<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 20, 1996
---------------------
AIR-CURE TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-10668 41-1667001
(State of incorporation) (Commission File No.) (IRS Employer Identification No.)
2727 Allen Parkway, Suite 760, Houston, Texas 77019-2100
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 713-285-2700.
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
ACQUISITION OF OHMSTEDE, INC.
On November 20, 1996, Air-Cure Technologies, Inc. (the "Company") acquired
all of the outstanding stock from the shareholders of Ohmstede, Inc.
("Ohmstede") for $51,638,000 paid in cash.
Ohmstede is the largest manufacturer of shell and tube heat exchangers in
the United States. Ohmstede has five plants located along the Gulf of Mexico
in Beaumont, Corpus Christi and La Porte, Texas; and in Lake Charles and St.
Gabriel, Louisiana. Ohmstede's corporate offices are located at 895 N. Main
Street, Beaumont, Texas 77701
Funding for the acquisition came from a combination of bank financing and
a private placement of subordinated debt with warrants. With the transaction
the Company's bank credit facilities were expanded from $27,501,000 to
$73,000,000 consisting of a $35,000,000 five-year term loan and a $38,000,000
five-year revolving credit facility. Five commercial banks participated in
the two credit facilities. Through a private placement the Company issued
$15,000,000 in subordinated debt with warrants which were purchased by two
investor groups. The Company issued 1,760,000 warrants to purchase its common
stock at $5.10 per share. On November 19, 1996, the closing price of the
Company's common stock price was $4.50 per share.
DISPOSITION OF AIR-CURE, INC. AND PIPKORN ENVIRONMENTAL TECHNOLOGIES, INC.
On November 22, 1996, the Company completed the disposition of two wholly-
owned subsidiaries, Air-Cure, Inc. ("ACI"), and Pipkorn Environmental
Technologies, Inc. ("Pipkorn"), to Air-Tec Acquisition Corporation
("Air-Tec"), an entity formed by the management of ACI and Pipkorn. The
Company sold 100% of the issued and outstanding capital stock of ACI and
Pipkorn for $1,700,000 consisting of $1,000,000 in cash and notes receivable
consisting of one promissory note for $300,000 at 8.5% interest maturing on
January 22, 1997 and a second promissory note for $400,000 at 8.5% interest
with principal payments of $50,000 each due on November 22, 1999 and November
22, 2000 and the balance of $300,000 due November 22, 2001. The sales price
was approximately equal to the Company's investment in those operations.
ACI and Pipkorn manufacture baghouse systems used principally by
coal-fired electrical utilities. Their combined operations had sales revenues
of approximately $5 million and incurred a loss in the Company's fiscal year
1995.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
As of the date of this Form 8-K, it is impracticable for the Company to
file the required financial statements of the acquired business. The Company
intends to file such required information as soon as the financial statements
become available but in any event not later than February 3, 1996.
<PAGE> 3
(b) PRO FORMA FINANCIAL INFORMATION.
As of the date of this Form 8-K, it is impracticable for the Company to
file the pro forma information with respect to the acquired business. The
information required hereunder will be filed concurrently with the filing of
the financial statements discussed above.
(c) EXHIBITS
The following exhibits are filed herewith:
4.1 Form of Registration Rights Agreement between Air-Cure
Technologies, Inc. and Mezzanine Management Limited dated November
18, 1996. (Filed herewith).
4.2 Form of Warrant Agreement between Air-Cure Technologies, Inc.
and Mezzanine Management Limited dated November 18, 1996.(Filed
herewith).
4.3 Form of Amended and Restated Credit Agreement, dated November
18, 1996 among Air-Cure Technologies, Inc., Bank of America
National Trust and Savings Association, as Agent, The First
National Bank of Boston, as Co-Agent and the Other Financial
Institutions Party Hereto. (Filed herewith).
4.4 Form of Warrant Agreement between Air-Cure Technologies, Inc.
and First Commerce Corporation dated November 18, 1996. (Filed
herewith).
4.5 Form of Senior Subordinated Note due November 18, 2003 between
Air-Cure Technologies, Inc. and International Mezzanine Capital,
B.V. dated November 18, 1996. (Filed herewith).
4.6 Form of Senior Subordinated Note due November 18, 2003 between
Air-Cure Technologies, Inc. and First Commerce Corporation dated
November 18, 1996. (Filed herewith).
4.7 Form of Subordination Agreement between Air-Cure Technologies,
Inc. and various financial institutions (the "Senior Lenders")
including Bank of America National Trust and Savings Association,
as Agent, and The First National Bank of Boston, as Co-Agent, dated
November 18, 1996. (Filed herewith).
4.8 Form of Guaranty executed by Air-Cure Technologies, Inc. in
favor of International Mezzanine Capital, B.V. and First Commerce
Corporation ("Purchasers") dated November 18, 1996.(Filed
herewith).
<PAGE> 4
4.9 Form of Subordinated Note and Purchase Agreement between
Air-Cure Technologies, Inc. (the "Company") and International
Mezzanine Capital, B.V. and First Commerce Corporation
(collectively the "Purchasers") dated November 18, 1996. (Filed
herewith).
10.1a Agreement and Plan of Merger, dated September 19, 1996,
among Air-Cure Technologies, Inc., Ohmstede, Inc. and Air-Cure
Acquisition, Inc.
99.1 News Release of Air-Cure Technologies, Inc. concerning the
completion of the Ohmstede, Inc. Acquisition dated November 19,
1996. (Filed herewith).
99.2 News Release of Air-Cure Technologies, Inc. regarding the
sale of Air-Cure, Inc. and Pipkorn Environmental Technologies, Inc.
dated November 26, 1996. (Filed herewith).
- --------------------
a Incorporated by reference. Document was previously filed as exhibit to
registrant's Quarterly Report on Form 10-Q for the quarter ended September 30,
1996. (File No. 1-10668).
SIGNATURES
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 hereto duly authorized.
Date: December 5, 1996 AIR-CURE TECHNOLOGIES, INC.
By:/s/Lawrance W. McAfee
-------------------------------------
Lawrance W. McAfee,
Executive Vice President,
Chief Financial Officer and Secretary
Date: December 5, 1996 By:/s/David E. Crays
-------------------------------------
David E. Crays,
Corporate Controller and
Assistant Secretary
<PAGE> 5
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
4.1 Form of Registration Rights Agreement between Air-Cure
Technologies, Inc. and Mezzanine Management Limited dated November
18, 1996. (Filed herewith).
4.2 Form of Warrant Agreement between Air-Cure Technologies, Inc.
and Mezzanine Management Limited dated November 18, 1996.(Filed
herewith).
4.3 Form of Amended and Restated Credit Agreement, dated November
18, 1996 among Air-Cure Technologies, Inc., Bank of America
National Trust and Savings Association, as Agent, The First
National Bank of Boston, as Co-Agent and the Other Financial
Institutions Party Hereto. (Filed herewith).
4.4 Form of Warrant Agreement between Air-Cure Technologies, Inc.
and First Commerce Corporation dated November 18, 1996. (Filed
herewith).
4.5 Form of Senior Subordinated Note due November 18, 2003 between
Air-Cure Technologies, Inc. and International Mezzanine Capital,
B.V. dated November 18, 1996. (Filed herewith).
4.6 Form of Senior Subordinated Note due November 18, 2003 between
Air-Cure Technologies, Inc. and First Commerce Corporation dated
November 18, 1996. (Filed herewith).
4.7 Form of Subordination Agreement between Air-Cure Technologies,
Inc. and various financial institutions (the "Senior Lenders")
including Bank of America National Trust and Savings Association,
as Agent, and The First National Bank of Boston, as Co-Agent, dated
November 18, 1996. (Filed herewith).
4.8 Form of Guaranty executed by Air-Cure Technologies, Inc. in
favor of International Mezzanine Capital, B.V. and First Commerce
Corporation ("Purchasers") dated November 18, 1996.(Filed
herewith).
4.9 Form of Subordinated Note and Purchase Agreement between
Air-Cure Technologies, Inc. (the "Company") and International
Mezzanine Capital, B.V. and First Commerce Corporation
(collectively the "Purchasers") dated November 18, 1996. (Filed
herewith).
10.1a Agreement and Plan of Merger, dated September 19, 1996,
among Air-Cure Technologies, Inc., Ohmstede, Inc. and Air-Cure
Acquisition, Inc.
99.1 News Release of Air-Cure Technologies, Inc. concerning the
completion of the Ohmstede, Inc. Acquisition dated November 19,
1996. (Filed herewith).
99.2 News Release of Air-Cure Technologies, Inc. regarding the
sale of Air-Cure, Inc. and Pipkorn Environmental Technologies, Inc.
dated November 26, 1996. (Filed herewith).
</TABLE>
- --------------------
a Incorporated by reference. Document was previously filed as exhibit to
registrant's Quarterly Report on Form 10-Q for the quarter ended September 30,
1996. (File No. 1-10668).
<PAGE> 1
EXHIBIT 4.1
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of November 18, 1996,
among AIR-CURE TECHNOLOGIES, INC., a Delaware corporation (the "COMPANY"),
INTERNATIONAL MEZZANINE CAPITAL, B.V. ("IMC") and FIRST COMMERCE CORPORATION
("FCC", and together with IMC, collectively, the "PURCHASERS").
1. Background. The Company and the Purchasers have entered into
that certain Subordinated Note and Warrant Purchase Agreement (the "PURCHASE
AGREEMENT"), dated as of November 18, 1996, pursuant to which the Company has
agreed, among other things, to issue and sell its Common Stock Purchase
Warrants Expiring November 18, 2003 (the "WARRANTS"), evidencing rights to
purchase an aggregate of 1,760,000 shares (subject to adjustment as provided
therein) of the Company's Common Stock, par value $0.001 per share (the "COMMON
STOCK"). This agreement shall become effective upon the issuance of such
Warrants.
2. Registration under Securities Act, etc.
2.1. Registration on Request.
(a) Request by Holders of Warrants or Registrable
Securities. The holders of 51% (by number of shares and shares then
purchasable by exercise of the Warrants) or more of the then outstanding
Registrable Securities and Warrants (the "MAJORITY HOLDERS") may, at any time,
request in writing that the Company effect the registration under the
Securities Act of all or part of such holders' Registrable Securities. Such
request shall specify the intended method of disposition thereof and whether or
not such requested registration is to be an underwritten offering. Promptly
after receiving such request, the Company will give written notice of such
requested registration to all other holders of Warrants or Registrable
Securities and, so long as the aggregate number of Registrable Securities
requested to be so registered under (i) and (ii) below equals at least 880,000
shares (as adjusted to reflect any stock splits, stock dividends, combinations
of common stock, reclassifications and comparable transactions occurring after
November 18, 1996), thereupon the Company will use its best efforts to effect
the registration under the Securities Act of:
(i) the Registrable Securities which the Company
has been so requested to register by such holders initiating such
request, and
-1-
<PAGE> 2
(ii) all other Registrable Securities which the
Company has been requested to register by such other holders of
Warrants or Registrable Securities by written request given to the
Company within 30 days after the giving of such written notice by the
Company (which request shall specify the intended method of
disposition of such Registrable Securities), all to the extent
requisite to permit the disposition (in accordance with the intended
methods thereof as aforesaid) of the Registrable Securities so to be
registered.
The holders of Warrants or Registrable Securities shall be entitled to only one
requested registration pursuant to this Section 2.1 (unless such requested
registration is deemed not to have been effected as described in Section 2.1(e)
hereof).
(b) Registration of Other Securities. If the Company
effects the registration pursuant to this Section 2.1 in connection with an
underwritten offering by one or more holders of Registrable Securities, no
securities other than Registrable Securities shall be included among the
securities covered by the registration unless the holders of all Registrable
Securities to be covered by the registration (and the holders of all Warrants
therefor) shall have consented in writing to the inclusion of such other
securities.
(c) Registration Statement Form. The registration under
this Section 2.1 shall be on such appropriate registration form of the
Commission (i) as shall be selected by the Company and as shall be reasonably
acceptable to the Requisite Holders and (ii) as shall permit the disposition of
such Registrable Securities in accordance with the intended method or methods
of disposition specified in their request for such registration. The Company
agrees to include in such registration statement all information which holders
of Registrable Securities being registered (or holders of Warrants therefor)
shall reasonably request. The Company agrees that if the holders of
Registrable Securities so indicate in the request for registration of
Registrable Securities pursuant to this Section 2.1, the registration statement
filed in response to such request shall be a "shelf" registration statement
pursuant to Rule 415 (or any successor provision that may be adopted by the
Commission) under the Securities Act (a "Demand Shelf Registration Statement").
(d) Expenses. The Company will pay all Registration
Expenses in connection with the registration requested pursuant to this Section
2.1.
(e) Effective Registration Statement. The registration
requested pursuant to this Section 2.1 shall not be deemed to have been
effected (i) unless a registration statement with respect thereto has become
effective, (ii) if after it has become effective, the registration is
interfered with by any stop order, injunction or other order or requirement of
the Commission or other governmental agency or court for any reason, (iii) if,
in the event a Demand Shelf Registration Statement is effected pursuant to
Section 2.1 hereof, such Demand Shelf Registration Statement expires or
otherwise permanently ceases to be effective prior to the sale thereunder of
all Registrable Securities registered pursuant to such Demand Registration
Statement or (iv) if the
-2-
<PAGE> 3
conditions to closing specified in the purchase agreement or underwriting
agreement entered into in connection with the registration are not satisfied.
(f) Selection of Underwriters. If the requested
registration pursuant to this Section 2.1 involves an underwritten offering,
the underwriter or underwriters thereof shall be selected by the Company with
the approval of the Designated Holder.
(g) Priority in Requested Registration. If the requested
registration pursuant to this Section 2.1 involves an underwritten offering,
and the managing underwriter shall advise the Company in writing (with a copy
to each holder of Warrants or Registrable Securities requesting registration)
that, in its opinion, the number of securities requested to be included in the
registration exceeds the number which can be sold in such offering within a
price range acceptable to the Designated Holder, the Company will include in
the registration to the extent of the number which the Company is so advised
can be sold in such offering Registrable Securities requested to be included in
the registration, pro rata among the holders of Registrable Securities (or
Warrants therefor) requesting the registration on the basis of the percentage
of such Registrable Securities held by or issuable to such holders. In
connection with a registration as to which the provisions of this clause (g)
apply, no securities other than Registrable Securities shall be covered by such
registration.
(h) Dispositions by the Company During Underwritten
Demand Registration. Without the prior written consent of the Requisite
Holders, the Company agrees not to effect any public sale or distribution of
any of its equity securities during the seven days prior to and the 90 days
after any underwritten registration of Registrable Securities pursuant to this
Agreement becomes effective (or, in the case of an underwritten offering of
Registrable Securities pursuant to a Demand Shelf Registration Statement, seven
days prior to and the 90 days after the date of the underwriting or purchase
agreement in connection with such underwritten offering); provided, however,
that the Company shall not be so prohibited from effecting such a public sale
or distribution made as part of such underwritten registration, or pursuant to
registrations on Form S-4 or S-8 or any successor or similar forms thereto, or
pursuant to registrations theretofore filed with the Commission under Rule 415
(or any successor or similar provision that may be adopted by the Commission)
under the Securities Act.
2.2. Incidental Registration.
(a) Right to Include Registrable Securities. If the
Company at any time proposes to register any of its securities under the
Securities Act (other than by a registration on Form S-4 or S-8 or any
successor or similar form and other than pursuant to Section 2.1), whether or
not for sale for its own account, it will each such time give prompt written
notice to all holders of Warrants or Registrable Securities of its intention to
do so and of such holders' rights under this Section 2.2. Upon the written
request of any such holder made within 30 days after the receipt of any such
notice (which request shall specify the Registrable Securities intended to be
disposed of by such holder and the intended method of disposition thereof), the
Company will use
-3-
<PAGE> 4
its best efforts to effect the registration under the Securities Act of all
Registrable Securities which the Company has been so requested to register by
the holders thereof, provided that if, at any time after giving written notice
of its intention to register any securities and prior to the effective date of
the registration statement filed in connection with such registration, the
Company shall determine for any reason not to register or to delay registration
of such securities, the Company may, at its election, give written notice of
such determination to each holder of Warrants or Registrable Securities and,
thereupon, (i) in the case of a determination not to register, shall be
relieved of its obligation to register any Registrable Securities in connection
with such registration (but not from its obligation to pay the Registration
Expenses in connection therewith), without prejudice, however, to the rights of
any holder or holders of Warrants or Registrable Securities entitled to do so
to request that such registration be effected as a registration under Section
2.1, and (ii) in the case of a determination to delay registering, shall be
permitted to delay registering any Registrable Securities, for the same period
as the delay in registering such other securities. No registration effected
under this Section 2.2 shall be deemed to have been effected pursuant to
Section 2.1 or shall relieve the Company of its obligation to effect a
registration upon request under Section 2.1. The Company will pay all
Registration Expenses in connection with each registration of Registrable
Securities requested pursuant to this Section 2.2.
(b) Priority in Incidental Registrations. If (i) a
registration pursuant to this Section 2.2 involves an underwritten offering of
the securities so being registered, whether or not for sale for the account of
the Company, to be distributed (on a firm commitment basis) by or through one
or more underwriters of recognized standing under underwriting terms
appropriate for such a transaction, (ii) the Registrable Securities so
requested to be registered for sale are not also to be included in such
underwritten offering (because the Company has not been requested so to include
such Registrable Securities pursuant to Section 2.4 (b), or if so requested, is
not obligated to do so under Section 2.4 (b)), and (iii) the managing
underwriter of such underwritten offering shall inform the Company and the
holders of Warrants or Registrable Securities requesting such registration by
letter of its belief that the number of securities requested to be included in
such registration exceeds the number which can be sold in (or during the time
of) such offering, then the Company may include all securities proposed by the
Company to be sold for its own account and may decrease the number of
Registrable Securities and other securities of the Company so proposed to be
sold and so requested to be included in such registration (pro rata among the
holders thereof on the basis of the percentage of the securities of the Company
held by such holders) to the extent necessary to reduce the number of
securities to be included in the registration to the level recommended by the
managing underwriter, provided that no holder of Common Stock whose exercise of
a demand registration right caused the filing of a registration statement shall
be required to reduce the number of shares included in such registration by
such holder.
-4-
<PAGE> 5
2.3. Registration Procedures.
(a) Company Procedures. If and whenever the Company is
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act as provided in Sections 2.1 and 2.2, the
Company will as expeditiously as possible:
(i) prepare and (as soon thereafter as possible
or in any event no later than 60 days after the end of the period
within which requests for registration may be given to the Company)
file with the Commission the requisite registration statement to
effect such registration and thereafter use its best efforts to cause
such registration statement to become effective, provided that the
Company may discontinue any registration of its securities which are
not Registrable Securities (and, under the circumstances specified in
Section 2.2(a), its securities which are Registrable Securities) at
any time prior to the effective date of the registration statement
relating thereto;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep
such registration statement effective, to permit continuous resales
thereunder by the holders of Registrable Securities, and to comply
with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement
until such time as all of such securities have been disposed of in
accordance with the intended methods of disposition by the seller or
sellers thereof set forth in such registration statement;
(iii) furnish to each seller of Registrable
Securities covered by such registration statement such number of
conformed copies of such registration statement and of each such
amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus contained in such
registration statement (including each preliminary prospectus and any
summary prospectus) and any other prospectus filed under Rule 424
under the Securities Act, in conformity with the requirements of the
Securities Act, and such other documents, as the Designated Holder may
reasonably request;
(iv) use its best efforts to register or qualify
all Registrable Securities and other securities covered by such
registration statement under such other securities or blue sky laws of
such jurisdictions as the Designated Holder shall reasonably request,
to keep such registration or qualification in effect for so long as
such registration statement remains in effect, and take any other
action which may be reasonably necessary or advisable to enable each
seller to consummate the disposition in such jurisdictions of the
securities owned by such seller, except that the Company shall not for
any such purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it would not but for
the requirements of this subdivision (iv) be obligated to be so
qualified or to consent to general service of process in any such
jurisdiction;
-5-
<PAGE> 6
(v) use its best efforts to cause all Registrable
Securities covered by such 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;
(vi) furnish to the Designated Holder a signed
counterpart, addressed to each seller of Registrable Securities, the
Designated Holder and any underwriters (or, if not so addressed,
explicitly stating that such parties may rely thereupon) of:
(x) an opinion of counsel for the
Company, dated the effective date of such registration
statement (and, if such registration includes an underwritten
public offering, dated the date of the closing under the
underwriting agreement), reasonably satisfactory in form and
substance to the Designated Holder, and
(y) a "comfort" letter, dated the
effective date of such registration statement (and, if such
registration includes an underwritten public offering, dated
the date of the closing under the underwriting agreement),
signed by the independent public accountants who have
certified the Company's financial statements included in such
registration statement,
covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in
the case of the accountants' letter, with respect to events subsequent
to the date of such financial statements, as are customarily covered
in opinions of issuer's counsel and in accountants' letters delivered
to the underwriters in underwritten public offerings of securities
and, in the case of the accountants' letter, such other financial
matters, and, in the case of the legal opinion, such other legal
matters, as the Designated Holder may reasonably request;
(vii) notify the Designated Holder at any time when
a prospectus relating thereto is required to be delivered under the
Securities Act, upon discovery that, or upon the happening of any
event as a result of which, the prospectus included in such
registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which
they were made, and at the request of the Designated Holder promptly
prepare and furnish to the Designated Holder or any seller of
Registrable Securities covered by such registration statement a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall 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 not misleading in the light of the circumstances under which
they were made;
-6-
<PAGE> 7
(viii) otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably practicable,
an earnings statement covering the period of at least twelve months,
but not more than eighteen months, beginning with the first full
calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act, and will furnish to the
Designated Holder and each such seller at least five business days
prior to the filing thereof a copy of any amendment or supplement to
such registration statement or prospectus and shall not file any
thereof to which the Designated Holder shall have reasonably objected
on the grounds that such amendment or supplement does not comply in
all material respects with the requirements of the Securities Act or
of the rules or regulations thereunder;
(ix) provide and cause to be maintained a transfer
agent and registrar for all Registrable Securities covered by such
registration statement from and after a date not later than the
effective date of such registration statement;
(x) use its best efforts to cause all Registrable
Securities covered by such registration statement to be listed on any
securities exchange on which any of the Registrable Securities are
then listed or to be quoted by the Nasdaq National Market (or any
successor thereto or any comparable system) on which any of the
Registrable Securities are then quoted; and
(xi) enter into such agreements and take such
other actions as the Designated Holder shall reasonably request in
order to expedite or facilitate the disposition of such Registrable
Securities.
(b) Certain Other Procedures.
(i) The Company may require each seller of
Registrable Securities as to which any registration is being effected
to furnish the Company such information regarding such seller and the
distribution of such securities as the Company may from time to time
reasonably request in writing.
(ii) Notwithstanding anything herein to the
contrary, if the Company determines in its good faith judgment that
the filing of a registration statement otherwise required to be filed
hereunder, or of any supplement or amendment to a registration
statement to keep such registration statement continuously effective
under the Securities Act and usable by holders for resales of
Registrable Securities as would otherwise be required hereunder, would
require disclosure of material information the disclosure of which
would materially adversely affect the Company's ability to consummate
a significant transaction, upon written notice of such determination
by the Company, the obligation of the Company to file, supplement or
amend the registration statement will be suspended
-7-
<PAGE> 8
until the Company notifies the holders in writing that the reasons for
suspension of such obligations on the part of the Company no longer
exist; provided that no such suspension shall last more than 60
consecutive days. In addition, if the Company initiates and is in
good faith pursuing an underwritten primary offering of equity
securities (as defined in Rule 405 under the Securities Act) on a
registration statement (other than any registration by the Company on
Form S-8, or a successor or substantially similar form, of an employee
stock option, stock purchase or compensation plan or of securities
issued or issuable pursuant to any such plan), the obligation
hereunder of the Company to file, supplement or amend a registration
statement shall be suspended during the registration period of such
underwritten primary equity offering; provided that no such suspension
shall last more than 60 consecutive days.
(iii) Each holder of Registrable Securities agrees
by acquisition of such Registrable Securities that (a) upon receipt of
any notice from the Company of the happening of any event of the kind
described in the subdivision (vii) of Section 2.3(a), such holder will
forthwith discontinue such holder's disposition of Registrable
Securities pursuant to the registration statement relating to such
Registrable Securities until such holder's receipt of the copies of
the supplemented or amended prospectus contemplated by subdivision
(vii) of Section 2.3(a) and (b) upon the receipt of any notice from
the Company of any suspension period referred to in subdivision (ii)
of Section 2.3(b), such holder will forthwith discontinue such
holder's disposition of Registrable Securities pursuant to the
registration statement until it is advised in writing by the Company
that the resales under the registration statement may be resumed. The
Company will use its best efforts to take such action as is necessary
to allow resales to so resume; and will promptly notify the holder's
of Registrable Securities when such resales may be resumed.
2.4 Underwritten Offerings.
(a) Requested Underwritten Offerings. If requested by
the underwriters for any underwritten offering of Registrable Securities
pursuant to a registration requested under Section 2.1, the Company will enter
into an underwriting agreement with such underwriters for such offering, such
agreement to be satisfactory in substance and form to the Designated Holder and
the underwriters and to contain such representations and warranties by the
Company and such other terms as are generally prevailing in agreements of this
type, including, without limitation, indemnities to the effect and to the
extent provided in Section 2.6. The holders of Registrable Securities to be
distributed by such underwriters shall be parties to such underwriting
agreement and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such holders of Registrable Securities and that any or all
of the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
holders of Registrable Securities. Any such holder of Registrable Securities
shall not be required to make any representations or warranties to or
agreements with the Company or the underwriters other than the indemnity
-8-
<PAGE> 9
agreement specified in Section 2.6(b) hereof and representations, warranties or
agreements regarding such holder, such holder's Registrable Securities and such
holder's intended method of distribution and any other representation required
by law.
(b) Incidental Underwritten Offerings. If the Company at
any time proposes to register any of its securities under the Securities Act as
contemplated by Section 2.2 and such securities are to be distributed by or
through one or more underwriters, the Company will, if requested by any holder
of Warrants or Registrable Securities as provided in Section 2.2 and subject to
the provisions of Section 2.2(b), arrange for such underwriters to include all
the Registrable Securities to be offered and sold by such holder among the
securities to be distributed by such underwriters. The holders of Registrable
Securities to be distributed by such underwriters shall be parties to the
underwriting agreement between the Company and such underwriters and may, at
their option, require that any or all of the representations and warranties by,
and the other agreements on the part of, the Company to and for the benefit of
such underwriters shall also be made to and for the benefit of such holders of
Registrable Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be
conditions precedent to the obligations of such holders of Registrable
Securities. Any such holder of Registrable Securities shall not be required to
make any representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding
such holder, such holder's Registrable Securities and such holder's intended
method of distribution and any other representation required by law, and other
than the indemnity agreement specified in Section 2.6(b) hereof.
2.5. Preparation; Reasonable Investigation. In connection
with the preparation and filing of each registration statement under the
Securities Act pursuant to this Agreement, the Company will give the Designated
Holder, underwriters for the holders of Registrable Securities registered under
such registration statement, if any, and their respective counsel and
accountants the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give
each of them such access to its books and records and such opportunities to
discuss the business of the Company with its officers and the independent
public accountants who have certified its financial statements as shall be
necessary, in the opinion of such Designated Holder's and such underwriters'
respective counsel, to conduct a reasonable investigation within the meaning of
the Securities Act.
2.6. Indemnification.
(a) Indemnification by the Company. In the event of any
registration of any securities of the Company under the Securities Act, the
Company will, and hereby does, (i) in the case of any registration statement
filed pursuant to Section 2.1 or 2.2 indemnify and hold harmless the seller of
any Registrable Securities covered by such registration statement, its
directors and officers, each other Person who participates as an underwriter in
the offering or sale of such securities and each other Person, if any, who
controls such seller or any such underwriter within
-9-
<PAGE> 10
the meaning of the Securities Act, and (ii) in the case of any registration
statement of the Company, indemnify and hold harmless the Designated Holder,
its directors and officers and each other Person, if any, who controls the
Designated Holder within the meaning of the Securities Act, in each case
against any losses, claims, damages or liabilities, joint or several, to which
such seller or the Designated Holder or any such director or officer or
underwriter or controlling person may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and the Company will reimburse such seller,
the Designated Holder and each such director, officer, underwriter and
controlling person for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; provided that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement in reliance upon
and in conformity with written information furnished to the Company through an
instrument duly executed by such seller or the Designated Holder, as the case
may be, specifically stating that it is for use in the preparation thereof and,
provided further that the Company shall not be liable to any Person who
participates as an underwriter, in the offering or sale of Registrable
Securities or any other Person, if any, who controls such underwriter within
the meaning of the Securities Act, in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding in respect thereof) or
expense arises out of such Person's failure to send or give a copy of the final
prospectus, as the same may be then supplemented or amended, to the Person
asserting an untrue statement or alleged untrue statement or omission or
alleged omission at or prior to the written confirmation of the sale of
Registrable Securities to such Person if such statement or omission was
corrected in such final prospectus. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of such seller
or any such director, officer, underwriter or controlling person and shall
survive the transfer of such securities by such seller.
(b) Indemnification by the Sellers. The Company may
require, as a condition to including any Registrable Securities in any
registration statement filed pursuant to Section 2.3, that the Company shall
have received an undertaking satisfactory to it from the prospective seller of
such securities, to indemnify and hold harmless (in the same manner and to the
same extent as set forth in subdivision (a) of this Section 2.6) the Company,
each director of the Company, each officer of the Company and each other
Person, if any, who controls the Company within the meaning of the Securities
Act, with respect to any statement or alleged statement in or omission or
alleged omission from such registration statement, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, if such
-10-
<PAGE> 11
statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by such seller specifically stating
that it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement. Such indemnity shall remain in full force and effect, regardless
of any investigation made by or on behalf of the Company or any such director,
officer or controlling Person and shall survive the transfer of such securities
by such seller.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding subdivisions of this Section
2.6, such indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party, give written notice to the latter of the
commencement of such action, provided that the failure of any indemnified party
to give notice as provided herein shall not relieve the indemnifying party of
its obligations under the preceding subdivisions of this Section 2.6, except to
the extent that the indemnifying party is actually prejudiced by such failure
to give notice. In case any such action is brought against an indemnified
party, unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may exist in respect
of such claim, the indemnifying party shall be entitled to participate in and
to assume the defense thereof, jointly with any other indemnifying party
similarly notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation.
(d) Other Indemnification. Indemnification similar to
that specified in the preceding subdivisions of this Section 2.6 (with
appropriate modifications) shall be given by the Company and each seller of
Registrable Securities with respect to any required registration or other
qualification of securities under any Federal or state law or regulation of any
governmental authority other than the Securities Act.
(e) Indemnification Payments. The indemnification
required by this Section 2.6 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense as and when bills are
received or expense, loss, damage or liability is incurred.
2.7. Adjustments Affecting Registrable Securities. The
Company will not effect or permit to occur any combination or subdivision of
shares which would have a material adverse effect upon the ability of the
holders of Registrable Securities or Warrants therefor to include such
Registrable Securities in any registration of its securities contemplated by
this Section 2 or the
-11-
<PAGE> 12
marketability of such Registrable Securities under any such registration,
whether by materially increasing or decreasing the price per share of such
Registrable Securities or otherwise.
2.8 Granting of Registration Rights. The Company shall
not, without the prior written consent of the Majority Holders, grant any right
to any other person to register any shares of capital stock or other securities
of the Company if such right could reasonably be expected to conflict with, or
be superior to the rights of the holders of Registrable Securities under, this
Agreement, unless the holders of Registrable Securities are granted the same
right as is granted to such other person.
3. Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
Common Stock: As defined in Section 1.
Commission: The Securities and Exchange Commission or any
other Federal agency at the time administering the Securities Act.
Company: As defined in the introductory paragraph of this
Agreement.
Designated Holder: With respect to any registration of
Registrable Securities by the Company pursuant to Section 2, a holder
of Registrable Securities (or Warrants therefor) appointed by the
Requisite Holders to act as agent for all holders of Registrable
Securities to be registered (or Warrants therefor), with written
notice of such appointment provided to the Company. The Designated
Holder shall be entitled to indemnification by such other holders of
Registrable Securities (or Warrants therefor).
Exchange Act: The Securities Exchange Act of 1934, or any
similar Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Securities Exchange Act of
1934 shall include a reference to the comparable section, if any, of
any such similar Federal statute.
Majority Holders: As defined in Section 1.
Person: A corporation, an association, a partnership, a
business, an individual, a governmental or political subdivision
thereof or a governmental agency.
Purchase Agreement: As defined in Section 1.
Purchasers: As defined in the introductory paragraph of this
Agreement.
-12-
<PAGE> 13
Registrable Securities: (a) Any shares of Common Stock issued
or issuable upon exercise of any of the Warrants and (b) any
securities issued or issuable with respect to any such Common Stock by
way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or
other reorganization or otherwise. As to any particular Registrable
Securities, once issued such securities shall cease to be Registrable
Securities when (a) a registration statement with respect to the sale
of such securities shall have become effective under the Securities
Act and such securities shall have been disposed of in accordance with
such registration statement, (b) they shall have been distributed to
the public pursuant to Rule 144 (or any successor provision) under the
Securities Act, (c) they shall have been otherwise transferred, new
certificates for them not bearing a legend restricting further
transfer shall have been delivered by the Company and subsequent
disposition of them shall not require registration or qualification of
them under the Securities Act or any similar state law then in force,
or (d) they shall have ceased to be outstanding.
Registration Expenses: All expenses incident to the Company's
performance of or compliance with Section 2, including, without
limitation, all registration, filing and National Association of
Securities Dealers fees, all fees and expenses of complying with
securities or blue sky laws, all word processing, duplicating and
printing expenses, messenger and delivery expenses, the fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and
compliance, the fees and disbursements incurred by the holders of
Registrable Securities to be registered and the holders of Warrants
therefor (but excluding the fees and disbursements of (a) any
accountants retained by any such holders and (b) any counsel other
than counsel retained by the Designated Holder on behalf of all such
holders) and any fees and disbursements of underwriters customarily
paid by issuers or sellers of securities, but excluding underwriting
discounts and commissions and transfer taxes, if any.
Requisite Holders: With respect to any registration of
Registrable Securities by the Company pursuant to Section 2, any
holder or holders of 51% (by number of shares) of the Registrable
Securities to be so registered or of Warrants for such Registrable
Securities.
Securities Act: The Securities Act of 1933, or any similar
Federal statute, and the rules and regulations of the Commission
thereunder, all as of the same shall be in effect at the time.
References to a particular section of the Securities Act of 1933 shall
include a reference to the comparable section, if any, of any such
similar Federal Statute.
4. Rule 144: If the Company shall have filed a registration
statement pursuant to the requirements of Section 12 of the Exchange Act or a
registration statement pursuant to the requirements of the Securities Act, the
Company will file the reports required to be filed by it under the Securities
Act and the Exchange Act and the rules and regulations adopted by the
-13-
<PAGE> 14
Commission thereunder (or, if the Company is not required to file such reports,
will, upon the request of any holder of Warrants or Registrable Securities,
make publicly available other information) and will take such further action as
any holder of Warrants or Registrable Securities may reasonably request, all to
the extent required from time to time to enable such holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (a) Rule 144 under the Securities Act, as such
Rule may be amended from time to time or (b) any similar rule or regulation
hereafter adopted by the Commission. Upon the request of any holder of
Warrants or Registrable Securities, the Company will deliver to such holder a
written statement as to whether it has complied with such requirements.
5. Amendments and Waivers. This Agreement may be amended and the
Company may take any action herein prohibited or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the Majority
Holders. Each holder of any Warrants or Registrable Securities at the time or
thereafter outstanding shall be bound by any consent authorized by this Section
5, whether or not such Registrable Securities shall have been marked to
indicate such consent.
6. Nominees for Beneficial Owners. In the event that any
Registrable Securities are held by a nominee for the beneficial owner thereof,
the beneficial owner thereof may, at its election, be treated as the holder of
such Warrants or Registrable Securities for purposes of any request or other
action by any holder or holders of Warrants or Registrable Securities pursuant
to this Agreement or any determination of any number or percentage of shares of
Warrants or Registrable Securities held by any holder or holders of Warrants or
Registrable Securities contemplated by this Agreement. If the beneficial owner
of any Warrants or Registrable Securities so elects, the Company may require
assurances reasonably satisfactory to it of such owner's beneficial ownership
of such Warrants or Registrable Securities.
7. Notices. All communications provided for hereunder shall be
sent by first-class mail and (a) if addressed to a party other than the
Company, addressed to such party in the manner set forth in the Purchase
Agreement, or at such other address as such party shall have furnished to the
Company in writing, or (b) if addressed to the Company, at 2727 Allen Parkway,
Suite 760, Houston, Texas 77019, Attention: Chief Financial Officer, or at such
other address, or to the attention of such other officer, as the Company shall
have furnished to each holder of Warrants or Registrable Securities at the time
outstanding; provided, however, that any such communication to the Company may
also, at the option of any of the parties hereunder, be either delivered to the
Company at its address set forth above or to any officer of the Company.
8. Assignment. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto and their respective
successors and assigns. In addition, and whether or not any express assignment
shall have been made, the provisions of this Agreement which are for the
benefit of the parties hereto other than the Company shall also be for the
benefit of and enforceable by any subsequent holder of any Warrants or
Registrable Securities, subject to the provisions respecting the minimum
numbers or percentages of shares of Warrants or
-14-
<PAGE> 15
Registrable Securities required in order to be entitled to certain rights, or
to take certain actions contained herein.
9. Descriptive Headings. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only and
shall not limit or otherwise affect the meaning hereof.
10. Specific Performance. The parties hereto recognize and agree
that money damages may be insufficient to compensate the holders of any
Warrants or Registrable Securities for breaches by the Company of the terms
hereof and, consequently, that the equitable remedy of specific performance of
the terms hereof will be available in the event of any such breach.
11. Governing Law. This Agreement shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the
laws of the State of New York. In the event a final judgment by a court of
competent jurisdiction holds that such choice of New York law is unenforceable,
then this Agreement shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the laws of the State of Louisiana.
12. Counterparts. This Agreement may be executed simultaneously
in any number of counterparts, each of which shall be deemed an original, but
all such counterparts shall together constitute one and the same instrument.
-15-
<PAGE> 16
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
AIR-CURE TECHNOLOGIES, INC.
By:
------------------------------------
Name:
Title:
INTERNATIONAL MEZZANINE CAPITAL, B.V.
By:
------------------------------------
Sjaak Schouten
Authorized Officer
FIRST COMMERCE CORPORATION
By:
------------------------------------
Ashton J. Ryan, Jr.
Senior Executive Vice President
-16-
<PAGE> 1
EXHIBIT 4.2
WARRANT
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT
BE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SUCH ACT.
THIS WARRANT IS SUBJECT TO THE RIGHTS AND RESTRICTIONS, INCLUDING
CERTAIN RESTRICTIONS ON TRANSFER, CONTAINED IN A SUBORDINATED NOTE AND
WARRANT PURCHASE AGREEMENT AND A REGISTRATION RIGHTS AGREEMENT, EACH
DATED AS OF NOVEMBER 18, 1996 (A COPY OF EACH OF WHICH IS ON FILE WITH
THE SECRETARY OF THE ISSUER HEREOF).
AIR-CURE TECHNOLOGIES, INC.
COMMON STOCK PURCHASE WARRANT
EXPIRING NOVEMBER 18, 2003
HOUSTON, TEXAS
NO. 1 NOVEMBER 18, 1996
AIR-CURE TECHNOLOGIES, INC. (the "COMPANY"), a Delaware
corporation, for value received, hereby certifies that International Mezzanine
Capital, B.V. or its registered assigns is entitled to purchase from the
Company 1,525,333 duly authorized, validly issued, fully paid and nonassessable
shares of the Company's Common Stock, par value $0.001 per share (the "ORIGINAL
COMMON STOCK"), at an initial exercise price per share of $5.10, at any time or
from time to time after the date hereof and prior to 5:00 p.m., New York City
time, on November 18, 2003, all subject to the terms, conditions and
adjustments set forth below in this Warrant.
<PAGE> 2
This Warrant is one of the Common Stock Purchase Warrants
expiring November 18, 2003 (the "WARRANTS", such term to include all Warrants
issued in substitution therefor) originally issued in connection with the issue
and sale by the Company of the Company's Senior Subordinated Notes Due November
18, 2003, in the aggregate principal amount of $15,000,000 (the "NOTES")
pursuant to that certain Subordinated Note and Warrant Purchase Agreement dated
as of November 18, 1996 (the "PURCHASE AGREEMENT") among the Company,
International Mezzanine Capital, B.V. and First Commerce Corporation
(collectively, the "PURCHASERS"). The Warrants originally so issued evidence
rights to purchase an aggregate of 1,760,000 shares of Original Common Stock,
subject to adjustment as provided herein. The term "NOTES" as used herein
shall include each Note delivered pursuant to any provision of the Purchase
Agreement and each Note delivered in substitution or exchange for any such Note
pursuant to any such provision. Certain capitalized terms used in this Warrant
are defined in section 13.
1. Exercise of Warrant.
1A. Manner of Exercise. This Warrant may be exercised by
the holder hereof, in whole or in part, during normal business hours on any
Business Day on or after the date hereof to and including November 18, 2003, by
surrender of this Warrant, with the form of subscription at the end hereof (or
a reasonable facsimile thereof) duly executed by such holder, to the Company at
its principal office (or, if such exercise shall be in connection with an
underwritten public offering of shares of Common Stock (or Other Securities)
subject to this Warrant, at the location at which the underwriters shall have
agreed to accept delivery thereof), accompanied by payment, in cash or by
certified or official bank check payable to the order of the Company, in the
amount obtained by multiplying (a) the number of shares of Original Common
Stock (without giving effect to any adjustment therein) designated in such form
of subscription by (b) $5.10. The number of duly authorized, validly issued,
fully paid and nonassessable shares of Common Stock which the holder of this
Warrant shall be entitled to receive upon each exercise hereof shall be
determined by multiplying the number of shares of Common Stock which would
otherwise (but for the provisions of section 2) be issuable upon such exercise,
as designated by the holder hereof pursuant to this section 1A, by a fraction
of which (a) the numerator is $5.10 and (b) the denominator is the Exercise
Price in effect on the date of such exercise. The "EXERCISE PRICE" shall
initially be $5.10 per share, shall be adjusted and readjusted from time to
time as provided in section 2 and, as so adjusted and readjusted, shall remain
in effect until a further adjustment or readjustment thereof is required by
section 2.
1B. When Exercise Effective. Each exercise of this
Warrant shall be deemed to have been effected and the Exercise Price shall be
determined immediately prior to the close of business on the Business Day on
which this Warrant shall have been surrendered to the Company as provided in
section 1A, and at such time the person or persons in whose name or names any
certificate or certificates for shares of Original Common Stock (or Other
Securities) shall be issuable upon such exercise as provided in section 1C
shall be deemed to have become the holder or holders of record thereof.
-2-
<PAGE> 3
1C. Delivery of Stock Certificates, etc. Promptly after
the exercise of this Warrant, in whole or in part, and in any event within ten
Business Days thereafter (unless such exercise shall be in connection with an
underwritten public offering of shares of Common Stock (or Other Securities)
subject to this Warrant, in which event concurrently with such exercise), the
Company at its expense will cause to be issued in the name of and delivered to
the holder hereof or, subject to section 8, as such holder may direct,
(a) a certificate or certificates for the number
of duly authorized, validly issued, fully paid and nonassessable
shares of Common Stock (or Other Securities) to which such holder
shall be entitled upon such exercise, and
(b) in case such exercise is in part only, a new
Warrant or Warrants of like tenor, specifying the aggregate on the
face or faces thereof the number of shares of Common Stock equal to
the number of such shares specified on the face of this Warrant minus
the number of such shares designated by the holder upon such exercise
as provided in section 1A.
1D. Company to Reaffirm Obligations. The Company will,
at the time of or at any time after each exercise of this Warrant, upon the
request of the holder hereof or of any shares of Common Stock (or Other
Securities) issued upon such exercise, acknowledge in writing its continuing
obligation to afford to such holder all rights to which such holder shall
continue to be entitled after such exercise in accordance with the terms of
this Warrant, provided that if any such holder shall fail to make any such
request, the failure shall not affect the continuing obligation of the Company
to afford such rights to such holder.
1E. Fractional Shares. No fractional shares shall be
issued upon exercise of this Warrant and no payment or adjustment shall be made
upon any exercise on account of any cash dividends (except as provided in
section 2B) on the Common Stock or Other Securities issued upon such
conversion. If any fractional interest in a share of Common Stock would,
except for the provisions of the first sentence of this section 1E, be
deliverable upon the exercise of this Warrant, the Company shall, in lieu of
delivering the fractional share therefor, pay to the holder exercising this
Warrant an amount in cash equal to the Market Price of such fractional
interest.
1F. Cashless Exercise. As an alternative to exercise of
this Warrant by payment in cash (or by certified or official bank check), as
provided above in section 1A, the holder of this Warrant may, at its option,
exercise its right to purchase some or all of the shares of Common Stock
pursuant to this Warrant, by receiving the number of shares of Common Stock
subscribed pursuant to this Warrant in exchange for a reduction in the
principal amount then owed to such holder under the Notes held by such holder
in an amount equal to the applicable cash Exercise Price times the number of
shares of Common Stock to be received by such holder as a result of such
cashless Warrant exercise (a "CASHLESS EXCHANGE").
-3-
<PAGE> 4
2. Protection Against Dilution or Other Impairment of Rights;
Adjustment of Exercise Price.
2A. Issuance of Additional Shares of Common Stock. In
case the Company, at any time or from time to time after November 18, 1996 (the
"INITIAL DATE"), shall issue or sell Additional Shares of Common Stock
(including Additional Shares of Common Stock deemed to be issued pursuant to
section 2C or 2D) without consideration or for a consideration per share
(determined pursuant to section 2E) less than the greater of (i) the Exercise
Price or (ii) (x) with respect to any issuance or sale of Additional Shares of
Common Stock to any Person (other than an Affiliate of the Company) that is not
made pursuant to a Qualified Offering, 90% of the Market Price and (y) with
respect to any other issuances or sales of Additional Shares of Common Stock,
the Market Price in effect, in each case, on the date of and immediately prior
to such issue or sale, then, and in each such case, subject to section 2H, the
Exercise Price shall be reduced, concurrently with such issue or sale, to a
price (calculated to the nearest .001 of a cent) determined by multiplying such
Exercise Price by a fraction,
(a) the numerator of which shall be (i) the number of
shares of Common Stock outstanding immediately prior to such issue or
sale plus (ii) the number of shares of Common Stock which the
aggregate consideration received by the Company for the total number
of such Additional Shares of Common Stock so issued or sold would
purchase at the greater of such Market Price or such Exercise Price,
and
(b) the denominator of which shall be the number of
shares of Common Stock outstanding immediately after such issue or
sale,
provided that, for the purposes of this section 2A, (x) immediately after any
Additional Shares of Common Stock are deemed to have been issued pursuant to
section 2C or 2D, such Additional Shares shall be deemed to be outstanding, and
(y) treasury shares shall not be deemed to be outstanding.
2B. Extraordinary Dividends and Distributions. In case
the Company at any time or from time to time after the date hereof shall
declare, order, pay or make a dividend or other distribution (including,
without limitation, any distribution of other or additional stock or other
securities or property or Options by way of dividend or spin-off,
reclassification, recapitalization or similar corporate rearrangement and any
redemption or acquisition of any such stock or Options) on the Common Stock,
other than (a) a dividend payable in Additional Shares of Common Stock or in
Options for Common Stock or (b) a dividend permitted to be made under the
Dividend Restrictions, then, and in each such case, subject to section 2H, the
Exercise Price in effect immediately prior to the close of business on the
record date fixed for the determination of holders of any class of securities
entitled to receive such dividend or distribution shall be reduced, effective
as of the close of business on such record date, to a price (calculated to the
nearest .001 of a cent) determined by multiplying such Exercise Price by a
fraction,
-4-
<PAGE> 5
(i) the numerator of which shall be the Market
Price in effect on such record date less (x) the amount of such
dividend or distribution (if payable in cash) or (y) the value of such
dividend or distribution, as determined in good faith by the Board of
Directors of the Company (if payable in securities or other property),
in each case as applicable to one share of Common Stock, and
(ii) the denominator of which shall be such
Market Price.
2C. Treatment of Options and Convertible Securities. In
case the Company, at any time or from time to time after the date hereof, shall
issue, sell, grant or assume, or shall fix a record date for the determination
of holders of any class of securities entitled to receive, any Options or
Convertible Securities, whether or not such Options or the right to convert or
exchange any such Convertible Securities are immediately exercisable, then, and
in each such case, the maximum number of Additional Shares of Common Stock (as
set forth in the instrument relating thereto, without regard to any provisions
contained therein for a subsequent adjustment of such number) issuable upon the
exercise of such Options or, in the case of Convertible Securities and Options
therefor, issuable upon the conversion or exchange of such Convertible
Securities (or the exercise of such Options for Convertible Securities and
subsequent conversion or exchange of the Convertible Securities issued), shall
be deemed to be Additional Shares of Common Stock issued as of the time of such
issue, sale, grant or assumption or, in case such a record date shall have been
fixed, as of the close of business on such record date, provided, that such
Additional Shares of Common Stock shall not be deemed to have been issued
unless the consideration per share (determined pursuant to section 2E) of such
shares would be less than the greater of the Exercise Price or the Market Price
in effect, in each case, on the date of and immediately prior to such issue,
sale, grant or assumption or immediately prior to the close of business on such
record date or, if the Common Stock trades on an ex-dividend basis, on the date
prior to the commencement of ex-dividend trading, as the case may be, and
provided, further, that in any such case in which Additional Shares of Common
Stock are deemed to be issued,
(a) if an adjustment of the Exercise Price shall be made
upon the fixing of a record date as referred to in the first sentence
of this section 2C, no further adjustment of the Exercise Price shall
be made as a result of the subsequent issue or sale of any Options or
Convertible Securities for the purpose of which such record date was
set;
(b) no further adjustment of the Exercise Price shall be
made upon the subsequent issue or sale of Additional Shares of Common
Stock or Convertible Securities upon the exercise of such Options or
the conversion or exchange of such Convertible Securities;
(c) if such Options or Convertible Securities by their
terms provide, with the passage of time or otherwise, for any change
in the consideration payable to the Company, or change in the number
of Additional Shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof (by change of rate or otherwise), the
Exercise Price computed upon the original issue, sale, grant or
assumption thereof (or upon the occurrence
-5-
<PAGE> 6
of the record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such change becoming
effective, be recomputed to reflect such change insofar as it affects
such Options, or the rights of conversion or exchange under such
Convertible Securities, which are outstanding at such time;
(d) upon the expiration of any such Options or of the
rights of conversion or exchange under any such Convertible Securities
which shall not have been exercised (or upon purchase by the Company
and cancellation or retirement of any such Options which shall not
have been exercised or of any such Convertible Securities the rights
of conversion or exchange under which shall not have been exercised),
the Exercise Price computed upon the original issue, sale, grant or
assumption thereof (or upon the occurrence of the record date with
respect thereto), and any subsequent adjustments based thereon, shall,
upon such expiration (or such cancellation or retirement, as the case
may be), be recomputed as if:
(i) in the case of Options for Common Stock or in
the case of Convertible Securities, the only Additional Shares
of Common Stock issued or sold (or deemed issued or sold) were
the Additional Shares of Common Stock, if any, actually issued
or sold upon the exercise of such Options or the conversion or
exchange of such Convertible Securities and the consideration
received therefor was (x) an amount equal to (A) the
consideration actually received by the Company for the issue,
sale, grant or assumption of all such Options, whether or not
exercised, plus (B) the consideration actually received by the
Company upon such exercise, minus (C) the consideration paid
by the Company for any purchase of such Options which were not
exercised, or (y) an amount equal to (A) the consideration
actually received by the Company for the issue, sale, grant or
assumption of all such Convertible Securities which were
actually converted or exchanged, plus (B) the additional
consideration, if any, actually received by the Company upon
such conversion or exchange, minus (C) the excess, if any, of
the consideration paid by the Company for any purchase of such
Convertible Securities, the rights of conversion or exchange
under which were not exercised, over an amount that would be
equal to the fair value (as determined in good faith by the
Board of Directors of the Company) of the Convertible
Securities so purchased if such Convertible Securities were
not convertible into or exchangeable for Additional Shares of
Common Stock, and
(ii) in the case of Options for Convertible
Securities, only the Convertible Securities, if any, actually
issued or sold upon the exercise of such Options were issued
at the time of the issue, sale, grant or assumption of such
Options, and the consideration received by the Company for the
Additional Shares of Common Stock deemed to have then been
issued was an amount equal to (x) the consideration actually
received by the Company for the issue, sale, grant or
assumption of all such Options, whether or not exercised, plus
(y) the consideration deemed to have been received by the
Company (pursuant to section 2E) upon the issue or sale of the
Convertible Securities with respect to which such Options were
actually exercised,
-6-
<PAGE> 7
minus (z) the consideration paid by the Company for any
purchase of such Options which were not exercised; and
(e) no readjustment pursuant to subsection (c) or (d)
above shall have the effect of increasing the Exercise Price then in
effect by an amount in excess of the amount of the adjustment thereof
originally made in respect of the issue, sale, grant or assumption of
such Options or Convertible Securities.
2D. Treatment of Stock Dividends, Stock Splits, Etc. In
case the Company, at any time or from time to time after the date hereof, shall
declare or pay any dividend or other distribution on any class of securities of
the Company payable in shares of Common Stock, or shall effect a subdivision of
the outstanding shares of Common Stock into a greater number of shares of
Common Stock (by reclassification or otherwise than by payment of a dividend in
Common Stock), then, and in each such case, Additional Shares of Common Stock
shall be deemed to have been issued (a) in the case of any such dividend or
other distribution, immediately after the close of business on the record date
for the determination of holders of any class of securities entitled to receive
such dividend or other distribution, or (b) in the case of any such
subdivision, at the close of business on the day immediately prior to the day
upon which such corporate action becomes effective.
2E. Computation of Consideration. For the purposes of
this Warrant:
(a) The consideration for the issue or sale of any
Additional Shares of Common Stock or for the issue, sale, grant or
assumption of any Options or Convertible Securities, irrespective of
the accounting treatment of such consideration,
(i) insofar as it consists of cash, shall be
computed as the amount of cash received by the Company, and
insofar as it consists of securities or other property, shall
be computed as of the date immediately preceding such issue,
sale, grant or assumption as the fair value (as determined in
good faith by the Board of Directors of the Company) of such
consideration (or, if such consideration is received for the
issue or sale of Additional Shares of Common Stock and the
Market Price thereof is less than the fair value, as so
determined, of such consideration, then such consideration
shall be computed as the Market Price of such Additional
Shares of Common Stock), in each case without deducting any
expenses paid or incurred by the Company, any commissions or
compensation paid or concessions or discounts allowed to
underwriters, dealers or other performing similar services and
any accrued interest or dividends in connection with such
issue or sale, and
(ii) in case Additional Shares of Common Stock are
issued or sold or Options or Convertible Securities are
issued, sold, granted or assumed together with other stock or
securities or other assets of the Company for a consideration
which covers both, shall be the proportion of such
consideration so received, computed as provided in clause (i)
above, allocable to such Additional Shares of Common Stock
-7-
<PAGE> 8
or Options or Convertible Securities, as the case may be, all
as determined in good faith by the Board of Directors or the
Company.
(b) All Additional Shares of Common Stock, Options or
Convertible Securities issued in payment of any dividend or other
distribution on any class of stock of the Company and all Additional
Shares of Common Stock issued to effect a subdivision of the
outstanding shares of Common Stock into a greater number of shares of
Common Stock (by reclassification or otherwise than by payment of a
dividend in Common Stock) shall be deemed to have been issued without
consideration.
(c) Additional Shares of Common Stock deemed to have been
issued for consideration pursuant to section 2C, relating to Options
and Convertible Securities, shall be deemed to have been issued for a
consideration per share determined by dividing
(i) the total amount, if any, received and
receivable by the Company as consideration for the issue,
sale, grant or assumption of the Options or Convertible
Securities in question, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments
relating thereto, without regard to any provision contained
therein for a subsequent adjustment of such consideration)
payable to the Company upon the exercise in full of such
Options or the conversion or exchange of such Convertible
Securities or, in the case of Options for Convertible
Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible
Securities, in each case computing such consideration as
provided in the foregoing subsection (a),
by
(ii) the maximum number of shares of Common Stock
(as set forth in the instruments relating thereto, without
regard to any provision contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such
Options or the conversion or exchange of such Convertible
Securities.
2F. Adjustments for Combinations, Etc. In case the
outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common Stock,
the Exercise Price in effect immediately prior to such combination or
consolidation shall, concurrently with the effectiveness of such combination or
consolidation, be proportionately increased.
2G. Dilution in Case of Other Securities. In case any
Other Securities shall be issued or sold or shall become subject to issue or
sale upon the conversion or exchange of any stock (or Other Securities) of the
Company (or any issuer of Other Securities or any other Person referred to in
section 2I) or to subscription, purchase or other acquisition pursuant to any
Options issued or granted by the Company (or any such other issuer or Person)
for a consideration such as to dilute,
-8-
<PAGE> 9
on a basis to which the standards established in the other provisions of this
Warrant, the exercise rights granted by this Warrant, then, and in each such
case, the computations, adjustments and readjustments provided for in this
Warrant with respect to the Exercise Price shall be made as nearly as possible
in the manner so provided and applied to determine the amount of Other
Securities from time to time receivable upon the exercise of this Warrant, so
as to protect the holder of this Warrant against the effect of such dilution.
2H. Minimum Adjustment of Exercise Price. If the amount
of any adjustment of the Exercise Price required hereunder would be less than
one percent of the Exercise Price in effect at the time such adjustment is
otherwise so required to be made, such amount shall be carried forward and
adjustment with respect thereto made at the time of and together with any
subsequent adjustment which, together with such amount and any other amount or
amounts so carried forward, shall aggregate at least one percent of such
Exercise Price; provided, that upon the exercise of this Warrant, all
adjustments carried forward and not theretofore made up to and including the
date of such exercise shall be made to the nearest .001 of a cent.
2I. Changes in Common Stock. In case of any capital
reorganization or reclassification or recapitalization of the capital stock of
the Company (other than in the cases referred to in Paragraph 2D) or in case of
the consolidation or merger of the Company with or into another corporation or
other business entity or in case of the sale or transfer of the property of the
Company as an entirety or substantially as an entirety, there shall thereafter
be deliverable upon the exercise of this Warrant or any portion thereof (in
lieu of or in addition to the number of shares of Common Stock theretofore
deliverable) the number of shares of stock or other securities, cash or other
property of any nature whatsoever to which the holder of the number of shares
of Common Stock which would otherwise have been deliverable upon the exercise
of this Warrant or any portion thereof at the time would have been entitled
upon such capital reorganization, reclassification or recapitalization of
capital stock, consolidation, merger or sale, and at the same aggregate
Exercise Price. Prior to and as a condition of the consummation of any
transaction described in the preceding sentence, the Company shall make
appropriate, written adjustments in the application of the provisions herein
set forth satisfactory to the holders of the Warrants entitled to purchase not
less than a majority of the shares of Common Stock issuable upon the exercise
thereof with respect to the rights and interests of the holders of the Warrants
so that the provisions set forth herein shall thereafter be applicable, as
nearly as possible, in relation to any shares of stock or other securities or
other property thereafter deliverable upon exercise of this Warrant. Any such
adjustment shall be made by and set forth in a supplemental agreement between
the Company and the successor entity and be approved by the Required Holders.
Subject to such adjustments, at the time of such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder. The foregoing provisions of this
Section shall similarly apply to successive reorganizations, reclassifications,
mergers, consolidations or disposition of assets.
-9-
<PAGE> 10
2J. Certain Issues Excepted. Anything herein to the
contrary notwithstanding, the Company shall not be required to make any
adjustment of the Exercise Price in the case of (a) the issuance of the
Warrants, (b) the issuance of shares of Common Stock issuable upon exercise of
the Warrants, (c) the issuance of Options pursuant to the Company's 1990 Stock
Option Plan or Directors' Stock Option Plan as in effect at the date of
original issuance of this Warrant and as may be hereafter amended by any
amendment approved by holders of securities representing a majority of the
securities voted on such amendment the beneficial owners (as that term is
defined in Rule 16a-1 under the Exchange Act) of which securities are not then
directors or officers of the Company or any of its subsidiaries (collectively,
the "Option Plans"), and (d) the issuance of Common Stock pursuant to (x) any
exercise of Options granted under either of the Option Plans or (y) the
Company's Employee Stock Purchase Plan as in effect at the date of original
issuance of this Warrant and as may be hereafter amended by any amendment
approved by holders of securities representing a majority of the securities
voted on such amendment the beneficial owners (as that term is defined in Rule
16a-1 under the Exchange Act) of which securities are not then directors or
officers of the Company or any of its subsidiaries.
2K. Notice of Adjustment. Upon the occurrence of any
event requiring an adjustment of the Exercise Price, then and in each such case
the Company shall promptly deliver to the holder of this Warrant an Officer's
Certificate stating the Exercise Price resulting from such adjustment and the
increase or decrease, if any, in the number of shares of Common Stock issuable
upon the exercise of this Warrant, setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is based. The
Company shall obtain and deliver to the holder of this Warrant the opinion of
Arthur Andersen LLP (or any other firm of independent public accountants of
recognized national standing selected by the Company and approved by such
holder holders making such request) within 30 days of a written request by the
holder of this Warrant therefor, which opinion shall confirm the statements in
the most recent Officer's Certificate delivered under this Section 2K. The
costs associated with responding to such a request for an opinion shall be
borne by the Company; provided, however, that the holder of this Warrant shall
pay the fees and expenses of the independent public accountants in rendering
any opinion required under this Section 2K in response to any such request by
such holder (other than the first such request made by such holder under this
Section 2K) if the opinion of the independent public accountants in response to
the request confirms the accuracy of all of the statements in the applicable
Officer's Certificate.
2L. Other Notices. In case at any time:
(a) the Company shall declare to the holders of Common
Stock any dividend other than a regular periodic cash dividend or any
periodic cash dividend in excess of 115% of the cash dividend for the
comparable fiscal period in the immediately preceding fiscal year;
-10-
<PAGE> 11
(b) the Company shall declare or pay any dividend upon
Common Stock payable in stock or make any special dividend or other
distribution (other than regular cash dividends) to the holders of
Common Stock;
(c) the Company shall offer for subscription pro rata to
the holders of Common Stock any additional shares of stock of any
class or other rights;
(d) there shall be any capital reorganization, or
reclassification of the capital stock of the Company, or consolidation
or merger of the Company with, or sale of all or substantially all of
its assets to, another corporation or other entity;
(e) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company;
(f) there shall be made any tender offer for any shares
of capital stock of the Company; or
(g) there shall be any other Transaction;
then, in any one or more of such cases, the Company shall give to the holder of
this Warrant (i) at least 15 days prior to any event referred to in subsection
(a) or (b) above, at least 30 days prior to any event referred to in subsection
(c), (d) or (e) above, and within five days after it has knowledge of any
pending tender offer or other Transaction, written notice of the date on which
the books of the Company shall close or a record shall be taken for such
dividend, distribution or subscription rights or for determining rights to vote
in respect of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation, winding-up or Transaction or the date by which
shareholders must tender shares in any tender offer and (ii) in the case of any
such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation, winding-up or tender offer or Transaction known to
the Company, at least 30 days prior written notice of the date (or, if not then
known, a reasonable approximation thereof by the Company) when the same shall
take place. Such notice in accordance with the foregoing clause (i) shall also
specify, in the case of any such dividend, distribution or subscription rights,
the date on which the holders of Common Stock shall be entitled thereto, and
such notice in accordance with the foregoing clause (ii) shall also specify the
date on which the holders of Common Stock shall be entitled to exchange their
Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, winding-up, tender offer or Transaction, as the case may be.
Such notice shall also state that the action in question or the record date is
subject to the effectiveness of a registration statement under the Securities
Act or to a favorable vote of security holders, if either is required.
2M. Certain Events. If any event occurs as to which, in
the good faith judgment of the Board of Directors of the Company, the other
provisions of this Warrant are not strictly applicable or if strictly
applicable would not fairly protect the exercise rights of the holders of the
-11-
<PAGE> 12
Warrants in accordance with the essential intent and principles of such
provisions, then the Board of Directors of the Company shall appoint its
regular independent auditors or another firm of independent public accountants
of recognized national standing which shall give their opinion upon the
adjustment, if any, on a basis consistent with such essential intent and
principles, necessary to preserve, without dilution, the rights of the holders
of the Warrants. Upon receipt of such opinion, the Board of Directors of the
Company shall forthwith make the adjustments described therein; provided, that
no such adjustment shall have the effect of increasing the Exercise Price as
otherwise determined pursuant to this Warrant. The Company may make such
reductions in the Exercise Price as it deems advisable, including any
reductions necessary to ensure that any event treated for federal income tax
purposes as a distribution of stock or stock rights not be taxable to
recipients.
2N. Prohibition of Certain Actions. The Company will
not, by amendment of its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith assist in the
carrying out of all the provisions of this Warrant and in the taking of all
such action as may reasonably be requested by the holder of this Warrant in
order to protect the exercise privilege of the holder of this Warrant against
dilution or other impairment, consistent with the tenor and purpose of this
Warrant. Without limiting the generality of the foregoing, the Company (a)
will not increase the par value of any shares of Common Stock receivable upon
the exercise of this Warrant above the Exercise Price then in effect, (b) will
take all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of all Warrants from time to time outstanding,
(c) will not take any action which results in any adjustment of the Exercise
Price if the total number of shares of Common Stock or Other Securities
issuable after the action upon the exercise of all of the Warrants would exceed
the total number of shares of Common Stock or Other Securities then authorized
by the Company's certificate of incorporation and available for the purpose of
issue upon such conversion, (d) will not issue any capital stock of any class
which has the right to more than one vote per share and (e) will not issue any
capital stock of any class which is preferred as to dividends or as to the
distribution of assets upon voluntary or involuntary dissolution, liquidation
or winding-up, unless the rights of the holders thereof shall be limited to a
fixed sum or percentage (or floating rate related to market yields) of par
value or stated value in respect of participation in dividends and a fixed sum
or percentage of par value or stated value in any such distribution of assets.
3. Stock to be Reserved. The Company will at all times reserve
and keep available out of the authorized Common Stock, solely for the purpose
of issue upon the exercise of the Warrants as herein provided, such number of
shares of Common Stock as shall then be issuable upon the exercise of all
outstanding Warrants and the Company will maintain at all times all other
rights and privileges sufficient to enable it to fulfill all its obligations
hereunder. The Company covenants that all shares of Common Stock which shall
be so issuable shall, upon issuance, be duly authorized, validly issued, fully
paid and nonassessable, free from preemptive or similar rights on the part of
the holders of any shares of capital stock or securities of the Company or any
other Person, and free
-12-
<PAGE> 13
from all taxes, liens and charges with respect to the issue thereof (not
including any income taxes payable by the holders of Warrants being exercised
in respect of gains thereon), and the Exercise Price will be credited to the
capital and surplus of the Company. The Company will take all such action as
may be necessary to assure that such shares of Common Stock may be so issued
without violation of any applicable law or regulation, or of any applicable
requirements of the National Association of Securities Dealers, Inc. and of any
domestic securities exchange upon which the Common Stock may be listed.
4. Registration of Common Stock. If any shares of Common Stock
required to be reserved for purposes of the exercise of Warrants require
registration with or approval of any governmental authority under any Federal
or State law (other than the Securities Act, registration under which is
governed by the Registration Rights Agreement), before such shares may be
issued upon the exercise thereof, the Company will, at its expense and as
expeditiously as possible, use its best efforts to cause such shares to be duly
registered or approved, as the case may be. Shares of Common Stock issuable
upon exercise of the Warrants shall be registered by the Company under the
Securities Act or similar statute then in force if required by the Registration
Rights Agreement and subject to the conditions stated in such agreement. At
any such time as the Common Stock is listed on any national securities exchange
or quoted by the Nasdaq National Market or any successor thereto or any
comparable system, the Company will, at its expense, obtain promptly and
maintain the approval for listing on each such exchange or quoting by the
Nasdaq National Market or such successor thereto or comparable system, upon
official notice of issuance, the shares of Common Stock issuable upon exercise
of the then outstanding Warrants and maintain the listing or quoting of such
shares after their issuance so long as the Common Stock is so listed or quoted;
and the Company will also cause to be so listed or quoted, will register under
the Exchange Act and will maintain such listing or quoting of, any Other
Securities that at any time are issuable upon exercise of the Warrants, if and
at the time that any securities of the same class shall be listed on such
national securities exchange by the Company.
5. Issue Tax. The issuance of certificates for shares of Common
Stock upon exercise of this Warrant shall be made without charge to the holders
hereof for any issuance tax in respect thereto.
6. Closing of Books. The Company will at no time close its
transfer books against the transfer of any Warrant or of any share of Common
Stock issued or issuable upon the exercise of any Warrant in any manner which
interferes with the timely exercise of such Warrant.
7. No Rights or Liabilities as Stockholders. This Warrant shall
not entitle the holder thereof to any of the rights of a stockholder of the
Company, except as expressly contemplated herein. No provision of this
Warrant, in the absence of the actual exercise of such Warrant and receipt by
the holder thereof of Common Stock issuable upon such conversion, shall give
rise to any liability on the part of such holder as a stockholder of the
Company, whether such liability shall be asserted by the Company or by
creditors of the Company.
-13-
<PAGE> 14
8. Restrictive Legends. Except as otherwise permitted by this
section 8, each Warrant originally issued and each Warrant issued upon direct
or indirect transfer or in substitution for any Warrant pursuant to this
section 8 shall be stamped or otherwise imprinted with legends in substantially
the following form:
"This Warrant and any shares acquired upon the exercise of this
Warrant have not been registered under the Securities Act of 1933 and
may not be transferred in the absence of such registration or an
exemption therefrom under such Act."
"This Warrant is subject to the rights and restrictions, including
certain restrictions on transfer, contained in a Subordinated Note and
Warrant Purchase Agreement and a Registration Rights Agreement, each
dated as of November 18, 1996 (a copy of each of which is on file with
the Secretary of the issuer hereof)."
Except as otherwise permitted by this section 8, (a) each certificate for
Original Common Stock (or Other Securities) issued upon the exercise of any
Warrant, and (b) each certificate issued upon the direct or indirect transfer
of any such Original Common Stock (or Other Securities) shall be stamped or
otherwise imprinted with a legend in substantially the following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 and may not be transferred in the
absence of such registration or an exemption therefrom under such
Act."
The holder of any Restricted Securities shall be entitled to receive from the
Company, without expense, new securities of like tenor not bearing the
applicable legend set forth above in this section 8 when such securities shall
have been (a) effectively registered under the Securities Act and disposed of
in accordance with the registration statement covering such Restricted
Securities, (b) distributed to the public pursuant to Rule 144 or any
comparable rule under the Securities Act, or (c) when, in the opinion of
independent counsel for the holder thereof experienced in Securities Act
matters, such restrictions are no longer required in order to insure compliance
with the Securities Act. The reasonable fees and disbursements of counsel for
any holder of Restricted Securities in connection with all opinions rendered
pursuant to this section 8 shall be borne equally by the Company and such
holder.
9. Availability of Information. The Company will cooperate with
each holder of any Restricted Securities in supplying such information as may
be necessary for such holder to complete and file any information reporting
forms presently or hereafter required by the Commission as a condition to the
availability of an exemption from the Securities Act for the sale of any
Restricted Securities. The Company will furnish to each holder of any
Warrants, promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent or made available
generally by the Company to its stockholders, and copies of all regular and
periodic reports and all registration statements and prospectuses filed by the
Company with any securities exchange or with the Commission.
-14-
<PAGE> 15
10. Information Required By Rule 144A. The Company will, upon the
request of the holder of this Warrant, provide such holder, and any qualified
institutional buyer designated by such holder, such financial and other
information as such holder may reasonably determine to be necessary in order to
permit compliance with the information requirements of Rule 144A under the
Securities Act in connection with the resale of Warrants, except at such times
as the Company is subject to the reporting requirements of Section 13 or 15(d)
of the Exchange Act. For the purpose of this section 10, the term "qualified
institutional buyer" shall have the meaning specified in Rule 144A under the
Securities Act.
11. Registration Rights Agreement. The holder of this Warrant and
the holders of any securities issued or issuable upon the exercise hereof are
each entitled to the benefits of the Registration Rights Agreement, dated of
even date herewith, between the Company and the Purchaser.
12. Ownership, Transfer and Substitution of Warrants.
12A. Ownership of Warrants. Except as otherwise required
by law, the Company may treat the Person in whose name any Warrant is
registered on the register kept at the principal office of the Company as the
owner and holder thereof for all purposes, notwithstanding any notice to the
contrary except that, if and when any Warrant is properly assigned in blank,
the Company, in its discretion, may (but shall not be obligated to) treat the
bearer thereof as the owner of such Warrant for all purposes, notwithstanding
any notice to the Company to the contrary. Subject to section 8, a Warrant, if
properly assigned, may be exercised by a new holder without first having a new
Warrant issued.
12B. Transfer and Exchange of Warrants. Upon the
surrender of any Warrant, properly endorsed, for registration of transfer or
for exchange at the principal office of the Company, the Company at its expense
will (subject to compliance with section 8, if applicable) execute and deliver
to or upon the order of the holder thereof a new Warrant or Warrants of like
tenor, in the name of such holder or as such holder (upon payment by such
holder of any applicable transfer taxes) may direct, calling in the aggregate
on the face or faces thereof for the number of shares of Original Common Stock
called for on the face or faces of the Warrant or Warrants so surrendered.
12C. Replacement of Warrants. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of any Warrant and, in the case of any such loss, theft or
destruction of any Warrant held by a Person other than the Purchaser or any
institutional investor reasonably satisfactory to the Company, upon delivery of
indemnity reasonably satisfactory to the Company in form and amount or, in the
case of any such mutilation, upon surrender of such Warrant for cancellation at
the principal office of the Company, the Company at its expense will execute
and deliver, in lieu thereof, a new Warrant of like tenor.
13. Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
-15-
<PAGE> 16
"ADDITIONAL SHARES OF COMMON STOCK" shall mean all shares
(including treasury shares) of Common Stock issued or sold (or, pursuant to
section 2C or 2D deemed to be issued) by the Company after the date hereof,
whether or not subsequently reacquired or retired by the Company, other than
shares of Common Stock issued upon the exercise or partial exercise of the
Warrants.
"AFFILIATE" shall mean, as to any Person, any other Person
which, directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. A Person shall be deemed to control another
Person if the controlling Person possesses, directly or indirectly, the power
to direct or cause the direction of the management and policies of such other
Person, whether through the ownership of voting securities or membership
interests, by contract, or otherwise. Without limiting the foregoing, any
Person which is an officer, director or 10% or greater shareholder of the
Company, or a member of the immediate family of any such officer, director or
10% or greater shareholder, shall be deemed to be an Affiliate of the Company.
"BENEFICIAL OWNER" shall have the meaning assigned thereto to
Rule 13d-3 under the Exchange Act as in effect on the date hereof.
"BUSINESS DAY" shall mean any day on which banks are open for
business in New York City (other than a Saturday, a Sunday or a legal holiday
in the State of New York), provided, that any reference to "days" (unless
Business Days are specified) shall mean calendar days.
"CASHLESS EXERCISE" shall have the meaning specified in
Section 1F.
"CHANGE IN CONTROL" shall be deemed to have occurred if (a)
any Person or group (within the meaning of Rule 13d-5 under the Exchange Act),
other than any Person who owns on November 18, 1996 more than 10% of the
outstanding common stock of the Company or any spouse or descendant thereof (or
any trust solely for the benefit of one or more of the foregoing) or any
Affiliate of any of the foregoing, shall become the Beneficial Owner of 20% or
more of the Voting Stock of the Company or (b) a majority of the members of the
Board of Directors of the Company shall cease to be Continuing Members.
"COMMISSION" shall mean the Securities and Exchange Commission
or any successor federal agency having similar powers.
"COMMON STOCK" shall mean the Original Common Stock, any stock
into which such stock shall have been converted or changed or any stock
resulting from any reclassification of such stock and all other stock of any
class or classes (however designated) of the Company the holders of which have
the right, without limitation as to amount, either to all or to a share of the
balance of current dividends and liquidating dividends after the payment of
dividends and distributions on any shares entitled to preference.
"COMPANY" shall mean Air-Cure Technologies, Inc., a Delaware
corporation.
-16-
<PAGE> 17
"CONTINUING MEMBER" shall mean a member of the Board of
Directors of the Company who either (a) was a member of the Company's Board of
Directors on November 18, 1996 or (b) became a member of such Board of
Directors after November 18, 1996 and whose election or nomination for election
was approved by a vote of the majority of the Continuing Members then members
of the Company's Board of Directors.
"CONVERTIBLE SECURITIES" shall mean any evidences of
indebtedness, shares of stock (other than Common Stock) or other securities
directly or indirectly convertible into or exchangeable for Additional Shares
of Common Stock.
"DIVIDEND RESTRICTIONS" shall mean the restrictions on the
ability of the Company to declare, order, pay or make dividends or other
distributions, as set forth in paragraph 6B of the Note Agreement dated as of
the Initial Date by and among the Company and the Purchasers, whether or not
such Note Agreement remains in effect.
"EXCHANGE ACT" shall mean the Securities and Exchange Act of
1934, as amended.
"EXERCISE PRICE" shall have the meaning specified in section
1A.
"INITIAL DATE" shall have the meaning specified in section 2A.
"MARKET PRICE" shall mean on any date specified herein:
(a) with respect to Common Stock or to common stock (or
equivalent equity interests) of an Acquiring Company or its Parent, the amount
per share equal to: (i) if the Common Stock or such common stock (or
equivalent equity interests) is Publicly Traded at the time of determination,
the average of the closing prices thereof on all domestic securities exchanges
on which such security may at the time be listed, or, if there have been no
sales on any such exchange on such day, the average of the highest bid and
lowest asked prices on all such exchanges at the end of such day, or, if on any
day such security is not so listed, the closing price quoted on the Nasdaq
National Market on such day, or if on any such day such security is not quoted
in the Nasdaq National Market, the closing price on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar successor organization, in each such case averaged
over a period of twenty-one (21) days consisting of the day as of which "Market
Price" is being determined and the twenty (20) consecutive Business Days prior
to such day; provided, however, that after a Qualified Offering, if the
determination of Market Price is being made for purposes of Section 2A hereof
as a result of the issuance of Common Stock pursuant to a registered,
underwritten, publicly distributed offering, then the Market Price will, for
purposes of Section 2A hereof, be the price to the public in connection with
that public offering; or (ii) if neither the Common Stock nor such common
stock (or equivalent equity interests) is Publicly Traded at the time of
determination, the higher of (x) the book value thereof as determined by any
firm of independent public accountants of recognized standing selected by the
Board of Directors of the Company, as of the last day of any month ending
within 60 days preceding the date as of which the
-17-
<PAGE> 18
determination is to be made or (y) the fair value thereof (as determined in
good faith by the Board of Directors of the Company); and
(b) with respect to any other securities, the fair value
thereof (as determined in good faith by the Board of Directors of the Company).
"NOTES" shall have the meaning specified in the opening
paragraphs of this Warrant.
"OFFICER'S CERTIFICATE" shall mean a certificate signed in the
name of the Company by its President, one of its Vice Presidents or its
Treasurer.
"OPTIONS" shall mean rights, options or warrants to subscribe
for, purchase or otherwise acquire either Additional Shares of Common Stock or
Convertible Securities.
"ORIGINAL COMMON STOCK" shall have the meaning specified in
the opening paragraphs of this Warrant.
"OTHER SECURITIES" shall mean any stock (other than Common
Stock) and any other securities of the Company or any other Person (corporate
or otherwise) which the holders of the Warrants at any time shall be entitled
to receive, or shall have received, upon the exercise of the Warrants, in lieu
of or in addition to Common Stock, or which at any time shall be issuable or
shall have been issued in exchange for or in replacement of Common Stock or
Other Securities pursuant to section 2I or otherwise.
"PERSON" shall mean and include an individual, a partnership,
an association, a joint venture, a corporation, a trust, a limited liability
company, an unincorporated organization and a government or any department or
agency thereof.
"PUBLICLY TRADED" shall mean, with respect to any security,
that such security is (a) listed on a domestic securities exchange, (b) quoted
on the Nasdaq National Market or (c) traded in the domestic over-the counter
market, which trades are reported by the National Quotation Bureau,
Incorporated.
"PURCHASE AGREEMENT" shall have the meaning specified in the
opening paragraphs of this Warrant.
"PURCHASERS" shall have the meaning specified in the opening
paragraphs of this Warrant.
"QUALIFIED OFFERING" shall mean an underwritten public
offering of the Common Stock registered under the Securities Act, which
offering results in net proceeds to the Company of at least $5,000,000.
-18-
<PAGE> 19
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration
Rights Agreement dated of even date herewith by and among the Company and the
Purchasers.
"REQUIRED HOLDERS" shall mean the holders of at least 51% of
all the Warrants at the time outstanding, determined on the basis of the number
of shares of Common Stock then purchasable upon the exercise of all Warrants
then outstanding.
"RESTRICTED SECURITIES" shall mean (a) any Warrants bearing
the applicable legend set forth in section 8 and (b) any shares of Original
Common Stock (or Other Securities) which have been issued upon the exercise of
Warrants and which are evidenced by a certificate or certificates bearing the
applicable legend set forth in such section, and (c) unless the context
otherwise requires, any shares of Original Common Stock (or other Securities)
which are at the time issuable upon the exercise of Warrants and which, when so
issued, will be evidenced by a certificate or certificates bearing the
applicable legend set forth in such section.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"VOTING STOCK" shall mean, with respect to any Person, any
shares of stock or other equity interests of any class or classes of such
Person whose holders are entitled under ordinary circumstances (irrespective of
whether at the time stock or other equity interests of any other class or
classes shall have or might have voting power by reason of the happening of any
contingency) to vote for the election of a majority of the directors, managers,
trustees or other governing body of such Person.
"WARRANTS" shall have the meaning specified in the opening
paragraphs of this Warrant.
14. Remedies. The Company stipulates that the remedies at law of
the holder of this Warrant in the event of any default or threatened default by
the Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
15. Notices. All notices and other communications under this
Warrant shall be in writing and shall be mailed by registered or certified
mail, return receipt requested, addressed (a) if to any holder of any Warrant
or any holder of any Common stock (or Other Securities), at the registered
address of such holder as set forth in the applicable register kept at the
principal office of the Company, or (b) if to the Company, to the attention of
its Chief Financial Officer at its principal office, provided that the exercise
of any Warrant shall be effected in the manner provided in section 1.
-19-
<PAGE> 20
16. Miscellaneous. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought. The agreements of the Company contained in this
Warrant other than those applicable solely to the Warrants and the holders
thereof shall inure to the benefit of and be enforceable by any holder or
holders at the time of any Common Stock (or Other Securities) issued upon the
exercise of Warrants, whether so expressed or not. This Warrant shall be
construed and enforced in accordance with and governed by the laws of the State
of New York; provided, however, that in the event a final judgment by a court
of competent jurisdiction holds that such choice of New York law is
unenforceable, then this Warrant shall be construed and enforced in accordance
with the laws of the State of Louisiana. The section headings in this Warrant
are for purposes of convenience only and shall not constitute a part hereof.
AIR-CURE TECHNOLOGIES, INC.
By:
--------------------------------------------
Name:
Title:
FORM OF SUBSCRIPTION
--------------------
(To be executed only upon exercise of Warrant)
To AIR-CURE TECHNOLOGIES, INC.
The undersigned registered holder of the within Warrant hereby
irrevocably exercises such Warrant for, and purchases thereunder, _____(1)
shares of Original Common Stock of AIR-CURE TECHNOLOGIES, INC., [AND HEREWITH
MAKES PAYMENT OF $_______________ THEREFOR](2) [IN A CASHLESS EXERCISE PURSUANT
TO SECTION 1F OF THE WARRANT](3), and requests that the certificates for such
shares be issued in the name of, and delivered to _________________________
whose address is _________________________.
- -------------------------
(1) Insert here the number of shares called for on the face of this
Warrant (or, in the case of a partial exercise, the portion thereof as
to which this Warrant is being exercised), in either case without
making any adjustment for additional Common Stock or any other stock
or other securities or property or cash which, pursuant to the
adjustment provisions of this Warrant, may be delivered upon exercise.
In the case of a partial exercise, a new Warrant or Warrants will be
issued and delivered, representing the unexercised portion of this
Warrant, to the holder surrendering the same.
(2) Use in connection with an exercise involving a delivery of funds to
the Company.
(3) Use in connection with Section 1F of the Warrant.
-20-
<PAGE> 21
Dated:
------------------------------------
---------------------------------------
(Signature must conform in all respects
to name of holder as specified on the
face of this Warrant)
---------------------------------------
(Street Address)
---------------------------------------
(City) (State) (Zip Code)
-21-
<PAGE> 22
FORM OF ASSIGNMENT
(To be executed only upon transfer of Warrant)
For value received, the undersigned registered holder of the within
Warrant hereby sells, assigns and transfers unto
_______________________________ the right represented by such Warrant to
purchase ________________________________(4) shares of Original Common Stock of
AIR-CURE TECHNOLOGIES, INC., to which such Warrant relates, and appoints
_______________________________ Attorney to make such transfer on the books of
AIR-CURE TECHNOLOGIES, INC., maintained for such purpose, with full power of
substitution in the premises.
Dated:_____________________________________
---------------------------------------
(Signature must conform in all respects
to name of holder as specified on the
face of this Warrant)
----------------------------------------
(Street Address)
----------------------------------------
(City) (State) (Zip Code)
Signed in the presence of:
- -------------------------------------------
- --------------------
(4) Insert here the number of shares called for on the face of the within
Warrant (or, in the case of a partial assignment, the portion thereof
as to which this Warrant is being assigned), in either case without
making any adjustment for additional Common Stock or any other stock
or other securities or property or cash which, pursuant to the
adjustment provisions of the within Warrant, may be delivered upon
exercise. In the case of a partial assignment, a new Warrant or
Warrants will be issued and delivered, representing the portion of the
within Warrant not being assigned, to the holder assigning the same.
-22-
<PAGE> 1
EXHIBIT 4.3
================================================================================
- --------------------------------------------------------------------------------
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF NOVEMBER 18, 1996
AMONG
AIR-CURE TECHNOLOGIES, INC.,
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
AS AGENT,
THE FIRST NATIONAL BANK OF BOSTON,
AS CO-AGENT,
AND
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
ARRANGED BY
BA SECURITIES, INC.
================================================================================
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
<S> <C> <C>
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . 1
1.1 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Interpretive Provisions . . . . . . . . . . . . . . . . 23
1.3 Accounting Principles . . . . . . . . . . . . . . . . . . . . 24
ARTICLE II
THE CREDITS . . . . . . . . . . . . . . 24
2.1 Amounts and Terms of Commitments . . . . . . . . . . . . . . 24
(a) The Revolving Credit . . . . . . . . . . . . . . . . . 24
(b) The Term Credit . . . . . . . . . . . . . . . . . . . 24
2.2 Loan Accounts . . . . . . . . . . . . . . . . . . . . . . . . 25
2.3 Procedure for Borrowing . . . . . . . . . . . . . . . . . . . 25
2.4 Conversion and Continuation Elections . . . . . . . . . . . . 26
2.5 Voluntary Termination or Reduction of Commitments . . . . . . 27
2.6 Optional Prepayments . . . . . . . . . . . . . . . . . . . . 27
2.7 Mandatory Prepayments. . . . . . . . . . . . . . . . . . . . 28
(a) Borrowing Base Deficiency . . . . . . . . . . . . . . 28
(b) Sale of Assets . . . . . . . . . . . . . . . . . . . 28
(c) Debt Offering . . . . . . . . . . . . . . . . . . . . 28
(d) Equity Offering . . . . . . . . . . . . . . . . . . . 28
(e) Excess Cash Flow . . . . . . . . . . . . . . . . . . 28
2.8 Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(a) The Revolving Credit . . . . . . . . . . . . . . . . 29
(b) The Term Credit . . . . . . . . . . . . . . . . . . . 29
2.9 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.10 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(a) Agency Fees . . . . . . . . . . . . . . . . . . . . . 30
(b) Commitment Fees . . . . . . . . . . . . . . . . . . . 30
2.11 Computation of Fees and Interest . . . . . . . . . . . . . . 30
2.12 Payments by the Company . . . . . . . . . . . . . . . . . . 31
2.13 Payments by the Lenders to the Agent . . . . . . . . . . . . 31
2.14 Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . 32
ARTICLE III
THE LETTERS OF CREDIT . . . . . . . . . 33
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Section Page
<S> <C> <C>
3.1 The Letter of Credit Subfacility. . . . . . . . . . . . . . . 33
3.2 Issuance, Amendment and Renewal of Letters of Credit . . . . 34
3.3 Risk Participations, Drawings and Reimbursements . . . . . . 36
3.4 Repayment of Participations . . . . . . . . . . . . . . . . . 37
3.5 Role of the Issuing Lender . . . . . . . . . . . . . . . . . 38
3.6 Obligations Absolute . . . . . . . . . . . . . . . . . . . . 39
3.7 Cash Collateral Pledge . . . . . . . . . . . . . . . . . . . 40
3.8 Letter of Credit Fees . . . . . . . . . . . . . . . . . . . . 40
3.9 Uniform Customs and Practice . . . . . . . . . . . . . . . . 40
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY . . . . . . . 40
4.1 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.2 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.3 Increased Costs and Reduction of Return . . . . . . . . . . . 42
4.4 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . 43
4.5 Inability to Determine Rates . . . . . . . . . . . . . . . . 44
4.6 Certificates of Lenders . . . . . . . . . . . . . . . . . . . 44
4.7 Substitution of Lenders . . . . . . . . . . . . . . . . . . . 44
4.8 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE V
CONDITIONS PRECEDENT . . . . . . . . . . . . 44
5.1 Conditions of Initial Credit Extensions . . . . . . . . . . . 44
(a) Credit Agreement and Notes . . . . . . . . . . . 45
(b) Resolutions; Incumbency . . . . . . . . . . . . . 45
(c) Certificate . . . . . . . . . . . . . . . . . . . 45
(d) Legal Opinions . . . . . . . . . . . . . . . . . 45
(e) Payment of Fees . . . . . . . . . . . . . . . . . 46
(f) Guaranty . . . . . . . . . . . . . . . . . . . . 46
(g) Security Agreement, etc. . . . . . . . . . . . . 46
(h) . . . . . . . . . . . . . . . . . . . . . . . . 46
(k) Other Documents . . . . . . . . . . . . . . . . . 47
5.2 Conditions to All Credit Extensions . . . . . . . . . . . . . 47
(a) Notice, Application . . . . . . . . . . . . . . . 47
(b) Continuation of Representations and Warranties . 47
(c) No Existing Default . . . . . . . . . . . . . . . 47
ARTICLE VI
REPRESENTATIONS AND WARRANTIES . . . . . . . . . 47
6.1 Corporate Existence and Power . . . . . . . . . . . . . . . . 47
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Section Page
<S> <C> <C>
6.2 Corporate Authorization; No Contravention . . . . . . . . . . 48
6.3 Governmental Authorization . . . . . . . . . . . . . . . . . 48
6.4 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . 48
6.5 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.6 No Default . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.7 ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . 49
6.8 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . 50
6.9 Title to Properties . . . . . . . . . . . . . . . . . . . . . 50
6.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.11 Financial Condition . . . . . . . . . . . . . . . . . . . . . 50
6.12 Environmental Compliance . . . . . . . . . . . . . . . . . . 50
(a) No Violations . . . . . . . . . . . . . . . . . . 50
(b) Notices . . . . . . . . . . . . . . . . . . . . . 51
(c) Handling of Hazardous Substances . . . . . . . . 51
(d) Clean-Ups . . . . . . . . . . . . . . . . . . . . 52
(e) Investigations . . . . . . . . . . . . . . . . . . 52
6.13 Regulated Entities . . . . . . . . . . . . . . . . . . . . . 52
6.14 No Burdensome Restrictions . . . . . . . . . . . . . . . . . 52
6.15 Copyrights, Patents, Trademarks and Licenses, etc . . . . . . 52
6.16 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . 52
6.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.18 Solvency, etc . . . . . . . . . . . . . . . . . . . . . . . . 53
6.19 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . 53
6.22 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE VII
AFFIRMATIVE COVENANTS . . . . . . . . . . . . 54
7.1 Financial Statements . . . . . . . . . . . . . . . . . . . . 54
7.2 Certificates; Other Information . . . . . . . . . . . . . . . 55
7.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.4 Preservation of Corporate Existence, Etc . . . . . . . . . . 58
7.5 Maintenance of Property . . . . . . . . . . . . . . . . . . . 58
7.6 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.7 Payment of Obligations . . . . . . . . . . . . . . . . . . . 58
7.8 Compliance with Laws . . . . . . . . . . . . . . . . . . . . 59
7.9 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . 59
7.10 Inspection of Property and Books and Records . . . . . . . . 59
7.11 Environmental Matters . . . . . . . . . . . . . . . . . . . 59
7.12 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . 60
7.14 Further Assurances . . . . . . . . . . . . . . . . . . . . . 60
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
Section Page
<S> <C> <C>
7.15 Interest Rate Protection . . . . . . . . . . . . . . . . . . 60
7.16 Real Estate Documentation. . . . . . . . . . . . . . . . . . 60
ARTICLE VIII
NEGATIVE COVENANTS . . . . . . . . . . . . 61
8.1 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . 61
8.2 Disposition of Assets . . . . . . . . . . . . . . . . . . . . 62
8.3 Consolidations and Mergers . . . . . . . . . . . . . . . . . 63
8.4 Loans and Investments . . . . . . . . . . . . . . . . . . . . 63
8.5 Limitation on Indebtedness . . . . . . . . . . . . . . . . . 64
8.6 Transactions with Affiliates . . . . . . . . . . . . . . . . 64
8.7 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . 64
8.8 Contingent Obligations . . . . . . . . . . . . . . . . . . . 64
8.9 Sale-Leaseback Arrangements. . . . . . . . . . . . . . . . 65
8.10 Lease Obligations . . . . . . . . . . . . . . . . . . . . . 65
8.11 Minimum Interest Coverage Ratio . . . . . . . . . . . . . . 65
8.12 Maximum Indebtedness to Capitalization Ratio . . . . . . . . 66
8.13 Minimum Net Worth . . . . . . . . . . . . . . . . . . . . . 66
8.14 Underbillings Ratio . . . . . . . . . . . . . . . . . . . . 66
8.15 Minimum Consolidated Net Income . . . . . . . . . . . . . . 66
8.16 Current Ratio . . . . . . . . . . . . . . . . . . . . . . . 66
8.17 Maximum Total Indebtedness to EBITDA . . . . . . . . . . . . 66
8.18 Restricted Payments . . . . . . . . . . . . . . . . . . . . 67
8.19 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.20 Change in Business . . . . . . . . . . . . . . . . . . . . . 67
8.21 Accounting Changes . . . . . . . . . . . . . . . . . . . . . 67
8.22 Foreign Subsidiaries . . . . . . . . . . . . . . . . . . . . 67
8.23 Negative Pledges . . . . . . . . . . . . . . . . . . . . . . 68
8.24 Capital Expenditures . . . . . . . . . . . . . . . . . . . . 68
ARTICLE IX
EVENTS OF DEFAULT . . . . . . . . . . . . . 68
9.1 Event of Default . . . . . . . . . . . . . . . . . . . . . . 68
(a) Non-Payment . . . . . . . . . . . . . . . . . . . 68
(b) Representation or Warranty . . . . . . . . . . . 68
(c) Specific Defaults . . . . . . . . . . . . . . . . 68
(d) Other Defaults . . . . . . . . . . . . . . . . . 68
(e) Cross-Default . . . . . . . . . . . . . . . . . . 68
(f) Insolvency; Voluntary Proceedings . . . . . . . . 69
</TABLE>
iv
<PAGE> 6
<TABLE>
<CAPTION>
Section Page
<S> <C>
(g) Involuntary Proceedings . . . . . . . . . . . . . 69
(h) ERISA . . . . . . . . . . . . . . . . . . . . . . 69
(i) Monetary Judgments . . . . . . . . . . . . . . . 69
(j) Non-Monetary Judgments . . . . . . . . . . . . . 70
(k) Guarantor Defaults . . . . . . . . . . . . . . . 70
(l) Security Agreement, etc. . . . . . . . . . . . . 70
(m) Pledge Agreements . . . . . . . . . . . . . . . . 70
(n) Material Environmental Events . . . . . . . . . . 70
(o) Change of Control . . . . . . . . . . . . . . . 70
9.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . 70
9.3 Rights Not Exclusive . . . . . . . . . . . . . . . . . . . . 71
ARTICLE X
THE AGENT . . . . . . . . . . . . . . . 71
10.1 Appointment and Authorization . . . . . . . . . . . . . . . 71
10.2 Delegation of Duties . . . . . . . . . . . . . . . . . . . . 72
10.3 Liability of Agent . . . . . . . . . . . . . . . . . . . . . 72
10.4 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . 72
10.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . 73
10.6 Credit Decision . . . . . . . . . . . . . . . . . . . . . . 73
10.7 Indemnification of Agent . . . . . . . . . . . . . . . . . . 74
10.8 Agent in Individual Capacity . . . . . . . . . . . . . . . . 74
10.9 Successor Agent . . . . . . . . . . . . . . . . . . . . . . 74
10.10 Withholding Tax . . . . . . . . . . . . . . . . . . . . . . 75
10.11 Collateral Matters . . . . . . . . . . . . . . . . . . . . . 76
10.12 Co-Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 77
11.1 Amendments and Waivers . . . . . . . . . . . . . . . . . . . 77
11.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 78
11.3 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . 79
11.4 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . 79
11.5 Company Indemnification . . . . . . . . . . . . . . . . . . 79
11.6 Payments Set Aside . . . . . . . . . . . . . . . . . . . . . 80
11.7 Successors and Assigns . . . . . . . . . . . . . . . . . . . 80
11.8 Assignments, Participations, etc. . . . . . . . . . . . . . 80
11.9 Confidentiality . . . . . . . . . . . . . . . . . . . . . . 81
11.10 Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.11 Automatic Debits of Fees . . . . . . . . . . . . . . . . . 82
11.12 Notification of Addresses, Lending Offices, Etc. . . . . . 82
11.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 83
11.14 Severability . . . . . . . . . . . . . . . . . . . . . . . 83
</TABLE>
v
<PAGE> 7
<TABLE>
<CAPTION>
Section Page
<S> <C> <C>
11.15 No Third Parties Benefited . . . . . . . . . . . . . . . . 83
11.16 Governing Law and Jurisdiction . . . . . . . . . . . . . . 83
11.17 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . 83
11.18 Consent to Release of Subsidiaries . . . . . . . . . . . . 84
11.19 Entire Agreement . . . . . . . . . . . . . . . . . . . . . 84
</TABLE>
vi
<PAGE> 8
SCHEDULES
Schedule 1.1A Commitments and Pro Rata Shares
Schedule 1.1B Pricing Schedule
Schedule 6.11 Financial Condition
Schedule 6.16 Subsidiaries and Minority Interests
Schedule 6.17 Insurance Matters
Schedule 6.21 Real Property
Schedule 8.1 Permitted Liens
Schedule 8.5 Permitted Indebtedness
Schedule 8.8 Contingent Obligations
Schedule 11.2 Lending Offices; Addresses for Notices
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D-1 Form of Opinion of Counsel to the Company and the
Guarantors
Exhibit D-2 Form of Opinion of Illinois Counsel to the Company and the
Guarantors
Exhibit D-3 Form of Opinion of Louisiana Counsel to the Company and the
Guarantors
Exhibit E Copy of Guaranty
Exhibit F Copy of Security Agreement
Exhibit G-1 Copy of Company Pledge Agreement
Exhibit G-2 Form of Subsidiary Pledge Agreement
Exhibit H Form of Assignment and Acceptance
Exhibit I Form of Promissory Note
Exhibit J Form of Borrowing Base Certificate
Exhibit K Form of Reaffirmation of Loan Documents
vii
<PAGE> 9
AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of
November 18, 1996, among AIR-CURE TECHNOLOGIES, INC., a Delaware corporation
(the "Company"), the several financial institutions from time to time party to
this Agreement (collectively the "Lenders"; individually each a "Lender"), BANK
OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as agent for the Lenders,
and THE FIRST NATIONAL BANK OF BOSTON, as Co-Agent.
WHEREAS, the Company, certain of the Lenders and Bank of America
National Trust and Savings Association, as agent, entered into a Credit
Agreement dated as of October 18, 1995, as amended (the "Original Credit
Agreement");
WHEREAS, the Lenders have agreed to rearrange, restructure, extend and
increase the credit facilities available under the Original Credit Agreement by
making available to the Company a term loan and revolving credit facility with
letter of credit subfacility upon the terms and conditions set forth in this
Agreement; and
WHEREAS, to give effect to the foregoing the Company, the Lenders and
the Agent desire to enter into this Agreement to amend and restate the Original
Credit Agreement;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the parties hereby amend and restate the Original Credit Agreement in
its entirety as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms. The following terms have the following
meanings:
Account Debtor means any Person who is obligated to the
Company or any Subsidiary under, with respect to, or on account of an
Account Receivable.
Accounts Receivable means, with respect to any Person, any
right of such Person to payment for goods sold or leased or for
services rendered, whether or not evidenced by an instrument or
chattel paper and whether or not yet earned by performance.
Acquisition means any transaction or series of related
transactions for the purpose of, or resulting directly or indirectly
in, (a) the acquisition of all or substantially all of the assets of a
Person, or of any business or division of a Person, (b) the
acquisition of in excess of 50% of the capital stock, partnership
interests,
1
<PAGE> 10
membership interests or equity of any Person, or otherwise causing any
Person to become a Subsidiary, or (c) a merger or consolidation or any
other combination with another Person (other than a Person that is a
Subsidiary) provided that the Company or a Subsidiary is the surviving
entity.
Affected Lender - see Section 4.7.
Affiliate means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person. A Person shall be deemed to
control another Person if the controlling Person possesses, directly
or indirectly, the power to direct or cause the direction of the
management and policies of such other Person, whether through the
ownership of voting securities or membership interests, by contract,
or otherwise. Without limiting the foregoing, any Person which is an
officer, director or 10% or greater shareholder of the Company, or a
member of the immediate family of any such officer, director or 10% or
greater shareholder, shall be deemed to be an Affiliate of the
Company.
Agent means BofA in its capacity as agent for the Lenders
hereunder, and any successor agent arising under Section 10.9.
Agent-Related Persons means BofA and any successor agent
arising under Section 10.9, together with their respective Affiliates
(including, in the case of BofA, BAI), and the officers, directors,
employees, agents and attorneys-in-fact of such Persons and
Affiliates.
Agent's Payment Office means the address for payments set
forth on Schedule 11.2 in relation to the Agent, or such other address
as the Agent may from time to time specify.
Agreement means this Amended and Restated Credit Agreement.
Applicable Margin means, with respect to Base Rate Loans and
Offshore Rate Loans, the percentages determined in accordance with the
Pricing Schedule attached hereto as Schedule 1.1B.
Arranger means BA Securities, Inc.
Assignment and Acceptance - see Section 11.8(a).
Attorney Costs means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the
reasonable allocated cost of internal legal services and all
reasonable disbursements of internal counsel.
BAI means Bank of America Illinois, an Illinois banking
corporation.
2
<PAGE> 11
Bankruptcy Code means the Federal Bankruptcy Reform Act of
1978 (11 U.S.C. Section 101, et seq.).
Base Rate means, for any day, the higher of: (a) 0.50% per
annum above the latest Federal Funds Rate; and (b) the rate of
interest in effect for such day as publicly announced from time to
time by BofA in San Francisco as its "reference rate." (The
"reference rate" is a rate set by BofA based upon various factors
including BofA's costs and desired return, general economic conditions
and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced rate.)
Any change in the reference rate announced by BofA shall take effect
at the opening of business on the day specified in the public
announcement of such change, or on a daily basis in the case of (a)
above.
Base Rate Loan means a Loan that bears interest based on the
Base Rate.
Beneficial Owner shall have the meaning assigned thereto in
Rule 13d-3 of the SEC under the Exchange Act as in effect on the date
hereof.
BofA means Bank of America National Trust and Savings
Association, a national banking association.
Borrowing means a borrowing hereunder consisting of Revolving
Loans or Term Loans of the same Type made to the Company on the same
day by the Lenders under Article II, and, other than in the case of
Base Rate Loans, having the same Interest Period.
Borrowing Base means the sum of (a) 85% of Eligible Accounts
Receivable of the Company and its Subsidiaries, plus (b) 50% of
Eligible Inventory of the Company and its Subsidiaries, plus (c) 25%
of Eligible WIP of the Company and its Subsidiaries, plus (d) 25% of
Eligible Underbillings.
Borrowing Date means any date on which a Borrowing occurs
under Section 2.3.
Business Day means any day other than a Saturday, Sunday or
other day on which commercial banks in New York City, Chicago or San
Francisco are authorized or required by law to close and, if the
applicable Business Day relates to an Offshore Rate Loan, means such a
day on which dealings are carried on in the applicable offshore dollar
interbank market.
Capital Adequacy Regulation means any guideline, request or
directive of any central bank or other Governmental Authority, or any
other law, rule or regulation, whether or not having the force of law,
in each case regarding capital adequacy of any bank or of any
corporation controlling a bank.
3
<PAGE> 12
Cash Collateralize means to pledge and deposit with or deliver
to the Agent, for the benefit of the Agent, the Issuing Lenders and
the Lenders, as additional collateral for the L/C Obligations, cash or
deposit account balances pursuant to documentation in form and
substance satisfactory to the Agent and the Issuing Lenders (which
documents are hereby consented to by the Lenders). Derivatives of
such term shall have corresponding meaning. The Company hereby grants
the Agent, for the benefit of the Agent, the Issuing Lender and the
Lenders, a security interest in all such cash and deposit account
balances. Cash collateral shall be maintained in blocked, interest
bearing deposit accounts at BofA or an Affiliate thereof.
CERCLA - see subsection 6.12(a).
Change of Control means that (a) any Person or group (within
the meaning of Rule 13d-5 of the SEC under the Exchange Act), other
than any Person who owns on the date of this Agreement more than 10%
of the outstanding common stock of the Company or any spouse or
descendant thereof (or any trust solely for the benefit of one or more
of the foregoing) or any Affiliate of any of the foregoing, shall
become the Beneficial Owner of 20% or more of the Voting Stock of the
Company or (b) a majority of the members of the Board of Directors of
the Company shall cease to be Continuing Members.
Closing Date means the date on which all conditions precedent
set forth in Section 5.1 are satisfied or waived by all Lenders (or,
in the case of subsection 5.1(e), waived by the Person entitled to
receive such payment).
Co-Agent means The First National Bank of Boston in its
capacity as co-agent for the Lenders hereunder.
Code means the Internal Revenue Code of 1986.
Commitment means, as to each Lender, the amount set forth
opposite such Lender's name on Schedule 1.1A, as adjusted from time to
time in accordance with the terms of this Agreement.
Company - see the introductory clause hereto.
Company Pledge Agreement means the Pledge Agreement between
the Company and the Agent, a copy of which is attached hereto as
Exhibit G-1.
Compliance Certificate means a certificate substantially in
the form of Exhibit C.
Computation Period means each period of four consecutive
fiscal quarters of the Company ending on the last day of a fiscal
quarter.
4
<PAGE> 13
Consolidated Net Income means, with respect to the Company and
its Subsidiaries for any period, the net income (or loss) of the
Company and its Subsidiaries for such period, excluding (i) any
extraordinary or non-recurring gains during such period and (ii) to
the extent applicable, the $4,200,000 restructuring charge taken by
the Company in the first quarter of 1996. Prior to the first
anniversary of the consummation of the Ohmstede Acquisition, the
financial results of Ohmstede, Inc. for the relevant period will be
included for purposes of calculating Consolidated Net Income (without
any adjustment for cost savings or other synergies).
Contingent Obligation means, as to any Person, any direct or
indirect liability of such Person, whether or not contingent, with or
without recourse, (a) with respect to any Indebtedness, lease,
dividend, letter of credit or other obligation (the "primary
obligation") of another Person (the "primary obligor"), including any
obligation of such Person (i) to purchase, repurchase or otherwise
acquire such primary obligation or any security therefor, (ii) to
advance or provide funds for the payment or discharge of any primary
obligation, or to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency or
any balance sheet item, level of income or financial condition of the
primary obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any primary
obligation of the ability of the primary obligor to make payment of
such primary obligation, or (iv) otherwise to assure or hold harmless
the holder of any primary obligation against loss in respect thereof
(each, a "Guaranty Obligation"); (b) with respect to any Surety
Instrument (other than any Letter of Credit) issued for the account of
such Person or as to which such Person is otherwise liable for
reimbursement of drawings or payments; (c) to purchase any materials,
supplies or other property from, or to obtain the services of, another
Person if the relevant contract or other related document or
obligation requires that payment for such materials, supplies or other
property, or for such services, shall be made regardless of whether
delivery of such materials, supplies or other property is ever made or
tendered, or such services are ever performed or tendered, or (d) in
respect of any Swap Contract. The amount of any Contingent Obligation
shall, in the case of Guaranty Obligations, be deemed equal to the
stated or determinable amount of the primary obligation in respect of
which such Guaranty Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect
thereof, and in the case of other Contingent Obligations, shall be
equal to the maximum reasonably anticipated liability in respect
thereof.
Continuing Member means a member of the Board of Directors of
the Company who either (a) was a member of the Company's Board of
Directors on the Closing Date and has been such continuously
thereafter or (b) became a member of such Board of Directors after the
Closing Date and whose election or nomination for election was
approved by a vote of the majority of the Continuing Members then
members of the Company's Board of Directors.
5
<PAGE> 14
Contractual Obligation means, as to any Person, any provision
of any security issued by such Person or of any agreement,
undertaking, contract, indenture, mortgage, deed of trust or other
instrument, document or agreement to which such Person is a party or
by which it or any of its property is bound.
Conversion/Continuation Date means any date on which, under
Section 2.4, the Company (a) converts Loans of one Type to the other
Type or (b) continues as Offshore Rate Loans, but with a new Interest
Period, Offshore Rate Loans having Interest Periods expiring on such
date.
Current Ratio means, at any time, (a) the consolidated current
assets of the Company and its Subsidiaries divided by (b) the
consolidated current liabilities (excluding current maturities of
long-term Indebtedness) of the Company and its Subsidiaries.
Credit Extension means and includes (a) the making of any Loan
hereunder and (b) the Issuance of any Letter of Credit hereunder.
Dollars and $ mean lawful money of the United States.
EBITDA means, for any Computation Period, Consolidated Net
Income before deducting Interest Expense, income tax expense,
depreciation and amortization (including amortization of debt discount
and debt issuance costs) for such Computation Period. Prior to the
first anniversary of the consummation of the Ohmstede Acquisition, the
financial results of Ohmstede, Inc. for the relevant period will be
included for purposes of calculating EBITDA (without any adjustments
for cost savings or other synergies).
Effective Amount means, with respect to any outstanding L/C
Obligations on any date, the amount of such L/C Obligations on such
date after giving effect to any Issuances of Letters of Credit
occurring on such date and any other changes in the aggregate amount
of the L/C Obligations as of such date, including as a result of any
reimbursements of outstanding unpaid drawings under any Letter of
Credit or any reduction in the maximum amount available for drawing
under any Letter of Credit taking effect on such date.
Eligible Account Receivable means an Account Receivable owing
to the Company or any Subsidiary which meets all of the following
requirements:
(1) it arises from either (a) the performance of services
by the Company or the applicable Subsidiary, which services have been
fully performed and, if applicable, acknowledged and/or accepted by
the Account Debtor with respect thereto; or (b) the sale or lease of
goods by the Company or the applicable Subsidiary; and if it arises
from the sale or lease of goods, (i) such goods comply with such
Account
6
<PAGE> 15
Debtor's specifications (if any) and have been shipped to, or
delivered to and accepted by, such Account Debtor, or the Company or
such Subsidiary is entitled under the terms of the contract or
purchase order governing the sale and purchase of such goods to
invoice such Account Debtor therefor, and (ii) in the case of goods
which have been shipped or delivered to such Account Debtor, the
Company or such Subsidiary has possession of, or if requested by the
Agent has delivered to the Agent, shipping and delivery receipts
evidencing such shipment, delivery and acceptance;
(2) it is evidenced by an invoice rendered to the Account
Debtor with respect thereto which is dated not earlier than the date
of shipment or performance;
(3) it (a) is subject to a perfected Lien in favor of the
Agent and (b) is not subject to any other assignment, claim or Lien
other than Liens consented to by the Required Lenders;
(4) it is a valid, legally enforceable and unconditional
obligation of the Account Debtor with respect thereto, and is not
subject to setoff, counterclaim, credit, allowance, discount (except
any credit, allowance or discount which has been deducted in computing
the net amount of the applicable invoice as shown in the original
schedule or Borrowing Base Certificate furnished to the Lenders
identifying or including such Account Receivable) or adjustment by the
Account Debtor with respect thereto, or to any claim by such Account
Debtor denying liability thereunder in whole or in part, and such
Account Debtor has not refused to accept any of the goods or services
which are the subject of such Account Receivable or offered or
attempted to return any of such goods;
(5) neither the Company nor the applicable Subsidiary has
knowledge of any bankruptcy, insolvency or similar proceeding by or
against the Account Debtor with respect thereto or of any other
proceeding or action which is threatened or pending against such
Account Debtor or to which such Account Debtor is a party which is
likely to result in any material adverse change in such Account
Debtor's financial condition or in its ability to pay any Account
Receivable in full when due;
(6) it does not arise out of a contract or order which,
by its terms, forbids, restricts or makes void or unenforceable the
assignment by the Company or the applicable Subsidiary to the Agent of
the Account Receivable arising with respect thereto;
(7) the Account Debtor with respect thereto is not an
Affiliate of the Company or a director, officer, employee or agent of
the Company or an Affiliate thereof;
(8) it is not an Account Receivable arising from a "sale
on approval," "sale or return" or "consignment," or subject to any
other repurchase or return agreement;
7
<PAGE> 16
(9) it is not an Account Receivable with respect to which
possession and/or control of the goods sold giving rise thereto is
held, maintained or retained by the Company or any Subsidiary (or by
any agent or custodian of the Company or any Subsidiary) for the
account of or subject to further and/or future direction from the
Account Debtor with respect thereto, unless authorized or contemplated
in the contract or purchase order governing such sale;
(10) it arises in the ordinary course of the Company's or
the applicable Subsidiary's business;
(11) such Account Receivable is not more than 90 days past
the due date thereof according to the original terms of sale; and
(12) not more than 25% of the amount of all Accounts
Receivable owing by such Account Debtor to the Company and its
Subsidiaries remains unpaid 90 days past the due date of the original
invoice thereof according to the original terms of sale.
An Account Receivable which is at any time an Eligible Account Receivable, but
which subsequently fails to meet any of the foregoing requirements, shall
forthwith cease to be an Eligible Account Receivable.
Eligible Assignee means (i) a commercial bank organized under
the laws of the United States, or any state thereof, and having a
combined capital and surplus of at least $100,000,000; (ii) a
commercial bank organized under the laws of any other country which is
a member of the Organization for Economic Cooperation and Development
(the OECD), or a political subdivision of any such country, and having
a combined capital and surplus of at least $100,000,000, provided that
such bank is acting through a branch or agency located in the United
States; and (iii) a Person that is primarily engaged in the business
of commercial banking and that is (A) a Subsidiary of a Lender, (B) a
Subsidiary of a Person of which a Lender is a Subsidiary, or (C) a
Person of which a Lender is a Subsidiary.
Eligible Inventory means all goods of the Company and its
Subsidiaries which are held for lease or sale or held as raw materials
or supplies, and which meet all of the following requirements:
(1) it (a) is subject to a perfected Lien in favor of the
Agent and (b) is not subject to any assignment, claim or Lien other
than Liens consented to by the Required Lenders;
(2) if held for sale or lease or furnishing under
contracts of service, it is (except as the Required Lenders may
otherwise consent in writing) new, unused and in first-class
condition;
8
<PAGE> 17
(3) except as the Required Lenders may otherwise consent,
it is in the possession and control of the Company or the applicable
Subsidiary;
(4) it is not inventory which is dedicated to,
identifiable with, or otherwise specifically to be used in the
manufacture of goods which are to be sold or leased to the United
States of America or any department, agency or instrumentality
thereof, and in respect of which inventory the Company or the
applicable Subsidiary shall have received any progress or other
advance payment which is or may be credited against any Account
Receivable generated upon the sale or lease of any such goods;
(5) it is not inventory produced in violation of the Fair
Labor Standards Act and subject to the "hot goods" provisions
contained in Title 29 U.S.C. Section 215 or any successor statute or
section;
(6) it is not inventory bearing a servicemark, trademark
or name of any Person other than the Company or the applicable
Subsidiary, or with respect to which the use by the Company or the
applicable Subsidiary or the manufacture or sale thereof by the
Company or the applicable Subsidiary is subject to any licensing,
patent, royalty, trademark, tradename or copyright agreement with any
other Person, and such inventory is not subject to any agreement which
would restrict the Agent's ability to sell or otherwise dispose of
such inventory;
(7) it is not (i) packaging or shipping materials, (ii)
goods used in connection with maintenance or repair of the Company's
or the applicable Subsidiary's business, properties or assets, or
(iii) work in process; and
(8) it is not held for sale at a "close-out" or otherwise
offered generally at a discount as part of a discontinued line.
Inventory of the Company or any Subsidiary which is at any time Eligible
Inventory but which subsequently fails to meet any of the foregoing
requirements shall forthwith cease to be Eligible Inventory.
Eligible Underbillings means Underbillings of the Company and
its Subsidiaries net of billings in excess of cost.
Eligible WIP means all goods of the Company and its
Subsidiaries which constitute work in process and which meet all the
requirements set forth in clauses (1), (3), (4) and (5) of the
definition of Eligible Inventory. Work in process of the Company or
any Subsidiary which is at any time Eligible WIP but which
subsequently fails to meet any of the foregoing requirements shall
forthwith cease to be Eligible WIP.
9
<PAGE> 18
Environmental Claims means all claims, however asserted, by
any Governmental Authority or other Person alleging potential
liability or responsibility for violation of any Environmental Law, or
for release or injury to the environment.
Environmental Laws means all federal, state or local laws
(including RCRA, CERCLA, SARA, the Federal Clean Water Act, the
Federal Clean Air Act and the Toxic Substances Control Act), statutes,
common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authority, in each case relating to environmental, health, safety or
land use matters.
ERISA means the Employee Retirement Income Security Act of
1974, and regulations promulgated thereunder.
ERISA Affiliate means any trade or business (whether or not
incorporated) under common control with the Company within the meaning
of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of
the Code for purposes of provisions relating to Section 412 of the
Code).
ERISA Event means (a) a Reportable Event with respect to a
Pension Plan; (b) a withdrawal by the Company or any ERISA Affiliate
from a Pension Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer (as defined in Section
4001(a)(2) of ERISA) or a substantial cessation of operations which is
treated as such a withdrawal; (c) a complete or partial withdrawal by
the Company or any ERISA Affiliate from a Multiemployer Plan or
notification that a Multiemployer Plan is in reorganization; (d) the
filing of a notice of intent to terminate, the treatment of a Pension
Plan amendment as a termination under Section 4041 or 4041A of ERISA,
or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which might
reasonably be expected to constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon the
Company or any ERISA Affiliate.
Event of Default means any of the events or circumstances
specified in Section 9.1.
Excess Cash Flow means, for any fiscal year, (i) the sum for
such year of EBITDA plus extraordinary or non-recurring gains (other
than non-cash gains) plus any increase in cash and cash equivalents
since the end of the prior fiscal year, minus (ii) the sum for such
year of (A) all capital expenditures (excluding any expenditures
financed through capitalized leases or purchase money financing), (B)
all prepayments
10
<PAGE> 19
on Term Loans, (C) any permanent reduction of the Revolving
Commitment, (D) income tax expense, (E) Interest Expense, (F) any net
increase in working capital since the end of the prior fiscal year,
(G) extraordinary or nonrecurring cash losses, and (H) cash proceeds
from asset dispositions to the extent included in EBITDA (except to
the extent used to prepay Term Loans).
Federal Funds Rate means, for any day, the rate set forth in
the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Bank of New
York (including any such successor, "H.15(519)") on the preceding
Business Day opposite the caption "Federal Funds (Effective)"; or, if
for any relevant day such rate is not so published on any such
preceding Business Day, the rate for such day will be the arithmetic
mean as determined by the Agent of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 a.m. (New York City
time) on that day by each of three leading brokers of Federal funds
transactions in New York City selected by the Agent.
Financial L/C Fee Rate means the rate determined in accordance
with Schedule 1.1B in the case of each Financial Letter of Credit;
provided that the foregoing rate shall be increased by 2% at any time
an Event of Default exists.
Financial Letter of Credit means any Letter of Credit which
any Lender is required under any Requirement of Law (including under
12 CFR Part 3, Appendix A, Section 3, clause (b)) to classify as a
financial letter of credit with respect to its issuance thereof or
participation therein pursuant to this Agreement.
Foreign Subsidiary means (a) as of the Closing Date, each of
Air-Cure Environmental GmbH, Air-Cure (Singapore) Ltd. and Air-Cure
(Canada) Technologies, Ltd, and (b) thereafter, each Person listed in
clause (a) and each other Person which becomes a Subsidiary of the
Company and is not organized under the laws of any state of, and
conducts substantially all of its business outside of, the United
States.
FRB means the Board of Governors of the Federal Reserve
System, and any Governmental Authority succeeding to any of its
principal functions.
GAAP means generally accepted accounting principles set forth
from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date
of determination.
Governmental Authority means any nation or government, any
state or other political subdivision thereof, any central bank (or
similar monetary or regulatory
11
<PAGE> 20
authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled,
through stock or capital ownership or otherwise, by any of the
foregoing.
Guarantor means (a) as of the Closing Date, each of the
Subsidiaries listed on Schedule 6.16, other than Foreign Subsidiaries,
and Ohmstede, Inc., and (b) thereafter, each Person listed in clause
(a) and each other Person which executes and delivers a counterpart of
the Guaranty.
Guaranty means the Guaranty issued by the Guarantors, a copy
of which is attached hereto as Exhibit E.
Guaranty Obligation has the meaning specified in the
definition of Contingent Obligation.
Hazardous Substances - see subsection 6.12(b).
Honor Date - see subsection 3.3(b).
Immaterial Law means any provision of any Environmental Law
the violation of which will not (a) violate any judgment, decree or
order which is binding upon the Company or any Subsidiary, (b) result
in or threaten (either immediately or with the passage of time) any
injury to public health or the environment or any material damage to
the property of any Person or (c) result in any liability or expense
(other than any de minimis liability or expense) for the Company or
any Subsidiary (either immediately or with the passage of time);
provided that no provision of any Environmental Law shall be an
Immaterial Law if the Agent has notified the Company that the Required
Lenders have determined in good faith that such provision is material.
Immaterial Notice means a notice from or allegation by a
Person which is not Governmental Authority or agency (or a
representative thereof) regarding any event or condition relating to
the environment for which the Company or any Subsidiary may have any
liability or any breach by the Company or any Subsidiary of any
Environmental Law, which notice or allegation (a) has not given rise
to any judicial or regulatory case or proceeding and (b) in the
reasonable judgment the Company, is not likely to result in any
liability or expense (other than any de minimis liability or expense)
for the Company or the applicable Subsidiary.
Indebtedness of any Person means, without duplication, (a) all
indebtedness of such Person for borrowed money; (b) all obligations
issued, undertaken or assumed by such Person as the deferred purchase
price of property or services (other than trade payables entered into
in the ordinary course of business on ordinary terms); (c)
12
<PAGE> 21
all non-contingent reimbursement or payment obligations by such Person
with respect to Surety Instruments; (d) all obligations of such Person
evidenced by notes, bonds, debentures or similar instruments; (e) all
indebtedness created or arising under any conditional sale or other
title retention agreement, or incurred as financing, in either case
with respect to property acquired by such Person (even though the
rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such
property); (f) all obligations of such Person with respect to capital
leases; (g) all net obligations of such Person with respect to Swap
Contracts; (h) all indebtedness of such Person referred to in clauses
(a) through (g) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien upon or in property (including accounts and
contracts rights) owned by such Person, even though such Person has
not assumed or become liable for the payment of such Indebtedness; and
(i) all Guaranty Obligations of such Person in respect of indebtedness
or obligations of others of the kinds referred to in clauses (a)
through (g) above.
Indemnified Liabilities - see Section 11.5.
Indemnified Person - see Section 11.5.
Independent Auditor - see subsection 7.1(a).
Insolvency Proceeding means, without respect to any Person,
(a) any case, action or proceeding with respect to such Person before
any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors (including any proceeding under the
Bankruptcy Code) or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors, or other,
similar arrangement in respect of such Person's creditors generally or
any substantial portion of such creditors.
Interest Coverage Ratio means, as of the last day of any
fiscal quarter beginning with the fiscal quarter ending March 31,
1997, the ratio of (a) Consolidated Net Income before deducting
Interest Expense and income tax expense for the Computation Period
ending on such day, to (b) Interest Expense for such Computation
Period.
Interest Expense means for any period the consolidated
interest expense of the Company and its Subsidiaries for such period
(including all imputed interest on capital leases, but excluding any
amortization of debt discount and any loan transaction costs or lender
fees other than interest and fees at the rates stated in the
instruments giving rise to such interest and fees).
13
<PAGE> 22
Interest Payment Date means (i) as to any Offshore Rate Loan,
the last day of each Interest Period applicable to such Loan,
provided, however, that if any Interest Period for any Offshore Rate
Loan exceeds three months, the date that falls three months after the
beginning of such Interest Period is also an Interest Payment Date;
and (ii) as to any Base Rate Loan, the last Business Day of each
calendar quarter.
Interest Period means, as to any Offshore Rate Loan, the
period commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or
continued as an Offshore Rate Loan, and ending on the date one, two,
three or six months thereafter, as selected by the Company in its
Notice of Borrowing or Notice of Conversion/Continuation; provided
that:
(i) if any Interest Period would otherwise end on
a day that is not a Business Day, such Interest Period shall
be extended to the following Business Day unless the result of
such extension would be to carry such Interest Period into
another calendar month, in which event such Interest Period
shall end on the preceding Business Day;
(ii) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest
Period;
(iii) no Interest Period for any Revolving Loan
shall extend beyond the scheduled Revolving Termination Date;
and
(iv) no Interest Period applicable to a Term Loan
or portion thereof shall extend beyond any date upon which is
due any scheduled principal payment in respect of the Term
Loans unless the aggregate principal amount of Term Loans
represented by Base Rate Loans, or by Offshore Rate Loans
having Interest Periods that will expire on or before such
date, equals or exceeds the amount of such principal payment.
IRS means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the Code.
Issuance Date - see subsection 3.1(a).
Issue means, with respect to any Letter of Credit, to issue or
to extend the expiry of, or to renew or increase the amount of, such
Letter of Credit; and the terms "Issued," "Issuing" and "Issuance"
have corresponding meanings.
14
<PAGE> 23
Issuing Lender means BAI in its capacity as issuer of one or
more Letters of Credit hereunder, together with any replacement letter
of credit issuer arising under subsection 10.1(b) or Section 10.9.
Joint Venture means a single-purpose corporation, partnership,
limited liability company, joint venture or other similar legal
arrangement (whether created by contract or conducted through a
separate legal entity) now or hereafter formed by the Company or any
of its Subsidiaries with another Person in order to conduct a common
venture or enterprise with such Person (provided that the term Joint
Venture shall not include any Subsidiary).
L/C Advance means each Lender's participation in any L/C
Borrowing in accordance with its Pro Rata Share.
L/C Amendment Application means an application form for
amendment of an outstanding standby letter of credit as shall at any
time be in use at the Issuing Lender, as the Issuing Lender shall
request.
L/C Application means an application form for issuance of a
standby letter of credit as shall at any time be in use by the Issuing
Lender, as the Issuing Lender shall request.
L/C Borrowing means an extension of credit resulting from a
drawing under any Letter of Credit which shall not have been
reimbursed on the date when made nor converted into a Borrowing of
Revolving Loans under subsection 3.3(c).
L/C Commitment means the commitment of the Issuing Lenders to
Issue, and the commitment of the Lenders severally to participate in,
Letters of Credit from time to time Issued under Article III, in an
aggregate amount not to exceed on any date the lesser of $10,000,000
and the amount of the Revolving Commitment; it being understood that
the L/C Commitment is a part of the Revolving Commitment, rather than
a separate, independent commitment.
L/C Obligations means at any time the sum of (a) the aggregate
undrawn amount of all Letters of Credit then outstanding, plus (b) the
amount of all unreimbursed drawings under all Letters of Credit,
including all outstanding L/C Borrowings.
L/C-Related Documents means the Letters of Credit, the L/C
Applications, the L/C Amendment Applications and any other document
relating to any Letter of Credit, including any of the Issuing
Lender's standard form documents for letter of credit issuances.
15
<PAGE> 24
Lender - see the introductory clause hereto. References to
the "Lenders" shall include the Issuing Lender in its capacity as
such; for purposes of clarification only, to the extent that the
Issuing Lender may have any rights or obligations in addition to those
of the other Lenders due to its status as Issuing Lender, its status
as such will be specifically referenced.
Lending Office means, as to any Lender, the office or offices
of such Lender specified as its "Lending Office" or "Domestic Lending
Office" or "Offshore Lending Office", as the case may be, on Schedule
11.2, or such other office or offices as such Lender may from time to
time specify to the Company and the Agent.
Letter of Credit means any standby letter of credit Issued by
the Issuing Lender pursuant to Article III.
Lien means any security interest, mortgage, deed of trust,
pledge, hypothecation, assignment, charge or deposit arrangement,
encumbrance, lien (statutory or other) or preferential arrangement of
any kind or nature whatsoever in respect of any property (including
those created by, arising under or evidenced by any conditional sale
or other title retention agreement, the interest of a lessor under a
capital lease, or any financing lease having substantially the same
economic effect as any of the foregoing, but not including the
interest of a lessor under an operating lease).
Loan means an extension of credit by a Lender to the Company
under Article II or Article III in the form of a Revolving Loan, Term
Loan or L/C Advance. Each Revolving Loan may be, and each Term Loan
may be divided into tranches which may be, a Base Rate Loan or an
Offshore Rate Loan (each a "Type" of Loan).
Loan Documents means this Agreement, any Note, the L/C-Related
Documents, the Security Agreement, the Guaranty, the Pledge
Agreements, each Mortgage and all other documents (including any
mortgage, leasehold mortgage or dead of trust) delivered to the Agent
or any Lender in connection herewith.
Margin Stock means "margin stock" as such term is defined in
Regulation G, T, U or X of the FRB.
Material Adverse Effect means (a) a material adverse change
in, or a material adverse effect upon, the operations, business,
properties, condition (financial or otherwise) or prospects of the
Company and its Subsidiaries taken as a whole; or (b) a material
adverse effect upon the legality, validity, binding effect or
enforceability against the Company or any Guarantor of any Loan
Document.
16
<PAGE> 25
Mortgage means a mortgage, deed of trust or similar document
granting a Lien on real property in appropriate form for filing or
recording in the applicable jurisdiction and otherwise reasonably
satisfactory to the Agent.
Multiemployer Plan means a "multiemployer plan", within the
meaning of Section 4001(a)(3) of ERISA, with respect to which the
Company or any ERISA Affiliate may have any liability.
Net Worth means the Company's consolidated stockholders'
equity.
Non-Financial L/C Fee Rate means the rate determined in
accordance with Schedule 1.1B in the case of each Non-Financial Letter
of Credit; provided that the foregoing rate shall be increased by 2%
at any time an Event of Default exists.
Non-Financial Letter of Credit means any Letter of Credit
which any Lender is not required under any Requirement of Law
(including under 12 CFR Part 3, Appendix A, Section 3, clause(b)) to
classify as a financial letter of credit with respect to its issuance
thereof or participation therein pursuant to this Agreement.
Note means a promissory note executed by the Company in favor
of a Lender pursuant to subsection 2.2(b), in substantially the form
of Exhibit I.
Notice of Borrowing means a notice in substantially the form
of Exhibit A.
Notice of Conversion/Continuation means a notice in
substantially the form of Exhibit B.
Obligations means all advances, debts, liabilities,
obligations, covenants and duties arising under any Loan Document
owing by the Company to any Lender, the Agent, or any Indemnified
Person, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, or now
existing or hereafter arising.
Offshore Rate means, for any Interest Period, with respect to
Offshore Rate Loans comprising part of the same Borrowing, the rate of
interest per annum (rounded upward, if necessary, to the next 1/16th
of 1%) determined by the Agent as follows:
Offshore Rate = IBOR
-------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
17
<PAGE> 26
"Eurodollar Reserve Percentage" means for any day for any
Interest Period the maximum reserve percentage (expressed as a
decimal, rounded upward, if necessary, to the next 1/100th of
1%) in effect on such day (whether or not applicable to any
Lender) under regulations issued from time to time by the FRB
for determining the maximum reserve requirement (including any
emergency, supplemental or other marginal reserve requirement)
with respect to Eurocurrency funding (currently referred to as
"Eurocurrency liabilities"); and
"IBOR" means the rate of interest per annum determined by the
Agent as the rate at which Dollar deposits in the approximate
amount of BAI's Offshore Rate Loan for such Interest Period
would be offered by the Grand Cayman Branch of Bank of America
National Trust and Savings Association, Grand Cayman B.W.I.
(or such other office as may be designated for such purpose by
BofA), to major banks in the offshore dollar interbank market
at their request at approximately 11:00 a.m. (New York City
time) two Business Days prior to the commencement of such
Interest Period.
The Offshore Rate shall be adjusted automatically as to all
Offshore Rate Loans then outstanding as of the effective date
of any change in the Eurodollar Reserve Percentage.
Offshore Rate Loan means a Loan that bears interest based on
the Offshore Rate.
Ohmstede Acquisition means the acquisition by the Company of
Ohmstede, Inc.
Ohmstede Acquisition Documents means the Agreement and Plan of
Merger dated as of September 19, 1996 among the Company, Air-Cure
Acquisition, Inc. and Ohmstede, Inc., including all schedules and
exhibits thereto, and all other documents executed in connection with
the Ohmstede Acquisition.
Organization Documents means, for any corporation, the
certificate or articles of incorporation, the bylaws, any certificate
of determination or instrument relating to the rights of preferred
shareholders of such corporation, any shareholder rights agreement,
and all applicable resolutions of the board of directors (or any
committee thereof) of such corporation.
Original Credit Agreement - see the first recital.
Other Taxes means any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies
which arise from any
18
<PAGE> 27
payment made hereunder or from the execution, delivery or registration
of, or otherwise with respect to, this Agreement or any other Loan
Document.
Participant - see subsection 11.8(c).
PBGC means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions
under ERISA.
Pension Plan means a pension plan (as defined in Section 3(2)
of ERISA) subject to Title IV of ERISA with respect to which the
Company or any ERISA Affiliate may have any liability.
Permitted Acquisition means an Acquisition by the Company or
any Subsidiary which has been approved by the Required Lenders.
Permitted Liens - see Section 8.1.
Person means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
Plan means an employee benefit plan (as defined in Section
3(3) of ERISA) which the Company sponsors or maintains or to which the
Company makes, is making, or is obligated to make contributions and
includes any Pension Plan.
Pledge Agreements means the Company Pledge Agreement and each
Subsidiary Pledge Agreement.
Pro Rata Share means, as to any Lender at any time, the
percentage equivalent (expressed as a decimal, rounded to the ninth
decimal place) at such time of such Lender's Commitment (whether
funded or unfunded) divided by the combined Commitments (whether
funded or unfunded) of all Lenders. The initial Pro Rata Share of
each Lender is set forth on Schedule 1.1A.
RCRA - see subsection 6.12(a).
Real Property means all real property heretofore, now or
hereafter owned, operated or leased by the Company or any Subsidiary.
Release has the meaning specified in CERCLA and the term
"Disposal" (or "Disposed") shall have the meaning specified in RCRA
and regulations promulgated thereunder; provided that in the event
either CERCLA or RCRA is amended so as to broaden the meaning of any
term defined thereby, such broader meaning shall apply as of the
effective date of such amendment; and provided further, to the extent
that
19
<PAGE> 28
the laws of a state wherein the affected property lies establish a
meaning for "Release" or "Disposal" which is broader than is specified
in either CERCLA or RCRA, such broader meaning shall apply.
Replacement Lender - see Section 4.7.
Reportable Event means, any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such
event for which the 30-day notice requirement under ERISA has been
waived in regulations issued by the PBGC.
Required Lenders means at any time Lenders then holding at
least 66-2/3% of the then aggregate unpaid principal amount of the
Loans or, if no Loans are outstanding, Lenders then having at least
66-2/3% of the aggregate amount of the Commitments.
Requirement of Law means, as to any Person, any law (statutory
or common), treaty, rule or regulation or determination of an
arbitrator or of a Governmental Authority, in each case applicable to
or binding upon such Person or any of its property or to which such
Person or any of its property is subject.
Responsible Officer means the chief executive officer, the
president, the chief financial officer or the treasurer of the
Company, or any other officer having substantially the same authority
and responsibility.
Restricted Payment - see Section 8.18.
Revolving Commitment means the aggregate amount of the
commitments of the Lenders to make Revolving Loans hereunder. The
amount of the Revolving Commitment is $38,000,000, as reduced from
time to time in accordance with the terms of this Agreement.
Revolving Loan - see Section 2.1.
Revolving Termination Date means the earlier to occur of:
(a) November 18, 2001; and
(b) the date on which the Revolving Commitment
terminates in accordance with the provisions of this
Agreement.
SARA - see subsection 6.12(a).
SEC means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.
20
<PAGE> 29
Security Agreement means the Security Agreement among the
Company, the Guarantors and the Agent, a copy of which is attached
hereto as Exhibit F.
Subordinated Debt means (a) $15,000,000 of Senior Subordinated
Notes due November 18, 2003 issued pursuant to the Subordinated Note
and Warrant Purchase Agreement dated as of November 18, 1996, and (b)
any other Indebtedness of the Company having maturities and other
terms, and which is subordinated to the obligations of the Company
hereunder in a manner, satisfactory to the Required Lenders.
Subsidiary of a Person means any corporation, association,
partnership, limited liability company, joint venture or other
business entity of which more than 50% of the voting stock, membership
interests or other equity interests is owned or controlled directly or
indirectly by such Person, or by one or more of the Subsidiaries of
such Person, or by a combination thereof. Unless the context
otherwise clearly requires, references herein to a "Subsidiary" refer
to a Subsidiary of the Company.
Subsidiary Pledge Agreement means a Pledge Agreement between a
Subsidiary and the Agent substantially in the form of Exhibit G-2.
Surety Instruments means all letters of credit (including
standby and commercial), banker's acceptances, bank guaranties, surety
bonds and similar instruments.
Swap Contract means any agreement (including any master
agreement and any agreement, whether or not in writing, relating to
any single transaction) that is an interest rate swap agreement, basis
swap, forward rate agreement, commodity swap, commodity option, equity
or equity index swap or option, bond option, interest rate option,
forward foreign exchange agreement, rate cap, collar or floor
agreement, currency swap agreement, cross-currency rate swap
agreement, swaption, currency option or other similar agreement
(including any option to enter into any of the foregoing).
Taxes means any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Lender and the Agent,
such taxes (including income taxes or franchise taxes) as are imposed
on or measured by such Lender's or the Agent's, as the case may be,
net income by the jurisdiction (or any political subdivision thereof)
under the laws of which such Lender or the Agent, as the case may be,
is organized or maintains a lending office.
Term Commitment means the aggregate amount of the commitments
of the Lenders to make the Term Loans hereunder. The amount of the
Term Commitment
21
<PAGE> 30
is $35,000,000, as reduced from time to time in accordance with the
terms of this Agreement.
Term Commitment Termination Date means the earlier of (i)
November 18, 2001 and (ii) the date on which the Term Commitment
terminates in accordance with the provisions of this Agreement.
Term Loan - see Section 2.1.
Total Indebtedness means all Indebtedness of the Company and
its Subsidiaries determined on a consolidated basis, excluding
Indebtedness described in, and Guaranty Obligations in respect of
Indebtedness described in, clause (g) of the definition of
Indebtedness.
Type has the meaning specified in the definition of "Loan."
Underbillings means the costs and estimated earnings of the
Company and its Subsidiaries in excess of customer billings on
uncompleted contracts.
Underbillings Ratio means at any time the ratio of (i) the
total of Underbillings, minus any L/C Obligations relating to
contracts included in calculating Underbillings, plus Ohmstede, Inc.'s
work-in-process inventory to (ii) the consolidated sales/revenues of
the Company and its Subsidiaries for the four most recently-completed
fiscal quarters of the Company.
Unfunded Pension Liability means the excess of a Pension
Plan's benefit liabilities under Section 4001(a)(16) of ERISA, over
the current value of such Pension Plan's assets, determined in
accordance with the assumptions used for funding such Pension Plan
pursuant to Section 412 of the Code for the applicable plan year.
United States and U.S. each means the United States of
America.
Unmatured Event of Default means any event or circumstance
which, with the giving of notice, the lapse of time, or both, would
(if not cured or otherwise remedied during such time) constitute an
Event of Default.
Voting Stock means, with respect to any Person, any shares of
stock or other equity interests of any class or classes of such Person
whose holders are entitled under ordinary circumstances (irrespective
of whether at the time stock or other equity interests of any other
class or classes shall have or might have voting power by reason of
the happening of any contingency) to vote for the election of a
majority of the directors, managers, trustees or other governing body
of such Person.
22
<PAGE> 31
Wholly-Owned Subsidiary means any corporation in which (other
than directors' qualifying shares required by law) 100% of the capital
stock of each class having ordinary voting power, and 100% of the
capital stock of every other class, in each case, at the time as of
which any determination is being made, is owned, beneficially and of
record, by the Company, or by one or more other Wholly-Owned
Subsidiaries, or by a combination thereof.
1.2 Other Interpretive Provisions.
(a) The meanings of defined terms are equally applicable
to the singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar
words refer to this Agreement as a whole and not to any particular provision of
this Agreement; and subsection, Section, Schedule and Exhibit references are to
this Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all
instruments, documents, agreements, certificates, indentures, notices
and other writings, however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(iii) In the computation of periods of time from a
specified date to a later specified date, the word "from" means "from
and including"; the words "to" and "until" each mean "to but
excluding"; and the word "through" means "to and including."
(d) Unless otherwise expressly provided herein, (i)
references to agreements (including this Agreement) and other contractual
instruments shall be deemed to include all subsequent amendments and other
modifications thereto, but only to the extent such amendments and other
modifications are not prohibited by the terms of any Loan Document, and (ii)
references to any statute or regulation are to be construed as including all
statutory and regulatory provisions consolidating, amending, replacing,
supplementing or interpreting the statute or regulation.
(e) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(f) This Agreement and the other Loan Documents may use
several different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are cumulative
and shall each be performed in accordance with their terms.
23
<PAGE> 32
(g) This Agreement and the other Loan Documents are the
result of negotiations among and have been reviewed by counsel to the Agent,
the Company and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Lenders or the Agent
merely because of the Lenders' or the Agent's involvement in their preparation.
1.3 Accounting Principles.
(a) Unless the context otherwise clearly requires, all
accounting terms not expressly defined herein shall be construed, and all
financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied; provided that if the Company
notifies the Agent that the Company wishes to amend any covenant in Article
VIII to eliminate the effect of any change in GAAP on the operation of such
covenant (or if the Agent notifies the Company that the Required Lenders wish
to amend Article VIII for such purpose), then the Company's compliance with
such covenant shall be determined on the basis of GAAP in effect immediately
before the relevant change in GAAP became effective, until either such notice
is withdrawn or such covenant is amended in a manner satisfactory to the
Company and the Required Lenders.
(b) References herein to "fiscal year" and "fiscal
quarter" refer to such fiscal periods of the Company.
ARTICLE II
THE CREDITS
2.1 Amounts and Terms of Commitments.
(a) The Revolving Credit. Each Lender severally agrees, on
the terms and conditions set forth herein, to make loans to the Company (each
such loan, a "Revolving Loan") from time to time, on any Business Day during
the period from the Closing Date to the Revolving Termination Date, in an
aggregate amount not to exceed at any time outstanding such Lender's Pro Rata
Share of the amount of the Revolving Commitment, provided that, after giving
effect to any Borrowing of Revolving Loans, the aggregate amount of all
Revolving Loans plus the Effective Amount of all L/C Obligations shall not
exceed the lesser of the amount of the Revolving Commitment or the Borrowing
Base. Within the foregoing limits, and subject to the other terms and
conditions hereof, the Company may borrow under this subsection 2.1(a), prepay
under Section 2.6 or 2.7 and reborrow under this subsection 2.1(a).
(b) The Term Credit. Each Lender severally agrees, on the
terms and conditions set forth herein, to make a single loan to the Company
(each such loan, a "Term Loan") on the Closing Date in an amount not to exceed
such Lender's Pro Rata Share of the
24
<PAGE> 33
Term Commitment. Amounts borrowed as Term Loans which are repaid or prepaid by
the Company may not be reborrowed.
2.2 Loan Accounts. (a) The Loans made by each Lender and the Letters
of Credit Issued by the Issuing Lender shall be evidenced by one or more
accounts or records maintained by the Agent, such Lender or the Issuing Lender,
as the case may be, in the ordinary course of business. The accounts or
records maintained by the Agent, the Issuing Lender and each Lender shall be
conclusive (absent manifest error) as to the amount of the Loans made by the
Lenders to the Company and the Letters of Credit Issued for the account of the
Company, and the interest and payments thereon. Any failure so to record or
any error in doing so shall not, however, limit or otherwise affect the
obligation of the Company hereunder to pay any amount owing with respect to any
Loan or any Letter of Credit.
(b) Upon the request of any Lender made through the
Agent, the Loans made by such Lender may be evidenced by one or more Notes,
instead of loan accounts. Each such Lender shall endorse on the schedules
annexed to its Note(s) the date, amount and maturity of each Loan made by it
and the amount of each payment of principal made by the Company with respect
thereto. Each such Lender is irrevocably authorized by the Company to endorse
its Note(s) and such Lender's record shall be conclusive (absent manifest
error); provided that the failure of a Lender to make, or an error in making, a
notation thereon with respect to any Loan shall not limit or otherwise affect
the obligations of the Company hereunder or under any Note to such Lender.
2.3 Procedure for Borrowing. (a) Each Borrowing of Revolving Loans
or Term Loans shall be made upon the Company's irrevocable written notice
delivered to the Agent in the form of a Notice of Borrowing (which notice must
be received by the Agent prior to 10:30 a.m. (Chicago time) (i) three Business
Days prior to the requested Borrowing Date, in the case of Offshore Rate Loans;
and (ii) on the requested Borrowing Date, in the case of Base Rate Loans),
specifying:
(A) the amount of the Borrowing, which shall
be (x) in the case of Offshore Rate Loans, in a minimum amount
of $200,000 or a higher integral multiple of $100,000 and (y)
in the case of Base Rate Loans, in an aggregate minimum amount
of $200,000 or a higher integral multiple of $100,000;
(B) the requested Borrowing Date, which
shall be a Business Day;
(C) the Type of Loans comprising the
Borrowing; and
(D) in the case of Offshore Rate Loans,
the duration of the Interest Period therefor.
25
<PAGE> 34
(b) The Agent will promptly notify each Lender of its
receipt of any Notice of Borrowing and of the amount of such Lender's Pro Rata
Share of such Borrowing.
(c) Each Lender will make the amount of its Pro Rata
Share of each Borrowing available to the Agent for the account of the Company
at the Agent's Payment Office by 12:00 noon (Chicago time) on the Borrowing
Date requested by the Company in funds immediately available to the Agent. The
proceeds of all Loans will then be made available to the Company by the Agent
at such office by crediting the account of the Company on the books of BAI with
the aggregate of the amounts made available to the Agent by the Lenders and in
like funds as received by the Agent.
(d) After giving effect to any Borrowing, there may not
be more than five different Interest Periods in effect.
2.4 Conversion and Continuation Elections. (a) The Company may, upon
irrevocable written notice to the Agent in accordance with subsection 2.4(b):
(i) elect to convert, on any Business Day, any Base
Rate Loans (in an aggregate minimum amount of $200,000 or a higher
integral multiple of $100,000) into Offshore Rate Loans;
(ii) elect to convert, on the last day of the
applicable Interest Period, any Offshore Rate Loans (or any part
thereof in an aggregate minimum amount of $200,000 or a higher
integral multiple of $100,000) into Base Rate Loans; or
(iii) elect to continue, as of the last day of the
applicable Interest Period, any Offshore Rate Loans having Interest
Periods expiring on such day (or any part thereof in an aggregate
minimum amount of $200,000 or a higher integral multiple of $100,000);
provided that if at any time the aggregate amount of Offshore Rate Loans in
respect of any Borrowing shall have been reduced, by payment, prepayment, or
conversion of part thereof, to be less than $200,000, such Offshore Rate Loans
shall automatically convert into Base Rate Loans; provided, further, that
notwithstanding any of the foregoing provisions of this Section 2.4, after
payment of the first installment of principal of the Term Loans pursuant to
subsection 2.8(b), the Company may have one Borrowing of Term Loans, and may
make conversions and continuations of all or a portion thereof so long as after
giving effect thereto there is only one Borrowing of Term Loans, which is not
an integral multiple of $100,000 (but is an integral multiple of $500).
(b) The Company shall deliver a Notice of
Conversion/Continuation to be received by the Agent not later than 10:30 a.m.
(Chicago time) at least (i) three Business Days in advance of the
Conversion/Continuation Date, if the Loans are to be converted into
26
<PAGE> 35
or continued as Offshore Rate Loans; and (ii) on the Conversion/Continuation
Date, if the Loans are to be converted into Base Rate Loans, specifying:
(A) the proposed Conversion/Continuation
Date;
(B) the aggregate amount of Loans to be
converted or continued;
(C) the Type of Loans resulting from the
proposed conversion or continuation; and
(D) other than in the case of
conversions into Base Rate Loans, the duration of the
requested Interest Period.
(c) If upon the expiration of any Interest Period
applicable to Offshore Rate Loans, the Company has failed to select timely a
new Interest Period to be applicable to such Offshore Rate Loans, the Company
shall be deemed to have elected to convert such Offshore Rate Loans into Base
Rate Loans effective as of the expiration date of such Interest Period.
(d) The Agent will promptly notify each Lender of its
receipt of a Notice of Conversion/Continuation or, if no timely notice is
provided by the Company, the Agent will promptly notify each Lender of the
details of any automatic conversion. All conversions and continuations shall
be made ratably according to the respective outstanding principal amounts of
the Loans with respect to which the notice was given held by each Lender.
(e) Unless the Required Lenders otherwise agree, during
the existence of an Event of Default or Unmatured Event of Default, the Company
may not elect to have a Loan converted into or continued as an Offshore Rate
Loan.
(f) After giving effect to any conversion or continuation
of Loans, there may not be more than five different Interest Periods in effect.
2.5 Voluntary Termination or Reduction of Commitments. The Company
may, upon not less than five Business Days' prior notice to the Agent,
terminate the Revolving Commitment or (prior to the funding of the Term Loans)
the Term Commitment, or permanently reduce the Revolving Commitment or (prior
to the funding of the Term Loans) the Term Commitment, by an aggregate amount
of $1,000,000 or a higher integral multiple thereof; unless, in the case of the
Revolving Commitment, after giving effect thereto and to any prepayment of
Revolving Loans made on the effective date thereof, the aggregate principal
amount of all Revolving Loans plus the Effective Amount of all L/C Obligations
would exceed the amount of the Revolving Commitment then in effect. Once
reduced in accordance with this Section, neither the Revolving Commitment nor
the Term Commitment may be increased. Any reduction of the Revolving
Commitment or the Term Commitment shall be applied to each Lender according to
its Pro Rata Share.
27
<PAGE> 36
2.6 Optional Prepayments. Subject to Section 4.4, the Company may,
from time to time, upon irrevocable notice to the Agent by 10:30 a.m. (Chicago
time) on any Business Day, ratably prepay any Borrowing of Loans in whole or in
part, any such partial prepayment to be in an aggregate minimum amount of
$200,000 or a higher integral multiple of $100,000. Such notice of prepayment
shall specify the date and amount of such prepayment and the Loans to be
prepaid. The Agent will promptly notify each Lender of its receipt of any such
notice and of such Lender's Pro Rata Share of such prepayment. If any such
notice is given by the Company, the Company shall make such prepayment and the
payment amount specified in such notice shall be due and payable on the date
specified therein, together with, in the case of Offshore Rate Loans, accrued
interest to such date on the amount prepaid and any amounts required pursuant
to Section 4.4. Optional prepayments of Term Loans shall be applied on a pro
rata basis against the remaining installments thereof.
2.7 Mandatory Prepayments.
(a) Borrowing Base Deficiency. If at any time the sum of the
aggregate principal amount of all outstanding Revolving Loans plus the
Effective Amount of all L/C Obligations exceeds the Borrowing Base, the Company
will make an immediate repayment of Revolving Loans in an amount equal to 100%
of such excess (rounded upward, if necessary, to an integral multiple of
$100,000).
(b) Sale of Assets. Within 10 days after any Major Asset Sale (as
defined below), the Company shall make a prepayment of the Term Loans in an
amount equal to 100% of the net proceeds of such Major Asset Sale. For
purposes of the foregoing, "Major Asset Sale" means any sale, transfer or other
disposition of assets by the Company or any Subsidiary outside the ordinary
course of business in one transaction or a series of related transactions which
results in net proceeds to the Company and its Subsidiaries of $500,000 or
more, other than the sale of the Subsidiaries of the Company referenced in
subsection 8.2(c) so long as 100% of the net proceeds of such sale is used to
reduce amounts outstanding under this Agreement.
(c) Debt Offering. Concurrently with the consummation of any
issuance of any Permitted Debt (as defined below), the Company shall make a
prepayment of the Term Loans in an amount equal to 100% of the net proceeds of
such Permitted Debt. For purposes of the foregoing, "Permitted Debt" means (i)
any Subordinated Debt issued after the Closing Date and (ii) any other
Indebtedness of the Company not permitted by Section 8.5 as in effect in the
Closing Date but approved in writing by the Required Lenders.
(d) Equity Offering. Concurrently with the consummation of any
Equity Offering (as defined below), the Company shall make a prepayment of the
Term Loans in an amount equal to the Specified Percentage (as defined below) of
the net proceeds from such Equity Offering. For purposes of the foregoing, (i)
"Equity Offering" means the issuance by the Company or any Subsidiary of any of
its capital stock or any option, warrant or other right to acquire any of its
capital stock, excluding any of the foregoing issued by a Subsidiary to
28
<PAGE> 37
the Company or to a Wholly-Owned Subsidiary; and (ii) "Specified Percentage"
means (x) 100% of the first $5,000,000 of net proceeds from Equity Offerings,
(y) 50% of the next $30,000,000 of net proceeds from Equity Offerings and (z)
0% of any additional net proceeds from Equity Offerings.
(e) Excess Cash Flow. If the ratio of (i) Total Indebtedness to (ii)
the sum of Total Indebtedness plus Net Worth has not been reduced to 0.60:1.00
or less by December 31 of any year (excluding December 31, 1996), then within
90 days after such date the Company shall make a prepayment of the Term Loans
in an amount equal to 50% of Excess Cash Flow for the preceding fiscal year.
(f) Application of Prepayments of Term Loans. Mandatory prepayments
of Term Loans pursuant to subsections 2.7(b), (c) and (d) shall be applied on a
pro rata basis against the remaining installments of the Term Loans. Mandatory
prepayments of Term Loans pursuant to subsection 2.7(e) shall be applied to the
remaining installments of the Term Loans in the inverse order of maturity.
2.8 Repayment.
(a) The Revolving Credit. The Company shall repay all Revolving
Loans on the Revolving Termination Date.
(b) The Term Credit. The Company shall repay the Term Loans in
twenty consecutive quarterly installments. The first four installments shall
be in the amount of $1,500,000 each, the next fifteen installments shall be in
the amount of $1,812,500 each, and the final installment shall be in the
remaining unpaid principal amount of the Term Loan. The first such installment
shall be payable on January 31, 1997, with subsequent installments on the last
Business Day of each third month thereafter.
2.9 Interest. (a) Each Revolving Loan and Term Loan shall bear
interest on the outstanding principal amount thereof from the applicable
Borrowing Date at a rate per annum equal to the Offshore Rate or the Base Rate,
as the case may be (and subject to the Company's right to convert to the other
Type of Loans under Section 2.4), plus the Applicable Margin.
(b) Interest on each Loan shall be paid in arrears on
each Interest Payment Date therefor. Interest shall also be paid on the date
of any prepayment of Offshore Rate Loans under Section 2.6 or 2.7 for the
portion of the Loans so prepaid and upon payment (including prepayment) in full
thereof.
(c) Notwithstanding subsections (a) and (b) of this
Section, during the existence of any Unmatured Event of Default under
subsection 9.1(a) or (g) or any Event of Default under subsection 9.1(a), (f)
or (g), and, at the election of the Required Lenders, during the existence of
any other Event of Default, the Company shall pay interest (after as
29
<PAGE> 38
well as before entry of judgment thereon to the extent permitted by law) on the
principal amount of all outstanding Loans and, to the extent permitted by
applicable law, on any other amount payable hereunder or under any other Loan
Document, at a rate per annum equal to the rate otherwise applicable thereto
pursuant to the terms hereof or such other Loan Document (or, if no such rate
is specified, the Base Rate plus the Applicable Margin) plus 2%. All such
interest shall be payable on demand.
(d) Anything herein to the contrary notwithstanding, the
obligations of the Company to any Lender hereunder shall be subject to the
limitation that payments of interest shall not be required for any period for
which interest is computed hereunder to the extent (but only to the extent)
that contracting for or receiving such payment by such Lender would be contrary
to the provisions of any law applicable to such Lender limiting the highest
rate of interest that may be lawfully contracted for, charged or received by
such Lender, and in such event the Company shall pay such Lender interest at
the highest rate permitted by applicable law.
2.10 Fees. In addition to certain fees described in Section 3.8:
(a) Agency Fees. The Company shall pay to each of the
Arranger, the Agent and the Co-Agent such additional fees at such times and in
such amounts as are mutually agreed upon from time to time between the Company
and the Arranger, the Agent or Co-Agent, as the case may be.
(b) Commitment Fees. (i) The Company shall pay to the Agent
for the account of each Lender a commitment fee at the rates determined in
accordance with Schedule 1.1B, on the average daily unused portion of such
Lender's Pro Rata Share of the Revolving Commitment, computed on a quarterly
basis in arrears on the last Business Day of each calendar quarter (or, if
earlier, the Revolving Termination Date) based upon the daily utilization for
such quarter (or such shorter period) as calculated by the Agent. For purposes
of calculating utilization under this subsection, the Revolving Commitment
shall be deemed used to the extent of the aggregate principal amount of all
Revolving Loans then outstanding plus the Effective Amount of all L/C
Obligations. Such commitment fee shall accrue from the Closing Date to the
Revolving Termination Date and shall be due and payable quarterly in arrears on
the last Business Day of each calendar quarter, with the final payment to be
made on the Revolving Termination Date.
(ii) The commitment fees provided in this subsection shall
accrue at all times after the Closing Date, including at any time during which
one or more conditions in Article V are not met.
(c) Fronting Fee. The Company shall pay a letter of
credit fronting fee to the Issuing Lender as agreed upon from time to time
between the Company and the Issuing Lender.
30
<PAGE> 39
2.11 Computation of Fees and Interest. (a) All computations of
interest for Base Rate Loans when the Base Rate is determined by BofA's
"reference rate" shall be made on the basis of a year of 365 or 366 days, as
the case may be, and actual days elapsed. All other computations of interest
and fees shall be made on the basis of a 360-day year and actual days elapsed
(which results in more interest being paid than if computed on the basis of a
365-day year). Interest and fees shall accrue during each period during which
interest or fees are computed from the first day thereof to the last day
thereof.
(b) Each determination of an interest rate by the Agent
shall be conclusive and binding on the Company and the Lenders in the absence
of manifest error. The Agent will, at the request of the Company or any
Lender, deliver to the Company or such Lender, as the case may be, a statement
showing the quotations used by the Agent in determining any interest rate and
the resulting interest rate.
2.12 Payments by the Company. (a) All payments to be made by the
Company shall be made without set-off, recoupment or counterclaim. Except as
otherwise expressly provided herein, all payments by the Company shall be made
to the Agent for the account of the Lenders at the Agent's Payment Office, and
shall be made in dollars and in immediately available funds, no later than 1:00
p.m. (Chicago time) on the date specified herein. The Agent will promptly
distribute to each Lender its Pro Rata Share (or other applicable share as
expressly provided herein) of such payment in like funds as received. Any
payment received by the Agent later than 1:00 p.m. (Chicago time) shall be
deemed to have been received on the following Business Day and any applicable
interest or fee shall continue to accrue.
(b) Whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day (unless,
in the case of a payment with respect to an Offshore Rate Loan, the following
Business Day is the first Business Day of a calendar month, in which case such
payment shall be due on the preceding Business Day), and such extension of time
shall in such case be included in the computation of interest or fees, as the
case may be.
(c) Unless the Agent receives notice from the Company
prior to the date on which any payment is due to the Lenders that the Company
will not make such payment in full as and when required, the Agent may assume
that the Company has made such payment in full to the Agent on such date in
immediately available funds and the Agent may (but shall not be so required),
in reliance upon such assumption, distribute to each Lender on such due date an
amount equal to the amount then due such Lender. If and to the extent the
Company has not made such payment in full to the Agent, each Lender shall repay
to the Agent on demand such amount distributed to such Lender, together with
interest thereon at the Federal Funds Rate for each day from the date such
amount is distributed to such Lender until the date repaid.
2.13 Payments by the Lenders to the Agent. (a) Unless the Agent
receives notice from a Lender on or prior to the Closing Date or, with respect
to any Borrowing after the
31
<PAGE> 40
Closing Date, at least one Business Day prior to the date of such Borrowing,
that such Lender will not make available as and when required hereunder to the
Agent for the account of the Company the amount of such Lender's Pro Rata Share
of such Borrowing, the Agent may assume that each Lender has made such amount
available to the Agent in immediately available funds on the Borrowing Date and
the Agent may (but shall not be required), in reliance upon such assumption,
make available to the Company on such date a corresponding amount. If and to
the extent any Lender shall not have made its full amount available to the
Agent in immediately available funds and the Agent in such circumstances has
made available to the Company such amount, such Lender shall on the Business
Day following such Borrowing Date make such amount available to the Agent,
together with interest at the Federal Funds Rate for each day during such
period. A notice of the Agent submitted to any Lender with respect to amounts
owing under this subsection (a) shall be conclusive, absent manifest error. If
such amount is so made available, such payment to the Agent shall constitute
such Lender's Loan on the date of Borrowing for all purposes of this Agreement.
If such amount is not made available to the Agent on the Business Day following
the Borrowing Date, the Agent will notify the Company of such failure to fund
and, upon demand by the Agent, the Company shall pay such amount to the Agent
for the Agent's account, together with interest thereon for each day elapsed
since the date of such Borrowing, at a rate per annum equal to the interest
rate applicable at the time to the Loans comprising such Borrowing.
(b) The failure of any Lender to make any Loan on any
Borrowing Date shall not relieve any other Lender of any obligation hereunder
to make a Loan on such Borrowing Date, but no Lender shall be responsible for
the failure of any other Lender to make the Loan to be made by such other
Lender on any Borrowing Date.
2.14 Sharing of Payments, Etc. If, other than as expressly provided
elsewhere herein, any Lender shall obtain on account of the Loans made by it
any payment (whether voluntary, involuntary, through the exercise of any right
of set-off, or otherwise) in excess of its Pro Rata Share, such Lender shall
immediately (a) notify the Agent of such fact, and (b) purchase from the other
Lenders such participations in the Loans made by them as shall be necessary to
cause such purchasing Lender to share the excess payment pro rata with each of
them; provided, however, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Lender, such purchase shall to that
extent be rescinded and each other Lender shall repay to the purchasing Lender
the purchase price paid therefor, together with an amount equal to such paying
Lender's ratable share (according to the proportion of (i) the amount of such
paying Lender's required repayment to (ii) the total amount so recovered from
the purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. The Company
agrees that any Lender so purchasing a participation from another Lender may,
to the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off, but subject to Section 11.10) with respect to
such participation as fully as if such Lender were the direct creditor of the
Company in the amount of such participation. The Agent will keep records
(which shall be conclusive and binding in the absence of manifest error) of
32
<PAGE> 41
participations purchased under this Section and will in each case notify the
Lenders following any such purchases or repayments.
ARTICLE III
THE LETTERS OF CREDIT
3.1 The Letter of Credit Subfacility. (a) On the terms and
conditions set forth herein (i) the Issuing Lender agrees, (A) from time to
time on any Business Day during the period from the Closing Date to the
Revolving Termination Date to issue Letters of Credit for the account of the
Company, and to amend or renew Letters of Credit previously issued by it, in
accordance with subsections 3.2(c) and 3.2(d), and (B) to honor properly drawn
drafts under the Letters of Credit issued by it; and (ii) the Lenders severally
agree to participate in Letters of Credit Issued for the account of the
Company; provided that the Issuing Lender shall not be obligated to Issue, and
no Lender shall be obligated to participate in, any Letter of Credit if as of
the date of Issuance of such Letter of Credit (the "Issuance Date") (1) the
Effective Amount of all L/C Obligations plus the aggregate amount of all
Revolving Loans exceeds the amount of the Revolving Commitment or the Borrowing
Base; or (2) the Effective Amount of all L/C Obligations exceeds the L/C
Commitment. Within the foregoing limits, and subject to the other terms and
conditions hereof, the Company's ability to obtain Letters of Credit shall be
fully revolving, and, accordingly, the Company may, during the foregoing
period, obtain Letters of Credit to replace Letters of Credit which have
expired or which have been drawn upon and reimbursed.
(b) The Issuing Lender shall not be under any obligation
to Issue any Letter of Credit if:
(i) any order, judgment or decree of any
Governmental Authority or arbitrator shall by its terms purport to
enjoin or restrain the Issuing Lender from Issuing such Letter of
Credit, or any Requirement of Law applicable to the Issuing Lender or
any request or directive (whether or not having the force of law) from
any Governmental Authority with jurisdiction over the Issuing Lender
shall prohibit, or request that the Issuing Lender refrain from, the
Issuance of letters of credit generally or such Letter of Credit in
particular or shall impose upon the Issuing Lender with respect to
such Letter of Credit any restriction, reserve or capital requirement
(for which the Issuing Lender is not otherwise compensated hereunder)
not in effect on the Closing Date, or shall impose upon the Issuing
Lender any unreimbursed loss, cost or expense which was not applicable
on the Closing Date and which the Issuing Lender in good faith deems
material to it;
(ii) the Issuing Lender has received written notice
from any Lender, the Agent or the Company, on or prior to the Business
Day prior to the requested
33
<PAGE> 42
date of Issuance of such Letter of Credit, that one or more of the
applicable conditions contained in Article V is not then satisfied;
(iii) the expiry date of any requested Letter of
Credit is after the Revolving Termination Date, unless all of the
Lenders have approved such expiry date in writing;
(iv) any requested Letter of Credit does not provide
for drafts, or is not otherwise in form and substance acceptable to
the Issuing Lender, or the Issuance of a Letter of Credit shall
violate any applicable policies of the Issuing Lender;
(v) such Letter of Credit is to support obligations
of the Company or any Subsidiary with respect to workmen's
compensation or similar obligations;
(vi) such Letter of Credit is denominated in a
currency other than Dollars; or
(vii) such Letter of Credit is not a standby letter
of credit;
3.2 Issuance, Amendment and Renewal of Letters of Credit. (a) Each
Letter of Credit shall be issued upon the irrevocable written request of the
Company received by the Issuing Lender (with a copy sent by the Company to the
Agent) at least five days (or such shorter time as the Issuing Lender and the
Agent may agree in a particular instance in their sole discretion) prior to the
proposed date of issuance. Each such request for issuance of a Letter of
Credit shall be by facsimile, confirmed immediately in an original writing, in
the form of an L/C Application, and shall specify in form and detail
satisfactory to the Issuing Lender: (i) the proposed date of issuance of the
Letter of Credit (which shall be a Business Day); (ii) the face amount of the
Letter of Credit; (iii) the expiry date of the Letter of Credit; (iv) the name
and address of the beneficiary thereof; (v) the documents to be presented by
the beneficiary of the Letter of Credit in case of any drawing thereunder; (vi)
the full text of any certificate to be presented by the beneficiary in case of
any drawing thereunder; and (vii) such other matters as the Issuing Lender may
require.
(b) At least two Business Days prior to the Issuance of
any Letter of Credit, the Issuing Lender will confirm with the Agent (by
telephone or in writing) that the Agent has received a copy of the L/C
Application or L/C Amendment Application from the Company and, if not, the
Issuing Lender will provide the Agent with a copy thereof. Unless the Issuing
Lender has received, on or before the Business Day immediately preceding the
date on which the Issuing Lender is to issue a requested Letter of Credit, (A)
notice from the Agent directing the Issuing Lender not to issue such Letter of
Credit because such issuance is not then permitted under subsection 3.1(a) as a
result of the limitations set forth in clause (1) or (2) thereof or (B) a
notice described in subsection 3.1(b)(ii), then, subject to the terms and
conditions hereof, the Issuing Lender shall, on the requested date, issue a
Letter of Credit for
34
<PAGE> 43
the account of the Company in accordance with the Issuing Lender's usual and
customary business practices.
(c) From time to time while a Letter of Credit is
outstanding and prior to the Revolving Termination Date, the Issuing Lender
will, upon the written request of the Company received by the Issuing Lender
(with a copy sent by the Company to the Agent) at least five days (or such
shorter time as the Issuing Lender and the Agent may agree in a particular
instance in their sole discretion) prior to the proposed date of amendment,
amend any Letter of Credit issued by it. Each such request for amendment of a
Letter of Credit shall be made by facsimile, confirmed immediately in an
original writing, made in the form of an L/C Amendment Application and shall
specify in form and detail satisfactory to the Issuing Lender: (i) the Letter
of Credit to be amended; (ii) the proposed date of amendment of such Letter of
Credit (which shall be a Business Day); (iii) the nature of the proposed
amendment; and (iv) such other matters as the Issuing Lender may require. The
Issuing Lender shall not have any obligation to amend any Letter of Credit if:
(A) the Issuing Lender would have no obligation at such time to issue such
Letter of Credit in its amended form under the terms of this Agreement; or (B)
the beneficiary of such Letter of Credit does not accept the proposed amendment
to such Letter of Credit. The Agent will promptly notify the Lenders of the
receipt by it of any L/C Application or L/C Amendment Application.
(d) The Issuing Lender and the Lenders agree that, while
a Letter of Credit is outstanding and prior to the Revolving Termination Date,
at the option of the Company and upon the written request of the Company
received by the Issuing Lender (with a copy sent by the Company to the Agent)
at least five days (or such shorter time as the Issuing Lender and the Agent
may agree in a particular instance in their sole discretion) prior to the
proposed date of notification of renewal, the Issuing Lender shall be entitled
to authorize the automatic renewal of any Letter of Credit. Each such request
for renewal of a Letter of Credit shall be made by facsimile, confirmed
immediately in an original writing, in the form of an L/C Amendment
Application, and shall specify in form and detail satisfactory to the Issuing
Lender: (i) the Letter of Credit to be renewed; (ii) the proposed date of
notification of renewal of such Letter of Credit (which shall be a Business
Day); (iii) the revised expiry date of such Letter of Credit (which, unless all
Lenders otherwise consent, shall be prior to the Revolving Termination Date);
and (iv) such other matters as the Issuing Lender may require. The Issuing
Lender shall not be under any obligation to renew any Letter of Credit if: (A)
the Issuing Lender would have no obligation at such time to issue or amend such
Letter of Credit in its renewed form under the terms of this Agreement; or (B)
the beneficiary of such Letter of Credit does not accept the proposed renewal
of such Letter of Credit. If any outstanding Letter of Credit shall provide
that it shall be automatically renewed unless the beneficiary thereof receives
notice from the Issuing Lender that such Letter of Credit shall not be renewed,
and if at the time of renewal the Issuing Lender would be entitled to authorize
the automatic renewal of such Letter of Credit in accordance with this
subsection 3.2(d) upon the request of the Company but such Issuing Lender shall
not have received any L/C Amendment Application from the Company with respect
to such renewal or other written direction by the Company with respect thereto,
the Issuing Lender shall
35
<PAGE> 44
nonetheless be permitted to allow such Letter of Credit to renew, and the
Company and the Lenders hereby authorize such renewal, and, accordingly, the
Issuing Lender shall be deemed to have received an L/C Amendment Application
from the Company requesting such renewal.
(e) The Issuing Lender may, at its election (or as
required by the Agent at the direction of the Required Lenders), deliver any
notice of termination or other communication to any Letter of Credit
beneficiary or transferee, and take any other action as necessary or
appropriate, at any time and from time to time, in order to cause the expiry
date of any Letter of Credit to be a date not later than the Revolving
Termination Date.
(f) This Agreement shall control in the event of any
conflict with any L/C-Related Document (other than any Letter of Credit).
(g) The Issuing Lender will deliver to the Agent,
concurrently or promptly following its delivery of a Letter of Credit, or
amendment to or renewal of a Letter of Credit, to an advising bank or a
beneficiary, a true and complete copy of each such Letter of Credit or
amendment to or renewal of a Letter of Credit.
3.3 Risk Participations, Drawings and Reimbursements. (a)
Immediately upon the Issuance of each Letter of Credit, each Lender shall be
deemed to, and hereby irrevocably and unconditionally agrees to, purchase from
the Issuing Lender a participation in such Letter of Credit and each drawing
thereunder in an amount equal to the product of (i) such Lender's Pro Rata
Share times (ii) the maximum amount available to be drawn under such Letter of
Credit and the amount of such drawing, respectively.
(b) In the event of any request for a drawing under a
Letter of Credit by the beneficiary or transferee thereof, the Issuing Lender
will promptly notify the Company and the Agent. The Company shall reimburse
the Issuing Lender prior to 1:00 p.m. (Chicago time), on each date that any
amount is paid by the Issuing Lender under any Letter of Credit (each such
date, an "Honor Date"), in an amount equal to the amount so paid by the Issuing
Lender. If the Company fails to reimburse the Issuing Lender for the full
amount of any drawing under any Letter of Credit by 1:00 p.m. (Chicago time) on
the Honor Date, the Issuing Lender will promptly notify the Agent and the Agent
will promptly notify each Lender thereof, and the Company shall be deemed to
have requested that Base Rate Loans be made by the Lenders to be disbursed on
the Honor Date under such Letter of Credit, subject to the amount of the
unutilized portion of the Revolving Commitment and subject to the conditions
set forth in Section 5.2. Any notice given by the Issuing Lender or the Agent
pursuant to this subsection 3.3(b) may be oral if immediately confirmed in
writing (including by facsimile); provided that the lack of such an immediate
confirmation shall not affect the conclusiveness or binding effect of such
notice.
(c) Each Lender shall upon any notice pursuant to subsection
3.3(b) make available to the Agent for the account of the Issuing Lender an
amount in Dollars and in
36
<PAGE> 45
immediately available funds equal to its Pro Rata Share of the amount of the
drawing, whereupon the participating Lenders shall (subject to subsection
3.3(d)) each be deemed to have made a Revolving Loan consisting of a Base Rate
Loan to the Company in such amount. If any Lender so notified fails to make
available to the Agent for the account of the Issuing Lender the amount of such
Lender's Pro Rata Share of the amount of such drawing by no later than 2:00
p.m. (Chicago time) on the Honor Date, then interest shall accrue on such
Lender's obligation to make such payment, from the Honor Date to the date such
Lender makes such payment, at a rate per annum equal to the Federal Funds Rate
in effect from time to time during such period. The Agent will promptly give
notice of the occurrence of the Honor Date, but failure of the Agent to give
any such notice on the Honor Date or in sufficient time to enable any Lender to
effect such payment on such date shall not relieve such Lender from its
obligations under this Section 3.3.
(d) With respect to any unreimbursed drawing that is not
converted into Revolving Loans consisting of Base Rate Loans in whole or in
part, because of the Company's failure to satisfy the conditions set forth in
Section 5.2 or for any other reason, the Company shall be deemed to have
incurred from the Issuing Lender an L/C Borrowing in the amount of such
drawing, which L/C Borrowing shall be due and payable on demand (together with
interest) and shall bear interest at a rate per annum equal to the Base Rate
plus 2% per annum, and each Lender's payment to the Issuing Lender pursuant to
subsection 3.3(c) shall be deemed payment in respect of its participation in
such L/C Borrowing and shall constitute an L/C Advance from such Lender in
satisfaction of its participation obligation under this Section 3.3.
(e) Each Lender's obligation in accordance with this
Agreement to make Revolving Loans or L/C Advances, as contemplated by this
Section 3.3, as a result of a drawing under a Letter of Credit, shall be
absolute and unconditional and without recourse to the Issuing Lender and shall
not be affected by any circumstance, including (i) any set-off, counterclaim,
recoupment, defense or other right which such Lender may have against the
Issuing Lender, the Company or any other Person for any reason whatsoever; (ii)
the existence of an Event of Default, an Unmatured Event of Default or a
Material Adverse Effect; or (iii) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing; provided that each
Lender's obligation to make Revolving Loans under this Section 3.3 is subject
to the conditions set forth in Section 5.2.
3.4 Repayment of Participations. (a) Upon (and only upon) receipt by
the Agent for the account of the Issuing Lender of immediately available funds
from the Company (i) in reimbursement of any payment made by the Issuing Lender
under a Letter of Credit with respect to which any Lender has paid the Agent
for the account of the Issuing Lender for such Lender's participation in such
Letter of Credit pursuant to Section 3.3 or (ii) in payment of interest
thereon, the Agent will pay to each Lender, in the same funds as those received
by the Agent for the account of the Issuing Lender, the amount of such Lender's
Pro Rata Share of such funds, and the Issuing Lender shall receive the amount
of the Pro Rata Share
37
<PAGE> 46
of such funds of any Lender that did not so pay the Agent for the account of
the Issuing Lender.
(b) If the Agent or the Issuing Lender is required at any
time to return to the Company, or to a trustee, receiver, liquidator or
custodian, or to any official in any Insolvency Proceeding, any portion of any
payment made by the Company to the Agent for the account of the Issuing Lender
pursuant to subsection 3.4(a) in reimbursement of a payment made under a Letter
of Credit or interest or fee thereon, each Lender shall, on demand of the
Agent, forthwith return to the Agent or the Issuing Lender the amount of its
Pro Rata Share of any amount so returned by the Agent or the Issuing Lender
plus interest thereon from the date such demand is made to the date such amount
is returned by such Lender to the Agent or the Issuing Lender, at a rate per
annum equal to the Federal Funds Rate in effect from time to time.
3.5 Role of the Issuing Lender. (a) Each Lender and the Company
agree that, in paying any drawing under a Letter of Credit, the Issuing Lender
shall not have any responsibility to obtain any document (other than any sight
draft and certificate expressly required by such Letter of Credit) or to
ascertain or inquire as to the validity or accuracy of any such document or the
authority of the Person executing or delivering any such document.
(b) Neither the Issuing Lender nor any of its correspondents,
participants or assignees shall be liable to any Lender for: (i) any action
taken or omitted in connection herewith at the request or with the approval of
the Lenders (including the Required Lenders, as applicable); (ii) any action
taken or omitted in the absence of gross negligence or willful misconduct; or
(iii) the due execution, effectiveness, validity or enforceability of any L/C-
Related Document.
(c) The Company hereby assumes all risks of the acts or
omissions of any beneficiary or transferee with respect to its use of any
Letter of Credit; provided that this assumption is not intended to, and shall
not, preclude the Company's pursuing such rights and remedies as it may have
against the beneficiary or transferee at law or under any other agreement.
Neither the Issuing Lender nor any of its correspondents, participants or
assignees shall be liable or responsible for any of the matters described in
clauses (i) through (vii) of Section 3.6; provided that, anything in such
clauses to the contrary notwithstanding, the Company may have a claim against
the Issuing Lender, and the Issuing Lender may be liable to the Company, to the
extent, but only to the extent, of any direct, as opposed to consequential or
exemplary, damages suffered by the Company which the Company proves were caused
by the Issuing Lender's willful misconduct or gross negligence or the Issuing
Lender's willful failure to pay under any Letter of Credit after the
presentation to it by the beneficiary of a sight draft and certificate(s)
strictly complying with the terms and conditions of such Letter of Credit. In
furtherance and not in limitation of the foregoing: (i) the Issuing Lender may
accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary; and (ii) the Issuing Lender shall not be
responsible for the validity or sufficiency of
38
<PAGE> 47
any instrument transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any reason.
3.6 Obligations Absolute. The obligations of the Company under this
Agreement and any L/C-Related Document to reimburse the Issuing Lender for a
drawing under a Letter of Credit, and to repay any L/C Borrowing and any
drawing under a Letter of Credit converted into Revolving Loans, shall be
unconditional and irrevocable, and shall be paid strictly in accordance with
the terms of this Agreement and each such other L/C-Related Document under all
circumstances, including the following:
(i) any lack of validity or enforceability of this
Agreement or any L/C-Related Document;
(ii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the obligations of
the Company in respect of any Letter of Credit or any other amendment
or waiver of or any consent to departure from all or any of the L/C-
Related Documents;
(iii) the existence of any claim, set-off, defense
or other right that the Company may have at any time against any
beneficiary or any transferee of any Letter of Credit (or any Person
for whom any such beneficiary or any such transferee may be acting),
the Issuing Lender or any other Person, whether in connection with
this Agreement, the transactions contemplated hereby or by the
L/C-Related Documents or any unrelated transaction;
(iv) any draft, demand, certificate or other
document presented under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect; or any loss or
delay in the transmission or otherwise of any document required in
order to make a drawing under any Letter of Credit;
(v) any payment by the Issuing Lender under any
Letter of Credit against presentation of a draft or certificate that
does not strictly comply with the terms of such Letter of Credit; or
any payment made by the Issuing Lender under any Letter of Credit to
any Person purporting to be a trustee in bankruptcy, debtor-in-
possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or
any transferee of any Letter of Credit, including any arising in
connection with any Insolvency Proceeding;
(vi) any exchange, release or non-perfection of any
collateral, or any release or amendment or waiver of or consent to
departure from any guarantee, for all or any of the obligations of the
Company in respect of any Letter of Credit; or
39
<PAGE> 48
(vii) any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing, including
any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Company or a guarantor.
3.7 Cash Collateral Pledge. If any Letter of Credit remains
outstanding and partially or wholly undrawn as of the Revolving Termination
Date, then the Company shall immediately Cash Collateralize the L/C Obligations
in an amount equal to the maximum amount then available to be drawn under all
Letters of Credit.
3.8 Letter of Credit Fees. (a) The Company shall pay to the Agent
for the account of each Lender a letter of credit fee with respect to each
Letter of Credit equal to (i) in the case of a Financial Letter of Credit, the
Financial L/C Fee Rate per annum of the average daily maximum amount available
to be drawn on such Letter of Credit, or (ii) in the case of a Non-Financial
Letter of Credit, the Non-Financial L/C Fee Rate per annum of the average daily
maximum amount available to be drawn on such Letter of Credit, in each case
computed on a quarterly basis in arrears on the last Business Day of each
calendar quarter.
(b) The letter of credit fees payable under subsection
3.8(a) and the fronting fees payable under subsection 3.8(b) shall be due and
payable quarterly in arrears on the last Business Day of each calendar quarter
during which Letters of Credit are outstanding, commencing on the first such
quarterly date to occur after the Closing Date, through the Revolving
Termination Date (or such later date upon which all outstanding Letters of
Credit shall expire or be fully drawn), with the final payment to be made on
the Revolving Termination Date (or such later date).
(c) The Company shall pay to the Issuing Lender from time
to time on demand the normal issuance, presentation, amendment and other
processing fees, and other standard costs and charges, of the Issuing Lender
relating to letters of credit as from time to time in effect.
3.9 Uniform Customs and Practice. The Uniform Customs and Practice
for Documentary Credits as published by the International Chamber of Commerce
most recently at the time of issuance of any Letter of Credit shall (unless
otherwise expressly provided in such Letter of Credit) apply to each Letter of
Credit.
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
4.1 Taxes. (a) Any and all payments by the Company to each Lender or
the Agent under this Agreement and any other Loan Document shall be made free
and clear of, and without deduction or withholding for, any Taxes. In
addition, the Company shall pay all Other Taxes.
40
<PAGE> 49
(b) The Company agrees to indemnify and hold harmless
each Lender and the Agent for the full amount of Taxes or Other Taxes
(including any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section) paid by the Lender or the Agent and any liability
(including penalties, interest, additions to tax and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes
were correctly or legally asserted. Payment under this indemnification shall
be made within 30 days after the date the Lender or the Agent makes written
demand therefor.
(c) If the Company shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to any Lender or the Agent, then:
(i) the sum payable shall be increased as necessary
so that after making all required deductions and withholdings
(including deductions and withholdings applicable to additional sums
payable under this Section) such Lender or the Agent, as the case may
be, receives an amount equal to the sum it would have received had no
such deductions or withholdings been made;
(ii) the Company shall make such deductions and
withholdings; and
(iii) the Company shall pay the full amount deducted
or withheld to the relevant taxing authority or other authority in
accordance with applicable law.
(d) Within 30 days after the date of any payment by the
Company of Taxes or Other Taxes, the Company shall furnish the Agent the
original or a copy of a receipt evidencing payment thereof, or other evidence
of payment satisfactory to the Agent.
(e) The Company shall not be required to pay an
additional amount to, or indemnify, any Lender or the Agent pursuant to this
Section 4.1 to the extent that (i) the obligation to withhold or pay such
amount existed on the Initial Date (as hereinafter defined) or (ii) the
obligation to withhold or pay such amount would not have arisen but for the
failure of the Agent or such Lender to comply with the provisions of Section
10.10 of this Agreement. For purposes of this subsection 4.1(e), "Initial
Date" shall mean (a) in the case of the Agent and any Lender that is a
signatory hereto, the date of this Agreement, (b) in the case of any Person
which subsequently becomes a Lender hereunder, the date of the applicable
Assignment and Acceptance, and (c) in the case of any Participant, the date on
which it becomes a Participant.
(f) If the Company is required to pay additional amounts
to any Lender or the Agent pursuant to subsection (c) of this Section, then
such Lender shall use reasonable efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its Lending Office so as to
eliminate any such additional payment by the Company which may thereafter
accrue, if such change in the judgment of such Lender is not otherwise
disadvantageous to such Lender.
41
<PAGE> 50
4.2 Illegality. (a) If any Lender determines that the introduction
of any Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for such Lender or its applicable Lending Office to make
Offshore Rate Loans, then, on notice thereof by the Lender to the Company
through the Agent, any obligation of such Lender to make Offshore Rate Loans
shall be suspended until such Lender notifies the Agent and the Company that
the circumstances giving rise to such determination no longer exist.
(b) If a Lender determines that it is unlawful to
maintain any Offshore Rate Loan, the Company shall, upon its receipt of notice
of such fact and demand from such Lender (with a copy to the Agent), prepay in
full such Offshore Rate Loan, together with interest accrued thereon and
amounts required under Section 4.4, either on the last day of the Interest
Period thereof, if such Lender may lawfully continue to maintain such Offshore
Rate Loan to such day, or on such earlier date on which such Lender may no
longer lawfully continue to maintain such Offshore Rate Loan (as determined by
such Lender). If the Company is required to so prepay any Offshore Rate Loan,
then concurrently with such prepayment, the Company shall borrow from the
affected Lender, in the amount of such repayment, a Base Rate Loan.
(c) If the obligation of any Lender to make or maintain
Offshore Rate Loans has been terminated or suspended pursuant to subsection (a)
or (b) above, all Loans which would otherwise be made by such Lender as
Offshore Rate Loans shall be instead Base Rate Loans.
(d) Before giving any notice to the Agent under this
Section, the affected Lender shall designate a different Lending Office with
respect to its Offshore Rate Loans if such designation will avoid the need for
giving such notice or making such demand and will not, in the judgment of such
Lender, be illegal or otherwise disadvantageous to such Lender.
4.3 Increased Costs and Reduction of Return. (a) If any Lender
determines that, due to either (i) the introduction of or any change (other
than any change by way of imposition of or increase in reserve requirements
included in the calculation of the Offshore Rate) in or in the interpretation
of any law or regulation or (ii) compliance by such Lender with any guideline
or request from any central bank or other Governmental Authority (whether or
not having the force of law), there shall be any increase in the cost to such
Lender of agreeing to make or making, funding or maintaining any Offshore Rate
Loan or participating in Letters of Credit or, in the case of any Issuing
Lender, any increase in the cost to such Issuing Lender of agreeing to issue,
issuing or maintaining any Letter of Credit or of agreeing to make or making,
funding or maintaining any unpaid drawing under any Letter of Credit, then the
Company shall be liable for, and shall from time to time, upon demand (with a
copy of such demand to be sent to the Agent), pay to the Agent for the account
of such Lender, additional amounts as are sufficient to compensate such Lender
for such increased costs.
42
<PAGE> 51
(b) If any Lender shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in any Capital
Adequacy Regulation, (iii) any change in the interpretation or administration
of any Capital Adequacy Regulation by any central bank or other Governmental
Authority charged with the interpretation or administration thereof, or (iv)
compliance by such Lender (or its Lending Office) or any corporation
controlling such Lender with any Capital Adequacy Regulation, affects or would
affect the amount of capital required or expected to be maintained by such
Lender or any corporation controlling such Lender and (taking into
consideration such Lender's or such corporation's policies with respect to
capital adequacy) determines that the amount of such capital is increased as a
consequence of its Commitment, loans, credits or obligations under this
Agreement, then, upon demand of such Lender to the Company through the Agent,
the Company shall pay to such Lender, from time to time as specified by such
Lender, additional amounts sufficient to compensate such Lender for such
increase.
4.4 Funding Losses. The Company shall reimburse each Lender and hold
each Lender harmless from any loss or expense which such Lender may sustain or
incur as a consequence of:
(a) the failure of the Company to make on a timely basis
any payment of principal of any Offshore Rate Loan;
(b) the failure of the Company to borrow, continue or
convert a Loan after the Company has given (or is deemed to have given) a
Notice of Borrowing or a Notice of Conversion/ Continuation;
(c) the failure of the Company to make any prepayment in
accordance with any notice delivered under Section 2.6;
(d) the prepayment (including pursuant to Section 2.6 or
2.7) or other payment (including after acceleration thereof) of an Offshore
Rate Loan on a day that is not the last day of the relevant Interest Period; or
(e) the automatic conversion under Section 2.4 of any
Offshore Rate Loan to a Base Rate Loan on a day that is not the last day of the
relevant Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Offshore Rate Loans or from fees
payable to terminate the deposits from which such funds were obtained. For
purposes of calculating amounts payable by the Company to the Lenders under
this Section and under subsection 4.3(a), each Offshore Rate Loan made by a
Lender (and each related reserve, special deposit or similar requirement) shall
be conclusively deemed to have been funded at the IBOR used in determining the
Offshore Rate for such Offshore Rate Loan by a matching deposit or other
borrowing in the interbank eurodollar market for a comparable amount and for a
comparable period, whether or not such Offshore Rate Loan is in fact so funded.
43
<PAGE> 52
4.5 Inability to Determine Rates. If the Agent determines that for
any reason adequate and reasonable means do not exist for determining the
Offshore Rate for any requested Interest Period with respect to a proposed
Offshore Rate Loan, or the Required Lenders determine (and notify the Agent)
that the Offshore Rate applicable pursuant to subsection 2.9(a) for any
requested Interest Period with respect to a proposed Offshore Rate Loan does
not adequately and fairly reflect the cost to such Lenders of funding such
Loan, the Agent will promptly so notify the Company and each Lender.
Thereafter, the obligation of the Lenders to make or maintain Offshore Rate
Loans hereunder shall be suspended until the Agent or the Required Lenders, as
the case may be, revokes such notice in writing. Upon receipt of such notice,
the Company may revoke any Notice of Borrowing or Notice of
Conversion/Continuation then submitted by it. If the Company does not revoke
such Notice, the Lenders shall make, convert or continue the Loans, as proposed
by the Company, in the amount specified in the applicable notice submitted by
the Company, but such Loans shall be made, converted or continued as Base Rate
Loans instead of Offshore Rate Loan.
4.6 Certificates of Lenders. Any Lender claiming reimbursement or
compensation under this Article IV shall deliver to the Company (with a copy to
the Agent) a certificate setting forth in reasonable detail the amount payable
to such Lender hereunder and such certificate shall be conclusive and binding
on the Company in the absence of manifest error.
4.7 Substitution of Lenders. Upon the receipt by the Company from
any Lender (an "Affected Lender") of a claim for compensation under Section 4.1
or 4.3 or a notice of the type described in subsection 4.2(a) or (b), the
Company may: (i) request the Affected Lender to use its best efforts to obtain
a replacement bank or financial institution satisfactory to the Company to
acquire and assume all or a ratable part of all of such Affected Lender's Loans
and Commitment (a "Replacement Lender"); (ii) request one more of the other
Lenders to acquire and assume all or part of such Affected Lender's Loans and
Commitment; or (iii) designate a Replacement Lender. Any such designation of a
Replacement Lender under clause (i) or (iii) shall be subject to the prior
written consent of the Agent and each Issuing Lender.
4.8 Survival. The agreements and obligations of the Company in this
Article IV shall survive the payment of all other Obligations.
ARTICLE V
CONDITIONS PRECEDENT
5.1 Conditions of Initial Credit Extensions. The obligation of each
Lender to make its initial Credit Extension is subject to the conditions that
(i) the Company shall have issued Subordinated Debt in an aggregate face amount
of not less than $15,000,000, (ii) the Agent shall have received, on or before
December 13, 1996, (A) evidence that the Company has paid (or will pay with the
proceeds of the initial Loans) all principal, interest and fees
44
<PAGE> 53
outstanding under the Original Credit Agreement (and all amounts payable under
Section 4.4 thereof to the extent any Lender has made demand therefor), (B)
evidence that the Ohmstede Acquisition has been (or concurrently with the
initial Borrowing will be) consummated on terms and conditions set forth in the
Ohmstede Acquisition Documents, without giving effect to any amendment or other
modification thereto or waiver thereunder unless consented to by the Lenders
(such terms and conditions to include, without limitation, that the purchase
price for all of the stock of Ohmstede, Inc. will not exceed $52,000,000 and
that all outstanding debt of Ohmstede, Inc. and its Subsidiaries will not
exceed $2,000,000 and will be paid concurrently with the initial Borrowing (and
that all Liens securing such debt will be released)), and (C) all of the
following, in form and substance satisfactory to the Agent and each Lender, and
in sufficient copies for the Agent and each Lender:
(a) Credit Agreement and Notes. This Agreement and the
Notes (if any) executed by each party thereto.
(b) Resolutions; Incumbency.
(i) Copies of the resolutions of the board of
directors of each of the Company and each Guarantor authorizing the
transactions contemplated hereby, certified as of the Closing Date by
the Secretary or an Assistant Secretary of such entity; and
(ii) A certificate of the Secretary or an Assistant
Secretary of each of the Company and each Guarantor certifying the
names and true signatures of the officers of such entity authorized to
execute, deliver and perform the documents to be delivered by such
entity hereunder.
(c) Certificate. A certificate signed by a Responsible
Officer, dated as of the Closing Date, stating that:
(i) the representations and warranties contained in
Article VI are true and correct on and as of such date, as though made
on and as of such date;
(ii) no Event of Default or Unmatured Event of
Default exists or will result from the initial Credit Extensions; and
(iii) no event or circumstance has occurred since
June 30, 1996 that has resulted or could reasonably be expected to
result in a Material Adverse Effect.
(d) Legal Opinions. Opinions of (i) Porter & Hedges,
counsel to the Company and the Guarantors, substantially in the form of Exhibit
D-1; (ii) Sidley & Austin, Illinois counsel to the Company and the Guarantors,
substantially in the form of Exhibit D-2; and (iii) Gordon, Arata, McCollan &
Duplantis, L.L.P., Louisiana counsel to the Company and the Guarantors,
substantially in the form of Exhibit D-3.
45
<PAGE> 54
(e) Payment of Fees. Evidence of payment by the Company
of all accrued and unpaid fees, costs and expenses to the extent then due and
payable on the Closing Date, together with Attorney Costs of the Agent to the
extent invoiced prior to or on the Closing Date, plus such additional amounts
of Attorney Costs as shall constitute the Agent's reasonable estimate of
Attorney Costs incurred or to be incurred by it through the closing proceedings
(provided that such estimate shall not thereafter preclude final settling of
accounts between the Company and the Agent).
(f) Guaranty. A counterpart of the Guaranty executed by
Ohmstede, Inc.
(g) Security Agreement, etc. A counterpart of the
Security Agreement, executed by Ohmstede, Inc., together with evidence,
reasonably satisfactory to the Agent, that all instruments and documents
(including financing statements), necessary or desirable to perfect and protect
the Agent's Lien on the collateral granted under the Security Agreement have
been signed and delivered to the Agent in appropriate form for filing or
recording (if necessary).
(h) Reaffirmation of Loan Documents. A counterpart of
the Reaffirmation of Loan Documents, substantially in the form of Exhibit K,
executed by the Company and each Guarantor (other than Ohmstede, Inc.).
(i) Stock Certificates. Stock certificates representing the
shares of capital stock of Ohmstede, Inc. and appropriate blank stock powers
executed by the Company.
(j) Real Estate Documentation. With respect to each parcel
of Real Property owned by the Company or any Subsidiary, a duly executed
Mortgage, together with:
(i) an ALTA loan title insurance policy, issued by an insurer
acceptable to the Agent, insuring the Agent's Lien on such
parcel and containing such endorsements as the Agent may
reasonably require (it being understood that the amount of
coverage, exceptions to coverage and status of title set forth
in such policy shall be reasonably acceptable to the Agent);
(ii) copies of all documents of record concerning such parcel as
shown on the commitment for the ALTA loan title insurance
policy referred to above; and
(iii) original or certified copies of insurance policies with
respect to such parcel issued to the Company or the applicable
Subsidiary for (i) public liability insurance and (ii) "all
risk" property and casualty insurance and, if such parcel is
in a flood hazard area, flood insurance, with standard
noncontributory mortgagee clauses or endorsements in favor of
the Agent (it being understood
46
<PAGE> 55
that the amount, terms of coverage and insurer for all such
policies shall be reasonably acceptable to the Agent).
(k) Other Documents. Such other approvals, opinions,
documents or materials as the Agent or any Lender may request.
5.2 Conditions to All Credit Extensions. The obligation of each
Lender to make any Loan to be made by it and the obligation of the Issuing
Lender to Issue any Letter of Credit is subject to the satisfaction of the
following conditions precedent on the relevant Borrowing Date or Issuance Date:
(a) Notice, Application. In the case of any Loan, the
Agent shall have received a Notice of Borrowing; and in the case of any
Issuance of any Letter of Credit, the Issuing Lender and the Agent shall have
received an L/C Application or L/C Amendment Application, as required under
Section 3.2.
(b) Continuation of Representations and Warranties. The
representations and warranties in Article VI shall be true and correct on and
as of such Borrowing Date or Issuance Date with the same effect as if made on
and as of such Borrowing Date or Issuance Date (except to the extent such
representations and warranties expressly refer to an earlier date, in which
case they shall be true and correct as of such earlier date).
(c) No Existing Default. No Event of Default or
Unmatured Event of Default shall exist or shall result from such Borrowing or
Issuance.
Each Notice of Borrowing and L/C Application or L/C Amendment Application
submitted by the Company hereunder shall constitute a representation and
warranty by the Company hereunder, as of the date of such notice and as of the
applicable Borrowing Date or Issuance Date, that the conditions in this Section
5.2 are satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Agent and each Lender that:
6.1 Corporate Existence and Power. The Company and each of its
Subsidiaries:
(a) is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation;
47
<PAGE> 56
(b) has the power and authority and all governmental
licenses, authorizations, consents and approvals (i) to own its assets and to
carry on its business and (ii) to execute, deliver and perform its obligations
under the Loan Documents;
(c) is duly qualified as a foreign corporation and is
licensed and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification or license; and
(d) is in compliance with all Requirements of Law;
except, in each case referred to in clause (b)(i), (c) or (d), to the extent
that the failure to do so could not reasonably be expected to have a Material
Adverse Effect.
6.2 Corporate Authorization; No Contravention. The execution,
delivery and performance by the Company of this Agreement and each other Loan
Document to which the Company is party, and the execution, delivery and
performance by each Guarantor of the Guaranty and each other Loan Document to
which such Guarantor is a party, have been duly authorized by all necessary
corporate action, and do not and will not:
(a) contravene the terms of any of the Company's or any
Guarantor's Organization Documents;
(b) conflict with or result in a breach or contravention
of, or the creation of any Lien under, any document evidencing any Contractual
Obligation to which the Company or any Guarantor is a party or any order,
injunction, writ or decree of any Governmental Authority to which the Company
or any Guarantor or any of their respective assets is subject; or
(c) violate any Requirement of Law.
6.3 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the Company or
any Guarantor of any Loan Document.
6.4 Binding Effect. Each Loan Document to which the Company or any
Guarantor is a party constitutes the legal, valid and binding obligation of the
Company or such Guarantor, enforceable against the Company or such Guarantor in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws affecting the enforcement of
creditors' rights generally or by equitable principles relating to
enforceability.
6.5 Litigation. There are no actions, suits, proceedings, claims or
disputes pending, or to the best knowledge of the Company, threatened or
contemplated, at law, in equity, in
48
<PAGE> 57
arbitration or before any Governmental Authority, against the Company or any
Subsidiary or any of their respective properties which: (a) purport to affect
or pertain to this Agreement or any other Loan Document, or any of the
transactions contemplated hereby or thereby; or (b) would reasonably be
expected to have a Material Adverse Effect. No injunction, writ, temporary
restraining order or other order of any nature has been issued by any court or
other Governmental Authority purporting to enjoin or restrain the execution,
delivery or performance of this Agreement or any other Loan Document, or
directing that the transactions provided for herein or therein not be
consummated as herein or therein provided.
6.6 No Default. No Event of Default or Unmatured Event of Default
exists or would result from the incurring of any Obligations by the Company.
As of the Closing Date, neither the Company nor any Subsidiary is in default
under or with respect to any Contractual Obligation in any respect which,
individually or together with all such defaults, could reasonably be expected
to have a Material Adverse Effect, or that would, if such default had occurred
after the Closing Date, create an Event of Default under subsection 9.1(e).
6.7 ERISA Compliance.
(a) Each Plan is in compliance in all material respects with
the applicable provisions of ERISA, the Code and other federal or state law.
Each Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the IRS and to the best
knowledge of the Company, nothing has occurred which would cause the loss of
such qualification. The Company and each ERISA Affiliate has made all required
contributions to any Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of
Company, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan which has resulted or could reasonably be
expected to result in a Material Adverse Effect. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan which has resulted or could reasonably be expected to result in a
Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably
expected to occur; (ii) no contribution failure has occurred with respect to a
Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA;
(iii) no Pension Plan has any Unfunded Pension Liability; (iv) neither the
Company nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability under Title IV of ERISA with respect to any Pension Plan (other
than premiums due and not delinquent under Section 4007 of ERISA); (v) neither
the Company nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability) under
Section 4201 or 4243 of ERISA with respect to a
49
<PAGE> 58
Multiemployer Plan; and (vi) neither the Company nor any ERISA Affiliate has
engaged in a transaction that could be subject to Section 4069 or 4212(c) or
ERISA.
6.8 Use of Proceeds; Margin Regulations. The proceeds of the Loans
are to be used solely for the purposes set forth in and permitted by Sections
7.12 and 8.7. Neither the Company nor any Subsidiary is generally engaged in
the business of purchasing or selling Margin Stock or extending credit for the
purpose of purchasing or carrying Margin Stock.
6.9 Title to Properties. Each of the Company and each Subsidiary has
good record and marketable title in fee simple to, or a valid leasehold
interest in, all real property necessary or used in the ordinary conduct of its
businesses, except for such defects in title as could not, individually or in
the aggregate, have a Material Adverse Effect. As of the Closing Date, the
property of the Company and its Subsidiaries is subject to no Liens, other than
Permitted Liens.
6.10 Taxes. The Company and its Subsidiaries have filed all Federal
and other material tax returns and reports required to be filed, and have paid
all Federal and other material taxes, assessments, fees and other governmental
charges levied or imposed upon them or their properties, income or assets
otherwise due and payable, except those which are being contested in good faith
by appropriate proceedings and for which adequate reserves have been provided
in accordance with GAAP. There is no proposed tax assessment against the
Company or any Subsidiary that would, if made, have a Material Adverse Effect.
6.11 Financial Condition.
(a) The audited consolidated financial statements of the
Company and its Subsidiaries dated December 31, 1995 and the unaudited
consolidated financial statements of the Company and its Subsidiaries dated
June 30, 1996, copies of which have been delivered to each Lender, and the
related statements of income, shareholders' equity and cash flows for the
period then ended, were prepared in accordance with GAAP (subject, in the case
of unaudited statements, to the absence of footnotes and to normal year-end
audit adjustments), fairly present the financial condition of the Company and
the Subsidiaries as at such date and the results of their operations for the
period covered thereby and show all material indebtedness and other
liabilities, direct or contingent, of the Company and its consolidated
Subsidiaries as of the date hereof, including liabilities for taxes, material
commitments and Contingent Obligations.
(b) Since June 30, 1996, there has been no Material
Adverse Effect.
6.12 Environmental Compliance.
(a) No Violations. Neither the Company nor any
Subsidiary, nor any operator of the Company's or any Subsidiary's properties,
is in violation, or alleged violation, of any judgment, decree, order, law,
permit, license, rule or regulation pertaining
50
<PAGE> 59
to environmental matters, including those arising under the Resource
Conservation and Recovery Act ("RCRA"), the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA"), the Superfund
Amendments and Reauthorization Act of 1986 ("SARA") or any other Environmental
Law which (i) in any single case, requires expenditures in any three-year
period of $100,000 or more by the Company and its Subsidiaries in penalties
and/or for investigative, removal or remedial actions or (ii) individually or
in the aggregate otherwise might reasonably be expected to have a Material
Adverse Effect.
(b) Notices. Neither the Company nor any Subsidiary has
received notice (other than, in the case of clause (c) below, an Immaterial
Notice) from any third party, including any Federal, state or local
governmental authority: (a) that any one of them has been identified by the
U.S. Environmental Protection Agency as a potentially responsible party under
CERCLA with respect to a site listed on the National Priorities List, 40 C.F.R.
Part 300 Appendix B; (b) that any hazardous waste, as defined by 42 U.S.C.
Section 6903(5), any hazardous substance as defined by 42 U.S.C. Section
9601(14), any pollutant or contaminant as defined by 42 U.S.C. Section 9601(33)
or any toxic substance, oil or hazardous material or other chemical or
substance regulated by any Environmental Law, excluding household hazardous
waste (all of the foregoing, "Hazardous Substances"), which any one of them has
generated, transported or disposed of has been found at any site at which a
Federal, state or local agency or other third party has conducted a remedial
investigation, removal or other response action pursuant to any Environmental
Law; (c) that the Company or any Subsidiary must conduct a remedial
investigation, removal, response action or other activity pursuant to any
Environmental Law; or (d) of any material Environmental Claim.
(c) Handling of Hazardous Substances. (i) No portion of
the Real Property or other assets of the Company or any Subsidiary has been
used for the handling, processing, storage or disposal of Hazardous Substances
except in accordance in all material respects with applicable Environmental
Laws (other than any Immaterial Law); and no underground tank or other
underground storage receptacle for Hazardous Substances is located on such
properties; (ii) in the course of any activities conducted by the Company, any
Subsidiary or the operators of any Real Property, no Hazardous Substances have
been generated or are being used on such properties except in accordance in all
material respects with applicable Environmental Laws (other than any Immaterial
Law); (iii) there have been no Releases or threatened Releases of Hazardous
Substances on, upon, into or from any Real Property or other assets of the
Company or any Subsidiary, which Releases singly or in the aggregate might
reasonably be expected to have a material adverse effect on the value of such
Real Property or assets; (iv) to the best of the Company's knowledge, there
have been no Releases on, upon, from or into any real property in the vicinity
of the Real Property or other assets of the Company or any Subsidiary which,
through soil or groundwater contamination, may have come to be located on, and
which might reasonably be expected to have a material adverse effect on the
value of, the Real Property or other assets of the Company or any Subsidiary;
and (v) any Hazardous Substances generated by the Company and its Subsidiaries
have been transported offsite only by properly licensed carriers and delivered
only to
51
<PAGE> 60
treatment or disposal facilities maintaining valid permits as required under
applicable Environmental Laws, which transporters and facilities have been and
are, to the best of the Company's knowledge, operating in compliance with such
permits and applicable Environmental Laws.
(d) Clean-Ups. None of the Real Property or other assets
of the Company or any Subsidiary is or will be subject to any applicable
environmental clean-up responsibility law or environmental restrictive transfer
law or regulation, by virtue of the transactions set forth herein and
contemplated hereby.
(e) Investigations. The Company and its Subsidiaries
have taken all reasonable steps to investigate the past and present condition
and usage of the Real Properties and the operations conducted by the Company
and its Subsidiaries.
6.13 Regulated Entities. None of the Company, any Person controlling
the Company, or any Subsidiary is an "Investment Company" within the meaning of
the Investment Company Act of 1940. The Company is not subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act,
the Interstate Commerce Act, any state public utilities code, or any other
Federal or state statute or regulation limiting its ability to incur
Indebtedness.
6.14 No Burdensome Restrictions. Neither the Company nor any
Subsidiary is a party to or bound by any Contractual Obligation, or subject to
any restriction in any Organization Document, or any Requirement of Law, which
could reasonably be expected to have a Material Adverse Effect.
6.15 Copyrights, Patents, Trademarks and Licenses, etc. The Company
and its Subsidiaries own or are licensed or otherwise have the right to use all
of the patents, trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations and other rights that are reasonably necessary for
the operation of their respective businesses, without conflict with the rights
of any other Person. To the best knowledge of the Company, no slogan or other
advertising device, product, process, method, substance, part or other material
now employed, or now contemplated to be employed, by the Company or any
Subsidiary infringes upon any rights held by any other Person. No claim or
litigation regarding any of the foregoing is pending or, to the knowledge of
the Company, threatened, and no patent, invention, device, application,
principle or any statute, law, rule, regulation, standard or code is pending
or, to the knowledge of the Company, proposed, which, in either case, could
reasonably be expected to have a Material Adverse Effect.
6.16 Subsidiaries. As of the Closing Date, the Company has no
Subsidiaries other than those specifically disclosed in part (a) of Schedule
6.16 hereto (other than Ohmstede, Inc., which will become a Subsidiary on the
Closing Date) and has no equity investments in any other corporation or entity
other than those specifically disclosed in part (b) of Schedule 6.16.
52
<PAGE> 61
6.17 Insurance. Set forth in Schedule 6.17 is a complete and
accurate summary of the property and casualty insurance program carried by
Company and its Subsidiaries on the Closing Date, including the names of
insurers, amounts of coverage and types of coverage. Such summary also
includes any self-insurance program that is in effect.
6.18 Solvency, etc. On the Closing Date (or, in the case of any
Person which becomes a Guarantor after the Closing Date, on the date such
Person becomes a Guarantor), and immediately prior to and after giving effect
to the Issuance of each Letter of Credit and each Borrowing hereunder and the
use of the proceeds thereof, (a) each of the Company's and each Guarantor's
assets will exceed its liabilities and (b) each of the Company and each
Guarantor will be solvent, will be able to pay its debts as they mature, will
own property with fair saleable value greater than the amount required to pay
its debts and will have capital sufficient to carry on its business as then
constituted.
6.19 Labor Matters. (a) Neither the Company nor any Subsidiary has,
within the two-year period preceding the date of this Agreement, taken any
action which would have constituted or resulted in a "plant closing" or "mass
layoff" within the meaning of the Federal Worker Adjustment and Retraining
Notification Act of 1988 or any similar applicable federal, state or local law,
and the Company has no reasonable expectation that any such action is or will
be required at any time prior to the Revolving Termination Date; and (b) on the
date of this Agreement, (i) neither the Company nor any Subsidiary is a party
to any generalized labor dispute and (ii) there are no strikes or walkouts
relating to any labor contracts to which the Company or any Subsidiary is a
party or is otherwise subject.
6.20 Ohmstede Acquisition. (a) The Ohmstede Acquisition Documents
constitute the purchase agreement for the Ohmstede Acquisition (including all
amendments thereto) as in effect on the Closing Date.
(b) The representations and warranties made by the
Company and, to the best of the Company's knowledge, by Ohmstede, Inc.
contained in the Ohmstede Acquisition Documents (i) were true and correct in
all material respects when made, (ii) are true and correct in all material
respects on the date hereof, and (iii) will be true and correct in all material
respects as of the Closing Date (except, in the case of clauses (ii) and (iii),
to the extent such representations and warranties relate solely to an earlier
date, in which case they were true and correct to all material respects as of
such earlier dates).
(c) The Ohmstede Acquisition complies in all material
respects with all applicable legal requirements, and all necessary
governmental, regulatory, shareholder and other consents and approvals required
for the consummation of the Ohmstede Acquisition have been, or prior to the
consummation thereof will be, duly obtained and in full force and effect.
(d) The execution and delivery by the Company of the Ohmstede
Acquisition Documents, and the consummation by the Company of the Ohmstede
Acquisition, will not
53
<PAGE> 62
violate any Requirement of Law, or result in a breach of, or constitute a
default under, any material agreement or indenture, or any order or decree,
affecting the Company, or, to the best of the Company's knowledge, Ohmstede,
Inc.
6.21 Real Property. Set forth on Schedule 6.21 is a complete and
accurate list, as of the date of this Agreement and after giving effect to the
Ohmstede Acquisition, of the address and legal description of all Real Property
owned by the Company or any Subsidiary.
6.22 Full Disclosure. None of the representations or warranties made
by the Company or any Subsidiary in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of the Company or any Subsidiary in connection with the Loan
Documents (including the offering and disclosure materials delivered by or on
behalf of the Company to the Lenders prior to the Closing Date), contains any
untrue statement of a material fact or omits any material fact required to be
stated therein or necessary to make the statements made therein, in light of
the circumstances under which they are made, not misleading as of the time when
made or delivered.
ARTICLE VII
AFFIRMATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, or any Loan
or other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, unless the Required Lenders waive compliance in
writing:
7.1 Financial Statements. The Company shall deliver to the Agent and
each Lender, in form and detail satisfactory to the Agent and the Required
Lenders:
(a) as soon as available, but not later than 90 days
after the end of each fiscal year, (i) a copy of the audited consolidated
balance sheet of the Company and its Subsidiaries as at the end of such year
and the related consolidated statements of income, shareholders' equity and
cash flows for such year, setting forth in each case in comparative form the
figures for the previous fiscal year, and accompanied by the opinion of Arthur
Andersen LLP or another nationally-recognized independent public accounting
firm ("Independent Auditor"), which report (x) shall state that such
consolidated financial statements present fairly in all material respects the
consolidated financial position of the Company and its Subsidiaries for the
periods indicated in conformity with GAAP applied on a basis consistent with
prior years and (y) shall not be qualified or limited because of a restricted
or limited examination by the Independent Auditor of any material portion of
the Company's or any Subsidiary's records; and (ii) consolidating balance
sheets of the Company and its Subsidiaries as at the end of such year and
consolidating statements of income and
54
<PAGE> 63
cash flows for the Company and its Subsidiaries for such fiscal year, certified
by a Responsible Officer;
(b) as soon as available, but not later than 45 days
after the end of each fiscal quarter (except the last fiscal quarter of each
fiscal year), consolidated and consolidating balance sheets of the Company and
its Subsidiaries as of the end of such fiscal quarter, together with
consolidated and consolidating statements of income and a consolidated
statement of cash flows for such fiscal quarter and for the period beginning
with the first day of such fiscal year and ending on the last day of such
fiscal quarter, certified by a Responsible Officer as fairly presenting in all
material respects, in accordance with GAAP (except for the absence of footnotes
and subject to normal year-end audit adjustments) the financial position and
results of operation for the periods covered thereby; and
(c) as soon as available, but not later than 30 days
after the end of each month, (i) a consolidated balance sheet of the Company
and its Subsidiaries as of the end of such month and the related consolidated
statements of income for the period commencing on the first day and ending on
the last day of such month, certified by a Responsible Officer as fairly
presenting in all material respects, in accordance with GAAP (except for the
absence of footnotes and subject to normal year-end audit adjustments), the
financial position and the results of operations of the Company and its
Subsidiaries; and (ii) an operating report for such month in form and detail
reasonably satisfactory to the Required Lenders.
7.2 Certificates; Other Information. The Company shall furnish to
each Lender:
(a) concurrently with the delivery of the financial
statements referred to in subsection 7.1(a), a certificate of the Independent
Auditor stating that in making the examination necessary therefor no knowledge
was obtained of any Event of Default or Unmatured Event of Default, except as
specified in such certificate;
(b) concurrently with the delivery of the financial
statements referred to in subsections 7.1(a) and (b), a Compliance Certificate,
each executed by a Responsible Officer;
(c) concurrently with the delivery of the financial
statements referred to in subsection 7.1(c), a certificate in the form of
Exhibit J, with appropriate insertions, executed by a Responsible Officer;
(d) promptly, copies of all financial statements and
reports that the Company sends to its shareholders, and copies of all financial
statements and regular, periodic or special reports (including Forms 10K, 10Q
and 8K) that the Company or any Subsidiary may make to, or file with, the SEC;
(e) promptly upon the request of the Agent or any Lender,
copies of all detailed financial and management reports submitted to the
Company by the Independent
55
<PAGE> 64
Auditor in connection with each annual or interim audit made of the books of
the Company and its Subsidiaries;
(f) as soon as practicable and in any event within 60
days after the commencement of each fiscal year, (i) the business plan for the
Company and its Subsidiaries for such fiscal year prepared in a manner
consistent with the projections delivered by the Company to the Lenders prior
to the Closing Date or otherwise in a manner satisfactory to the Required
Lenders; and (ii) a complete and accurate summary of the property, casualty and
liability insurance carried by the Company and it Subsidiaries, including the
information described in Section 6.17; and
(g) promptly, such additional information regarding the
business, financial or corporate affairs of the Company or any Subsidiary as
the Agent, at the request of any Lender, may from time to time request.
7.3 Notices. The Company shall promptly notify the Agent and each
Lender of:
(a) the occurrence of any Event of Default or Unmatured
Event of Default;
(b) any matter that has resulted or could reasonably be
expected to result in a Material Adverse Effect, including (i) any breach or
non-performance of, or any default under, a Contractual Obligation of the
Company or any Subsidiary; (ii) any dispute, litigation, investigation,
proceeding or suspension between the Company or any Subsidiary and any
Governmental Authority; or (iii) the commencement of, or any material
development in, any litigation or proceeding affecting the Company or any
Subsidiary, including pursuant to any applicable Environmental Laws;
(c) the occurrence of any of the following events
affecting the Company or any ERISA Affiliate (but in no event more than 10 days
after such event, provided that the Company shall notify the Agent and each
Lender not less than ten days before the occurrence of any event described in
clause (ii) below), and deliver to the Agent and each Lender a copy of any
notice with respect to such event that is filed with a Governmental Authority
and any notice delivered by a Governmental Authority to the Company or any
ERISA Affiliate with respect to such event:
(i) an ERISA Event;
(ii) a contribution failure with respect to a
Pension Plan sufficient to give rise to a Lien under Section 302(f) of
ERISA;
(iii) a material increase in the Unfunded Pension
Liability of any Pension Plan;
56
<PAGE> 65
(iv) the adoption of, or the commencement of
contributions to, any Plan subject to Section 412 of the Code by the
Company or any ERISA Affiliate; or
(v) the adoption of any amendment to a Plan subject
to Section 412 of the Code, if such amendment results in a material
increase in contributions or Unfunded Pension Liability; or
(d) any cancellation of or material change in any
insurance maintained by the Company or any Subsidiary;
(e) any violation of any Environmental Law relating to
any Real Property or the Company's or any Subsidiary's operations which
violation might reasonably be expected to have a material adverse effect on
such Real Property or on the Company's or any Subsidiary's operations;
(f) any potential or known Release, or threat of Release,
of any Hazardous Substance at, from or into any Real Property which the Company
or any Subsidiary reports in writing, or is required to report in writing, to
any Governmental Authority and which is material in amount or nature or which
could materially affect the value of any Real Property;
(g) the Company's or any Subsidiary's receipt of any
notice (other than an Immaterial Notice) of violation of any Environmental Law
or of any Release or threatened Release of a Hazardous Substance, including a
notice or claim of liability or potential responsibility from any third party
(including any official of any Governmental Authority) and including notice of
any formal inquiry, proceeding, demand, investigation or other action with
regard to (i) the Company's or any Subsidiary's or any Person's operation of
any Real Property, (ii) contamination on, from or into any Real Property or
(iii) investigation or remediation of offsite locations at which the Company,
any Subsidiary or any of their respective predecessors are alleged to have
directly or indirectly Disposed of Hazardous Substances;
(h) the Company's or any Subsidiary's receipt of any
notice (other than an Immaterial Notice) of the incurrence by any third party
(including any Governmental Authority) of any expense or loss in connection
with the assessment, containment, removal or remediation of any Hazardous
Substances with respect to which the Company or any Subsidiary may be liable or
for which a Lien may be imposed on any Real Property; or
(i) any Environmental Claim which has resulted or could
reasonably be expected to result in a Lien on any assets of the Company or any
Subsidiary;
(j) any material change in accounting policies or
financial reporting practices by the Company or any of its consolidated
Subsidiaries.
57
<PAGE> 66
Each notice under this Section shall be accompanied by a
written statement by a Responsible Officer setting forth details of the
occurrence referred to therein, and stating what action the Company or any
affected Subsidiary proposes to take with respect thereto and at what time.
Each notice under subsection 7.3(a) shall describe with particularity any and
all clauses or provisions of this Agreement or any other Loan Document that
have been breached or violated.
7.4 Preservation of Corporate Existence, Etc. The Company shall, and
shall cause each Subsidiary to:
(a) preserve and maintain in full force and effect its
corporate existence and good standing under the laws of its state or
jurisdiction of incorporation;
(b) preserve and maintain in full force and effect all
governmental rights, privileges, qualifications, permits, licenses and
franchises necessary or desirable in the normal conduct of its business except
in connection with transactions permitted by Section 8.3 and sales of assets
permitted by Section 8.2;
(c) use reasonable efforts, in the ordinary course of
business, to preserve its business organization and goodwill; and
(d) preserve or renew all of its registered patents,
trademarks, trade names and service marks, the non-preservation of which could
reasonably be expected to have a Material Adverse Effect.
7.5 Maintenance of Property. The Company shall, and shall cause each
Subsidiary to, maintain and preserve all its property which is used or useful
in its business in good working order and condition, ordinary wear and tear
excepted.
7.6 Insurance. The Company shall, and shall cause each Subsidiary
to, maintain, with financially sound and reputable independent insurers,
insurance with respect to its properties and business against loss or damage of
the kinds customarily insured against by Persons engaged in the same or similar
business, of such types and in such amounts as are customarily carried under
similar circumstances by such other Persons.
7.7 Payment of Obligations. The Company shall, and shall cause each
Subsidiary to, pay and discharge as the same shall become due and payable, all
their respective obligations and liabilities, including:
(a) all tax liabilities, assessments and governmental
charges or levies upon it or its properties or assets; and
(b) all lawful claims which, if unpaid, would by law
become a Lien upon its property;
58
<PAGE> 67
unless, in each case, the same are being contested in good faith by appropriate
proceedings and adequate reserves in accordance with GAAP are being maintained
by the Company or such Subsidiary.
7.8 Compliance with Laws. The Company shall, and shall cause each
Subsidiary to, comply in all material respects with all Requirements of Law of
any Governmental Authority having jurisdiction over it or its business
(including the Federal Fair Labor Standards Act), except such as may be
contested in good faith or as to which a bona fide dispute may exist.
7.9 Compliance with ERISA. The Company shall, and shall cause each
of its ERISA Affiliates to: (a) maintain each Plan in compliance in all
material respects with the applicable provisions of ERISA, the Code and other
federal or state law; (b) cause each Plan which is qualified under Section
401(a) of the Code to maintain such qualification; and (c) make all required
contributions to any Plan subject to Section 412 of the Code.
7.10 Inspection of Property and Books and Records. The Company
shall, and shall cause each Subsidiary to, maintain proper books of record and
account, in which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all financial transactions and matters
involving the assets and business of the Company and such Subsidiary. The
Company shall, and shall cause each Subsidiary to, permit representatives and
independent contractors of the Agent or any Lender to visit and inspect any of
their respective properties, to examine their respective corporate, financial
and operating records, and to make copies thereof or abstracts therefrom, and
to discuss their respective affairs, finances and accounts with their
respective directors, officers, and independent public accountants, all at the
expense of the Company and at such reasonable times during normal business
hours and as often as may be reasonably desired, upon reasonable advance notice
to the Company; provided, however, that when an Event of Default exists, the
Agent or any Lender may do any of the foregoing without advance notice.
7.11 Environmental Matters. (a) If any material Release or Disposal
of Hazardous Substances shall occur or shall have occurred on any Real Property
or any other assets of the Company or any Subsidiary, the Company shall, or
shall cause the applicable Subsidiary to, cause the prompt containment and
removal of such Hazardous Substances and the remediation of such Real Property
or other assets as necessary to comply in all material respects with all
Environmental Laws and to preserve the value of such Real Property or other
assets. Without limiting the generality of the foregoing, the Company shall,
and shall cause each Subsidiary to, comply in a reasonable and cost-effective
manner with any valid Federal or state judicial or administrative order
requiring the performance at any Real Property of activities in response to the
Release or threatened Release of a Hazardous Substance except for the period of
time that the Company or such Subsidiary is diligently and in good faith
contesting such order.
(b) To the extent that the transportation of "hazardous
waste" as defined by RCRA is permitted by this Agreement, the Company shall,
and shall cause its Subsidiaries
59
<PAGE> 68
to, dispose of such hazardous waste only at licensed disposal facilities
operating, to the best of the Company's or such Subsidiary's knowledge after
reasonable inquiry, in compliance with Environmental Laws.
7.12 Use of Proceeds. The Company shall use the proceeds of the
Loans to partially finance the Ohmstede Acquisition, for working capital and
for other general corporate purposes (including capital expenditures and
Permitted Acquisitions) and to refinance certain debt of the Company, in all
cases not in contravention of any Requirement of Law or of any Loan Document.
7.13 Collateral Audits. The Company shall, and shall cause each
Subsidiary to, permit the Agent and its agents or designees, from time to time,
to inspect and evaluate the collateral pledged to the Agent pursuant to the
Security Agreement, and to inspect, audit and make copies of and extracts from
all records and all other papers in the possession of the Company or such
Subsidiary.
7.14 Further Assurances. The Company shall, and shall cause each
Subsidiary to, take such actions as the Agent may reasonably request from time
to time (including the execution and delivery of guaranties, security
agreements, pledge agreements, mortgages, stock powers, financing statements
and other documents, the filing or recording of any of the foregoing, and the
delivery of stock certificates and other collateral with respect to which
perfection is obtained by possession) to ensure that (a) the obligations of the
Company hereunder and under the other Loan Documents are secured by
substantially all assets of the Company and guaranteed by all Subsidiaries of
the Company (including, promptly upon the acquisition or creation thereof, any
Subsidiary created or acquired after the date hereof) and (b) the obligations
of each Subsidiary under any guaranty issued pursuant to clause (a) are secured
by substantially all of the assets of such Subsidiary.
7.15 Interest Rate Protection. If the Company has not completed one
or more Equity Offerings (as defined in Section 2.7(d)) after the date hereof
resulting in net cash proceeds of at least $20,000,000 by September 30, 1997,
then the Company will enter into one or more interest rate swaps, interest rate
caps or similar agreements having terms and conditions (including national
interest rates and principal amounts), and with counterparties, reasonably
acceptable to the Required Lenders covering Loans in an aggregate principal
amount not less than the remainder of $20,000,000 minus the net cash proceeds
of all Equity Offerings after the date hereof.
7.16 Real Estate Documentation. The Company shall provide,
within 90 days of the date hereof, an ALTA Survey, certified to the Agent and
the applicable title company, showing all easements, encroachments,
improvements, structures and matters of record and containing a complete legal
description and flood hazard notation (it being understood that such survey
shall not indicate any material encroachments) for each parcel of Real Property
listed on Schedule 6.21.
60
<PAGE> 69
ARTICLE VIII
NEGATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, or any Loan
or other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, unless the Required Lenders waive compliance in
writing:
8.1 Limitation on Liens. The Company shall not, and shall not permit
any Subsidiary to, directly or indirectly, make, create, incur, assume or
suffer to exist any Lien upon or with respect to any part of its property,
whether now owned or hereafter acquired, other than the following ("Permitted
Liens"):
(a) any Lien existing on property of the Company or any
Subsidiary on the Closing Date and set forth in Schedule 8.1 securing
Indebtedness outstanding on such date;
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other
governmental charges which are not delinquent or remain payable without
penalty, or to the extent that non-payment thereof is permitted by Section 7.7,
provided that no notice of lien has been filed or recorded under the Code;
(d) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the ordinary
course of business which are not delinquent or remain payable without penalty
or which are being contested in good faith and by appropriate proceedings,
which proceedings have the effect of preventing the forfeiture or sale of the
property subject thereto;
(e) Liens (other than any Lien imposed by ERISA)
consisting of pledges or deposits required in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other
social security legislation;
(f) Liens on property of the Company or any Subsidiary
securing (i) the non-delinquent performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, (ii) contingent
obligations on surety, performance and appeal bonds, and (iii) other non-
delinquent obligations of a like nature; in each case, incurred in the ordinary
course of business, provided that all such Liens in the aggregate would not
(even if enforced) cause a Material Adverse Effect;
(g) Liens consisting of judgment or judicial attachment
liens, provided that the enforcement of such Liens is effectively stayed and
all such liens in the aggregate at any time outstanding for the Company and its
Subsidiaries do not exceed $100,000;
(h) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property
61
<PAGE> 70
subject thereto or interfere with the ordinary conduct of the businesses of the
Company and its Subsidiaries;
(i) purchase money security interests on any property
acquired by the Company or any Subsidiary in the ordinary course of business,
securing Indebtedness incurred or assumed for the purpose of financing all or
any part of the cost of acquiring such property; provided that (i) any such
Lien attaches to such property concurrently with or within 20 days after the
acquisition thereof, (ii) such Lien attaches solely to the property so acquired
in such transaction, (iii) the principal amount of the Indebtedness secured
thereby shall not exceed 100% of the cost of such property, and (iv) the
principal amount of the Indebtedness secured by all such purchase money
security interests plus the aggregate amount of all Indebtedness arising under
capital leases shall not at any time exceed $500,000;
(j) Liens securing obligations in respect of capital
leases on assets subject to such leases, provided that the aggregate amount of
all Indebtedness arising under such capital leases plus the aggregate amount of
all Indebtedness secured by purchase money security interests shall not at any
time exceed $500,000; and
(k) Liens arising solely by virtue of any statutory or
common law provision relating to banker's liens, rights of set-off or similar
rights and remedies as to deposit accounts or other funds maintained with a
creditor depository institution; provided that (i) such deposit account is not
a dedicated cash collateral account and is not subject to restrictions against
access by the Company in excess of those set forth by regulations promulgated
by the FRB, (ii) such deposit account is not intended by the Company or any
Subsidiary to provide collateral to the depository institution and (iii) the
aggregate amount of all such deposits with all depository institutions which
are not Lenders shall not at any time exceed $2,000,000.
8.2 Disposition of Assets. The Company shall not, and shall not
permit any Subsidiary to, directly or indirectly, sell, assign, lease, convey,
transfer or otherwise dispose of (whether in one or a series of transactions)
any property (including accounts and notes receivable, with or without
recourse) or enter into any agreement to do any of the foregoing, except:
(a) dispositions of inventory, or used, worn-out or
surplus equipment, all in the ordinary course of business;
(b) the sale of equipment to the extent that such
equipment is exchanged for credit against the purchase price of similar
replacement equipment, or the proceeds of such sale are reasonably promptly
applied to the purchase price of such replacement equipment; and
(c) the sale of all of the stock of Air-Cure, Inc.
(including its Subsidiary, Air-Cure Service, Inc.) and Pipkorn Environmental
Technologies, Inc.
62
<PAGE> 71
(d) dispositions not otherwise permitted hereunder which
are made for fair market value; provided that (i) at the time of any
disposition, no Event of Default or Unmatured Event of Default shall exist or
will result from such disposition, (ii) the aggregate sales price from such
disposition shall be paid in cash, and (iii) the aggregate value of all assets
so sold by the Company and its Subsidiaries in any fiscal year shall not exceed
$500,000.
8.3 Consolidations and Mergers. The Company shall not, and shall not
permit any Subsidiary to, merge or consolidate with or into any other Person,
except that any Subsidiary may merge with the Company, provided that the
Company shall be the continuing or surviving corporation, or with any one or
more Subsidiaries, provided that if any transaction shall be between a
Subsidiary and a Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary shall be
the continuing or surviving corporation.
8.4 Loans and Investments. The Company shall not, and shall not
permit any Subsidiary to, purchase or acquire, or make any commitment therefor,
any capital stock, equity interest, or other obligations or securities of, or
any interest in, any other Person, or make or commit to make any Acquisition,
or make or commit to make any advance, loan, extension of credit or capital
contribution to or any other investment in, any other Person, except for:
(a) investments in cash equivalents issued by any Lender;
(b) extensions of credit in the nature of accounts
receivable or notes receivable arising from the sale or lease of goods or
services in the ordinary course of business;
(c) loans and advances to employees in the ordinary
course of business (such as travel advances) in an aggregate amount not at any
time exceeding $100,000.
(d) investments in money market mutual funds sponsored by
any Lender;
(e) investments by the Company or any Subsidiary in, or
loans and advances by the Company or any Subsidiary to, any Person which is a
Subsidiary of the Company or such Subsidiary (prior to, in the case of an
investment, the making of such investment); provided, however, that any future
investments, loans or advances by the Company or any Subsidiary in or to a
Foreign Subsidiary (less any return of principal or return of equity received
in cash with respect to any such investment) shall not exceed $1,000,000 in an
aggregate amount at any time during the term of this Agreement;
(f) loans and advances by any Subsidiary to the Company;
(g) the Ohmstede Acquisition;
(h) Permitted Acquisitions; and
63
<PAGE> 72
(i) other investments (including investments in Joint
Ventures) in an aggregate amount not exceeding $250,000 during the term of this
Agreement.
8.5 Limitation on Indebtedness. The Company shall not, and shall not
permit any Subsidiary to, create, incur, assume, suffer to exist, or otherwise
become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement;
(b) Indebtedness consisting of Contingent Obligations
permitted pursuant to Section 8.8;
(c) Indebtedness existing on the Closing Date and set
forth in Schedule 8.5;
(d) Indebtedness secured by Liens permitted by
subsections 8.1(i) and (k); and
(e) Subordinated Debt.
8.6 Transactions with Affiliates. The Company shall not, and shall
not permit any Subsidiary to, enter into any transaction with any Affiliate of
the Company (other than a Subsidiary), except upon fair and reasonable terms no
less favorable to the Company or such Subsidiary than would obtain in a
comparable arm's-length transaction with a Person not an Affiliate of the
Company.
8.7 Use of Proceeds. The Company shall not, and shall not permit any
Subsidiary to, use any portion of the Loan proceeds or any Letter of Credit,
directly or indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or
otherwise refinance indebtedness of the Company or others incurred to purchase
or carry Margin Stock, (iii) to extend credit for the purpose of purchasing or
carrying any Margin Stock, or (iv) to acquire any security in any transaction
that is subject to Section 13 or 14 of the Securities Exchange Act of 1934.
8.8 Contingent Obligations. The Company shall not, and shall not
permit any Subsidiary to, create, incur, assume or suffer to exist any
Contingent Obligation except:
(a) endorsements for collection or deposit in the
ordinary course of business;
(b) Swap Contracts entered into in the ordinary course of
business as bona fide hedging transactions;
(c) Contingent Obligations of the Company and its
Subsidiaries existing as of the Closing Date and listed in Schedule 8.8;
64
<PAGE> 73
(d) Contingent Obligations arising under the Loan
Documents; and
(e) Contingent Obligations in respect of surety or
performance bonds to the extent permitted by Section 8.1(f); and
(f) Guaranties of the Company's Subsidiaries under the
Subordinated Debt described in clause (a) of the definition of Subordinated
Debt.
8.9 Sale-Leaseback Arrangements. The Company shall not, and shall
not permit any Subsidiary to, enter into any sale-leaseback arrangements.
8.10 Lease Obligations. The Company shall not, and shall not permit
any Subsidiary to, create or suffer to exist any obligations for the payment of
rent for any property under lease except for:
(a) leases of the Company and its Subsidiaries in
existence on the Closing Date and any renewal, extension or refinancing
thereof;
(b) operating leases entered into by the Company or any
Subsidiary in the ordinary course of business, provided that the aggregate
rental payments under all such operating leases shall not exceed in any fiscal
year $1,250,000; and
(c) capital leases to the extent permitted by Section
8.1(k).
8.11 Minimum Interest Coverage Ratio. The Company shall not permit
the Interest Coverage Ratio to be less than the following ratios during the
following periods:
<TABLE>
<CAPTION>
Periods Interest Coverage Ratio
------- -----------------------
<S> <C>
1/1/97 through 12/31/97 2.00:1.0
1/1/98 through 12/31/98 2.50:1.0
1/1/99 and thereafter 3.00:1.0
</TABLE>
65
<PAGE> 74
8.12 Maximum Indebtedness to Capitalization Ratio. The Company shall
not at any time permit the ratio of (a) Total Indebtedness to (b) the sum of
Total Indebtedness plus Net Worth to exceed the following ratios during the
following periods:
<TABLE>
<CAPTION>
Total Indebtedness
Period to Capitalization Ratio
------ -----------------------
<S> <C>
Closing Date through 12/31/96 0.80:1.0
1/1/97 through 12/31/97 0.75:1.0
1/1/98 through 12/31/98 0.65:1.0
1/1/99 through 12/31/99 0.60:1.0
1/1/00 through 12/31/00 0.50:1.0
1/1/01 and thereafter 0.45:1.0
</TABLE>
8.13 Minimum Net Worth. The Company will not at any time permit Net
Worth to be less than the sum of (a) $20,000,000 plus (b) 75% of quarterly
Consolidated Net Income for the period beginning with July 1, 1996 (provided
that if Consolidated Net Income is less than zero for any fiscal quarter, for
purposes of this Section 8.13 Consolidated Net Income for such fiscal quarter
will be deemed to be zero) plus (c) 100% of the net proceeds of any equity
contributed to or issued by the Company or any of its Subsidiaries (on a
consolidated basis) after the Closing Date.
8.14 Underbillings Ratio. The Company shall not permit the
Underbillings Ratio to exceed 0.30 to 1 for any fiscal quarter.
8.15 Minimum Consolidated Net Income. The Company shall not permit
Consolidated Net Income to be less than zero for any fiscal quarter.
8.16 Current Ratio. The Company shall not permit the Current Ratio
to be less than 1.35 to 1.
8.17 Maximum Total Indebtedness to EBITDA. The Company shall not
permit the ratio of Total Indebtedness to EBITDA as of the last day of any
period of four consecutive fiscal quarters to be greater than the following
ratios as of the following dates:
<TABLE>
<CAPTION>
Quarter Ending Total Indebtedness to EBITDA Ratio
-------------- ----------------------------------
<S> <C>
Closing Date through 6/30/97 4.50:1.0
7/1/97 through 12/31/97 4.25:1.0
</TABLE>
66
<PAGE> 75
<TABLE>
<S> <C>
1/1/98 through 12/31/98 3.75:1.0
1/1/99 through 12/31/99 3.50:1.0
1/1/00 and thereafter 3.25:1.0
</TABLE>
8.18 Restricted Payments. The Company shall not, and shall not
permit any Subsidiary to, declare or make any dividend payment or other
distribution of assets, properties, cash, rights, obligations or securities on
account of any shares of any class of its capital stock, or purchase, redeem or
otherwise acquire for value any shares of its capital stock or any warrants,
rights or options to acquire such shares, now or hereafter outstanding, or
prepay, purchase, redeem or defease any Subordinated Debt (all of the foregoing
being collectively called "Restricted Payments"), except that (i) any
Subsidiary may declare and pay dividends to the Company and (ii) the Company
may:
(a) declare and make stock splits and dividend payments
or other distributions payable solely in its common stock; and
(b) purchase, redeem or otherwise acquire shares of its
common stock or warrants or options to acquire any such shares with the
proceeds received from the substantially concurrent issue of new shares of its
common stock.
8.19 ERISA. The Company shall not, and shall not permit any of its
ERISA Affiliates to: (a) engage in a prohibited transaction or violation of
the fiduciary responsibility rules with respect to any Plan which has resulted
or could reasonably be expected to result in liability of the Company in an
aggregate amount in excess of $100,000; or (b) engage in a transaction that
could be subject to Section 4069 or 4212(c) of ERISA.
8.20 Change in Business. The Company shall not, and shall not permit
any Subsidiary to, engage in any line of business other than the businesses
engaged in by the Company and its Subsidiaries as of the date hereof and
businesses reasonably related thereto (but excluding the transportation,
storage or other handling of Hazardous Substances except where permitted in
connection with and incidental to the normal transportation, storage and other
handling of non-hazardous waste).
8.21 Accounting Changes. The Company shall not, and shall not permit
any Subsidiary to, make any significant change in accounting treatment or
reporting practices, except as required by GAAP, or change the fiscal year of
the Company or of any Subsidiary.
8.22 Foreign Subsidiaries. The Company shall not at any time permit
the total assets of all Foreign Subsidiaries to exceed 10% of the total assets
of the Company and its Subsidiaries on a consolidated basis.
67
<PAGE> 76
8.23 Negative Pledges. The Company shall not, and shall not permit
any Subsidiary to, enter into any agreement which would restrict the Company or
such Subsidiary from granting to the Agent, on behalf of the Lenders, a Lien on
any asset of the Company or such Subsidiary.
8.24 Capital Expenditures. The Company shall not permit the
aggregate amount of any capital expenditures made by the Company and its
Subsidiaries in any fiscal year to exceed $2,500,000 in the fiscal year ending
December 31, 1997 or $2,000,000 in any fiscal year thereafter.
ARTICLE IX
EVENTS OF DEFAULT
9.1 Event of Default. Any of the following shall constitute an
"Event of Default":
(a) Non-Payment. The Company fails to pay (i) when and
as required to be paid herein, any amount of principal of any Loan or any L/C
Obligation, or (ii) within five days after the same becomes due, any interest,
fee or other amount payable hereunder or under any other Loan Document.
(b) Representation or Warranty. Any representation or
warranty by the Company or any Subsidiary made or deemed made herein or in any
other Loan Document, or which is contained in any certificate, document or
financial or other statement by the Company, any Subsidiary or any Responsible
Officer furnished at any time under this Agreement or any other Loan Document,
is incorrect in any material respect on or as of the date made or deemed made.
(c) Specific Defaults. The Company fails to perform or
observe any term, covenant or agreement contained in any of subsection 7.3(a)
or Sections 8.1 through 8.5, 8.7, 8.8, 8.18, 8.19, 8.22 or 8.23.
(d) Other Defaults. The Company or any Subsidiary party
thereto fails to perform or observe any other term or covenant contained in
this Agreement or any other Loan Document, and such default shall continue
unremedied for a period of 30 days after the earlier of (i) the date upon which
a Responsible Officer knew or reasonably should have known of such failure or
(ii) the date upon which written notice thereof is given to the Company by the
Agent or any Lender.
(e) Cross-Default. The Company or any Subsidiary (i)
fails to make any payment in respect of any Indebtedness or Contingent
Obligation having an aggregate principal amount (including amounts owing to all
creditors under any combined or syndicated
68
<PAGE> 77
credit arrangement) of more than $100,000 when due (whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise); or (ii)
fails to perform or observe any other condition or covenant, or any other event
shall occur or condition shall exist, under any agreement or instrument
relating to any Indebtedness or Contingent Obligation having an aggregate
principal amount (including amounts owing to all creditors under any combined
or syndicated credit arrangement) of more than $100,000, if the effect of such
failure, event or condition is to cause, or to permit the holder or holders of
such Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, such Indebtedness to be declared to be due and payable
prior to its stated maturity, or such Contingent Obligation to become payable,
or cash collateral in respect thereof to be demanded.
(f) Insolvency; Voluntary Proceedings. The Company or
any Subsidiary (i) ceases or fails to be solvent, or generally fails to pay, or
admits in writing its inability to pay, its debts as they become due; (ii)
voluntarily ceases to conduct its business in the ordinary course; (iii)
commences any Insolvency Proceeding with respect to itself; or (iv) takes any
action to effectuate or authorize any of the foregoing.
(g) Involuntary Proceedings. (i) Any involuntary
Insolvency Proceeding is commenced or filed against the Company or any
Subsidiary, or any writ, judgment, warrant of attachment, warrant of execution
or similar process is issued or levied against a substantial part of the
Company's or any Subsidiary's properties, and such proceeding or petition shall
not be dismissed, or such writ, judgment, warrant of attachment, warrant of
execution or similar process shall not be released, vacated or fully bonded
within 60 days after commencement, filing or levy; (ii) the Company or any
Subsidiary admits the material allegations of a petition against it in any
Insolvency Proceeding, or an order for relief (or similar order under non-U.S.
law) is ordered in any Insolvency Proceeding; or (iii) the Company or any
Subsidiary acquiesces in the appointment of a receiver, trustee, custodian,
conservator, liquidator, mortgagee in possession (or agent therefor) or other
similar Person for itself or a substantial portion of its property or business.
(h) ERISA. (i) An ERISA Event shall occur with respect
to a Pension Plan or Multiemployer Plan which has resulted or could reasonably
be expected to result in liability of the Company under Title IV of ERISA to
the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in
excess of $100,000; (ii) a contribution failure shall have occurred with
respect to a Pension Plan sufficient to give rise to a Lien under Section
302(f) of ERISA; (iii) the aggregate amount of Unfunded Pension Liability among
all Pension Plans at any time exceeds $100,000; or (iv) the Company or any
ERISA Affiliate shall fail to pay when due, after the expiration of any
applicable grace period, any installment payment with respect to its withdrawal
liability under Section 4201 of ERISA under a Multiemployer Plan in an
aggregate amount in excess of $100,000.
(i) Monetary Judgments. One or more non-interlocutory
judgments, non-interlocutory orders, decrees or arbitration awards is entered
against the Company or any
69
<PAGE> 78
Subsidiary involving in the aggregate a liability (to the extent not covered by
independent third-party insurance as to which the insurer does not dispute
coverage), as to any single or related series of transactions, incidents or
conditions, of $100,000 or more, and the same shall remain unvacated and
unstayed pending appeal for a period of 30 days after the entry thereof.
(j) Non-Monetary Judgments. Any non-monetary judgment,
order or decree is entered against the Company or any Subsidiary which has or
would reasonably be expected to have a Material Adverse Effect, and there shall
be any period of 30 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect.
(k) Guarantor Defaults. Any Guarantor fails in any
material respect to perform or observe any term, covenant or agreement in the
Guaranty; or the Guaranty is for any reason partially (including with respect
to future advances) or wholly revoked or invalidated, or otherwise ceases to be
in full force and effect; or any Guarantor, or any other Person by, through or
on behalf of any Guarantor, contests in any manner the validity or
enforceability of the Guaranty or denies that such Guarantor has any further
liability or obligation thereunder.
(l) Security Agreement, etc. The Security Agreement
shall cease to be in full force and effect; or the Company, or any Person by,
through or on behalf of the Company, shall contest the validity or
enforceability of the Security Agreement.
(m) Pledge Agreements. Any Pledge Agreement shall cease
to be in full force and effect; or the Company or the applicable Subsidiary, or
any Person by, through or on behalf of the Company or the applicable
Subsidiary, shall contest the validity or enforceability of any Pledge
Agreement.
(n) Material Environmental Events. There shall occur or
exist one or more circumstances or events of a type or types referred to in
Section 6.12 or 7.11 that, singly or in the aggregate, has resulted or could
reasonably be expected to result in expenditures by the Company and its
Subsidiaries (on account of fines, investigations, removal or remediation) in
excess of $1,000,000 in any fiscal year or $2,000,000 during the period from
the Closing Date to the scheduled Revolving Termination Date or that otherwise
has resulted or could reasonably be expected to result in a Material Adverse
Effect.
(o) Change of Control. Any Change of Control occurs.
9.2 Remedies. If any Event of Default occurs, the Agent shall, at
the request of, or may, with the consent of, the Required Lenders do any or all
of the following:
70
<PAGE> 79
(a) declare the commitment of each Lender to make Loans
and any obligation of the Issuing Lender to Issue Letters of Credit to be
terminated, whereupon such commitments and obligations shall be terminated;
(b) declare an amount equal to the maximum aggregate
amount that is or at any time thereafter may become available for drawing under
any outstanding Letter of Credit (whether or not any beneficiary shall have
presented, or shall be entitled at such time to present, the drafts or other
documents required to draw under such Letter of Credit) to be immediately due
and payable, and declare the unpaid principal amount of all outstanding Loans,
all interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Company; and
(c) exercise on behalf of itself and the Lenders all
rights and remedies available to it and the Lenders under the Loan Documents or
applicable law;
provided, however, that upon the occurrence of any Event of Default specified
in subsection 9.1(f) or (g), the obligation of each Lender to make Loans and
the obligation of the Issuing Lender to Issue Letters of Credit shall
automatically terminate and the unpaid principal amount of all outstanding
Loans and all interest and other amounts as aforesaid shall automatically
become due and payable without further act of the Agent, the Issuing Lender or
any other Lender.
9.3 Rights Not Exclusive. The rights provided for in this Agreement
and the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
ARTICLE X
THE AGENT
10.1 Appointment and Authorization. (a) Each Lender hereby
irrevocably (subject to Section 10.9) appoints, designates and authorizes the
Agent to take such action on its behalf under the provisions of this Agreement
and each other Loan Document and to exercise such powers and perform such
duties as are expressly delegated to it by the terms of this Agreement or any
other Loan Document, together with such powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary contained elsewhere in
this Agreement or in any other Loan Document, the Agent shall not have any
duties or responsibilities, except those expressly set forth herein, nor shall
the Agent have or be deemed to have any fiduciary relationship with any Lender,
and no implied covenants,
71
<PAGE> 80
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against the
Agent.
(b) The Issuing Lender shall act on behalf of the Lenders
with respect to the Letters of Credit and the documents associated therewith
until such time and except for so long as the Agent may agree at the request of
the Required Lenders to act for the Issuing Lender with respect thereto;
provided, however, that the Issuing Lender shall have all of the benefits and
immunities (i) provided to the Agent in this Article X with respect to any acts
taken or omissions suffered by the Issuing Lender in connection with Letters of
Credit Issued by it or proposed to be Issued by it and the applications and
agreements for letters of credit pertaining to the Letters of Credit as fully
as if the term "Agent", as used in this Article X, included the Issuing Lender
with respect to such acts or omissions, and (ii) as additionally provided in
this Agreement with respect to the Issuing Lender.
10.2 Delegation of Duties. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
10.3 Liability of Agent. None of the Agent-Related Persons shall (i)
be liable for any action taken or omitted to be taken by any of them under or
in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or
willful misconduct), or (ii) be responsible in any manner to any of the Lenders
for any recital, statement, representation or warranty made by the Company or
any Subsidiary or Affiliate of the Company, or any officer thereof, contained
in this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Agent under or in connection with, this Agreement or any other Loan Document,
or the validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Loan Document, or for any failure of the Company or
any other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Company or any
of the Company's Subsidiaries or Affiliates.
10.4 Reliance by Agent. (a) The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, statement or other document or conversation believed by it
to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons, and upon advice and statements of legal counsel (including
counsel to the Company), independent accountants and other experts selected by
the Agent. The Agent shall be fully justified in failing or refusing to take
any action under this
72
<PAGE> 81
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Required Lenders as it deems appropriate and, if it so
requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of
the Required Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders.
(b) For purposes of determining compliance with the
conditions specified in Section 5.1, each Lender that has executed this
Agreement shall be deemed to have consented to, approved or accepted, or to be
satisfied with, each document or other matter either sent by the Agent to such
Lender for consent, approval, acceptance or satisfaction, or required
thereunder to be consented to or approved by or acceptable or satisfactory to
such Lender.
10.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Event of Default or Unmatured
Event of Default, except with respect to defaults in the payment of principal,
interest and fees required to be paid to the Agent for the account of the
Lenders, unless the Agent shall have received written notice from a Lender or
the Company referring to this Agreement, describing such Event of Default or
Unmatured Event of Default and stating that such notice is a "notice of
default". The Agent will notify the Lenders of its receipt of any such notice.
The Agent shall take such action with respect to such Event of Default or
Unmatured Event of Default as may be requested by the Required Lenders in
accordance with Article IX; provided, however, that unless and until the Agent
has received any such request, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Event of Default or Unmatured Event of Default as it shall deem advisable or in
the best interest of the Lenders.
10.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that
no act by the Agent hereinafter taken, including any review of the affairs of
the Company and its Subsidiaries, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon any Agent-Related Person and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Company and its Subsidiaries, and all applicable bank
regulatory laws relating to the transactions contemplated hereby, and made its
own decision to enter into this Agreement and to extend credit to the Company
hereunder. Each Lender also represents that it will, independently and without
reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement
73
<PAGE> 82
and the other Loan Documents, and to make such investigations as it deems
necessary to inform itself as to the business, prospects, operations, property,
financial and other condition and creditworthiness of the Company. Except for
notices, reports and other documents expressly herein required to be furnished
to the Lenders by the Agent, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of the Company which may come into the possession
of any of the Agent-Related Persons.
10.7 Indemnification of Agent. Whether or not the transactions
contemplated hereby are consummated, the Lenders shall indemnify upon demand
the Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Company and without limiting the obligation of the Company to do so), pro rata,
from and against any and all Indemnified Liabilities; provided, however, that
no Lender shall be liable for the payment to any Agent-Related Person of any
portion of the Indemnified Liabilities resulting solely from such Person's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Lender shall reimburse the Agent upon demand for its ratable share of any
costs or out-of-pocket expenses (including Attorney Costs) incurred by the
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any
document contemplated by or referred to herein, to the extent that the Agent is
not reimbursed for such expenses by or on behalf of the Company. The
undertaking in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of the Agent.
10.8 Agent in Individual Capacity. BofA and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Company and its
Subsidiaries and Affiliates as though BofA were not the Agent hereunder and
without notice to or consent of the Lenders. The Lenders acknowledge that,
pursuant to such activities, BofA or its Affiliates may receive information
regarding the Company or its Affiliates (including information that may be
subject to confidentiality obligations in favor of the Company or such
Subsidiary) and acknowledge that the Agent shall be under no obligation to
provide such information to them. With respect to their respective Loans (if
any), BofA and any Affiliate thereof shall have the same rights and powers
under this Agreement as any other Lender and may exercise the same as though
BofA were not the Agent.
10.9 Successor Agent. The Agent may, and at the request of the
Required Lenders shall, resign as Agent upon 30 days' notice to the Lenders.
If the Agent resigns under this Agreement, the Required Lenders shall appoint
from among the Lenders a successor agent for the Lenders. If no successor
agent is appointed prior to the effective date of the resignation of the Agent,
the Agent may appoint, after consulting with the Lenders and the Company, a
successor agent from among the Lenders. Upon the acceptance of its
74
<PAGE> 83
appointment as successor agent hereunder, such successor agent shall succeed to
all the rights, powers and duties of the retiring Agent and the term "Agent"
shall mean such successor agent and the retiring Agent's appointment, powers
and duties as Agent shall be terminated. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Article X and Sections 11.4 and 11.5
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement. If no successor agent has accepted
appointment as Agent by the date which is 30 days following a retiring Agent's
notice of resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
the Agent hereunder until such time, if any, as the Required Lenders appoint a
successor agent as provided for above. Notwithstanding the foregoing, however,
BofA may not be removed as the Agent at the request of the Required Lenders
unless BAI or any Affiliate thereof acting as the Issuing Lender hereunder
shall also simultaneously be replaced as Issuing Lender pursuant to
documentation in form and substance reasonably satisfactory to BofA and (and,
if applicable, such Affiliate).
10.10 Withholding Tax. (a) If any Lender is a "foreign corporation,
partnership or trust" within the meaning of the Code and such Lender claims
exemption from, or a reduction of, U.S. withholding tax under Section 1441 or
1442 of the Code, such Lender shall deliver to the Agent and the Company:
(i) if such Lender claims an exemption from, or a
reduction of, withholding tax under a United States tax treaty,
properly completed IRS Forms 1001 and W-8 before the payment of any
interest in the first calendar year and before the payment of any
interest in each third succeeding calendar year during which interest
may be paid under this Agreement;
(ii) if such Lender claims that interest paid under
this Agreement is exempt from United States withholding tax because it
is effectively connected with a United States trade or business of
such Lender, two properly completed and executed copies of IRS Form
4224 before the payment of any interest is due in the first taxable
year of such Lender and in each succeeding taxable year of such Lender
during which interest may be paid under this Agreement, and IRS Form
W-9; and
(iii) such other form or forms as may be required
under the Code or other laws of the United States as a condition to
exemption from, or reduction of, United States withholding tax.
Each such Lender agrees to promptly notify the Agent and the Company of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001 and
such Lender sells, assigns, grants a participation in, or otherwise transfers
all or part of the Obligations of the Company
75
<PAGE> 84
to such Lender, such Lender agrees to notify the Agent and the Company of the
percentage amount in which it is no longer the beneficial owner of Obligations
of the Company to such Lender. To the extent of such percentage amount, the
Agent and the Company will treat such Lender's IRS Form 1001 as no longer
valid.
(c) If any Lender claiming exemption from United States
withholding tax by filing IRS Form 4224 with the Agent and the Company sells,
assigns, grants a participation in, or otherwise transfers all or part of the
Obligations of the Company to such Lender, such Lender agrees to undertake sole
responsibility for complying with the withholding tax requirements imposed by
Sections 1441 and 1442 of the Code.
(d) If any Lender is entitled to a reduction in the
applicable withholding tax, the Agent or the Company may withhold from any
interest payment to such Lender an amount equivalent to the applicable
withholding tax after taking into account such reduction. If the forms or
other documentation required by subsection (a) of this Section are not
delivered to the Agent and the Company, then the Agent or the Company may
withhold from any interest payment to such Lender not providing such forms or
other documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that the Agent or the
Company did not properly withhold tax from amounts paid to or for the account
of any Lender (because the appropriate form was not delivered or was not
properly executed, or because such Lender failed to notify the Agent of a
change in circumstances which rendered the exemption from, or reduction of,
withholding tax ineffective, or for any other reason) such Lender shall
indemnify the Agent and the Company fully for all amounts paid, directly or
indirectly, by the Agent or the Company as tax or otherwise, including
penalties and interest, and including any taxes imposed by any jurisdiction on
the amounts payable to the Agent or the Company under this Section, together
with all costs and expenses (including Attorney Costs). The obligation of the
Lenders under this subsection shall survive the payment of all Obligations and
the resignation or replacement of the Agent.
10.11 Collateral Matters.
(a) The Agent is authorized on behalf of all the Lenders,
without the necessity of any notice to or further consent from any Lender, from
time to time to take any action with respect to any collateral or the Loan
Documents which may be necessary to perfect and maintain perfected the security
interest in and Liens upon the collateral granted pursuant to the Loan
Documents.
(b) The Lenders irrevocably authorize the Agent, at its
option and in its discretion, to release any security interest or Lien granted
to or held by the Agent upon any collateral (i) upon termination of the
Commitments and payment in full of all Loans and all other obligations known to
the Agent and payable under this Agreement and the other Loan
76
<PAGE> 85
Documents; (ii) constituting property sold or to be sold or disposed of as part
of or in connection with any disposition permitted hereunder; (iii)
constituting property in which the Company or any Subsidiary owned no interest
at the time such security interest or Lien was granted or at any time
thereafter; (iv) constituting property leased to the Company or any Subsidiary
under a lease which has expired or been terminated in a transaction permitted
under this Agreement or is about to expire and which has not been, and is not
intended by the Company or such Subsidiary to be, renewed or extended; (v)
consisting of an instrument evidencing Indebtedness or other debt instrument,
if the indebtedness thereby has been paid in full; or (vi) if approved,
authorized or ratified in writing by all the Lenders. Upon request by the
Agent at any time, the Lenders will confirm in writing the Agent's authority to
release particular types or items of collateral pursuant to this subsection
10.11(b).
10.12 Co-Agent. The Co-Agent shall have no duties or
responsibilities hereunder in such capacity.
ARTICLE XI
MISCELLANEOUS
11.1 Amendments and Waivers. No amendment or waiver of any provision
of this Agreement or any other Loan Document, and no consent with respect to
any departure by the Company therefrom, shall be effective unless the same
shall be in writing and signed by the Required Lenders (or by the Agent at the
written request of the Required Lenders) and the Company and acknowledged by
the Agent, and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided that
no such waiver, amendment or consent shall, unless in writing and signed by all
Lenders and the Company and acknowledged by the Agent, do any of the following:
(a) increase or extend the Commitment of any Lender (or
reinstate any Commitment terminated pursuant to Section 9.2);
(b) postpone or delay any date fixed by this Agreement or
any other Loan Document for any payment of principal, interest, fees or other
amounts due to the Lenders (or any of them) hereunder or under any other Loan
Document;
(c) reduce the principal of, or the rate of interest
specified herein on, any Loan or (subject to clause (iii) below) reduce any
fees or other amounts payable hereunder or under any other Loan Document;
(d) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which is required for the
Lenders or any of them to take any action hereunder;
77
<PAGE> 86
(e) release all or substantially all of the collateral
granted under the Loan Documents; or
(f) amend this Section, or Section 2.14, or any provision
herein providing for consent or other action by all Lenders;
and provided, further, that (i) no amendment, waiver or consent shall, unless
in writing and signed by the Issuing Lender in addition to the Required Lenders
or all Lenders, as the case may be, affect the rights or duties of the Issuing
Lender under this Agreement or any L/C-Related Document, (ii) no amendment,
waiver or consent shall, unless in writing and signed by the Agent in addition
to the Required Lenders or all Lenders, as the case may be, affect the rights
or duties of the Agent under this Agreement or any other Loan Document, and
(iii) the fees payable to the Agent pursuant to subsection 2.10(a) may be
changed pursuant to a writing executed by the Company and the Agent.
11.2 Notices. (a) All notices, requests and other communications
hereunder shall be in writing (including, unless the context expressly
otherwise provides, by facsimile transmission, provided that any matter
transmitted by the Company by facsimile (i) shall be immediately confirmed by a
telephone call to the recipient at the number specified on Schedule 11.2, and
(ii) shall be followed promptly by delivery of a hard copy original thereof)
and mailed, faxed or delivered to the address or facsimile number specified for
notices on Schedule 11.2; or, as directed to the Company or the Agent, to such
other address as shall be designated by such party in a written notice to the
other parties, and as directed to any other party, at such other address as
shall be designated by such party in a written notice to the Company and the
Agent.
(b) All such notices, requests and communications shall,
when transmitted by overnight delivery, or faxed, be effective when delivered,
or transmitted in legible form by facsimile machine, respectively, or if
mailed, upon the third Business Day after the date deposited into the U.S.
mail; except that notices to the Agent pursuant to Article II, III or X shall
not be effective until actually received by the Agent, and notices pursuant to
Article III to the Issuing Lender shall not be effective until actually
received by the Issuing Lender at the address specified for the "Issuing
Lender" on Schedule 11.2.
(c) Any agreement of the Agent and the Lenders herein to
receive certain notices by telephone or facsimile is solely for the convenience
and at the request of the Company. The Agent and the Lenders shall be entitled
to rely on the authority of any Person purporting to be a Person authorized by
the Company to give such notice and the Agent and the Lenders shall not have
any liability to the Company or other Person on account of any action taken or
not taken by the Agent or the Lenders in reliance upon such telephonic or
facsimile notice. The obligation of the Company to repay the Loans and L/C
Obligations shall not be affected in any way or to any extent by any failure of
the Agent and the Lenders to receive written confirmation of any telephonic or
facsimile notice or the receipt by the Agent and the Lenders of a confirmation
which is at variance with the terms
78
<PAGE> 87
understood by the Agent and the Lenders to be contained in the telephonic or
facsimile notice.
11.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent or any Lender, any right, remedy,
power or privilege hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege.
11.4 Costs and Expenses. The Company shall:
(a) whether or not the transactions contemplated hereby
are consummated, pay or reimburse BAI, the Agent and the Arranger within five
Business Days after demand (subject to subsection 5.1(e)) for all costs and
expenses incurred by BAI, the Agent or the Arranger, as applicable, in
connection with the development, preparation, delivery, administration and
execution of, and any amendment, supplement, waiver or modification to (in each
case, whether or not consummated), this Agreement, any Loan Document and any
other document prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby, including
Attorney Costs incurred by BAI, the Agent and the Arranger with respect
thereto; and
(b) pay or reimburse the Agent and each Lender within
five Business Days after demand (subject to subsection 5.1(e)) for all costs
and expenses (including Attorney Costs) incurred by them in connection with the
enforcement, attempted enforcement, or preservation of any right or remedy
under this Agreement or any other Loan Document during the existence of an
Event of Default or after acceleration of the Loans (including in connection
with any "workout" or restructuring regarding the Loans, and including in any
Insolvency Proceeding or appellate proceeding).
11.5 Company Indemnification. Whether or not the transactions
contemplated hereby are consummated, the Company shall indemnify and hold the
Agent-Related Persons and each Lender and each of their respective officers,
directors, employees, counsel, agents and attorneys-in-fact (each an
"Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses and disbursements (including Attorney Costs) of any kind or
nature whatsoever which may at any time (including at any time following
repayment of the Loans, the termination of the Letters of Credit and the
termination, resignation or replacement of the Agent or replacement of any
Lender) be imposed on, incurred by or asserted against any such Person in any
way relating to or arising out of this Agreement or any document contemplated
by or referred to herein, or the transactions contemplated hereby or thereby,
or any action taken or omitted by any such Person under or in connection with
any of the foregoing, including with respect to any investigation, litigation
or proceeding (including any Insolvency Proceeding or appellate proceeding)
related to or arising out of this Agreement or the Loans or Letters of Credit
or the use of the proceeds thereof, whether or not any
79
<PAGE> 88
Indemnified Person is a party thereto (all the foregoing, collectively, the
"Indemnified Liabilities"); provided that the Company shall have no obligation
hereunder to any Indemnified Person with respect to Indemnified Liabilities
resulting solely from the gross negligence or willful misconduct of such
Indemnified Person. The agreements in this Section shall survive payment of all
other Obligations.
11.6 Payments Set Aside. To the extent that the Company makes a
payment to the Agent or the Lenders, or the Agent or the Lenders exercise their
right of set-off, and such payment or the proceeds of such set-off or any part
thereof is subsequently invalidated, declared to be fraudulent or preferential,
set aside or required (including pursuant to any settlement entered into by the
Agent or such Lender in its discretion) to be repaid to a trustee or receiver,
or any other party, in connection with any Insolvency Proceeding or otherwise,
then (a) to the extent of such recovery the obligation or part thereof
originally intended to be satisfied shall be revived and continued in full
force and effect as if such payment had not been made or such set-off had not
occurred and (b) each Lender severally agrees to pay to the Agent upon demand
its pro rata share of any amount so recovered from or repaid by the Agent.
11.7 Successors and Assigns. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Company may not assign or
transfer any of its rights or obligations under this Agreement without the
prior written consent of the Agent and each Lender.
11.8 Assignments, Participations, etc. (a) Any Lender may, with the
written consent of the Agent and the Issuing Lender, at any time assign and
delegate to one or more Eligible Assignees (each an "Assignee") all, or any
ratable part of all, of the Loans, the Commitment, the L/C Obligations and the
other rights and obligations of such Lender hereunder, in a minimum amount of
$5,000,000 (or, if less, all of such Lender's remaining rights and obligations
hereunder); provided, however, that the Company, the Agent and the Issuing
Lender may continue to deal solely and directly with such Lender in connection
with the interest so assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given to the Company
and the Agent by such Lender and the Assignee; (ii) such Lender and the
Assignee shall have delivered to the Company and the Agent an Assignment and
Acceptance in the form of Exhibit H ("Assignment and Acceptance") together with
any Note subject to such assignment and (iii) the assignor Lender or the
Assignee has paid to the Agent a processing fee in the amount of $3,500.
(b) From and after the date that the Agent notifies the
assignor Lender that it has provided its consent, and received the consent of
the Issuing Lender, with respect to an executed Assignment and Acceptance and
payment of the above-referenced processing fee, (i) the Assignee thereunder
shall be a party hereto and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment and Acceptance,
shall have the rights and obligations of a Lender under the Loan Documents, and
(ii) the assignor
80
<PAGE> 89
Lender shall, to the extent that rights and obligations hereunder and under the
other Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under
the Loan Documents.
(c) Any Lender may at any time sell to one or more
commercial banks or other Persons not Affiliates of the Company (a
"Participant") participating interests in any Loan, the Commitment of such
Lender and the other interests of such Lender (the "originating Lender")
hereunder and under the other Loan Documents; provided, however, that (i) the
originating Lender's obligations under this Agreement shall remain unchanged,
(ii) the originating Lender shall remain solely responsible for the performance
of such obligations, (iii) the Company, the Issuing Lender and the Agent shall
continue to deal solely and directly with the originating Lender in connection
with the originating Lender's rights and obligations under this Agreement and
the other Loan Documents, and (iv) no Lender shall transfer or grant any
participating interest under which the Participant has rights to approve any
amendment to, or any consent or waiver with respect to, this Agreement or any
other Loan Document, except to the extent such amendment, consent or waiver
would require unanimous consent of the Lenders as described in the first
proviso to Section 11.1. In the case of any such participation, the Participant
shall be entitled to the benefit of Sections 4.1, 4.3 and 11.5 as though it
were also a Lender hereunder, and if amounts outstanding under this Agreement
are due and unpaid, or shall have been declared or shall have become due and
payable upon the occurrence of an Event of Default, the Participant shall be
deemed to have the right of set-off in respect of its participating interest in
amounts owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement.
(d) Notwithstanding any other provision in this
Agreement, any Lender may at any time create a security interest in, or pledge,
all or any portion of its rights under and interest in this Agreement and any
Note held by it in favor of any Federal Reserve Bank in accordance with
Regulation A of the FRB or U.S. Treasury Regulation 31 CFR Section 203.14, and
such Federal Reserve Bank may enforce such pledge or security interest in any
manner permitted under applicable law.
11.9 Confidentiality. Each Lender agrees to take and to cause its
Affiliates to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information identified as "confidential" or
"secret" by the Company and provided to it by the Company or any Subsidiary,
or by the Agent on the Company's or any Subsidiary's behalf, under this
Agreement or any other Loan Document, and neither such Lender nor any of its
Affiliates shall use any such information other than in connection with or in
enforcement of this Agreement and the other Loan Documents or in connection
with other business now or hereafter existing or contemplated with the Company
or any Subsidiary; except to the extent such information (i) was or becomes
generally available to the public other than as a result of disclosure by such
Lender, or (ii) was or becomes available on a non-confidential basis from a
source other than the Company, provided that such source is not bound by a
confidentiality agreement with the Company or any Subsidiary known to such
81
<PAGE> 90
Lender; provided, however, that any Lender may disclose such information (A) at
the request or pursuant to any requirement of any Governmental Authority to
which such Lender is subject or in connection with an examination of such
Lender by any such authority; (B) pursuant to subpoena or other court process;
(C) when required to do so in accordance with the provisions of any applicable
Requirement of Law; (D) to the extent reasonably required in connection with
any litigation or proceeding to which the Agent or any Lender or any of their
respective Affiliates may be party; (E) to the extent reasonably required in
connection with the exercise of any remedy hereunder or under any other Loan
Document; (F) to such Lender's independent auditors and other professional
advisors; (G) to any Participant or Assignee, actual or potential, provided
that such Person agrees in writing to keep such information confidential to the
same extent required of the Lenders hereunder; (H) as to any Lender or its
Affiliate, as expressly permitted under the terms of any other document or
agreement regarding confidentiality to which the Company or any Subsidiary is
party or is deemed party with such Lender or such Affiliate; and (I) to its
Affiliates.
11.10 Set-off. In addition to any right or remedy of the Lenders
provided by law, if an Event of Default exists, or the Loans have been
accelerated, each Lender is authorized at any time and from time to time,
without prior notice to the Company, any such notice being waived by the
Company 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 by, and other indebtedness at any time owing by, such Lender to or
for the credit or the account of the Company against any and all Obligations
owing to such Lender, now or hereafter existing, irrespective of whether or not
the Agent or such Lender shall have made demand under this Agreement or any
other Loan Document and although such Obligations may be contingent or
unmatured. Each Lender agrees promptly to notify the Company and the Agent
after any such set-off and application made by such Lender; provided that the
failure to give such notice shall not affect the validity of such set-off and
application.
11.11 Automatic Debits of Fees. With respect to any commitment fee,
arrangement fee, letter of credit fee or other fee, or any other cost or
expense (including Attorney Costs) due and payable to the Agent or the Issuing
Lender under the Loan Documents, the Company hereby irrevocably authorizes BofA
to debit (or to cause BAI to debit) any deposit account of the Company with
BofA (or BAI) in an amount such that the aggregate amount debited from all such
deposit accounts does not exceed such fee or other cost or expense. If there
are insufficient funds in such deposit accounts to cover the amount of the fee
or other cost or expense then due, such debits will be reversed (in whole or in
part, in BofA's sole discretion) and such amount not debited shall be deemed to
be unpaid. No such debit under this Section shall be deemed a set-off.
11.12 Notification of Addresses, Lending Offices, Etc. Each Lender
shall notify the Agent in writing of any change in the address to which notices
to such Lender should be directed, of addresses of any Lending Office, of
payment instructions in respect of all payments to be made to it hereunder and
of such other administrative information as the Agent shall reasonably request.
82
<PAGE> 91
11.13 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of which taken together shall constitute but one and the same
instrument.
11.14 Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or such instrument or agreement.
11.15 No Third Parties Benefited. This Agreement is made and entered
into for the sole protection and legal benefit of the Company, the Lenders, the
Agent and the Agent-Related Persons, and their permitted successors, assigns
and participants, and no other Person shall be a direct or indirect legal
beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Agreement or any other Loan Document.
11.16 Governing Law and Jurisdiction. (a) THIS AGREEMENT AND ANY
NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF ILLINOIS; PROVIDED THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL
RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF ILLINOIS OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF ILLINOIS, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE AGENT AND
THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-
EXCLUSIVE JURISDICTION OF SUCH COURTS. EACH OF THE COMPANY, THE AGENT AND THE
LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION
IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE COMPANY, THE
AGENT AND THE LENDERS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR
OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY ILLINOIS LAW.
11.17 Waiver of Jury Trial. THE COMPANY, THE LENDERS AND THE AGENT
EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON,
83
<PAGE> 92
PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS,
OR OTHERWISE. THE COMPANY, THE LENDERS AND THE AGENT EACH AGREE THAT ANY SUCH
CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE
RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY
ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENT, RENEWAL, SUPPLEMENT OR MODIFICATION TO THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS.
11.18 Consent to Release of Subsidiaries. The Lenders authorize the
Agent to release Air-Cure, Inc. (and its Subsidiary Air-Cure Service, Inc.) and
Pipkorn Environmental Technologies, Inc. from their respective obligations
under the Guaranty, the Security Agreement, the Company Pledge Agreement and
the Subsidiary Pledge Agreement upon the consummation of the sale of these
Subsidiaries.
11.19 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Company,
the Lenders and the Agent, and supersedes all prior or contemporaneous
agreements and understandings of such Persons, verbal or written, relating to
the subject matter hereof and thereof.
84
<PAGE> 93
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered in Chicago, Illinois by their proper and duly
authorized officers as of the day and year first above written.
AIR-CURE TECHNOLOGIES, INC.
By:
-------------------------------
Title:
----------------------------
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent
By:
-------------------------------
Title:
----------------------------
BANK OF AMERICA ILLINOIS, as
Issuing Lender
By:
-------------------------------
Title:
----------------------------
BANK OF AMERICA ILLINOIS, as a
Lender
By:
-------------------------------
Title:
----------------------------
THE FIRST NATIONAL BANK OF BOSTON,
individually and as Co-Agent
By:
-------------------------------
Title:
----------------------------
85
<PAGE> 94
SCHEDULE 1.1A
COMMITMENTS
AND PRO RATA SHARES
<TABLE>
<CAPTION>
Term Loan Revolving Pro Rata
Lender Commitment Commitment Share
------ ---------- ---------- --------
<S> <C> <C> <C>
Bank of America Illinois $26,369,863 $28,630,137 75.3424657%
The First National Bank
of Boston $ 8,630,137 $ 9,369,863 24.6575343%
TOTAL $35,000,000 $38,000,000 100%
</TABLE>
<PAGE> 95
SCHEDULE 1.1B
PRICING SCHEDULE
The Applicable Margin, with respect to Base Rate Loans and Offshore
Rate Loans, the rate per annum applicable for commitment fees, the Financial
L/C Fee Rate per annum applicable for Financial Letters of Credit and the Non-
Financial L/C Fee Rate per annum applicable for Non-Financial Letters of
Credit, respectively, shall be determined in accordance with the table below
and the other provisions of this Schedule 1.1B.
<TABLE>
<CAPTION>
Level I Level II Level III Level IV Level V
<S> <C> <C> <C> <C> <C>
Rate for 0.375% 0.50% 0.50% 0.50% 0.50%
Commitment Fee
Offshore Margin 2.00% 2.25% 2.50% 2.75% 3.00%
for a Revolving Loan
or Term Loan
Base Rate Margin for a 0.25% 0.50% 0.75% 1.00% 1.25%
Revolving Loan or Term
Loan
Financial L/C Fee Rate 2.00% 2.25% 2.50% 2.75% 3.00%
Non-Financial L/C Fee 1.00% 1.125% 1.25% 1.375% 1.50%
Rate
</TABLE>
Level I applies when the Total Indebtedness to EBITDA Ratio is less
than 2.5 to 1.
Level II applies when the Total Indebtedness Debt to EBITDA Ratio is
equal to or greater than 2.5 to 1 but less than 3.0 to 1.
Level III applies when the Total Indebtedness to EBITDA Ratio is equal
to or greater than 3.0 to 1 but less than 3.5 to 1.
Level IV applies when the Total Indebtedness to EBITDA Ratio is equal
to or greater than 3.5 to 1 but less than 4.0 to 1.
Level V applies when the Total Indebtedness to EBITDA Ratio is equal to
or greater than 4.0 to 1.
<PAGE> 96
The Applicable Margin shall be adjusted, to the extent applicable, 45
days (or, in the case of the last fiscal quarter of any fiscal year, 90 days)
after the end of each fiscal quarter based on the Total Indebtedness to EBITDA
Ratio as of the last day of such fiscal quarter; provided that if the Company
fails to deliver the financial statements required by Section 7.1 and the
related certificate required by Section 7.2 by the 45th day (or, if applicable,
the 90th day) after any fiscal quarter, Level V shall apply until such
financial statements are delivered.
<PAGE> 97
SCHEDULE 6.16
SUBSIDIARIES OF AIR-CURE TECHNOLOGIES, INC.
Part A
Air-Cure Dynamics, Inc.
Amerex Industries, Inc.
Interel Environmental Technologies, Inc.
Air-Cure Environmental GmbH*
Air-Cure (Singapore) Ltd.*
Air-Cure (Canada) Technologies, Ltd.*
Allied Industries, Inc.
Air-Cure, Inc.
Pipkorn Environmental Technologies, Inc.
Air-Cure Service, Inc. (Subsidiary of Air-Cure, Inc.)
* Denotes a Foreign Subsidiary.
Part B
Joint Venture in Malaysia with Polymer Composite Asia Sdn. Bhd., a
subsidiary of The Hexagon Group.
<PAGE> 98
SCHEDULE 6.17
INSURANCE MATTERS
See attached materials.
<PAGE> 99
SCHEDULE 6.21
REAL PROPERTY
<PAGE> 100
SCHEDULE 8.1
PERMITTED LIENS
NONE
<PAGE> 101
SCHEDULE 8.5
PERMITTED INDEBTEDNESS
<PAGE> 102
SCHEDULE 8.8
CONTINGENT OBLIGATIONS
<PAGE> 103
SCHEDULE 11.2
OFFSHORE AND DOMESTIC LENDING OFFICES,
ADDRESSES FOR NOTICES
AIR-CURE TECHNOLOGIES, INC.
Air-Cure Technologies, Inc.
2727 Allen Parkway
Suite 760
Houston, Texas 77019
Attention: Larry McAfee
Telephone: (713) 285-2700
Facsimile: (713) 522-1759
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Agent
Bank of America National Trust and Savings Association
Agency Management Services Illinois
231 South LaSalle Street
Mail Stop 0830
Chicago, Illinois 60697
Attention: David L. Graham
Telephone: (312) 828-7299
Facsimile: (312) 974-9103
THE FIRST NATIONAL BANK OF BOSTON,
as Co-Agent
The First National Bank of Boston
100 Federal Street
Mail Stop 01-08-06
Boston, Massachusetts 02110
Attention: Charles Woodard
Telephone: (617) 434-5835
Facsimile: (617) 434-2160
<PAGE> 104
BANK OF AMERICA ILLINOIS,
as Issuing Lender
Address for Notices:
Bank of America Illinois
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Robert Rospierski/Service Industries
Telephone: (312) 828-8363
Facsimile: (312) 828-1974
BANK OF AMERICA ILLINOIS,
as a Lender
Domestic and Offshore Lending Office:
231 South LaSalle Street
Chicago, Illinois 60697
Notices (other than Borrowing notices and Notices of
Conversion/Continuation):
Bank of America Illinois
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Robert Rospierski/Service Industries
Telephone: (312) 828-8363
Facsimile: (312) 828-1974
<PAGE> 105
THE FIRST NATIONAL BANK OF BOSTON,
as a Lender
Domestic and Offshore Lending Office:
100 Federal Street
Boston, Massachusetts 02110
Notices (other than Borrowing notices and Notices of
Conversion/Continuation):
The First National Bank of Boston
100 Federal Street
Mail Stop 01-08-06
Boston, Massachusetts 02110
Attention: Charles Woodard/Environmental Services Group
Telephone: (617) 434-5834
Facsimile: (617) 434-2160
<PAGE> 1
EXHIBIT 4.4
WARRANT
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT
BE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SUCH ACT.
THIS WARRANT IS SUBJECT TO THE RIGHTS AND RESTRICTIONS, INCLUDING
CERTAIN RESTRICTIONS ON TRANSFER, CONTAINED IN A SUBORDINATED NOTE AND
WARRANT PURCHASE AGREEMENT AND A REGISTRATION RIGHTS AGREEMENT, EACH
DATED AS OF NOVEMBER 18, 1996 (A COPY OF EACH OF WHICH IS ON FILE WITH
THE SECRETARY OF THE ISSUER HEREOF).
AIR-CURE TECHNOLOGIES, INC.
COMMON STOCK PURCHASE WARRANT
EXPIRING NOVEMBER 18, 2003
HOUSTON, TEXAS
NO. 2 NOVEMBER 18, 1996
AIR-CURE TECHNOLOGIES, INC. (the "COMPANY"), a Delaware
corporation, for value received, hereby certifies that First Commerce
Corporation or its registered assigns is entitled to purchase from the Company
234,667 duly authorized, validly issued, fully paid and nonassessable shares of
the Company's Common Stock, par value $0.001 per share (the "ORIGINAL COMMON
STOCK"), at an initial exercise price per share of $5.10, at any time or from
time to time after the date hereof and prior to 5:00 p.m., New York City time,
on November 18, 2003, all subject to the terms, conditions and adjustments set
forth below in this Warrant.
<PAGE> 2
This Warrant is one of the Common Stock Purchase Warrants
expiring November 18, 2003 (the "WARRANTS", such term to include all Warrants
issued in substitution therefor) originally issued in connection with the issue
and sale by the Company of the Company's Senior Subordinated Notes Due November
18, 2003, in the aggregate principal amount of $15,000,000 (the "NOTES")
pursuant to that certain Subordinated Note and Warrant Purchase Agreement dated
as of November 18, 1996 (the "PURCHASE AGREEMENT") among the Company,
International Mezzanine Capital, B.V. and First Commerce Corporation
(collectively, the "PURCHASERS"). The Warrants originally so issued evidence
rights to purchase an aggregate of 1,760,000 shares of Original Common Stock,
subject to adjustment as provided herein. The term "NOTES" as used herein
shall include each Note delivered pursuant to any provision of the Purchase
Agreement and each Note delivered in substitution or exchange for any such Note
pursuant to any such provision. Certain capitalized terms used in this Warrant
are defined in section 13.
1. Exercise of Warrant.
1A. Manner of Exercise. This Warrant may be exercised by
the holder hereof, in whole or in part, during normal business hours on any
Business Day on or after the date hereof to and including November 18, 2003, by
surrender of this Warrant, with the form of subscription at the end hereof (or
a reasonable facsimile thereof) duly executed by such holder, to the Company at
its principal office (or, if such exercise shall be in connection with an
underwritten public offering of shares of Common Stock (or Other Securities)
subject to this Warrant, at the location at which the underwriters shall have
agreed to accept delivery thereof), accompanied by payment, in cash or by
certified or official bank check payable to the order of the Company, in the
amount obtained by multiplying (a) the number of shares of Original Common
Stock (without giving effect to any adjustment therein) designated in such form
of subscription by (b) $5.10. The number of duly authorized, validly issued,
fully paid and nonassessable shares of Common Stock which the holder of this
Warrant shall be entitled to receive upon each exercise hereof shall be
determined by multiplying the number of shares of Common Stock which would
otherwise (but for the provisions of section 2) be issuable upon such exercise,
as designated by the holder hereof pursuant to this section 1A, by a fraction
of which (a) the numerator is $5.10 and (b) the denominator is the Exercise
Price in effect on the date of such exercise. The "EXERCISE PRICE" shall
initially be $5.10 per share, shall be adjusted and readjusted from time to
time as provided in section 2 and, as so adjusted and readjusted, shall remain
in effect until a further adjustment or readjustment thereof is required by
section 2.
1B. When Exercise Effective. Each exercise of this
Warrant shall be deemed to have been effected and the Exercise Price shall be
determined immediately prior to the close of business on the Business Day on
which this Warrant shall have been surrendered to the Company as provided in
section 1A, and at such time the person or persons in whose name or names any
certificate or certificates for shares of Original Common Stock (or Other
Securities) shall be issuable upon such exercise as provided in section 1C
shall be deemed to have become the holder or holders of record thereof.
-2-
<PAGE> 3
1C. Delivery of Stock Certificates, etc. Promptly after
the exercise of this Warrant, in whole or in part, and in any event within ten
Business Days thereafter (unless such exercise shall be in connection with an
underwritten public offering of shares of Common Stock (or Other Securities)
subject to this Warrant, in which event concurrently with such exercise), the
Company at its expense will cause to be issued in the name of and delivered to
the holder hereof or, subject to section 8, as such holder may direct,
(a) a certificate or certificates for the number
of duly authorized, validly issued, fully paid and nonassessable
shares of Common Stock (or Other Securities) to which such holder
shall be entitled upon such exercise, and
(b) in case such exercise is in part only, a new
Warrant or Warrants of like tenor, specifying the aggregate on the
face or faces thereof the number of shares of Common Stock equal to
the number of such shares specified on the face of this Warrant minus
the number of such shares designated by the holder upon such exercise
as provided in section 1A.
1D. Company to Reaffirm Obligations. The Company will,
at the time of or at any time after each exercise of this Warrant, upon the
request of the holder hereof or of any shares of Common Stock (or Other
Securities) issued upon such exercise, acknowledge in writing its continuing
obligation to afford to such holder all rights to which such holder shall
continue to be entitled after such exercise in accordance with the terms of
this Warrant, provided that if any such holder shall fail to make any such
request, the failure shall not affect the continuing obligation of the Company
to afford such rights to such holder.
1E. Fractional Shares. No fractional shares shall be
issued upon exercise of this Warrant and no payment or adjustment shall be made
upon any exercise on account of any cash dividends (except as provided in
section 2B) on the Common Stock or Other Securities issued upon such
conversion. If any fractional interest in a share of Common Stock would,
except for the provisions of the first sentence of this section 1E, be
deliverable upon the exercise of this Warrant, the Company shall, in lieu of
delivering the fractional share therefor, pay to the holder exercising this
Warrant an amount in cash equal to the Market Price of such fractional
interest.
1F. Cashless Exercise. As an alternative to exercise of
this Warrant by payment in cash (or by certified or official bank check), as
provided above in section 1A, the holder of this Warrant may, at its option,
exercise its right to purchase some or all of the shares of Common Stock
pursuant to this Warrant, by receiving the number of shares of Common Stock
subscribed pursuant to this Warrant in exchange for a reduction in the
principal amount then owed to such holder under the Notes held by such holder
in an amount equal to the applicable cash Exercise Price times the number of
shares of Common Stock to be received by such holder as a result of such
cashless Warrant exercise (a "CASHLESS EXCHANGE").
-3-
<PAGE> 4
2. Protection Against Dilution or Other Impairment of Rights;
Adjustment of Exercise Price.
2A. Issuance of Additional Shares of Common Stock. In
case the Company, at any time or from time to time after November 18, 1996 (the
"INITIAL DATE"), shall issue or sell Additional Shares of Common Stock
(including Additional Shares of Common Stock deemed to be issued pursuant to
section 2C or 2D) without consideration or for a consideration per share
(determined pursuant to section 2E) less than the greater of (i) the Exercise
Price or (ii) (x) with respect to any issuance or sale of Additional Shares of
Common Stock to any Person (other than an Affiliate of the Company) that is not
made pursuant to a Qualified Offering, 90% of the Market Price and (y) with
respect to any other issuances or sales of Additional Shares of Common Stock,
the Market Price in effect, in each case, on the date of and immediately prior
to such issue or sale, then, and in each such case, subject to section 2H, the
Exercise Price shall be reduced, concurrently with such issue or sale, to a
price (calculated to the nearest .001 of a cent) determined by multiplying such
Exercise Price by a fraction,
(a) the numerator of which shall be (i) the number of
shares of Common Stock outstanding immediately prior to such issue or
sale plus (ii) the number of shares of Common Stock which the
aggregate consideration received by the Company for the total number
of such Additional Shares of Common Stock so issued or sold would
purchase at the greater of such Market Price or such Exercise Price,
and
(b) the denominator of which shall be the number of
shares of Common Stock outstanding immediately after such issue or
sale,
provided that, for the purposes of this section 2A, (x) immediately after any
Additional Shares of Common Stock are deemed to have been issued pursuant to
section 2C or 2D, such Additional Shares shall be deemed to be outstanding, and
(y) treasury shares shall not be deemed to be outstanding.
2B. Extraordinary Dividends and Distributions. In case
the Company at any time or from time to time after the date hereof shall
declare, order, pay or make a dividend or other distribution (including,
without limitation, any distribution of other or additional stock or other
securities or property or Options by way of dividend or spin-off,
reclassification, recapitalization or similar corporate rearrangement and any
redemption or acquisition of any such stock or Options) on the Common Stock,
other than (a) a dividend payable in Additional Shares of Common Stock or in
Options for Common Stock or (b) a dividend permitted to be made under the
Dividend Restrictions, then, and in each such case, subject to section 2H, the
Exercise Price in effect immediately prior to the close of business on the
record date fixed for the determination of holders of any class of securities
entitled to receive such dividend or distribution shall be reduced, effective
as of the close of business on such record date, to a price (calculated to the
nearest .001 of a cent) determined by multiplying such Exercise Price by a
fraction,
-4-
<PAGE> 5
(i) the numerator of which shall be the Market
Price in effect on such record date less (x) the amount of such
dividend or distribution (if payable in cash) or (y) the value of such
dividend or distribution, as determined in good faith by the Board of
Directors of the Company (if payable in securities or other property),
in each case as applicable to one share of Common Stock, and
(ii) the denominator of which shall be such Market
Price.
2C. Treatment of Options and Convertible Securities. In
case the Company, at any time or from time to time after the date hereof, shall
issue, sell, grant or assume, or shall fix a record date for the determination
of holders of any class of securities entitled to receive, any Options or
Convertible Securities, whether or not such Options or the right to convert or
exchange any such Convertible Securities are immediately exercisable, then, and
in each such case, the maximum number of Additional Shares of Common Stock (as
set forth in the instrument relating thereto, without regard to any provisions
contained therein for a subsequent adjustment of such number) issuable upon the
exercise of such Options or, in the case of Convertible Securities and Options
therefor, issuable upon the conversion or exchange of such Convertible
Securities (or the exercise of such Options for Convertible Securities and
subsequent conversion or exchange of the Convertible Securities issued), shall
be deemed to be Additional Shares of Common Stock issued as of the time of such
issue, sale, grant or assumption or, in case such a record date shall have been
fixed, as of the close of business on such record date, provided, that such
Additional Shares of Common Stock shall not be deemed to have been issued
unless the consideration per share (determined pursuant to section 2E) of such
shares would be less than the greater of the Exercise Price or the Market Price
in effect, in each case, on the date of and immediately prior to such issue,
sale, grant or assumption or immediately prior to the close of business on such
record date or, if the Common Stock trades on an ex-dividend basis, on the date
prior to the commencement of ex-dividend trading, as the case may be, and
provided, further, that in any such case in which Additional Shares of Common
Stock are deemed to be issued,
(a) if an adjustment of the Exercise Price shall be made
upon the fixing of a record date as referred to in the first sentence
of this section 2C, no further adjustment of the Exercise Price shall
be made as a result of the subsequent issue or sale of any Options or
Convertible Securities for the purpose of which such record date was
set;
(b) no further adjustment of the Exercise Price shall be
made upon the subsequent issue or sale of Additional Shares of Common
Stock or Convertible Securities upon the exercise of such Options or
the conversion or exchange of such Convertible Securities;
(c) if such Options or Convertible Securities by their
terms provide, with the passage of time or otherwise, for any change
in the consideration payable to the Company, or change in the number
of Additional Shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof (by change of rate or otherwise), the
Exercise Price computed upon the original issue, sale, grant or
assumption thereof (or upon the occurrence
-5-
<PAGE> 6
of the record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such change becoming
effective, be recomputed to reflect such change insofar as it affects
such Options, or the rights of conversion or exchange under such
Convertible Securities, which are outstanding at such time;
(d) upon the expiration of any such Options or of the
rights of conversion or exchange under any such Convertible Securities
which shall not have been exercised (or upon purchase by the Company
and cancellation or retirement of any such Options which shall not
have been exercised or of any such Convertible Securities the rights
of conversion or exchange under which shall not have been exercised),
the Exercise Price computed upon the original issue, sale, grant or
assumption thereof (or upon the occurrence of the record date with
respect thereto), and any subsequent adjustments based thereon, shall,
upon such expiration (or such cancellation or retirement, as the case
may be), be recomputed as if:
(i) in the case of Options for Common Stock or in
the case of Convertible Securities, the only Additional Shares
of Common Stock issued or sold (or deemed issued or sold) were
the Additional Shares of Common Stock, if any, actually issued
or sold upon the exercise of such Options or the conversion or
exchange of such Convertible Securities and the consideration
received therefor was (x) an amount equal to (A) the
consideration actually received by the Company for the issue,
sale, grant or assumption of all such Options, whether or not
exercised, plus (B) the consideration actually received by the
Company upon such exercise, minus (C) the consideration paid
by the Company for any purchase of such Options which were not
exercised, or (y) an amount equal to (A) the consideration
actually received by the Company for the issue, sale, grant or
assumption of all such Convertible Securities which were
actually converted or exchanged, plus (B) the additional
consideration, if any, actually received by the Company upon
such conversion or exchange, minus (C) the excess, if any, of
the consideration paid by the Company for any purchase of such
Convertible Securities, the rights of conversion or exchange
under which were not exercised, over an amount that would be
equal to the fair value (as determined in good faith by the
Board of Directors of the Company) of the Convertible
Securities so purchased if such Convertible Securities were
not convertible into or exchangeable for Additional Shares of
Common Stock, and
(ii) in the case of Options for Convertible
Securities, only the Convertible Securities, if any, actually
issued or sold upon the exercise of such Options were issued
at the time of the issue, sale, grant or assumption of such
Options, and the consideration received by the Company for the
Additional Shares of Common Stock deemed to have then been
issued was an amount equal to (x) the consideration actually
received by the Company for the issue, sale, grant or
assumption of all such Options, whether or not exercised,plus
(y) the consideration deemed to have been received by the
Company (pursuant to section 2E) upon the issue or sale of the
Convertible Securities with respect to which such Options were
actually exercised,
-6-
<PAGE> 7
minus (z) the consideration paid by the Company for any
purchase of such Options which were not exercised; and
(e) no readjustment pursuant to subsection (c) or (d)
above shall have the effect of increasing the Exercise Price then in
effect by an amount in excess of the amount of the adjustment thereof
originally made in respect of the issue, sale, grant or assumption of
such Options or Convertible Securities.
2D. Treatment of Stock Dividends, Stock Splits, Etc. In
case the Company, at any time or from time to time after the date hereof, shall
declare or pay any dividend or other distribution on any class of securities of
the Company payable in shares of Common Stock, or shall effect a subdivision of
the outstanding shares of Common Stock into a greater number of shares of
Common Stock (by reclassification or otherwise than by payment of a dividend in
Common Stock), then, and in each such case, Additional Shares of Common Stock
shall be deemed to have been issued (a) in the case of any such dividend or
other distribution, immediately after the close of business on the record date
for the determination of holders of any class of securities entitled to receive
such dividend or other distribution, or (b) in the case of any such
subdivision, at the close of business on the day immediately prior to the day
upon which such corporate action becomes effective.
2E. Computation of Consideration. For the purposes of
this Warrant:
(a) The consideration for the issue or sale of any
Additional Shares of Common Stock or for the issue, sale, grant or
assumption of any Options or Convertible Securities, irrespective of
the accounting treatment of such consideration,
(i) insofar as it consists of cash, shall be
computed as the amount of cash received by the Company, and
insofar as it consists of securities or other property, shall
be computed as of the date immediately preceding such issue,
sale, grant or assumption as the fair value (as determined in
good faith by the Board of Directors of the Company) of such
consideration (or, if such consideration is received for the
issue or sale of Additional Shares of Common Stock and the
Market Price thereof is less than the fair value, as so
determined, of such consideration, then such consideration
shall be computed as the Market Price of such Additional
Shares of Common Stock), in each case without deducting any
expenses paid or incurred by the Company, any commissions or
compensation paid or concessions or discounts allowed to
underwriters, dealers or other performing similar services and
any accrued interest or dividends in connection with such
issue or sale, and
(ii) in case Additional Shares of Common Stock are
issued or sold or Options or Convertible Securities are
issued, sold, granted or assumed together with other stock or
securities or other assets of the Company for a consideration
which covers both, shall be the proportion of such
consideration so received, computed as provided in clause (i)
above, allocable to such Additional Shares of Common Stock
-7-
<PAGE> 8
or Options or Convertible Securities, as the case may be, all
as determined in good faith by the Board of Directors or the
Company.
(b) All Additional Shares of Common Stock, Options or
Convertible Securities issued in payment of any dividend or other
distribution on any class of stock of the Company and all Additional
Shares of Common Stock issued to effect a subdivision of the
outstanding shares of Common Stock into a greater number of shares of
Common Stock (by reclassification or otherwise than by payment of a
dividend in Common Stock) shall be deemed to have been issued without
consideration.
(c) Additional Shares of Common Stock deemed to have been
issued for consideration pursuant to section 2C, relating to Options
and Convertible Securities, shall be deemed to have been issued for a
consideration per share determined by dividing
(i) the total amount, if any, received and
receivable by the Company as consideration for the issue,
sale, grant or assumption of the Options or Convertible
Securities in question, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments
relating thereto, without regard to any provision contained
therein for a subsequent adjustment of such consideration)
payable to the Company upon the exercise in full of such
Options or the conversion or exchange of such Convertible
Securities or, in the case of Options for Convertible
Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible
Securities, in each case computing such consideration as
provided in the foregoing subsection (a),
by
(ii) the maximum number of shares of Common Stock
(as set forth in the instruments relating thereto, without
regard to any provision contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such
Options or the conversion or exchange of such Convertible
Securities.
2F. Adjustments for Combinations, Etc. In case the
outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common Stock,
the Exercise Price in effect immediately prior to such combination or
consolidation shall, concurrently with the effectiveness of such combination or
consolidation, be proportionately increased.
2G. Dilution in Case of Other Securities. In case any
Other Securities shall be issued or sold or shall become subject to issue or
sale upon the conversion or exchange of any stock (or Other Securities) of the
Company (or any issuer of Other Securities or any other Person referred to in
section 2I) or to subscription, purchase or other acquisition pursuant to any
Options issued or granted by the Company (or any such other issuer or Person)
for a consideration such as to dilute,
-8-
<PAGE> 9
on a basis to which the standards established in the other provisions of this
Warrant, the exercise rights granted by this Warrant, then, and in each such
case, the computations, adjustments and readjustments provided for in this
Warrant with respect to the Exercise Price shall be made as nearly as possible
in the manner so provided and applied to determine the amount of Other
Securities from time to time receivable upon the exercise of this Warrant, so
as to protect the holder of this Warrant against the effect of such dilution.
2H. Minimum Adjustment of Exercise Price. If the amount
of any adjustment of the Exercise Price required hereunder would be less than
one percent of the Exercise Price in effect at the time such adjustment is
otherwise so required to be made, such amount shall be carried forward and
adjustment with respect thereto made at the time of and together with any
subsequent adjustment which, together with such amount and any other amount or
amounts so carried forward, shall aggregate at least one percent of such
Exercise Price; provided, that upon the exercise of this Warrant, all
adjustments carried forward and not theretofore made up to and including the
date of such exercise shall be made to the nearest .001 of a cent.
2I. Changes in Common Stock. In case of any capital
reorganization or reclassification or recapitalization of the capital stock of
the Company (other than in the cases referred to in Paragraph 2D) or in case of
the consolidation or merger of the Company with or into another corporation or
other business entity or in case of the sale or transfer of the property of the
Company as an entirety or substantially as an entirety, there shall thereafter
be deliverable upon the exercise of this Warrant or any portion thereof (in
lieu of or in addition to the number of shares of Common Stock theretofore
deliverable) the number of shares of stock or other securities, cash or other
property of any nature whatsoever to which the holder of the number of shares
of Common Stock which would otherwise have been deliverable upon the exercise
of this Warrant or any portion thereof at the time would have been entitled
upon such capital reorganization, reclassification or recapitalization of
capital stock, consolidation, merger or sale, and at the same aggregate
Exercise Price. Prior to and as a condition of the consummation of any
transaction described in the preceding sentence, the Company shall make
appropriate, written adjustments in the application of the provisions herein
set forth satisfactory to the holders of the Warrants entitled to purchase not
less than a majority of the shares of Common Stock issuable upon the exercise
thereof with respect to the rights and interests of the holders of the Warrants
so that the provisions set forth herein shall thereafter be applicable, as
nearly as possible, in relation to any shares of stock or other securities or
other property thereafter deliverable upon exercise of this Warrant. Any such
adjustment shall be made by and set forth in a supplemental agreement between
the Company and the successor entity and be approved by the Required Holders.
Subject to such adjustments, at the time of such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder. The foregoing provisions of this
Section shall similarly apply to successive reorganizations, reclassifications,
mergers, consolidations or disposition of assets.
-9-
<PAGE> 10
2J. Certain Issues Excepted. Anything herein to the
contrary notwithstanding, the Company shall not be required to make any
adjustment of the Exercise Price in the case of (a) the issuance of the
Warrants, (b) the issuance of shares of Common Stock issuable upon exercise of
the Warrants, (c) the issuance of Options pursuant to the Company's 1990 Stock
Option Plan or Directors' Stock Option Plan as in effect at the date of
original issuance of this Warrant and as may be hereafter amended by any
amendment approved by holders of securities representing a majority of the
securities voted on such amendment the beneficial owners (as that term is
defined in Rule 16a-1 under the Exchange Act) of which securities are not then
directors or officers of the Company or any of its subsidiaries (collectively,
the "Option Plans"), and (d) the issuance of Common Stock pursuant to (x) any
exercise of Options granted under either of the Option Plans or (y) the
Company's Employee Stock Purchase Plan as in effect at the date of original
issuance of this Warrant and as may be hereafter amended by any amendment
approved by holders of securities representing a majority of the securities
voted on such amendment the beneficial owners (as that term is defined in Rule
16a-1 under the Exchange Act) of which securities are not then directors or
officers of the Company or any of its subsidiaries.
2K. Notice of Adjustment. Upon the occurrence of any
event requiring an adjustment of the Exercise Price, then and in each such case
the Company shall promptly deliver to the holder of this Warrant an Officer's
Certificate stating the Exercise Price resulting from such adjustment and the
increase or decrease, if any, in the number of shares of Common Stock issuable
upon the exercise of this Warrant, setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is based. The
Company shall obtain and deliver to the holder of this Warrant the opinion of
Arthur Andersen LLP (or any other firm of independent public accountants of
recognized national standing selected by the Company and approved by such
holder holders making such request) within 30 days of a written request by the
holder of this Warrant therefor, which opinion shall confirm the statements in
the most recent Officer's Certificate delivered under this Section 2K. The
costs associated with responding to such a request for an opinion shall be
borne by the Company; provided, however, that the holder of this Warrant shall
pay the fees and expenses of the independent public accountants in rendering
any opinion required under this Section 2K in response to any such request by
such holder (other than the first such request made by such holder under this
Section 2K) if the opinion of the independent public accountants in response to
the request confirms the accuracy of all of the statements in the applicable
Officer's Certificate.
2L. Other Notices. In case at any time:
(a) the Company shall declare to the holders of Common
Stock any dividend other than a regular periodic cash dividend or any
periodic cash dividend in excess of 115% of the cash dividend for the
comparable fiscal period in the immediately preceding fiscal year;
-10-
<PAGE> 11
(b) the Company shall declare or pay any dividend upon
Common Stock payable in stock or make any special dividend or other
distribution (other than regular cash dividends) to the holders of
Common Stock;
(c) the Company shall offer for subscription pro rata to
the holders of Common Stock any additional shares of stock of any
class or other rights;
(d) there shall be any capital reorganization, or
reclassification of the capital stock of the Company, or consolidation
or merger of the Company with, or sale of all or substantially all of
its assets to, another corporation or other entity;
(e) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company;
(f) there shall be made any tender offer for any shares
of capital stock of the Company; or
(g) there shall be any other Transaction;
then, in any one or more of such cases, the Company shall give to the holder of
this Warrant (i) at least 15 days prior to any event referred to in subsection
(a) or (b) above, at least 30 days prior to any event referred to in subsection
(c), (d) or (e) above, and within five days after it has knowledge of any
pending tender offer or other Transaction, written notice of the date on which
the books of the Company shall close or a record shall be taken for such
dividend, distribution or subscription rights or for determining rights to vote
in respect of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation, winding-up or Transaction or the date by which
shareholders must tender shares in any tender offer and (ii) in the case of any
such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation, winding-up or tender offer or Transaction known to
the Company, at least 30 days prior written notice of the date (or, if not then
known, a reasonable approximation thereof by the Company) when the same shall
take place. Such notice in accordance with the foregoing clause (i) shall also
specify, in the case of any such dividend, distribution or subscription rights,
the date on which the holders of Common Stock shall be entitled thereto, and
such notice in accordance with the foregoing clause (ii) shall also specify the
date on which the holders of Common Stock shall be entitled to exchange their
Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, winding-up, tender offer or Transaction, as the case may be.
Such notice shall also state that the action in question or the record date is
subject to the effectiveness of a registration statement under the Securities
Act or to a favorable vote of security holders, if either is required.
2M. Certain Events. If any event occurs as to which, in
the good faith judgment of the Board of Directors of the Company, the other
provisions of this Warrant are not strictly applicable or if strictly
applicable would not fairly protect the exercise rights of the holders of the
-11-
<PAGE> 12
Warrants in accordance with the essential intent and principles of such
provisions, then the Board of Directors of the Company shall appoint its
regular independent auditors or another firm of independent public accountants
of recognized national standing which shall give their opinion upon the
adjustment, if any, on a basis consistent with such essential intent and
principles, necessary to preserve, without dilution, the rights of the holders
of the Warrants. Upon receipt of such opinion, the Board of Directors of the
Company shall forthwith make the adjustments described therein; provided, that
no such adjustment shall have the effect of increasing the Exercise Price as
otherwise determined pursuant to this Warrant. The Company may make such
reductions in the Exercise Price as it deems advisable, including any
reductions necessary to ensure that any event treated for federal income tax
purposes as a distribution of stock or stock rights not be taxable to
recipients.
2N. Prohibition of Certain Actions. The Company will
not, by amendment of its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith assist in the
carrying out of all the provisions of this Warrant and in the taking of all
such action as may reasonably be requested by the holder of this Warrant in
order to protect the exercise privilege of the holder of this Warrant against
dilution or other impairment, consistent with the tenor and purpose of this
Warrant. Without limiting the generality of the foregoing, the Company (a)
will not increase the par value of any shares of Common Stock receivable upon
the exercise of this Warrant above the Exercise Price then in effect, (b) will
take all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of all Warrants from time to time outstanding,
(c) will not take any action which results in any adjustment of the Exercise
Price if the total number of shares of Common Stock or Other Securities
issuable after the action upon the exercise of all of the Warrants would exceed
the total number of shares of Common Stock or Other Securities then authorized
by the Company's certificate of incorporation and available for the purpose of
issue upon such conversion, (d) will not issue any capital stock of any class
which has the right to more than one vote per share and (e) will not issue any
capital stock of any class which is preferred as to dividends or as to the
distribution of assets upon voluntary or involuntary dissolution, liquidation
or winding-up, unless the rights of the holders thereof shall be limited to a
fixed sum or percentage (or floating rate related to market yields) of par
value or stated value in respect of participation in dividends and a fixed sum
or percentage of par value or stated value in any such distribution of assets.
3. Stock to be Reserved. The Company will at all times reserve
and keep available out of the authorized Common Stock, solely for the purpose
of issue upon the exercise of the Warrants as herein provided, such number of
shares of Common Stock as shall then be issuable upon the exercise of all
outstanding Warrants and the Company will maintain at all times all other
rights and privileges sufficient to enable it to fulfill all its obligations
hereunder. The Company covenants that all shares of Common Stock which shall
be so issuable shall, upon issuance, be duly authorized, validly issued, fully
paid and nonassessable, free from preemptive or similar rights on the part of
the holders of any shares of capital stock or securities of the Company or any
other Person, and free
-12-
<PAGE> 13
from all taxes, liens and charges with respect to the issue thereof (not
including any income taxes payable by the holders of Warrants being exercised
in respect of gains thereon), and the Exercise Price will be credited to the
capital and surplus of the Company. The Company will take all such action as
may be necessary to assure that such shares of Common Stock may be so issued
without violation of any applicable law or regulation, or of any applicable
requirements of the National Association of Securities Dealers, Inc. and of any
domestic securities exchange upon which the Common Stock may be listed.
4. Registration of Common Stock. If any shares of Common Stock
required to be reserved for purposes of the exercise of Warrants require
registration with or approval of any governmental authority under any Federal
or State law (other than the Securities Act, registration under which is
governed by the Registration Rights Agreement), before such shares may be
issued upon the exercise thereof, the Company will, at its expense and as
expeditiously as possible, use its best efforts to cause such shares to be duly
registered or approved, as the case may be. Shares of Common Stock issuable
upon exercise of the Warrants shall be registered by the Company under the
Securities Act or similar statute then in force if required by the Registration
Rights Agreement and subject to the conditions stated in such agreement. At
any such time as the Common Stock is listed on any national securities exchange
or quoted by the Nasdaq National Market or any successor thereto or any
comparable system, the Company will, at its expense, obtain promptly and
maintain the approval for listing on each such exchange or quoting by the
Nasdaq National Market or such successor thereto or comparable system, upon
official notice of issuance, the shares of Common Stock issuable upon exercise
of the then outstanding Warrants and maintain the listing or quoting of such
shares after their issuance so long as the Common Stock is so listed or quoted;
and the Company will also cause to be so listed or quoted, will register under
the Exchange Act and will maintain such listing or quoting of, any Other
Securities that at any time are issuable upon exercise of the Warrants, if and
at the time that any securities of the same class shall be listed on such
national securities exchange by the Company.
5. Issue Tax. The issuance of certificates for shares of Common
Stock upon exercise of this Warrant shall be made without charge to the holders
hereof for any issuance tax in respect thereto.
6. Closing of Books. The Company will at no time close its
transfer books against the transfer of any Warrant or of any share of Common
Stock issued or issuable upon the exercise of any Warrant in any manner which
interferes with the timely exercise of such Warrant.
7. No Rights or Liabilities as Stockholders. This Warrant shall
not entitle the holder thereof to any of the rights of a stockholder of the
Company, except as expressly contemplated herein. No provision of this
Warrant, in the absence of the actual exercise of such Warrant and receipt by
the holder thereof of Common Stock issuable upon such conversion, shall give
rise to any liability on the part of such holder as a stockholder of the
Company, whether such liability shall be asserted by the Company or by
creditors of the Company.
-13-
<PAGE> 14
8. Restrictive Legends. Except as otherwise permitted by this
section 8, each Warrant originally issued and each Warrant issued upon direct
or indirect transfer or in substitution for any Warrant pursuant to this
section 8 shall be stamped or otherwise imprinted with legends in substantially
the following form:
"This Warrant and any shares acquired upon the exercise of this
Warrant have not been registered under the Securities Act of 1933 and
may not be transferred in the absence of such registration or an
exemption therefrom under such Act."
"This Warrant is subject to the rights and restrictions, including
certain restrictions on transfer, contained in a Subordinated Note and
Warrant Purchase Agreement and a Registration Rights Agreement, each
dated as of November 18, 1996 (a copy of each of which is on file with
the Secretary of the issuer hereof)."
Except as otherwise permitted by this section 8, (a) each certificate for
Original Common Stock (or Other Securities) issued upon the exercise of any
Warrant, and (b) each certificate issued upon the direct or indirect transfer
of any such Original Common Stock (or Other Securities) shall be stamped or
otherwise imprinted with a legend in substantially the following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 and may not be transferred in the
absence of such registration or an exemption therefrom under such
Act."
The holder of any Restricted Securities shall be entitled to receive from the
Company, without expense, new securities of like tenor not bearing the
applicable legend set forth above in this section 8 when such securities shall
have been (a) effectively registered under the Securities Act and disposed of
in accordance with the registration statement covering such Restricted
Securities, (b) distributed to the public pursuant to Rule 144 or any
comparable rule under the Securities Act, or (c) when, in the opinion of
independent counsel for the holder thereof experienced in Securities Act
matters, such restrictions are no longer required in order to insure compliance
with the Securities Act. The reasonable fees and disbursements of counsel for
any holder of Restricted Securities in connection with all opinions rendered
pursuant to this section 8 shall be borne equally by the Company and such
holder.
9. Availability of Information. The Company will cooperate with
each holder of any Restricted Securities in supplying such information as may
be necessary for such holder to complete and file any information reporting
forms presently or hereafter required by the Commission as a condition to the
availability of an exemption from the Securities Act for the sale of any
Restricted Securities. The Company will furnish to each holder of any
Warrants, promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent or made available
generally by the Company to its stockholders, and copies of all regular and
periodic reports and all registration statements and prospectuses filed by the
Company with any securities exchange or with the Commission.
-14-
<PAGE> 15
10. Information Required By Rule 144A. The Company will, upon the
request of the holder of this Warrant, provide such holder, and any qualified
institutional buyer designated by such holder, such financial and other
information as such holder may reasonably determine to be necessary in order to
permit compliance with the information requirements of Rule 144A under the
Securities Act in connection with the resale of Warrants, except at such times
as the Company is subject to the reporting requirements of Section 13 or 15(d)
of the Exchange Act. For the purpose of this section 10, the term "qualified
institutional buyer" shall have the meaning specified in Rule 144A under the
Securities Act.
11. Registration Rights Agreement. The holder of this Warrant and
the holders of any securities issued or issuable upon the exercise hereof are
each entitled to the benefits of the Registration Rights Agreement, dated of
even date herewith, between the Company and the Purchaser.
12. Ownership, Transfer and Substitution of Warrants.
12A. Ownership of Warrants. Except as otherwise required
by law, the Company may treat the Person in whose name any Warrant is
registered on the register kept at the principal office of the Company as the
owner and holder thereof for all purposes, notwithstanding any notice to the
contrary except that, if and when any Warrant is properly assigned in blank,
the Company, in its discretion, may (but shall not be obligated to) treat the
bearer thereof as the owner of such Warrant for all purposes, notwithstanding
any notice to the Company to the contrary. Subject to section 8, a Warrant, if
properly assigned, may be exercised by a new holder without first having a new
Warrant issued.
12B. Transfer and Exchange of Warrants. Upon the
surrender of any Warrant, properly endorsed, for registration of transfer or
for exchange at the principal office of the Company, the Company at its expense
will (subject to compliance with section 8, if applicable) execute and deliver
to or upon the order of the holder thereof a new Warrant or Warrants of like
tenor, in the name of such holder or as such holder (upon payment by such
holder of any applicable transfer taxes) may direct, calling in the aggregate
on the face or faces thereof for the number of shares of Original Common Stock
called for on the face or faces of the Warrant or Warrants so surrendered.
12C. Replacement of Warrants. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of any Warrant and, in the case of any such loss, theft or
destruction of any Warrant held by a Person other than the Purchaser or any
institutional investor reasonably satisfactory to the Company, upon delivery of
indemnity reasonably satisfactory to the Company in form and amount or, in the
case of any such mutilation, upon surrender of such Warrant for cancellation at
the principal office of the Company, the Company at its expense will execute
and deliver, in lieu thereof, a new Warrant of like tenor.
13. Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
-15-
<PAGE> 16
"ADDITIONAL SHARES OF COMMON STOCK" shall mean all shares
(including treasury shares) of Common Stock issued or sold (or, pursuant to
section 2C or 2D deemed to be issued) by the Company after the date hereof,
whether or not subsequently reacquired or retired by the Company, other than
shares of Common Stock issued upon the exercise or partial exercise of the
Warrants.
"AFFILIATE" shall mean, as to any Person, any other Person
which, directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. A Person shall be deemed to control another
Person if the controlling Person possesses, directly or indirectly, the power
to direct or cause the direction of the management and policies of such other
Person, whether through the ownership of voting securities or membership
interests, by contract, or otherwise. Without limiting the foregoing, any
Person which is an officer, director or 10% or greater shareholder of the
Company, or a member of the immediate family of any such officer, director or
10% or greater shareholder, shall be deemed to be an Affiliate of the Company.
"BENEFICIAL OWNER" shall have the meaning assigned thereto to
Rule 13d-3 under the Exchange Act as in effect on the date hereof.
"BUSINESS DAY" shall mean any day on which banks are open for
business in New York City (other than a Saturday, a Sunday or a legal holiday
in the State of New York), provided, that any reference to "days" (unless
Business Days are specified) shall mean calendar days.
"CASHLESS EXERCISE" shall have the meaning specified in
Section 1F.
"CHANGE IN CONTROL" shall be deemed to have occurred if (a)
any Person or group (within the meaning of Rule 13d-5 under the Exchange Act),
other than any Person who owns on November 18, 1996 more than 10% of the
outstanding common stock of the Company or any spouse or descendant thereof (or
any trust solely for the benefit of one or more of the foregoing) or any
Affiliate of any of the foregoing, shall become the Beneficial Owner of 20% or
more of the Voting Stock of the Company or (b) a majority of the members of the
Board of Directors of the Company shall cease to be Continuing Members.
"COMMISSION" shall mean the Securities and Exchange Commission
or any successor federal agency having similar powers.
"COMMON STOCK" shall mean the Original Common Stock, any stock
into which such stock shall have been converted or changed or any stock
resulting from any reclassification of such stock and all other stock of any
class or classes (however designated) of the Company the holders of which have
the right, without limitation as to amount, either to all or to a share of the
balance of current dividends and liquidating dividends after the payment of
dividends and distributions on any shares entitled to preference.
"COMPANY" shall mean Air-Cure Technologies, Inc., a Delaware
corporation.
-16-
<PAGE> 17
"CONTINUING MEMBER" shall mean a member of the Board of
Directors of the Company who either (a) was a member of the Company's Board of
Directors on November 18, 1996 or (b) became a member of such Board of
Directors after November 18, 1996 and whose election or nomination for election
was approved by a vote of the majority of the Continuing Members then members
of the Company's Board of Directors.
"CONVERTIBLE SECURITIES" shall mean any evidences of
indebtedness, shares of stock (other than Common Stock) or other securities
directly or indirectly convertible into or exchangeable for Additional Shares
of Common Stock.
"DIVIDEND RESTRICTIONS" shall mean the restrictions on the
ability of the Company to declare, order, pay or make dividends or other
distributions, as set forth in paragraph 6B of the Note Agreement dated as of
the Initial Date by and among the Company and the Purchasers, whether or not
such Note Agreement remains in effect.
"EXCHANGE ACT" shall mean the Securities and Exchange Act of
1934, as amended.
"EXERCISE PRICE" shall have the meaning specified in section
1A.
"INITIAL DATE" shall have the meaning specified in section 2A.
"MARKET PRICE" shall mean on any date specified herein:
(a) with respect to Common Stock or to common stock (or
equivalent equity interests) of an Acquiring Company or its Parent, the amount
per share equal to: (i) if the Common Stock or such common stock (or
equivalent equity interests) is Publicly Traded at the time of determination,
the average of the closing prices thereof on all domestic securities exchanges
on which such security may at the time be listed, or, if there have been no
sales on any such exchange on such day, the average of the highest bid and
lowest asked prices on all such exchanges at the end of such day, or, if on any
day such security is not so listed, the closing price quoted on the Nasdaq
National Market on such day, or if on any such day such security is not quoted
in the Nasdaq National Market, the closing price on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar successor organization, in each such case averaged
over a period of twenty-one (21) days consisting of the day as of which "Market
Price" is being determined and the twenty (20) consecutive Business Days prior
to such day; provided, however, that after a Qualified Offering, if the
determination of Market Price is being made for purposes of Section 2A hereof
as a result of the issuance of Common Stock pursuant to a registered,
underwritten, publicly distributed offering, then the Market Price will, for
purposes of Section 2A hereof, be the price to the public in connection with
that public offering; or (ii) if neither the Common Stock nor such common
stock (or equivalent equity interests) is Publicly Traded at the time of
determination, the higher of (x) the book value thereof as determined by any
firm of independent public accountants of recognized standing selected by the
Board of Directors of the Company, as of the last day of any month ending
within 60 days preceding the date as of which the
-17-
<PAGE> 18
determination is to be made or (y) the fair value thereof (as determined in
good faith by the Board of Directors of the Company); and
(b) with respect to any other securities, the fair value
thereof (as determined in good faith by the Board of Directors of the Company).
"NOTES" shall have the meaning specified in the opening
paragraphs of this Warrant.
"OFFICER'S CERTIFICATE" shall mean a certificate signed in the
name of the Company by its President, one of its Vice Presidents or its
Treasurer.
"OPTIONS" shall mean rights, options or warrants to subscribe
for, purchase or otherwise acquire either Additional Shares of Common Stock or
Convertible Securities.
"ORIGINAL COMMON STOCK" shall have the meaning specified in
the opening paragraphs of this Warrant.
"OTHER SECURITIES" shall mean any stock (other than Common
Stock) and any other securities of the Company or any other Person (corporate
or otherwise) which the holders of the Warrants at any time shall be entitled
to receive, or shall have received, upon the exercise of the Warrants, in lieu
of or in addition to Common Stock, or which at any time shall be issuable or
shall have been issued in exchange for or in replacement of Common Stock or
Other Securities pursuant to section 2I or otherwise.
"PERSON" shall mean and include an individual, a partnership,
an association, a joint venture, a corporation, a trust, a limited liability
company, an unincorporated organization and a government or any department or
agency thereof.
"PUBLICLY TRADED" shall mean, with respect to any security,
that such security is (a) listed on a domestic securities exchange, (b) quoted
on the Nasdaq National Market or (c) traded in the domestic over-the counter
market, which trades are reported by the National Quotation Bureau,
Incorporated.
"PURCHASE AGREEMENT" shall have the meaning specified in the
opening paragraphs of this Warrant.
"PURCHASERS" shall have the meaning specified in the opening
paragraphs of this Warrant.
"QUALIFIED OFFERING" shall mean an underwritten public
offering of the Common Stock registered under the Securities Act, which
offering results in net proceeds to the Company of at least $5,000,000.
-18-
<PAGE> 19
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration
Rights Agreement dated of even date herewith by and among the Company and the
Purchasers.
"REQUIRED HOLDERS" shall mean the holders of at least 51% of
all the Warrants at the time outstanding, determined on the basis of the number
of shares of Common Stock then purchasable upon the exercise of all Warrants
then outstanding.
"RESTRICTED SECURITIES" shall mean (a) any Warrants bearing
the applicable legend set forth in section 8 and (b) any shares of Original
Common Stock (or Other Securities) which have been issued upon the exercise of
Warrants and which are evidenced by a certificate or certificates bearing the
applicable legend set forth in such section, and (c) unless the context
otherwise requires, any shares of Original Common Stock (or other Securities)
which are at the time issuable upon the exercise of Warrants and which, when so
issued, will be evidenced by a certificate or certificates bearing the
applicable legend set forth in such section.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"VOTING STOCK" shall mean, with respect to any Person, any
shares of stock or other equity interests of any class or classes of such
Person whose holders are entitled under ordinary circumstances (irrespective of
whether at the time stock or other equity interests of any other class or
classes shall have or might have voting power by reason of the happening of any
contingency) to vote for the election of a majority of the directors, managers,
trustees or other governing body of such Person.
"WARRANTS" shall have the meaning specified in the opening
paragraphs of this Warrant.
14. Remedies. The Company stipulates that the remedies at law of
the holder of this Warrant in the event of any default or threatened default by
the Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
15. Notices. All notices and other communications under this
Warrant shall be in writing and shall be mailed by registered or certified
mail, return receipt requested, addressed (a) if to any holder of any Warrant
or any holder of any Common stock (or Other Securities), at the registered
address of such holder as set forth in the applicable register kept at the
principal office of the Company, or (b) if to the Company, to the attention of
its Chief Financial Officer at its principal office, provided that the exercise
of any Warrant shall be effected in the manner provided in section 1.
-19-
<PAGE> 20
16. Miscellaneous. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought. The agreements of the Company contained in this
Warrant other than those applicable solely to the Warrants and the holders
thereof shall inure to the benefit of and be enforceable by any holder or
holders at the time of any Common Stock (or Other Securities) issued upon the
exercise of Warrants, whether so expressed or not. This Warrant shall be
construed and enforced in accordance with and governed by the laws of the State
of New York; provided, however, that in the event a final judgment by a court
of competent jurisdiction holds that such choice of New York law is
unenforceable, then this Warrant shall be construed and enforced in accordance
with the laws of the State of Louisiana. The section headings in this Warrant
are for purposes of convenience only and shall not constitute a part hereof.
AIR-CURE TECHNOLOGIES, INC.
By:
-----------------------------------
Name:
Title:
FORM OF SUBSCRIPTION
(To be executed only upon exercise of Warrant)
To AIR-CURE TECHNOLOGIES, INC.
The undersigned registered holder of the within Warrant hereby
irrevocably exercises such Warrant for, and purchases thereunder, _____(1)
shares of Original Common Stock of AIR-CURE TECHNOLOGIES, INC., [AND HEREWITH
MAKES PAYMENT OF $_______________ THEREFOR](2)[IN A CASHLESS EXERCISE PURSUANT
TO SECTION 1F OF THE WARRANT](3), and requests that the certificates for such
shares be issued in the name of, and delivered to _________________________
whose address is _________________________.
- -------------------------
(1) Insert here the number of shares called for on the face
of this Warrant (or, in the case of a partial exercise, the portion
thereof as to which this Warrant is being exercised), in either case
without making any adjustment for additional Common Stock or any other
stock or other securities or property or cash which, pursuant to the
adjustment provisions of this Warrant, may be delivered upon exercise.
In the case of a partial exercise, a new Warrant or Warrants will be
issued and delivered, representing the unexercised portion of this
Warrant, to the holder surrendering the same.
(2) Use in connection with an exercise involving a delivery
of funds to the Company.
(3) Use in connection with Section 1F of the Warrant.
-20-
<PAGE> 21
Dated:
------------------
-----------------------------------------------
(Signature must conform in all respects to name
of holder as specified on the face of this
Warrant)
-----------------------------------------------
(Street Address)
-----------------------------------------------
(City) (State) (Zip Code)
-21-
<PAGE> 22
FORM OF ASSIGNMENT
(To be executed only upon transfer of Warrant)
For value received, the undersigned registered holder of the within
Warrant hereby sells, assigns and transfers unto_____________________________
the right represented by such Warrant to purchase ___________________________(4)
shares of Original Common Stock of AIR-CURE TECHNOLOGIES, INC., to which such
Warrant relates, and appoints_______________________________ Attorney to make
such transfer on the books of AIR-CURE TECHNOLOGIES, INC., maintained for such
purpose, with full power of substitution in the premises.
Dated:
------------------------
------------------------------------------
(Signature must conform in all respects
to name of holder as specified on the face
of this Warrant)
------------------------------------------
(Street Address)
------------------------------------------
(City) (State) (Zip Code)
Signed in the presence of:
- ------------------------------
- -----------------------
(4) Insert here the number of shares called for on the face
of the within Warrant (or, in the case of a partial assignment, the
portion thereof as to which this Warrant is being assigned), in either
case without making any adjustment for additional Common Stock or any
other stock or other securities or property or cash which, pursuant to
the adjustment provisions of the within Warrant, may be delivered upon
exercise. In the case of a partial assignment, a new Warrant or Warrants
will be issued and delivered, representing the portion of the within
Warrant not being assigned, to the holder assigning the same.
-22-
<PAGE> 1
EXHIBIT 4.5
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION UNLESS AN EXEMPTION OR EXCLUSION THEREFROM IS
AVAILABLE.
THIS NOTE IS SUBJECT TO THE TERMS AND CONDITIONS OF THE
SUBORDINATION AGREEMENT.
THIS NOTE IS SUBJECT TO THE RIGHTS AND RESTRICTIONS, INCLUDING
CERTAIN RESTRICTIONS ON TRANSFER, CONTAINED IN A SUBORDINATED
NOTE AND WARRANT PURCHASE AGREEMENT DATED AS OF NOVEMBER 18,
1996 (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
ISSUER HEREOF).
AIR-CURE TECHNOLOGIES, INC.
SENIOR SUBORDINATED NOTE DUE NOVEMBER 18, 2003
No. RS-1
$13,000,000 November 18, 1996
FOR VALUE RECEIVED, the undersigned, AIR-CURE TECHNOLOGIES, INC. (the
"COMPANY"), a corporation organized and existing under the laws of the State of
Delaware, hereby promises to pay to International Mezzanine Capital, B.V. or
registered and permitted assigns, the principal sum of THIRTEEN MILLION AND
NO/ONE-HUNDREDTHS DOLLARS ($13,000,000.00) on November 18, 2003, with interest
(computed on the basis of a 365-day year) (a) on the unpaid balance thereof at
the rates of interest per annum set forth in paragraph 1A of the Agreement,
payable quarterly on the last Business Day of December, March, June and
September in each year, commencing with the December next succeeding the date
hereof, until the principal hereof shall have become due and payable, and (b)
on any overdue payment (including any overdue prepayment) of principal and any
overdue payment of interest, payable quarterly as aforesaid (or, at the option
of the registered holder hereof, on demand), at a rate per annum from time to
time equal to the lesser of (a) the maximum rate permitted by applicable law or
(b) 2.00% per annum above the rate otherwise applicable.
A-1
<PAGE> 2
This Note is one of a series of Senior Subordinated Notes (the
"NOTES") issued pursuant to a Subordinated Note and Warrant Purchase Agreement,
dated as of November 18, 1996 (as amended from time to time, the "AGREEMENT"),
among the Company, International Mezzanine Capital, B.V. and First Commerce
Corporation and is entitled to the benefits thereof.
Payments of principal and interest on this Note are to be made as
indicated in the Purchaser Schedule to the Agreement or at such other place as
the holder hereof shall designate to the Company in writing, in lawful money of
the United States of America.
This Note is a registered Note and, as provided in, and subject to the
terms and conditions of, the Agreement, upon surrender of this Note for
registration of transfer, duly endorsed, or accompanied by a written instrument
of transfer duly executed, by the registered holder hereof or such holder's
attorney duly authorized in writing, a new Note of like tenor for a like
principal amount will be issued to, and registered in the name of, the
transferee. Prior to due presentment for registration of transfer, the Company
may treat the person in whose name this Note is registered as the owner hereof
for the purpose of receiving payment and for all other purposes, and the
Company shall not be affected by any notice to the contrary.
This Note is subject to certain prepayments, as specified in the
Agreement.
THIS NOTE AND THE DEBT EVIDENCED HEREBY, INCLUDING THE PRINCIPAL AND
INTEREST SHALL AT ALL TIMES REMAIN JUNIOR AND SUBORDINATE TO ANY AND ALL SENIOR
DEBT (AS DEFINED IN THE AGREEMENT), ALL ON THE TERMS AND TO THE EXTENT MORE
FULLY SET FORTH IN THE AGREEMENT.
If an Event of Default, as defined in the Agreement, shall occur and
be continuing, the principal of this Note may be declared or otherwise become
due and payable in the manner and with the effect provided in the Agreement.
The Company, and the purchaser and the registered holder of this Note
specifically intend and agree to limit contractually the amount of interest
payable under this Note to the maximum amount of interest lawfully permitted to
be charged under applicable law. Therefore, none of the terms of this Note
shall ever be construed to create a contract to pay interest at a rate in
excess of the maximum rate permitted to be charged under applicable law, and
neither the Company nor any other party liable or to become liable hereunder
shall ever be liable for interest in excess of the amount determined at such
maximum rate, and the provisions of paragraph 12Q of the Agreement shall
control over any contrary provision of this Note.
A-2
<PAGE> 3
THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW
OF THE STATE OF NEW YORK. IN THE EVENT A FINAL JUDGMENT BY A COURT OF
COMPETENT JURISDICTION HOLDS THAT SUCH CHOICE OF NEW YORK LAW IS UNENFORCEABLE,
THEN THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE
RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF LOUISIANA.
AIR-CURE TECHNOLOGIES, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
A-3
<PAGE> 1
EXHIBIT 4.6
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION UNLESS AN EXEMPTION OR EXCLUSION THEREFROM IS
AVAILABLE.
THIS NOTE IS SUBJECT TO THE TERMS AND CONDITIONS OF THE
SUBORDINATION AGREEMENT.
THIS NOTE IS SUBJECT TO THE RIGHTS AND RESTRICTIONS, INCLUDING
CERTAIN RESTRICTIONS ON TRANSFER, CONTAINED IN A SUBORDINATED
NOTE AND WARRANT PURCHASE AGREEMENT DATED AS OF NOVEMBER 18,
1996 (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
ISSUER HEREOF).
AIR-CURE TECHNOLOGIES, INC.
SENIOR SUBORDINATED NOTE DUE NOVEMBER 18, 2003
No. RS-2
$2,000,000 November 18, 1996
FOR VALUE RECEIVED, the undersigned, AIR-CURE TECHNOLOGIES, INC. (the
"COMPANY"), a corporation organized and existing under the laws of the State of
Delaware, hereby promises to pay to First Commere Corporation or registered and
permitted assigns, the principal sum of TWO MILLION AND NO/ONE-HUNDREDTHS
DOLLARS ($2,000,000.00) on November 18, 2003, with interest (computed on the
basis of a 365-day year) (a) on the unpaid balance thereof at the rates of
interest per annum set forth in paragraph 1A of the Agreement, payable
quarterly on the last Business Day of December, March, June and September in
each year, commencing with the December next succeeding the date hereof, until
the principal hereof shall have become due and payable, and (b) on any overdue
payment (including any overdue prepayment) of principal and any overdue payment
of interest, payable quarterly as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate per annum from time to time
equal to the lesser of (a) the maximum rate permitted by applicable law or (b)
2.00% per annum above the rate otherwise applicable.
A-1
<PAGE> 2
This Note is one of a series of Senior Subordinated Notes (the
"NOTES") issued pursuant to a Subordinated Note and Warrant Purchase Agreement,
dated as of November 18, 1996 (as amended from time to time, the "AGREEMENT"),
among the Company, International Mezzanine Capital, B.V. and First Commerce
Corporation and is entitled to the benefits thereof.
Payments of principal and interest on this Note are to be made as
indicated in the Purchaser Schedule to the Agreement or at such other place as
the holder hereof shall designate to the Company in writing, in lawful money of
the United States of America.
This Note is a registered Note and, as provided in, and subject to the
terms and conditions of, the Agreement, upon surrender of this Note for
registration of transfer, duly endorsed, or accompanied by a written instrument
of transfer duly executed, by the registered holder hereof or such holder's
attorney duly authorized in writing, a new Note of like tenor for a like
principal amount will be issued to, and registered in the name of, the
transferee. Prior to due presentment for registration of transfer, the Company
may treat the person in whose name this Note is registered as the owner hereof
for the purpose of receiving payment and for all other purposes, and the
Company shall not be affected by any notice to the contrary.
This Note is subject to certain prepayments, as specified in the
Agreement.
THIS NOTE AND THE DEBT EVIDENCED HEREBY, INCLUDING THE PRINCIPAL AND
INTEREST SHALL AT ALL TIMES REMAIN JUNIOR AND SUBORDINATE TO ANY AND ALL SENIOR
DEBT (AS DEFINED IN THE AGREEMENT), ALL ON THE TERMS AND TO THE EXTENT MORE
FULLY SET FORTH IN THE AGREEMENT.
If an Event of Default, as defined in the Agreement, shall occur and
be continuing, the principal of this Note may be declared or otherwise become
due and payable in the manner and with the effect provided in the Agreement.
The Company, and the purchaser and the registered holder of this Note
specifically intend and agree to limit contractually the amount of interest
payable under this Note to the maximum amount of interest lawfully permitted to
be charged under applicable law. Therefore, none of the terms of this Note
shall ever be construed to create a contract to pay interest at a rate in
excess of the maximum rate permitted to be charged under applicable law, and
neither the Company nor any other party liable or to become liable hereunder
shall ever be liable for interest in excess of the amount determined at such
maximum rate, and the provisions of paragraph 12Q of the Agreement shall
control over any contrary provision of this Note.
A-2
<PAGE> 3
THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW
OF THE STATE OF NEW YORK. IN THE EVENT A FINAL JUDGMENT BY A COURT OF
COMPETENT JURISDICTION HOLDS THAT SUCH CHOICE OF NEW YORK LAW IS UNENFORCEABLE,
THEN THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE
RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF LOUISIANA.
AIR-CURE TECHNOLOGIES, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
--------------------------------
A-3
<PAGE> 1
EXHIBIT 4.7
SUBORDINATION AGREEMENT
WHEREAS, AIR-CURE TECHNOLOGIES, INC. (together with its successors and
assigns, the "Company") may from time to time become indebted to the various
financial institutions (together with their respective successors and assigns,
collectively the "Senior Lenders" and each individually a "Senior Lender")
from time to time party to an Amended and Restated Credit Agreement dated as of
November 18, 1996 (as amended, restated or otherwise modified from time to
time, together with any replacement therefor or refinancing thereof, the
"Senior Credit Agreement") among the Company, the Senior Lenders, Bank of
America National Trust and Savings Association, as agent for the Senior Lenders
(in such capacity, together with any successor thereto in such capacity, the
"Agent"), and The First National Bank of Boston, as co-agent for the Senior
Lenders (in such capacity, the "Co-Agent");
WHEREAS, concurrently with the execution of this Agreement, the Company
will enter into a Subordinated Note and Warrant Purchase Agreement (as amended
or otherwise modified from time to time, the "Subordinated Note Agreement")
with International Mezzanine Capital, B.V. ("IMC") and First Commerce
Corporation ("FCC") (together with their respective successors and assigns,
collectively the "Noteholders");
NOW, THEREFORE, to induce the Senior Lenders, from time to time, to make
loans and to issue letters of credit (including, without limitation, renewals
or extensions of any loans or letters of credit heretofore or hereafter made)
to the Company under or in connection with the Senior Credit Agreement, and for
other valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Noteholders agree as follows:
1. Unless otherwise defined herein, terms used herein have the
meanings assigned to such terms in Schedule A attached hereto. All obligations
of the Company and the Guarantors, howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent, now or hereafter existing,
or due or to become due (including, without limitation, any and all interest
accruing on any of the Liabilities after the commencement of any Proceedings
(as defined in Section 2(i) hereof), notwithstanding any provision or rule of
law which might restrict the right of any Person, as against the Company, any
Guarantor or anyone else, to collect such interest) are hereinafter called
"Liabilities." All Liabilities to the Agent, the Co-Agent, any Senior Lender
or any Affiliate of any Senior Lender which is a party to a Swap Contract with
the Company (collectively, the "Senior Creditors") arising under (i) the Senior
Credit Agreement, (ii) any Swap Contract or (iii) the Guaranty executed in
favor of the Senior Creditors are herein called "Senior Liabilities"; and all
Liabilities to the Noteholders arising under (i) the Subordinated Note
Agreement, (ii) the
-1-
<PAGE> 2
Subordinated Notes or (iii) the Guaranty executed in favor of the Noteholders
are herein called "Junior Liabilities". For the purposes of this Agreement,
Senior Liabilities shall include all obligations of the Company under the
Senior Credit Agreement or any Swap Contract between the Company and any Senior
Creditor and all Liabilities of any Guarantor under the Guaranty executed in
favor of the Senior Creditors, notwithstanding any right or power of the
Company, any Guarantor or anyone else to assert any claim or defense as to the
invalidity or unenforceability of any such obligation, and no such claim or
defense shall affect or impair the agreements and obligations of the
Noteholders hereunder.
2. Anything in this Agreement to the contrary notwithstanding, the
Junior Liabilities shall be subordinate and junior to the extent set forth in
subparagraphs (i) through (vii), inclusive, below, to all Senior Liabilities.
(i) Except as hereinafter in this Agreement expressly
otherwise provided or as the Agent with the consent of the Required
Lenders may hereafter otherwise expressly consent in writing, the
payment of all Junior Liabilities shall be postponed and subordinated to
the payment in full in cash of all Senior Liabilities, and no payment or
other distribution whatsoever in respect of any Junior Liabilities shall
be made, nor (except as contemplated by Section 1F of the Warrants)
shall any property or assets of the Company or any Guarantor be applied
to the purchase or other acquisition or retirement of any Junior
Liabilities; provided that, subject to the provisions of subparagraphs
(ii) through (vii) below, there are excepted from the terms of the
foregoing provisions of this Section 2(i): (a) payments of interest
under the Subordinated Note Agreement to the Noteholders by the Company
or any Guarantor, (b) payments of any of the costs and expenses referred
to in Section 12B(i)(i) of the Subordinated Note Agreement and (c)
payments of any of the charges, fees and expenses referred to in Section
12B(i)(ii) of the Subordinated Note Agreement (collectively, the
"Permitted Payments").
(ii) In the event of any insolvency, bankruptcy, liquidation,
reorganization or other similar proceedings, or any receivership
proceedings in connection therewith, relative to the Company, and in the
event of any proceedings for voluntary liquidation, dissolution or other
winding up of the Company, whether or not involving insolvency or
bankruptcy proceedings (each such event, a "Proceeding"), then all
Senior Liabilities shall first be paid in full in cash before any
payment is made by the Company in respect of the Junior Liabilities.
(iii) In any Proceeding of the Company or any Guarantor, any
payment or distribution of any kind or character, whether in cash,
property, stock or obligations, which may be payable or deliverable in
respect of the Junior Liabilities shall be paid or delivered directly to
the Agent for application in payment of the Senior Liabilities in
accordance with the priorities then existing among the Senior Creditors,
unless and until all Senior Liabilities shall have been paid in full in
cash; provided, however, that no such delivery shall be made to Senior
Creditors of stock or obligations which are issued pursuant to
reorganization
- 2 -
<PAGE> 3
proceedings if such stock or obligations are subordinate and junior
(whether by law or agreement) at least to the extent provided in this
Section 2 to the payment of all Senior Liabilities then outstanding and
to the payment of any stock or obligations which are issued in exchange
or substitution for any Senior Liabilities then outstanding.
(iv) Upon the acceleration of the maturity of any Senior
Liabilities, no payment of the Junior Liabilities shall be made, unless
the percentage of Senior Creditors specified in the instrument creating
or evidencing such Senior Liabilities rescind or annul such acceleration
in writing or such Senior Liabilities shall have been paid in full in
cash.
(v) During the continuance of any Event of Default under and
as defined in the Senior Credit Agreement (any such event being referred
to herein as a "Senior Default"), if notice of such default has been
given to the Company and to the Noteholders' Representative by the Agent
and such notice shall specify that it constitutes a "blockage notice"
pursuant to this Section 2(v), then no Permitted Payments shall be made
during the period of 180 days from the date of such blockage notice
(subject to the number of such days being reduced pursuant to Section
2(vi)(y)), unless such Senior Default shall have been cured or waived in
writing or ceases to exist and any acceleration of Senior Liabilities as
to which such Senior Default relates shall have been rescinded or
annulled in writing or the Senior Liabilities to which such Senior
Default relates shall have been paid in full in cash (the "Blockage
Period").
(vi) Notwithstanding the foregoing, (x) Permitted Payments
shall not be blocked pursuant to Section 2(v) more than twice in any
period of twelve consecutive months as long as any of the Junior
Liabilities remain outstanding, (y) Permitted Payments shall not be
blocked pursuant to Section 2(v) for more than an aggregate 180 days
during any such period of twelve consecutive months as long as any of
the Junior Liabilities remain outstanding, and (z) the Senior Creditors
shall not be entitled to give notice pursuant to Section 2(v) more than
once with respect to any Senior Default which was specified in such a
blockage notice and which has continued without interruption since the
date such notice was given, nor shall the Senior Creditors be entitled
to give a separate blockage notice with respect to any Senior Default
not so specified which (to the knowledge of the Senior Creditors) was
existing on the date the blockage notice shall have been given pursuant
to Section 2(v) and which has continued without interruption from the
date such notice was given.
(vii) Subject to the automatic acceleration provisions of the
Bankruptcy Code, so long as any Senior Liabilities remain outstanding,
no Noteholder may
(x) declare or join in the declaration of any Junior
Liabilities to be due and payable or otherwise accelerate the
maturity of any principal of the Junior Liabilities, accrued
interest thereon or other amounts due in respect thereof, or
- 3 -
<PAGE> 4
(y) commence or join in the commencement of any
bankruptcy or insolvency proceeding against the Company or any
subsidiary thereof, or
(z) commence any litigation against the Company or any
Guarantor to collect any Junior Liabilities,
prior to the earlier of (A) the tenth day after the date on which any holder of
the Junior Liabilities shall have given written notice to the Agent of its
intention to take such action or (B) the acceleration of any of the Senior
Liabilities; provided, however, that no Noteholder shall take any action
described in clause (x), (y) or (z) above during a Blockage Period (unless any
of the Senior Liabilities shall have been accelerated during such Blockage
Period).
3. The Noteholders shall not at any time be charged with knowledge
of the existence of any facts which would prohibit the making of any payment to
or for the account of the Noteholders, unless and until the Noteholders'
Representative shall have received written notice thereof from the Company or
the Agent; and, prior to the receipt of any such written notice, the
Noteholders shall be entitled to assume conclusively that no such facts exist.
4. Each Noteholder shall be entitled to rely on the delivery to it
of a written notice by a Person representing itself to be a Senior Creditor to
establish the facts set forth therein and that such notice has been given by a
Senior Creditor. If any Noteholder shall determine in good faith that further
evidence is required with respect to the right of any Person as a Senior
Creditor to participate in any payment or distribution pursuant thereto, such
Noteholder may request such Person to furnish evidence as to the amount of
Senior Liabilities 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 hereunder, and if such evidence is not
furnished, such Noteholder may defer any payment to such Person pending
judicial determination as to the right of such Person to receive payment.
5. Each and every Noteholder undertakes and agrees for the benefit
of each Senior Creditor to execute, verify, deliver and file a proof of claim
which the Agent may at any time reasonably require, as requested in writing, in
order to prove and realize upon any rights or claims pertaining to the Junior
Liabilities and to effectuate the full benefit of the subordination contained
herein; and upon failure of any Noteholder so to do, the Agent shall be deemed
to be irrevocably appointed the agent and attorney-in-fact of such Noteholder
to execute, verify, deliver and file any such proof of claim.
6. Upon any distribution of assets of the Company or any Guarantor
pursuant to a Proceeding, the Noteholders shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which such
Proceeding is pending, or a certificate of the liquidating trustee or agent or
other Person making any distribution to the Noteholders, for the purpose of
ascertaining the Persons entitled to participate in such distribution, the
Senior Creditors and other Liabilities of
- 4 -
<PAGE> 5
the Company or any Guarantor, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto
and hereto.
7. In the event that any payment or distribution of assets shall be
received by any Noteholder on account of the Junior Liabilities in violation of
the provisions of this Agreement, such payment or distribution shall be
promptly paid over and delivered to the Agent in the form received (except for
any necessary endorsements) for application to the payment of Senior
Liabilities, until the Senior Liabilities shall have been paid in full in cash.
Until so delivered, any such payment or distribution shall be held by the
recipient in trust for the Senior Creditors.
8. The provisions of this Agreement are for the purpose of defining
the relative rights of the Senior Creditors on the one hand, and the
Noteholders on the other hand, against the Company and the Guarantors and their
property, and nothing herein shall impair, as between the Company and the
Guarantors and the Noteholders, the obligation of the Company and the
Guarantors, which is unconditional and absolute, to pay to the Noteholders the
Junior Liabilities in accordance with the terms and the provisions thereof,
subject to the rights, if any, under this Agreement of Senior Creditors to
receive cash, property, stock or obligations otherwise payable or deliverable
by the Company and the Guarantors to the Noteholders.
9. Upon payment in full in cash of all Senior Liabilities, the
Noteholders shall be subrogated to the rights of the Senior Creditors to
receive payments or distributions of assets of the Company and the Guarantors
made on Senior Liabilities until the Junior Liabilities shall be paid in full,
and, for the purposes of such subrogation, no payments or distributions (direct
or indirect) to the Senior Creditors of any cash, property, stock or
obligations to which the Noteholders would be entitled except for the
provisions of Section 2 shall, as between the Company and the Guarantors, their
creditors (other than the Senior Creditors) and the Noteholders, be deemed to
be a payment by the Company or any Guarantor to or on account of Senior
Liabilities.
10. Any notices hereunder shall be in writing (including facsimile
transmission) and shall be sent (i) in the case of notices to the Agent, to:
Bank of America National Trust and Savings Association
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Agency Management Services
Facsimile No.: 312-974-9103
- 5 -
<PAGE> 6
with copies to:
Bank of America Illinois
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Robert Rospierski/Service Industries
Facsimile No.: 312-828-1974
and
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
Attention: Robert Baptista
Facsimile No.: 312-701-7711
(ii) in the case of notices to the Noteholders' Representative,
to:
International Mezzanine Capital, B.V.
Herengracht 424
1017 BZ Amsterdam
The Netherlands
Attention: Sjaak Schouten
with copies to:
Mezzanine Management Limited
Manfield House
376-379 Strand
London WC2R OLR
UNITED KINGDOM
Attention: Angus Penman
and
First Commerce Capital, Inc.
201 St. Charles Avenue, Suite 1608
New Orleans, LA 70170
Attention: Paul Giffin
- 6 -
<PAGE> 7
and
Baker & Botts, L.L.P.
910 Louisiana
Houston, Texas 77002
Attention: Bill Hart, Jr.
(iii) in the case of notices to the Company, to:
Air-Cure Technologies, Inc.
2727 Allen Parkway
Suite 760
Houston, Texas 77019
Attention: Larry McAfee; or
(iv) in the case of any of the foregoing, to such other address
as such Person shall have specified to (x) in the case of the Agent, the
Company and the Noteholders' Representative, (y) in the case of the
Noteholders' Representative, the Agent and the Company and (z) in the
case of the Company, the Agent and the Noteholders' Representative.
Notices shall be deemed to have been received (a) if sent by messenger
or courier, when received at the address specified above, (b) if sent by
facsimile, when transmission has been confirmed and (c) if sent by
registered or certified mail, on the fifth Business Day after being
sent.
11. The Noteholders hereby waive: (a) notice of acceptance of this
Agreement by the Agent or any Senior Creditor; (b) notice of the existence or
creation or non-payment of all or any of the Senior Liabilities; and (c) all
diligence in collection or protection of or realization upon the Senior
Liabilities or any security therefor.
12. This Agreement shall in all respects be a continuing agreement
and shall remain in full force and effect (notwithstanding, without limitation,
the dissolution, death or incompetency of any Noteholder or that at any time or
from time to time all Senior Liabilities may have been paid in full), subject
to discontinuance only upon receipt by the Agent of written notice from the
Noteholders, or any Person duly authorized and acting on behalf of the
Noteholders, of the discontinuance thereof; provided that no such notice of
discontinuance shall affect or impair any of the agreements and obligations of
the Noteholders hereunder with respect to any and all Senior Liabilities
existing prior to the time of receipt of such notice by the Agent, any and all
Senior Liabilities created or acquired thereafter pursuant to any previous
commitment made by any Senior Creditor under or in connection with the Senior
Credit Agreement or in connection with any Swap Contract with the Company, any
and all extensions or renewals of any of the foregoing, any and all interest
accruing on any of the foregoing, and any and all expenses paid or incurred by
the Agent or any other Senior Creditor in endeavoring to collect or realize
upon any of the foregoing or any security therefor; and all of the agreements
and obligations of the Noteholders under this Agreement
- 7 -
<PAGE> 8
shall, notwithstanding any such notice of discontinuance, remain fully in
effect until all such Senior Liabilities (including any extensions or renewals
of any thereof and all such interest and expenses) shall have been finally paid
in full in cash.
13. The Agent or any other Senior Creditor may, from time to time,
whether before or after any discontinuance of this Agreement, at its sole
discretion and without notice to the Noteholder, take any or all of the
following actions: (a) retain or obtain a security interest in any property to
secure any of the Senior Liabilities, (b) retain or obtain the primary or
secondary obligation of any other obligor or obligors with respect to any of
the Senior Liabilities, (c) extend or renew for one or more periods (whether or
not longer than the original period), alter or exchange any of the Senior
Liabilities, or release or compromise any obligation of any nature of any
obligor with respect to any of the Senior Liabilities, and (d) release its
security interest in, or surrender, release, or permit any substitution or
exchange for, all or any part of any property securing any of the Senior
Liabilities, or extend or renew for one or more periods (whether or not longer
than the original period), or release, compromise, alter, or exchange any
obligations of any nature of any obligor with respect to any such property.
14. Each Senior Creditor may, from time to time, whether before or
after any discontinuance of this Agreement, without notice to any Noteholder,
assign or transfer any or all of the Senior Liabilities or any interest
therein; and, notwithstanding any such assignment or transfer or any subsequent
assignment or transfer thereof, such Senior Liabilities shall be and remain
Senior Liabilities for the purposes of this Agreement, and every immediate and
successive assignee or transferee of any of the Senior Liabilities or of any
interest therein shall, to the extent of the interest of such assignee or
transferee in the Senior Liabilities, be entitled to the benefits of this
Agreement to the same extent as if such assignee or transferee were the
transferring Senior Creditor.
15. No Senior Creditor shall be prejudiced in its rights under this
Agreement by any act or failure to act of the Company, any Guarantor or any
Noteholder, or any noncompliance of the Company, any Guarantor or any
Noteholder with any agreement or obligation, regardless of any knowledge
thereof which such Senior Creditor or any other Senior Creditor may have or
with which such Senior Creditor or any other Senior Creditor may be charged;
and no action of the Agent or any other Senior Creditor permitted hereunder
shall in any way affect or impair the rights of the Agent or any other Senior
Creditor and the obligations of any Noteholder under this Agreement.
16. No delay on the part of the Agent or any other Senior Creditor in
the exercise of any right or remedy shall operate as a waiver thereof, and no
single or partial exercise by the Agent or any other Senior Creditor of any
right or remedy shall preclude other or further exercise thereof or the
exercise of any other right or remedy; nor shall any modification or waiver of
any of the provisions of this Agreement be binding upon the Agent or any other
Senior Creditor except as expressly set forth in a writing duly signed and
delivered on behalf of the Agent, with the consent of the Required Lenders.
- 8 -
<PAGE> 9
17. This Agreement shall be binding upon the Noteholders and upon the
heirs, legal representatives, successors and assigns of the Noteholders; and
all references herein to the Company and each Guarantor shall be deemed to
include any successor or successors, whether immediate or remote, to such
corporation.
18. This Agreement shall be construed in accordance with and governed
by the laws of the State of Illinois. Wherever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under such law, such provision shall be ineffective to
the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
19. The Noteholders agree to promptly execute and deliver to the
Company and the Agent a release of the obligations under the Guaranty of any
Guarantor, which Guarantor is sold pursuant to and in compliance with paragraph
6B of the Subordinated Note Agreement or pursuant to any foreclosure proceeding
by the Agent.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]
- 9 -
<PAGE> 10
IN WITNESS WHEREOF, this Agreement is dated effective this ____ day of
November, 1996.
INTERNATIONAL MEZZANINE CAPITAL, B.V.
By:
---------------------------------
Title:
------------------------------
FIRST COMMERCE CORPORATION
By:
---------------------------------
Title:
------------------------------
<PAGE> 11
ACKNOWLEDGMENT
The Company and each Guarantor hereby acknowledges receipt of a copy of
the foregoing Subordination Agreement, waives notice of acceptance thereof by
the Agent or any other Senior Creditor, and agrees to be bound by the terms and
provisions thereof, to make no payments or distributions contrary to the terms
and provisions thereof, and to do every other act and thing necessary or
appropriate to carry out such terms and provisions. In the event of any
violation of any of the terms and provisions of the foregoing Subordination
Agreement, then, at the election of the Required Lenders, any and all
obligations of the Company under or in connection with the Senior Credit
Agreement shall forthwith become due and payable and any and all agreements of
the Senior Creditors to make loans, advances, or other financial accommodations
to the Company under or in connection with the Senior Credit Agreement shall
forthwith terminate, notwithstanding any provisions thereof to the contrary.
Dated: November 18, 1996
AIR-CURE TECHNOLOGIES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
OHMSTEDE, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
AIR-CURE DYNAMICS, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
- 11 -
<PAGE> 12
ALLIED INDUSTRIES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
AMEREX INDUSTRIES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
VIC ENVIRONMENTAL SYSTEMS, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
INTEREL ENVIRONMENTAL
TECHNOLOGIES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
- 12 -
<PAGE> 13
SCHEDULE A
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. A Person shall be deemed to control another Person
if the controlling Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of such other
Person, whether through the ownership of voting securities or membership
interests, by contract, or otherwise.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978
(11 U.S.C. Section 101, et. seq.).
"Guarantor" shall mean (i) as of November 18, 1996, Ohmstede,
Inc., Air-Cure Dynamics, Inc., Allied Industries, Inc., Amerex Industries,
Inc., VIC Environmental Systems, Inc., and Interel Environmental Technologies,
Inc. and (ii) thereafter, each Person listed in clause (i) and each other
Person which executes or delivers a counterpart of the Guaranty.
"Guaranty" shall mean a guaranty in the form delivered to the
Senior Creditors and the Noteholders on November 18, 1996, as amended or
otherwise modified from time to time.
"Noteholders' Representative" means International Mezzanine
Capital, B.V. or any person or entity designated as the successor Noteholders'
Representative by the existing Noteholders' Representative in a written notice
received by the Agent (which notice (i) shall specify the name, address and
facsimile number of such successor Noteholders' Representative and (ii) may be
conclusively relied upon by the Agent until the Agent receives a new notice
changing any information therein).
"Person" shall have the meaning set forth in the Senior Credit
Agreement as of the date hereof.
"Required Lenders" shall have the meaning set forth in the Senior
Credit Agreement as of the date hereof.
"Senior Note" shall mean any "Note", as such term is defined in
the Senior Credit Agreement as of the date hereof.
"Subordinated Notes" shall mean the Notes issued by the Company
and purchased by the Noteholders pursuant to the Subordinated Note Agreement.
"Swap Contract" means any agreement (including any master
agreement and any agreement, whether or not in writing, relating to any single
transaction) that is an interest rate swap agreement, basis swap, forward rate
agreement, interest rate option, rate cap, collar or floor agreement, or other
similar agreement (including any option to enter into any of the foregoing)
entered into by the Borrower for the purpose of protecting the Borrower against
fluctuations in interest rates on the Senior Liabilities.
- 13 -
<PAGE> 1
EXHIBIT 4.8
GUARANTY
THIS GUARANTY dated as of November 18, 1996, is executed in favor of
International Mezzanine Capital, B.V. and First Commerce Corporation (together
with their successors and permitted assigns, the "Purchasers").
W I T N E S S E T H:
WHEREAS, Air-Cure Technologies, Inc. (the "Company") has entered into
a Subordinated Note and Warrant Purchase Agreement dated as of even date
herewith (as amended or otherwise modified from time to time, the "Note
Agreement"; terms used but not defined herein are used as defined in the Note
Agreement) with the Purchasers;
WHEREAS, each of the undersigned will benefit from the issuance of
Notes pursuant to the Note Agreement and is willing to guaranty the
Liabilities (as defined below) as hereinafter set forth;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each of the undersigned hereby
jointly and severally unconditionally and irrevocably, as primary obligor and
not merely as surety, guarantees the full and prompt payment when due, whether
by acceleration or otherwise, and at all times thereafter, of all obligations
(monetary or otherwise) of the Company to each Purchaser under or in connection
with the Note Agreement, the Notes, any other Transaction Document and any
other document or instrument executed in connection therewith, in each case
howsoever created, arising or evidenced, whether direct or indirect, absolute
or contingent, now or hereafter existing, or due or to become due (all such
obligations being herein collectively called the "Liabilities"); provided,
however, that the liability of each of the undersigned hereunder shall be
limited to the maximum amount of the Liabilities which such undersigned may
guaranty without violating any fraudulent conveyance or fraudulent transfer law
(plus all costs and expenses paid or incurred by any Purchaser in enforcing
this Guaranty against such undersigned).
Each of the undersigned agrees that, in the event of the dissolution
or insolvency of the Company or any undersigned, or the inability or failure of
the Company or any undersigned to pay debts as they become due, or an
assignment by the Company or any undersigned for the benefit of creditors, or
the occurrence of any other Event of Default under paragraph 8A(vi) or 8A(vii)
of the Note Agreement, and if such event shall occur at a time when any of the
Liabilities may not then be due and payable, such undersigned will pay to the
Purchasers forthwith the full amount which would be payable hereunder by such
undersigned if all Liabilities were then due and payable.
This Guaranty shall in all respects be a continuing, irrevocable,
absolute and unconditional guaranty, and shall remain in full force and effect
(notwithstanding, without limitation, the
<PAGE> 2
dissolution of any of the undersigned or that at any time or from time to time
no Liabilities are outstanding) until all Liabilities have been paid in full.
The undersigned further agree that if at any time all or any part of
any payment theretofore applied by any Purchaser to any of the Liabilities is
or must be rescinded or returned by such Purchaser for any reason whatsoever
(including, the insolvency, bankruptcy or reorganization of the Company or any
of the undersigned), such Liabilities shall, for the purposes of this Guaranty,
to the extent that such payment is or must be rescinded or returned, be deemed
to have continued in existence, notwithstanding such application by such
Purchaser, and this Guaranty shall continue to be effective or be reinstated,
as the case may be, as to such Liabilities, all as though such application by
such Purchaser had not been made.
Any Purchaser may, from time to time, at its sole discretion and
without notice to the undersigned (or any of them), take any or all of the
following actions: (a) retain or obtain a security interest in any property to
secure any of the Liabilities or any obligation hereunder, (b) retain or obtain
the primary or secondary obligation of any obligor or obligors, in addition to
the undersigned, with respect to any of the Liabilities, (c) extend or renew
any of the Liabilities for one or more periods (whether or not longer than the
original period), alter or exchange any of the Liabilities, or release or
compromise any obligation of any of the undersigned hereunder or any obligation
of any nature of any other obligor with respect to any of the Liabilities, (d)
release its security interest in, or surrender, release or permit any
substitution or exchange for, all or any part of any property securing any of
the Liabilities or any obligation hereunder, or extend or renew for one or more
periods (whether or not longer than the original period) or release,
compromise, alter or exchange any obligations of any nature of any obligor with
respect to any such property, and (e) resort to the undersigned (or any of
them) for payment of any of the Liabilities when due, whether or not such
Purchaser shall have resorted to any property securing any of the Liabilities
or any obligation hereunder or shall have proceeded against any other of the
undersigned or any other obligor primarily or secondarily obligated with
respect to any of the Liabilities.
Each of the undersigned hereby expressly waives: (a) notice of the
acceptance by any Purchaser of this Guaranty, (b) notice of the existence or
creation or nonpayment of all or any of the Liabilities, (c) presentment,
demand, notice of dishonor, protest, and all other notices whatsoever, and (d)
all diligence in collection or protection of or realization upon any
Liabilities or any security for or guaranty of any Liabilities.
Notwithstanding any payment made by or for the account of any of the
undersigned pursuant to this Guaranty, the undersigned shall not be subrogated
to any right of any Purchaser until such time as the Purchasers shall have
received final payment in cash of the full amount of all Liabilities.
Each of the undersigned further agrees to pay all expenses (including
Attorney Costs) paid or incurred by any Purchaser in endeavoring to collect the
Liabilities of such undersigned, or any part thereof, and in enforcing this
Guaranty against such undersigned.
2
<PAGE> 3
The creation or existence from time to time of additional Liabilities
to the Purchasers or any of them is hereby authorized, without notice to the
undersigned (or any of them), and shall in no way affect or impair the rights
of the Purchasers or the obligations of the undersigned under this Guaranty,
including each of the undersigned's guaranty of such additional Liabilities.
Any Purchaser may from time to time without notice to the undersigned
(or any of them), assign or transfer any or all of the Liabilities or any
interest therein; and, notwithstanding any such assignment or transfer or any
subsequent assignment or transfer thereof, such Liabilities shall be and remain
Liabilities for the purposes of this Guaranty, and each and every immediate and
successive assignee or transferee of any of the Liabilities or of any interest
therein shall, to the extent of the interest of such assignee or transferee in
the Liabilities, be entitled to the benefits of this Guaranty to the same
extent as if such assignee or transferee were an original Purchaser.
No delay on the part of any Purchaser in the exercise of any right or
remedy shall operate as a waiver thereof, and no single or partial exercise by
any Purchaser of any right or remedy shall preclude other or further exercise
thereof or the exercise of any other right or remedy; nor shall any
modification or waiver of any provision of this Guaranty be binding upon the
Purchasers except as expressly set forth in a writing duly signed and delivered
on behalf of the Purchasers. No action of any Purchaser permitted hereunder
shall in any way affect or impair the rights of any Purchaser or the
obligations of the undersigned under this Guaranty. For purposes of this
Guaranty, Liabilities shall include all obligations of the Company to any
Purchaser arising under or in connection with the Note Agreement, any Note, any
other Transaction Document or any other document or instrument notwithstanding
any right or power of the Company or anyone else to assert any claim or defense
as to the invalidity or unenforceability of any such obligation, and no such
claim or defense shall affect or impair the obligations of any of the
undersigned hereunder.
This Guaranty shall be binding upon the undersigned and the successors
and assigns of the undersigned; and to the extent that the Company or any of
the undersigned is either a partnership or a corporation, all references herein
to the Company and to the undersigned, respectively, shall be deemed to include
any successor or successors, whether immediate or remote, to such partnership
or corporation. The term "undersigned" as used herein shall mean all parties
executing this Guaranty and each of them, and all such parties shall be jointly
and severally obligated hereunder.
This Guaranty shall be construed in accordance with and governed by
the internal laws of the State of New York. In the event a final judgment by a
court of competent jurisdiction holds that such choice of New York law is
unenforceable, then this Guaranty shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the law of the state
of Louisiana. Wherever possible each provision of this Guaranty shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Guaranty shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Guaranty.
3
<PAGE> 4
This Guaranty may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, and each such counterpart
shall be deemed to be an original but all such counterparts shall together
constitute one and the same Guaranty. At any time after the date of this
Guaranty, one or more additional Persons may become parties hereto by executing
and delivering to the Purchasers a counterpart of this Guaranty. Immediately
upon such execution and delivery (and without any further action), each such
additional Person will become a party to, and will be bound by all of the terms
of, this Guaranty.
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY, OR ANY
TRANSACTIONS RELATING HERETO OR THERETO, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF THE UNDERSIGNED OR
THE PURCHASERS MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR THE
UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND EACH OF THE
UNDERSIGNED HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY
AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS.
EACH OF THE UNDERSIGNED HEREBY IRREVOCABLY WAIVES ANY OBJECTIONS, INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
EACH OF THE UNDERSIGNED, AND (BY ACCEPTING THE BENEFITS HEREOF) EACH
OF THE PURCHASERS, HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS GUARANTY, ANY OTHER
TRANSACTION DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR
THEREWITH OR ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF
THE FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY.
THIS GUARANTY IS SUBJECT TO THE TERMS AND CONDITIONS OF THAT CERTAIN
SUBORDINATION AGREEMENT OF EVEN DATE HEREWITH (AS DEFINED IN THE NOTE
AGREEMENT).
4
<PAGE> 5
IN WITNESS WHEREOF, this Guaranty has been duly executed and delivered
as of the day and year first above written.
OHMSTEDE, INC.
By:
-------------------------------
Address: Title:
----------------------------
- -------------------------------
- -------------------------------
- -------------------------------
AIR-CURE DYNAMICS, INC.
By:
-------------------------------
Address: Title:
----------------------------
- -------------------------------
- -------------------------------
- -------------------------------
ALLIED INDUSTRIES, INC.
By:
-------------------------------
Address: Title:
----------------------------
- -------------------------------
- -------------------------------
- -------------------------------
5
<PAGE> 6
AMEREX INDUSTRIES, INC.
By:
-------------------------------
Address: Title:
----------------------------
- -------------------------------
- -------------------------------
- -------------------------------
VIC ENVIRONMENTAL SYSTEMS, INC.
By:
-------------------------------
Address: Title:
----------------------------
- -------------------------------
- -------------------------------
- -------------------------------
INTEREL ENVIRONMENTAL
TECHNOLOGIES, INC.
By:
-------------------------------
Address: Title:
----------------------------
- -------------------------------
- -------------------------------
- -------------------------------
6
<PAGE> 7
The undersigned is executing a
counterpart hereof for purposes of
becoming a party hereto:
----------------------------------
By:
-------------------------------
Address: Title:
---------------------------
- -------------------------------
- -------------------------------
- -------------------------------
7
<PAGE> 1
EXHIBIT 4.9
AIR-CURE TECHNOLOGIES, INC.
2727 ALLEN PARKWAY, SUITE 760
HOUSTON, TEXAS 77019
As of November 18, 1996
TO EACH OF THE PURCHASERS
LISTED IN THE ATTACHED SCHEDULE A:
$15,000,000 SENIOR SUBORDINATED NOTES DUE 2003
COMMON STOCK PURCHASE WARRANTS EXPIRING 2003
Ladies and Gentlemen:
The undersigned, Air-Cure Technologies, Inc., a Delaware corporation
(the "COMPANY"), hereby agrees with you as follows:
PARAGRAPH 1. AUTHORIZATION OF ISSUE OF SECURITIES.
1A. AUTHORIZATION OF ISSUE OF NOTES. The Company will
authorize the issue of its senior subordinated promissory notes (any such
promissory notes which have been issued pursuant to this Agreement, and any
such notes which may be issued in substitution or exchange therefor, herein
collectively called the "NOTES") in the aggregate principal amount of
$15,000,000, to be dated the date of issue thereof, to mature November 18, 2003
and to bear interest on the unpaid balance thereof from the date thereof until
the principal thereof shall have become due and payable at the rates of
interest per annum indicated below for the periods indicated below and on
overdue payments at the rate specified therein; such Notes shall be
substantially in the form of Exhibit A attached hereto.
<TABLE>
<CAPTION>
Periods Rate
------- ----
<S> <C>
Date of Closing - December 31, 1997 12.00%
January 1, 1998 - December 31, 1998 12.50%
January 1, 1999 - December 31, 1999 13.00%
January 1, 2000 - December 31, 2000 13.50%
January 1, 2001 - December 31, 2001 14.00%
January 1, 2002 - December 31, 2002 14.50%
January 1, 2003 - November __, 2003 15.00%
</TABLE>
<PAGE> 2
1B. AUTHORIZATION OF ISSUE OF WARRANTS. The Company will
also authorize the issue of its Common Stock Purchase Warrants (any such Common
Stock Purchase Warrants which have been issued pursuant to this Agreement, and
any such Common Stock Purchase Warrants which may be issued in substitution or
exchange therefor, herein collectively called the "WARRANTS") evidencing rights
to purchase from the Company an aggregate of 1,760,000 shares of the Company's
Common Stock, par value $0.001 per share (the "COMMON STOCK"), at an initial
exercise price per share of $5.10, at any time or from time to time after the
Date of Closing and prior to 5:00 p.m. New York City time on November 18, 2003,
all subject to the terms, conditions and adjustments set forth in the Warrants;
such Warrants shall be substantially in the form of Exhibit B attached hereto.
Capitalized terms used herein have the meanings specified in paragraph 11.
PARAGRAPH 2. PURCHASE AND SALE OF SECURITIES.
2. PURCHASE AND SALE OF SECURITIES. The Company hereby agrees to
sell to you and, subject to the terms and conditions herein set forth, you
severally agree to purchase from the Company the following:
(i) Notes in the aggregate principal amount set forth
opposite your name in the Purchaser Schedule; and
(ii) Warrants evidencing rights to purchase an aggregate
number of shares of Common Stock set forth opposite your name in the Purchaser
Schedule.
The aggregate purchase price for the Notes shall be 100% of the principal
amount of the Notes, and the aggregate purchase price for the Warrants shall be
$10.00.
The Company will deliver to you, at the offices of Porter & Hedges, L.L.P. (a)
one or more Notes registered in your name, evidencing the aggregate principal
amount of Notes to be purchased by you and in the denomination or denominations
specified in the Purchaser Schedule attached hereto, and (b) one or more
Warrants registered in your name, evidencing rights to purchase an aggregate
number of shares of Common Stock, such Warrant or Warrants to evidence rights
to purchase the number of shares of Common Stock specified in the Purchaser
Schedule attached hereto, against payment of the purchase price for the Notes
and Warrants by transfer of immediately available funds for credit to the
Company's account #71-13838 at Bank of America Illinois, Chicago, Illinois,
Routing No. 071000039, on the date of closing, which shall be November 18, 1996
or any other date on or before November 22, 1996 upon which the Company and
you may mutually agree (the "CLOSING" or the "DATE OF CLOSING").
2
<PAGE> 3
PARAGRAPH 3. CONDITIONS PRECEDENT.
3. CONDITIONS TO CLOSING. Your obligation to purchase and pay
for the Securities to be purchased by you hereunder is subject to the
satisfaction, on or before the Date of Closing, of the following conditions:
3A. CERTAIN DOCUMENTS. You shall have received the
following, each dated the Date of Closing unless otherwise indicated:
(i) The Notes to be purchased by you;
(ii) The Warrants to be purchased by you;
(iii) Certified copies of the resolutions of the Board of
Directors of the Company and each Guarantor approving all documents to be
delivered hereunder to which it is a party, and evidencing other necessary
corporate action and governmental approvals, if any, with respect to such
documents;
(iv) A certificate of the Secretary or an Assistant
Secretary of the Borrower and each Guarantor certifying the names and true
signatures of the officers of the Borrower and such Guarantor authorized to
sign the documents to be delivered hereunder to which it is a party;
(v) Certified copies of the Certificate of Incorporation
and bylaws of the Borrower and each Guarantor;
(vi) A favorable opinion of Porter & Hedges, L.L.P.,
counsel to the Company, satisfactory to you and substantially in the form of
Exhibit C attached hereto and as to such other matters as you may reasonably
request;
(vii) Certified copies of Requests for Information or
Copies (Form UCC-11), or equivalent reports in the form delivered under the
Senior Credit Agreement;
(viii) A letter satisfactory to you from Simmons & Company
International, placement agent for the Company, regarding the private offering
of the Securities;
(ix) The Registration Rights Agreement, duly executed and
delivered by the Company;
(x) The Participation Rights Agreement, duly executed and
delivered by the parties thereto (other than you);
(xi) A guaranty, substantially in the form of Exhibit D
attached hereto (the "GUARANTY"), executed by each Guarantor; and
3
<PAGE> 4
(xii) Additional documents or certificates with respect to
legal matters or corporate or other proceedings related to the transactions
contemplated hereby as you may reasonably request.
3B. ACQUISITION. On the Date of Closing, the Company
shall have delivered to the holders evidence that the Ohmstede Acquisition has
been (or concurrently will be) consummated on terms and conditions satisfactory
to the holders.
3C. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The
representations and warranties contained in paragraph 9 shall be true on and as
of the Date of Closing, except to the extent of changes caused by the
transactions herein contemplated; there shall exist on the Date of Closing no
Event of Default or Default; and the Company shall have delivered to you an
Officer's Certificate, dated the Date of Closing, to both such effects.
3D. SALE OF NOTES TO ALL PURCHASERS. At the Closing, the
Company shall sell to you the Note or Notes to be purchased by you at the
Closing and shall receive payment in full therefor.
3E. PURCHASE PERMITTED BY APPLICABLE LAWS. The offer by
the Company of, and the purchase of and payment for, the Securities to be
purchased by you on the Date of Closing on the terms and conditions herein
provided (including the use of the proceeds of such Securities by the Company)
shall not violate any applicable law or governmental regulation (including,
without limitation, Section 5 of the Securities Act or Regulation G or X of the
Board of Governors of the Federal Reserve System) and shall not subject you to
any tax, penalty, liability or other onerous condition under or pursuant to any
applicable law or governmental regulation, and you shall have received such
certificates or other evidence as you may request to establish compliance with
this condition.
3F. PROCEEDINGS. All corporate and other proceedings
taken or to be taken in connection with the transactions contemplated hereby
and all documents incident thereto shall be satisfactory in substance and form
to you, and you shall have received all such counterpart originals or certified
or other copies of such documents as you may reasonably request.
3G. SENIOR DEBT. All corporate and other proceedings
taken or to be taken in connection with the Company's execution and delivery of
the Senior Credit Agreement, the other transactions contemplated thereby and
all documents incident thereto shall be satisfactory in substance and form to
you, and you shall have received all such counterpart originals or certified or
other copies of such documents as you may reasonably request. On the Closing
Date, the Company shall have delivered to you evidence that the Senior Credit
Agreement has been (or concurrently will be) consummated on terms and
conditions satisfactory to you and that the Company has borrowed (or
concurrently will be borrowing) at least $35,000,000 of Term Loans thereunder
and obtained an available revolving commitment of at least $38,000,000
thereunder.
4
<PAGE> 5
3H. FEES. (i) You shall have received your pro-rata
portion of the $225,000 structuring fee which is due and payable on or before
the Date of Closing (less amounts previously paid) and (ii) without limiting
the provisions of paragraph 12B, your special counsel shall have received its
reasonable fees, charges and disbursements to the extent reflected in a
statement of such special counsel rendered to the Company at least one Business
Day prior to the Closing.
PARAGRAPH 4. PREPAYMENTS.
4. PREPAYMENTS. The Notes shall be subject to prepayment only
with respect to the prepayments specified in paragraphs 4A and 4B.
4A. OPTIONAL PREPAYMENT OF NOTES.
(i) The Notes shall be subject to prepayment on any
Business Day in whole at any time or from time to time in part (in multiples of
$1,000,000), at the option of the Company, without premium or penalty.
(ii) The Company shall give the holder of each Note
irrevocable written notice of any prepayment pursuant to this paragraph 4A not
less than ten Business Days prior to the prepayment date, specifying such
prepayment date and the principal amount of the Notes, and of the Notes held by
such holder, to be prepaid on such date and stating that such prepayment is to
be made pursuant to this paragraph 4A. Notice of prepayment having been given
as aforesaid, the principal amount of the Notes specified in such notice,
together with interest thereon to the prepayment date, shall become due and
payable on such prepayment date. The Company shall, on or before the day on
which it gives written notice of any prepayment pursuant to this paragraph 4A,
give telephonic notice of the principal amount of the Notes to be prepaid and
the prepayment date to each holder which shall have designated a recipient of
such notices in the Purchaser Schedule attached hereto or by notice in writing
to the Company.
4B. CHANGE IN CONTROL.
(i) Notice of Change in Control. The Company will,
immediately after any Responsible Officer has knowledge of the occurrence of
any Change in Control, give written notice of such Change in Control to each
holder of the Notes unless notice in respect of such Change in Control shall
have been given pursuant to paragraph 4B(ii). If a Change in Control has
already occurred, all of the Notes shall immediately be due and payable in
accordance with clause (v) hereof and such notice shall be accompanied by the
certificate described in clause (vi).
(ii) Condition to Company Action. The Company will not
take any action that consummates or finalizes a Change in Control unless (a) at
least 30 days prior to the proposed Change of Control it shall have given to
each holder of Notes written notice containing and constituting an offer to
prepay the Notes as described in clause (iii) of this paragraph 4B
5
<PAGE> 6
accompanied by the certificate described in clause (vi) hereof, and (b) upon
such Change of Control, it prepays all Notes required to be prepaid in
accordance with this paragraph 4B.
(iii) Offer to Prepay Notes. The offer to prepay Notes
contemplated by the foregoing clauses (i) and (ii) shall be an offer to prepay,
in accordance with and subject to this paragraph 4B, all, but not less than
all, the Notes held by each holder (in this case only, "holder" in respect of
any Note registered in the name of a nominee for a disclosed beneficial owner
shall mean such beneficial owner) on a date specified in such offer (the
"PROPOSED PREPAYMENT DATE"). Such Proposed Prepayment Date shall be the date
of the Change of Control.
(iv) Acceptance. Each holder of Notes shall automatically
be deemed to accept the offer to prepay made pursuant to this paragraph 4B.
(v) Prepayment; Reduction of Required Prepayments.
Prepayment of the Notes to be prepaid pursuant to this paragraph 4B shall be at
the applicable percentage of the principal amount of such Notes identified in
paragraph 4A depending upon the date of the Proposed Payment Date, together
with interest on such Notes accrued to the date of prepayment. The prepayment
shall be made on the Proposed Prepayment Date.
(vi) Officer's Certificate. Each offer to prepay the
Notes pursuant to this paragraph 4B shall be accompanied by a certificate,
executed by a Responsible Officer of the Company and dated the date of such
offer, specifying: (a) the Proposed Prepayment Date; (b) that such offer is
made pursuant to this paragraph 4B; (c) the principal amount of each Note
offered to be prepaid; (d) the interest that would be due on each Note offered
to be prepaid, accrued to the Proposed Prepayment Date; (e) that the conditions
of this paragraph 4B have been fulfilled; and (f) in reasonable detail, the
nature and date of the Change in Control.
4C. PARTIAL PAYMENTS PRO RATA. Upon any partial
prepayment of Notes pursuant to paragraph 4A, the principal amount so prepaid
shall be allocated to all Notes at the time outstanding (including, for the
purpose of this paragraph 4C only, all such Notes prepaid or otherwise retired
or purchased or otherwise acquired by the Company or any of its Subsidiaries or
Affiliates other than by prepayment pursuant to paragraph 4A or 4B) in
proportion to the respective outstanding principal amounts thereof.
4D. RETIREMENT OF NOTES. The Company shall not, and
shall not permit any of its Subsidiaries or Affiliates to, prepay or otherwise
retire in whole or in part prior to their stated final maturity (other than by
prepayment pursuant to paragraph 4A or 4B or upon acceleration of such final
maturity pursuant to paragraph 8A), or purchase or otherwise acquire, directly
or indirectly, Notes held by any holder unless the Company or such Subsidiary
or Affiliate shall have offered to prepay or otherwise retire or purchase or
otherwise acquire, as the case may be, the same proportion of the aggregate
principal amount of Notes held by each other holder of Notes at the time
outstanding upon the same terms and conditions. Any Notes so prepaid or
otherwise retired or purchased or otherwise acquired by the Company or any of
its Subsidiaries or Affiliates shall not be
6
<PAGE> 7
deemed to be outstanding for any purpose under this Agreement, except as
provided in paragraph 4C.
4E. MAINTENANCE OF INVESTMENT. The Company acknowledges,
and the parties hereto agree, that each holder of a Note has the right to
maintain its investment in the Notes free from repayment by the Company (except
as herein specifically provided for).
PARAGRAPH 5. AFFIRMATIVE COVENANTS.
5. AFFIRMATIVE COVENANTS.
So long as any Note shall remain unpaid (or, as to Paragraph 5A(i),
5A(ii), 5B(iii) and 5D through 5N) so long as any Warrant shall remain
outstanding), the Company covenants that:
5A. FINANCIAL STATEMENTS. The Company shall deliver to
the each holder, in form and detail satisfactory to the Required Holders:
(i) as soon as available, but not later than 90 days
after the end of each fiscal year, (a) a copy of the audited consolidated
balance sheet of the Company and its Subsidiaries as at the end of such year
and the related consolidated statements of income, shareholders' equity and
cash flows for such year, setting forth in each case in comparative form the
figures for the previous fiscal year, and accompanied by the opinion of Arthur
Andersen LLP or another nationally-recognized independent public accounting
firm "INDEPENDENT AUDITOR"), which report (x) shall state that such
consolidated financial statements present fairly in all material respects the
consolidated financial position of the Company and its Subsidiaries for the
periods indicated in conformity with GAAP applied on a basis consistent with
prior years and (y) shall not be qualified or limited because of a restricted
or limited examination by the Independent Auditor of any material portion of
the Company's or any Subsidiary's records; and (b) consolidating balance sheets
of the Company and its Subsidiaries as at the end of such year and
consolidating statements of income and cash flows for the Company and its
Subsidiaries for such fiscal year, certified by a Responsible Officer;
(ii) as soon as available, but not later than 45 days
after the end of each fiscal quarter (except the last fiscal quarter of each
fiscal year), consolidated and consolidating balance sheets of the Company and
its Subsidiaries as of the end of such fiscal quarter, together with
consolidated and consolidating statements of income and a consolidated
statement of cash flows for such fiscal quarter and for the period beginning
with the first day of such fiscal year and ending on the last day of such
fiscal quarter, certified by a Responsible Officer as fairly presenting in all
material respects, in accordance with GAAP (subject to normal year end audit
adjustments and except that explanatory footnote disclosures required by GAAP
may be omitted) the financial position and results of operation for the periods
covered thereby; and
(iii) as soon as available, but not later than 30 days
after the end of each month, (a) a consolidated balance sheet of the Company
and its Subsidiaries as of the end of such month and
7
<PAGE> 8
the related consolidated statements of income for the period commencing on the
first day and ending on the last day of such month, certified by a Responsible
Officer as fairly presenting in all material respects, in accordance with GAAP
(subject to normal year-end audit adjustments and except that explanatory
footnote disclosures required by GAAP may be omitted), the financial position
and the results of operations of the Company and its Subsidiaries; and (b) an
operating report for such month in the form delivered to the Senior Creditors.
5B. CERTIFICATES; OTHER INFORMATION. The Company shall
furnish to each holder:
(i) concurrently with the delivery of the financial
statements referred to in paragraph 5A(i), a certificate of the Independent
Auditor stating that in making the examination necessary therefor no knowledge
was obtained of any Event of Default or Default, except as specified in such
certificate;
(ii) concurrently with the delivery of the financial
statements referred to in paragraph 5A(i) and (ii), a Compliance Certificate,
each executed by a Responsible Officer;
(iii) promptly, copies of all financial statements and
reports that the Company sends to its shareholders, and copies of all financial
statements and regular, periodic or special reports (including Forms 10K, 10Q
and 8K) that the Company or any Subsidiary may make to, or file with, the SEC;
(iv) promptly upon the request of any holder, copies of
all detailed financial and management reports submitted to the Company by the
Independent Auditor in connection with each annual or interim audit made of the
books of the Company and its Subsidiaries;
(v) as soon as practicable and in any event within 60
days after the commencement of each fiscal year, (i) the business plan for the
Company and its Subsidiaries for such fiscal year prepared in a manner
satisfactory to the Required Holders; and (ii) a complete and accurate summary
of the property, casualty and liability insurance carried by the Company and
its Subsidiaries, including the information described in paragraph 9Q;
(vi) immediately, and in any event within five (5)
Business Days, after their becoming available, copies of any compliance
certificate delivered to any Senior Creditor under any Senior Loan Document and
any notice of default or event of default thereunder; and
(vii) promptly, such additional information regarding the
business financial or corporate affairs of the Company or any Subsidiary as of
any holder, may from time to time reasonably request.
8
<PAGE> 9
5C. NOTICES. The Company shall promptly notify each
holder of:
(i) the occurrence of any Event of Default or Default;
(ii) any matter that has resulted or could reasonably be
expected to result in a Material Adverse Effect, including (a) any breach or
non-performance of, or any default under, a Contractual Obligation of the
Company or any Subsidiary that has resulted or could reasonably be expected to
result in a Material Adverse Effect; (b) any dispute, litigation,
investigation, proceeding or suspension between the Company or any Subsidiary
and any Governmental Authority that has resulted or could reasonably be
expected to result in a Material Adverse Effect; or (c) the commencement of, or
any material development in, any litigation or proceeding affecting the Company
or any Subsidiary, including pursuant to any applicable Environmental Laws;
(iii) the occurrence of any of the following events
affecting the Company or any ERISA Affiliate (but in no event more than 10 days
after such event, provided that the Company shall notify each holder not less
than ten days before the occurrence of any event described clause (b) below),
and deliver to the holder and each holder a copy of any notice with respect to
such event that is filed with a Governmental Authority and any notice delivered
by a Governmental Authority to the Company or any ERISA Affiliate with respect
to such event:
(a) an ERISA Event;
(b) a contribution failure with respect to a
Pension Plan sufficient to give rise to a Lien under Section 302(f) of
ERISA;
(c) a material increase in the Unfunded Pension
Liability of any Pension Plan;
(d) the adoption of, or the commencement of
contributions to, any Plan subject to Section 412 of the Code by the
Company or any ERISA Affiliate; or
(e) the adoption of any amendment to a Plan
subject to Section 412 of the Code, if such amendment results in a
material increase in contributions or Unfunded Pension Liability; or
(f) any cancellation of any insurance maintained
by the Company or any Subsidiary;
(g) any violation of any Environmental Law
relating to any Real Property or the Company's or any Subsidiary's
operations which violation might reasonably be expected to have a
material adverse effect on such Real Property or on the Company's or
any Subsidiary's operations;
9
<PAGE> 10
(h) any potential or known Release, or threat of
Release, of any Hazardous Substance at, from or into any Real Property
which the Company or any Subsidiary reports in writing, or is required
to report in writing, to any Governmental Authority and which is
material in amount or nature or which could materially affect the
value of any Real Property;
(i) the Company's or any Subsidiary's receipt of
any notice (other than an Immaterial Notice) of violation of any
Environmental Law or of any Release or threatened Release of a
Hazardous Substance, including a notice or claim of liability or
potential responsibility from any third party (including any official
of any Governmental Authority) and including notice of any formal
inquiry, proceeding, demand, investigation or other action with regard
to (a) the Company's or any Subsidiary's or any Person's operation of
any Real Property, (b) contamination on, from or into any Real
Property or (c) investigation or remediation of offsite locations at
which the Company, any Subsidiary or any of their predecessors are
alleged to have directly or indirectly Disposed of Hazardous
Substances;
(j) the Company's or any Subsidiary's receipt of
any notice (other than an Immaterial Notice) of the incurrence by any
third party (including any Governmental Authority) of any expense or
loss in connection with the assessment, containment, removal
remediation of any Hazardous Substances with respect to which the
Company or any Subsidiary may be liable or for which a Lien may be
imposed on any Real Property; or
(k) any Environmental Claim which has resulted or
could reasonably be expected to result in a Lien on any assets of the
Company or any Subsidiary;
(l) any material change in accounting policies or
financial reporting practices by the Company or any of its
consolidated Subsidiaries.
Each notice under this paragraph 5C shall be accompanied by a written
statement by a Responsible Officer setting forth details of the occurrence
referred to therein, and stating what action the Company or any affected
Subsidiary proposes to take with respect thereto and at what time. Each notice
under paragraph 5C(i) shall describe with particularity any and all clauses or
provisions of this Agreement or any other Transaction Document that have been
breached or violated.
5D. PRESERVATION OF CORPORATE EXISTENCE, ETC. The
Company shall, and shall cause each Subsidiary to:
(i) subject to paragraph 6C, preserve and maintain in
full force and effect its corporate existence and good standing under the laws
of its state or jurisdiction of incorporation;
(ii) preserve and maintain in full force and effect all
governmental rights, privileges, qualifications, permits, licenses and
franchises necessary or desirable in the normal conduct of its business except
in connection with transactions permitted by paragraph 6C and sales of assets
permitted by paragraph 6B;
10
<PAGE> 11
(iii) use reasonable efforts, in the ordinary course of
business, to preserve its business organization and goodwill; and
(iv) preserve or renew all of its registered patents,
trademarks, trade names and service marks, the non-preservation of which could
reasonably be expected to have a Material Adverse Effect.
5E. MAINTENANCE OF PROPERTY. The Company shall, and
shall cause each Subsidiary to, maintain and preserve all its property which is
used or useful in its business in good working order and condition, ordinary
wear and tear excepted.
5F. INSURANCE. The Company shall, and shall cause each
Subsidiary to, maintain, with financially sound and reputable independent
insurers, insurance with respect to its properties and business against loss or
damage of the kinds customarily insured against by persons engaged in the same
or similar business, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons.
5G. PAYMENT OF OBLIGATIONS. The Company shall, and shall
cause each Subsidiary to, pay and discharge as the same shall become due and
payable, all their respective obligations and liabilities, including:
(i) all tax liabilities, assessments and governmental
charges or levies upon or its properties or assets; and
(ii) all lawful claims which, if unpaid, would by law
become a Lien upon its property;
unless, in each case, the same are being contested in good faith by appropriate
proceedings and adequate reserves in accordance with GAAP are being maintained
by the Company or such Subsidiary.
5H. COMPLIANCE WITH LAWS. The Company shall, and shall
cause each Subsidiary to, comply in all material respects with all Requirements
of Law of any Governmental Authority having jurisdiction over it or its
business (including the Federal Fair Labor Standards Act), except such as may
be contested in good faith or as to which a bona fide dispute may exist.
5I. COMPLIANCE WITH ERISA. The Company shall, and shall
cause each of its ERISA Affiliates to: (i) maintain each Plan in compliance in
all material respects with the applicable provisions of ERISA, the Code and
other federal or state law; (ii) cause each Plan which is qualified under
Section 401(a) of the Code to maintain such qualification; and (iii) make all
required contributions to any Plan subject to Section 412 of the Code.
11
<PAGE> 12
5J. INSPECTION OF PROPERTY AND BOOKS AND RECORDS. The
Company shall, and shall cause each Subsidiary to, maintain proper books of
record and account, in which full, true and correct entries in conformity with
GAAP consistently applied shall be made of all financial transactions and
matters involving the assets and business of the Company and such Subsidiary.
The Company shall, and shall cause each Subsidiary to, permit representatives
and independent contractors of any holder to visit and inspect any of their
respective properties, to examine their respective corporate, financial and
operating records, and to make copies thereof or abstracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
directors, officers, and independent public accountants, all at the expense of
the Company and at such reasonable times during normal business hours and as
often as may be reasonably desired, upon reasonable advance notice to the
Company; provided however, that when an Event of Default exists, any holder may
do any of the foregoing without advance notice.
5K. ENVIRONMENTAL MATTERS. (i) If any material Release
or Disposal of Hazardous Substances shall occur or shall have occurred on any
Real Property or any other assets of the Company or any Subsidiary, the Company
shall, or shall cause the applicable Subsidiary to, cause the prompt
containment and removal of such Hazardous Substances and the remediation of
such Real Property or other assets as necessary to comply in all material
aspects with all Environmental Laws and to preserve the value of such Real
Property or other assets. Without limiting the generality of the foregoing,
the Company shall, and shall cause each Subsidiary to, comply in a reasonable
and cost-effective manner with any valid federal or state judicial or
administrative order requiring the performance at any Real Property of
activities in response to the Release or threatened Release of a Hazardous
Substance except for the period of time that the Company or such Subsidiary is
diligently and in good faith contesting such order.
(ii) The Company shall, and shall cause its Subsidiaries
to, dispose of Hazardous Substances only at licensed disposal facilities
operating, to the best of the Company's or such Subsidiary's knowledge after
reasonable inquiry, in compliance with Environmental Laws.
5L. USE OF PROCEEDS. The Company shall use the proceeds
of the sale to the Securities to partially finance the Ohmstede Acquisition,
for working capital and other general corporate purposes (including capital
expenditures) and to consolidate and refinance certain debt of the Company and
its Subsidiaries, in all cases not in contravention of any Requirement of Law
or of any Transaction Document.
5M. BOARD REPRESENTATIVES. Immediately following the
Closing and for so long as any Notes are outstanding or, if longer, the
aggregate number of shares of Common Stock issued and outstanding as a result
of the exercise of Warrants plus the number of shares of Common Stock then
purchasable upon exercise of the Warrants (in each case giving effect to any
changes to such number of shares as a result of post-exercise events,
including, without limitation, dividends payable in shares of Common Stock and
stock splits) held by the original holders (or any Affiliate assignees thereof)
is equal or greater than 5% of the total number of the then issued and
outstanding shares of Common Stock, the holders shall have the right to cause
one person to be nominated to the
12
<PAGE> 13
Company's Board of Directors, such person to be reasonably acceptable to the
Company's Board of Directors based on its past practice of qualifying nominees
and its fiduciary duties. The designation of such nominee to the Company's
Board of Directors shall be made by the holders in a joint notice to the
Company. The holders shall have the right annually to give their joint notice
to the Company of the person whom they wish to be nominated to the Board of
Directors at the Company's annual meeting of shareholders. This notice shall
be given by the holders to the Company in a timely manner which will permit the
Company to cause such nominee to be included in the Company's proxy statement
and other necessary disclosures, communications and filings. In the event any
person so nominated by the holders serves on the Board of Directors of the
Company and then fails to serve or continue to serve for any reason, the
holders shall have the right to nominate a successor meeting the same
qualification requirements described above to be elected to serve on the Board
of Directors. Any person so nominated will be appointed by the remaining
directors as such successor or recommended by the Board of Directors to the
Company's shareholders for election, as applicable. Prior to the Closing, the
holders may advise the Company by joint notice containing the name of the
person whom the holders desire to serve on the Board of Directors of the
Company immediately following Closing. Upon timely receipt of this notice from
the holders, the Company shall take such action as is necessary and appropriate
to cause such person designated by the holders to become a member of the Board
of Directors of the Company immediately following Closing. Such person will
serve on the Board of Directors of the Company in accordance with the bylaws
and rules and procedures adopted by the Company until the next annual meeting
of shareholders of the Company or unless they fail to serve or continue to
serve for any reason. Each person serving as a director of the Company who was
nominated by the holders in accordance with this section shall be entitled to
all of the voting, notice and other privileges and rights held by other
directors of the Company in general, including, without limitation, rights to
director fees and reimbursements for expenses given to other directors of the
Company and directors' insurance as provided for other directors of the
Company. The rights of the holders under this paragraph 5M may be sold or
assigned only to the Affiliates thereof.
5N. FURTHER ASSURANCES. The Company shall, and shall
cause each Subsidiary to, take such actions as the Required Holders may
reasonably request from time to time to ensure that the obligations of the
Company hereunder and under the other Transaction Documents (other than the
Equity Documents) are guaranteed by all Subsidiaries (other than any Foreign
Subsidiary, subject to paragraph 6U) of the Company (including, promptly upon
the acquisition or creation thereof, any such Subsidiary created or acquired
after the date hereof).
PARAGRAPH 6. NEGATIVE COVENANTS.
6. NEGATIVE COVENANTS. So long as any Note shall remain unpaid,
the Company covenants that:
6A. LIMITATION ON LIENS. The Company shall not, and
shall not permit any Subsidiary to, directly or indirectly, make, create,
incur, assume or suffer to exist any Lien upon or
13
<PAGE> 14
with respect to any part of its property, whether now owned or hereafter
acquired, other than the following ("PERMITTED LIENS"):
(i) any Lien existing on property of the Company or any
Subsidiary on the Closing Date and set forth in Schedule 6A securing
Indebtedness outstanding on such date;
(ii) any Lien securing Senior Debt;
(iii) Liens for taxes, fees, assessments or other
governmental charges which are not delinquent or remain payable without
penalty, or to the extent that non-payment thereof is permitted by paragraph
5G, provided that no notice of lien has been filed or recorded under the Code;
(iv) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the ordinary
course of business which are not delinquent or remain payable without penalty
or which are being contested in good faith and by appropriate proceedings,
which proceedings have the effect of preventing the forfeiture or sale of the
property subject thereto;
(v) Liens (other than any Lien imposed by ERISA)
consisting of pledges or deposits required in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other
social security legislation;
(vi) Liens on property of the Company or any Subsidiary
securing (a) the non-delinquent performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, (b) contingent
obligations on surety, performance and appeal bonds, and (c) other
non-delinquent obligations of a like nature; in each case, incurred in the
ordinary course of business, provided that all such Liens in the aggregate
would not (even if enforced) cause a Material Adverse Effect;
(vii) Liens consisting of judgment or judicial attachment
liens, provided that the enforcement of such Liens is effectively stayed and
all such liens in the aggregate at any time outstanding for the Company and its
Subsidiaries do not exceed $500,000;
(viii) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in mount, and which do not in any case
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the businesses of the Company and its
Subsidiaries;
(ix) purchase money security interests on any property
acquired by the Company or any Subsidiary in the ordinary course of business,
securing Indebtedness incurred or assumed for the purpose of financing all or
any part of the cost of acquiring such property; provided that (a) any such
Lien attaches to such property concurrently with or within 20 days after the
acquisition thereof, (b) such Lien attaches solely to the property so acquired
in such transaction, (c) the principal amount
14
<PAGE> 15
of the Indebtedness secured thereby shall not exceed 100% of the cost of such
property, and (d) the principal amount of the Indebtedness secured by all such
purchase money security interests plus the aggregate amount of Indebtedness
arising under capital leases shall not at any time exceed $1,500,000;
(x) Liens securing obligations in respect of capital
leases on assets subject to such leases, provided that the aggregate amount of
all Indebtedness arising under such capital leases plus the aggregate amount
of all Indebtedness secured by purchase money security interests shall not at
any time exceed $1,500,000; and
(xi) Liens arising solely by virtue of any statutory or
common law provision relating to banker's liens, rights of set-off or similar
rights and remedies as to deposit accounts or other funds maintained with a
creditor depository institution.
6B. DISPOSITION OF ASSETS. The Company shall not, and
shall not permit any Subsidiary to, directly or indirectly, sell, assign,
lease, convey, transfer or otherwise dispose of (whether one or a series of
transactions) any property (including accounts and notes receivable, with or
without recourse) or enter into any agreement to do any of the foregoing,
except:
(i) dispositions of inventory, or used, worn-out or
surplus equipment, all in the ordinary course of business;
(ii) the sale of equipment to the extent that such
equipment is exchanged for credit against the purchase price of similar
replacement equipment, or the proceeds of such sale are reasonably promptly
applied to the purchase price of such replacement equipment;
(iii) the sale of all of the stock of Air-Cure, Inc.
(including its Subsidiary, Air-Cure Service, Inc.) and Pipkorn Environmental
Technologies, Inc.; and
(iv) dispositions not otherwise permitted hereunder which
are made for fair market value; provided that (a) at the time of any
disposition, no Event of Default or Default shall exist or will result from
such disposition, (b) the aggregate sales price from such disposition shall be
paid in cash, (c) within 30 days of any such disposition, the Company shall
apply the proceeds therefrom toward payment of the Senior Debt if required by
Section 2.7(b) of the Senior Credit Agreement, as in effect on the date hereof,
(d) after giving effect to such disposition, the aggregate net book value of
all assets of the Company and its Subsidiaries disposed of (on a consolidated
basis) during the period of 12 consecutive months immediately preceding such
disposition shall not exceed 25% of consolidated net tangible assets of the
Company and its Subsidiaries as of the end of the fiscal quarter immediately
preceding or coinciding with such disposition, and (e) in connection with any
such disposition (or series of related dispositions) with a fair market value
estimated by the Company in good faith to be in excess of $500,000, the board
of directors of the Company shall have determined that such disposition was
made for fair market value and promptly, and in any event within 15 days after
such disposition, the Company shall provide the holders with written notice of
15
<PAGE> 16
such disposition, of the amount of the fair market value and the net proceeds
thereof, and of the Company's election to make such disposition pursuant to
this paragraph 6B(iv), together with an officer's certificate containing
sufficient calculations to evidence compliance with this paragraph 6B(iv).
6C. CONSOLIDATIONS AND MERGERS. The Company shall not,
and shall not permit any Subsidiary to, merge or consolidate with or into any
other Person, except that any Subsidiary may merge with (i) the Company,
provided that the Company shall be the continuing or surviving corporation, or
(ii) any one or more Subsidiaries, provided that if any transaction shall be
between a Subsidiary and a Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary
shall be the continuing or surviving corporation.
6D. LOANS AND INVESTMENTS. The Company shall not, and
shall not permit any Subsidiary to, purchase or acquire, or make any commitment
therefor, any capital stock, equity interest, or other obligations or
securities of, or any interest in, any other Person, or make or commit to make
any Acquisition, or make or commit to make any advance, loan, extension of
credit or capital contribution to or any other investment in, any other Person,
except for:
(i) investments in cash equivalents issued by any Senior
Lender;
(ii) extensions of credit in the nature of accounts
receivable or notes receivable arising from the sale or lease of goods or
services in the ordinary course of business;
(iii) loans and advances to employees in the ordinary
course of business (such as travel advances) in an aggregate amount not at any
time exceeding $100,000;
(iv) investments in money market mutual funds sponsored by
any Senior Lender;
(v) investments by the Company or any Subsidiary in, or
loans and by the Company or any Subsidiary to, any Person which is a Subsidiary
of the Company or such Subsidiary (prior to, in the case of an investment, the
making of such investment); provided, however, that any future investments,
loans or advances by the Company or any Subsidiary in or to a Foreign
Subsidiary (less any return of principal or return of equity received in cash
with respect to any such investment) shall not exceed $2,000,000 in an
aggregate amount at any time during the term of this Agreement;
(vi) loans and advances by any Subsidiary to the Company;
(vii) the Ohmstede Acquisition;
(viii) Permitted Acquisitions; and
16
<PAGE> 17
(ix) other investments (including investments in Joint
Ventures) in an amount not exceeding $1,000,000 during the term of this
Agreement.
6E. LIMITATION ON INDEBTEDNESS. The Company shall not,
and shall not permit any Subsidiary to, create, incur, assume, suffer to exist,
or otherwise become or remain directly or indirectly liable with respect to,
any Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement;
(ii) Indebtedness consisting of Contingent Obligations
permitted pursuant to paragraph 6H;
(iii) Indebtedness existing on the Closing Date and set
forth in Schedule 6E(iii);
(iv) Indebtedness secured by Liens permitted by paragraph
6A(ix) and (x);
(v) the Senior Debt, in an aggregate outstanding
principal amounts not to exceed the amounts identified on Schedule 6E(v) for
the type of debt and for periods indicated therein; and
(vi) additional Indebtedness (which may include Senior
Debt in excess of amounts permitted by clause (v)) provided that:
(a) such Indebtedness is incurred only for
working capital purposes or to accommodate deferral of scheduled
principal payments on the Senior Debt; and
(b) the amount of such Indebtedness shall not at
any time exceed the Maximum Additional Indebtedness.
As used herein, the term "Maximum Additional Indebtedness" shall mean an
outstanding principal amount equal to $10,000,000; provided that such amount
shall be automatically reduced from time to time (to a minimum amount of
$3,000,000) by 50% of the amount of any prepayment required pursuant to Section
2.7(d) of the Senior Credit Agreement (as in effect as of the date hereof).
6F. TRANSACTIONS WITH AFFILIATES. The Company shall not,
and shall not permit any Subsidiary to, enter into any transaction with any
Affiliate of the Company (other than a Subsidiary), except upon fair and
reasonable terms no less favorable to the Company or such Subsidiary than would
obtain in a comparable arm's-length transaction with a Person not an Affiliate
of the Company.
6G. USE OF PROCEEDS. The Company shall not, and shall
not permit any Subsidiary to, use any proceeds from the sale of the Securities,
directly or indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or
otherwise refinance indebtedness of the Company or others incurred
17
<PAGE> 18
to purchase or carry Margin Stock, (iii) to extend credit for the purpose of
purchasing or carrying any Margin Stock, or (iv) to acquire any security in any
transaction that is subject to Section 13 or 14 of the Exchange Act.
6H. CONTINGENT OBLIGATIONS. The Company shall not, and
shall not permit any Subsidiary to, create, incur, assume or suffer to exist
any Contingent Obligation except:
(i) endorsements for collection or deposit in the
ordinary course of business;
(ii) Swap Contracts entered into in the ordinary course of
business as bona fide hedging transactions;
(iii) Contingent Obligations of the Company and its
Subsidiaries existing as of the Closing Date and listed in Schedule 6H;
(iv) Contingent Obligations (a) constituting Senior Debt,
to the extent permitted by paragraph 6E(v) and (vi), and (b) arising under the
Transaction Documents; and
(v) Contingent Obligations in respect of surety or
performance bonds to the extent permitted by paragraph 6A(vi).
6I. SALE-LEASEBACK TRANSACTIONS. The Company shall not,
and shall not permit any Subsidiary to, enter into any sale-leaseback
transaction, unless (i) within 30 days of such transaction, the Company makes
an optional prepayment in cash of the term loan portion of the Senior Debt at
least equal in amount to the value of the transaction, (ii) the transaction is
for fair-market value, and (iii) the aggregate sales value of all such
transactions entered into after the Closing Date shall not exceed $2,000,000.
6J. LEASE OBLIGATIONS. The Company shall not, and shall
not permit any Subsidiary to, create or suffer to exist any obligations for the
payment of rent for any property under lease except for:
(i) leases of the Company and its Subsidiaries in
existence on the Closing Date and any renewal, extension or refinancing
thereof;
(ii) operating leases entered into by the Company or any
Subsidiary in the ordinary course of business, provided that the aggregate
rental payments under all such operating leases shall not exceed in any fiscal
year $2,000,000; and
(iii) capital leases to the extent permitted by paragraph
6A(x).
18
<PAGE> 19
6K. MINIMUM INTEREST COVERAGE RATIO. The Company shall
not permit the Interest Coverage Ratio to be less than the following ratios
during the following periods:
<TABLE>
<CAPTION>
Periods Interest Coverage Ratio
------- -----------------------
<S> <C>
1/1/97 through 12/31/97 1.50:1.00
1/1/98 through 12/31/98 1.75:1.00
1/1/99 and thereafter 2.00:1.00
</TABLE>
6L. MAXIMUM INDEBTEDNESS TO CAPITALIZATION RATIO. The
Company shall not at any time permit the ratio of (a) Total Indebtedness to (b)
the sum of Total Indebtedness plus Net Worth to exceed the following ratios
during the following periods:
<TABLE>
<CAPTION>
Total Indebtedness to
Periods Capitalization Ratio
------- --------------------
<S> <C>
Closing Date through 12/31/96 0.90:1.00
1/1/97 through 12/31/97 0.85:1.00
1/1/98 through 12/31/98 0.75:1.00
1/1/99 through 12/31/99 0.70:1.00
1/1/00 and thereafter 0.60:1.00
</TABLE>
6M. MINIMUM NET WORTH. The Company will not at any time
permit Net Worth to be less than the sum of (a) $18,000,000 plus (b) 75% of
quarterly Consolidated Net Income for the period beginning with July 1, 1996
(provided that if Consolidated Net Income is less than zero for any fiscal
quarter, for purposes of this paragraph 6M Consolidated Net Income for such
fiscal quarter will be deemed to be zero) plus (c) 100% of the net proceeds of
any equity contributed to or issued by the Company or any of its Subsidiaries
(on a consolidated basis) after the Closing Date.
19
<PAGE> 20
6N. MAXIMUM TOTAL INDEBTEDNESS TO EBITDA. The Company
shall not permit the ratio of Total Indebtedness to EBITDA as of the last day
of any period of four consecutive fiscal quarters to be greater than the
following ratios as of the following dates:
<TABLE>
<CAPTION>
Total Indebtedness to Periods
Periods EBITDA Ratio
------- ------------
<S> <C>
Closing Date through 6/30/97 5.25:1.00
7/1/97 through 12/31/97 5.00:1.00
1/1/98 through 12/31/98 4.75:1.00
1/1/99 through 12/31/99 4.50:1.00
1/1/00 and thereafter 4.25:1.00
</TABLE>
6O. RESTRICTED PAYMENTS. The Company shall not, and shall
not permit any Subsidiary to, declare or make any dividend payment or other
distribution of assets, properties, cash, rights, obligations or securities on
account of any shares of any class of its capital stock, or purchase, redeem or
otherwise acquire for value any shares of its capital stock or any warrants,
rights or options to acquire such shares, now or hereafter outstanding all of
the foregoing being collectively called "RESTRICTED PAYMENTS"), except that (i)
any Subsidiary may declare and pay dividends to the Company or another
Subsidiary and (ii) the Company may:
(a) declare and make stock splits and dividend
payments or other distributions payable solely in its common stock;
and
(b) purchase, redeem or otherwise acquire shares
of its common stock or warrants or options to acquire any such shares
with the proceeds received from the substantially concurrent issue of
new shares of its common stock.
6P. ERISA. The Company shall not, and shall not permit
any of its ERISA Affiliates to: (i) engage in a prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan which
has resulted or could reasonably be expected to result in liability of the
Company in an aggregate amount in excess of $300,000; or (ii) engage in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA.
6Q. CHANGE IN BUSINESS. The Company shall not, and shall
not permit any Subsidiary to, engage in any line of business other than the
businesses engaged in by the Company and its Subsidiaries as of the date of the
consummation of the Ohmstede Acquisition and businesses reasonably related
thereto (but excluding the transportation, storage or other handling of
Hazardous Substances except where permitted in connection with and incidental
to the normal transportation, storage and other handling of non-hazardous
waste).
20
<PAGE> 21
6R. ACCOUNTING CHANGES. The Company shall not, and shall
not permit any Subsidiary to, make any significant change in accounting
treatment or reporting practices, except as required by GAAP, or change the
fiscal year of the Company or of any Subsidiary.
6S. FOREIGN SUBSIDIARIES. The Company shall not at any
time permit the total assets of all Foreign Subsidiaries to exceed 15% of the
total assets of the Company and its Subsidiaries on a consolidated basis.
6T. CAPITAL EXPENDITURES. The Company shall not permit
the aggregate amount of any capital expenditures made by the Company and its
Subsidiaries in any fiscal year to exceed $3,500,000 in the fiscal year ending
December 31, 1997 or $3,000,000 in any fiscal year thereafter.
6U. RESTRICTIVE AGREEMENTS. The Company will not, and
will not permit any Subsidiary to, amend or modify any term or provision of any
Senior Loan Document, or enter into or suffer to exist any other Contractual
Obligation (other than the Subordination Agreement and the Transaction
Documents and as set forth in Section 8.18 of the Senior Credit Agreement (as
in effect on the date hereof)), the execution, delivery and performance of
which would prohibit or restrict the ability of the Company to make any
prepayments or purchases of the Notes or any other payments required or
permitted under this Agreement or otherwise prohibit or prevent the Borrower's
compliance with any Transaction Document. In the event any Foreign Subsidiary
shall execute and deliver a guaranty in favor of the Senior Creditors or the
holder of any Indebtedness permitted by paragraph 6E(vi), such Foreign
Subsidiary shall simultaneously execute and deliver a similar guaranty in favor
of the holders.
PARAGRAPH 7. SUBORDINATION OF NOTES. The Notes shall be subject to
the terms and conditions of the Subordination Agreement.
PARAGRAPH 8. EVENTS OF DEFAULT.
8. EVENTS OF DEFAULT.
8A. ACCELERATION. If any of the following events shall
occur and be continuing for any reason whatsoever (and whether such occurrence
shall be voluntary or involuntary or come about or be effected by operation of
law or otherwise):
(i) Non-Payment. The Company fails to pay (a) when and
as required to be paid herein, any amount of principal with respect to any
Note, or (b) within ten days after the same becomes due, any interest, fee or
other amount payable hereunder or under any other Transaction Document (other
than any Equity Document); or
(ii) Representation or Warranty. Any representation or
warranty by the Company or any Subsidiary made or deemed made herein or in any
other Transaction Document (other than any Equity Document), or which is
contained in any certificate, document or financial or other
21
<PAGE> 22
statement by the Company, any Subsidiary or any Responsible Officer furnished
at any time under this Agreement or any other Transaction Document (other than
any Equity Document), is incorrect in any material respect on or as of the date
made or deemed made; or
(iii) Specific Defaults. The Company fails to perform or
observe any term, covenant or agreement contained in any of paragraph 5C(i) or
paragraphs 6A through 6E, 6G, 6H, 6O, 6P, 6S or 6U; or
(iv) Other Defaults. The Company or any Subsidiary party
thereto, fails to perform or observe any other term or covenant contained in
this Agreement or any other Transaction Document (other than any Equity
Document) and such default shall continue unremedied for a period of 30 days
after the earlier of (a) the date upon which a Responsible Officer knew or
reasonably should have known of such failure or (b) the date upon which written
notice thereof is given to the Company by holder; or
(v) Cross-Default. (a) The Company or any Subsidiary (i)
fails to make any payment in respect of any Indebtedness or Contingent
Obligation (excluding Senior Debt and any Contingent Obligation in respect
thereof) having an aggregate principal amount (including amounts owing to all
creditors under any combined or syndicated credit arrangement) of more than
$500,000 when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise); or (ii) fails to perform or observe any
other condition or covenant, or any other event shall occur or condition shall
exist, under any agreement or instrument relating to any Indebtedness or
Contingent Obligation (excluding Senior Debt and any Contingent Obligation in
respect thereof) having an aggregate principal amount (including amounts owing
to all creditors under any combined or syndicated credit arrangement) of more
than $500,000, if the effect of such failure, event or condition is to cause,
or to permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Indebtedness (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause, such Indebtedness
to be declared to be due and payable prior to its stated maturity, or such
Contingent Obligation to become payable, or cash collateral in respect thereof
to be demanded; or (b) any portion of the Senior Debt or any Contingent
Obligation in respect thereof is declared to be due and payable prior to its
stated maturity or cash collateral in respect thereof is demanded; or
(vi) Insolvency: Voluntary Proceedings. The Company or
any Subsidiary (a) ceases or fails to be solvent, or generally fails to pay, or
admits in writing its inability to pay, its debts as they become due; (b)
voluntarily ceases to conduct its business in the ordinary course; (c)
commences an Insolvency Proceeding with respect to itself; or (d) takes any
action to effectuate or authorize any of the foregoing; or
(vii) Involuntary Proceedings. (a) Any involuntary
Insolvency Proceeding is commenced or filed against the Company or any
Subsidiary, or any writ, judgment, warrant of attachment, warrant of execution
or similar process is issued or levied against a substantial part of the
Company's or any Subsidiary's properties, and such proceeding or petition shall
not be dismissed,
22
<PAGE> 23
or such writ, judgment, warrant of attachment, warrant of execution or similar
process shall not be released, vacated or fully bonded within 60 days after
commencement, filing or levy; (b) the Company or any Subsidiary admits the
material allegations of a petition against it in any Insolvency Proceeding, or
an order for relief (or similar order under non- U.S. law) is ordered in any
Insolvency Proceeding; or (c) the Company or any Subsidiary acquiesces in the
appointment of a receiver, trustee, custodian, conservator, liquidator,
mortgagee in possession (or agent therefor) or other similar Person for itself
or a substantial portion of its property or business; or
(viii) ERISA. (a) An ERISA Event shall occur with respect to
a Pension Plan or Multiemployer Plan which has resulted or could reasonably be
expected to result in liability of the Company under Title IV of ERISA to the
Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess
of $300,000; (b) a contribution failure shall have occurred with respect to a
Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA;
(c) the aggregate amount of Unfunded Pension Liability among all Pension Plans
at any time exceeds $300,000; or (d) the Company or any ERISA Affiliate shall
fail to pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section 4201
of ERISA under a Multiemployer Plan in an aggregate amount in excess of
$300,000; or
(ix) Monetary Judgments. One or more non-interlocutory
judgments, noninterlocutory orders, decrees or arbitration awards is entered
against the Company or any Subsidiary involving in the aggregate a liability
(to the extent not covered by independent third-party insurance as to which the
insurer does not dispute coverage), as to any single or related series of
transactions, incidents or conditions, of $500,000 or more, and the same shall
remain unvacated and unstayed pending appeal for a period of 30 days after the
entry thereof; or
(x) Non-Monetary Judgments. Any non-monetary judgment,
order or decree is entered against the Company or any Subsidiary which has or
would reasonably be expected to have a Material Adverse Effect, and there shall
be any period of 30 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
(xi) Guarantor Defaults. Any Guarantor fails in any
material respect to perform or observe any term, covenant or agreement in the
Guaranty; or the Guaranty is for any reason partially (including with respect
to future advances) or wholly revoked or invalidated, or otherwise ceases to be
in full force and effect; or any Guarantor, or any other Person by, through or
on behalf of any Guarantor, contests in any manner the validity or
enforceability of the Guaranty or denies that such Guarantor has any further
liability or obligation thereunder; or
(xii) Material Environmental Events. There shall occur or
exist one or more circumstances or events of a type or types referred to in
paragraph 9L or 5K that, singly or in the aggregate, has resulted or could
reasonably be expected to result in expenditures by the Company and its
Subsidiaries (on account of fines, investigations, removal or remediation) in
excess of
23
<PAGE> 24
$1,500,000 in any fiscal year or $2,500,000 during the period from the Closing
Date to October 31, 2003 or that otherwise has resulted or could reasonably be
expected to result in a Material Adverse Effect;
then (a) if such event is an Event of Default specified in
clause (i) of this paragraph 8A, the holder of any Note (other than the Company
or any of its Subsidiaries or Affiliates) may at its option, by notice in
writing to the Company, declare such Note to be, and such Note shall thereupon
be and become, immediately due and payable at par together with interest
accrued thereon, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Company, (b) if such event is an
Event of Default specified in clause (vi) or (vii) of this paragraph 8A with
respect to the Company or any Subsidiary thereof, all of the Notes at the time
outstanding shall, subject to the Subordination Agreement, automatically become
immediately due and payable together with interest accrued thereon with respect
to each Note, without presentment, demand, protest or notice of any kind, all
of which are hereby waived by the Company, and (c) if such event is not an
Event of Default specified in clause (vi), or (vii) of this paragraph 8A with
respect to the Company, the Required Holder(s) may at its or their option, by
notice in writing to the Company, declare all of the Notes to be, and all of
the Notes shall thereupon be and become, immediately due and payable together
with interest accrued thereon with respect to each Note, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Company.
8B. RESCISSION OF ACCELERATION. At any time after any or
all of the Notes shall have been declared immediately due and payable pursuant
to paragraph 8A, the Required Holder(s) may, by notice in writing to the
Company, rescind and annul such declaration and its consequences if (i) the
Company shall have paid all overdue interest on the Notes, the principal
payable with respect to any Notes which have become due otherwise than by
reason of such declaration, and interest on such overdue interest and overdue
principal at the rate specified in the Notes, (ii) the Company shall not have
paid any amounts which have become due solely by reason of such declaration,
(iii) all Events of Default and Defaults, other than non-payment of amounts
which have become due solely by reason of such declaration, shall have been
cured or waived pursuant to paragraph 12C, and (iv) no judgment or decree shall
have been entered for the payment of any amounts due pursuant to the Notes or
this Agreement. No such rescission or annulment shall extend to or affect any
subsequent Event of Default or Default or impair any right arising therefrom.
8C. NOTICE OF ACCELERATION OR RESCISSION. Whenever any
Note shall be declared immediately due and payable pursuant to paragraph 8A or
any such declaration shall be rescinded and annulled pursuant to paragraph 8B,
the Company shall forthwith give written notice thereof to the holder of each
Note at the time outstanding.
8D. OTHER REMEDIES. If any Event of Default or Default
shall occur and be continuing, the holder of any Note may proceed to protect
and enforce its rights under this Agreement and such Note by exercising such
remedies as are available to such holder in respect thereof under applicable
law, either by suit in equity or by action at law, or both, whether for
specific
24
<PAGE> 25
performance of any covenant or other agreement contained in this Agreement or
in aid of the exercise of any power granted in this Agreement. No remedy
conferred in this Agreement upon the holder of any Note is intended to be
exclusive of any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to every other remedy conferred herein or
now or hereafter existing at law or in equity or by statute or otherwise.
PARAGRAPH 9. REPRESENTATIONS, COVENANTS AND WARRANTIES.
9. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Company
represents, covenants and warrants as follows:
9A. CORPORATE EXISTENCE AND POWER. The Company and each
of its Subsidiaries:
(i) is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation;
(ii) has the power and authority and all governmental
licenses, authorizations, consents and approvals (a) to own its assets and to
carry on its business and (b) to execute, deliver and perform its obligations
under the Transaction Documents and (c) to offer, issue, sell and deliver the
Securities;
(iii) is duly qualified as a foreign corporation and is
licensed and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification or license; and
(iv) is in compliance with all Requirements of Law;
except, in each case referred to in clause (ii)(a)(iii), or (iv), to the extent
that the failure to do so could not reasonably be expected to have a Material
Adverse Effect.
9B. CORPORATE AUTHORIZATION; NO CONTRAVENTION. The
execution, delivery and performance by the Company of this Agreement and each
other Transaction Document to which the Company is party, and the execution,
delivery and performance by each Guarantor of the Guaranty and each other
Transaction Document to which such Guarantor is a party, and the offering,
issuance and sale of the Securities, have been duly authorized by all necessary
corporate action, and do not and will not:
(i) contravene the terms of any of the Company's or any
Guarantor's Organization Documents;
(ii) conflict with or result in a breach or contravention
of, or the creation of any Lien under, any document evidencing any Contractual
Obligation to which the Company or any
25
<PAGE> 26
Guarantor is a party or any order, injunction, writ or decree of any
Governmental Authority to which the Company or any Guarantor or any of their
respective assets is subject; or
(iii) violate any Requirement of Law.
9C. GOVERNMENTAL AUTHORIZATION. No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the Company or
any Guarantor of any Transaction Document, or the offering, issuance, sale and
delivery of the Securities.
9D. BINDING EFFECT. Each Transaction Document to which
the Company or any Guarantor is a party constitutes the legal, valid and
binding obligation of the Company or such Guarantor, enforceable against the
Company or such Guarantor in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency, or similar
laws effecting the enforcement of creditors' rights generally or by equitable
principles relating to enforceability.
9E. LITIGATION. There are no actions, suits,
proceedings, claims or disputes pending, or to the best knowledge of the
Company, threatened or contemplated, at law, in equity, in arbitration or
before any Governmental Authority, against the Company or any Subsidiary or any
of their respective properties which: (i) purport to affect or pertain to this
Agreement or any other Transaction Document, or any of the transactions
contemplated hereby or thereby; or (ii) would reasonably be expected to have a
Material Adverse Effect. No injunction, writ, temporary restraining order or
other order of any nature has been issued by any court or other Governmental
Authority purporting to enjoin or restrain the execution, delivery or
performance of this Agreement or any other Transaction Document, or directing
that the transactions provided for herein or therein not be consummated as
herein or therein provided.
9F. NO DEFAULT. No Event of Default or Default exists or
will result from the incurring of any Obligations by the Company. As of the
Closing Date, neither the Company nor any Subsidiary is in default under or
with respect to any Obligation in any respect which, individually or together
with all such defaults, could reasonably be expected to have a Material Adverse
Effect, or that would, if such default had occurred after the Closing Date,
create an Event of Default under paragraph 8A(v).
9G. ERISA COMPLIANCE.
(i) Each Plan is in compliance in all material respects
with the applicable provisions of ERISA, the Code and other federal or state
law. Each Plan which is intended to qualify under Section 401(a) of the Code
has received a favorable determination letter from the IRS and to the best
knowledge of the Company, nothing has occurred which would cause the loss of
such qualification. The Company and each ERISA Affiliate has made all required
contributions to any
26
<PAGE> 27
Plan subject to Section 412 of the Code, and no application for a funding
waiver or an extension of any amortization period pursuant to Section 412 of
the Code has been made with respect to any Plan.
(ii) There are no pending or, to the best knowledge of
Company, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan which has resulted or could reasonably be
expected to result in a Material Adverse Effect. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan which has resulted or could reasonably be expected to result in a
Material Adverse Effect.
(iii) (a) No ERISA Event has occurred or is reasonably
expected to occur; (b) no contribution failure has occurred with respect to a
Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA;
(c) no Pension Plan has any Unfunded Pension Liability; (d) neither the Company
nor any ERISA Affiliate has incurred, or reasonably expects to incur, any
liability under Title IV of ERISA with respect to any Pension Plan (other than
premiums due and not delinquent under Section 4007 of ERISA); (e) neither the
Company nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Section 4201 or
4243 of ERISA with respect to a Multiemployer Plan; and (f) neither the Company
nor any ERISA Affiliate has engaged in a transaction that could be subject to
Section 4069 or 4212(c) or ERISA.
9H. USE OF PROCEEDS; MARGIN REGULATIONS. The proceeds of
the sale of the Securities are to be used solely for the purposes set forth in
and permitted by paragraph 5L and 6G. Neither the Company nor any Subsidiary is
generally engaged in the business of purchasing or selling Margin Stock or
extending credit for the purpose of purchasing or carrying Margin Stock.
9I. TITLE TO PROPERTIES. Each of the Company and each
Subsidiary has good record and marketable title in fee simple to, or a valid
leasehold interest in, all real property necessary or used in the ordinary
conduct of its businesses, except for such defects in title as could not,
individually or in the aggregate, have a Material Adverse Effect. As of the
Closing Date, the property of the Company and its Subsidiaries is subject to no
Liens, other than Permitted Liens.
9J. TAXES. The Company and its Subsidiaries have filed
all United States federal and other material tax returns and reports required
to be filed, and have paid all United States federal and other material taxes,
assessments, fees and other governmental charges levied or imposed upon them or
their properties, income or assets otherwise due and payable, except those
which are being contested in good faith by appropriate proceedings and for
which adequate reserves have been provided in accordance with GAAP. There is
no proposed tax assessment against the Company or any Subsidiary that would, if
made, have a Material Adverse Effect.
9K. FINANCIAL CONDITION.
(i) The audited consolidated financial statements of the
Company and its Subsidiaries at December 31, 1995 and the unaudited
consolidated financial statements of the
27
<PAGE> 28
Company and its Subsidiaries at June 30, 1996, copies of which have been
delivered to you, and the related statements of income, shareholders' equity
and cash flows for the periods then ended, were prepared in accordance with
GAAP (subject, in the case of unaudited statements, to the absence of footnotes
and to normal year-end audit adjustments), fairly present in all material
respects the financial condition of the Company and the Subsidiaries as at such
date and the results of their operations for the period covered thereby and
except as disclosed in Schedule 9K, show all material indebtedness and other
liabilities, direct or contingent, of the Company and its consolidated
Subsidiaries as of the date hereof, including liabilities for taxes, material
commitments and Contingent Obligations.
(ii) Since June 30, 1996, there has been no Material
Adverse Effect.
9L. ENVIRONMENTAL COMPLIANCE.
(i) No Violations. Neither the Company nor any
Subsidiary, nor any operator of the Company's or any Subsidiary's properties,
is in violation, or alleged violation, of any judgment, decree, order, law,
permit, license, rule or regulation pertaining environmental matters, including
those arising under the Resource Conservation and Recovery Act ("RCRA"), the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
"CERCLA"), the Superfund Amendments and Reauthorization Act of .986 "SARA") or
any other Environmental Law which (i) in any single case, requires expenditures
in any three-year period of $100,000 or more by the Company and its
subsidiaries in penalties and/or for investigative, removal or remedial actions
or (ii) individually or in the aggregate otherwise might reasonably be expected
to have a Material Adverse Effect.
(ii) Notices. Neither the Company nor any Subsidiary has
received notice (other than, in the case of clause (iii) below, an Immaterial
Notice) from any third party, including any Federal, state or local
governmental authority: (a) that any one of them has been identified by the
U.S. Environmental Protection Agency as a potentially responsible party under
CERCLA with respect to a site listed on the National Priorities List, 40 C.F.R.
Part 300 Appendix B; (b) that any hazardous waste, as defined by 42 U.S.C.
Section 6903(5), any Hazardous substance as defined by 42 U.S.C. Section
9601(14), any pollutant or contaminant as refined by 42 U.S.C. Section 9601(33)
or any toxic substance, oil or hazardous material or other chemical or
substance regulated by any Environmental Law, excluding household hazardous
waste (all of the foregoing, "HAZARDOUS SUBSTANCES"), which any one of them has
generated, transported or disposed of has been found at any site at which a
Federal, state or local agency or other third party has conducted a remedial
investigation, removal or other response action pursuant to any Environmental
Law; (c) that the Company or any Subsidiary must conduct a remedial
investigation, removal, response action or other activity pursuant to any
Environmental Law; or (d) of any material Environmental Claim.
(iii) Handling of Hazardous Substances. (a) No portion of
the Real Property or other assets of the Company or any Subsidiary has been
used for the handling, processing, storage or disposal of Hazardous Substances
except in accordance in all material respects with applicable
28
<PAGE> 29
Environmental Laws (other than any Immaterial Law); and no underground tank or
other underground storage receptacle for Hazardous Substances is located on
such properties; (b) in the course of any activities conducted by the Company,
any Subsidiary or the operators of any Real Property, no Hazardous Substances
have been generated or are being used on such properties except in accordance
in all material respects with applicable Environmental Laws (other than any
Immaterial Law); (c) there have been no Releases or threatened Releases of
Hazardous Substances on, upon, into or from any Real Property or other assets
of the Company or any Subsidiary, which Releases singly or in the aggregate
might reasonably be expected to have a material adverse effect on the value of
such Real Property or assets; (d) to the best of the Company's knowledge, there
have been no Releases on, upon, from or into any real property in the vicinity
of the Real Property or other assets of the Company or any Subsidiary which,
through soil or groundwater contamination, may have come to be located on, and
which might reasonably be expected to have a material adverse effect on the
value of, the Real Property or other assets of the Company or any subsidiary;
and (e) any Hazardous Substances generated by the Company and its Subsidiaries
have been transported offsite only by properly licensed carriers and delivered
only to treatment or disposal facilities maintaining valid permits as required
under applicable Environmental Laws, which transporters and facilities have
been and are, to the best of the Company's knowledge, operating in compliance
with such permits and applicable Environmental Laws.
(iv) Clean-Ups. None of the Real Property or other assets
of the Company or any Subsidiary is or will be subject to any applicable
environmental clean-up responsibility law or environmental restrictive transfer
law or regulation, by virtue of the transactions set forth herein and
contemplated hereby.
(v) Investigations. The Company and its Subsidiaries
have taken all reasonable steps to investigate the past and present condition
and usage of the Real Properties and the operations conducted by the Company
and its Subsidiaries.
9M. REGULATED ENTITIES. None of the Company, any Person
controlling the Company, or any Subsidiary is an "Investment Company" within
the meaning of the Investment Company Act of 1940. The Company is not subject
to regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, any state public utilities code, or any
other Federal or state statute or regulation limiting its ability to incur
Indebtedness.
9N. NO BURDENSOME RESTRICTIONS. Neither the Company nor
any Subsidiary is a party to or bound by any Contractual Obligation, or subject
to any restriction in any Organization Document, or any Requirement of Law,
which could reasonably be expected to have a Material Adverse Effect.
9O. COPYRIGHTS, PATENTS, TRADEMARKS AND LICENSES, ETC.
The Company and its Subsidiaries own or are licensed or otherwise have the
right to use all of the patents, trademarks, service marks, trade names,
copyrights, contractual franchises, authorizations and other rights that are
reasonably necessary for the operation of their respective businesses, without
conflict with the
29
<PAGE> 30
rights of any other Person. To the best knowledge of the Company, no slogan or
other advertising device, product, process, method, substance, part or other
material now employed, or now contemplated to be employed, by the Company or
any subsidiary infringes upon any rights held by any other Person. No claim or
litigation regarding any of the foregoing is pending or, to the knowledge of
the Company, threatened, ind no patent, invention, device, application,
principle or any statute, law, rule, regulation, standard or code is pending
or, to the knowledge of the Company, proposed, which, in either case, could
reasonably be expected to have a Material Adverse Effect.
9P. SUBSIDIARIES. As of the Closing Date, the Company
has no Subsidiaries other than those specifically disclosed in part (a) of
Schedule 9P hereto (other than Ohmstede, Inc., which will become a Subsidiary
on the Closing Date) and has no equity investments in any other corporation or
entity other than those specifically disclosed in part (b) of Schedule 9P.
9Q. INSURANCE. Set forth in Schedule 9Q is a complete
and accurate summary of the property and casualty insurance program carried by
Company and its Subsidiaries on the Closing Date, including the names of
insurers, policy numbers, expiration dates, amounts of coverage, types of
coverage, the, annual premiums, Best's policyholder's and financial size
ratings of the insurers, exclusions, deductibles and self-insured retention and
the details of any retrospective rating plan, fronting arrangement or any other
self-insurance or risk assumption agreed to by Company or any Subsidiary or
imposed upon Company or any Subsidiary by any such insurer. Such summary also
includes any self-insurance program that is in effect.
9R. SOLVENCY, ETC. On the Closing Date (or, in the case
of any Person which becomes a Guarantor after the Closing Date, on the date
such Person becomes a Guarantor), and immediately prior to and after giving
effect to the use of the proceeds of the Securities, (i) each of the Company's
and each Guarantor's assets will exceed its liabilities and (ii) each of the
Company and each Guarantor will be solvent, will be able to pay its debts as
they mature, will own property with fair saleable value greater than the amount
required to pay its debts and will have capital sufficient to carry on its
business as then constituted.
9S. LABOR MATTERS. Except as disclosed on Schedule 9S:
(i) neither the Company nor any Subsidiary has, within the two-year period
preceding the date of this Agreement, taken any action which would have
constituted or resulted in a "plant closing" or "mass layoff" within the
meaning of the Federal Worker Adjustment and Retraining Notification Act of
1988 or any similar applicable federal, state or local law, and the Company has
no reasonable expectation that any such action is or will be required at any
time prior to October 31, 2003; and (b) on the date of this Agreement, (i)
either the Company nor any Subsidiary is a party to any generalized labor
dispute and (ii) there are no strikes or walkouts relating to any labor
contracts to which the Company or any Subsidiary is a party or is otherwise
subject.
9T. OHMSTEDE ACQUISITION. (i) The Ohmstede Acquisition
Documents constitute the purchase agreement for the Ohmstede Acquisition
(including all amendments thereto) as in effect on the Closing Date.
30
<PAGE> 31
(ii) The representation and warranties made by the Company
and, to the best of the Company's knowledge, by Ohmstede, Inc. contained in the
Ohmstede Acquisition Documents (a) were true and correct in all material
respects when made, (b) are true and correct in all material respects on the
date hereof, and (c) will be true and correct in all material respects as of
the Closing Date (except, in the case of clauses (b) and (c), to the extent
such representations and warranties relate solely to an earlier date, in which
case they were true and correct to all material respects as of such earlier
dates).
(iii) The Ohmstede Acquisition complies in all material
respects with all applicable legal requirements, and all necessary
governmental, regulatory, shareholder and other consents and approvals required
for the consummation of the Ohmstede Acquisition have been, or prior to the
consummation thereof will be, duly obtained and in full force and effect.
(iv) The execution and delivery by the Company of the
Ohmstede Acquisition Documents, and the consummation by the Company of the
Ohmstede Acquisition, will not violate any Requirement of Law, or result in a
breach of, or constitute a default under, any material agreement or indenture,
or any order or decree, affecting the Company, or, to the best of the Company's
knowledge, Ohmstede, Inc.
9U. FULL DISCLOSURE. None of the representations or
warranties made by the Company or any Subsidiary in the Transaction Documents
as of the date such representations and warranties are made or deemed made, and
none of the statements contained in any exhibit, report, statement or
certificate furnished by or on behalf of the Company or any Subsidiary in
connection with the Transaction Documents (including the offering and
disclosure materials delivered by or on behalf of the Company to you prior to
the Closing Date), contains any untrue statement of a material fact or omits
any material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they are
made, not misleading as of the time when made or delivered.
9V. AUTHORIZED CAPITAL STOCK. The authorized capital
stock of the Company consists of (i) 31,000,000 shares of Common Stock, $0.001
per share par value, of which 11,498,118 shares are outstanding on the date
hereof and (ii) 1,000,000 shares of Preferred Stock, $0.01 per share par value,
of which zero shares are outstanding on the date hereof. All of said
outstanding shares of Common Stock are duly authorized, validly issued, fully
paid and nonassessable. The Company does not have outstanding any warrants,
options, convertible securities or other rights for the purchase or acquisition
of shares of its capital stock other than (i) the Warrants, (ii) the 133,546
warrants to purchase Common Stock issued to Sanders Morris Mundy Inc., (iii)
the 50,000 warrants to purchase Common Stock issued to Pennsylvania Merchants
Group, (iv) the 1,145,850 stock options issued to employees, (v) the 57,000
stock options issued to directors, and (vi) the 16,388 stock options issued to
the Company's investor relations firm. The Warrants and the shares of Common
Stock issuable upon the exercise of the Warrants have been duly and validly
authorized, and such shares of Common Stock have been duly reserved for
issuance upon exercise of the Warrants. No shareholder of the Company or any
other Person is entitled to preemptive or similar
31
<PAGE> 32
rights with respect to the shares of Common Stock which are issuable upon
exercise of the Warrants and, if and when issued upon exercise of the Warrants
in accordance with the provisions thereof, such shares will be validly issued,
fully paid and nonassessable shares.
9W. OFFERING OF SECURITIES. Neither the Company nor any
agent acting on its behalf has, directly or indirectly, offered the Notes, the
Warrants or any similar security of the Company for sale to, or solicited any
offers to buy the Notes, the Warrants or any similar security of the Company
from, or otherwise approached or negotiated with respect thereto with, any
Person other than institutional investors, and neither the Company nor any
agent acting on its behalf has taken or will take any action which would
subject the issuance or sale of the Notes or the Warrants to the provisions of
Section 5 of the Securities Act or to the provisions of any securities or Blue
Sky law of any applicable jurisdiction.
PARAGRAPH 10. REPRESENTATION OF EACH PURCHASER; AGREEMENT TO
SUBORDINATE. (i) Each of you severally represents that you are not acquiring
the Securities to be purchased by you hereunder with a view to or for sale in
connection with any distribution thereof within the meaning of the Securities
Act, provided that the disposition of your property shall at all times be and
remain within your control.
(ii) Upon the Company's request, each holder agrees to
enter into a subordination agreement, substantially in the form of the
Subordination Agreement, with any holders of the Indebtedness described in
paragraph 6E(vi).
PARAGRAPH 11. DEFINITIONS.
11. DEFINITIONS. For the purpose of this Agreement, the terms
defined in the introductory sentence and in paragraphs 1 and 2 shall have the
respective meanings specified therein, and the following terms shall have the
meanings specified with respect thereto below:
11A. CERTAIN TERMS.
"ACCREDITED INVESTOR" shall have the meaning set forth in Rule
501 of the Securities Act, as modified by that certain letter agreement of even
date herewith among the Company and the holders.
"ACQUISITION" means any transaction or series of related
transactions for the purpose of, or resulting directly or indirectly in, (i)
the acquisition of all or substantially all of the assets of a Person, or of
any business or division of a Person, (ii) the acquisition of in excess of 50%
of the capital stock, partnership interests, membership interests or equity of
any Person, or otherwise causing any Person to become a Subsidiary, or (iii) a
merger or consolidation or any other combination with another Person (other
than a Person that is a Subsidiary) provided that the Company or a Subsidiary
is the surviving entity.
32
<PAGE> 33
"AFFILIATE" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. A Person shall be deemed to control another Person
if the controlling Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of such other
Person, whether through the ownership of voting securities or membership
interests, by contract, or otherwise. Without limiting the foregoing, any
Person which is an officer, director or 10% or greater shareholder of the
Company, or a member of the immediate family of any such officer, director or
10% or greater shareholder, shall be deemed to be an Affiliate of the Company.
"ATTORNEY COSTS" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the reasonable
allocated cost of internal legal services and all reasonable disbursements of
internal counsel.
"BANKRUPTCY CODE" means the Federal Bankruptcy Reform Act of
1978 (11 U.S.C. Section 101, et seq.)
"BENEFICIAL OWNER" shall have the meaning assigned thereto in
Rule 13d-3 of the SEC under the Exchange Act as in effect on the date hereof.
"BUSINESS DAY" shall mean any day on which banks are open for
business in New York City (other than a Saturday, a Sunday or a legal holiday
in the State of New York).
"CERCLA" shall have the meaning set forth in paragraph 9L(i).
"CHANGE OF CONTROL" shall have the meaning set forth in the
Warrants.
"CLOSING" or "DATE OF CLOSING" shall have the meaning
specified in paragraph 2.
"CODE" means the Internal Revenue Code of 1986, as amended
from time to time.
"COMPLIANCE CERTIFICATE" means a certificate substantially in
the form of Exhibit H.
"COMPUTATION PERIOD" means each period of four consecutive
fiscal quarters ending on the last day of a fiscal quarter.
"CONSOLIDATED NET INCOME" means, with respect to the Company
and its Subsidiaries for any period, the net income (or loss) of the Company
and its Subsidiaries for such period, excluding (i) any extraordinary or
non-recurring gains during such period and (ii) to the extent applicable, the
$4,200,000 restructuring charge taken by the Company in the first quarter of
1996. Prior to the first anniversary of the consummation of the Ohmstede
Acquisition, the financial results of Ohmstede, Inc. for the relevant period
(calculated in accordance with GAAP) will be included for purposes of
calculating Consolidated Net Income (without any adjustment for cost savings or
other synergies).
33
<PAGE> 34
"CONTINGENT OBLIGATION" means, as to any Person, any direct or
indirect liability of such Person, whether or not contingent, with or without
recourse, (i) with respect to any Indebtedness, lease, dividend, letter of
credit or other obligation (the "primary obligation") of another Person (the
"primary obligor"), including any obligation of such Person (a) to purchase,
repurchase or otherwise acquire such primary obligation or any security
therefor, (b) to advance or provide funds for the payment or discharge of any
primary obligation, or to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet item, level of income or financial condition of the primary
obligor, (c) to purchase property, securities or services primarily for the
purpose of assuring the owner of any primary obligation of the ability of the
primary obligor to make payment of such primary obligation, or (d) otherwise to
assure or hold harmless the holder of any primary obligation against loss in
respect thereof (each, a "GUARANTY OBLIGATION"); (ii) with respect to any
Surety Instrument (other than any Letter of Credit) issued for the account of
such Person or as to which such Person is otherwise liable for reimbursement of
drawings or payments; (iii) to purchase any materials, supplies or other
property from, or to obtain the services of, another Person if the relevant
contract or other related document or obligation requires that payment for such
materials, supplies or other property, or for such services, shall be made
regardless of whether delivery of such materials, supplies or other property is
ever made or tendered, or such services are ever performed or tendered, or (iv)
in respect of any Swap Contract. The amount of any Contingent Obligation
shall, in the case of Guaranty Obligations, be deemed equal to the stated or
determinable amount of the primary obligation in respect of which such Guaranty
Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof, and in the case of other Contingent
Obligations, shall be equal to the maximum reasonably anticipated liability in
respect thereof.
"CONTRACTUAL OBLIGATION" means, as to any Person, any
provision of any security issued by such Person or of any agreement,
undertaking contract, indenture, mortgage, deed of trust or other instrument,
document or agreement to which such Person is a party or by which it or any of
its property is bound.
"EBITDA" means, for any Computation Period, Consolidated Net
Income before deducting Interest Expense, income tax expense, depreciation and
amortization [(including amortization of debt discount and debt issuance
costs)] for such Computation Period. Prior to the first anniversary of the
consummation of the Ohmstede Acquisition, the financial results of Ohmstede,
Inc. for the relevant period (calculated in accordance with GAAP) will be
included for purposes of calculating EBITDA (without any adjustments for cost
savings or other synergies).
"ENVIRONMENTAL CLAIMS" means all claims, however asserted, by
any Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury
to the environment.
"ENVIRONMENTAL LAWS" means all federal, state or local laws
(including RCRA, CERCLA, SARA, the Federal Clean Water Act, the Federal Clean
Air Act and the Toxic Substances Control Act), statutes, common law duties,
rules, regulations, ordinances and codes, together with
34
<PAGE> 35
all administrative orders, directed duties, requests, licenses, authorizations
and permits of, and agreements with, any Governmental Authority in each case
relating to environmental, health, safety or land use matters.
"EQUITY DOCUMENTS" means, collectively, the Registration
Rights Agreement and the Warrants.
"ERISA" means the Employee Retirement Income Security Act of
1974, and regulations promulgated thereunder.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) under common control with the Company within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).
"ERISA EVENT" means (i) a Reportable Event with respect to a
Pension Plan; (ii) a withdrawal by the Company or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
substantial cessation of operations which is treated as such a withdrawal;
(iii) a complete or partial withdrawal by the Company or any ERISA Affiliate
from a Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (iv) the filing of a notice of intent to terminate, the
treatment of a Pension Plan amendment as a termination under Section 4041 or
4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a
Pension Plan or Multiemployer Plan; (v) an event or condition which might
reasonably be expected to constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any Pension
Plan or Multiemployer Plan; or (vi) the imposition of any liability under Title
IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007
of ERISA, upon the Company or any ERISA Affiliate.
"EVENT OF DEFAULT" shall mean any of the events specified in
paragraph 8A, provided that there has been satisfied any requirement in
connection with such event for the giving of notice, or the lapse of time, or
the happening of any further condition, event or act, and "DEFAULT" shall mean
any of such events, whether or not any such requirement has been satisfied.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
"FOREIGN SUBSIDIARY" means (i) as of the Closing Date, each of
Air-Cure Environmental GmbH, Air-Cure (Singapore) Ltd. and Air-Cure (Canada)
Technologies, Ltd, and (ii) thereafter, each Person listed in clause (i) and
each other Person which becomes a Subsidiary of the Company and is not
organized under the laws of any state of, and conducts substantially all of its
business outside of, the United States.
"FRB" means the Board of Governors of the Federal Reserve
System, and any Governmental Authority succeeding to any of its principal
functions.
35
<PAGE> 36
"GAAP" shall have the meaning specified in paragraph 11B.
"GOVERNMENTAL AUTHORITY" means any nation or government, any
state or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"GUARANTOR" means (i) as of the Closing Date, each of the
Subsidiaries listed on Schedule 9P, other than the Foreign Subsidiaries, and
Ohmstede, Inc., and (ii) thereafter, each Person listed in clause (i) and each
other Person which executes and delivers a counterpart of the Guaranty.
"GUARANTY" shall have the meaning set forth in paragraph
3A(xi).
"GUARANTY OBLIGATION" has the meaning set forth in the
definition of Contingent Obligation.
"HAZARDOUS SUBSTANCES" shall have the meaning set forth in
paragraph 9L(ii).
"IMMATERIAL LAW" means any provision of any Environmental Law
the violation of which will not (i) violate any judgment, decree or order which
is binding upon the Company or any Subsidiary, (ii) result in or threaten
(either immediately or with the passage of time) any injury to public health or
the environment or any material damage to the property of any Person or (iii)
result in any liability or expense (other than any de minimis liability or
expense) for the Company or any Subsidiary (either immediately or with the
passage of time); provided that no provision of any Environmental Law shall be
an Immaterial Law if the Required Holders have determined in good faith that
such provision is material.
"IMMATERIAL NOTICE" means a notice from or allegation by a
Person which is not Governmental Authority or agency (or a representative
thereof) regarding any event or condition relating to the environment for which
the Company or any Subsidiary may have any liability or any breach by the
Company or any Subsidiary of any Environmental Law, which notice or allegation
(i) has not given rise to any judicial or regulatory case or proceeding and
(ii) in the reasonable judgment the Company, is not likely to result in any
liability or expense (other than any de minimis liability or expense) for the
Company or the applicable Subsidiary.
"INDEBTEDNESS" of any Person means, without duplication, (i)
all indebtedness of such Person for borrowed money; (ii) all obligations
issued, undertaken or assumed by such Person as the deferred purchase price of
property or services (other than trade payables entered into in the ordinary
course of business on ordinary terms); (iii) all non-contingent reimbursement
or payment obligations by such Person with respect to Surety Instruments; (iv)
all obligations of such Person evidenced by notes, bonds, debentures or similar
instruments; (v) all indebtedness created or arising under any conditional sale
or other title retention agreement, or incurred as financing, in either case
36
<PAGE> 37
with respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property); (vi) all obligations of
such Person with respect to capital leases; (vii) all net obligations of such
Person with respect to Swap Contracts; (viii) all indebtedness of such Person
referred to in clauses (i) through (vii) above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien upon or in property (including accounts and contracts
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness; and (ix) all Guaranty Obligations
of such Person in respect of indebtedness or obligations of others of the kinds
referred to in clauses (i) through (vii) above.
"INDEMNIFIED LIABILITIES" shall have the meaning set forth in
paragraph 12B(ii).
"INDEMNIFIED PERSON" shall have the meaning set forth in
paragraph 12B(ii).
"INDEPENDENT AUDITOR" shall have the meaning specified in
paragraph 5A(i).
"INSOLVENCY PROCEEDING" means, without respect to any Person,
(i) any case, action or proceeding with respect to such Person before any court
or other Governmental Authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief of
debtors (including any proceeding under the Bankruptcy Code) or (ii) any
general assignment for the benefit of creditors, composition, marshalling of
assets for creditors, or other, similar arrangement in respect of such Person's
creditors generally or any substantial portion of such creditors.
"INTEREST COVERAGE RATIO" means, as of the last day of any
fiscal quarter, beginning with the fiscal quarter ending March 31, 1997, the
ratio of (a) Consolidated Net Income before deducting Interest Expense and
income tax expense for the Computation Period ending on such day, to (b)
Interest Expense for such Computation Period.
"INTEREST EXPENSE" means for any period the consolidated
interest expense of the Company and its Subsidiaries for such period (including
all imputed interest on capital leases, but excluding any amortization of debt
discount and any loan transaction costs or lender fees other than interest and
fees at the rates stated in the instruments giving rise to such interest and
fees).
"JOINT VENTURE" means a single-purpose corporation,
partnership, limited liability company, joint venture or other similar legal
arrangement (whether created by contract or conducted through a separate legal
entity) now or hereafter formed by the Company or any of its Subsidiaries with
another Person in order to conduct a common venture or enterprise with such
Person (provided that the term Joint Venture shall not include any Subsidiary).
"LETTER OF CREDIT" has the meaning set forth in the Senior
Credit Agreement as of the date hereof.
37
<PAGE> 38
"LIEN" means any security interest, mortgage, deed of trust,
pledge, hypothecation, assignment, charge or deposit arrangement, encumbrance,
lien (statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising
under or evidenced by any conditional sale or other title retention agreement,
the interest of a lessor under a capital lease, or any financing lease having
substantially the same economic effect as any of the foregoing, but not
including the interest of a lessor under an operating lease).
"MARGIN STOCK" means "margin stock" as such term is defined in
Regulation G, T, U or X of the FRB.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse change
in, or a material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of the Company and its
Subsidiaries taken as a whole; or (ii) a material adverse effect upon the
legality, validity, binding effect or enforceability against the Company or any
Guarantor of any Transaction Document.
"MULTIEMPLOYER PLAN" means a "multiemployer plan", within the
meaning of Section 4001(a)(3) of ERISA, with respect to which the Company or
any ERISA Affiliate may have any liability.
"NET WORTH" means the Company's consolidated stockholders'
equity.
"NOTES" shall have the meaning specified in paragraph 1A.
"OFFICER'S CERTIFICATE" shall mean a certificate signed in the
name of the Company by its President, one of its Vice Presidents or its
Treasurer.
"OHMSTEDE ACQUISITION" means the acquisition by the Company of
Ohmstede, Inc.
"OHMSTEDE ACQUISITION DOCUMENTS" means the Agreement and Plan
of Merger dated as of September 19, 1996 among the Company, Air-Cure
Acquisition, Inc. and Ohmstede, Inc., including all schedules and exhibits
thereto, and all other documents executed in connection with the Ohmstede
Acquisition.
"ORGANIZATION DOCUMENTS" means, for any corporation, the
certificate or articles of incorporation, the bylaws, any certificate of
designation or instrument relating to the rights of preferred shareholders of
such corporation, any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee thereof) of such
corporation.
"OTHER TAXES" means any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder
38
<PAGE> 39
or from the execution, delivery or registration of, or otherwise with respect
to, this Agreement or any other Transaction Document.
"PARTICIPATION RIGHTS AGREEMENT" shall mean the Participation
Rights Agreement, dated of even date herewith, by and among you and certain
holders of the Company's Common Stock, par value $0.001 per share, that are
parties thereto; such Participation Rights Agreement shall be substantially in
the form of Exhibit E attached hereto.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions under
ERISA.
"PENSION PLAN" means a pension plan (as defined in Section
3(2) of ERISA) subject to Title IV of ERISA with respect to which the Company
or any ERISA Affiliate may have any liability.
"PERMITTED ACQUISITIONS" means an Acquisition by the Company
or any Subsidiary which has been approved by the Required Holders.
"PERMITTED LIENS" shall have the meaning specified in
paragraph 6A.
"PERSON" means an individual, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
"PLAN" means an employee benefit plan (as defined in Section
3(3) of ERISA) which the Company sponsors or maintains or to which the Company
makes, is making, or is obligated to make contributions and includes any
Pension Plan.
"PROPOSED PREPAYMENT DATE" has the meaning specified in clause
(iii) of paragraph 4B.
"RCRA" shall have the meaning specified in paragraph 9L(i).
"REAL PROPERTY" means all real property heretofore, now or
hereafter owned, operated or leased by the Company or any Subsidiary.
"RELEASE" has the meaning specified in CERCLA and the term
"DISPOSAL" (or "DISPOSED") shall have the meaning specified in RCRA and
regulations promulgated thereunder; provided that in the event either CERCLA or
RCRA is amended so as to broaden the meaning of any term defined thereby, such
broader meaning shall apply as of the effective date of such amendment; and
provided further, to the extent that the laws of a state wherein the affected
property lies establish a meaning for "Release" or "Disposal" which is broader
than is specified in either CERCLA or RCRA, such broader meaning shall apply.
39
<PAGE> 40
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration
Rights Agreement, dated of even date herewith, by and between you and the
Company and substantially in the form of Exhibit F attached hereto.
"REPORTABLE EVENT" means, any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder, other than any such
event for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
"REQUIRED HOLDER(S)" shall mean the holder or holders of at
least 51% of the aggregate principal amount of the Notes from time to time
outstanding.
"REQUIREMENT OF LAW" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or determination of an
arbitrator or of a Governmental Authority, in each case applicable to or
binding upon such Person or any of its property or to which such Person or any
of its property is subject.
"RESPONSIBLE OFFICER" shall mean the chief executive officer,
the president, the chief financial officer or the treasurer of the Company, or
any other officer having substantially the same authority and responsibility.
"RESTRICTED PAYMENT" shall have the meaning specified in
paragraph 6Q.
"SARA" shall have the meaning specified in paragraph 9L(i).
"SECURITIES" shall mean the Notes and the Warrants.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SENIOR CREDITORS" shall mean the "Senior Lenders" as such
term is defined in the Subordination Agreement.
"SENIOR DEBT" shall mean the "Senior Liabilities", as such
term is defined in the Subordination Agreement.
"SENIOR CREDIT AGREEMENT" shall mean the Amended and Restated
Credit Agreement, dated of even date herewith, among the Company and the Senior
Lenders as amended, restated, supplemented, refunded, refinanced or otherwise
modified from time to time.
"SENIOR LOAN DOCUMENTS" shall mean the "LOAN DOCUMENTS", as
such term is defined in the Senior Credit Agreement.
40
<PAGE> 41
"SUBORDINATION AGREEMENT" shall mean that certain
Subordination Agreement of even date herewith, substantially in the form of
Exhibit G attached hereto, as amended or otherwise modified from time to time.
"SUBSIDIARY" of a Person means any corporation, association,
partnership, limited liability company, joint venture or other business entity
of which more than 50% of the voting stock, membership interests or other
equity interests is owned or controlled directly or indirectly by such Person,
or by one or more of the Subsidiaries of such Person, or by a combination
thereof. Unless the context otherwise clearly requires, references herein to a
"Subsidiary" refer to a Subsidiary of the Company.
"SURETY INSTRUMENTS" means all letters of credit (including
standby and commercial), banker's acceptances, bank guaranties, surety bonds
and similar instruments.
"SWAP CONTRACT" means any agreement (including any master
agreement and any agreement, whether or not in writing, relating to any single
transaction) that is an interest rate swap agreement, basis swap, forward rate
agreement, commodity swap, commodity option, equity or equity index swap or
option, bond option, interest rate option, forward foreign exchange agreement,
rate cap, collar or floor agreement, currency swap agreement, cross-currency
rate swap agreement, swaption, currency option or other similar agreement
(including any option to enter into any of the foregoing).
"TAXES" means any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each holder, such taxes (including income
taxes or franchise taxes) as are imposed on or measured by such holder's net
income by the jurisdiction (or any political subdivision thereof) under the
laws of which such holder is organized or maintains an office.
"TOTAL INDEBTEDNESS" means the sum of all Indebtedness of the
Company and its Subsidiaries determined on a consolidated basis, excluding
Indebtedness described in, and Guaranty Obligations in respect of Indebtedness
described in, clause (vii) of the definition of Indebtedness.
"TRANSACTION DOCUMENT" means this Agreement, any Note, the
Guaranty, the Registration Rights Agreement, the Participation Agreement, the
Warrants and all other documents delivered to any holder in connection
herewith.
"TRANSFEREE" shall mean any direct or indirect transferee of
all or any part of any Note or Warrant purchased by you under this Agreement.
"UNFUNDED PENSION LIABILITY" means the excess of a Pension
Plan's benefit liabilities under Section 4001(a)(16) of ERISA, over the current
value of such Pension Plan's assets, determined in accordance with the
assumptions used for funding such Pension Plan pursuant to Section 412 of the
Code for the applicable plan year.
41
<PAGE> 42
"WARRANTS" shall have the meaning specified in paragraph 1B.
"WHOLLY-OWNED SUBSIDIARY" means any corporation in which
(other than directors' qualifying shares required by law) 100% of the capital
stock of each class having ordinary voting power, and 100 % of the capital
stock of every other class, in each case, at the time as of which any
determination is being made, is owned, beneficially and of record, by the
Company, or by one or more other Wholly-Owned Subsidiaries, or by a combination
thereof.
11B. ACCOUNTING PRINCIPLES, TERMS AND DETERMINATIONS.
(i) The meanings of defined terms are equally applicable
to the singular and plural forms of the defined terms.
(ii) The words "hereof", "herein", "hereunder" and similar
words refer to this Agreement as a whole and not to any particular provisions
of this Agreement; and paragraph, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(iii) (a) The term "documents" includes any and all
instruments, documents, agreements, certificates, indentures, notices and other
writings, however evidenced
(b) The term "including" is not limiting and
means "including without limitation."
(c) In the computation of periods of time from a
specified date to a later specified date, the word "from" means "from
and including"; the words "to" and "until" each mean "to but
excluding"; and the word "through" means "to and including."
(iv) Unless otherwise expressly provided herein, (a)
references to agreements (including this Agreement) and other contractual
instruments shall be deemed to include all subsequent amendments and other
modifications thereto, but only to the extent such amendments and other
modifications are not prohibited by the terms of any Transaction Document, and
(b) references to any statute or regulation are to be construed as including
all statutory and regulatory provisions consolidating, amending, replacing,
supplementing or interpreting the statute or regulation.
(v) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(vi) This Agreement and the other Transaction Documents
may use several different limitations, tests or measurements to regulate the
same or similar matters. All such limitations, tests and measurements are
cumulative and shall each be performed in accordance with its terms.
42
<PAGE> 43
(vii) This Agreement and the other Transaction Documents
are the result of negotiations among, and have been reviewed by counsel to, the
holders, the Company and the other parties, and are the products of all
parties. Accordingly, they shall not be construed against the holders merely
because of the holders' involvement in their preparation.
(viii) Unless the context otherwise clearly requires, all
accounting terms not expressly defined herein shall be construed, and all
financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied; provided that if the Company
notifies the holders that the Company wishes to amend any covenant in paragraph
6 to eliminate the effect of any change in GAAP on the operation of such
covenant (or if the holders notify the Company that the holders wish to amend
paragraph 6 for such purpose), then the Company's compliance with such covenant
shall be determined on the basis of GAAP in effect immediately before the
relevant change in GAAP became effective, until such covenant is amended in a
manner satisfactory to the holders.
(ix) References herein to "fiscal year" and "fiscal
quarter" refer to such fiscal periods of the Company.
(x) All references in this Agreement to "GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES" or to "GAAP" shall be deemed to refer to
generally accepted accounting principles set forth from time to time in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the U.S. accounting profession), which
are applicable to the circumstances as of the date of determination.
PARAGRAPH 12. MISCELLANEOUS.
12. MISCELLANEOUS.
12A. NOTE PAYMENTS. So long as you shall hold any Note,
the Company will make payments of principal of, and interest on such Note,
which comply with the terms of this Agreement, by wire transfer of immediately
available funds for credit (not later than 12:00 noon, New York City time, on
the date due) to your account or accounts as specified in the Purchaser
Schedule attached hereto, or such other account or accounts as you may
designate in writing, notwithstanding any contrary provision herein or in any
Note with respect to the place of payment. You agree that, before disposing of
any Note, you will make a notation thereon (or on a schedule attached thereto)
of all principal payments previously made thereon and of the date to which
interest thereon has been paid. The Company agrees to afford the benefits of
this paragraph 12A to any Transferee which shall have made the same agreement
as you have made in this paragraph 12A.
43
<PAGE> 44
12B. EXPENSES; INDEMNIFICATION. (i) The Company agrees,
whether or not the transactions contemplated hereby shall be consummated, to
pay, and save you and any Transferee harmless against liability for the payment
of, all reasonable costs or expenses arising in connection with such
transactions, including, without limitation: (i) all reasonable costs and
expenses incurred by the holders in connection with the consummation of the
transactions contemplated hereby, (ii) all document production and duplication
charges and the fees and expenses of any special counsel engaged by you or such
Transferee in connection with this Agreement, the transactions contemplated
hereby and any subsequent proposed modification of, or proposed consent under,
this Agreement whether or not such proposed modification shall be effected or
proposed consent granted, (iii) the costs and expenses, including reasonable
attorneys' fees, incurred by you or such Transferee in enforcing or defending
(or determining whether or how to enforce or defend) any rights under this
Agreement, the Notes, the Warrants, the Registration Rights Agreement or the
Participation Rights Agreement or in responding to any subpoena or other legal
process or informal investigative demand issued in connection with this
Agreement, such other documents or the transactions contemplated hereby or
thereby or by reason of your or such Transferee's having acquired any Note or
Warrant, including without limitation costs and expenses incurred in any
bankruptcy case, and (iv) the costs and expenses, including financial advisors'
fees, incurred in connection with the insolvency or bankruptcy of the Company
or any Subsidiary or in connection with any workout or restructuring of the
transactions contemplated hereby and by the other Transaction Documents. The
obligations of the Company under this paragraph 12B shall survive the transfer
of any Note or portion thereof or interest therein by you or any Transferee and
the payment of any Note.
(ii) WHETHER OR NOT THE TRANSACTION CONTEMPLATED HEREBY
ARE CONSUMMATED, THE COMPANY SHALL INDEMNIFY AND HOLD EACH HOLDER AND EACH OF
THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, COUNSEL, AGENTS AND
ATTORNEYS-IN-FACT (EACH AN "INDEMNIFIED PERSON" HARMLESS FROM AND AGAINST ANY
AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, CHARGES, EXPENSES AND DISBURSEMENTS (INCLUDING
ATTORNEY COSTS) OF ANY KIND OR NATURE WHATSOEVER WHICH MAY AT ANY TIME
(INCLUDING AT ANY TIME FOLLOWING REPAYMENT OF THE NOTES AND THE TERMINATION OR
REPLACEMENT OF ANY HOLDER) BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST ANY
SUCH PERSON IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY
DOCUMENT CONTEMPLATED BY OR REFERRED TO HEREIN, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, OR ANY ACTION TAKEN OR OMITTED BY ANY SUCH
PERSON UNDER OR IN CONNECTION WITH ANY OF THE FOREGOING, INCLUDING WITH RESPECT
TO ANY INVESTIGATION, LITIGATION OR PROCEEDING (INCLUDING ANY INSOLVENCY
PROCEEDING OR APPELLATE PROCEEDING) RELATED TO OR ARISING OUT OF THIS AGREEMENT
OR THE SECURITIES OR THE USE OF THE PROCEEDS THEREOF, WHETHER OR NOT ANY
INDEMNIFIED PERSON IS A PARTY THERETO (ALL THE FOREGOING, COLLECTIVELY, THE
"INDEMNIFIED LIABILITIES"); PROVIDED THAT THE COMPANY SHALL HAVE NO OBLIGATION
HEREUNDER TO ANY INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES
RESULTING SOLELY FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH
INDEMNIFIED PERSON.
44
<PAGE> 45
12C. CONSENT TO AMENDMENTS. This Agreement may be
amended, and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, if the Company shall
obtain the written consent to such amendment, action or omission to act, of the
Required Holder(s) except that, without the written consent of the holder or
holders of all Notes at the time outstanding, no amendment to this Agreement
shall change the maturity of any Note, or change the principal of, or the rate
or time of payment of interest on any Note, or affect the time, amount or
allocation of any prepayments, or change the proportion of the principal
amount of the Notes required with respect to any consent, amendment, waiver or
declaration. Each holder of any Securities at the time or thereafter
outstanding shall be bound by any consent authorized by this paragraph 12C,
whether or not such Securities shall have been marked to indicate such consent,
but any Securities issued thereafter may bear a notation referring to any such
consent. No course of dealing between the Company and the holder of any
Securities nor any delay in exercising any rights hereunder or under any
Securities shall operate as a waiver of any rights of any holder of such
Securities.
12D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES;
LOST NOTES. The Notes are issuable as registered notes without coupons in
denominations of at least $100,000, except as may be necessary to reflect any
principal amount not evenly divisible by $100,000. The Company shall keep at
its principal office a register in which the Company shall provide for the
registration of Notes and of transfers of Notes. Upon surrender for
registration of transfer of any Note at the principal office of the Company,
the Company shall, at its expense, execute and deliver one or more new Notes of
like tenor and of a like aggregate principal amount, registered in the name of
such transferee or transferees. At the option of the holder of any Note, such
Note may be exchanged for other Notes of like tenor and of any authorized
denominations, of a like aggregate principal amount, upon surrender of the Note
to be exchanged at the principal office of the Company. Whenever any Notes are
so surrendered for exchange, the Company shall, at its expense, execute and
deliver the Notes which the holder making the exchange is entitled to receive.
Every Note surrendered for registration of transfer or exchange shall be duly
endorsed, or be accompanied by a written instrument of transfer duly executed,
by the holder of such Note or such holder's attorney duly authorized in
writing. Any Note or Notes issued in exchange for any Note or upon transfer
thereof shall carry the rights to unpaid interest and interest to accrue which
were carried by the Note so exchanged or transferred, so that neither gain nor
loss of interest shall result from any such transfer or exchange. Upon receipt
of written notice from the holder of any Note of the loss, theft, destruction
or mutilation of such Note and, in the case of any such loss, theft or
destruction, upon receipt of such holder's unsecured indemnity agreement, or in
the case of any such mutilation upon surrender and cancellation of such Note,
the Company will make and deliver a new Note, of like tenor, in lieu of the
lost, stolen, destroyed or mutilated Note.
12E. PERSONS DEEMED OWNERS; PARTICIPATIONS. Prior to due
presentment for registration of transfer, the Company may treat the Person in
whose name any Note is registered as the owner and holder of such Note for the
purpose of receiving payment of principal of and interest on such Note and for
all other purposes whatsoever, whether or not such Note shall be overdue, and
the Company shall not be affected by notice to the contrary. Subject to the
preceding sentence, the
45
<PAGE> 46
holder of any Note may from time to time grant participations in such Note to
any Person on such terms and conditions as may be determined by such holder in
its sole and absolute discretion, provided that any such participation shall be
in a principal amount of at least $100,000.
12F. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT. All representations and warranties contained herein or made in
writing by or on behalf of the Company in connection herewith shall survive the
execution and delivery of this Agreement and the Notes, the transfer by you of
any Warrant or Note or portion thereof or interest therein and the payment of
any Note, and may be relied upon by any Transferee, regardless of any
investigation made at any time by or on behalf of you or any Transferee.
Subject to the preceding sentence, this Agreement, the Notes, the Warrants, the
Registration Rights Agreement and the Participation Rights Agreement embody the
entire agreement and understanding between you and the Company and supersede
all prior agreements and understandings relating to the subject matter hereof.
12G. SUCCESSORS AND ASSIGNS. All covenants and other
agreements in this Agreement contained by or on behalf of either of the parties
hereto shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto (including, without limitation, any Transferee)
whether so expressed or not. Each holder of a Security is entitled to freely
transfer and assign, in whole or in part, its rights thereby, provided that any
such transfer or assignment is to an Affiliate thereof or an Accredited
Investor and provided such transfer and assignment complies with all applicable
securities laws.
12H. CONFIDENTIALITY. Each holder agrees to take and to
cause its Affiliates to take normal and reasonable precautions and exercise due
care to maintain the confidentiality of all information identified as
"confidential" or "secret" by the Company and provided to it by the Company or
any Subsidiary, or by any Person on the Company's or any Subsidiary's behalf,
under this Agreement or any other Transaction Document, and neither such holder
nor any of its Affiliates shall use any such information other than in
connection with or in enforcement of this Agreement and the other Transaction
Documents or in connection with other business now or hereafter existing or
contemplated with the Company or any Subsidiary; except to the extent such
information (i) was or becomes generally available to the public other than as
a result of disclosure by such holder, or (ii) was or becomes available on a
non-confidential basis from a source other than the Company, provided that such
source is not bound by a confidentiality agreement with the Company or any
Subsidiary known to such holder; provided, however, that any holder may
disclose such information (A) at the request or pursuant to any requirement of
any Governmental Authority to which such holder is subject or in connection
with an examination of such holder by any such authority; (B) pursuant to
subpoena or other court process; (C) when required to do so in accordance with
the provisions of any applicable Requirement of Law; (D) to the extent
reasonably required in connection with any litigation or proceeding to which
any holder or any of their respective Affiliates may be party; (E) to the
extent reasonably required in connection with the exercise of any remedy
hereunder or under any other Transaction Document; (F) to such holder's
independent auditors and other professional advisors; (G) to any participant or
assignee, actual or potential, provided that such Person agrees in writing to
keep such information confidential to the same extent required of the
46
<PAGE> 47
holders hereunder; (H) as to any holder or its Affiliate, as expressly
permitted under the terms of any other document or agreement regarding
confidentiality to which the Company or any Subsidiary is party or is deemed
party with such holder or such Affiliate; and (I) to its Affiliates.
12I. NOTICES. All notices or other communications
provided for hereunder shall be in writing (including, unless the context
expressly otherwise provides, by facsimile transmission, provided that any
matter transmitted by the Company by facsimile (i) shall be immediately
confirmed by a telephone call to the recipient at the number specified on the
Purchaser Schedule or below, as the case may be, and (ii) shall be followed
promptly by delivery of a hard copy original thereof) and sent by first class
mail or nationwide overnight delivery service (with charges prepaid) or faxed
and (i) if to you, addressed to you at the address specified for such
communications in the Purchaser Schedule attached hereto, or at such other
address as you shall have specified to the Company in writing, (ii) if to any
other holder of any Note or Warrant, addressed to such other holder at such
address as such other holder shall have specified to the Company in writing or,
if any such other holder shall not have so specified an address to the Company,
then addressed to such other holder in care of the last holder of such Note or
Warrant which shall have so specified an address to the Company, and (iii) if
to the Company, addressed to it at 2727 Allen Parkway, Suite 760, Houston,
Texas 77019, Attention: Chief Financial Officer, telephone: (713) 285-2700;
telefax: (713) 520-8228, or at such other address as the Company shall have
specified to the holder of each Note or Warrant in writing.
12J. PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of
principal of or interest on any Note that is due on a date other than a
Business Day shall be made on the next succeeding Business Day without
including the additional days elapsed in the computation of the interest
payable on such next succeeding Business Day.
12K. SATISFACTION REQUIREMENT. If any agreement,
certificate or other writing, or any action taken or to be taken, is by the
terms of this Agreement required to be satisfactory to you or to the Required
Holder(s), the determination of such satisfaction shall be made by you or the
Required Holder(s), as the case may be, in the sole and exclusive judgment
(exercised in good faith) of the Person or Persons making such determination.
12L. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED
BY, THE LAW OF THE STATE OF NEW YORK. IN THE EVENT A FINAL JUDGMENT BY A COURT
OF COMPETENT JURISDICTION HOLDS THAT SUCH CHOICE OF NEW YORK LAW IS
UNENFORCEABLE, THEN THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF
THE STATE OF LOUISIANA. This Agreement may not be changed orally, but (subject
to the provisions of paragraph 12C) only by an agreement in writing signed by
the party against whom enforcement of any waiver, change, modification or
discharge is sought.
47
<PAGE> 48
12M. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION.
(i) THE COMPANY AND EACH HOLDER OF SECURITIES HEREBY
KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A
TRIAL BY JURY IN ANY LITIGATION OF ANY CLAIM WHICH IS BASED HEREON, OR ARISES
OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT, THE NOTES, THE WARRANTS,
THE REGISTRATION RIGHTS AGREEMENT OR THE PARTICIPATION RIGHTS AGREEMENT, OR ANY
TRANSACTIONS RELATING HERETO OR THERETO, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF THE COMPANY OR THE
NOTE HOLDERS. THE COMPANY ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR YOU TO ENTER INTO THE NOTE AGREEMENT.
(ii) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT, THE NOTES, THE WARRANTS, THE REGISTRATION RIGHTS AGREEMENT OR THE
PARTICIPATION RIGHTS AGREEMENT, OR ANY TRANSACTIONS RELATING HERETO OR THERETO,
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN), OR ACTIONS OF THE COMPANY OR THE NOTE HOLDERS MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK OR THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND THE COMPANY HEREBY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS. THE COMPANY HEREBY IRREVOCABLY WAIVES
ANY OBJECTIONS, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS.
12N. VALUATION OF WARRANTS. The Company and the
Purchasers acknowledge and agree that the value of the Warrants is contingent
and speculative, and that the Board of Directors of the Company, by resolutions
duly adopted by a written unanimous consent set forth in the minutes of the
Board of Directors of the Company, and based in part on the opinion of the
investment banking firm of Sanders Morris Mundy Inc., has determined that the
value of the Warrants on the date of this Agreement is $2,288,000. The Company
represents and warrants to the Purchasers that such valuation of the Warrants
by its Board of Directors was made on a reasonable and informed basis. The
Company and the Purchasers agree that the valuation of the Warrants made by the
Board of Directors of the Company in the manner represented by the Company in
this Paragraph 12N shall be binding on the Company for all purposes, including
for purposes of Sections 1272 and 1273 of the Code and Treasury Regulation
9.1273-2(h) under the Code, and for financial reporting purposes. Neither the
Company nor either Purchaser shall take any position or make any claim on any
federal income tax return or otherwise, which conflicts or is inconsistent with
the acknowledgments, representations and agreements set forth in this Paragraph
12N.
48
<PAGE> 49
12O. SEVERABILITY. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
12P. DESCRIPTIVE HEADINGS. The descriptive headings of
the several paragraphs of this Agreement are inserted for convenience only and
do not constitute a part of this Agreement.
12Q. MAXIMUM INTEREST PAYABLE. The Company, you and any
other holders of the Notes specifically intend and agree to limit contractually
the amount of interest payable under this Agreement, the Notes and all other
instruments and agreements related hereto and thereto to the maximum amount of
interest lawfully permitted to be charged under applicable law. Therefore,
none of the terms of this Agreement, the Notes or any instrument pertaining to
or relating to this Agreement or the Notes shall ever be construed to create a
contract to pay interest at a rate in excess of the maximum rate permitted to
be charged under applicable law, and neither the Company, any guarantor nor any
other party liable or to become liable hereunder, under the Notes, any guaranty
or under any other instruments and agreements related hereto and thereto shall
ever be liable for interest in excess of the amount determined at such maximum
rate, and the provisions of this paragraph 12Q shall control over all other
provisions of this Agreement, any Notes, any guaranty or any other instrument
pertaining to or relating to the transactions herein contemplated. If any such
excess of interest is contracted for, charged or received under this Agreement,
a Note, or the Guaranty or if the maturity of the indebtedness evidenced by a
Note is accelerated in whole or in part, or in the event that all or part of
the principal of or interest on a Note shall be prepaid, so that under any of
such circumstances the amount of interest contracted for, charged or received
Agreement, a Note or the Guaranty, on the amount of principal actually
outstanding from time to time under a Note shall exceed the maximum amount of
interest permitted by applicable usury laws, then in any such event (i) the
provisions of this paragraph shall govern and control, (ii) neither the Company
nor any other person now or hereafter liable under a Note for the payment of a
Note shall be obligated to pay the amount of such interest to the extent that
it is in excess of the maximum amount of interest permitted to be contracted
for by, charged to or received from the person obligated thereon under
applicable usury laws, (iii) any such excess which may have been collected
either shall be applied as a credit against the then unpaid principal amount on
such Note or refunded to the Company or other person paying the same, at the
holder's option, and (iv) the effective rate of interest shall be automatically
reduced to the maximum lawful rate of interest permitted under applicable usury
laws as now or hereafter construed by the courts having jurisdiction thereof.
All calculations of the rate of interest contracted for, charged or received
under a Note which are made for the purpose of determining whether such rate
exceeds the maximum lawful rate of interest shall be made, to the extent
permitted by applicable usury laws, by amortizing, prorating, allocating and
spreading in equal parts during the period of the full stated term of the
indebtedness evidenced by such Note, all interest at any time contracted for,
charged or received from the Company or otherwise by the holder or holders
thereof in connection with this Agreement, a Note, or the Guaranty.
"APPLICABLE LAW" as used in this paragraph means that law in effect from time
to time
49
<PAGE> 50
which permits the charging and collection of the highest permissible lawful,
nonusurious rate of interest on the transactions herein contemplated including
laws of the State of New York and of the United States of America, and "MAXIMUM
RATE" as used in this paragraph means, with respect to each of the Notes, the
maximum lawful, nonusurious rates of interest (if any) which under applicable
law may be charged to the Company from time to time with respect to such Notes.
12R. TAXES. (i) Any and all payments by the Company to
each holder under this Agreement and any other Transaction Document shall be
made free and clear of, and without deduction or withholding for, any Taxes.
In addition, the Company shall pay all Other Taxes.
(ii) The Company agrees to indemnify and hold harmless
each holder for the full amount of Taxes or Other Taxes (including any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this paragraph
12R) paid by the holder and any liability (including penalties, interest,
additions to tax and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
Payment under this indemnification shall be made within 30 days after the date
the holder makes written demand therefor.
(iii) If the Company shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to any holder, then:
(a) the sum payable shall be increased as
necessary so that after making all required deductions and
withholdings (including deductions and withholdings applicable to
additional sums payable under this paragraph 12R) such holder receives
an amount equal to the sum it would have received had no such
deductions or withholdings been made;
(b) the Company shall make such deductions and
withholdings; and
(c) the Company shall pay the full amount
deducted or withheld to the relevant taxing authority or other
authority in accordance with applicable law.
(iv) Within 30 days after the date of any payment by the
Company of Taxes or Other Taxes, the Company shall furnish such holder the
original or a copy of a receipt evidencing payment thereof, or other evidence
of payment satisfactory to such holder.
(v) The Company shall not be required to pay an
additional amount to, or indemnify, any holder pursuant to this paragraph 12R
to the extent that (a) the obligation to withhold or pay such amount existed on
the Initial Date (as hereinafter defined) or (b) the obligation to withhold or
pay such amount would not have arisen but for the failure of such holder to
comply with the provisions of this paragraph. For purposes of this clause (v),
"Initial Date" shall mean (i) in the case of any holder that is a signatory
hereto, the date of this Agreement, and (ii) in the case of any Person which
subsequently becomes a holder hereunder, the date such Person becomes a holder.
50
<PAGE> 51
(vi) International Mezzanine Capital B.V. represents and
warrants, under penalties of perjury, that on the Initial Date, it is a
"foreign corporation, partnership or trust" within the meaning of the Code and
all payments made to it under this Agreement are exempt from U.S. withholding
tax under the Code.
(vii) As long as the information set forth in clause (vi)
of this paragraph 12Q remains true and correct, International Mezzanine Capital
B.V. shall, as reasonably requested by the Company, deliver to the Company:
(a) properly completed IRS Forms 1001 and W-8;
(b) such other form or forms as may be required
under the Code or other laws of the United States as a condition to
exemption from United States withholding tax; and
(c) recertification of information provided under
this clause (vii).
12S. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original but all of which
together shall constitute one instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]
51
<PAGE> 52
If you are in agreement with the foregoing, please sign the
form of acceptance on the enclosed counterpart of this letter and return the
same to the Company, whereupon this letter shall become a binding agreement
between the Company and you.
Very truly yours,
AIR-CURE TECHNOLOGIES, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
The foregoing Agreement is
hereby accepted as of the
date first above written.
INTERNATIONAL MEZZANINE CAPITAL, B.V.
By:
-----------------------------------------------
Name: Sjaak Schouten
Title: Authorized Officer
FIRST COMMERCE CORPORATION
By:
-----------------------------------------------
Name: Ashton J. Ryan, Jr.
Title: Senior Executive Vice President
<PAGE> 53
PURCHASER SCHEDULE
INTERNATIONAL MEZZANINE CAPITAL, B.V.
Aggregate
Principal Amount
of Notes to be Note
Purchased Denomination
--------- ------------
$ 13,000,000 $ 13,000,000
(No. RS-1)
Aggregate Number of
Shares of
Common Stock for
which Warrant is
Exercisable Warrant Number
----------- --------------
1,525,333 WA-1
(1) All payments on account of Notes held by such
purchaser shall be made by wire transfer of
immediately available funds for credit to:
ABN AMRO, New York
(ABA No.) 026-009-580
for credit to:
Meespierson, N.V.
for the account of:
International Mezzanine Capital, B.V.
Acct. No. 213075687
Each such wire transfer shall set forth the name of the
Company, a reference to "Senior Subordinated Notes due
November 18, 2003," and the due date and application
(as among principal and interest of the payment being
made.
<PAGE> 54
(2) Address for all notices relating to payments:
International Mezzanine Capital, B.V.
Herengracht 424
1017 BZ Amsterdam
The Netherlands
Attention: Sjaak Schouten
(3) Address for all other communications and notices:
International Mezzanine Capital, B.V.
Herengracht 424
1017 BZ Amsterdam
The Netherlands
Attention: Sjaak Schouten
with a copy to:
Mezzanine Management Limited
Manfield House
1 Southhampton Street
London WC2R 0LR
Attention: Angus W. Penman
(4) Recipient of telephonic prepayment notices:
Sjaak Schouten
31-20-4222943
FIRST COMMERCE CORPORATION
Aggregate
Principal Amount
of Notes to be Note
Purchased Denomination
--------- ------------
$ 2,000,000 $ 2,000,000
(No. RS-2)
<PAGE> 55
Aggregate Number of
Shares of
Common Stock for
which Warrant is
Exercisable Warrant Number
----------- --------------
234,667 WA-2
(1) All payments on account of Notes held by
such purchaser shall be made by wire transfer
of immediately available funds for credit to:
Credit Bank Name: Chase/Chemical
Credit ABA: 0210-0012-8
Credit Beneficiary Name: First National Bank of Commerce
Beneficiary Account No.: 144-715-435
Further Credit: First Commerce Corporation
Account No.: 0038-03-903
Reference: Air Cure Technologies
Each such wire transfer shall set forth
the name of the Company, a reference to
"Senior Subordinated Notes due
November 18, 2003," and the due date and
application (as among principal and in-
terest of the payment being made.
(2) Address for all notices relating to payments:
First Commerce Corporation
201 St. Charles Avenue
Suite 1608
New Orleans, Louisiana 70170
fax: (504) 623-1779
Attention: Paul F. Giffin
(3) Address for all other communications and
notices:
First Commerce Corporation
201 St. Charles Avenue
Suite 1608
New Orleans, Louisiana 70170
fax: (504) 623-1779
Attention: Paul F. Giffin
<PAGE> 56
(4) Recipient of telephonic prepayment notices:
Paul F. Giffin
(504) 623-1771
(5) Tax Identification No.: 72-0701203
<PAGE> 57
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AIR-CURE TECHNOLOGIES, INC.
$15,000,000
SENIOR SUBORDINATED NOTES DUE NOVEMBER 18, 2003
AND
COMMON STOCK PURCHASE WARRANTS EXPIRING NOVEMBER 18, 2003
-------------
SUBORDINATED NOTE AND WARRANT PURCHASE AGREEMENT
-------------
DATED AS OF NOVEMBER 18, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 58
TABLE OF CONTENTS
(Not Part of Agreement)
<TABLE>
<CAPTION>
Page
----
<S> <C>
PARAGRAPH 1. AUTHORIZATION OF ISSUE OF SECURITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1A. Authorization of Issue of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1B. Authorization of Issue of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
PARAGRAPH 2. PURCHASE AND SALE OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. Purchase and Sale of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
PARAGRAPH 3. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3. Conditions to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3A. Certain Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3B. Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3C. Representations and Warranties; No Default . . . . . . . . . . . . . . . . . . . . . . . . 4
3D. Sale of Notes to All Purchasers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3E. Purchase Permitted By Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3F. Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3G. Senior Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3H. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
PARAGRAPH 4. PREPAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4. Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4A. Optional Prepayment of Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4B. Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4C. Partial Payments Pro Rata . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4D. Retirement of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4E. Maintenance of Investment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
PARAGRAPH 5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5A. Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5B. Certificates; Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5C. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5D. Preservation of Corporate Existence, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 10
5E. Maintenance of Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5F. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5G. Payment of Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5H. Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
(i)
<PAGE> 59
<TABLE>
<S> <C>
5I. Compliance with ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5J. Inspection of Property and Books and Records. . . . . . . . . . . . . . . . . . . . . . . 12
5K. Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5L. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5M. Board Representatives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5N. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
PARAGRAPH 6. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6A. Limitation on Liens.14
6B. Disposition of Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6C. Consolidations and Mergers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6D. Loans and Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6E. Limitation on Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6F. Transactions with Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6G. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6H. Contingent Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6I. Sale-Leaseback Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6J. Lease Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6K. Minimum Interest Coverage Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6L. Maximum Indebtedness to Capitalization Ratio. . . . . . . . . . . . . . . . . . . . . . . 19
6M. Minimum Net Worth. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6N. Maximum Total Indebtedness to EBITDA. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6O. Restricted Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6P. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6Q. Change in Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6R. Accounting Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6S. Foreign Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6T. Capital Expenditures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6U. Restrictive Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
PARAGRAPH 7. SUBORDINATION OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
PARAGRAPH 8. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8A. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8B. Rescission of Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8C. Notice of Acceleration or Rescission . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8D. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
(ii)
<PAGE> 60
<TABLE>
<S> <C>
PARAGRAPH 9. REPRESENTATIONS, COVENANTS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . 25
9. Representations, Covenants and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9A. Corporate Existence and Power. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9B. Corporate Authorization; No Contravention. . . . . . . . . . . . . . . . . . . . . . . . . 25
9C. Governmental Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9D. Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9E. Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9F. No Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9G. ERISA Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9H. Use of Proceeds; Margin Regulations. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9I. Title to Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9J. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9K. Financial Condition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9L. Environmental Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9M. Regulated Entities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9N. No Burdensome Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9O. Copyrights, Patents, Trademarks and Licenses, etc. . . . . . . . . . . . . . . . . . . . . 30
9P. Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9Q. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9R. Solvency, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9S. Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9T. Ohmstede Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9U. Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9V. Authorized Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9W. Offering of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
PARAGRAPH 10. REPRESENTATION OF EACH PURCHASER; AGREEMENT
TO SUBORDINATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
PARAGRAPH 11. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11A. Certain Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11B. Accounting Principles, Terms and Determinations . . . . . . . . . . . . . . . . . . . . . 42
PARAGRAPH 12. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
12. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
12A. Note Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
12B. Expenses; Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
12C. Consent to Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
12D. Form, Registration, Transfer and Exchange of Notes; Lost Notes . . . . . . . . . . . . . . 46
12E. Persons Deemed Owners; Participations . . . . . . . . . . . . . . . . . . . . . . . . . . 46
12F. Survival of Representations and Warranties; Entire Agreement. . . . . . . . . . . . . . . 46
12G. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
</TABLE>
(iii)
<PAGE> 61
<TABLE>
<S> <C> <C>
12H. Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
12I. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
12J. Payments Due on Non-Business Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
12K. Satisfaction Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
12L. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
12M. Waiver of Jury Trial; Consent to Jurisdiction. . . . . . . . . . . . . . . . . . . . . . . 48
12N. Valuation of Warrants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
12O. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
12P. Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
12Q. Maximum Interest Payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12R. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
12S. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
</TABLE>
(iv)
<PAGE> 62
<TABLE>
<CAPTION>
PURCHASER SCHEDULE
<S> <C>
SCHEDULE 6A -- EXISTING LIENS
SCHEDULE 6E(iii) -- EXISTING INDEBTEDNESS
SCHEDULE 6E(v) -- SENIOR DEBT
SCHEDULE 6H -- EXISTING CONTINGENT OBLIGATIONS
SCHEDULE 9K -- FINANCIAL CONDITION
SCHEDULE 9P -- SUBSIDIARIES AND MINORITY INTERESTS
SCHEDULE 9Q -- INSURANCE MATTERS
SCHEDULE 9S -- LABOR MATTERS
EXHIBIT A -- FORM OF SENIOR SUBORDINATED NOTE
EXHIBIT B -- FORM OF COMMON STOCK PURCHASE WARRANT
EXHIBIT C -- FORM OF OPINION OF COMPANY'S COUNSEL
EXHIBIT D -- FORM OF GUARANTY
EXHIBIT E -- FORM OF PARTICIPATION RIGHTS AGREEMENT
EXHIBIT F -- FORM OF REGISTRATION RIGHTS AGREEMENT
EXHIBIT G -- FORM OF SUBORDINATION AGREEMENT
EXHIBIT H -- FORM OF COMPLIANCE CERTIFICATE
</TABLE>
(v)
<PAGE> 1
EXHIBIT 99.1
Company Contacts:
Mark Johnson - Chairman, President and Chief Executive Officer
Larry McAfee - Executive Vice President and Chief Financial Officer
(713) 285-2700
Investor Relations:
Doug Poretz
(703) 506-1778
AIR-CURE TECHNOLOGIES, INC. COMPLETES
OHMSTEDE, INC. ACQUISITION
HOUSTON, TEXAS, November 19, 1996 -- Air-Cure Technologies, Inc. (NASDAQ:ATSS)
today announced the completion of the acquisition of Ohmstede, Inc., the
nation's largest manufacturer of heat exchangers. The acquisition for
approximately $52,000,000 was financed by a combination of bank financing and
private placement of subordinated debt with warrants.
Air-Cue and Ohmstede's combined pro forma revenues for the three and nine
months ended September 30, 1996, were $48,051,000 and $148,101,000,
respectively, which compare to Air-Cure's reported revenues of $22,992,000 and
$72,185,000, respectively. Combined pro forma net earnings for the three and
nine month periods, excluding the first quarter restructuring charge, were
$1,069,000 or $.09 per share and $4,669,000 or $.40 per share, respectively.
These compare to actual reported net earnings, excluding the restructuring
charge of $428,000 or $.04 per share and $2,240,000 or $.19 per share for the
respective period.
Chief Executive Officer, Mark Johnson, stated, "When we announced the Company's
restructuring plan in the first quarter of this year, it was in anticipation of
a major strategic acquisition such as this one. I stated at that time that
Air-Cure would be at a $250 million annualized revenue rate by December 31,
1997. We are approximately a year ahead of our plan."
Larry McAfee, Chief Financial Officer, noted, "The acquisition of Ohmstede
approximately doubles the Company's revenues and earnings. Air-Cure will
continue to focus on the acquisition of companies that are niche market leaders
with strong growth potential that complement our existing products and
services."
Air-Cure Technologies, Inc. is a rapidly growing supplier of manufactured
equipment and engineered systems used in the processing, treatment and movement
of gases and liquids. The Company markets its products worldwide through its
Hydrocarbon Processing Equipment and Industrial Equipment Divisions.
<PAGE> 1
EXHIBIT 99.2
Company Contacts:
Mark Johnson - Chairman, President and Chief Executive Officer
Larry McAfee - Executive Vice President and Chief Financial Officer
(713)285-2700
Investor Relations:
Doug Poretz
(703)506-1778
AIR-CURE TECHNOLOGIES, INC.
SELLS TWO SMALL AIR POLLUTION
CONTROL SUBSIDIARIES
HOUSTON, TEXAS, November 26, 1996 -- Air-Cure Technologies, Inc. (NASDAQ:ATSS)
announced today that the Company has sold two of it's subsidiaries, it's
Air-Cure, Inc. and Pipkorn Environmental Technologies, Inc. The sales price
for the two companies was $1.7 million which was approximately equal to the
Company's investment in those operations.
Air-Cure, Inc. and Pipkorn Environmental Technologies, Inc. are involved in the
manufacture of baghouse systems used principally by coal-fired electrical
utilities. The combined operations had sales revenues of approximately $5
million and incurred a loss in the Company's past fiscal year.
Mark Johnson, Air-Cure Technologies Chief Executive Officer, stated "The sale
of these two small subsidiaries is consistent with our strategy of focusing on
being a value-added supplier of industrial processing equipment. We are
distancing the Company from being tied to air pollution control, a business
driven by slow and unpredictable government regulations. The Company's recent
acquisition of Ohmstede, Inc. is consistent with our strategy. Today,
approximately 70% of Air-Cure Technologies' revenue is process related, 20%
environmental and 10% air movement."
Air-Cure Technologies, Inc. is a rapidly growing supplier of manufactured
equipment and engineered systems used in the processing, treatment and movement
of gases and liquids. Through facilities located in North America, Europe and
the Far East, the Company operates internationally providing products and
services to a broad base of industrial customers.
# # #
