect to such designation, no
Default shall have occurred and be continuing. Any designation by the Company
pursuant to this definition shall be made in an officer's certificate delivered
to the Administrative Agent and containing a certification that such designation
is in compliance with the terms of this definition. Notwithstanding the
foregoing, no Borrowing Subsidiary shall at any time be an Unrestricted
Subsidiary.
"WHOLLY OWNED SUBSIDIARY" means any Subsidiary of the Company all
the capital stock or other equity interests of which (other than directors'
qualifying shares and shares held by other than the Persons to the extent such
shares are required by applicable law to be held by a Person other than the
Company or one of its Subsidiaries) is owned by the Company or one or more
Wholly Owned Subsidiaries.
<PAGE>
31
"WITHDRAWAL LIABILITY" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
"WORK-IN-PROCESS" means goods to be sold in the normal course of
business, which are currently in the process of being manufactured and shall be
valued at standard costs with respect to labor, overhead and direct material
costs; PROVIDED that labor and overhead does not comprise more than 25% of the
total value of work-in-process per assembly.
SECTION 1.02. CLASSIFICATION OF LOANS AND BORROWINGS. For purposes
of this Agreement, Loans may be classified and referred to by Class (E.G., a
"Revolving Loan") or by Type (E.G., a "Eurodollar Loan") or by Class and Type
(E.G., a "Eurodollar Revolving Loan"). Borrowings also may be classified and
referred to by Class (E.G., a "Revolving Borrowing") or by Type (E.G., a
"Eurodollar Borrowing") or by Class and Type (E.G., a "Eurodollar Revolving
Borrowing").
SECTION 1.03. TERMS GENERALLY. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
SECTION 1.04. ACCOUNTING TERMS; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; PROVIDED
that, if the Company notifies the Administrative Agent that the Company requests
an amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent notifies the Company
that the Required Lenders request an amendment to any provision hereof for such
purpose), regardless of whether any such notice is given before or after such
change in GAAP or in the application thereof, then such provision shall be
interpreted on the basis of GAAP as in effect and applied immediately before
such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
ARTICLE II
THE CREDITS
SECTION 2.01. COMMITMENTS. (a) Subject to the terms and conditions
set forth herein, each Lender agrees (i) to make a Term Loan to the Company on
the Effective Date, in dollars, in a principal amount that will not result in
(x) such Lender's Term Loan exceeding such Lender's Term Loan Commitment or (y)
the sum of the aggregate outstanding principal
<PAGE>
32
amount of the Loans and the LC Exposure exceeding the Borrowing Base then in
effect and (ii) to make Revolving Loans to any Borrower from time to time during
the Revolving Availability Period, in dollars, in an aggregate principal amount
that will not result in (x) such Lender's Revolving Exposure exceeding its
Revolving Commitment, (y) the sum of the aggregate outstanding principal amount
of the Loans and the LC Exposure exceeding the Borrowing Base then in effect or
(z) in the case of any Foreign Borrower, the sum of the aggregate outstanding
principal amount of the Revolving Loans of all Foreign Borrowers exceeding
$20,000,000. Within the foregoing limits and subject to the terms and conditions
set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans.
Amounts repaid in respect of Term Loans may not be reborrowed.
(b) Subject to the terms and conditions and relying upon the
representations and warranties set forth herein, each Fronting Lender that is
party to a Foreign Borrower Supplement agrees, severally and not jointly, to
make Revolving Loans to any Foreign Borrower that is a designated Borrower under
such Foreign Borrower Supplement from time to time during the Revolving
Availability Period, in dollars, in an aggregate principal amount that will not
result in (i) such Lender's Revolving Exposure exceeding its Revolving
Commitment, (ii) the aggregate outstanding principal amount of the Loans and the
LC Exposure exceeding the Borrowing Base then in effect, (iii) the aggregate
principal amount of the Revolving Loans made by such Fronting Lender pursuant to
such Foreign Borrower Supplement exceeding such Fronting Lender's Foreign
Borrower Commitment under such Foreign Borrower Supplement or (iv) the sum of
the aggregate outstanding principal amount of the Revolving Loans of all Foreign
Borrowers exceeding $20,000,000; PROVIDED that a Fronting Lender shall not be
required to, and shall not, make any Revolving Loan under this paragraph if the
Required Lenders shall have delivered to such Fronting Lender, not later than
two Business Days prior to the date on which any such Revolving Loan shall have
been scheduled to be made, a notice stating that a Default has occurred and is
continuing and directing such Fronting Lender not to make Revolving Loans.
(c) In the event that any Revolving Borrowing made pursuant to
paragraph (b) above shall be outstanding and (i) the principal of or interest on
such Borrowing shall not be paid within three Business Days after the date on
which it is due and one or more Fronting Lenders holding a majority in interest
of the outstanding Revolving Loans included in such Revolving Borrowing shall
deliver to the Administrative Agent and the Company a request that the
provisions of this paragraph take effect with respect to such Borrowing or (ii)
the Revolving Commitments shall be terminated or the Loans accelerated pursuant
to Article VII, then (A) each Revolving Lender shall acquire at face value a
participation in the Loans included in such Revolving Borrowing and the interest
accrued thereon equal to its Applicable Percentage of such obligations, and
shall pay the purchase price for such participation by wire transfer of
immediately available funds in dollars to the Administrative Agent in the manner
provided in Section 2.05 (and the Administrative Agent shall promptly wire the
amounts so received to the applicable Fronting Lenders ratably in accordance
with their respective Revolving Loans included in such Revolving Borrowings) and
(B) such Loans shall at all times thereafter, until repaid in accordance with
the terms hereof, bear interest at the rate applicable to overdue ABR Borrowings
under Section 2.13(c), and the principal of and interest on such Loans will be
payable at the applicable times and places for overdue ABR Borrowings. The
obligations of the Revolving Lenders to acquire and pay for participations in
Revolving Loans pursuant to this paragraph shall be absolute and unconditional
under any and all circumstances.
(d) One or more Foreign Borrowers, the Administrative Agent and one
or more Revolving Lenders may from time to time enter into one or more Foreign
Borrower Supplements pursuant to which such Revolving Lenders may agree to serve
as Fronting Lenders. Any such Foreign Borrower Supplement shall set forth the
Foreign Borrower Commitment of each Fronting Lender party thereto, the Foreign
Borrowers that may borrow under such Foreign Borrower Supplement, any special
provisions for the times and places at which or the Persons to which Borrowing
Requests are to be delivered, proceeds of Borrowings are to be disbursed or
payments in respect of Borrowings are to be made or for the compensation to be
payable to
<PAGE>
33
Fronting Lenders and any other special provisions to be applicable to Borrowings
under such Foreign Borrower Supplement. Any special provisions referred to in
the preceding sentence that shall be included in any Foreign Borrower Supplement
shall be applicable to all Borrowings under such Foreign Borrower Supplement,
notwithstanding any other provision of this Article II to the contrary (and in
the absence of any such special provisions, the applicable provisions set forth
in this Article II shall control).
SECTION 2.02. LOANS AND BORROWINGS. (a) Each Term Loan and each
Revolving Loan made pursuant to Section 2.01(a) shall be made as part of a
Borrowing consisting of Loans of the same Class and Type made by the Lenders
ratably in accordance with their respective Commitments of the applicable Class.
Each Revolving Loan made pursuant to Section 2.01(b) shall be made as part of a
Borrowing consisting of Loans of the same Type made by the Fronting Lenders
ratably in accordance with their respective applicable Foreign Borrower
Commitments. The failure of any Lender to make any Loan required to be made by
it shall not relieve any other Lender of its obligations hereunder; PROVIDED
that the Commitments of the Lenders are several and no Lender shall be
responsible for any other Lender's failure to make Loans as required.
(b) Subject to Section 2.13, each Revolving Borrowing and Term
Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the
applicable Borrower may request in accordance herewith. Each Lender at its
option may make any Eurodollar Loan by causing any domestic or foreign branch or
Affiliate of such Lender to make such Loan; PROVIDED that any exercise of such
option shall not affect the obligation of any Borrower to repay such Loan in
accordance with the terms of this Agreement.
(c) At the commencement of each Interest Period for any Eurodollar
Borrowing, and at the time that any ABR Borrowing is made, such Borrowing shall
be in an aggregate amount that is an integral multiple of $500,000; PROVIDED
that an ABR Revolving Borrowing may be in an aggregate amount that is equal to
the entire unused balance of the total Revolving Commitments or that is required
to finance the reimbursement of an LC Disbursement as contemplated by Section
2.04(e). Borrowings of more than one Type and Class may be outstanding at the
same time; PROVIDED that there shall not at any time be more than a total of
five Eurodollar Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, no
Borrower shall be entitled to request, or to elect to convert or continue, any
Borrowing if the Interest Period requested with respect thereto would end after
the Revolving Maturity Date or Term Loan Maturity Date, as applicable or if the
requested Interest Period with respect to any Term Loan or portion thereof would
extend beyond any date upon which is due any scheduled principal payment in
respect of Term Loans unless the aggregate principal amount of Term Loans which
are ABR Loans or which are Eurodollar Loans having Interest Periods that will
expire on or before such date equals or exceeds the amount of such principal
payment.
SECTION 2.03. REQUESTS FOR BORROWINGS. To request a Revolving
Borrowing or Term Borrowing, the applicable Borrower shall notify the
Administrative Agent of such request by telephone (a) in the case of a
Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three
Business Days before the date of the proposed Borrowing or (b) in the case of an
ABR Borrowing, not later than 11:00 a.m., New York City time, on the date of the
proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable
and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Borrowing Request in a form approved by the
Administrative Agent and signed by the Borrower. Each such telephonic and
written Borrowing Request shall specify the following information in compliance
with Section 2.02:
(i) whether the requested Borrowing is to be a Revolving Borrowing or
Term Borrowing and, in the case of a Revolving Borrowing, whether such
Borrowing is to be
<PAGE>
34
made under Section 2.01(a) or 2.01(b) (and, if such Borrowing is to be
made under Section 2.01(b), the Foreign Borrower Supplement pursuant to
which such Borrowing is to be made);
(ii) the aggregate amount of such Borrowing;
(iii) the date of such Borrowing, which shall be a Business Day;
(iv) whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;
(v) in the case of a Eurodollar Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period contemplated by
the definition of the term "Interest Period";
(vi) the Borrower requesting such Borrowing; and
(vii) the location and number of the Borrower's account to which funds
are to be disbursed, which shall comply with the requirements of Section
2.05(a).
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Revolving Borrowing, then the requesting
Borrower shall be deemed to have selected an Interest Period of one month's
duration. Promptly following receipt of a Borrowing Request in accordance with
this Section, the Administrative Agent shall advise each Lender or Fronting
Lender, as the case may be, of the details thereof and of the amount of such
Lender's Loan to be made as part of the requested Borrowing.
SECTION 2.04. LETTERS OF CREDIT. (a) GENERAL. Subject to the terms
and conditions set forth herein, the Company may request the issuance of Letters
of Credit for its own account or for the joint and several account of the
Company and a Subsidiary, in a form reasonably acceptable to the Administrative
Agent and the applicable Issuing Bank, at any time and from time to time during
the Revolving Availability Period. In the event of any inconsistency between the
terms and conditions of this Agreement and the terms and conditions of any form
of letter of credit application or other agreement submitted by the Company to,
or entered into by the Company with, an Issuing Bank relating to any Letter of
Credit, the terms and conditions of this Agreement shall control.
(b) NOTICE OF ISSUANCE, AMENDMENT, RENEWAL, EXTENSION; CERTAIN
CONDITIONS. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Company shall hand
deliver or telecopy (or transmit by electronic communication, if arrangements
for doing so have been approved by the applicable Issuing Bank) to the
applicable Issuing Bank and the Administrative Agent (reasonably in advance of
the requested date of issuance, amendment, renewal or extension) a notice
requesting the issuance of a Letter of Credit, or identifying the Letter of
Credit to be amended, renewed or extended, and specifying the date of issuance,
amendment, renewal or extension (which shall be a Business Day), the date on
which such Letter of Credit is to expire (which shall comply with paragraph (c)
of this Section), the amount of such Letter of Credit, the name and address of
the beneficiary thereof and such other information as shall be necessary to
prepare, amend, renew or extend such Letter of Credit. If requested by such
Issuing Bank, the Company also shall submit a letter of credit application on
such Issuing Bank's standard form in connection with any request for a Letter of
Credit. A Letter of Credit shall be issued, amended, renewed or extended only if
(and upon issuance, amendment, renewal or extension of each Letter of Credit the
Company shall be deemed to represent and warrant that), after giving effect to
such issuance, amendment, renewal or extension (i) the LC Exposure shall not
exceed $20,000,000, (ii) the total Revolving Exposures shall not exceed the
total Revolving Commitments and (iii) the sum of the aggregate
<PAGE>
35
outstanding principal amount of the Loans and the LC Exposure shall not exceed
the Borrowing Base then in effect.
(c) EXPIRATION DATE. Each Letter of Credit shall expire at or prior
to the close of business on the earlier of (i) the date one year after the date
of the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five Business Days prior to the Revolving Maturity Date.
(d) PARTICIPATIONS. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of any Issuing Bank or the Lenders, each Issuing Bank
hereby grants to each Revolving Lender, and each Revolving Lender hereby
acquires from such Issuing Bank, a participation in such Letter of Credit equal
to such Lender's Applicable Percentage of the aggregate amount available to be
drawn under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to
pay to the Administrative Agent, for the account of each Issuing Bank, such
Lender's Applicable Percentage of each LC Disbursement made by such Issuing Bank
and not reimbursed by the Company on the date due as provided in paragraph (e)
of this Section, or of any reimbursement payment required to be refunded to the
Company for any reason. Each Lender acknowledges and agrees that its obligation
to acquire participations pursuant to this paragraph in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.
(e) REIMBURSEMENT. If any Issuing Bank shall make any LC
Disbursement in respect of a Letter of Credit, the Company shall reimburse such
LC Disbursement by paying to the Administrative Agent an amount equal to such LC
Disbursement not later than 12:00 noon, New York City time, on the date that
such LC Disbursement is made, if the Company shall have received notice of such
LC Disbursement prior to 10:00 a.m., New York City time, on such date, or, if
such notice has not been received by the Company prior to such time on such
date, then not later than 12:00 noon, New York City time, on the Business Day
immediately following the day that the Company receives such notice. If the
Company fails to make such payment when due, the Administrative Agent shall
notify each Revolving Lender of the applicable LC Disbursement, the payment then
due from the Company in respect thereof and such Lender's Applicable Percentage
thereof. Promptly following receipt of such notice, each Revolving Lender shall
pay to the Administrative Agent its Applicable Percentage of the payment then
due from the Company, in the same manner as provided in Section 2.05 with
respect to Loans made by such Lender (and Section 2.05 shall apply, MUTATIS
MUTANDIS, to the payment obligations of the Revolving Lenders), and the
Administrative Agent shall promptly pay to the applicable Issuing Bank the
amounts so received by it from the Revolving Lenders. Promptly following receipt
by the Administrative Agent of any payment from the Company pursuant to this
paragraph, the Administrative Agent shall distribute such payment to such
Issuing Bank or, to the extent that Revolving Lenders have made payments
pursuant to this paragraph to reimburse such Issuing Bank, then to such Lenders
and the Issuing Bank as their interests may appear. Any payment made by a
Revolving Lender pursuant to this paragraph to reimburse an Issuing Bank for any
LC Disbursement shall not constitute a Loan and shall not relieve the Company of
its obligation to reimburse such LC Disbursement.
(f) OBLIGATIONS ABSOLUTE. The Company's obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by any
<PAGE>
36
Issuing Bank under a Letter of Credit against presentation of a draft or other
document that does not comply with the terms of such Letter of Credit, or (iv)
any other event or circumstance whatsoever, whether or not similar to any of the
foregoing, that might, but for the provisions of this Section, constitute a
legal or equitable discharge of, or provide a right of setoff against, the
Company's obligations hereunder. Neither the Administrative Agent, the Lenders
nor any Issuing Bank, nor any of their Related Parties, shall have any liability
or responsibility by reason of or in connection with the issuance or transfer of
any Letter of Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding
sentence), or any error, omission, interruption, loss or delay in transmission
or delivery of any draft, notice or other communication under or relating to any
Letter of Credit (including any document required to make a drawing thereunder),
any error in interpretation of technical terms or any consequence arising from
causes beyond the control of any Issuing Bank; PROVIDED that the foregoing shall
not be construed to excuse any Issuing Bank from liability to the Company to the
extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Company to the extent permitted by
applicable law) suffered by the Company that are caused by any Issuing Bank's
failure to exercise care when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof. The parties
hereto expressly agree that, in the absence of gross negligence or wilful
misconduct on the part of the Issuing Bank (as finally determined by a court of
competent jurisdiction), such Issuing Bank shall be deemed to have exercised
care in each such determination. In furtherance of the foregoing and without
limiting the generality thereof, the parties agree that, with respect to
documents presented which appear on their face to be in substantial compliance
with the terms of a Letter of Credit, each Issuing Bank may, in its sole
discretion, either accept and make payment upon such documents without
responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.
(g) DISBURSEMENT PROCEDURES. Each Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. The Issuing Bank shall promptly
notify the Administrative Agent and the Company by telephone (confirmed by
telecopy) of such demand for payment and whether the Issuing Bank has made or
will make an LC Disbursement thereunder; PROVIDED that any failure to give or
delay in giving such notice shall not relieve the Company of its obligation to
reimburse the Issuing Bank and the Revolving Lenders with respect to any such LC
Disbursement.
(h) INTERIM INTEREST. If any Issuing Bank shall make any LC
Disbursement, then, unless the Company shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Company reimburses such LC Disbursement,
at the rate per annum then applicable to ABR Revolving Loans; PROVIDED that, if
the Company fails to reimburse such LC Disbursement when due pursuant to
paragraph (e) of this Section, then Section 2.12(c) shall apply. Interest
accrued pursuant to this paragraph shall be for the account of the Issuing Bank,
except that interest accrued on and after the date of payment by any Revolving
Lender pursuant to paragraph (e) of this Section to reimburse the Issuing Bank
shall be for the account of such Lender to the extent of such payment.
(i) REPLACEMENT OF AN ISSUING BANK. Any Issuing Bank may be replaced
at any time by written agreement among the Company, the Administrative Agent,
the replaced Issuing Bank and the successor Issuing Bank. The Administrative
Agent shall notify the Lenders of any such replacement of an Issuing Bank. At
the time any such replacement shall become effective, the Company shall pay all
unpaid fees accrued for the account of the replaced Issuing Bank pursuant to
Section 2.11(b). From and after the effective date of any such replacement, (i)
the successor Issuing Bank shall have all the rights and obligations of the
Issuing Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to
<PAGE>
37
the term "Issuing Bank" shall be deemed to refer to such successor or to any
previous Issuing Bank, or to such successor and all previous Issuing Banks, as
the context shall require. After the replacement of an Issuing Bank hereunder,
the replaced Issuing Bank shall remain a party hereto and shall continue to have
all the rights and obligations of an Issuing Bank under this Agreement with
respect to Letters of Credit issued by it prior to such replacement, but shall
not be required to issue additional Letters of Credit.
(j) CASH COLLATERALIZATION. If any Event of Default shall occur and
be continuing, on the Business Day that the Company receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Lenders with LC Exposure representing greater
than 50% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, the Company shall deposit in an account with the
Administrative Agent, in the name of the Administrative Agent and for the
benefit of the Lenders, an amount in cash equal to the LC Exposure as of such
date plus any accrued and unpaid interest thereon; PROVIDED that the obligation
to deposit such cash collateral shall become effective immediately, and such
deposit shall become immediately due and payable, without demand or other notice
of any kind, upon the occurrence of any Event of Default with respect to the
Company described in clause (h) or (i) of Article VII. The Company also shall
deposit cash collateral pursuant to this paragraph as and to the extent required
by Section 2.10(b) and (c), and any such cash collateral so deposited and held
by the Administrative Agent hereunder shall constitute part of the Borrowing
Base for purposes of determining compliance with Section 2.10(b) and (c). Each
such deposit shall be held by the Administrative Agent as collateral for the
payment and performance of the obligations of the Company under this Agreement.
The Administrative Agent shall have exclusive dominion and control, including
the exclusive right of withdrawal, over such account. Other than any interest
earned on the investment of such deposits, which investments shall be made at
the option and sole discretion of the Administrative Agent and at the Company's
risk and expense, such deposits shall not bear interest. Interest or profits, if
any, on such investments shall accumulate in such account. Moneys in such
account shall be applied by the Administrative Agent to reimburse any Issuing
Bank for LC Disbursements for which it has not been reimbursed and, to the
extent not so applied, shall be held for the satisfaction of the reimbursement
obligations of the Company for the LC Exposure at such time or, if the maturity
of the Loans has been accelerated (but subject to the consent of Revolving
Lenders with LC Exposure representing greater than 50% of the total LC
Exposure), be applied to satisfy other obligations of the Company under this
Agreement. If the Company is required to provide an amount of cash collateral
hereunder as a result of the occurrence of an Event of Default, such amount (to
the extent not applied as aforesaid) shall be returned to the Company within
three Business Days after all Events of Default have been cured or waived. If
the Company is required to provide an amount of cash collateral hereunder
pursuant to Section 2.10(b), such amount (to the extent not applied as
aforesaid) shall be returned to the Company as and to the extent that, after
giving effect to such return, the Company would remain in compliance with
Section 2.10(b) and no Default shall have occurred and be continuing.
SECTION 2.05. FUNDING OF BORROWINGS. (a) Each Lender shall make each
Loan to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 1:00 p.m., New York City time, to the account of
the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders. The Administrative Agent will make such Loans available
to the applicable Borrower by promptly crediting the amounts so received, in
like funds, to an account of such Borrower maintained with the Administrative
Agent in New York City and designated by such Borrower in the applicable
Borrowing Request; PROVIDED that ABR Revolving Loans made to finance the
reimbursement of an LC Disbursement as provided in Section 2.04(e) shall be
remitted by the Administrative Agent to the applicable Issuing Bank.
(b) Unless the Administrative Agent shall have received notice from
a Lender prior to any Borrowing that such Lender will not make available to the
Administrative Agent such Lender's share of such Borrowing, the Administrative
Agent may assume that such Lender
<PAGE>
38
has made such share available on such date in accordance with paragraph (a) of
this Section and may, in reliance upon such assumption, make available to the
applicable Borrower a corresponding amount. In such event, if a Lender has not
in fact made its share of the applicable Borrowing available to the
Administrative Agent, then the applicable Lender and the Borrower severally
agree to pay to the Administrative Agent forthwith on demand such corresponding
amount with interest thereon, for each day from and including the date such
amount is made available to the Borrower to but excluding the date of payment to
the Administrative Agent, at (i) in the case of such Lender, the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation or (ii) in
the case of the Borrower, the interest rate applicable to ABR Loans. If such
Lender pays such amount to the Administrative Agent, then such amount shall
constitute such Lender's Loan included in such Borrowing.
SECTION 2.06. INTEREST ELECTIONS. (a) Each Revolving Borrowing and
Term Borrowing initially shall be of the Type specified in the applicable
Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an
initial Interest Period as specified in such Borrowing Request. Thereafter, the
applicable Borrower may elect to convert such Borrowing to a different Type or
to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect
Interest Periods therefor, all as provided in this Section. The Borrower may
elect different options with respect to different portions of the affected
Borrowing, in which case each such portion shall be allocated ratably among the
Lenders holding the Loans comprising such Borrowing, and the Loans comprising
each such portion shall be considered a separate Borrowing.
(b) To make an election pursuant to this Section, the applicable
Borrower shall notify the Administrative Agent of such election by telephone by
the time that a Borrowing Request would be required under Section 2.03 if the
Borrower were requesting a Revolving Borrowing of the Type resulting from such
election to be made on the effective date of such election. Each such telephonic
Interest Election Request shall be irrevocable and shall be confirmed promptly
by hand delivery or telecopy to the Administrative Agent of a written Interest
Election Request in a form approved by the Administrative Agent and signed by
the applicable Borrower.
(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02 and paragraph
(f) of this Section:
(i) the Borrowing to which such Interest Election Request applies and,
if different options are being elected with respect to different portions
thereof, the portions thereof to be allocated to each resulting Borrowing
(in which case the information to be specified pursuant to clauses (iii)
and (iv) below shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest
Period to be applicable thereto after giving effect to such election,
which shall be a period contemplated by the definition of the term
"Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
<PAGE>
39
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.
(e) If the applicable Borrower fails to deliver a timely Interest
Election Request with respect to a Eurodollar Borrowing prior to the end of the
Interest Period applicable thereto, then, unless such Borrowing is repaid as
provided herein, at the end of such Interest Period such Borrowing shall be
converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if
an Event of Default has occurred and is continuing and the Administrative Agent,
at the request of the Required Lenders, so notifies the Borrower, then, so long
as an Event of Default is continuing (i) no outstanding Borrowing may be
converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each
Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the
Interest Period applicable thereto.
SECTION 2.07. TERMINATION AND REDUCTION OF COMMITMENTS. (a) Unless
previously terminated, (i) the Term Loan Commitments shall permanently terminate
at 5:00 p.m., New York City time, on the Effective Date and (ii) the Revolving
Commitments and the Foreign Borrower Commitments shall permanently terminate on
the Revolving Maturity Date.
(b) The Company may at any time terminate, or from time to time
reduce, the Revolving Commitments or any Foreign Borrower Commitment; PROVIDED
that (i) each reduction of the Revolving Commitments shall be in an amount that
is an integral multiple of $5,000,000 and (ii) the Company shall not terminate
or reduce the Revolving Commitments or any Foreign Borrower Commitment if, after
giving effect to any concurrent prepayment of the Revolving Loans in accordance
with Section 2.10, the sum of the Revolving Exposures would exceed the total
Revolving Commitments.
(c) The Company shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under paragraph (b) of this
Section, at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Company pursuant to this Section shall be irrevocable; PROVIDED that a notice of
termination of the Revolving Commitments delivered by the Company may state that
such notice is conditioned upon the effectiveness of other credit facilities, in
which case such notice may be revoked by the Company (by notice to the
Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied. Any termination or reduction of the Revolving
Commitments shall be permanent. Each reduction of the Revolving Commitments
shall be made ratably among the Lenders in accordance with their respective
Revolving Commitments.
SECTION 2.08. REPAYMENT OF LOANS; EVIDENCE OF DEBT. (a) Each
Borrower hereby unconditionally promises to pay (i) to the Administrative Agent
for the account of each Lender the then unpaid principal amount of each
Revolving Loan of such Lender on the Revolving Maturity Date and (ii) to the
Administrative Agent for the account of each Lender the then unpaid principal
amount of each Term Loan of such Lender as provided in Section 2.09.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of each Borrower to such
Lender resulting from each Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
(c) The Administrative Agent shall maintain accounts in which it
shall record (i) the amount of each Loan made 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
Borrowers to each Lender hereunder and (iii) the amount of any sum
<PAGE>
40
received by the Administrative Agent hereunder for the account of the Lenders
and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section 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 any Borrower
to repay the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans of any Class made by it be
evidenced by a promissory note. In such event, the applicable Borrower shall
prepare, execute and deliver to such Lender a promissory note 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 the
Company. Thereafter, the Loans evidenced by such promissory note and interest
thereon shall at all times (including after assignment pursuant to Section 9.04)
be represented by one or more promissory notes in such form payable to the order
of the payee named therein (or, if such promissory note is a registered note, to
such payee and its registered assigns).
SECTION 2.09. AMORTIZATION OF TERM LOANS. (a) Subject to adjustment
pursuant to paragraph (d) of this Section, the Company shall repay the Term
Borrowings in 20 consecutive quarterly installments, payable on December 31,
1999 and on each Quarterly Date thereafter, in the quarterly and annual
aggregate principal amounts set forth opposite the applicable period listed
below:
PERIOD QUARTERLY PAYMENT ANNUAL AMOUNT
1999 $3,000,000 $3,000,000
2000 4,000,000 16,000,000
2001 4,500,000 18,000,000
2002 5,000,000 20,000,000
2003 5,500,000 22,000,000
2004 7,000,000 21,000,000
(b) To the extent not previously paid, all Term Loans shall be due
and payable on the Term Loan Maturity Date.
(c) Any prepayment of a Term Borrowing shall be applied to reduce
the subsequent scheduled repayments of the Term Borrowings to be made pursuant
to this Section ratably; PROVIDED that any prepayment made pursuant to Section
2.10(a) shall be applied FIRST, to reduce the next scheduled repayment of the
Term Borrowings to be made pursuant to this Section unless and until such next
scheduled repayment has been eliminated as a result of reductions hereunder and
SECOND, ratably.
(d) Prior to any repayment of any Term Borrowings hereunder, the
Company shall select the Borrowing or Borrowings to be repaid and shall notify
the Administrative Agent by telephone (confirmed by telecopy) of such selection
not later than 11:00 a.m., New York City time, three Business Days before the
scheduled date of such repayment. Each repayment of a Borrowing shall be applied
ratably to the Loans included in the repaid Borrowing. Repayments of Term
Borrowings shall be accompanied by accrued interest on the amount repaid.
<PAGE>
41
SECTION 2.10. PREPAYMENT OF LOANS. (a) Each Borrower shall have the
right at any time and from time to time to prepay any Borrowing in whole or in
part, in an aggregate amount that is an integral multiple of $5,000,000, subject
to the requirements of this Section.
(b) In the event and on each occasion that the sum of the Revolving
Exposures exceeds the total Revolving Commitments, the Borrowers shall prepay
Revolving Borrowings (or, if no such Borrowings are outstanding, deposit cash
collateral in an account with the Administrative Agent pursuant to Section
2.04(j)) in an aggregate amount equal to such excess.
(c) In the event and on each occasion that the sum of the aggregate
outstanding principal amount of all Term Loans and the aggregate Revolving
Exposure exceeds the Borrowing Base, the Borrowers shall prepay Borrowings (or,
if no such Borrowings are outstanding, deposit cash collateral in an account
with the Administrative Agent pursuant to Section 2.04(j)) in an aggregate
amount equal to such excess.
(d) In the event and on each occasion that any Proceeds are received
by the Company, the Company shall, immediately after such Proceeds are received,
apply such Proceeds to prepay Term Loans until the Term Loans have been paid in
full.
(e) The Company shall notify the Administrative Agent by telephone
(confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City
time, three Business Days before the date of prepayment or (ii) in the case of
prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time,
one Business Day before the date of prepayment. Each such notice shall be
irrevocable and shall specify the prepayment date, the principal amount of each
Borrowing or portion thereof to be prepaid and, in the case of a mandatory
prepayment, a reasonably detailed calculation of the amount of such prepayment;
PROVIDED that, if a notice of optional prepayment is given in connection with a
conditional notice of termination of the Revolving Commitments as contemplated
by Section 2.07, then such notice of prepayment may be revoked if such notice of
termination is revoked in accordance with Section 2.07. Promptly following
receipt of any such notice, the Administrative Agent shall advise the Lenders of
the contents thereof. Each partial prepayment of any Borrowing shall be in an
aggregate amount that is an integral multiple of $5,000,000, except as necessary
to apply fully the required amount of a mandatory prepayment. Each prepayment of
a Borrowing shall be applied ratably to the Loans included in the prepaid
Borrowing. Prepayments shall be accompanied by accrued interest to the extent
required by Section 2.12.
SECTION 2.11. FEES. (a) The Company agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee, which
shall accrue at the Applicable Rate on the average daily unused amount of the
Revolving Commitment of such Lender during the period from and including the
date of this Agreement to but excluding the date on which such Revolving
Commitment terminates. Accrued commitment fees in respect of the Revolving
Commitments shall be payable in arrears on the last day of March, June,
September and December of each year and on the date on which the Revolving
Commitments terminate, commencing on the first such date to occur after the date
hereof. All commitment fees shall be computed on the basis of a year of 360 days
and shall be payable for the actual number of days elapsed (including the first
day but excluding the last day). For purposes of computing commitment fees with
respect to Revolving Commitments, a Revolving Commitment of a Lender shall be
deemed to be used to the extent of the outstanding Revolving Loans and LC
Exposure of such Lender.
(b) The Company agrees to pay (i) to the Administrative Agent for
the account of each Revolving Lender a participation fee with respect to its
participation in each Letter of Credit, which shall accrue at a per annum rate
equal to the Applicable Rate used to compute interest on Eurodollar Revolving
Loans on the average daily amount of the portion of such Lender's LC Exposure
(excluding any portion thereof attributable to unreimbursed LC
<PAGE>
42
Disbursements) attributable to such Letter of Credit during the period from and
including the date of issuance of such Letter of Credit to but excluding the
date on which such Letter of Credit expires or is drawn in full (but which shall
in no event be less than $500 for the period from and including the date of
issuance thereof to but excluding the date on which it expires or is drawn in
full), and (ii) to each Issuing Bank a fronting fee, which shall accrue at the
rate of 0.125% per annum on the average daily amount of the LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the Effective Date to but excluding the
later of the date of termination of the Revolving Commitments and the date on
which there ceases to be any LC Exposure, as well as each Issuing Bank's
standard fees with respect to the issuance, amendment, renewal or extension of
any Letter of Credit or processing of drawings thereunder. Participation fees
and fronting fees accrued through and including the last day of March, June,
September and December of each year shall be payable on the third Business Day
following such last day, commencing on the first such date to occur after the
Effective Date; PROVIDED that all such fees shall be payable on the date on
which the Revolving Commitments terminate and any such fees accruing after the
date on which the Revolving Commitments terminate shall be payable on demand.
Any other fees payable to any Issuing Bank pursuant to this paragraph shall be
payable within 10 days after demand. All participation fees and fronting fees
shall be computed on the basis of a year of 360 days and shall be payable for
the actual number of days elapsed (including the first day but excluding the
last day).
(c) The Company agrees to pay (or to cause the applicable Foreign
Borrower to pay) (i) to the Administrative Agent for the account of each
Revolving Lender a participation fee (an "FOREIGN BORROWER PARTICIPATION FEE")
with respect to its obligation under Section 2.01(c) to acquire participations
in Revolving Loans, which shall accrue at the Applicable Rate used to determine
the interest rate applicable to Eurocurrency Revolving Loans on the average
daily amount of such Revolving Lender's Foreign Borrower Exposure (excluding any
portion thereof attributable to Revolving Loans in respect of which such Lender
has made, or is required to have made, payments to the applicable Fronting
Lenders as provided in Section 2.01(d)) during the period from and including the
date hereof to but excluding the later of the date on which such Lender's
Revolving Commitment terminates and the date on which such Lender ceases to have
any Foreign Borrower Exposure, and (ii) to each Fronting Lender a fronting fee
(an "FOREIGN BORROWER FRONTING FEE"), which shall accrue at the rate of .125%
per annum on the daily aggregate outstanding amount of the Revolving Loans made
by such Fronting Lender under Section 2.01(b) during the period from and
including the date hereof to but excluding the later of the date of termination
of the Revolving Commitments and the date on which there cease to be any
Revolving Loans outstanding. Foreign Borrower Participation Fees and Foreign
Borrower Fronting Fees accrued under this paragraph through and including the
last day of March, June, September and December of each year shall be payable on
the third Business Day following such last day, commencing on the first such
date to occur after the date hereof; PROVIDED that all such Fees shall be
payable on the date on which the Revolving Commitments terminate and any such
Fees accruing after the date on which the Revolving Commitments terminate shall
be payable on demand. All Foreign Borrower Participation Fees and Foreign
Borrower Fronting Fees payable under this paragraph shall be computed on the
basis of a year of 360 days and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).
(d) The Company agrees to pay to the Administrative Agent, for its
own account, fees payable in the amounts and at the times separately agreed upon
between the Company and the Administrative Agent.
(e) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to any Issuing
Bank, in the case of fees payable to it) for distribution, in the case of
commitment fees and participation fees, to the Lenders entitled thereto. Fees
paid shall not be refundable under any circumstances.
<PAGE>
43
SECTION 2.12. INTEREST. (a) The Loans comprising each ABR Borrowing
shall bear interest at the Alternate Base Rate plus the Applicable Rate (except
that the Loans comprising each ABR Borrowing made pursuant to Section 2.01(b)
shall bear interest at the Alternate Base Rate).
(b) The Loans comprising each Eurodollar Borrowing shall bear
interest at the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Rate (except that the Loans comprising each
Eurodollar Borrowing made pursuant to Section 2.01(b) shall bear interest at the
Adjusted LIBO Rate for the Interest Period in effect for such Borrowing).
(c) Notwithstanding the foregoing, if any principal of or interest
on any Loan or any fee or other amount payable by any Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraphs
of this Section or (ii) in the case of any other amount, 2% plus the rate
applicable to ABR Revolving Loans as provided in paragraph (a) of this Section.
(d) Accrued interest on each Loan shall be payable in arrears on
each Interest Payment Date for such Loan and, in the case of Revolving Loans,
upon termination of the Revolving Commitments; PROVIDED that (i) interest
accrued pursuant to paragraph (c) of this Section shall be payable on demand,
(ii) in the event of any repayment or prepayment of any Loan (other than a
prepayment of an ABR Revolving Loan prior to the end of the Revolving
Availability Period), accrued interest on the principal amount repaid or prepaid
shall be payable on the date of such repayment or prepayment and (iii) in the
event of any conversion of any Eurodollar Loan prior to the end of the current
Interest Period therefor, accrued interest on such Loan shall be payable on the
effective date of such conversion.
(e) All interest hereunder shall be computed on the basis of a year
of 360 days, except that interest computed by reference to the Alternate Base
Rate at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). The applicable Alternate Base Rate or
Adjusted LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.
SECTION 2.13. ALTERNATE RATE OF INTEREST. If prior to the
commencement of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall
be conclusive absent manifest error) that adequate and reasonable means do
not exist for ascertaining the Adjusted LIBO Rate for such Interest
Period; or
(b) the Administrative Agent determines that the Adjusted LIBO Rate
for such Interest Period will not adequately and fairly reflect the cost
to such Lenders of making or maintaining their Loans included in such
Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Company and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Company and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
<PAGE>
44
SECTION 2.14. INCREASED COSTS. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account
of, or credit extended by, any Lender (except any such reserve
requirement reflected in the Adjusted LIBO Rate) or any Issuing Bank; or
(ii) impose on any Lender or Issuing Bank or the London interbank market
any other condition affecting this Agreement or Eurodollar Loans made by
such Lender or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Company will pay to such Lender or Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or Issuing Bank, as
the case may be, for such additional costs incurred or reduction suffered.
(b) If any Lender or Issuing Bank determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lender's or Issuing Bank's capital or on the capital of such
Lender's or Issuing Bank's holding company, if any, as a consequence of this
Agreement or the Loans made by, or participations in Letters of Credit held by,
such Lender, or the Letters of Credit issued by such Issuing Bank, to a level
below that which such Lender or the Issuing Bank or such Lender's or Issuing
Bank's holding company could have achieved but for such Change in Law (taking
into consideration such Lender's or Issuing Bank's policies and the policies of
such Lender's or Issuing Bank's holding company with respect to capital
adequacy), then from time to time the Company will pay to such Lender or Issuing
Bank, as the case may be, such additional amount or amounts as will compensate
such Lender or Issuing Bank or such Lender's or Issuing Bank's holding company
for any such reduction suffered.
(c) A certificate of a Lender or Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or Issuing Bank or its
holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section shall be delivered to the Company and shall be conclusive absent
manifest error. The Company shall pay such Lender or Issuing Bank, as the case
may be, the amount shown as due on any such certificate within 10 Business Days
after receipt thereof.
(d) Failure or delay on the part of any Lender or Issuing Bank to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender's or Issuing Bank's right to demand such compensation; PROVIDED that
the Company shall not be required to compensate a Lender or Issuing Bank
pursuant to this Section for any increased costs or reductions incurred more
than 270 days prior to the date that such Lender or Issuing Bank, as the case
may be, notifies the Company of the Change in Law giving rise to such increased
costs or reductions and of such Lender's or Issuing Bank's intention to claim
compensation therefor; PROVIDED FURTHER that, if the Change in Law giving rise
to such increased costs or reductions is retroactive, then the 270-day period
referred to above shall be extended to include the period of retroactive effect
thereof.
SECTION 2.15. BREAK FUNDING PAYMENTS. In the event of (a) the
payment of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Revolving Loan or Term Loan on the date specified in any
<PAGE>
45
notice delivered pursuant hereto (regardless of whether such notice may be
revoked under Section 2.10(e) and is revoked in accordance therewith), (d) the
purchase of participations in any Revolving Loan pursuant to Section 2.01(c), or
(e) the assignment of any Eurodollar Loan other than on the last day of the
Interest Period applicable thereto as a result of a request by the applicable
Borrower pursuant to Section 2.18, then, in any such event, the applicable
Borrower shall compensate each Lender for the loss, cost and expense
attributable to such event. In the case of a Eurodollar Loan, such loss, cost or
expense to any Lender shall be deemed to include an amount determined by such
Lender to be the excess, if any, of (i) the amount of interest which would have
accrued on the principal amount of such Loan had such event not occurred, at the
Adjusted LIBO Rate that would have been applicable to such Loan, for the period
from the date of such event to the last day of the then current Interest Period
therefor (or, in the case of a failure to borrow, convert or continue, for the
period that would have been the Interest Period for such Loan), over (ii) the
amount of interest which would accrue on such principal amount for such period
at the interest rate which such Lender would bid were it to bid, at the
commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the eurodollar market. A certificate of any Lender
setting forth any amount or amounts that such Lender is entitled to receive
pursuant to this Section shall be delivered to the applicable Borrower and shall
be conclusive absent manifest error. The applicable Borrower shall pay such
Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.
SECTION 2.16. TAXES. (a) Any and all payments by or on account of
any obligation of any Loan Party hereunder or under any other Loan Document
shall be made free and clear of and without deduction for any Indemnified Taxes
or Other Taxes; PROVIDED that if any Loan Party shall be required to deduct any
Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
the Administrative Agent, Lender or Issuing Bank (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrower shall make such deductions and (iii) such Loan Party
shall pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.
(b) In addition, the Company shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Company shall indemnify the Administrative Agent, each
Lender and each Issuing Bank, within 10 Business Days after written demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by
the Administrative Agent, such Lender or Issuing Bank, as the case may be, on or
with respect to any payment by or on account of any obligation of any Loan Party
hereunder or under any other Loan Document (including Indemnified Taxes or Other
Taxes imposed or asserted on or attributable to amounts payable under this
Section) and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability delivered
to the Company by a Lender or the Issuing Bank, or by the Administrative Agent
on its own behalf or on behalf of a Lender or Issuing Bank, shall be conclusive
absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Company shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which a
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by
<PAGE>
46
applicable law, such properly completed and executed documentation prescribed by
applicable law or reasonably requested by the Borrower as will permit such
payments to be made without withholding or at a reduced rate, provided that such
Foreign Lender has received written notice from the Borrower advising it of the
availability of such exemption or reduction and supplying all applicable
documentation.
SECTION 2.17. PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF
SET-OFFS. (a) Each Borrower shall make each payment required to be made by it
hereunder or under any other Loan Document (whether of principal, interest, fees
or reimbursement of LC Disbursements, or of amounts payable under Section 2.14,
2.15 or 2.16, or otherwise) prior to the time expressly required hereunder or
under such other Loan Document for such payment (or, if no such time is
expressly required, prior to 12:00 noon, New York City time), on the date when
due, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at 270 Park Avenue, New
York, New York, except payments to be made directly to an Issuing Bank as
expressly provided herein and except that payments pursuant to Sections 2.14,
2.15, 2.16 and 9.03 shall be made directly to the Persons entitled thereto and
payments pursuant to other Loan Documents shall be made to the Persons specified
therein. The Administrative Agent shall distribute any such payments received by
it for the account of any other Person to the appropriate recipient promptly
following receipt thereof. If any payment under any Loan Document shall be due
on a day that is not a Business Day, the date for payment shall be extended to
the next succeeding Business Day, and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such extension.
All payments under each Loan Document shall be made in dollars.
(b) If at any time insufficient funds are received by and available
to the Administrative Agent to pay fully all amounts of principal, unreimbursed
LC Disbursements, interest and fees then due hereunder, such funds shall be
applied (i) first, towards payment of interest and fees then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
interest and fees then due to such parties, and (ii) second, towards payment of
principal and unreimbursed LC Disbursements then due hereunder, ratably among
the parties entitled thereto in accordance with the amounts of principal and
unreimbursed LC Disbursements then due to such parties.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans (other than Revolving Loans made pursuant
to Section 2.01(b)), Term Loans, participations in LC Disbursements or in
participations in Revolving Loans made by Fronting Lenders resulting in such
Lender receiving payment of a greater proportion of the aggregate amount of its
Revolving Loans (other than Revolving Loans made pursuant to Section 2.01(b)),
Term Loans, participations in LC Disbursements or in participations in Revolving
Loans made by Fronting Lenders and accrued interest thereon than the proportion
received by any other Lender, then the Lender receiving such greater proportion
shall purchase (for cash at face value) participations in the Revolving Loans
(other than Revolving Loans made pursuant to Section 2.01(b)), Term Loans,
participations in LC Disbursements of other Lenders or in participations in
Revolving Loans made by Fronting Lenders to the extent necessary so that the
benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Revolving Loans (other than Revolving Loans made pursuant to
Section 2.01(b)), Term Loans, participations in LC Disbursements or in
participations in Revolving Loans made by Fronting Lenders; PROVIDED that (i) if
any such participations are purchased and all or any portion of the payment
giving rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by a Borrower pursuant to and in accordance with the express terms
<PAGE>
47
of this Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or participations
in LC Disbursements to any assignee or participant, other than to the Borrower
or any Subsidiary or Affiliate thereof (as to which the provisions of this
paragraph shall apply). Each Borrower consents to the foregoing and agrees, to
the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against such Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of such Borrower
in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from
a Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or the Issuing Banks hereunder that such
Borrower will not make such payment, the Administrative Agent may assume that
such Borrower has made such payment on such date in accordance herewith and may,
in reliance upon such assumption, distribute to the Lenders or the Issuing
Banks, as the case may be, the amount due. In such event, if such Borrower has
not in fact made such payment, then each of the Lenders or the Issuing Banks, as
the case may be, severally agrees to repay to the Administrative Agent forthwith
on demand the amount so distributed to such Lender or Issuing Bank with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Administrative Agent, at the
greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation.
(e) If any Lender shall fail to make any payment required to be made
by it pursuant to Section 2.04(c), 2.04(d) or (e), 2.05(b), 2.17(d) or 9.03(c),
then the Administrative Agent may, in its discretion (notwithstanding any
contrary provision hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender's
obligations under such Sections until all such unsatisfied obligations are fully
paid.
SECTION 2.18. MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS. (a) If
any Lender requests compensation under Section 2.14, or if a Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.16, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.14 or 2.16, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrowers
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.14, or if a
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.16,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights and obligations under this Agreement to
an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); PROVIDED that (i) the Borrower
shall have received the prior written consent of the Administrative Agent (and,
if a Revolving Commitment is being assigned, the Issuing Bank), which consent
shall not unreasonably be withheld, (ii) such Lender shall have received payment
of an amount equal to the outstanding principal of its Loans and participations
in LC Disbursements, accrued interest thereon, accrued fees and all other
amounts payable to it hereunder, from the assignee (to the extent of such
outstanding principal and accrued interest and fees) or the Borrowers (in the
case of all other amounts) and (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.14 or payments required
to be made pursuant to Section 2.16, such
<PAGE>
48
assignment will result in a material reduction in such compensation or payments.
A Lender shall not be required to make any such assignment and delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.
SECTION 2.19. BORROWING SUBSIDIARIES. On or after the Effective
Date, the Company may designate any Restricted Subsidiary of the Company as a
Borrowing Subsidiary by delivery to the Administrative Agent of a Borrowing
Subsidiary Agreement executed by such Restricted Subsidiary and the Company, and
upon such delivery such Restricted Subsidiary shall for all purposes of this
Agreement be a Borrowing Subsidiary and a party to this Agreement until the
Company shall have executed and delivered to the Administrative Agent a
Borrowing Subsidiary Termination with respect to such Restricted Subsidiary,
whereupon such Restricted Subsidiary shall cease to be a Borrowing Subsidiary
and a party to this Agreement. Notwithstanding the preceding sentence, no
Borrowing Subsidiary Termination will become effective as to any Borrowing
Subsidiary at a time when any principal of or interest on any Revolving Loan to
such Borrowing Subsidiary or any Letter of Credit issued for the account of such
Borrowing Subsidiary shall be outstanding hereunder; PROVIDED that such
Borrowing Subsidiary Termination shall be effective to terminate such Borrowing
Subsidiary's right to make further Borrowings or to request Letters of Credit
under this Agreement. As soon as practicable upon receipt of a Borrowing
Subsidiary Agreement, the Administrative Agent shall send a copy thereof to each
Lender.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to the Lenders that:
SECTION 3.01. ORGANIZATION; POWERS. Each of the Borrower and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.
SECTION 3.02. AUTHORIZATION; ENFORCEABILITY. The Transactions to be
entered into by each Loan Party are within such Loan Party's corporate powers
and have been duly authorized by all necessary corporate and, if required,
stockholder action. This Agreement has been duly executed and delivered by the
Borrowers and constitutes, and each other Loan Document to which any Loan Party
is to be a party, when executed and delivered by such Loan Party, will
constitute, a legal, valid and binding obligation of the Borrowers or such Loan
Party (as the case may be), enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.
SECTION 3.03. GOVERNMENTAL APPROVALS; NO CONFLICTS. The Transactions
(a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except (i) such as have been
obtained or made and are in full force and effect, (ii) filings necessary to
perfect Liens created under the Loan Documents and (iii) those the failure to
obtain or make which, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, (b) will not violate any
applicable law or regulation or the charter, by-laws or other organizational
documents of the Company or any of its Subsidiaries or any order of any
Governmental Authority, (c) will not violate or result in a default under any
indenture, material agreement or other material instrument binding upon the
<PAGE>
49
Company or any of its Subsidiaries or its assets, or give rise to a right
thereunder to require any payment to be made by the Company or any of its
Subsidiaries and (d) will not result in the creation or imposition of any Lien
on any asset of the Company or any of its Subsidiaries, except Liens created
under the Loan Documents.
SECTION 3.04. FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE. (a)
The Company has heretofore furnished to the Lenders its consolidated balance
sheet and statements of income, stockholders equity and cash flows (i) as of and
for the fiscal year ended December 31, 1998, reported on by KPMG LLP,
independent certified public accountants, and (ii) as of and for the fiscal
quarter and the portion of the current fiscal year ended June 30, 1999,
certified by its chief financial officer. Such financial statements present
fairly, in all material respects, the financial position and results of
operations and cash flows of the Company and its consolidated Subsidiaries as of
such dates and for such periods in accordance with GAAP, subject to year-end
audit adjustments and the absence of footnotes in the case of the statements
referred to in clause (ii) above.
(b) The Company has heretofore furnished to the Lenders its pro
forma consolidated balance sheet as of June 30, 1999, prepared giving effect to
the Transactions as if the Transactions had occurred on such date. Such pro
forma consolidated balance sheet (i) has been prepared in good faith based on
the same assumptions used to prepare the pro forma financial statements included
in the Information Memorandum (which assumptions are believed by the Company to
be reasonable), (ii) accurately reflects all adjustments reasonably necessary to
give effect to the Transactions and (iii) presents fairly, in all material
respects, the pro forma financial position of the Company and its consolidated
Subsidiaries as of June 30, 1999 as if the Transactions had occurred on such
date; PROVIDED that with respect to the Avex Entities, the Company's
representation hereunder is made only pursuant to the Company's best knowledge.
(c) Except as disclosed in the financial statements referred to
above or the notes thereto or in the Information Memorandum and except for the
Disclosed Matters, after giving effect to the Transactions, none of the Company
or its Subsidiaries has, as of the Effective Date, any material contingent
liabilities, unusual long-term commitments or unrealized losses.
(d) Since December 31, 1998, there has been no Material Adverse
Effect.
SECTION 3.05. PROPERTIES. (a) Each of the Company and its
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business (including its Mortgaged
Properties), except for minor defects in title that (i) do not interfere with
its ability to conduct its business as currently conducted or to utilize such
properties for their intended purposes and (ii) individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
(b) Each of the Company and its Subsidiaries owns, or is licensed to
use, all trademarks, tradenames, copyrights, patents and other intellectual
property material to its business, and the use thereof by the Company and its
Subsidiaries does not infringe upon the rights of any other Person, except for
any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
(c) Schedule 3.05 sets forth the address of each real property that
is owned or leased by the Company or any of its Subsidiaries as of the Effective
Date after giving effect to the Transactions.
SECTION 3.06. LITIGATION AND ENVIRONMENTAL MATTERS. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries (i) as to which
there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate,
<PAGE>
50
to result in a Material Adverse Effect (other than the Disclosed Matters) or
(ii) that involve any of the Loan Documents or the Transactions.
(b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, neither the Company nor any of
its Subsidiaries (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (ii) has become subject to any Environmental
Liability, (iii) has received notice of any claim with respect to any
Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
(c) Since the date of this Agreement, there has been no change in
the status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
SECTION 3.07. COMPLIANCE WITH LAWS AND AGREEMENTS. Each of the
Company and its Subsidiaries is in compliance with all laws, regulations and
orders of any Governmental Authority applicable to it or its property and all
indentures, material agreements and other instruments binding upon it or its
property, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect. No
Default has occurred and is continuing.
SECTION 3.08. INVESTMENT AND HOLDING COMPANY STATUS. Neither the
Company nor any of its Subsidiaries is (a) an "investment company" as defined
in, or subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 3.09. TAXES. Each of the Company and its Subsidiaries has
timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) any Taxes that are being contested in good faith by
appropriate proceedings and for which the Company or such Subsidiary, as
applicable, has set aside on its books adequate reserves or (b) to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $5,000,000 the fair market value of the assets of such Plan, and the
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by more than $15,000,000 the fair
market value of the assets of all such underfunded Plans.
SECTION 3.11. DISCLOSURE. The Company has disclosed to the Lenders
all agreements, instruments and corporate or other restrictions to which the
Company or any of its Subsidiaries is subject, and all other matters known to
any of them, that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect. Neither the Information
Memorandum nor any of the other reports, financial statements, certificates or
other information furnished by or on behalf of any Loan Party to the
Administrative Agent or any Lender in connection with the negotiation of this
Agreement or any other Loan Document or delivered hereunder or thereunder (as
modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, taken as a whole, in the light of the circumstances
under which
<PAGE>
51
they were made, not misleading; PROVIDED that, with respect to projected
financial information, the Borrowers represent only that such information was
prepared in good faith based upon assumptions believed to be reasonable at the
time.
SECTION 3.12. SUBSIDIARIES. Schedule 3.12 sets forth the name of,
and the ownership interest of the Company in, each Subsidiary of the Company and
identifies each Subsidiary that is a Subsidiary Loan Party, in each case as of
the Effective Date.
SECTION 3.13. INSURANCE. Schedule 3.13 sets forth a description of
all insurance maintained by or on behalf of the Company and its Subsidiaries as
of the Effective Date. As of the Effective Date, all premiums in respect of such
insurance have been paid. The Company believes that the insurance maintained by
or on behalf of the Company and its Subsidiaries is adequate.
SECTION 3.14. LABOR MATTERS. As of the Effective Date, there are no
strikes, lockouts or slowdowns against the Company or any Subsidiary pending or,
to the knowledge of the Company, threatened. The hours worked by and payments
made to employees of the Company and the Subsidiaries have not been in violation
of the Fair Labor Standards Act or any other applicable Federal, state, local or
foreign law dealing with such matters. All payments due from the Company or any
Subsidiary, or for which any claim may be made against the Company or any
Subsidiary, on account of wages and employee health and welfare insurance and
other benefits, have been paid or accrued as a liability on the books of the
Company or such Subsidiary. The consummation of the Transactions will not give
rise to any right of termination or right of renegotiation on the part of any
union under any collective bargaining agreement to which the Company or any
Subsidiary is bound.
SECTION 3.15. SOLVENCY. Immediately after the consummation of the
Transactions to occur on the Effective Date and immediately following the making
of each Loan made on the Effective Date and after giving effect to the
application of the proceeds of such Loans, (a) the fair value of the assets of
each Loan Party, at a fair valuation, will exceed its debts and liabilities,
subordinated, contingent or otherwise; (b) the present fair saleable value of
the property of each Loan Party will be greater than the amount that will be
required to pay the probable liability of its debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (c) each Loan Party will be able to pay its debts
and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (d) each Loan Party will not have
unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be conducted
following the Effective Date.
SECTION 3.16. SENIOR INDEBTEDNESS. The Obligations will constitute
Senior Debt under and as defined in the Subordinated Note Indenture.
SECTION 3.17. YEAR 2000. Any reprogramming required to permit the
proper functioning, in and following the year 2000, of (a) the computer systems
of the Company and its Subsidiaries and (b) 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 completed by September 30, 1999, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. The cost to the Company and its
Subsidiaries of such reprogramming and testing and of the reasonably foreseeable
consequences of year 2000 to the Company and its Subsidiaries (including
reprogramming errors and the failure of others' systems or equipment) will not
result in a Default or a Material Adverse Effect. Except for such of the
reprogramming referred to in the preceding sentence as may be necessary, the
computer and management information systems of the Company and its Subsidiaries
are and, with ordinary course upgrading and maintenance, will continue for the
term of this Agreement to be, sufficient to permit the Company to conduct its
businesses without Material Adverse Effect.
<PAGE>
52
SECTION 3.18. INTELLECTUAL PROPERTY. The Company and each of its
Subsidiary owns, or is licensed to use, all patents, trademarks, tradenames,
service marks, copyrights, technology, know-how and processes (together with all
applications therefor and licenses granting rights therein, "INTELLECTUAL
PROPERTY") reasonably necessary for the conduct of its business as currently
conducted, except for those the failure to own or be licensed to use which could
not reasonably be expected to result in a Material Adverse Effect. To the
knowledge of the Company, (a) the use of Intellectual Property by the Company
and its Subsidiaries does not infringe on the rights of any person, (b) no
Intellectual Property of the Company or any of its Subsidiaries is being
infringed upon by any Person, and (c) no claim is pending or threatened in
writing challenging the use or the validity of any Intellectual Property of the
Company or any Subsidiary, except for infringements and claims referred to in
the foregoing clauses (a), (b) and (c) that, in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
ARTICLE IV
CONDITIONS
SECTION 4.01. EFFECTIVE DATE. The obligations of the Lenders to make
Loans and of the Issuing Banks to issue Letters of Credit hereunder shall not
become effective until the date on which each of the following conditions is
satisfied (or waived in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have received
from each party hereto either (i) a counterpart of this Agreement signed
on behalf of such party or (ii) written evidence satisfactory to the
Administrative Agent (which may include telecopy transmission of a signed
signature page of this Agreement) that such party has signed a counterpart
of this Agreement.
(b) The Administrative Agent shall have received a favorable written
opinion (addressed to the Administrative Agent, the Collateral Agent, the
Documentation Agent, the Issuing Banks and the Lenders and dated the
Effective Date) of Bracewell & Patterson, L.L.P., counsel for the Company,
substantially in the form of Exhibit B-1 and covering such other matters
relating to the Loan Parties, the Loan Documents or the Transactions as
the Required Lenders shall reasonably request. The Company hereby requests
such counsel to deliver such opinion.
(c) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably
request relating to the organization, existence and good standing of each
Loan Party, the authorization of the Transactions and any other legal
matters relating to the Loan Parties, the Loan Documents or the
Transactions, all in form and substance satisfactory to the Administrative
Agent and its counsel.
(d) The Administrative Agent shall have received a certificate,
dated the Effective Date and signed by the President, a Vice President or
a Financial Officer of the Company, confirming compliance with the
conditions set forth in paragraphs (a) and (b) of Section 4.02.
(e) The Administrative Agent shall have received all fees and other
amounts due and payable on or prior to the Effective Date, including, to
the extent invoiced, reimbursement or payment of all out-of-pocket
expenses (including reasonable fees, charges and disbursements of counsel)
required to be reimbursed or paid by any Loan Party hereunder or under any
other Loan Document.
<PAGE>
53
(f) The Collateral and Guarantee Requirement shall have been
satisfied and the Administrative Agent shall have received a completed
Perfection Certificate dated the Effective Date and signed by an executive
officer or Financial Officer of the Company, together with all attachments
contemplated thereby, including the results of a search of the UCC (or
equivalent) filings made with respect to the Loan Parties in the
jurisdictions contemplated by the Perfection Certificate and copies of the
financing statements (or similar documents) disclosed by such search and
evidence reasonably satisfactory to the Administrative Agent that the
Liens indicated by such financing statements (or similar documents) are
permitted by Section 6.02 or have been released.
(g) The Administrative Agent shall have received evidence that the
insurance required by Section 5.07 and the Security Documents is in
effect.
(h) The Company shall have received (and there shall have been
released from any escrow or similar arrangements in effect pending the
consummation of the Acquisition) gross cash proceeds of not less than
$80,200,000 from the issuance of the Subordinated Notes. The
Administrative Agent shall have received copies of the Subordinated Note
Documents, certified by a Financial Officer as complete and correct.
(i) All consents and approvals required to be obtained from any
Governmental Authority or other Person in connection with the Transactions
shall have been obtained, and all applicable waiting periods and appeal
periods shall have expired, in each case without the imposition of any
burdensome conditions. The Acquisition and the other Transactions shall
have been, or substantially simultaneously with the initial funding of
Loans on the Effective Date shall be, consummated in accordance with the
Stock Purchase Agreement and applicable law, without any amendment to or
waiver of any material terms or conditions of the Stock Purchase Agreement
not approved by the Administrative Agent. The Administrative Agent shall
have received a copy of the Stock Purchase Agreement and all certificates,
opinions and other documents delivered thereunder, certified by a
Financial Officer as complete and correct.
(j) The Lenders shall have received a pro forma consolidated balance
sheet of the Company as of June 30, 1999, reflecting all pro forma
adjustments as if the Transactions had been consummated on such date, and
such pro forma consolidated balance sheet shall be consistent in all
material respects with the forecasts and other information previously
provided to the Lenders.
(k) The Administrative Agent shall have received (i) audited
consolidated balance sheets and related statements of income,
stockholders' equity and cash flows of the Avex Entities for the fiscal
years ended December 31, 1998 and 1997 and (ii) to the extent available,
unaudited consolidated balance sheets and related statements of income,
stockholders' equity and cash flows of the Avex Entities for each fiscal
quarter, if any, ending after December 31, 1998, which audited financial
statements for periods ending in 1999 (x) shall be in form and scope
satisfactory to the Administrative Agent and (y) shall not be materially
and adversely inconsistent with the financial statements or the
projections previously provided to the Lenders.
(l) The Administrative Agent shall have received a completed
Borrowing Base Certificate dated the Effective Date and signed by a
Financial Officer of the Company.
(m) The consummation of the Transactions shall not (i) violate any
applicable law, statute, rule or regulation, (ii) cause or create any
prepayment events or liens under any debt instruments or other agreements
or (iii) conflict with, or result in a default or event of default under,
any material agreement of the Company, any of the Subsidiaries or the Avex
Entities.
<PAGE>
54
(n) The Scheduled Indebtedness shall have been or shall
simultaneously be repaid in full or released, all agreements and
instruments evidencing or governing such Indebtedness and all lending or
other commitments thereunder shall have been terminated and all Liens
securing such Indebtedness shall have been released, and the
Administrative Agent shall have received such evidence as it shall
reasonably have requested as to the satisfaction of such conditions. After
giving effect to the Effective Date Transactions, neither the Company nor
any of its Subsidiaries shall have outstanding any Indebtedness or shares
of preferred stock other than (i) Indebtedness incurred under the Loan
Documents, (ii) the Subordinated Notes and (iii) Indebtedness set forth in
Schedule 4.01(o).
(o) The Administrative Agent shall be reasonably satisfied that each
of the Company and its Subsidiaries is in compliance with all laws,
regulations and orders of any Governmental Authority applicable to it or
its property (including ERISA, margin regulations, securities laws and
environmental laws) and all indentures, material agreements and other
instruments binding upon it or its property, except where the failure to
do so, individually or in the aggregate, could not reasonably be expected
to result in a Material Adverse Effect.
(p) The Administrative Agent shall be reasonably satisfied with the
sufficiency of amounts under available Revolving Loans to meet the ongoing
working capital requirements of the Company and its subsidiaries following
the consummation of the Transactions.
The Administrative Agent shall notify the Company and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans and of the Issuing
Bank to issue Letters of Credit hereunder shall not become effective unless each
of the foregoing conditions is satisfied (or waived pursuant to Section 9.02) at
or prior to 5:00 p.m., New York City time, on October 31, 1999 (and, in the
event such conditions are not so satisfied or waived, the Commitments shall
terminate at such time).
SECTION 4.02. EACH CREDIT EVENT. The obligation of each Lender to
make a Loan on the occasion of any Borrowing, and of the Issuing Banks to issue,
amend, renew or extend any Letter of Credit, is subject to receipt of the
request therefor in accordance herewith and to the satisfaction of the following
conditions:
(a) The representations and warranties of each Loan Party set forth
in the Loan Documents shall be true and correct in all material respects
on and as of the date of such Borrowing or the date of issuance,
amendment, renewal or extension of such Letter of Credit, as applicable.
(b) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter
of Credit, as applicable, no Default shall have occurred and be
continuing.
Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrowers on the date thereof as to the matters specified in paragraphs (a) and
(b) of this Section.
SECTION 4.03. INITIAL CREDIT EVENT FOR EACH BORROWING SUBSIDIARY.
The obligation of the Lenders to make Loans to any Borrowing Subsidiary and the
obligations of the
<PAGE>
55
Issuing Banks to issue Letters of credit for the account of any Borrowing
Subsidiary are subject to the satisfaction of the following conditions:
<PAGE>
56
(a) The Administrative Agent (or its counsel) shall have received a
Borrowing Subsidiary Agreement duly executed by such Borrowing Subsidiary
and the other parties
thereto.
(b) The Administrative Agent shall have received a favorable written
opinion of counsel for such Borrowing Subsidiary, substantially in the
form of Exhibit B-2 and covering such other matters relating to such
Borrowing Subsidiary and its Borrowing Subsidiary Agreement as the
Administrative Agent shall reasonably request.
(c) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably
request relating to the organization, existence and good standing of such
Borrowing Subsidiary, the authorization of the Transactions insofar as
they relate to such Borrowing Subsidiary, the satisfaction of the
Collateral and Guarantee Requirement insofar as it relates to the assets
of such Borrowing Subsidiary and any other legal matters relating to such
Borrowing Subsidiary, its Borrowing Subsidiary Agreement or such
Transactions, all in form and substance satisfactory to the Administrative
Agent and its counsel.
ARTICLE V
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full and all Letters of Credit shall have expired or terminated and
all LC Disbursements shall have been reimbursed, each Borrower covenants and
agrees with the Lenders that:
SECTION 5.01. FINANCIAL STATEMENTS AND OTHER INFORMATION. The
Company will furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year of the Company,
audited consolidated balance sheets and related statements of operations,
stockholders' equity and cash flows as of the end of and for such year,
setting forth in each case in comparative form the figures for the
previous fiscal year, of (i) the Company and the consolidated Subsidiaries
and (ii) the Company and the Restricted Subsidiaries as of the end of such
year, all reported on by KPMG LLP or other independent public accountants
of recognized national standing (without a "going concern" or like
qualification or exception and without any qualification or exception as
to the scope of such audit) to the effect that such consolidated financial
statements present fairly in all material respects the financial condition
and results of operations of the Company and the consolidated Subsidiaries
or the Company and the consolidated Restricted Subsidiaries, as
applicable, on a consolidated basis in accordance with GAAP consistently
applied;
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of the Company, the consolidated balance
sheets and related statements of operations, stockholders' equity and cash
flows as of the end of and for such fiscal quarter and the then elapsed
portion of the fiscal year, setting forth in each case in comparative form
the figures for the previous fiscal year, of (i) the Company and the
consolidated Subsidiaries and (ii) the Company and the Restricted
Subsidiaries, all certified by one of the Company's Financial Officers as
presenting fairly in all material respects the financial condition and
results of operations of the Company and the consolidated Subsidiaries or
the Company and the consolidated Restricted Subsidiaries, as applicable,
on a consolidated basis in accordance with GAAP consistently applied,
subject to normal year-end audit adjustments and the absence of footnotes;
<PAGE>
57
(c) concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer of the
Company (i) certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action taken
or proposed to be taken with respect thereto, (ii) setting forth
reasonably detailed calculations demonstrating compliance with Sections
6.13, 6.14, 6.15, 6.16 and 6.17 and (iii) stating whether any change in
GAAP or in the application thereof has occurred since the date of the
Company's audited financial statements referred to in Section 3.04 and, if
any such change has occurred, specifying the effect of such change on the
financial statements accompanying such certificate;
(d) concurrently with any delivery of financial statements under
clause (a) above, any management letter delivered to the management of the
Company by the accounting firm that reported on such financial statements;
(e) within 10 days after the end of each calendar month, (i) a
completed Borrowing Base Certificate calculating and certifying the
Borrowing Base as of the last day of such calendar month, certified as
complete and correct and signed on behalf of the Company by a Financial
Officer, and (ii) such other supporting documentation and additional
reports with respect to the Borrowing Base as the Administrative Agent
shall reasonably request;
(f) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
the Company or any Subsidiary with the Securities and Exchange Commission,
or any Governmental Authority succeeding to any or all of the functions of
said Commission, or with any national securities exchange, or distributed
by the Company to its shareholders generally, as the case may be; and
(g) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the
Company or any Subsidi ary, or compliance with the terms of any Loan
Document, as the Administrative Agent or any Lender may reasonably
request.
SECTION 5.02. NOTICES OF MATERIAL EVENTS. The Company will furnish
to the Administrative Agent and each Lender prompt written notice of the
following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by
or before any arbitrator or Governmental Authority against or affecting
the Company or any Affiliate thereof that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together with
any other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Company and its Subsidiaries in an aggregate
amount exceeding $5,000,000;
(d) the occurrence of any event or any other development by which
the Company or any of its Subsidiaries (i) fails to comply with any
Environmental Law or to obtain, maintain or comply with any permit,
license or other approval required under any Environmental Law, (ii)
becomes subject to any Environmental Liability, (iii) receives notice of
any claim with respect to any Environmental Liability or (iv) becomes
aware of any basis for any Environmental Liability and in each of the
preceding clauses, which individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect; and
<PAGE>
58
(e) any other development (including the termination of any material
contract) that results in, or could reasonably be expected to result in, a
Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Company setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
SECTION 5.03. INFORMATION REGARDING COLLATERAL. (a) The Company will
furnish to the Administrative Agent prompt written notice of any change (i) in
any Loan Party's corporate name or in any trade name used to identify it in the
conduct of its business or in the ownership of its properties, (ii) in the
location of any Loan Party's chief executive office, its principal place of
business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility),
(iii) in any Loan Party's identity or corporate structure or (iv) in any Loan
Party's Federal Taxpayer Identification Number. The Company agrees not to effect
or permit any change referred to in the preceding sentence unless all filings
have been made under the UCC or otherwise that are required in order for the
Administrative Agent to continue at all times following such change to have a
valid, legal and perfected security interest in all the Collateral. The Company
also agrees promptly to notify the Administrative Agent if any material portion
of the Collateral is damaged or destroyed.
(b) Each year, at the time of delivery of annual financial
statements with respect to the preceding fiscal year pursuant to clause (a) of
Section 5.01, the Company shall deliver to the Administrative Agent a
certificate of a Financial Officer and the chief legal officer of the Company
(i) setting forth the information required pursuant to Section 1 of the
Perfection Certificate or confirming that there has been no change in such
information since the date of the Perfection Certificate delivered on the
Effective Date or the date of the most recent certificate delivered pursuant to
this Section and (ii) certifying that all UCC financing statements (including
fixture filings, as applicable) or other appropriate filings, recordings or
registrations, including all refilings, rerecordings and reregistrations,
containing a description of the Collateral have been filed of record in each
governmental, municipal or other appropriate office in each jurisdiction
identified pursuant to clause (i) above to the extent necessary to protect and
perfect the security interests under the Security Documents for a period of not
less than 18 months after the date of such certificate (except as noted therein
with respect to any continuation statements to be filed within such period).
SECTION 5.04. EXISTENCE; CONDUCT OF BUSINESS. The Company will, and
will cause each of its Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges, franchises, patents,
copyrights, trademarks and trade names material to the conduct of its business,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect; PROVIDED that the
foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 6.03.
SECTION 5.05. PAYMENT OF OBLIGATIONS. The Company will, and will
cause each of its Subsidiaries to, pay its Indebtedness and other obligations,
including Tax liabilities, before the same shall become delinquent or in
default, except where (a) the validity or amount thereof is being contested in
good faith by appropriate proceedings, (b) the Company or such Subsidiary has
set aside on its books adequate reserves with respect thereto in accordance with
GAAP, (c) such contest effectively suspends collection of the contested
obligation and the enforcement of any Lien securing such obligation and (d) the
failure to make payment pending such contest could not reasonably be expected to
result in a Material Adverse Effect.
SECTION 5.06. MAINTENANCE OF PROPERTIES. The Company will, and will
cause each of its Subsidiaries to, keep and maintain all property material to
the conduct of its business
<PAGE>
59
in good working order and condition, ordinary wear and tear excepted, except
where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 5.07. INSURANCE. The Company will, and will cause each of
its Subsidiaries to, maintain, with financially sound and reputable insurance
companies (a) insurance in such amounts (with no greater risk retention) and
against such risks as are customarily maintained by companies of established
repute engaged in the same or similar businesses operating in the same or
similar locations and (b) all insurance required to be maintained pursuant to
the Security Documents. The Company will furnish to the Lenders, upon request of
the Administrative Agent, information in reasonable detail as to the insurance
so maintained.
SECTION 5.08. BOOKS AND RECORDS; INSPECTION AND AUDIT RIGHTS. (a)
The Company will, and will cause each of its Subsidiaries to, keep proper books
of record and account in which full, true and correct entries are made of all
material dealings and transactions in relation to its business and activities.
The Company will, and will cause each of its Subsidiaries to, permit any
representatives designated by the Administrative Agent or any Lender, upon
reasonable prior notice, to visit and inspect its properties, to examine and
make extracts from its books and records, and to discuss its affairs, finances
and condition with its officers and independent accountants, all at such
reasonable times and as often as reasonably requested.
(b) The Company will, and will cause each of its Subsidiaries to,
permit any representatives designated by the Administrative Agent (including any
consultants, accountants, lawyers and appraisers retained by the Administrative
Agent) to conduct evaluations and appraisals of the Company's computation of the
Borrowing Base and the assets included in the Borrowing Base, all at such
reasonable times and as often as reasonably requested; PROVIDED that, if no
Default shall have occurred and be continuing, no more than one such evaluation
will be requested by the Administrative Agent during any fiscal year. The
Company shall pay the reasonable fees and expenses of any representatives
retained by the Administrative Agent to conduct any such evaluation or
appraisal. The Company also agrees to modify or adjust the computation of the
Borrowing Base (which may include maintaining additional reserves or changing
the definitions of or modifying the eligibility criteria for the components of
the Borrowing Base) to the extent required by the Administrative Agent or the
Required Lenders as a result of any such evaluation or appraisal, in each case
with the consent of the Company (such consent not to be unreasonably withheld).
SECTION 5.09. COMPLIANCE WITH LAWS. The Company will, and will cause
each of its Subsidiaries to, comply with all laws, rules, regulations and orders
of any Governmental Authority (including Environmental Laws) applicable to it or
its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
SECTION 5.10. USE OF PROCEEDS AND LETTERS OF CREDIT. The proceeds of
the Borrowings hereunder will be used only for the purposes set forth in the
preamble to this Agreement. No part of the proceeds of any Loan will be used,
whether directly or indirectly, for any purpose that entails a violation of any
of the Regulations of the Board, including Regulations U and X.
SECTION 5.11. ADDITIONAL SUBSIDIARIES. If any additional Subsidiary
is formed or acquired after the Effective Date, the Company will, at least five
Business Days before such Subsidiary is formed or acquired, notify the
Administrative Agent and the Lenders thereof and cause the Collateral and
Guarantee Requirement to be satisfied (to the extent applicable) with respect to
such Subsidiary and with respect to any Equity Interest in or Indebtedness of
such Subsidiary owned or to be owned by or on behalf of the Company or any other
Subsidiary.
<PAGE>
60
SECTION 5.12. FURTHER ASSURANCES. The Company will, and will cause
each Subsidiary to, execute any and all further documents, financing statements,
agreements and instruments, and take all such further actions (including the
filing and recording of financing statements, fixture filings, mortgages, deeds
of trust and other documents), which may be required under any applicable law,
or which the Administrative Agent or the Required Lenders may reasonably
request, to cause the Collateral and Guarantee Requirement to be and remain
satisfied, all at the expense of the Loan Parties. The Company also agrees to
provide to the Administrative Agent from time to time upon request evidence
reasonably satisfactory to the Administrative Agent as to the perfection and
priority of the Liens created or intended to be created by the Security
Documents.
SECTION 5.13. INTEREST RATE AND CURRENCY EXCHANGE RATE PROTECTION.
As promptly as practicable, and in any event within 60 days after the Effective
Date, the Company will enter into, and thereafter for a period of not less than
four years will maintain in effect, one or more interest rate protection
agreements on such terms and with such parties as shall be reasonably
satisfactory to the Administrative Agent, the effect of which shall be to fix or
limit the interest cost to the Company with respect to at least 50% of the Term
Loans outstanding from time to time. The Company will also identify currency
exchange rate risks to which the Company and the Subsidiaries are subject from
time to time and enter into one or more exchange rate protection agreements, on
such terms and with such parties as shall be reasonably satisfactory to the
Administrative Agent, to limit such risks. Without limiting the foregoing, in
the event the Company shall use the proceeds of any Borrowing hereunder to make
a loan or advance to any Foreign Subsidiary, such loan or advance will be
denominated in the currency of the jurisdiction in which such Subsidiary has its
principal operations and the Company will enter into one or more exchange rate
protection agreements, on such terms and with such parties as shall be
reasonably satisfactory to the Administrative Agent, to limit the exchange rate
risk to the Company associated with such loan or advance.
SECTION 5.14. OWNERSHIP OF SUBSIDIARIES. (a) The Company will, and
will cause each of the Subsidiaries to, ensure that all Equity Interests in
Domestic Subsidiaries are owned directly or indirectly at all times only by the
Company or one or more other Domestic Subsidiaries and that all the Equity
Interests of such latter Domestic Subsidiaries are pledged to secure the
Obligations.
(b) As promptly as practicable, and in any event within 30 days
after the Effective Date, the Company will, and will cause each of its
Subsidiaries to, ensure that any Foreign Subsidiary (including each Foreign
Subsidiary acquired in connection with the Acquisition), is owned directly or
indirectly at all times by a Qualified Foreign Subsidiary Holding Company and
that all the Equity Interests of such Qualified Foreign Subsidiary Holding
Company are pledged to secure the Obligations.
ARTICLE VI
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the principal
of and interest on each Loan and all fees payable hereunder have been paid in
full and all Letters of Credit have expired or terminated and all LC
Disbursements shall have been reimbursed, each Borrower covenants and agrees
with the Lenders that:
SECTION 6.01. INDEBTEDNESS. The Company will not, and will not
permit any Subsidiary to, create, incur, assume or permit to exist any
Indebtedness, except:
(a) the Obligations;
<PAGE>
61
(b) Subordinated Notes in a maximum aggregate principal amount of
$80,200,000;
(c) Acceptable Securities; PROVIDED that the Proceeds thereof shall
have been applied as required by Section 2.10(d);
(d) Indebtedness existing on the date hereof and set forth in
Schedule 6.01, and extensions, renewals and replacements of any such
Indebtedness that do not change the obligors liable for the payment
thereof, increase the outstanding principal amount thereof or shorten the
maturity or the weighted average life thereof;
(e) Intercompany Indebtedness (to the extent permitted by Section
6.04);
(f) Guarantees by the Company or any Subsidiary of Indebtedness of
any Restricted Subsidiary, other than Guarantees by the Company or any
Subsidiary that is a Loan Party of Indebtedness of any Subsidiary that is
not a Loan Party;
(g) Indebtedness of the Company, any Domestic Subsidiary or any
Foreign Borrower incurred to finance the acquisition, construction or
improvement of any fixed or capital assets, including Capital Lease
Obligations and any Indebtedness assumed in connection with the
acquisition of any such assets or secured by a Lien on any such assets
prior to the acquisition thereof, and extensions, renewals and
replacements of any such Indebtedness that do not increase the outstanding
principal amount thereof or result in an earlier maturity date or
decreased weighted average life thereof; PROVIDED that (A) such
Indebtedness is incurred prior to or within 90 days after such acquisition
or the completion of such construction or improvement and (B) the
aggregate principal amount of Indebtedness permitted by this clause (g)
shall not exceed $5,000,000 at any time outstanding;
(h) Indebtedness of any Person that becomes a Domestic Subsidiary or
a Foreign Borrower after the date hereof; PROVIDED that (A) such
Indebtedness exists at the time such Person becomes a Domestic Subsidiary
or a Foreign Borrower, as the case may be, and is not created in
contemplation of or in connection with such Person becoming a Domestic
Subsidiary or a Foreign Borrower, as the case may be, and (B) the
aggregate principal amount of Indebtedness permitted by this clause (h)
shall not exceed $5,000,000 at any time outstanding;
(i) Indebtedness of Unrestricted Subsidiaries for which neither the
Company nor any Restricted Subsidiary shall be liable as obligor, under
any Guarantee or otherwise;
(j) other unsecured Indebtedness in an aggregate principal amount
not exceeding $2,500,000 at any time outstanding; and
(k) other unsecured Indebtedness incurred by Foreign Subsidiaries
for working capital purposes in an aggregate principal amount not
exceeding $2,500,000 at any time outstanding.
SECTION 6.02. LIENS. The Company will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or asset now owned or hereafter acquired by it, except:
(a) Liens created under the Loan Documents;
(b) Permitted Encumbrances;
<PAGE>
62
(c) any Lien on any property or asset of the Company or any Subsidiary
existing on the date hereof and set forth in Schedule 6.02; PROVIDED that
(i) such Lien shall not apply to any other property or asset of the
Company or any Subsidiary and (ii) such Lien shall secure only those
obligations which it secures on the date hereof;
(d) any Lien existing on any property or asset prior to the acquisition
thereof by the Company or any Subsidiary or existing on any property or
asset of any Person that becomes a Subsidiary after the date hereof prior
to the time such Person becomes a Subsidiary; PROVIDED that (A) such Lien
is not created in contemplation of or in connection with such acquisition
or such Person becoming a Subsidiary, as the case may be, (B) such Lien
shall not apply to any other property or assets of the Company or any
Subsidiary and (C) such Lien shall secure only those obligations which it
secures on the date of such acquisition or the date such Person becomes a
Subsidiary, as the case may be and extensions, renewals and replacements
thereof that do not increase the outstanding principal amount thereof;
(e) Liens on fixed or capital assets acquired, constructed or improved
by the Company or any Subsidiary, including Liens deemed to exist in
respect of assets subject to Capital Lease Obligations; PROVIDED that (A)
such Liens secure Indebtedness permitted by clause (g) of Section 6.01,
(B) such Liens and the Indebtedness secured thereby are incurred prior to
or within 180 days after such acquisition or the completion of such
construction or improvement, (C) the Indebtedness secured thereby does not
exceed of the cost of acquiring, constructing or improving such fixed or
capital assets and (D) such Liens shall not apply to any other property or
assets of the Company or any Subsidiary;
(f) Liens securing Intercompany Indebtedness permitted under Section
6.01(e);
(g) extensions, renewals or replacements of any Lien referred to in
clauses (c), (d) and (e); PROVIDED that the principal amount of the
Indebtedness or obligations secured thereby is not increased and that any
such extension, renewal or replacement is limited to the assets originally
encumbered thereby;
(h) Liens on the assets of Unrestricted Subsidiaries securing
Indebtedness permitted under Section 6.01(i); and
(i) additional Liens incurred by the Company and its Subsidiaries so
long as the value of the property subject to such Liens, and the
Indebtedness and other obligations secured thereby, do not exceed
$1,000,000 at any time.
SECTION 6.03. FUNDAMENTAL CHANGES. (a) The Company will not, and
will not permit any Subsidiary to, merge into or consolidate with any other
Person, or permit any other Person to merge into or consolidate with it, or
liquidate or dissolve, except that, if at the time thereof and immediately after
giving effect thereto no Default shall have occurred and be continuing (i) any
Person may merge into the Company in a transaction in which the Company is the
surviving corporation, (ii) any Person may merge with or into any Subsidiary in
a transaction in which the surviving entity is a Subsidiary; PROVIDED that (A)
if any party to such merger is a Loan Party the surviving Person must also be a
Loan Party and must succeed to all the obligations of such Loan Party under the
Loan Documents and (B) if any party to such merger is a Restricted Subsidiary
the surviving Person shall also be a Restricted Subsidiary unless designated as
an Unrestricted Subsidiary pursuant to the definition of such term and (iii) any
Subsidiary (other than a Loan Party) may liquidate or dissolve if the Company
determines in good faith that such liquidation or dissolution is in the best
interests of the Company and is not materially disadvantageous to the Lenders;
PROVIDED that any such merger involving a Person that is not a Wholly Owned
Subsidiary immediately prior to such merger shall not be permitted unless also
permitted by Section 6.04.
<PAGE>
63
(b) The Company will not, and will not permit any of its
Subsidiaries to, engage to any material extent in any business other than
businesses of the type conducted by the Company and its Subsidiaries on the date
hereof and businesses reasonably related or reasonably incidental thereto.
SECTION 6.04. INVESTMENTS, LOANS, ADVANCES, GUARANTEES AND
ACQUISITIONS. The Company will not, and will not permit any of its Subsidiaries
to, purchase, hold or acquire (including pursuant to any merger with any Person
that was not a Wholly Owned Subsidiary prior to such merger) any Equity
Interests in or evidences of indebtedness or other securities (including any
option, warrant or other right to acquire any of the foregoing) of, make or
permit to exist any loans or advances to, Guarantee any obligations of, or make
or permit to exist any investment or any other interest in, any other Person
(all the foregoing being collectively called "INVESTMENTS"), or purchase or
otherwise acquire (in one transaction or a series of transactions) any assets of
any other Person (other than inventory acquired in the ordinary course of
business) that constitute a business unit or are substantial in relation to the
consolidated assets of the Company, except:
(a) the Acquisition;
(b) Permitted Investments;
(c) Investments existing on the date hereof and set forth on Schedule
6.04;
(d) Investments existing on the date hereof in Subsidiaries;
(e) additional Investments in Persons that, immediately prior to such
investments, are Restricted Subsidiaries;
(f) Investments by Unrestricted Subsidiaries in Persons that,
immediately prior to such investments, are Unrestricted Subsidiaries;
(g) Investments consisting of all the issued and outstanding capital
stock, or all or substantially all the assets, of Persons engaged in lines
of business permitted under Section 6.03(b); PROVIDED that (A) no Default
shall have occurred and be continuing at the time any such Investment is
made or would occur as a result thereof and (B) the cash consideration
payable for all such Investments made under this clause (g) after the date
hereof in the capital stock or assets of other Persons shall not exceed
$20,000,000 in the aggregate;
(h) Guarantees constituting Indebtedness permitted by Section 6.01;
PROVIDED that a Subsidiary shall not Guarantee the Subordinated Notes or
any Acceptable Securities;
(i) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;
(j) accounts receivable arising in the ordinary course of business;
(k) investments and loans held by any Subsidiary at the time it becomes
a Subsidiary in a transaction permitted by this Section;
(l) reasonable advances to officers and employees of the Company and
any Subsidiary for travel arising in the ordinary course of business;
(m) loans to officers and employees of the Company or any Subsidiary,
not to exceed $100,000 in the aggregate at any one time outstanding;
<PAGE>
64
(n) promissory notes and other noncash consideration received by the
Company and its Subsidiaries in connection with any asset sale permitted
hereunder;
(o) advances in the form of prepayments of expenses, so long as such
expenses were incurred in the ordinary course of business and are paid in
accordance with customary trade terms of the Company or any of its
Subsidiaries;
(p) Guarantees by the Company of obligations of Restricted Subsidiaries
incurred in the ordinary course of business and not constituting
Indebtedness; and
(q) other investments, loans or advances made by the Company, any
Domestic Subsidiary or any Foreign Borrower at times when no Default or
Event of Default shall have occurred and be continuing or would occur as a
result thereof and that, taken together with all other investments made
after the date hereof under this clause (q), would not exceed (A) the sum
of $5,000,000 and 50% of Consolidated Net Income of the Company for the
period (treated as one accounting period) commencing January 1, 2000, and
ending at the most recent fiscal quarter end for which financial
statements shall have been delivered under Section 5.01(a) or (b), minus
(B) the amount of Restricted Payments made after the date hereof pursuant
to Section 6.08(a).
SECTION 6.05. ASSET SALES, ETC. The Company will not, and will not
permit any of its Restricted Subsidiaries to, sell, transfer, lease or otherwise
dispose of any asset, including any Equity Interest, except:
(a) sales of inventory, used or surplus equipment and Permitted
Investments in the ordinary course of business or as expressly permitted
elsewhere in this Agreement;
(b) sales, transfers and dispositions to the Company or a Restricted
Subsidiary; and
(c) sales, transfers and other dispositions of other assets (other than
Equity Interests in Subsidiaries); PROVIDED that (x) the aggregate
proceeds from such sales, transfers and other dispositions during any
fiscal year shall not exceed the greater of (A) 10% of Consolidated Net
Tangible Assets as of the beginning of such fiscal year and (B) 10% of
Consolidated Net Income of the Company (excluding Unrestricted
Subsidiaries) for such fiscal year, (y) not more than $2,000,000 of
noncash proceeds shall be received from such sales, transfers and other
dispositions during any fiscal year and (z) the aggregate cash proceeds in
excess of the greater of (A) 5% of Consolidated Net Tangible Assets as of
the beginning of such fiscal year and (B) 5% of Consolidated Net Income of
the Company (excluding Unrestricted Subsidiaries) for such fiscal year
shall be applied to prepay Term Borrowings; PROVIDED FURTHER, however,
that if the Company shall deliver to the Administrative Agent within 10
days after receipt of such proceeds a certificate of a Financial Officer
to the effect that the Company and the Subsidiaries intend to apply such
proceeds (or a portion thereof specified in such certificate), within one
year after receipt of such proceeds, to acquire real property, equipment
or other tangible assets to be used in the business of the Company and the
Subsidiaries, and certifying that no Default has occurred and is
continuing, and if, pending such application, such proceeds shall be held
in the form of cash or Permitted Investments, then no prepayment shall be
required pursuant to this clause (iii) in respect of such proceeds (or the
portion of such proceeds specified in such certificate, if applicable)
except to the extent such proceeds shall not have been so applied by the
end of such one year period, at which time a prepayment shall be required
in an amount equal to the proceeds not so applied.
<PAGE>
65
SECTION 6.06. SALE AND LEASEBACK TRANSACTIONS. The Company will not,
and will not permit any of its Restricted Subsidiaries to, enter into any
arrangement, directly or indirectly, whereby it shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned or
hereinafter acquired, and thereafter rent or lease such property or other
property that it intends to use for substantially the same purpose or purposes
as the property sold or transferred.
SECTION 6.07. HEDGING AGREEMENTS. The Company will not, and will not
permit any of its Subsidiaries to, enter into any Hedging Agreement, other than
(a) Hedging Agreements required by Section 5.13 and (b) Hedging Agreements
entered into in the ordinary course of business to hedge or mitigate risks to
which the Company or such Subsidiary is exposed in the conduct of its business
or the management of its liabilities.
SECTION 6.08. RESTRICTED PAYMENTS; CERTAIN PAYMENTS IN RESPECT OF
INDEBTEDNESS. (a) The Company will not, and will not permit any Restricted
Subsidiary to, declare or make, or agree to make, directly or indirectly, any
Restricted Payment, or incur any obligation (contingent or otherwise) to do so,
except that (i) Restricted Subsidiaries may declare and pay dividends ratably
with respect to their capital stock and (ii) if no Default or Event of Default
has occurred and is continuing or would occur as a result thereof, the Company
may make any Restricted Payment that, taken together with all other Restricted
Payments made after the date hereof, would not exceed (A) the sum of $5,000,000
and 50% of Consolidated Net Income of the Company for the period (treated as one
accounting period) commencing January 1, 2000, and ending at the most recent
fiscal quarter end for which financial statements shall have been delivered
under Section 5.01(a) or (b), minus (B) the amount of investments made after the
date hereof pursuant to Section 6.04(q).
(b) The Company will not, and will not permit any Restricted
Subsidiary to, make or agree to make, directly or indirectly, any payment or
other distribution (whether in cash, securities or other property) of or in
respect of the principal of or interest on any Subordinated Indebtedness, or any
payment or other distribution (whether in cash, securities or other property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, defeasance, cancelation or termination of any
Subordinated Indebtedness, except scheduled and other mandatory payments of
interest and principal in respect of Subordinated Indebtedness; PROVIDED that no
payment shall be made in respect of Subordinated Indebtedness that is prohibited
by the subordination provisions applicable to such Subordinated Indebtedness.
SECTION 6.09. TRANSACTIONS WITH AFFILIATES. The Company will not,
and will not permit any Subsidiary to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) transactions in the ordinary course of business at prices
and on terms and conditions not less favorable to the Company or such Subsidiary
than could be obtained on an arm's-length basis from unrelated third parties,
(b) transactions between or among the Company and the Restricted Subsidiaries
not involving any other Affiliate, (c) transactions among or between
Unrestricted Subsidiaries and (d) any Restricted Payment permitted by Section
6.08.
SECTION 6.10. RESTRICTIVE AGREEMENTS. The Company will not, and will
not permit any Restricted Subsidiary to, directly or indirectly, enter into,
incur or permit to exist any agreement or other arrangement that prohibits,
restricts or imposes any condition upon (a) the ability of the Company or any
Restricted Subsidiary to create, incur or permit to exist any Lien upon any of
its property or assets, or (b) the ability of any Restricted Subsidiary (i) to
pay dividends or other distributions with respect to any shares of its capital
stock, (ii) to make or repay loans or advances to the Company or any other
Restricted Subsidiary, (iii) to Guarantee Indebtedness of the Company or any
other Restricted Subsidiary or (iv) sell, lease or transfer any of its Property
to the Company or any other Restricted Subsidiary; PROVIDED that (i) the
foregoing shall not apply to restrictions and conditions imposed by law or by
any Loan Document, (ii) the
<PAGE>
66
foregoing shall not apply to restrictions and conditions existing on the date
hereof identified on Schedule 6.10 (but shall apply to any extension or renewal
of, or any amendment or modification expanding the scope of, any such
restriction or condition), (iii) the foregoing shall not apply to customary
restrictions and conditions contained in agreements relating to the sale of a
Restricted Subsidiary pending such sale, provided that such restrictions and
conditions apply only to the Restricted Subsidiary that is to be sold and such
sale is permitted hereunder, (iv) clause (a) of the foregoing shall not apply to
restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the property or assets securing such Indebtedness and (v) clause
(a) of the foregoing shall not apply to customary provisions in leases and other
contracts restricting the assignment thereof.
SECTION 6.11. SALES AND ASSIGNMENTS OF INCOME, REVENUES AND
RECEIVABLES. The Company will not, and will not permit any Restricted Subsidiary
to, sell or assign, with or without recourse, for discount or otherwise, any
income or revenues, including notes and accounts receivable.
SECTION 6.12. AMENDMENT OF MATERIAL DOCUMENTS. The Company will not,
and will not permit any Subsidiary to, amend, modify or waive in any respect
materially adverse to the Company or to the rights or interests of the Lenders
any of its rights under the Subordinated Note Indenture or any document
evidencing or governing Acceptable Securities.
SECTION 6.13. INTEREST EXPENSE COVERAGE RATIO. The Company will not
permit the Interest Coverage Ratio for any Rolling Period to be less than 3.00
to 1.00.
SECTION 6.14. ADJUSTED LEVERAGE RATIO; LEVERAGE RATIO. (a) The
Company will not permit the Adjusted Leverage Ratio as of any date during any
period set forth below to exceed the ratio set forth opposite such period:
PERIOD RATIO
Through December 31, 1999 3.25 to 1.00
January 1, 2000 through December 31, 2000 3.00 to 1.00
Thereafter 2.50 to 1.00
(b) The Company will not permit the Leverage Ratio as of any date during
any period set forth below to exceed the ratio set forth opposite such period:
PERIOD RATIO
Through December 31, 1999 3.25 to 1.00
Thereafter 3.00 to 1.00
SECTION 6.15. FIXED CHARGE COVERAGE RATIO. The Company will not
permit the Fixed Charge Coverage Ratio for any Rolling Period to be less than
1.10 to 1.00.
SECTION 6.16. CURRENT RATIO. The Company will not permit the Current
Ratio at any time to be less than 1.50 to 1.00.
SECTION 6.17. MINIMUM TANGIBLE NET WORTH. The Company will not
permit Consolidated Tangible Net Worth (excluding Unrestricted Subsidiaries) as
of any date to be less than the sum of (x) 75% of Consolidated Tangible Net
Worth (excluding Unrestricted Subsidiaries) as of the Effective Date plus (y)
50% of Consolidated Net Income of the Company
<PAGE>
67
and its Restricted Subsidiaries (but only to the extent such amount is positive)
for fiscal quarters ended after September 30, 1999 plus (z) 75% of the aggregate
Net Proceeds (cash or non-cash) from the issuance by the Company or any
Restricted Subsidiary of Equity Interests subsequent to the Effective Date.
ARTICLE VII
EVENTS OF DEFAULT
If any of the following events ("EVENTS OF DEFAULT") shall occur:
(a) any Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the
same shall become due and payable, whether at the due date thereof or at a
date fixed for prepay ment thereof or otherwise;
(b) any Borrower shall fail to pay any interest on any Loan or any
fee or any other amount (other than an amount referred to in clause (a) of
this Article) payable under this Agreement or any other Loan Document,
when and as the same shall become due and payable, and such failure shall
continue unremedied for a period of five days;
(c) any representation or warranty made or deemed made by or on
behalf of the Company or any Subsidiary in or in connection with any Loan
Document or any amendment or modification thereof or waiver thereunder, or
in any report, certificate, financial statement or other document
furnished pursuant to or in connection with any Loan Document or any
amendment or modification thereof or waiver thereunder, shall prove to
have been incorrect in any material respect when made or deemed made;
(d) the Company or any Subsidiary shall fail to observe or perform
any covenant or agreement contained in Section 5.02, 5.04 (with respect to
the existence of any Borrower) or 5.10 or in Article VI;
(e) any Loan Party shall fail to observe or perform any covenant or
agreement contained in any Loan Document (other than those specified in
clause (a), (b) or (d) of this Article), and such failure shall continue
unremedied for a period of 30 days after the earlier of (i) the Company's
obtaining knowledge thereof or (ii) written notice thereof from the
Administrative Agent to the Company (which notice will be given at the
request of any Lender);
(f) the Company or any Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of
any Material Indebtedness, when and as the same shall become due and
payable;
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables
or permits (with or without the giving of notice, the lapse of time or
both) the holder or holders of any Material Indebtedness or any trustee or
agent on its or their behalf to cause any Material Indebtedness to become
due, or to require the prepayment, repurchase, redemption or defeasance
thereof, prior to its scheduled maturity; PROVIDED that this clause (g)
shall not apply to secured Indebtedness that becomes due as a result of
the voluntary sale or transfer of the property or assets securing such
Indebtedness;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other
relief in respect of the Company or any Subsidiary or its debts, or of a
substantial part of its assets, under any
<PAGE>
68
Federal, state or foreign bankruptcy, insolvency, receivership or similar
law now or hereafter in effect or (ii) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for the
Company or any Subsidiary or for a substantial part of its assets, and, in
any such case, such proceeding or petition shall continue undismissed for
60 days or an order or decree approving or ordering any of the foregoing
shall be entered;
(i) the Company or any Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or
other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to
the institution of, or fail to contest in a timely and appropriate manner,
any proceeding or petition described in clause (h) of this Article, (iii)
apply for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Company or any
Subsidiary or for a substantial part of its assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any
such proceeding, (v) make a general assignment for the benefit of
creditors or (vi) take any action for the purpose of effecting any of the
fore going;
(j) the Company or any Subsidiary shall become unable, admit in
writing its inability or fail generally to pay its debts as they become
due;
(k) one or more judgments for the payment of money in an aggregate
amount in excess of $5,000,000 shall be rendered against the Company, any
Subsidiary or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution
shall not be effectively stayed, or any action shall be legally taken by a
judgment creditor to attach or levy upon any assets of the Company or any
Subsidiary to enforce any such judgment;
(l) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that
have occurred, could reasonably be expected to result in liability of the
Company and its Subsidiaries in an aggregate amount exceeding (i)
$5,000,000 in any year or (ii) $15,000,000 for all periods;
(m) any Lien or guarantee purported to be created under any Security
Document shall cease to be, or shall be asserted by any Loan Party not to
be, a valid and perfected Lien on any material portion of the Collateral,
with the priority required by the applicable Security Document, except (i)
as a result of the sale or other disposition of the applicable Collateral
in a transaction permitted under the Loan Documents or (ii) as a result of
the Administrative Agent's failure to maintain possession of any stock
certificates, promissory notes or other instruments delivered to it under
any Pledge Agreement; or
(n) a Change in Control shall occur;
then, and in every such event (other than an event with respect to the Company
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Company, take either or
both of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Borrowers accrued hereunder, shall become due
and payable immediately, without presentment,
<PAGE>
69
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrowers; and in case of any event with respect to the Company described in
clause (h) or (i) of this Article, the Commitments shall automatically terminate
and the principal of the Loans then outstanding, together with accrued interest
thereon and all fees and other obligations of the Borrowers accrued hereunder,
shall automatically become due and payable, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrowers.
ARTICLE VIII
THE ADMINISTRATIVE AGENT
Each of the Lenders and the Issuing Banks hereby irrevocably
appoints the Administrative Agent as its agent and authorizes the Administrative
Agent to take such actions on its behalf and to exercise such powers as are
delegated to the Administrative Agent by the terms of the Loan Documents,
together with such actions and powers as are reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall have
the same rights and powers in its capacity as a Lender as any other Lender and
may exercise the same as though it were not the Administrative Agent, and such
bank and its Affiliates may accept deposits from, lend money to and generally
engage in any kind of business with the Company or any Subsidiary or other
Affiliate thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations
except those expressly set forth in the Loan Documents. Without limiting the
generality of the foregoing, (a) the Administrative Agent shall not be subject
to any fiduciary or other implied duties, regardless of whether a Default has
occurred and is continuing, (b) the Administrative Agent shall not have any duty
to take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated by the Loan Documents
that the Administrative Agent is required to exercise in writing by the Required
Lenders (or such other number or percentage of the Lenders as shall be necessary
under the circumstances as provided in Section 9.02), and (c) except as
expressly set forth in the Loan Documents, the Administrative Agent shall not
have any duty to disclose, and shall not be liable for the failure to disclose,
any information relating to the Company or any of its Subsidiaries that is
communicated to or obtained by the bank serving as Administrative Agent or any
of its Affiliates in any capacity. The Administrative Agent shall not be liable
for any action taken or not taken by it with the consent or at the request of
the Required Lenders (or such other number or percentage of the Lenders as shall
be necessary under the circumstances as provided in Section 9.02) or in the
absence of its own gross negligence or wilful misconduct. The Administrative
Agent shall not be deemed not to have knowledge of any Default unless and until
written notice thereof is given to the Administrative Agent by the Company or a
Lender, and the Administrative Agent shall not be responsible for or have any
duty to ascertain or inquire into (i) any statement, warranty or representation
made in or in connection with any Loan Document, (ii) the contents of any
certificate, report or other document delivered thereunder or in connection
therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth in any Loan Document, (iv) the
validity, enforceability, effectiveness or genuineness of any Loan Document or
any other agreement, instrument or document, or (v) the satisfaction of any
condition set forth in Article IV or elsewhere in any Loan Document, other than
to confirm receipt of items expressly required to be delivered to the
Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall
not incur any liability for relying upon, any notice, request, certificate,
consent, statement, instrument, document or other writing believed by it to be
genuine and to have been signed or sent by the proper Person. The Administrative
Agent also may rely upon any statement made to it orally or by telephone and
believed by it to be made by the proper Person, and shall not incur any
liability
<PAGE>
70
for relying thereon. The Administrative Agent may consult with legal counsel
(who may be counsel for the Company), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.
The Administrative Agent may perform any and all its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of each Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor the
Administrative Agent as provided in this paragraph, the Administrative Agent may
resign at any time by notifying the Lenders, the Issuing Banks and the Company.
Upon any such resignation, the Required Lenders shall have the right, in
consultation with the Company, to appoint a successor. If no successor shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation, then the retiring Administrative Agent may, on behalf of the
Lenders and the Issuing Banks, appoint a successor Administrative Agent which
shall be a bank with an office in New York, New York, or an Affiliate of any
such bank. Upon the acceptance of its appointment as Administrative Agent
hereunder by a successor, such successor shall 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. The fees payable by the Company to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Company and such successor. After the
Administrative Agent's resignation hereunder, the provisions of this Article and
Section 9.03 shall continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while it was
acting as Administrative Agent.
Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges 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 from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document or related agreement or any document furnished hereunder
or thereunder.
It is expressly understood that none of the Documentation Agent nor
any Co-Agent shall have any duties or responsibilities under this Agreement.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. NOTICES. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
<PAGE>
71
(a) if to the Company or any Borrowing Subsidiary, to it, or to it
in care of the Company, at 3000 Technology Drive, Angleton, TX, Attention
of: Cary T. Fu (Telecopy No. (409) 848-5269);
(b) if to the Administrative Agent, to it at Chase Bank of Texas,
National Association, Loan and Agency Services Group, 712 Main Street,
Houston, TX 77002, Attention of James Dolphin (Telecopy No. (713)
216-6004), with a copy to The Chase Manhattan Bank, One Chase Manhattan
Plaza, 8th Floor, New York, NY 10081, Attention of Muniram Appanna
(Telecopy No. (212)-552-7490);
(c) if to Chase in its capacity as an Issuing Bank, to it at Chase
Bank of Texas, National Association., Loan and Agency Services Group, 712
Main Street, Houston, TX 77002, Attention of James Dolphin (Telecopy No.
(713) 216-6004), with a copy to The Chase Manhattan Bank, One Chase
Manhattan Plaza, 8th Floor, New York, NY 10081, Attention of Muniram
Appanna (Telecopy No. (212)-552-7490); and
(d) if to any other Lender or Issuing Bank, to it at its address (or
telecopy number) set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 9.02. WAIVERS; AMENDMENTS. (a) No failure or delay by the
Administrative Agent, any Issuing Bank or any Lender in exercising any right or
power hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent, the Issuing
Banks and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of any Loan Document or consent to
any departure by any Loan Party therefrom shall in any event be effective unless
the same shall be permitted by paragraph (b) of this Section, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given. Without limiting the generality of the foregoing, the
making of a Loan or issuance of a Letter of Credit shall not be construed as a
waiver of any Default, regardless of whether the Administrative Agent, any
Lender or any Issuing Bank may have had notice or knowledge of such Default at
the time.
(b) Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except, in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by the Company and the Required Lenders or, in the case of any
other Loan Document, pursuant to an agreement or agreements in writing entered
into by the Administrative Agent and the Loan Party or Loan Parties that are
parties thereto, in each case with the consent of the Required Lenders; PROVIDED
that no such agreement shall (i) increase the Commitment of any Lender without
the written consent of such Lender, (ii) reduce the principal amount of any Loan
or LC Disbursement or reduce the rate of interest thereon, or reduce any fees
payable hereunder, without the written consent of each Lender affected thereby,
(iii) postpone the maturity of any Loan, or any scheduled payment of the
principal amount of any Term Loan under Section 2.09, or the required date of
reimbursement of any LC Disbursement, or any date for the payment of any
interest or fees payable hereunder, or reduce the amount of, waive or excuse any
such payment, or postpone the scheduled date of expiration of any Commitment,
without the written consent of each Lender affected thereby, (iv) change Section
2.17(b) or (c) in a manner that would alter the pro rata sharing of payments
required thereby, without the written consent of each Lender, (v) change any
<PAGE>
72
of the provisions of this Section or the percentage set forth in the definition
of "Required Lenders" or any other provision of any Loan Document specifying the
number or percentage of Lenders (or Lenders of any Class) required to waive,
amend or modify any rights thereunder or make any determination or grant any
consent thereunder, without the written consent of each Lender (or each Lender
of such Class, as the case may be), (vi) release all or substantially all the
Guarantors from their Guarantees under the Guarantee Agreement except as
expressly provided in the Guarantee Agreement or Section 9.14, or limit the
liability of the Guarantors in respect of their Guarantee, without the written
consent of each Lender or (vii) release all or substantially all the Collateral
from the Liens of the Security Documents without the written consent of each
Lender; PROVIDED FURTHER that (A) no such agreement shall amend, modify or
otherwise affect the rights or duties of the Administrative Agent or any Issuing
Bank without the prior written consent of the Administrative Agent or such
Issuing Bank, as the case may be, and (B) any waiver, amendment or modification
of this Agreement that by its terms reduces or adversely affects the rights or
duties under this Agreement of the Lenders holding Loans or Commitments of one
or more Classes without affecting the rights or duties of the Lenders holding
Loans or Commitments of the other Class or Classes may be effected by an
agreement or agreements in writing entered into by the Company and the
percentage in interest of each adversely affected Class of Lenders that would be
required to consent thereto under this Section if such Class of Lenders were the
only Class of Lenders at such time. Notwithstanding the foregoing, any provision
of this Agreement may be amended by an agreement in writing entered into by the
Company, the Required Lenders and the Administrative Agent (and, if their rights
or obligations are affected thereby the Issuing Banks) if (i) by the terms of
such agreement the Commitment of each Lender not consenting to the amendment
provided for therein shall terminate upon the effectiveness of such amendment
and (ii) at the time such amendment becomes effective, each Lender not
consenting thereto receives payment in full of the principal of and interest
accrued on each Loan made by it and all other amounts owing to it or accrued for
its account under this Agreement.
SECTION 9.03. EXPENSES; INDEMNITY; DAMAGE WAIVER. (a) The Company
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including the reasonable fees, charges
and disbursements of counsel for the Administrative Agent and such Affiliates,
in connection with the syndication of the credit facilities provided for herein,
the preparation and administration of the Loan Documents or any amendments,
modifications or waivers of the provisions thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated), (ii) all
reasonable out-of-pocket expenses incurred by any Issuing Bank in connection
with the issuance, amendment, renewal or extension of any Letter of Credit or
any demand for payment thereunder and (iii) all out-of-pocket expenses incurred
by the Administrative Agent, any Issuing Bank or, after the occurrence and
during the continuance of any Default, any Lender, including the fees, charges
and disbursements of any counsel for the Administrative Agent, any Issuing Bank
or any Lender, in connection with the enforcement or protection of its rights in
connection with the Loan Documents, including its rights under this Section, or
in connection with the Loans made or Letters of Credit issued hereunder,
including all such out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of such Loans or Letters of Credit.
(b) The Company shall indemnify the Administrative Agent, each
Issuing Bank and each Lender, and each Related Party of any of the foregoing
Persons (each such Person being called an "INDEMNITEE") against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including the fees, charges and disbursements of any counsel
for any Indemnitee, incurred by or asserted against any Indemnitee arising out
of, in connection with, or as a result of (i) the execution or delivery of any
Loan Document or any other agreement or instrument contemplated hereby, the
performance by the parties to the Loan Documents of their respective obligations
thereunder or the consummation of the Transactions or any other transactions
contemplated hereby, (ii) any Loan or Letter of Credit or the use of the
proceeds therefrom (including any refusal by an Issuing Bank to honor a demand
for payment under a Letter of Credit if the documents presented in connection
with such demand do not
<PAGE>
73
strictly comply with the terms of such Letter of Credit), (iii) any actual or
alleged presence or release of Hazardous Materials on or from any Mortgaged
Property or any other property currently or formerly owned or operated by the
Company or any of its Subsidiaries, or any Environmental Liability related in
any way to the Company or any of its Subsidiaries or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto; PROVIDED that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses are deter mined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or wilful misconduct of such Indemnitee.
(c) To the extent that the Company fails to pay any amount required
to be paid by it to the Administrative Agent or any Issuing Bank under paragraph
(a) or (b) of this Section, each Lender severally agrees to pay to the
Administrative Agent or Issuing Bank, as the case may be, such Lender's pro rata
share (determined as of the time that the applicable unreimbursed expense or
indemnity payment is sought) of such unpaid amount; PROVIDED that the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against the
Administrative Agent or Issuing Bank in its capacity as such. For purposes
hereof, a Lender's "pro rata share" shall be determined based upon its share of
the sum of the total Revolving Exposures, outstanding Term Loans and unused
Commitments at the time.
(d) To the extent permitted by applicable law, the Company shall not
assert, and hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement or any agreement or instrument contemplated hereby, the
Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable promptly
after written demand therefor.
SECTION 9.04. SUCCESSORS AND ASSIGNS. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby (including any
Affiliate of an Issuing Bank that issues any Letter of Credit), except that a
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by a Borrower without such consent shall be null and
void). Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby (including any Affiliate of an Issuing
Bank that issues any Letter of Credit) and, to the extent expressly contemplated
hereby, the Related Parties of each of the Administrative Agent, the Issuing
Banks and the Lenders) any legal or equitable right, remedy or claim under or by
reason of this Agreement.
(b) Any Lender may assign to one or more assignees all or a portion
of its rights and obligations under this Agreement (including all or a portion
of its Commitment and the Loans at the time owing to it); PROVIDED that (i)
except in the case of an assignment to a Lender or an Affiliate of a Lender,
each of the Company and the Administrative Agent (and, in the case of an
assignment of all or a portion of a Revolving Commitment or any Lender's
obligations in respect of its LC Exposure, such Issuing Bank) must give their
prior written consent to such assignment (which consent shall not be
unreasonably withheld), (ii) except in the case of an assignment to a Lender or
an Affiliate of a Lender or an assignment of the entire remaining amount of the
assigning Lender's Commitment or Loans, the amount of the Commitment or Loans of
the assigning Lender subject to each such assignment (determined as of the date
the Assignment and Acceptance with respect to such assignment is delivered to
the Administrative Agent) shall not be less than $5,000,000 unless each of the
Company and the Administrative
<PAGE>
74
Agent otherwise consent, (iii) each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender's rights and
obligations under this Agreement, (iv) the parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and Acceptance,
together with a processing and recordation fee of $3,500, and (v) the assignee,
if it shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire; and PROVIDED FURTHER that any consent of the
Company otherwise required under this paragraph shall not be required if an
Event of Default under clause (h) or (i) of Article VII has occurred and is
continuing. Subject to acceptance and recording thereof pursuant to paragraph
(d) of this Section, from and after the effective date specified in each
Assignment and Acceptance the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Acceptance, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all of the assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of Sections
2.14, 2.15, 2.16 and 9.03). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this paragraph shall
be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (e) of
this Section.
(c) The Administrative Agent, acting for this purpose as an agent of
the Borrowers, shall maintain at one of its offices in The City of Houston a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the "REGISTER"). The entries in
the Register shall be conclusive, and the Borrowers, the Administrative Agent,
the Issuing Banks and the Lenders may treat each Person whose name is recorded
in the Register pursuant to the terms hereof as a Lender hereunder for all
purposes of this Agreement, notwithstanding notice to the contrary. The Register
shall be available for inspection by any Borrower, any Issuing Bank and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Administrative Agent shall accept such Assignment and
Acceptance and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Company, the
Administrative Agent or any Issuing Bank, sell participations to one or more
banks or other entities (a "PARTICIPANT") in all or a portion of such Lender's
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); PROVIDED that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrowers, the Administrative Agent, the Issuing
Banks and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce the Loan Documents and to approve any amendment, modification or waiver
of any provision of the Loan Documents; PROVIDED that (i) such agreement or
instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, modification or waiver described in the
first proviso to Section 9.02(b) that affects such Participant and (ii) in the
case of
<PAGE>
75
a Lender selling a participation to a wholly owned subsidiary of such Lender,
such agreement or instrument may provide that such Participant shall also have
the right to approve any amendment, modification or waiver of any provision of
the Loan Documents . Subject to paragraph (f) of this Section, the Borrowers
agree that each Participant shall be entitled to the benefits of Sections 2.14,
2.15 and 2.16 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to paragraph (b) of this Section. To the extent
permitted by law, each Participant also shall be entitled to the benefits of
Section 9.08 as though it were a Lender, provided such Participant agrees to be
subject to Section 2.17(c) as though it were a Lender.
(f) A Participant shall not be entitled to receive any greater
payment under Section 2.14 or 2.16 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower's prior written consent. A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 2.16 unless
the Company is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Company, to comply with Section
2.16(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations
of such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; PROVIDED that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.
SECTION 9.05. SURVIVAL. All covenants, agreements, representations
and warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Administrative Agent, any Issuing
Bank or any Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid or any Letter of Credit is outstanding and
so long as the Commitments have not expired or terminated. The provisions of
Sections 2.14, 2.15, 2.16 and 9.03 and Article VIII shall survive and remain in
full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Letters of Credit and the Commitments or the termination of this
Agreement or any provision hereof.
SECTION 9.06. COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement,
the other Loan Documents and the Fee Letter dated July 21, 1999, among Chase
Securities Inc., Chase and the Company constitute the entire contract among the
parties relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.
<PAGE>
76
SECTION 9.07. SEVERABILITY. Any provision of this Agreement held to
be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.08. RIGHT OF SETOFF. If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of any
Borrower against any of and all the obligations of any Borrower now or hereafter
existing under this Agreement held by such Lender, irrespective of whether or
not such Lender shall have made any demand under this Agreement and although
such obligations may be unmatured. The rights of each Lender under this Section
are in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.
SECTION 9.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF
PROCESS. (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.
(b) Each Borrower hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of the Supreme
Court of the State of New York sitting in New York County and of the United
States District Court of the Southern District of New York, and any appellate
court from any thereof, in any action or proceeding arising out of or relating
to any Loan Document, or for recognition or enforcement of any judgment, and
each of the parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement or any other Loan Document shall affect any right that
the Administrative Agent, any Issuing Bank or any Lender may otherwise have to
bring any action or proceeding relating to this Agreement or any other Loan
Document against any Borrower or its properties in the courts of any
jurisdiction.
(c) Each Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any other Loan
Document in any court referred to in paragraph (b) of this Section. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
<PAGE>
77
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. HEADINGS. Article and Section headings and the Table
of Contents used herein are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.12. CONFIDENTIALITY. Each of the Administrative Agent, the
applicable Issuing Bank and the Lenders agrees to maintain the confidentiality
of the Information (as defined below), except that Information may be disclosed
(a) to its and its Affiliates' directors, officers, employees and agents,
including accountants, legal counsel and other advisors (it being understood
that the Persons to whom such disclosure is made will be informed of the
confidential nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement, (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or any other Loan Document or the
enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to any
assignee of or Participant in, or any prospective assignee of or Participant in,
any of its rights or obligations under this Agreement, (g) with the consent of
the Company or (h) to the extent such Information (i) becomes publicly available
other than as a result of a breach of this Section or (ii) becomes available to
the Administrative Agent, any Issuing Bank or any Lender on a nonconfidential
basis from a source other than the Company. For the purposes of this Section,
"INFORMATION" means all information received from the Company relating to the
Company or its business, other than any such information that is available to
the Administrative Agent, any Issuing Bank or any Lender on a nonconfidential
basis prior to disclosure by the Company; PROVIDED that, in the case of
information received from the Company after the date hereof, such information is
clearly identified at the time of delivery as confidential. Any Person required
to maintain the confidentiality of Information as provided in this Section shall
be considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
SECTION 9.13. INTEREST RATE LIMITATION. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively the "CHARGES"), shall exceed the
maximum lawful rate (the "MAXIMUM Rate") which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
SECTION 9.14. RELEASE OF LIENS AND GUARANTEES. In the event that the
Company or any Subsidiary sells, transfers or otherwise disposes of all or any
portion of any of the Equity Interests, assets or property owned by the Company
or such Subsidiary in a transaction not prohibited by this Agreement, the
Administrative Agent and the Collateral Agent shall promptly (and the Lenders
hereby authorize and instruct the Administrative Agent and the Collateral Agent
to) take such action and execute any such documents as may be reasonably
<PAGE>
78
requested by the Company and at the Borrower's expense to release any Liens
created by any Loan Document in respect of such Equity Interests, assets or
property, including the release and satisfaction of record of any mortgage or
deed of trust granted in connection herewith, and, in the case of a disposition
of all or substantially all the Equity Interests or assets of any Subsidiary
that is a Loan Party, terminate such Subsidiary's obligations under the
Guarantee Agreement and each other Loan Document. In addition, the
Administrative Agent and the Collateral Agent agree to take such actions as are
reasonably requested by the Company and at the Borrower's expense to terminate
the Liens and security interests created by the Loan Documents when all the
Obligations have been paid in full and all Letters of Credit and Commitments
terminated.
<PAGE>
79
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and
year first above written.
BENCHMARK ELECTRONICS, INC.,
by
/s/ GAYLA J. DELLY
Name: Gayla J. Delly
Title: Treasurer
<PAGE>
80
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, individually and as
Administrative Agent,
by
/s/ JAMES R. DOLPHIS
Name: James R. Dolphis
Title: Senior Vice President
<PAGE>
81
CITICORP NORTH AMERICA, INC.,
individually and as Documentation Agent,
by
/s/ ROBERT H. CHEN
Name: Robert H. Chen
Title: Attorney in Fact
<PAGE>
82
BANK OF AMERICA, N.A., individually and as
Co-Agent,
by
/s/ MICHAEL J. MC CUTCHIN
Name: Michael J. Mc Cutchin
Title: Managing Director
<PAGE>
83
BANK ONE, TEXAS, N.A., individually and as
Co-Agent,
by
/s/ BARRY A. KELLY
Name: Barry A. Kelly
Title: Managing Director
<PAGE>
84
SUNTRUST BANK, ATLANTA, individually
and as Co-Agent,
by
/s/ D. J. ARMSTRONG
Name: D. J. Armstrong
Title:
<PAGE>
85
ABN AMRO BANK N.V.,
by
/s/ MATHEW HARVEY
Name: Mathew Harvey
Title: Vice President
by
/s/ JAMIE DILLON
Name: Jamie Dillon
Title: Vice President
<PAGE>
86
BANK OF TOKYO-MITSUBISHI, LTD.
HOUSTON AGENCY,
by
/s/ MASATO MIYACHI
Name: Masato Miyachi
Title: General Manager
<PAGE>
87
COMERICA BANK,
by
/s/ REGINALD M. GOLDSMITH, III
Name: Reginald M. Goldsmith, III
Title: Vice President
<PAGE>
88
COMPASS BANK,
by
/s/ JOHN D. GREEN
Name: John D. Green
Title: Vice President
<PAGE>
89
GUARANTY FEDERAL BANK, F.S.B.,
by
/s/ RICHARD MENCHACO
Name: Richard Menchaco
Title: Vice President
EXHIBIT 99.2
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Registration Agreement"),
entered into as of August 24th, 1999, between J.M. Huber Corporation, a New
Jersey corporation (the "Investor"), and Benchmark Electronics, Inc., a Texas
corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Investor and the Company entered into that certain Stock
Purchase Agreement dated as of July 1, 1999, as supplemented by the Bid Letter
of even date, as amended by the Supplemental and Amendatory Agreement dated as
of July 30, 1999 (together the "Stock Purchase Agreement"), as amended by the
Amended and Restated Stock Purchase Agreement dated as of August 12, 1999,
pursuant to which the Company agreed to purchase all of the outstanding capital
stock of AVEX Electronics Inc., an Alabama corporation and a wholly owned
subsidiary of the Investor, and all of the outstanding capital stock of Kilbride
Holdings B.V., a Netherlands corporation and an indirect wholly-owned subsidiary
of the Investor, upon the terms and subject to the conditions set forth therein;
WHEREAS, pursuant to the terms of and in partial consideration for the
transactions contemplated by the Stock Purchase Agreement, the Company agreed to
issue one million (1,000,000) shares of the Benchmark Stock (the "Shares") to
the Investor;
WHEREAS, pursuant to the terms of and in partial consideration for the
transactions contemplated by the Stock Purchase Agreement, the Company agreed to
provide the Investor with certain registration rights with respect to the Shares
as set forth in this Registration Agreement;
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in the Stock Purchase Agreement
and this Registration Agreement and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, and intending to be
legally bound hereby, the Company and the Investor agree as follows:
1. (a) CERTAIN DEFINITIONS. The following terms shall have the
following respective meanings:
"BENCHMARK STOCK" means the New York Stock Exchange-listed voting common
stock of the Company, par value $0.10 per share, currently bearing trading
symbol: BHE.
"COMMISSION" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended,
or any successor federal statute, and the rules and regulations of the
Commission promulgated thereunder, all as the same shall be in effect from time
to time.
<PAGE>
"INVESTOR" shall include the Investor and any permitted assignee or
transferee of the rights under the Stock Purchase Agreement to whom the
registration rights conferred by this Registration Agreement have been
transferred in compliance with Section 12 of this Registration Agreement.
"REGISTER," "REGISTERED" and "REGISTRATION" shall refer to a registration
effected by preparing and filing an appropriate registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"REGISTRABLE SECURITIES" shall mean any Shares and any capital stock or
other securities of the Company issued or issuable with respect to such Shares,
including (i) upon any conversion or exchange thereof, (ii) by way of stock
dividend or other distribution, stock split or reverse stock split, or (iii) in
connection with a combination of shares, recapitalization, merger,
consolidation, exchange offer or other reorganization. As to any particular
Registrable Securities, such securities shall cease to be Registrable Securities
when (A) a registration statement under the Securities Act covering the offering
of such Registrable Securities has been declared effective by the Commission and
such Registrable Securities have been disposed of pursuant to such effective
registration statement, (B) such Registrable Securities are sold under
circumstances in which all of the applicable conditions of Rule 144 (or any
similar provision then in force) under the Securities Act ("Rule 144") are met,
(C) such Registrable Securities have been otherwise transferred and the Company
has delivered a new certificate or other evidence of ownership for such
securities not bearing a restrictive legend, or (D) such time as, in the opinion
of counsel to the Company, which counsel shall be acceptable to the Investor in
its sole discretion, all such Registrable Securities may be sold without any
time, volume or manner of sale limitation pursuant to Rule 144(k) (or any
similar provision then in effect) under the Securities Act.
"REGISTRATION EXPENSES" shall mean all expenses to be incurred by the
Company in connection with the Investor's exercise of its registration rights
under this Registration Agreement, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel to the Company, fees and disbursements of the Company's certified public
accountants, blue sky fees and expenses, reasonable fees and disbursements of
counsel to the Investor for a "due diligence" examination of the Company and
review of the Registration Statement, which Investor counsel fees shall not
exceed $5,000, and the expense of any special audits incident thereto, which
shall be paid in any event by the Company; PROVIDED, that Registration Expenses
shall not include Selling Expenses.
"REGISTRATION STATEMENT" shall have the meaning set forth in Section 2(a).
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
"SELLING EXPENSES" shall mean all underwriting or placement agent fees,
discounts, brokerage commissions, selling commissions and other expenses of sale
that are not Registration Expenses, which shall be paid by Investor.
2
<PAGE>
(b) Capitalized terms used in this Registration Agreement and not
otherwise defined herein shall have the meanings ascribed to them in the Stock
Purchase Agreement.
(c) Unless otherwise indicated to the contrary herein by the context
or use thereof: (i) the words, "herein," "hereto," "hereof" and words of similar
import refer to this Registration Agreement as a whole and not to any particular
Section or paragraph hereof; (ii) the word "including" means "including, but not
limited to"; (iii) masculine gender shall also include the feminine and neuter
genders, and vice versa; and (iv) words importing the singular shall also
include the plural, and vice versa.
2. REGISTRATION REQUIREMENTS. (a) The Company will apply its reasonable
commercial efforts to file, within ninety (90) calendar days of the Closing
Date, or, if the Company is unable to achieve such filing within such period
despite such efforts, the Company shall apply reasonable commercial efforts to
make such filing as expeditiously as possible thereafter, in accordance with
applicable law, a Registration Statement on Form S-3 (or, if unavailable, such
other form for registration to permit resale of the Registrable Securities) (the
"Registration Statement") to register the resale of all of the Registrable
Securities (including, without limitation, the execution of an undertaking to
file post-effective amendments, appropriate qualification under applicable blue
sky or other state securities laws and appropriate compliance with applicable
regulations issued under the Securities Act) in the manner (including manner of
sale) and in all states reasonably requested by the Investor for purposes of
maximizing the proceeds realizable by the Investor from such sale or
distribution. The Company shall use its best efforts to cause the Registration
Statement to become effective by the Commission no later than one hundred twenty
(120) calendar days from the Closing Date. Furthermore, at the time of filing of
the Registration Statement, the Company shall file (A) such blue sky filings as
shall have been reasonably requested by the Investor, PROVIDED that the Company
will not be required to qualify generally to do business in any jurisdiction
where it would otherwise be required to qualify but for this Agreement or to
consent to general service of process in any jurisdiction, and (B) any required
filings with the New York Stock Exchange or other exchange or market where the
Shares are traded. The Company shall use its best efforts to have all filings
declared effective as promptly as practicable.
(b) The Company shall take all such other reasonable actions in
connection therewith in order to expedite or facilitate the registration of such
Registrable Securities.
3. REGISTRATION PROCEDURES. The Company will keep the Investor advised
in writing as to the filing of the Registration Statement related to the Shares
and the effective date thereof and the receipt of the order declaring such
Registration Statement effective. At its expense, the Company will use its
reasonable best efforts to:
(a) Keep such Registration Statement effective for a period equal to
twenty-four (24) months PLUS the period of any suspension of effectiveness
pursuant to Section 4 hereof, following the Closing Date, or until such time as
the Investor no longer holds Registrable Securities, whichever first occurs.
3
<PAGE>
(b) Furnish such number of prospectuses and amendments and
supplements thereto, and other documents incident thereto as the Investor from
time to time may reasonably request.
(c) Prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be necessary to
keep such Registration Statement effective for the applicable period; cause the
related prospectus to be supplemented by any required prospectus supplement, and
as so supplemented to be filed pursuant to Rule 424 under the Securities Act;
and comply with the provisions of the Securities Act applicable to it with
respect to the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the intended methods
of disposition by the sellers thereof set forth in such Registration Statement
or supplement to such prospectus;
(d) Notify the General Counsel of the Investor and its counsel (as
designated in writing by the Investor) promptly by telephone or facsimile, and
confirm such notice (a "Notice") in writing, (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed, and, with
respect to the Registration Statement or any post-effective amendment, when the
same has become effective, (ii) of any request by the Commission for amendments
or supplements to the Registration Statement or related prospectus or for
additional information, (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purposes, (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
of any of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose, and (v) of the
happening of any event as a result of which the prospectus included in the
Registration Statement (as then in effect) contains any 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 case of the prospectus or
any preliminary prospectus, in light of the circumstances under which they were
made) not misleading;
(e) Upon the occurrence of any event contemplated by Section
3(d)(ii)-(vi) and immediately upon the expiration of any suspension of
effectiveness pursuant to Section 4, prepare, if the occurrence of such event or
period requires such preparation, a supplement or post-effective amendment to
the Registration Statement or related prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities being sold thereunder,
such prospectus will not contain an untrue statement of a material fact or omit
to state any material fact necessary to make the statements, in light of the
circumstances under which they were made, not misleading;
(f) Take all steps reasonably necessary to enable the Investor to
avail itself of the prospectus delivery mechanism set forth in Rule 153 (or
successor thereto) under the Securities Act, PROVIDED, HOWEVER, that nothing
shall require the Company to list the Benchmark Stock on any national securities
exchange or other market on which shares of the Benchmark Stock are not then
traded.
4
<PAGE>
(g) Obtain the withdrawal of any order suspending the effectiveness
of the Registration Statement, or the lifting of any suspension of the
qualification of any of the Registrable Securities for sale in any jurisdiction,
at the earliest possible moment;
(h) Cause all Registrable Securities subject to the Registration
Statement at all times to be registered or qualified for offer and sale under
the securities or blue sky laws of such jurisdictions as the Investor reasonably
requests in writing; use its best efforts to keep each such registration or
qualification effective, including through new filings or amendments or
renewals, during the period the Registration Statement is required to be kept
effective and do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Registrable Securities
covered by the Registration Statement; provided, however, that the Company will
not be required to qualify to do business or take any action that would subject
it to taxation or general service of process in any jurisdiction where it is not
then so qualified or subject;
(i) Cause the Registrable Securities covered by the Registration
Statement to be registered with or approved by such other governmental agencies
or authorities as may be necessary to enable the seller or sellers thereof to
consummate the disposition of such Registrable Securities in accordance with the
chosen method or methods of distribution; and
(j) Cause all Registrable Securities included in such Registration
Statement to be listed, by the date the Registration Statement is declared
effective, on the principal securities exchange or automated interdealer system
on which the same type of securities of the Company are then listed or traded.
4. SUSPENSIONS OF EFFECTIVENESS. If the Company shall furnish to the
Investor a certificate signed by the president of the Company stating that, in
the good faith judgment of the Board of Directors of the Company, any
registration under the Securities Act of Registrable Securities should not be
continued because it would materially interfere with any material financing,
acquisition, corporate reorganization, merger, or other transaction involving
the Company, the Company shall have the right to suspend the use of the
Registration Statement for a reasonable period which, in any event, shall not
exceed thirty (30) calendar days, provided that such right shall not be
exercised more than once in any consecutive 12-month period.
5. INDEMNIFICATION.
(a) COMPANY INDEMNITY. The Company will indemnify the Investor, each
of its officers and directors, and each Entity controlling the Investor, within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act and the rules and regulations thereunder with respect to which registration,
qualification or compliance has been effected pursuant to this Registration
Agreement, against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in the Registration Statement
under which Registrable Securities were registered under the Securities Act
pursuant to this Agreement, any preliminary or final prospectus contained
therein, or any amendment or supplement thereof, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or
5
<PAGE>
necessary to make the statements therein not misleading, or any violation by the
Company of the Securities Act or any state securities law or, in either case,
any rule or regulation thereunder applicable to the Company and relating to
action or inaction required of the Company in connection with any such
registration, qualification or compliance, and will reimburse the Investor, each
of its officers and directors, and each Entity controlling the Investor, for any
legal and any other expenses reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability or action;
PROVIDED, that the Company will not be liable in any such case to the extent
that any such claim, loss, damage, liability or expense arises out of or is
based on any untrue statement or omission (or alleged untrue statement or
omission) that is made in reliance upon and in conformity with written
information furnished to the Company by the Investor specifically for use in any
such registration. The indemnity agreement contained in this Section 5(a) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company (which consent will not be unreasonably withheld).
(b) INVESTOR INDEMNITY. The Investor will, if Registrable Securities
held by it are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its officers and directors, and each Entity who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
and the rules and regulations thereunder, against all claims, losses, damages
and liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
the Registration Statement under which Registrable Securities were registered
under the Securities Act pursuant to this Agreement, any preliminary or final
prospectus contained therein, or any amendment or supplement thereof, or based
on any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statement therein not misleading,
and will reimburse the Company and its officers and directors, and each Entity
controlling the Company, for any legal or any other expenses reasonably incurred
in connection with investigating and defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such Registration Statement, preliminary or final
prospectus contained therein or amendment or supplement thereof in reliance upon
and in conformity with written information furnished to the Company by the
Investor specifically for use therein, and provided that the Investor shall not
be liable under this indemnity for an amount in excess of the gross proceeds
received by the Investor from the sale of the Registrable Securities pursuant to
such Registration Statement. The indemnity agreement contained in this Section
5(b) shall not apply to amounts paid in settlement of any such claims, losses,
damages or liabilities if such settlement is effected without the written
consent of the Investor (which consent shall not be unreasonably withheld).
(c) PROCEDURE. Each party entitled to indemnification under this
Section 5 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim in any litigation resulting therefrom; PROVIDED that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not be
6
<PAGE>
unreasonably withheld), and the Indemnified Party may participate in such
defense at its expense; and PROVIDED, FURTHER, that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section except to the extent
that the Indemnifying Party is materially prejudiced by such failure to provide
notice. The Indemnifying Party shall not, in connection with any one such action
or proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel) at any time
for such Indemnified Party, PROVIDED, HOWEVER, that if separate firm(s) of
attorneys are required due to a conflict of interest, then the indemnifying
party shall be liable for the reasonable fees and expenses of each such separate
firm. No Indemnifying Party, in the defense of any such claim or litigation,
shall, except with the consent of each Indemnified Party (which shall not be
unreasonably withheld), consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation. No Indemnified Party shall,
except with the consent of the Indemnifying Party (which consent shall not be
unreasonably withheld), consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnifying Party of a release from all
liability in respect to such claim or litigation. Each Indemnified Party shall
furnish such information regarding itself or the claim in question as an
Indemnifying Party may reasonably request and as shall be reasonably required in
connection with the defense of such claim and litigation resulting therefrom.
6. CONTRIBUTION. (a) If the indemnification provided for in Section 5
hereof is unavailable to the Indemnified Party in respect of any losses, claims,
damages or liabilities referred to herein (other than by reason of the
exceptions provided therein), then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages or
liabilities as between the Company on the one hand and the Investor on the
other, in such proportion as is appropriate to reflect the relative fault of the
Company and of the Investor in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations.
The relative fault of the Company on the one hand and of the Investor on
the other shall be determined by reference to, among other things, whether any
action in question in connection with preparation of the Registration Statement,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been made by, or relates to
information supplied by, the Company or the Investor, and the parties' relative
intent and knowledge.
(b) In no event shall the obligation of any Indemnifying Party to
contribute under this Section 6 exceed the amount that such Indemnifying Party
would have been obligated to pay by way of indemnification if the
indemnification provided for under Section 5(a) or Section 5(b) hereof had been
available under the circumstances.
7
<PAGE>
(c) The Company and the Investor agree that it would not be just and
equitable if contribution pursuant to this Section 6 were 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 immediately preceding
paragraphs. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraphs shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section, the Investor shall not be
required to contribute any amount in excess of the amount by which the proceeds
received by the Investor from the sale of Registrable Securities pursuant to the
Registration Statement exceeds the amount of any damages that the Investor has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Entity who was not guilty of such
fraudulent misrepresentation.
7. SURVIVAL. The indemnity and contribution agreements contained in
Section 5 and Section 6 and the standstill and right of first refusal provisions
of Section 8 and Section 10 shall remain operative and in full force and effect
regardless of (i) any termination of this Registration Agreement, (ii) any
investigation made by or on behalf of any Indemnified Party or by or on behalf
of the Company and (iii) the consummation of the sale or successive resales of
the Registrable Securities.
8. STANDSTILL. The Investor covenants to the Company that the Investor
will not acquire beneficial ownership of additional Benchmark Stock (other than
Benchmark Stock purchased by the J.M. Huber Corporation Retirement Plan or the
J.M. Huber Corporation Profit Sharing Plan or Benchmark Stock issued by
Benchmark to all of its shareholders, including (i) upon any conversion or
exchange of the Benchmark Stock, (ii) by way of stock dividend or other
distribution, stock split or reverse stock split, or (iii) in connection with a
combination of shares, recapitalization, merger, consolidation, exchange offer
or other reorganization), or take any other actions to influence control of the
Company without the consent of the Board of Directors of the Company.
9. INFORMATION BY INVESTOR. The Investor shall promptly furnish to the
Company such information regarding the Investor and the distribution proposed by
such Investor as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Registration Agreement. All information provided
to the Company by the Investor shall be accurate and complete in all material
respects and the Investor shall promptly notify the Company if any such
information becomes incorrect or incomplete.
10. RIGHT OF FIRST REFUSAL OF THE COMPANY. In the event that the
Investor shall propose to transfer three hundred thousand (300,000) or more
shares of common stock constituting Registrable Securities to any person who is
not an Affiliate of the Investor, then the Investor shall give to the Company at
least three (3) Business Days' prior notice (the "Transfer Notice") of the
proposed transfer. The Transfer Notice shall disclose in reasonable detail the
8
<PAGE>
terms (including price) and conditions of the proposed transfer, the identity of
the proposed transferee, and the number of the Shares proposed to be
transferred. The Company shall have the right to object, upon written
notification to the Investor received on or prior to the expiration of such
three-day period, to the identity of the transferee, provided that such
objection may only be for commercially reasonable grounds based upon competitive
conditions. Any such notification by the Company shall state in reasonable
detail its grounds for objection. In the event the Company so objects to the
identity of the proposed transferee, it shall, within fifteen (15) Business Days
following the three-day period above-mentioned, purchase the Shares proposed to
be transferred for cash and upon the same terms and conditions described in the
Transfer Notice.
11. TRANSFER OR ASSIGNMENT OF RIGHTS. Neither this Registration
Agreement nor any rights of the Investor or the Company hereunder may be
assigned by either party to any other Entity, except that, upon prior written
notice to the Company, the Investor's rights and obligations under this
Registration Agreement may be assigned, in whole or in part, to any Affiliate of
the Investor (a "Permitted Transferee"), and the rights and obligations of the
Investor under this Rights Agreement shall inure to the benefit of, and be
enforceable by and against, any such Permitted Transferee.
12. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Registration Agreement contains the
entire understanding and agreement of the parties relating to the registration
of Registrable Securities, and may not be modified or terminated except by a
written agreement signed by both parties.
(b) NOTICES. All notices, demands, requests, consents, approvals or
other communications required or permitted to be given hereunder or which are
given with respect to this Registration Agreement shall be in writing and shall
be made as provided in Section 9.1 of the Stock Purchase Agreement.
(c) GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.
THIS REGISTRATION AGREEMENT AND THE VALIDITY AND PERFORMANCE OF THE TERMS HEREOF
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW OR CHOICE OF LAW,
EXCEPT TO THE EXTENT THAT THE LAW OF THE STATE OF TEXAS REGULATES THE COMPANY'S
ISSUANCE OF SECURITIES. THE PARTIES HERETO HEREBY AGREE THAT ALL ACTIONS OR
PROCEEDINGS ARISING DIRECTLY OR INDIRECTLY FROM OR IN CONNECTION WITH THIS
REGISTRATION AGREEMENT SHALL BE LITIGATED ONLY IN THE SUPREME COURT OF THE STATE
OF NEW YORK OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK LOCATED IN NEW YORK COUNTY, NEW YORK. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, THE PARTIES HERETO CONSENT TO THE JURISDICTION AND VENUE OF THE FOREGOING
COURTS AND CONSENT THAT ANY PROCESS OR NOTICE OF MOTION OR OTHER APPLICATION TO
EITHER OF SAID COURTS OR A JUDGE THEREOF MAY BE SERVED INSIDE OR OUTSIDE THE
STATE OF NEW YORK OR THE SOUTHERN DISTRICT OF NEW YORK BY
9
<PAGE>
REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO SUCH PARTY AT ITS ADDRESS
SET FORTH IN THIS REGISTRATION AGREEMENT (AND SERVICE SO MADE SHALL BE DEEMED
COMPLETE FIVE (5) DAYS AFTER THE SAME HAS BEEN POSTED AS AFORESAID) OR BY
PERSONAL SERVICE OR IN SUCH OTHER MANNER AS MAY BE PERMISSIBLE UNDER THE RULES
OF SAID COURTS. THE PARTIES HERETO HEREBY WAIVE ANY RIGHT TO A JURY TRIAL IN
CONNECTION WITH ANY LITIGATION PURSUANT TO THIS RIGHTS AGREEMENT.
(D) TITLES. The titles used in this Registration Agreement are used
for convenience only and are not to be considered in construing or interpreting
this Registration Agreement.
(E) RULE 144. The Company will use its best efforts to file all
reports required to be filed by it under the Exchange Act and that it will take
such further action as holders of Registrable Securities may reasonably request,
all to the extent required from time to time to enable the Investor to sell
Registrable Securities without registration under the Act within the limitation
of the exemptions provided by (a) Rule 144, as such Rule may be amended from
time to time, or (b) any similar role or regulation hereafter adopted by the
Commission. If at any time the Company is not required to file such reports, it
will, upon the request of the Investor, make publicly available other
information so long as necessary to permit sales pursuant to Rule 144. Upon the
request of the Investor, the Company will deliver to the Investor a written
statement as to whether it has complied with such requirements.
(F) OPINION OF COUNSEL. The Company shall deliver, concurrently with
the Registration Statement being declared effective by the Commission, an
opinion of counsel to the Company stating: "The Registration Statement (except
as to the financial statements and other financial data contained therein as to
which we do not express an opinion), filed with the Securities and Exchange
Commission pursuant to the Registration Agreement, with respect to the Benchmark
Stock delivered to Seller at the Closing, in the form in which it became
effective, complies as to form in all material respects with the requirements of
the Securities Act of 1933, as amended, and the rules and regulations
thereunder."
(G) QUESTIONNAIRE. Investor agrees to complete in a timely fashion
the questionnaire in the form previously provided by the Company.
(H) COUNTERPARTS. This Registration Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed as of the date first above written.
J.M. HUBER CORPORATION
By /S/ M. L. MARBERRY
Name: Michael L. Marberry
Title: Vice President, New Business
Development
BENCHMARK ELECTRONICS, INC.
By /S/ GAYLA J. DELLY
Name: Gayla J. Delly
Title: Treasurer
11
EXHIBIT 99.3
EXECUTION COPY
BENCHMARK ELECTRONICS, INC.
TO
HARRIS TRUST COMPANY OF NEW YORK,
AS TRUSTEE
-----------
INDENTURE
DATED AS OF AUGUST 13, 1999
6% CONVERTIBLE SUBORDINATED NOTES DUE 2006
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions. ................................................................1
Section 1.02. Other Definitions.............................................................5
Section 1.03. Incorporation by Reference of Trust Indenture Act.............................6
Section 1.04. Rules of Construction.........................................................6
ARTICLE II
THE SECURITIES
Section 2.01. Form and Dating...............................................................7
Section 2.02. Execution, Authentication and Delivery........................................8
Section 2.03. Registrar, Paying Agent and Conversion Agent..................................8
Section 2.04. Paying Agent to Hold Money in Trust...........................................8
Section 2.05. Noteholder Lists..............................................................8
Section 2.06. Transfer and Exchange.........................................................9
Section 2.07. Replacement Securities.......................................................11
Section 2.08. Outstanding Securities.......................................................11
Section 2.09. Treasury Securities..........................................................11
Section 2.10. Temporary Securities; Exchange of Global Security for Definitive Securities..11
Section 2.11. Cancellation.................................................................12
Section 2.12. Payment of Interest: Interest Rights Preserved...............................12
Section 2.13. Computation of Interest......................................................13
Section 2.14. CUSIP Number.................................................................13
Section 2.15. Regulation S.................................................................13
Section 2.16. Persons Deemed Owners........................................................13
ARTICLE III
REDEMPTION
Section 3.01. Notices to Trustee...........................................................14
Section 3.02. Selection of Securities to be Redeemed.......................................14
Section 3.03. Notice of Redemption.........................................................14
Section 3.04. Effect of Notice of Redemption...............................................15
Section 3.05. Deposit of Redemption Price..................................................15
Section 3.06. Securities Redeemed in Part..................................................15
Section 3.07. Optional Redemption and Provisional Redemption...............................15
Section 3.08. Designated Event Offer.......................................................15
Section 3.09. Special Redemption Offer.....................................................17
ARTICLE IV
COVENANTS
Section 4.01. Payment of Securities........................................................18
Section 4.02. SEC Reports..................................................................19
Section 4.03. Compliance Certificate.......................................................19
Section 4.04. Stay, Extension and Usury Law................................................20
Section 4.05. Corporate Existence..........................................................20
i
<PAGE>
Section 4.06. Taxes........................................................................20
Section 4.07. Designated Event.............................................................20
Section 4.08. Investment Company Act.......................................................20
Section 4.09. Special Redemption...........................................................20
Section 4.10. Escrow Agreement and Collateral..............................................21
ARTICLE V
CONVERSION
Section 5.01. Conversion Privilege.........................................................21
Section 5.02. Conversion Procedure.........................................................21
Section 5.03. Fractional Shares............................................................22
Section 5.04. Taxes on Conversion..........................................................22
Section 5.05. Company to Provide Stock.....................................................22
Section 5.06. Adjustment of Conversion Price...............................................23
Section 5.07. No Adjustment................................................................25
Section 5.08. Other Adjustments............................................................25
Section 5.09. [Intentionally Left Blank]...................................................25
Section 5.10. [Intentionally Left Blank]...................................................25
Section 5.11. Notice of Adjustment.........................................................25
Section 5.12. Notice of Certain Transactions...............................................25
Section 5.13. Effect of Reclassifications, Consolidations, Mergers, Continuances or Sales on
Conversion Privilege.........................................................26
Section 5.14. Trustee's Disclaimer.........................................................26
Section 5.15. Cancellation of Converted Securities.........................................26
Section 5.16. Restriction on Common Stock Issuable Upon Conversion.........................27
ARTICLE VI
SUBORDINATION
Section 6.01. Agreement to Subordinate.....................................................27
Section 6.02. No Payment on Securities if Senior Debt in Default...........................27
Section 6.03. Distribution on Acceleration of Securities; Dissolution and Reorganization;
Subrogation
of Securities................................................................28
Section 6.04. Reliance by Senior Debt on Subordination Provisions..........................30
Section 6.05. No Waiver of Subordination Provisions........................................30
Section 6.06. Trustee's Relation to Senior Debt............................................30
Section 6.07. Other Provisions Subject Hereto..............................................31
ARTICLE VII
SUCCESSORS
Section 7.01. Merger, Consolidation or Sale of Assets......................................31
Section 7.02. Successor Corporation Substituted............................................32
ARTICLE VIII
DEFAULTS AND REMEDIES
Section 8.01. Events of Default............................................................32
Section 8.02. Acceleration.................................................................33
Section 8.03. Other Remedies...............................................................33
Section 8.04. Waiver of Past Defaults......................................................33
ii
<PAGE>
Section 8.05. Control by Majority..........................................................34
Section 8.06. Limitation on Suits..........................................................34
Section 8.07. Rights of Noteholders to Receive Payment.....................................34
Section 8.08. Collection Suit by Trustee...................................................34
Section 8.09. Trustee May File Proofs of Claim.............................................34
Section 8.10. Priorities...................................................................35
Section 8.11. Undertaking for Costs........................................................35
Section 8.12. Restoration of Rights and Remedies...........................................35
Section 8.13. Rights and Remedies Cumulative...............................................36
Section 8.14. Delay or Omission Not Waiver.................................................36
ARTICLE IX
TRUSTEE
Section 9.01. Duties of Trustee............................................................36
Section 9.02. Rights of Trustee............................................................36
Section 9.03. Individual Rights of Trustee.................................................37
Section 9.04. Trustee's Disclaimer.........................................................37
Section 9.05. Notice of Defaults...........................................................37
Section 9.06. Reports by Trustee to Noteholders............................................38
Section 9.07. Compensation and Indemnity...................................................38
Section 9.08. Replacement of Trustee.......................................................38
Section 9.09. Successor Trustee by Merger, Etc.............................................39
Section 9.10. Eligibility; Disqualification................................................39
Section 9.11. Preferential Collection of Claims Against Company............................39
ARTICLE X
DISCHARGE OF INDENTURE
Section 10.01. Termination of the Company's Obligations....................................39
Section 10.02. Repayment to Company........................................................40
Section 10.03. Reinstatement...............................................................40
ARTICLE XI
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 11.01. Without Consent of Noteholders..............................................41
Section 11.02. With Consent of Noteholders.................................................41
Section 11.03. Compliance with Trust Indenture Act.........................................42
Section 11.04. Revocation and Effect of Consents...........................................42
Section 11.05. Notation on or Exchange of Securities.......................................43
Section 11.06. Trustee Protected...........................................................43
Section 11.07. Trustee to Sign Supplemental Indentures.....................................43
Section 11.08. Payment for Consent.........................................................44
ARTICLE XII
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls................................................44
Section 12.02. Notices.....................................................................44
Section 12.03. Communication by Noteholders with Other Noteholders.........................44
Section 12.04. Certificate and Opinion as to Conditions Precedent..........................44
iii
<PAGE>
Section 12.05. Statements Required in Certificate or Opinion...............................45
Section 12.06. Rules by Trustee and Agents.................................................45
Section 12.07. Legal Holidays..............................................................45
Section 12.08. No Recourse Against Others..................................................45
Section 12.09. Counterparts................................................................46
Section 12.10. Variable Provisions.........................................................46
Section 12.11. GOVERNING LAW...............................................................46
Section 12.12. No Adverse Interpretation of Other Agreements...............................46
Section 12.13. Successors..................................................................46
Section 12.14. Severability................................................................46
Section 12.15. Table of Contents, Headings, Etc............................................46
EXHIBIT A -- FORM OF CONVERTIBLE SUBORDINATED NOTE..........................................A-1
EXHIBIT B -- FORM OF TRANSFER CERTIFICATE...................................................B-1
EXHIBIT C -- FORM OF ACCREDITED INVESTOR TRANSFEREE CERTIFICATE.............................C-1
EXHIBIT D -- FORM OF RESTRICTED COMMON STOCK LEGEND.........................................D-1
EXHIBIT E -- FORM OF TRANSFER CERTIFICATE FOR TRANSFER OF
RESTRICTED COMMON STOCK.....................................................E-1
</TABLE>
iv
<PAGE>
INDENTURE dated as of August 13, 1999 between Benchmark Electronics, Inc.,
a Texas corporation (the "Company"), and Harris Trust Company of New York, a New
York banking corporation and trust company, as
trustee (the "Trustee").
Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the holders of the Company's 6% Convertible
Subordinated Notes due 2006 (the "Securities"):
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. DEFINITIONS.
"AFFILIATE" of any specified person means any other person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling",
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such person,
whether through the ownership of voting securities or by agreement or otherwise.
"AGENT" means any Registrar, Paying Agent or Conversion Agent.
"APPLICABLE PROCEDURES" means, with respect to any transfer or transaction
involving a Global Security or beneficial interest therein, the rules and
procedures of the Depositary for such Security, in each case to the extent
applicable to such transaction and as in effect from time to time.
"BANK FACILITY" means the contemplated senior secured credit facility
referred to in the Credit Agreement dated as of August, 1999, among the Company,
Chase Bank of Texas, National Association as Administrative Agent and Collateral
Agent, Citicorp USA, Inc. as Documentation Agent and each of the lenders party
thereto, in each case together with any amendments, extensions, revisions,
refinancings thereof by a lender or syndicate of lenders (including any such
amendments, extensions, revisions and refinancings that increase the principal
amount thereof).
"BOARD OF DIRECTORS" means the board of directors of the Company or any
authorized committee of such board of directors.
"BOARD RESOLUTION" means a copy of a resolution of the Board of Directors
certified by the Secretary or an Assistant Secretary of the Company to have been
duly adopted by the Board of Directors and to be in full force and effect on the
date of such certification and delivery to the Trustee.
"BUSINESS DAY" means any day that is not a Legal Holiday.
"CAPITAL STOCK" means any and all shares, interests, participations,
rights or other equivalents (however designated) of equity interests in any
entity, including, without limitation, corporate stock and partnership
interests.
"CHANGE OF CONTROL" means any event where: (i) any "person" or "group" (as
such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is or
becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act) of shares representing more than 50% of the combined voting power
of the then outstanding securities entitled to vote generally in elections of
directors of the Company ("Voting Stock"), (ii) the Company consolidates with or
merges into any other person, or any other person merges into the Company, and,
in the case of any such transaction, the outstanding Common Stock of the Company
is reclassified into or exchanged for any other property or securities, unless
the stockholders of the Company immediately before such transaction own,
directly or indirectly immediately following such transaction, at least a
majority of the combined voting power of the then outstanding voting securities
entitled to vote generally in elections of directors of the corporation
resulting from such transaction in substantially the same respective proportions
as their ownership of the Voting Stock immediately before such transaction,
(iii) the Company or the Company and its Subsidiaries, taken as a whole, sells,
assigns, conveys, transfers or leases all or substantially all assets of the
Company or of the Company and its Subsidiaries, taken as a whole, as applicable
(other than to one or more wholly-owned Subsidiaries of the Company), or (iv)
any time the Continuing Directors do not constitute a majority of the board of
directors of the Company (or, if applicable, a successor corporation to the
Company).
"CLOSING DATE" means August 13, 1999.
1
<PAGE>
"COMMON STOCK" means the common stock of the Company as the same exists at
the date of this Indenture or as such stock may be constituted from time to
time.
"COMPANY" means the party named as such above until a successor replaces
it in accordance with Article VII and thereafter means the successor.
"CONTINUING DIRECTORS" means, as of any date of determination, any member
of the board of directors of the Company who (i) was a member of such board of
directors on the date of this Indenture or (ii) was nominated for election or
elected to such board of directors with the approval of a majority of the
Continuing Directors who were members of such board of directors at the time of
such nomination or election.
"CORPORATE TRUST OFFICE" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of execution of this Indenture is located at 88 Pine
Street, 19th Floor, New York, New York 10005, Attention: Corporate Trust
Department.
"DAILY MARKET PRICE" means the price of a share of Common Stock on the
relevant date, determined (a) on the basis of the last reported sale price of
the Common Stock as reported on the New York Stock Exchange (the "NYSE"), or if
the Common Stock is not then listed on the NYSE, as reported on the principal
national securities exchange upon which the Common Stock is listed or (b) if the
Common Stock is not listed on the NYSE or on any national securities exchange,
on the basis of the average of the high bid and low asked quotations regular way
on the day in question in the over-the-counter market as reported by the
National Association of Securities Dealers Automated Quotation System, or if not
so quoted, as reported by National Quotation Bureau, Incorporated, or a similar
organization.
"DAMAGES PAYMENT DATE" has the meaning set forth in the Registration
Agreement.
"DEFAULT" means any event that is or, with the passage of time or the
giving of notice or both, would be an Event of Default.
"DEPOSITARY" means The Depository Trust Company, its nominees and their
respective successors.
"DESIGNATED EVENT" means the occurrence of a Change of Control or a
Termination of Trading.
"DESIGNATED SENIOR DEBT" means (i) any Senior Debt under the Bank
Facility, (ii) any Senior Debt which as of the Closing Date, has an aggregate
principal amount outstanding of at least $15,000,000 and (iii) any Senior Debt,
which at the date of determination, has an aggregate principal amount
outstanding of, or commitments to lend up to, at least $15,000,000 and is
specifically designated by the Company in the instrument evidencing or governing
such Senior Debt as "Designated Senior Debt" for purposes of this Indenture.
"ESCROW AGENT" means Harris Trust Company of New York, or any successor
appointed pursuant to the terms of the Escrow Agreement.
"ESCROW AGREEMENT" means the Escrow Agreement dated as of August 13, 1999,
between the Escrow Agent and the Company.
"ESCROWED FUNDS" shall have the meaning given such term in the Escrow
Agreement.
"EXCHANGE ACT" means the Securities Exchange Act of 1934.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting profession
of the United States, which are in effect from time to time.
"GLOBAL SECURITIES LEGEND" means the legend labeled as such and that is
set forth in Exhibit A hereto.
"GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
2
<PAGE>
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness; and such term, when used as a verb, shall have correlative
meaning.
"INDEBTEDNESS" means, with respect to any Person, all Obligations, whether
or not contingent, of such Person (i)(a) for borrowed money (including, but not
limited to, any indebtedness secured by a security interest, mortgage or other
lien on the assets of such Person which is (1) given to secure all or part of
the purchase price of property subject thereto, whether given to the vendor of
such property or to another, or (2) existing on property at the time of
acquisition thereof), (b) evidenced by a note, debenture, bond or other written
instrument, (c) under a lease required to be capitalized on the balance sheet of
the lessee under GAAP or under any lease or related document (including a
purchase agreement) which provides that such Person is contractually obligated
to purchase or to cause a third party to purchase such leased property, (d) in
respect of letters of credit, bank guarantees or bankers' acceptances (including
reimbursement obligations with respect to any of the foregoing), (e) with
respect to Indebtedness secured by a mortgage, pledge, lien, encumbrance, charge
or adverse claim affecting title or resulting in an encumbrance to which the
property or assets of such Person are subject, whether or not the Obligation
secured thereby shall have been assumed or Guaranteed by or shall otherwise be
such Person's legal liability, (f) in respect of the balance of the deferred and
unpaid purchase price of any property or assets, and (g) under interest rate or
currency swap agreements, cap, floor and collar agreements, spot and forward
contracts and similar agreements and arrangements; (ii) with respect to any
Obligation of others of the type described in the preceding clause (i) or under
clause (iii) below assumed by or Guaranteed in any manner by such Person or in
effect Guaranteed by such Person through an agreement to purchase (including,
without limitation, "take or pay" and similar arrangements), contingent or
otherwise (and the Obligations of such Person under any such assumptions,
Guarantees or other such arrangements); and (iii) any and all deferrals,
renewals, extensions, refinancings and refundings of, or amendments,
modifications or supplements to, any of the foregoing.
"INDENTURE" means this Indenture, as amended or supplemented from time to
time by one or more indentures supplemental hereto entered into pursuant to the
applicable provisions hereof, including for all purposes of this Indenture any
supplemental indenture and the provisions of the TIA that are deemed to be a
part of and govern this Indenture and any supplemental indenture.
"INITIAL PURCHASERS" means Salomon Smith Barney Inc. and Chase Securities
Inc.
"INTEREST PAYMENT DATE" means, when used with respect to the Securities,
each February 15 and August 15.
"ISSUANCE DATE" means August 13, 1999.
"JUNIOR SECURITIES" means securities of the Company as reorganized or
readjusted or any other corporation provided for by a plan or reorganization or
readjustment the payment of which is subordinate, at least to the extent
provided for in this Indenture with respect to Securities, to the payment in
full without diminution or modification by such plan of all Senior Debt.
"LIQUIDATED DAMAGES" has the meaning specified in paragraph 12 of the form
of Security which is attached as Exhibit A hereto.
"MATERIAL SUBSIDIARY" means any Subsidiary of the Company which at the
date of determination is a "significant subsidiary" as defined in Rule 1-02(w)
of Regulation S-X under the Securities Act and the Exchange Act (as such
Regulation is in effect on August 9, 1999).
"MATURITY DATE" and "FINAL MATURITY DATE" mean, when used with respect to
the Securities, August 15, 2006.
"NOTEHOLDER" or "HOLDER" means a person in whose name a Security is
registered.
"NYSE" has the meaning specified in the definition of "Daily Market
Price".
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"OFFERING MEMORANDUM" means the offering memorandum relating to the
Securities dated August 9, 1999.
3
<PAGE>
"OFFICERS' CERTIFICATE" means a certificate signed by two Officers, one of
whom must be the Chairman of the Board, the Chief Executive Officer, the
President, the Chief Financial Officer or the Treasurer of the Company, and
delivered to the Trustee that meets the requirements of this Indenture.
"OPINION OF COUNSEL" means a written opinion from legal counsel who is
acceptable to the Trustee that meets the requirements of Sections 12.04 and
12.05 hereof. The counsel may be an employee of or counsel to the Company or the
Trustee unless otherwise expressly stated herein.
"PERSON" and "PERSON" means any individual, corporation, partnership,
joint venture, association, joint stock company, trust, unincorporated
organization, limited liability company or government or any agency or political
subdivision thereof.
"REGISTRATION AGREEMENT" means the Registration Agreement relating to the
Securities and Common Stock issuable upon conversion of such Securities dated
August 9, 1999, between the Company and the Initial Purchasers, as such
agreement may be amended, modified or supplemented from time to time.
"REPRESENTATIVE" means the trustee, agent or representative (if any)
for an issue of Senior Debt.
"RESTRICTED COMMON STOCK LEGEND" means the legend labeled as such and that
is set forth in Exhibit D hereto.
"RESTRICTED DEFINITIVE SECURITIES LEGEND" means the legend labeled as such
and that is set forth in Exhibit A hereto.
"RESTRICTED GLOBAL SECURITIES LEGEND" means the legend labeled as such and
that is set forth in Exhibit A hereto.
"RESTRICTED SECURITIES LEGEND" means the Restricted Definitive Securities
Legend or the Restricted Global Securities Legend or both, as the context may
require.
"SEC" means the Securities and Exchange Commission.
"SECURITIES" means the Securities described in the preamble above that are
issued, authenticated and delivered under this Indenture.
"SECURITIES ACT" means the Securities Act of 1933.
"SENIOR DEBT" means the principal of, premium, if any, on, interest on and
other amounts due on Indebtedness of the Company, whether outstanding on the
date of this Indenture or hereafter created (including the Bank Facility),
incurred, assumed or Guaranteed by the Company (including all deferrals,
renewals, extensions, refinancings and refundings of, or amendments,
modifications or supplements to, any of the foregoing), unless, in the
instrument creating or evidencing or pursuant to which such Indebtedness is
outstanding, it is expressly provided that such Indebtedness is not senior in
right of payment to, or ranks pari passu in right of payment with, the
Securities. Senior Debt includes, with respect to the obligations described
above, interest accruing, pursuant to the terms of such Senior Debt, on or after
the filing of any petition in bankruptcy or for reorganization relating to the
Company, whether or not post-filing interest is allowed in such proceeding, at
the rate specified in the instrument governing the relevant obligation.
Notwithstanding anything to the contrary in the foregoing, Senior Debt shall not
include: (a) Indebtedness of or amounts owed by the Company for compensation to
employees, or for goods, services or materials purchased in the ordinary course
of business; (b) Indebtedness of the Company to a Subsidiary of the Company
(other than such Indebtedness that would be subject to a claim by the lenders
under the Company's credit facilities existing on the Issuance Date or the Bank
Facility that would be prior to the claim of the holders of the Securities); or
(c) any liability for federal, state, local or other taxes owed or owing by the
Company.
"SHELF REGISTRATION STATEMENT" shall have the meaning set forth in the
Registration Agreement.
"STOCK PURCHASE AGREEMENT" means the Stock Purchase Agreement dated as of
July 1, 1999, as amended by the Supplemental and Amendatory Agreement dated as
of July 30, 1999, between the Company and J. M. Huber Corporation ("Huber")
providing for the Company to acquire AVEX Electronics Inc. and a wholly owned
subsidiary of Huber to be formed under the laws of Netherlands (the "AVEX
acquisition").
4
<PAGE>
"SUBSIDIARY" of a Person means any corporation, association or other
business entity of which more than 50% of the total voting power of shares of
Capital Stock entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more of
the other Subsidiaries of that Person or a combination thereof.
"TERMINATION OF TRADING" means an event where the Common Stock (or other
securities into which the Securities are then convertible) is neither listed for
trading on the NYSE or another United States national securities exchange nor
approved for trading on the Nasdaq National Market or other established
automated over-the-counter trading market in the United States.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code ss.ss.
77aaa-77bbbb) and the rules and regulations thereunder as in effect on the date
on which this Indenture is qualified under the Trust Indenture Act of 1939
except as required by Section 11.03 hereof, provided that if the Trust Indenture
Act of 1939 or the rules and regulations thereunder are amended after such date,
"TIA" means, if so required by such amendment, the Trust Indenture Act of 1939,
as so amended.
"TRADING DAY" shall mean (A) if the applicable security is listed or
admitted for trading on the NYSE or another national securities exchange, a day
on which the NYSE or such other national securities exchange is open for
business, (B) if the applicable security is quoted on the Nasdaq National
Market, a day on which trades may be made thereon or (C) if the applicable
security is not so listed, admitted for trading or quoted, any day other than a
Legal Holiday.
"TRUSTEE" means the party named as such above until a successor replaces
it in accordance with the applicable provisions of this Indenture and thereafter
means the successor.
"TRUST OFFICER" means any officer within the corporate trust department of
the Trustee, including any vice president, assistant vice president, assistant
secretary, assistant treasurer, trust officer or any other officer of the
Trustee who customarily performs functions similar to those performed by the
persons who at the time shall be such officers, respectively, and who shall have
direct responsibility for the administration of this Indenture or to whom any
corporate trust matter is referred because of such person's knowledge of and
familiarity with the particular subject.
Section 1.02. OTHER DEFINITIONS.
DEFINED IN
TERM SECTION
- ---- -------
"Agent Members".................................................... 2.01
"AVEX Acquisition Event"........................................... 4.09
"Bankruptcy Law"................................................... 8.01
"Cedel Bank"....................................................... 2.01
"Company Special Call Date"....................................... 4.09
"Company Special Call Payment"..................................... 4.09
"Commencement Date"................................................ 3.08
"Conversion Agent"................................................. 2.03
"Conversion Date".................................................. 5.02
"Conversion Price"................................................. 5.01
"Conversion Shares"................................................ 5.06
"Current Market Price"............................................. 5.06
"Custodian"........................................................ 8.01
"Default Rate"..................................................... 2.13
"Defaulted Interest................................................ 2.12
"Definitive Securities"............................................ 2.01
"Designated Event Offer"........................................... 4.07
"Designated Event Payment"......................................... 4.07
5
<PAGE>
Defined in
"Designated Event Payment Date".................................... 3.08
"Distribution Date"................................................ 5.06
"Distribution Record Date"......................................... 5.06
"Excess Payment"................................................... 5.06
"Euroclear"........................................................ 2.01
"Event of Default"................................................. 8.01
"Global Security".................................................. 2.01
"Legal Holiday".................................................... 12.07
"Non-Global Purchasers"............................................ 2.01
"Officer".......................................................... 12.10
"Paying Agent"..................................................... 2.03
"Payment Blockage Notice".......................................... 6.02
"Payment Blockage Period".......................................... 6.02
"Payment Default".................................................. 8.01
"Purchase Agreement"............................................... 2.01
"Purchase Date".................................................... 5.06
"QIBs"............................................................. 2.01
"Registrar"........................................................ 2.03
"Regulation S"..................................................... 2.01
"Rights"........................................................... 5.06
"Rule 144A"........................................................ 2.01
"Special Redemption Commencement Date"............................. 3.09
"Special Redemption Offer"......................................... 4.09
"Special Redemption Payment"....................................... 4.09
"Special Redemption Payment Date".................................. 3.09
"Special Redemption Price"......................................... 4.09
"Special Redemption Tender Period"................................. 3.09
"Tender Period".................................................... 3.08
Section 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Securities;
"indenture security holder" means a Noteholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Securities means the Company or any other obligor on
the Securities.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
6
<PAGE>
Section 1.04. RULES OF CONSTRUCTION. Unless the context otherwise
requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP consistently applied;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and words in the
plural include the singular; and
(e) provisions apply to successive events and transactions.
ARTICLE II
THE SECURITIES
Section 2.01. FORM AND DATING. The Securities and the Trustee's
certificate of authentication shall be substantially in the form of Exhibit A
which is hereby incorporated in and expressly made a part of this Indenture.
The Securities may have notations, legends or endorsements required by
law, stock exchange rule, agreements to which the Company is subject, if any, or
usage (provided that any such notation, legend or endorsement is in a form
acceptable to the Company). The Company shall furnish any such legend not
contained in Exhibit A to the Trustee in writing. Each Security shall be dated
the date of its authentication. The terms and provisions of the Securities set
forth in Exhibit A are part of the terms of this Indenture and to the extent
applicable, the Company and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
(a) GLOBAL SECURITIES. The Securities are being offered and sold by the
Company pursuant to a Purchase Agreement relating to the Securities, dated
August 9, 1999, among the Company and the Initial Purchasers (the "Purchase
Agreement").
Securities offered and sold (i) in reliance on Regulation S under the
Securities Act ("Regulation S") or (ii) to "qualified institutional buyers" as
defined in Rule 144A ("QIBs") in reliance on Rule 144A under the Securities Act
("Rule 144A"), each as provided in the Purchase Agreement, shall be issued in
the form of one or more permanent global Securities in definitive, fully
registered form without interest coupons with the Global Securities Legend and
Restricted Global Securities Legend set forth in Exhibit A hereto (each, a
"Global Security"). Any Global Security shall be deposited on behalf of the
purchasers of the Securities represented thereby with the Trustee, at its New
York office, as custodian for the Depositary, and registered in the name of the
Depositary or a nominee of the Depositary for the accounts of participants in
the Depositary (and, in the case of Securities held in accordance with
Regulation S, registered with the Depositary for the accounts of designated
agents holding on behalf of the Euroclear System ("Euroclear") or Cedel Bank,
societe anonyme ("Cedel Bank")), duly executed by the Company and authenticated
by the Trustee as hereinafter provided. The aggregate principal amount of a
Global Security may from time to time be increased or decreased by adjustments
made on the records of the Trustee and the Depositary or its nominee as
hereinafter provided.
(b) BOOK-ENTRY PROVISIONS. This Section 2.01(b) shall apply only to a
Global Security deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with this
Section 2.01(b) and the written order of the Company, authenticate and deliver
initially one or more Global Securities that (i) shall be registered in the name
of Cede & Co. or other nominee of such Depositary and (ii) shall be delivered by
the Trustee to such Depositary or pursuant to such Depositary's instructions or
held by the Trustee as custodian for the Depositary pursuant to a FAST Balance
Certificate Agreement between the Depositary and the Trustee.
Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depositary or by the Trustee as the custodian of the
Depositary or under such Global Security, and the Depositary may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of such Global Security for all purposes
7
<PAGE>
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the
Company, the Trustee or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Depositary or impair, as between the Depositary and its Agent Members, the
operation of customary practices of such Depositary governing the exercise of
the rights of a holder of a beneficial interest in any Global Security.
The provisions of the "Operating Procedures of the Euroclear System" and
"Terms and Conditions Governing Use of Euroclear" and the "Management
Regulations and Instructions to Participants" of Cedel shall be applicable to
interests in any Global Securities that are held by participants through
Euroclear or Cedel. The Trustee shall have no obligation to notify holders of
any such procedures or to monitor or enforce compliance with the same.
(c) DEFINITIVE SECURITIES. Except as provided in Section 2.06 and 2.10,
owners of beneficial interests in Global Securities will not be entitled to
receive physical delivery of certificated Securities in definitive form.
Purchasers of Securities who are not QIBs and did not purchase Securities sold
in reliance on Regulation S under the Securities Act (referred to herein as the
"Non-Global Purchasers") will receive certificated Securities in definitive form
bearing the Restricted Definitive Securities Legend set forth in Exhibit A
hereto ("Definitive Securities"). Definitive Securities will bear the Restricted
Definitive Securities Legend set forth on Exhibit A unless removed in accordance
with Section 2.06(b).
Section 2.02. EXECUTION, AUTHENTICATION AND DELIVERY. Two Officers shall
sign the Securities for the Company by manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds that office
at the time the Security is authenticated, the Security shall nevertheless be
valid.
A Security shall not be entitled to any benefits under this Indenture or
the Registration Agreement or otherwise be valid until authenticated by the
manual signature of an authorized signatory of the Trustee. The signature shall
be conclusive evidence that the Security has been authenticated under this
Indenture.
Upon a written order of the Company signed by two Officers, the Trustee
shall authenticate the Securities for original issue up to an aggregate
principal amount of $75,000,000 (plus up to an additional $11,250,000 aggregate
principal amount which may be issued from time to time upon exercise by the
Initial Purchasers of the over-allotment option set forth in the Purchase
Agreement) and deliver such authenticated Securities as directed in such order.
The aggregate principal amount of Securities outstanding at any time shall not
exceed such amount except as provided in Section 2.07.
The Trustee may appoint one or more authenticating agents acceptable to
the Company to authenticate Securities. An authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate of the Company.
Section 2.03. REGISTRAR, PAYING AGENT AND CONVERSION AGENT. The Company
shall maintain in the Borough of Manhattan, The City of New York, State of New
York (i) an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar"), (ii) an office or agency where
Securities may be presented for payment (the "Paying Agent"), (iii) an office or
agency where Securities may be presented for conversion (the "Conversion Agent")
and (iv) an office or agency where notices to or demands upon the Company in
respect of the Securities and this Indenture may be sent. The Registrar shall
keep a register of the Securities and of their transfer and exchange. The
Company has initially appointed the Trustee (at 88 Pine Street, 19th Floor, New
York, New York 10005) as its Registrar, Paying Agent and Conversion Agent in New
York. The Company may appoint one or more co-registrars, one or more additional
paying agents and one or more additional conversion agents in such other
locations as it shall determine. The term "Registrar" includes any co-registrar,
the term "Paying Agent" includes any additional paying agent and the term
"Conversion Agent" includes any additional conversion agent. The Company may
change any Paying Agent, Registrar or Conversion Agent without prior notice to
any Noteholder. The Company shall notify the Trustee of the name and address of
any newly-appointed Agent not a party to this Indenture. If the Company fails to
appoint or maintain another entity as Registrar, Paying Agent or Conversion
Agent, the Trustee shall act as such.
Section 2.04. PAYING AGENT TO HOLD MONEY IN TRUST. The Company shall
require each Paying Agent other than the Trustee to agree in writing that the
Paying Agent will hold in trust for the benefit of Noteholders or the Trustee
all money held by the Paying Agent for the payment of principal of, premium, if
any, on, interest on and
8
<PAGE>
Liquidated Damages, if any, on, the Securities, and will notify the Trustee of
any default by the Company in making any such payment. While any such default
continues, the Trustee may require a Paying Agent to pay all money held by it to
the Trustee. The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee and to account for any money disbursed by it. Upon
payment over to the Trustee, the Paying Agent (if other than the Company or an
Affiliate of the Company) shall have no further liability for the money. If the
Company or an Affiliate of the Company acts as Paying Agent, it shall segregate
and hold in a separate trust fund for the benefit of the Noteholders all money
held by it as Paying Agent.
Section 2.05. NOTEHOLDER LISTS. The Trustee shall preserve in as current a
form as is reasonably practicable the most recent list available to it of the
names and addresses of Noteholders and shall otherwise comply with TIA
ss.312(a). If the Trustee is not the Registrar, the Company shall furnish to the
Trustee at least seven Business Days before each interest payment date and at
such other times as the Trustee may request in writing a list in such form and
as of such date as the Trustee may reasonably require of the names and addresses
of Noteholders, and the Company shall otherwise comply with TIA ss.312(a).
Section 2.06. TRANSFER AND EXCHANGE. Where Securities are presented to the
Registrar with a request to register a transfer or to exchange them for an equal
principal amount of Securities of other denominations, such Registrar shall
register the transfer or make the exchange if the requirements set forth in this
Indenture and as otherwise may be reasonably required by the Registrar with
respect to such transactions are met. To permit registrations of transfers and
exchanges, the Company shall issue and the Trustee shall authenticate Securities
at the Registrar's request. No service charge shall be made for any registration
of transfer or exchange (except as otherwise expressly permitted herein), but
the Company may require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other than any such
transfer tax or similar governmental charge payable upon exchanges pursuant to
Sections 2.10, 3.06, 3.08, 3.09, 5.02 or 11.05 hereof not involving any transfer
of the Securities).
The Company shall not be required (i) to issue, register the transfer of,
or exchange Securities during a period beginning at the opening of business 15
days before the day of mailing of notice of redemption of Securities under
Section 3.03 hereof and ending at the close of business on the day of such
mailing, or (ii) to exchange or register the transfer of any Security so
selected for redemption in whole or in part, except the unredeemed portion of
any Security being redeemed in part.
(a) Notwithstanding any provision to the contrary herein, so long as a
Global Security remains outstanding and is held by or on behalf of the
Depositary, transfers of a Global Security, in whole or in part, or of any
beneficial interest therein, shall only be made in accordance with Sections
2.01(b) and 2.10 and this Section 2.06(a); provided, however, that beneficial
interests in a Global Security may be transferred to persons who take delivery
thereof in the form of a beneficial interest in the Global Security in
accordance with the transfer restrictions set forth under the heading "Notice to
Investors" in the Offering Memorandum and, if applicable, in the Restricted
Global Securities Legend.
(i) Except for transfers or exchanges made in accordance with any of
clauses (ii) through (v) of this Section 2.06(a) and Section 2.10,
transfers of a Global Security shall be limited to transfers of such
Global Security in whole, but not in part, to nominees of the Depositary
or to a successor of the Depositary or such successor's nominee.
(ii) GLOBAL SECURITY TO DEFINITIVE SECURITY. If an owner of a
beneficial interest in a Global Security deposited with the Depositary or
with the Trustee as custodian for the Depositary wishes at any time to
transfer its interest in such Global Security to a Person who is required
to take delivery thereof in the form of a Definitive Security, such owner
may, subject to the rules and procedures of Euroclear or Cedel Bank, if
applicable, and the Depositary, cause the exchange of such interest for
one or more Definitive Securities of any authorized denomination or
denominations and of the same aggregate principal amount. Upon receipt by
the Registrar of (1) instructions from Euroclear or Cedel Bank, if
applicable, and the Depositary directing the Trustee to authenticate and
deliver one or more Definitive Securities of the same aggregate principal
amount as the beneficial interest in the Global Security to be exchanged,
such instructions to contain the name or names of the designated
transferee or transferees, the authorized denomination or denominations of
the Definitive Securities to be so issued and appropriate delivery
instructions, (2) a certificate substantially in the form of Exhibit B
attached hereto given by the owner of such beneficial interest, (3) a
certificate substantially in the form of Exhibit C attached hereto given
by the person acquiring the Definitive Securities for which such interest
is being exchanged, to the effect set forth therein, and (4) such other
certifications or other information and, in the case of transfers pursuant
to
9
<PAGE>
Rule 144 under the Securities Act, legal opinions as the Company may
reasonably require to confirm that such transfer is being made pursuant to
an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act, then Euroclear or Cedel Bank, if
applicable, or the Registrar, as the case may be, will instruct the
Depositary to reduce or cause to be reduced such Global Security by the
aggregate principal amount of the beneficial interest therein to be
exchanged and to debit or cause to be debited from the account of the
Person making such transfer the beneficial interest in the Global Security
that is being transferred, and concurrently with such reduction and debit
the Company shall execute, and the Trustee shall authenticate and deliver,
one or more Definitive Securities of the same aggregate principal amount
in accordance with the instructions referred to above.
(iii) DEFINITIVE SECURITY TO DEFINITIVE SECURITY. If a holder of a
Definitive Security wishes at any time to transfer such Definitive
Security (or portion thereof) to a Person who is required to take delivery
thereof in the form of a Definitive Security, such holder may, subject to
the restrictions on transfer set forth herein and in such Definitive
Security, cause the transfer of such Definitive Security (or any portion
thereof in a principal amount equal to an authorized denomination) to such
transferee. Upon receipt by the Registrar of (1) such Definitive Security,
duly endorsed as provided herein, (2) instructions from such holder
directing the Trustee to authenticate and deliver one or more Definitive
Securities of the same aggregate principal amount as the Definitive
Security (or portion thereof) to be transferred, such instructions to
contain the name or names of the designated transferee or transferees, the
authorized denomination or denominations of the Definitive Securities to
be so issued and appropriate delivery instructions, (3) a certificate from
the holder of the Definitive Security to be transferred in substantially
the form of Exhibit B attached hereto, (4) a certificate substantially in
the form of Exhibit C attached hereto given by the person acquiring the
Definitive Securities (or portion thereof), to the effect set forth
therein, and (5) such other certifications or other information and, in
the case of transfers pursuant to Rule 144 under the Securities Act, legal
opinions as the Company may reasonably require to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act, then
the Registrar, shall cancel or cause to be canceled such Definitive
Security and concurrently therewith, the Company shall execute, and the
Trustee shall authenticate and deliver, one or more Definitive Securities
in the appropriate aggregate principal amount, in accordance with the
instructions referred to above and, if only a portion of a Definitive
Security is transferred as aforesaid, concurrently therewith Company shall
execute and the Trustee shall authenticate and deliver to the transferor a
Definitive Security in a principal amount equal to the principal amount
which has not been transferred. A holder of a Definitive Security may at
any time exchange such Definitive Security for one or more Definitive
Securities of other authorized denominations and in the same aggregate
principal amount and registered in the same name by delivering such
Definitive Security, duly endorsed as provided herein, to the Trustee
together with instructions directing the Trustee to authenticate and
deliver one or more Definitive Securities in the same aggregate principal
amount and registered in the same name as the Definitive Security to be
exchanged, and the Registrar thereupon shall cancel or caused to be
canceled such Definitive Security and concurrently therewith the Company
shall execute and Trustee shall authenticate and deliver, one or more
Definitive Securities in the same aggregate principal amount and
registered in the same name as the Definitive Security being exchanged.
(iv) DEFINITIVE SECURITY TO GLOBAL SECURITY. If a holder of a
Definitive Security wishes at any time to transfer such Definitive
Security (or portion thereof) to a Person who is not required to take
delivery thereof in the form of a Definitive Security, such holder shall,
subject to the restrictions on transfer set forth herein and in such
Definitive Security and the rules of the Depositary and Euroclear and
Cedel Bank, as applicable, cause the exchange of such Definitive Security
for a beneficial interest in the Global Security. Upon receipt by the
Registrar of (1) such Definitive Security, duly endorsed as provided
herein, (2) instructions from such holder directing the Trustee to
increase the aggregate principal amount of the Global Security deposited
with the Depository or with the Trustee as custodian for the Depository by
the same aggregate principal amount at maturity as the Definitive Security
to be exchanged, such instructions to contain the name or names of a
member of, or participant in, the Depository that is designated as the
transferee, the account of such member or participant and other
appropriate delivery instructions, (3) the assignment form on the back of
the Definitive Security completed in full (certifying in effect that such
transfer complies with Rule 144A or Regulation S under the Securities Act
or is otherwise being made to a Person who is not required to take
delivery of such Security in the form of a Definitive Security) and (4)
such other certifications or other information and, in the case of
transfers pursuant to Rule 144 under the Securities Act, legal opinions as
the Company may reasonably require to confirm that such transfer is being
made pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act, then the Trustee,
shall cancel or cause to be canceled such
10
<PAGE>
Definitive Security and concurrently therewith shall increase the
aggregate principal amount of the Global Security by the same aggregate
principal amount as the Definitive Security canceled.
(v) OTHER EXCHANGES. In the event that a Global Security is
exchanged for Securities in definitive registered form pursuant to Section
2.10 prior to the effectiveness of a Shelf Registration Statement with
respect to such Securities, such Securities may be exchanged only in
accordance with such procedures as are substantially consistent with the
provisions of clauses (ii) and (iii) above (including the certification
requirements intended to ensure that such transfers comply with Rule 144A
or Regulation S under the Securities Act, as the case may be) and such
other procedures as may from time to time be adopted by the Company.
(b) Except in connection with a Shelf Registration Statement contemplated
by and in accordance with the terms of the Registration Agreement, if Securities
are issued upon the registration of transfer, exchange or replacement of
Securities bearing a Restricted Securities Legend, or if a request is made to
remove such a Definitive Securities Legend on Securities, the Securities so
issued shall bear the Restricted Securities Legend, or a Restricted Securities
Legend shall not be removed, as the case may be, unless there is delivered to
the Company such satisfactory evidence, which, in the case of a transfer made
pursuant to Rule 144 under the Securities Act, may include an opinion of counsel
given in accordance with the laws in the State of New York, as may be reasonably
required by the Company, that neither the legend nor the restrictions on
transfer set forth therein are required to ensure that transfers thereof comply
with the provisions of Rule 144A, Rule 144 or Regulation S under the Securities
Act or that such Securities are not "restricted" within the meaning of Rule 144
under the Securities Act. Upon provision to the Company of such satisfactory
evidence, the Trustee, at the written direction of the Company, shall
authenticate and deliver Securities that do not bear the legend. The Company
shall not otherwise be entitled to require the delivery of a legal opinion in
connection with any transfer or exchange of Securities.
(c) Neither the Trustee nor any Agent shall have any responsibility for
any actions taken or not taken by the Depositary.
(d) The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Security (including any transfers between or among Depositary's
participants or beneficial owners of interests in any Global Security) other
than to require delivery of such certificates and other documentation as is
expressly required by, and to do so if and when expressly required by, the terms
of this Indenture and to examine the same to determine substantial compliance as
to form with the express requirements hereof.
Section 2.07. REPLACEMENT SECURITIES. If the holder of a Security claims
that the Security has been lost, destroyed or wrongfully taken or if such
Security is mutilated and is surrendered to the Registrar, the Company shall
issue and the Trustee shall authenticate a replacement Security if the Trustee's
and the Company's requirements (as shall have been previously communicated to
the Trustee in a written letter of standing instruction) are met. If required by
the Trustee, the Registrar or the Company, an indemnity bond must be sufficient
in the judgment of each of the foregoing to protect the Company, the Trustee,
any Agent or any authenticating agent from any loss which any of them may suffer
if a Security is replaced. The Company may charge for its expenses in replacing
a Security.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, or is about to be redeemed or purchased
by the Company pursuant to Article III hereof or converted into shares of Common
Stock pursuant to Article V hereof, the Company in its discretion may, instead
of issuing a new Security, pay, redeem or convert such Security, as the case may
be.
Every replacement Security is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Securities duly issued hereunder. The provisions
of this Section 2.07 are exclusive and shall preclude (to the extent lawful) all
other rights and remedies with respect to the replacement of mutilated,
destroyed, lost or stolen Securities.
Section 2.08. OUTSTANDING SECURITIES. The Securities outstanding at any
time are all the Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancellation, and those described in
this Section as not outstanding.
11
<PAGE>
If a Security is replaced, paid, redeemed or converted, it ceases to be
outstanding unless, in the case of a replaced Security, the Trustee receives
proof satisfactory to it that the replaced Security is held by a bona fide
purchaser.
If Securities are considered paid under Section 4.01 hereof, they cease to
be outstanding and interest (and Liquidated Damages, if any) on them ceases to
accrue.
Except as set forth in Section 2.09 hereof, a Security does not cease to
be outstanding because the Company or an Affiliate of the Company holds the
Security.
Section 2.09. TREASURY SECURITIES. In determining whether the Noteholders
of the required principal amount of Securities have concurred in any direction,
waiver or consent, Securities owned by the Company or an Affiliate of the
Company shall be considered as though they are not outstanding, except that for
the purposes of determining whether the Trustee shall be protected in relying on
any such direction, waiver or consent, only Securities which a Trust Officer
actually knows are so owned shall be so disregarded.
Section 2.10. TEMPORARY SECURITIES; EXCHANGE OF GLOBAL SECURITY FOR
DEFINITIVE SECURITIES.
(a) Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of definitive Securities but may
have variations that the Company considers appropriate for temporary Securities
and shall be reasonably acceptable to the Trustee. Without unreasonable delay,
the Company shall prepare and the Trustee shall authenticate definitive
Securities in exchange for temporary Securities.
(b) Except for transfers made in accordance with Section 2.06(a), a Global
Security deposited with the Depositary or with the Trustee as custodian for the
Depositary pursuant to Section 2.01 shall be transferred to the beneficial
owners thereof in the form of certificated Securities in definitive form only if
such transfer complies with Section 2.06 and (i) the Depositary notifies the
Company that it is unwilling or unable to continue as Depositary for such Global
Security or if at any time such Depositary ceases to be a "clearing agency"
registered under the Exchange Act and a successor Depositary is not appointed by
the Company within 90 days of such notice, or (ii) an Event of Default has
occurred and is continuing.
(c) Any Global Security or interest thereon that is transferable to the
beneficial owners thereof in the form of certificated Securities in definitive
form shall, if held by the Depository, be surrendered by the Depositary to the
Trustee, without charge, and the Trustee shall authenticate and deliver, upon
such transfer of each portion of such Global Security, an equal aggregate
principal amount of Securities of authorized denominations in the form of
certificated Securities in definitive form. Any portion of a Global Security
transferred pursuant to this Section shall be executed, authenticated and
delivered only in denominations of $1,000 and any integral multiple thereof and
registered in such names as the Depositary shall direct. Any Securities in the
form of certificated Securities in definitive form delivered in exchange for an
interest in the Global Security shall, except as otherwise provided by Section
2.06(b), bear the Restricted Definitive Securities Legend set forth in Exhibit A
hereto.
(d) Prior to any transfer pursuant to Section 2.10(b), the registered
holder of a Global Security may grant proxies and otherwise authorize any
Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a holder is entitled to take under this
Indenture or the Securities.
(e) The Company will make available to the Trustee a reasonable supply of
certificated Securities in definitive form without interest coupons.
Section 2.11. CANCELLATION. The Company at any time may deliver Securities
to the Registrar for cancellation. The Registrar, Paying Agent and Conversion
Agent shall forward to the Trustee any Securities surrendered to them for
registration of transfer, redemption, conversion, exchange or payment. The
Trustee shall promptly cancel all Securities surrendered for registration of
transfer, redemption, conversion, exchange, payment, replacement or cancellation
and shall dispose of all such canceled Securities in accordance with its
customary procedures. The Company may not issue new Securities to replace
Securities that it has paid or that have been delivered to the Registrar for
cancellation or that any holder has converted.
All Securities which are redeemed, purchased or otherwise acquired by the
Company or any of its Subsidiaries or Affiliates prior to the final maturity
date of the Securities shall be delivered to the Trustee for
12
<PAGE>
cancellation and the Company may not hold or resell any such Securities or issue
any new Securities to replace any such Securities or any Securities that any
holder has converted pursuant to this Indenture.
Section 2.12. PAYMENT OF INTEREST: INTEREST RIGHTS PRESERVED. Interest
(including Liquidated Damages, if any) on any Security which is payable, and is
punctually paid or duly provided for on any February 15 or August 15 shall be
paid to the Person in whose name such Security (or one or more predecessor
Securities) is registered at the close of business on the record date for such
interest payment, which shall be the February 1 or August 1 (whether or not a
Business Day) immediately preceding such interest payment date.
Any interest and Liquidated Damages, if any, on any Security which is
payable, but is not punctually paid or duly provided for, on any interest
payment date (herein collectively called "Defaulted Interest") shall forthwith
cease to be payable to the registered holder on the relevant record date, and,
except as hereinafter provided, such Defaulted Interest and any interest payable
on such Defaulted Interest may be paid by the Company, at its election, as
provided in subsection (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted Interest,
and any interest payable on such Defaulted Interest, to the Persons in
whose names the Securities are registered at the close of business on a
special record date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on the Securities and the date of the proposed payment, and at the same
time the Company shall deposit with the Trustee an amount of money equal
to the aggregate amount proposed to be paid in respect of such Defaulted
Interest (including Liquidated Damages, if any) or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as provided in
this subsection (a). Thereupon, the Trustee shall fix a special record
date for the payment of such Defaulted Interest which shall be not more
than 15 calendar days and not less than 10 calendar days prior to the date
of the proposed payment and not less than 10 calendar days after the
receipt by the Trustee of the notice of the proposed payment. The Trustee
shall promptly notify the Company of such special record date and, in the
name and at the expense of the Company, shall cause notice of the proposed
payment of such Defaulted Interest and the special record date therefor to
be sent, first class mail, postage prepaid, to each holder at such
holder's address as it appears in the register for the Securities, not
less than 10 calendar days prior to such special record date. Notice of
the proposed payment of such Defaulted Interest and the special record
date therefor having been mailed as aforesaid, such Defaulted Interest
shall be paid to the Persons in whose names the Securities are registered
at the close of business on such special record date and shall no longer
be payable pursuant to the following subsection (b).
(b) The Company may make payment of any Defaulted Interest, and any
interest payable on such Defaulted Interest, on the Securities in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this clause,
such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 2.12, each Security
delivered under this Indenture upon registration of transfer of, or in exchange
for, or in lieu of, or in substitution for, any other Security, shall carry the
rights to interest (and Liquidated Damages, if any) accrued and unpaid, and to
accrue, which were carried by such other Security.
Section 2.13. COMPUTATION OF INTEREST. Interest on the Securities shall be
computed on the basis of a 360-day year consisting of twelve 30-day months. In
the event that any principal of or premium, if any, or interest or Liquidated
Damages, if any, on the Securities is not paid when due, then except to the
extent permitted by law, such overdue principal, premium, if any, interest and
Liquidated Damages, if any, shall bear interest until paid at the Default Rate,
compounded semi-annually. As used herein, the term "Default Rate" means, as of
any date and whether or not any Securities are outstanding on such date, a rate
per annum equal to (i) 5% per annum plus (ii) if a Registration Default (as
defined in the Registration Agreement) has occurred and is continuing on such
date, the per annum rate of interest at which Liquidated Damages on the
Securities are being computed on such date or, if no Securities are outstanding
on such date, the per annum rate of interest at which Liquidated Damages on the
Securities would have been computed on such date if the Securities were
outstanding.
Section 2.14. CUSIP NUMBER. The Company in issuing the Securities may use
a "CUSIP" number in notices of redemption or exchange as a convenience to
holders; provided that any such notice may state that no
13
<PAGE>
representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Securities and that reliance may be placed only
on the other identification numbers printed on the Securities. The Company shall
promptly notify the Trustee of any change in the CUSIP number.
Section 2.15. REGULATION S. The Company agrees that it will refuse to
register any transfer of Securities or any shares of Common Stock issued upon
conversion of Securities that is not made in accordance with the provisions of
Regulation S under the Securities Act, pursuant to a registration statement
which has been declared effective under the Securities Act or pursuant to an
available exemption from the registration requirements of the Securities Act;
provided that the provisions of this paragraph shall not be applicable to any
Securities which do not bear a Restricted Securities Legend or to any shares of
Common Stock evidenced by certificates which do not bear a Restricted Common
Stock Legend.
Section 2.16. PERSONS DEEMED OWNERS. Prior to due presentment of a
Security for registration of transfer, the Company, the Trustee and any Agent of
the Company may treat the Person in whose name such Security is registered as
the owner of such Security for the purpose of receiving payment of principal of
and premium, if any, and (subject to Sections 2.06 and 2.13 above) interest and
Liquidated Damages, if any, on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Company,
the Trustee nor any Agent shall be affected by notice to the contrary.
ARTICLE III
REDEMPTION
Section 3.01. NOTICES TO TRUSTEE. If the Company elects to redeem
Securities pursuant to Section 3.07 hereof, it shall notify the Trustee in
writing of the redemption date and the principal amount of Securities to be
redeemed. The Company shall give each notice provided for in this Section 3.01
at least 45 days before the redemption date (unless a shorter notice period
shall be satisfactory to the Trustee).
Section 3.02. SELECTION OF SECURITIES TO BE REDEEMED. If less than all the
Securities are to be redeemed, the Trustee shall select the Securities to be
redeemed by a method that complies with the requirements of the principal
national securities exchange, if any, on which the Securities are listed, or, if
the Securities are not so listed, on a pro rata basis, by lot or by such other
method as the Trustee considers fair and appropriate. The Trustee shall make the
selection not more than 60 days and not less than 30 days before the redemption
date from Securities outstanding not previously called for redemption. The
Trustee may select for redemption portions of the principal of Securities that
have denominations larger than $1,000. Securities and portions of them it
selects shall be in principal amounts of $1,000 or integral multiples of $1,000.
Provisions of this Indenture that apply to Securities called for redemption also
apply to portions of Securities called for redemption. The Trustee shall notify
the Company promptly of the Securities or portions of Securities to be called
for redemption.
If any Security selected for partial redemption is converted in part after
such selection, the converted portion of such Security shall be deemed (so far
as may be) to be the portion to be selected for redemption. The Securities (or
portions thereof) so selected shall be deemed duly selected for redemption for
all purposes hereof, notwithstanding that any such Security is converted in
whole or in part before the mailing of the notice of redemption. Upon any
redemption of less than all the Securities, the Company and the Trustee may
treat as outstanding any Securities surrendered for conversion during the period
15 days next preceding the mailing of a notice of redemption and need not treat
as outstanding any Security authenticated and delivered during such period in
exchange for the unconverted portion of any Security converted in part during
such period.
Section 3.03. NOTICE OF REDEMPTION. At least 30 days but not more than 60
days before a redemption date, the Company shall mail a notice of redemption to
each holder whose Securities are to be redeemed at such holder's registered
address.
The notice shall identify the Securities to be redeemed (including the
CUSIP number) and shall state:
(a) the redemption date;
(b) the redemption price and the amount accrued and unpaid interest
and Liquidated Damages, if any, to be paid;
14
<PAGE>
(c) if any Security is being redeemed in part, the portion of the
principal amount of such Security to be redeemed and that, after the
redemption date, upon cancellation of such Security, a new Security or
Securities in principal amount equal to the unredeemed portion will be
issued in the name of the holder thereof;
(d) the name and address of the Paying Agent;
(e) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price plus accrued interest and
Liquidated Damages, if any;
(f) that, unless the Company defaults in making such redemption
payment or the Paying Agent is prohibited from making such payment
pursuant to the terms of this Indenture, by law or otherwise, interest and
Liquidated Damages, if applicable, on Securities called for redemption
cease to accrue on and after the redemption date;
(g) the paragraph of the Securities pursuant to which the Securities
called for redemption are being redeemed; and
(h) any other information necessary to enable holders to comply with
the notice of redemption.
Such notice shall also state the current Conversion Price and the date on
which the right to convert such Securities or portions thereof into Common Stock
of the Company will expire.
At the Company's request, the Trustee shall give notice of redemption in
the Company's name and at the Company's expense. In such event, the Company
shall provide the Trustee with the information required by this Section 3.03 in
a timely manner; provided that the Company shall give the Trustee not less than
60 days' written notice unless the Trustee consents to a shorter period.
Section 3.04. EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption is
mailed, Securities called for redemption become due and payable on the
redemption date at the price set forth in the Security plus interest and
Liquidated Damages, if any, accrued and unpaid to the redemption date; provided
that accrued interest and Liquidated Damages which are due and payable on any
interest payment date which is on or prior to the redemption date shall be
payable to the holders of such Securities, or one or more predecessor
Securities, registered as such at the close of business on the relevant record
date; and provided, further, that if a redemption date is not a Business Day,
payment shall be made on the next succeeding Business Day and no interest shall
accrue for the period from such redemption date to such succeeding Business Day
unless the Company shall default in the payment due on such Business Day. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in such notice. Failure to give notice or any defect in the notice
to any holder shall not affect the validity of the notice to any other holder.
The notice if mailed in the manner herein provided shall be conclusively
presumed to have been given. In any case, failure to give such notice to any
holder or any defect in the notice to any holder of any Security designated for
redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other Securities.
Section 3.05. DEPOSIT OF REDEMPTION PRICE. Prior to 10:00 a.m. (New York
City time) on the redemption date, the Company shall deposit with the Trustee or
the Paying Agent in immediately available funds, money sufficient to pay the
redemption price of and accrued and unpaid interest and Liquidated Damages, if
applicable, to but not including the redemption date on all Securities to be
redeemed on that date (subject to the right of holders of record on the relevant
record date to receive interest (and Liquidated Damages, if applicable) due on
an interest payment date) unless theretofore converted into Common Stock
pursuant to the provisions hereof. The Trustee or such Paying Agent shall return
to the Company any money not required for that purpose.
So long as the Company complies with the preceding paragraph and the other
provisions of this Article III and unless the Paying Agent is prohibited from
making such payment pursuant to the terms of this Indenture, by law or
otherwise, interest (and Liquidated Damages, if any) on the Securities to be
redeemed on the applicable redemption date shall cease to accrue from and after
such redemption date and such Securities or portions thereof shall be deemed not
to be entitled to any benefit under this Indenture except to receive payment on
the redemption date of the redemption price plus interest and Liquidated
Damages, if any, accrued and unpaid to the redemption
15
<PAGE>
date. If any Security called for redemption shall not be so paid upon surrender
for redemption, then, from the redemption date until such redemption price
(including, without limitation, accrued interest and Liquidated Damages, if any)
is paid in full, the Company shall pay interest, to the extent permitted by law,
on the unpaid principal of and premium, if any, interest and Liquidated Damages,
if any, on such Security at the Default Rate, compounded semiannually.
Section 3.06. SECURITIES REDEEMED IN PART. Upon surrender of a Security
that is redeemed in part, the Company shall issue and the Trustee shall
authenticate for the holder at the expense of the Company a new Security equal
in principal amount to the unredeemed portion of the Security surrendered.
Section 3.07. OPTIONAL REDEMPTION AND PROVISIONAL REDEMPTION. The Company
may redeem all or any portion of the Securities, upon the terms and at the
redemption prices set forth in each of the Securities. Any redemption pursuant
to this Section 3.07 shall be made pursuant to the provisions of Section 3.01
through 3.06 hereof.
Section 3.08. DESIGNATED EVENT OFFER.
(a) In the event that, pursuant to Section 4.07 hereof, a Designated Event
Offer is commenced, the Company shall follow the procedures in this Section
3.08.
(b) The Designated Event Offer shall remain open for a period specified by
the Company which shall be no less than 30 days and no more than 40 days from
and including the date of the mailing of notice in accordance with Section
3.08(e) hereof (the "Commencement Date"), except to the extent that a longer
period is required by applicable law (the "Tender Period"). On the day (the
"Designated Event Payment Date") immediately following the last day of the
Tender Period, the Company shall purchase the principal amount of Securities
duly surrendered for repurchase and not withdrawn.
(c) If a Designated Event Payment Date is after a record date and before
the related interest payment date, accrued interest and Liquidated Damages, if
any, to the related interest payment date will be paid to the persons in whose
names the Securities (or one or more predecessor Securities) are registered at
the close of business on such record date, notwithstanding the repurchase of any
such Securities on such Designated Event Payment Date, and no additional
interest or Liquidated Damages, if any, will be payable to Noteholders who
tender Securities for purchase on such Designated Event Payment Date.
(d) The Company shall provide the Trustee with written notice of the
Designated Event Offer at least 10 Business Days before the Commencement Date.
(e) Within 30 days following any Designated Event, unless the Company is
entitled to and has previously elected to redeem all of the outstanding
Securities at its option and has previously given holders notice of its
intention to redeem all of the outstanding Securities in accordance with Article
III of this Indenture, the Company or the Trustee (at the request and expense of
the Company) shall send, by first class mail, a notice to each of the
Noteholders, which shall govern the terms of the Designated Event Offer and
shall state:
(i) that the Designated Event Offer is being made pursuant to this
Section 3.08 and Section 4.07 hereof and that all Securities validly
tendered will be accepted for payment;
(ii) the purchase price (as determined in accordance with Section
4.07 hereof, subject to Section 3.08(c) hereof), the length of time the
Designated Event Offer will remain open and the Designated Event Payment
Date;
(iii) that any Security or portion thereof not validly tendered or
accepted for payment will continue to accrue interest and Liquidated
Damages, if applicable, and will continue to have conversion rights;
(iv) that, unless the Company defaults in the payment of the
Designated Event Payment, any Security or portion thereof accepted for
payment pursuant to the Designated Event Offer shall cease to accrue
interest and Liquidated Damages, if applicable, from and after the
Designated Event Payment Date and will cease to have conversion rights
after the Designated Event Payment Date;
16
<PAGE>
(v) that Noteholders electing to have a Definitive Security or
portion thereof purchased pursuant to any Designated Event Offer will be
required to surrender the Definitive Security, with the form entitled
"Option of Noteholder To Elect Purchase" on the reverse of the Security
completed, to a Paying Agent at the address specified in the notice (which
shall include an address in the Borough of Manhattan, The City of New
York) prior to the close of business on the third Business Day preceding
the Designated Event Payment Date;
(vi) that Noteholders will be entitled to withdraw their election if
a Paying Agent receives, not later than the close of business on the
second Business Day preceding the Designated Event Payment Date, a letter
or facsimile transmission setting forth the name of the Noteholder, the
principal amount of the Securities or portion thereof delivered for
purchase and a statement that such Noteholder is withdrawing his election
to have such Securities or portions thereof purchased; and
(vii) for Noteholders whose Securities are being purchased only in
part, the Company shall issue and the Trustee shall authenticate for
Noteholders (at the Company's expense) a new Security equal in principal
amount to the unredeemed portion of the Security surrendered.
In addition, the notice shall contain all instructions, other information
and materials that the Company shall reasonably deem necessary to enable such
Noteholders to tender Securities pursuant to the Designated Event Offer or to
withdraw tendered Securities. If the Company is not required to mail such notice
because, as provided above, it has previously given notice of its intention to
redeem the Securities in whole but the Company thereafter defaults in the
payment of the redemption price (including accrued interest and Liquidated
Damages, if any) on any of the Securities on the relevant redemption date, then
the Company shall be required to give notice pursuant to this Section 3.08(e) no
later than the second Business Day following such redemption date, in which case
the Tender Period shall be 30 days except to the extent that a longer period is
required by applicable law. In the event that the Company is required by
applicable law to extend the Tender Period beyond the Designated Event Payment
Date set forth in such notice, the Company will, as promptly as possible, issue
a press release and send notice to holders announcing such extension and the new
Designated Event Payment Date, which press release and notice shall state the
new deadlines for surrendering and withdrawing Securities.
(f) Prior to 10:00 A.M. (New York City Time) on the Designated Event
Payment Date, the Company shall irrevocably deposit with the Trustee or the
Paying Agent in immediately available funds an amount equal to the Designated
Event Payment in respect of all Securities or portions thereof validly tendered
and not withdrawn, such funds to be held for payment in accordance with the
terms of this Section 3.08. On the Designated Event Payment Date, the Company
shall, to the extent lawful, (i) accept for payment the Securities or portions
thereof validly tendered pursuant to the Designated Event Offer, (ii) deliver or
cause to be delivered to the Trustee the Securities so accepted and (iii)
deliver to the Trustee an Officers' Certificate identifying the Securities or
portions thereof tendered and not withdrawn to the Company and stating that such
Securities have been accepted for payment by the Company in accordance with the
terms of this Section 3.08. The Paying Agent shall promptly (but in any case not
later than five calendar days after the Designated Event Payment Date) mail or
deliver to each holder of Notes so accepted for payment an amount equal to the
Designated Event Payment for such Securities, and the Trustee shall promptly
authenticate and mail or otherwise deliver to each such Noteholder a new
Security equal in principal amount to any unpurchased portion of the Security
surrendered; provided that each new Security shall be in an integral multiple of
$1,000. Any Securities not so accepted shall be promptly mailed or otherwise
delivered by or on behalf of the Company to the holders thereof. The Company
will publicly announce the results of the Designated Event Offer on, or as soon
as practicable after, the Designated Event Payment Date.
(g) The Designated Event Offer shall be made by the Company in compliance
with all applicable provisions of the Exchange Act and any other securities laws
and regulations (including, without limitation, Rules 13e-4 and 14e-1 under the
Exchange Act) to the extent such laws and regulations are applicable in
connection with the repurchase of the Securities in connection with a Designated
Event.
Section 3.09. SPECIAL REDEMPTION OFFER.
(a) In the event that, pursuant to Section 4.09 hereof, a Special
Redemption Offer is commenced, the Company shall follow the procedures in this
Section 3.09.
(b) The Special Redemption Offer shall remain open for a period specified
by the Company which shall be not less than 30 days and no more than 40 days
from and including the date of the mailing of notice in accordance with Section
3.09(d) hereof (the "Special Redemption Commencement Date"), except to the
extent that
17
<PAGE>
a longer period is required by applicable law (the "Special Redemption Tender
Period"). On the day (the "Special Redemption Payment Date") immediately
following the last day of the Special Redemption Tender Period, the Company
shall purchase the principal amount of Securities duly surrendered
for repurchase and not withdrawn.
(c) If a Special Redemption Payment Date is after a record date and before
the related interest payment date, accrued interest and Liquidated Damages, if
any, to the related interest payment date will be paid to the persons in whose
names the Securities (or one or more predecessor Securities) are registered at
the close of business on such record date, notwithstanding the repurchase of any
such Securities on such Special Redemption Payment Date, and no additional
interest or Liquidated Damages, if any, will be payable to Noteholders who
tender Securities for purchase on such Special Redemption Payment Date.
(d) The Company shall provide the Trustee and the Escrow Agent with
written notice of the Special Redemption Offer at least 10 Business Days before
the Special Redemption Commencement Date.
(e) Within 10 days following any AVEX Acquisition Event, the Company or
the Trustee (at the request and expense of the Company) shall send, by first
class mail, a notice to each of the Noteholders, which shall govern the terms of
the Special Redemption Offer and shall state:
(i) that the Special Redemption Offer is being made pursuant to this
Section 3.09 and Section 4.09 hereof and that all Securities validly
tendered will be accepted for payment;
(ii) the Special Redemption Payment (as determined in accordance
with Section 4.09 hereof, subject to Section 3.09(c) hereof), the length
of time the Special Redemption Offer will remain open and the Special
Redemption Payment Date;
(iii) that any Security or portion thereof not validly tendered or
accepted for payment will continue to accrue interest and Liquidated
Damages, if applicable, and will continue to have conversion rights;
(iv) that, unless the Company defaults in the payment of the Special
Redemption Payment, any Security or portion thereof accepted for payment
pursuant to the Special Redemption Offer shall cease to accrue interest
and Liquidated Damages, if applicable, from and after the Special
Redemption Payment Date and will cease to have conversion rights after the
Special Redemption Payment Date;
(v) that Noteholders electing to have a Definitive Security or
portion thereof purchased pursuant to any Special Redemption Offer will be
required to surrender the Definitive Security, with the form entitled
"Option of Noteholder To Elect Purchase" on the reverse of the Security
completed, to a Paying Agent at the address specified in the notice (which
shall include an address in the Borough of Manhattan, The City of New
York) prior to the close of business on the third Business Day preceding
the Special Redemption Payment Date; and
(vi) that Noteholders will be entitled to withdraw their election if
a Paying Agent receives, not later than the close of business on the
second Business Day preceding the Special Redemption Payment Date, a
letter or facsimile transmission setting forth the name of the Noteholder,
the principal amount of the Securities or portion thereof delivered for
purchase and a statement that such Noteholder is withdrawing his election
to have such Securities or portions thereof purchased.
In addition, the notice shall contain all instructions, other information
and materials that the Company shall reasonably deem necessary to enable such
Noteholders to tender Securities pursuant to the Special Redemption Offer or to
withdraw tendered Securities. In the event that the Company is required by
applicable law to extend the Tender Period beyond the Special Redemption Payment
Date set forth in such notice, the Company will, as promptly as possible, issue
a press release and send notice to holders announcing such extension and the new
Special Redemption Payment Date, which press release and notice shall state the
new deadlines for surrendering and withdrawing Securities.
(f) On or before the last Business Day prior to the Special Redemption
Payment Date, the Company shall irrevocably deposit with the Trustee or the
Paying Agent in immediately available funds an amount equal to or in excess of
the Special Redemption Payment in respect of all Securities or portions thereof
validly tendered and not withdrawn, such funds to be held for payment in
accordance with the terms of this Section 3.09; provided, however, that such
funds deposited shall be less any amounts deposited by the Escrow Agent pursuant
to the terms of the
18
<PAGE>
Escrow Agreement (to the extent funds deposited by the Escrow Agent are in an
amount equal to the Special Redemption Payment, the Company shall need not
deposit any additional funds). If the amount of the funds deposited by the
Escrow Agent exceeds the Special Redemption Payment, the Trustee will release
such excess to the Company on the Special Redemption Date. On the Special
Redemption Payment Date, the Company shall, to the extent lawful, (i) accept for
purchase the Securities or portions thereof validly tendered pursuant to the
Special Redemption Offer, (ii) deliver or cause to be delivered to the Trustee
the Securities so accepted and (iii) deliver to the Trustee an Officers'
Certificate identifying the Securities or portions thereof tendered and not
withdrawn to the Company and stating that such Securities have been accepted for
purchase by the Company in accordance with the terms of this Section 3.09. The
Paying Agent shall promptly (but in any case not later than five calendar days
after the Special Redemption Payment Date) mail or deliver to each holder of
Notes so accepted for purchase an amount equal to the Special Redemption Payment
for such Securities. The Company will publicly announce the results of the
Special Redemption Offer on, or as soon as practicable after, the Special
Redemption Payment Date.
(g) The Special Redemption Offer shall be made by the Company in
compliance with all applicable provisions of the Exchange Act and any other
securities laws and regulations (including, without limitation, Rules 13e-4 and
14e-1 under the Exchange Act) to the extent such laws and regulations are
applicable in connection with the repurchase of the Securities in connection
with an AVEX Acquisition Event.
ARTICLE IV
COVENANTS
Section 4.01. PAYMENT OF SECURITIES. The Company shall pay the principal
of, premium, if any, and interest (and Liquidated Damages, if applicable) on the
Securities on the dates and in the manner provided in the Securities and this
Indenture. Principal, premium, if any, and interest (and Liquidated Damages, if
applicable) shall be considered paid on the date due if the Paying Agent (other
than the Company or an Affiliate of the Company) holds on that date money
designated for and sufficient to pay all principal, premium, if any and interest
(and Liquidated Damages, if any) then due and such Paying Agent is not
prohibited from paying such money to the Noteholders on that date pursuant to
the terms of this Indenture. To the extent lawful, the Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest (and on overdue principal,
premium, if any, and Liquidated Damages, if applicable (in each case without
regard to any applicable grace period)), at the Default Rate, compounded
semiannually.
Section 4.02. SEC REPORTS. The Company will comply with the requirements
of TIA Section 314(a). In addition, whether or not required by the rules and
regulations of the SEC, so long as any Securities are outstanding, the Company
will file with the SEC and furnish (without exhibits) to the Trustee and to the
holders of Securities all quarterly and annual financial information required to
be contained in a filing with the SEC on Forms 10-Q and 10- K, including a
"Management's Discussion and Analysis of Financial Conditions and Results of
Operations" and, with respect to annual consolidated financial statements only,
a report on the annual consolidated financial statements by the Company's
certified independent accountants. The Company shall not be required to file any
report or other information with the SEC if the SEC does not permit such filing.
Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt thereof shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder.
In addition, so long as any of the Securities or shares of Common Stock
issued or issuable upon conversion of the Securities are "restricted securities"
within the meaning of Rule 144(a)(3) under the Securities Act and if the Company
at any time is not subject to and in compliance with either Section 13 or 15(d)
of the Exchange Act or it is not exempt from such reporting requirements
pursuant to and in compliance with Rule 12g3-2(b) under the Exchange Act, the
Company will provide to each holder and beneficial owner of such restricted
securities, and to any prospective purchaser designated by any such holder or
beneficial owner, upon request of such holder, beneficial owner or prospective
purchaser, the information required pursuant to Rule 144A(d)(4) of the
Securities Act.
Section 4.03. COMPLIANCE CERTIFICATE. The Company shall deliver to the
Trustee, within 120 days after the end of each fiscal year of the Company, an
Officers' Certificate stating that a review of the activities of the Company and
its subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Company has kept, observed, performed and fulfilled its obligations under, and
complied with the covenants and conditions contained in, this Indenture, and
further stating,
19
<PAGE>
as to each such Officer signing such certificate, that to the best of such
Officer's knowledge the Company has kept, observed, performed and fulfilled each
and every covenant, and complied with the covenants and conditions contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions hereof (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which such Officer may have knowledge) and that to the best of such Officer's
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of, or premium, if any, interest or
Liquidated Damages, if any, on, the Securities are prohibited.
One of the Officers signing such Officers' Certificate shall be either the
Company's principal executive officer, principal financial officer or principal
accounting officer.
The Company will, so long as any of the Securities are outstanding,
deliver to the Trustee, forthwith upon, but in any event within five Business
Days after, becoming aware of:
(a) any Default, Event of Default or default in the performance of
any covenant, agreement or condition contained in this Indenture; or
(b) any default under any other credit agreement, mortgage,
indenture or instrument of the nature described in Section 8.01(e),
an Officers' Certificate specifying such Default, Event of Default or default
and what action the Company is taking or proposing to take with respect thereto.
Immediately upon the occurrence of any event giving rise to an obligation
of the Company to pay Liquidated Damages with respect to the Securities in
accordance with paragraph 12 of the form thereof and the Registration Agreement
or the termination of any such obligation, the Company shall give the Trustee
notice of such commencement or termination of the obligation to pay Liquidated
Damages with regard to the Securities and the amount thereof (except in the
event of a termination) and of the event giving rise to such commencement or
termination (such notice to be contained in an Officers' Certificate), and prior
to receipt of such Officers' Certificate the Trustee shall be entitled to assume
that no such commencement or termination has occurred, as the case may be,
unless the Trustee has actual knowledge of such commencement or termination.
Section 4.04. STAY, EXTENSION AND USURY LAW. The Company covenants (to the
extent that it may lawfully do so) that it will not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law wherever enacted, now or at any time hereafter
in force, which may affect the covenants or the performance of this Indenture;
and the Company (to the extent it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it will not, by
resort to any such law, hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law has been enacted.
Section 4.05. CORPORATE EXISTENCE. Except as provided in Article VII
hereof, the Company will do or cause to be done all things necessary to preserve
and keep in full force and effect its corporate existence and the corporate,
partnership or other existence of each Subsidiary of the Company in accordance
with the respective organizational documents of the Company and each Subsidiary
and the rights (charter and statutory), licenses and franchises of the Company
and its Subsidiaries; provided, however, that the Company shall not be required
to preserve any such right, license or franchise, or the corporate, partnership
or other existence of any Subsidiary, if the Board of Directors shall determine
that the preservation thereof is no longer desirable in the conduct of the
business of the Company and its Subsidiaries taken as a whole and that the loss
thereof is not adverse in any material respect to the Noteholders.
Section 4.06. TAXES. The Company shall pay, and shall cause each of its
Subsidiaries to pay, prior to delinquency, all taxes, assessments and
governmental levies, except such as are contested in good faith and by
appropriate proceedings and for which adequate reserves in accordance with GAAP
or other appropriate provisions have been made.
Section 4.07. DESIGNATED EVENT. Upon the occurrence of a Designated Event,
each holder of Securities will have the right, in accordance with this Section
4.07 and Section 3.08 hereof, to require the Company to repurchase all or any
part (in an integral multiple of $1,000) of such holder's Securities pursuant to
the terms of an offer made as provided in Section 3.08 (the "Designated Event
Offer") at a purchase price equal to 100% of the
20
<PAGE>
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the Designated Event Payment Date (the "Designated
Event Payment").
Section 4.08. INVESTMENT COMPANY ACT. As long as any Securities are
outstanding, the Company will conduct its business and operations so as not to
become an "investment company" within the meaning of the Investment Company Act
of 1940, as amended (the "Investment Company Act"), and will take all steps
required in order for it to continue not to be an "investment company" and not
to be required to be registered under the Investment Company Act, including, if
necessary, redeployment of the assets of the Company.
Section 4.09. SPECIAL REDEMPTION. (a) (1) Upon the occurrence of the
earlier of (i) if the AVEX acquisition has not occurred, February 15, 2000 and
(ii) the termination of the Stock Purchase Agreement (each an "AVEX Acquisition
Event"), each holder of Securities will have the right, in accordance with this
Section 4.09 and Section 3.09 hereof, to require the Company to repurchase all
of such holder's Securities pursuant to the terms of an offer made as provided
in Section 3.09 (the "Special Redemption Offer") at a purchase price equal to
101% of the principal amount thereof (the "Special Redemption Price"), plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the
Special Redemption Payment Date (the aggregate amount to be paid to all holders
of Securities, the "Special Redemption Payment"). (2) The terms of the Stock
Purchase Agreement shall not be amended or modified after the Closing Date, in
each case except for such changes that would not have any material adverse
effect on the holders of the Securities.
(b) If after the Special Redemption Payment Date, less than 10% of the
original aggregate principal amount of the Securities remains outstanding, the
Company may, at its option, redeem the remaining Securities, in whole, but not
in part, at a price equal to the Special Redemption Price, plus accrued and
unpaid interest and Liquidated Damages, if any, to the date fixed for their
redemption by the Company (such date to be a date no later than 30 days
following the Special Redemption Date, the "Company Special Call Date" and such
payment, the "Company Special Call Payment"); provided that subject to the
provisions of this clause (b), the provisions of Sections 3.03, 3.04 and 3.05
shall apply to such redemption; provided further, that the notices to holders
and the Trustee specified in Section 3.03 shall be given at least 20 days before
the Company Special Call Date.
(c) If the AVEX acquisition occurs on or prior to February 15, 2000, the
Company shall furnish to the Trustee and the Escrow Agent an Officer's
Certificate specifying the occurrence of such event and also specifying
compliance with Section 4.09 (a)(2).
Section 4.10. ESCROW AGREEMENT AND COLLATERAL. The Company shall not
amend, waive or otherwise modify, or permit or consent to any amendment, waiver
or other modification, the Escrow Agreement in any way that would be adverse to
the Noteholders. The Company shall not take or omit to take any action that
might or would have the result of materially impairing the security interest
with respect to the Escrowed Funds for the benefit of the Trustee and the
Noteholders, and the Company shall not grant to any Person other than the Escrow
Agent for the benefit of the Trustee and the Noteholders, any interest
whatsoever in any of the Escrowed Funds.
ARTICLE V
CONVERSION
Section 5.01. CONVERSION PRIVILEGE. (a) A holder of any Security may
convert the principal amount thereof (or any portion thereof that is an integral
multiple of $1,000) into fully paid and nonassessable shares of Common Stock of
the Company at any time after 90 days following the Issuance Date and prior to
the close of business on the Business Day immediately preceding the final
maturity date of the Security at the Conversion Price then in effect, except
that, with respect to any Security called for redemption, such conversion right
shall terminate at the close of business on the Business Day immediately
preceding the redemption date (unless the Company shall default in making the
redemption payment when it becomes due, in which case the conversion right shall
terminate at the close of business on the date on which such default is cured).
(b) If on any date after August 19, 2002, the Daily Market Price of the
Common Stock has equaled or exceeded 150% of the Conversion Price then in
effect, for at least 20 out of 30 consecutive Trading Days, then the Company
shall have the right, for up to ten Trading Days after any such date, to cause
all the Securities to convert into fully paid and nonassessable Common Stock of
the Company at the Conversion Price determined as hereinafter provided, in
effect at the time of conversion. The Company may exercise such right by sending
written notice of such exercise to the Trustee whereby the conversion will
automatically occur. The Securities shall convert on the
21
<PAGE>
date such notice is received by the Trustee, and the Conversion Price shall be
the Conversion Price in effect on such date.
(c) The number of shares of Common Stock issuable upon conversion of a
Security is determined by dividing the principal amount of the Security
converted by the Conversion Price in effect on the Conversion Date.
"Conversion Price" means $40.20, as the same may be adjusted from time to
time as provided in this Article V.
Provisions of this Indenture that apply to conversion of all of a Security
also apply to conversion of a portion of it. A holder of Securities is not
entitled to any rights of a holder of Common Stock until such holder of
Securities has converted such Securities into Common Stock, and only to the
extent that such Securities are deemed to have been converted into Common Stock
under this Article V.
Section 5.02. CONVERSION PROCEDURE. To convert a Security, a holder must
satisfy the requirements in paragraph 11 of the Securities. The date on which
the holder satisfies all of those requirements is the conversion date (the
"Conversion Date"). In the case of an automatic conversion pursuant to the terms
of Section 5.01(b), the Conversion Date shall be the date the Trustee receives
the appropriate notice from the Company. As promptly as practicable on or after
the Conversion Date, the Company shall issue and deliver to the Trustee a
certificate or certificates for the number of whole shares of Common Stock
issuable upon the conversion and a check or other payment for any fractional
share in an amount determined pursuant to Section 5.03. Such certificate or
certificates will be sent by the Trustee to the Conversion Agent for delivery to
the holder. The Person in whose name the certificate is registered shall become
the stockholder of record on the Conversion Date and, as of such date, such
Person's rights as a Noteholder with respect to the converted Security shall
cease; provided, however, that, except as otherwise provided in this Section
5.02, no surrender of a Security on any date when the stock transfer books of
the Company shall be closed shall be effective to constitute the Person entitled
to receive the shares of Common Stock upon such conversion as the stockholder of
record of such shares of Common Stock on such date, but such surrender shall be
effective to constitute the Person entitled to receive such shares of Common
Stock as the stockholder of record thereof for all purposes at the close of
business on the next succeeding day on which such stock transfer books are open;
provided, further, however, that such conversion shall be at the Conversion
Price in effect on the date that such Security shall have been surrendered for
conversion, as if the stock transfer books of the Company had not been closed.
In the case of an automatic conversion pursuant to Section 5.01(b), no
holder of a Security shall be entitled to receive a certificate representing
shares of Common Stock, and the Conversion Agent shall not deliver any such
certificate to the holder of any Security so converted, until (i) the Security,
if such Security is a Definitive Security is surrendered to the Trustee for
cancelation or (ii) the Security, if such Security is a Global Security, is
surrendered for cancelation in accordance with the procedures of the Depositary.
No payment or adjustment will be made for accrued and unpaid interest or
Liquidated Damages on a converted Security or for dividends or distributions on,
or Liquidated Damages, if any, attributable to, shares of Common Stock issued
upon conversion of a Security, except that, if any holder surrenders a Security
for conversion after the close of business on any record date for the payment of
an installment of interest and prior to the opening of business on the next
succeeding interest payment date, then, notwithstanding such conversion, accrued
and unpaid interest and Liquidated Damages, if applicable, payable on such
Security on such interest payment date shall be paid on such interest payment
date to the person who was the holder of such Security (or one or more
predecessor Securities) at the close of business on such record date. In the
case of any Security surrendered for conversion after the close of business on a
record date for the payment of an installment of interest and prior to the
opening of business on the next succeeding interest payment date, then, unless
such Security has been called for redemption on a redemption date or is to be
repurchased on a Designated Event Payment Date or Special Redemption Date or is
converted pursuant to Section 5.02(b) after such record date and prior to such
interest payment date, such Security, when surrendered for conversion, must be
accompanied by payment in an amount equal to the interest and Liquidated
Damages, if applicable, payable on such interest payment date on the principal
amount of such Security so converted. Holders of Common Stock issued upon
conversion will not be entitled to receive any dividends payable to holders of
Common Stock as of any record time before the close of business on the
Conversion Date.
If a holder converts more than one Security at the same time, the number
of whole shares of Common Stock issuable upon the conversion shall be based on
the total principal amount of Securities converted.
22
<PAGE>
Upon surrender of a Security that is converted in part, the Trustee shall
authenticate for the holder a new Security equal in principal amount to the
unconverted portion of the Security surrendered.
Section 5.03. FRACTIONAL SHARES. The Company will not issue fractional
shares of Common Stock upon conversion of a Security. In lieu thereof, the
Company will pay an amount in cash based upon the Daily Market Price of the
Common Stock on the Trading Day prior to the Conversion Date.
Section 5.04. TAXES ON CONVERSION. The issuance of certificates for shares
of Common Stock upon the conversion of any Security shall be made without charge
to the converting Noteholder for such certificates or for any tax in respect of
the issuance of such certificates, and such certificates shall be issued in the
respective names of, or in such names as may be directed by, the holder or
holders of the converted Security; provided, however, that in the event that
certificates for shares of Common Stock are to be issued in a name other than
the name of the holder of the Security converted, such Security, when
surrendered for conversion, shall be accompanied by an instrument of assignment
or transfer, in form satisfactory to the Company, duly executed by the
registered holder thereof or his duly authorized attorney; and provided,
further, however, that the Company shall not be required to pay any tax which
may be payable in respect of any transfer involved in the issuance and delivery
of any such certificates in a name other than that of the holder of the
converted Security, and the Company shall not be required to issue or deliver
such certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid or is
not applicable.
Section 5.05. COMPANY TO PROVIDE STOCK. The Company shall at all times
reserve and keep available, free from preemptive rights, out of its authorized
but unissued Common Stock, solely for the purpose of issuance upon conversion of
Securities as herein provided, a sufficient number of shares of Common Stock to
permit the conversion of all outstanding Securities for shares of Common Stock.
All shares of Common Stock which may be issued upon conversion of the
Securities shall be duly authorized, validly issued, fully paid and
nonassessable when so issued. In the case of the conversion of a Global
Security, such conversion shall be subject to any Applicable Procedures. The
Company shall take such action from time to time as shall be necessary so that
par value of the Common Stock shall at all times be equal to or less than the
Conversion Price then in effect.
The Company shall from time to time take all action necessary so that the
Common Stock which may be issued upon conversion of Securities, immediately upon
their issuance (or, if such Common Stock is subject to restrictions on transfer
under the Securities Act, upon their resale pursuant to an effective Shelf
Registration Statement or in a transaction pursuant to which the certificate
evidencing such Common Stock shall no longer bear the Restricted Common Stock
Legend), will be listed on the principal securities exchanges, interdealer
quotation systems (including the Nasdaq National Market) and markets, if any, on
which other shares of Common Stock of the Company are then listed or quoted.
Section 5.06. ADJUSTMENT OF CONVERSION PRICE. The Conversion Price shall
be subject to adjustment from time to time as follows:
(a) In case the Company shall (1) pay a dividend in shares of Common Stock
to holders of Common Stock (or any event treated as such for U.S. Federal income
tax purposes), (2) make a distribution in shares of Common Stock to holders of
Common Stock (or any event treated as such for U.S. Federal income tax
purposes), (3) subdivide its outstanding shares of Common Stock into a greater
number of shares of Common Stock or (4) combine its outstanding shares of Common
Stock into a smaller number of shares of Common Stock, the Conversion Price in
effect immediately prior to such action shall be adjusted so that the holder of
any Security thereafter surrendered for conversion shall be entitled to receive
the number of shares of Common Stock which he would have owned immediately
following such action had such Securities been converted immediately prior
thereto. Any adjustment made pursuant to this subsection (a) shall become
effective immediately after the record date in the case of a dividend or
distribution and shall become effective immediately after the effective date in
the case of a subdivision or combination.
(b) In case the Company shall issue rights or warrants to all holders of
Common Stock entitling them to subscribe for or purchase shares of Common Stock
(or securities convertible into Common Stock) at a price per share (or having a
conversion price per share) less than the Current Market Price per share (as
determined pursuant to subsection (f) below) of the Common Stock on the record
date for determining the holders of the Common Stock entitled to receive such
rights or warrants, the Conversion Price shall be adjusted so that the same
shall equal the
23
<PAGE>
price determined by multiplying the Conversion Price in effect immediately prior
to such record date by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding as of the close of business on such record
date plus the number of shares of Common Stock which the aggregate offering
price of the total number of shares of Common Stock so offered for subscription
or purchase (or the aggregate conversion price of the convertible securities so
offered) would purchase at such Current Market Price, and of which the
denominator shall be the number of shares of Common Stock outstanding on such
record date plus the number of additional shares of Common Stock so offered for
subscription or purchase (or into which the convertible securities so offered
are convertible). Such adjustments shall become effective immediately after such
record date. For the purposes of this subsection (b), the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of such Common Stock. The
Company shall not issue any rights, options or warrants in respect of shares of
Common Stock held in the treasury of the Company.
(c) In case the Company shall distribute to all holders of Common Stock
shares of Capital Stock of the Company (other than Common Stock), evidences of
indebtedness, cash, rights or warrants entitling the holders thereof to
subscribe for or purchase securities (other than rights or warrants described in
subsection (b) above) or other assets (including securities of Persons other
than the Company but excluding (i) dividends or distributions paid exclusively
in cash, (ii) dividends and distributions described in subsection (b) above and
(iii) distributions in connection with the consolidation, merger or transfer of
assets covered by Section 5.13), then in each such case the Conversion Price
shall be adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the date of such
distribution by a fraction of which the numerator shall be the Current Market
Price (determined as provided in subsection (f) below) of the Common Stock on
the record date mentioned below less the fair market value on such record date
(as determined by the Board of Directors, whose determination shall be
conclusive evidence of such fair market value and described in a Board
Resolution delivered to the Trustee) of the portion of the evidences of
indebtedness, shares of Capital Stock, cash, rights, warrants or other assets so
distributed applicable to one share of Common Stock (determined on the basis of
the number of shares of the Common Stock outstanding on the record date), and of
which the denominator shall be such Current Market Price of the Common Stock.
Such adjustment shall become effective immediately after the record date for the
determination of the holders of Common Stock entitled to receive such
distribution. Notwithstanding the foregoing, in case the Company shall
distribute rights or warrants to subscribe for additional shares of the
Company's Capital Stock (other than rights or warrants referred to in subsection
(b) above) ("Rights") to all holders of Common Stock, the Company may, in lieu
of making any adjustment pursuant to the foregoing provisions of this Section
5.06(c), make proper provision so that each holder of a Security who converts
such Security (or any portion thereof) after the record date for such
distribution and prior to the expiration or redemption of the Rights shall be
entitled to receive upon such conversion, in addition to the shares of Common
Stock issuable upon such conversion (the "Conversion Shares"), a number of
Rights to be determined as follows: (i) if such conversion occurs on or prior to
the date for the distribution to the holders of Rights of separate certificates
evidencing such Rights (the "Distribution Date"), the same number of Rights to
which a holder of a number of shares of Common Stock equal to the number of
Conversion Shares is entitled at the time of such conversion in accordance with
the terms and provisions of and applicable to the Rights; and (ii) if such
conversion occurs after the Distribution Date, the same number of Rights to
which a holder of the number of shares of Common Stock into which the principal
amount of the Security so converted was convertible immediately prior to the
Distribution Date would have been entitled on the Distribution Date in
accordance with the terms and provisions of and applicable to the Rights.
(d) In case the Company shall, by dividend or otherwise, at any time make
a distribution to all holders of its Common Stock exclusively in cash (including
any distributions of cash out of current or retained earnings of the Company but
excluding any cash that is distributed as part of a distribution requiring a
Conversion Price adjustment pursuant to paragraph (c) of this Section) in an
aggregate amount that, together with the sum of (x) the aggregate amount of any
other distributions made exclusively in cash to all holders of Common Stock
within the 12 months preceding the date fixed for determining the stockholders
entitled to such distribution (the "Distribution Record Date") and in respect of
which no Conversion Price adjustment pursuant to paragraph (c) or (e) of this
Section or this paragraph (d) has been made plus (y) the aggregate amount of all
Excess Payments in respect of any tender offers or other negotiated transactions
by the Company or any of its Subsidiaries for Common Stock concluded within the
12 months preceding the Distribution Record Date and in respect of which no
Conversion Price adjustment pursuant to paragraphs (c) or (e) of this Section or
this paragraph (d) has been made, exceeds 12 1/2% of the product of the Current
Market Price per share (determined as provided in paragraph (f) of this Section)
of the Common Stock on the Distribution Record Date multiplied by the number of
shares of Common Stock outstanding on the Distribution Record Date (excluding
shares held in the treasury of the Company), the Conversion Price shall be
reduced so that the same shall equal the price determined by multiplying such
Conversion Price in effect immediately prior to the effectiveness of the
Conversion Price reduction contemplated by this paragraph (d)
24
<PAGE>
by a fraction of which the numerator shall be the Current Market Price per share
(determined as provided in paragraph (f) of this Section) of the Common Stock on
the Distribution Record Date less the sum of the aggregate amount of cash and
the aggregate Excess Payments so distributed, paid or payable within such 12
month period (including, without limitation, the distribution in respect of
which such adjustment is being made) applicable to one share of Common Stock
(which shall be determined by dividing the sum of the aggregate amount of cash
and the aggregate Excess Payments so distributed, paid or payable within such 12
months (including, without limitation, the distribution in respect of which such
adjustment is being made) by the number of shares of Common Stock outstanding on
the Distribution Record Date and the denominator shall be such Current Market
Price per share (determined as provided in paragraph (f) of this Section) of the
Common Stock on the Distribution Record Date, such reduction to become effective
immediately prior to the opening of business on the day following the
Distribution Record Date.
(e) In case a tender offer or other negotiated transaction made by the
Company or any Subsidiary of the Company for all or any portion of the Common
Stock shall be consummated, if an Excess Payment is made in respect of such
tender offer or other negotiated transaction and the aggregate amount of such
Excess Payment, together with the sum of (x) the aggregate amount of any
distributions, by dividend or otherwise, to all holders of the Common Stock made
in cash (including any distributions of cash out of current or retained earnings
of the Company) within the 12 months preceding the date of payment of such
current negotiated transaction consideration or expiration of such current
tender offer, as the case may be (the "Purchase Date"), and as to which no
adjustment in the Conversion Price pursuant to paragraph (c) or paragraph (d) of
this Section or this paragraph (e) has been made plus (y) the aggregate amount
of all Excess Payments in respect of any other tender offers or other negotiated
transactions by the Company or any of its Subsidiaries for Common Stock
concluded within the 12 months preceding the Purchase Date and in respect of
which no adjustment in the Conversion Price pursuant to paragraph (c) or (d) of
this Section or this paragraph (e) has been made, exceeds 12 1/2% of the product
of the Current Market Price per share (determined as provided in paragraph (f)
of this Section) of the Common Stock on the Purchase Date multiplied by the
number of shares of Common Stock outstanding on the Purchase Date (including any
tendered shares but excluding any shares held in the treasury of the Company),
the Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying such Conversion Price in effect immediately prior to
the effectiveness of the Conversion Price reduction contemplated by this
paragraph (e) by a fraction of which the numerator shall be the Current Market
Price per share (determined as provided in paragraph (f) of this Section) of the
Common Stock on the Purchase Date less the sum of the aggregate amount of cash
and the aggregate Excess Payments so distributed, paid or payable within such 12
month period (including, without limitation, the Excess Payment in respect of
which such adjustment is being made) applicable to one share of Common Stock
(which shall be determined by dividing the sum of the aggregate amount of cash
and the aggregate Excess Payments so distributed, paid or payable within such 12
months (including, without limitation, the Excess Payment in respect of which
such adjustment is being made) by the number of shares of Common Stock
outstanding on the Purchase Date and the denominator shall be such Current
Market Price per share (determined as provided in paragraph (f) of this Section)
of the Common Stock on the Purchase Date, such reduction to become effective
immediately prior to the opening of business on the day following the Purchase
Date.
(f) The "Current Market Price" per share of Common Stock on any date shall
be deemed to be the average of the Daily Market Prices for the shorter of (i) 30
consecutive Business Days ending on the last full Trading Day on the exchange or
market referred to in determining such Daily Market Prices prior to the time of
determination or (ii) the period commencing on the date next succeeding the
first public announcement of the issuance of such rights or such warrants or
such other distribution or such tender offer or other negotiated transaction
through such last full Trading Day on the exchange or market referred to in
determining such Daily Market Prices prior to the time of determination.
(g) "Excess Payment" means the excess of (A) the aggregate of the cash and
fair market value (as determined by the Board of Directors, whose determination
shall be conclusive evidence of such fair market value and described in a Board
Resolution delivered to the Trustee) of other consideration paid by the Company
or any of its Subsidiaries with respect to the shares acquired in a tender offer
or other negotiated transaction over (B) the Daily Market Price on the Trading
Day immediately following the completion of the tender offer or other negotiated
transaction multiplied by the number of acquired shares.
(h) In any case in which this Section 5.06 shall require that an
adjustment be made immediately following a record date for an event, the Company
may elect to defer, until such event, issuing to the holder of any Security
converted after such record date the shares of Common Stock and other Capital
Stock of the Company issuable upon such conversion over and above the shares of
Common Stock and other Capital Stock of the Company issuable upon such
conversion on the basis of the Conversion Price prior to adjustment; and, in
lieu of the
25
<PAGE>
shares the issuance of which is so deferred, the Company shall issue or cause
its transfer agents to issue due bills or other appropriate evidence of the
right to receive such shares.
Section 5.07. NO ADJUSTMENT. No adjustment in the Conversion Price shall
be required until cumulative adjustments amount to 1.0% or more of the
Conversion Price as last adjusted; provided, however, that any adjustments which
by reason of this Section 5.07 are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Article V shall be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be. No adjustment need be made for
rights to purchase Common Stock pursuant to a Company plan for reinvestment of
dividends or interest. No adjustment need be made for a change in the par value
or no par value of the Common Stock.
Section 5.08. OTHER ADJUSTMENTS.
(a) In the event that, as a result of an adjustment made pursuant to
Section 5.06 above, the holder of any Security thereafter surrendered for
conversion shall become entitled to receive any shares of Capital Stock of the
Company other than shares of its Common Stock, thereafter the Conversion Price
of such other shares so receivable upon conversion of any Securities shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to Common Stock
contained in this Article V.
(b) In the event that any shares of Common Stock issuable upon exercise of
any of the rights, options or warrants referred to in Section 5.06(b) and
Section 5.06(c) hereof are not delivered prior to the expiration of such rights,
options, or warrants, the Conversion Price shall be readjusted to the Conversion
Price which would otherwise have been in effect had the adjustment made upon the
issuance of such rights, options or warrants been made on the basis of delivery
of only the number of such rights, options and warrants which were actually
exercised.
Section 5.09. [INTENTIONALLY LEFT BLANK].
Section 5.10. [INTENTIONALLY LEFT BLANK].
Section 5.11. NOTICE OF ADJUSTMENT. Whenever the Conversion Price is
adjusted, the Company shall promptly mail (or cause the Trustee to mail at the
Company's expense) to Noteholders at the addresses appearing on the Registrar's
books a notice of the adjustment and file with the Trustee an Officers'
Certificate briefly stating the facts requiring the adjustment and the manner of
computing it.
Section 5.12. NOTICE OF CERTAIN TRANSACTIONS. In the event that:
(a) the Company takes any action which would require an adjustment
in the Conversion Price;
(b) the Company takes any action that would require a supplemental
indenture pursuant to Section 5.13; or
(c) there is a dissolution or liquidation of the Company;
the Company shall mail (or cause the Trustee to mail at the Company's expense)
to Noteholders at the addresses appearing on the Registrar's books and the
Trustee a notice stating the proposed record or effective date, as the case may
be. The Company shall mail the notice at least 15 days before such date;
however, failure to mail such notice or any defect therein shall not affect the
validity of any transaction referred to in clause (a), (b) or (c) of this
Section 5.12.
Section 5.13. EFFECT OF RECLASSIFICATIONS, CONSOLIDATIONS, MERGERS,
CONTINUANCES OR SALES ON CONVERSION PRIVILEGE. If any of the following shall
occur, namely: (i) any reclassification or change of outstanding shares of
Common Stock issuable upon conversion of Securities (other than a change in par
value, or from par value to no par value, or from no par value to par value, or
as a result of a subdivision or combination), (ii) any consolidation or merger
to which the Company is a party other than a merger in which the Company is the
continuing corporation and which does not result in any reclassification of, or
change (other than a change in name, or par value, or from par value to no par
value, or from no par value to par value or as a result of a subdivision or
combination) in, outstanding shares of Common Stock, (iii) any continuance in a
new jurisdiction which does not result in any reclassification of, or change
(other than a change in name, or par value, or from par value to no par value,
or from
26
<PAGE>
no par value to par value) in, outstanding shares of Common Stock, or (iv) any
sale or conveyance of all or substantially all of the property of the Company
(determined on a consolidated basis), then the Company, or such successor or
purchasing corporation, as the case may be, shall, as a condition precedent to
such reclassification, change, consolidation, merger, continuance, sale or
conveyance, execute and deliver to the Trustee a supplemental indenture in form
satisfactory to the Trustee providing that the holder of each Security then
outstanding shall have the right to convert such Security into the kind and
amount of shares of stock and other securities and property (including cash)
receivable upon such reclassification, change, consolidation, merger,
continuance, sale or conveyance by a holder of the number of shares of Common
Stock deliverable upon conversion of such Security immediately prior to such
reclassification, change, consolidation, merger, continuance, sale or
conveyance. Such supplemental indenture shall provide for adjustments of the
Conversion Price which shall be as nearly equivalent as may be practicable to
the adjustments of the Conversion Price provided for in this Article V. The
foregoing, however, shall not in any way affect the right a holder of a Security
may otherwise have, pursuant to clause (ii) of the last sentence of subsection
(c) of Section 5.06, to receive Rights upon conversion of a Security. If, in the
case of any such consolidation, merger, continuance, sale or conveyance, the
stock or other securities and property (including cash) receivable thereupon by
a holder of Common Stock includes shares of stock or other securities and
property of a corporation or other business entity other than the successor or
purchasing corporation, as the case may be, in such consolidation, merger,
continuance, sale or conveyance, then such supplemental indenture shall also be
executed by such other corporation or other business entity and shall contain
such additional provisions to protect the interests of the holders of the
Securities as the Board of Directors of the Company shall reasonably consider
necessary by reason of the foregoing. The provision of this Section 5.13 shall
similarly apply to successive consolidations, mergers, continuances, sales or
conveyances.
In the event the Company shall execute a supplemental indenture pursuant
to this Section 5.13, the Company shall promptly file with the Trustee (x) an
Officers' Certificate briefly stating the reasons therefor, the kind or amount
of shares of stock or securities or property (including cash) receivable by
holders of the Securities upon the conversion of their Securities after any such
reclassification, change, consolidation, merger, continuance, sale or conveyance
and any adjustment to be made with respect thereto (y) and Opinion of Counsel
stating that all conditions precedent relating to such transaction have been
complied with, and shall promptly mail (or cause the Trustee to mail at the
Company's expense) notice thereof to all holders.
Section 5.14. TRUSTEE'S DISCLAIMER. The Trustee has no duty to determine
when an adjustment under this Article V should be made, how it should be made or
what such adjustment should be or whether a supplemental indenture is required
by this Article V, but may accept as conclusive evidence of the correctness of
any such adjustment, and shall be protected in relying in good faith upon the
Officers' Certificate with respect thereto which the Company is obligated to
file with the Trustee pursuant to Section 5.11. The Trustee makes no
representation as to the validity or value of any securities or assets issued
upon conversion of Securities, and the Trustee shall not be responsible for the
Company's failure to comply with any provisions of this Article V, except as
provided in Article IX.
The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any supplemental indenture executed
pursuant to Section 5.13, but, except as provided in Article IX, may accept as
conclusive evidence of the correctness thereof, and shall be protected in
relying upon, the Officers' Certificate with respect thereto which the Company
is obligated to file with the Trustee pursuant to Section 5.13.
Section 5.15. CANCELLATION OF CONVERTED SECURITIES. All Securities
delivered for conversion shall be delivered to the Trustee to be canceled by or
at the direction of the Trustee, which shall dispose of the same as provided in
Section 2.11.
Section 5.16. RESTRICTION ON COMMON STOCK ISSUABLE UPON CONVERSION. (a)
Shares of Common Stock to be issued upon conversion of Securities prior to the
effectiveness of a Shelf Registration Statement shall be physically delivered in
certificated form to the holders converting such Securities and the certificate
representing such shares of Common Stock shall bear the Restricted Common Stock
Legend unless removed in accordance with Section 5.16(c).
(b) If (i) shares of Common Stock to be issued upon conversion of a
Security prior to the effectiveness of a Shelf Registration Statement are to be
registered in a name other than that of the holder of such Security or (ii)
shares of Common Stock represented by a certificate bearing the Restricted
Common Stock Legend are transferred subsequently by such holder, then, unless
the Shelf Registration Statement has become effective and such shares are being
transferred pursuant to the Shelf Registration Statement, the holder must
deliver to the transfer agent for the Common Stock a certificate in
substantially the form of Exhibit E as to compliance with the
27
<PAGE>
restrictions on transfer applicable to such shares of Common Stock and neither
the transfer agent nor the registrar for the Common Stock shall be required to
register any transfer of such Common Stock not so accompanied by a properly
completed certificate.
(c) Except in connection with a Shelf Registration Statement, if
certificates representing shares of Common Stock are issued upon the
registration of transfer, exchange or replacement of any other certificate
representing shares of Common Stock bearing the Restricted Common Stock Legend,
or if a request is made to remove such Restricted Common Stock Legend from
certificates representing shares of Common Stock, the certificates so issued
shall bear the Restricted Common Stock Legend, or the Restricted Common Stock
Legend shall not be removed, as the case may be, unless there is delivered to
the Company such satisfactory evidence, which, in the case of a transfer made
pursuant to Rule 144 under the Securities Act, may include an opinion of counsel
pursuant to the laws in the State of New York, as may be reasonably required by
the Company, that neither the legend nor the restrictions on transfer set forth
therein are required to ensure that transfers thereof comply with the provisions
of Rule 144A, Rule 144 or Regulation S under the Securities Act or that such
shares of Common Stock are securities that are not "restricted" within the
meaning of Rule 144 under the Securities Act. Upon provision to the Company of
such reasonably satisfactory evidence, the Company shall cause the transfer
agent for the Common Stock to countersign and deliver certificates representing
shares of Common Stock that do not bear the legend.
ARTICLE VI
SUBORDINATION
Section 6.01. AGREEMENT TO SUBORDINATE. The Company, for itself and its
successors, and each Noteholder, by his acceptance of Securities, agree that the
payment of the principal of and premium, if any, interest, Liquidated Damages,
if any, and any other amounts due on the Securities is subordinated in right of
payment, to the extent and in the manner stated in this Article VI, to the prior
payment in full of all existing and future Senior Debt. Anything herein to the
contrary notwithstanding, the provisions of this Article VI shall not be
applicable with respect to any Liquidated Damages payable in respect of shares
of Common Stock issued on conversion of Securities.
Section 6.02. NO PAYMENT ON SECURITIES IF SENIOR DEBT IN DEFAULT. Anything
in this Indenture to the contrary notwithstanding, no payment on account of
principal of or premium, if any, interest or Liquidated Damages, if any on or
other amounts due on the Securities (including the making of a deposit pursuant
to Section 3.05 or 3.08(f), but excluding a deposit pursuant to Section
3.09(f)), and no redemption, purchase, or other acquisition of the Securities,
shall be made by or on behalf of the Company (other than a Special Redemption
Payment) unless (i) full payment of all amounts then due for principal of and
interest on, and of all other amounts then due on, all Senior Debt has been made
or duly provided for pursuant to the terms of the instruments governing such
Senior Debt and (ii) at the time for, and immediately after giving effect to,
such payment, redemption, purchase or other acquisition, there shall not exist
under any Senior Debt, or any agreement pursuant to which any Senior Debt is
issued, any default which shall not have been cured or waived and which default
shall have resulted in the full amount of such Senior Debt being declared due
and payable. In addition, if the Trustee shall receive written notice from the
holders of Designated Senior Debt or their Representative (a "Payment Blockage
Notice") that there has occurred and is continuing under such Designated Senior
Debt, or any agreement pursuant to which such Designated Senior Debt is issued,
any default, which default shall not have been cured or waived, giving the
holders of such Designated Senior Debt the right to declare such Designated
Senior Debt immediately due and payable, then, anything in this Indenture to the
contrary notwithstanding, no payment on account of the principal of or premium,
if any, interest or Liquidated Damages, if any, on or any other amounts due on
the Securities (including, without limitation, the making of a deposit pursuant
to Section 3.05 or 3.08(f), but excluding a deposit pursuant to Section
3.09(f)), and no redemption, purchase or other acquisition of the Securities,
shall be made by or on behalf of the Company (other than a Special Redemption
Payment) during the period (the "Payment Blockage Period") commencing on the
date of receipt of the Payment Blockage Notice and ending (unless earlier
terminated by notice given to the Trustee by the holders or the Representative
of the holders of such Designated Senior Debt) on the earlier of (a) the date on
which such default shall have been cured or waived or (b) 180 days from the
receipt of the Payment Blockage Notice. Notwithstanding the provisions described
in the immediately preceding sentence (but subject to the provisions contained
in Section 6.01 and the first sentence of this Section 6.02), unless the holders
of such Designated Senior Debt or the Representative of such holders shall have
accelerated the maturity of such Designated Senior Debt, the Company may resume
payments on the Securities after the end of such Payment Blockage Period. Not
more than one Payment Blockage Notice may be given in any consecutive 365-day
period,
28
<PAGE>
irrespective of the number of defaults with respect to Senior Debt during such
period. Notwithstanding anything herein to the contrary, payments made by the
Company pursuant to Sections 3.09 and 4.09 to repurchase or redeem Securities
following an AVEX Acquisition Event shall not be subject to the provisions
herein and will not be subordinated in right of payment to the prior payment of
Senior Debt.
In the event that, notwithstanding the provisions of this Section 6.02,
payments are made by or on behalf of the Company in contravention of the
provisions of this Section 6.02, such payments shall be held by the Trustee, any
Paying Agent or the holders, as applicable, in trust for the benefit of, and
shall be paid over to and delivered to, the Representatives of the holders of
Senior Debt or the trustee under the indenture or other agreement (if any),
pursuant to which any instruments evidencing any Senior Debt may have been
issued for application to the payment of all Senior Debt ratably according to
the aggregate amounts remaining unpaid to the extent necessary to pay all Senior
Debt in full in accordance with the terms of such Senior Debt, after giving
effect to any concurrent payment or distribution to or for the holders of Senior
Debt.
The Company shall give prompt written notice to the Trustee and any Paying
Agent of any default or event of default under any Senior Debt or under any
agreement pursuant to which any Senior Debt may have been issued.
Section 6.03. DISTRIBUTION ON ACCELERATION OF SECURITIES; DISSOLUTION AND
REORGANIZATION; SUBROGATION OF SECURITIES.
(a) If the Securities are declared due and payable because of the
occurrence of an Event of Default, the Company shall give prompt written notice
to the holders of all Senior Debt or to the Representatives or trustee(s) for
such Senior Debt of such acceleration. The Company may not pay the principal of,
or premium, if any, interest or Liquidated Damages, if any, on, or any other
amounts due on, the Securities until five Business Days after such holders,
Representatives or trustee(s) of Senior Debt receive such notice and,
thereafter, the Company may pay the principal of, and premium, if any, interest
and Liquidated Damages, if any, on, and any other amounts due on, the Securities
only if the provisions of this Article VI permit such payment.
(b) Upon (i) any acceleration of the principal amount due on the
Securities because of an Event of Default or (ii) any direct or indirect
distribution of assets of the Company upon any dissolution, winding up,
liquidation or reorganization of the Company (whether in bankruptcy, insolvency
or receivership proceedings or upon an assignment for the benefit of creditors
or any other dissolution, winding up, liquidation or reorganization of the
Company):
(1) the holders of all Senior Debt shall first be entitled to
receive payment in full of the principal thereof, the interest thereon and
any other amounts due thereon before the holders are entitled to receive
payment on account of the principal of, or premium, if any, interest or
Liquidated Damages, if any, on, or any other amounts due on, the
Securities (other than payments of Junior Securities);
(2) any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities (other than Junior
Securities), to which the holders or the Trustee would be entitled (other
than in respect of amounts payable to the Trustee pursuant to Section
9.07) except for the provisions of this Article, shall be paid by the
liquidating trustee or agent or other Person making such a payment or
distribution, directly to the holders of Senior Debt (or their
Representative(s) or trustee(s) acting on their behalf), ratably according
to the aggregate amounts remaining unpaid on account of the principal of
and interest on and other amounts due on the Senior Debt held or
represented by each, to the extent necessary to make payment in full of
all Senior Debt remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of such Senior Debt; and
(3) in the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in
cash, property or securities (other than Junior Securities), shall be
received by the Trustee (other than in respect of amounts payable to the
Trustee pursuant to Section 9.07) or the holders before all Senior Debt is
paid in full, such payment or distribution shall be held in trust for the
benefit of, and be paid over to upon request by a holder of Senior Debt,
to the holders of the Senior Debt remaining unpaid or their
Representatives or trustee(s) acting on their behalf, ratably as
aforesaid, for application to the payment of such Senior Debt until all
such Senior Debt shall have been paid in full, after giving effect to any
concurrent payment or distribution to the holders of such Senior Debt.
29
<PAGE>
Subject to the payment in full of all Senior Debt, the holders shall be
subrogated to the rights of the holders of Senior Debt to receive payments and
distributions of cash, property or securities of the Company applicable to the
Senior Debt until the principal of, and premium, if any, interest and Liquidated
Damages, if any on, and all other amounts payable in respect of the Securities
shall be paid in full and, for purposes of such subrogation, no such payments or
distributions to the holders of Senior Debt of cash, property or securities
which otherwise would have been payable or distributable to holders shall, as
between the Company, its creditors other than the holders of Senior Debt, and
the holders, be deemed to be a payment by the Company to or on account of the
Senior Debt, it being understood that the provisions of this Article are and are
intended solely for the purpose of defining the relative rights of the holders,
on the one hand, and the holders of Senior Debt, on the other hand.
Nothing contained in this Article or elsewhere in this Indenture or in the
Securities is intended to or shall (i) impair, as between the Company and its
creditors other than the holders of Senior Debt, the obligation of the Company,
which is absolute and unconditional, to pay to the holders the principal of,
premium, if any, on, and interest and Liquidated Damages, if any, on, the
Securities as and when the same shall become due and payable in accordance with
the terms of the Securities, (ii) affect the relative rights of the holders and
creditors of the Company other than holders of Senior Debt or, as between the
Company and the Trustee, the obligations of the Company to the Trustee, or (iii)
prevent the Trustee or the holders from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article of the holders of Senior Debt in respect of
cash, property and securities of the Company received upon the exercise of any
such remedy.
Upon distribution of assets of the Company referred to in this Article,
the Trustee, subject to the provisions of Section 9.01 hereof, and the holders
shall be entitled to rely upon a certificate of the liquidating trustee or agent
or other Person making any distribution to the Trustee or to the holders for the
purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Debt and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article.
The Trustee, however, shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt. Nothing contained in this Article or elsewhere in this
Indenture, or in any of the Securities, shall prevent the good faith application
by the Trustee of any moneys which were deposited with it hereunder, prior to
its receipt of written notice of facts which would prohibit such application,
for the purpose of the payment of or on account of the principal of, premium, if
any, on, interest or Liquidated Damages, if any, on, the Securities unless,
prior to the date on which such application is made by the Trustee, the Trustee
shall be charged with actual notice under Section 6.03(d) hereof of the facts
which would prohibit the making of such application.
(c) The provisions of this Article shall not be applicable to any cash,
properties or securities received by the Trustee or by any holder of the
Securities when received as a holder of Senior Debt and nothing in Section 9.11
hereof or elsewhere in this Indenture shall deprive the Trustee or such holder
of the Securities of any of its rights as such holder of Senior Debt.
(d) The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment of
money to or by the Trustee in respect of the Securities pursuant to the
provisions of this Article. The Trustee, subject to the provisions of Section
9.01 hereof, shall be entitled to assume that no such fact exists unless the
Company or any holder of Senior Debt or any trustee therefor has given actual
notice thereof to the Trustee. Notwithstanding the provisions of this Article or
any other provisions of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any fact which would prohibit the making of any
payment of moneys to or by the Trustee in respect of the Securities pursuant to
the provisions in this Article, unless, and until two Business Days after, the
Trustee shall have received written notice thereof from the Company or any
holder or holders of Senior Debt or from any trustee or Representative therefor;
and, prior to the receipt of any such written notice, the Trustee, subject to
the provisions of Section 9.01 hereof, shall be entitled in all respects
conclusively to assume that no such facts exist; provided that if on a date not
less than two Business Days immediately preceding the date upon which, by the
terms hereof, any such moneys may become payable for any purpose (including,
without limitation, to pay the principal of, premium, if any, on, interest or
Liquidated Damages, if any, on, any Security), the Trustee shall not have
received with respect to such moneys the notice provided for in this Section
6.03(d), then anything herein contained to the contrary notwithstanding, the
Trustee shall have full power and authority to receive such moneys and to apply
the same to the purpose for which they were received, and shall not be affected
by any notice to the contrary which may be received by it on or after such prior
date.
The Trustee shall be entitled to rely conclusively on the delivery to it
of a written notice by a Person representing himself to be a holder of Senior
Debt (or a trustee or Representative on behalf of such holder) to
30
<PAGE>
establish that such notice has been given by a holder of Senior Debt (or a
trustee or Representative on behalf of any such holder or holders). In the event
that the Trustee determines in good faith that further evidence is required with
respect to the right of any Person as a holder of Senior Debt to participate in
any payment or distribution pursuant to this Article, the Trustee may request
such Person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of Senior Debt held by such Person, the extent to which such
person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such Person under this Article, and, if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment; nor shall the Trustee be charged with knowledge or the curing or
waiving of any default of the character specified in Section 6.02 hereof or that
any event or any condition preventing any payment in respect of the Securities
shall have ceased to exist, unless and until the Trustee shall have received
written notice to such effect.
(e) The provisions of this Section 6.03 applicable to the Trustee shall
(unless the context requires otherwise) also apply to any Paying Agent for the
Company.
Section 6.04. RELIANCE BY SENIOR DEBT ON SUBORDINATION PROVISIONS. Each
holder of any Security by his acceptance thereof acknowledges and agrees that
the foregoing subordination provisions are, and are intended to be, an
inducement and a consideration for each holder of any Senior Debt, whether such
Senior Debt was created or acquired before or after the issuance of the
Securities, to acquire and continue to hold, or to continue to hold, such Senior
Debt, and such holder of Senior Debt shall be deemed conclusively to have relied
on such subordination provisions in acquiring and continuing to hold, or in
continuing to hold, such Senior Debt. Notice of any default in the payment of
any Senior Debt, except as expressly stated in this Article, and notice of
acceptance of the provisions hereof are, to the extent permitted by law, hereby
expressly waived. Except as otherwise expressly provided herein, no waiver,
forbearance or release by any holder of Senior Debt under such Senior Debt or
under this Article shall constitute a release of any of the obligations or
liabilities of the Trustee or holders of the Securities provided in this
Article.
Section 6.05. NO WAIVER OF SUBORDINATION PROVISIONS. Except as otherwise
expressly provided herein, no right of any present or future holder of any
Senior Debt to enforce subordination as herein provided shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act, in good faith, by any such holder, or
by any noncompliance by the Company with the terms, provisions and covenants of
this Indenture, regardless of any knowledge thereof any such holder may have or
be otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Debt may, at any time and from time to time, without the
consent of, or notice to, the Trustee or the holders of the Securities, without
incurring responsibility to the holders of the Securities and without impairing
or releasing the subordination provided in this Article VI or the obligations
hereunder of the holders of the Securities to the holders of Senior Debt, do any
one or more of the following: (i) change the manner, place or terms of payment
of, or renew or alter, Senior Debt, or otherwise amend or supplement in any
manner Senior Debt or any instrument evidencing the same or any agreement under
which Senior Debt is outstanding; (ii) sell, exchange, release or otherwise
dispose of any property pledged, mortgaged or otherwise securing Senior Debt;
(iii) release any person liable in any manner for the collection of Senior Debt;
and (iv) exercise or refrain from exercising any rights against the Company or
any other Person.
Section 6.06. TRUSTEE'S RELATION TO SENIOR DEBT. The Trustee in its
individual capacity shall be entitled to all the rights set forth in this
Article in respect of any Senior Debt at any time held by it, to the same extent
as any holder of Senior Debt, and nothing in Section 9.11 hereof or elsewhere in
this Indenture shall deprive the Trustee of any of its rights as such holder.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform or to observe only such of its covenants and obligations, as are
specifically set forth in this Article, and no implied covenants or obligations
with respect to the holders of Senior Debt shall be read into this Indenture
against the Trustee. The Trustee shall not owe any fiduciary duty to the holders
of Senior Debt but shall have only such obligations to such holders as are
expressly set forth in this Article.
Each holder of a Security by his acceptance thereof authorizes and directs
the Trustee on his behalf to take such action as may be necessary or appropriate
to effectuate the subordination provided in this Article and appoints the
Trustee his attorney-in-fact for any and all such purposes, including, in the
event of any dissolution, winding up or liquidation or reorganization under any
applicable bankruptcy law of the Company (whether in bankruptcy,
31
<PAGE>
insolvency or receivership proceedings or otherwise), the timely filing of a
claim for the unpaid balance of such holder's Securities in the form required in
such proceedings and the causing of such claim to be approved. If the Trustee
does not file a claim or proof of debt in the form required in such proceedings
prior to 30 days before the expiration of the time to file such claims or
proofs, then any holder or holders of Senior Debt or their Representative or
Representatives shall have the right to demand, sue for, collect, receive and
receipt for the payments and distributions in respect of the Securities which
are required to be paid or delivered to the holders of Senior Debt as provided
in this Article and to file and prove all claims therefor and to take all such
other action in the name of the holders or otherwise, as such holders of Senior
Debt or Representative thereof may determine to be necessary or appropriate for
the enforcement of the provisions of this Article.
Section 6.07. OTHER PROVISIONS SUBJECT HERETO. Except as expressly stated
in this Article, notwithstanding anything contained in this Indenture to the
contrary, all the provisions of this Indenture and the Securities are subject to
the provisions of this Article VI. However, nothing in this Article shall apply
to or adversely affect the claims of, or payment to, the Trustee pursuant to
Section 9.07 or the right of any holder of Common Stock issued upon conversion
of Securities to receive Liquidated Damages, if any, in respect of such shares
of Common Stock. Notwithstanding the foregoing, the failure to make a payment on
account of principal of, premium, if any, on, or interest or Liquidated Damages,
if any, on, the Securities by reason of any provision of this Article VI shall
not be construed as preventing the occurrence of an Event of Default under
Section 8.01.
ARTICLE VII
SUCCESSORS
Section 7.01. MERGER, CONSOLIDATION OR SALE OF ASSETS. The Company will
not consolidate or merge with or into any person (whether or not the Company is
the surviving corporation), continue in a new jurisdiction or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets unless:
(a) the Company is the surviving corporation (in the case of a
merger) or the Person formed by or surviving any such consolidation or
merger (if other than the Company) or the Person which acquires by sale,
assignment, transfer, lease, conveyance or other disposition the
properties and assets of the Company is a corporation organized and
existing under the laws of the United States, any state thereof or the
District of Columbia; provided that in the event of the continuation of
the Company in the new jurisdiction, the Company must remain a corporation
organized and existing under the laws of the United States, any state
thereof or the District of Columbia;
(b) the corporation formed by or surviving any such consolidation or
merger (if other than the Company) or the corporation to which such sale,
assignment, transfer, lease, conveyance or other disposition will have
been made assumes all the obligations of the Company, pursuant to a
supplemental indenture in a form reasonably satisfactory to the Trustee,
under the Securities, the Registration Agreement and the Indenture;
(c) the Company, or if other than the Company, the entity or Person
formed by or surviving such merger or consolidation, shall have delivered
to the Trustee an opinion of counsel to the effect that the holders of
Securities will not recognize gain or loss for U.S. Federal income tax
purposes as a result of the transaction and will be subject to U.S.
Federal income tax on the same amounts, in the same manner and at the same
time as would have been the case if such transaction had not occurred;
(d) such sale, assignment, transfer, lease, conveyance or other
disposition of all or substantially all of the Company's properties or
assets shall be as an entirety or virtually as an entirety to one
corporation and such corporation shall have assumed all the obligations of
the Company, pursuant to a supplemental indenture in form reasonably
satisfactory to the Trustee, under the Securities, the Registration
Agreement and the Indenture;
(e) immediately after such transaction no Default or Event of
Default exists; and
(f) the Company or such corporation shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating
that such transaction and the supplemental indenture, if required, comply
with the Indenture and that all conditions precedent in the Indenture
relating to such transaction have been satisfied.
32
<PAGE>
Section 7.02. SUCCESSOR CORPORATION SUBSTITUTED. Upon any consolidation or
merger or any sale, assignment, transfer, lease, conveyance or other disposition
of all or substantially all of the assets of the Company in accordance with
Section 7.01 hereof, the successor corporation (if other than the Company)
formed by such consolidation or into or with which the Company is merged or the
corporation to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for and may exercise
every right and power of, the Company under this Indenture with the same effect
as if such successor Person has been named as the Company herein; provided,
however, that the predecessor Company in the case of a sale, assignment,
transfer, lease, conveyance or other disposition shall not be released from the
obligation to pay the principal of, premium, if any, on and interest and
Liquidated Damages, if any, on the Securities.
ARTICLE VIII
DEFAULTS AND REMEDIES
Section 8.01. EVENTS OF DEFAULT. An "Event of Default" occurs if:
(a) the Company defaults in the payment of any interest or
Liquidated Damages on any Security when the same becomes due and payable
and the default continues for a period of 30 days; or
(b) the Company defaults in the payment of any principal of or
premium, if any, on any Security when the same becomes due and payable,
whether at maturity, upon redemption or otherwise (including, without
limitation, failure by the Company to purchase Securities tendered for
purchase pursuant to (i) a Designated Event Offer as and when required
pursuant to Section 3.08 or Section 4.07 hereof or (ii) a Special
Redemption Event as and when required pursuant to Section 3.09 or Section
4.09 hereof); or
(c) the Company fails to observe or perform any covenant or
agreement contained in Sections 3.08, 3.09, 4.07 or 4.09 hereof; or
(d) the Company fails to observe or perform any other covenant or
agreement contained in this Indenture or the Securities required by it to
be performed and the failure continues for a period of 60 days after the
receipt of written notice by the Company from the Trustee or by the
Company and the Trustee from the holders of at least 25% in aggregate
principal amount of the then outstanding Securities stating that such
notice is a "Notice of Default"; or
(e) the Company fails to observe or perform any covenant or
agreement contained in the Escrow Agreement or the Trustee (except as a
result of any action taken by the Trustee or the Escrow Agent) no longer
has a valid security interest in the Escrowed Funds as provided pursuant
to the Escrow Agreement; or
(f) a default under any credit agreement, mortgage, indenture or
instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the Company or
any Subsidiary of the Company (or the payment of which is Guaranteed by
the Company or any of its Subsidiaries), whether such Indebtedness or
Guarantee exists on the date of this Indenture or is created thereafter,
which default (i) is caused by a failure to pay when due any principal of
or interest on such Indebtedness within the grace period provided for in
such Indebtedness (which failure continues beyond any applicable grace
period) (a "Payment Default") or (ii) results in the acceleration of such
Indebtedness prior to its express maturity (without such acceleration
being rescinded or annulled) and, in each case, the principal amount of
such Indebtedness, together with the principal amount of any other such
Indebtedness under which there is a Payment Default or the maturity of
which has been so accelerated, aggregates $15,000,000 or more and which
Payment Default is not cured or which acceleration is not annulled within
30 days after written receipt by the Company from the Trustee or by the
Company and the Trustee from any holder of Securities stating that such
notice is a "Notice of Default"; or
(g) a final, non-appealable judgment or final non-appealable
judgments (other than any judgment as to which a reputable insurance
company has accepted full liability) for the payment of money are entered
by a court or courts of competent jurisdiction against the Company or any
Subsidiaries of the Company and remain unstayed, unbonded or undischarged
for a period (during which execution shall not
33
<PAGE>
be effectively stayed) of 60 days, provided that the aggregate of all
such judgments exceeds $15,000,000; or
(h) the Company or any Material Subsidiary pursuant to or within the
meaning of any Bankruptcy Law:
(A) commences a voluntary case or proceeding; or
(B) consents to the entry of an order for relief against the
Company or any Material Subsidiary in an involuntary case or
proceeding; or
(C) consents to the appointment of a Custodian of the Company
or any Material Subsidiary or for all or any substantial part of its
property; or
(D) makes a general assignment for the benefit of its
creditors; or
(E) take corporate or similar action in respect of any of
the foregoing; or
(i) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law
that:
(A) is for relief against the Company or any Material
Subsidiary in an involuntary case or proceeding; or
(B) appoints a Custodian of the Company or any Material
Subsidiary or for all or any substantial part of the property of the
Company or any Material Subsidiary; or
(C) orders the liquidation of the Company or any Material
Subsidiary; and in each case referred to in this paragraph (h) the
order or decree remains unstayed and in effect for 60 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
federal, state or foreign bankruptcy, insolvency or similar law. The term
"Custodian" means any custodian, receiver, trustee, assignee, sequestor,
liquidator or similar official under any Bankruptcy Law.
Section 8.02. ACCELERATION. If an Event of Default (other than an Event of
Default specified in clauses (h) and (i) of Section 8.01 hereof with respect to
the Company) occurs and is continuing, the Trustee by notice to the Company, or
the Noteholders of at least 25% in principal amount of the then outstanding
Securities by notice to the Company and the Trustee, may declare all the
Securities to be due and payable. Upon such declaration, the principal of,
premium, if any, on and accrued and unpaid interest and Liquidated Damages, if
applicable, on the Securities shall be due and payable immediately. If an Event
of Default specified in clause (h) or (i) of Section 8.01 hereof occurs with
respect to the Company, the principal of, premium, if any, on and accrued and
unpaid interest and Liquidated Damages, if any, on the Securities shall ipso
facto become and be immediately due and payable without any declaration or other
act on the part of the Trustee or any Noteholder. The Noteholders of a majority
in aggregate principal amount of the then outstanding Securities by notice to
the Trustee may rescind an acceleration and its consequences if the rescission
would not conflict with any judgment or decree, if all amounts payable to the
Trustee pursuant to Section 9.07 hereof have been paid and if all existing
Events of Default have been cured or waived as provided for herein except
nonpayment of principal, premium, if any, interest or Liquidated Damages, if
any, that has become due solely because of the acceleration.
Section 8.03. OTHER REMEDIES. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of, premium, if any, on or interest and Liquidated Damages, if any,
on, the Securities or to enforce the performance of any provision of the
Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Noteholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
34
<PAGE>
Section 8.04. WAIVER OF PAST DEFAULTS. Subject to Section 8.07 hereof, the
Noteholders of a majority in aggregate principal amount of the then outstanding
Securities by notice to the Trustee may waive an existing Default or Event of
Default and its consequences except a continuing Default or Event of Default in
the payment of the Designated Event Payment, Special Redemption Payment, or
principal of, premium, if any, on, or interest or Liquidated Damages, if any,
on, any Security or in respect of a covenant in or other provision of this
Indenture or the Securities which cannot be amended or waived without the
consent of each Noteholder affected. When a Default or Event of Default is
waived, it is cured and ceases; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereon.
Section 8.05. CONTROL BY MAJORITY. The Noteholders of a majority in
principal amount of the then outstanding Securities may direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on it. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture, that
may be unduly prejudicial to the rights of other Noteholders, or that may
involve the Trustee in personal liability; provided that the Trustee may take
any other action deemed by the Trustee that is not inconsistent with such
direction. Prior to taking any action hereunder, the Trustee shall be entitled
to indemnification reasonably satisfactory to it against all losses and expenses
caused by taking or not taking such action.
Section 8.06. LIMITATION ON SUITS. A Noteholder may pursue a remedy with
respect to this Indenture or the Securities only if:
(a) the Noteholder gives to the Trustee a written notice of a
continuing Event of Default;
(b) the Noteholders of at least 25% in principal amount of the then
outstanding Securities make a written request to the Trustee to pursue the
remedy;
(c) such Noteholder or Noteholders offer and, if requested, provide
to the Trustee indemnity reasonably satisfactory to the Trustee against
any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of indemnity; and
(e) during such 60-day period the Noteholders of a majority in
principal amount of the then outstanding Securities do not give the
Trustee a direction inconsistent with the request.
A Noteholder may not use this Indenture to prejudice the rights of another
Noteholder or to obtain a preference or priority over another Noteholder.
Section 8.07. RIGHTS OF NOTEHOLDERS TO RECEIVE PAYMENT. Notwithstanding
any other provision of this Indenture, the right of any Noteholder of a Security
to receive payment of principal of, premium, if any on, and interest and
Liquidated Damages, if any, on the Security, on or after the respective due
dates expressed in the Security and this Indenture, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of the Noteholder made pursuant to this
Section.
Section 8.08. COLLECTION SUIT BY TRUSTEE. If an Event of Default specified
in Section 8.01(a) or (b) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
for the whole amount of principal, premium, if any, interest and Liquidated
Damages, if any, remaining unpaid on the Securities and, to the extent permitted
by law, interest on overdue principal, premium, if any, interest and Liquidated
Damages, if any and such further amount as shall be sufficient to cover the
costs and, to the extent lawful, expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due under Section 9.07 hereof.
Section 8.09. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee shall be
entitled and empowered, without regard to whether the Trustee or any holder
shall have made any demand or performed any other act pursuant to the provisions
of this Article and without regard to whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise, by intervention in any proceedings relative to the Company or any
other obligor upon the Securities, or to the creditors or property or assets of
the Company or any such other obligor or otherwise, to take any and all actions
authorized under the TIA in order to have claims of the holders and
35
<PAGE>
the Trustee allowed in any such proceeding. In particular, the Trustee shall
be entitled and empowered in such instances:
(a) to file and prove a claim or claims for the whole amount of
principal and premium, if any, interest, Liquidated Damages, if any, and
any other amounts owing and unpaid in respect of the Securities, and to
file such other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including all amounts owing to
the Trustee and each predecessor Trustee pursuant to Section 9.07 hereof)
and of the holders allowed in any judicial proceedings relating to the
Company or other obligor upon the Securities property of the Company or
any such other obligor,
(b) unless prohibited by applicable law and regulations, to vote on
behalf of the holders of the Securities in any election of a trustee or a
standby trustee in arrangement, reorganization, liquidation or other
bankruptcy or insolvency proceedings or Person performing similar
functions in comparable proceedings, and
(c) to participate as a member, voting or otherwise, of any official
committee of creditors approved in such matter and to collect and receive
any moneys or other property or assets payable or deliverable on any such
claims, and to distribute all amounts received with respect to the claims
of the holders and of the Trustee on their behalf; and any trustee,
receiver, or liquidator, custodian or other similar official is hereby
authorized by each of the holders to make payments to the Trustee, and, in
the event that the Trustee shall consent to the making of payments
directly to the holders, to pay to the Trustee such amounts as shall be
sufficient to cover all amounts owing to the Trustee and each predecessor
Trustee pursuant to Section 9.07 hereof.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any holder thereof, or to authorize the Trustee to
vote in respect of the claim of any holder of any such proceeding except, as
aforesaid, to vote for the election of a trustee in bankruptcy or similar
person.
In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party), the Trustee shall be held to represent all the
holders of the Securities, and it shall not be necessary to make any holders of
the Securities parties to any such proceedings.
Section 8.10. PRIORITIES. If the Trustee collects any money pursuant to
this Article, it shall pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 9.07 hereof,
including payment of all compensation, expense and liabilities incurred,
and all advances made, by the Trustee and the costs and expenses of
collection;
SECOND: to the holders of Senior Debt to the extent required by
Article VI;
THIRD: to the Noteholders, for amounts due and unpaid on the
Securities for principal, premium, if any, interest and Liquidated
Damages, if any, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Securities for principal,
premium, if any, interest and Liquidated Damages, if any; and
FOURTH: to the Company or to such other party as a court of
competent jurisdiction shall direct.
Except as otherwise provided in Section 2.12 hereof, the Trustee may fix a
record date and payment date for any payment to Noteholders made pursuant to
this Section 8.10. At least 15 days before such record date, the Company shall
mail to each holder and the Trustee a notice that states the record date, the
payment date and amount to be paid. The Trustee may mail such notice in the name
and at the expense of the Company.
Section 8.11. UNDERTAKING FOR COSTS. In any suit for the enforcement of
any right or remedy under this Indenture or in any suit against the Trustee for
any action taken or omitted by it as a Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees and expenses, against any party
36
<PAGE>
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a holder pursuant to Section 8.07 hereof, or a
suit by Noteholders of more than 10% in principal amount of the then outstanding
Securities.
Section 8.12. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any
holder of Securities has instituted any proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee or to
such holder, then and in every such case the Company, the Trustee and the
holders shall, subject to any determination in such proceeding, be restored
severally and respectively to their former positions hereunder, and thereafter
all rights and remedies of the Trustee and the holders shall continue as though
no such proceeding has been instituted.
Section 8.13. RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise provided
in Section 2.07 hereof, no right or remedy conferred herein, upon or reserved to
the Trustee or to the holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent (to
the extent permitted by law) the concurrent assertion or employment of any other
appropriate right or remedy.
Section 8.14. DELAY OR OMISSION NOT WAIVER. No delay or omission of the
Trustee or of any holder of any Security to exercise any right or remedy
accruing upon any Event of Default shall (to the extent permitted by law) impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article VIII or by
law to the Trustee or to the holders may (to the extent permitted by law) be
exercised from time to time and as often as may be deemed expedient, by the
Trustee or by the holders, as the case may be.
ARTICLE IX
TRUSTEE
Section 9.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent Person
would exercise or use under the circumstances in the conduct of such Person's
own affairs.
(b) Except during the continuance of an Event of Default: (i) the Trustee
need perform only those duties that are specifically set forth in this Indenture
and no others; and (ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and, if required by the terms hereof, conforming to the requirements of
this Indenture. However, the Trustee shall examine the certificates and opinions
to determine whether or not they conform to the applicable requirements, if any,
of this Indenture. The Trustee may reasonably consult with its legal counsel and
rely upon advice from such counsel with respect to legal matters.
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that: (i) this paragraph does not limit the effect of paragraph (b) of this
Section 9.01; (ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts and (iii) the Trustee shall not be
liable with respect to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section 8.05 hereof.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section 9.01.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any holders, unless such holder shall have offered to the Trustee
security and indemnity reasonably satisfactory to it against any loss, liability
or expense.
37
<PAGE>
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
Section 9.02. RIGHTS OF TRUSTEE.
(a) Subject to the provisions of Section 9.01(a) hereof, the Trustee may
rely on any document believed by it to be genuine and to have been signed or
presented by the proper person. The Trustee need not investigate any fact or
matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel, or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel of its choice and the advice of such counsel or any Opinion of Counsel
with respect to legal matters relating to this Indenture and the Securities
shall be full and complete authorization and protection from liability in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in accordance with the advice or opinion of such counsel.
(c) The Trustee may act through agents and shall not be responsible for
the misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute
willful misconduct or negligence.
(e) The Trustee shall not be charged with knowledge of any Event of
Default under subsection (c), (d), (e), (f), (g) or (h) of Section 8.01 unless
either (1) a Trust Officer assigned to its corporate trust department shall have
actual knowledge thereof, or (2) the Trustee shall have received notice thereof
in accordance with Section 12.02 hereof from the Company or any holder; provided
that the Trustee shall comply with the "automatic stay" provisions contained in
U.S. Bankruptcy Law, if applicable.
(f) Prior to the occurrence of an Event of Default hereunder and after the
curing and waiving of all Events of Default, the Trustee shall not be bound to
make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debentures, note, other evidence of indebtedness or other
paper or document unless requested in writing to do so by the holders of not
less than a majority in aggregate principal amount of the Securities then
outstanding; provided that if the payment within a reasonable time to the
Trustee of the costs, expenses or liabilities likely to be incurred by it in the
making of such investigation is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms of this
Indenture, the Trustee may require reasonable indemnity against expenses or
liabilities as a condition to proceeding; the reasonable expenses of every such
examination shall be paid by the Company or, if advanced by the Trustee, shall
be repaid by the Company upon demand. The Trustee shall not be bound to
ascertain or inquire as to the performance or observance of any covenants,
conditions, or agreements on the part of the Company, except as otherwise set
forth herein, but the Trustee may, in its discretion, make such further inquiry
or investigation into such facts or matters as it may see fit and if the Trustee
shall determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Company personally or
by agent or attorney at the sole cost of the Company.
(g) The Trustee shall not be required to give any bond or surety in
respect of the performance of its powers and duties hereunder.
(h) The rights, privileges, protections, immunities and benefits given to
the Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder and to each Agent employed to act hereunder.
Section 9.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual
or any other capacity may become the owner or pledgee of Securities and may
otherwise deal with the Company or an Affiliate with the same rights it would
have if it were not Trustee. Any Agent may do the same with like rights.
However, in the event that the Trustee acquires any conflicting interest (as
defined in the TIA) it must eliminate such conflict within 90 days, apply to the
Commission for permission to continue as Trustee or resign. Any Agent may do the
same with like rights and duties. The Trustee is also subject to Sections 9.10
and 9.11 hereof.
38
<PAGE>
Section 9.04. TRUSTEE'S DISCLAIMER. The Trustee makes no representation as
to the validity or adequacy of this Indenture or the Securities, it shall not be
accountable for the Company's use of the proceeds from the Securities, and it
shall not be responsible for any statement of the Company in this Indenture or
any statement in the Securities (other than its certificate of authentication)
or for compliance by the Company with the Registration Agreement.
Section 9.05. NOTICE OF DEFAULTS. If a Default or Event of Default occurs
and is continuing and if it is known to the Trustee, the Trustee shall mail to
Noteholders a notice of the Default or Event of Default within 90 days after it
occurs. Except in the case of a Default or Event of Default relating to the
failure to pay any principal of or premium, if any, interest or Liquidated
Damages (including a Designated Event Payment or Special Redemption Payment), if
any, on any Security, the Trustee may withhold the notice if and so long as a
committee of its Trust Officers in good faith determines that withholding the
notice is in the interests of Noteholders.
Section 9.06. REPORTS BY TRUSTEE TO NOTEHOLDERS. Within 60 days after the
reporting date stated in Section 12.10, the Trustee shall mail to Noteholders a
brief report dated as of such reporting date that complies with TIA ss. 313(a)
if and to the extent required by such ss. 313(a). The Trustee also shall comply
with TIA ss. 313(b)(2). The Trustee shall also transmit by mail all reports as
required by TIA ss. 313(c).
A copy of each report at the time of its mailing to Noteholders shall be
filed with the SEC and each stock exchange on which the Securities are listed.
The Company shall notify the Trustee when the Securities are listed on any stock
exchange and of any delisting thereof.
Section 9.07. COMPENSATION AND INDEMNITY. The Company shall pay to the
Trustee from time to time such compensation for its services hereunder as shall
be agreed upon from time to time in writing by the Company and the Trustee. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable disbursements, expenses and advances incurred or made
by it in connection with the performance of its duties hereunder. Such
disbursements and expenses may include the reasonable disbursements,
compensation and expenses of the Trustee's agents and counsel.
The Company shall indemnify each of the Trustee and each predecessor
Trustee against any and all loss, damage, claim, liability or expense incurred
by it in connection with the performance of its duties hereunder except as set
forth in the next paragraph. The Trustee shall notify the Company promptly of
any claim for which it may seek indemnity. Failure by the Trustee to notify the
Company shall not release the Company of its obligations hereunder. The Company
shall defend the claim and the Trustee shall cooperate in the defense. If in the
reasonable opinion of Trustee's counsel, a conflict of interest exists between
the Trustee and the Company with respect to such claim, the Trustee may have
separate counsel and the Company shall pay the reasonable fees, disbursements
and expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
The Company need not reimburse any expense or indemnify against any loss
or liability incurred by the Trustee through the Trustee's negligence or bad
faith.
The obligations of the Company under this Section 9.07 shall survive the
resignation or removal of the Trustee and the satisfaction and discharge of the
Indenture.
To secure the Company's payment obligations in this Section, the Trustee
shall have a lien on all money or property held or collected by the Trustee in
its capacity as Trustee, except money or property held in trust to pay principal
of, or premium, if any, interest or Liquidated Damages, if any, on, particular
Securities. Such lien shall survive the satisfaction or discharge of the
indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 8.01(g) or (h) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
Section 9.08. REPLACEMENT OF TRUSTEE. A resignation or removal of the
Trustee and appointment of a successor Trustee shall become effective only upon
the successor Trustee's acceptance of appointment as provided in this Section.
39
<PAGE>
The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Company. The Noteholders of a majority
in principal amount of the then outstanding Securities may remove the Trustee by
so notifying the Trustee and the Company in writing. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section 9.10 hereof, unless the
Trustee's duty to resign is stayed as provided in TIA ss. 310(b);
(b) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy
Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the
Noteholders of a majority in principal amount of the then outstanding Securities
may appoint a successor Trustee to replace the successor Trustee appointed by
the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Noteholders of at least 10% in principal amount of the then outstanding
Securities may petition, at the expense of the Company, any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 9.10 hereof, unless the
Trustee's duty to resign is stayed as provided in TIA ss. 310(b), any Noteholder
who has been a bona fide holder of a Security for at least six months may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon the resignation or removal
of the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to Noteholders. The
retiring Trustee shall promptly transfer all property held by it as Trustee to
the successor Trustee, subject to the lien provided for in Section 9.07 hereof.
Notwithstanding the resignation or replacement of the Trustee pursuant to this
Section 9.08, the Company's obligations under Section 9.07 hereof shall continue
for the benefit of the retiring trustee with respect to expenses and liabilities
incurred by it prior to such resignation or replacement.
Section 9.09. SUCCESSOR TRUSTEE BY MERGER, ETC. If the Trustee
consolidates, merges or converts into, or transfers all or substantially all of
its corporate trust business to, another corporation, the successor corporation
without any further act shall be the successor Trustee.
In case at the time such successor or successors by merger, conversion or
consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Securities shall have been authenticated but not delivered,
any such successor to the Trustee may adopt the certificate of authentication of
any predecessor trustee, and deliver such Securities so authenticated; and in
case at that time any of the Securities shall not have been authenticated, any
successor to the Trustee may authenticate such Securities either in the name of
any predecessor hereunder or in the name of the successor to the Trustee; and in
all such cases such certificates shall have the full force which it is anywhere
in the Securities or in this Indenture provided that the certificate of the
Trustee shall have.
Section 9.10. ELIGIBILITY; DISQUALIFICATION. This Indenture shall always
have a Trustee who satisfies the requirements of TIA ss. 310(a)(1), (2) and (5).
The Trustee shall always have a combined capital and surplus as stated in
Section 12.10 hereof. The Trustee is subject to TIA ss. 310(b); provided,
however, that there shall be excluded from the operation of TIA ss. 310(b)(1)
any indenture or indentures under which other securities or certificates of
interest or participation in other securities of the Company are outstanding if
the requirements for such exclusion set forth in TIA ss. 310(b)(1) are met.
40
<PAGE>
Section 9.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The
Trustee is subject to TIA ss. 311(a), excluding any creditor relationship listed
in TIA ss. 311(b). A Trustee who has resigned or been removed shall be subject
to TIA ss. 311(a) to the extent indicated therein.
ARTICLE X
DISCHARGE OF INDENTURE
Section 10.01. TERMINATION OF THE COMPANY'S OBLIGATIONS. This Indenture
shall cease to be of further effect (except as to any surviving rights of
conversion, registration of transfer or exchange of Securities herein expressly
provided for and except as further provided below), and the Trustee, on demand
of and at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when
(a) either
(i) all Securities theretofore authenticated and delivered (other
than (i) Securities which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 2.07 and (ii) Securities
for whose payment money has theretofore been deposited in trust and
thereafter repaid to the Company as provided in Section 10.02) have been
delivered to the Trustee for cancellation; or
(ii) all such Securities not theretofore delivered to the Trustee
for cancellation
(A) have become due and payable, or
(B) will become due and payable at the final maturity date
within one year, or
(C) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company,
and the Company, in the case of clause (A), (B) or (C) above, has
irrevocably deposited or caused to be irrevocably deposited with the
Trustee as trust funds in trust for the purpose cash in an amount
sufficient to pay and discharge the entire indebtedness on such Securities
not theretofore delivered to the Trustee for cancellation, for principal,
premium, if any, interest and Liquidated Damages, if any, to the date of
such deposit (in the case of Securities which have become due and payable)
or to the final maturity date or redemption date, as the case may be, in
all other cases;
(b) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 9.07, the obligations of
the Company to pay Liquidated Damages under this Indenture, the Securities and
the Registration Agreement and, if money shall have been deposited with the
Trustee pursuant to subclause (ii) of clause (a) of this Section, the provisions
of Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.10, 2.11 (second paragraph only),
2.13, 2.15, 3.08, 3.09, 4.02 (second paragraph only), 4.04, 4.07, 4.08 and 4.09,
Article V and this Article X, shall survive; and, notwithstanding the
satisfaction and discharge of this Indenture, the Company agrees to reimburse
the Trustee for any costs or expenses thereafter reasonably and properly
incurred by the Trustee and to compensate the Trustee for any services
thereafter reasonably and properly rendered by the Trustee in connection with
this Indenture, the Registration Agreement or the Securities. Thereupon, the
Trustee upon request of the Company, shall acknowledge in writing the discharge
of the Company's obligations under this Indenture, except for those surviving
obligations specified above.
Subject to the provisions of Section 10.02, the Trustee shall hold in
trust, for the benefit of the holders, all money deposited with it pursuant to
this Section 10.01 and shall apply the deposited money in accordance with this
Indenture and the Securities to the payment of the principal of, and premium, if
any, interest and Liquidated
41
<PAGE>
Damages, if any, on the Securities. Money so held in trust shall not be subject
to the subordination provisions of Article VI.
Section 10.02. REPAYMENT TO COMPANY. The Trustee and the Paying Agent
shall promptly pay to the Company upon request any excess money or securities
held by them at any time.
The Trustee and the Paying Agent shall pay to the Company upon written
request any money held by them for the payment of principal or interest that
remains unclaimed for two years after the date upon which such payment shall
have become due; provided, however, that the Company shall have first caused
notice of such payment to the Company to be mailed to each Noteholder entitled
thereto no less than 30 days prior to such payment or within such period shall
have published such notice in a financial newspaper of widespread circulation
published in The City of New York, including, without limitation, The Wall
Street Journal (national edition). After payment to the Company, the Trustee and
the Paying Agent shall have no further liability with respect to such money and
Noteholders entitled to the money must look to the Company for payment as
general creditors unless any applicable abandoned property law designates
another person.
Section 10.03. REINSTATEMENT. If the Trustee or any Paying Agent is unable
to apply any money in accordance with the second paragraph of Section 10.01 by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Company's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to Section 10.01 until such time as the Trustee or such Paying Agent is
permitted to apply all such money in accordance with Section 10.01; PROVIDED,
HOWEVER, that if the Company has made any payment of the principal of or
premium, if any, interest or Liquidated Damages, if any, on any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the holders of such Securities to receive any such payment from
the money held by the Trustee or such Paying Agent.
ARTICLE XI
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 11.01. WITHOUT CONSENT OF NOTEHOLDERS. The Company and the Trustee
may amend or supplement this Indenture or the Securities without the consent of
any Noteholder:
(a) to cure any ambiguity, defect or inconsistency;
(b) to comply with Sections 5.13 and 7.01 hereof;
(c) to provide for uncertificated Securities in addition to
certificated Securities;
(d) to make any change that does not adversely affect the legal
rights hereunder of any Noteholder;
(e) to qualify this Indenture under the TIA or to comply with the
requirements of the SEC in order to maintain the qualification of the
Indenture under the TIA;
(f) to make any change that provides any additional rights or
benefits to the holders of
Securities;
(g) to evidence and provide for the acceptance under the Indenture
of a successor Trustee; or
(h) to release the security interest in the Escrowed Funds pursuant
to the terms of the Escrow Agreement.
Upon the request of the Company accompanied by a Board Resolution
authorizing the execution of any such amended or supplemental Indenture, and
upon receipt by the Trustee of the documents described in Section 11.07 hereof,
the Trustee shall join with the Company in the execution of any amended or
supplemental Indenture authorized or permitted by the terms of this Indenture
and to make any further appropriate agreements and stipulations that may be
therein contained, but the Trustee shall not be obligated to enter into such
amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
42
<PAGE>
An amendment under this Section may not make any change that adversely
affects the rights under Article VI of any holder of Senior Debt then
outstanding unless the holders of such Senior Debt (or any group or
representative thereof authorized to give a consent) consent to such change.
Section 11.02. WITH CONSENT OF NOTEHOLDERS. Except as provided below in
this Section 11.02, the Company and the Trustee may amend or supplement this
Indenture or the Securities with the written consent (including consents
obtained in connection with any tender or exchange offer for Securities) of the
Noteholders of at least a majority in principal amount of the then outstanding
Securities. Subject to Sections 8.04 and 8.07 hereof, the Noteholders of a
majority in principal amount of the Securities then outstanding may also by
their written consent (including consents obtained in connection with any tender
offer or exchange offer for Securities) waive any existing Default or Event of
Default as provided in Section 8.04 or waive compliance in a particular instance
by the Company with any provision of this Indenture or the Securities. However,
without the consent of each Noteholder affected, an amendment, supplement or
waiver under this Section may not (with respect to any Securities held by a
nonconsenting Noteholder):
(a) reduce the amount of Securities whose Noteholders must consent
to an amendment, supplement or waiver;
(b) reduce the rate of, or change the time for payment of, interest
or Liquidated Damages on any Security;
(c) reduce the principal of or change the fixed maturity of any
Security or alter the redemption provisions with respect thereto
(including, without limitation, the amount of any premium payable upon
redemption);
(d) make any Security payable in money other than that stated in the
Security;
(e) make any change in Section 8.04, 8.07 or 11.02 hereof (this
sentence);
(f) waive a default in the payment of the Designated Event Payment
or the Special Redemption Payment or any principal of, or premium, if any,
or interest or Liquidated Damages, if any, on, any Security (other than a
rescission of acceleration pursuant to Section 8.02 hereof and a waiver of
nonpayment of principal, premium, if any, interest or Liquidated Damages,
if any, that have become due solely because of such acceleration of the
Securities);
(g) at any time after a Designated Event or AVEX Acquisition Event
has occurred, change the time at which the related repurchase or
redemption offer must be made or at which the Securities must be
repurchased or redeemed pursuant to such offer;
(h) waive a redemption or repurchase payment payable on any
Security;
(i) make any change in the rights of holders of Securities to
receive payment of principal of, or premium, if any, or interest or
Liquidated Damages, if any, on, the Securities;
(j) modify the conversion or subordination provisions in a manner
adverse to the holders of the Securities;
(k) impair the right of Noteholders to convert Securities into
Common Stock of the Company or otherwise to receive any cash, securities
or other property receivable by a holder upon conversion of Securities;
(l) modify or amend the Escrow Agreement in a manner adverse to the
holders of the Securities; or
(m) release the security interest granted in favor of the Trustee on
behalf of the holders of Securities in the Escrowed Funds other than
pursuant to the terms of the Escrow Agreement.
Upon the request of the Company accompanied by a Board Resolution
authorizing the execution of any such amended or supplemental Indenture, and
upon the filing with the Trustee of evidence satisfactory to the Trustee of the
consent of the Holders of Securities as aforesaid, and upon receipt by the
Trustee of the documents
43
<PAGE>
described in Section 11.07 hereof, the Trustee shall join with the Company in
the execution of such amended or supplemental Indenture unless such amended or
supplemental Indenture affects the Trustee's own rights, duties or immunities
under this Indenture or otherwise, in which case the Trustee may in its
discretion, but shall not be obligated to, enter into such amended or
supplemental Indenture.
To secure a consent of the Noteholders under this Section 11.02, it shall
not be necessary for the Noteholders to approve the particular form of any
proposed amendment, supplement or waiver, but it shall be sufficient if such
consent approves the substance thereof.
Section 11.03. COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment to
this Indenture or the Securities shall be set forth in a supplemental indenture
that complies with the TIA as then in effect.
Section 11.04. REVOCATION AND EFFECT OF CONSENTS. Until an amendment,
supplement or waiver becomes effective, a consent to it by a Noteholder of a
Security is a continuing consent by the Noteholder and every subsequent
Noteholder of a Security or portion of a Security that evidences the same debt
as the consenting Noteholder's Security, even if notation of the consent is not
made on any Security. However, any such Noteholder or subsequent Noteholder may
revoke the consent as to such Noteholder's Security or portion of a Security if
the Trustee receives the notice of revocation before the date on which the
Trustee receives an Officers' Certificate certifying that the Noteholders of the
requisite principal amount of Securities have consented to the amendment,
supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Noteholders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then notwithstanding the
provisions of the immediately preceding paragraph, those persons who were
Noteholders at such record date (or their duly designated proxies), and only
those persons, shall be entitled to consent to such amendment, supplement or
waiver or to revoke any consent previously given, whether or not such persons
continue to be Noteholders after such record date. No consent shall be valid or
effective for more than 90 days after such record date unless consents from
Noteholders of the principal amount of Securities required hereunder for such
amendment, supplement or waiver to be effective shall have also been given and
not revoked within such 90-day period.
After an amendment, supplement or waiver becomes effective it shall bind
every Noteholder, unless it is of the type described in any of clauses (a)
through (l) of Section 11.02 hereof. In such case, the amendment, supplement or
waiver shall bind each Noteholder who has consented to it and every subsequent
Noteholder that evidences the same debt as the consenting Noteholder's Security.
Upon the execution of any supplemental indenture under this Article XI,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby. After a supplemental indenture becomes effective, the
Company shall mail to holders a notice briefly describing such amendment. The
failure to give such notice to all holders, or any defect therein, shall not
impair or affect the validity of an amendment under this Article.
Section 11.05. NOTATION ON OR EXCHANGE OF SECURITIES. The Trustee may
place an appropriate notation about an amendment, supplement or waiver on any
Security thereafter authenticated. The Company in exchange for all Securities
may issue and the Trustee shall authenticate new Securities that reflect the
amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new security shall not
affect validity and effect of such amendment, supplement or waiver.
Section 11.06. TRUSTEE PROTECTED. The Trustee shall sign all supplemental
indentures, except that the Trustee may, but need not, sign any supplemental
indenture that adversely affects its rights, duties or immunities.
Section 11.07. TRUSTEE TO SIGN SUPPLEMENTAL INDENTURES. The Company may
not sign a supplemental Indenture until the Board of Directors approves it. In
executing any supplemental indenture, the Trustee shall be entitled to receive
indemnity reasonably satisfactory to it and to receive and (subject to Section
9.01) shall be fully
44
<PAGE>
protected in relying upon, in addition to the documents required by Section
12.04, an Officers' Certificate and an Opinion of Counsel stating that:
(a) such supplemental indenture is authorized or permitted by this
Indenture and that all conditions precedent to the execution, delivery and
performance of such supplemental indenture have been satisfied;
(b) the Company has all necessary corporate power and authority to
execute and deliver the supplemental indenture and that the execution,
delivery and performance of such supplemental indenture has been duly
authorized by all necessary corporate action of the Company;
(c) the execution, delivery and performance of the supplemental
indenture do not conflict with, or result in the breach of or constitute a
default under any of the terms, conditions or provisions of (i) this
Indenture, (ii) the charter documents or by-laws of the Company, or (iii)
any material agreement or instrument to which the Company is subject and
of which such counsel is aware;
(d) to the knowledge of legal counsel writing such Opinion of
Counsel, the execution, delivery and performance of the supplemental
indenture do not conflict with, or result in the breach of any of the
terms, conditions or provisions of (i) any law or regulation applicable to
the Company, or (ii) any material order, writ, injunction or decree of any
court or governmental instrumentality applicable to the Company;
(e) such supplemental indenture has been duly and validly executed
and delivered by the Company, and this Indenture together with such
supplemental indenture constitutes a legal, valid and binding obligation
of the Company enforceable against the Company, in accordance with its
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer,
moratorium or similar laws affecting the enforcement of creditors' rights
generally and general equitable principles (whether considered in a
proceeding at law or in equity); and
(f) this Indenture together with such amendment or supplement
complies with the TIA.
Section 11.08. PAYMENT FOR CONSENT. Neither the Company nor any Affiliate
of the Company shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any holder for
or as an inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE XII
MISCELLANEOUS
Section 12.01. TRUST INDENTURE ACT CONTROLS. If any provision of this
Indenture limits, qualifies, or conflicts with another provision which is
automatically deemed to be incorporated in this Indenture by the TIA, the
incorporated provision shall control. If any provision of this Indenture
modifies or excludes any provision of the TIA that may be so modified or
excluded, the latter provision shall be deemed to apply to this Indenture as so
modified or excluded, as the case may be.
Section 12.02. NOTICES. Any notice or communication by the Company or the
Trustee to the other is duly given if in writing and delivered in person or
mailed by first-class mail (registered or certified, return receipt requested),
telecopier (promptly confirmed in writing) or overnight air courier guaranteeing
next day delivery to the other's address stated in Section 12.10 hereof. The
Company or the Trustee by notice to the other may designate additional or
different addresses for subsequent notices or communications.
Any notice or communication to a Noteholder shall be mailed by first-class
mail, postage prepaid to his address shown on the register kept by the
Registrar. Any notice or communication shall also be so mailed to any Person
described in TIA ss. 313(c), to the extent required by the TIA. Failure to mail
a notice or communication to a Noteholder or any defect in it shall not affect
its sufficiency with respect to other Noteholders.
45
<PAGE>
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it;
a notice or communication, however, shall not be effective unless, in the case
of the Trustee, actually received.
If the Company mails a notice or communication to Noteholders, it shall
mail a copy to the Trustee and each Agent at the same time.
All other notices or communications shall be in writing.
In case by reason of the suspension of regular mail service, or by reason
of any other cause, it shall be impossible to mail any notice as required by the
Indenture, then such method of notification as shall be made with the approval
of the Trustee shall constitute a sufficient mailing of such notice.
Section 12.03. COMMUNICATION BY NOTEHOLDERS WITH OTHER NOTEHOLDERS.
Noteholders may communicate pursuant to TIA ss. 312(b) with other Noteholders
with respect to their rights under this Indenture or the Securities. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA ss. 312(c).
Section 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon
any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 12.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 12.05 hereof) stating that, in the opinion of such counsel, all
such conditions precedent and covenants have been satisfied.
In any case where several matters are required by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more such Persons as
to other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate or opinion of an Officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such Officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
by, an Officer or Officer of the Company stating that the information with
respect to such factual matters is in the possession of the Company, unless such
counsel knows, or in the exercise of reasonable care should know, that the
certificate of opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Any Officers' Certificate, statement or Opinion of Counsel may be based,
insofar as it relates to accounting matters, upon a certificate or opinion of or
representation by an accountant (who may be an employee of the Company), or firm
of accountants, unless such Officer or counsel, as the case may be, knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representation with respect to the accounting matters upon which his or her
certificate, statement or opinion may be based as aforesaid is erroneous.
Section 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than pursuant to Section 4.03) shall
include:
(a) a statement that the Persons signing such certificate or
rendering such opinion has read such covenant or condition;
46
<PAGE>
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, such Person has
made such examination or investigation as is necessary to enable such
Person to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been complied with.
Section 12.06. RULES BY TRUSTEE AND AGENTS. The Trustee may make
reasonable rules for action by, or a meeting of, Noteholders. The Registrar or
Paying Agent may make reasonable rules and set reasonable requirements for its
functions.
Section 12.07. LEGAL HOLIDAYS. A "Legal Holiday" is a Saturday, a Sunday
or a day on which banking institutions in the State of New York are not required
to be open. If a payment date is a Legal Holiday at a place of payment, payment
may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest or Liquidated Damages shall accrue for the intervening
period unless the Company shall default in making the payment due on such next
succeeding day. If any other operative date for purposes of this Indenture shall
occur on a Legal Holiday then for all purposes the next succeeding day that is
not a Legal Holiday shall be such operative date.
Section 12.08. NO RECOURSE AGAINST OTHERS. A director, officer, employee
or stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Securities or this Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. Each Noteholder by accepting a Security waives and releases all such
liability. The waiver and release are part of the consideration for the issue of
the Securities.
Section 12.09. COUNTERPARTS. This Indenture may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
Section 12.10. VARIABLE PROVISIONS. "Officer" means the Chairman of the
Board, the Chief Executive Officer, the President, any Vice-President, the Chief
Financial Officer, the Treasurer, the Secretary, any Assistant Treasurer, any
Assistant Secretary or the Controller of the Company.
The Company initially appoints the Trustee as Paying Agent, Registrar and
Conversion Agent, and the Trustee hereby accepts such appointments.
The first certificate pursuant to Section 4.03 hereof shall be for the
fiscal year ending on December 31, 1999.
The reporting date for Section 9.06 hereof is February 15 of each year.
The first reporting date is February 15, 2000.
The Trustee shall always have a combined capital and surplus of at least
$50,000,000 or shall be a member of a bank holding system the aggregate combined
capital and surplus of which is $50,000,000 as set forth in its most recent
published annual report of condition; provided that the Trustee's separate
capital and surplus shall at all times be at least the amount required by
Section 310(a)(2) of the TIA.
The Company's address for purposes of the Indenture is:
Benchmark Electronics, Inc.
3000 Technology Drive
Angleton, Texas 77515
Attention: Chief Financial Officer
Telephone No.: (409) 848-6550
Telecopier No.: (409) 848-5269
47
<PAGE>
The Trustee's address is:
Harris Trust Company of New York
Wall Street Plaza
88 Pine Street, 19th Floor
New York, New York 10005
Attn: [Corporate Trust Trustee Administration]
Telephone No.: (212) 701-7657
Telecopier No.: (212) 701-7664/7698
The Company or the Trustee may change its address for purposes of this
Indenture by written notice to the other.
Section 12.11. GOVERNING LAW. THE INTERNAL LAWS OF THE STATE OF NEW YORK
SHALL GOVERN THIS INDENTURE AND THE SECURITIES, WITHOUT REGARD, TO THE EXTENT
PERMITTED BY LAW, TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
Section 12.12. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company or an Affiliate. Any such indenture, loan or debt agreement may
not be used to interpret this Indenture.
Section 12.13. SUCCESSORS. All agreements of the Company in this Indenture
and the Securities shall bind its successor. All agreements of the Trustee in
this Indenture shall bind its successor.
Section 12.14. SEVERABILITY. In case any provision in this Indenture or in
the Securities shall be invalid, illegal or unenforceable, then (to the extent
permitted by law) the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
Section 12.15. TABLE OF CONTENTS, HEADINGS, ETC. The Table of Contents and
headings of the Articles and Sections of this Indenture and the Securities have
been inserted for convenience of reference only, are not to be considered a part
hereof or thereof, and shall in no way modify or restrict any of the terms or
provisions hereof or thereof.
48
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
Benchmark Electronics, Inc., as Company,
By /S/ GAYLA J. DELLY
Name: Gayla J. Delly
Title: Treasurer
Harris Trust Company of New York,
as Trustee,
By /S/ AMY ROBERTS
Name: Amy Roberts
Title: Vice President
49
<PAGE>
EXHIBIT A
FORM OF CONVERTIBLE SUBORDINATED NOTE
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Global Securities Legend--For Inclusion in Global Securities Only]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE EXPIRATION OF THE HOLDING
PERIOD UNDER RULE 144(k) (OR ANY SUCCESSOR THERETO) UNDER THE SECURITIES ACT
WHICH IS APPLICABLE TO THIS SECURITY OR (Y) BY ANY HOLDER THAT WAS AN
"AFFILIATE" (WITHIN THE MEANING OF RULE 144 UNDER THE SECURITIES ACT) OF THE
COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER,
IN EITHER CASE OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (3) IN AN OFFSHORE TRANSACTION (AS DEFINED IN REGULATION S UNDER THE
SECURITIES ACT) IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, (4) TO
AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT ("INSTITUTIONAL ACCREDITED INVESTOR")
THAT IS ACQUIRING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION
AND THAT, PRIOR TO SUCH TRANSFER, DELIVERS TO THE COMPANY AND THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THE SECURITY EVIDENCED HEREBY (THE FORM OF WHICH
LETTER MAY BE OBTAINED FROM THE TRUSTEE), (5) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER
THE SECURITIES ACT OR (6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A
QUALIFIED INSTITUTIONAL BUYER OR (2) AN INSTITUTIONAL ACCREDITED INVESTOR AND
THAT IT IS HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR
DISTRIBUTION OR (3) NOT A U.S. PERSON AND IS OUTSIDE THE UNITED STATES WITHIN
THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (k)(2) OF
RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT. IN ANY CASE THE HOLDER
HEREOF WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTIONS WITH
REGARD TO THIS SECURITY OR ANY
A-1
<PAGE>
COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY EXCEPT AS PERMITTED BY
THE SECURITIES ACT.
[Restricted Definitive Security Legend--For Inclusion in Definitive
Securities Only]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE EXPIRATION OF THE HOLDING
PERIOD UNDER RULE 144(k) (OR ANY SUCCESSOR THERETO) UNDER THE SECURITIES ACT
WHICH IS APPLICABLE TO THIS SECURITY OR (Y) BY ANY HOLDER THAT WAS AN
"AFFILIATE" (WITHIN THE MEANING OF RULE 144 UNDER THE SECURITIES ACT) OF THE
COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER,
IN EITHER CASE OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE
OF TRANSFER ON THE REVERSE OF THIS SECURITY), (3) IN AN OFFSHORE TRANSACTION (AS
DEFINED IN REGULATION S UNDER THE SECURITIES ACT) IN ACCORDANCE WITH REGULATION
S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON
THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), (4) TO AN
INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT ("INSTITUTIONAL ACCREDITED INVESTOR") (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON
THE REVERSE OF THIS SECURITY) THAT IS ACQUIRING THIS SECURITY FOR INVESTMENT
PURPOSES AND NOT FOR DISTRIBUTION AND THAT, PRIOR TO SUCH TRANSFER, DELIVERS TO
THE COMPANY AND THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE SECURITY
EVIDENCED HEREBY (THE FORM OF WHICH LETTER MAY BE OBTAINED FROM THE TRUSTEE),
(5) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED
BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX
CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
SECURITY) OR (6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES. PRIOR TO A TRANSFER OF THIS SECURITY (OTHER
THAN A TRANSFER PURSUANT TO CLAUSE (6) ABOVE), THE HOLDER OF THIS SECURITY MUST,
PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY AND THE TRUSTEE SUCH CERTIFICATES
AND OTHER INFORMATION AND, IN THE CASE OF A TRANSFER PURSUANT TO CLAUSE (5)
ABOVE, A LEGAL OPINION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT ANY
TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE FOREGOING RESTRICTIONS. THE
HOLDER HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND AGREES FOR THE
BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER OR (2) AN
INSTITUTIONAL ACCREDITED INVESTOR AND THAT IT IS HOLDING THIS SECURITY FOR
INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION OR (3) NOT A U.S. PERSON AND IS
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING THE
REQUIREMENTS OF PARAGRAPH (k)(2) OF RULE 902 UNDER) REGULATION S UNDER THE
SECURITIES ACT. IN ANY CASE THE HOLDER HEREOF WILL NOT, DIRECTLY OR INDIRECTLY,
ENGAGE IN ANY HEDGING TRANSACTIONS WITH REGARD TO THIS SECURITY OR ANY COMMON
STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY EXCEPT AS PERMITTED BY THE
SECURITIES ACT.
A-2
<PAGE>
No. CUSIP No. [*Global Security: ]
[**Definitive Security: ]
6% Convertible Subordinated Note due 2006
Benchmark Electronics, Inc.
Benchmark Electronics, Inc., a Texas corporation (the "Company"), promises
to pay to _________________________________________________________________ or
registered assigns, the principal sum [indicated on Schedule A hereof] * [of
_________ Dollars ($_________)]** on August 15, 2006.
Interest Payment Dates: February 15 and August 15, commencing February 15,
2000.
Record Dates: February 1 and August 1.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof which further provisions shall for all purposes have
the same effect as if set forth at this place.
[Signature Page Follows]
- --------
* Applicable to Global Securities only.
** Applicable to Definitive Securities only.
A-3
<PAGE>
IN WITNESS WHEREOF, Benchmark Electronics, Inc. has caused this Security to
be signed manually or by facsimile by its duly authorized Officers.
BENCHMARK ELECTRONICS, INC.,
By:
Name:
Title:
By:
Name:
Title:
Dated:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
This is one of the Securities described in the within-mentioned Indenture.
HARRIS TRUST COMPANY OF NEW YORK, as Trustee,
by __________________________________________
Authorized Signatory
A-4
<PAGE>
BENCHMARK ELECTRONICS, INC.
6% Convertible Subordinated Note due 2006
1. INTEREST. Benchmark Electronics, Inc., a Texas corporation (the
"Company"), is the issuer of the 6% Convertible Subordinated Notes due 2006 (the
"Securities"), of which this Security is a part. The Company promises to pay
interest on the Securities in cash semiannually on each February 15 and August
15, commencing on February 15, 2000, to holders of record at the close of
business on the immediately preceding February 1 or August 1, as the case may
be.
Interest on the Securities will accrue from the most recent date to which
interest has been paid, or if no interest has been paid, from August 13, 1999.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months. To the extent lawful, the Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal of and premium, if any, interest, and Liquidated Damages, if any, on
the Securities (in each case without regard to any applicable grace period) at
the Default Rate, compounded semi-annually.
2. METHOD OF PAYMENT. The Company will pay interest and Liquidated
Damages, if any, on the Securities (except Defaulted Interest) to the Persons
who are registered holders of the Securities at the close of business on the
record date for the applicable interest payment date even though Securities are
canceled after the record date and on or before the interest payment date. The
Noteholder hereof must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal, premium, if any, interest
and Liquidated Damages, if any, in money of the United States that at the time
of payment is legal tender for payment of public and private debts. However, the
Company may pay interest by check payable in such money. It may mail an interest
check to a holder's registered address.
3. PAYING AGENT AND REGISTRAR. The Trustee will act as Paying Agent,
Registrar and Conversion Agent. The Company may change any Paying Agent,
Registrar, or Conversion Agent without prior notice.
4. INDENTURE. The Company issued the Securities under an indenture, dated
as of August 13, 1999 (the "Indenture"), between the Company and Harris Trust
Company of New York, as Trustee. The terms of the Securities include those
stated in the Indenture and those made part of the Indenture by the Trust
Indenture Act of 1939 (15 U.S. Code ss.ss. 77aaa-77bbbb) as in effect on the
date of the Indenture. The Securities are subject to, and qualified by, all such
terms, certain of which are summarized hereon, and Noteholders are referred to
the Indenture and such Act for a statement of such terms. The Securities are
general unsecured obligations of the Company limited to an aggregate principal
amount of up to $86,250,000. The Indenture does not limit the ability of the
Company or any of its Subsidiaries to incur indebtedness or to grant security
interests or liens in respect of their assets.
5. PROVISIONAL REDEMPTION. The Securities may not be redeemed under any
circumstances prior to February 15, 2001 (except as set forth in paragraph 9(b)
below). On or after such date, the Company may, at its option and to the extent
permitted by applicable law, redeem the Securities, in whole or in part, at any
time or from time to time (in any integral multiple of $1,000) at a redemption
price equal to 104.286% of the principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, to, but excluding, the date of
redemption (the "Provisional Redemption Date") (subject to the rights of holders
of record on the relevant record date to receive interest and Liquidated
Damages, if any, due on the corresponding interest payment date), if the Daily
Market Price of the Common Stock equals or exceeds 150% of the Conversion Price
then in effect for at least 20 out of 30 consecutive days on which the New York
Stock Exchange is open for the transaction of business prior to the date notice
is delivered pursuant to Section 3.03. On or after the redemption date, interest
and Liquidated Damages, if any, will cease to accrue on the Securities, or
portions thereof, called for redemption unless the Company shall default in the
payment of the redemption price and accrued interest and Liquidated Damages, if
any, payable on the redemption date on the Securities to be redeemed.
If the Company undertakes a Provisional Redemption, holders of Securities
that the Company calls for redemption will also receive a payment (the
"Additional Payment") in an amount equal to the present value of the aggregate
value of the interest payments that would thereafter have been payable on the
Securities from Provisional Redemption Date to, but excluding, August 19, 2002
(the "Additional Period"). The present value will be calculated using the bond
equivalent yield on U.S. Treasury notes or bills having a term nearest in length
to that of the Additional Period as of the day immediately preceding the date on
which a notice of Provisional Redemption is mailed.
A-5
<PAGE>
6. OPTIONAL REDEMPTION. Except as specified in paragraph 5, the Securities
are not redeemable at the Company's option prior to August 19, 2002. On such
date and thereafter, the Securities will be subject to redemption at the option
of the Company, in whole or in part, at any time or from time to time (in any
integral multiple of $1,000), at the following redemption prices (expressed as
percentages of the principal amount), if redeemed during the 12-month period
beginning August 15 of the years indicated (or August 19 in the case of 2002):
Year Redemption Price
2002................... 103.429%
2003................... 102.571%
2004................... 101.714%
2005................... 100.857%
in each case plus accrued and unpaid interest and Liquidated Damages, if any, to
(but excluding) the redemption date (subject to the right of holders of record
on the relevant record date to receive interest and Liquidated Damages, if any,
due on the corresponding interest payment date). On or after the redemption
date, interest and Liquidated Damages, if any, will cease to accrue on the
Securities, or portions thereof, called for redemption unless the Company shall
default in the payment of the redemption price and accrued interest and
Liquidated Damages, if any, payable on the redemption date on the Securities to
be redeemed.
7. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each holder of the
Securities to be redeemed at his address of record. Securities in denominations
larger than $1,000 may be redeemed in part but only in integral multiples of
$1,000. In the event of a redemption of less than all of the Securities, the
Securities will be chosen for redemption by the Trustee in accordance with the
Indenture. Unless the Company defaults in making such redemption payment
(including accrued interest and Liquidated Damages, if any), or a Paying Agent
is prohibited from making such payment pursuant to the Indenture, by law or
otherwise, interest and Liquidated Damages, if applicable cease to accrue on the
Securities or portions of them called for redemption on and after the redemption
date.
If this Security is redeemed subsequent to a record date with respect to
any interest payment date specified above and on or prior to such interest
payment date, then any accrued interest and Liquidated Damages, if any, will be
paid to the person in whose name this Security is registered at the close of
business on such record date.
8. MANDATORY REDEMPTION. The Company will not be required to make
mandatory redemption payments with respect to the Securities. There are no
sinking fund payments with respect to the Securities.
9. REPURCHASE AT OPTION OF HOLDER. (a) If there is a Designated Event, the
Company shall be required to offer to purchase on the Designated Event Payment
Date all outstanding Securities at a purchase price equal to 100% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, to the Designated Event Payment Date (subject to the right of
holders of record on the relevant record date to receive interest and Liquidated
Damages, if any, due on the corresponding interest payment date); provided that,
on the terms and subject to the conditions set forth in the Indenture, the
Company shall not be required to offer to purchase the Securities as aforesaid
if the Company has given notice of redemption of all of the outstanding
Securities to holders in accordance with the Indenture. Holders of Securities
that are subject to an offer to purchase will receive a Designated Event Offer
from the Company prior to any related Designated Event Payment Date and holders
of Definitive Securities may elect to have such Securities or portions thereof
in authorized denominations purchased by completing the form entitled "Option of
Noteholder To Elect Purchase" appearing below. Holders of Securities other than
Definitive Securities may elect to have such Securities purchased in accordance
with the procedures of the Depositary as set forth in the Designated Event Offer
materials. Noteholders have the right to withdraw their election by delivering a
written notice of withdrawal to the Company or the Paying Agent in accordance
with the terms of the Indenture.
(b) (1) If there is an AVEX Acquisition Event, the Company shall be
required to offer to purchase on the Special Redemption Payment Date all
outstanding Securities at a purchase price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest and Liquidated Damages, if any, to the
Special Redemption Payment Date (subject to the right of holders of record on
the relevant record date to receive interest and Liquidated Damages, if any, due
on the corresponding interest payment date). Holders of Securities that are
subject to an offer to purchase will receive a Special Redemption Offer from the
Company
A-6
<PAGE>
prior to any related Special Redemption Payment Date and holders of Definitive
Securities may elect to have such Securities in whole, but not in part, in
authorized denominations purchased by completing the form entitled "Option of
Noteholder To Elect Purchase" appearing below. Holders of Securities other than
Definitive Securities may elect to have such Securities purchased in accordance
with the procedures of the Depositary as set forth in the Special Redemption
Offer materials. Noteholders have the right to withdraw their election by
delivering a written notice of withdrawal to the Company or the Paying Agent in
accordance with the terms of the Indenture.
(2) If after the Special Redemption Payment Date, less than 10% of
the original aggregate principal amount of the Securities remains outstanding,
the Company may, at its option, redeem the remaining Securities, in whole, but
not in part, at a price equal to the Company Special Call Payment; provided that
subject to the provisions of this clause (2) and Section 4.09 of the Indenture,
the provisions of Sections 3.03, 3.04 and 3.05 of the Indenture shall apply to
such redemption; provided further, that the notices to holders and the Trustee
specified in Section 3.03 of the Indenture shall be given at least 20 days
before the Company Special Call Date.
10. SUBORDINATION. The payment of the principal of, premium, if any, on,
interest and Liquidated Damages, if any, on and any other amounts due on the
Securities is subordinated in right of payment to all existing and future Senior
Debt of the Company, as described in the Indenture. Each Noteholder, by
accepting a Security, agrees to such subordination and authorizes and directs
the Trustee on its behalf to take such action as may be necessary or appropriate
to effectuate the subordination so provided and appoints the Trustee as its
attorney-in-fact for such purpose.
11. CONVERSION. (a) The holder of any Security has the right, exercisable
at any time after 90 days following the Issuance Date and prior to the close of
business on the Business Day immediately preceding the final maturity date of
the Security, to convert the principal amount thereof (or any portion thereof
that is an integral multiple of $1,000) into shares of Common Stock at the
initial Conversion Price of $40.20 per share, subject to adjustment under
certain circumstances as provided in the Indenture, except that if a Security is
called for redemption, the conversion right will terminate at the close of
business on the Business Day immediately preceding the date fixed for redemption
(unless the Company shall default in making the redemption payment, including
interest and Liquidated Damages, if any, when it becomes due, in which case the
conversion right shall terminate at the close of business on the date on which
such default is cured).
(b) If on any date after August 19, 2002, the Daily Market Price of the
Common Stock has equaled or exceeded 150% of the Conversion Price then in
effect, for at least 20 out of 30 consecutive Trading Days, then the Company
shall have the right, for up to five Trading Days after any such date, to cause
all the Securities to convert into fully paid and nonassessable Common Stock of
the Company at the Conversion Price in effect at the time of conversion, subject
to adjustment under certain circumstances as provided in the Indenture. The
Company may exercise such right by sending written notice of such exercise to
the Trustee whereby the conversion will automatically occur. The Securities
shall convert on the date such notice is received by the Trustee, and the
Conversion Price shall be the Conversion Price in effect on such date.
Beneficial owners of interests in Global Securities may exercise their
right of conversion by delivering to the Depositary the appropriate instructions
for conversion pursuant to the Depositary's procedures and, in the case of
conversions through Euroclear or Cedel Bank, in accordance with Euroclear's or
Cedel Bank's normal operating procedures when application has been made to make
the underlying Common Stock eligible for trading on Cedel Bank or Euroclear. To
convert a certificated Security, the holder must (1) complete and sign a notice
of election to convert substantially in the form set forth below (or complete
and manually sign a facsimile thereof) and deliver such notice to a Conversion
Agent, (2) surrender the Security to a Conversion Agent, (3) furnish appropriate
endorsements or transfer documents if required by the Conversion Agent and (4)
pay any transfer or similar tax, if required by the Conversion Agent. Upon
conversion, no adjustment or payment will be made for accrued and unpaid
interest or Liquidated Damages, if any, on the Securities so converted or for
dividends or distributions on, or Liquidated Damages, if any, attributable to,
any Common Stock issued on conversion of the Securities, except that, if any
Noteholder surrenders a Security for conversion after the close of business on a
record date for the payment of interest and prior to the opening of business on
the next interest payment date, then, notwithstanding such conversion, the
interest payable on such interest payment date will be paid on such interest
payment date to the person who was the registered holder of such Security on
such record date. Any Securities surrendered for conversion during the period
after the close of business on any record date for the payment of interest and
before the opening of business on the next succeeding interest payment date
(except Securities called for redemption on a redemption date or to be
A-7
<PAGE>
repurchased on a Designated Event Payment Date, a Special Redemption Payment
Date or an automatic conversion pursuant to the terms of Section 5.01(b) during
such period) must be accompanied by payment in an amount equal to the interest
and Liquidated Damages, if any, payable on such interest payment date on the
principal amount of Securities so converted. The number of shares of Common
Stock issuable upon conversion of a Security is determined by dividing the
principal amount of the Security converted by the Conversion Price in effect on
the Conversion Date. No fractional shares will be issued upon conversion but a
cash adjustment will be made for any fractional interest.
A Definitive Security in respect of which a holder has delivered an
"Option of Noteholder to Elect Purchase" form appearing below exercising the
option of such holder to require the Company to purchase such Security may be
converted only if the notice of exercise is withdrawn as provided above and in
accordance with the terms of the Indenture. The above description of conversion
of the Securities is qualified by reference to, and is subject in its entirety
to, the more complete description thereof contained in the Indenture.
12. REGISTRATION AGREEMENT. The holder of this Security is entitled to the
benefits of a Registration Agreement, dated August 9, 1999, between the Company
and the Initial Purchasers (the "Registration Agreement"). Pursuant to the
Registration Agreement the Company has agreed for the benefit of the holders of
the Securities and the Common Stock issued and issuable upon conversion of the
Securities, that (i) it will, at its cost, within 90 days after the Closing
Date, file a shelf registration statement (the "Shelf Registration Statement")
with the Securities and Exchange Commission (the "Commission") with respect to
resales of the Securities and the Common Stock issuable upon conversion thereof,
(ii) the Company will use its reasonable best efforts to cause such Shelf
Registration Statement to be declared effective by the Commission under the
Securities Act within 150 days after the Closing Date and (iii) the Company will
keep such Shelf Registration Statement continuously effective under the
Securities Act until the earliest of (a) the second anniversary of the Closing
Date or, if later, the second anniversary of the last date on which any
Securities are issued upon exercise of the Initial Purchasers' over-allotment
option, (b) the date on which the Securities or the Common Stock issuable upon
conversion thereof may be sold to Persons who are not "affiliates" (as defined
in Rule 144) of the Company pursuant to paragraph (k) of Rule 144 (or any
successor provision) promulgated by the Commission under the Securities Act, (c)
the date as of which the Securities or the Common Stock issuable upon conversion
thereof have been transferred pursuant to Rule 144 under the Securities Act (or
any similar provision then in force) and (d) the date as of which all the
Securities or the Common Stock issuable upon conversion thereof have been sold
pursuant to such Shelf Registration Statement.
If the Shelf Registration Statement (i) is not filed with the Commission
on or prior to 90 days, or has not been declared effective by the Commission
within 150 days, after the Closing Date or (ii) is filed and declared effective
but shall thereafter cease to be effective (without being succeeded immediately
by a replacement shelf registration statement filed and declared effective) or
cease to be usable (including, without limitation, as a result of a Suspension
Period as defined below) for the offer and sale of Transfer Restricted
Securities (as defined below) for a period of time (including any Suspension
Period) which shall exceed 60 days in the aggregate in any 12-month period
during the period beginning on the Closing Date and ending on the second
anniversary of the Closing Date or, if later, the second anniversary of the last
date on which any Securities are issued upon exercise of the Initial Purchasers'
over-allotment option (each such event referred to in clauses (i) and (ii) being
referred to herein as a "Registration Default"), the Company will pay liquidated
damages ("Liquidated Damages") to each holder of Transfer Restricted Securities
which has complied with its obligations under the Registration Agreement. The
amount of Liquidated Damages payable during any period in which a Registration
Default shall have occurred and be continuing is that amount which is equal to
one-quarter of one percent (25 basis points) per annum per $1,000 principal
amount of Securities and $2.50 per annum per 24.875622 shares of Common Stock
(subject to adjustment from time to time in the event of a stock split, stock
recombination, stock dividend and the like) constituting Transfer Restricted
Securities for the first 90 days during which a Registration Default has
occurred and is continuing and one-half of one percent (50 basis points) per
annum per $1,000 principal amount of Securities and $5.00 per annum per
24.875622 shares of Common Stock (subject to adjustment as set forth above)
constituting Transfer Restricted Securities for any additional days during which
such Registration Default has occurred and is continuing. The Company will pay
all accrued Liquidated Damages by wire transfer of immediately available funds
or by federal funds check on each Damages Payment Date, and Liquidated Damages
will be calculated on the basis of a 360-day year consisting of twelve 30-day
months. Following the cure of a Registration Default, Liquidated Damages will
cease to accrue with respect to such Registration Default.
"Transfer Restricted Securities" means each Security and each share of
Common Stock issued on conversion thereof until the date on which such Security
or share, as the case may be, (i) has been transferred
A-8
<PAGE>
pursuant to the Shelf Registration Statement or another registration statement
covering such Security or share which has been filed with the Commission
pursuant to the Securities Act, in either case after such registration statement
has become and while such registration statement is effective under the
Securities Act, (ii) has been transferred pursuant to Rule 144 under the
Securities Act (or any similar provision then in force), or (iii) may be sold or
transferred pursuant to Rule 144(k) under the Securities Act (or any similar
provision then in force).
Pursuant to the Registration Agreement, the Company may suspend the use of
the prospectus which is a part of the Shelf Registration Statement for a period
not to exceed 30 days in any three-month period or for three periods not to
exceed an aggregate of 90 days in any twelve-month period under certain
circumstances (each, a "Suspension Period"); provided that the existence of a
Suspension Period will not prevent the occurrence of a Registration Default or
otherwise limit the obligation of the Company to pay Liquidated Damages.
The above description of certain provisions of the Registration Agreement
is qualified by reference to, and is subject in its entirety to, the more
complete description thereof contained in the Registration Agreement.
13. DENOMINATIONS, TRANSFER, EXCHANGE AND REPLACEMENT. The Securities are
in registered form, without coupons, in denominations of $1,000 and integral
multiples of $1,000. The transfer of Securities may be registered, and
Securities may be exchanged, as provided in the Indenture. The Registrar may
require a Noteholder, among other things, to furnish appropriate endorsements
and transfer documents and to pay any taxes and fees required by law or
permitted by the Indenture. The Registrar need not exchange or register the
transfer of any Security or portion of a Security selected for redemption
(except the unredeemed portion of any Security being redeemed in part). Also, it
need not exchange or register the transfer of any Security for a period
beginning at the opening of business 15 days before the day of mailing of a
notice of redemption of Securities and ending at the close of business on the
day of such mailing. Replacement Securities for lost, stolen or mutilated
Securities may be issued in accordance with the terms of the Indenture.
14. PERSONS DEEMED OWNERS. The registered Noteholder of a Security may be
treated as its owner for all purposes.
15. UNCLAIMED MONEY. If money for the payment of principal of or premium,
if any, interest or Liquidated Damages, if any, on Securities remains unclaimed
for two years, the Trustee and the Paying Agent shall pay the money back to the
Company at its written request. After that, Noteholders of Securities entitled
to the money must look to the Company for payment, unless an abandoned property
law designates another person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
16. DEFAULTS AND REMEDIES. The Securities shall have the Events of Default
as set forth in Section 8.01 of the Indenture. Subject to certain limitations in
the Indenture, if an Event of Default occurs and is continuing, the Trustee by
notice to the Company or the Noteholders of at least 25% in aggregate principal
amount of the then outstanding Securities by notice to the Company and the
Trustee may declare all the Securities to be due and payable immediately, except
that in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, all unpaid principal, premium, if any, and accrued and
unpaid interest and Liquidated Damages, if any, on the Securities shall become
due and payable immediately without further action or notice. Upon acceleration
as described in either of the preceding sentences, the subordination provisions
of the Indenture preclude any payment being made to Noteholders for at least 5
Business Days except as otherwise provided in the Indenture.
The Noteholders of a majority in principal amount of the Securities then
outstanding by written notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default have been cured or waived except
nonpayment of principal, premium, if any, Liquidated Damages, if any, and
interest that has become due solely because of the acceleration. Noteholders may
not enforce the Indenture or the Securities except as provided in the Indenture.
Subject to certain limitations, Noteholders of a majority in principal amount of
the then outstanding Securities issued under the Indenture may direct the
Trustee in its exercise of any trust or power. The Company must furnish
compliance certificates to the Trustee annually. The above description of Events
of Default and remedies is qualified by reference to, and subject in its
entirety to, the more complete description thereof contained in the Indenture.
A-9
<PAGE>
17. AMENDMENTS, SUPPLEMENTS AND WAIVERS. Subject to certain exceptions,
the Indenture or the Securities may be amended or supplemented with the consent
of the Noteholders of at least a majority in principal amount of the then
outstanding Securities (including consents obtained in connection with a tender
offer or exchange offer for Securities), and any existing default may be waived
with the consent of the Noteholders of a majority in principal amount of the
then outstanding Securities (including consents obtained in connection with a
tender offer or exchange offer for Securities). Without the consent of any
Noteholder, the Indenture or the Securities may be amended, among other things,
to cure any ambiguity, defect or inconsistency, to provide for assumption by a
successor of the Company's obligations to Noteholders, to make any change that
does not adversely affect the rights of any Noteholder, to qualify the Indenture
under the TIA, or to comply with the requirements of the SEC in order to
maintain the qualification of the Indenture under the TIA.
18. TRUSTEE DEALINGS WITH THE COMPANY. The Trustee, in its individual or
any other capacity, may become the owner or pledgee of the Securities and may
otherwise deal with the Company or an Affiliate of the Company with the same
rights it would have, as if it were not Trustee, subject to certain limitations
provided for in the Indenture and in the TIA. Any Agent may do the same with
like rights.
19. NO RECOURSE AGAINST OTHERS. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Securities or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. Each Noteholder, by accepting a Security, waives and releases all such
liability. The waiver and release are part of the consideration for the issue of
the Securities.
20. GOVERNING LAW; INDENTURE TO CONTROL. THE INTERNAL LAWS OF THE STATE OF
NEW YORK SHALL GOVERN THE INDENTURE AND THE SECURITIES WITHOUT REGARD, TO THE
EXTENT PERMITTED BY LAW, TO CONFLICT OF LAW PROVISIONS THEREOF. IN THE EVENT OF
ANY CONFLICT BETWEEN THE PROVISIONS OF THIS SECURITY ON THE ONE HAND AND THE
INDENTURE OR THE REGISTRATION AGREEMENT, ON THE OTHER HAND, THE PROVISIONS OF
THE INDENTURE OR THE REGISTRATION AGREEMENT, AS THE CASE MAY BE, SHALL CONTROL.
21. AUTHENTICATION. The Securities shall not be valid until authenticated
by the manual signature of an authorized signatory of the Trustee or an
authenticating agent.
22. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Noteholder or an assignee, such as: TEN COM (for tenants in common), TEN ENT
(for tenants by the entireties), JT TEN (for joint tenants with right of
survivorship and not as tenants in common), CUST (for Custodian), and U/G/M/A
(for Uniform Gifts to Minors Act).
23. DEFINITIONS. Capitalized terms not defined in this Security have the
meanings given to them in the Indenture.
The Company will furnish to any Noteholder of the Securities upon written
request and without charge a copy of the Indenture and the Registration
Agreement. Request may be made to:
Benchmark Electronics, Inc.
Attention: Chief Financial Officer
3000 Technology Drive
Angleton, Texas 77515
A-10
<PAGE>
CERTIFICATE OF TRANSFER
To assign this Security, fill in the form below:
(I) or (we) assign and transfer this Security to
- -----------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. no.)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________ agent to
transfer this Security on the books of the Company. The agent may substitute
another to act for him.
Your Signature:
(Sign exactly as your name appears on the other side
of this Security)
Date: ___________________
Medallion Signature Guarantee: _____________________________
[FOR INCLUSION ONLY IF THIS SECURITY BEARS A RESTRICTED SECURITIES LEGEND] In
connection with any transfer of any of the Securities evidenced by this
certificate which are "restricted securities" (as defined in Rule 144 (or any
successor thereto) under the Securities Act), the undersigned confirms that such
Securities are being transferred:
CHECK ONE BOX BELOW
(1) |_| to the Company; or
(2) |_| pursuant to and in compliance with Rule 144A under the
Securities Act of 1933; or
(3) |_| pursuant to and in compliance with Regulation S under the
Securities Act of 1933; or
(4) |_| to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933)
that has furnished to the Trustee a signed letter containing
certain representations and agreements (the form of which
letter can be obtained from the Trustee); or
(5) |_| pursuant to an exemption from registration under the
Securities Act of 1933 provided by Rule 144 thereunder.
Unless one of the boxes is checked, the Registrar will refuse to register
any of the Securities evidenced by this certificate in the name of any
person other than the registered holder thereof; provided, however, that
if box (3), (4) or (5) is checked, the Trustee may require, prior to
registering any such transfer of the Securities, such certifications and
other information, and if box (5) is checked such legal opinions, as the
Company has reasonably requested in writing, by delivery to the Trustee of
a standing letter of instruction, to confirm that such transfer is being
made pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act of 1933; provided that
this paragraph shall not be applicable to any Securities which are not
"restricted securities" (as defined in Rule 144 (or any successor thereto)
under the Securities Act).
A-11
<PAGE>
Your Signature:
(Sign exactly as your name appears on the other side
of this Security)
Date: __________________
Medallion Signature Guarantee: ________________________________
A-12
<PAGE>
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE A
The initial principal amount of this Global Security shall be $_______.
The following increases or decreases in the principal amount of this Global
Security have been made:
Amount of
increase
in Principal
Amount Principal
of this Global Amount of Amount of Signature of
Security decrease this Global authorized
including in Principal Security signatory of
upon exercise of Amount following such Trustee or
over-allotment of this Global decrease or Securities
Date Made option Security increase Custodian
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
OPTION OF NOTEHOLDER TO ELECT PURCHASE
If you want to elect to have this Security or a portion thereof
repurchased by the Company pursuant to Section 3.08, 3.09, 4.07 or 4.09 of the
Indenture, check the box: |_|
If the purchase is in part, indicate the portion ($1,000 or any
integral multiple thereof) to be
purchased: ____________
Your Signature:_______________________________
(Sign exactly as your name
appears on the other side
of this Security)
Date: ____________
Medallion Signature Guarantee: _______________________
<PAGE>
ELECTION TO CONVERT
To Benchmark Electronics, Inc.:
The undersigned owner of this Security hereby irrevocably exercises the
option to convert this Security, or the portion below designated, into Common
Stock of Benchmark Electronics, Inc. in accordance with the terms of the
Indenture referred to in this Security, and directs that the shares issuable and
deliverable upon conversion, together with any check in payment for fractional
shares, be issued in the name of and delivered to the undersigned, unless a
different name has been indicated below. If shares are to be issued in the name
of a person other than the undersigned, the undersigned will pay all transfer
taxes payable with respect thereto.
The undersigned agrees to be bound by the terms of the Registration
Agreement relating to the Common Stock issued upon conversion of the Securities.
If you want to convert this Security in whole, check the box below. If you
want to convert this Security in part, indicate the portion of this Security to
be converted in the space provided below.
In whole |_| or Portion of Security to
be
converted ($1,000 or
any integral
multiple thereof):
$__________________
Date: ______________ Your Signature:____________________________________
(Sign exactly as your name appears on the
other side of this Security)
Medallion Signature Guarantee:
Please print or typewrite your name and address, including zip code, and social
security or other identifying number:
If the Common Stock is to be issued and delivered to someone other than you,
please print or typewrite the name and address, including zip code, and social
security or other identifying number of that person:
A-2
<PAGE>
EXHIBIT B
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM GLOBAL SECURITY OR DEFINITIVE SECURITY
TO DEFINITIVE SECURITY
(Transfers pursuant to ss. 2.06(a)(ii) or ss. 2.06(a)(iii) of the Indenture)
Harris Trust Company of New York, as Registrar
Attn: Corporate Trust Department
Re: Benchmark Electronics, Inc. 6% Convertible Subordinated Notes
DUE 2006 (THE "SECURITIES")
Reference is hereby made to the Indenture dated as of August 13, 1999 (the
"Indenture") between Benchmark Electronics, Inc. and Harris Trust Company of New
York, as Trustee. Capitalized terms used but not defined herein shall have the
meanings given them in the Indenture.
This letter relates to U.S. $ aggregate principal amount of
Securities which are held [in the form of a [Definitive] [Global Security (CUSIP
No. _____________)]* in the name of [name of transferor] (the "Transferor") to
effect the transfer of the Securities.
In connection with such request, and in respect of such Securities, the
Transferor does hereby certify that such Securities are being transferred in
accordance with (i) the transfer restrictions set forth in the Securities and
the Indenture and (ii) to a transferee that the Transferor reasonably believes
is an institutional "accredited investor" (as defined in Rule 501(a)(1), (2),
(3) or (7) of Regulation D under the U.S. Securities Act of 1933, as amended)
(an "Institutional Accredited Investor") which is acquiring such Securities for
its own account or for one or more accounts, each of which is an Institutional
Accredited Investors, over which it exercises sole investment discretion and
(iii) in accordance with applicable securities laws of any state of the United
States.
[Name of Transferor],
By
Name:
Title:
Dated:
cc: Benchmark Electronics, Inc.
Attn: Secretary
- --------
* Insert, if appropriate.
B-1
<PAGE>
EXHIBIT C
FORM OF ACCREDITED INVESTOR TRANSFEREE CERTIFICATE (Transfers
pursuant to ss. 2.06(a)(ii) and ss. 2.06(a)(iii))
Harris Trust Company of New York, as Registrar
Attn: Corporate Trust Department
Re: Benchmark Electronics, Inc. 6% Convertible Subordinated Notes
DUE 2006 (THE "SECURITIES")
Reference is hereby made to the Indenture dated as of August 13, 1999 (the
"Indenture") between Benchmark Electronics, Inc., a Texas corporation (the
"Company"), and Harris Trust Company of New York, as Trustee (the "Trustee").
Capitalized terms used but not defined herein shall have the meanings given them
in the Indenture.
In connection with our proposed purchase of $___________________ aggregate
principal amount of the Securities, which are convertible into shares of common
stock ("Common Stock") of the Company, we confirm that:
1. We understand that the Securities and the Common Stock issuable upon
conversion thereof have not been registered under the Securities Act of
1933, as amended (the "Securities Act"), and may not be sold except as
permitted in the following sentence. We understand and agree, on our own
behalf and on behalf of any accounts for which we are acting as hereinafter
stated, (x) that such Securities are being transferred to us in a
transaction not involving any public offering within the meaning of the
Securities Act, (y) that if we should resell, pledge or otherwise transfer
any such Securities or any shares of Common Stock issuable upon conversion
thereof prior to the later of (I) the expiration of the holding period under
Rule 144(k) (or any successor thereto) under the Securities Act which is
applicable to such Securities or shares of Common Stock, as the case may be,
or (II) within three months after we cease to be an affiliate (within the
meaning of Rule 144 under the Securities Act) of the Company, such
Securities or the Common Stock issuable upon conversion thereof may be
resold, pledged or transferred only (i) to the Company, (ii) so long as such
Securities are eligible for resale pursuant to Rule 144A under the
Securities Act ("Rule 144A"), to a person whom we reasonably believe is a
"qualified institutional buyer" (as defined in Rule 144A) ("QIB") that
purchases for its own account or for the account of a QIB to whom notice is
given that the resale, pledge or transfer is being made in reliance on Rule
144A (as indicated by the box checked by the transferor on the Certificate
of Transfer on the reverse of the certificate for the Securities), it being
understood that the Common Stock is not eligible for resale pursuant to Rule
144A, (iii) in an offshore transaction (as defined in Regulation S under the
Securities Act) in accordance with Regulation S under the Securities Act (as
indicated by the box checked by the transferor on the Certificate of
Transfer on the reverse of the certificate for the Securities or on a
comparable Certificate of Transfer for the Common Stock issuable upon
conversion thereof), (iv) to an institution that is an "accredited investor"
as defined in Rule 501 (a) (1), (2), (3) or (7) under the Securities Act (an
"Institutional Accredited Investor") (as indicated by the box checked by the
transferor on the Certificate of Transfer on the reverse of the certificate
for the Securities or on a comparable Certificate of Transfer for the Common
Stock issuable upon conversion thereof) that is acquiring the securities for
its own account or for the account of one or more other Institutional
Accredited Investors over which it exercises sole investment discretion and
that prior to such transfer, delivers a signed letter to the Company and the
Trustee (or the transfer agent in the case of Common Stock issuable upon
conversion thereof) certifying that it and each such account is such an
Institutional Accredited Investor and is acquiring the Securities or the
Common Stock issuable upon conversion thereof for investment purposes and
not for distribution and agreeing to the restrictions on transfer of the
Securities or the Common Stock issuable upon conversion thereof, (v)
pursuant to an exemption from registration under the Securities Act provided
by Rule 144 (if applicable) under the Securities Act (as indicated by the
box checked transferor on the Certificate of Transfer on the reverse of the
certificate for the Securities or a comparable Certificate of Transfer for
the Common Stock issuable upon conversion thereof), or (vi) pursuant to an
effective registration statement under the Securities Act, in each case in
accordance with any applicable securities laws of any state of the United
States, and we will notify any purchaser of the Securities or the Common
Stock issuable upon conversion thereof from us of the above resale
C-1
<PAGE>
restrictions, if then applicable. We further understand that in connection
with any transfer of the Securities or the Common Stock issuable upon
conversion thereof (other than a transfer pursuant to clause (vi) above) by
us that the Company and the Trustee (or the transfer agent in the case of
Common Stock issuable upon conversion thereof) may request, and if so
requested we will furnish, such certificates and other information and, in
the case of a transfer pursuant to clause (v) above, a legal opinion as they
may reasonably require to confirm that any such transfer complies with the
foregoing restrictions. Finally, we understand that in any case we will not
directly or indirectly engage in any hedging transactions with regard to the
Securities or the Common Stock issuable upon conversion of the Securities
except as permitted by the Securities Act.
2. We are able to fend for ourselves in connection with our purchase of
the Securities, we have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of our
investment in the Securities, and we and any accounts for which we are
acting are each able to bear the economic risk of our or its investment and
can afford the complete loss of such investment.
3. We understand that the Company and others will rely upon the truth and
accuracy of the foregoing acknowledgments, representations, agreements and
warranties and we agree that if any of the acknowledgments, representations,
agreements or warranties made or deemed to have been made by us by our
purchase of the Securities, for our own account or for one or more accounts
as to each of which we exercise sole investment discretion, are no longer
accurate, we shall promptly notify the Company.
4. With respect to the certificates representing Securities we are
purchasing, we understand that such certificates will be in definitive
registered form and that the notification requirement referred to in (1)
above requires that, until the expiration of the holding period with respect
to sales of the Securities under clause (k) of Rule 144 under the Securities
Act, that such Securities will bear a legend substantially to the following
effect:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE EXPIRATION OF THE
HOLDING PERIOD UNDER RULE 144(k) (OR ANY SUCCESSOR THERETO) UNDER THE SECURITIES
ACT WHICH IS APPLICABLE TO THIS SECURITY OR (Y) BY ANY HOLDER THAT WAS AN
"AFFILIATE" (WITHIN THE MEANING OF RULE 144 UNDER THE SECURITIES ACT) OF THE
COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER,
IN EITHER CASE OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE
OF TRANSFER ON THE REVERSE OF THIS SECURITY), (3) IN AN OFFSHORE TRANSACTION (AS
DEFINED IN REGULATION S UNDER THE SECURITIES ACT) IN ACCORDANCE WITH REGULATION
S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON
THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), (4) TO AN
INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT ("INSTITUTIONAL ACCREDITED INVESTOR") (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON
THE REVERSE OF THIS SECURITY) THAT IS ACQUIRING THIS SECURITY FOR INVESTMENT
PURPOSES AND NOT FOR DISTRIBUTION AND THAT, PRIOR TO SUCH TRANSFER, DELIVERS TO
THE COMPANY AND THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE SECURITY
EVIDENCED HEREBY (THE FORM OF WHICH LETTER MAY BE OBTAINED FROM THE TRUSTEE),
(5) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED
BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX
CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
SECURITY) OR (6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, IN EACH CASE
C-2
<PAGE>
IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES. PRIOR TO A TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER PURSUANT TO
CLAUSE (6) ABOVE), THE HOLDER OF THIS SECURITY MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO THE COMPANY AND THE TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION
AND, IN THE CASE OF A TRANSFER PURSUANT TO CLAUSE (5) ABOVE, A LEGAL OPINION AS
THEY MAY REASONABLY REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY
COMPLIES WITH THE FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A
QUALIFIED INSTITUTIONAL BUYER OR (2) AN INSTITUTIONAL ACCREDITED INVESTOR AND
THAT IT IS HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR
DISTRIBUTION OR (3) NOT A U.S. PERSON AND IS OUTSIDE THE UNITED STATES WITHIN
THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (k)(2) OF
RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT. IN ANY CASE THE HOLDER
HEREOF WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTIONS WITH
REGARD TO THIS SECURITY OR ANY COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
SECURITY EXCEPT AS PERMITTED BY THE SECURITIES ACT."
5. With respect to certificates representing shares of Common Stock
issuable upon conversion of the Securities, we understand that the
notification requirement referred to in (1) above requires that, until the
expiration of the holding period with respect to sales of such Common Stock
under clause (k) of Rule 144 under the Securities Act, such certificates
will bear a legend substantially to the effect set forth as Exhibit D to the
Indenture and that a copy of such legend may be obtained from the Trustee.
6. We are acquiring the Securities purchased by us for investment
purposes, and not for distribution, for our own account or for one or more
accounts as to each of which we exercise sole investment discretion and we
are and each such account is an Institutional Accredited Investor.
7. You and the Company are entitled to rely on this letter and you and the
Company are irrevocably authorized to produce this letter or a copy hereof
to any interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby.
Very truly yours,
___________________________
(Name of Purchaser)
By:________________________
Dated:_____________________
cc: Benchmark Electronics, Inc.
Attn: Chief Financial Officer
3000 Technology Drive
Angleton, Texas 77515
C-3
<PAGE>
EXHIBIT D
FORM OF RESTRICTED COMMON STOCK LEGEND
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE EXPIRATION OF THE
HOLDING PERIOD UNDER RULE 144(k) (OR ANY SUCCESSOR THERETO) UNDER THE SECURITIES
ACT WHICH IS APPLICABLE TO THIS SECURITY OR (Y) BY ANY HOLDER THAT WAS AN
"AFFILIATE" (WITHIN THE MEANING OF RULE 144 UNDER THE SECURITIES ACT) OF THE
COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER,
IN EITHER CASE, OTHER THAN (1) TO THE COMPANY, (2) IN AN OFFSHORE TRANSACTION
(AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) IN ACCORDANCE WITH
REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE
TRANSFEROR ON THE CERTIFICATE OF TRANSFER APPLICABLE TO THIS SECURITY, THE FORM
OF WHICH MAY BE OBTAINED FROM THE COMPANY OR THE TRANSFER AGENT), (3) TO AN
INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT ("INSTITUTIONAL ACCREDITED INVESTOR") (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER
APPLICABLE TO THIS SECURITY, THE FORM OF WHICH MAY BE OBTAINED FROM THE COMPANY
OR THE TRANSFER AGENT) THAT IS ACQUIRING THIS SECURITY FOR INVESTMENT PURPOSES
AND NOT FOR DISTRIBUTION, AND THAT, PRIOR TO SUCH TRANSFER, DELIVERS TO THE
COMPANY AND THE TRANSFER AGENT A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE
SECURITY EVIDENCED HEREBY (THE FORM OF WHICH LETTER MAY BE OBTAINED FROM THE
COMPANY OR THE TRANSFER AGENT), (4) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE
SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
CERTIFICATE OF TRANSFER APPLICABLE TO THIS SECURITY, THE FORM OF WHICH MAY BE
OBTAINED FROM THE COMPANY OR THE TRANSFER AGENT) OR (5) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH
ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. PRIOR TO A
TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER PURSUANT TO CLAUSE (5) ABOVE),
THE HOLDER OF THIS SECURITY MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY
AND THE TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AND, IN THE CASE
OF A TRANSFER PURSUANT TO CLAUSE (4) ABOVE, A LEGAL OPINION AS THEY MAY
REASONABLY REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES
WITH THE FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) AN
INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT AND THAT IT IS HOLDING THIS SECURITY FOR
INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION OR (2) NOT A U.S. PERSON AND IS
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING THE
REQUIREMENTS OF PARAGRAPH (k)(2) OF RULE 902 UNDER) REGULATION S UNDER THE
SECURITIES ACT. IN ANY CASE THE HOLDER HEREOF WILL NOT, DIRECTLY OR INDIRECTLY,
ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS SECURITY EXCEPT AS
PERMITTED BY THE SECURITIES ACT."
D-1
<PAGE>
EXHIBIT E
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
OF RESTRICTED COMMON STOCK
(Transfers pursuant to ss. 5.16(c) of the Indenture)
[NAME AND ADDRESS OF COMMON STOCK TRANSFER AGENT]
Re: Benchmark Electronics, Inc. 6% Convertible Subordinated Notes
DUE 2006 (THE "SECURITIES")
Reference is hereby made to the Indenture dated as of August 13, 1999 (the
"Indenture") between Benchmark Electronics, Inc. and Harris Trust Company of New
York, as Trustee. Capitalized terms used but not defined herein shall have the
meanings given them in the Indenture.
This letter relates to _________ shares of Common Stock represented by the
accompanying certificate(s) that were issued upon conversion of Securities and
which are held in the name of [name of transferor] (the "Transferor") to effect
the transfer of such Common Stock.
In connection with the transfer of such shares of Common Stock, the
undersigned confirms that such shares of Common Stock are being transferred:
CHECK ONE BOX BELOW
(1) |_| to the Company; or
(2) |_| pursuant to and in compliance with Regulation S under the Securities
Act of 1933; or
(3) |_| to an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) under
the Securities Act of 1933) that has furnished to the
transfer agent a signed letter containing
certain representations and agreements (the form of which
letter can be obtained from the
Company or transfer agent); or
(4) |_| pursuant to an exemption from registration under the Securities Act
of 1933 provided by Rule 144 thereunder.
Unless one of the boxes is checked, the transfer agent will refuse to
register any of the Common Stock evidenced by this certificate in the name of
any person other than the registered holder thereof; provided, however, that if
box (2), (3) or (4) is checked, the transfer agent may require, prior to
registering any such transfer of the Common Stock such certifications and other
information, and if box (4) is checked such legal opinions, as the Company has
reasonably requested in writing, by delivery to the transfer agent of a standing
letter of instruction, to confirm that such transfer is being made pursuant to
an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933.
[Name of Transferor],
By________________________
Name:
Title:
Dated:
cc: Benchmark Electronics, Inc.
Attn: Secretary
E-1
EXHIBIT 99.4
[Draft--8/9/99]
BENCHMARK ELECTRONICS, INC.
6% Convertible Subordinated Notes due 2006
REGISTRATION AGREEMENT
New York, New York
August 9, 1999
Salomon Smith Barney Inc.
Chase Securities Inc.
As Representatives of the Initial Purchasers Named in
Schedule I to the Purchase Agreement (as defined below)
388 Greenwich Street
New York, New York 10003
Ladies and Gentlemen:
Benchmark Electronics, Inc., a Texas corporation (the "Company"), proposes
to issue and sell (such issuance and sale, the "Initial Placement") to the
several parties named in Schedule I to the Purchase Agreement (the "Initial
Purchasers") for whom you (the "Representatives") are acting as representatives,
upon the terms set forth in a purchase agreement dated August 9, 1999 (the
"Purchase Agreement"), $75,000,000 aggregate principal amount (plus up to an
additional $11,250,000 aggregate principal amount to cover over-allotments, if
any) of its 6% Convertible Subordinated Notes due 2006 (the "Securities"). The
Securities will be convertible into shares of common stock, par value $.10 per
share, of the Company at the conversion price set forth in the Offering
Memorandum (as defined herein), as the same may be adjusted from time to time
pursuant to the Indenture referred to below. As an inducement to you to enter
into the Purchase Agreement and in satisfaction of a condition to your
obligations thereunder, the Company agrees with you, (i) for your benefit and
(ii) for the benefit of the holders from time to time of the Securities and the
Common Stock issuable upon conversion of the Securities (including you), as
follows:
1. DEFINITIONS. Capitalized terms used herein without definition shall
have the respective meanings set forth in the Purchase Agreement. As used in
this Agreement, the following capitalized terms shall have the following
meanings:
"ACT" means the Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder.
"AFFILIATE" of any specified person means any other person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling",
"controlled by" and "under common control with"), as used with respect to any
person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such person,
whether through the ownership of voting securities or by agreement or otherwise.
"BUSINESS DAY" has the meaning set forth in the Indenture.
1
<PAGE>
"CLOSING DATE" means August 13, 1999.
"COMMON STOCK" means the common stock, par value $.10 per share, of the
Company, as it exists on the date of this Agreement and any other shares of
capital stock or other securities of the Company into which such Common Stock
may be reclassified or changed, together with any and all other securities which
may from time to time be issuable upon conversion of Securities.
"DAMAGES PAYMENT DATE" means, with respect to the Securities or the Common
Stock issuable upon conversion thereof, as applicable, each Interest Payment
Date; and in the event that any Security, or portion thereof, is called for
redemption or surrendered for purchase by the Company and not withdrawn pursuant
to a Designated Event Offer (as defined in the Indenture), a Provisional
Redemption (as defined in the Indenture) or a Special Event Redemption (as
defined in the Indenture), the relevant redemption date, Designated Event
Payment Date (as defined in the Indenture), Provisional Redemption Date (as
defined in the Indenture) or Special Redemption Date (as defined in the
Indenture) as the case may be, shall also be a Damages Payment Date with respect
to such Security, or portion thereof, unless the Indenture provides that accrued
and unpaid interest on the Security (or portion thereof) to be redeemed or
repurchased, as the case may be, is to be paid to the person who was the Holder
thereof on a record date prior to such redemption date, Provisional Redemption
Date, Special Redemption Date or Designated Event Payment Date, as the case may
be, in which case the Damages Payment Date shall be the date on which interest
is payable to such Record Holder.
"DEFAULT RATE" has the meaning set forth in the Indenture.
"DTC" has the meaning set forth in Section 3(k) hereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"FINAL MATURITY DATE" means August 15, 2006.
"HOLDER" means a person who is a holder or beneficial owner (including the
Initial Purchasers) of any Securities or shares of Common Stock issued upon
conversion of Securities; provided that, unless otherwise expressly stated
herein, only registered holders of Securities or Common Stock issued on
conversion thereof shall be counted for purposes of calculating any proportion
of holders entitled to take any action or give notice pursuant to this
Agreement.
"INDENTURE" means the Indenture relating to the Securities dated as of
August 13, 1999, between the Company and Harris Trust Company of New York, as
trustee, as the same may be amended from time to time in accordance with the
terms thereof.
"INITIAL PLACEMENT" has the meaning set forth in the preamble hereto.
"INITIAL PURCHASERS" has the meaning set forth in the preamble hereto.
"INTEREST PAYMENT DATE" shall mean each August 15 and February 15.
"LIQUIDATED DAMAGES" has the meaning set forth in Section 2(e) hereof.
2
<PAGE>
"MAJORITY HOLDERS" means the Holders of a majority of the then outstanding
aggregate principal amount of Securities registered under a Shelf Registration
Statement; PROVIDED that Holders of Common Stock issued upon conversion of
Securities shall be deemed to be Holders of the aggregate principal amount of
Securities from which such Common Stock was converted; and provided, further,
that Securities or Common Stock which have been sold or otherwise transferred
pursuant to the Shelf Registration Statement shall not be included in the
calculation of Majority Holders.
"MAJORITY UNDERWRITING HOLDERS" means, with respect to any Underwritten
Offering, the Holders of a majority of the then outstanding aggregate principal
amount of Securities registered under any Shelf Registration Statement whose
Securities are or are to be included in such Underwritten Offering; provided
that Holders of Common Stock issued upon conversion of Securities should be
deemed to be Holders of the aggregate principal amount of Securities from which
such Common Stock was converted.
"MANAGING UNDERWRITERS" means the Underwriter or Underwriters that shall
administer an Underwritten Offering.
"NASD" has the meaning set forth in Section 3(i) hereof.
"NOTICE AND QUESTIONNAIRE" means a Notice of Registration Statement and
Selling Securityholder Questionnaire substantially in the form of Exhibit A
hereto.
"OFFERING MEMORANDUM" means the Final Memorandum as defined in the
Purchase Agreement.
"PERSON" and "PERSON" have the meaning set forth in the Indenture.
"PROSPECTUS" means the prospectus included in any Shelf Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Securities or Common Stock issuable upon
conversion thereof covered by such Shelf Registration Statement, and all
amendments and supplements to such prospectus, including all documents
incorporated or deemed to be incorporated by reference in such prospectus.
"PURCHASE AGREEMENT" has the meaning set forth in the preamble hereto.
"RECORD HOLDER" means (i) with respect to any Damages Payment Date which
occurs on an Interest Payment Date, each person who is registered on the books
of the registrar as the holder of Securities at the close of business on the
record date with respect to such Interest Payment Date and (ii) with respect to
any Damages Payment Date relating to the Common Stock issued upon conversion
thereof, each person who is a holder of record of such Common Stock fifteen days
prior to the Damages Payment Date.
"REGISTRATION DEFAULT" has the meaning set forth in Section 2(e) hereof.
"REPRESENTATIVES" has the meaning set forth in the preamble thereto.
"RULE 144" means Rule 144 (or any successor provision) under the Act.
"SEC" means the Securities and Exchange Commission.
3
<PAGE>
"SECURITIES" has the meaning set forth in the preamble hereto.
"SHELF REGISTRATION" means a registration effected pursuant to Section 2
hereof.
"SHELF REGISTRATION PERIOD" has the meaning set forth in Section 2(c)
hereof.
"SHELF REGISTRATION STATEMENT" means a "shelf" registration statement of
the Company pursuant to the provisions of Section 2 hereof which covers all of
the Securities and the Common Stock issuable upon conversion thereof, as
applicable, on Form S-3 or on another appropriate form for an offering to be
made on a delayed or continuous basis pursuant to Rule 415 under the Act, or any
similar rule that may be adopted by the SEC, and all amendments and supplements
to such registration statement, including post-effective amendments, in each
case including the Prospectus contained therein, all exhibits thereto and all
documents incorporated or deemed to be incorporated by reference therein.
"SUSPENSION PERIOD" has the meaning set forth in Section 2(d) hereof.
"TRANSFER RESTRICTED SECURITIES" means each Security and each share of
Common Stock issued upon conversion thereof until the date on which such
Security or share of Common Stock, as the case may be, (i) has been transferred
pursuant to the Shelf Registration Statement or another registration statement
covering such Security or share of Common Stock which has been filed with the
SEC pursuant to the Act, in either case after such registration statement has
become effective and while such registration statement is effective under the
Act, (ii) has been transferred pursuant to Rule 144 under the Act (or any
similar provision then in force), or (iii) may be sold or transferred pursuant
to Rule 144(k) under the Act (or any successor provision then in force).
"TRUSTEE" means the trustee with respect to the Securities under the
Indenture.
"UNDERWRITER" means any underwriter of Securities or Common Stock issuable
upon conversion thereof in connection with an offering thereof under a Shelf
Registration Statement.
"UNDERWRITTEN OFFERING" means an offering in which the Securities or
Common Stock issued upon conversion thereof are sold to an Underwriter or with
the assistance of an Underwriter for reoffering to the public.
All references in this Agreement to financial statements and schedules and
other information which is "contained", "included", or "stated" in the Shelf
Registration Statement, any preliminary Prospectus or Prospectus (and all other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
or deemed to be incorporated by reference in such Shelf Registration Statement,
preliminary Prospectus or Prospectus, as the case may be; and all references in
this Agreement to amendments or supplements to the Shelf Registration Statement,
any preliminary Prospectus or Prospectus shall be deemed to mean and include the
filing of any document under the Exchange Act, after the date of such Shelf
Registration Statement, preliminary Prospectus or Prospectus, as the case may
be, which is incorporated or deemed to be incorporated by reference therein.
4
<PAGE>
2. SHELF REGISTRATION STATEMENT.
(a) The Company shall prepare and, not later than 90 days following the
Closing Date, shall file with the SEC a Shelf Registration Statement with
respect to resales of the Securities and the Common Stock issuable upon
conversion thereof by the Holders from time to time in accordance with the
methods of distribution elected by such Holders and set forth in such Shelf
Registration Statement and thereafter shall use its reasonable best efforts to
cause such Shelf Registration Statement to be declared effective under the Act
within 150 days after the Closing Date; provided that if any Securities are
issued upon exercise of the over-allotment option granted to the Initial
Purchasers in the Purchase Agreement and the date on which such Securities are
issued occurs after the Closing Date, the Company will take such steps, prior to
the effective date of the Shelf Registration Statement, to ensure that such
Securities and Common Stock issuable upon conversion thereof are included in the
Shelf Registration Statement on the same terms as the Securities issued on the
Closing Date. The Company shall supplement or amend the Shelf Registration
Statement if required by the rules, regulations or instructions applicable to
the registration form used by the Company for the Shelf Registration Statement,
if required by the Act, the Exchange Act or the SEC.
(b) (1) Not less than 30 calendar days prior to the effectiveness of the
Shelf Registration Statement, the Company shall mail the Notice and
Questionnaire to the Holders of Securities and Common Stock issued upon
conversion thereof. No Holder shall be entitled to be named as a selling
securityholder in the Shelf Registration Statement, and no Holder shall be
entitled to use the Prospectus forming a part thereof for resales of Securities
or Common Stock issued upon conversion thereof at any time, unless such Holder
has returned a completed and signed Notice and Questionnaire to the Company by
the deadline for responses set forth therein; PROVIDED, HOWEVER, that Holders of
Securities or Common Stock issued upon conversion thereof shall have at least 20
calendar days from the date on which the Notice and Questionnaire is first
mailed to such Holders to return a completed and signed Notice and Questionnaire
to the Company.
(2) After the Shelf Registration Statement has become effective, the
Company shall, upon the request of any Holder of Securities or Common Stock
issued or issuable upon conversion thereof that has not returned a completed
Notice and Questionnaire, promptly send a Notice and Questionnaire to such
Holder. The Company shall not be required to take any action to name such Holder
as a selling securityholder in the Shelf Registration Statement or to enable
such Holder to use the Prospectus forming a part thereof for resales of
Securities or Common Stock issued or issuable upon conversion thereof until such
Holder has returned a completed and signed Notice and Questionnaire to the
Company, whereupon the Company will be required to take such action.
(c) The Company shall keep the Shelf Registration Statement continuously
effective under the Act in order to permit the Prospectus forming part thereof
to be usable by all Holders until the earliest of (i) the second anniversary of
the Closing Date or, if later, the second anniversary of the last date on which
any Securities are issued upon exercise of the Initial Purchasers'
over-allotment option, (ii) the date on which all the Securities and Common
Stock issued or issuable upon conversion thereof may be sold by non-affiliates
("affiliates" for such purpose having the meaning set forth in Rule 144) of the
Company pursuant to paragraph (k) of Rule 144 (or any successor provision)
promulgated by the SEC under the Act, (iii) the date as of which all the
Securities and Common Stock issued or issuable upon conversion thereof have been
transferred pursuant to Rule 144 under the Securities Act (or any similar
provision then in force) and (iv) such date as of which all the Securities and
the Common Stock issued or issuable upon conversion thereof have been sold
pursuant to the Shelf Registration Statement (in
5
<PAGE>
any such case, such period being called the "Shelf Registration Period"). The
Company will, subject to Section 2(d), prepare and file with the SEC such
amendments and post-effective amendments to the Shelf Registration Statement as
may be necessary to keep the Shelf Registration Statement continuously effective
for the Shelf Registration Period; subject to Section 2(d), cause the related
Prospectus to be supplemented by any required supplement, and as so supplemented
to be filed pursuant to Rule 424 (or any similar provisions then in force) under
the Act; and, comply in all material respects with the provisions of the Act
with respect to the disposition of all securities covered by the Shelf
Registration Statement during the applicable period in accordance with the
intended methods of disposition by the sellers thereof set forth in such Shelf
Registration Statement as so amended or such Prospectus as so supplemented.
(d) The Company may suspend the use of the Prospectus for a period not to
exceed 30 days in any three-month period or for three periods not to exceed an
aggregate of 90 days in any twelve-month period (the "Suspension Period") for
valid business reasons, to be determined by the Company in its sole reasonable
judgment (not including avoidance of the Company's obligations hereunder),
including, without limitation, the acquisition or divestiture of assets, public
filings with the SEC, pending corporate developments and similar events;
provided that the Company promptly thereafter complies with the requirements of
Section 3(j) hereof, if applicable; provided, that the existence of a Suspension
Period will not prevent the occurrence of a Registration Default or otherwise
limit the obligation of the Company to pay Liquidated Damages. The Company shall
provide notice to the Holders of a Suspension Period as required under Section
3(c)(1)(iv) hereof.
(e) If (i) the Shelf Registration Statement is not filed with the SEC on
or prior to 90 days after the Closing Date, (ii) the Shelf Registration
Statement has not been declared effective by the SEC within 150 days after the
Closing Date, or (iii) the Shelf Registration Statement is filed and declared
effective but shall thereafter cease to be effective (without being succeeded
immediately by a replacement shelf registration statement filed and declared
effective) or usable (including as a result of a Suspension Period) for the
offer and sale of Transfer Restricted Securities for a period of time (including
any Suspension Period) which shall exceed 60 days in the aggregate in any
twelve-month period during the period beginning on the Closing Date and ending
on the second anniversary of the Closing Date or, if later, the second
anniversary of the last date on which any Securities are issued upon exercise of
the Initial Purchasers' over-allotment option (each such event referred to in
clauses (i) through (iii), a "Registration Default"), the Company will pay
liquidated damages ("Liquidated Damages") to each Holder of Transfer Restricted
Securities who has complied with such Holder's obligations under this Agreement.
The amount of Liquidated Damages payable during any period in which a
Registration Default has occurred and is continuing is the amount which is equal
to one-quarter of one percent (25 basis points) per annum per $1,000 principal
amount of Securities and $2.50 per annum per 24.875622 shares of Common Stock
(subject to adjustment in the event of a stock split, stock recombination, stock
dividend and the like) constituting Transfer Restricted Securities for the first
90 days during which a Registration Default has occurred and is continuing and
one-half of one percent (50 basis points) per annum per $1,000 principal amount
of Securities and $5.00 per annum per 24.875622 shares of Common Stock (subject
to adjustment as set forth above) constituting Transfer Restricted Securities
for any additional days during which a Registration Default has occurred and is
continuing (in each case subject to further adjustment from time to time in the
event of a stock split, stock recombination, stock dividend and the like), it
being understood that all calculations pursuant to this and the preceding
sentence shall be carried out to five decimals. Following the cure of all
6
<PAGE>
Registration Defaults, Liquidated Damages will cease to accrue with respect to
such Registration Default. All accrued Liquidated Damages shall be paid by wire
transfer of immediately available funds or by federal funds check by the Company
on each Damages Payment Date and Liquidated Damages will be calculated on the
basis of a 360-day year consisting of twelve 30-day months. In the event that
any Liquidated Damages are not paid when due, then to the extent permitted by
law, such overdue Liquidated Damages, if any, shall bear interest until paid at
the Default Rate, compounded semi-annually. The parties hereto agree that the
Liquidated Damages provided for in this Section 2(e) constitute a reasonable
estimate of the damages that may be incurred by Holders by reason of a
Registration Default.
(f) All of the Company's obligations (including, without limitation, the
obligation to pay Liquidated Damages) set forth in the preceding paragraph which
are outstanding or exist with respect to any Transfer Restricted Security at the
time such security ceases to be a Transfer Restricted Security shall survive
until such time as all such obligations with respect to such security shall have
been satisfied in full.
(g) Immediately upon the occurrence or the termination of a Registration
Default, the Company shall give the Trustee, in the case of notice with respect
to the Securities, and the transfer and paying agent for the Common Stock, in
the case of notice with respect to Common Stock issued or issuable upon
conversion thereof, notice of such commencement or termination, of the
obligation to pay Liquidated Damages with regard to the Securities and Common
Stock and the amount thereof and of the event giving rise to such commencement
or termination (such notice to be contained in an Officers' Certificate (as such
term is defined in the Indenture)), and prior to receipt of such Officers'
Certificate the Trustee and such transfer and paying agent shall be entitled to
assume that no such commencement or termination has occurred, as the case may
be.
(h) All Securities which are redeemed, purchased or otherwise acquired by
the Company or any of its subsidiaries or affiliates (as defined in Rule 144 (or
any successor provision) under the Act) prior to the Final Maturity Date shall
be delivered to the Trustee for cancellation and the Company may not hold or
resell such Securities or issue any new Securities to replace any such
Securities or any Securities that any Holder has converted pursuant to the
Indenture. All shares of Common Stock issued upon conversion of the Securities
which are repurchased or otherwise acquired by the Company or any of its
subsidiaries or affiliates (as defined in Rule 144 (or any successor provision)
under the Act) at any time while such shares are "restricted securities" within
the meaning of Rule 144 shall not be resold or otherwise transferred except
pursuant to a registration statement which has been declared effective under the
Act.
3. REGISTRATION PROCEDURES. In connection with any Shelf Registration
Statement, the following provisions shall apply:
(a) The Company shall furnish to you, prior to the filing thereof
with the SEC, a copy of any Shelf Registration Statement, and each
amendment thereof (excluding amendments caused by the filing by the
Company with the SEC of a report required by the Exchange Act), a copy of
any Prospectus, and each amendment or supplement, if any, to the
Prospectus included therein and shall use its best efforts to reflect in
each such document, when so filed with the SEC, such comments as Salomon
Smith Barney Inc. reasonably may propose. Salomon Smith Barney Inc. shall
promptly furnish to the Company any comments it may have to such documents
mentioned in the foregoing sentence.
7
<PAGE>
(b) The Company shall ensure that (i) any Shelf Registration
Statement and any amendment thereto and any Prospectus forming part
thereof and any amendment or supplement thereto comply in all material
respects with the Act and the rules and regulations thereunder, (ii) any
Shelf Registration Statement and any amendment thereto does not, when it
becomes effective, contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading and (iii) any Prospectus
forming part of any Shelf Registration Statement, and any amendment or
supplement to such Prospectus, does not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in light of the circumstances under which they
were made, not misleading; PROVIDED that the Company makes no
representation or agreement with respect to information with respect to
you, any Underwriter or any Holder required to be included in any Shelf
Registration or Prospectus pursuant to the Act or the rules and
regulations thereunder and which information is included therein in
reliance upon and in conformity with information furnished to the Company
in writing by you, any Underwriter or any such Holder.
(c) (1) The Company, as promptly as reasonably practicable, shall
advise you and each Holder that has returned a completed and signed Notice
and Questionnaire to the Company and, if requested by you or any such
Holder, confirm such advice in writing:
(i) when a Shelf Registration Statement and any amendment
thereto has been filed with the SEC and when the Shelf Registration
Statement or any post-effective amendment thereto has become
effective;
(ii) of any request by the SEC for amendments or supplements
to the Shelf Registration Statement or the Prospectus or for
additional information;
(iii) of the determination by the Company that a
post-effective amendment to the Shelf Registration Statement would
be appropriate; and
(iv) of the commencement or termination of any Suspension
Period.
(2) The Company shall advise you and each Holder that has
returned a completed and signed Notice and Questionnaire to the Company
and, if requested by you or any such Holder, confirm such advice in
writing:
(i) of the issuance by the SEC of any stop order suspending
the effectiveness of the Shelf Registration Statement or the
initiation of any proceedings for that purpose;
(ii) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Securities
included in any Shelf Registration Statement for sale in any
jurisdiction or the initiation or threat of any proceeding for such
purpose; and
(iii) of the suspension of the use of the Prospectus pursuant
to Section 2(d) hereof or of the happening of any event that
requires the making of any changes in the Shelf Registration
Statement or the
8
<PAGE>
Prospectus so that, as of such date, the statements therein are not
misleading and the Shelf Registration Statement or the Prospectus,
as the case may be, does not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein (in the case of
the Prospectus, in light of the circumstances under which they were
made) not misleading (which advice shall be accompanied by an
instruction to suspend the use of the Prospectus until the requisite
changes have been made).
(d) The Company shall use its reasonable best efforts to obtain the
withdrawal of any order suspending the effectiveness of any Shelf
Registration Statement or the lifting of any suspension of the
qualification (or exemption from qualification) of any of the Securities
for offer or sale in any jurisdiction at the earliest possible time.
(e) The Company shall furnish to each Holder of Securities and the
Common Stock issued upon conversion thereof included within the coverage
of any Shelf Registration Statement, without charge, at least one copy of
such Shelf Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, and, if the Holder
so requests in writing, all exhibits (including those incorporated by
reference).
(f) The Company shall, during the Shelf Registration Period, deliver
to each Holder of Securities or the Common Stock issued upon conversion
thereof included within the coverage of any Shelf Registration Statement,
without charge, as many copies of the Prospectus (including each
preliminary Prospectus) included in such Shelf Registration Statement and
any amendment or supplement thereto as such Holder may reasonably request;
and, except during the continuance of any Suspension Period, the Company
consents to the use of the Prospectus or any amendment or supplement
thereto by each of the selling Holders in connection with the offering and
sale of the Securities or the Common Stock issued upon conversion thereof
covered by the Prospectus or any amendment or supplement thereto.
(g) Prior to any offering of Securities or the Common Stock issued
upon conversion thereof pursuant to any Shelf Registration Statement, the
Company shall register or qualify or cooperate with the Holders of
Securities and the Common Stock issued upon conversion thereof included
therein and their respective counsel in connection with the registration
or qualification (or exemption from such registration or qualification) of
such Securities or Common Stock for offer and sale, as the case may be,
under the securities or blue sky laws of such jurisdictions as any such
Holders reasonably request in writing and do any and all other acts or
things necessary or advisable to enable the offer and sale in such
jurisdictions of the Securities and the Common Stock issued upon
conversion thereof covered by such Shelf Registration Statement; PROVIDED,
HOWEVER, that the Company will not be required to (A) qualify generally to
do business in any jurisdiction where it is not then so qualified or to
(B) take any action which would subject it to general service of process
or to taxation in any such jurisdiction where it is not then so subject.
(h) The Company shall cooperate with the Holders to facilitate the
timely preparation and delivery of certificates representing Securities or
the Common Stock issued upon conversion thereof to be sold pursuant to any
Shelf
9
<PAGE>
Registration Statement free of any restrictive legends and in such
denominations and registered in such names as Holders may request prior to
sales of Securities or the Common Stock issued upon conversion thereof
pursuant to such Shelf Registration Statement.
(i) Subject to the exceptions contained in (A) and (B) of subsection
(g) hereof, the Company shall use its best efforts to cause the Securities
and Common Stock issued upon conversion thereof covered by the applicable
Shelf Registration Statement to be registered with or approved by such
other federal, state and local governmental agencies or authorities, and
self-regulatory organizations in the United States as may be necessary to
enable the Holders to consummate the disposition of such Securities and
Common Stock issued upon conversion thereof as contemplated by the Shelf
Registration Statement; without limitation to the foregoing, the Company
shall make all filings and provide all such information as may be required
by the National Association of Securities Dealers, Inc. (the "NASD") in
connection with the offering under the Shelf Registration Statement of the
Securities and Common Stock issued upon conversion thereof (including,
without limitation, such as may be required by NASD Rule 2710 or 2720),
and shall cooperate with each Holder in connection with any filings
required to be made with the NASD by such Holder in that regard.
(j) Upon the occurrence of any event contemplated by paragraph
3(c)(2)(iii) above and subject to Section 3(a) hereof, the Company shall
promptly prepare and file with the SEC a post-effective amendment to any
Shelf Registration Statement or an amendment or supplement to the related
Prospectus or any document incorporated therein by reference or file a
document which is incorporated or deemed to be incorporated by reference
in such Shelf Registration Statement or Prospectus, as the case may be, so
that, as thereafter delivered to purchasers of the Securities or the
Common Stock issued upon conversion thereof included therein, the Shelf
Registration Statement and the Prospectus, in each case as then amended or
supplemented, will not include an untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
in order to make the statements therein (in the case of the Prospectus in
light of the circumstances under which they were made) not misleading and
in the case of a post-effective amendment, use its best efforts to cause
it to become effective as promptly as practicable; provided that the
Company's obligations under this paragraph (j) shall be suspended if the
Company has suspended the use of the Prospectus in accordance with Section
2(d) hereof and given notice of such suspension to Holders, it being
understood that the Company's obligations under this Subsection (j) shall
be automatically reinstated at the end of such Suspension Period.
(k) The Company shall use its reasonable best efforts to cause The
Depository Trust Company ("DTC") on the first Business Day following the
effective date of any Shelf Registration Statement hereunder or as soon as
possible thereafter to remove (i) from any existing CUSIP number assigned
to the Securities any designation indicating that the Securities are
"restricted securities", which efforts shall include delivery to DTC of a
letter executed by the Company substantially in the form of Exhibit B
hereto and (ii) any other stop or restriction on DTC's system with respect
to the Securities. In the event the Company is unable to cause DTC to take
actions described in the immediately preceding sentence, the Company shall
take such actions as Salomon Smith Barney Inc. may
10
<PAGE>
reasonably request to provide, as soon as practicable, a CUSIP number for
the Securities registered under such Shelf Registration Statement and to
cause such CUSIP number to be assigned to such Securities (or to the
maximum aggregate principal amount of the Securities to which such number
may be assigned). Upon compliance with the foregoing requirements of this
Section 3(k), the Company shall provide the Trustee with global
certificates for such Securities in a form eligible for deposit with DTC.
(l) The Company shall use its best efforts to comply with all
applicable rules and regulations of the SEC and shall make generally
available to its security holders as soon as practicable but in any event
not later than 15 months after (i) the effective date of the applicable
Shelf Registration Statement, (ii) the effective date of each
post-effective amendment to any Shelf Registration Statement, and (iii)
the date of each filing by the Company with the SEC of an Annual Report on
Form 10-K that is incorporated by reference or deemed to be incorporated
by reference in the Shelf Registration Statement, an earnings statement
satisfying the provisions of Section 11(a) of the Act and Rule 158
promulgated by the SEC thereunder.
(m) The Company shall use its best efforts to cause the Indenture to
be qualified under the TIA (as defined in the Indenture) in a timely
manner.
(n) The Company shall cause all Common Stock issued or issuable upon
conversion of the Securities to be listed on each securities exchange or
quotation system on which the Common Stock is then listed no later than
the date the applicable Shelf Registration Statement is declared effective
and, in connection therewith, to make such filings as may be required
under the Exchange Act and to have such filings declared effective as and
when required thereunder.
(o) The Company may require each Holder of Securities or the Common
Stock issued upon conversion thereof to be sold pursuant to any Shelf
Registration Statement to furnish to the Company such information
regarding the Holder and the distribution of such Securities or Common
Stock sought by the Notice and Questionnaire and such additional
information as may, from time to time, be required by the Act and the
rules and regulations promulgated thereunder, and the obligations of the
Company to any Holder hereunder shall be expressly conditioned on the
compliance of such Holder with such request.
(p) The Company shall, if reasonably requested, use its best efforts
to promptly incorporate in a Prospectus supplement or post-effective
amendment to a Shelf Registration Statement (i) such information as the
Majority Holders provide or, if the Securities or Common Stock are being
sold in an Underwritten Offering, as the Managing Underwriters or the
Majority Underwriting Holders reasonably agree should be included therein
and provide to the Company in writing for inclusion in the Shelf
Registration Statement or Prospectus, and (ii) such information as a
Holder may provide from time to time to the Company in writing for
inclusion in a Prospectus or any Shelf Registration Statement concerning
such Holder and the distribution of such Holder's Securities and Common
Stock and, in either case, shall make all required filings of such
Prospectus supplement or post-effective amendment as soon as practicable
after being notified in writing of the matters to be incorporated in such
Prospectus supplement or post-effective amendment, provided that the
Company shall not be
11
<PAGE>
required to take any action under this Section 3(p) that is not, in the
reasonable opinion of counsel for the Company, in compliance with
applicable law.
(q) The Company shall enter into such customary agreements
(including underwriting agreements) and take all other appropriate actions
as may be reasonably requested in order to expedite or facilitate the
registration or the disposition of the Securities or the Common Stock
issued or issuable upon conversion thereof, and in connection therewith,
if an underwriting agreement is entered into, cause the same to contain
indemnification and contribution provisions and procedures no less
favorable than those set forth in Section 5 (or such other reasonable and
customary provisions and procedures acceptable to the Majority
Underwriting Holders and the Managing Underwriters, if any, with respect
to all parties to be indemnified pursuant to Section 5). The plan of
distribution in the Shelf Registration Statement and the Prospectus
included therein shall permit resales of the Securities or Common Stock
issuable upon conversion thereof to be made by selling security holders
through underwriters, brokers and dealers, and shall also include such
other information as Salomon Smith Barney Inc. may reasonably request.
(r) The Company shall (i) make reasonably available for inspection
by the Holders of Securities and the Common Stock issued upon conversion
thereof registered or to be registered under a Shelf Registration
Statement, any Underwriter participating in any disposition pursuant to
such Shelf Registration Statement, and any attorney, accountant or other
agent retained by the Holders or any such Underwriter all relevant
financial and other records, pertinent corporate documents and properties
of the Company and its subsidiaries as is customary for due diligence
examinations in connection with public offerings; (ii) cause the Company's
officers, directors and employees to supply all relevant information
reasonably requested by the Holders or any such Underwriter, attorney,
accountant or agent in connection with any such Shelf Registration
Statement as is customary for similar due diligence examinations;
PROVIDED, HOWEVER, that any information that is designated in writing by
the Company, in its sole discretion, as confidential at the time of
delivery of such information shall be kept confidential by the Holders or
any such Underwriter, attorney, accountant or agent, unless disclosure
thereof is made in connection with a court, administrative or regulatory
proceeding or required by law, or such information has become available to
the public generally through the Company or through a third party without
an accompanying obligation of confidentiality; provided, further, that if
the foregoing inspection and information gathering specified in
subsections (i) and (ii) would, in the Company's reasonable judgment,
disrupt the Company's conduct of business, such inspections and
information gathering shall be coordinated on behalf of the Holders and
the other parties entitled thereto by one counsel designated by or on
behalf of the Majority Holders (or, in the case of an Underwritten
Offering, the Majority Underwriting Holders and the Managing
Underwriters); (iii) make such representations and warranties to the
Holders of Securities and the Common Stock issued upon conversion thereof
registered thereunder and the Underwriters, if any, in form, substance and
scope as are customarily made by issuers to Underwriters and covering
matters including, but not limited to, those set forth in the Purchase
Agreement; (iv) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions, in form, scope and substance, shall
be reasonably satisfactory to the Managing Underwriters, if any) addressed
to each selling Holder and the Underwriters, if any, covering such matters
as are customarily covered in opinions requested in public offerings; (v)
obtain "cold comfort" letters
12
<PAGE>
and updates thereof from the independent certified public accountants of
the Company (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business acquired
by the Company for which financial statements and financial data are, or
are required to be, included in the Shelf Registration Statement),
addressed to each selling Holder of Securities and Common Stock issued
upon conversion thereof registered thereunder (provided such Holder
furnishes the accountants with such representations as the accountants
customarily require in similar situations) and the Underwriters, if any,
in customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with primary underwritten offerings;
and (vi) deliver such documents and certificates as may be reasonably
requested by the Majority Holders or, in the case of an Underwritten
Offering, the Majority Underwriting Holders, and the Managing
Underwriters, if any, including those to evidence compliance with Section
3(j) and with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company. The foregoing
actions set forth in clauses (iii), (iv), (v) and (vi) of this Section
3(r) shall be performed at (A) the effectiveness of such Shelf
Registration Statement and each post-effective amendment thereto and (B)
each closing under any underwriting or similar agreement as and to the
extent required thereunder.
(s) Each Holder agrees that, upon receipt of notice of the happening
of an event described in Sections 3(c)(1)(ii) through and including
3(c)(1)(iv) and Sections 3(c)(2)(i) through and including 3(c)(2)(iii),
each Holder shall forthwith discontinue (and shall cause its agents and
representatives to discontinue) disposition of the Securities and the
Common Stock issuable upon conversion thereof and will not resume
disposition of such Securities or the Common Stock until such Holder has
received copies of an amended or supplemented Prospectus contemplated by
Section 3(j) hereof, or until such Holder is advised in writing by the
Company that the use of the Prospectus may be resumed or that the relevant
Suspension Period has been terminated, as the case may be, provided that,
the foregoing shall not prevent the sale, transfer or other disposition of
Securities or Common Stock issuable upon conversion thereof by a Holder in
a transaction which is exempt from, or not subject to, the registration
requirements of the Act, so long as such Holder does not and is not
required to deliver the applicable Prospectus or Shelf Registration
Statement in connection with such sale, transfer or other disposition, as
the case may be; and provided, further, that the provisions of this
paragraph (s) shall not prevent the occurrence of a Registration Default
or otherwise limit the obligation of the Company to pay Liquidated
Damages.
4. REGISTRATION EXPENSES. The Company shall bear all expenses incurred in
connection with the performance of its obligations under Sections 2 and 3 hereof
and shall reimburse the Holders for the reasonable fees and disbursements of one
firm or counsel designated by the Majority Holders to act as counsel for the
Holders in connection therewith. Notwithstanding the provisions of this Section
4, each Holder shall bear the expense of any broker's commission, agency fee or
Underwriter's discount or commission.
5. INDEMNIFICATION AND CONTRIBUTION.
(a) (i) The Company agrees to indemnify and hold harmless each Holder of
Securities and each Holder of Common Stock issued upon conversion thereof
covered by any Shelf Registration Statement (including the Initial Purchasers),
the directors, officers, employees and agents of each such Holder and each
person who controls any such Holder within the meaning of either the Act or the
Exchange Act against any and all
13
<PAGE>
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other Federal or
state law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in the Shelf Registration Statement as originally filed or in any
amendment thereof, or in any preliminary Prospectus or Prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a 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, and agrees to
reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by any of them in connection with investigating or
defending any such loss, claim, damage, liability or action; PROVIDED, HOWEVER,
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon (A) any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any such Holder or any Initial
Purchaser specifically for inclusion therein, (B) use of a Shelf Registration
Statement or the related Prospectus during a period when a stop order has been
issued in respect of such Shelf Registration or any proceedings for that purpose
have been initiated or use of a Prospectus when use of such Prospectus has been
suspended pursuant to Section 2(d) or Section 3(s); PROVIDED, FURTHER, in each
case, that Holders received prior notice of such stop order, initiation of
proceedings or suspension, or (C) if the Holder fails to deliver a Prospectus,
as then amended or supplemented, provided that the Company shall have delivered
to such Holder such Prospectus, as then amended or supplemented. This indemnity
agreement will be in addition to any liability which the Company may otherwise
have.
(ii) The Company also agrees to indemnify and to contribute to
Losses, as provided in Section 5(d), of any Underwriters of Securities or Common
Stock issued upon conversion thereof registered under a Shelf Registration
Statement, their officers and directors and each person who controls any such
Underwriter within the meaning of either the Act or the Exchange Act on
substantially the same basis as that of the indemnification of the Initial
Purchasers and the selling Holders provided in this Section 5(a) and shall, if
requested by any Holder, enter into an underwriting agreement reflecting such
agreement, as provided in Section 3(q) hereof. This indemnity agreement will be
in addition to any liability which the Company may otherwise have.
(b) Each Holder of Securities or Common Stock issued upon conversion
thereof covered by a Shelf Registration Statement (including the Initial
Purchasers) severally and not jointly agrees to indemnify and hold harmless (i)
the Company, (ii) each of its directors, (iii) each of its officers who signs
such Shelf Registration Statement and (iv) each person who controls the Company
within the meaning of either the Act or the Exchange Act to the same extent as
the foregoing indemnity from the Company to each such Holder, but only with
reference to written information relating to such Holder furnished to the
Company by or on behalf of such Holder specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability which any such Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 5 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 5, notify the indemnifying party in writing of the commencement thereof;
but the failure so to
14
<PAGE>
notify the indemnifying party (i) will not relieve it from liability under
paragraph (a) or (b) above unless and to the extent it did not otherwise learn
of such action and such failure results in the forfeiture by the indemnifying
party of substantial rights and defenses; and (ii) will not, in any event,
relieve the indemnifying party from any obligations to any indemnified party
other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); PROVIDED, HOWEVER, that such counsel shall be
reasonably satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the indemnified
party in an action, the indemnified party shall have the right to employ
separate counsel (including local counsel), and the indemnifying party shall
bear the reasonable fees, costs and expenses of such separate counsel (and local
counsel) if (i) the use of counsel chosen by the indemnifying party to represent
the indemnified party would present such counsel with a conflict of interest;
(ii) the actual or potential defendants in, or targets of, any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party; (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action; or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. Notwithstanding the foregoing, the Company shall not,
in the connection with any one action or proceeding or separate but
substantially similar or related actions or proceedings in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate counsel (in addition to
one separate local counsel) at any time for the indemnified parties, which firm
or firms (including any local counsel) shall be designated by Salomon Smith
Barney Inc. An indemnifying party will not, without the prior written consent of
the indemnified party, which consent will not be unreasonably withheld, settle
or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of such indemnified party from all liability arising out of such claim, action,
suit or proceeding. The Company shall not be liable for any losses, claims,
damages or liabilities by reason of any settlement of any action or proceeding
effected without the Company's prior written consent, which consent will not be
unreasonably withheld.
(d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section 5 is unavailable to or insufficient to hold harmless an indemnified
party for any reason, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall have an obligation to contribute to
the aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending same)
(collectively "Losses"), as incurred, to which such indemnified party may be
subject in such proportion as is appropriate to reflect the relative benefits
received by such indemnifying party, on the one hand, and such indemnified
party, on the other hand, from the Initial Placement and the Shelf Registration
Statement which resulted in such Losses; PROVIDED, HOWEVER, that in no case
shall the Initial Purchasers be responsible, in the aggregate, for any amount in
excess of
15
<PAGE>
the purchase discount or commission applicable to the Securities, as set forth
on the cover page of the Offering Memorandum, nor shall any Underwriter be
responsible for any amount in excess of the underwriting discount or commission
applicable to the Securities and Common Stock issued upon conversion thereof
purchased by such Underwriter under the Shelf Registration Statement which
resulted in such Losses. If the allocation provided by the immediately preceding
sentence is unavailable for any reason, the indemnifying party and the
indemnified party shall contribute in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of such
indemnifying party, on the one hand, and such indemnified party, on the other
hand, in connection with the statements or omissions which resulted in such
Losses as well as any other relevant equitable considerations. Benefits received
by the Company shall be deemed to be equal to the sum of (x) the total net
proceeds from the Initial Placement (before deducting expenses) as set forth on
the cover page of the Offering Memorandum and (y) the total amount of Liquidated
Damages that the Company was not required to pay as a result of registering the
Securities and Common Stock issued upon conversion thereof covered by the Shelf
Registration Statement which resulted in such Losses. Benefits received by the
Initial Purchasers shall be deemed to be equal to the total purchase discounts
and commissions as set forth on the cover page of the Offering Memorandum, and
benefits received by any other Holders shall be deemed to be equal to the value
of receiving Securities or the Common Stock issuable upon conversion thereof
registered under the Act. Benefits received by any Underwriter shall be deemed
to be equal to the total underwriting discounts and commissions, as set forth on
the cover page of the Prospectus forming a part of the Shelf Registration
Statement (or the applicable Prospectus supplement) which resulted in such
Losses. Relative fault shall be determined by reference to whether any untrue
statement or omission or alleged untrue statement or omission relates to
information provided by the indemnifying party, on the one hand, or by the
indemnified party, on the other hand. The parties agree that it would not be
just and equitable if contribution were determined by pro rata allocation or any
other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 5, each person who controls a Holder within the meaning of either
the Act or the Exchange Act and each director, officer, employee and agent of
such Holder shall have the same rights to contribution as such Holder, and each
person who controls the Company within the meaning of either the Act or the
Exchange Act, each officer of the Company who shall have signed the Shelf
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, and each person who controls an
Underwriter within the meaning of either the Act or the Exchange Act and each
officer and director of each Underwriter shall have the same rights to
contribution as such Underwriter, subject in each case to the applicable terms
and conditions of this paragraph (d).
(e) The provisions of this Section 5 will remain in full force and effect,
regardless of any investigation made by or on behalf of any Holder, any
Underwriter or the Company or any of the officers, directors or controlling
persons referred to in Section 5 hereof, and will survive the sale by a Holder
of Securities or shares of Common Stock covered by a Shelf Registration
Statement.
6. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. The Company has not, as of the date
hereof, entered into nor shall it, on or after the date hereof, enter into, any
agreement with respect
16
<PAGE>
to its securities that is inconsistent with the rights granted to the Holders
herein or otherwise conflicts with the provisions hereof.
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, qualified, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of the
Majority Holders; PROVIDED that with respect to any matter that directly or
indirectly affects the rights of the Initial Purchasers hereunder, the Company
shall obtain the written consent of each of the Initial Purchasers against which
such amendment, qualification, supplement, waiver or consent is to be effective.
Notwithstanding the foregoing (except the foregoing proviso), a waiver or
consent to departure from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders whose Securities or Common Stock
are being sold pursuant to a Shelf Registration Statement and that does not
directly or indirectly affect the rights of other Holders may be given by the
Majority Holders, determined on the basis of Securities or Common Stock issued
upon conversion thereof being sold rather than registered under such Shelf
Registration Statement.
(c) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telecopier, or air courier guaranteeing overnight delivery:
(1) if to you, initially at the address set forth in the Purchase
Agreement;
(2) if to any other Holder, at the most current address given by
such Holder to the Company in accordance with the provisions of this
Section 6(c), which address initially is, with respect to each Holder, the
address of such Holder maintained by the Registrar under the Indenture or,
in the case of Common Stock, the address maintained by the registrar of
the Common Stock, with a copy in like manner to Salomon Smith Barney Inc.;
and
(3) if to the Company, initially at its address set forth in the
Purchase Agreement.
All such notices and communications shall be deemed to have been duly
given when received, if delivered by hand or air courier, and when sent, if sent
by first-class mail or telecopier.
The Initial Purchasers or the Company by notice to the other may designate
additional or different addresses for subsequent notices or communications.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties,
including, without the need for an express assignment or any consent by the
Company thereto, subsequent Holders. The Company hereby agrees to extend the
benefits of this Agreement to any Holder and Underwriter and any such Holder and
Underwriter may specifically enforce the provisions of this Agreement as if an
original party hereto. In the event that any other person shall succeed to the
Company under the Indenture as provided in Article VII thereof, then such
successor shall enter into an agreement, in form and substance reasonably
satisfactory to the Initial Purchasers, whereby such successor shall assume all
of the Company's obligations under this Agreement.
17
<PAGE>
(e) COUNTERPARTS. This agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED IN SAID STATE, WITHOUT REGARD, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, TO THE CONFLICTS OF LAW RULES THEREOF.
(h) SEVERABILITY. In the event that any one of more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired or affected
thereby, it being intended that all of the rights and privileges of the parties
shall be enforceable to the fullest extent permitted by law.
(i) SECURITIES HELD BY THE COMPANY, ETC. Whenever the consent or approval
of Holders of a specified percentage of principal amount of Securities or the
Common Stock issuable upon conversion thereof is required hereunder, Securities
or the Common Stock issued upon conversion thereof held by the Company or its
Affiliates (other than subsequent Holders of Securities or the Common Stock
issued upon conversion thereof if such subsequent Holders are deemed to be
Affiliates solely by reason of their holdings of such Securities) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
18
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between the Company and you.
Very truly yours,
BENCHMARK ELECTRONICS, INC.
/S/ GAYLA J. DELLY
Name: Gayla J. Delly
Title: Treasurer
The foregoing Agreement is hereby
confirmed and accepted as of the date first
above written.
SALOMON SMITH BARNEY INC.
CHASE SECURITIES INC.
For themselves and the other Initial
Purchasers named in Schedule I to the
Purchase Agreement.
BY: SALOMON SMITH BARNEY INC.
By /S/ KEVIN TICE
Name: Kevin Tice
Title: Managing Director
19
<PAGE>
EXHIBIT A
Benchmark Electronics, Inc.
Notice of Registration Statement
and
Selling Securityholder Questionnaire
Reference is hereby made to the Registration Agreement (the "Registration
Agreement") between Benchmark Electronics, Inc., a Texas corporation (the
"Company"), and the Initial Purchasers named therein. Pursuant to the
Registration Agreement, the Company has filed or will file with the United
States Securities and Exchange Commission (the "Commission") a registration
statement on Form S-3 (the "Shelf Registration Statement") for the registration
and resale under Rule 415 of the Securities Act of 1933, as amended (the
"Securities Act"), of the Company's 6% Convertible Subordinated Notes due 2006
(the "Securities"), and the shares of the Company's common stock, par value $.10
per share (the "Common Stock"), issuable upon conversion thereof. A copy of the
Registration Agreement is attached hereto. All capitalized terms not otherwise
defined herein shall have the meanings ascribed thereto in the Registration
Agreement.
Each holder and beneficial owner of Transfer Restricted Securities is
entitled to have its Transfer Restricted Securities included in the Shelf
Registration Statement. In order to have Transfer Restricted Securities included
in the Shelf Registration Statement, this Notice of Registration Statement and
Selling Securityholder Questionnaire ("Notice and Questionnaire") must be
completed, executed and delivered to the Company's counsel at the following
address, for receipt ON OR BEFORE [DEADLINE FOR RESPONSE]: [NAME AND ADDRESS OF
COUNSEL]. Holders or beneficial owners of Transfer Restricted Securities who do
not complete, execute and return this Notice and Questionnaire by such date (i)
will not be named as selling securityholders in the Shelf Registration Statement
and (ii) may not use the Prospectus forming a part thereof for resales of
Transfer Restricted Securities, subject, however, to the Company's obligations
under Section 2(b)(2) of the Registration Agreement.
Certain legal consequences arise from being named as a selling
securityholder in the Shelf Registration Statement and related Prospectus.
Accordingly, holders and beneficial owners of Transfer Restricted Securities are
advised to consult their own securities law counsel regarding the consequences
of being named or not being named as a selling securityholder in the Shelf
Registration Statement and related Prospectus.
ELECTION
The undersigned (the "Selling Securityholder") hereby elects to include in
the Shelf Registration Statement the Transfer Restricted Securities held or
beneficially owned by it and listed below in Item (3)(b). The undersigned, by
signing and returning this
A-1
<PAGE>
Notice and Questionnaire, agrees to be bound with respect to such Transfer
Restricted Securities by the terms and conditions of this Notice and
Questionnaire and the Registration Agreement, including, without limitation, the
indemnification set forth in Section 5 of the Registration Agreement, as if the
undersigned Selling Securityholder were an original party thereto.
QUESTIONNAIRE
(1) (a) Full legal name of Selling Securityholder:
(b) Full legal name of registered holder (if not the same as in (a) above)
of Transfer Restricted Securities listed in (3) below (if the Transfer
Restricted Securities are held through a broker-dealer or other third party and,
as a result, you do not know the legal name of the registered holder, please
complete Item (1)(c) below):
(c) Full legal name of broker-dealer or other third party through which
Transfer Restricted Securities listed in (3) below are held:
(2) Address for notices to Selling Securityholder:
Telephone:
Fax:
Contact Person:
(3) Beneficial ownership of Transfer Restricted Securities.
EXCEPT AS SET FORTH BELOW IN THIS ITEM (3), THE UNDERSIGNED DOES NOT
BENEFICIALLY OWN ANY SECURITIES OR SHARES OF COMMON STOCK WHICH CONSTITUTE
TRANSFER RESTRICTED SECURITIES.
(a) Principal amount of Securities constituting Transfer Restricted
Securities beneficially owned:
Number of shares of Common Stock, if any, constituting Transfer Restricted
Securities (include only shares of Common Stock which have actually been issued,
not shares issuable upon future conversion of Securities):
The undersigned also may be deemed to beneficially own such number of
shares of Common Stock as may be issued from time to time upon conversion of the
Securities listed in Item (3)(a) above.
(b) Principal amount of Securities and number of shares of outstanding
Common Stock constituting Transfer Restricted Securities which the undersigned
wishes to be included in the Shelf Registration Statement:
Unless otherwise indicated in the space provided below, all Securities,
all shares of Common Stock listed in response to Item (3)(a) above, and all
shares of Common Stock issuable upon conversion of the Securities listed in
response to Item (3)(b)above, will be included in the Shelf Registration
Statement. If the undersigned does not wish all
A-2
<PAGE>
such Securities or shares of Common Stock to be so included, please indicate
below the number of such shares to be included:
(4) Beneficial ownership of other securities of the Company:
EXCEPT AS SET FORTH BELOW IN THIS ITEM (4), THE UNDERSIGNED SELLING
SECURITYHOLDER IS NOT THE BENEFICIAL OR REGISTERED OWNER OF ANY SHARES OF COMMON
STOCK OR ANY OTHER SECURITIES OF THE COMPANY, OTHER THAN SECURITIES AND SHARES
OF COMMON STOCK LISTED ABOVE IN ITEM (3).
State any exceptions here:
(5) Relationships with the Company:
EXCEPT AS SET FORTH BELOW, NEITHER THE SELLING SECURITYHOLDER NOR ANY OF
ITS OFFICERS, DIRECTORS OR 5% OR GREATER STOCKHOLDERS HAS HELD ANY POSITION OR
OFFICE OR HAS HAD ANY OTHER MATERIAL RELATIONSHIP WITH THE COMPANY (OR ITS
PREDECESSORS OR AFFILIATES)DURING THE PAST THREE YEARS.
State any exceptions here:
(6) Plan of Distribution:
EXCEPT AS SET FORTH BELOW, THE UNDERSIGNED SELLING SECURITYHOLDER INTENDS
TO DISTRIBUTE THE TRANSFER RESTRICTED SECURITIES LISTED ABOVE IN ITEM (3) ONLY
AS FOLLOWS (IF AT ALL): SUCH TRANSFER RESTRICTED SECURITIES MAY BE SOLD FROM
TIME TO TIME BY THE UNDERSIGNED SELLING SECURITYHOLDER (I) TO OR THROUGH
UNDERWRITERS, BROKERS OR DEALERS; (II) DIRECTLY TO ONE OR MORE OTHER PURCHASERS;
(III) THROUGH AGENTS ON A BEST-EFFORTS BASIS OR OTHERWISE; OR (IV) THROUGH A
COMBINATION OF ANY SUCH METHODS OF SALE. SUCH TRANSFER RESTRICTED SECURITIES MAY
BE SOLD FROM TIME TO TIME IN ONE OR MORE TRANSACTIONS AT A FIXED PRICE OR
PRICES, WHICH MAY BE CHANGED, AT MARKET PRICES PREVAILING AT THE TIME OF SALE,
AT PRICES RELATED TO SUCH PREVAILING MARKET PRICES, AT VARYING PRICES DETERMINED
AT THE TIME OF SALE, OR AT NEGOTIATED PRICES. SUCH SALES MAY BE EFFECTED IN
TRANSACTIONS (WHICH MAY INVOLVE CROSSES OR BLOCK TRANSACTIONS) (I) ON ANY
NATIONAL SECURITIES EXCHANGE OR QUOTATION SERVICE ON WHICH THE TRANSFER
RESTRICTED SECURITIES MAY BE LISTED OR QUOTED AT THE TIME OF SALE, (II) IN THE
OVER-THE-COUNTER MARKET, (III) IN TRANSACTIONS OTHERWISE THAN ON SUCH EXCHANGES
OR SERVICES OR IN THE OVER-THE-COUNTER MARKET, OR (IV) THROUGH THE WRITING OF
OPTIONS. IN CONNECTION WITH SALES OF THE TRANSFER RESTRICTED SECURITIES OR
OTHERWISE, THE SELLING SECURITYHOLDER MAY ENTER INTO HEDGING TRANSACTIONS WITH
BROKERS-DEALERS OR OTHERS, WHICH MAY IN TURN ENGAGE IN SHORT SALES OF THE
TRANSFER RESTRICTED SECURITIES IN THE COURSE OF HEDGING THE POSITIONS THEY
ASSUME. THE SELLING SECURITYHOLDER MAY ALSO SELL TRANSFER RESTRICTED SECURITIES
SHORT AND DELIVER TRANSFER RESTRICTED SECURITIES TO CLOSE OUT SUCH SHORT
POSITIONS, OR LOAN OR PLEDGE TRANSFER RESTRICTED SECURITIES TO BROKERS- DEALERS
OR OTHERS THAT IN TURN MAY SELL SUCH SECURITIES. THE SELLING SECURITYHOLDER MAY
PLEDGE OR GRANT A SECURITY INTEREST IN SOME OR ALL OF THE TRANSFER RESTRICTED
SECURITIES OWNED BY IT AND, IF IT DEFAULTS IN THE PERFORMANCE OF ITS SECURED
OBLIGATIONS, THE PLEDGEES OR SECURED PARTIES MAY OFFER AND SELL THE TRANSFER
RESTRICTED SECURITIES FROM TIME TO TIME
A-3
<PAGE>
PURSUANT TO THE PROSPECTUS. THE SELLING SECURITYHOLDER ALSO MAY TRANSFER AND
DONATE SHARES IN OTHER CIRCUMSTANCES IN WHICH CASE THE TRANSFEREES, DONEES,
PLEDGEES OR OTHER SUCCESSORS IN INTEREST WILL BE THE SELLING STOCKHOLDERS FOR
PURPOSES OF THE PROSPECTUS. THE SELLING SECURITYHOLDER MAY SELL SHORT THE COMMON
STOCK AND MAY DELIVER THE PROSPECTUS IN CONNECTION WITH SUCH SHORT SALES AND USE
THE SHARES COVERED BY THE PROSPECTUS TO COVER SUCH SHORT SALES.
State any exceptions here:
By signing below, the Selling Securityholder acknowledges that it
understands its obligation to comply, and agrees that it will comply, with the
provisions of the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder, particularly Regulation M and the prospectus delivery
requirements under the Securities Act.
In the event that the Selling Securityholder transfers all or any portion
of the Transfer Restricted Securities listed in Item (3) above after the date on
which such information is provided to the Company (other than a transaction as a
result of which such securities shall no longer be Transfer Restricted
Securities), the Selling Securityholder agrees to notify the transferees at the
time of the transfer of its rights and obligations under this Notice and
Questionnaire and the Registration Agreement.
By signing below, the Selling Securityholder consents to the disclosure of
the information contained herein in its answers to Items (1) through (6) above
and the inclusion of such information in the Shelf Registration Statement and
related Prospectus. The Selling Securityholder understands that such information
will be relied upon by the Company in connection with the preparation of the
Shelf Registration Statement and related Prospectus.
The Selling Securityholder agrees to promptly notify the Company of any
inaccuracies or changes in the information provided herein which may occur
subsequent to the date hereof at any time while the Shelf Registration Statement
remains in effect. All notices hereunder and pursuant to the Registration
Agreement shall be made in writing, by hand-delivery, first-class mail, or air
courier guaranteeing overnight delivery as follows:
Benchmark Electronics, Inc.
3000 Technology Drive
Angleton, Texas 77515
Attention: Chief Financial Officer
Once this Notice and Questionnaire is executed by the Selling
Securityholder and received by the Company, the terms of this Notice and
Questionnaire, and the representations and warranties contained herein, shall be
binding on, shall inure to the benefit of and shall be enforceable by the
respective successors, heirs, personal representatives, and assigns of the
Company and the Selling Securityholder (with respect to the Transfer Restricted
Securities beneficially owned by such Selling Securityholder and listed in Item
(3)(b) above). This Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York.
A-4
<PAGE>
IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused
this Notice and Questionnaire to be executed and delivered either in person or
by its duly authorized agent.
Dated:
Selling Securityholder (Print/type full
legal name of beneficial owner of Transfer
Restricted Securities).
By:_______________________________________
Name:
Title:
A-5
<PAGE>
EXHIBIT B
FORM OF LETTER TO BE PROVIDED BY ISSUER TO
THE DEPOSITORY TRUST COMPANY
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, NY 10004
Re: 6% Convertible Subordinated Notes due 2006 (the "Securities")
of Benchmark Electronics, Inc.
Ladies and Gentlemen:
Please be advised that the Securities and Exchange Commission has declared
effective a Registration Statement on Form S-3 under the Securities Act of 1933,
as amended, with regard to all of the Securities referenced above. Accordingly,
there is no longer any restriction as to whom such Securities may be sold and
any restrictions on the CUSIP designation are no longer appropriate and may be
removed. I understand that upon receipt of this letter, DTC will remove any stop
or restriction on its system with respect to this issue.
As always, please do not hesitate to call if we can of further assistance.
Very truly yours,
By:_____________________________________
Authorized Officer
B-1
