SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
Commission File No. 0-21830
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JOHNSTOWN AMERICA INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Incorporated pursuant to the Laws of the State of Delaware
---------------------
Internal Revenue Service - Employer Identification No. 25-1672791
980 N. Michigan Avenue
Suite 1000
Chicago, IL 60611
(Address of principal executive offices)
(312) 280-8844
Registrant's telephone number, including area code
---------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
The total number of shares of the registrant's Common Stock, $.01 par value,
outstanding on March 17, 1999 was 10,025,754.
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JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
PAGE
PART I FINANCIAL INFORMATION....................................... 3
Item 1 Condensed Consolidated Balance Sheets as
of March 31, 1999, and December 31, 1998.................... 4-5
Condensed Consolidated Statements of Income for
the Three Months Ended March 31, 1999 and 1998.............. 6
Condensed Consolidated Statements of Cash Flows
for the Three Months Ended March 31, 1999 and 1998.......... 7-8
Notes to Condensed Consolidated Financial Statements........ 9-22
ITEM 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations............... 23-29
PART II OTHER INFORMATION ........................................ 30
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
In the opinion of the registrant's management, the unaudited condensed
consolidated financial statements included in this filing on Form 10-Q reflect
all adjustments (which consist of normal recurring adjustments) which are
considered necessary for a fair presentation of financial information for the
periods presented.
3
<PAGE>
JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 1999 AND DECEMBER 31, 1998
(Unaudited)
March 31, December 31,
(In thousands) 1999 1998
---------- ----------
ASSETS
Current Assets:
Cash and cash equivalents............................ $ 36,543 $ 39,112
Accounts receivable, net............................. 97,328 81,740
Inventories.......................................... 63,512 66,678
Prepaid expenses and other current assets............ 16,261 16,202
---------- ----------
Total current assets............................... 213,644 203,732
Property, plant and equipment, net................... 113,088 115,193
Leasing business assets, net......................... 20,599 19,523
Deferred financing costs, net........................ 6,821 7,526
Intangible assets, net............................... 236,280 238,380
---------- ----------
Total assets....................................... $ 590,432 $ 584,354
========== ==========
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
AS OF MARCH 31, 1999 AND DECEMBER 31, 1998
(Unaudited)
March 31, December 31,
(In thousands) 1999 1998
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable .................................... $ 72,640 $ 65,583
Accrued expenses and other payables ................. 74,402 70,843
Current maturities of long-term debt and capital .... 701 9,511
lease
--------- ---------
Total current liabilities ......................... 147,743 145,937
Long-term debt and capital lease, less current ....... 43,254 54,486
maturities
JAIX Leasing debt, less current maturities ........... 8,586 8,711
Senior subordinated notes ............................ 182,250 182,338
Deferred income tax liabilities ...................... 34,259 34,571
Other long-term liabilities .......................... 48,770 47,594
Shareholders' Equity:
Preferred stock, par $.01, 20,000 shares
authorized, none outstanding ....................... -- --
Common stock, par $.01, 201,000 shares
authorized, 10,023 and 9,900 issued and outstanding
as of March 31, 1999 and December 31, 1998,
respectively ....................................... 100 99
Paid-in capital ..................................... 58,655 56,892
Unearned compensation ............................... (1,522) --
Retained earnings ................................... 68,347 53,741
Employee receivables for stock purchases ............ (10) (15)
--------- ---------
Total shareholders' equity ........................ 125,570 110,717
========= =========
Total liabilities and shareholders' equity ......... $ 590,432 $ 584,354
========= =========
See accompanying notes to condensed consolidated financial statements.
5
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JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(Unaudited)
(In thousands, except per share data)
Three Months Ended
March 31,
----------------------
1999 1998
---------- ----------
Net manufacturing sales .............................. $ 295,882 $ 228,814
Leasing revenue ...................................... 2,478 2,379
--------- ---------
Total revenue ....................................... 298,360 231,193
Cost of sales - manufacturing ........................ 248,049 199,161
Cost of leasing ...................................... 1,406 1,488
--------- ---------
Gross profit ........................................ 48,905 30,544
Selling, general and administrative
expenses ............................................ 14,360 13,161
Amortization expense ................................. 2,098 2,139
Gain on sale of leased freight cars .................. -- (1,223)
Patent litigation settlement ......................... -- (16,750)
--------- ---------
Operating income .................................... 32,447 33,217
Interest income ...................................... (224) (193)
Interest expense ..................................... 6,952 8,246
Interest expense - leasing ........................... 218 569
--------- ---------
Income before income taxes and extraordinary item .... 25,501 24,595
Provision for income taxes ........................... 10,585 10,552
--------- ---------
Net income before extraordinary item ................. 14,916 14,043
Extraordinary item, net of income taxes .............. (299) --
--------- ---------
Net income and comprehensive income .................. $ 14,617 $ 14,043
========= =========
Basic earnings per share:
Income before extraordinary item...................... $ 1.50 $ 1.44
Extraordinary item.................................... (0.03) --
--------- ---------
Net income per share.................................. $ 1.47 $ 1.44
========= =========
Basic weighted average shares outstanding............. 9,913 9,767
========= =========
Diluted earnings per share:
Income before extraordinary item...................... $ 1.47 $ 1.40
Extraordinary item.................................... (0.03) --
--------- ---------
Net income per share.................................. $ 1.44 $ 1.40
========= =========
Diluted weighted average equivalents and
shares outstanding................................... 10,148 10,072
========= =========
See accompanying notes to condensed consolidated financial statements.
6
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JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(Unaudited)
Three Months Ended
March 31,
----------------------
(In thousands) 1999 1998
---------- ----------
OPERATING ACTIVITIES:
Net income............................................... $ 14,617 $ 14,043
Adjustments to reconcile net income to net cash from operating activities:
Depreciation .......................................... 4,022 3,864
Amortization .......................................... 2,731 3,130
Provision for postretirement benefits ................. 708 696
Deferred income tax benefit ........................... (312) (273)
Gain on sale of leased freight cars ................... -- (1,223)
Patent litigation settlement .......................... -- (16,750)
Extraordinary item .................................... 299 --
Changes in operating assets and liabilities:
Accounts receivable, net .............................. (15,588) (38,504)
Inventories ........................................... 3,165 2,093
Accounts payable ...................................... 7,056 15,525
Other assets and liabilities .......................... 3,915 6,482
--------- ---------
Net cash provided by (used for) operating activities .... 20,613 (10,917)
--------- ---------
INVESTING ACTIVITIES:
Capital expenditures .................................... (1,758) (1,797)
Leasing business asset additions ........................ (1,247) (2,232)
Proceeds from sale of leased freight cars ............... -- 24,320
------- -------
Net cash provided by (used for) investing activities .... (3,005) 20,291
------- -------
See accompanying notes to condensed consolidated financial statements.
7
<PAGE>
JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(Unaudited)
Three Months Ended
March 31,
----------------------
(In thousands) 1999 1998
---------- ----------
FINANCING ACTIVITIES:
Payments of term loans and capital lease............... $ (20,053) $ (881)
Payments of JAIX Leasing loans......................... (114) (19,649)
Payment of deferred financing costs.................... (205) --
Other.................................................. 195 20
---------- ----------
Net cash used for financing activities................. (20,177) (20,510)
---------- ----------
Net decrease in cash and cash equivalents.............. (2,569) (11,136)
CASH AND CASH EQUIVALENTS,
beginning of period................................... 39,112 30,875
---------- ----------
CASH AND CASH EQUIVALENTS,
end of period......................................... $ 36,543 $ 19,739
========== ==========
SUPPLEMENTAL CASH FLOWS DISCLOSURE
Cash paid for interest.................................. $ 12,269 $ 13,451
Cash paid for income taxes.............................. $ 738 $ 1,075
See accompanying notes to condensed consolidated financial statements.
8
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JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended March 31, 1999
(Unaudited)
1. BASIS OF PRESENTATION
The financial statements presented herein and these notes are unaudited. Certain
information and footnote disclosures normally included in the financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission. Although the registrant believes that all
adjustments (which include only normal recurring adjustments) necessary for a
fair presentation have been made, interim periods are not necessarily indicative
of the results of operations for a full year. As such, these financial
statements should be read in conjunction with the financial statements and notes
thereto included by reference in the registrant's Form 10-K for the year ended
December 31, 1998.
The condensed consolidated financial statements include the accounts of
Johnstown America Industries, Inc. and its wholly owned subsidiaries (the
"Company"). All significant intercompany transactions and accounts have been
eliminated.
2. SUBSEQUENT EVENTS
SALE OF FREIGHT CAR OPERATIONS
On May 11, 1999, the Company announced that it had signed a definitive agreement
to sell the stock of its freight car operations, including Johnstown America
Corporation, Freight Car Services Inc. and JAIX Leasing Company to a newly
formed company that will operate under the Johnstown America Corporation (JAC)
name. It is expected that the transaction will close in mid-June. Under the
terms of the agreement, the Company will receive proceeds of approximately $100
million in cash and a 20 percent equity interest in the newly formed JAC
company. An additional contingent payment of $20 million plus interest will be
received upon certain one time events related to JAC. In addition, the new
company will assume all of the liabilities of the freight car operations,
including the $5.3 million Industrial Revenue Bond debt of Freight Car Services,
Inc.; $9.1 million of JAIX Leasing Company debt; and employee- related
liabilities including $10.8 million of retiree medical and life insurance
liabilities and the assumption of existing union contracts together with related
liabilities. Anticipated after-tax cash proceeds of approximately $75 million
will be used to prepay outstanding indebtedness under the new Senior Credit
Facility which will result in an after tax extraordinary non-cash charge of
approximately $20.0 million. After the sale of the freight car operations, the
Company will restate its historical financial statements to reflect those
operations as discontinued operations.
9
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JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the Three Months Ended March 31, 1999
(Unaudited)
EMI COMPANY ACQUISITION
On May 3, 1999, the Company announced that its Gunite Corporation subsidiary had
signed a definitive agreement to acquire the assets of EMI Company (EMI), an
iron foundry and machining company located in Erie, Pennsylvania from Hitachi
Metals America, Ltd. Terms of the transaction were not disclosed. The Company
plans to fund the purchase price with available cash on-hand.
IMPERIAL GROUP ACQUISITION
On April 29, 1999, the Company acquired the assets of Imperial Group, Inc.
(Imperial). Imperial is a leading Tier I and Tier II supplier of body and
chassis components for heavy-duty Class 8 truck manufacturers and transit bus
manufacturers. The purchase price for Imperial, consisting of $57.4 million in
cash and 156,740 shares of JAII common stock, was approximately $60.1 million at
closing. In connection with the acquisition, JAII entered into a new senior bank
credit facility (see "New Senior Credit Facility" below).
NEW SENIOR BANK CREDIT FACILITY
In conjunction with the acquisition of Imperial, the Company on April 29, 1999,
entered into a new Senior Bank Credit Facility. The new facility is comprised of
a $50 million Term A Loan, a $50 million Term B Loan and an undrawn $75 million
Revolving Credit Facility. Proceeds were used to finance the Imperial
acquisition, to refinance JAII's then outstanding senior bank debt of $36.6
million (resulting in an extraordinary non-cash after tax charge of $1.7
million), and for working capital and other general corporate purposes.
At the Company's election, interest rates per annum on the new Term A loan and
the new Revolving Credit Facility are fluctuating rates of interest measured by
reference to either (a) an adjusted London inter-bank offered rate (LIBOR) plus
a borrowing margin or (b) an alternate base rate (ABR) plus a borrowing margin.
Such borrowing margins range between 1.50% and 2.50% for LIBOR loans and between
0.50% and 1.50% for ABR loans, fluctuating within each range in 0.25% increments
based on the Company achieving certain financial results. Interest rates per
annum applicable to the Term B loan are either (a) LIBOR plus a margin of 2.75%
or (b) ABR plus a margin of 1.75%. Additionally, various fees related to unused
commitments, letters of credit and administration of the facility are incurred
by the Company. Borrowings under the new Senior Bank Credit Facility are
guaranteed by each of the Company's subsidiaries other than JAIX Leasing (the
Guarantor Subsidiaries) and are secured by the assets and stock of the Company
and its Guarantor Subsidiaries. The Term A Loan and the Revolving Credit
Facility mature on April 29, 2004 and the Term B Loan matures on April 29, 2005.
10
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JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the Three Months Ended March 31, 1999
(Unaudited)
The new Senior Bank Credit Facility contains various financial covenants
including capital expenditure limitations, minimum leverage and interest
coverage ratios, and minimum net worth. The agreement also restricts the Company
from paying dividends and making other distributions in certain circumstances,
and limits the ability to repurchase common stock and prepay the Senior
Subordinated Notes.
INDUSTRIAL REVENUE BOND
On April 1 1999, the Company, through its wholly owned subsidiary, Bostrom
Seating, Inc., issued Industrial Revenue Bonds for $3.1 million which bear
interest at a variable rate (3.35% as of April 1, 1999) and can be redeemed by
the Company at any time. The bonds are secured by a letter of credit issued by
the Company. The bonds have no amortization and mature in 2014. The bonds are
also subject to a weekly "put" provision by the holders of the bonds. In the
event that any or all of the bonds are put to the Company under this provision,
the Company would either refinance such bonds with additional borrowings under
the new Revolving Credit Facility or use available cash on hand.
3. INVENTORIES
Inventories of the Company consist of the following (in thousands):
March 31, December 31,
1999 1998
---------- ----------
Raw materials and purchased
components $ 12,767 $ 11,605
Work-in-progress and finished goods 50,745 55,073
---------- ----------
$ 63,512 $ 66,678
========== ==========
11
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JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the Three Months Ended March 31, 1999
(Unaudited)
4. DEBT
Long-term debt of the Company consists of the following (in thousands):
March 31, December 31,
1999 1998
---------- ----------
Revolving loan $ -- $ --
Tranche B term loan 36,632 56,632
---------- ----------
Total senior bank facilities 36,632 56,632
Industrial revenue bond 5,300 5,300
Capital lease 1,540 1,593
JAIX Leasing debt 9,069 9,183
---------- ----------
Total debt 52,541 72,708
Less:
Current maturities (701) (9,511)
Long-term portion of JAIX Leasing debt (8,586) (8,711)
---------- ----------
Long-term debt $ 43,254 $ 54,486
========== ==========
SENIOR BANK FACILITIES
The Company entered into a credit facility (Senior Bank Facilities) on August
23, 1995, in conjunction with the acquisition of Truck Components Inc. (TCI) and
the related transactions. The revolving credit line portion of the Senior Bank
Facilities provided for up to $75 million of outstanding borrowings and letters
of credit, limited by the level of eligible accounts receivable and inventories.
As of March 31, 1999, availability under the revolving credit line, after
consideration of outstanding letters of credit of $13.5 million, was $ 61.5
million and the weighted average interest rate of all outstanding loans under
the Senior Bank Facilities was 8.76%.
The Tranche A term loan was paid off in 1997. The Company used $20.0 million of
cash from operations during the first quarter of 1999 to prepay obligations
under the Tranche B term loan. An extraordinary non-cash after tax charge of
$0.3 million was incurred from the write off of unamortized deferred costs
associated with this debt repayment. On April 29, 1999, the remaining balance of
$36.6 million in Tranche B loans was repaid and the facility was terminated in
connection with the establishment of a new Senior Bank Credit Facility (see Note
2).
12
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JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the Three Months Ended March 31, 1999
(Unaudited)
JAIX LEASING DEBT
On June 14, 1996, JAIX Leasing entered into a ten-year term loan which bears
interest at an average interest rate of 8.87%. At March 31, 1999, debt
outstanding under the facility was $9.1 million. The facility is secured by the
underlying leases and assets and contains various covenants.
INDUSTRIAL REVENUE BOND
The Company, through its wholly owned subsidiary, Freight Car Services, Inc.,
issued Industrial Revenue Bonds for $5.3 million which bear interest at a
variable rate (3.2% as of March 31, 1999) and can be redeemed by the Company at
any time. The bonds are secured by a letter of credit issued by the Company. The
bonds have no amortization and mature on December 1, 2010. The bonds are also
subject to a weekly "put" provision by the holders of the bonds. In the event
that any or all of the bonds are put to the Company under this provision, the
Company would effectively refinance such bonds with additional borrowings under
new the Revolving Credit Facility or utilize available cash on hand.
INTEREST RATE CONTRACTS
The Company has entered into an interest rate contract to fix a portion of the
cost of its variable rate bank debt. This contract limits the effect of market
fluctuations on the interest cost of floating rate debt. The notional principal
amounts outstanding on the interest rate contract covering the current period is
$25 million at a 6.14% fixed rate of interest plus the applicable borrowing
margin. The contract matures in August 2000.
5. SENIOR SUBORDINATED NOTES
In 1995, the Company issued $100 million of Senior Subordinated Notes which are
due August 15, 2005. In 1997, the Company issued $80 million of additional notes
due August 15, 2005 (collectively, the Notes) with substantially identical terms
to the already outstanding notes at a $3.6 million premium, for an effective
rate of 10.8%. These Notes have an interest rate of 11.75% per annum and are
guaranteed on an unsecured, senior subordinated joint and several basis by each
of the Guarantor Subsidiaries. Pursuant to the settlement of separate interest
rate contracts in effect when each portion of the Notes was issued, the Company
realized a $0.8 million loss and a $2.6 million gain upon the 1997 and 1995
issuances, respectively. The gain and the loss are being amortized as an offset
to interest expense over the term of the Notes. The Notes have customary
restrictive covenants including restrictions on incurrence of additional
13
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JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the Three Months Ended March 31, 1999
(Unaudited)
indebtedness, payment of dividends and redemption of capital stock. The Notes
are subordinated to all indebtedness under the Senior Bank Facilities and
cross-default provisions do exist. Except in certain limited circumstances, the
Notes are not subject to optional redemption by the Company prior to August 15,
2000, and thereafter are subject to optional redemption by the Company at
declining redemption premiums. Upon the occurrence of a change in control (as
defined), the Company is required to offer to repurchase the Notes at a price
equal to 101% of the principal amount thereof plus accrued interest.
The Company's future operating performance and ability to service or refinance
the Notes and to extend or refinance the senior bank debt will be subject to
future economic conditions and to financial, business and other factors, many of
which are beyond the Company's control.
6. ENVIRONMENTAL MATTERS
The Company's subsidiaries are currently involved in several matters relating to
the investigation and/or remediation of locations where the subsidiaries have
arranged for the disposal of foundry and other wastes. Such matters include five
situations in which the Company, through its TCI subsidiaries and their
predecessors, have been named or are believed to be potentially responsible
parties ("PRP") in the contamination of the sites. With respect to claims
involving Gunite Corporation ("Gunite"), TCI and Gunite in September 1997
entered into a private-party settlement (the "Settlement") of certain pending
litigation with a prior owner of Gunite, pursuant to which each of TCI and
Gunite and the prior owner withdrew their claims against the other. As a result
of the Settlement, TCI and Gunite will not be responsible for liabilities and
costs related to certain alleged contamination of Gunite's facilities and at
certain off-site properties to the extent arising out of operations of Gunite
prior to the acquisition of Gunite by TCI in September 1987. As of March 31,
1999, based on all of the information currently available to the Company, the
Company has an environmental reserve of $10.7 million which management believes
is adequate to cover future expenditures. This reserve is based on current cost
estimates and does not reduce estimated expenditures to net present value,
although the Company's subsidiaries are not likely to incur costs for most of
the reserved matters until several years in the future. Any cash expenditures
required by the Company or its subsidiaries to comply with applicable
environmental laws and/or to pay for any remediation efforts will not be reduced
or otherwise affected by the existence of the environmental reserve. Due to the
early stage of investigation of many of the sites and potential remediations
referred to above, there are significant uncertainties as to waste quantities
involved, the extent and timing of the remediation which will be required, the
range of acceptable solutions, costs of remediation and the number of
potentially responsible parties contributing to such costs. Based on all of the
information presently available, the Company believes that the environmental
14
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JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the Three Months Ended March 31, 1999
(Unaudited)
reserve will be adequate to cover its future costs related to the sites
associated with the environmental reserve, and that any additional costs will
not have a material adverse effect on the financial condition or results of
operations of the Company. However, the discovery of additional sites, the
modification of existing laws or regulations, the imposition of joint and
several liability or the uncertainties referred to above could result in such a
material adverse effect.
7. BUSINESS SEGMENT INFORMATION
The Company is engaged in the transportation industry and operates in two
business segments. Both segments operate in North America. There are no
intersegment sales.
The Company's reportable segments are its strategic business units that serve
separate markets. They are managed separately because each segment serves a
different sector in the transportation field. The freight car segment consists
of Johnstown America Corporation, Freight Car Services and JAIX Leasing. The
truck components segment consists of Gunite Corporation, Brillion Iron Works,
Bostrom Seating and Fabco Automotive.
The Company accumulates its expenses for the corporate headquarters which
provide services to each of the operating segments. These costs are partially
allocated to the segments based primarily on the sales of each unit.
The accounting policies of the segments are the same as those followed by the
consolidated Company. The Company evaluates performances based on operating
income or loss before interest and income taxes, and also on operating cash flow
defined as operating income or loss plus depreciation and amortization. Certain
segment information for the quarters ended March 31, 1999 and 1998 is as
follows:
15
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JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the Three Months Ended March 31, 1999
(Unaudited)
(IN MILLIONS) OPERATING
NET SALES INCOME (LOSS)
---------- --------------
FIRST QUARTER 1999
- ------------------
Freight Car $ 181.1 $ 18.9
---------- ----------
Truck Components 117.3 14.0
---------- ----------
Corporate 0.0 (0.5)
---------- ----------
TOTAL $ 298.4 $ 32.4
========== ==========
FIRST QUARTER 1998
- ------------------
Freight Car $ 117.4 $ 21.5(1)
---------- ----------
Truck Components 113.8 12.2
---------- ----------
Corporate 0.0 (0.4)
---------- ----------
TOTAL $ 231.2 $ 33.2
========== ==========
(1) INCLUDES FAVORABLE SETTLEMENT OF PATENT LAWSUIT LITIGATION OF $16.8
MILLION.
8. GUARANTOR SUBSIDIARIES
The Notes and the obligations under the senior bank debt are fully and
unconditionally guaranteed on an unsecured, senior subordinated, joint and
several basis by each of the Guarantor Subsidiaries. The following condensed
consolidating financial data illustrates the composition of the Parent Company,
the Guarantor Subsidiaries, and JAIX Leasing as of and for certain dates and
periods. Separate complete financial statements of the respective Guarantor
Subsidiaries would not provide additional information which would be useful in
assessing the financial composition of the Guarantor Subsidiaries and thus, are
not presented.
Investments in subsidiaries are accounted for by the Parent Company on the
equity method for purposes of the supplemental consolidating presentation.
Earnings of subsidiaries are therefore reflected in the Parent Company's
investment accounts and earnings. The principle elimination entries eliminate
the Parent Company's investment in subsidiaries and intercompany balances and
transactions.
16
<PAGE>
<TABLE>
Condensed Consolidating Balance Sheet
as of March 31, 1999
(In millions)
(Unaudited)
PARENT GUARANTOR JAIX
COMPANY SUBSIDIARIES LEASING ELIMINATIONS CONSOLIDATED
--------- ------------ --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents $ 40.9 $ (10.9) $ 6.5 $ -- $ 36.5
Accounts receivable, net -- 96.9 0.4 -- 97.3
Inventories -- 63.5 -- -- 63.5
Prepaid expenses and other 1.6 15.1 (0.4) -- 16.3
---------- ---------- ---------- ---------- ----------
Total current assets 42.5 164.6 6.5 -- 213.6
Property, plant and equipment, net 2.4 112.3 19.3 (0.3) 133.7
Other assets 159.7 236.6 0.4 (153.6) 243.1
---------- ---------- ---------- ---------- ----------
Total assets $ 204.6 $ 513.5 $ 26.2 $ (153.9) $ 590.4
========== ========== ========== ========== ==========
Accounts payable $ -- $ 72.6 $ -- $ -- $ 72.6
Other current liabilities (33.8) 105.7 3.2 -- 75.1
---------- ---------- ---------- ---------- ----------
Total current liabilities (33.8) 178.3 3.2 -- 147.7
Noncurrent liabilities -- 79.5 3.5 -- 83.0
Long-term debt, less current
maturities and intercompany
advances 112.8 112.7 8.6 -- 234.1
Total shareholders' equity 125.6 143.0 10.9 (153.9) 125.6
---------- ---------- ---------- ---------- ----------
Total liabilities and shareholders'
equity $ 204.6 $ 513.5 $ 26.2 $ (153.9) $ 590.4
========== ========== ========== ========== ==========
17
<PAGE>
Condensed Consolidating Statement of Income
For the Three Months Ended March 31, 1999
(In millions)
(Unaudited)
PARENT GUARANTOR JAIX
COMPANY SUBSIDIARIES LEASING ELIMINATIONS CONSOLIDATED
--------- ------------ --------- ------------ ------------
Total revenue $ -- $ 295.9 $ 2.5 $ -- $ 298.4
Cost of sales -- 248.1 1.4 -- 249.5
---------- ---------- ---------- ---------- ----------
Gross profit -- 47.8 1.1 -- 48.9
Selling, general, administrative
and amortization expenses 0.5 15.8 0.2 -- 16.5
---------- ---------- ---------- ---------- ----------
Operating income (0.5) 32.0 0.9 -- 32.4
Interest expense, net 3.8 2.9 0.2 -- 6.9
Equity (earnings) of subsidiaries (17.5) -- -- (17.5) --
Provision (benefit) for income (1.7) 12.0 0.3 -- 10.6
taxes.
---------- ---------- ---------- ---------- ----------
Net income (loss) before
extraordinary item 14.9 17.1 0.4 (17.5) 14.9
Extraordinary item net of
income tax (0.3) -- -- -- (0.3)
---------- ---------- ---------- ---------- ----------
Net income (loss) $ 14.6 $ 17.1 $ 0.4 $ (17.5) $ 14.6
========== ========== ========== ========== ==========
18
<PAGE>
Condensed Consolidating Statement of Cash Flows
For the Three Months Ended March 31, 1999
(In millions)
(Unaudited)
PARENT GUARANTOR JAIX
COMPANY SUBSIDIARIES LEASING ELIMINATIONS CONSOLIDATED
--------- ------------ --------- ------------ ------------
CASH FLOWS FROM
OPERATING ACTIVITIES $ (9.5) $ 27.3 $ 2.8 $ -- $ 20.6
CASH FLOWS FROM
INVESTING ACTIVITIES:
Capital expenditures -- (1.8) -- -- (1.8)
Leasing business asset additions -- -- (1.2) -- (1.2)
---------- ---------- ---------- ---------- ----------
Cash provided by (used for)
investing activities -- (1.8) (1.2) -- (3.0)
CASH FLOWS FROM
FINANCING ACTIVITIES:
Payments of term loans
and capital lease (20.0) (0.1) -- -- (20.1)
Payments of JAIX Leasing debt -- -- (0.1) -- (0.1)
Intercompany advances (2.2) 2.2 -- -- --
Payment of deferred financing
costs and other 0.2 -- (0.2) -- --
Dividends received (paid) 25.0 (25.0) -- -- --
---------- ---------- ---------- ---------- ----------
Cash provided by (used for)
financing activities 3.0 (22.9) (0.3) -- (20.2)
Net increase (decrease) in cash
and cash equivalents (6.5) 2.6 1.3 -- (2.6)
CASH AND CASH
EQUIVALENTS,
beginning of period 47.4 (13.5) 5.2 -- 39.1
---------- ---------- ---------- ---------- ----------
CASH AND CASH
EQUIVALENTS,
end of period $ 40.9 $ (10.9) $ 6.5 $ -- $ 36.5
========== ========== ========== ========== ==========
19
<PAGE>
Condensed Consolidating Balance Sheet
as of December 31, 1998
(In millions)
PARENT GUARANTOR JAIX
COMPANY SUBSIDIARIES LEASING ELIMINATIONS CONSOLIDATED
--------- ------------ --------- ------------ ------------
Cash and cash equivalents $ 47.4 $ (13.5) $ 5.2 $ -- $ 39.1
Accounts receivable, net -- 81.3 0.4 -- 81.7
Inventories -- 66.7 -- -- 66.7
Prepaid expenses and other 3.1 12.0 1.1 -- 16.2
---------- ---------- ---------- ---------- ----------
Total current assets 50.5 146.5 6.7 -- 203.7
Property, plant and equipment, net 2.4 114.4 18.2 (0.3) 134.7
Other assets 168.1 238.5 0.3 (160.9) 246.0
---------- ---------- ---------- ---------- ----------
Total assets $ 221.0 $ 499.4 $ 25.2 $ (161.2) $ 584.4
========== ========== ========== ========== ==========
Accounts payable $ -- $ 65.4 $ 0.2 $ -- $ 65.6
Other current liabilities (16.0) 93.9 2.4 -- 80.3
---------- ---------- ---------- ---------- ----------
Total current liabilities (16.0) 159.3 2.6 -- 145.9
Noncurrent liabilities -- 78.8 3.5 -- 82.3
Long-term debt, less current
maturities and intercompany
advances (receivables) 126.3 110.5 8.7 -- 245.5
Total shareholders' equity 110.7 150.8 10.4 (161.2) 110.7
---------- ---------- ---------- ---------- ----------
Total liabilities and shareholders'
equity $ 221.0 $ 499.4 $ 25.2 $ (161.2) $ 584.4
========== ========== ========== ========== ==========
20
<PAGE>
Condensed Consolidating Statement of Income
For the Three Months Ended March 31, 1998
(In millions)
(Unaudited)
PARENT GUARANTOR JAIX
COMPANY SUBSIDIARIES LEASING ELIMINATIONS CONSOLIDATED
--------- ------------ --------- ------------ ------------
Total revenue $ -- $ 228.8 $ 2.4 $ -- $ 231.2
Cost of sales -- 199.2 1.5 -- 200.7
---------- ---------- ---------- ---------- ----------
Gross profit -- 29.6 0.9 -- 30.5
Selling, general, administrative
and amortization expenses 0.4 14.9 -- -- 15.3
---------- ---------- ---------- ---------- ----------
Gain on sale of leased freight cars -- -- (1.2) -- (1.2)
Patent litigation settlement -- (16.8) -- -- (16.8)
---------- ---------- ---------- ---------- ----------
Operating income (0.4) 31.5 2.1 -- 33.2
Interest expense, net 3.4 4.7 0.5 -- 8.6
Equity (earnings) of subsidiaries (16.3) -- -- 16.3 --
Provision (benefit) for income
taxes (1.5) 11.5 0.6 -- 0.6
---------- ---------- ---------- ---------- ----------
Net income (loss) $ 14.0 $ 15.3 $ 1.0 $ (16.3) $ 14.0
========== ========== ========== ========== ==========
21
<PAGE>
Condensed Consolidating Statement of Cash Flows
For the Three Months Ended March 31, 1998
(millions)
(Unaudited)
PARENT GUARANTOR JAIX
COMPANY SUBSIDIARIES LEASING ELIMINATIONS CONSOLIDATED
--------- ------------ --------- ------------ ------------
CASH FLOWS FROM
OPERATING ACTIVITIES $ (8.9) $ (1.9) $ (0.1) $ -- $ (10.9)
CASH FLOWS FROM
INVESTING ACTIVITIES:
Capital expenditures -- (1.8) -- -- (1.8)
Leasing business asset additions -- -- (2.2) -- (2.2)
Proceeds from sale of leased
freight cars -- -- 24.3 -- 24.3
---------- ---------- ---------- ---------- ----------
Cash provided by (used for)
investing activities -- (1.8) 22.1 -- 20.3
CASH FLOWS FROM
FINANCING ACTIVITIES:
Payments of term loans and
capital leases (0.8) (0.1) -- -- (0.9)
Net Borrowings under
JAIX Leasing debt -- -- (19.7) -- (19.7)
Intercompany advances (2.0) 2.0 -- -- --
---------- ---------- ---------- ---------- ----------
Cash provided by (used for)
financing activities (2.8) 1.9 (19.7) -- (20.6)
Net increase (decrease) in cash
and cash equivalents (11.7) (1.8) 2.3 -- (11.2)
CASH AND CASH
EQUIVALENTS,
beginning of period 25.1 3.8 2.0 -- 30.9
---------- ---------- ---------- ---------- ----------
CASH AND CASH
EQUIVALENTS,
end of period $ 13.4 $ 2.0 $ 4.3 $ -- $ 19.7
========== ========== ========== ========== ==========
</TABLE>
22
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
GENERAL
Johnstown America Industries, Inc. (the "Company") has two operating segments
within the transportation industry: truck components, a leading manufacturer of
wheel-end components, seating, steerable drive axles, gearboxes and other
castings for the heavy-duty truck industry; and freight cars, a leading
manufacturer and lessor of new and rebuilt freight cars used for hauling coal,
intermodal containers, highway trailers, automobiles, agricultural and mining
products.
The Company's sales are affected to a significant degree by the freight car and
Class 8 truck markets. Both the freight car and the Class 8 truck markets are
subject to significant fluctuations due to economic conditions in these
particular markets, changes in the alternative methods of transportation and
other factors. There can be no assurance that fluctuations in such markets will
not have a material adverse effect on the results of operations or financial
condition of the Company.
Johnstown America Corporation (JAC) and Freight Car Services (FCS), the
Company's freight car manufacturing subsidiaries sales are driven principally by
the number and type of new and rebuilt freight cars delivered in any given
period. Due to the large size of customer orders, the specific time frame for
delivery of freight cars ordered and variations in the mix of cars ordered, the
number and type of cars produced in any given quarter may fluctuate greatly. As
a result, the Company's revenues and results of operations and cash flows from
operations may fluctuate as well.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
TOTAL REVENUE
Total revenue for the three months ended March 31, 1999 increased 29.1% to
$298.4 million from $231.2 million in the first quarter of 1998. The revenue
increase was primarily due to an increase in the freight car segment of 54.3%
from $117.4 million in the first quarter of 1998 to $181.1 million in the first
quarter of 1999. Shipments of new and rebuilt cars in 1999 were 3,027 compared
to 2,087 new and rebuilt cars in 1998. As of March 31, 1999 the Company's
backlog of new and rebuilt cars was 8,282, compared to 4,625 cars at March 31,
1998 and 9,462 cars at December 31, 1998. The truck component segment revenue
increased 3.1% from $113.8 in the first quarter of 1998 to $117.3 million in the
first quarter of 1999.
23
<PAGE>
COST OF SALES - MANUFACTURING AND GROSS PROFITS
Cost of sales - manufacturing for the first quarter as a percent of
manufacturing sales was 83.8% in 1999 compared to 87.0% in 1998. Related gross
profits were 16.2% and 13.0%, respectively. The increase in gross profit margins
resulted primarily from higher gross profit margins in the freight car segment
due to increased volume, better pricing and operational improvements made in the
first quarter of 1999 in comparison to the first quarter of 1998.
SELLING, GENERAL, ADMINISTRATIVE AND AMORTIZATION
Selling, general and administrative expenses as a percentage of total revenue
were 5.0% and 5.7% in the first quarter of 1999 and 1998, respectively. On a
percentage of total revenue basis, selling, general and administrative expenses
in the truck components segment were relatively unchanged, but were reduced in
the freight car segment due to significantly higher revenues. Amortization
expense was $2.1 million in both the first quarter of 1999 and 1998.
OPERATING INCOME
Operating income was $32.4 million in the first quarter of 1999, compared to
$33.2 million in the first quarter of 1998. Operating income in the first
quarter of 1998 was favorably affected by a $16.8 million patent litigation
settlement. Operating income in the first quarter of 1999 increased by $16.0
million compared to operating income in the first quarter of 1998 after
non-recurring items. During the first quarter of 1999, increased sales and
margins accounted for $18.4 million of the increase, while selling, general and
administrative expense increased in the first quarter of 1999 by $1.2 million
over first quarter 1998 levels. The Company also recognized a $1.2 million gain
on the sale of leased freight cars in the first quarter of 1998.
OTHER
Interest expense, net, was $6.9 million in the first quarter of 1999, compared
to $8.6 million in the first quarter of 1998. The reduced interest expense was
due to significantly lower levels of both the Company's term debt and its JAIX
Leasing subsidiary's debt.
The Company recorded an extraordinary item, net of income tax, of $0.3 million
in the first quarter of 1999 due to the early repayment of $20.0 of Tranche B
Term debt.
Net income and diluted earnings per share for the first quarter of 1999 were
$14.6 million and $1.44, respectively, compared to net income and diluted
earnings per share of $14.0 million and $1.40, respectively, for the first
quarter of 1998.
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended March 31, 1999, the Company provided cash from
operations of $20.6 million compared with a use of cash of $10.9 million for the
first three months of 1998. The Company used $3.0 million of cash in 1999
24
<PAGE>
for investing activities, $1.8 million for capital expenditures and $1.2 million
for leased business asset additions. Cash used by financing activities was $20.2
million for the first three months of 1999, due to the pay down of $20.1 million
of term loan principal payments and capital lease and $0.1 million of leasing
debt.
The Company's freight car sales are characterized by large order sizes, specific
customer delivery schedules and related vendor receipts and payment schedules,
all of which can combine to create significant fluctuations in working capital
accounts when comparing end of period balances. Such fluctuations tend to be of
short duration, and the Company considers this to be a normal part of its
operating cycle which does not significantly impact its financial flexibility
and liquidity.
As of March 31, 1999, there was $36.6 million of term loans outstanding under
the Senior Bank Facilities, $182.2 million of Notes outstanding, and no
borrowings under the $75 million revolving credit line under the Senior Bank
Facilities. Availability under the revolving credit line, after consideration of
outstanding letters of credit of $13.5 million, was $61.5 million.
Interest payments on the Notes and interest and principal payments under the
Senior Bank Facility represent significant liquidity requirements for the
Company. The Notes require semiannual interest payments of approximately $10.6
million. Borrowings under the new Senior Bank Credit Facility bears interest at
floating rates and require interest payments on varying dates depending upon the
interest rate option selected by the Company. The term loans under the Senior
Bank Credit Facility require periodic principal payments through their
maturities.
The Company believes that the cash flow generated from its operations, together
with amounts available under its revolving credit line, should be sufficient to
fund its debt service requirements, working capital needs, anticipated capital
expenditures and other operating expenses (including expenditures required by
applicable environmental laws and regulations). The Company's future operating
performance and ability to service or refinance the Notes and to extend or
refinance the new Senior Bank Credit Facilities will be subject to future
economic conditions and to financial, business and other factors, many of which
are beyond the Company's control.
As of March 31, 1999, the Company's balance sheet included cash of $36.5
million.
SUBSEQUENT EVENTS
On May 11, 1999, the Company announced that it had signed a definitive agreement
to sell the stock of its freight car operations, including Johnstown America
Corporation, Freight Car Services Inc. and JAIX Leasing Company to a newly
formed company that will operate under the Johnstown America Corporation (JAC)
name. It is expected that the transaction will close in mid-June. Under the
terms of the agreement, the Company will receive proceeds of approximately $100
million in cash and a 20 percent equity interest in the newly formed JAC
company. An additional contingent payment of $20 million plus interest will be
received upon certain one time events related to JAC. In addition, the new
company will assume all of the liabilities of the freight car operations,
including the $5.3 million Industrial Revenue Bond debt of Freight Car Services,
Inc.; $9.1 million of JAIX Leasing Company debt; and employee- related
liabilities including $10.8 million of retiree medical and life insurance
liabilities and the assumption of existing union contracts together with related
liabilities. Anticipated after-tax cash proceeds of approximately $75 million
25
<PAGE>
will be used to prepay outstanding indebtedness under the new Senior Credit
Facility which will result in an after tax extraordinary non-cash charge of
approximately $20.0 million. After the sale of the freight car operations, the
Company will restate its historical financial statements to reflect those
operations as discontinued operations.
On May 3, 1999, the Company announced that its Gunite Corporation subsidiary had
signed a definitive agreement to acquire the assets of EMI Company (EMI), an
iron foundry and machining company located in Erie, Pennsylvania with annual
revenues of approximately $55 million, from Hitachi Metals America, Ltd. Terms
of the transaction were not disclosed. The Company plans to fund the purchase
price with available cash on-hand.
On April 29, 1999, the Company acquired the assets of Imperial Group, Inc.
(Imperial). Imperial is a leading Tier I and Tier II supplier of body and
chassis components for heavy-duty Class 8 truck manufacturers and transit bus
manufacturers. The purchase price for Imperial, consisting of $57.4 million in
cash and 156,740 shares of JAII common stock, was approximately $60.1 million at
closing. Imperial's 1998 revenues were $81.8 million. In connection with the
acquisition, JAII entered into a new senior bank credit facility (see "New
Senior Credit Facility" below).
In conjunction with the acquisition of Imperial, the Company on April 29, 1999,
entered into a new Senior Bank Credit Facility. The new facility is comprised of
a $50 million Term A Loan, a $50 million Term B Loan and an undrawn $75 million
Revolving Credit Facility. Proceeds were used to finance the Imperial
acquisition, to refinance JAII's then outstanding senior bank debt of $36.6
million (resulting in an extraordinary non-cash after tax charge of $1.7
million), and for working capital and other general corporate purposes.
At the Company's election, interest rates per annum on the new Term A loan and
the new Revolving Credit Facility are fluctuating rates of interest measured by
reference to either (a) an adjusted London inter-bank offered rate (LIBOR) plus
a borrowing margin or (b) an alternate base rate (ABR) plus a borrowing margin.
Such borrowing margins range between 1.50% and 2.50% for LIBOR loans and between
0.50% and 1.50% for ABR loans, fluctuating within each range in 0.25% increments
based on the Company achieving certain financial results. Interest rates per
annum applicable to the Term B loan are either (a) LIBOR plus a margin of 2.75%
or (b) ABR plus a margin of 1.75%. Additionally, various fees related to unused
commitments, letters of credit and administration of the facility are incurred
by the Company. Borrowings under the new Senior Bank Credit Facility are
guaranteed by each of the Company's subsidiaries other than JAIX Leasing (the
Guarantor Subsidiaries) and are secured by the assets and stock of the Company
and its Guarantor Subsidiaries. The Term A Loan and the Revolving Credit
Facility mature on April 29, 2004 and the Term B Loan matures on April 29, 2005.
The new Senior Bank Credit Facility contains various financial covenants
including capital expenditure limitations, minimum leverage and interest
coverage ratios, and minimum net worth. The agreement also restricts the Company
from paying dividends and making other distributions in certain circumstances,
and limits the ability to repurchase common stock and prepay the Senior
Subordinated Notes.
In April 1999, the Company, through its wholly owned subsidiary, Bostrom
Seating, Inc., issued Industrial Revenue Bonds for $3.1 million which bear
interest at a variable rate (3.35% as of April 1, 1999) and can be redeemed by
the Company at any time. The bonds are secured by a letter of credit issued by
Johnstown America Industries, Inc. The bonds have no amortization and mature in
2014. The bonds are also subject to a weekly "put" provision by the holders of
26
<PAGE>
the bonds. In the event that any or all of the bonds are put to the Company
under this provision, the Company would effectively refinance such bonds with
additional borrowings under the new Revolving Credit Facility.
YEAR 2000
The Year 2000 issue is the result of date-sensitive devices, systems and
computer programs that were deployed using two digits rather than four to define
the applicable year. Any such technology may recognize a year containing "00" as
the year 1900 rather than the year 2000. This issue could result in a system
failure or miscalculations causing disruptions of operations including, among
other things, a temporary inability to process transactions or engage in similar
normal business activities.
In 1996, the Company initiated a comprehensive program to ensure that its
various business systems continue to function properly in the year 2000. By the
end of 1998, all critical business systems at each operating unit had been
reviewed, modified if necessary, and tested. Many non-critical business systems
had also been reviewed, modified and tested. All non-critical systems are
expected to be fully tested by mid 1999. Assessment of manufacturing processes
and facility management systems is underway and is expected to be substantially
completed by mid 1999.
Additionally, the Company is currently assessing readiness for the year 2000 by
key suppliers and other third parties with whom it has significant business
relationships. Information requests have been distributed and replies have been
received. If the risk is deemed material, the Company is performing onsite
visits to verify the adequacy of the information received.
Based upon the accomplishments to date, no contingency plans are expected to be
needed and therefore none have been developed. However, because of the
substantial progress to date, we believe adequate time will be available to
insure alternatives can be developed, assessed and implemented if necessary,
prior to the Year 2000 issue having a material impact on the Company's
operations. If however, systems of the Company or its key suppliers or other
third parties with whom it has significant business relationships are not Year
2000 compliant on a timely basis and a contingency plan is not developed on a
timely basis, the Year 2000 issue could have a material adverse effect on the
Company's operations and financial condition.
Beginning in 1996, as part of the Company's ongoing information system
improvement process, its enterprise systems were upgraded, which partially
mitigated the impact of the Year 2000 problem. Excluding the cost of upgrading
the enterprise systems, the pretax cost incurred to date of becoming "Year 2000"
compliant has been approximately $0.5 million and is not expected to be more
than $0.7 million for the total project. Such costs are being funded through
operating cash flows.
The cost of the project and expected completion are based on management's best
estimates, which were derived using numerous assumptions of future events,
including the continued availability of certain resources and other factors.
27
<PAGE>
However, there can be no guarantee that these estimates will be achieved and
actual results could differ materially from those anticipated. Specific factors
that might cause such material differences include, but are not limited to, the
availability and cost of personnel trained in this area, the ability to locate
and correct all relevant computer codes, and similar uncertainties.
Additionally, there can be no guarantee that the systems of other companies on
which the Company's systems rely will be timely converted, or that a failure to
convert by another company, or a conversion that is incompatible with the
Company's systems, would not have a material adverse effect on the Company.
ENVIRONMENTAL MATTERS
The Company's subsidiaries are currently involved in several matters relating to
the investigation and/or remediation of locations where the subsidiaries have
arranged for the disposal of foundry and other wastes. Such matters include five
situations in which the Company, through its TCI subsidiaries and their
predecessors, have been named or are believed to be potentially responsible
parties ("PRP") in the contamination of the sites. With respect to claims
involving Gunite Corporation ("Gunite"), TCI and Gunite in September 1997
entered into a private-party settlement (the "Settlement") of certain pending
litigation with a prior owner of Gunite, pursuant to which each of TCI and
Gunite and the prior owner withdrew their claims against the other. As of result
of the Settlement, TCI and Gunite will not be responsible for liabilities and
costs related to certain alleged contamination of Gunite's facilities and at
certain off-site properties to the extent arising out of operations of Gunite
prior to the acquisition of Gunite by TCI in September 1987. As of March 31,
1999, based on all of the information currently available to the Company, the
Company has an environmental reserve of $10.7 million which management believes
its adequate to cover future expenditures. This reserve is based on current cost
estimates and does not reduce estimated expenditures to net present value,
although the Company's subsidiaries are not likely to incur costs for most of
the reserved matters until several years in the future. Any cash expenditures
required by the Company or its subsidiaries to comply with applicable
environmental laws and/or to pay for any remediation efforts will not be reduced
or otherwise affected by the existence of the environmental reserve. Due to the
early stage of investigation of many of the sites and potential remediations
referred to above, there are significant uncertainties as to waste quantities
involved, the extent and timing of the remediation which will be required, the
range of acceptable solutions, costs of remediation and the number of
potentially responsible parties contributing to such costs. Based on all of the
information presently available, the Company believes that the environmental
reserve will be adequate to cover its future costs related to the sites
associated with the environmental reserve, and that any additional costs will
not have a material adverse effect on the financial condition or results of
operations of the Company. However, the discovery of additional sites, the
modification of existing laws or regulations, the imposition of joint and
several liability or the uncertainties referred to above could result in such a
material adverse effect.
NEW ACCOUNTING PRONOUNCEMENTS
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" was
issued in June 1998 and must be adopted by the Company by the year 2000. This
new pronouncement will require the Company to record derivatives on the balance
28
<PAGE>
sheet as assets or liabilities, measured at fair value and gains or losses
resulting from the changes in the values of those derivatives to be accounted
for depending on the use of the derivative and whether it qualifies for hedge
accounting. The Company is evaluating the standard and does not expect it to
have a material impact on the financial results or condition of the Company
because the use of derivatives at the Company is not significant.
FORWARD-LOOKING STATEMENTS
The foregoing outlook contains forward-looking statements that are based on
current expectations and are subject to a number of risks and uncertainties.
Actual results could differ materially from current expectations due to a number
of factors, including general economic conditions; competitive factors and
pricing pressures; shifts in market demand, the performance and needs of
industries served by the Company's businesses; and the risks described from time
to time in the Company's Securities and Exchange Commission reports.
EFFECTS OF INFLATION
General price inflation has not had a material impact on the Company's results
of operations.
29
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
10.1 Asset Purchase Agreement, dated as of March 22, 1999, among the
Company, Imperial Group Acquisition, L.P., Imperial Fabricating Company
of Tennessee, Inc., Fleet Design, Inc., Imperial Group, Inc., Fred D.
Culbreath and Joseph A. Hicks.
10.2 Asset Purchase Agreement, dated as of April 30, 1999, among Gunite
Corporation, Gunite Acquisition Corp., Hitachi Metals America,
Ltd. and Ward Manufacturing, Inc.
10.3 Share Purchase Agreement, dated as of May 10, 1999, between the Company
and Rabbit Hill Holdings, Inc. (incorporated by reference to Exhibit
99.2 of the Company's Current Report on Form 8-K dated May 12, 1999).
10.4 Credit Agreement, dated as of April 29, 1999, among the Company, the
financial institutions named therein, The Chase Manhattan Bank, as
Administrative Agent, Collateral Agent and Swingline Lender,
BankBoston, N.A. and The First National Bank of Chicago, as Co-Agents,
and Chase Manhattan Bank Delaware, as Issuing Bank.
10.5 Bond Guaranty Agreement dated April 1, 1999, by Bostrom Seating, Inc.
and Lease Agreement, dated April 1, 1999, between Bostrom Seating, Inc.
and The Industrial Development Board of the City of Piedmont, relating
to $3.1 million of industrial revenue bonds.
(B) REPORTS
The Company filed the following reports on Form 8-K during the three months
ended March 31, 1999:
None
30
<PAGE>
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 thereunto duly authorized.
JOHNSTOWN AMERICA INDUSTRIES, INC.
By /S/ ANDREW M. WELLER
- ---------------------------------------
Andrew M. Weller
Executive Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
Dated: May 13, 1999
ASSET PURCHASE AGREEMENT
Dated as of March 22, 1999
For the Purchase
of
Substantially all of the Assets of
IMPERIAL FABRICATING COMPANY
OF TENNESSEE, INC.
and
FLEET DESIGN, INC.
by
JOHNSTOWN AMERICA INDUSTRIES. INC.
and its Subsidiary
IMPERIAL GROUP ACQUISITION, L.P.
collectively as
BUYER
i
<PAGE>
<TABLE>
TABLE OF CONTENTS
<S> <C>
Article I. DEFINITIONS.....................................................................2
Section 1.01 Definitions..................................................................2
Article II. PURCHASE AND SALE OF ASSETS....................................................2
Section 2.01 Sale of Assets...............................................................2
Section 2.02 Purchase of Assets...........................................................2
Section 2.03 Assets to be Acquired........................................................2
Section 2.04 Excluded Assets..............................................................4
Section 2.05 Assumption of Liabilities....................................................4
Section 2.06 Excluded Liabilities.........................................................5
Article III. PURCHASE PRICE................................................................6
Section 3.01 Purchase Price for Assets....................................................6
Section 3.02 Payment of the Purchase Price................................................7
Section 3.03 Payment and Deposits to Escrow Accounts......................................7
Section 3.04 Earn-Out Payments............................................................8
Section 3.05 Payment of Certain Indebtedness at Closing...................................8
Section 3.06 Payment of Balance of Purchase Price.........................................8
Article IV. PURCHASE PRICE ALLOCATIONS AND ADJUSTMENTS.....................................9
Section 4.01 Allocation of Purchase Price.................................................9
Section 4.02 Closing Balance Sheet........................................................9
Section 4.03 Procedure for Post Closing Purchase Price Adjustment.........................9
Section 4.04 Payment of Post Closing Purchase Price Adjustment...........................10
Article V. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER...............................10
Section 5.01 Conditions Precedent to the Obligations of Buyer............................10
Section 5.02 Acquisition of Industrial Realty Partners Real Estate.......................10
Section 5.03 Employment Agreements.......................................................11
Section 5.04 Delivery of Exhibits and Schedules..........................................11
Section 5.05 Receipt of Consents and Approvals...........................................11
Section 5.06 Hart Scott Rodino Approval..................................................11
Section 5.07 Opinion of the Sellers' Counsel.............................................11
Section 5.08 Correctness of the Sellers' Representations and Warranties..................11
Section 5.09 Absence of Legal Restraints.................................................12
Section 5.10 Absence of Bankruptcy Proceedings...........................................12
Section 5.11 Corporate Authorization and Approval by the Companies and Shareholder.......12
Section 5.12 Payment of the Closing Indebtedness.........................................12
Section 5.13 No Material Adverse Effect..................................................12
Section 5.14 Secretary's Certificate.....................................................13
Section 5.15 Non-Competition Agreements..................................................13
Section 5.16 Receipt of Financing........................................................13
Section 5.17 Escrow Agreements...........................................................13
Section 5.18 Real Estate Leases..........................................................13
Section 5.19 Execution of Design/Build Agreement and Lease/Tennessee.....................13
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Section 5.20 Execution of Design/Build Agreement and Lease/Texas.........................13
Section 5.21 FIRPTA Certificates.........................................................13
Section 5.22 Other Material Documents....................................................13
Article VI. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLERS.......................13
Section 6.01 Conditions Precedent to the Obligations of the Sellers......................14
Section 6.02 Acquisition of Industrial Realty Partners Real Estate.......................14
Section 6.03 Employment Agreements.......................................................14
Section 6.04 Non-Competition Agreements..................................................14
Section 6.05 Delivery of Exhibits and Schedules..........................................14
Section 6.06 Hart Scott Rodino Approval..................................................14
Section 6.07 Opinion of Buyer's Counsel..................................................14
Section 6.08 Correctness of Buyer's Representations and Warranties.......................14
Section 6.09 Absence of Legal Restraints.................................................14
Section 6.10 Absence of Bankruptcy Proceedings...........................................15
Section 6.11 Corporate Authorization and Approval by Buyer...............................15
Section 6.12 Secretary's Certificate.....................................................15
Section 6.13 Escrow Agreements...........................................................15
Section 6.14 Execution of Design/Build Agreement and Lease/Tennessee.....................16
Section 6.15 Execution of Design/Build Agreement and Lease/Texas.........................16
Section 6.16 Real Estate Leases..........................................................16
Article VII. CLOSING.....................................................................16
Section 7.01 Closing.....................................................................16
Article VIII. REPRESENTATIONS AND WARRANTIES OF THE SELLERS..............................16
Section 8.01 Organization and Qualification of the Shareholder...........................16
Section 8.02 Organization and Qualification of the Companies.............................17
Section 8.03 Ownership and Status of the Companies' and the Shareholder's Capital Stock..18
Section 8.04 Power to Approve Sale of Assets of the Companies............................18
Section 8.05 Conflicts With Law or Other Agreements; Required Filings and Consents.......18
Section 8.06 Litigation and Judgments....................................................19
Section 8.07 Brokers.....................................................................20
Section 8.08 Control of Related Businesses...............................................20
Section 8.09 Authorization and Binding Effect............................................20
Section 8.10 Corporate Records of Stock Ownership........................................20
Section 8.11 Subsidiaries, Affiliates and Joint Ventures.................................21
Section 8.12 Insider Transactions........................................................21
Section 8.13 Licenses, Permits and Eligibility...........................................21
Section 8.14 Personal Property of the Companies..........................................22
Section 8.15 Accounts Receivable.........................................................23
Section 8.16 Tradenames and Intellectual Property Rights.................................23
Section 8.17 Title to Included Real Property............................................23
Section 8.18 Condition of Property.......................................................24
Section 8.19 Land Use Regulation.........................................................24
Section 8.20 Reports, Contracts and Other Documents......................................25
Section 8.21 Use Permits and Other Approvals.............................................25
Section 8.22 Environmental Matters.......................................................25
Section 8.23 Prior Financial Statements..................................................27
Section 8.24 Employment Matters..........................................................28
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Section 8.25 Contracts of the Companies..................................................30
Section 8.26 Inventories.................................................................31
Section 8.27 Absence of Certain Changes, Events and Conditions...........................31
Section 8.28 Taxes.......................................................................33
Section 8.29 Accounting Practices........................................................34
Section 8.30 Product Warranties..........................................................35
Section 8.31 Customers and Suppliers.....................................................35
Section 8.32 Year 2000 Issue.............................................................35
Article IX. SECURITY REPRESENTATIONS OF THE SELLERS......................................35
Section 9.01 Security Representations of Sellers.........................................35
Article X. REPRESENTATIONS AND WARRANTIES OF JAII AND JAII ACQUISITION SUB................38
Section 10.01 JAII and JAII Acquisition Sub.............................................38
Section 10.02 Brokers...................................................................39
Section 10.03 Authorization.............................................................39
Section 10.04 Power to Approve Purchase of the Assets and the Acquired Business.........39
Section 10.05 Conflicts With Law or Other Agreements; Required Filings and Consents.....39
Section 10.06 Required Filings and Consents.............................................40
Section 10.07 Litigation and Judgments..................................................40
Section 10.08 Validity of Shares........................................................40
Section 10.09 Full Disclosure...........................................................41
Article XI. ADDITIONAL AGREEMENTS........................................................41
Section 11.01 Conduct of Business by the Companies Pending the Closing..................41
Section 11.02 Access to Information.....................................................42
Section 11.03 Notification of Certain Matters...........................................42
Section 11.04 Further Action; Reasonable Efforts........................................42
Section 11.05 No Shop...................................................................42
Section 11.06 Hart Scott Rodino Act Matters.............................................43
Section 11.07 Payment of Broker's Fees and Expenses.....................................43
Section 11.08 Consents and Approvals....................................................43
Section 11.09 Cooperation with Respect to Financing.....................................43
Section 11.10 Change of Corporate Names.................................................43
Article XII. INDEMNIFICATION.............................................................44
Section 12.01 Survival of Representations and Warranties................................44
Section 12.02 Indemnification by the Sellers............................................44
Section 12.03 Indemnification by JAII and JAII Acquisition Sub..........................45
Section 12.04 Conditions of Indemnification.............................................46
Section 12.05 Limitations on Indemnification............................................49
Article XIII. TERMINATION, AMENDMENT AND WAIVER..........................................50
Section 13.01 Termination...............................................................50
Section 13.02 Effect of Termination.....................................................51
Section 13.03 Amendment.................................................................52
Section 13.04 Waiver....................................................................52
Article XIV. GENERAL PROVISIONS..........................................................53
Section 14.01 Notices...................................................................53
Section 14.02 Parties in Interest.......................................................54
Section 14.03 Governing Law.............................................................54
Section 14.04 Headings..................................................................54
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Section 14.05 Counterparts..............................................................54
Section 14.06 Expenses..................................................................54
Section 14.07 Entire Agreement, Assignment..............................................55
Section 14.08 Time......................................................................55
Section 14.09 Reformation and Severability..............................................55
Section 14.10 Preparation and Filing of Tax Returns.....................................55
Section 14.11 News Releases.............................................................56
Section 14.12 Access to Books and Records...............................................56
</TABLE>
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is entered into as of this the 22nd day
of March, 1999 by and among IMPERIAL FABRICATING COMPANY OF TENNESSEE, INC., a
Tennessee corporation (herein "IFC"), and FLEET DESIGN, INC., a Tennessee
corporation (herein "FDI"), (collectively referred to herein as the
"Companies"), IMPERIAL GROUP, INC., a Tennessee corporation (herein the
"Shareholder") and Fred D. Culbreath and Joseph A. Hicks, the Shareholders of
Imperial Group, Inc. (the "Imperial Shareholders") (IFC, FDI, the Shareholder
and the Imperial Shareholders are collectively referred to herein as the
"Sellers") and JOHNSTOWN AMERICA INDUSTRIES, INC. ("JAII"), a Delaware
corporation, and IMPERIAL GROUP ACQUISITION, L.P. ("JAII Acquisition Sub"), a
Delaware limited partnership (JAII and JAII Acquisition Sub are herein
collectively referred to as the "Buyer").
WITNESSETH:
WHEREAS, IFC is engaged in the business of metal fabrications,
stampings, and assemblies of parts for the truck and transit bus industry; and
WHEREAS, FDI is engaged in the business of chrome plating and polishing
of component parts for the truck and transit bus industry; and
WHEREAS, IFC and FDI are wholly-owned qualifying Subchapter S
subsidiaries of the Shareholder;
WHEREAS, the Imperial Shareholders are the owners of all the issued and
outstanding shares of capital stock of the Shareholder; and
WHEREAS, the Companies desire to sell substantially all of the Assets
(as herein defined) used in connection with their respective manufacturing
operations and businesses (referred to collectively herein as the "Acquired
Business") to Buyer and Buyer desires to purchase the Assets and the Acquired
Business on the terms and conditions set forth herein.
NOW, THEREFORE, for and in consideration of the mutual agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, the Sellers and Buyer covenant, represent, warrant and agree as follows:
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ARTICLE I.
DEFINITIONS
SECTION 1.01 DEFINITIONS.
As used in this Agreement the capitalized terms set forth herein shall
have the meanings indicated in EXHIBIT A, unless the context or use indicates
another or different meaning.
ARTICLE II.
PURCHASE AND SALE OF ASSETS
SECTION 2.01 SALE OF ASSETS.
Subject to the terms and conditions of this Agreement, the Companies
covenant and agree to sell, assign, transfer, convey and deliver to Buyer (or
cause to be sold, assigned, transferred, conveyed and delivered to Buyer) at
the Closing, the Assets and the Acquired Business, as described in SECTION
2.03 hereof, in the manner and for the consideration set forth in ARTICLE III.
SECTION 2.02 PURCHASE OF ASSETS.
Subject to the terms and conditions of this Agreement, Buyer covenants
and agrees to purchase from the Companies at the Closing the Assets and the
Acquired Business, as described in SECTION 2.03 hereof, in the manner and for
the consideration set forth in ARTICLE III.
SECTION 2.03 ASSETS TO BE ACQUIRED.
The Companies shall, at the Closing, effective as of 12:01 a.m., local
time, on the Closing Date, by special warranty deed, bills of sale and other
appropriate documents of transfer reasonably satisfactory to Buyer and the
Sellers, (the "Transfer Documents") transfer to Buyer, free and clear of any
claim, suit, proceedings, restriction, limitation, security interest, pledge,
lien or encumbrance of any kind or nature whatsoever, except those, if any,
which are set forth on SECTION 2.03 SCHEDULE (A), all right, title and
interest of the Companies in and to the properties, assets and rights of every
nature, kind and description, tangible and intangible (including goodwill),
whether real, personal or mixed, whether accrued, contingent or otherwise and
whether now existing or hereinafter acquired (other than the Excluded Assets
as herein defined) relating to or used or held for use in connection with the
Acquired Business as the same may exist on the Closing Date (collectively, the
"Assets"), including without limitation all those items in the following
categories:
(a) all machinery, equipment, furniture, furnishings, automobiles, trucks,
vehicles, tools, dies, molds and parts and similar property (including,
but not limited to, any of the foregoing purchased subject to any
conditional sales or title retention agreement in favor of any other
Person);
(b) all inventories of raw materials, work in process, finished products,
goods, spare parts, replacement and component parts, and office and
other supplies (collectively, the "Inventories"), including Inventories
held at any location controlled by the Companies and Inventories
previously purchased and in transit to the Companies at such locations;
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(c) all rights in and to products sold or leased (including, but not limited
to, products hereafter returned or repossessed and unpaid sellers'
rights of rescission, replevin, reclamation and rights to stoppage in
transit);
(d) all rights (including, but not limited to, any and all Intellectual
Property rights) in and to the products sold or leased and in and to any
products or other Intellectual Property rights under research or
development prior to or on the Closing Date;
(e) the right to the corporate names "Imperial Fabricating Company of
Tennessee, Inc.", "Fleet Design, Inc.", "Imperial Group, Inc." and such
other names used by the Companies and the Shareholder as set forth on
SECTION 2.03(E) SCHEDULE (A); provided, however, Buyer, with Sellers'
cooperation, shall be responsible to secure its right to these corporate
names by the filing of appropriate name reservations or other corporate
filings, as appropriate and necessary, with the respective state
offices, as required by the applicable state law;
(f) all of the rights of the Companies under all contracts, arrangements,
licenses, leases (real and personal) and other agreements (the "Assumed
Contracts") including, without limitation, any right to receive payment
for products sold or services rendered, and to receive goods and
services, pursuant to such agreements and to assert claims and take
other rightful actions in respect of breaches, defaults and other
violations of such contracts, arrangements, licenses, leases and other
agreements and otherwise, but, only to the extent Buyer assumes the
Companies' obligations under such contracts, agreements, licenses,
leases and other agreements pursuant to SECTION 2.05;
(g) all credits, prepaid expenses, deferred charges, advance payments,
security deposits, prepaid items and retroactive insurance adjustments
for workers' compensation claims;
(h) all notes and accounts receivable held by the Companies and all notes,
bonds and other evidences of indebtedness of and rights to receive
payments (including the benefits and proceeds of all insurance policies)
from any Person held by the Companies, except for cash and cash
equivalents, intracompany and affiliate transactions and accounts, cash
surrender value of life insurance, and investment securities as set
forth on SECTION 2.03(H) SCHEDULE (A);
(i) all Intellectual Property owned by the Companies or licensed to the
Companies and all rights thereunder or in respect thereof relating to or
used or held for use in connection with the Acquired Business,
including, but not limited to, rights to sue for and remedies against
past, present and future infringements thereof, and rights of priority
and protection of interests therein under the laws of any jurisdiction
worldwide and all tangible embodiments thereof;
(j) all books, records, manuals and other materials (in any form or medium),
including, without limitation, all records and materials maintained at
the headquarters of the Companies, advertising matter, catalogues, price
lists, correspondence, mailing lists, lists of customers,
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distribution lists, photographs, production data, sales and promotional
materials and records, purchasing materials and records, personnel
records, manufacturing and quality control records and procedures,
blueprints, research and development files, records, data and laboratory
books, Intellectual Property disclosures, media materials and plates,
accounting records, sales order files and litigation files;
(k) to the extent their transfer is permitted by law, all Governmental
Approvals, including all applications therefor;
(l) all real property, as set forth in SECTION 2.03(L) SCHEDULE (A) and all
licenses, permits, approvals and qualifications relating to any real
property issued to the Companies by any Governmental Authority (herein
the "Included Real Property");
(m) all rights to causes of action, lawsuits, judgments, claims and demands
of any nature available to or being pursued by the Companies with
respect to the Acquired Business or the ownership, use, function or
value of any Asset, whether arising by way of counterclaim or otherwise;
and
(n) all guarantees, warranties, indemnities and similar rights in favor of
the Companies with respect to any Asset.
SECTION 2.04 EXCLUDED ASSETS.
The Assets shall not include (a) Cash or Cash Equivalents of the
Companies; (b) the real property set forth on SECTION 2.04 SCHEDULE (A) (the
"Excluded Real Property"); (c) all life insurance policies owned by the
Companies as set forth on SECTION 2.04 SCHEDULE (A); (d) all investment
securities and the other assets set forth on SECTION 2.04 SCHEDULE (A) and (e)
the other assets set forth on SECTION 2.04 SCHEDULE (A) (herein collectively the
"Excluded Assets"). The Excluded Assets shall be the only Assets of the
Companies excluded from transfer to Buyer hereunder.
SECTION 2.05 ASSUMPTION OF LIABILITIES.
(a) Subject to the terms and conditions set forth herein, at the Closing,
Buyer shall assume and agree to pay, honor and discharge when due all of
the following liabilities relating to the Assets and, except as provided
in SECTION 2.06 existing at or arising on or after the Closing Date
(collectively, the "Assumed Liabilities"):
(i) any and all liabilities, obligations and commitments relating
exclusively to the Acquired Business or the Assets that are (x)
reflected on the December Balance Sheet (as herein defined), or (y)
incurred after the date of the December Balance Sheet in the ordinary
course of business consistent with prior practice and in accordance
with the terms of this Agreement;
(ii) any and all liabilities, obligations and commitments (x) arising out of
the agreements, contracts and commitments set forth on SECTION
2.05(A)(II) SCHEDULE (A) but not including
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any obligation or liability for any breach thereof occurring prior to
the Closing Date or (y) listed on SECTION 2.05(A)(II) SCHEDULE (B);
(iii) all obligations of the Companies pursuant to all outstanding quotes,
blanket purchase orders and monthly releases by and between the
Companies and PACCAR as of the Closing Date, incurred in the ordinary
course of business and consistent with the Companies' policies;
(iv) all obligations of the Companies, from and after the Closing, with
respect to the leases of real property set forth on SECTION 2.05(A)(IV)
SCHEDULE (A) (the "Included Leased Property");
(v) liabilities with respect to all litigation and claims which are
specifically reserved for on the Closing Balance Sheet, but only to the
extent of the reserve designated as the Litigation Reserve as set forth
on the Closing Balance Sheet;
(vi) liabilities with respect to all product liability, product recalls,
warranty claims, defective material claims and merchandise returns, but
only to the extent of the reserve designated as the Warranty Reserve as
set forth on the Closing Balance Sheet; and
(vii) liabilities for Taxes relating to or arising out of the Acquired
Business accruing with respect to any time period occurring, at or
prior to Closing, but only to the extent of the reserve reserve
designated as the Tax Reserve as set forth on the Closing Balance
Sheet.
(b) At the Closing, Buyer shall assume the Assumed Liabilities relating to
the Acquired Business by executing and delivering to the Sellers an
assumption agreement in a form reasonably satisfactory to the Sellers
(the "ASSUMPTION AGREEMENT") and attached hereto as SECTION 2.05(B)
SCHEDULE(A).
SECTION 2.06 EXCLUDED LIABILITIES.
Except for the Liabilities assumed by Buyer as set forth in SECTION 2.05
or as set forth in SECTION 2.05(B) SCHEDULE (A), and regardless of any
disclosure to Buyer, Buyer shall not assume any liabilities, obligations or
commitments of any Seller relating to or arising out of the operation of the
Acquired Business or the ownership of the Assets prior to the Closing (the
"Excluded Liabilities"), other than the Assumed Liabilities. Specifically the
Excluded Liabilities include, but are not limited to:
(a) liabilities with respect to all litigation and claims (exclusive of
claims under SECTION 2.06(B)) which are not specifically reserved for on
the Closing Balance Sheet in the Litigation Reserve or which is in
excess of the Litigation Reserve as set forth on the Closing Balance
Sheet, to the extent of such excess;
(b) liabilities with respect to all product liability, product recalls,
warranty claims, defective material claims and merchendise returns,
which are not specifically reserved for in the
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Warranty Reserve on the Closing Balance Sheet or which are in excess of
the Warranty Reserve as set forth on the Closing Balance Sheet, to the
extent of such excess;
(c) liabilities for Taxes relating to or arising out of the Acquired
Business accruing with respect to any time period occurring, at or prior
to Closing which are not specifically reserved for in the Tax Reserve on
the Closing Balance Sheet or which are in excess of the Tax Reserve as
set forth on the Closing Balance Sheet, to the extent of such excess;
(d) liabilities for Third Party and Governmental Environmental Liabilities
and Costs;
(e) liabilities for intercompany accounts payable which do not represent
trade accounts payable;
(f) liabilities, obligations and commitments of the Sellers required by GAAP
to be included in the December Balance Sheet but which are not included
in the December Balance Sheet;
(g) liabilities, obligations and commitments of the Sellers incurred after
the date of the December Balance Sheet which are not in the ordinary
course of business consistent with past practices of the Companies; and
(h) liabilities and obligations of the Companies resulting from the failure
of the Companies to comply in all material respects with all federal,
state, local and foreign statutues, laws, ordinances, regulations, rules
and permits, judgments, orders or decrees (except to the extent such
liabilities and obligations are reserved for in the Litigation Reserve
as set forth on Closing Balance Sheet) applicable to the Acquired
Business or the Assets and commitments of the Sellers.
ARTICLE III.
PURCHASE PRICE
SECTION 3.01 PURCHASE PRICE FOR ASSETS.
(a) The Purchase Price. The Purchase Price for the Assets and the Acquired
Business shall be an amount equal to (i) the sum of (A) $56,000,000 in
cash, minus the amount of Indebtedness as set forth on SECTION 3.05
SCHEDULE (A) (the "Closing Indebtedness") of the Companies which remains
outstanding, if any, after giving effect to the payment by Sellers of
the Closing Indebtedness on the Closing Date, (the "Cash Component");
and (B) the Stock Component (as herein defined); and (C) the Earn-Out
Payments (as herein defined); and (D) the Post Closing Purchase Price
Adjustment (as herein defined) and (ii) the Assumed Liabilities
(such aggregate amount is referred to herein as the "Purchase Price").
(b) Form of Purchase Price Paid at Closing. The Purchase Price to be paid at
Closing shall consist of (i) a payment of (A) the Cash Component plus
(B) that number of shares of JAII's common stock, $.01 par value per
share (the "JAII Common Stock"), equal in value to $2.5 million (the
"Stock Component") plus the assumption of the Assumed Liabilities. For
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purposes of determining the number of shares of JAII Common Stock that
shall be delivered to the Companies at Closing, $2.5 million shall be
divided by the average of the closing price of a share of JAII Common
Stock for each of the ten trading days immediately prior to the date of
the public announcement of JAII of the acquisition of the Assets and the
Acquired Business (the "JAII Average Closing Price"). The Stock
Component of the Purchase Price will consist of shares of JAII Common
Stock that have not been registered under the Securities Act of 1933, as
amended (the "Securities Act").
SECTION 3.02 PAYMENT OF THE PURCHASE PRICE.
At Closing, Buyer shall deliver to the Companies the Cash Component and
the Stock Component, minus any cash or shares of JAII Common Stock delivered to
the Escrow Agents pursuant to SECTION 3.03 below.
SECTION 3.03 PAYMENT AND DEPOSITS TO ESCROW ACCOUNTS.
(a) Deposit of Indemnification Escrow.
At Closing, Buyer shall deliver to an escrow agent (which shall be a
national bank or trust company) mutually agreeable to the parties and
willing to serve, subject to the terms of the Indemnification Escrow
Agreement (as herein defined), as escrow agent for the benefit of Buyer
and the Sellers (the "Indemnification Escrow Agent") an amount equal to
$3.0 million (otherwise deliverable to the Companies pursuant to SECTION
3.01(B) above) consisting of (i) cash, (ii) shares of JAII Common Stock
(based on the JAII Average Closing Price) or (iii) any combination
thereof (the "Indemnification Escrow Amount"). The form of the Escrow
Indemnification Amount shall be at the sole election of the Companies.
The Indemnification Escrow Amount shall be administered and disbursed by
the Indemnification Escrow Agent pursuant to the terms and conditions of
an escrow agreement (the "Indemnificaton Escrow Agreement")
substantially in the form attached hereto as SECTION 3.03(A) SCHEDULE
(A). All cash required to be paid to the Indemnification Escrow Agent
pursuant to this Section shall be made by wire transfer of immmediately
available funds to the Indemnification Escrow Agent's account as
designated by the escrow agent.
(b) Deposit of Tennessee Plant Escrow.
At Closing, Buyer shall deliver to an escrow agent (which shall be a
national bank or trust company) mutually agreeable to the parties and
willing to serve, subject to the terms of the Tennessee Plant Escrow
Agreement (as herein defined), as escrow agent for the benefit of Buyer
and the Sellers (the "Tennessee Plant Escrow Agent") an amount equal to
five million dollars ($5,000,000.00) in cash (otherwise deliverable to
the Companies pursuant to SECTION 3.01(B) above) (the "Tennessee Plant
Escrow Amount"). The Tennessee Plant Escrow Amount shall be administered
and disbursed by the Tennessee Plant Escrow Agent pursuant to the terms
and conditions of an escrow agreement (the "Tennessee Plant Escrow
Agreement") substantially in the form attached hereto as SECTION 3.03(B)
SCHEDULE (A). All cash required to be paid to the Tennessee Plant Escrow
Agent pursuant to this Section shall
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be made by wire transfer of immediately available funds to the Tennessee
Plant Escrow Agent's account as designated by the escrow agent.
(c) Deposit of Texas Plant Escrow.
At Closing, Buyer shall deliver to an escrow agent (which shall be a
national bank or trust company) mutually agreeable to the parties and
willing to serve, subject to the terms of the Texas Plant Escrow
Agreement (as herein defined), as escrow agent for the benefit of Buyer
and the Sellers (the "Texas Plant Escrow Agent") an amount equal to two
million dollars ($2,000,000.00) in cash (otherwise deliverable to the
Companies pursuant to SECTION 3.01(B) above) (the "Texas Plant Escrow
Amount"). The Texas Plant Escrow Amount shall be administered and
disbursed by the Texas Plant Escrow Agent pursuant to the terms and
conditions of an escrow agreement (the "Texas Plant Escrow Agreement")
substantially in the form attached hereto as SECTION 3.03(C) SCHEDULE
(A) . All cash required to be paid to the Texas Plant Escrow Agent
pursuant to this Section shall be made by wire transfer of immediately
available funds to the Texas Plant Escrow Agent's account as designated
by the escrow agent.
SECTION 3.04 EARN-OUT PAYMENTS.
As part of the Purchase Price, the Companies shall be entitled to
receive earn-out payments from Buyer following the Closing (the "Earn-Out
Payments"). The Earn-Out Payments shall become due and payable to the Companies
following the Closing in accordance with and subject to the terms of SECTION
3.04 SCHEDULE (A) hereto.
SECTION 3.05 PAYMENT OF CERTAIN INDEBTEDNESS AT CLOSING.
On the Closing Date, the Sellers shall cause the Companies to pay, from
the Purchase Price, in full all Indebtedness of the Companies (including
interest, fees, penalties and other related amounts) as of the Closing Date as
set forth on SECTION 3.05 SCHEDULE (A) (the "Closing Indebtedness") and the
Sellers shall cause the bankers of the Companies to deliver releases with
respect thereto. SECTION 3.05 SCHEDULE (A) provides a complete and accurate
description of the Closing Indebtedness.
SECTION 3.06 PAYMENT OF BALANCE OF PURCHASE PRICE.
The balance of the Cash Component of the Purchase Price due at Closing
pursuant to SECTION 3.01(A), after the payments and deposits required by SECTION
3.03 and SECTION 3.05, shall be made by wire transfer of immediately available
funds to the accounts designated by the Companies.
ARTICLE IV.
PURCHASE PRICE ALLOCATIONS AND ADJUSTMENTS
SECTION 4.01 ALLOCATION OF PURCHASE PRICE.
Buyer and the Companies agree that for federal income tax purposes they
will each treat and report the transactions consummated pursuant to this
Agreement as an "Asset Acquisition" pursuant to the Internal Revenue Code of
1986, as amended.
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SECTION 4.02 CLOSING BALANCE SHEET.
Within sixty (60) days following the Closing, the Companies shall cause
the Companies' accounting firm, Bumpus, Hall, Myatt, Thompson & Emery, P.C., to
prepare at the Companies' sole expense a combined Closing Balance Sheet for the
Assets and the Acquired Business, prepared in accordance with GAAP, except as
set forth herein, and on a basis consistent with the calculation of the Average
Working Capital (as herein defined) in accordance with the accounting practices
of the Companies applied on a consistent basis as reflected in the Companies'
prior financial statements and shall deliver to Buyer, the Closing Balance Sheet
as of the Closing Date (the "Closing Balance Sheet"). The Closing Balance Sheet
shall be adjusted to exclude from the Closing Balance Sheet all of the Excluded
Assets and Excluded Liabilities and shall reflect the payments at Closing of the
Closing Indebtedness. The Closing Balance Sheet shall be accompanied by a
calculation of the Post Closing Purchase Price Adjustment, certified by the
Companies' accountants as being calculated consistently with the provisions of
this Section. The Post Closing Purchase Price Adjustment shall mean an amount
equal to the difference between the Closing Date Working Capital (as herein
defined), as of the Closing Date, and the Average Working Capital (as herein
defined and calculated in accordance with SECTION 4.02 SCHEDULE (A)). The
amount, if any, by which the Closing Date Working Capital exceeds the Average
Working Capital shall be an increase in the Purchase Price and the amount, if
any, by which the Closing Date Working Capital is less than the Average Working
Capital shall be a reduction in the Purchase Price. The Closing Balance Sheet
shall include specific reserves designated respectively the Litigation Reserve,
the Warranty Reserve and the Tax Reserve to reserve specifically for such
matters. If no reserve is set up for one of the named reserves, then no reserve
shall exist for such matters.
SECTION 4.03 PROCEDURE FOR POST CLOSING PURCHASE PRICE ADJUSTMENT.
Buyer, shall within thirty (30) days after receipt of the Closing
Balance Sheet and the calculation of the Post Closing Purchase Price Adjustment,
notify the Sellers in writing, that Buyer either: (a) accepts the calculation of
the Post Closing Purchase Price Adjustment as calculated in accordance with
SECTION 4.02, or (b) disagrees with the calculation of the Post Closing Purchase
Price Adjustment, and, Buyer shall specify in detail any items which Buyer
disputes, including the dollar amounts in dispute, the basis for the
disagreement and Buyer's calculation of the disputed item. If the Sellers and
Buyer cannot agree upon any disputed items within thirty (30) days after receipt
by the Sellers of SECTION 4.03 SCHEDULE (A), then such disagreement shall be
submitted to KPMG Peat Marwick LLP (the "Independent Accountant") for
resolution. The Sellers and Buyer shall each prepare a written submission for
delivery to the other party and the Independent Accountant setting forth the
items which remain in dispute and the position of such party with respect to the
disputed item. The determination by the Independent Accountant shall be final
and binding on the parties hereto and judgment on such determination may be
entered in any court having jurisdiction. In the event the Independent
Accountant accepts Buyer's calculation of the Post Closing Purchase Price
Adjustment, then the Sellers shall be solely responsible for all of the costs
and expenses of the Independent Accountant. In the event the Independent
Accountant accepts the Sellers' calculation of the Post Closing Purchase Price
Adjustment, then Buyer shall be solely responsible for all of the costs and
expenses of the Independent Accountant. In the event the
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Independent Accountant accepts neither Buyer's nor the Sellers' calculation of
the Post Closing Purchase Price Adjustment, then the fees and expenses of the
Independent Accountant shall be shared equally by the Sellers and Buyer. The
Sellers shall bear, and be solely responsible for, all of the costs and expenses
incurred by them in connection with the preparation of the Closing Balance
Sheet. The Sellers and Buyer shall each bear, and be responsible for, the costs
and expenses incurred by each of them (including the fees and expenses of their
respective accounting firms) in connection with their review of the Closing
Balance Sheet and the Post Closing Purchase Price Adjustment.
SECTION 4.04 PAYMENT OF POST CLOSING PURCHASE PRICE ADJUSTMENT.
Any reduction in the Purchase Price, as a result of the Post Closing
Purchase Price Adjustment, shall be paid within ten (10) days to Buyer by the
Companies, by cashier's check or wire transfer to an account designated by
Buyer. Any increase in the Purchase Price, as a result of Post Closing Purchase
Price Adjustment, shall be paid within ten (10) days to the Sellers by Buyer by
cashier's check or wire transfer to an account designated by the Sellers.
ARTICLE V.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
SECTION 5.01 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER.
The obligations of Buyer to effect the Closing, to purchase the Assets
and the Acquired Business and to perform its obligations hereunder are and shall
be subject, at the discretion of Buyer, to the prior fulfillment of each of the
following conditions set forth in this ARTICLE V.
SECTION 5.02 ACQUISITION OF INDUSTRIAL REALTY PARTNERS REAL ESTATE.
The purchase by Buyer, at Closing, of the real estate described in
SECTION 5.02 SCHEDULE (A) by execution and delivery by Buyer and Industrial
Realty Partners of the Real Estate Purchase Agreement attached hereto as SECTION
5.02 SCHEDULE (B) and the consummation of the purchase of the Industrial Realty
Partners Property in accordance with the Real Estate Purchase Agreement.
SECTION 5.03 EMPLOYMENT AGREEMENTS.
The execution and delivery at Closing of the employment agreements for
the individuals set forth in SECTION 5.03 SCHEDULE (A) and in substantially the
form of the Employment Agreements attached as Section 5.03 Schedule (b). This
SECTION 5.03 does not constitute an offer of employment to such key employees
and is not intended to confer upon any person other than Buyer and the Sellers
any rights or remedies under this Agreement.
SECTION 5.04 DELIVERY OF EXHIBITS AND SCHEDULES.
The delivery to Buyer of all of the Exhibits and Schedules required by
this Agreement to be delivered by the Sellers, updated through the Closing Date,
provided, however, that Buyer shall not be obligated to assume any liability or
obligation disclosed in such updated Schedules and shall not be obligated to
close if such updated Schedules disclose any matter which creates a Material
Adverse Effect.
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SECTION 5.05 RECEIPT OF CONSENTS AND APPROVALS.
Receipt by, and if necessary, pursuant to a Governmental Requirement,
transfer to Buyer, in form and substance reasonably satisfactory to Buyer's
counsel, of all required governmental and third party permits, licenses,
consents, estoppel certificates, approvals, authorizations, or waivers required
to be obtained by Buyer or the Sellers in connection with the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby or to continue the operation of the Acquired
Business as conducted by the Companies on the date of this Agreement, or, to
maintain in full force and effect the material licenses, franchises, leases or
other material agreements of the Companies, as set forth on SECTION 5.05
SCHEDULE (A).
SECTION 5.06 HART SCOTT RODINO APPROVAL.
If required, all applicable waiting periods (and any extensions thereof)
under the HSR Act shall have expired or otherwise been terminated and the
Companies and the Buyer shall have received all authorizations, consents, and
approvals of the government and governmental agencies required under the HSR
Act.
SECTION 5.07 OPINION OF THE SELLERS' COUNSEL.
Receipt by Buyer of the opinion of the Sellers' counsel substantially in
the form of SECTION 5.07 SCHEDULE (A) attached hereto.
SECTION 5.08 CORRECTNESS OF THE SELLERS' REPRESENTATIONS AND WARRANTIES.
Except for changes expressly permitted or contemplated hereby or
consented to by Buyer, and except for matters waived or consented to by Buyer
pursuant to SECTION 13.04, each of the representations and warranties of the
Sellers set forth in ARTICLE VIII, shall be true and correct on and as of the
Closing Date with the same effect as if made at such time; and the Sellers shall
have in all material respects performed and complied with each of the
agreements, covenants, terms and conditions hereof applicable to the Sellers.
SECTION 5.09 ABSENCE OF LEGAL RESTRAINTS.
There shall have been no order or preliminary or permanent injunction
entered in any action or proceeding before any court or governmental,
administrative or regulatory authority or agency, or no other action taken, or
statute, rule, regulation, legislation, interpretation, judgment or order
proposed, enacted, entered, enforced, promulgated, amended, issued or deemed
applicable to Buyer, or the Sellers, by any legislative body, court, government
or governmental, administrative or regulatory authority or agency which shall
have remained in effect and which shall have had the effect of: (i) making
illegal, delaying or otherwise directly or indirectly restraining or prohibiting
the purchase of the Assets and the Acquired Business by Buyer as contemplated
hereby, or the consummation of the transactions hereunder; or, (ii) prohibiting
or limiting the ownership or operation by Buyer of the Assets and Acquired
Business, or compelling the Companies to dispose of or hold separate all or any
portion of the Acquired Business or Assets of the Companies as a result of the
transactions hereunder. There shall not be pending or threatened before any
court or governmental, administrative or regulatory authority or agency any
action or proceeding instituted
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by any governmental, administrative or regulatory authority which seeks to have
any of the effects specified in this Section.
SECTION 5.10 ABSENCE OF BANKRUPTCY PROCEEDINGS.
No proceeding shall have been instituted or consented to by or against
the Companies, Buyer or the Shareholder seeking to adjudicate them as bankrupt
or insolvent, or seeking liquidation, winding-up, reorganization, arrangement,
adjustment, protection, relief, or composition of their debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for the Companies, Buyer or the
Shareholder or any substantial part of their respective properties (each such
action being a "Bankruptcy Proceeding"), and the Sellers shall not have taken
any corporate action to authorize any Bankruptcy Proceeding.
SECTION 5.11 CORPORATE AUTHORIZATION AND APPROVAL BY THE COMPANIES AND
SHAREHOLDER.
Receipt by Buyer, at or before Closing, of copies of (i) resolutions of
the Board of Directors of the Shareholder and of the Companies and (ii) approval
of the Shareholder, certified by the respective Secretaries of the Shareholder
and the Companies, authorizing the transactions contemplated by this Agreement,
including, without limitation, the sale of the Assets and the Acquired Business,
and the execution and delivery of this Agreement and all documents related
hereto by an authorized officer of the Companies. The authorizations of the
Shareholder and the Companies shall be attached hereto as SECTION 5.11 SCHEDULE
(A) and (B) RESPECTIVELY.
SECTION 5.12 PAYMENT OF THE CLOSING INDEBTEDNESS.
The payment at Closing, by the Companies, in full and complete
discharge, of the Closing Indebtedness set forth on SECTION 3.05 SCHEDULE (A).
SECTION 5.13 NO MATERIAL ADVERSE EFFECT.
Since the date of this Agreement, there shall have occurred no Material
Adverse Effect.
SECTION 5.14 SECRETARY'S CERTIFICATE.
Receipt by Buyer of a certificate of the Secretary of the Companies
attached hereto as SECTION 5.14 SCHEDULE (A) dated the Closing Date and
attaching copies (certified by the Secretary of State of Tennessee, as
appropriate), of the Articles of Incorporation, By-Laws, certificate of
existence and resolutions of the Companies, certifying as to the incumbency of
the officers of the Companies and representing and warranting that the
conditions set forth in SECTION 5.05 and SECTION 5.08 have been satisfied.
SECTION 5.15 NON-COMPETITION AGREEMENTS.
Each Seller shall have entered into non-competition agreements with
Buyer in the form of SECTION 5.15 SCHEDULE (A) and, subject to the occurrence of
the Closing, such non-competition agreements being in full force and effect as
of the Closing Date.
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SECTION 5.16 RECEIPT OF FINANCING.
Buyer shall have received the proceeds of its bank financing.
SECTION 5.17 ESCROW AGREEMENTS.
The Sellers shall have entered into the Escrow Agreements set forth in
SECTION 3.03 and, subject to the occurrence of the Closing, such Escrow
Agreements shall be in full force and effect as of the Closing Date.
SECTION 5.18 REAL ESTATE LEASES.
The lessors of the Included Leased Property shall have executed and
delivered to Buyer at Closing the leases and/or assignments of the Included
Leased Property leases as set forth on SECTION 5.18 SCHEDULE (A).
SECTION 5.19 EXECUTION OF DESIGN/BUILD AGREEMENT AND LEASE/TENNESSEE.
The execution and delivery by CHI NU, L.L.C. of the Design/Build and
Lease Agreements for the construction of a new Tennessee facility in
substantially the form attached hereto as SECTION 5.19 SCHEDULES (A) AND (B).
SECTION 5.20 EXECUTION OF DESIGN/BUILD AGREEMENT AND LEASE/TEXAS.
The execution and delivery by Industrial Realty Partners of the
Design/Build and Lease Agreements for the construction of a new Texas facility
in substantially the form attached hereto as SECTION 5.20 SCHEDULES (A) AND (B).
SECTION 5.21 FIRPTA CERTIFICATES.
Delivery to Buyer of an executed certificate of non-foreign status for
each Company.
SECTION 5.22 OTHER MATERIAL DOCUMENTS.
Delivery to Buyer of such other material documents executed and
delivered by the Companies as reasonably requested by Buyer.
ARTICLE VI.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLERS
SECTION 6.01 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLERS.
The obligations of the Sellers to effect the Closing, to sell the Assets
and the Acquired Business and to perform their obligations hereunder are and
shall be subject, at the discretion of the Sellers, to the prior fulfillment of
each of the following conditions set forth in this ARTICLE VI.
SECTION 6.02 ACQUISITION OF INDUSTRIAL REALTY PARTNERS REAL ESTATE.
The purchase by Buyer, at Closing, of the real estate described in
SECTION 5.02 SCHEDULE (A) by execution and delivery by Buyer and Industrial
Realty Partners of the Real Estate Purchase Agreement attached hereto as SECTION
5.02 SCHEDULE (B) and the consummation of the purchase of the Industrial Realty
Partners Property in accordance with the Real Estate Purchase Agreement.
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SECTION 6.03 EMPLOYMENT AGREEMENTS.
The execution and delivery at Closing by Buyer of the employment
agreements for the individuals set forth in SECTION 5.03 SCHEDULE (A) and in
substantially the form of the Employment Agreements attached as SECTION 5.03
SCHEDULE (B).
SECTION 6.04 NON-COMPETITION AGREEMENTS.
Buyer shall have entered into non-competition agreements with each
Seller in the form of SECTION 5.15 SCHEDULE (A) (or Buyer shall have waived the
requirement for non-competition agreements from each Seller at Closing and
otherwise provided for the medical coverages set forth therein) and, subject to
the occurrence of the Closing, such non-competition agreements being in full
force and effect as of the Closing Date.
SECTION 6.05 DELIVERY OF EXHIBITS AND SCHEDULES.
The delivery to the Sellers of all of the Exhibits and Schedules
required by this Agreement to be delivered by Buyer, updated through the Closing
Date.
SECTION 6.06 HART SCOTT RODINO APPROVAL.
If required, all applicable waiting periods (and any extensions thereof)
under the HSR Act shall have expired or otherwise been terminated and the
Companies and Buyer shall have received all authorizations, consents, and
approvals of the government and governmental agencies required under the HSR
Act.
SECTION 6.07 OPINION OF BUYER'S COUNSEL.
Receipt by the Sellers of the opinion of Buyer's counsel substantially
in the form of SECTION 6.07 SCHEDULE (A) attached hereto.
SECTION 6.08 CORRECTNESS OF BUYER'S REPRESENTATIONS AND WARRANTIES.
Except for changes expressly permitted or contemplated hereby or
consented to by the Sellers, and except for matters waived or consented to by
the Sellers pursuant to SECTION 13.04, each of the representations and
warranties of Buyer set forth in ARTICLE X hereof shall be true and correct on
and as of the Closing Date with the same effect as if made at such time; and
Buyer shall have, in all material respects, performed and complied with each of
the agreements, covenants, terms and conditions hereof applicable to Buyer.
SECTION 6.09 ABSENCE OF LEGAL RESTRAINTS.
There shall have been no order or preliminary or permanent injunction
entered in any action or proceeding before any court or governmental,
administrative or regulatory authority or agency, or no other action taken, or
statute, rule, regulation, legislation, interpretation, judgment or order
proposed enacted, entered, enforced, promulgated, amended, issued or deemed
applicable to Buyer or the Sellers by any legislative body, court, government or
governmental, administrative or regulatory authority or agency which shall have
remained in effect and which shall have had the effect of: (i) making illegal,
delaying or otherwise directly or indirectly restraining or prohibiting the
purchase of the Assets and the Acquired Business by Buyer as contemplated
hereby, or the
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consummation of the transactions hereunder; or, (ii) prohibiting or limiting the
ownership or operation by Buyer of the Assets and Acquired Business, or
compelling the Companies to dispose of or hold separate all or any portion of
the Acquired Business or Assets of the Companies as a result of the transactions
hereunder. There shall not be pending or threatened before any court or
governmental, administrative or regulatory authority or agency any action or
proceeding instituted by any governmental, administrative or regulatory
authority which seeks to have any of the effects specified in this Section.
SECTION 6.10 ABSENCE OF BANKRUPTCY PROCEEDINGS.
No proceeding shall have been instituted against Buyer, the Companies or
the Shareholder seeking to adjudicate any of them as bankrupt or insolvent, or
seeking liquidation, winding-up, reorganization, arrangement, adjustment,
protection, relief, or composition of their debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee,
custodian or other similar official for Buyer, the Companies or the Shareholder
or any substantial part of their respective properties (each such action being a
"Bankruptcy Proceeding") and neither Buyer nor the Sellers shall have taken any
corporate action to authorize any Bankruptcy Proceeding.
SECTION 6.11 CORPORATE AUTHORIZATION AND APPROVAL BY BUYER.
Receipt by the Sellers, at or before Closing, of copies of resolutions
of the Board of Directors of Buyer, certified by the Secretary of Buyer,
authorizing the transactions contemplated by this Agreement, including, without
limitation, the purchase of the Assets and the Acquired Business, and the
execution and delivery of this Agreement and all documents related hereto by an
authorized officer of Buyer. The authorizations of Buyer shall be attached
hereto as SECTION 6.11 SCHEDULE (A).
SECTION 6.12 SECRETARY'S CERTIFICATE.
Receipt by Sellers of a certificate of the Secretary of Buyer, in the
form attached hereto as SECTION 6.12 SCHEDULE (A) dated the Closing Date and
attaching copies (certified by the Secretary of State of Delaware, as
appropriate), of the Articles of Incorporation, Certificate of Limited
Partneship, By-Laws, Limited Partnership agreement, certificate of existence and
resolutions of Buyer, certifying as to the incumbency of the officers of Buyer
and representing and warranting that the conditions set forth in SECTION 6.08
and SECTION 6.09 have been satisfied.
SECTION 6.13 ESCROW AGREEMENTS.
Buyer shall have entered into the Escrow Agreements set forth in SECTION
3.03 and, subject to the occurrence of the Closing, such Escrow Agreements shall
be in full force and effect as of the Closing Date.
SECTION 6.14 EXECUTION OF DESIGN/BUILD AGREEMENT AND LEASE/TENNESSEE.
The execution and delivery by Buyer of the Design/Build and Lease
Agreements for the construction of a new Tennessee facility in substantially the
form attached hereto as SECTION 5.19 SCHEDULES (A) AND (B).
SECTION 6.15 EXECUTION OF DESIGN/BUILD AGREEMENT AND LEASE/TEXAS.
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The execution and delivery by Buyer of the Design/Build and Lease
Agreements for the construction of a new Texas facility in substantially the
form attached hereto as SECTION 5.20 SCHEDULES (A) AND (B).
SECTION 6.16 REAL ESTATE LEASES.
Buyer shall have executed and delivered to the Sellers at Closing the
leases and/or assignments of the Included Leased Property as set forth on
SECTION 5.18 SCHEDULE (A).
ARTICLE VII.
CLOSING
SECTION 7.01 CLOSING.
The closing hereunder (the "Closing") shall take place at the offices of
Wyatt, Tarrant & Combs, 1500 Nashville City Center, Nashville, Tn. 511 Union
Street, Nashville, Tn. on April 26, 1999 or at such other place and time and
date as may be agreed to by the Sellers and Buyer.
ARTICLE VIII.
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each Seller, jointly and severally, represents and warrants to Buyer, as
of the date hereof and on the Closing Date, that all of the representations and
warranties contained in this Article are true and correct and agrees as follows:
SECTION 8.01 ORGANIZATION AND QUALIFICATION OF THE SHAREHOLDER.
(a) The Shareholder--Organization.
The Shareholder is a corporation duly organized, validly existing under
the laws of the State of Tennessee, and has the full corporate power and
authority to own, lease and operate its properties and carry on its
business in all respects as presently owned or conducted. The
Shareholder is duly qualified or licensed as a foreign corporation to do
business in each jurisdiction where its ownership or leasing of property
or the conduct of its business requires such qualification. Attached
hereto as SECTION 8.01(A) SCHEDULE (A) and SECTION 8.01(A) SCHEDULE (B)
are (i) a true and complete copy of the Articles of Incorporation of the
Shareholder, as amended and in effect as of the date of this Agreement,
certified by the Secretary of State of the State of Tennessee; and, (ii)
a true and complete copy of the ByLaws of the Shareholder, as amended
and in effect as of the date of this Agreement, certified by the
Secretary of the Shareholder. The Shareholder is not in violation of any
of the provisions of its Articles of Incorporation or By-Laws.
(b) The Shareholder--Evidence of Good Standing and Existence.
The Shareholder is a corporation in good standing under the laws of the
State of Tennessee and in each foreign jurisdiction where its ownership
or leasing of property or the conduct of
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its business requires qualification or licensing as a foreign
corporation. Attached hereto as SECTION 8.01(B) SCHEDULE (A) and SECTION
8.01(B) SCHEDULE (B) are: (i) a copy of a certificate of good standing
from the Secretary of State of the State of Tennessee evidencing the due
organization, valid existence and good standing of the Shareholder in
the State of Tennessee; and, (ii) a certificate from the applicable
Secretary of State evidencing the due organization, valid existence and
good standing of the Shareholder in each foreign jurisdiction where its
ownership or leasing of property or the conduct of its business requires
qualification or licensing as a foreign corporation.
SECTION 8.02 ORGANIZATION AND QUALIFICATION OF THE COMPANIES.
(a) The Companies--Organization.
Each of the Companies is a corporation duly organized, validly existing
under the laws of the State of Tennessee, and has the full corporate
power and authority to own, lease and operate its properties and carry
on its business in all respects as presently owned or conducted. Each of
the Companies is duly qualified or licensed as a foreign corporation to
do business, in each jurisdiction where its ownership or leasing of
property or the conduct of its business requires such qualification.
Attached hereto as SECTION 8.02(A) SCHEDULE (A) and SECTION 8.02(A)
SCHEDULE (B) are (i) a true and complete copy of the Articles of
Incorporation of each of the Companies, as amended and in effect as of
the date of this Agreement, certified by the Secretary of State of the
State of Tennessee; and, (ii) a true and complete copy of the respective
By-Laws of each of the Companies, as amended and in effect as of the
date of this Agreement, certified by the respective Secretary of each of
the Companies.
(b) The Companies--Evidence of Good Standing and Existence.
Each of the Companies is a corporation in good standing under the laws
of the State of Tennessee and in each foreign jurisdiction where its
ownership or leasing of property or the conduct of its business requires
qualification or licensing as a foreign corporation. Attached hereto as
SECTION 8.02(B) SCHEDULE (A) and SECTION 8.02(B) SCHEDULE (B) are: (i) a
copy of a certificate of good standing from the Secretary of State of
the State of Tennessee evidencing the due organization, valid existence
and good standing of each of the Companies in the State of Tennessee;
and, (ii) . a certificate from the applicable Secretary of State
evidencing the due organization, valid existence and good standing of
each of the Companies in each foreign jurisdiction where its ownership
or leasing of property or the conduct of its business requires
qualification or licensing as a foreign corporation.
SECTION 8.03 OWNERSHIP AND STATUS OF THE COMPANIES' AND THE SHAREHOLDER'S
CAPITAL STOCK.
(a) Shareholder as Owner of the Companies.
The Shareholder is the record, beneficial and legal owner of all of the
issued and outstanding shares of all classes of stock of each of the
Companies, free and clear of all Liens, except for the Liens set forth
on SECTION 8.03(A) SCHEDULE (A) all of which will be released at or
before the Closing Date.
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(b) Imperial Shareholders.
The Imperial Shareholders are the record, beneficial and legal owners of
all of the issued and outstanding shares of stock of all classes of
stock of Imperial Group, Inc. free and clear of all Liens, except for
the Liens set forth on SECTION 8.03(B) SCHEDULE (A).
SECTION 8.04 POWER OF THE SHAREHOLDER AND THE IMPERIAL SHAREHOLDERS TO APPROVE
SALE OF ASSETS OF THE COMPANIES.
The Shareholder and the Imperial Shareholders have the full power, legal
capacity and authority to execute and deliver this Agreement and each other
document to which the Shareholder or the Imperial Shareholders are a party and
to perform the Shareholder's or the Imperial Shareholders' obligations in this
Agreement and in all other documents to which the Shareholder or the Imperial
Shareholders are a party. This Agreement constitutes, and each such other
document when executed and delivered by the Shareholder and the Imperial
Shareholders will constitute, the legal, valid and binding obligation of the
Shareholder and the Imperial Shareholders, enforceable against the Shareholder
and the Imperial Shareholders in accordance with its terms, except as that
enforceability may be: (i) limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and (ii) subject to general principles of equity
(regardless of whether that enforceability is considered in a proceeding in
equity or at law). The Shareholder and the Imperial Shareholders have obtained,
in accordance with all applicable state corporate law, its charter and by-laws,
if applicable, all approvals and have taken or will take as of the Closing Date
all actions necessary for the authorization, execution, delivery and performance
by the Shareholder and the Imperial Shareholders of this Agreement and the other
documents to which the Shareholder and the Imperial Shareholders are a party,
including, but not limited, to the sale of the Assets and the Acquired Business
and the transactions contemplated herein.
SECTION 8.05 CONFLICTS WITH LAW OR OTHER AGREEMENTS; REQUIRED FILINGS AND
CONSENTS.
(a) Conflicts.
The execution and delivery of this Agreement and each other document to
which the Sellers are a party do not, and the performance of this
Agreement and each other document (including, without limitation, the
consummation of the transactions contemplated hereunder) will not: (i)
violate any provision of the Articles of Incorporation or By-Laws of the
Companies and the Shareholder; (ii) conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to the Sellers or
by which their properties are bound or affected; or (iii) except as set
forth in SECTION 8.05(A) SCHEDULE (A) result in any breach of or
constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or encumbrance on any of the properties or assets
of the Sellers pursuant to any agreement, note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, insurance policy
or other instrument or obligation to which the Sellers are a party, or
by which the Sellers, or any of their properties are bound or
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affected; or, (iv) result in the creation of or impositions of any Lien
on the shares of stock of the Companies or any asset of the Shareholder.
(b) Required Filings and Consents.
Except as may be required by the HSR Act or set forth in SECTION 8.05(B)
SCHEDULE (A) the execution and delivery of this Agreement by the Sellers
do not, and the performance of this Agreement by the Sellers (including,
without limitation, the consummation of the transactions contemplated
hereunder) will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or
regulatory authority, domestic or foreign, on the part of the Sellers.
(c) Public Reporting Obligations.
Neither the Shareholder nor the Companies has presently and has not had
in the past any obligation to file annual reports or other documents
under the Securities Exchange Act of 1934, as amended, and no such
reports have been filed.
SECTION 8.06 LITIGATION AND JUDGMENTS.
(a) Litigation.
Except as set forth on SECTION 8.06(A) SCHEDULE (A) there is no legal
proceeding (or governmental investigation) pending before any court or
governmental body, or any other duly constituted tribunal, or threatened
or in prospect, against or related to the Sellers, or any of the
business or properties thereof. The Sellers are not in default with
respect to any judgment, order, writ, injunction, decree or assessment
against it by any court, federal regulatory agency, state attorney
general, public service commission, governmental agency, department or
instrumentality. Neither the Sellers nor any of its respective
directors, officers, or to the best knowledge of the Sellers, their
agents, or employees is in violation of or charged, or threatened with
any violation of, or under investigation with respect to any violation
of, any provision of any federal, state, or local law or administrative
rule or regulation relating to any aspect of the business or property of
the Sellers (including, without limitation, any laws, rules, or
regulations relating to political contributions or other questionable
payments) which give rise to any liability on the part of Buyer
following the Closing or have a Material Adverse Effect. In addition,
SECTION 8.06(A) SCHEDULE (B) sets forth, as of the Closing Date, a list
of all claims pending or threatened against the Sellers by any Person.
(b) No Orders, Judgments or Decrees.
Except as set forth on SECTION 8.06(B) SCHEDULE (A), the Sellers are not
subject to any order, judgment or decree, or any other legal
restriction, which adversely affects the Assets or the Acquired Business
or which would prevent or hinder the transactions contemplated by this
Agreement.
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SECTION 8.07 BROKERS.
The Sellers have employed Merrill Lynch to serve as a Business Advisor
with respect to this transaction and the Sellers' obligation with respect to
Merrill Lynch's employment is as set forth in SECTION 8.07 SCHEDULE (A). The
Merrill Lynch fees and expenses shall be paid by the Companies. Except with
respect to Merrill Lynch, the Sellers have not directly or indirectly in
connection with this Agreement or the transactions contemplated hereby (a)
employed any broker, finder or agent, or (b) agreed to pay or incurred any
obligation to pay any broker's or finder's fee, any sales commission or any
similar form of compensation.
SECTION 8.08 CONTROL OF RELATED BUSINESSES.
The Sellers are not, alone or with one or more other Persons, the
controlling Affiliate of any Entity, business or trade that (a) is engaged in
any line of business which is the same as or similar to any line of business in
which the Companies are engaged, or (b) is engaged in any transaction with the
Companies, except as set forth in SECTION 8.08 SCHEDULE (A).
SECTION 8.09 AUTHORIZATION AND BINDING EFFECT.
Each of the Companies has the full power and authority to execute and
deliver this Agreement, the other agreement(s) contemplated hereby to which each
of the Companies is a party and to perform each of the Companies' respective
obligations in this Agreement and in each document to which each of the
Companies is a party. This Agreement constitutes and each such other document
when executed and delivered by each of the Companies, will constitute the legal,
valid and binding obligation of each of the Companies enforceable in accordance
with its terms, except as that enforceability may be: (i) limited by any
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and (ii) subject to
general principles of equity (regardless of whether that enforceability is
considered in a proceeding in equity or at law). The Companies have obtained, in
accordance with all applicable state corporate law, their respective charters
and by-laws, all approvals and have taken or will take as of the Closing Date
all actions necessary for the authorization, execution, delivery and performance
by the Companies of this Agreement and the other documents to which the
Companies are a party, including, but not limited, to the sale of the Assets and
the Acquired Business and the transactions contemplated herein.
SECTION 8.10 CORPORATE RECORDS OF STOCK OWNERSHIP.
The stock transfer books, minute books and stock ledgers of each the
Companies and the Shareholder, copies of which have been delivered to Buyer, are
true, complete, accurate and up to date, and contain all necessary signatures,
and set forth all of the shares issued, transferred and surrendered. No transfer
has been made without surrender of the proper certificate, duly endorsed, and
all certificates so surrendered have been duly canceled.
SECTION 8.11 SUBSIDIARIES, AFFILIATES AND JOINT VENTURES.
(a) No Subsidiaries.
The Companies do not directly or indirectly own securities or other
ownership interests of any corporation or other entity having ordinary
voting power to elect a majority of the board
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of directors of such corporation or other entity or other persons
performing similar functions. The Companies own certain investment
securities set forth on SECTION 2.04 SCHEDULE (A).
(b) Joint Ventures and Partnerships.
Except as set forth on SECTION 8.11(B) SCHEDULE (A) neither of the
Companies is a general or limited partner of, or a party to any joint
venture with, any other entity, and neither of the Companies, directly
or indirectly, owns any interest in any other corporation, partnership,
joint venture or other business association or entity.
SECTION 8.12 INSIDER TRANSACTIONS.
(a) Company Obligations.
Except as set forth in SECTION 8.12(A) SCHEDULE (A), neither of
the Companies is indebted to any other Seller, or any director,
officer, employee or agent of any other Seller, or any Affiliate
of a Seller, except for amounts due as normal salary, wages, or
reimbursement of ordinary business expenses, and no director,
officer, employee or agent of either of the Companies is indebted
to the Companies except for ordinary business expense advances.
(b) Shareholder Obligations.
Except as set forth in SECTION 8.12(B) SCHEDULE (A), the
Shareholder and the Imperial Shareholders do not have any direct
or indirect indebtedness to the Companies or any direct or
indirect interest in any property used by, or relating to, the
Companies, except through the ownership of the capital stock of
the Companies or the Shareholder.
(c) Powers of Attorney.
Set forth on SECTION 8.12(C) SCHEDULE (A) are the names of all
persons holding powers of attorney from the Companies and copies
of such powers of attorney.
SECTION 8.13 LICENSES, PERMITS AND ELIGIBILITY.
Each of the Companies has obtained all material permits, licenses and other
authorizations that are required under federal, state and local laws necessary
for the lawful conduct of the business of the Acquired Business. Attached as
SECTION 8.13 SCHEDULE (A) is a list of all material licenses, permits and
authorizations held by the Companies and except as noted on SECTION 8.13
SCHEDULE (A), such permits are in full force and effect and are transferable to
Buyer.
SECTION 8.14 PERSONAL PROPERTY OF THE COMPANIES.
(a) Title to Tangible Personal Property.
Except as set forth in SECTION 8.14(A) SCHEDULE (A), each of the
Companies have and at the Closing, will have good, indefeasible,
marketable and merchantable title, free and clear of all Liens,
to all tangible personal property, (including, but not limited
to, all equipment, furniture, fixtures, inventory, supplies,
accounts receivable and other
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intangible personal properties) reflected in the December Balance
Sheet or acquired since the date of the December Balance Sheet,
other than any personal property disposed of in the ordinary
course of business since the date of the December Balance Sheet
and all fully depreciated items of tangible personal property
(herein the "Tangible Personal Property"). Except as set forth on
SECTION 8.14(A) SCHEDULE (B) the Tangible Personal Property
constitutes all of the Tangible Personal Property used by the
Companies for the operation of the Acquired Business as currently
conducted by the Companies, except for the Excluded Assets.
(b) Owned Tangible Personal Property.
Attached hereto as SECTION 8.14(B) SCHEDULE (A) is a true and
complete list of all personal property owned by the Companies.
(c) Leased Tangible Personal Property.
Attached hereto as SECTION 8.14(C) SCHEDULE (A) is a true and
complete list of all leases and other agreements under which the
Companies lease, hold or operate any tools, furniture, machinery,
equipment, vehicles or other Tangible Personal Property owned by
any other person for use in the Acquired Business. Copies of all
leases for the Tangible Personal Property set forth on SECTION
8.14(C) SCHEDULE (A) have been delivered to Buyer. Except as set
forth on SECTION 8.14(C) SCHEDULE (A), all such leases and
agreements are in full force and effect. Neither of the Companies
nor, to the best knowledge of the Sellers, any other party is in
default, violation or breach under any such lease and, to the
best knowledge of the Sellers, no event has occurred and is
continuing which constitutes or, with notice or the passage of
time or both, would constitute a default, violation or breach
under any such lease, except as set forth on SECTION 8.14(C)
SCHEDULE (A).
(d) Operating Condition.
Except as set forth on SECTION 8.14(D) SCHEDULE (A), all of the
Assets constituting Tangible Personal Property owned or leased by
the Companies are in good operating condition and repair,
ordinary wear and tear excepted, and all machinery, equipment and
motor vehicles owned or used by the Companies are in such
condition and repair as is suitable for the operation of the
Acquired Business, except for repairs and replacements required
in the ordinary course of business.
SECTION 8.15 ACCOUNTS RECEIVABLE.
The accounts recievable included in the December Balance Sheet (as
herein defined) constitute all of the accounts receivable of the Acquired
Business as of the December Balance Sheet Date (as herein defined). Except as
set forth on SECTION 8.15 SCHEDULE (A), each of the Companies is the true and
lawful owner of its accounts receivable and has good and clear title to each
account, free and clear of all Liens, with the absolute right to transfer any
interest therein. To the best of the Companies' knowledge and except as set
forth on SECTION 8.15 SCHEDULE (A), each account receivable is as set forth on
the December Balance Sheet and will be as set forth on the Closing
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Balance Sheet: (i) a valid obligation of the account debtor, enforceable in
accordance with its terms, and is not subject to any set-offs, adverse claims,
assessments, defaults, prepayments, defenses, and conditions precedent, (ii) a
true and correct statement of the account of actual services performed for and
accepted by such account debtor, (iii) collectible in full through the exercise
of usual and customary collection practices in the industry, subject to the
reserves as set forth on the applicable balance sheet, and (iv) the reserve for
allowance of doubtful accounts as set forth on the applicable balance sheet is
and will be adequate and in accordance with generally accepted accounting
principles.
SECTION 8.16 TRADENAMES AND INTELLECTUAL PROPERTY RIGHTS.
Attached hereto as SECTION 8.16 SCHEDULE (A) is a list of each trade
name or other corporate name used by the Companies and a list of all other
patents, copyrights, registrations or applications with respect thereto,
licenses (including software licenses) or other rights with respect thereto
owned or used by the Companies in the conduct of the Acquired Business. Except
as set forth in SECTION 8.16 SCHEDULE (A), the Companies own valid title to the
Companies Intellectual Property, free and clear of all Liens. The Companies have
not granted any license to any other Person with respect to the Companies'
Intellectual Property. Except as set forth in SECTION 8.16 SCHEDULE (A), the
Companies are not aware of any third parties using, infringing or
misappropriating any of the Companies' Intellectual Property or any marks or
names that are confusingly similar thereto. Except as set forth in SECTION 8.16
SCHEDULE (A), with respect to the Acquired Business as conducted (a) no products
made, sold or distributed by the Companies or service provided by the Companies
violate any license or infringe any intellectual property rights of any third
party, and (b) there are no pending claims or demands by any third party to the
contrary.
SECTION 8.17 TITLE TO INCLUDED REAL PROPERTY.
All of the buildings, offices and other improvements located upon any
Included Real Property and Included Leased Property (collectively referred to
herein as the Included Property) are in good repair, ordinary wear and tear
excepted. Attached hereto as SECTION 8.17 SCHEDULE (A) is a list of title
commitments and/or title reports, as requested by Buyer, issued within thirty
(30) days prior to the date hereof with respect to Included Property and a list
of each appraisal with respect to such parcels of real estate, copies of which
have been delivered to Buyer, as requested by Buyer.
Except as set forth on SECTION 8.17 SCHEDULE (B) and except for
Permitted Liens, the Companies have good, valid and marketable fee simple title
to the Included Real Property, free and clear of all Liens. At Closing, the
Companies shall have good, valid and marketable fee simple title to the Included
Real Property indicated on SECTION 8.17 SCHEDULE (A). There are no outstanding
options or rights of first refusal to purchase the Included Real Property, or
any portion thereof or interest therein.
The Companies have delivered to Buyer correct and complete copies of all
leases with respect to the Included Leased Property indicated on SECTION
2.05(A)(IV) SCHEDULE (A). Each of the Included Leased Property leases is legal,
valid, binding, enforceable in accordance with its terms and in full force and
effect, except as may be limited by bankruptcy, insolvency, reorganization and
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similar Applicable Laws affecting creditors generally and by the availability of
equitable remedies. Neither of the Companies nor any other party is in default,
violation or breach in any respect under any of the Included Leased Property
leases, and no event has occurred and is continuing that constitutes or, with
notice or the passage of time or both, would constitute a default, material
violation or material breach in any respect undersuch leases. Each of the
Included Leased Property leases grants the tenant under such lease the exclusive
right to use and occupy the demised premises thereunder. At Closing, the
Companies shall have good and valid title to the leasehold estate under each of
the Included Leased Property leases free and clear of all Liens. Each Company
enjoys peaceful and undisturbed possession under its respective Included Leased
Property leases.
The Included Property constitutes all the fee and leasehold interests in
real property held for use in connection with or used by the Companies in the
Acquired Business, except for the Excluded Real Property. The Included Property,
is, in the opinion of the Sellers, all of the real property interests necessary
for the conduct of, or otherwise material to the Acquired Business as conducted
on the date hereof.
SECTION 8.18 CONDITION OF PROPERTY.
Except as set forth on SECTION 8.18 SCHEDULE (A), there are now, and at
the Closing Date there will be, no material physical or mechanical defects of
the Included Property, including, without limitation, the plumbing, heating, air
conditioning, ventilating and electrical systems, and all such items are in good
operating condition and repair, ordinary wear and tear excepted. The use and
operation of the Included Property in the conduct of the Acquired Business does
not violate in any material respect any instrument of record or agreement
affecting the Included Property. Except as set forth in SECTION 8.22, there is
no material violation by the Sellers of any covenant, condition, restriction,
easement ordinance, code or regulation or order of any Governmental Authority
having jurisdiction over such property or, to the best knowledge of the Sellers,
of any other Person entitled to enforce the same affecting the Included Property
or the use or occupancy thereof. No damage or destruction has occurred with
respect to any of the Included Property since the December Balance Sheet Date
that would, individually or in the aggregate, have a Material Adverse Effect.
SECTION 8.19 LAND USE REGULATION.
Except as set forth on SECTION 8.19 SCHEDULE (A), there are no
condemnation, zoning or other land use regulation proceedings, either instituted
or to the best of the Sellers' knowledge, planned to be instituted, which could
detrimentally affect the use or operation of the Included Property for its
intended purpose or the value of the Included Property, nor have Sellers
received notice of any special assessment proceedings affecting the Included
Property nor are the Sellers aware of any contemplated zoning hearing or
proceeding with respect to any of the Included Property. To the best of the
Sellers' knowledge, the Included Property is in full compliance with all
applicable building, zoning, subdivision and other land use and similar
Applicable Laws affecting the Included Property (collectively, the "Real
Property Laws"), and the Companies have received no notice of violation or
claimed violation of any Real Property Law. There is no pending or, to the best
knowledge of the Sellers, anticipated change in any Real Property Law that will
have or result in a Material Adverse Effect upon the ownership, alteration, use,
occupancy or operation of the Included Property or any
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portion thereof. No current use by the Companies of the Included Property is
dependent on a nonconforming use or other Governmental Approval the absence of
which would materially limit the use of such properties or assets held for use
in connection with, necessary for the conduct of, or otherwise material to, the
Acquired Business.
SECTION 8.20 REPORTS, CONTRACTS AND OTHER DOCUMENTS.
The mechanical and structural plans and specifications, certificates of
occupancy, and warranties, relating to or affecting the Included Real Property,
delivered to Buyer pursuant to this Agreement or in connection with the
execution hereof are and at the time of Closing will be true and correct copies,
and, at the time of Closing, the certificates of occupancy and the warranties
will be in full force and effect in accordance with the provisions thereof.
SECTION 8.21 USE PERMITS AND OTHER APPROVALS.
The Sellers have obtained all licenses, permits, approvals, easements
and rights of way required from all governmental authorities having jurisdiction
over the Included Real Property or from private parties for the normal use and
operation of the Included Real Property to ensure free and unimpeded vehicular
and pedestrian ingress to and egress from the Included Real Property and as
required to permit the normal intended usage of the Included Real Property by
the tenants thereof, their invitees and customers. The Sellers have materially
complied with all such licenses and permits and have not received any notice
that any such licenses or permits will not be renewed upon expiration, or of any
material conditions which will be imposed in order to receive any such renewal.
SECTION 8.22 ENVIRONMENTAL MATTERS.
(a) Permits.
All Environmental Permits currently held by the Companies are
identified in SECTION 8.22(A) SCHEDULE (A), and the Companies
currently hold, all such Environmental Permits necessary to the
conduct of the Acquired Business, and all such Environmental
Permits shall be validly transferred to Buyer on the Closing
Date, except as set forth on SECTION 8.22(A) SCHEDULE (A). The
Companies have not been notified by any relevant Governmental
Authority that any Environmental Permit will be modified,
suspended, canceled or revoked, or cannot be renewed in the
ordinary course of business.
(b) No Violation.
Except as set forth on SECTION 8.22(B) SCHEDULE (A), each of the
Companies has complied and is in compliance in all material
respects with all Environmental Permits and all applicable
Environmental Laws pertaining to the Included Property (and the
use, ownership or transferability thereof) and the Acquired
Business. Except as set forth on SECTION 8.22(B) SCHEDULE (A), no
Person has alleged any violation by or liability of the Companies
of or pursuant to any Environmental Permits or any applicable
Environmental Law relating to the conduct of the Acquired
Business or the use, ownership or transferability of the Included
Property.
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(c) No Actions.
Except as set forth in SECTION 8.22(C) SCHEDULE (A), the
Companies have not caused or taken any action that has resulted
or may result in, or has been or is subject to, any liability or
obligation relating to (i) the environmental conditions on,
under, or about any Included Property, the Assets or other
properties or assets owned, leased or used or held for use by the
Companies in connection with, necessary for the conduct of, or
otherwise material to, and to be transferred or transferred to
Buyer as part of the Acquired Business, or (ii) the past or
present use, management, handling, transport, treatment,
generation, storage, arrangement for disposal or treatment or
Release or threatened Release of any Hazardous Substances, except
for any such liabilities and obligations that, individually and
in the aggregate, are not material to the Acquired Business and
have not had or resulted in, and will not have or result in, a
Material Adverse Effect.
(d) Other. Except as set forth in SECTION 8.22(D) SCHEDULE (A):
(i) None of current or past operations, or any by-product
thereof, and none of the currently owned property or assets of
the Companies used in the Acquired Business and to be transferred
to Buyer as part of the Assets or the Acquired Business,
including without limitation the Assets and the Included
Property, is related to or subject to any investigation or
evaluation by any Governmental Authority or other Person, as to
whether any Remedial Action is needed to respond to a Release or
threatened Release of any Hazardous Substances.
(ii) Neither Company is subject to any outstanding order,
judgment, injunction, decree or writ from, or contractual of
other obligation to or with, any Governmental Authority or other
Person in respect of which Buyer may be required to incur any
Third Party and Governmental Environmental Liabilities and Costs
arising from the Release or threatened Release of a Hazardous
Substance.
(iii) None of the Included Property is, and the Companies, have
not transported or arranged for transportation (directly or
indirectly) of any Hazardous Substances relating to the Assets or
the Included Property to any location that is, listed or proposed
for listing under CERCLA, or on any similar state list, or the
subject of federal, state or local enforcement actions or
investigations or Remedial Action.
(iv) No work, repair, construction or capital expenditure is
required or planned in respect of the Assets pursuant to or to
comply with any Environmental Law, nor has either of the
Companies received any notice of any such requirement, except for
such work, repair, construction or capital expenditure as is not
material to the Acquired Business and is in the ordinary course
of business.
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(v) The Companies have disclosed and made available to Buyer all
information, including without limitation all studies, analyses
and test results, in the possession, custody or control of either
Company relating to (i) the environmental conditions on, under or
about the Included Property, (ii) the compliance of the Included
Property and the Acquired Business with applicable Environmental
Laws and Environmental Permits and (iii) Hazardous Substances
used, managed, handled, transported, treated, generated, stored,
arranged for disposal or treatment, Released or threatened to be
Released by either Company or any other Person at any time on any
Included Property, or otherwise in connection with the use or
operation of the Assets used in or held for use in connection
with the Acquired Business, including, without limitations, to
any location other than the Included Property.
SECTION 8.23 PRIOR FINANCIAL STATEMENTS.
(a) The Companies have delivered to Buyer copies of the following
financial statements:
(i) the audited combined balance sheet of the Companies as at
December 31, 1996, 1997 and December 31, 1998 and related
statements of income and retained earnings and changes in
financial position for the fiscal years ended on those dates,
together with supporting schedules and certificates of Bumpus,
Hall, Myatt Thompson & Emery, certified public accountants, that
such financial statements present fairly the financial positions
of the Companies as at the respective dates of said balance
sheets and results of operations and changes in financial
positions of the Companies for the respective periods then ended
in conformity with generally accepted accounting principles
applied on a basis consistent with that of preceding periods (the
December Balance Sheet of the Companies as at December 31, 1998
are referred to as the "December Balance Sheet" and December 31,
1998 is refered to as the "December Balance Sheet Date"); and
(ii) the unaudited combined balance sheet of the Companies as at
February 28, 1998 and 1999 and related statements of income and
retained earnings and changes in financial position for the
two-month periods ended on those dates, together with supporting
schedules, certified by the Chief Executive Officer and Chief
Financial Officer of the Companies.
Except as set forth in the notes thereto, all of such financial
statements present fairly the financial position of the Companies as at
the respective dates of said balance sheets and results of operations
and changes in financial position of the Companies for the respective
periods then ended in conformity with generally accepted accounting
principles applied on a basis consistent with that of the preceding
periods (subject, in the case of such balance sheets as at February 28,
1998 and 1999 and such related statements of income and retained
earnings and changes in financial position for the two-month periods
ended on those dates, to normal year-end adjustments consistent with
prior periods). Except as set forth on SECTION 8.23(A) SCHEDULE (A), no
uncollectible accounts receivable are reflected on any of said
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balance sheets without provision for an adequate reserve for
uncollectible amounts; inventories reflected on the balance sheets
represent only good and serviceable items priced at the lower of cost
(first in, first out method) or market values with adequate provision
for obsolescence, shrinkage, excess quantities, defective materials and
deterioration.
(b) The Companies have prepared the financial projections and data for 1999
through 2002 attached hereto as SECTION 8.23(B) SCHEDULE (A) (the
"PROJECTIONS") in good faith and the Sellers believe the Projections
reflect a reasonable estimate of the performance of the Companies for
the periods presented; but such Projections are not a representation or
guarantee of future results.
(c) The balance sheets included in the financial statements delivered
pursuant to this SECTION 8.23 include material assets and liabilities
not intended to constitute a part of the Acquired Business or the Assets
after giving effect to the transactions contemplated hereby. The
material assets and liabilites not intended to constitue a part of the
Acquired Business or the Assets which are included in the balance sheets
included in such finanacial statements are identified by category of
asset or liability, as applicable, on SECTION 8.23(C) SCHEDULE (A).
The statements of income and retained earnings and statements of cash
flows included in the financial statements delivered pursuant to this
SECTION 8.23 do not reflect the operations of any entity or business not
intended to constitute a part of the Acquired Business, after giving
effect to the transactions contemplated hereby, except for the results
of operations resulting from the inclusion of the assets and liabilities
set forth on SECTION 8.23(C) SCHEDULE (A) in the operations of the
Companies and the results of operations resulting from the subsidiary
relationship with the Shareholder and the ownership of real property
used in the operation of the business by affiliated entities, and
reflect all costs that historically have been incurred by the Acquired
Business (other than the Excluded Liabilities).
SECTION 8.24 EMPLOYMENT MATTERS.
(a) Employee Census.
Attached hereto as SECTION 8.24(A) SCHEDULE (A) is a list, as of
the date of Closing, of the names and current compensation of all
of the officers and employees of the Companies, the date of each
such individual's first date of employment with the Companies,
the position held by each such individual, such individual's
status as a salaried or hourly employee or commissioned agent,
and the date of the last change in compensation for each such
individual.
No personnel otherwise employed by the Company and listed on
SECTION 8.24(A) SCHEDULE (A) is required or necessary for the
operation of the Acquired Business. Except as set forth on
SECTION 8.24(A) SCHEDULE (A) the Companies do not employ any
agents or independent contractors receiving regular compensation.
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(b) Wages and Benefits.
Except as set forth on SECTION 8.24(B) SCHEDULE (A) attached
hereto, no bonuses, additional compensation or other forms of
compensation or benefits (including, but not limited to, accrued
vacation pay, sick pay or other such benefits) are payable by the
Companies with respect to periods ending on or prior to the
Closing Date.
(c) Employee Benefit Plans.
Attached hereto as SECTION 8.24(C) SCHEDULE (A) is a true and
complete list and description of (with complete copies delivered
to Buyer): (i) all employee benefit plans (within the meaning of
Section 3(3) of ERISA) maintained or contributed to by any of the
Companies or any of their respective ERISA Affiliates or with
respect to which the Companies or any of their ERISA Affiliates
have any liability; and (ii) each employee benefit plan for which
the Companies or any of their respective ERISA Affiliates could
incur liability under Section 4069 of ERISA, in the event such
plan were terminated, or under Section 4212(c) of ERISA, or in
respect of which the Companies or any of their respective ERISA
Affiliates remains secondarily liable under Section 4204 of ERISA
(herein referred to each individually as a "Plan" and
collectively, the "Plans"). Except as contemplated herein, the
Companies have no express commitment: (i) to create, incur
liability with respect to or cause to exist any other employee
benefit plan, program or arrangement; (ii) to enter into any
material contract or agreement to provide compensation or
benefits to any individual; or (iii) to modify or terminate any
Plan, other than with respect to a modification or termination
required by ERISA or the Code.
(d) Qualification of Plans.
Except as set forth on SECTION 8.24(D) SCHEDULE (A) each Plan
that is intended to be qualified under Section 401(a) of the Code
has received a favorable determination letter from the IRS after
1985 providing that it is so qualified and each trust established
in connection with any Plan that is intended to be exempt from
federal income taxation under Section 501(a) of the Code has
received a determination letter from the IRS after 1985 providing
that it is so exempt and no fact or event has occurred since the
date of such determination letter that could adversely affect the
qualified status of any such Plan or the exempt status of any
such trust. None of the Plans is subject to the laws of any
jurisdiction outside of the United States.
(e) Prohibited Transactions.
There has been no prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Code) with respect to
any Plan. No complete or partial termination has occurred within
the five years preceding the date hereof with respect to any
Plan. None of the assets of the Companies is, or is expected to
be, the subject of any lien arising under Section 302(f) of ERISA
or Section 412(n) of the Code. The Companies have not been, nor
are expected to be, required to post any security under Section
307 of ERISA or Section 401(a)(29) of the Code.
(f) Compliance with Law.
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Each Plan is now and has been operated in all respects in
accordance with the requirements of all applicable laws
(including, without limitation, ERISA and the Code) and with the
requirements of the terms of such Plan. All employer
contributions, premiums, payments or amounts required to be made,
paid or accrued with respect to any Plan have been made, paid or
accrued on or before their due dates.
(g) Multiemployer Plans.
Except as specified on SECTION 8.24(G) SCHEDULE (A), no Plan is a
"multiemployer plan" as defined in ERISA, and neither the
Companies nor any of their ERISA Affiliates has or could have a
withdrawal liability with respect to a multiemployer plan.
SECTION 8.25 CONTRACTS OF THE COMPANIES.
(a) Insurance.
A list of all insurance policies of the Companies (copies of
which have been supplied to Buyer), is set forth on SECTION
8.25(A) SCHEDULE (A) are in full force and effect and all
premiums due and payable thereon have been paid. The Companies
have delivered to Buyer complete and correct copies of all such
policies together with all riders and amendments thereto. The
Companies have complied in all material respects with the terms
and provisions of such policies. The insurance coverage provided
by such policies is adequate and customary for the Acquired
Business. The Companies will maintain all insurance policies in
force, and will pay all premiums due with respect to such
policies through the Closing Date. There are no circumstances
existing which would enable such insurers to avoid liability
under the policies issued by them. There are no pending claims
against such insurance policies of the Companies as to which the
insurers have denied liability. There exist no claims under such
insurance policies that have not been properly filed by the
Companies. No insurance company has canceled any policy with the
Company during the past 18 months.
(b) Agreements Restricting Competition.
Attached hereto as SECTION 8.25(B) SCHEDULE (A) is a list of all
contracts, agreements or understandings to which either of the
Companies is a party or is in any way bound (or which would bind
Buyer as a result of the transactions contemplated in this
Agreement) in any way restricting or purporting to restrict
competition, whether with specified persons or in specified areas
or otherwise.
(c) Other Contracts and Agreements.
Attached hereto as SECTION 8.25(C) SCHEDULE (A) is a list of all
material agreements, contracts, leases, licenses, commitments and
other instruments and arrangements (whether written or oral) by
which (i) any of the Assets are bound or affected or (ii) to
which the Sellers are a party or by which they are bound in
connection with the
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Acquired Business or the Assets (the "Contracts"). Complete and
accurate copies of all such Contracts have been delivered to
Buyer. Except as set forth in SECTION 8.25(C) SCHEDULE (A), no
consent of any third party is required under any Contract as a
result of or in connection with, and the enforceability of any
Contract will not be affected in any manner by, the execution,
delivery and performance of this Agreement. Each of the Contracts
is in full force and effect and constitutes a legal, valid and
binding obligation of the respective parties thereto, and except
as set forth on SECTION 8.25(C) SCHEDULE (B), the Companies are
not in default or breach of (with or without the giving of notice
or the passage of time) any such agreement or instrument.
SECTION 8.26 INVENTORIES.
Except for the reserve for obsolete inventory set forth on the December
Balance Sheet or to be included in the Closing Balance Sheet, all Inventories of
the Companies are determined in accordance with GAAP and are merchantable and
saleable or usable in the ordinary course of business of the Acquired Business
(including sale to the after parts market) and do not include obsolete or
discontinued items.
SECTION 8.27 ABSENCE OF CERTAIN CHANGES, EVENTS AND CONDITIONS.
Except as set forth in SECTION 8.27 SCHEDULE (A), since the December
Balance Sheet Date, the Companies have conducted the Acquired Business only in
the ordinary course consistent with prior practice and have not, on behalf of,
in connection with or relating to the Acquired Business or the Assets:
(a) suffered any Material Adverse Effect;
(b) entered into, amended or terminated any material contract
(including, without limitation, purchase orders and supplier
contracts);
(c) declared or paid any dividend, distribution or payments to
the Companies' Shareholder or its Affiliates (other than salary
and benefits paid to Shareholder, the Imperial Shareholders or
their Affiliates who are employees of the Companies and rent paid
to the Imperial Shareholders or their Affiliates, each consistent
with past practice);
(d) incurred any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, except
current liabilities for trade or business obligations incurred in
connection with the purchase of goods or services in the ordinary
course of business consistent with prior practice, none of which
liabilities, in any case or in the aggregate, could have a
Material Adverse Effect;
(e) discharged or satisfied any Lien other than those then
required to be discharged or satisfied, or paid any obligation or
liability, absolute, accrued, continent or otherwise, whether due
or to become due, other than current liabilities shown on the
December
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Balance Sheet and current liabilities incurred since the date
thereof in the ordinary course of business consistent with prior
practice;
(f) mortgaged, pledged or subjected to Lien, any property,
business or assets, tangible or intangible, held in connection
with the Acquired Business;
(g) sold, transferred, leased to others or otherwise disposed of
any of the Assets, except for inventory sold in the ordinary
course of business, or canceled or compromised any debt or claim,
or waived or released any right of substantial value;
(h) received any notice of termination of any contract, lease or
other agreement or suffered any damage, destruction or loss
(whether or not covered by insurance) which, in any case or in
the aggregate, has had a Material Adverse Effect;
(i) transferred or granted any rights under, or entered into any
settlement regarding the breach or infringement of, any
Intellectual Property, or modified any existing rights with
respect thereto;
(j) granted any increase in the compensation (including bonus
payments) of any officer or employee other than in the ordinary
course of business consistent with past practice;
(k) encountered any labor union organizing activity, had any
actual or threatened employee strikes, work stoppages, slowdowns
or lockouts, or had any material change in its relations with its
employees, agents, customers or suppliers;
(l) lost any major customer or major supplier or had any material
order canceled or knows of any threatened cancellation of any
material order;
(m) made any change in its practices with respect to the
collection of receivables, payment of accounts payable or
purchase and sale of inventory;
(n) made any capital expenditures or capital additions or
improvements in excess of an aggregate of $100,000;
(o) instituted, settled or agreed to settle any litigation,
action or proceeding before any court or governmental body
relating to the Acquired Business or the Assets other than in the
ordinary course of business consistent with past practices but
not in any case involving amounts in excess of $25,000.00;
(p) paid or agreed to pay any legal, accounting, brokerage,
finder's fee, Taxes or other expense in connection with, or
incurred any severance pay obligations by reason of, this
Agreement or the transactions contemplated hereby; or
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(q) taken any action or omitted to take any action that would
result in the occurrence of any of the foregoing.
SECTION 8.28 TAXES.
Each of the following representations and warranties in this SECTION
8.28 is qualified to the extent set forth in SECTION 8.28 SCHEDULE (A).
(a) Qualifying Subchapter S Subsidiaries and Payment of Taxes.
Each of the Companies is, a Qualifying Subchapter S Subsidiary
under Section 1361(b)(3) of the Internal Revenue Code of 1986, as
amended (the "Code"), and is not required to file a federal income
tax return. All state tax returns required to be filed with
respect to any Tax for which the Companies are liable have been
duly and timely filed with the appropriate Taxing Authority, each
Tax shown to be payable on each such Return has been paid, and
adequate reserves have been established on the consolidated books
of the Companies and the Shareholder for all Taxes for which any
of the Companies is liable, but the payment of which is not yet
due. Each of the Companies has timely filed true, correct and
complete declarations of estimated Tax in each jurisdiction in
which any such declaration is required to be filed by it. No Liens
for Taxes exist upon the Assets of the Companies, except Liens for
Taxes which are not yet due. No Litigation with respect to any Tax
for which the Companies is asserted to be liable is pending or, to
the knowledge of the Companies, threatened. There are no requests
for rulings or determinations in respect of any Taxes pending
between the Companies and any Taxing Authority. No extension of
any period during which any Tax may be assessed or collected and
for which the Companies are or may be liable has been granted to
any Taxing Authority. The Companies are not a party to any tax
allocation or sharing agreement. All amounts required to be
withheld by any of the Companies or paid to governmental agencies
for income, social security, unemployment insurance, sales,
excise, use and other Taxes have been collected or withheld and
paid to the proper Taxing Authority. The Companies have made all
deposits required by law to be made with respect to employees'
withholding and other employment taxes.
(b) Filing of Returns and Payment of Taxes.
All federal, state and local income and other tax returns
(including, without limitation, any and all returns or
declarations in respect of income, estimated real property,
personal property, sales, use, payroll, privilege and other taxes
or impositions) of the Companies required to be filed on or
before the date hereof have been filed; and all taxes shown on
said returns or on any assessments received by the Companies to
be due and payable on or before the date hereof, have been paid.
All taxes and assessments required to have been withheld or
collected by the Companies have been duly withheld and collected,
and have been duly paid over to the proper governmental
authorities, all as and to the extent prescribed by law. The
Companies
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have not been advised of any deficiency claimed or proposed to be
claimed against or relating to the Companies by any taxing
authority which has not been paid, settled or adequately reserved
for by the Companies; and there are no matters under discussion
with any taxing authority which might result in the assessment of
additional amounts against or relating to the Companies, or any
of the assets of the Companies. There are no agreements, waivers
or other arrangements providing for an extension of time with
respect to the filing of any returns or the assessment of any tax
or deficiency against or relating to the Companies.
(c) Reserves for Taxes.
The Companies have sufficient reserves for the payment of all
unpaid federal, state and local taxes through the Closing Date
and for all periods prior thereto, including, without limitation,
all taxes, if any, imposed after such date but in respect of any
period or periods prior to the Closing Date. The Shareholder has
furnished Buyer with true and correct copies of all federal,
state and local tax returns of or in respect of the Companies and
the Shareholder as actually filed for the three tax years prior
to Closing.
(d) Other Tax Matters.
There were no existing liens for Taxes upon any of the Assets.
SECTION 8.29 ACCOUNTING PRACTICES.
The Companies make and keep accurate books and records reflecting its
assets and liabilities and maintains internal accounting controls that provide
reasonable assurance that (i) transactions are executed with management's
authorization, (ii) transactions are recorded as necessary to permit preparation
of the Companies' financial statements and to maintain accountability for the
assets and liabilities of the Companies, (iii) access to the assets of the
Companies is permitted only in accordance with management's authorization and
(iv) the reported accountability of the assets and liabilities of the
Companiesare compared with existing assets and liabilities at reasonable
intervals.
Section 8.30 Product Warranties.
Except as set forth in SECTION 8.30 SCHEDULE (A), as applicable: (i) the
Companies have no unexpired, expressed product warranty with respect to any
product that they manufacture or sell or that they have heretofore manufactured
or sold; and (ii) the Companies have not received any notice of any claim
(actual or threatened) based on any expressed product warranty; and (iii) the
Companies do not know or have any reasonable ground to know of any claim (actual
or threatened) based on any product warranty of which the Companies have
received notice.
SECTION 8.31 CUSTOMERS AND SUPPLIERS.
SECTION 8.31 SCHEDULE (A) contains a list of those entities that were
the ten largest customers of each of the Companies in terms of approximate
dollar amount of sales during the fiscal year ended December 31, 1998 with a
statement for each such customer during each such period of the dollar amount of
such sales. Except as set forth in SECTION 8.31 SCHEDULE (B), since the December
Balance Sheet Date, the Sellers have not received any oral or written notice
from a customer or vendor of an
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adverse change in the relationship between the Companies and each customer
listed on SECTION 8.31 SCHEDULE (A) or between the Companies and any of their
ten largest suppliers.
SECTION 8.32 YEAR 2000 ISSUE.
Except as listed on SECTION 8.32 SCHEDULE (A), the Sellers reasonably
anticipate that all computer applications that are material to the Acquired
Business and included among the Assets will on a timely basis be able to perform
properly date sensitive functions for all dates before and after January 1,
2000.
ARTICLE IX.
SECURITY REPRESENTATIONS OF THE SELLERS
SECTION 9.01 SECURITY REPRESENTATIONS OF SELLERS.
Each Seller hereby represents and warrants to Buyer as follows:
(a) The Seller has received and carefully reviewed the materials identified
on SECTION 9.01 SCHEDULE (A);
(b) The Seller has had an opportunity to ask questions of and receive
answers from JAII concerning JAII and all such questions, if any, have
been answered to the full satisfaction of the Seller; the Seller has
received all the information he or she considers necessary or
appropriate for deciding whether to enter into this Agreement and
acquire the JAII Common Stock;
(c) The Seller has such knowledge and expertise in financial and business
matters that he or she is capable of evaluating the merits and risks
involved in an investment in the JAII Common Stock;
(d) Except as set forth in this Agreement, no representations or warranties
have been made to the Seller by JAII, or any agent, employee or
Affiliate of JAII; and in entering into this transaction the Seller is
not relying upon any information other than that identified on SECTION
9.01 SCHEDULE (A), any document filed by JAII with the SEC, this
Agreement and the results of independent investigations, if any, by the
Seller;
(e) The Seller is acquiring the JAII Common Stock for investment purposes
only, solely for the account of the Seller (and not as a nominee or
agent), and not with a view towards the resale or distribution of any
part thereof, and the Seller has no present intention of selling,
granting any participation in, or otherwise distributing the same;
(f) The Seller is familiar with Rule 144 of the Securities Act and
understands the resale limitations imposed thereby; the Seller
understands that (i) the JAII Common Stock has not been registered under
the Securities Act or the securities laws of any state, and the issuance
of such JAII Common Stock is based upon an exemption from such
registration requirements for non-public offerings pursuant to the
Securities Act and applicable state securities laws; (ii) the JAII
Common Stock is and will be "restricted securities" as said term is
defined in
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Rule 144 of the Securities Act; (iii) the JAII Common Stock may not be
sold or otherwise transferred unless it has been first registered under
the Securities Act and all applicable state securities laws, or unless
exemptions from such registration provisions are available with respect
to said resale or transfer; (iv) JAII is under no obligation to register
the JAII Common Stock under the Securities Act or any state securities
laws, or to take any action to make any exemption from any such
registration provisions available; (v) the certificates for the JAII
Common Stock will bear a legend to the effect that the transfer of the
securities represented thereby is subject to the provisions hereof; and
(vi) stop transfer instructions will be placed with the transfer agent,
if any, for the JAII Common Stock;
(g) The Seller will not sell or otherwise transfer any of the JAII Common
Stock unless and until (i) said JAII Common Stock shall have first been
registered under the Securities Act and all applicable state securities
laws; or (ii) if required by JAII in light of the circumstances
surrounding the proposed sale or transfer the Seller shall have first
delivered to JAII a written opinion of counsel (which counsel and
opinion, in form and substance, shall be reasonably satisfactory to
JAII), to the effect that the proposed sale or transfer is exempt from
the registration provisions of the Securities Act and, if the JAII
Common Stock is not then listed on a national exchange, all applicable
state securities laws;
(h) The Seller has been advised that as of the date of this Agreement he or
she may be deemed an "Affiliate" of the Companies, as that term is
defined for purposes of paragraphs (c) and (d) of Rule 145 of the rules
and regulations promulgated by the SEC under the Securities Act and the
JAII Common Stock received by the Seller may be sold only (i) pursuant
to an effective registration statement under the Securities Act, (ii) in
conformity with the volume and other limitations of Rules 144 and 145
promulgated by the SEC under the Securities Act, or (iii) in reliance
upon an exemption from registration available under the Securities Act;
and the Seller will not sell or otherwise transfer any of the JAII
Common Stock in violation of the Securities Act or the rules and
regulations promulgated by the SEC thereunder;
(i) It is understood that the certificates evidencing the JAII Common Stock
may bear the following legends or a combination thereof:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER ANY STATE SECURITIES LAWS. NEITHER SUCH
SHARES NOR ANY PORTION THEREOF OR INTEREST THEREIN MAY BE
SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED
OF UNLESS THE SAME ARE REGISTERED UNDER SAID ACT AND
APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION
FROM SUCH REGISTRATION IS AVAILABLE AND THE CORPORATION
SHALL HAVE RECEIVED EVIDENCE OF SUCH EXEMPTION
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SATISFACTORY TO THE CORPORATION (WHICH MAY
INCLUDE, AMONG OTHER THINGS, AN OPINION OF
COUNSEL SATISFACTORY TO THE CORPORATION)."
(ii) Any legend required by the laws of the State of Delaware or Tennessee
or any other applicable state securities laws.
(i) It is understood that any legend on a certificate pursuant to SECTION
9.01(H)(I) shall be removed, and JAII shall have a certificate issued
without such legend to the holder thereof, if the securities represented
by the certificate are registered under the Securities Act and/or such
legend may be properly removed under the terms of Rule 144 and/or Rule
145 promulgated under the Securities Act, and/or if the holder of the
certificate provides JAII (upon JAII's request in light of the
circumstances surrounding the request) with an opinion of counsel for
such holder, reasonably satisfactory to legal counsel for JAII to the
effect that a sale, transfer or assignment of such securities may be
made without registration or is subject to an exemption from
registration, and that the legend is no longer required;
(j) The Seller is an "accredited investor", as such term is defined in Rule
501(a) of the Securities Act;
(k) The Seller acknowledges that as a result of disclosures by Buyer
contemplated under this Agreement, the Seller may, from time to time,
have material, non-public information concerning JAII. The Seller
confirms that it and its respective affiliates are aware, and that it
has advised its representatives that (i) the United States securities
laws may prohibit a person who has material, non-public information from
purchasing or selling securities of any company to which such
information relates, and (ii) material, non-public information shall not
be communicated to any other person except as permitted herein;
(l) The Seller will comply with the policies of JAII relating to insider
trading that apply to all officers and directors of JAII;
(m) Prior to April 26, 2000, the Sellers shall not sell any shares of JAII
Common Stock acquired pursuant to this Agreement;
(n) Between April 26, 2000 and April 26, 2001, the Sellers may sell up to
50% of the aggregate amount of shares of JAII Common Stock acquired
pursuant to this Agreement, subject to the restrictions on resale set
forth in this ARTICLE IX;
(o) After April 26, 2001, the Sellers may sell up to 100% of the aggregate
amount of shares of JAII Common Stock acquired pursuant to this
Agreement, subject to the restrictions on resale set forth in this
ARTICLE IX; and
(p) The Sellers may not dispose of more than 25,000 shares (in aggregate) of
JAII Common Stock in any three-month period.
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ARTICLE X.
REPRESENTATIONS AND WARRANTIES OF JAII AND JAII ACQUISITION SUB
JAII and JAII Acquisition Sub, jointly and severally, represent and
warrant to the Sellers that:
SECTION 10.01 JAII AND JAII ACQUISITION SUB.
JAII is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and has the full corporate
power and authority to own, lease and operate its properties and carry on its
businesses in all respects as presently owned or conducted. Attached hereto as
SECTION 10.01 SCHEDULE (A) is a copy of a certificate of good standing from the
Secretary of State of the State of Delaware evidencing the due organization,
valid existence and good standing of JAII in the State of Delaware.
JAII Acquisition Sub is a Delaware limited partnership, duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite legal power and authority to own, lease and operate its
properties and carry on its business in all respects as presently owned or
conducted. Attached hereto as SECTION 10.01 SCHEDULE (B) is a copy of a
certificate of good standing from the Secretary of State of the State of
Delaware evidencing the due organization, valid existence and good standing of
JAII Acquisition Sub as a limited partnership in the State of Delaware.
SECTION 10.02 BROKERS.
No broker, finder or investment banker is entitled to any brokerage,
finders or other fee or commission in connection with the transactions hereunder
based upon arrangements made by or on behalf of Buyer.
SECTION 10.03 AUTHORIZATION.
The execution and delivery by JAII Acquisition Sub and JAII of this
Agreement and each document to which JAII Acquisition Sub and JAII is a party
and the performance by JAII Acquisition Sub and JAII of their respective
obligations hereunder are with respect to JAII Acquisition Sub and JAII: (i)
within their respective corporate and partnership powers and (ii) not in
violation of any provision of their charter or by-laws or partnership agreement,
as applicable.
SECTION 10.04 POWER OF THE JAII ACQUISITION SUB AND JAII TO APPROVE PURCHASE OF
THE ASSETS AND THE ACQUIRED BUSINESS OF THE COMPANIES.
JAII Acquisition Sub and JAII have the full power, legal capacity and
authority to execute and deliver this Agreement and each other document to which
the JAII Acquisition Sub and JAII are parties and to perform their obligations
in this Agreement and in all other documents to which they are a party. This
Agreement constitutes and each such other document when executed and delivered
by JAII Acquisition Sub and JAII, will constitute, the legal, valid and binding
obligation of JAII Acquisition Sub and JAII, enforceable against JAII
Acquisition Sub and JAII in accordance with its terms, except as that
enforceability may be: (i) limited by any applicable bankruptcy, insolvency,
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reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and (ii) subject to general principles of equity
(regardless of whether that enforceability is considered in a proceeding in
equity or at law). JAII Acquisition Sub and JAII have obtained, in accordance
with all applicable state corporate law and partnership law, their respective
charters and by-laws and partnership agreement, all approvals and have taken or
will take as of the Closing Date all actions necessary for the authorization,
execution, delivery and performance by JAII Acquisition Sub and JAII of this
Agreement and the other documents to which JAII Acquisition Sub and JAII are
parties, including, but not limited to the purchase of the Assets and the
Acquired Business of the Companies and the transactions contemplated herein.
SECTION 10.05 CONFLICTS WITH LAW OR OTHER AGREEMENTS; REQUIRED FILINGS AND
CONSENTS.
The execution and delivery of this Agreement and each other document to
which JAII Acquisition Sub and JAII are parties do not, and the performance of
this Agreement and each other document (including, without limitation, the
consummation of the transactions contemplated hereunder) will not: (i) conflict
with or violate any law, rule, regulation, order, judgment or decree applicable
to JAII Acquisition Sub and JAII or by which they are bound or affected, or (ii)
result in any breach of or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or encumbrance on any of the properties or assets of JAII
Acquisition Sub and JAII pursuant to any agreement, note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, insurance policy or
other instrument or obligation to which JAII Acquisition Sub and JAII are
parties, or by which JAII Acquisition Sub and JAII or any of their properties
are bound or affected, except where the violation, breach or default would not
reasonably be expected to have a material adverse effect on Buyer.
SECTION 10.06 REQUIRED FILINGS AND CONSENTS.
Except for compliance with HSR, the execution and delivery of this
Agreement by Buyer does not, and the performance of this Agreement by Buyer
(including, without limitation, the consummation of the transactions
contemplated hereunder) will not, require any consent, approval, authorization
or permit of, or filing with or notification to, any governmental or regulatory
authority, domestic or foreign, on the part of Buyer.
SECTION 10.07 LITIGATION AND JUDGMENTS.
(a) Litigation.
Except as set forth on SECTION 10.07(A) SCHEDULE (A), there is no
legal proceeding (or governmental investigation) pending before
any court or governmental body, or any other duly constituted
tribunal, or, to the best of Buyer's knowledge, threatened or in
prospect, involving Buyer that (i) questions the validity of this
Agreement or (ii) seeks to delay, prohibit or restrict in any
manner any action taken or contemplated to be taken by Buyer
under this Agreement .
(b) No Orders, Judgments or Decrees.
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Buyer is not subject to any order, judgment or decree, or any
other legal restriction, which would prevent or hinder the
transactions contemplated by this Agreement.
SECTION 10.08 VALIDITY OF SHARES.
The JAII Common Stock to be issued pursuant to the terms of this
Agreement shall, when issued, (i) be duly authorized, validly issued, fully paid
and nonassessable and free of Liens (other than Liens created by reason of the
Escrow Agreement) created by Buyer; (ii) be free and clear of any transfer
restrictions and Liens, other than those imposed under applicable federal and
state securities laws and regulations and under the Escrow Agreement to be
executed pursuant to this Agreement; and (iii) not be subject to any preemptive
rights created by statute, the Certificate of Incorporation or the By-Laws of
JAII or Buyer.
SECTION 10.09 CONTINUED EMPLOYMENT.
Upon Closing, Buyer agrees to offer employment to substantially all of
the employees of the Companies at each of the Companies' plants so that there
will not be a reduction of more than 45 employees at each of the Companies'
facilities and there will be no more than a one-third reduction in the number of
employees at each such plant. Buyer further agrees to provide to the employees
any notice required by the Worker Adjustment and Retraining Notifications Act
(29 USC ss.ss.2101 et. seq.) as a result of the actions of Buyer subsequent to
Closing. Nothing in this Error! Reference source not found. shall confer any
rights upon any person or entity other than the parties to this Agreement.
SECTION 10.10 FULL DISCLOSURE.
The materials delivered by the Buyer to the Sellers as SECTION 9.01(A)
SCHEDULE (A) WITH respect to the JAII Shares do not at the time filed with the
Securities and Exchange Commission contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein
not in light of the circumstances under which they were made misleading.
ARTICLE XI.
ADDITIONAL AGREEMENTS
SECTION 11.01 CONDUCT OF BUSINESS BY THE COMPANIES PENDING THE CLOSING.
From the date hereof to the Closing Date, except as set forth on SECTION
11.01 SCHEDULE (A), as expressly permitted or required by this Agreement or as
otherwise consented to by Buyer in writing, each Company will:
(a) maintain itself at all times as a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction under which it is incorporated;
(b) carry on its business and operations in a good and diligent
manner on an arm's-length basis and substantially in the manner
carried on as of the date hereof and the Company will not engage
in any activity or transaction or make any commitment to
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purchase or spend other than in the ordinary course of its
business as heretofore conducted;
(c) continue to carry all of its existing insurance;
(d) use commercially reasonable efforts to preserve its business
organization intact, to keep available to Buyer the services of
its employees and independent contractors and to preserve for
Buyer its relationships with suppliers, licensees, distributors
and customers and others having business relationships with it;
(e) maintain its facilities, machinery and equipment in good
operating condition and repair, subject only to ordinary wear and
tear;
(f) not take any action which would be prohibited by SECTION
8.27; and
(g) without limiting the foregoing, consult with Buyer regarding
all significant developments, transactions and proposals relating
to the Acquired Business or the Assets.
SECTION 11.02 ACCESS TO INFORMATION.
(a) Access.
From the date hereof to the Closing Date, the Shareholder shall,
and shall cause the Companies, and its officers, directors,
employees, auditors and other agents to, afford Buyer and its
auditors, employees, and other agents reasonable access, at all
reasonable times, to the officers, employees, agents, properties,
offices, and other facilities of the Companies and to all
customers, suppliers and other parties with which the Companies
conduct Business, all books and records, and shall furnish Buyer
with all financial, operating and other data and information with
respect to the business and properties of the Companies as Buyer,
through its employees or agents, may reasonably request. No
investigation pursuant to this SECTION 11.02(A) shall affect any
representations or warranties of the parties herein or the
conditions to the obligations of the parties hereto.
(b) Confidentiality.
All information furnished by the Sellers hereunder shall be
treated as the property of the Sellers, as applicable, until
consummation of the transactions hereby, and, if such
transactions shall not occur and the Sellers are not in default
hereunder, Buyer shall return to the Sellers all documents or
other materials containing information supplied hereunder and
shall keep such information confidential and shall not use such
information for any competitive purpose, except that Buyer shall
be free to use and disclose all or any of such information which
(i) was already in their possession at the time of disclosure to
it; (ii) is a matter of public knowledge; (iii) has been or is
hereafter published other than through Buyer; or (iv) is lawfully
obtained by Buyer
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from a third person without restrictions of confidentiality. The
covenants of Buyer contained in this SECTION 11.02(B) shall
terminate at the Closing.
Section 11.03 Notification of Certain Matters.
The Sellers shall give prompt notice to Buyer of: (i) the occurrence, or
non-occurrence, of any event the occurrence, or non-occurrence, of which would
be likely to cause any representation or warranty contained in this Agreement to
be untrue or inaccurate; and (ii) any failure of the Sellers to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied
hereunder.
SECTION 11.04 FURTHER ACTION; REASONABLE EFFORTS.
Upon the terms and subject to the conditions hereof, each of the parties
hereto shall use all commercially reasonable efforts to take, or cause to be
taken, all appropriate action, and to do or cause to be done all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated hereunder.
SECTION 11.05 NO SHOP.
Each of the Sellers agree that, from the date hereof and until the
termination of this Agreement in accordance with ARTICLE XIII, no Seller, nor
any of its respective officers and directors, shall and the Sellers will direct
and use their best efforts to cause each of their respective Representatives not
to initiate, solicit or encourage, directly or indirectly, any inquiries or the
making or implementation of any proposal or offer (including any proposal or
offer to the Shareholder) with respect to a merger, acquisition, consolidation
or similar transaction involving, or any purchase of all or any significant
portion of the assets or any equity securities of, the Companies or engage in
any activities, discussions or negotiations concerning, or provide any
Confidential Information respecting, the Companies or Buyer to, or have any
discussions with any Person relating to such an offer or proposal or otherwise
facilitate any effort or attempt to make or implement such an offer or proposal.
The Sellers shall promptly notify Buyer of any such offer or proposal.
SECTION 11.06 HART SCOTT RODINO ACT MATTERS.
If Buyer shall determine that filings pursuant to and under the Hart
Scott Rodino Act (the HSR Act) are necessary or appropriate in connection with
the effectuation of the Acquisition and the Companies wil1 compile and file (or
will cause its "ultimate parent entity" as determined for purposes of the HSR
Act) to file under the HSR Act, within ten (10) days of the date of this
Agreement, such information respecting it as the HSR Act requires of an Entity
to be acquired. The Shareholder will, and will cause each of the Companies to,
coordinate and cooperate with Buyer in exchanging such information and supplying
such assistance as may be reasonably requested by Buyer in connection with the
filings and other actions contemplated by this SECTION 11.06.
SECTION 11.07 PAYMENT OF BROKER'S FEES AND EXPENSES.
On or prior to the Closing, the Companies shall pay all of the fees and
expenses of Merrill Lynch which are due and payable at or prior to the Closing
in connection with the transactions contemplated by this Agreement.
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SECTION 11.08 CONSENTS AND APPROVALS.
The Sellers, as promptly as practicable, will obtain, or cause to be
obtained, all consents (including, without limitation, all Governmental
Approvals and any consents required under any Contract) necessary to be obtained
by it in order to consummate the sale and transfer of the Assets pursuant to
this Agreement and the consummation of the other transactions contemplated
hereby.
SECTION 11.09 COOPERATION WITH RESPECT TO FINANCING.
The Sellers agree to cooperate in any reasonable manner with Buyer in
connection with Buyer's obtaining of financing to consummate the transactions
contemplated hereby and, in connection therewith.
SECTION 11.10 CHANGE OF CORPORATE NAMES.
The Companies and the Shareholder shall each file an amendment
immediately following the Closing to their respective Articles of Incorporation
changing their names from Imperial Fabricating Company of Tennessee, Inc. and
Fleet Design, Inc., and Imperial Group, Inc. to the names set forth on SECTION
11.10 SCHEDULE (A).
ARTICLE XII.
INDEMNIFICATION
SECTION 12.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representatives and warranties of each party contained in this
Agreement shall survive the Closing for a period of three (3) years following
the Closing, except the representations and warranties with respect to (i)
SECTION 8.28 shall survive until the expiration of the applicable statutes of
limitations (including all periods of extension and tolling) and (ii) SECTIONS
8.01, 8.02, 8.07, 8.10, 8.14(A), 10.02 10.03 and SECTION 10.08 shall survive
indefinitely following the Closing. The representations and warranties of each
party contained in this Agreement shall apply to the Assets, the Acquired
Business and the Assumed Liabilities. Each representation and warranty made in
this Agreement shall be considered amended and supplemented by each of the
Schedules and shall survive as noted above notwithstanding any investigation at
any time made by or on behalf of any party to this Agreement.
SECTION 12.02 INDEMNIFICATION BY THE SELLERS.
The Sellers, jointly and severally, shall indemnify, hold harmless and
defend (and pay or reimburse) Buyer, its successors and assigns, and its
officers, directors, employees, affiliates and agents ("Buyer's Indemnified
Persons") from, for and against any loss, damage, liability, deficiency or claim
(including without limitation reasonable attorneys' fees and other costs and
expenses incident to any suit, action, dispute, investigation or other
proceeding or in asserting any of their respective rights) arising out of or
resulting from (and will pay Buyer's Indemnified Persons in accordance with the
provisions of this ARTICLE XII, the full amount of any sum which Buyer's
Indemnified Persons become obligated on account of):
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(a) Any breach of the representations and warranties of the
Sellers in this Agreement or the Schedules to this Agreement, or
by Industrial Realty Partners under the Real Estate Purchase
Agreement;
(b) Nonfulfillment of any covenant, agreement, condition or other
obligation of the Sellers in this Agreement or by Industrial
Realty Partners under the Real Estate Purchase Agreement;
(c) All taxes determined by reference to income, capital gain,
gross income, gross receipts, net profits or similar items for
all tax periods prior to and including the date of through
Closing;
(d) Any Excluded Asset;
(e) Any Excluded Liability or an Excluded Liabilty under the Real
Estate Purchase Agreement.
(f) Liabilities with respect to the warranty claim of PACCAR; as
described in SECTION 12.02(F) SCHEDULE (A);
(g) Third Party and Governmental Environmental Liabilities
and Costs;
(h) Buyer's Environmental Expenditures;
(i) Enforcement of this SECTION 12.02; and
(j) Each of the foregoing is referred to as a "Buyer's
Indemnified Loss." This indemnification applies notwithstanding
the closing, the delivery of any instruments of conveyance, and
regardless of any investigation at any time made by or on behalf
of Buyer or of any information Buyer may have. The obligation of
the Sellers to indemnify Buyer for a Buyer Indemnified Loss under
SECTION 12.02(A) shall expire in accordance with the expiration
of the specific warranty as set forth in SECTION 12.02(A) and
SECTION 12.02(H) shall expire on the third (3rd) anniversary of
the date of the Closing. Provided, however that no claim
presented in writing for indemnification pursuant to this ARTICLE
XII prior to the termination and expiration of the
indemnification obligation as set forth herein will be affected
in any way by that termination and expiration.
SECTION 12.03 INDEMNIFICATION BY JAII AND JAII ACQUISITION SUB.
JAII Acquisition Sub and JAII, jointly and severally, shall
indemnify, hold harmless and defend (and pay or reimburse) the Sellers, their
successors and assigns, and their officers, directors, employees, affiliates and
agents ("Sellers' Indemnified Persons") from, for and against any loss, damage,
liability, deficiency or claim (including without limitation reasonable
attorneys' fees and other costs and expenses incident to any suit, action,
dispute, investigation or other proceeding)
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arising out of or resulting from (and will pay Sellers' Indemnified Persons in
accordance with the provisions of this ARTICLE XII, the full amount of any sum
which Sellers' Indemnified Persons become obligated on account of):
(a) Any breach of the representations and warranties of JAII
Acquisition Sub or JAII in this Agreement (including the
Schedules) or of JAII Acquisition Sub or JAII under the Real
Estate Purchase Agreement;
(b) Nonfulfillment of any covenant, agreement, condition or other
obligation of JAII Acquisition Sub or JAII in this Agreement or
of JAII Acquisition Sub or JAII under the Real Estate Purchase
Agreement;
(c) Any acquired Assets, the Acquired Business and the Assumed
Liabilities; and
(d) Enforcement of this SECTION 12.03.
Each of the foregoing is referred to as a "Sellers' Indemnified Loss."
SECTION 12.04 CONDITIONS OF INDEMNIFICATION.
All claims for indemnification under this Agreement shall be asserted
and resolved as follows:
(a) Notification of Claim, Election Period.
A party claiming indemnification under this Agreement (an
"Indemnified Party") shall promptly (i) notify the party from
whom indemnification is sought (the "Indemnifying Party") of any
third-party claim or claims asserted against the Indemnified
Party ("Third Party Claim") that could give rise to a right of
indemnification under this Agreement and (ii) transmit to the
Indemnified Party a written notice ("Claim Notice") describing in
reasonable detail the nature of the Third Party Claim, a copy of
all papers served with respect to that claim (if any), an
estimate of the amount of Damages attributable to the Third Party
Claim to the extent feasible (which estimate shall not be
conclusive of the final amount of that claim) and the basis for
the Indemnified Party's request for indemnification under this
Agreement. Except as set forth in SECTION 12.01 and SECTION
12.02(J), the failure to promptly deliver a Claim Notice shall
not relieve the Indemnifying Party of its obligations to the
Indemnified Party with respect to the related Third Party Claim
except to the extent that the resulting delay is materially
prejudicial to the defense of that claim. Within 15 days after
receipt of any Claim Notice (the "Election Period"), the
Indemnifying Party shall notify the Indemnified Party (i) whether
the Indemnifying Party disputes its potential liability to the
Indemnified Party under this SECTION 12.04 with respect to that
Third Party Claim, and (ii) if the Indemnifying Party does not
dispute its potential liability to the Indemnified Party with
respect to that Third Party Claim, whether the Indemnifying Party
desires, at the sole cost and
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expense of the Indemnifying Party, to defend the Indemnified
Party against that Third Party Claim.
(b) Defense of Third Party Claims by Indemnifying Party.
If the Indemnifying Party does not dispute its potential
liability to the Indemnified Party and notifies the Indemnified
Party within the Election Period that the Indemnifying Party
elects to assume the defense of the Third Party Claim, then the
Indemnifying Party shall have the right to defend, at its sole
cost and expense, that Third Party Claim by all appropriate
proceedings which proceedings shall be prosecuted diligently by
the Indemnifying Party to a final conclusion or settled at the
discretion of the Indemnifying Party in accordance with this
SECTION 12.04 provided that counsel for the Indemnifying Party
who shall conduct the defense of such claim or litigation shall
be reasonably satisfactory to the Indemnified Party), and the
Indemnified Party will furnish the Indemnifying Party with all
information in its possession with respect to that Third Party
Claim and otherwise cooperate with the Indemnifying Party in the
defense of that Third Party Claim. Except with the prior written
consent of the Indemnified Party, no Indemnifying Party, in the
defense of any such claim or litigation, shall consent to entry
of any judgment or enter into any settlement that provides for
injunctive or other non-monetary relief affecting the Indemnified
Party or that does not include as an unconditional term thereof
the giving by each claimant or plaintiff to such Indemnified
Party of a release from all liability with respect to such claim
or litigation.
In the event that the Indemnified Party shall in good faith
determine that the conduct of the defense of any claim subject to
indemnification hereunder or any proposed settlement of any such
claim by the Indemnifying Party might be expected to affect
adversely the Indemnified Party's tax liability for any taxable
year or the ability of Indemnified Party to conduct its business
(including relationships with customers, suppliers or other
parties with whom the Indemnified Party conducts business), or
that the Indemnified Party may have available to it one or more
defenses or counterclaims that are inconsistent with one or more
of those that may be available to the Indemnifying Party in
respect of such claim or any litigation relating thereto, the
Indemnified Party shall have the right at all times to take over
and assume control over the defense, settlement, negotiations or
litigation relating to any such claim at the sole cost of the
Indemnified Party, PROVIDED that if the Indemnified Party does so
take over and assume control, the Indemnified Party shall not
settle such claim or litigation without the written consent of
the Indemnifying Party, such consent not to be unreasonably
withheld. In the event that the Indemnifying Party does not
accept the defense of any matter as above provided, the
Indemnified Party shall have the full right to defend, at the
Indemnified Party's cost, against any such claim or demand and
shall be entitled to settle or agree to pay in full such claim or
demand. In any event, the Indemnifying Party and the Indemnified
Party shall cooperate in the defense of any claim or litigation
subject to this SECTION 12.04(B) and the records of each shall
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be available to the other with respect to such defense.
Notwithstanding anything else in this Agreement to the contrary,
if there is any claim asserted by any third party relating to any
tax return for any period that ends after the Closing Date which
if successful could result in Buyer being indemnified under
SECTION 12.02, Buyer shall solely participate in, control and
resolve such claim, provided Buyer shall communicate with the
Sellers regarding the status of the claim.
The Indemnified Party is hereby authorized at the sole cost and
expense of the Indemnifying Party, to file, during the Election
Period any motion, answer or other pleadings that the Indemnified
Party shall deem necessary or appropriate to protect its
interests or those of the Indemnifying Party. The Indemnified
Party may participate in, but not control, any defense or
settlement of any Third Party Claim controlled by the
Indemnifying Party pursuant to this SECTION 12.04 and will bear
its own costs and expenses with respect to that participation;
provided, however, that if the named parties to any such action
(including any impleaded parties) include both the Indemnifying
Party and the Indemnified Party, and the Indemnified Party has
been advised by counsel that there may be one or more legal
defenses available to it which are different from or additional
to those available to the Indemnifying Party, then the
Indemnified Party may employ separate counsel at its own expense
(which expense may be included in the claim for indemnification)
and, on its written notification of that employment, the
Indemnifying Party shall not have the right to assume or continue
the defense of such action on behalf of the Indemnified Party.
(c) Disputed Liability, Defense of Third Party Claims.
If the Indemnifying Party (i) within the Election Period (a)
disputes its potential liability to the Indemnified Party under
this ARTICLE XII, (b) elects not to defend the Indemnified Party
pursuant to SECTION 12.04(B); or (c) fails to notify the
Indemnified Party that the Indemnifying Party elects to defend
the Indemnified Party pursuant to SECTION 12.04(B) or (ii) elects
to defend the Indemnified Party pursuant to SECTION 12.04(B), but
fails diligently and promptly to prosecute or settle the Third
Party Claim, then the Indemnified Party shall have the right to
defend, at the sole cost and expense of the Indemnifying Party
(if the Indemnified Party is entitled to indemnification
hereunder), the Third Party Claim by all appropriate proceedings,
which proceedings shall be promptly and vigorously prosecuted by
the Indemnified Party to a final conclusion or settled. The
Indemnified Party shall have full control of such defense and
proceedings. Notwithstanding the foregoing, if the Indemnifying
Party has delivered a written notice to the Indemnified Party to
the effect that the Indemnifying Party disputes its potential
liability to the Indemnified Party under this SECTION 12.04(C)
and if that dispute is resolved in favor of the Indemnifying
Party, the Indemnifying Party shall not be required to bear the
costs and expenses of the Indemnified Party's defense pursuant to
this SECTION 12.04(C), or of the Indemnifying Party's
participation therein at the Indemnified Party's request, and the
Indemnified Party shall reimburse the Indemnifying Party in full
for all reasonable costs and
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expenses of such litigation. The Indemnifying Party may
participate in, but not control, any defense or settlement
controlled by the Indemnified Party pursuant this SECTION
12.04(C) and the Indemnifying Party shall bear its own costs and
expenses with respect to that participation.
(d) Direct Claims.
In the event any Indemnified Party should have a claim against
any Indemnifying Party hereunder that does not involve a Third
Party Claim, the Indemnified Party shall transmit to the
Indemnifying Party a written notice (the "Indemnity Notice")
describing in reasonable detail the nature of the claim, an
estimate of the amount of Damages attributable to that claim to
the extent feasible (which estimate shall not be nonexclusive of
the final amount of that claim) and the basis of the Indemnified
Party's request for indemnification under this Agreement. If the
Indemnifying Party does not notify the Indemnified Party within
15 days from its receipt of the Indemnity Notice that the
Indemnifying Party disputes the claim specified by the
Indemnified Party in the Indemnity Notice that claim shall be
deemed a liability of the Indemnifying Party hereunder. If the
Indemnifying Party has timely disputed that claim as provided
above, that dispute shall be resolved by proceedings in an
appropriate court of competent jurisdiction if the parties do not
reach settlement of that dispute within 30 days after notice of
that dispute is given.
(e) Payments Of Indemnified Amounts.
Payments of all amounts owing by an Indemnifying Party pursuant
to this ARTICLE XII relating to a Third-Party Claim shall be made
promptly when due.
SECTION 12.05 LIMITATIONS ON INDEMNIFICATION.
(a) Limitations on the Sellers' Indemnification Obligations for
Breach of Representation or Warranty.
Notwithstanding the provisions of this ARTICLE XII, the Sellers
shall not be required to indemnify or hold harmless Buyer on
account of any Buyer Indemnified Loss under SECTION 12.02(A),
unless the liability of the Sellers in respect of that Buyer
Indemnified Loss, when aggregated with the liability of the
Sellers in respect of all Buyer Indemnified Losses under SECTION
12.02(A) and SECTION 12.02(H), exceeds $300,000. In no event
shall the aggregate joint and several liability of the Sellers
under SECTION 12.02(A) and SECTION 12.02(H) exceed $6,000,000.
(b) The Sellers' Indemnification Obligations for Nonfulfillment
of Agreements, Tax Matters and Excluded Assets. The Sellers'
indemnification or reimbursement liability to Buyer for claims
made under SECTION 12.02(A), SECTION 12.02(C) SECTION 12.02(D)
and SECTION 12.02(F) shall not be subject to the limitations
described in SECTION 12.05(A), notwithstanding that Buyer's
rights to indemnification under SECTION 12.02(A), SECTION
12.02(C) SECTION 12.02(D) and SECTION 12.02(F) could also be
claimed under SECTION 12.02(A).
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(c) The Sellers' Indemnification Obligations for Excluded
Liabilities. The Sellers' indemnification or reimbursement
liability to Buyer for claims made under SECTION 12.02(E) shall
not be subject to the limitations described in SECTION 12.05(A),
notwithstanding that Buyer's and JAII's rights to indemnification
under SECTION 12.02(E) could also be claimed under SECTION
12.02(A); provided, however, that if a claim is made by Buyer for
indemnification under SECTION 12.02(E) and such claim could also
be claimed as a breach of representation or warranty under
SECTION 8.13, SECTION 8.16, SECTION 8.21, SECTION 8.23(B), or for
a claim under SECTION 12.02(H) then such claim shall be treated
as a claim under SECTION 12.02(A) and subject to the limitations
on Sellers' obligations to indemnify Buyer and JAII as set forth
in SECTION 12.05(A).
(d) The Sellers' Indemnification Obligations for Third-Party and
Governmental Authorities Claims for Environmental Liabilites and
Claims. The Sellers' indemnification or reimbursement liability
to Buyer for claims made under SECTION 12.02(G) shall not be
subject to the limitations described in SECTION 12.05(A),
notwithstanding that Buyer's rights to indemnification under
SECTION 12.02(G) could also be claimed under SECTION 12.02(A) or
under SECTION 12.02(H).
(e) Limitations on the Sellers' Indemnification Obligations for
Buyer's Environmental Expenditures.
Notwithstanding the provisions of this ARTICLE XII, the Seller
shall not be required to indemnify or hold harmless Buyer on
account of any Buyer's Indemnified Loss under SECTION 12.02(H),
unless the liability of the Sellers in respect of that Buyer's
Indemnified Loss, when aggregated with the liability of the
Seller in respect of all Buyer's Indemnified Losses under SECTION
12.02(A) and SECTION 12.02(H), exceeds $300,000. In no event
shall the aggregate joint and several liability of the Sellers
under SECTION 12.02(A) and SECTION 12.02(H), exceed $6,000,000.
(f) Limitations on Buyer's Indemnification Obligations.
Notwithstanding the provisions of this ARTICLE XII, JAII
Acquisition Sub and JAII shall not be required to indemnify or
hold harmless the Sellers on account of any Sellers' Indemnified
Loss under SECTION 12.03(A), unless the liability of Buyer in
respect of that Sellers' Indemnified Loss, when aggregated with
the liability of the Seller in respect of all Buyer's Indemnified
Losses under SECTION 12.03 exceeds $300,000. In no event shall
the aggregate joint and several liability of JAII Acquisition Sub
and JAII under SECTION 12.03(A), exceed $6,000,000. JAII
Acquisition Sub and JAII's indemnification and reimbursement
liability to the Sellers for claims under SECTION 12.03(B),
SECTION 12.03(C), and SECTION 12.03(D) shall not be subject to
the limitations described in this paragraph, notwithstanding that
the Sellers' rights to indemnification under SECTION 12.03(B),
SECTION 12.03(C) and SECTION 12.03(D) could also be claimed under
SECTION 12.03(A).
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ARTICLE XIII.
TERMINATION, AMENDMENT AND WAIVER
SECTION 13.01 TERMINATION.
This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time prior to the Closing Date provided any one
of the following events occur:
(i) by mutual written consent of the Sellers and Buyer;
(ii) the Sellers, on the one hand, or by Buyer, on the other
hand, if a material breach or default shall be made by the other
party in the observance or in the due and timely performance of
any of the representations, covenants, agreements or conditions
contained herein;.
(iii) by Buyer or the Sellers, if any court of competent
jurisdiction, governmental authority shall have issued an order,
decree, or ruling or taken any other action restraining,
enjoining or otherwise prohibiting any of the transactions
hereunder and such order, decree, ruling or other action shall
have become final and nonappealable;
(iv) without any action or notice (in writing or otherwise) if
any Bankruptcy Proceeding shall have been instituted or consented
to by or against either of the Companies by any of the parties
hereto;
(v) by the Sellers if the transactions contemplated by this
Agreement to take place at the Closing shall not have been
consummated by the close of business on the 30th day after April
26,1999 (the "Expiration Date"), unless the failure of such
transactions to be consummated results from the failure of the
Sellers to perform or adhere to any agreement required hereby to
be performed or adhered to by the Sellers prior to or on the
Expiration Date;
(vi) by Buyer if the transactions contemplated by this Agreement
to take place at the Closing shall not have been consummated by
the close of business on the Expiration Date; or
(vii) by the Sellers solely for the reason that the Buyer has not
acquired sufficient financing to consummate the transactions
contemplated by this Agreement to take place at the Closing not
later that the close of business on the Expiration Date and the
Buyer refuses or is unable to close by the Expiration Date.
Provided, however, that the Seller's right to terminate under
this Section and Buyer's obligation to pay the fee set forth in
SECTION 13.02(E) shall only arise if the following conditions are
met: (i) the representations and warranties of the Sellers are
true and correct as of the date hereof and the date of such
termination and the Sellers deliver to Buyer a certificate to
that effect (ii) the events described in SECTION 13.01(III) and
SECTION
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13.01(IV) have not taken place; and (iii) the Buyer's refusal or
inability to close or acquire sufficient financing is not due to
the failure of the Sellers to perform or comply with any of the
covenants, agreements or conditions which they are required to
perform or comply with prior to the Closing.
SECTION 13.02 EFFECT OF TERMINATION.
(a) Termination by Agreement.
In the event of the termination of this Agreement pursuant to SECTION
13.01(I) this Agreement shall forthwith become void and have no effect
and there shall be no liability on the part of any party hereto.
(b) Termination for Legal Restraint.
In the event of the termination of this Agreement pursuant to SECTION
13.01(III) or SECTION 13.01(IV) this Agreement shall forthwith become
void and have no effect and there shall be no liability on the part of
any party hereto.
(c) Unilateral Termination.
In the event of the termination of this Agreement pursuant to SECTION
13.01(V) or SECTION 13.01(VI) this Agreement shall forthwith become void
and have no effect and there shall be no liability on the part of any
party hereto, unless the failure of the such transactions to become
consummated result from the failure of the terminating party to perform
or adhere to any agreement required hereby to be performed or adhered to
by the terminating prior to or on the Expiration Date. In such event, a
unilateral termination by a defaulting termination shall entitle the
non-defaulting party to terminate this Agreement under SECTION 13.01(II)
and proceed under SECTION 13.02(D).
(d) Termination for Cause.
In the event of the termination of this Agreement pursuant to SECTION
13.01(II), the non-defaulting party shall be entitled to its rights and
remedies at law or in equity.
(e) Termination for Failure of Financing.
In the event of the termination of this Agreement by Sellers pursuant to
SECTION 13.01(VII), then the Buyer shall pay to the Sellers a fee of
$500,000. Buyer's payment to the Sellers of the $500,000 fee shall
constitute liquidated damages and a release with respect to any claim
for damages which the Sellers would otherwise be entitled to assert
against the Buyer with respect to this Agreement and the transactions
contemplated thereby.
SECTION 13.03 AMENDMENT.
This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
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SECTION 13.04 WAIVER.
At any time prior to the Closing Date, either party hereto may: (a)
extend the time for the performance of any of the obligations or other acts of
the other party hereto; (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto; and
(c) waive compliance with any of the agreements or conditions contained herein.
Any such extension or waiver shall be valid if set forth in an instrument in
writing signed by the party to be bound thereby. Any such waiver shall
constitute a waiver only with respect to the specific matter described in such
writing and shall in no way impair the rights of the party granting such waiver
in any other respect or at any other time. Neither the waiver by any of the
parties hereto of a breach of or a default under any of the provisions of this
Agreement, nor the failure by any of the parties, on one or more occasions, to
enforce any of the provisions of this Agreement or to exercise any right or
privilege hereunder, shall be construed as a waiver of any other breach or
default of a similar nature, or as a waiver of any of such provisions, rights or
privileges hereunder. The rights and remedies herein provided are cumulative and
are not exclusive of any rights or remedies that any party may otherwise have at
law or in equity. The rights and remedies of any party based upon, arising out
of or otherwise in respect of any inaccuracy or breach of any representation,
warranty, covenant or agreement or failure to fulfill any conditions shall in no
way be limited by the fact that the act, omission, occurrence or other state of
facts upon which any claim of any such inaccuracy or breach is based may also be
the subject matter of any other representation, warranty, covenant or agreement
as to which there is no inaccuracy or breach. The representations and warranties
of the Sellers shall not be affected or deemed waived by reason of any
investigation made by or on behalf of Buyer (including but not limited to by any
of its advisors, consultants or representatives) or by reason of the fact that
Buyer or any of such advisors, consultants or representatives knew or should
have known that any such representation or warranty is or might be inaccurate.
ARTICLE XIV.
GENERAL PROVISIONS
SECTION 14.01 NOTICES.
All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by cable, telecopy,
telegram or telex or by registered or certified mail (postage prepaid, return
receipt requested) to the respective parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(i) if to Buyer:
Johnstown America Industries, Inc.
980 North Michigan Avenue
Suite 1000
Chicago, Illinois 60611
Phone: (312) 280-8844
Fax: (312) 280-4820
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Attn: Mr. Kenneth M. Tallering
with a copy to:
Mr. Robert F. Wall
Winston & Strawn
35 W. Wacker Drive
Chicago, Illinois 60601
Phone: 312-558-5600
Fax: 312-558-5700
(b) if to the Sellers:
Mr. Fred Culbreath
Mr. Joe Hicks
And for the Companies and the Shareholder
6106 Johnson Chapel Road
Brentwood, Tn. 37072
Phone: 615-373-3895
Fax: 615-661-0047
with a copy to:
Mr. Daniel R. Loftus
Wyatt Tarrant & Combs
1500 Nashville City Center
511 Union Street
Nashville, Tennessee 37219-1750
Phone: (615) 244-0020
Fax: (615) 256-1726
SECTION 14.02 PARTIES IN INTEREST.
This Agreement shall be binding upon and inure solely to the benefit of
each party hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement, except
as provided in ARTICLE XII with respect to indemnification of Indemnified
Parties.
SECTION 14.03 GOVERNING LAW.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware regardless of the law, that might otherwise
govern under applicable principles of conflicts of laws thereof.
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SECTION 14.04 HEADINGS.
The descriptive headings contained in this Agreement are included for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 14.05 COUNTERPARTS.
This Agreement may be executed in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
SECTION 14.06 EXPENSES.
Each party shall pay all of their own respective expenses incurred by or
on behalf of each of them in connection with this Agreement and the transactions
contemplated hereunder, including, but not limited to, all attorneys' fees.
The Companies and Buyer shall pay their respective obligations for all
federal, state, local, foreign and other transfers, sales, use or similar taxes
applicable to, imposed upon or arising out of the transfer of the Assets.
SECTION 14.07 ENTIRE AGREEMENT, ASSIGNMENT.
This Agreement constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior agreements and
undertakings, both written and oral, between the parties with respect to the
subject matter hereof. This Agreement shall not be assigned by operation of law
or otherwise without the prior written consent of the other party hereto,
provided that (i) Buyer may assign this Agreement to any subsidiary of Buyer or
to any lender to Buyer or any subsidiary or affiliate thereof as security for
obligations to such lender in respect of the financing arrangements entered into
in connection with the transactions contemplated hereby and any refinancing,
extensions, refundings or renewals thereof, PROVIDED, FURTHER, that no
assignment to any such lender shall in any way affect Buyer's obligations or
liabilities under this Agreement and (ii) Buyer may assign Buyer's right to
indemnification or reimbursement upon a sale or transfer of all or substantially
all of the assets of the Acquired Business.
SECTION 14.08 TIME.
Time is of the essence in the performance of this Agreement.
SECTION 14.09 REFORMATION AND SEVERABILITY.
If any provision of this Agreement is invalid, illegal or unenforceable
that provision shall, to the extent possible, be modified in such manner as to
be valid, legal and enforceable so as to most nearly retain the intent of the
parties hereto as expressed herein and if such a modification is not possible,
that provision shall be severed from this Agreement and in either case the
validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.
SECTION 14.10 PREPARATION AND FILING OF TAX RETURNS.
Each party hereto will provide to each of the other parties hereto such
cooperation and information as each of them reasonably may request in filing any
Return, amended Return or claim
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for refund, determining a liability for Taxes or a right to refund of Taxes or
in conducting any audit or other proceeding in respect of Taxes. This
cooperation and information shall include providing copies of all relevant
portions of the relevant Returns, together with such accompanying schedules and
work papers, documents relating to rulings or other determinations by Taxing
Authorities and records concerning the ownership and Tax bases of property as
are relevant and which a party possesses. Each party will make its employees, if
any, reasonably available on a mutually convenient basis at its cost to provide
an explanation of any documents or information so provided. Subject to the
preceding sentence, each party required to file Returns pursuant to this
Agreement shall bear all costs attributable to the preparation and filing of
those Returns.
SECTION 14.11 NEWS RELEASES.
Except as required by applicable law, prior to the Closing, no notices
to third parties or other publicity, including press releases, concerning any of
the transactions provided for herein shall be made, except for such written
information as shall have been approved in writing as to form and content by the
other party, which approval shall not be unreasonably withheld.
SECTION 14.12 ACCESS TO BOOKS AND RECORDS.
From and after the Closing, Buyer shall and shall cause its officers,
directors, employees, auditors and other agents to, afford the Sellers and its
auditors, employees, and other agents reasonable access, at all reasonable
times, to the officers, employees, agents, properties, offices, and other
facilities of the Acquired Business, all books and records, and shall furnish
the Sellers with all financial, operating and other data and information with
respect to the Acquired Business as the Sellers, through its employees or
agents, may reasonably request and as is reasonably required for Sellers to
prepare and file tax returns or other reports, returns, studies or other
information with governmental authorities or agencies or to fulfill, claim or
defend its rights and obligations under ARTICLE XII or to review and audit the
books and records of Buyer with respect to the calculation and payment of the
Earn-Out Amount. The Sellers shall have the right to retain or make copies of
all such information, at their expense. Buyer will make its employees, if any,
reasonably available on a mutually convenient basis at its cost to provide an
explanation of any documents or information so provided. Sellers agree that all
information provided pursuant to this Section shall be considered confidential
information and maintained by the Sellers as confidential information for use
only with respect to the matters set forth in this Section.
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IN WITNESS WHEREOF, Buyer and the Sellers have each caused this
Agreement to be executed as of the date first written above.
IMPERIAL FABRICATING COMPANY OF TENNESSEE, INC.
BY:______________________________
- ---------------------------------
TITLE
FLEET DESIGN, INC.
BY:______________________________
- ---------------------------------
TITLE
IMPERIAL GROUP, INC.
BY:______________________________
- ---------------------------------
TITLE
Shareholders of Imperial Group, Inc.
- ------------------------------
Fred D. Culbreath
- ---------------------------------
Joseph A. Hicks
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Johnstown America Industries, Inc.
A Delaware corporation
By:________________________________
- -----------------------------------
Title
Imperial Group Acquisition, L.P.
A Delaware Limited Partnership
By: Imperial Group Holding Corp.-1
A Delaware corporation
By:________________________________
- -----------------------------------
Title
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EXHIBIT A
DEFINITIONS
DEFINED TERMS. As used in this Agreement, the following terms have the meanings
assigned to them below:
"Acquired Business" has the meaning specified in the Preliminary Statement.
"Affiliate" means, as to any specified Person, any other Person that, directly
or indirectly through one or more intermediaries or otherwise, controls, is
controlled by or is under common control with the specified Person. As used in
this definition, "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a Person
(whether through ownership of Capital Stock of that Person, by contract or
otherwise).
"Agreement" means this Agreement, including all attached Schedules, Annexes,
Addenda and Exhibits, as each of the same may be amended, modified or
supplemented from time to time pursuant to the provisions hereof or thereof.
"Applicable Law" means all applicable provisions of all (i) constitutions,
treaties, statues, laws (including the common law), rules, regulations,
ordinances, codes or orders of any Governmental Authority, (ii) Governmental
Approvals and (iii) orders, decisions, injunctions, judgments, awards and
decrees of or agreements with any Governmental Authority.
"Assets" is defined in SECTION 2.03.
"Assumed Liabilities" is defined in SECTION 2.05.
"Assumption Agreement" is defined in SECTION 2.05.
Average Working Capital shall mean $5,825,522.00 which the parties acknowledge
and agree has been calculated in accordance with the definition of Working
Capital for the period from July 1998 to February 1999, in accordance with
SECTION 4.02 SCHEDULE (A)
"Buyer's Environmental Expenditures" means all expenditures paid by Buyer which
are necessary to cause the Acquired Business to be in compliance with any and
all requirements of Environmental Laws as of the Closing Date, including,
without limitation, all Environmental Permits issued under or pursuant to such
Environmental Laws, including, without limitation, all expenditures related to
all fees, disbursements and expenses of counsel, experts, personnel and
consultants based on, arising out of or otherwise in respect of the operations
of the Acquired Business on or prior to the Closing. Buyer's Environmental
Expenditures shall not include any expenditure or Damage incurred by
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Buyer with respect to any Remedial Action or any Included Property or the
Property as defined in the Real Estate Purchase Agreement (purchased by Buyer as
part of the Assets or leased pursuant to this Agreement).
"Capital Stock" means, with respect to: (a) any corporation, any share, or any
depositary receipt or other certificate representing any share, of an equity
ownership interest in that corporation; and (b) any other Entity, any share,
membership or other percentage interest, unit of participation or other
equivalent (however designated) of an equity interest in that Entity.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, 42 U.S.C. ss. 9601 et seq.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means, with respect to any Person, all trade secrets
and other confidential, nonpublic and/or proprietary information of that Person,
including information derived from reports, investigations, research, work in
progress, codes, marketing and sales programs, capital expenditure projects,
cost summaries, pricing formulae, contract analyses, financial information,
projections, confidential filings with any Governmental Authority and all other
confidential, nonpublic concepts, methods of doing business, ideas, materials or
information prepared or performed for, by or on behalf of that Person.
"Counsel for Buyer" means Winston & Strawn.
"Closing Balance Sheet" means the Balance Sheet prepared in accordance with
SECTION 4.02.
"Closing Date Working Capital" shall mean the Working Capital of the Acquired
Business transferred to Buyer at Closing calculated on a basis consistent with
the calculation of Average Working Capital for the assets and liabilities
transferred to Buyer at Closing. For purposes of calculating the Closing Date
Working Capital, Non-Cash Current Assets and Non-Cash Current Liabilities shall
not include any affiliated receivables, affiliated payables, Excluded Assets and
Excluded Liabilities.
"Damage" to any specified Person means any cost, damage (including any
consequential, exemplary, punitive or treble damage) or expense (including
reasonable fees and actual disbursements by attorneys, consultants, experts or
other Representatives and Litigation costs), any fine of or penalty on or any
liability (including loss of earnings or profits) of any other nature of that
Person; provided, that if any Indemnified Party should have a claim against any
Indemnifying Party that does not involve a Third Party Claim and for which the
Indemnified Party seeks indemnification pursuant to ARTICLE XII, the amount of
Damages attributable to that claim will not include any amount representing
consequential, exemplary, punitive or treble damage. Provided, further, that in
the event the Buyer incurs Damage to which it is entitled to indemnification
from Sellers under this Agreement and Buyer receives insurance proceeds
(including the costs of defense of any Third Party
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Claims) from any of the insurance policies as contemplated by SECTION
2.06(F),SECTION 2.03(G),SECTION 2.03(H), SECTION 2.03(I) then such proceeds as
received by the Buyer shall be credited against such Damages for the benefit of
the Sellers.
"Damage Claim" means, as asserted (a) against any specified Person, any claim,
demand or Litigation made or pending against the specified Person for Damages to
any other Person, or (b) by the specified Person, any claim or demand of the
specified Person against any other Person for Damages to the specified Person.
"Entity" means any sole proprietorship, corporation, partnership of any kind
having a separate legal status, limited liability company, business trust,
unincorporated organization or association, mutual company, joint stock company
or joint venture.
"Environmental Laws" means any and all Governmental Requirements relating to the
environment or worker health or safety, including ambient air, surface water,
land surface or subsurface strata, or to emissions, discharges, Releases or
threatened Releases of pollutants, contaminants, chemicals or industrial, toxic
or hazardous substances or wastes (including Solid Wastes, Hazardous Wastes or
Hazardous Substances) or noxious noise or odor into environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, recycling, removal, transport or handling of pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances or wastes (including,
without limitations, petroleum, petroleum distillates, asbestos or asbestos-
containing material, polychlorinated biphenyls, chlorofluorocarbons (including
chlorofluorocarbon- 12) or hydrochlorofluorocarbons).
"Environmental Permits" means any federal, state and local permit, license,
registration, consent, order, administrative consent order, certificate,
approval or other authorization necessary for the conduct of the Acquired
Business as currently conducted or previously conducted under any Environmental
Law.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" means, with respect to any specified Person at any time, any
other Person, including an Affiliate of the specified Person, that is, or at any
time within six years of that time was, a member of any ERISA Group of which the
specified Person is or was a member at the same time.
"ERISA Group" means any "group of organizations" within the meaning of Section
414(b), (c), (m) or (o) of the Code or any "controlled group" as defined in
Section 4001(a)(14) of ERISA.
"ERISA Pension Benefit Plan" means any "employee pension benefit plan", as
defined in Section 3(2) of ERISA, including any plan that is covered by Title IV
of ERISA or subject to the minimum funding standards under Section 412 of the
Code (excluding any Multiemployer Plan).
"Exchange Act" means the Securities Exchange Act of 1934.
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"GAAP" means generally accepted accounting principles and practices in the
United States as in effect from time to time and have been or are applied on a
basis consistent with the most recent Financial Statements delivered to Buyer
prior to the Closing Date.
"Governmental Approval" means at any time any authorization, consent, approval,
permit, franchise, certificate, license, implementing order or exemption of, or
registration or filing with any Governmental Authority, including any
certification or licensing of a natural person to engage in a profession or
trade or a specific regulated activity, at that time.
"Governmental Authority" means (a) any national, state, county, municipal or
other government, domestic or foreign, or any agency, board, bureau, commission,
court, department or other instrumentality of any such government, or (b) any
Person having the authority under any applicable Governmental Requirement to
assess and collect Taxes for its own account.
"Governmental Requirement" means at any time (a) any law, statute, code,
ordinance, order, rule, regulation, judgment, decree, injunction, writ, edict,
award, authorization or other requirement of any Governmental Authority in
effect, and as then may be interpreted by applicable Governmental Authorities,
at that time or (b) any obligation included in any certificate, certification,
franchise, permit or license issued by any Governmental Authority or resulting
from binding arbitration, including any requirement under common law, at that
time.
"Hazardous Substances" means any substance that: (i) is or contains asbestos,
urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum or
petroleum-derived substances or wastes, radon gas or related materials; (ii)
requires investigation, removal or remediation under any Environmental Law, or
is defined, listed, identified or regulated as a "Solid Waste", Hazardous Waste"
or "Hazardous Substance" thereunder, or (iii) is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic, or otherwise
hazardous and is regulated by any Governmental Authority or Environmental Law.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
"Included Real Property" means the real property owned by the Sellers as set
forth on SECTION 2.03(L) SCHEDULE (A), together with all other structures,
facilities, improvements, fixtures, systems, equipment and items of property
presently or hereafter located thereon or attached or appurtenant thereto prior
to the Closing, which are owned by Sellers.
"Included Leased Property" means the real property leased to the Sellers as set
forth on SECTION 2.05(A)(IV) SCHEDULE (A), together with all other structures,
facilities, improvements, fixtures, systems, equipment and items of property
presently or hereafter located thereon attached or appurtenant thereto prior to
the Closing, which are owned by Sellers.
"Indebtedness" of any Person means, without duplication, (a) any liability of
that Person (i) for borrowed money or arising out of any extension of credit to
or for the account of that Person
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(including reimbursement or payment obligations with respect to surety bonds,
letters of credit, banker's acceptances and similar instruments) for the
deferred purchase price of property or services or arising under conditional
sale or other title retention agreements, other than trade payables arising in
the ordinary course of business, (ii) evidenced by notes bonds, debentures or
similar instruments, (iii) in respect of capital leases or (iv) in respect of
interest rate protection agreements, (b) any liability secured by any Lien upon
any property or assets of that Person (or upon any revenues, income or profits
of that Person therefrom), whether or not that Person has assumed that liability
or otherwise become liable for the payment thereof or (c) any liability of
others of the type described in the preceding clause (a) or (b) in respect of
which that Person has incurred, assumed or acquired a liability by means of a
Guaranty.
"Information" means written information, including (a) data, certificates,
reports and statements (excluding financial statements) and (b) summaries of
unwritten agreements, arrangements, contracts, plans, policies, programs or
practices or of unwritten amendments or modifications of, supplements to or
waivers under any of the foregoing documents.
"Intellectual Property" means any and all United States and foreign: (a) patents
(including design patents, industrial designs and utility models) and patent
applications (including design patents, industrial designs and utility models)
and patent applications (including docketed patent disclosures awaiting filing,
reissues, divisions, continuations-in-part and extensions), patent disclosures
awaiting filing determination, inventions, and improvements thereto; (b)
trademarks, service marks, trade names, trade dress, logos, business and product
names, slogans, and registrations and applications for registration thereof; (c)
copyrights (including software) and registrations thereof; (d) inventions,
processes, designs, formulae, trade secrets, know-how, industrial models,
confidential and technical information, manufacturing, engineering and technical
drawings, product specifications and confidential business information; and (e)
intellectual property rights similar to any of the foregoing.
"Inventories" is defined in SECTION 2.03(B).
"IRS" means the Internal Revenue Service.
"Lien" means, with respect to any property or asset of any Person (or any
revenues, income or profits of that Person therefrom) (in each case whether the
same is consensual or nonconsensual or arises by contract, operation of law,
legal process or otherwise), (a) any mortgage, lien, security interest, pledge,
attachment, levy or other charge or encumbrance of any kind thereupon or in
respect thereof or (b) any other arrangement, under which the same is
transferred, sequestered or otherwise identified with the intention of
subjecting the same to, or making the same available for, the payment or
performance of any liability in priority to the payment of the ordinary,
unsecured creditors of that Person, including any "adverse claim" (as defined in
the applicable Uniform Commercial Code) in the case of any Capital Stock. For
purposes of this Agreement, a Person shall be deemed to own subject to a Lien
any asset that it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to that asset.
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"Litigation" means any action, case, proceeding, claim, grievance, suit or
investigation or other proceeding conducted by or pending before any
Governmental Authority or any arbitration proceeding.
"Material" means, as applied to any Asset or the Acquired Business, any
consequence of any fact or circumstance relating to the business, operations,
property or assets, liabilities, financial condition or results of operations ,
as the case may be and which exceeds $50,000.00.
"Material Adverse Effect" means, with respect to the consequences of any fact or
circumstance (including the occurrence or non-occurrence of any event) with
respect to the Assets or Acquired Business, that is Materially adverse to the
business, operations, prospects, results of operations, condition (financial or
otherwise), properties (including intangible properties), assets (including
intangible assets) or liabilities of the Acquired Business.
"Multiemployer Plan" means a "multiemployer" plan as defined in Section
4001(a)(3) of ERISA, Section 414 of the Code or Section 3(37) of ERISA.
"Permitted Liens" means (i) Liens reserved against in the December Balance
Sheet, to the extent so reserved, (ii) Liens for Taxes not yet due and payable
or which are being contested in good faith and by appropriate proceedings if
adequate reserves with respect thereto are maintained on Sellers' books in
accordance with GAAP, or (iii) Liens and encumbrances set forth in the title
commitments for the Included Property which are acceptable to Buyer.
"Person" means any natural person, Entity, estate, trust, union or employee
organization or Governmental Authority or, for the purpose of the definition of
"ERISA Affiliate," any trade or business.
"Prohibited Transaction" means any transaction that is prohibited under Section
4975 of the Code or Section 406 of ERISA and not exempt under Section 4975 of
the Code or Section 408 of ERISA.
"Real Property Laws" is defined in SECTION 8.18.
"Release" means any releasing, disposing, discharging, injecting, spilling,
leaking, leaching, pumping, dumping, pouring, emitting, escaping, emptying,
seeping, dispersal, migration, transporting, placing and the like, including
without limitation, the moving of any materials through, into or upon, any land,
soil, surface water, ground water on air, or otherwise entering into the
environment.
"Remedial Action" means all actions required by a state or federal governmental
authority or agency to (i) study, investigate, identify or delineate any such
Hazardous Substances; (ii) respond to or address the Release or threatened
Release of Hazardous Substances; (iii) clean up, remove, treat or in any other
way remediate any Hazardous Substances; or (iv) prevent the Release of Hazardous
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Substances so that they do not migrate or endanger or threaten to endanger
public health or welfare or the environment, in each case, to be performed in
compliance with applicable Environmental Laws and in a manner that does not
adversely affect the operation, marketability and value of the Included
Property.
"Representatives" means, with respect to any Person, the directors, officers,
employees, Affiliates, accountants (including independent certified public
accountants), advisors, attorneys, consultants or other agents of that Person,
or any other representatives of that Person or of any of those directors,
officers, employees, Affiliates, accountants (including independent certified
public accountants), advisors, attorneys, consultants or other agents.
"Returns" of any Person means the returns, reports or statements (including any
Information returns) any Governmental Requirement requires to be filed by that
Person for purposes of any Tax.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Sellers' Counsel" shall mean Wyatt, Tarrant & Combs.
"Solid Wastes, Hazardous Wastes or Hazardous Substances" have the meanings
ascribed to those terms in CERCLA, the Resource Conservation and Recovery Act,
as amended, 42 USC ss.6901 et SEQ. ("RCRA") or any other Environmental Law
applicable to the business or operations of the Company or any company
Subsidiary which imparts a broader meaning to any of those terms than does
CERCLA or RCRA.
"Subsidiary" of any specified Person at any time, means any Entity a majority of
the Capital Stock of which is at that time owned or controlled, directly or
indirectly, by the specified Person.
"Tax" or "Taxes" means all net or gross income, gross receipts, net proceeds,
sales, use, ad valorem, value added, franchise, bank shares, withholding,
payroll, employment, excise, property, deed, stamp, alternative or add-on
minimum, environmental or other taxes, assessments, duties, fees, levies or
other governmental charges or assessments of any nature whatever imposed by any
Governmental Requirement, whether disputed or not, together with any interest,
penalties, additions to tax or additional amounts with respect thereto.
"Taxing Authority" means any Governmental Authority having or purporting to
exercise jurisdiction with respect to any Tax.
"Third Party and Governmental Environmental Liabilities and Costs" means all
Damages incurred by Buyer, whether direct or indirect, known or unknown, current
or potential, past, present or future, imposed by, under or pursuant to
Environmental Laws or Environmental Permits, (whether on-site or off-site)
including, without limitation, all Damages to Buyer related to Remedial Actions,
and all
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fees, disbursements and expenses of counsel, experts, personnel and consultants
based on, arising out of or otherwise in respect of: the operations of the
Acquired Business on or prior to the Closing or any condition existing on, in or
under the Included Property or the Property as defined in the Real Estate
Purchase Agreement as of the Closing (which are the results of the actions of
the Sellers and/or any lessor of the Included Property, but excluding any Damage
directly caused by Buyer), including without limitation, the Included Property
located at 3301 Highway 76 and 3278 Highway 76, New Deal, Sumner County,
Tennessee.
"Welfare Plan" means an "employee welfare benefit plan" as defined in Section
3(1) of ERISA.
"Working Capital" shall mean the difference between the Non-Cash Current Assets
and Non-Cash Current Liabilities. For purposes of this Agreement, "Non-Cash
Current Assets" shall mean the sum of (a) trade accounts receivable less any
allowance for bad debts and any reserves for overbilling; plus (b) receivables
from scrap sales; plus (c) Inventories, net of any reserve; plus (d) prepaid
expenses excluding prepaid loan costs and prepaid expenses related to the
preparation of the Assets for sale. For purposes of this Agreement, "Non-Cash
Current Liabilities" shall mean the sum of (a) all trade accounts payable; plus
(b) accrued expenses; plus (c) reserves for warranty, product liability, product
recall and defective merchandise claims; plus (d) accrued and withheld taxes;
plus (e) state and federal income taxes payable computed using the subchapter S
corporation status and the individual shareholder federal tax rates.
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LIST OF SCHEDULES:
SECTION 2.03 SCHEDULE (A)
Permitted Encumbrances 2
SECTION 2.03(E) SCHEDULE (A)
Corporate Names 3
SECTION 2.03(H) SCHEDULE (A)
Excluded Cash and Cash Equivalent Assets 3
SECTION 2.03(L) SCHEDULE (A)
Included Real Property 4
SECTION 2.04 SCHEDULE (A)
Excluded Assets 4
SECTION 2.05(A)(II) SCHEDULE (A)
Assumed Contracts and Liabilities 5
SECTION 2.05(A)(II)SCHEDULE (B)
Other Assumed Agreements 5
SECTION 2.05(A)(IV) SCHEDULE (A)
Included Real Property Leases 5
SECTION 2.05(B) SCHEDULE(A).
Assumption Agreement 5
SECTION 3.03(A) SCHEDULE (A)
Indemnification Escrow Agreement 7
SECTION 3.03(B) SCHEDULE (A)
Tennessee Plant Escrow Agreement 8
SECTION 3.03(C) SCHEDULE (A)
Texas Plant Escrow Agreement 8
SECTION 3.04 SCHEDULE (A)
Earn Out Payment Calculation 8
SECTION 3.05 SCHEDULE (A)
Closing Indebtedness 8
SECTION 4.02 SCHEDULE (A)
Calculation of Average Working Capital 9
SECTION 5.02 SCHEDULE (A)
Industrial Realty Partners Real Estate 10
SECTION 5.02 SCHEDULE (B)
Industrial Realty Partners Real Estate Agreement 10
SECTION 5.03 SCHEDULE (A)
List of Individuals for Employment Agreements 11
SECTION 5.03 SCHEDULE (B)
Form of Employment Agreement 11
SECTION 5.05 SCHEDULE (A).
Agreements requiring Consents and Approvals 11
SECTION 5.07 SCHEDULE (A)
Form of Opinion from Sellers' Counsel
SECTION 5.11 SCHEDULE (A)
Authorizing Minutes of Imperial Group, Inc. 12
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SECTION 5.11 SCHEDULE (B)
Authorizing Minutes of the Companies 12
SECTION 5.14 SCHEDULE (A)
Sellers' Closing Certificate 12
SECTION 5.15 SCHEDULE (A)
Non-Competition Agreements 13
SECTION 5.18 SCHEDULE (A).
List of Included Leased Property 13
SECTION 5.19 SCHEDULES (A) AND (B) LEASE AND DESIGN/BUILD AGREEMENT FOR
TENNESSEE ---- 13
SECTION 5.20 SCHEDULES (A) AND (B).
Lease and Design/Build for Texas 13
SECTION 6.07 SCHEDULE (A)
Buyer's Opinion of Counsel 15
SECTION 6.11 SCHEDULE (A)
Authorizing Minutes of Buyer 16
SECTION 6.12 SCHEDULE (A)
Buyer's Closing Certificate 16
SECTION 8.01(A) SCHEDULE (A)
Articles of Incorporation for Imperial Group, Inc. 17
SECTION 8.01(A) SCHEDULE (B)
By-Laws of Imperial Group, Inc. 17
SECTION 8.01(B) SCHEDULE (A)
Certificates of Existence for Imperial Group, Inc. 17
SECTION 8.01(B) SCHEDULE (B)
Foreign Qualification of Imperial Group, Inc. 17
SECTION 8.02(A) SCHEDULE (A)
Articles of Incorporation for the Companies 18
SECTION 8.02(A) SCHEDULE (B)
By-Laws of the Companies 18
SECTION 8.02(B) SCHEDULE (A)
Certificates of Existence of the Companies 18
SECTION 8.02(B) SCHEDULE (B)
Foreign Qualification Certificates of the Companies 18
SECTION 8.03(A) SCHEDULE (A)
Liens of shares of stock 18
SECTION 8.03(B) SCHEDULE (A)
Liens on Imperial Shareholders' Shares 19
SECTION 8.05(A) SCHEDULE (A)
Breach of Contracts and Agreements 19
SECTION 8.05(B) SCHEDULE (A)
Required Filings and Consents 20
SECTION 8.06(A) SCHEDULE (A)
Litigation 20
SECTION 8.06(A) SCHEDULE (B)
Pending Claims 20
SECTION 8.06(B) SCHEDULE (A)
Orders, Decrees and Judgments 20
SECTION 8.07 SCHEDULE (A)
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Merrill Lynch Agreements 21
SECTION 8.08 SCHEDULE (A)
Related Transactions 21
SECTION 8.11(B) SCHEDULE (A)
Joint Ventures and Partnerships 22
SECTION 8.12(A) SCHEDULE (A)
Company Obligations to other Sellers 22
SECTION 8.12(B) SCHEDULE (A)
Shareholder Obligations to the Companies 22
SECTION 8.12(C) SCHEDULE (A)
Powers of Attorney 22
SECTION 8.13 SCHEDULE (A)
Material Licenses, Permits, Authorizations 22
SECTION 8.14(A) SCHEDULE (A)
Exceptions to Personal Property Title 23
SECTION 8.14(A) SCHEDULE (B)
Consigned Inventory 23
SECTION 8.14(B)SCHEDULE (A)
List of Owned Tangible Personal Property 23
SECTION 8.14(C) SCHEDULE (A)
List of Leased Tangible Personal Property 23
SECTION 8.14(D) SCHEDULE (A)
Exception to Condition of Property 24
SECTION 8.15 SCHEDULE (A)
Exceptions to Title to Receivables and Collectibility 24
SECTION 8.16 SCHEDULE (A)
List of Tradenames and Intellectual Property 24
SECTION 8.17 SCHEDULE (A)
List of Title Commitments on Includes Property 25
SECTION 8.17 SCHEDULE (B)
Exceptions to Title on Included Real Property 25
SECTION 8.18 SCHEDULE (A)
Exceptions to Condition of Property 25
SECTION 8.19 SCHEDULE (A)
Land Use Regulation Exception 26
SECTION 8.22(A) SCHEDULE (A)
List of Environmental Permits 27
SECTION 8.22(B) SCHEDULE (A)
Alleged Violations or Liability of the Companies 27
Violations of Environmental Laws or Permits 27
SECTION 8.22(C) SCHEDULE (A)
Remedial and other Environmental Actions 27
SECTION 8.22(D) SCHEDULE (A)
Other Environmental Matters 28
SECTION 8.23(A) SCHEDULE (A)
Uncollectible Receivables 29
SECTION 8.23(B) SCHEDULE (A)
Projections 29
SECTION 8.23(C) SCHEDULE (A)
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Excluded Assets and Excluded Liabilities included in Prior Financials 30
SECTION 8.24(A) SCHEDULE (A)
Employee Census 30
SECTION 8.24(B) SCHEDULE (A)
Other Wages and Benefits 30
SECTION 8.24(C) SCHEDULE (A)
Employee Benefit Plans 30
SECTION 8.24(D) SCHEDULE (A)
Exceptions to Plan Qualifications 31
SECTION 8.24(G) SCHEDULE (A)
Multiemployer Plans 32
SECTION 8.25(A) SCHEDULE (A)
List of Insurance Policies 32
SECTION 8.25(B) SCHEDULE (A)
Noncompetition Agreements 32
SECTION 8.25(C) SCHEDULE (A)
Other Material Contracts and Agreements 32
SECTION 8.25(C) SCHEDULE (B)
Exceptions to General Representation and Warranty Concerning Contracts 33
SECTION 8.27 SCHEDULE (A)
Absence of Changes 33
SECTION 8.28 SCHEDULE (A).
Exceptions to Taxes 35
SECTION 8.30 SCHEDULE (A)
Exceptions to Product Warranties 36
SECTION 8.31 SCHEDULE (A)
Ten Largest Customers 36
SECTION 8.31 SCHEDULE (B)
Changes in Customer Relationships 37
SECTION 8.32 SCHEDULE (A)
Exceptions to Year 2000 Issues 37
SECTION 9.01 SCHEDULE (A)
JAII Stock Disclosure Information 37
SECTION 10.01 SCHEDULE (A)
Certificate of Good Standing for JAII 40
SECTION 10.01 SCHEDULE (B)
Certificate of Good Standing for Limited Partnership 40
SECTION 10.07(A) SCHEDULE (A)
Buyer's Litigation Exceptions 42
SECTION 11.01 SCHEDULE (A)
Exceptions to Conduct Pending Closing 43
SECTION 11.11 SCHEDULE (A)
New Corporate Names for the Companies 45
SECTION 12.02(F) SCHEDULE (A)
Paccar Warranty Claim 46
4
ASSET PURCHASE AGREEMENT
Dated as of April 30, 1999
By and Among
HITACHI METALS AMERICA, LTD.,
WARD MANUFACTURING, INC.,
GUNITE CORPORATION AND
GUNITE ACQUISITION CORP.
For the Purchase of
Substantially All of the Assets of
THE EMI COMPANY DIVISION OF WARD MANUFACTURING, INC.
<PAGE>
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "AGREEMENT") dated as of this
30th day of April, 1999 is made and entered into by and among GUNITE
CORPORATION, a Delaware corporation ("GUNITE"), GUNITE ACQUISITION CORP., a
Delaware corporation and wholly-owned subsidiary of Gunite ("GUNITE
ACQUISITION"), HITACHI METALS AMERICA, LTD., a New York corporation ("HITACHI"),
and WARD MANUFACTURING, INC., a Pennsylvania corporation and wholly-owned
subsidiary of Hitachi ("WARD"). Gunite and Gunite Acquisition are referred to
collectively as the "BUYER". Hitachi and Ward are referred to collectively as
the "SELLERS".
WHEREAS, Ward is engaged primarily, through its EMI Company
Division (the "EMI DIVISION"), in the operation of a job shop iron foundry and
the manufacturing of wheel-end component parts for the heavy-duty truck and
trailer industry in Erie, Pennsylvania (the "BUSINESS"); and
WHEREAS, the Sellers desire to sell and the Buyer desires to
purchase substantially all of the assets used by the EMI Division in the
Business, subject to the Buyer's assumption of certain liabilities, upon the
terms and subject to the conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
contained in this Agreement, the parties hereto agree as follows:
I. PURCHASE OF ACQUIRED ASSETS AND
ASSUMPTION OF LIABILITIES
1.1 THE TRANSACTION. Upon the terms and subject to the conditions of
this Agreement, Ward agrees to sell, assign, transfer, convey and deliver to
Gunite Acquisition, and Gunite Acquisition agrees to purchase, at the Closing
(as defined in Section 2.1), all of Ward's right, title and interest in the
Acquired Assets (as defined in Section 1.2), free and clear of all liens,
claims, charges or encumbrances other than Permitted Encumbrances (as defined in
Section 3.10(a)) and those encumbrances permitted by Section 3.9(a), and Gunite
Acquisition agrees to assume the Assumed Liabilities (as defined in Section
1.4).
1.2 ACQUIRED ASSETS. The term "ACQUIRED ASSETS" means all of the assets,
properties, goodwill and rights owned by Ward and used solely in the operation
of the Business, of whatever kind and nature, real, personal or mixed, tangible
or intangible, other than Excluded Assets (as defined in Section 1.3),
including, but not limited to, the following:
(a) all machinery, equipment (except as set forth in Section
1.3(c)), furniture, furnishings, automobiles, trucks, vehicles, tools, dies,
molds and parts and similar property (including, but not limited to, any of the
foregoing purchased subject to any conditional sales or title retention
agreement in favor of any other person) relating to the Business;
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(b) all rights in, to and under all leases of items described
under Section 1.2(a), including those listed on SCHEDULE 3.11;
(c) all inventories of raw materials, work in process, finished
products, goods, spare parts, replacement and component parts, and office and
other supplies, including inventories held at any location controlled by Ward
and inventories previously purchased and in transit to Ward at such locations,
in each case related to the Business;
(d) all rights in and to products sold or leased (including, but
not limited to, products hereafter returned or repossessed and unpaid sellers'
rights of rescission, replevin, reclamation and rights to stoppage in transit)
in connection with the Business;
(e) all intellectual property rights relating to the Business,
except as set forth in Section 1.5(j);
(f) all right, title and interest of Ward in, to and under the
sales agreements with Palmar, Inc. and Manac, Inc. from the Closing Date (as
defined in Section 2.1) until December 31, 1999 or March 31, 2000, as the case
may be;
(g) all right, title and interest of Ward in, to and under all
contracts, leases, purchase orders, customer orders, work orders, warranties and
undertakings relating to the Business (whether oral or written) to which Ward is
a party or by which Ward is bound, including those listed on SCHEDULE 1.2(G)
(the "ASSUMED CONTRACTS");
(h) all credits, prepaid expenses (except as set forth in Section
1.3(i) and (j)), deferred charges (except for deferred financing costs, less
accumulated amortization), advance payments, security deposits and prepaid items
relating to the Business;
(i) all notes and accounts receivable held by Ward and all notes,
bonds and other evidences of indebtedness of and, except for all intercompany
receivables from Hitachi, rights to receive payments from any person held by
Ward, including the benefits of and proceeds from all insurance policies (except
as set forth in Section 1.3(g)), in each case related to the Business;
(j) shipping records, operating data and records, sale and
purchase correspondence, and files relating to the Business (copies of which the
Buyer shall provide to the Sellers), but excluding (1) corporate, financial and
accounting books and records of the Sellers relating to the Business (copies of
which the Sellers shall provide to the Buyer) and (2) all tax returns, reports
and estimates of the Sellers and all workpapers and other materials used in
preparation of such tax returns, reports and estimates (in each case, whether or
not related to the Business and whether or not originals or copies) (the "TAX
MATERIALS");
(k) to the extent legally assignable without consent or payment,
all right, title and interest of Ward in, to and under all franchises, licenses,
permits, orders, certificates, approvals and
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other governmental authorizations which are necessary to own or lease and
operate the Acquired Assets and to conduct the Business as it has been conducted
by Ward, including all applications therefor;
(l) all interests in real property of Ward listed on SCHEDULE
3.10, together with all buildings, improvements, fixtures and all appurtenances
thereto;
(m) all of the Benefit Plans (as defined in Section 3.19), except
those listed on SCHEDULE 1.3(D);
(n) all funds held in trust pursuant to the Benefit Plans for the
purpose of providing retirement benefits, welfare benefits or other employee
benefits for employees of the Business;
(o) all computer hardware, software and programs, together with
all users' manuals, training manuals, sales literature, and other system and
operations documentation relating to such computer programs relating to the
Business;
(p) all customer lists and supplier lists for the Business;
(q) all guaranties, warranties, indemnities and similar rights in
favor of the Sellers with respect to any Acquired Asset;
(r) all rights to causes of action, lawsuits, judgments, claims
and demands of any nature available to or being pursued by Ward with respect to
the Business, except as set forth in Sections 1.3(f) and 1.3(g); and
(s) the rights to the names EMI, Erie Wheels and EMI Company and
any other names used in connection with the Business.
1.3 EXCLUDED ASSETS. The term "EXCLUDED ASSETS" means:
(a) all cash and cash equivalents as of the Closing Date;
(b) all intercompany receivables from Hitachi;
(c) the equipment held for sale or transfer to an affiliate of
Ward listed on SCHEDULE 1.3(C);
(d) those Ward Benefit Plans listed on SCHEDULE 1.3(D);
(e) deferred financing costs, less accumulated amortization;
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(f) the rights of Ward to receive any proceeds resulting from the
resolution of any of the pending litigation or claims relating to the Business
listed on SCHEDULE 1.3(F) and all rights to causes of action, lawsuits,
judgments, claims and demands of any nature relating to such pending litigation
or claims;
(g) the rights of Ward to receive any proceeds resulting from the
resolution of any of the pending insurance claims relating to the Business
listed on SCHEDULE 1.3(G);
(h) the rights of the Sellers in respect of any federal, state or
local tax refunds, credits or other assets of any nature in respect of any Taxes
(as defined in Section 3.12), whether or not relating to the Business,
attributable to periods ending on or prior to the Closing Date;
(i) all prepaid shutdown costs;
(j) a prepaid insurance premium listed on SCHEDULE 1.3(J);
(k) the rights of Ward to certain job work from Mitsubishi
consisting of the front and rear knuckle and damper fork parts described on
SCHEDULE 1.3(K);
(l) corporate, financial and accounting books and records of the
Sellers relating to the Business (copies of which the Sellers shall provide to
the Buyer), but only copies of (1) shipping records, operating data and records,
sale and purchase correspondence, and files relating to the Business and (2) the
Tax Materials;
(m) any rights to tax refunds with respect to the real property
listed on SCHEDULE 3.10 for the period before the Closing Date, and upon receipt
the Buyer agrees to promptly pay (or, when appropriate, forward) to Ward any
such refunds; and
(n) any rights of the Sellers under Section 8.2(f).
1.4 ASSUMPTION OF LIABILITIES. Except as set forth in Section 1.5, upon
the terms and subject to the conditions of this Agreement, the Buyer shall
assume and agree to pay, honor and discharge when due all of the following
liabilities relating to the Acquired Assets existing at or arising on or after
the Closing Date (collectively, the "ASSUMED LIABILITIES"):
(a) any and all liabilities, obligations and commitments relating
exclusively to the Business or the Acquired Assets that are (i) reflected on the
Closing Balance Sheet (as defined in Section 1.8(a)) and (ii) incurred as of the
Closing in the ordinary course of business consistent with prior practice and in
accordance with the terms of this Agreement, including, without limitation,
trade accounts payable,
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payroll taxes, accrued liabilities (other than Excluded Liabilities), and
operating lease liabilities for equipment such as telephone, office equipment,
automobiles, fork lifts and similar equipment;
(b) any and all liabilities, obligations and commitments arising
out of the Assumed Contracts, but not including any obligation or liability for
any breach thereof occurring prior to the Closing Date;
(c) any and all liabilities, obligations and commitments arising
out of Ward's sales agreements with Palmar, Inc. and Manac, Inc. from the
Closing Date until December 31, 1999 or March 31, 2000, as the case may be;
(d) Transfer Taxes (as defined in Section 5.7(a)) and property
taxes that are the responsibility of the Buyer under Section 5.7(b);
(e) fees and expenses incurred by the Buyer in connection with
negotiating, preparing, closing and carrying out this Agreement and the
transactions contemplated by this Agreement, including the fees, expenses,
disbursements and expenses for the Buyer's attorneys, accountants, investment
bankers and consultants;
(f) liabilities relating to or arising with respect to any of the
Acquired Assets; and
(g) liabilities arising under Section 5.9(b).
1.5 EXCLUDED LIABILITIES. Notwithstanding the provisions of Section 1.4
or any other provision hereof or any Schedule or Exhibit hereto and regardless
of any disclosure to the Buyer, the Buyer shall not assume any liabilities,
obligations or commitments of the Sellers relating to or arising out of the
operation of the Business or the ownership of the Acquired Assets prior to the
Closing other than the Assumed Liabilities (the "EXCLUDED LIABILITIES"),
including, without limitation:
(a) liabilities resulting from outstanding checks of Ward
presented for payment on or after the Closing Date;
(b) liabilities related to any and all workers' compensation and
disability claims resulting from any injury incurred on or prior to the Closing
Date;
(c) liabilities for any medical treatment or service occurring on
or prior to the Closing Date;
(d) liabilities related to any and all obligations under loans
and capital leases of Ward relating to the Business and all related contingent
and accrued interest, fees and expenses, including those listed on SCHEDULE
1.5(D);
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(e) liabilities with respect to all pending or, based on written
notice, threatened litigation and claims relating to the Business listed on
SCHEDULE 3.14;
(f) liabilities with respect to all product liability, product
recalls, warranty claims, defective material claims and merchandise returns with
respect to products sold and delivered by Ward on or prior to the Closing Date;
(g) liabilities for intercompany accounts payable to Hitachi;
(h) liabilities for Taxes relating to or arising out of the
Business accruing with respect to any time period occurring at or prior to
Closing, except for (i) property taxes that are the responsibility of the Buyer
under Section 5.7(b), (ii) Transfer Taxes, which the Buyer will pay, and (iii)
any other Taxes to the extent specifically accrued for on the Closing Balance
Sheet;
(i) liabilities, obligations and commitments of Ward arising out
of certain job work for Mitsubishi consisting of the front and rear knuckle and
damper fork parts described on SCHEDULE 1.3(K);
(j) liabilities with respect to all pending or, based on written
notice, threatened litigation and claims relating to any infringement by Ward of
any patent, copyright, trademark, trade name, know how, trade secret or other
proprietary right of any other person in connection with the conduct of the
Business listed on SCHEDULE 3.15(B) for products shipped prior to the Closing
Date;
(k) fees and expenses incurred by the Sellers in connection with
negotiating, preparing, closing and carrying out this Agreement and the
transactions contemplated by this Agreement, including the fees, expenses,
disbursements and expenses for the Sellers' attorneys, accountants, investment
bankers and consultants;
(l) liabilities relating to or arising with respect to any of the
Excluded Assets; and
(m) liabilities relating to or arising with respect to the
Environmental Claims listed on SCHEDULE 3.17(A) and SCHEDULE 3.17(F).
1.6 PURCHASE PRICE. The purchase price for the Acquired Assets shall be
an amount equal to the sum of (i) Fourteen Million Dollars ($14,000,000) for
plant property, equipment and construction in progress, (ii) the "stipulated
loss value" as of the Closing for two electric melt furnaces which are currently
leased by Ward from Fujilease Corporation (which in no event shall exceed Two
Million Five Hundred Thousand Dollars ($2,500,000)), and (iii) Two Million Two
Hundred Thirty-Seven Thousand Dollars ($2,237,000) for the adjusted working
capital of EMI Company (the predecessor of Ward) as of January 31, 1999 (the
"INITIAL PURCHASE PRICE"), plus or minus the Working Capital Adjustment (as
described in Section 1.8(a)(i)) (the "PURCHASE PRICE").
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<PAGE>
1.7 PAYMENT OF PURCHASE PRICE.
(a) At the Closing, the Buyer shall pay to Ward an amount equal
to the Initial Purchase Price by wire transfer of immediately available funds to
such account as Sellers shall designate.
(b) After the Closing, the Buyer or Ward, as appropriate, shall
make the payment, if any, required by Section 1.8.
1.8 POST-CLOSING ADJUSTMENT. A post-closing adjustment to the
Initial Purchase Price shall be made as follows.
(a) Within sixty (60) days after the Closing Date, the Buyer and
the Sellers, together with their respective accountants, shall prepare (i) an
unaudited balance sheet of the Business as of the Closing Date reflecting the
total Acquired Assets and Assumed Liabilities of the Business and excluding the
Excluded Assets and the Excluded Liabilities (the "CLOSING BALANCE SHEET") and
(ii) the Working Capital Adjustment (as hereinafter defined). The Buyer shall
undertake reasonable efforts to cause the EMI Division monthly reporting package
for the current month through the Closing Date to be delivered to Hitachi
promptly after the Closing. The Closing Balance Sheet shall be prepared in
accordance with generally accepted accounting principles (subject to normal
year-end adjustments consistent with prior periods) on a basis consistent with
the balance sheet of the Business as of March 31, 1999 (the "BALANCE SHEET").
The Working Capital Adjustment shall become final for all purposes of this
Agreement unless the Buyer and the Sellers are unable to agree on the Working
Capital Adjustment, in which case the Buyer and the Sellers agree that a
mutually acceptable independent accounting firm of nationally recognized
standing (the "INDEPENDENT ACCOUNTANT") shall make the final determination of
the Working Capital Adjustment. The determination by the Independent Accountant
of the Working Capital Adjustment shall be binding on the Buyer and the Sellers.
The date on which the Working Capital Adjustment is finally determined pursuant
to this Section 1.8(a) shall hereinafter be referred to as the "WORKING CAPITAL
SETTLEMENT DATE". The Buyer and the Sellers shall each bear the costs of their
and their respective accountants' preparation of the Closing Balance Sheet, and
each of such parties shall pay 50% of the Independent Accountant's fees and
expenses in connection with this Section 1.8.
(i) "WORKING CAPITAL ADJUSTMENT" shall mean the result
(which may be positive or negative) obtained by subtracting Two Million
Two Hundred Thirty-Seven Thousand Dollars ($2,237,000) from the Closing
Date Working Capital (as hereinafter defined).
(ii) "CLOSING DATE WORKING CAPITAL" shall mean (1) the
amount of the current assets of the Business as of the Closing Date
(consisting of trade accounts receivable (other than accounts
receivables from Hitachi), inventories, prepaid expenses, marketable
securities and prepaid pension obligations) less (2) the amount of the
current liabilities of the Business as of the Closing Date (consisting
of accounts payable and accrued liabilities (other than workers'
compensation liabilities and accrued interest obligations, but including
post-retirement life insurance
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<PAGE>
and long-term pension liabilities)) derived, in each case, from the
Closing Balance Sheet. In no event shall the current assets of the
Business as of the Closing Date or the current liabilities of the
Business as of the Closing Date include any Excluded Asset or Excluded
Liability, respectively. The Sellers and the Buyer agree that the
Closing Date Working Capital shall be prepared on a basis consistent
with the adjusted working capital of EMI Company as of January 31, 1999,
which was Two Million Two Hundred Thirty-Seven Thousand Dollars
($2,237,000) as shown on Schedule 1.8.
(b) If the Working Capital Adjustment is positive, the Buyer
shall, within three (3) business days of the Working Capital Settlement Date,
pay to Ward by wire transfer of immediately available funds the absolute amount
of the Working Capital Adjustment. If the Working Capital Adjustment is
negative, Ward shall, within three (3) business days of the Working Capital
Settlement Date, pay to the Buyer by wire transfer of immediately available
funds the absolute amount of the Working Capital Adjustment.
1.9 ALLOCATION. The Buyer and the Sellers shall mutually agree upon the
allocation of the Purchase Price and Assumed Liabilities to the Acquired Assets
no later than ninety (90) days after the Working Capital Settlement Date (the
"ALLOCATION"). The Buyer and the Sellers acknowledge that the Allocation shall
be determined pursuant to arm's length bargaining between the parties regarding
the fair market values of the Acquired Assets in accordance with Section 1060 of
the Internal Revenue Code of 1986, as amended (the "CODE"). The parties shall
report the sale and purchase of the Acquired Assets on all tax returns and tax
forms (including, without limitation, Form 8594 of the Internal Revenue Service)
in a manner consistent with such Allocation and shall not, in connection with
the filing of such returns or forms, make any Allocation of the Purchase Price
and Assumed Liabilities which is inconsistent with the Allocation. The parties
agree to consult with one another with respect to any tax audit, controversy or
litigation relating to the Allocation. If the Buyer and the Sellers cannot agree
on an Allocation, then the Allocation shall be referred to the Independent
Accountant which shall be directed to resolve the Allocation within thirty (30)
days thereafter, and whose decision shall be final and binding on both parties.
The Buyer, on the one hand, and the Sellers, on the other hand, shall each be
responsible for one-half of the fees and expenses of the Independent Accountant
in connection with such determination.
II. CLOSING
2.1 CLOSING DATE. The closing of the transactions contemplated by this
Agreement (the "CLOSING") is anticipated to occur on or about May 17, 1999 or
such earlier or later date as the parties may mutually agree (the "CLOSING
DATE") at such place as the parties shall mutually agree.
2.2 DELIVERIES AT THE CLOSING. At the Closing:
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(a) Ward shall deliver to the Buyer an Assignment Agreement
relating to the Acquired Assets in a form reasonably acceptable to the parties,
Ward or Hitachi, as the case may be, shall deliver to the Buyer the various
agreements, opinions, certificates and other documents and instruments referred
to in Section 6.2, and the Sellers shall deliver to the Buyer such other
documents as the Buyer or its counsel may reasonably request to demonstrate
satisfaction of the conditions and compliance with the agreements set forth in
this Agreement.
(b) The Buyer shall deliver to the Sellers (i) an Assumption
Agreement relating to the Assumed Liabilities in a form reasonably acceptable to
the parties, (ii) the various other agreements, opinions, certificates and other
documents and instruments referred to in Section 6.1, and (iii) such other
documents as the Sellers or their counsel may reasonably request to demonstrate
satisfaction of the conditions and compliance with the agreements set forth in
this Agreement.
2.3 THIRD-PARTY CONSENTS. To the extent that Ward's rights under any
agreement, contract, commitment, lease, permits or other asset to be assigned to
the Buyer under this Agreement may not be assigned without the consent of
another person which has not been obtained, this Agreement shall not constitute
an agreement to assign the same if an attempted assignment would constitute a
breach thereof or be unlawful, and Ward shall use all reasonable efforts to
obtain any such required consent(s) as promptly as possible. If any such consent
shall not be obtained or if any attempted assignment would be ineffective or
would impair the Buyer's rights under the asset in question so that the Buyer
would not in effect acquire the benefit of all such rights, Ward, to the maximum
extent permitted by law and the asset, shall act after the Closing as the
Buyer's agent in order to obtain for it the benefits thereunder and shall
cooperate, to the maximum extent permitted by law and the asset, with the Buyer
in any other reasonable arrangement designed to provide such benefits to the
Buyer. Nothing in this Section 2.3 shall be deemed a waiver by the Buyer of its
right to have received on or before the Closing an effective assignment of all
of the Acquired Assets nor shall this Section 2.3 be deemed to constitute an
agreement to exclude from the Acquired Assets any assets described under Section
1.2.
III. REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Ward represents and warrants to the Buyer as follows:
3.1 ORGANIZATION. Each Seller is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of Pennsylvania
(in the case of Ward) and the State of New York (in the case of Hitachi) and has
the corporate power and authority to carry on its business as now being
conducted and to own and operate the properties and assets now owned and being
operated by it. Each Seller has delivered to the Buyer complete and correct
copies of such Seller's Certificate of Incorporation and By-Laws, in each case,
as amended and in effect on the date hereof. Neither Seller is in violation of
any of the provisions of its Certificate of Incorporation or By-Laws.
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3.2 QUALIFICATIONS. Ward is duly licensed or qualified to do business
relating to the Business and is in good standing in the Commonwealth of
Pennsylvania.
3.3 AUTHORITY AND ENFORCEABILITY. Each Seller has the corporate power
and authority to enter into this Agreement and to carry out its obligations
hereunder. The execution, delivery and performance of this Agreement and the
other agreements and documents to be executed and delivered by each Seller
pursuant to the provisions of this Agreement have been duly authorized by all
necessary corporate action on the part of each Seller. This Agreement has been
duly executed and delivered on behalf of each Seller and is a legal, valid and
binding obligation of each Seller enforceable against such Seller in accordance
with its terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization or other laws or equitable principles
relating to or affecting the enforcement of creditors' rights.
3.4 THIRD-PARTY CONSENTS. Except for the expiration or early termination
of the applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), and except as set forth on
SCHEDULE 3.4, no consent, authorization or approval of, and no filing with, any
third parties to any material contract to which it is a party or by which it may
be bound or any governmental authority is required for the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby.
3.5 NO CONFLICT OR VIOLATION. Except as set forth on SCHEDULE 3.5,
neither the execution, delivery or performance of this Agreement nor the
consummation of any of the transactions provided for in this Agreement (i) will
violate or conflict with the Certificate of Incorporation or By-Laws of either
Seller, (ii) will result in a breach of or default by either Seller under any
provision of any material contract or agreement of any kind to which such Seller
is a party or by which such Seller is bound or to which any property or asset of
such Seller is subject, (iii) is prohibited by, or requires either Seller to
obtain or make any consent, authorization, approval, registration or filing
under, any statute, law, ordinance, regulation, rule, judgment, decree or order
of any court or governmental agency, board, bureau, body, department or
authority, or of any other person, or (iv) will result in the creation or
imposition of any lien, claim, charge, restriction, equity or encumbrance of any
kind whatsoever upon, or give to any other person any interest or right
(including any right of termination or cancellation) in or with respect to, any
of the properties, assets, agreements or contracts of the Business.
3.6 FINANCIAL STATEMENTS.
(a) Ward has delivered to the Buyer copies of the unaudited
balance sheets of EMI Company as of March 31, 1998 and 1999 and related
statements of income for the fiscal years ended on those dates, as routinely
prepared based on unaudited monthly statements as prepared by EMI Company for
review by Hitachi's auditors in conformity with generally accepted accounting
principles applied on a basis consistent with that of the preceding years
(subject to normal year-end adjustments consistent with prior periods).
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(b) The Sellers have prepared the financial budget for April 1,
1999 through March 31, 2000 described on SCHEDULE 3.6 in a manner consistent
with that of the preceding financial budgets.
(c) Inventories reflected on the balance sheets represent only
good and serviceable items priced at the lower of cost (first in, first out
method) or market values with adequate provision for obsolescence, shrinkage,
excess quantities, defective materials and deterioration. Except for the reserve
for obsolete inventory set forth on the Balance Sheet and the Closing Balance
Sheet, all inventory has been acquired or produced in the ordinary course of
business and consists of good and serviceable items.
(d) Accounts receivable are reflected on the balance sheets with
provision for an adequate reserve for uncollectible amounts, based on known
facts and past collection patterns.
3.7 NO UNDISCLOSED LIABILITIES, ETC. As of the date of this Agreement,
the Business has no material liabilities or obligations of any kind, whether
absolute, accrued, asserted or unasserted, contingent or otherwise, other than
those which affect generally the industry in which the Business operates, except
liabilities, obligations or contingencies (i) which are accrued or reserved
against on the Balance Sheet, (ii) which were incurred after the date of such
Balance Sheet in the ordinary course of business and consistent with past
practice which, individually or in the aggregate, are not reasonably likely to
have a Material Adverse Effect (for purposes of this Agreement, a "MATERIAL
ADVERSE EFFECT" is defined as any event, occurrence, fact, condition, change or
effect that is materially adverse to the business, operations, results of
operations, condition (financial or otherwise), properties (including intangible
properties), assets (including intangible assets) or liabilities of the
Business, which shall include any consequence of any event, occurrence, fact,
condition, change or effect that exceeds $100,000), or (iii) which arise under
this Agreement or the transactions contemplated hereby or are described on
SCHEDULE 3.7 or are otherwise expressly disclosed in this Agreement or any
Schedule or Exhibit hereto.
3.8 ABSENCE OF CERTAIN CHANGES. Except as set forth on SCHEDULE 3.8,
since January 31, 1999, Ward has conducted the Business only in the ordinary
course consistent with prior practice and has not, on behalf of, in connection
with or relating to the Business or the Acquired Assets:
(a) suffered any Material Adverse Effect;
(b) entered into, amended or terminated any Material Contract;
(c) incurred any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due (except obligations or
liabilities incurred in connection with the ordinary course of business
consistent with prior practice), which, in any case or in the aggregate, could
have a Material Adverse Effect;
(d) discharged or satisfied any material lien other than those
then required to be discharged or satisfied, or paid any material obligation or
liability, absolute, accrued, contingent or
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otherwise, whether due or to become due, other than current liabilities shown on
the Balance Sheet and current liabilities incurred since the date thereof in the
ordinary course of business consistent with prior practice;
(e) mortgaged, pledged or subjected to any charge, lien, claim or
encumbrance or agreed to mortgage, pledge or subject to any charge, lien, claim
or encumbrance, any of its material properties or assets (other than Permitted
Encumbrances and those encumbrances permitted by Section 3.9(a));
(f) sold, transferred, leased to others or otherwise disposed of
any of the Acquired Assets, except for inventory sold in the ordinary course of
business, or canceled or compromised any debt or claim, or waived or released
any right of substantial value;
(g) received any notice of termination of any contract, lease or
other agreement or suffered any damage, destruction or loss (whether or not
covered by insurance) which, in any case or in the aggregate, has had a Material
Adverse Effect;
(h) transferred or granted any rights under, or entered into any
settlement regarding the breach or infringement of, any intellectual property,
or modified any existing rights with respect thereto;
(i) granted any increase in the compensation (including bonus
payments) of any officer or employee other than in the ordinary course of
business consistent with past practice;
(j) encountered any labor union organizing activity, had any
actual or, to the knowledge of Ward, threatened employee strikes, work
stoppages, slowdowns or lockouts, or had any material adverse change in its
relations with its employees, agents, customers or suppliers;
(k) lost any major customer or major supplier or had any material
order canceled or knows of any threatened cancellation of any material order;
(l) made any material change in its practices with respect to
collection of receivables, payment of accounts payable or purchase and sale of
inventory;
(m) made any capital expenditures or capital additions or
improvements in excess of an aggregate of $100,000, except as set forth on the
Balance Sheet ;
(n) instituted, settled or agreed to settle any litigation,
action or proceeding before any court or governmental body relating to the
Business or the Acquired Assets other than in the ordinary course of business
consistent with past practices, but not in any case involving amounts in excess
of $50,000;
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(o) paid or agreed to pay any brokerage or finder's fee in
connection with, or incurred any severance pay obligations by reason of, this
Agreement or the transactions contemplated hereby; or
(p) taken any action or omitted to take any action that would
result in the occurrence of any of the foregoing.
3.9 ACQUIRED ASSETS.
(a) Ward has good and marketable title to all of its properties
and assets (other than real property), including, without limitation, all those
used solely in the Business and those reflected on the balance sheets of the
Business referred to in Section 3.6 (except as sold or otherwise disposed of in
the ordinary course of business), subject to no mortgage, pledge, conditional
sales contract, lien, security interest, right of possession in favor of any
third party, claim or other encumbrance, except (i) the lien of current taxes
not yet due and payable, (ii) imperfections of title and encumbrances, if any,
which do not materially detract from the value of the property subject thereto
and do not materially impair the use of the property subject thereto or
materially impair the operations of the Business as presently conducted and
(iii) as set forth on SCHEDULE 3.9.
(b) The Acquired Assets, taken as a whole, constitute
substantially all the properties and assets relating to or used or held for use
in connection with the Business during the past twelve months (except inventory
sold, cash disposed of, accounts receivable collected, prepaid expenses
realized, contracts fully performed, properties or assets replaced by equivalent
or superior properties or assets, in each case in the ordinary course of
business, employees not hired by the Buyer, and the Excluded Assets). Except for
the Excluded Assets, there are no material assets or properties used in the
operation of the Business and owned by any person other than Ward that will not
be leased or licensed to the Buyer under valid, current leases or license
arrangements. The Acquired Assets are in all material respects adequate for the
purposes for which such assets are currently used or are held for use (or, in
the case of Acquired Assets not currently in use, for the purposes for which
they were being used immediately prior to the discontinuance of their use), and
are in normal operating condition (subject to normal wear and tear), as is,
where is. Ward has not received any notice of a violation (which is not cured)
of any applicable material regulation or building, zoning or other law with
respect to any of the Acquired Assets.
3.10 REAL PROPERTY.
(a) SCHEDULE 3.10 sets forth all real estate owned by Ward that
is used or held for use in connection with the Business (the "OWNED REAL
PROPERTY"). Ward has good, valid and marketable fee simple title to the Owned
Real Property, subject only to (i) all applicable zoning and building laws,
restrictions, regulations and ordinances, (ii) easements and rights of public
utilities, (iii) the state of facts shown on any surveys of the Owned Real
Property, (iv) the lien of current taxes not yet due and payable, (v) any
easements, restrictions, covenants and other encumbrances not specifically set
forth in this Section 3.10(a) which do not materially impair the use of the
property subject thereto or materially impair the
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operations of the Business as presently conducted and (vi) as set forth on
SCHEDULE 3.10 (collectively, the "PERMITTED ENCUMBRANCES"). There are no
outstanding options or rights of first refusal to purchase the Owned Real
Property or any portion thereof or interest therein.
(b) Except as set forth on SCHEDULE 3.10 and except for Permitted
Encumbrances, there is no easement, right-of-way agreement, license, sublease,
occupancy agreement, or like instrument with respect to any Owned Real Property.
(c) The Owned Real Property constitutes all of the interests in
real property held for use solely in connection with, necessary for the conduct
of, or otherwise material to the Business as presently conducted.
3.11 LEASED PERSONAL PROPERTY. SCHEDULE 3.11 sets forth a correct and
complete list of all leases and other agreements under which Ward leases, holds
or operates any tools, furniture, machinery, equipment, vehicles or other
personal property owned by any other person for use in the Business, the absence
of which would have a Material Adverse Effect. Ward has delivered to the Buyer
complete and correct copies of all such leases and agreements. Each such lease
is legal, valid, binding, enforceable, and in full force and effect against
Ward, except as may be limited by bankruptcy, insolvency, reorganization or
other laws or equitable principles relating to or affecting the enforcement of
creditors' rights. Ward is not in default, violation or breach in any respect
under any such lease and no event has occurred and is continuing that
constitutes or, with notice or the passage of time or both, would constitute a
default, violation or breach under any such lease.
3.12 TAX MATTERS. The term "TAXES" means all net income, capital gains,
gross income, gross receipts, sales, use, transfer, ad valorem, franchise,
profits, license, capital, withholding, payroll, employment, excise, goods and
services, severance, stamp, occupation, premium, property, assessments, or other
governmental charges of any kind whatsoever, together with any interest, fines
and any penalties, additions to tax or additional amounts incurred or accrued
under applicable federal, state, local or foreign tax law or assessed, charged
or imposed by any governmental authority, domestic or foreign, other than
Transfer Taxes, provided that any interest, penalties, additions to tax or
additional amounts that relate to Taxes for any taxable period (including any
portion of any taxable period ending on or before the Closing Date) shall be
deemed to be Taxes for such period, regardless of when such items are incurred,
accrued, assessed or charged. For the purposes of this Section 3.12, Ward shall
be deemed to include any predecessor of Ward or any person or entity from which
Ward incurs a liability for Taxes as a result of joint and several liability,
transferee liability, or otherwise.
Except as set forth on SCHEDULE 3.12:
(a) There are no existing liens for Taxes upon, pending against
or, to the best knowledge of Ward, threatened against the Business or any of the
Acquired Assets.
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(b) Ward has, with respect to the Business, (i) withheld all
required amounts from its employees, agents, contractors and nonresidents and
remitted such amounts to the proper agencies; (ii) paid all employer
contributions and premiums and (iii) filed all federal, state, local and foreign
returns and reports with respect to employee income tax withholding, and social
security and unemployment taxes and premiums, all in material compliance with
the withholding tax provisions of the Code or any prior provision of the Code
and other applicable laws.
(c) No portion of the cost of any of the Acquired Assets was
financed directly or indirectly from the proceeds of any tax exempt state or
local government obligation described in Code Section 103(a).
(d) Ward is not a foreign person within the meaning of Code
Section 1445.
3.13 CONTRACTS. Except as set forth on SCHEDULE 3.13 (the "MATERIAL
CONTRACTS"):
(a) Ward does not have any contracts, commitments, arrangements
or understandings that relate to the Business which may involve the expenditure
or receipt by the EMI Division of more than $100,000 for any individual
contract, commitment, arrangement or understanding or which was not entered into
in the ordinary course of business. Except as contemplated by this Agreement and
except as such rights may be assigned to the Buyer pursuant to the terms and
conditions of this Agreement, the legal enforceability after the Closing of the
rights of Ward under any of its contracts that relate to the Business will not
be affected in any manner by the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby;
(b) Ward has no sales or purchase commitments that relate to the
Business which are in excess of the normal, ordinary and usual capacity or
requirements of its business or which are not terminable on thirty (30) days'
notice and without liability, penalty or premium; and
(c) Ward is not a party to or bound by (i) any outstanding
contract with officers or employees of the Business that is not cancelable by
Ward on notice of not longer than thirty (30) days and without liability,
penalty or premium, or (ii) any agreements that relate to the Business that
contain any severance or termination pay, liabilities or obligations.
Except as set forth on SCHEDULE 3.13, Ward is not a party with
any governmental authority to any material contract that relates to the
Business. Each Material Contract to which Ward is a party is in full force and
effect and is valid and enforceable against Ward in accordance with its terms,
assuming the due authorization, execution and delivery thereof by each of the
other parties thereto. Ward is not in default in the observance or the
performance of any material term or obligation to be performed by it under any
Material Contract to which it is a party. To the best of Ward's knowledge, no
other person is in default in the observance or the performance of any term or
obligation to be performed by it under any Material Contract. Ward has delivered
to the Buyer true and complete copies of all Material Contracts.
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3.14 LITIGATION OR PROCEEDINGS.
(a) Except as set forth on SCHEDULE 3.14 and SCHEDULE 3.15(B),
there are no actions, suits, proceedings or investigations, either at law or in
equity, or before any commission or other administrative authority in any United
States or foreign jurisdiction, of any kind now pending or, to the best of
Ward's knowledge, threatened in any manner against Ward or the EMI Division
regarding the Business, nor has there been any such action, suit, proceeding or
investigation pending against Ward or the EMI Division during the two-year
period prior to the Closing Date. There are presently no outstanding judgments,
decrees or orders of any court or any governmental body or authority against or
affecting the Business or the Acquired Assets.
(b) Except as set forth on SCHEDULE 3.14, there are no actions,
suits, proceedings or investigations, either at law or in equity, or before any
commission or other administrative authority in any United States or foreign
jurisdiction, of any kind now pending or, to the best of Ward's knowledge,
threatened in any manner, or any circumstances which should or could reasonably
form the basis of any such action, suit, proceeding or investigation, involving
Ward or any of the properties or assets of the Business that (i) questions the
validity of this Agreement or (ii) seeks to delay, prohibit or restrict in any
manner any action taken or contemplated to be taken by Ward under this
Agreement.
3.15 INTELLECTUAL PROPERTY.
(a) Except as set forth on SCHEDULE 3.15(A), Ward does not own
any patent, copyright, registered trademark or trade name, nor has any license
to use any patent, copyright, trademark or trade name been issued to it, nor
does Ward use any patent, copyright, registered trademark or trade name in
connection with the conduct of the Business. Ward either owns or licenses each
of the patents, copyrights, registered trademarks and trade names listed on
SCHEDULE 3.15(A), and Ward has the exclusive right to use all such patents,
copyrights, registered trademarks and trade names in the Business.
(b) Immediately after the Closing, the Buyer will own or license
each of the patents, copyrights, registered trademarks and trade names listed on
SCHEDULE 3.15(A) free and clear of all liens, claims, charges or encumbrances,
and on the same terms and conditions as in effect prior to the Closing.
(c) Except as set forth on SCHEDULE 3.15(B), Ward does not know
of any claim, or any basis of any claim, that it has infringed any patent,
copyright, trademark, trade name, knowhow, trade secret or other proprietary
right of any other person in connection with the conduct of the Business.
3.16 COMPLIANCE WITH LAWS. Ward has not received any notice that the
Business is not in compliance (which non-compliance has not been cured) in all
material respects with all federal, state, local and foreign statutes, laws,
ordinances, regulations, rules, permits, judgments, orders or decrees of any
governmental authority having jurisdiction over the Business.
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3.17 ENVIRONMENTAL MATTERS.
(a) Except as set forth on SCHEDULE 3.17(A), the Business has
complied in all material respects with and is presently complying in all
material respects with all Environmental Laws.
(b) SCHEDULE 3.17(B) sets forth all permits, licenses, approvals
and authorizations required, as of the Closing Date, under Environmental Laws
for the operation of the Business (collectively, the "ENVIRONMENTAL PERMITS"),
and all such Environmental Permits are in full force and effect.
(c) (i) The Business has all Environmental Permits required under
all Environmental Laws for the Business, (ii) the Business is in compliance with
all material terms and conditions of the Environmental Permits, and (iii) there
is no pending or, to the knowledge of Ward, threatened action by any
governmental authority or other person to revoke, suspend, rescind, modify or
initiate any legal proceeding related to any such Environmental Permits.
(d) All Environmental Permits are in the possession of Ward and
will be transferred to the Buyer as of the Closing Date, in accordance with all
such Environmental Permits and Environmental Laws.
(e) Except as set forth on SCHEDULE 3.17(E), no person has
alleged any violation by Ward of any Environmental Permits or any applicable
Environmental Laws relating to the conduct of the Business or the use, ownership
or transfer of the Owned or Leased Real Property or other property, and Ward is
unaware of any such violations.
(f) Except as set forth on SCHEDULE 3.17(F), there has been and
currently is no Release or threatened Release of any Hazardous Substance (as
such terms are hereinafter defined) at or into the environment from, on, in,
under, to or at any of the properties where the Business has been or is
conducted (the "PROPERTIES"), or any other properties where Hazardous Substances
were transported or Released by the Business (the "OFF-SITE PROPERTIES"),
including, without limitation, Releases from underground storage tanks.
(g) Except as set forth on SCHEDULE 3.17(A) and SCHEDULE 3.17(F),
the Properties are not subject to any pending or, to Ward's knowledge,
threatened Environmental Claim, and, to Ward's knowledge, there are no
conditions or occurrences at the Properties which could form the basis for an
Environmental Claim against Ward relating to the properties or the conduct of
the Business.
(h) Except as set forth on SCHEDULE 3.17(A) and SCHEDULE 3.17(F),
to Ward's knowledge, no Hazardous Substance has been used, stored, manufactured,
treated, processed or transported to or from the Properties except as necessary
to the conduct of the Business and in compliance in all material respects with
Environmental Laws.
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"ENVIRONMENTAL CLAIM" shall mean any investigation, claim, notice
of violation, allegation, demand, suit, action, criminal or civil prosecution,
injunction, proceeding, penalty, fine, restriction, lien, encumbrance, judgment,
decree, order or agreement from, by or with any governmental authority or
private party concerning any Environmental Laws or any Release of any Hazardous
Substance into the environment or on the Properties or Off-site Properties.
"ENVIRONMENTAL LAWS" shall mean any applicable federal, state or
local statute, law, regulation, rule, standard, judgment, order, consent decree,
Environmental Permits, or other legal requirement or common law, in force or
effect as of the Closing Date, pertaining to (i) the protection of health,
safety or the environment, (ii) the conservation, management, or use of natural
resources or wildlife, (iii) the management, use, generation, transportation,
shipment, treatment, storage, disposal, Release, threatened Release, abatement,
removal, remediation or handling of, or exposure to, Hazardous Substances, (iv)
the regulation of storage tanks, or otherwise relating to pollution (including
any release to air, land, surface water, and groundwater). Environmental Laws
shall include, without limitation, any of the following statutes, or analogous
state statutes, or any implementing regulations: the Comprehensive Environmental
Response, Compensation and Liability Act, the Solid Waste Disposal Act, the
Federal Water Pollution Control Act, the Clean Air Act, the Emergency Planning
and Community Right to Know Act, and the Toxic Substances Control Act.
"HAZARDOUS SUBSTANCE" shall mean any substance, chemical,
compound, product, solid, gas, liquid, waste, byproduct, pollutant, contaminant,
or material which is (i) regulated, defined or designated as hazardous,
extremely or imminently hazardous, dangerous, carcinogenic or toxic, pursuant to
Environmental Laws; (ii) subject to investigation, monitoring, reporting or
remediation or other obligation by any government authority (local, state,
municipal, territorial or federal); (iii) asbestos, polychlorinated biphenyls
and petroleum and petroleum products (including crude oil or any fraction
thereof); (iv) waste, including, without limitation, solid waste; and (v)
natural gas, synthetic gas and any mixtures thereof.
"RELEASE" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping, or
disposing into the environment or onto the Properties or Off-site Properties
(including, without limitation, the abandonment or discarding of barrels,
containers, and other closed receptacles containing any Hazardous Substance or
pollutant or contaminant).
3.18 GOVERNMENTAL AUTHORIZATIONS AND REGULATIONS. Ward has all licenses,
franchises, permits and other governmental authorizations necessary to the
conduct of the Business, the absence of which would have a Material Adverse
Effect, and Ward is in substantial compliance with all such licenses,
franchises, permits and other governmental authorizations. Such licenses,
franchises, permits and other governmental authorizations are valid, and Ward
has not received any notice that any governmental authority intends to cancel,
terminate or not renew any such license, franchise, permit or other governmental
authorization.
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3.19 EMPLOYEE BENEFIT PLANS AND OTHER ARRANGEMENTS.
(a) BENEFIT PLANS. Except as set forth on SCHEDULE 3.19, Ward
does not sponsor, maintain, support, and is not otherwise a party to, or has any
liability under, any plan, program, fund, arrangement or contractual
undertaking, whether for the benefit of a single individual or for more than one
individual, and whether or not funded, which is (i) an employee pension benefit
plan (as defined in Section 3(2) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")), (ii) an employee welfare benefit plan (as
defined in Section 3(1) of ERISA) or (iii) any other incentive or compensatory
arrangement (not including base pay or commissions) for employees, their
dependents and/or their beneficiaries. Each plan, fund or arrangement described
in the preceding sentence is a "BENEFIT PLAN," and each Benefit Plan which is an
employee pension benefit plan as defined in Section 3(2) of ERISA is a "PENSION
PLAN." Except as set forth on SCHEDULE 3.19, none of the Benefit Plans is
maintained pursuant to the provisions of any collective bargaining agreement.
(b) COMPLIANCE. Each Benefit Plan substantially complies with the
applicable requirements of ERISA and the Code, and Ward has not violated ERISA
in any material respect with respect to the filing of applicable reports,
documents, and notices with the Secretary of Labor or the Secretary of the
Treasury or the furnishing of such documents to participants or beneficiaries
with respect to any Benefit Plan in a manner which would cause a Material
Adverse Effect on Ward.
(c) PROHIBITED TRANSACTIONS. Ward has not engaged in any
transaction with respect to the assets of any Benefit Plan by reason of which
Ward or any of its employees or directors is or could be subject to (i) the
excise taxes imposed by Section 4975(a) of the Code or (ii) civil liability
under Section 502(i) of ERISA.
(d) CONTRIBUTIONS. Contributions to each Pension Plan (including
all employer contributions and employee salary reduction contributions) which
are due and required to be paid or which are accrued for all periods prior to
the Closing Date have been timely paid to each Pension Plan or accrued on the
Closing Balance Sheet.
(e) TAX QUALIFICATION. Each Pension Plan which is intended to be
qualified under Code Section 401(a) has received a favorable determination
letter from the Internal Revenue Service, and nothing has occurred since the
date of such letter which would cause the disqualification of any such plan.
(f) FUNDING. The present value of all actuarial accrued
liabilities under the Benefit Plans which are subject to Title IV of ERISA, as
set forth in the latest actuarial valuation for such plans, does not exceed the
actuarial value of assets of such plans by more than $760,000 in the aggregate.
(g) DOCUMENTS. With respect to each Benefit Plan maintained in
connection with the conduct of the Business, Ward has made available to the
Buyer correct and complete copies of the plan document and summary plan
descriptions, the most recent determination letters, the most recent Form 5500
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annual report, and all related trust agreements, insurance contracts, and other
funding arrangements which implement such plan.
(h) ERISA TITLE IV CONSIDERATIONS. "ERISA AFFILIATE" means each
entity which is treated as a single employer with Ward for purposes of Code
Section 414. With respect to each Benefit Plan that Ward or any ERISA Affiliate
maintains or has maintained during the prior six years or to which any of them
contributes or has been required to contribute during the prior six years, (i)
neither Ward nor any ERISA Affiliate has incurred any liability to the PBGC
(other than PBGC premium payments) or otherwise under Title IV of ERISA
(including any withdrawal liability), (ii) there has been no "reportable event"
(within the meaning of Section 4043 of ERISA) or any event requiring disclosure
under Sections 4062(e), 4063(a) or 4041(c) of ERISA, and (iii) there has been no
event or condition which presents a material risk of termination of such plan by
the PBGC, which, with respect to clauses (i), (ii) and (iii) above, would cause
a Material Adverse Effect.
(i) MULTIEMPLOYER PLANS. Ward is not now, and has not in the past
been, a party to a "multiemployer plan" within the meaning of Section 3(37) of
ERISA. There are no circumstances pursuant to which Ward would be liable as a
result of any ERISA Affiliate being a party to a multiemployer plan.
(j) COBRA. Ward is in substantial compliance with the
requirements of Code Section 4980(B) ("COBRA"), which requires the continuation
of benefit coverage upon the happening of certain events. No Benefit Plan
provides post-employment welfare benefits to any employee, former employee or
dependent except as required by COBRA or except as otherwise set forth on
SCHEDULE 3.19.
(k) SEVERANCE. No severance payments, bonus payments or any other
compensatory payments will be triggered by the execution, delivery or
consummation of this Agreement.
(l) CLAIMS LIABILITY. No action, suit, proceeding, hearing or, to
the knowledge of Ward, investigation with respect to any Benefit Plan is
pending.
3.20 CERTAIN TRANSACTIONS. Except as set forth on SCHEDULE 3.20, no
officer, director, employee or affiliate of Ward transacts any business, either
directly or indirectly, with the Business nor owns or has any interest, directly
or indirectly, in whole or in part, in any Acquired Asset.
3.21 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither Ward nor any
director, officer, agent, employee or other person associated with or acting on
behalf of Ward has used any corporate funds for any unlawful contribution, gift,
entertainment or other expense relating to political activity or made any direct
or indirect unlawful payment to any United States or foreign government official
or employee from corporate funds or violated or is in violation of any provision
of the Foreign Corrupt Practices Act of 1977 or paid or made any bribe, rebate,
payoff, influence payment, kickback, or other unlawful payment.
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3.22 ACCOUNTING PRACTICES. Ward makes and keeps accurate books and
records reflecting the assets and liabilities of the Business and maintains
internal accounting controls that provide reasonable assurance that (i)
transactions are executed with management's authorization, (ii) transactions are
recorded as necessary to permit preparation of the financial statements of the
Business and to maintain accountability for the assets and liabilities of the
Business, (iii) access to the assets of the Business is permitted only in
accordance with management's authorization and (iv) the reported accountability
of the assets and liabilities of the Business is compared with existing assets
and liabilities at reasonable intervals.
3.23 INSURANCE. Ward currently maintains, and has at all times prior to
the date of this Agreement maintained, liability, casualty, property loss and
other insurance coverages upon the Acquired Assets and with respect to the
operation of the Business in such amounts, of such kinds and with such carriers
as are generally deemed appropriate and sufficient for companies of similar size
to the Business and engaged in similar types of business and operations in
similar locations as the Business. With respect to the Acquired Assets and the
operation of the Business, in the two years prior to the date of this Agreement,
Ward has not been refused any insurance nor has their coverage been limited by
any insurance company to which they have applied for insurance or with which
they have carried insurance.
3.24 PRODUCT WARRANTIES. Except as set forth on SCHEDULE 3.24, (i) there
is no unexpired, expressed product warranty with respect to any product
manufactured or sold in connection with the Business; (ii) Ward has not received
any notice of any claim based on any expressed product warranty; and (iii) Ward
has not received any notice of any claim (actual or threatened) based on any
product warranty relating to the Business.
3.25 CERTAIN DISCLOSURES. SCHEDULE 3.25 contains a list of all
non-expatriate officers and other executive employees of the Sellers employed in
connection with the Business, including the title, duties and annual salary or
rate of compensation for each such officer and executive employee.
3.26 BROKERS. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by the Sellers directly
with the Buyer and without the intervention of any other person and in such
manner as not to give rise to any valid claim against any of the parties for any
finder's fee, brokerage commission or like payment.
3.27 CUSTOMERS AND SUPPLIERS. SCHEDULE 3.27 contains a list of those
entities that were the ten largest customers of the Business in terms of dollar
amount of sales during the Business' fiscal year ended March 31, 1999 and during
the period from March 31, 1999 through the date hereof, together with a
statement for each such customer during each such period of the dollar amount of
such sales. Since March 31, 1999, there has been no material adverse change in
the relationship between Ward and each customer listed on SCHEDULE 3.27 or
between Ward and any of the ten largest suppliers of the Business.
3.28 YEAR 2000 ISSUES. Except as set forth on SCHEDULE 3.28, Ward has
(i) undertaken a review and assessment of all areas with the business and
operations of the Business that could be adversely
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affected by the potential problem caused by computer applications being unable
to properly perform date sensitive functions on or after January 1, 2000 due to
an inability to distinguish the Year 2000 from the Year 1900 (the "YEAR 2000
ISSUE"), (ii) developed a plan and time line for addressing the Year 2000 Issue
on a timely basis and (iii) to date, implemented such plan substantially in
accordance with the timetable. Except as listed on SCHEDULE 3.28, Ward
reasonably anticipates that all computer applications that are material to the
Business and the performance of Ward's obligations hereunder will on a timely
basis be able to perform properly date sensitive functions for all dates before
and after January 1, 2000, except to the extent the Buyer is responsible for
implementing the compliance plan after the Closing.
3.29 EMPLOYMENT MATTERS.
(a) SCHEDULE 3.29(A) lists the name and current base salary or
wage rates and rates of other compensation for each non-expatriate person
actively employed by the Business.
(b) With respect to the employees of the Business, except as
disclosed on SCHEDULE 3.29(B), (i) Ward is not a party to any collective
bargaining agreement; (ii) there is no unfair labor practice charge or complaint
pending or, to the knowledge of Ward, threatened against Ward; (iii) there is no
labor strike, slowdown, work stoppage, or lockout in effect or, to the knowledge
of Ward, threatened against Ward; and (iv) no action, suit or complaint, by or
before any court, governmental, or administrative agency or commission brought
by or on behalf of any employees of the Business, former employee, retiree or
labor organization is pending or, to the knowledge of Ward, threatened.
IV. REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants to the Sellers as follows:
4.1 CORPORATE ORGANIZATION. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the corporate power and authority to own its property and to carry on
its business as now being conducted. The Buyer has delivered to the Sellers
complete and correct copies of the Buyer's Certificate of Incorporation and
By-Laws, in each case, as amended and in effect on the date hereof. The Buyer is
not in violation of any of the provisions of its Certificate of Incorporation or
By-Laws.
4.2 AUTHORIZATION OF AGREEMENT; NO VIOLATION. The Buyer has the
corporate power and authority to enter into this Agreement and to carry out its
obligations hereunder. The Buyer or its subsidiary designated pursuant to
Section 9.9 (if any) will have, on or prior to the Closing Date, the power to
own and operate the Business following its acquisition thereof. As of the
Closing Date, the Buyer or its subsidiary designated pursuant to Section 9.9 (if
any) will be duly qualified to do business in, and will be in good standing in,
the Commonwealth of Pennsylvania. The execution, delivery and performance of
this
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Agreement and the other agreements and documents to be executed and delivered by
the Buyer pursuant to the provisions of this Agreement have been duly authorized
by all necessary corporate action on the part of the Buyer. This Agreement has
been duly executed and delivered on behalf of the Buyer and is a legal, valid
and binding obligation of the Buyer enforceable against the Buyer in accordance
with its terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization or other laws or equitable principles
relating to or affecting the enforcement of creditors' rights. Neither the
execution, delivery or performance of this Agreement by the Buyer nor the
consummation of any of the transactions provided for in this Agreement (i) will
violate or conflict with any provision of the Certificate of Incorporation or
By-Laws of the Buyer, (ii) will result in any breach of or default by the Buyer
under any provision of any material contract or agreement of any kind to which
the Buyer is a party or by which the Buyer is bound or to which the properties
or assets of the Buyer are subject, (iii) is prohibited by, or requires the
Buyer to obtain or make any consent, authorization, approval, registration or
filing under, any statute, law, ordinance, regulation, rule, judgment, decree or
order of any court or governmental agency, board, bureau, body, department or
authority, or of any other person, or (iv) will result in the creation or
imposition of any lien, claim, charge, restriction, equity or encumbrance of any
kind whatsoever upon, or give to any other person any interest or right
(including any right of termination or cancellation) in or with respect to, any
of the properties, assets, agreements or contracts of the Business.
4.3 LITIGATION. There are no actions, suits, proceedings or
investigations, either at law or in equity, or before any commission or other
administrative authority in any United States or foreign jurisdiction, of any
kind now pending or, to the best of the Buyer's knowledge, threatened or
proposed in any manner, or any circumstances which should or could reasonably
form the basis of any such action, suit, proceeding or investigation, involving
the Buyer or any of its properties or assets that (i) questions the validity of
this Agreement, (ii) seeks to delay, prohibit or restrict in any manner any
action taken or contemplated to be taken by the Buyer under this Agreement, or
(iii) would materially adversely affect the ability of the Buyer to conduct the
Business after the Closing Date on substantially the same basis as the Business
is currently being conducted.
4.4 THIRD-PARTY CONSENTS. Except for the expiration or early termination
of the applicable waiting period under the HSR Act, and except as set forth on
SCHEDULE 4.4, no consent, authorization or approval of, and no filing with, any
third parties to any material contract to which it is a party or by which it may
be bound or any governmental authority is required for the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby.
4.5 BROKERS. Except as set forth on SCHEDULE 4.5, all negotiations
relative to this Agreement and the transactions contemplated hereby have been
carried on by the Buyer directly with the Sellers and without the intervention
of any other person and in such manner as not to give rise to any valid claim
against any of the parties for a finder's fee, brokerage commission or like
payment.
4.6 FINANCING. Subject to the satisfaction of the conditions in Section
6.2, the Buyer shall have sufficient funds to pay the Purchase Price at the
Closing.
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V. COVENANTS
5.1 ACCESS, INFORMATION AND DOCUMENTS. Pending the Closing, the Sellers
will give to the Buyer and to its agents and representatives (including, but not
limited to, accountants, lawyers and appraisers) full and complete access during
normal working hours to any and all of the properties, assets, books, records
and other documents of the Business to enable the Buyer to make such examination
of the properties, assets, books, records and other documents of the Business as
the Buyer may determine, and the Sellers will furnish to the Buyer such
information and copies of such documents and records as the Buyer shall
reasonably request, but the Buyer shall not have access to the Tax Materials;
PROVIDED that the Sellers will be reasonably responsive to requests of the Buyer
for access to the Tax Materials on a need to know basis. As part of such
examination, the Buyer may make such inquiries of such persons having business
relationships with the Sellers in connection with the Business (including, but
not limited to, suppliers, licensees, distributors and customers) as the Buyer
shall reasonably determine and the Sellers shall cooperate fully with the Buyer
in connection therewith. Notwithstanding the foregoing, the Buyer may not
conduct any physically intrusive testing on the Owned Real Property prior to the
Closing.
5.2 CONDUCT OF BUSINESS PENDING CLOSING. From the date hereof until the
Closing, except as consented to by the Buyer in writing, Ward will:
(a) continue to maintain itself at all times as a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation;
(b) carry on the operations of the Business in a good and
diligent manner on an arm's-length basis and substantially in the manner carried
on as of the date hereof and not engage in any activity or transaction or make
any commitment to purchase or spend in connection with the Business other than
in the ordinary course of business as heretofore conducted; provided, however,
without the written consent of the Buyer, Ward will not make any commitment to
purchase or spend in connection with the Business involving $100,000 or more;
(c) continue to carry all of the existing insurance of the
Business;
(d) use commercially reasonable efforts to preserve the
organization of the Business intact, to keep available to the Buyer the services
of the employees and independent contractors of the Business and to preserve for
the Buyer Ward's relationships with suppliers, licensees, distributors and
customers and others having business relationships with it in connection with
the Business;
(e) maintain the facilities, machinery and equipment of the
Business in operating condition and repair, subject only to ordinary wear and
tear;
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(f) continue to maintain and keep accurate books and records
reflecting the assets and liabilities of the Business;
(g) not take any action which would be prohibited by Section 3.8;
and
(h) without limiting the foregoing, consult with the Buyer
regarding all significant developments, transactions and proposals relating to
the Business or the Acquired Assets.
5.3 CONSENTS AND APPROVALS. Ward shall use commercially reasonable
efforts to obtain prior to the Closing all consents, authorizations and
approvals under all statutes, laws, ordinances, regulations, rules, judgments,
decrees and orders of any court or governmental agency, board, bureau, body,
department or authority or of any other person required to be obtained by it in
connection with the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby.
5.4 NO SOLICITATION OF OFFERS. Between the date of this Agreement and
the Closing or earlier termination of this Agreement, the Sellers shall, and
shall cause their employees and representatives to, deal exclusively with the
Buyer in connection with the sale of the Business. Neither Seller nor any
employee or representative of either Seller shall directly or indirectly,
without the Buyer's prior written consent, solicit, encourage or initiate any
offer or proposal from, or engage in any discussions with, or provide any
information to, any person other than the Buyer and its affiliates, employees
and representatives, concerning any transaction involving the sale of any assets
of the EMI Division (other than sales of its products in the ordinary course of
business), or a merger, consolidation, liquidation, recapitalization or similar
transaction involving the EMI Division (collectively, "ACQUISITION
TRANSACTIONS"), nor shall either Seller or any employee or representative accept
any proposal with respect to any Acquisition Transaction.
5.5 CONFIDENTIAL INFORMATION. Unless and until the Closing has been
consummated, the terms and conditions of the Confidentiality Agreement dated as
of October 23, 1998 among Truck Components Inc., Gunite and Hitachi shall
continue as provided therein. An executed copy of such agreement is attached
hereto as EXHIBIT 5.5. From the date of this Agreement and continuing after the
Closing Date, the Sellers shall hold and shall cause their counsel, accountants,
financial advisors, appraisers and investment bankers to hold in confidence any
confidential data or information with respect to the Business or the Buyer,
except to the extent necessary to comply with any court order or any applicable
law, rule or regulation.
5.6 PRESS RELEASES AND PUBLIC STATEMENTS. Except as required by
applicable law, no party hereto shall give notice to third parties or otherwise
make any public statement or releases concerning this Agreement or the
transactions contemplated hereby except for such written information as shall
have been approved in writing as to form and content by the other party, which
approval shall not be unreasonably withheld.
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5.7 OTHER TAX PAYMENTS.
(a) The Buyer shall pay when due all transfer, realty transfer,
stock transfer, sales, use, stamp, documentary, recording and other similar
taxes and fees, including any penalties and interest, arising out of or in
connection with the consummation of the transactions contemplated by this
Agreement (the "TRANSFER TAXES"). Ward shall file all necessary documentation
and returns with respect to Transfer Taxes required by law to be filed by Ward.
The Buyer, as appropriate, will join in the execution of any such documentation
and returns.
(b) Where property taxes (including, with respect to real
property and without limitation, any water or sewer charges, and other taxes or
charges incident to the use of the Owned Real Property) applicable to any of the
Acquired Assets are attributable to any taxable period that includes but does
not end on the Closing Date, the amount of such taxes that are attributable to
the Pre-Closing Period shall be the amount of such taxes for the entire taxable
period, multiplied by a fraction the numerator of which is the number of
calendar days in the Pre-Closing Period and the denominator of which is the
entire number of calendar days in such taxable period, and the remainder of such
taxes for the taxable period shall be attributable to the Post-Closing Period.
The Buyer shall be responsible for the portion of such taxes attributable to the
Post-Closing Period, and Ward shall be responsible for the portion of such taxes
attributable to the Pre-Closing Period. "Pre-Closing Period" shall mean the
portion of the taxable period ending on the Closing Date. "Post-Closing Period"
means the portion of the taxable period beginning after the Closing Date.
(c) After the Closing, Ward and the Buyer shall each, and shall
cause their respective subsidiaries and affiliates to, provide the other party
with such cooperation and assistance as any of them may reasonably request of
another in respect of taxes of the Business; the preparation of any tax return,
including amended tax returns or claims for refund in respect of the Business;
or the participation in or conduct of any audit or other examination by any
taxing authority or judicial or administrative proceeding relating to the
liability for taxes of the Business. Such cooperation and information shall
include making employees available on a mutually convenient basis to provide
explanations of any documents or information provided. The party requesting
assistance shall reimburse the other party for reasonable out-of-pocket expenses
(other than salaries or wages of any employees of the parties) incurred in
providing such assistance. Except as may be required in connection with an audit
or examination proceeding or determination relating to taxes, any information
obtained pursuant to this Section 5.7(c) shall be kept confidential by the
parties hereto. Any errors in calculations or apportionments shall be corrected
or adjusted as soon as practicable after the Closing.
5.8 HSR ACT NOTIFICATION AND REPORT FORM. The Sellers and the Buyer
shall each, as soon as practicable, take all reasonable actions necessary to
comply promptly with all legal requirements which may be imposed on them with
respect to the consummation of the transactions contemplated in this Agreement.
The Sellers and the Buyer have filed the required Notification and Report Forms
under the HSR Act with the Federal Trade Commission and the Antitrust Division
of the Department of Justice, and
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each shall use its commercially reasonable efforts to respond as promptly as
practicable to all inquiries received from the Federal Trade Commission, the
Antitrust Division of the Department of Justice or any other governmental
authority for additional information or documentation. The Sellers will, and
will cause each of their affiliates to, coordinate and cooperate with the Buyer
in exchanging such information and supplying such assistance as may be
reasonably requested by the Buyer in connection with such filings and other
actions contemplated by this Section 5.8. The HSR Act application fee has been
paid by the Buyer.
5.9 THE BUYER'S OBLIGATION WITH RESPECT TO THE EMPLOYEES OF THE
BUSINESS.
(a) On the Closing Date, the Buyer shall offer employment to each
person actively employed by the Business (other than those to be covered by the
Service Agreement (as defined in Section 6.1(f))) (the "BUSINESS EMPLOYEES"),
except as may be otherwise required by the collective bargaining agreement with
the United Steel Workers of America identified on SCHEDULE 3.29(B), at the same
base salary and at rates of other compensation substantially the same as the
rates applicable to such employees immediately prior to the Closing Date. At the
Closing, Ward shall provide the Buyer with a list of all Business Employees as
of the Closing Date, which shall be attached as SCHEDULE 5.9. Within ninety (90)
days of the Closing Date, the Buyer shall not cause an employment loss, as
defined in the Workers Adjustment and Retraining Notification Act, as amended
(the "WARN ACT"), in sufficient numbers such that the notice requirement of the
WARN Act is applicable. Ward shall terminate the employment of all Business
Employees as of the Closing Date. The Buyer and the Sellers agree to cooperate
in jointly notifying the Business Employees of the termination of their
employment by Ward and the offer of employment by the Buyer. Nothing in this
Section 5.9 shall confer any rights upon any person or entity other than the
parties to this Agreement and their respective successors and permitted assigns.
Other than as specifically provided for, this provision shall in no way affect
the Buyer's ability to operate the Business in the future as it deems fit.
(b) The Buyer shall:
(i) credit periods of service prior to the Closing for
purposes of determining seniority, eligibility, vesting and benefit
entitlement under all benefit plans, programs and policies maintained by
the Buyer after the Closing;
(ii) cause each Business Employee hired by the Buyer (and
his or her eligible dependents) to be covered immediately following the
Closing by a group health plan that provides health benefits (within the
meaning of Section 5000(b)(1) of the Code) that (i) does not limit or
exclude coverage on the basis of any preexisting condition of such
Business Employee or dependent, and (ii) that provides each such
Business Employee full credit, for the year during which the Closing
occurs, with any deductible already incurred by the Business Employee
under the EMI Division's group health plan and with any other
out-of-pocket expenses that count against any maximum out-of-pocket
expense provision of the EMI Division's or the Buyer's group health plan
or medical plan;
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(iii) offer or provide COBRA coverage to any Business
Employee or any other former Business Employee or any of their
dependents who are entitled to be offered or provided such coverage and
have incurred a "qualifying event" on or prior to the Closing Date
pursuant to Part 6 of Subtitle B of Title I of ERISA;
(iv) assume the EMI Division's obligation to provide any
Business Employee or former Business Employee with post-termination life
insurance benefits; and
(v) as of the Closing, assume sponsorship of the EMI
Company Hourly 401(k) Savings Plan and the EMI Company Salaried
Retirement Savings Plan and be responsible for satisfying all
liabilities arising thereunder (and in connection with such assumption,
Ward shall take such action as may be necessary to assign the trust
agreement under such plans to the Buyer).
(c) With respect to the collective bargaining agreement with the
United Steel Workers of America identified on SCHEDULE 3.29(B), the Buyer agrees
that it shall (i) recognize the union that is a party to that agreement and (ii)
accept the terms of that agreement, including, without limitation, wages and
benefits; PROVIDED, HOWEVER, that the "spring back bonus" provision contained in
such agreement shall be modified to the Buyer's reasonable satisfaction prior to
the Closing.
(d) The Sellers shall have the right to retain complete copies of
all personnel records of the Business Employees.
5.10 POST-CLOSING TRANSITION MATTERS.
(a) Effective as of the Closing, (i) Ward shall retain certain
job work from Mitsubishi consisting of the front and rear knuckle and damper
fork parts described on SCHEDULE 1.3(K) and (ii) the Buyer agrees that it shall
manufacture and supply Ward with its requirements for the manufacturing of such
parts for Mitsubishi through July 1999 at the prices and in the quantities set
forth on SCHEDULE 5.10(A). The Sellers shall remove the equipment related to
this job work held for sale or transfer and referred to in Section 1.3(c) upon
the Sellers' request or the Buyer's completion of the work, whichever is sooner.
(b) Effective as of the Closing, the Buyer agrees that it shall
continue to supply customers (other than Palmar, Inc. and Manac, Inc., whom it
shall continue to supply from the Closing Date until December 31, 1999 or March
31, 2000, as the case may be, at the prices and in the quantities set forth in
the sales agreements referred to in Section 1.2(f)) of Ward for commercially
reasonable periods, with customary quantities and at commercially reasonable
prices and terms and agrees that it will not terminate any existing customer
relationship of Ward on less than three (3) months' notice.
(c) Effective as of the Closing, the Buyer agrees that it shall
service warranty claims for products sold and delivered by Ward prior to the
Closing. Ward agrees that it shall reimburse the Buyer for the cost of such
warranty claims.
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(d) The Buyer shall not be liable for its failure to perform or
for delay in performing any of its obligations under this Section 5.10 to the
extent and for so long as such performance is delayed or prevented by fire,
flood, wind, earthquake, war embargo, strikes, explosions, riots or other such
catastrophic events or uncontrollable acts, or by laws, rules, or regulations of
any governmental authority; PROVIDED that the Buyer takes commercially
reasonable steps to mitigate the effects of such events and recommences
performance after the termination of the effects of such events. Notwithstanding
any other provision to the contrary, the Buyer shall not be liable to any party
or any respective affiliate or related party for incidental, punitive or
consequential damages under this Section 5.10. Nothing in this Section 5.10
shall confer any rights upon any person or entity other than the parties to this
Agreement.
(e) For a period not to exceed three months after the Closing
Date, the Buyer shall permit the Treasurer and Corporate Controller of Ward to
remain on the premises of the EMI Division for the purpose of performing orderly
transition tasks on behalf of the Sellers, including, but not limited to,
closing the Closing Date financial results of the EMI Division and implementing
various tax reporting, financial reporting and other matters relating to the EMI
Division.
VI. CONDITIONS TO CLOSING
6.1 CONDITIONS TO OBLIGATIONS OF THE SELLERS. The obligation of the
Sellers to consummate the transactions contemplated by this Agreement at the
Closing is subject to the satisfaction, on or prior to the Closing, of each of
the following conditions, the failure of any one of which shall excuse the
Sellers from consummating such transactions unless any such conditions are
waived by the Sellers in writing:
(a) BUYER'S PERFORMANCE. The representations and warranties of
the Buyer contained in this Agreement (i) shall be true and correct in all
respects (in the case of any representation or warranty containing any
materiality qualification) or in all material respects (in the case of any
representation or warranty without any materiality qualification) at and as of
the date hereof and (ii) shall be repeated and shall be true and correct in all
respects (in the case of any representation or warranty containing any
materiality qualification) or in all material respects (in the case of any
representation or warranty without any materiality qualification) on and as of
the Closing Date with the same effect as though made at and as of such time. The
Buyer shall have duly performed and complied in all material respects with all
agreements and conditions required by this Agreement to be performed or complied
with by it prior to or on the Closing Date.
(b) OPINION OF COUNSEL. The Sellers shall have received an
opinion, dated the Closing Date, of Winston & Strawn, counsel for the Buyer, in
form and substance satisfactory to Morgan, Lewis & Bockius LLP, counsel for the
Sellers, to the effect that:
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(i) the Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and has the corporate power and authority to carry on its business as
now being conducted;
(ii) this Agreement has been duly authorized, executed and
delivered by Buyer and is a valid and binding obligation of the Buyer
enforceable against it in accordance with its terms, except (a) as the
same may be limited by bankruptcy, insolvency, reorganization or other
laws or equitable principles relating to or affecting the enforcement of
creditors' rights, (b) that the granting of specific performance is
subject to the discretion of a court of equity and (c) insofar as
indemnification and contribution provisions may be limited by applicable
law;
(iii) the execution and delivery of this Agreement by the
Buyer and the consummation of the transactions provided for in this
Agreement will not violate or conflict with any provision of the
Certificate of Incorporation or By-laws of the Buyer or, to the best of
the knowledge of such counsel, result in any breach of any contract or
agreement to which the Buyer is a party or by which the Buyer is bound
or to which the properties or assets of it are subject;
(iv) no authorization, approval or consent of, or any
action by, any United States federal or state court or regulatory
authority or by any court or regulatory authority of any foreign
jurisdiction that has not been obtained or taken is required for the
execution, delivery or performance of this Agreement by the Buyer; and
(v) such counsel knows of no litigation, proceeding or
investigation pending, threatened or proposed in any manner involving
the Buyer or any of their properties or assets or which questions the
validity of this Agreement or any action taken or to be taken by the
Buyer under this Agreement.
(c) CONSENTS AND APPROVALS. The Buyer shall have obtained all
consents, authorization and approvals under all statutes, laws, ordinances,
regulations, rules, judgments, decrees and orders of any court or governmental
agency, board, bureau, body, department or authority or of any other person
required to be obtained by the Buyer in connection with the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby.
(d) LITIGATION. No suit, action or other proceeding shall be
pending or threatened before any court or governmental agency seeking to
restrain, prohibit or obtain damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated hereby.
(e) HSR ACT. The applicable waiting period under the HSR Act and
the rules and regulations promulgated thereunder shall have expired or been
terminated.
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(f) SERVICE AGREEMENT. HM Management Services, Inc. shall have
entered into a service agreement with the Buyer (the "SERVICE AGREEMENT") for
the management services of certain employees of Ward in the form of EXHIBIT
6.1(F).
(g) SECRETARY'S CERTIFICATE. The Sellers shall have received a
certificate of the Secretary of the Buyer dated the Closing Date and attaching
copies (certified by the Secretary of State of Delaware, as appropriate), of the
Certificate of Incorporation, By-Laws, good standing certificate and resolutions
of the Buyer, certifying as to the incumbency of the officers of the Buyer and
representing and warranting that the conditions precedent set forth in Sections
6.1(a), (c) and (d) have been satisfied.
(h) The Sellers shall have received a certificate of the Buyer,
signed by an officer of the Buyer, stating that all of the inventory included in
the Acquired Assets is being purchased by the Buyer for purposes of resale.
6.2 CONDITIONS TO OBLIGATIONS OF THE BUYER. The obligation of the Buyer
to consummate the transactions contemplated by this Agreement at the Closing is
subject to the satisfaction, on or prior to the Closing, of each of the
following conditions, the failure of any one of which shall excuse the Buyer
from consummating such transactions unless any such conditions are waived by the
Buyer in writing:
(a) SELLERS' PERFORMANCE. The representations and warranties of
the Sellers contained in this Agreement (i) shall be true and correct in all
respects (in the case of any representation or warranty containing any
materiality qualification) or in all material respects (in the case of any
representation or warranty without any materiality qualification) at and as of
the date hereof, and (ii) shall be repeated and shall be true and correct in all
respects (in the case of any representation or warranty containing any
materiality qualification) or in all material respects (in the case of any
representation or warranty without any materiality qualification) on and as of
the Closing Date with the same effect as though made on and as of the Closing
Date. The Sellers shall have duly performed and complied in all material
respects with all agreements and conditions required by this Agreement to be
performed or complied with by them prior to or on the Closing Date.
(b) OPINION OF COUNSEL. The Buyer shall have received an opinion,
dated the Closing Date, of Morgan, Lewis & Bockius LLP, counsel for the Sellers,
in form and substance satisfactory to Winston & Strawn, counsel for the Buyer,
to the effect that:
(i) each Seller is a corporation duly organized, validly
existing and in good standing under the laws of the state of its
incorporation and has the corporate power and authority to carry on its
business as now being conducted and, in the case of Ward, to own and
operate the property and assets now owned and being operated by it in
connection with the Business;
(ii) this Agreement has been duly executed and delivered
by each Seller and is a valid and binding obligation of each Seller
enforceable against each Seller in accordance
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with its terms, except (a) as the same may be limited by bankruptcy,
insolvency, reorganization or other laws or equitable principles
relating to or affecting the enforcement of creditors' rights, (b) that
the granting of specific performance is subject to the discretion of a
court of equity and (c) insofar as indemnification and contribution
provisions may be limited by applicable law;
(iii) execution and delivery of this Agreement by each
Seller and the consummation of the transactions provided for in this
Agreement will not violate or conflict with any provision of the
Certificate of Incorporation or By-Laws of either Seller or, to the best
of the knowledge of such counsel, result in any breach of any contract
or agreement to which either Seller is a party or by which either Seller
is bound or, in the case of Ward, to which the properties or assets of
the Business are subject;
(iv) no authorization, approval or consent of, or any
action by, any United States federal or state court or regulatory
authority or by any court or regulatory authority of any foreign
jurisdiction that has not been obtained or taken is required for the
execution, delivery or performance of this Agreement by either Seller;
and
(v) such counsel knows of no litigation, proceeding or
investigation pending, threatened or proposed in any manner involving
either Seller or any of their properties or assets or which questions
the validity of this Agreement or any action taken or to be taken by
either Seller under this Agreement.
(c) NO MATERIAL ADVERSE EFFECT. On the Closing Date, the assets,
properties and operations of the Business shall not have been or then be
materially and adversely affected in any way as a result of any casualty or
disaster, accident, labor dispute, exercise of the power of eminent domain or
other governmental act or any other fortuitous event, act of God or the public
enemy, nor shall have there occurred any event that has a Material Adverse
Effect.
(d) LITIGATION. No suit, action or other proceeding shall be
pending or threatened before any court or governmental agency seeking to
restrain, prohibit or obtain damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated hereby.
(e) CONSENTS AND APPROVALS. The Sellers shall have obtained all
consents, authorization and approvals under all statutes, laws, ordinances,
regulations, rules, judgments, decrees and orders of any court or governmental
agency, board, bureau, body, department or authority or of any other person
required to be obtained by them in connection with the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, including those set forth on SCHEDULE 6.2(E).
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(f) SECRETARY'S CERTIFICATE. The Buyer shall have received a
certificate of the Secretary of each Seller dated the Closing Date and attaching
copies (certified by the Secretary of State of the state of its incorporation,
as appropriate), of the Certificate of Incorporation, By-Laws, good standing
certificate and resolutions of such Seller certifying as to the incumbency of
the officers of such Seller and representing and warranting that the conditions
precedent set forth in Sections 6.2(a), (c) (in the case of Ward), (d) and (e)
have been satisfied.
(g) HSR ACT. The applicable waiting period under the HSR Act and
the rules and regulations promulgated thereunder shall have expired or been
terminated.
(h) NON-COMPETITION AGREEMENT. The Sellers shall have entered
into a non-competition agreement with the Buyer in the form of EXHIBIT 6.2(H).
(i) SERVICE AGREEMENT. HM Management Services, Inc. shall have
entered into the Service Agreement for the management services of certain
employees of Ward in the form of EXHIBIT 6.1(F).
(j) COLLECTIVE BARGAINING AGREEMENT. The "spring back bonus"
provision of the collective bargaining agreement with the United Steel Workers
of America shall have been modified to the Buyer's reasonable satisfaction.
(k) TRANSFER DOCUMENTS. The Sellers shall have delivered to the
Buyer at the Closing all documents, certificates and agreements necessary to
transfer to the Buyer good and marketable title to the Acquired Assets, free and
clear of any and all liens, claims, charges or encumbrances other than Permitted
Encumbrances, including, without limitation, a special warranty deed, dated as
of the Closing Date, for the conveyance of each parcel of Owned Real Property,
together with any necessary transfer declarations or other filings.
(l) REAL ESTATE. The Buyer shall have received at its expense
from a nationally recognized title insurance company (the "TITLE COMPANY")
reasonably satisfactory to the Buyer a fee owner's title insurance policy issued
to the Buyer with respect to each parcel of Owned Real Property, in each case in
form and substance reasonably satisfactory to the Buyer, together with
endorsements reasonably requested by the Buyer, in an amount determined by the
Buyer, insuring the Buyer and issued as of the Closing Date by the Title
Company, showing the Buyer to have a fee simple title to each parcel of Owned
Real Property, subject only to Permitted Encumbrances. The Sellers shall have
delivered to the Title Company any reasonably required affidavits or indemnities
required by the Title Company in connection with the delivery of the owner's
title policies.
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VII. TERMINATION
7.1 TERMINATION. This Agreement may be terminated as follows:
(a) TERMINATION BY MUTUAL CONSENT. This Agreement may be
terminated at any time prior to the Closing by mutual consent of the Buyer and
the Sellers.
(b) TERMINATION BY THE BUYER. The Buyer may, without liability to
the Sellers, terminate this Agreement by notice to the Sellers (i) at any time
prior to the Closing if a default shall be made by the Sellers in the observance
or in the due and timely performance of any of the material terms hereof to be
performed by the Sellers that cannot be cured or remedied to the reasonable
satisfaction of the Buyer at or prior to the Closing, (ii) at any time prior to
the Closing if there has been a material breach of any representation or
warranty of the Sellers set forth in this Agreement, (iii) at any time prior to
the Closing if any non-appealable preliminary or permanent injunction or other
legal restraint or prohibition preventing the consummation of the transactions
contemplated by this Agreement shall be in effect, or (iv) if for any reason the
Closing shall not have occurred on or before June 15, 1999, so long as the
applicable waiting period under the HSR Act has expired, or such later date that
is thirty (30) days after the applicable waiting period under the HSR Act has
expired.
(c) TERMINATION BY THE SELLERS. The Sellers may, without
liability to the Buyer, terminate this Agreement by notice to the Buyer (i) at
any time prior to the Closing if a default shall be made by the Buyer in the
observance or in the due and timely performance of any of the material terms
hereof to be performed by the Buyer that cannot be cured or remedied to the
reasonable satisfaction of the Sellers at or prior to the Closing, (ii) at any
time prior to the Closing if there has been a material breach of any
representation or warranty of the Buyer set forth in this Agreement, (iii) at
any time prior to the Closing if any non-appealable preliminary or permanent
injunction or other legal restraint or prohibition preventing the consummation
of the transactions contemplated by this Agreement shall be in effect, or (iv)
if for any reason the Closing shall not have occurred on or before June 15,
1999, so long as the applicable waiting period under the HSR Act has expired, or
such later date that is thirty (30) days after the applicable waiting period
under the HSR Act has expired.
7.2 EFFECT OF TERMINATION. Termination of this Agreement pursuant to
this Article VII shall terminate all obligations of the parties hereto;
PROVIDED, HOWEVER, that termination pursuant to Section 7.1(b)(i) or (ii) or
7.1(c)(i) or (ii) shall not relieve the defaulting or breaching party hereunder
from any liability to the other party hereto resulting from the default or
breach hereunder of such defaulting or breaching party occurring prior to the
date of termination. If this Agreement is terminated pursuant to the provisions
of this Article VII, the provisions set forth in Sections 7.2, 9.1 and 9.7 shall
survive such termination.
VIII. SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; INDEMNIFICATION
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made by Ward or the Buyer in this Agreement shall survive for
eighteen (18) months after the Closing Date,
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except (i) with respect to the representations and warranties made by Ward
pursuant to Sections 3.1, 3.2, 3.3 and 3.9(a), which shall survive indefinitely,
and with respect to the representations and warranties made by the Buyer
pursuant to Sections 4.1 and 4.2, which shall survive indefinitely, (ii) with
respect to the representations and warranties made by Ward pursuant to Section
3.12, which shall survive until the expiration of the applicable statute of
limitations (including any extension thereof), (iii) with respect to the
representations and warranties made by Ward with respect to environmental
matters relating to the Properties pursuant to Section 3.17, which shall survive
for thirty (30) months after the Closing Date, and (iv) with respect to the
representations and warranties made by Ward with respect to environmental
matters relating to the Off-site Properties pursuant to Section 3.17, which
shall survive for a period of forty-eight (48) months after the Closing Date
(the "OFF-SITE ENVIRONMENTAL REPRESENTATIONS"); PROVIDED that such termination
shall not affect the rights of a party in respect of any claim made by such
party in a writing received by the other party prior to the expiration of any
such period.
8.2 INDEMNIFICATION.
(a) BY THE SELLERS. The Sellers, jointly and severally, covenant
and agree to defend, indemnify and hold harmless the Buyer and each of its
affiliates, directors, officers, agents and employees ("REPRESENTATIVES") from
and against, and pay or reimburse promptly the Buyer for, any and all claims,
liabilities, obligations, losses, fines, costs, royalties, proceedings,
deficiencies, orders, directives or damages (whether absolute, accrued,
conditional or otherwise and whether or not resulting from third party claims),
including out-of-pocket expenses and reasonable attorneys' fees incurred in the
investigation or defense of any of the same or in asserting any of their rights
hereunder (collectively, "LOSSES"), resulting from or arising out of:
(i) any Excluded Asset or Excluded Liability;
(ii) any misrepresentation in or breach of any representation or
warranty of Ward set forth in this Agreement; and
(iii) breach of any covenant, agreement or other obligation of
the Sellers set forth in this Agreement.
Notwithstanding the foregoing, (1) the Sellers shall not have any
obligation to indemnify or to reimburse the Buyer under Section 8.2(a)(ii)
except to the extent such obligation (calculated for these purposes net of
insurance proceeds) exceeds in the aggregate $150,000, in which event the
Sellers shall reimburse the Buyer for all Losses exceeding $150,000, subject to
the limitations set forth herein, and (2) the Sellers' aggregate indemnification
obligation to the Buyer with respect to any claims made under Section 8.2(a)(ii)
(excluding claims arising out of the Off-site Environmental Representations)
shall be $2,000,000. The Sellers' indemnification obligation to the Buyer for
claims arising under Sections 8.2(a)(i) and (a)(iii) (calculated for these
purposes net of insurance proceeds) shall not be subject to the limitations
described in clauses (1) and (2) above, notwithstanding that the Buyer's rights
to indemnification could also be claimed
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under Section 8.2(a)(ii). The Sellers' indemnification obligation to the Buyer
for claims arising out of the Off-site Environmental Representations (calculated
for these purposes net of insurance proceeds) shall not be subject to the
limitations described in clause (2) above, notwithstanding that the Buyer's
right to indemnification could also be claimed under Section 8.2(a)(ii).
(b) Notwithstanding the foregoing, no amounts of indemnity shall
be payable with respect to (1) any Losses resulting from any misrepresentation
in or breach of any representation or warranty of Ward set forth in this
Agreement that either Seller can show was actually known to the Buyer or any of
its representatives on or prior to the Closing, (2) any Losses as to which the
Buyer had actual knowledge of and a reasonable opportunity to mitigate its
Losses, but failed to mitigate such Losses, or (3) any Losses, to the extent
such Losses arise from the actions of the Buyer and as to which the Buyer had
knowledge, or reasonably should have known, that such actions would create such
Losses, except and to the extent where the Buyer is mitigating its Losses. To
the extent permitted by law, the Buyer and the Sellers hereby acknowledge and
agree that, from and after the Closing, their sole remedy with respect to any
and all claims arising under this Agreement shall be pursuant to the
indemnification provisions set forth in this Article VIII.
(c) Prior to any proposed sale, distribution or liquidation of
all or substantially all of their assets, the Sellers will notify the Buyer in
writing thereof (if not previously so notified) and, if requested by the Buyer,
shall arrange alternative means of providing for the indemnification obligations
of the Sellers set forth in this Section 8.2, in each case in an amount and upon
terms and conditions reasonably satisfactory to the Buyer.
(d) BY THE BUYER. The Buyer will indemnify and hold harmless the
Sellers and each of their Representatives from and against, and pay or reimburse
promptly the Sellers for, any and all Losses resulting from or arising out of:
(i) any Acquired Asset or Assumed Liability;
(ii) any misrepresentation in or breach of any representation or
warranty of the Buyer set forth in this Agreement; and
(iii) breach of any covenant, agreement or other obligation of
the Buyer set forth in this Agreement.
(e) INDEMNIFICATION PROCEDURES. In the case of any claim asserted
by a third party against a party entitled to indemnification under this
Agreement (the "INDEMNIFIED PARTY"), notice shall be given by the Indemnified
Party to the party required to provide indemnification (the "INDEMNIFYING
PARTY") promptly after such Indemnified Party has actual knowledge of any claim
as to which indemnity may be sought, and the Indemnified Party shall permit the
Indemnifying Party (at the expense of such Indemnifying Party) to assume the
defense of any claim or any litigation resulting therefrom; PROVIDED that (i)
the
36
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Indemnifying Party acknowledges its obligation to indemnify the Indemnified
Party in writing, (ii) the counsel for the Indemnifying Party who shall conduct
the defense of such claim or litigation shall be reasonably satisfactory to the
Indemnified Party, (iii) the Indemnified Party may participate in such defense
at such Indemnified Party's expense and (iv) the omission by any Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying Party
of its indemnification obligation under this Agreement except to the extent that
such omission results in a failure of actual notice to the Indemnifying Party
and such Indemnifying Party is materially prejudiced as a result of such failure
to give notice. Except with the prior written consent of the Indemnified Party,
no Indemnifying Party, in the defense of any such claim or litigation, shall
consent to entry of any judgment or enter into any settlement that provides for
injunctive or other nonmonetary relief affecting the Indemnified Party or that
does not include as an unconditional term thereof the giving by each claimant or
plaintiff to such Indemnified Party of a release from all liability with respect
to such claim or litigation. In the event that the Indemnifying Party does not
accept the defense of any matter as above provided, the Indemnified Party shall
have the full right to defend, at the Indemnifying Party's cost, against any
such claim or demand and shall be entitled to settle or agree to pay in full
such claim or demand. In any event, the Indemnifying Party and the Indemnified
Party shall cooperate in the defense of any claim or litigation subject to this
Section 8.2(e) and the records of each shall be available to the other with
respect to such defense.
(f) If the Indemnifying Party makes any payment pursuant to this
Section 8.2, or otherwise by reason of the transactions contemplated by this
Agreement or the other documents executed hereunder under any theory of
recovery, the Indemnifying Party shall succeed, to the extent of such payment
and to the extent permitted by law, to any rights and remedies of the
Indemnified Party to recoup amounts paid from third parties with respect to the
matters giving rise to indemnification hereunder.
IX. OTHER PROVISIONS
9.1 EXPENSES. The Sellers and the Buyer shall bear their respective
expenses, costs and fees (including attorneys', auditors' and financing
commitment fees) in connection with the transactions contemplated hereby,
including the preparation, execution and delivery of this Agreement and
compliance herewith, whether or not the transactions contemplated hereby shall
be consummated.
9.2 SEVERABILITY. If any provision of this Agreement, including any
phrase, sentence, clause, Section or subsection is inoperative or unenforceable
for any reason, such circumstances shall not have the effect of rendering the
provision in question inoperative or unenforceable in any other case or
circumstance, or of rendering any other provision or provisions herein contained
invalid, inoperative or unenforceable to any extent whatsoever.
37
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9.3 NOTICES.
(a) All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if (i) delivered
personally, (ii) mailed by first-class, registered or certified mail, return
receipt requested, postage prepaid, (iii) sent by next-day or overnight mail or
delivery or (iv) sent by telecopy or telegram and, in any such case, addressed
as follows:
if to the Buyer, to:
Gunite Corporation
302 Peoples Avenue
Rockford, Illinois 61104
Attention: Thomas W. Cook
Phone: (815) 964-3301
Fax: (815) 964-5961
with a copy to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601-9703
Attention: Robert F. Wall, Esq.
Phone: (312) 558-5600
Fax: (312) 558-5700
if to the Sellers, to:
Hitachi Metals America, Ltd.
2400 Westchester Avenue
Purchase, NY 10577
Attention: Vice President and Controller
Phone: (914) 694-9200
Fax: (914) 694-1575
38
<PAGE>
with a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Attention: Alan J. Neuwirth, Esq.
Phone: (212) 309-6064
Fax: (212) 309-6273
or, in each case, at such other address as may be specified in writing to the
other parties hereto.
(b) All such notices, requests, demands, waivers and other
communications shall be deemed to have been received (i) if by personal
delivery, on the day after such delivery, (ii) if by certified or registered
mail, on the seventh business day after the mailing thereof, (iii) if by
next-day or overnight mail or delivery, on the day delivered, and (iv) if by
telecopy or telegram, on the next day following the day on which such telecopy
or telegram was sent, provided that a copy is also sent by certified or
registered mail.
9.4 HEADINGS. The headings contained in this Agreement are for purposes
of convenience only and shall not affect the meaning or interpretation of this
Agreement.
9.5 ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules hereto), when executed and delivered, constitutes the entire agreement
and supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof.
9.6 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.
9.7 GOVERNING LAW AND CHOICE OF FORUM. THIS AGREEMENT SHALL BE GOVERNED
IN ALL RESPECTS, INCLUDING AS TO VALIDITY, INTERPRETATION AND EFFECT, BY THE
INTERNAL LAWS OF THE STATE OF PENNSYLVANIA, WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS RULES THEREOF. ANY AND ALL LITIGATION CONCERNING ANY DISPUTE
ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT SHALL BE FILED AND MAINTAINED
ONLY IN A STATE OR FEDERAL COURT SITTING IN THE STATE OF PENNSYLVANIA. THE BUYER
AND THE SELLERS HEREBY IRREVOCABLY CONSENT TO THE JURISDICTION OF SUCH COURTS
AND AGREE TO MAINTAIN AT ALL TIMES A CURRENT ADDRESS IN THE STATE OF
PENNSYLVANIA FOR SERVICE OF PROCESS, AND AGREE THAT THE MAILING OF SUCH SERVICE
OF PROCESS TO SUCH ADDRESS BY U.S. MAIL, POSTAGE PREPAID, SHALL CONSTITUTE
EFFECTIVE SERVICE OF PROCESS IN ANY SUCH PROCEEDING.
39
<PAGE>
9.8 BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, successors and
permitted assigns.
9.9 ASSIGNMENT. This Agreement shall not be assignable or otherwise
transferable by any party hereto without the prior written consent of the other
parties hereto; PROVIDED that the Buyer may assign this Agreement or any part
thereof to any subsidiary of the Buyer; PROVIDED, FURTHER, that no assignment to
any such subsidiary shall in any way affect the Buyer's obligations or
liabilities under this Agreement (it being understood and agreed that in the
event such subsidiary shall fail to perform any of its obligations under this
Agreement after such designation, the Sellers shall be entitled to seek such
performance from the Buyer without the necessity of pursuing any remedies
against such subsidiary other than making demand on such subsidiary for such
performance).
9.10 NO THIRD PARTY BENEFICIARIES. Except as provided in Article VIII
with respect to indemnification of Indemnified Parties hereunder, nothing in
this Agreement shall confer any rights upon any person or entity other than the
parties hereto and their respective heirs, successors and permitted assigns.
9.11 AMENDMENT; WAIVERS; REMEDIES. No amendment or modification of this
Agreement, and no waiver hereunder, shall be valid or binding unless set forth
in writing and duly executed by the party against whom enforcement of the
amendment, modification or waiver is sought. Any such waiver shall constitute a
waiver only with respect to the specific matter described in such writing and
shall in no way impair the rights of the party granting such waiver in any other
respect or at any other time. Neither the waiver by any of the parties hereto of
a breach of or a default under any of the provisions of this Agreement, nor the
failure by any of the parties, on one or more occasions, to enforce any of the
provisions of this Agreement or to exercise any right or privilege hereunder,
shall be construed as a waiver of any other breach or default of a similar
nature, or as a waiver of any of such provisions, rights or privileges
hereunder. The rights and remedies herein provided are cumulative and are not
exclusive of any rights or remedies that any party may otherwise have at law or
in equity. The rights and remedies of any party based upon, arising out of or
otherwise in respect of any inaccuracy or breach of any representation,
warranty, covenant or agreement or failure to fulfill any condition shall in no
way be limited by the fact that the act, omission, occurrence or other state of
facts upon which any claim of any such inaccuracy or breach is based may also be
the subject matter of any other representation, warranty, covenant or agreement
as to which there is no inaccuracy or breach.
9.12 CERTAIN DEFINITIONS. For purposes of this Agreement, "to the
knowledge of Ward", "to Ward's knowledge", "to the best knowledge of Ward" or
"to the best of Ward's knowledge" and words of similar import shall mean the
knowledge of Ward and the EMI Division.
[signature page follows]
40
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement
as of the date first above written.
GUNITE CORPORATION
By:________________________________
Name: Thomas W. Cook
Title: President
GUNITE ACQUISITION CORP.
By:________________________________
Name: Thomas W. Cook
Title: President
HITACHI METALS AMERICA, LTD.
By:_________________________________
Name: Masanobu Sakae
Title: President and Chief
Executive Officer
WARD MANUFACTURING, INC.
By:_________________________________
Name: Stephen A. Rhodes
Title: Chairman of the Board and
Chief Executive Officer
41
CONFORMED COPY
================================================================================
$175,000,000
CREDIT AGREEMENT
DATED AS OF APRIL 29, 1999
AMONG
JOHNSTOWN AMERICA INDUSTRIES, INC.,
THE LENDERS PARTY HERETO,
THE CHASE MANHATTAN BANK
AS ADMINISTRATIVE AGENT, COLLATERAL AGENT AND SWINGLINE LENDER,
BANKBOSTON, N.A.,
AND
THE FIRST NATIONAL BANK OF CHICAGO
AS CO-AGENTS,
CHASE MANHATTAN BANK DELAWARE,
AS ISSUING BANK,
[GRAPHIC OMITTED]
CHASE
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINED TERMS........................................... 2
SECTION 1.02. TERMS GENERALLY......................................... 16
ARTICLE II
THE CREDITS
SECTION 2.01. COMMITMENTS............................................. 17
SECTION 2.02. LOANS................................................... 17
SECTION 2.03. BORROWING PROCEDURE..................................... 18
SECTION 2.04. EVIDENCE OF DEBT; REPAYMENT OF LOANS.................... 19
SECTION 2.05. FEES.................................................... 19
SECTION 2.06. INTEREST ON LOANS....................................... 20
SECTION 2.07. DEFAULT INTEREST........................................ 21
SECTION 2.08. ALTERNATE RATE OF INTEREST.............................. 22
SECTION 2.09. TERMINATION AND REDUCTION OF COMMITMENTS................ 22
SECTION 2.10. CONVERSION AND CONTINUATION OF BORROWINGS.............. 22
SECTION 2.11. REPAYMENT OF TERM BORROWINGS............................ 23
SECTION 2.12. OPTIONAL PREPAYMENT..................................... 25
SECTION 2.13. MANDATORY PREPAYMENTS................................... 25
SECTION 2.14. RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES........... 27
SECTION 2.15. CHANGE IN LEGALITY...................................... 28
SECTION 2.16. INDEMNITY............................................... 29
SECTION 2.17. PRO RATA TREATMENT...................................... 29
SECTION 2.18. SHARING OF SETOFFS...................................... 29
SECTION 2.19. PAYMENTS................................................ 30
SECTION 2.20. TAXES................................................... 30
SECTION 2.21. ASSIGNMENT OF COMMITMENTS UNDER CERTAIN CIRCUMSTANCES;
DUTY TO MITIGATE................................. 32
SECTION 2.22. SWINGLINE LOANS......................................... 33
SECTION 2.23. LETTERS OF CREDIT....................................... 34
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. ORGANIZATION; POWERS.................................... 38
SECTION 3.02. AUTHORIZATION........................................... 38
SECTION 3.03. ENFORCEABILITY.......................................... 38
SECTION 3.04. GOVERNMENTAL APPROVALS.................................. 38
SECTION 3.05. FINANCIAL STATEMENTS.................................... 38
SECTION 3.06. NO MATERIAL ADVERSE CHANGE.............................. 39
SECTION 3.07. TITLE TO PROPERTIES; POSSESSION UNDER LEASES............ 39
SECTION 3.08. SUBSIDIARIES............................................ 39
<PAGE>
SECTION 3.09. LITIGATION; COMPLIANCE WITH LAWS........................ 39
SECTION 3.10. AGREEMENTS.............................................. 40
SECTION 3.11. FEDERAL RESERVE REGULATIONS............................. 40
SECTION 3.12. INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT 40
SECTION 3.13. USE OF PROCEEDS......................................... 40
SECTION 3.14. TAX RETURNS............................................. 40
SECTION 3.15. NO MATERIAL MISSTATEMENTS............................... 40
SECTION 3.16. EMPLOYEE BENEFIT PLANS.................................. 41
SECTION 3.17. ENVIRONMENTAL MATTERS................................... 41
SECTION 3.18. INSURANCE............................................... 42
SECTION 3.19. SECURITY DOCUMENTS...................................... 42
SECTION 3.20. LOCATION OF REAL PROPERTY AND LEASED PREMISES........... 43
SECTION 3.21. LABOR MATTERS........................................... 43
SECTION 3.22. SOLVENCY................................................ 43
SECTION 3.23. EXISTING LETTERS OF CREDIT.............................. 43
SECTION 3.24. SENIOR INDEBTEDNESS..................................... 43
SECTION 3.25. YEAR 2000............................................... 43
ARTICLE IV
CONDITIONS OF LENDING
SECTION 4.01. ALL CREDIT EVENTS....................................... 44
SECTION 4.02. FIRST CREDIT EVENT...................................... 44
ARTICLE V
AFFIRMATIVE COVENANTS
SECTION 5.01. EXISTENCE; BUSINESSES AND PROPERTIES.................... 48
SECTION 5.02. INSURANCE............................................... 48
SECTION 5.03. OBLIGATIONS AND TAXES................................... 49
SECTION 5.04. FINANCIAL STATEMENTS, REPORTS, ETC...................... 50
SECTION 5.05. LITIGATION AND OTHER NOTICES............................ 51
SECTION 5.06. EMPLOYEE BENEFITS....................................... 51
SECTION 5.07. MAINTAINING RECORDS; ACCESS TO PROPERTIES AND INSPECTIONS 51
SECTION 5.08. USE OF PROCEEDS......................................... 51
SECTION 5.09. COMPLIANCE WITH ENVIRONMENTAL LAWS...................... 51
SECTION 5.10. PREPARATION OF ENVIRONMENTAL REPORTS.................... 51
SECTION 5.11. FURTHER ASSURANCES...................................... 52
SECTION 5.12. MORTGAGED PROPERTY CASUALTY AND CONDEMNATION............ 52
SECTION 5.13. COMPLIANCE WITH LAWS.................................... 55
SECTION 5.14. INFORMATION REGARDING COLLATERAL........................ 56
SECTION 5.15. DELIVERY OF POST-CLOSING LEASEHOLD MORTGAGE............. 56
SECTION 5.16. DELIVERY OF POST-CLOSING CERTIFICATES OF OCCUPANCY...... 56
SECTION 5.17. DELIVERY OF POST-CLOSING INTELLECTUAL PROPERTY SCHEDULES TO
THE SECURITY AGREEMENT.......................... 57
ARTICLE VI
NEGATIVE COVENANTS
SECTION 6.01. INDEBTEDNESS............................................ 57
<PAGE>
SECTION 6.02. LIENS................................................... 58
SECTION 6.03. SALE AND LEASE-BACK TRANSACTIONS........................ 59
SECTION 6.04. INVESTMENTS, LOANS AND ADVANCES......................... 59
SECTION 6.05. MERGERS, CONSOLIDATIONS, SALES OF ASSETS AND ACQUISITIONS 60
SECTION 6.06. DIVIDENDS AND DISTRIBUTIONS; RESTRICTIONS ON ABILITY OF
SUBSIDIARIES TO PAY DIVIDENDS.................... 61
SECTION 6.07. TRANSACTIONS WITH AFFILIATES............................ 62
SECTION 6.08. OTHER INDEBTEDNESS AND AGREEMENTS....................... 62
SECTION 6.09. CAPITAL EXPENDITURES.................................... 62
SECTION 6.10. TOTAL DEBT RATIO........................................ 63
SECTION 6.11. INTEREST COVERAGE RATIO................................. 63
SECTION 6.12. NET WORTH............................................... 63
SECTION 6.13. BANK ACCOUNTS........................................... 63
SECTION 6.14. BUSINESS OF BORROWER AND SUBSIDIARIES................... 63
SECTION 6.15. FISCAL YEAR............................................. 63
ARTICLE VII
EVENTS OF DEFAULT
ARTICLE VIII
THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. NOTICES................................................. 67
SECTION 9.02. SURVIVAL OF AGREEMENT................................... 67
SECTION 9.03. BINDING EFFECT.......................................... 68
SECTION 9.04. SUCCESSORS AND ASSIGNS.................................. 68
SECTION 9.05. EXPENSES; INDEMNITY..................................... 70
SECTION 9.06. RIGHT OF SETOFF......................................... 71
SECTION 9.07. APPLICABLE LAW.......................................... 71
SECTION 9.08. WAIVERS; AMENDMENT...................................... 71
SECTION 9.09. INTEREST RATE LIMITATION................................ 72
SECTION 9.10. ENTIRE AGREEMENT........................................ 72
SECTION 9.11. WAIVER OF JURY TRIAL.................................... 72
SECTION 9.12. SEVERABILITY............................................ 72
SECTION 9.13. COUNTERPARTS............................................ 73
SECTION 9.14. HEADINGS................................................ 73
SECTION 9.15. JURISDICTION; CONSENT TO SERVICE OF PROCESS............. 73
SECTION 9.16. CONFIDENTIALITY......................................... 73
Schedule 1.01(a) Guarantors
Schedule 1.01(b) Mortgaged Properties
Schedule 2.01 Commitments
Schedule 3.07(a) Certain Encumbrances
Schedule 3.07(c) Condemnation Proceedings
Schedule 3.08 Subsidiaries
Schedule 3.09(a) Litigation
<PAGE>
Schedule 3.09(b) Compliance with Laws
Schedule 3.17 Environmental Matters
Schedule 3.18 Insurance
Schedule 3.19(d) Mortgage Filing Offices
Schedule 3.20(a) Owned Real Property
Schedule 3.20(b) Leased Real Property
Schedule 3.23 Existing Letters of Credit
Schedule 4.02(a) Local Counsel
Schedule 6.01(a) Indebtedness
Schedule 6.02(a) Liens
Schedule 6.04(a) Investments
Exhibit A Form of Administrative Questionnaire
Exhibit B Form of Assignment and Acceptance
Exhibit C Form of Borrowing Request
Exhibit D Form of Bostrom Pledge and Security Agreement
Exhibit E Form of Guarantee Agreement
Exhibit F Form of Indemnity, Subrogation and
Contribution Agreement
Exhibit G-1 Form of Mortgage
Exhibit G-2 Form of Leasehold Mortgage
Exhibit H Form of Pledge Agreement
Exhibit I Form of Security Agreement
Exhibit J-1 Form of Opinion of Winston & Strawn, Counsel
for the Borrower and the Subsidiaries
Exhibit J-2 Form of Opinion of Local Counsel
<PAGE>
CREDIT AGREEMENT dated as of April 29, 1999
(this "Agreement"), among JOHNSTOWN AMERICA
INDUSTRIES, INC., a Delaware corporation (the
"BORROWER"), the Lenders (as defined in Article I),
THE CHASE MANHATTAN BANK, a New York banking
corporation, as swingline lender (in such capacity,
the "SWINGLINE LENDER"), as administrative agent (in
such capacity, the "ADMINISTRATIVE AGENT"), and as
collateral agent (in such capacity, the "COLLATERAL
AGENT") for the Lenders, BANKBOSTON, N.A. and THE
FIRST NATIONAL BANK OF CHICAGO, as co-agents (in such
capacity, the "CO-AGENTS"), and CHASE MANHATTAN BANK
DELAWARE, a Delaware banking corporation, as Issuing
Bank (as defined in Article I).
Pursuant to an Asset Purchase Agreement dated as of March 22, 1999 (the
"ACQUISITION AGREEMENT"), among the Borrower, Imperial Group Acquisition, L.P.,
a Delaware limited partnership and a wholly owned Subsidiary (such term and each
other capitalized term used but not defined herein having the meaning assigned
to it in Article I) of the Borrower ("Sub"), Imperial Group, Inc., a Tennessee
corporation ("IMPERIAL"), Fleet Design, Inc., a Tennessee corporation and a
wholly owned subsidiary of Imperial ("FLEET"), Imperial Fabricating Company of
Tennessee, Inc., a Tennessee corporation and a wholly owned subsidiary of
Imperial ("IFC" and, together with Fleet, the "SELLERS"), and the shareholders
of Imperial, Sub will acquire substantially all the assets and assume the
related liabilities of the Sellers (the "ACQUISITION"), for aggregate
consideration of $58,500,000, subject to adjustment as set forth in the
Acquisition Agreement (the "ACQUISITION CONSIDERATION").
The Borrower has requested the Lenders to extend credit in the form of
(a) Tranche A Term Loans on the Closing Date, in an aggregate principal amount
not in excess of $50,000,000, (b) Tranche B Term Loans on the Closing Date, in
an aggregate principal amount not in excess of $50,000,000, and (c) Revolving
Loans at any time and from time to time after the Closing Date and prior to the
Revolving Credit Maturity Date, in an aggregate principal amount at any time
outstanding not in excess of $75,000,000 less the sum of (i) the aggregate
principal amount of the Swingline Loans outstanding at such time and (ii) the
L/C Exposure at such time. The Borrower has requested the Swingline Lender to
extend credit, at any time and from time to time prior to the Revolving Credit
Maturity Date, in the form of Swingline Loans. The Borrower has requested the
Issuing Bank to issue letters of credit, in an aggregate face amount at any time
outstanding not in excess of $35,000,000, to support payment obligations
incurred in the ordinary course of business by the Borrower and its
Subsidiaries.
The proceeds of the Term Loans are to be used solely (a) on the Closing
Date (i) to pay the Acquisition Consideration, (ii) to refinance the principal
of, and to pay all interest and other amounts payable in respect of, the
outstanding loans under the Existing Loan Agreement, and (iii) to pay related
fees and expenses and (b) on and after the Closing Date in the ordinary course
of the Borrower's business. The proceeds of the Revolving Loans are to be used
solely for general corporate purposes in the ordinary course of the Borrower's
business, including Permitted Acquisitions.
The Lenders and the Swingline Lender are willing to extend such credit
to the Borrower and the Issuing Bank is willing to issue letters of credit for
the account of the Borrower on the terms and subject to the conditions set forth
herein.
<PAGE>
Accordingly, the parties hereto agree as follows:
ARTICLEI
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the following
terms shall have the meanings specified below:
"ABR BORROWING" shall mean a Borrowing comprised of ABR Loans.
"ABR LOAN" shall mean any ABR Term Loan or ABR Revolving Loan.
"ABR REVOLVING LOAN" shall mean any Revolving Loan bearing interest at a
rate determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"ABR SPREAD" shall mean (a) with respect to Tranche A Term Loans and
Revolving Loans, 1.25%, subject to adjustment in accordance with Section
2.06(c), and (b) with respect to Tranche B Term Loans, 1.75%.
"ABR TERM BORROWING" shall mean a Borrowing comprised of ABR Term Loans.
"ABR TERM LOAN" shall mean any Term Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"ACCOUNT" shall mean any right to payment for goods sold or leased or
for services rendered, whether or not earned by performance.
"ACQUISITION" shall have the meaning assigned to such term in the
preliminary statement.
"ACQUISITION AGREEMENT" shall have the meaning assigned to such term in
the preliminary statement.
"ACQUISITION CONSIDERATION" shall have the meaning assigned to such term
in the preliminary statement.
"ADJUSTED LIBO RATE" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the product of (a) the LIBO Rate
in effect for such Interest Period and (b) Statutory Reserves.
"ADMINISTRATIVE AGENT FEES" shall have the meaning assigned to such term
in Section 2.05(b).
"ADMINISTRATIVE QUESTIONNAIRE" shall mean an Administrative
Questionnaire in the form of Exhibit A, or such other form as shall be approved
by the Administrative Agent.
"AFFILIATE" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified.
"AGREEMENT" shall have the meaning assigned to such term in the
preliminary statement.
"AGGREGATE REVOLVING CREDIT EXPOSURE" shall mean the aggregate amount of
the Lenders' Revolving Credit Exposures.
<PAGE>
"ALTERNATE BASE RATE" shall mean, for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the
Prime Rate in effect on such day, (b) the Base CD Rate in effect on such day
plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus 1/2
of 1%. If for any reason the Administrative Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Base CD Rate or the Federal Funds Effective Rate or both for any
reason, including the inability or failure of the Administrative Agent to obtain
sufficient quotations in accordance with the terms thereof, the Alternate Base
Rate shall be determined without regard to clause (b) or (c), or both, of the
preceding sentence, as appropriate, until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to a change
in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate shall be
effective on the effective date of such change in the Prime Rate, the Base CD
Rate or the Federal Funds Effective Rate, respectively. The term "PRIME RATE"
shall mean the rate of interest per annum publicly announced from time to time
by the Administrative Agent as its prime rate in effect at its principal office
in New York City; each change in the Prime Rate shall be effective on the date
such change is publicly announced as being effective. The term "BASE CD RATE"
shall mean the sum of (a) the product of (i) the Three-Month Secondary CD Rate
and (ii) Statutory Reserves and (b) the Assessment Rate. The term "FEDERAL FUNDS
EFFECTIVE RATE" shall mean, for any day, the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average of the quotations for
the day for such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.
"APPROVED FUND" shall mean, with respect to any Lender that is a fund or
a trust that invests in commercial loans, any other fund or trust that invests
in commercial loans and is managed or advised by the same investment advisor as
such Lender or by an Affiliate of such investment advisor.
"ASSESSMENT RATE" shall mean for any date the annual rate (rounded
upwards, if necessary, to the next 1/100 of 1%) most recently estimated by the
Administrative Agent as the then current net annual assessment rate that will be
employed in determining amounts payable by the Administrative Agent to the
Federal Deposit Insurance Corporation (or any successor thereto) for insurance
by such corporation (or such successor) of time deposits made in dollars at the
Administrative Agent's domestic offices.
"ASSET SALE" shall mean the sale, transfer or other disposition (by way
of merger or otherwise) by any Loan Party or any of the Subsidiaries to any
person other than any Loan Party of (a) any capital stock of any of the
Subsidiaries or (b) any other assets of the Borrower or any of the Subsidiaries
(other than inventory, obsolete or worn out assets, scrap and Permitted
Investments, in each case disposed of in the ordinary course of business) of any
Loan Party or any of the Subsidiaries, PROVIDED that any asset sale or series of
related asset sales described in clause (b) above having a value not in excess
of $100,000 shall not be deemed an "Asset Sale" for purposes of this Agreement.
"ASSIGNMENT AND ACCEPTANCE" shall mean an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the Administrative
Agent, in the form of Exhibit B or such other form as shall be approved by the
Administrative Agent.
"BOARD" shall mean the Board of Governors of the Federal Reserve System
of the United States of America.
"BOND DOCUMENTS" shall mean (a) the Bostrom Bond Documents, (b) any loan
agreement (as may be amended, modified or supplemented from time to time)
entered into, prior to or after the Closing Date, by a state or local government
authority and the Borrower or any Guarantor relating to industrial development
or tax-free bonds (the "BONDS") to be issued by such state or local government
authority, (c) any trust indenture (as may be amended, modified or supplemented
<PAGE>
from time to time) entered into, prior to or after the Closing Date, by a state
or local government authority and a trustee with respect to the Bonds and (d)
the other documents entered into in connection with the documents described in
clauses (b) and (c) above.
"BORROWING" shall mean a group of Loans of a single Type made by the
Lenders on a single date and as to which a single Interest Period is in effect.
"BORROWING REQUEST" shall mean a request by the Borrower in accordance
with the terms of Section 2.03 and substantially in the form of Exhibit C, or
such other form as shall be approved by the Administrative Agent.
"BOSTROM" shall mean Bostrom Seating, Inc., a Delaware corporation.
"BOSTROM BOND DOCUMENTS" shall mean the loan document, indenture and the
other documents executed in connection with the issuance of the Bostrom Bonds
(as each as may be amended, modified or supplemented from time to time).
"BOSTROM BONDS" shall mean the Variable/Fixed Rate Industrial
Development Revenue Bonds (Bostrom Seating, Inc. Project) Series 1999 issued by
The Industrial Development Board of the City of Piedmont in an aggregate
principal amount of $3,100,000, pursuant to the Trust Indenture dated as of
March 1, 1999 between Bostrom and NBD Bank, as trustee.
"BOSTROM PLEDGE AND SECURITY AGREEMENT" shall mean the Bostrom Pledge
and Security Agreement, substantially in the form of Exhibit D, among the
Borrower, Bostrom, the custodian identified therein and the Collateral Agent for
the benefit of the Secured Parties.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or day
on which banks in New York City are authorized or required by law to close;
PROVIDED, HOWEVER, that when used in connection with a Eurodollar Loan, the term
"BUSINESS DAY" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.
"CAPITAL LEASE OBLIGATIONS" of any person shall mean the obligations of
such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP for any period of determination.
"CASUALTY" shall have the meaning assigned to such term in Section
5.12(a).
A "CHANGE IN CONTROL" shall be deemed to have occurred if:
(a) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than one or more Permitted Holders,
is or becomes the beneficial owner (as defined in Rules 13d-3 and
13d-5 under the Exchange Act, except that a person shall be deemed to
have "beneficial ownership" of all shares that any such person has
the right to acquire, whether such right is exercisable immediately
or only after the passage of time), directly or indirectly, of more
than 35% of the Voting Stock of the Borrower;
(b) during any period of two consecutive years, individuals who
at the beginning of such period constituted the Board of Directors of
the Borrower (together with any new directors whose election by the
stockholders of the Borrower was approved by a majority of the
directors of the Borrower then still in office who were either
directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of the
Borrower then in office; or
<PAGE>
(c) any change in control with respect to the Borrower (or
similar event, howsoever denominated) shall occur under and as
defined in any indenture or agreement in respect of Indebtedness to
which the Borrower or any Subsidiary is a party.
"CLOSING DATE" shall mean the date of the first Credit Event.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"COLLATERAL" shall mean all the "Collateral" as defined in any Security
Document and shall also include the Mortgaged Properties.
"COMMITMENT" shall mean, with respect to any Lender, such Lender's
Revolving Credit Commitment, Term Loan Commitment and Swingline Commitment.
"COMMITMENT FEE" shall have the meaning assigned to such term in Section
2.05(a).
"COMMITMENT FEE PERCENTAGE" shall mean 0.50%; PROVIDED, HOWEVER, that at
any time that the ABR Spread and the LIBOR Spread are determined by reference to
the grid contained in Section 2.06(c), the Commitment Fee Percentage shall equal
the applicable percentage set forth below the caption "Commitment Fee
Percentage" on such grid at such time.
"CONDEMNATION" shall have the meaning assigned to such term in Section
5.12(b).
"CONDEMNATION PROCEEDS" shall have the meaning assigned to such term in
Section 5.12(b).
"CONFIDENTIAL INFORMATION MEMORANDUM" shall mean the Confidential
Information Memorandum of the Borrower dated March 1999.
"CONSOLIDATED CAPITAL EXPENDITURES" shall mean, for any period, the sum
of (a) the aggregate of all expenditures (whether paid in cash or other
consideration or accrued as a liability) by the Borrower and its Subsidiaries
during such period that, in accordance with GAAP, are or should be included in
"additions to property, plant or equipment" or similar items reflected in the
consolidated statement of cash flows of the Borrower and its Subsidiaries for
such period, and (b) to the extent not covered by clause (a) above, the
aggregate of all expenditures by the Borrower and its Subsidiaries to acquire by
purchase or otherwise the business, property or fixed assets of, or stock or
other evidence of beneficial ownership of, any person; PROVIDED, HOWEVER, that
Consolidated Capital Expenditures shall not include (i) expenditures made to
consummate the Acquisition or any Permitted Acquisition, (ii) investments in
JAIX Leasing permitted pursuant to Section 6.04(d) or (iii) investments in
Guarantors. Notwithstanding the foregoing, for purposes of determining
compliance with Section 6.11, "Consolidated Capital Expenditures" of the
Borrower and its consolidated Subsidiaries shall be determined on a pro forma
basis (a) for each of the four fiscal quarter periods ending September 30, 1999,
December 31, 1999, and March 31, 2000, giving effect to the Transactions as if
they occurred on the first day of such period, and (b) for each period of four
consecutive fiscal quarters during which a Permitted Acquisition shall have
occurred, giving effect to such Permitted Acquisition as if it occurred on the
first day of the relevant period, and such computations shall be set forth on a
certificate as described in Section 5.04(c).
"CONSOLIDATED EBITDA" shall mean, for any period, Consolidated Net
Income for such period, PLUS, to the extent deducted in computing such
Consolidated Net Income, the sum of, without duplication, (a) income tax
expense, (b) interest expense, (c) depreciation and amortization expense and (d)
any non-cash charges or non-cash losses, MINUS, to the extent added in computing
such Consolidated Net Income, (i) any interest income and (ii) any non-cash
gains, all as determined on a consolidated basis with respect to the Borrower
and the Subsidiaries in accordance with GAAP. Notwithstanding the foregoing, for
purposes of determining compliance with Sections 6.10 and 6.11, "Consolidated
EBITDA" of the Borrower and its consolidated Subsidiaries shall be determined on
a pro forma basis (a) for each of the four fiscal quarter periods ending
<PAGE>
September 30, 1999, December 31, 1999, and March 31, 2000, giving effect to the
Transactions as if they occurred on the first day of such period, and (b) for
each period of four consecutive fiscal quarters during which a Permitted
Acquisition shall have occurred, giving effect to such Permitted Acquisition as
if it occurred on the first day of the relevant period, and such computations
shall be set forth on a certificate as described in Section 5.04(c).
"CONSOLIDATED INTEREST EXPENSE" shall mean, for any period, the gross
interest expense accrued or paid by the Borrower and the Subsidiaries during
such period, determined on a consolidated basis in accordance with GAAP. For
purposes of the foregoing, gross interest expense shall be determined exclusive
of deferred financing costs and the amortization thereof and after giving effect
to any net payments made or received by the Borrower and the Subsidiaries with
respect to Hedging Agreements. Notwithstanding the foregoing, for purposes of
determining compliance with Section 6.11, "Consolidated Interest Expense" shall
mean (a) for the four fiscal quarter period ending September 30, 1999,
Consolidated Interest Expense for the fiscal quarter ending September 30, 1999,
divided by .25, (b) for the four fiscal quarter period ending December 31, 1999,
Consolidated Interest Expense for the two fiscal quarter period ending December
31, 1999, divided by .50 and (c) for the four fiscal quarter period ending March
31, 2000, Consolidated Interest Expense for the three fiscal quarter period
ending March 31, 2000, divided by .75.
"CONSOLIDATED NET INCOME" shall mean, for any period, net income or loss
of the Borrower and the Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP; PROVIDED that there shall be
excluded (a) the income of any person in which any other person (other than the
Borrower or any of the Subsidiaries or any director holding qualifying shares in
compliance with applicable law) has a joint interest and the income of JAIX
Leasing, except to the extent of the amount of dividends or other distributions
actually paid to the Borrower or any of the Subsidiaries by such person or by
JAIX Leasing during such period, (b) the income (or loss) of any person accrued
prior to the date it becomes a Subsidiary or is merged into or consolidated with
the Borrower or any of the Subsidiaries or the date that person's assets are
acquired by the Borrower or any of the Subsidiaries, (c) any after tax gains or
losses attributable to sales of assets out of the ordinary course of business
and (d) (to the extent not included in clauses (a) through (c) above) any
non-cash extraordinary gains or non-cash extraordinary losses.
"CONSOLIDATED NET WORTH" shall mean, as at any date of determination,
the consolidated stockholders' equity of the Borrower and its consolidated
Subsidiaries, as determined on a consolidated basis in accordance with GAAP;
PROVIDED, HOWEVER, that in determining Consolidated Net Worth, there shall be
excluded the effect of (a) any cash or non-cash extraordinary gains or losses
relating to the Transactions and accrued on or prior to the Closing Date, and
(b) any non-cash (but not cash) extraordinary gains or losses accrued after the
Closing Date.
"CONTROL" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
person, whether through the ownership of voting securities, by contract or
otherwise, and "CONTROLLING" and "CONTROLLED" shall have meanings correlative
thereto.
"CREDIT EVENT" shall have the meaning assigned to such term in Section
4.01.
"DEFAULT" shall mean any event or condition which upon notice, lapse of
time or both would constitute an Event of Default.
"DOLLARS" or "$" shall mean lawful money of the United States of
America.
"DOMESTIC SUBSIDIARIES" shall mean all Subsidiaries incorporated or
organized under the laws of the United States of America, any State thereof or
the District of Columbia.
<PAGE>
"ENVIRONMENT" shall mean ambient air, surface water and groundwater
(including potable water, navigable water and wetlands), the land surface or
subsurface strata, and any other media as otherwise defined in any Environmental
Law.
"ENVIRONMENTAL CLAIM" shall mean any written accusation, allegation,
notice of violation, claim, demand, order, consent decree, directive, cost
recovery action or other cause of action by, or on behalf of, any Governmental
Authority or any person for damages, injunctive or equitable relief, personal
injury (including sickness, disease or death), Remedial Action costs, tangible
or intangible property damage, natural resource damages, nuisance, pollution,
any adverse effect on the environment caused by any Hazardous Material, or for
fines, penalties or restrictions, in each case resulting from or based upon: (a)
the existence, or the continuation of the existence, of a Release (including
sudden or non-sudden, accidental or non-accidental Releases); (b) exposure to
any Hazardous Material; (c) the presence, use, handling, transportation,
storage, treatment or disposal of any Hazardous Material; or (d) the violation
or alleged violation of any Environmental Law or Environmental Permit.
"ENVIRONMENTAL LAW" shall mean any and all applicable present and future
treaties, statutes, common law, rules, regulations, codes, ordinances, orders,
decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to human health or the environment, preservation or reclamation of natural
resources or the management, Release or threatened Release of any Hazardous
Material, including the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. ss.ss. 9601 ET seq. (collectiveLY
"CERCLA"), the Solid Waste Disposal Act, as amended by the Resource Conservation
and Recovery Act of 1976 and Hazardous and Solid Amendments of 1984, 42 U.S.C.
ss.ss. 6901 ET seq., the Federal Water Pollution Control Act, as amended by the
Clean Water Act of 1977, 33 U.S.C. ss.ss. 1251 ET seq., the Clean Air Act of
1970, as amended 42 U.S.C. ss.ss. 7401 ET seq., the Toxic Substances Control Act
of 1976, 15 U.S.C. ss.ss. 2601 ET seq., the Emergency Planning and Community
Right-to-Know Act of 1986, 42 U.S.C. ss.ss. 11001 ET seq., the Safe Drinking
Water Act of 1974, as amended, 42 U.S.C. ss.ss. 300(F) ET seq., the Hazardous
Materials Transportation Act, 49 U.S.C. ss.sS. 1801 et seq., the Occupational
Safety and Health Act, 29 U.S.C. ss. 651 eT SEq., and any similar oR
implementing state or local law, and all amendments or regulations promulgated
thereunder.
"ENVIRONMENTAL PERMIT" shall mean any permit, approval, authorization,
certificate, license, variance, filing or permission required by or from any
Governmental Authority pursuant to any Environmental Law
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may be amended from time to time.
"ERISA AFFILIATE" shall mean any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code, or solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA EVENT" shall mean (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder, with respect to a
Plan; (b) the adoption of any amendment to a Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or Section 307
of ERISA; (c) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (d) the filing pursuant to Section 412(d) of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (e) the incurrence of any liability under
Title IV of ERISA with respect to the termination of any Plan or the withdrawal
or partial withdrawal of the Borrower or any of its ERISA Affiliates from any
Plan or Multiemployer Plan; (f) the receipt by the Borrower or any ERISA
Affiliate from the PBGC or a plan administrator of any notice relating to the
<PAGE>
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan; (g) the receipt by the Borrower or any ERISA Affiliate of any notice
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA; (h) the occurrence of a "prohibited
transaction" with respect to which the Borrower or any of its Subsidiaries is a
"disqualified person" (within the meaning of Section 4975 of the Code) or with
respect to which the Borrower or any such Subsidiary could otherwise be liable;
and (i) any other event or condition with respect to a Plan or Multiemployer
Plan that could reasonably be expected to result in liability of the Borrower.
"EURODOLLAR BORROWING" shall mean a Borrowing comprised of Eurodollar
Loans.
"EURODOLLAR LOAN" shall mean any Eurodollar Revolving Loan or Eurodollar
Term Loan.
"EURODOLLAR REVOLVING LOAN" shall mean any Revolving Loan bearing
interest at a rate determined by reference to the Adjusted LIBO Rate in
accordance with the provisions of Article II.
"EURODOLLAR TERM BORROWING" shall mean a Borrowing comprised of
Eurodollar Term Loans.
"EURODOLLAR TERM LOAN" shall mean any Term Loan bearing interest at a
rate determined by reference to the Adjusted LIBO Rate in accordance with the
provisions of Article II.
"EVENT OF DEFAULT" shall have the meaning assigned to such term in
Article VII.
"EXCESS CASH FLOW" shall mean, for any fiscal year, the excess of (a)
the sum of (i) Consolidated EBITDA and (ii) extraordinary cash income, if any,
not included in Consolidated EBITDA, over (b) the sum of (i) provisions for
taxes based on income, (ii) cash interest paid during such fiscal year, (iii)
cash Consolidated Capital Expenditures made in accordance with Section 6.09
during such fiscal year, (iv) scheduled and, in the case of purchase money
Indebtedness only, mandatory principal repayments of Indebtedness made during
such fiscal year, (v) mandatory prepayments of the principal of Loans during
such period, but only to the extent that such prepayments cannot by their terms
be reborrowed or redrawn and do not occur in connection with a refinancing of
all or any portion of such Loans, (vi) extraordinary cash expenses paid, if any,
not included in Consolidated EBITDA, (vii) payments made by the Borrower
pursuant to the JAIX Tax Sharing Agreement and (viii) cash consideration paid
for Permitted Acquisitions during such fiscal year except to the extent financed
with the proceeds of Indebtedness or the issuance of securities.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"EXISTING LETTER OF CREDIT" shall mean each Letter of Credit listed on
Schedule 3.23.
"EXISTING LOAN AGREEMENT" shall mean the Credit Agreement dated as of
August 23, 1995, as amended, among the Borrower, the lenders named therein, The
Chase Manhattan Bank (formerly known as Chemical Bank), as administrative agent,
swingline lender, collateral Agent and as an issuing bank, Chase Manhattan Bank
Delaware (formerly known as Chemical Bank Delaware), as an issuing bank, and
BankBoston, N.A. (formerly known as The First National Bank of Boston) and The
First National Bank of Chicago, as co-agents.
"FEE LETTER" shall mean the Fee Letter dated March 22, 1999, among the
Borrower, The Chase Manhattan Bank and Chase Securities Inc.
"FEES" shall mean the Commitment Fees, the Administrative Agent's Fees,
the LC Participation Fees and the Issuing Bank Fees.
"FINANCIAL OFFICER" of any corporation shall mean the chief financial
officer, principal accounting officer, Treasurer or Controller of such
corporation.
<PAGE>
"FOREIGN SUBSIDIARY" shall mean any Subsidiary that is not a Domestic
Subsidiary.
"GAAP" shall mean generally accepted accounting principles applied on a
consistent basis.
"GOVERNMENTAL AUTHORITY" shall mean any Federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory body
(including the National Association of Insurance Commissioners).
"GUARANTEE" of or by any person shall mean any obligation, contingent or
otherwise, of such person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other person (the "PRIMARY OBLIGOR") in any
manner, whether directly or indirectly, and including any obligation of such
person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or to purchase (or to advance
or supply funds for the purchase of) any security for the payment of such
Indebtedness, (b) to purchase or lease property, securities or services for the
purpose of assuring the owner of such Indebtedness of the payment of such
Indebtedness or (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness; PROVIDED, HOWEVER, that the
term Guarantee shall not include endorsements for collection or deposit in the
ordinary course of business.
"GUARANTEE AGREEMENT" shall mean the Guarantee Agreement, substantially
in the form of Exhibit E, made by the Guarantors in favor of the Collateral
Agent for the benefit of the Secured Parties.
"GUARANTORS" shall mean each person listed on Schedule 1.01(a), each
person who executes a Guarantee Agreement pursuant to Section 5.11 and the
permitted successors and assigns of each such person.
"HAZARDOUS MATERIALS" means all explosive or radioactive substances or
wastes, hazardous or toxic materials, substances or wastes, pollutants, solid,
liquid or gaseous wastes, including petroleum or petroleum distillates, asbestos
or asbestos containing materials, polychlorinated biphenyls ("PCBS") or
PCB-containing materials or equipment, radon gas, infectious or medical wastes
and all other materials, substances or wastes of any nature regulated pursuant
to any Environmental Law.
"HEDGING AGREEMENT" shall mean any ordinary course interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement, foreign
currency exchange agreement, commodity protection agreement or similar agreement
or arrangement designed to protect the Borrower or any Subsidiary against
fluctuations in interest rates, foreign currency exchange rates or commodity
prices and not for speculation.
"IMPERIAL" shall have the meaning assigned to such term in the
preliminary statement.
"IMPERIAL EARN-OUT OBLIGATION" shall mean the obligations of the
Borrower and Sub pursuant to Section 3.04(a) of the Acquisition Agreement.
"INACTIVE SUBSIDIARY" shall mean any Subsidiary of the Borrower that has
assets with a total book value not in excess of $10,000.
"INDEBTEDNESS" of any person shall mean, without duplication, (a) all
obligations of such person for borrowed money or with respect to deposits with
such person or advances to such person of any kind, (b) all obligations of such
person evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such person upon which interest charges are customarily paid, (d)
all obligations of such person under conditional sale or other title retention
agreements relating to property or assets purchased by such person, (e) all
obligations of such person issued or assumed as the deferred purchase price of
<PAGE>
property or services (excluding trade accounts payable and accrued obligations
incurred in the ordinary course of business), (f) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such person, whether or not the obligations secured thereby have
been assumed, (g) all Guarantees by such person of Indebtedness of others, (h)
all Capital Lease Obligations of such person, (i) all obligations of such person
in respect of Hedging Agreements and (j) all obligations of such person as an
account party in respect of letters of credit and bankers' acceptances. The
Indebtedness of any person shall include the Indebtedness of any partnership in
which such person is a general partner.
"INDEMNITY, SUBROGATION AND CONTRIBUTION AGREEMENT" shall mean the
Indemnity, Subrogation and Contribution Agreement, substantially in the form of
Exhibit F, among the Borrower, the Guarantors and the Collateral Agent.
"INSURANCE PROCEEDS" shall have the meaning assigned to such term in
Section 5.12(a).
"INTERCOMPANY INDEBTEDNESS" shall mean any Indebtedness of the Borrower
or any Subsidiary that is owing to any Loan Party.
"INTEREST PAYMENT DATE" shall mean, with respect to any Loan, the last
day of the Interest Period applicable to the Borrowing of which such Loan is a
part and, in the case of a Eurodollar Borrowing with an Interest Period of more
than three months' duration, each day that would have been an Interest Payment
Date had successive Interest Periods of three months' duration been applicable
to such Borrowing, and, in addition, the date of any prepayment of a Eurodollar
Borrowing or conversion of a Eurodollar Borrowing to an ABR Borrowing.
"INTEREST PERIOD" shall mean (a) as to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month that is 1, 2, 3 or 6 months thereafter, as the
Borrower may elect, and (b) as to any ABR Borrowing, the period commencing on
the date of such Borrowing and ending on the earliest of (i) the next succeeding
March 31, June 30, September 30 or December 31, and (ii) the Revolving Credit
Maturity Date, Tranche A Maturity Date or Tranche B Maturity Date, as
applicable; PROVIDED, HOWEVER, that if any Interest Period would end on a day
other than a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless, in the case of a Eurodollar Borrowing only, such
next succeeding Business Day would fall in the next calendar month, in which
case such Interest Period shall end on the next preceding Business Day. Interest
shall accrue from and including the first day of an Interest Period to but
excluding the last day of such Interest Period.
"ISSUING BANK" shall mean, as the context may require, (a) Chase
Manhattan Bank Delaware, with respect to Letters of Credit issued by it, (b) The
Chase Manhattan Bank, with respect to Letters of Credit issued by it, (c) any
other Lender that may become an Issuing Bank pursuant to Section 2.23(i) or (k),
with respect to Letters of Credit issued by such Lender, or (d) collectively,
all the foregoing.
"ISSUING BANK FEES" shall have the meaning assigned to such term in
Section 2.05(c).
"JAIX LEASING" shall mean JAIX Leasing Company, a Delaware corporation.
"JAIX LOAN AGREEMENT" shall mean the Credit Agreement dated as of June
14, 1996, among JAIX Leasing and NationsBanc Leasing Corporation of North
Carolina, as the same may be amended from time to time in accordance with the
terms thereof and hereof.
"JAIX TAX SHARING AGREEMENT" shall mean the Tax Sharing Agreement dated
as of May 12, 1995, between JAIX Leasing and the Borrower, as the same may be
amended from time to time in accordance with the terms thereof and hereof.
<PAGE>
"L/C COMMITMENT" shall mean the commitment of the Issuing Bank to issue
Letters of Credit pursuant to Section 2.23.
"L/C DISBURSEMENT" shall mean a payment or disbursement made by the
Issuing Bank pursuant to a Letter of Credit.
"L/C EXPOSURE" shall mean at any time the sum of (a) the aggregate
undrawn amount of all outstanding Letters of Credit at such time PLUS (b) the
aggregate principal amount of all L/C Disbursements that have not yet been
reimbursed at such time. The L/C Exposure of any Revolving Credit Lender at any
time shall mean its Pro Rata Percentage of the aggregate L/C Exposure at such
time.
"L/C PARTICIPATION FEE" shall have the meaning assigned to such term in
Section 2.05(c).
"LENDERS" shall mean, at any date of determination, (a) the financial
institutions listed on Schedule 2.01 (other than any such financial institution
that has ceased to be a party hereto pursuant to an Assignment and Acceptance)
and (b) any financial institution that has become a party hereto pursuant to an
Assignment and Acceptance. Unless the context clearly indicates otherwise, the
term "Lenders" shall include the Swingline Lender.
"LETTER OF CREDIT" shall mean any letter of credit issued pursuant to
Section 2.23.
"LIBO RATE" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate at which dollar
deposits approximately equal to the principal amount of such Eurodollar
Borrowing and for a maturity comparable to such Interest Period are offered by
the principal London office of the Administrative Agent in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.
"LIBOR SPREAD" shall mean (a) with respect to Tranche A Term Loans and
Revolving Loans, 2.25%, subject to adjustment in accordance with Section
2.06(c), and (b) with respect to Tranche B Term Loans, 2.75%.
"LIEN" shall mean, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.
"LOAN DOCUMENTS" shall mean this Agreement, the Letters of Credit, the
Guarantee Agreement, the Security Documents, the Indemnity, Subrogation and
Contribution Agreement and any promissory note issued pursuant to Section
2.04(e).
"LOAN PARTIES" shall mean the Borrower and the Guarantors.
"LOANS" shall mean the Revolving Loans, the Term Loans and the Swingline
Loans.
<PAGE>
"MARGIN STOCK" shall have the meaning assigned to such term in
Regulation U.
"MATERIAL ADVERSE EFFECT" shall mean (a) a materially adverse effect on
the business, assets, operations, properties or condition, financial or
otherwise, of the Borrower and the Subsidiaries, taken as a whole, (b) material
impairment of the ability of the Borrower or any Subsidiary to perform any of
its obligations under any Loan Document to which it is a party or (c) material
impairment of the rights of or benefits available to the Lenders under any Loan
Document.
"MORTGAGED PROPERTIES" shall mean the owned real properties and
leasehold and subleasehold interests of the Loan Parties specified on Schedule
1.01(b).
"MORTGAGES" shall mean the mortgages, deeds of trust, leasehold
mortgages, assignments of leases and rents, modifications and other security
documents delivered pursuant to clause (i) of Section 4.02(k) or pursuant to
Section 5.11, each substantially in the form of Exhibit G-1 or Exhibit G-2, as
applicable.
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"NET CASH PROCEEDS" shall mean (a) with respect to any Asset Sale, the
cash proceeds thereof net of (i) costs of sale (including payment of the
outstanding principal amount of, premium or penalty, if any, interest and other
amounts on any Indebtedness (other than Loans) required to be repaid under the
terms thereof as a result of such Asset Sale), (ii) taxes paid or payable in the
year such Asset Sale occurs or in the following year as a result thereof and
(iii) amounts provided as a reserve, in accordance with GAAP, against any
liabilities under any indemnification obligations associated with such Asset
Sale (PROVIDED that, to the extent and at the time any such amounts are released
from such reserve, such amounts shall constitute Net Cash Proceeds), and (b)
with respect to any issuance or other disposition of Indebtedness for borrowed
money, the cash proceeds thereof net of underwriting commissions or placement
fees and expenses directly incurred in connection therewith.
"OBLIGATIONS" shall mean all obligations defined as "Obligations" in the
Guarantee Agreement and the Security Documents.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
and defined in ERISA.
"PERMITTED ACQUISITIONS" shall have the meaning assigned to such term in
Section 6.05(a)(v).
"PERMITTED HOLDERS" shall mean members, as of the Closing Date, of
executive management of the Borrower and their respective Affiliates.
"PERFECTION CERTIFICATE" shall mean the Perfection Certificate
substantially in the form of Annex 2 to the Security Agreement.
"PERMITTED INVESTMENTS" shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United
States of America (or by any agency thereof to the extent such
obligations are backed by the full faith and credit of the United
States of America), in each case maturing within one year from the
date of acquisition thereof, or repurchase obligations in respect of
any thereof;
(b) investments in commercial paper maturing within 270 days from
the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from Standard &
Poor's Ratings Services or from Moody's Investors Service;
(c) investments in certificates of deposit, banker's acceptances
and time deposits maturing within one year from the date of
acquisition thereof issued or guaranteed by or placed with, and money
market deposit accounts issued or offered by, any domestic office of
any commercial bank organized under the laws of the United States of
America or any State thereof, or the domestic office of any Lender,
which commercial bank or Lender has a combined capital and surplus
and undivided profits of not less than $250,000,000 and is rated (or
the senior debt securities of the holding company of such commercial
bank or Lender are rated) A or better by Standard & Poor's Ratings
Services or A2 or better by Moody's Investors Service; and
<PAGE>
(d) other investment instruments approved in writing by the
Required Lenders and offered by financial institutions which have a
combined capital and surplus and undivided profits of not less than
$250,000,000.
"PERSON" shall mean any natural person, corporation, business trust,
joint venture, association, company, partnership or government, or any agency or
political subdivision thereof.
"PLAN" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 307 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"PLEDGE AGREEMENT" shall mean the Pledge Agreement, substantially in the
form of Exhibit H, between the Borrower, the Subsidiaries party thereto and the
Collateral Agent for the benefit of the Secured Parties.
"PREPAYMENT ACCOUNT" shall have the meaning assigned to such term in
Section 2.13(h).
"PRO RATA PERCENTAGE" of any Revolving Credit Lender at any time shall
mean the percentage of the Total Revolving Credit Commitment represented by such
Lender's Revolving Credit Commitment.
"REGISTER" shall have the meaning assigned to such term in Section
9.04(d).
"REGULATION U" shall mean Regulation U of the Board as from time to time
in effect and all official rulings and interpretations thereunder or thereof.
"REGULATION X" shall mean Regulation X of the Board as from time to time
in effect and all official rulings and interpretations thereunder or thereof.
"RELEASE" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing,
depositing, dispersing, emanating or migrating of any Hazardous Material in,
into, onto or through the environment.
"REMEDIAL ACTION" means (i) "remedial action" as such term is defined in
CERCLA, 42 U.S.C. Section 9601(24), and (ii) all other actions required by any
Governmental Authority or voluntarily undertaken to: (x) clean up, remove,
treat, abate or in any other way address any Hazardous Material in the
environment; (y) prevent the Release or threat of Release, or minimize the
further Release of any Hazardous Material so it does not migrate or endanger, or
threaten to endanger, public health, welfare or the environment; or (z) perform
studies and investigations in connection with, or as a precondition to, clause
(x) or (y) above.
"REQUIRED LENDERS" shall mean, at any time, Lenders having Loans
(excluding Swingline Loans), L/C Exposure, Swingline Exposure, unused Revolving
Credit Commitments and unused Term Loan Commitments representing at least a
majority of the sum of all Loans outstanding (excluding Swingline Loans), L/C
Exposure, Swingline Exposure, unused Revolving Credit Commitments and unused
Term Loan Commitments at such time.
<PAGE>
"RESPONSIBLE OFFICER" of any corporation shall mean any executive
officer or Financial Officer of such corporation and any other officer or
similar official thereof responsible for the administration of the obligations
of such corporation in respect of this Agreement.
"REVOLVING CREDIT BORROWING" shall mean a Borrowing comprised of
Revolving Loans.
"REVOLVING CREDIT COMMITMENT" shall mean, with respect to each Lender,
the commitment of such Lender to make Revolving Loans hereunder as set forth on
Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender
assumed its Revolving Credit Commitment, as applicable, as the same may be (a)
reduced from time to time pursuant to Section 2.09 and (b) reduced or increased
from time to time pursuant to assignments by or to such Lender pursuant to
Section 9.04.
"REVOLVING CREDIT EXPOSURE" shall mean, with respect to any Lender at
any time, the aggregate principal amount at such time of all outstanding
Revolving Loans of such Lender, PLUS the aggregate amount at such time of such
Lender's L/C Exposure, PLUS the aggregate amount at such time of such Lender's
Swingline Exposure.
"REVOLVING CREDIT LENDER" shall mean a Lender with a Revolving Credit
Commitment.
"REVOLVING CREDIT MATURITY DATE" shall mean April 29, 2004.
"REVOLVING LOANS" shall mean the revolving loans made by the Lenders to
the Borrower pursuant to clause (c) of Section 2.01. Each Revolving Loan shall
be a Eurodollar Revolving Loan or an ABR Revolving Loan.
"SECURED PARTIES" shall have the meaning assigned to such term in the
Security Agreement.
"SECURITY AGREEMENT" shall mean the Security Agreement, substantially in
the form of Exhibit I, between the Borrower, the Subsidiaries party thereto and
the Collateral Agent for the benefit of the Secured Parties.
"SECURITY DOCUMENTS" shall mean the Mortgages, the Security Agreement,
the Pledge Agreement, the Bostrom Pledge and Security Agreement and each of the
security agreements, mortgages and other instruments and documents executed and
delivered pursuant to any of the foregoing or pursuant to Section 5.11.
"SELLERS" shall have the meaning assigned to such term in the
preliminary statement.
"STATUTORY RESERVES" shall mean a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority, domestic or foreign,
to which the Administrative Agent is subject (a) with respect to the Base CD
Rate, for new negotiable nonpersonal time deposits in dollars of over $100,000
with maturities approximately equal to three months, and (b) with respect to the
Adjusted LIBO Rate, for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D or any
successor regulation or law. Eurodollar Loans shall be deemed to constitute
eurocurrency funding and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may be available
from time to time to the Administrative Agent under such Regulation D or any
comparable regulation. Statutory Reserves shall be adjusted automatically on and
as of the effective date of any change in any reserve percentage. "SUB" shall
have the meaning assigned to such term in the preliminary statement.
<PAGE>
"SUBORDINATED DEBT DOCUMENTS" shall mean the indentures under which the
Subordinated Notes were issued and all other instruments, agreements and other
documents evidencing or governing the Subordinated Notes or providing for any
Guarantee or other right in respect thereof.
"SUBORDINATED NOTES" shall mean the 11-3/4% Senior Subordinated Notes
due 2005 of the Borrower issued on August 23, 1995, in an aggregate principal
amount of $100,000,000, and issued on August 12, 1997, in an aggregate principal
amount of $80,000,000.
"SUBSIDIARY" shall mean, with respect to any person (herein referred to
as the "parent"), any corporation, partnership, association or other business
entity of which securities or other ownership interests representing more than
50% of the equity or more than 50% of the ordinary voting power or more than 50%
of the general partnership interests are, at the time any determination is being
made, owned, controlled or held by the parent or one or more subsidiaries of the
parent or by the parent and one or more subsidiaries of the parent.
"SUBSIDIARY" shall mean any subsidiary of the Borrower.
"SWINGLINE COMMITMENT" shall mean the commitment of the Swingline Lender
to make loans pursuant to Section 2.22, as the same may be reduced from time to
time pursuant to Section 2.09.
"SWINGLINE EXPOSURE" shall mean at any time the aggregate principal
amount at such time of all outstanding Swingline Loans. The Swingline Exposure
of any Revolving Credit Lender at any time shall equal its Pro Rata Percentage
of the aggregate Swingline Exposure at such time.
"SWINGLINE LOAN" shall mean any loan made by the Swingline Lender
pursuant to Section 2.22.
"TERM BORROWING" shall mean a Borrowing comprised of Tranche A Term
Loans or Tranche B Term Loans.
"TERM LOAN COMMITMENTS" shall mean the Tranche A Commitments and the
Tranche B Commitments.
"TERM LOAN REPAYMENT DATES" shall mean the Tranche A Term Loan Repayment
Dates and the Tranche B Term Loan Repayment Dates.
"TERM LOANS" shall mean Tranche A Term Loans and Tranche B Term Loans.
"THREE-MONTH SECONDARY CD RATE" shall mean, for any day, the secondary
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day shall not be a Business Day, the next preceding
Business Day) by the Board through the public information telephone line of the
Federal Reserve Bank of New York (which rate will, under the current practices
of the Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day), or, if such rate shall not be so reported
on such day or such next preceding Business Day, the average of the secondary
market quotations for three-month certificates of deposit of major money center
banks in New York City received at approximately 10:00 a.m., New York City time,
on such day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Administrative Agent from three New York City negotiable
certificate of deposit dealers of recognized standing selected by it.
<PAGE>
"TOTAL DEBT" shall mean, at any time, all Indebtedness, other than (a)
Indebtedness of the type referred to in clause (i) of the definition of the term
"Indebtedness", (b) Indebtedness in respect of any Letter of Credit, except to
the extent of any unreimbursed drawings thereunder, (c) Guarantees with respect
to surety bonds incurred in the ordinary course of business and (d) Indebtedness
of the type referred to in clause (f) or (g) or in the final sentence of the
definition of the term "Indebtedness", to the extent that the Indebtedness of
the other person referred to in such clause (f) or (g) or the partnership
referred to in such final sentence is Indebtedness of the type referred to in
the preceding clause (a), (b) or (c).
"TOTAL DEBT RATIO" shall mean the ratio of (i) Total Debt as of any date
of determination to (ii) Consolidated EBITDA for the four fiscal quarter period
ending on such date of determination.
"TOTAL REVOLVING CREDIT COMMITMENT" shall mean, at any time, the
aggregate amount of the Revolving Credit Commitments, as in effect at such time.
"TRANCHE A COMMITMENT" shall mean, with respect to each Lender, the
commitment of such Lender to make Tranche A Term Loans hereunder as set forth on
Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender
assumed its Tranche A Commitment, as applicable, as the same may be (a) reduced
from time to time pursuant to Section 2.09 and (b) reduced or increased from
time to time pursuant to assignments by or to such Lender pursuant to Section
9.04.
"TRANCHE A LENDERS" shall mean Lenders having outstanding Tranche A Term
Loans.
"TRANCHE A MATURITY DATE" shall mean April 29, 2004.
"TRANCHE A TERM BORROWING" shall mean a Borrowing comprised of Tranche A
Term Loans.
"TRANCHE A TERM LOAN REPAYMENT DATE" shall have the meaning set forth in
Section 2.11(a)(i).
"TRANCHE A TERM LOANS" shall mean the terms loans made by the Lenders to
the Borrower pursuant to clause (a) of Section 2.01. Each Tranche A Term Loan
shall be either a Eurodollar Term Loan or an ABR Term Loan.
"TRANCHE B COMMITMENT" shall mean, with respect to each Lender, the
commitment of such Lender to make Tranche B Term Loans hereunder as set forth in
Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender
assumed its Tranche B Commitment, as applicable, as the same may be (a) reduced
from time to time pursuant to Section 2.09 and (b) reduced or increased from
time to time pursuant to assignments by or to such Lender pursuant to Section
9.04.
"TRANCHE B LENDERS" shall mean Lenders having outstanding Tranche B Term
Loans.
"TRANCHE B MATURITY DATE" shall mean April 29, 2005.
"TRANCHE B TERM BORROWING" shall mean a Borrowing comprised of Tranche B
Term Loans.
"TRANCHE B TERM LOAN REPAYMENT DATE" shall have the meaning set forth in
Section 2.11(a)(ii).
"TRANCHE B TERM LOANS" shall mean the term loans made by the Lenders to
the Borrower pursuant to clause (b) of Section 2.01. Each Tranche B Term Loan
shall be either a Eurodollar Term Loan or an ABR Term Loan.
"TRANSACTIONS" shall have the meaning assigned to such term in Section
3.02.
"TYPE", when used in respect of any Loan or Borrowing, shall refer to
the Rate by reference to which interest on such Loan or on the Loans comprising
such Borrowing is determined. For purposes hereof, the term "RATE" shall include
the Adjusted LIBO Rate and the Alternate Base Rate.
<PAGE>
"VOTING STOCK" of a corporation shall mean all classes of capital stock
of such corporation then-outstanding and normally entitled to vote in the
election of directors.
"WHOLLY OWNED SUBSIDIARY" of any person shall mean a subsidiary of such
person of which securities (except for directors' qualifying shares) or other
ownership interests representing 100% of the equity or 100% of the ordinary
voting power or 100% of the general partnership interests are, at the time any
determination is being made, owned, controlled or held by such person or one or
more wholly owned subsidiaries of such person or by such person and one or more
wholly owned subsidiaries of such person.
"WITHDRAWAL LIABILITY" shall mean liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Terms Generally . The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Except as otherwise
expressly provided herein, (a) any reference in this Agreement to any Loan
Document shall mean such document as amended, restated, supplemented or
otherwise modified from time to time and (b) all terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in effect from
time to time; PROVIDED, HOWEVER, that for purposes of determining compliance
with the covenants contained in Article VI, all accounting terms herein shall be
interpreted and all accounting determinations hereunder shall be made in
accordance with GAAP as in effect on the date of this Agreement and applied on a
basis consistent with the application used in the financial statements referred
to in Section 3.05(a). Notwithstanding the foregoing, other than for purposes of
the financial statements referred to in Sections 5.04(a) and (b) and except as
expressly set forth in clause (a) of the definition of Consolidated Net Income
and in clause (b) of the definition of Consolidated Capital Expenditures, in all
computations of Capital Expenditures, Consolidated EBITDA, Consolidated Interest
Expense, Consolidated Net Worth, Total Debt and all other "consolidated"
amounts, the assets, charges, expenses, income, indebtedness, liabilities,
losses, obligations, net worth, and all other relevant amounts concerning JAIX
Leasing shall not be consolidated, but shall instead be excluded.
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Lender
agrees, severally and not jointly, (a) to make a Tranche A Term Loan to the
Borrower on the Closing Date in a principal amount not to exceed its Tranche A
Commitment, (b) to make a Tranche B Term Loan to the Borrower on the Closing
Date in a principal amount not to exceed its Tranche B Commitment, and (c) to
make Revolving Loans to the Borrower, at any time and from time to time after
the Closing Date, and until the earlier of the Revolving Credit Maturity Date
and the termination of the Revolving Credit Commitment of such Lender in
accordance with the terms hereof, in an aggregate principal amount at any time
outstanding that will not result in such Lender's Revolving Credit Exposure
exceeding such Lender's Revolving Credit Commitment. Within the limits set forth
in clause (c) of the preceding sentence and subject to the terms, conditions and
limitations set forth herein, the Borrower may borrow, pay or prepay and
reborrow Revolving Loans. Amounts paid or prepaid in respect of Term Loans may
not be reborrowed.
<PAGE>
SECTION 2.02. Loans . (a) Each Loan (other than Swingline Loans) shall
be made as part of a Borrowing consisting of Loans made by the Lenders ratably
in accordance with their respective Tranche A Commitments, Tranche B Commitments
or Revolving Credit Commitments, as the case may be; PROVIDED, HOWEVER, that the
failure of any Lender to make any Loan shall not in itself relieve any other
Lender of its obligation to lend hereunder (it being understood, however, that
no Lender shall be responsible for the failure of any other Lender to make any
Loan required to be made by such other Lender). Except for Loans deemed made
pursuant to Section 2.02(f), the Loans comprising any Borrowing shall be in an
aggregate principal amount that is (i) an integral multiple of $1,000,000 and
not less than $5,000,000 or (ii) equal to the remaining available balance of the
applicable Commitments.
(b) Subject to Sections 2.08 and 2.15, each Borrowing shall be comprised
entirely of ABR Loans or Eurodollar Loans as the Borrower may request pursuant
to Section 2.03. Each Lender may at its option make any Eurodollar Loan by
causing any domestic or foreign branch or Affiliate of such Lender to make such
Loan; PROVIDED, HOWEVER, that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement. Borrowings of more than one Type may be outstanding at the same
time; PROVIDED, HOWEVER, that the Borrower shall not be entitled to request any
Borrowing that, if made, would result in more than 10 Eurodollar Borrowings
outstanding hereunder at any time. For purposes of the foregoing, Borrowings
having different Interest Periods, regardless of whether they commence on the
same date, shall be considered separate Borrowings.
(c) Each Lender shall make each Loan to be made by it hereunder on the
proposed date thereof by wire transfer of immediately available funds to such
account in New York City as the Administrative Agent may designate not later
than 12:00 (noon)., New York City time, and the Administrative Agent shall by
1:00 p.m., New York City time, credit the amounts so received to an account with
the Administrative Agent designated by the Borrower in the applicable Borrowing
Request, which account must be in the name of the Borrower or, if a Borrowing
shall not occur on such date because any condition precedent herein specified
shall not have been met, return the amounts so received to the respective
Lenders.
(d) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's portion of such Borrowing,
the Administrative Agent may assume that such Lender has made such portion
available to the Administrative Agent on the date of such Borrowing in
accordance with paragraph (c) above and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If the Administrative Agent shall have so made funds
available then, to the extent that such Lender shall not have made such portion
available to the Administrative Agent, such Lender and the Borrower severally
and not jointly agree to repay to the Administrative Agent forthwith on demand
such corresponding amount together with interest thereon, for each day from the
date such amount is made available to the Borrower until (but not including) the
date such amount is repaid to the Administrative Agent at (i) in the case of the
Borrower, the interest rate applicable at the time to the Loans comprising such
Borrowing and (ii) in the case of such Lender, the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation. If such Lender shall
repay to the Administrative Agent such corresponding amount, such amount shall
constitute such Lender's Loan as part of such Borrowing for purposes of this
Agreement.
(e) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request any Revolving Credit Borrowing, Tranche A Term
Borrowing or Tranche B Term Borrowing if the Interest Period requested with
respect thereto would end after the Revolving Credit Maturity Date, the Tranche
A Maturity Date or the Tranche B Maturity Date, respectively.
<PAGE>
(f) If the Issuing Bank shall not have received from the Borrower the
payment required to be made by Section 2.23(e) within the time specified in such
Section, the Issuing Bank will promptly notify the Administrative Agent of the
L/C Disbursement and the Administrative Agent will promptly notify each
Revolving Credit Lender of such L/C Disbursement and its Pro Rata Percentage
thereof. Each Revolving Credit Lender shall pay by wire transfer of immediately
available funds to the Administrative Agent not later than 3:00 p.m., New York
City time, on such date (or, if such Revolving Credit Lender shall have received
such notice later than 1:00 p.m., New York City time, on any day, not later than
10:00 a.m., New York City time, on the immediately following Business Day), an
amount equal to such Lender's Pro Rata Percentage of such L/C Disbursement (it
being understood that such amount shall be deemed to constitute an ABR Revolving
Loan of such Lender and such payment shall be deemed to have reduced the L/C
Exposure by the amount of such payment), and the Administrative Agent will
promptly pay to the Issuing Bank amounts so received by it from the Revolving
Credit Lenders. The Administrative Agent will promptly pay to the Issuing Bank
any amounts received by it from the Borrower pursuant to Section 2.23(e) prior
to the time that any Revolving Credit Lender makes any payment pursuant to this
paragraph (f); any such amounts received by the Administrative Agent thereafter
will be promptly remitted by the Administrative Agent to the Revolving Credit
Lenders that shall have made such payments and to the Issuing Bank, as their
interests may appear. If any Revolving Credit Lender shall not have made its Pro
Rata Percentage of such L/C Disbursement available to the Administrative Agent
as provided above, such Lender and the Borrower severally and not jointly agree
to pay interest on such amount, for each day from and including the date such
amount is required to be paid in accordance with this paragraph to but excluding
the date such amount is paid, to the Administrative Agent at (i) in the case of
the Borrower, a rate per annum equal to the interest rate applicable to
Revolving Loans pursuant to Section 2.06, and (ii) in the case of such Lender,
the greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation.
SECTION2.03. Borrowing Procedure. In order to request a Borrowing (other
than a Swingline Loan or a deemed Borrowing pursuant to Section 2.02(f), as to
which this Section 2.03 shall not apply), the Borrower shall hand deliver or
telecopy to the Administrative Agent a duly completed Borrowing Request (or make
such request telephonically, promptly confirmed in writing or by telecopy) (a)
in the case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City
time, three Business Days before a proposed Borrowing, and (b) in the case of an
ABR Borrowing, not later than 12:00 noon, New York City time, one Business Day
before a proposed Borrowing. Each Borrowing Request shall be irrevocable, shall
be signed by or on behalf of the Borrower and shall specify the following
information: (i) whether the Borrowing then being requested is to be a Term
Borrowing or a Revolving Credit Borrowing, and whether such Borrowing is to be a
Eurodollar Borrowing or an ABR Borrowing; (ii) the date of such Borrowing (which
shall be a Business Day), (iii) the number and location of the account to which
funds are to be disbursed (which shall be an account that complies with the
requirements of Section 2.02(c)); (iv) the amount of such Borrowing; and (v) if
such Borrowing is to be a Eurodollar Borrowing, the Interest Period with respect
thereto; PROVIDED, HOWEVER, that, notwithstanding any contrary specification in
any Borrowing Request, each requested Borrowing shall comply with the
requirements therefor set forth in Section 2.02. If no election as to the Type
of Borrowing is specified in any such notice, then the requested Borrowing shall
be an ABR Borrowing. If no Interest Period with respect to any Eurodollar
Borrowing is specified in any such notice, then the Borrower shall be deemed to
have selected an Interest Period of one month's duration. The Administrative
Agent shall promptly advise the applicable Lenders of any notice given pursuant
to this Section 2.03 (and the contents thereof), and of each Lender's portion of
the requested Borrowing.
SECTION 2.04. Evidence of Debt; Repaymentof Loans . (a) The Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of each applicable Lender (i) the then unpaid principal amount of each
Term Loan as provided in Section 2.11, (ii) the then unpaid principal amount of
each Revolving Loan on the Revolving Credit Maturity Date and (iii) the then
unpaid principal amount of each Swingline Loan on the Revolving Credit Maturity
Date.
<PAGE>
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender from time to time, including the
amounts of principal and interest payable and paid such Lender from time to time
under this Agreement.
(c) The Administrative Agent shall maintain accounts in which it will
record (i) the amount of each Loan made hereunder, the Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder from the Borrower and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraphs
(b) and (c) above shall, absent manifest error, be prima facie evidence of the
existence and amounts of the obligations therein recorded; PROVIDED, HOWEVER,
that the failure of any Lender or the Administrative Agent to maintain such
accounts or any error therein shall not in any manner affect the obligations of
the Borrower to repay the Loans in accordance with their terms.
(e) Notwithstanding any other provision of this Agreement, in the event
any Lender shall request and receive a promissory note payable to such Lender
and its registered assigns, the interests represented by such note shall at all
times (including after any assignment of all or part of such interests pursuant
to Section 9.04) be represented by one or more promissory notes payable to the
payee named therein or its registered assigns.
SECTION 2.05. Fees . (a) The Borrower agrees to pay to each Lender,
through the Administrative Agent, on the last day of March, June, September and
December in each year and on each date on which any Commitment of such Lender
shall expire or be terminated as provided herein, a commitment fee (a
"COMMITMENT FEE") equal to the Commitment Fee Percentage per annum in effect
from time to time on the average daily unused amount (treating L/C Exposure as
usage of the Revolving Credit Commitments) of the Commitments of such Lender
(other than the Swingline Commitment) during the preceding quarter (or other
period commencing with the date hereof or ending with the date on which any of
such Commitments of such Lender shall expire or be terminated). All Commitment
Fees shall be computed on the basis of the actual number of days elapsed in a
year of 360 days. The Commitment Fee due to each Lender shall commence to accrue
on the date hereof and shall cease to accrue on the date on which such
Commitment of such Lender shall expire or be terminated as provided herein. For
purposes of calculating Commitment Fees only, no portion of the Revolving Credit
Commitments shall be deemed utilized under Section 2.17 as a result of
outstanding Swingline Loans.
(b) The Borrower agrees to pay to the Administrative Agent, for its own
account, the administrative fees set forth in the Fee Letter at the times and in
the amounts specified therein (the "ADMINISTRATIVE AGENT FEES").
(c) The Borrower agrees to pay (i) to each Revolving Credit Lender,
through the Administrative Agent, on the last day of March, June, September and
December of each year and on the date on which the Revolving Credit Commitment
of such Lender shall be terminated as provided herein, a fee (an "L/C
PARTICIPATION FEE") calculated on such Lender's Pro Rata Percentage of the
average daily aggregate L/C Exposure (excluding the portion thereof attributable
to unreimbursed L/C Disbursements) during the preceding quarter (or shorter
period commencing with the date hereof or ending with the Revolving Credit
Maturity Date or the date on which all Letters of Credit have been canceled or
have expired and the Revolving Credit Commitments of all Lenders shall have been
terminated) at a rate per annum equal to the LIBOR Spread from time to time used
to determine the interest rate on Revolving Credit Borrowings comprised of
Eurodollar Loans pursuant to Section 2.06, and (ii) to the Issuing Bank with
respect to each Letter of Credit the fronting fees set forth in the Fee Letter
plus, in connection with the issuance, amendment or transfer of any Letter of
Credit or any L/C Disbursement, the Issuing Bank's customary documentary and
processing charges (collectively, the "ISSUING BANK FEES"). All L/C
Participation Fees and Issuing Bank Fees shall be computed on the basis of the
actual number of days elapsed in a year of 360 days.
<PAGE>
(d) All Fees shall be paid on the dates due, in immediately available
funds, to the Administrative Agent for distribution, if and as appropriate,
among the Lenders, except that the Issuing Bank Fees shall be paid directly to
the Issuing Bank. All Fees shall be billed to the Borrower in advance of the due
dates thereof and, once paid, none of the Fees shall be refundable under any
circumstances except for manifest error in the calculation thereof.
SECTION 2.06. Interest on Loans . (a) Subject to the provisions of
Section 2.07, the Loans comprising each ABR Borrowing, including each Swingline
Loan, shall bear interest (computed on the basis of the actual number of days
elapsed over a year of 365 or 366 days, as the case may be, when the Alternate
Base Rate is determined by reference to the Prime Rate and over a year of 360
days at all other times) at a rate per annum equal to the Alternate Base Rate
plus the ABR Spread in effect at such time with respect to such Loans.
(b) Subject to the provisions of Section 2.07, the Loans comprising each
Eurodollar Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 360 days) at a rate per annum equal to the
Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the
LIBOR Spread in effect at such time with respect to such Loans.
(c) So long as no Event of Default shall have occurred and be
continuing, on each occasion that, as of the last day of any fiscal quarter
ending on or after June 30, 1999, the Total Debt Ratio shall fall within one of
the Categories set forth in the table below, the ABR Spread and the LIBOR Spread
in respect of Tranche A Term Loans and Revolving Loans and the Commitment Fee
Percentage shall be automatically changed, if necessary, to reflect the
percentages indicated for such Category on the table below, with any such change
to be effective on and after the date of delivery to the Administrative Agent of
the financial statements and certificate described in Section 5.04(a) or (b), as
applicable, and Section 5.04(c), respectively, relating to such fiscal quarter.
<TABLE>
===================================== ------------------ ---------------- =================
<S> <C> <C> <C>
CATEGORY ABR SPREAD LIBOR COMMITMENT FEE
SPREAD PERCENTAGE
===================================== ------------------ ---------------- =================
CATEGORY 1 1.50% 2.50% 0.50%
Equal to or greater than 3:00 to
1:00
===================================== ------------------ ---------------- =================
CATEGORY 2 1.25% 2.25% 0.50%
Equal to or greater than 2.50 to
1.00 but less than 3.00 to 1.00
===================================== ------------------ ---------------- =================
CATEGORY 3 1.00% 2.00% 0.50%
Equal to or greater than 2.25 to
1.00 but less than 2.50 to 1.00
===================================== ------------------ ---------------- =================
CATEGORY 4 0.75% 1.75% 0.50%
Equal to or greater than 2.00 to
1.00
but less than 2.25 to 1.00
===================================== ================== ================ =================
CATEGORY 5 0.50% 1.50% 0.375%
Less than 2.00 to 1.00
===================================== ================== ================ =================
</TABLE>
<PAGE>
In the event that any condition that gives rise to any change in a Category
pursuant to the first sentence of this Section 2.06(c) is no longer satisfied as
of the end of any subsequent fiscal quarter, on and after the date of delivery
to the Administrative Agent of the certificate described in Section 5.04(c)
relating to such subsequent fiscal quarter, the ABR Spread, the LIBOR Spread and
the Commitment Fee Percentage shall be automatically changed to reflect the
Category indicated by such certificate. Notwithstanding the foregoing, at any
time during which the Borrower has failed to deliver the certificate described
in Section 5.04(c) with respect to a fiscal quarter in accordance with the
provisions thereof, or at any time that an Event of Default shall have occurred
and shall be continuing, the ABR Spread, the LIBOR Spread and the Commitment Fee
Percentage shall be determined by reference to the definition of such terms,
without any adjustment pursuant to this Section, until such time as the Borrower
shall deliver such certificate in accordance with the provisions of Section
5.04(c) or such Event of Default shall be cured or waived.
(d) Interest on each Loan shall be payable on the Interest Payment Dates
applicable to such Loan except as otherwise provided in this Agreement. The
applicable Alternate Base Rate or Adjusted LIBO Rate for each Interest Period or
day within an Interest Period, as the case may be, shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest
error.
SECTION 2.07. Default Interest . If the Borrower shall default in the
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder, by acceleration or otherwise, or under any other Loan Document,
the Borrower shall on demand from time to time pay interest, to the extent
permitted by law, on such defaulted amount to but excluding the date of actual
payment (after as well as before judgment) (a) in the case of overdue principal,
at the rate otherwise applicable to such Loan pursuant to Section 2.06 plus
2.00% per annum and (b) in all other cases, at a rate per annum (computed on the
basis of the actual number of days elapsed over a year of 365 or 366 days, as
the case may be, when determined by reference to the Prime Rate and over a year
of 360 days at all other times) equal to the sum of the Alternate Base Rate plus
2.00%.
SECTION 2.08. Alternate Rate of Interest . In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Administrative Agent reasonably
shall have determined that dollar deposits in the principal amounts of the Loans
comprising such Borrowing are not generally available in the London interbank
market, or that the rates at which such dollar deposits are being offered will
not adequately and fairly reflect the cost to any Lender of making or
maintaining its Eurodollar Loan during such Interest Period, or that reasonable
means do not exist for ascertaining the Adjusted LIBO Rate, the Administrative
Agent shall, as soon as practicable thereafter, give written or telecopy notice
of such determination to the Borrower and the Lenders. In the event of any such
determination, until the Administrative Agent shall have advised the Borrower
and the Lenders that the circumstances giving rise to such notice no longer
exist, any request by the Borrower for a Eurodollar Borrowing pursuant to
Section 2.03 or 2.10 shall be deemed to be a request for an ABR Borrowing. Each
determination by the Administrative Agent hereunder shall be conclusive absent
manifest error.
SECTION 2.09. Termination and Reduction of Commitments . (a) The Term
Loan Commitments shall automatically terminate at 5:00 p.m., New York City time,
on the Closing Date. The Revolving Credit Commitments, the Swingline Commitment
and the L/C Commitment shall automatically terminate on the Revolving Credit
Maturity Date. Notwithstanding the foregoing, all the Commitments shall
automatically terminate at 5:00 p.m., New York City time, on May 15, 1999, if
the initial Credit Event shall not have occurred by such time.
(b) Upon at least three Business Days' prior irrevocable written or
telecopy notice to the Administrative Agent, the Borrower may at any time in
whole permanently terminate, or from time to time in part permanently reduce,
the Term Loan Commitments or the Revolving Credit Commitments; PROVIDED,
HOWEVER, that (i) each partial reduction of the Term Loan Commitments or the
Revolving Credit Commitments shall be in an integral multiple of $1,000,000 and
in a minimum amount of $5,000,000 or, if lesser, the then-outstanding Revolving
Credit Commitments and (ii) the Total Revolving Credit Commitment shall not be
reduced to an amount that is less than the sum of the Aggregate Revolving Credit
Exposure at the time.
<PAGE>
(c) Each reduction in the Term Loan Commitments or the Revolving Credit
Commitments hereunder shall be made ratably among the Lenders in accordance with
their respective applicable Commitments. The Borrower shall pay to the
Administrative Agent for the account of the applicable Lenders, on the date of
each termination or reduction, the Commitment Fees on the amount of the
Commitments so terminated or reduced accrued to but excluding the date of such
termination or reduction.
SECTION 2.10. Conversion and Continuation of Borrowings . The Borrower
shall have the right at any time upon prior irrevocable notice to the
Administrative Agent (a) not later than 12:00 (noon), New York City time, one
Business Day prior to conversion, to convert any Eurodollar Borrowing into an
ABR Borrowing, (b) not later than 11:00 a.m., New York City time, three Business
Days prior to conversion or continuation, to convert any ABR Borrowing into a
Eurodollar Borrowing or to continue any Eurodollar Borrowing as a Eurodollar
Borrowing for an additional Interest Period, and (c) not later than 11:00 a.m.,
New York City time, three Business Days prior to conversion, to convert the
Interest Period with respect to any Eurodollar Borrowing to another permissible
Interest Period, subject in each case to the following:
(i) each conversion or continuation shall be made pro rata among
the Lenders in accordance with the respective principal amounts
of the Loans comprising the converted or continued Borrowing;
(ii) if less than all the outstanding principal amount of any
Borrowing shall be converted or continued, then each resulting
Borrowing shall satisfy the limitations specified in Sections
2.02(a) and 2.02(b) regarding the principal amount and maximum
number of Borrowings of the relevant Type;
(iii) each conversion shall be effected by each Lender and the
Administrative Agent by recording for the account of such Lender
the new Loan of such Lender resulting from such conversion and
reducing the Loan (or portion thereof) of such Lender being
converted by an equivalent principal amount; accrued interest on
any Eurodollar Loan (or portion thereof) being converted shall be
paid by the Borrower at the time of conversion;
(iv) if any Eurodollar Borrowing is converted at a time other than
the end of the Interest Period applicable thereto, the Borrower
shall pay, upon demand, any amounts due to the Lenders pursuant
to Section 2.16;
(v) any portion of a Borrowing maturing or required to be repaid in
less than one month may not be converted into or continued as a
Eurodollar Borrowing;
(vi) any portion of a Eurodollar Borrowing that cannot be converted
into or continued as a Eurodollar Borrowing by reason of the
immediately preceding clause shall be automatically converted at
the end of the Interest Period in effect for such Borrowing into
an ABR Borrowing;
<PAGE>
(vii) no Interest Period may be selected for any Eurodollar Term
Borrowing that would end later than a Term Loan Repayment Date
occurring on or after the first day of such Interest Period if,
after giving effect to such selection, the aggregate outstanding
amount of (A) the Eurodollar Term Borrowings with Interest
Periods ending on or prior to such Term Loan Repayment Date and
(B) the ABR Term Borrowings would not be at least equal to the
principal amount of Term Borrowings to be paid on such Term Loan
Repayment Date; and
(vii) upon notice to the Borrower from the Administrative Agent on
behalf of the Required Lenders after the occurrence and during
the continuance of a Default or Event of Default, no outstanding
Loan may be converted into, or continued as, a Eurodollar Loan.
Each notice pursuant to this Section 2.10 shall be irrevocable and shall
refer to this Agreement and specify (i) the identity and amount of the Borrowing
that the Borrower requests be converted or continued, (ii) whether such
Borrowing is to be converted to or continued as a Eurodollar Borrowing or an ABR
Borrowing, (iii) if such notice requests a conversion, the date of such
conversion (which shall be a Business Day) and (iv) if such Borrowing is to be
converted to or continued as a Eurodollar Borrowing, the Interest Period with
respect thereto. If no Interest Period is specified in any such notice with
respect to any conversion to or continuation as a Eurodollar Borrowing, the
Borrower shall be deemed to have selected an Interest Period of one month's
duration. The Administrative Agent shall advise the Lenders of any notice given
pursuant to this Section 2.10 and of each Lender's portion of any converted or
continued Borrowing. If the Borrower shall not have given notice in accordance
with this Section 2.10 to continue any Borrowing into a subsequent Interest
Period (and shall not otherwise have given notice in accordance with this
Section 2.10 to convert such Borrowing), such Borrowing shall, at the end of the
Interest Period applicable thereto (unless repaid pursuant to the terms hereof),
automatically be continued into a new Interest Period as an ABR Borrowing.
SECTION 2.11. Repayment of Term Borrowings . (a) (i) The Borrower shall
pay to the Administrative Agent, for the account of the Tranche A Lenders, on
the dates set forth below or, if any such date is not a Business Day, on the
next succeeding Business Day (each such date being a "TRANCHE A TERM LOAN
REPAYMENT DATE"), a principal amount of the Tranche A Term Loans equal to the
amount set forth below for such date (subject to adjustment from time to time
pursuant to Sections 2.11(b), 2.12 and 2.13(g)), together in each case with
accrued and unpaid interest on the principal amount to be paid to but excluding
the date of such payment:
DATE AMOUNT
September 30, 1999 2,000,000
December 31, 1999 2,000,000
March 31, 2000 2,000,000
June 30, 2000 2,000,000
September 30, 2000 2,000,000
December 31, 2000 2,000,000
March 31, 2001 2,000,000
June 30, 2001 2,000,000
September 30, 2001 2,500,000
December 31, 2001 2,500,000
March 31, 2002 2,500,000
June 30, 2002 2,500,000
September 30, 2002 2,500,000
December 31, 2002 2,500,000
March 31, 2003 2,500,000
June 30, 2003 2,500,000
September 30, 2003 3,500,000
December 31, 2003 3,500,000
March 31, 2004 3,500,000
Tranche A Maturity Date 3,500,000
(ii) The Borrower shall pay to the Administrative Agent, for the account
of the Tranche B Lenders, on the dates set forth below or, if any such date is
not a Business Day, on the next succeeding Business Day (each such date being a
"TRANCHE B TERM LOAN REPAYMENT DATE"), a principal amount of the Tranche B Term
Loans equal to the amount set forth below for such date (subject to adjustment
from time to time pursuant to Sections 2.11(b), 2.12 and 2.13(g)), together in
each case with accrued and unpaid interest on the principal amount to be paid to
but excluding the date of such payment:
<PAGE>
DATE AMOUNT
September 30, 1999 125,000
December 31, 1999 125,000
March 31, 2000 125,000
June 30, 2000 125,000
September 30, 2000 125,000
December 31, 2000 125,000
March 31, 2001 125,000
June 30, 2001 125,000
September 30, 2001 125,000
December 31, 2001 125,000
March 31, 2002 125,000
June 30, 2002 125,000
September 30, 2002 125,000
December 31, 2002 125,000
March 31, 2003 125,000
June 30, 2003 125,000
September 30, 2003 125,000
December 31, 2003 125,000
March 31, 2004 125,000
June 30, 2004 125,000
September 30, 2004 5,000,000
December 31, 2004 5,000,000
March 31, 2005 5,000,000
Tranche B Maturity Date 32,500,000
(b) In the event and on each occasion that any Term Loan Commitments
shall be reduced or shall expire or terminate other than as a result of the
making of any Term Loans, the installments of principal due in respect of such
Term Loans on each Term Loan Repayment Date shall be reduced pro rata by an
aggregate amount equal to the amount of such reduction, expiration or
termination.
(c) To the extent not previously paid, all Tranche A Term Loans and
Tranche B Term Loans shall be due and payable on the Tranche A Maturity Date and
the Tranche B Maturity Date, respectively, together with accrued and unpaid
interest on the principal amount to be paid to but excluding the date of
payment.
(d) All repayments pursuant to this Section 2.11 shall be subject to
Section 2.16, but shall otherwise be without premium or penalty.
SECTION 2.12. Optional Prepayment. (a) The Borrower shall have the right
at any time and from time to time to prepay any Borrowing, in whole or in part,
upon written or telecopy notice (or telephonic notice promptly confirmed by
written or telecopy notice) delivered to the Administrative Agent before 11:00
a.m., New York City time, (i) at least three Business Days prior to the date
designated for such prepayment in the case of any prepayment of a Eurodollar
Borrowing or (ii) at least one Business Day prior to the date designated for
such prepayment in the case of any prepayment of an ABR Borrowing; PROVIDED,
HOWEVER, that each partial prepayment shall be in an amount that is an integral
multiple of $1,000,000 and not less than $5,000,000.
(b) Optional prepayments of Term Loans shall be allocated pro rata
between the then-outstanding Tranche A Term Loans and Tranche B Term Loans and,
at the option of the Borrower, (i) applied pro rata against the remaining
scheduled installments of principal due in respect of the Tranche A Term Loans
and Tranche B Term Loans under Sections 2.11(a)(i) and (ii), respectively, or
(ii) FIRST, applied against the scheduled installments of principal, if any, of
Tranche A Term Loans and Tranche B Term Loans due on any Term Loan Repayment
Date occurring within six months of the date of such prepayment and SECOND,
applied pro rata against the remaining scheduled installments of principal due
in respect of the Tranche A Term Loans and Tranche B Term Loans under Sections
2.11(a)(i) and (ii), respectively.
<PAGE>
(c) Each notice of prepayment shall specify the prepayment date and the
principal amount of each Borrowing (or portion thereof) to be prepaid, shall be
irrevocable and shall commit the Borrower to prepay such Borrowing by the amount
stated therein on the date stated therein. All prepayments under this Section
2.12 shall be subject to Section 2.16 but otherwise without premium or penalty.
All prepayments of Eurodollar Borrowings under this Section 2.12 shall be
accompanied by accrued interest on the principal amount being prepaid to the
date of payment.
SECTION 2.13. Mandatory Prepayments. (a) In the event of any termination
of all the Revolving Credit Commitments, the Borrower shall repay or prepay all
its outstanding Revolving Credit Borrowings and all outstanding Swingline Loans
on the date of such termination. In the event of any partial reduction of the
Revolving Credit Commitments, then (i) at or prior to the effective date of such
reduction or termination, the Administrative Agent shall notify the Borrower and
the Revolving Credit Lenders of the Aggregate Revolving Credit Exposure after
giving effect thereto and (ii) if the Aggregate Revolving Credit Exposure would
exceed the Total Revolving Credit Commitment after giving effect to such
reduction or termination, then the Borrower shall, on the date of such reduction
or termination, repay or prepay Revolving Credit Borrowings or Swingline Loans
(or a combination thereof) in an amount sufficient to eliminate such excess.
(b) Not later than the fifth Business Day following the completion of
any Asset Sale, the Borrower shall apply 100% of the Net Cash Proceeds received
with respect thereto to prepay outstanding Term Loans in accordance with
Sections 2.13(f) and (h); PROVIDED, however, that the Borrower shall not be
required to comply with this Section 2.13(b) until such time as the Net Cash
Proceeds from all Asset Sales received and not otherwise applied to prepay Term
Loans in accordance with this Section 2.13(b) exceeds $2,500,000 (and at such
time the Borrower shall so apply all such Net Cash Proceeds and, after each such
application, shall not be required to comply with the provisions of this
paragraph (b) until such time as such received but unapplied Net Cash Proceeds
again exceeds $2,500,000).
(c) Not later than the earlier of (i) 100 days after the end of each
fiscal year of the Borrower, commencing with the fiscal year ending on December
31, 2000, and (ii) ten days after the date on which the financial statements
with respect to such period are delivered pursuant to Section 5.04(a), the
Borrower shall prepay outstanding Term Loans in accordance with Sections 2.13(f)
and (h) in an aggregate principal amount equal to (A) 25% of Excess Cash Flow
for the fiscal year then ended if the Total Debt Ratio at the end of such fiscal
year was equal to or less than 2:00 to 1:00, (B) 50% of Excess Cash Flow for the
fiscal year then ended if the Total Debt Ratio at the end of such fiscal year
was greater than 2:00 to 1:00 but equal to or less than 3:00 to 1:00 and (C) 75%
of Excess Cash Flow for the fiscal year then ended if the Total Debt Ratio at
the end of such fiscal year was greater than 3:00 to 1:00; PROVIDED, HOWEVER,
that the amount required to be prepaid pursuant to clause (A), (B) or (C) will
be reduced by the amount of any optional prepayments of the principal of Loans
made during the fiscal year then ended, but only to the extent that such
prepayments cannot by their terms be reborrowed or redrawn and do not occur in
connection with a refinancing of all or any portion of such Loans.
(d) In the event that any Loan Party or any subsidiary of any Loan Party
shall receive Net Cash Proceeds from the issuance or other disposition of
Indebtedness for borrowed money of any Loan Party or any subsidiary of any Loan
Party (other than Indebtedness for borrowed money permitted pursuant to Section
6.01), the Borrower shall, substantially simultaneously with (and in any event
not later than the third Business Day next following) the receipt of such Net
Cash Proceeds by such Loan Party or subsidiary, apply an amount equal to 100% of
such Net Cash Proceeds to prepay outstanding Term Loans in accordance with
Sections 2.13(f) and (h).
<PAGE>
(e) In the event that there shall occur any Casualty or Condemnation
and, pursuant to Section 5.12, the Insurance Proceeds or Condemnation Proceeds,
as the case may be, are required to be used to prepay the Term Loans, then the
Borrower shall apply an amount equal to 100% of such Insurance Proceeds or
Condemnation Proceeds (in each case, net of taxes and other obligations required
to be paid out of such proceeds in accordance with the terms of the agreements
governing such obligations and this Agreement and the other Loan Documents), as
the case may be, to prepay outstanding Term Loans in accordance with Sections
2.13(f) and (h).
(f) Mandatory prepayments of outstanding obligations under this
Agreement pursuant to paragraphs (b) through (e) above shall, be allocated pro
rata between the then-outstanding Tranche A Term Loans and Tranche B Term Loans,
and at the option of the Borrower, (i) applied pro rata against the remaining
scheduled installments of principal due in respect of Tranche A Term Loans and
Tranche B Term Loans under Sections 2.11(a)(i) and (ii), respectively, or (ii)
FIRST, applied against the scheduled installments of principal, if any, of
Tranche A Term Loans and Tranche B Term Loans due on any Term Loan Repayment
Date occurring within six months of the date of such prepayment and SECOND,
applied pro rata against the remaining scheduled installments of principal due
in respect of Tranche A Term Loans and Tranche B Term Loans under Sections
2.11(a)(i) and (ii), respectively.
(g) The Borrower shall deliver to the Administrative Agent, (i) at the
time of each prepayment required under paragraphs (b) through (e) above, a
certificate signed by a Financial Officer of the Borrower setting forth in
reasonable detail the calculation of the amount of such prepayment and (ii) to
the extent reasonably practicable, at least three Business Days prior to the
time of each prepayment required under this Section 2.13, a notice of such
prepayment. Each notice of prepayment shall specify the prepayment date, the
Type of each Loan being prepaid and the principal amount of each Loan (or
portion thereof) to be prepaid. All prepayments of Borrowings under this Section
2.13 shall be subject to Section 2.16, but shall otherwise be without premium or
penalty.
(h) Amounts to be applied pursuant to this Section 2.13 to the
prepayment of Term Loans and Revolving Loans shall be applied, as applicable,
first to reduce outstanding ABR Loans. Any amounts remaining after each such
application shall, at the option of the Borrower, be applied to prepay
Eurodollar Loans immediately and/or shall be deposited in the Prepayment Account
(as defined below) for deferred application to Eurodollar Loans or other
Obligations as described below. The Administrative Agent shall apply any cash
deposited in the Prepayment Account to prepay Eurodollar Loans on the last day
of their respective Interest Periods (or, at the direction of the Borrower, on
any earlier date, subject to Section 2.16) until all outstanding Term Loans or
Revolving Loans, as the case may be, have been prepaid or until all the
allocable cash on deposit with respect to such Loans has been exhausted. For
purposes of this Agreement, the term "PREPAYMENT ACCOUNT" shall mean an account
established by the Borrower with the Administrative Agent and over which the
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal for application in accordance with this paragraph
(h). The Administrative Agent will, at the request of the Borrower, invest
amounts on deposit in the Prepayment Account in Permitted Investments that
mature prior to the last day of the applicable Interest Periods of the
Eurodollar Borrowings to be prepaid; PROVIDED, HOWEVER, that (i) the
Administrative Agent shall not be required to make any investment that, in its
sole judgment, would require or cause the Administrative Agent to be in, or
would result in any, violation of any law, statute, rule or regulation and (ii)
the Administrative Agent shall have no obligation to invest amounts on deposit
in the Prepayment Account in any investments other than overnight Permitted
Investments if a Default or Event of Default shall have occurred and be
continuing. The Borrower shall indemnify the Administrative Agent for any losses
relating to such investments so that the amount available to prepay Eurodollar
Borrowings on the last day of the applicable Interest Period is not less than
the amount that would have been available had such investments not been made
pursuant to this paragraph (h). Other than any interest earned on such
investments, the Prepayment Account shall not bear interest. Interest or
profits, if any, on such investments shall be deposited in the Prepayment
Account and reinvested and disbursed as specified above. If the maturity of the
Loans has been accelerated pursuant to Article VIII, the Administrative Agent
may, in its sole discretion, apply in accordance with the terms hereof and the
other Loan Documents all amounts on deposit in the Prepayment Account to satisfy
any of the Obligations. The Borrower hereby grants to the Administrative Agent,
for its benefit and the benefit of the Issuing Bank, the Swingline Lender and
the Lenders, a security interest in the Prepayment Account to secure the
Obligations.
<PAGE>
SECTION 2.14. Reserve Requirements; Change in Circumstances . (a)
Notwithstanding any other provision of this Agreement, if after the date of this
Agreement any change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Lender or the Issuing
Bank of the principal of or interest on any Eurodollar Loan made by such Lender
or any Fees or other amounts payable hereunder (other than changes in respect of
taxes imposed on the overall net income of such Lender or the Issuing Bank by
the jurisdiction in which such Lender or the Issuing Bank is organized, has its
applicable lending office or has its principal office or by any political
subdivision thereof or taxing authority therein), or shall impose, modify or
deem applicable any reserve, special deposit or similar requirement against
assets of, deposits with or for the account of or credit extended by any Lender
or the Issuing Bank (except any such reserve requirement or assessment which is
reflected in the Adjusted LIBO Rate or the Alternate Base Rate) or shall impose
on such Lender or the Issuing Bank or the London interbank market any other
condition affecting this Agreement or Eurodollar Loans made by such Lender or
any Letter of Credit or participation therein, and the result of any of the
foregoing shall be to increase the cost to such Lender or the Issuing Bank of
making or maintaining any Eurodollar Loan or increase the cost to any Lender of
issuing or maintaining any Letter of Credit or purchasing or maintaining a
participation therein or to reduce the amount of any sum received or receivable
by such Lender or the Issuing Bank hereunder (whether of principal, interest or
otherwise) by an amount reasonably deemed by such Lender or the Issuing Bank to
be material, then the Borrower will pay to such Lender or the Issuing Bank, as
the case may be, within 10 days of demand by such Lender or the Issuing Bank,
such additional amount or amounts as will compensate such Lender or the Issuing
Bank, as the case may be, for such additional costs incurred or reduction
suffered.
(b) If any Lender or the Issuing Bank shall have determined that the
adoption after the date hereof of any law, rule, regulation, agreement or
guideline regarding capital adequacy, or any change after the date hereof in any
such law, rule, regulation, agreement or guideline (whether such law, rule,
regulation, agreement or guideline has been adopted) or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by any Lender (or any
lending office of such Lender) or the Issuing Bank or any Lender's or the
Issuing Bank's holding company with any request or directive issued, changed or
interpreted after the date hereof regarding capital adequacy (whether or not
having the force of law) of any Governmental Authority has or would have the
effect of reducing the rate of return on such Lender's or the Issuing Bank's
capital or on the capital of such Lender's or the Issuing Bank's holding
company, if any, as a consequence of this Agreement or the Loans made or
participations in Letters of Credit purchased by such Lender pursuant hereto or
the Letters of Credit issued by the Issuing Bank pursuant hereto to a level
below that which such Lender or the Issuing Bank or such Lender's or the Issuing
Bank's holding company could have achieved but for such applicability, adoption,
change or compliance (taking into consideration such Lender's or the Issuing
Bank's policies and the policies of such Lender's or the Issuing Bank's holding
company with respect to capital adequacy) by an amount reasonably deemed by such
Lender or the Issuing Bank to be material, then from time to time, within 10
days of demand by such Lender or the Issuing Bank, the Borrower shall pay to
such Lender or the Issuing Bank, as the case may be, such additional amount or
amounts as will compensate such Lender or the Issuing Bank or such Lender's or
the Issuing Bank's holding company for any such reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or the Issuing Bank or its
holding company, as applicable, as specified in paragraph (a) or (b) above, and
setting forth in reasonable detail the basis and computation of the amount
claimed, shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender or the Issuing Bank the
amount shown as due on any such certificate delivered by it within 10 days after
its receipt of the same.
(d) Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital determined in accordance with the
terms hereof shall not constitute a waiver of such Lender's or the Issuing
Bank's right to demand such compensation, except that no Lender or the Issuing
Bank shall be entitled to compensation under this Section 2.14 for any costs
incurred or reduction suffered with respect to any date unless such Lender or
the Issuing Bank, as applicable, shall have notified the Borrower that it will
demand compensation for such costs or reductions under paragraph (c) above, not
more than six months after the later of (i) such date and (ii) the date on which
such Lender or the Issuing Bank, as applicable, shall have become aware of such
costs or reductions. The protection of this Section shall be available to each
Lender and the Issuing Bank regardless of any possible contention of the
invalidity or inapplicability of the law, rule, regulation, agreement, guideline
or other change or condition that shall have occurred or been imposed.
SECTION 2.15. Change in Legality . (a) Notwithstanding any other
provision of this Agreement, if, after the date hereof, any change in any law or
regulation or in the interpretation thereof by any Governmental Authority
charged with the administration or interpretation thereof shall make it unlawful
for any Lender to make or maintain any Eurodollar Loan or to give effect to its
obligations as contemplated hereby with respect to any Eurodollar Loan, then, by
written notice to the Borrower and to the Administrative Agent:
(i) such Lender may declare that Eurodollar Loans will not
thereafter (for the duration of such unlawfulness) be made by
such Lender hereunder (or be continued for additional Interest
Periods and ABR Loans will not thereafter (for such duration) be
converted into Eurodollar Loans), whereupon any request for a
Eurodollar Borrowing (or to convert an ABR Borrowing to a
Eurodollar Borrowing or to continue a Eurodollar Borrowing, for
an additional Interest Period) shall, as to such Lender only, be
deemed a request for an ABR Loan (or a request to continue an ABR
Loan as such for an additional Interest Period or to convert a
Eurodollar Loan into an ABR Loan, as the case may be), unless
such declaration shall be subsequently withdrawn; and
(ii) such Lender may require that all outstanding Eurodollar Loans
made by it be converted to ABR Loans, in which event all such
Eurodollar Loans shall be automatically converted to ABR Loans as
of the effective date of such notice as provided in paragraph (b)
below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting from the conversion of,
such Eurodollar Loans.
(b) For purposes of this Section 2.15, a notice to the Borrower by any
Lender shall be effective as to each Eurodollar Loan made by such Lender, if
lawful, on the last day of the Interest Period currently applicable to such
Eurodollar Loan; in all other cases such notice shall be effective on the date
of receipt by the Borrower.
<PAGE>
SECTION 2.16. Indemnity . The Borrower shall indemnify each Lender
against any loss or expense that such Lender may sustain or incur as a
consequence of (a) any event, other than a default by such Lender in the
performance of its obligations hereunder, which results in (i) such Lender
receiving or being deemed to receive any amount on account of the principal of
any Eurodollar Loan prior to the end of the Interest Period in effect therefor,
(ii) the conversion of any Eurodollar Loan to an ABR Loan, or the conversion of
the Interest Period with respect to any Eurodollar Loan, in each case other than
on the last day of the Interest Period in effect therefor, or (iii) any
Eurodollar Loan to be made by such Lender (including any Eurodollar Loan to be
made pursuant to a conversion or continuation under Section 2.10) not being made
after notice of such Loan shall have been given by the Borrower hereunder (any
of the events referred to in this clause (a) being called a "BREAKAGE EVENT") or
(b) any default in the making of any payment or prepayment of a Eurodollar Loan
on the date required to be made hereunder. In the case of any Breakage Event,
such loss shall include an amount equal to the excess, as reasonably determined
by such Lender, of (i) its cost of obtaining funds for the Eurodollar Loan that
is the subject of such Breakage Event for the period from the date of such
Breakage Event to the last day of the Interest Period in effect (or that would
have been in effect) for such Loan over (ii) the amount of interest reasonably
likely to be realized by such Lender in redeploying the funds released or not
utilized by reason of such Breakage Event for such period. A certificate of any
Lender setting forth in reasonable detail any amount or amounts which such
Lender is entitled to receive pursuant to this Section 2.16 and the basis and
computation thereof shall be delivered to the Borrower and shall be conclusive
absent manifest error.
SECTION 2.17. Pro Rata Treatment. Except as provided below in this
Section 2.17 with respect to Swingline Loans and as required under Section 2.15,
each Borrowing, each payment or prepayment of principal of any Borrowing, each
payment of interest on the Loans, each payment of the Commitment Fees, each
reduction of the Term Loan Commitments or the Revolving Credit Commitments and
each refinancing of any Borrowing with, conversion of any Borrowing to or
continuation of any Borrowing as a Borrowing of any Type shall be allocated pro
rata among the Lenders in accordance with their respective applicable
Commitments (or, if such Commitments shall have expired or been terminated, in
accordance with the respective principal amounts of their outstanding Loans).
For purposes of determining the available Revolving Credit Commitments of the
Lenders at any time, each outstanding Swingline Loan shall be deemed to have
utilized the Revolving Credit Commitments of the Lenders (including those
Lenders which shall not have made Swingline Loans) pro rata in accordance with
such respective Revolving Credit Commitments. Each Lender agrees that in
computing such Lender's portion of any Borrowing to be made hereunder, the
Administrative Agent may, in its discretion, round each Lender's percentage of
such Borrowing to the next higher or lower whole dollar amount.
SECTION 2.18. Sharing of Setoffs . Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
the Borrower, or pursuant to a secured claim under Section 506 of Title 11 of
the United States Code or other security or interest arising from, or in lieu
of, such secured claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means, obtain
payment (voluntary or involuntary) in respect of any Loan or Loans or L/C
Disbursement as a result of which the unpaid principal portion of its Tranche A
Term Loans, Tranche B Term Loans and Revolving Loans and participations in L/C
Disbursements shall be proportionately less than the unpaid principal portion of
the Tranche A Term Loans, Tranche B Term Loans and Revolving Loans and
participations in L/C Disbursements of any other Lender, it shall be deemed
simultaneously to have purchased from such other Lender at face value, and shall
promptly pay to such other Lender the purchase price for, a participation in the
Tranche A Term Loans, Tranche B Term Loans and Revolving Loans and L/C Exposure,
as the case may be of such other Lender, so that the aggregate unpaid principal
amount of the Tranche A Term Loans, Tranche B Term Loans and Revolving Loans and
L/C Exposure and participations in Tranche A Term Loans, Tranche B Term Loans
and Revolving Loans and L/C Exposure held by each Lender shall be in the same
proportion to the aggregate unpaid principal amount of all Tranche A Term Loans,
Tranche B Term Loans and Revolving Loans and L/C Exposure then-outstanding as
the principal amount of its Tranche A Term Loans, Tranche B Term Loans and
Revolving Loans and L/C Exposure prior to such exercise of banker's lien, setoff
or counterclaim or other event was to the principal amount of all Tranche A Term
Loans, Tranche B Term Loans and Revolving Loans and L/C Exposure outstanding
prior to such exercise of banker's lien, setoff or counterclaim or other event;
PROVIDED, HOWEVER, that if any such purchase or purchases or adjustments shall
be made pursuant to this Section and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase price or prices or
adjustment restored without interest. The Borrower expressly consents to the
foregoing arrangements and agrees that any Lender holding a participation in a
Term Loan or Revolving Loan or L/C Disbursement deemed to have been so purchased
may exercise any and all rights of banker's lien, setoff or counterclaim with
respect to any and all moneys owing by the Borrower to such Lender by reason
thereof as fully as if such Lender had made a Loan directly to the Borrower in
the amount of such participation.
<PAGE>
SECTION 2.19. Payments . (a) The Borrower shall make each payment
(including principal of or interest on any Borrowing or any L/C Disbursement or
any Fees or other amounts) hereunder and under any other Loan Document not later
than 12:00 (noon), New York City time, on the date when due in immediately
available dollars, without setoff, defense or counterclaim. Each such payment
(other than (i) Issuing Bank Fees, which shall be paid directly to the Issuing
Bank, and (ii) principal of and interest on Swingline Loans, which shall be paid
directly to the Swingline Lender except as otherwise provided in Section
2.21(e)) shall be made to the Administrative Agent at its offices at 270 Park
Avenue, New York, New York.
(b) Whenever any payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder or under any other Loan
Document shall become due, or otherwise would occur, on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of
interest or Fees, if applicable.
SECTION 2.20. Taxes. (a) Any and all payments by the Borrower hereunder
and under any other Loan Document shall be made, in accordance with Section
2.19, free and clear of and without deduction for any and all current or future
taxes, levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, EXCLUDING (i) income taxes imposed on the net income of
the Administrative Agent, any Lender or the Issuing Bank (or any transferee or
assignee thereof, including a participation holder (any such entity a
"TRANSFEREE")) and (ii) franchise taxes imposed on the net income or capital of
the Administrative Agent, any Lender or the Issuing Bank (or Transferee), in
each case by the jurisdiction under the laws of which the Administrative Agent,
such Lender or the Issuing Bank (or Transferee) is organized, has its principal
place of business or has its applicable lending office or any political
subdivision thereof or taxing authority therein (all such nonexcluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities, collectively
or individually, being called "TAXES"). If the Borrower shall be required to
deduct any Taxes from or in respect of any sum payable hereunder or under any
other Loan Document to the Administrative Agent, any Lender or the Issuing Bank
(or any Transferee), (i) the sum payable shall be increased by the amount (an
"ADDITIONAL AMOUNT") necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.20) the Administrative Agent, such Lender or the Issuing Bank (or Transferee),
as the case may be, shall receive an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower shall make such
deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower agrees to pay to the relevant Governmental
Authority in accordance with applicable law any current or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies (including, without limitation, mortgage recording taxes and similar
fees) that arise from any payment made hereunder or under any other Loan
Document or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or any other Loan Document ("OTHER TAXES").
(c) The Borrower will indemnify the Administrative Agent, each Lender
and the Issuing Bank (or Transferee) for the full amount of Taxes and Other
Taxes paid by the Administrative Agent, such Lender or the Issuing Bank (or
Transferee), as the case may be, and any liability (including penalties,
interest and expenses (including reasonable attorney's fees and expenses))
arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted by the relevant Governmental Authority
(it being understood that such indemnification shall not impair any right that
the Borrower may have to contest with the relevant Governmental Authority such
Taxes or Other Taxes). A certificate as to the amount of such payment or
liability prepared by the Administrative Agent, a Lender or the Issuing Bank (or
Transferee), or the Administrative Agent on its behalf, absent manifest error,
shall be final, conclusive and binding for all purposes. Such indemnification
shall be made within 30 days after the date the Administrative Agent, any Lender
or the Issuing Bank (or Transferee), as the case may be, makes written demand
therefor, accompanied by a copy of any written notice or demand by the relevant
Governmental Authority.
<PAGE>
(d) If the Administrative Agent, a Lender or the Issuing Bank (or
Transferee) receives a refund in respect of any Taxes or Other Taxes as to which
it has been indemnified by the Borrower or with respect to which the Borrower
has paid additional amounts pursuant to this Section 2.20, it shall within 30
days from the date of such receipt pay over such refund to the Borrower (but
only to the extent of indemnity payments made, or additional amounts paid, by
the Borrower under this Section 2.20 with respect to the Taxes or Other Taxes
giving rise to such refund), net of all reasonable out-of-pocket expenses of the
Administrative Agent, such Lender or the Issuing Bank (or Transferee) and
without interest (other than interest paid by the relevant Governmental
Authority with respect to such refund); PROVIDED, HOWEVER, that the Borrower,
upon the request of the Administrative Agent, such Lender or the Issuing Bank
(or Transferee), shall repay the amount paid over to the Borrower (plus
penalties, interest or other charges) to the Administrative Agent, such Lender
or the Issuing Bank (or Transferee) in the event the Administrative Agent, such
Lender or the Issuing Bank (or Transferee) is required to repay such refund to
such Governmental Authority.
(e) As soon as practicable after the date of any payment of Taxes or
Other Taxes by the Borrower to the relevant Governmental Authority, the Borrower
will deliver to the Administrative Agent, at its address referred to in Section
9.01, the original or a certified copy of a receipt issued by such Governmental
Authority evidencing payment thereof.
(f) Without prejudice to the survival of any other agreement contained
herein, the agreements and obligations contained in this Section 2.20 shall
survive the payment in full of the principal of and interest on all Loans made
hereunder, the expiration or cancelation of all Letters of Credit and the
reimbursement of all draws thereunder.
(g) Each Lender (or Transferee) that is organized under the laws of a
jurisdiction other than the United States, any State thereof or the District of
Columbia (a "NON-U.S. LENDER") shall deliver to the Borrower and the
Administrative Agent two copies of either United States Internal Revenue Service
Form 1001 or Form 4224, or, in the case of a Non-U.S. Lender claiming exemption
from U.S. Federal withholding tax under Section 871(h) or 881(c) of the Code
with respect to payments of "portfolio interest", a Form W-8, or any subsequent
versions thereof or successors thereto (and, if such Non-U.S. Lender delivers a
Form W-8, a certificate representing that such Non-U.S. Lender is not a bank for
purposes of Section 881(c) of the Code, is not a 10-percent shareholder (within
the meaning of Section 871(h)(3)(B) of the Code) of the Borrower and is not a
controlled foreign corporation related to the Borrower (within the meaning of
Section 864(d)(4) of the Code)), properly completed and duly executed by such
Non-U.S. Lender claiming complete exemption from, or reduced rate of, U.S.
Federal withholding tax on payments by the Borrower under this Agreement and the
other Loan Documents. Such forms shall be delivered by each Non-U.S. Lender on
or before the date it becomes a party to this Agreement (or, in the case of a
Transferee that is a participation holder, on or before the date such
participation holder becomes a Transferee hereunder) and on or before the date,
if any, such Non-U.S. Lender changes its applicable lending office by
designating a different lending office (a "NEW LENDING OFFICE"). In addition,
each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such Non-U.S. Lender.
Notwithstanding any other provision of this Section 2.20(g), a Non-U.S. Lender
shall not be required to deliver any form pursuant to this Section 2.20(g) that
such Non-U.S. Lender is not legally able to deliver.
<PAGE>
(h) The Borrower shall not be required to indemnify any Non-U.S. Lender
or to pay any additional amounts to any Non-U.S. Lender, in respect of United
States Federal withholding tax pursuant to paragraph (a) or (c) above to the
extent that (i) the obligation to withhold amounts with respect to United States
Federal withholding tax existed on the date such Non-U.S. Lender became a party
to this Agreement (or, in the case of a Transferee that is a participation
holder, on the date such participation holder became a Transferee hereunder) or,
with respect to payments to a New Lending Office, the date such Non-U.S. Lender
designated such New Lending Office with respect to a Loan; PROVIDED, HOWEVER,
that this paragraph (h) shall not apply (x) to any Transferee or New Lending
Office that becomes a Transferee or New Lending Office as a result of an
assignment, participation, transfer or designation made at the request of the
Borrower and (y) to the extent the indemnity payment or additional amounts any
Transferee, or any Lender (or Transferee), acting through a New Lending Office,
would be entitled to receive (without regard to this paragraph (h)) do not
exceed the indemnity payment or additional amounts that the person making the
assignment, participation or transfer to such Transferee, or Lender (or
Transferee) making the designation of such New Lending Office, would have been
entitled to receive in the absence of such assignment, participation, transfer
or designation or (ii) the obligation to pay such additional amounts would not
have arisen but for a failure by such Non-U.S. Lender to comply with the
provisions of paragraph (g) above.
(i) Nothing contained in this Section 2.20 shall require any Lender or
the Issuing Bank (or any Transferee) or the Administrative Agent to make
available any of its tax returns (or any other information that it deems to be
confidential or proprietary).
SECTION 2.21. Assignment of Commitments Under Certain Circumstances;
Duty to Mitigate . (a) In the event (i) any Lender or the Issuing Bank delivers
a certificate requesting compensation pursuant to Section 2.14, (ii) any Lender
or the Issuing Bank delivers a notice described in Section 2.15 or (iii) the
Borrower is required to pay any additional amount to any Lender or the Issuing
Bank or any Governmental Authority on account of any Lender or the Issuing Bank
pursuant to Section 2.20, the Borrower may, at its sole expense and effort, upon
notice to such Lender or the Issuing Bank and the Administrative Agent, require
such Lender or the Issuing Bank to transfer and assign, without recourse (in
accordance with and subject to the restrictions contained in Section 9.04,
except that the Borrower or such assignee shall pay the processing and
recordation fee referred to in clause (ii) thereof), all of its interests,
rights and obligations under this Agreement to an assignee designated in such
notice that shall assume such assigned obligations (which assignee may be
another Lender, if a Lender accepts such assignment), PROVIDED that (x) such
assignment shall not conflict with any law, rule or regulation or order of any
court or other Governmental Authority having jurisdiction, (y) the Borrower
shall have received the prior written consent of the Administrative Agent (and,
if a Revolving Credit Commitment is being assigned, of the Issuing Bank and the
Swingline Lender), which consent shall not unreasonably be withheld, and (z) the
Borrower or such assignee shall have paid to the affected Lender or the Issuing
Bank in immediately available funds an amount equal to the sum of the principal
of and interest accrued to the date of such payment on the outstanding Loans and
participation in L/C Disbursements and Swingline Loans of such Lender or the
Issuing Bank plus all Fees and other amounts accrued for the account of such
Lender or the Issuing Bank hereunder and under the other Loan Documents
(including any amounts under Section 2.14 and Section 2.16); PROVIDED FURTHER
that, if prior to any such transfer and assignment the circumstances or event
that resulted in such Lender's or the Issuing Bank's claim for compensation
under Section 2.14 or notice under Section 2.15 or the amounts paid pursuant to
Section 2.20, as the case may be, cease to cause such Lender or the Issuing Bank
to suffer increased costs or reductions in amounts received or receivable or
reduction in return on capital, or cease to have the consequences specified in
Section 2.15, or cease to result in amounts being payable under Section 2.20, as
the case may be (including as a result of any action taken by such Lender or the
Issuing Bank pursuant to paragraph (b) below), or if such Lender or the Issuing
Bank shall waive its right to claim further compensation under Section 2.14 in
respect of such circumstances or event or shall withdraw its notice under
Section 2.15 or shall waive its right to further payments under Section 2.20 in
respect of such circumstances or event, as the case may be, then such Lender or
the Issuing Bank shall not thereafter be required to make any such transfer and
assignment hereunder.
<PAGE>
(b) If (i) any Lender or the Issuing Bank shall request compensation
under Section 2.14, (ii) any Lender or the Issuing Bank delivers a notice
described in Section 2.15 or (iii) the Borrower is required to pay any
additional amount to any Lender or the Issuing Bank or any Governmental
Authority on account of any Lender or the Issuing Bank, pursuant to Section
2.20, then such Lender or the Issuing Bank shall use reasonable efforts (which
shall not require such Lender or the Issuing Bank to incur an unreimbursed loss
or unreimbursed cost or expense or otherwise take any action inconsistent with
its internal policies or legal or regulatory restrictions, as determined by such
Lender or Issuing Bank, or suffer any disadvantage or burden deemed by it to be
significant) (x) to file any certificate or document reasonably requested in
writing by the Borrower or (y) to assign its rights and delegate and transfer
its duties and obligations as Lender or Issuing Bank hereunder to another of its
offices, branches or affiliates, if such filing or assignment would reduce its
claims for compensation under Section 2.14 or enable it to withdraw its notice
pursuant to Section 2.15 or would reduce amounts payable pursuant to Section
2.20, as the case may be, in the future. The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender or the Issuing Bank in
connection with any such filing or assignment, delegation and transfer.
SECTION 2.22. Swingline Loans . (a) SWINGLINE COMMITMENT. Subject to the
terms and conditions and relying upon the representations and warranties herein
set forth, the Swingline Lender agrees to make loans to the Borrower at any time
and from time to time on and after the Closing Date and until the earlier of the
Revolving Credit Maturity Date and the termination of the Revolving Credit
Commitments in accordance with the terms hereof, in an aggregate principal
amount at any time outstanding that will not result in (i) the aggregate
principal amount of all Swingline Loans exceeding $10,000,000 in the aggregate
or (ii) the Aggregate Revolving Credit Exposure, after giving effect to any
Swingline Loan, exceeding the Total Revolving Credit Commitment. Each Swingline
Loan shall be in a principal amount that is an integral multiple of $50,000 and
not less than $100,000. The Swingline Commitment may be terminated or reduced
from time to time as provided herein. Within the foregoing limits, the Borrower
may borrow, pay or prepay and reborrow Swingline Loans hereunder, subject to the
terms, conditions and limitations set forth herein.
(b) SWINGLINE LOANS. The Borrower shall notify the Administrative Agent
in writing or by telecopy (or by telephone promptly confirmed in writing or by
telecopy), not later than 12:00 (noon), New York City time, on the day of a
proposed Swingline Loan. Such notice shall be delivered on a Business Day, shall
be irrevocable and shall refer to this Agreement and shall specify the requested
date (which shall be a Business Day) and amount of such Swingline Loan. The
Administrative Agent will promptly advise the Swingline Lender of any notice
received from the Borrower pursuant to this paragraph (b). The Swingline Lender
shall make each Swingline Loan available to the Borrower by means of a credit to
the general deposit account of the Borrower with the Swingline Lender by 2:00
p.m. on the date such Swingline Loan is so requested.
(c) PREPAYMENT. The Borrower shall have the right at any time and from
time to time to prepay any Swingline Loan, in whole or in part, upon giving
written or telecopy notice (or telephonic notice promptly confirmed by written
or telecopy notice) to the Swingline Lender and to the Administrative Agent
before 2:00 p.m., New York City time, on the date of prepayment at the Swingline
Lender's address for notices specified on Schedule 2.01, provided that all or
any portion of a Swingline Loan borrowed and prepaid on the same date shall be
deemed to have been outstanding for one day.
<PAGE>
(d) INTEREST. Each Swingline Loan shall be an ABR Loan and, subject to
the provisions of Section 2.07, shall bear interest as provided in Section
2.06(a).
(e) PARTICIPATIONS. The Swingline Lender may by written notice given to
the Administrative Agent not later than 10:00 a.m., New York City time, on any
Business Day require the Revolving Credit Lenders to acquire participations on
such Business Day in all or a portion of the Swingline Loans outstanding. Such
notice shall specify the aggregate amount of Swingline Loans in which Revolving
Credit Lenders will participate. The Administrative Agent will, promptly upon
receipt of such notice, give notice to each Revolving Credit Lender, specifying
in such notice such Lender's Pro Rata Percentage of such Swingline Loan or
Loans. In furtherance of the foregoing, each Revolving Credit Lender hereby
absolutely and unconditionally agrees, upon receipt of notice as provided above,
to pay to the Administrative Agent, for the account of the Swingline Lender,
such Revolving Credit Lender's Pro Rata Percentage of such Swingline Loan or
Loans. Each Lender acknowledges and agrees that its obligation to acquire
participations in Swingline Loans pursuant to this paragraph is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including the occurrence and continuance of a Default or an Event of Default,
and that each such payment shall be made without any offset, abatement,
withholding or reduction whatsoever. Each Lender shall comply with its
obligation under this paragraph by wire transfer of immediately available funds,
in the same manner as provided in Section 2.02(c) with respect to Loans made by
such Lender (and Section 2.02(c) shall apply, MUTATIS MUTANDIS, to the payment
obligations of the Lenders) and the Administrative Agent shall promptly pay to
the Swingline Lender the amounts so received by it from the Lenders. The
Administrative Agent shall notify the Borrower of any participations in any
Swingline Loan acquired pursuant to this paragraph and thereafter payments in
respect of such Swingline Loan shall be made to the Administrative Agent and not
to the Swingline Lender. Any amounts received by the Swingline Lender from the
Borrower (or other party on behalf of the Borrower) in respect of a Swingline
Loan after receipt by the Swingline Lender of the proceeds of a sale of
participations therein shall be promptly remitted to the Administrative Agent;
any such amounts received by the Administrative Agent shall be promptly remitted
by the Administrative Agent to the Lenders that shall have made their payments
pursuant to this paragraph and to the Swingline Lender, as their interests may
appear. The purchase of participations in a Swingline Loan pursuant to this
paragraph shall not relieve the Borrower (or other party liable for obligations
of the Borrower) of any default in the payment thereof.
<PAGE>
SECTION 2.23. Letters of Credit. (a) GENERAL. The Borrower may
request the issuance of a Letter of Credit, in a form reasonably acceptable to
the Administrative Agent and the Issuing Bank, appropriately completed, for the
account of the Borrower or any Subsidiary (other than JAIX Leasing or any
subsidiary thereof), at any time and from time to time while the Revolving
Credit Commitments remain in effect, PROVIDED that the Borrower shall be a
co-applicant with respect to each Letter of Credit issued for the account of any
Subsidiary. This Section shall not be construed to impose an obligation upon the
Issuing Bank to issue any Letter of Credit that is inconsistent with the terms
and conditions of this Agreement. Any Letter of Credit may, in the absolute
discretion of the Issuing Bank and The Chase Manhattan Bank (and shall, at the
request of the Borrower) be issued by The Chase Manhattan Bank, and, in the
event of any such issuance, all references herein and in the other Loan
Documents to the term "Issuing Bank" shall, with respect to any such Letter of
Credit, be deemed to refer to The Chase Manhattan Bank in such capacity, as the
context shall require.
(b) NOTICE OF ISSUANCE, AMENDMENT, RENEWAL, EXTENSION; CERTAIN
CONDITIONS. In order to request the issuance of a Letter of Credit (or to amend,
renew or extend an existing Letter of Credit), the Borrower shall hand deliver
or telecopy to the Issuing Bank and the Administrative Agent (reasonably in
advance of the requested date of issuance, amendment, renewal or extension) a
notice requesting the issuance of a Letter of Credit, or identifying the Letter
of Credit to be amended, renewed or extended, the date of issuance, amendment,
renewal or extension, the date on which such Letter of Credit is to expire
(which shall comply with paragraph (c) below), the amount of such Letter of
Credit, the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare such Letter of Credit. A Letter of
Credit shall be issued, amended, renewed or extended only if, and upon issuance,
amendment, renewal or extension of each Letter of Credit the Borrower shall be
deemed to represent and warrant that, after giving effect to such issuance,
amendment, renewal or extension (A) the L/C Exposure shall not exceed
$35,000,000 and (B) the Aggregate Revolving Credit Exposure shall not exceed the
Total Revolving Credit Commitment.
(c) EXPIRATION DATE. Each Letter of Credit shall expire at the close
of business on the earlier of the date one year after the date of the issuance
of such Letter of Credit and the date that is five Business Days prior to the
Revolving Credit Maturity Date, unless such Letter of Credit expires by its
terms on an earlier date. Each Letter of Credit may, upon the request of the
Borrower, include a provision whereby such Letter of Credit shall be renewed
automatically for additional consecutive periods of 12 months or less (but not
beyond the date that is five Business Days prior to the Revolving Credit
Maturity Date) unless the Issuing Bank notifies the beneficiary thereof at least
30 days prior to the then-applicable expiry date that such Letter of Credit will
not be renewed.
<PAGE>
(d) PARTICIPATIONS. By the issuance of a Letter of Credit and
without any further action on the part of the Issuing Bank or the Lenders, the
Issuing Bank hereby grants to each Revolving Credit Lender, and each such
Revolving Credit Lender hereby acquires from the applicable Issuing Bank, a
participation in such Letter of Credit equal to such Lender's Pro Rata
Percentage of the aggregate amount available to be drawn under such Letter of
Credit, effective upon the issuance of such Letter of Credit. In consideration
and in furtherance of the foregoing, each Revolving Credit Lender hereby
absolutely and unconditionally agrees to pay to the Administrative Agent, for
the account of the Issuing Bank, such Revolving Credit Lender's Pro Rata
Percentage of each L/C Disbursement made by the Issuing Bank and not reimbursed
by the Borrower (or, if applicable, another party pursuant to its obligations
under any other Loan Document) forthwith on the date due as provided in Section
2.02(f). Each Revolving Credit Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this paragraph in respect of
Letters of Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or an Event of Default, and that each such payment shall be made without any
offset, abatement, withholding or reduction whatsoever.
(e) REIMBURSEMENT. If the Issuing Bank shall make any L/C
Disbursement in respect of a Letter of Credit, the Borrower shall pay to the
Administrative Agent an amount equal to such L/C Disbursement not later than
3:00 p.m., New York City time, on the day on which the Borrower shall have
received notice from the Issuing Bank that payment of such draft will be made,
or, if the Borrower shall have received such notice later than 11:00 a.m., New
York City time, on any Business Day, the Borrower shall make such payment not
later than 11:00 a.m., New York City time, on the immediately following Business
Day. In the event that a trustee under the Bond Documents makes a payment to an
Issuing Bank directly as reimbursement for an L/C Disbursement, such Issuing
Bank shall, promptly upon receipt thereof, notify the Administrative Agent of
its receipt thereof and forward, disburse or retain such amount in accordance
with the directions of the Administrative Agent.
<PAGE>
(f) OBLIGATIONS ABSOLUTE. The Borrower's obligations to reimburse
L/C Disbursements as provided in paragraph (e) above shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement, under any and all circumstances whatsoever,
and irrespective of:
(i) any lack of validity or enforceability of any Letter of Credit or
any Loan Document, or any term or provision therein;
(ii) any amendment or waiver of or any consent to departure from all or
any of the provisions of any Letter of Credit or any Loan Document;
(iii) the existence of any claim, setoff, defense or other right that
the Borrower, any other party guaranteeing, or otherwise obligated
with, the Borrower, any Subsidiary or other Affiliate thereof or any
other person may at any time have against the beneficiary under any
Letter of Credit, the Issuing Bank, the Administrative Agent or any
Lender or any other person, whether in connection with this
Agreement, any other Loan Document or any other related or unrelated
agreement or transaction;
(iv) any draft or other document presented under a 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;
<PAGE>
(v) payment by the Issuing Bank under a Letter of Credit against
presentation of a draft or other document that does not comply with
the terms of such Letter of Credit; and
(vi) any other act or omission to act or delay of any kind of the
Issuing Bank, the Lenders, the Administrative Agent or any other
person or any other event or circumstance whatsoever, whether or not
similar to any of the foregoing, that might, but for the provisions
of this Section, constitute a legal or equitable discharge of the
Borrower's obligations hereunder.
Without limiting the generality of the foregoing, it is expressly
understood and agreed that the absolute and unconditional obligation of the
Borrower hereunder to reimburse L/C Disbursements will not be excused by the
gross negligence or wilful misconduct of the Issuing Bank. However, the
foregoing shall not be construed to excuse the Issuing Bank from liability to
the Borrower to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Borrower to the
extent permitted by applicable law) suffered by the Borrower that are caused by
the Issuing Bank's gross negligence or wilful misconduct in the performance of
its obligations hereunder; it is understood that the Issuing Bank 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, in making any payment under any Letter of Credit (i) the Issuing Bank's
exclusive reliance on the documents presented to it under such Letter of Credit
as to any and all matters set forth therein, including reliance on the amount of
any draft presented under such Letter of Credit, whether or not the amount due
to the beneficiary thereunder equals the amount of such draft and whether or not
any document presented pursuant to such Letter of Credit proves to be
insufficient in any respect, if such document on its face appears to be in
order, and whether or not any other statement or any other document presented
pursuant to such Letter of Credit proves to be forged or invalid or any
statement therein proves to be inaccurate or untrue in any respect whatsoever
and (ii) any noncompliance in any immaterial respect of the documents presented
under such Letter of Credit with the terms thereof shall, in each case, be
deemed not to constitute wilful misconduct or gross negligence of the Issuing
Bank.
(g) DISBURSEMENT PROCEDURES. The following disbursement procedures
shall be followed:
(i) The Issuing Bank shall, promptly following its receipt
thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall as promptly
as possible give telephonic notification, confirmed by telecopy, to
the Administrative Agent and the Borrower of such demand for payment
and whether the Issuing Bank has made or will make an L/C
Disbursement thereunder; PROVIDED, HOWEVER, that any failure to give
or delay in giving such notice shall not relieve the Borrower of its
obligation to reimburse the Issuing Bank and the Revolving Credit
Lenders with respect to any such L/C Disbursement pursuant to
Section 2.23(e). The Administrative Agent shall promptly give each
Revolving Credit Lender notice thereof.
(ii) In the event that under the Bond Documents an Issuing Bank is
given the right to approve disbursements from any project fund or
construction fund created with respect to the applicable bonds, the
Issuing Bank will provide a copy of the disbursement request
document to the Administrative Agent, and provide or withhold such
consent in accordance with the directions of the Administrative
Agent; PROVIDED that the Administrative Agent agrees to exercise the
same discretion with respect to a disbursement request that the
applicable Issuing Bank is required to exercise under the applicable
Bond Documents.
(h) INTERIM INTEREST. If the Issuing Bank shall make any L/C Disbursement
in respect of a Letter of Credit, then, unless the Borrower shall reimburse such
L/C Disbursement in full on such date, the unpaid amount thereof shall bear
interest for the account of the Issuing Bank, for each day from and including
the date of such L/C Disbursement, to but excluding the earlier of the date of
payment by the Borrower or the date on which interest shall commence to accrue
thereon as provided in Section 2.02 (f), at the rate per annum that would apply
to such amount if such amount were an ABR Loan. In the event that any bonds
issued under the Bond Documents are pledged under the terms of the applicable
Bond Documents to secure payment of unreimbursed L/C Disbursements, interest
paid with respect to such bonds shall be credited to the interest due hereunder,
and in the event that any Issuing Bank receives such interest payments on any
such bond directly from a bond trustee, such Issuing Bank shall immediately
notify the Administrative Agent of its receipt thereof and forward, disburse or
retain such amount in accordance with the directions of the Administrative
Agent.
<PAGE>
(i) RESIGNATION OR REMOVAL OF THE ISSUING BANK. The Issuing Bank may
resign at any time by giving 180 days' prior written notice to the
Administrative Agent, the Lenders and the Borrower, and may be removed at any
time by the Borrower by notice to the Issuing Bank, the Administrative Agent and
the Lenders. Subject to the next succeeding paragraph, upon the acceptance of
any appointment as the Issuing Bank hereunder by a Lender that shall agree to
serve as successor Issuing Bank, such successor shall succeed to and become
vested with all the interests, rights and obligations of the retiring Issuing
Bank and the retiring Issuing Bank shall be discharged from its obligations to
issue additional Letters of Credit hereunder. At the time such removal or
resignation shall become effective, the Borrower shall pay all accrued and
unpaid fees pursuant to Section 2.05(c)(ii). The acceptance of any appointment
as the Issuing Bank hereunder by a successor Lender shall be evidenced by an
agreement entered into by such successor, in a form satisfactory to the Borrower
and the Administrative Agent, and, from and after the effective date of such
agreement, (i) such successor Lender shall have all the rights and obligations
of the previous Issuing Bank under this Agreement and the other Loan Documents
and (ii) references herein and in the other Loan Documents to the term "Issuing
Bank" shall be deemed to refer to such successor or to any previous Issuing
Bank, or to such successor and all previous Issuing Banks, as the context shall
require. After the resignation or removal of the Issuing Bank hereunder, the
retiring Issuing Bank shall remain a party hereto and shall continue to have all
the rights and obligations of an Issuing Bank under this Agreement and the other
Loan Documents with respect to Letters of Credit issued by it prior to such
resignation or removal, but shall not be required to issue additional Letters of
Credit.
(j) CASH COLLATERALIZATION. If any Event of Default shall occur and be
continuing, the Borrower shall, on the Business Day it receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Credit Lenders holding participations in
outstanding Letters of Credit representing greater than 50% of the aggregate
undrawn amount of all outstanding Letters of Credit) thereof and of the amount
to be deposited, deposit in an account with the Collateral Agent, for the
benefit of the Revolving Credit Lenders, an amount in cash equal to the L/C
Exposure as of such date. Such deposit shall be held by the Collateral Agent as
collateral for the payment and performance of the Obligations. The Collateral
Agent shall have exclusive dominion and control, including the exclusive right
of withdrawal, over such account. Other than any interest earned on the
investment of such deposits in Permitted Investments, which investments shall be
made in the sole discretion of the Collateral Agent, such deposits shall not
bear interest (it being understood that the Collateral Agent shall have no
obligation to invest such amounts in any investments other than overnight
Permitted Investments). Interest or profits, if any, on such investments shall
accumulate in such account. Moneys in such account shall (i) automatically be
applied by the Administrative Agent to reimburse the Issuing Bank for L/C
Disbursements for which it has not been reimbursed, (ii) be held for the
satisfaction of the reimbursement obligations of the Borrower for the L/C
Exposure at such time and (iii) subject to the consent of Revolving Credit
Lenders holding participations in outstanding Letters of Credit representing
greater than 50% of the aggregate undrawn amount of all outstanding Letters of
Credit), be applied to satisfy the Obligations. If the Borrower is required to
provide an amount of cash collateral hereunder as a result of the occurrence of
an Event of Default, such amount (to the extent not applied as aforesaid) shall
be returned to the Borrower within three Business Days after all Events of
Default have been cured or waived.
<PAGE>
(k) ADDITIONAL ISSUING BANKS. The Borrower may, at any time and from time
to time with the consent of the Administrative Agent (which consent shall not be
unreasonably withheld) and such Lender, designate one or more additional Lenders
to act as an issuing bank under the terms of this Agreement. Any Lender
designated as an issuing bank pursuant to this paragraph (k) shall be deemed (in
addition to being a Lender) to be the Issuing Bank with respect to Letters of
Credit issued or to be issued by such Lender, and all references herein and in
the other Loan Documents to the term "Issuing Bank" shall, with respect to such
Letters of Credit, be deemed to refer to such Lender in its capacity as Issuing
Bank, as the context shall require.
(l) EXISTING LETTERS OF CREDIT. Each Existing Letter of Credit shall be
deemed to be a Letter of Credit issued hereunder, and on the Closing Date each
Revolving Credit Lender shall be deemed to have been granted and acquired a
participation therein pursuant to paragraph (d) above.
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to the Administrative Agent,
the Collateral Agent, the Issuing Bank and each of the Lenders that:
SECTION 3.01. Organization; Powers . Each of the Borrower and each
of the Subsidiaries (a) is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, (b) has
all requisite power and authority to own its property and assets and to carry on
its business as now conducted and as proposed to be conducted, (c) is qualified
to do business in, and is in good standing in, every jurisdiction where such
qualification is required, except where the failure so to qualify could not
reasonably be expected to result in a Material Adverse Effect, and (d) has the
corporate power and authority to execute, deliver and perform its obligations
under each of the Loan Documents and each other agreement or instrument
contemplated hereby to which it is or will be a party and, in the case of the
Borrower, to borrow hereunder.
SECTION 3.02. Authorization . The execution, delivery and
performance of (a) each of the Loan Documents by each Loan Party, (b) the
Acquisition Agreement by the Borrower and Sub, (c) the borrowings hereunder, the
issuances of the Letters of Credit, the use of the proceeds of the Loans and the
Letters of Credit and the creation of the security interests contemplated by the
Loan Documents and (d) the consummation of the Acquisition, the refinancing of
the Existing Loan Agreement and the other transactions contemplated by the
Acquisition Agreement and the Loan Documents (collectively, the "TRANSACTIONS")
(i) have been duly authorized by all requisite corporate and, if required,
stockholder action of the Borrower and each applicable Subsidiary and (ii) will
not (x) violate (A) any provision of any law, statute, rule or regulation
applicable to the Borrower or any Subsidiary or any of their properties, or of
the certificate or articles of incorporation or other constitutive documents or
by-laws of the Borrower or any Subsidiary, (B) any order of any Governmental
Authority applicable to the Borrower or any Subsidiary or any of their
properties or (C) any provision of any indenture, material agreement or other
material instrument to which the Borrower or any Subsidiary is a party or by
which any of them or any of their property is or may be bound, (y) be in
conflict with, result in a breach of or constitute (alone or with notice or
lapse of time or both) a default under, or give rise to any right to accelerate
or to require the prepayment, repurchase or redemption of any obligation under
any such indenture, agreement or other instrument or (iii) result in the
creation or imposition of any Lien upon or with respect to any property or
assets now owned or hereafter acquired by the Borrower or any Subsidiary (other
than any Lien created under the Security Documents or permitted by Section
6.02).
SECTION 3.03. Enforceability . This Agreement has been duly executed
and delivered by the Borrower and constitutes, and each other Loan Document when
executed and delivered by each Loan Party party thereto will constitute, a
legal, valid and binding obligation of such Loan Party enforceable against such
Loan Party in accordance with its terms.
<PAGE>
SECTION 3.04. Governmental Approvals . No action, consent or
approval of, registration or filing with or any other action by any Governmental
Authority is or will be required in connection with the execution, delivery or
performance of the Loan Documents by the Borrower and each applicable
Subsidiary, or the consummation of the Transactions, except for (a) the filing
of Uniform Commercial Code financing statements and filings with the United
States Patent and Trademark Office and the United States Copyright Office, (b)
recordation of the Mortgages and (c) such as have been made or obtained and are
in full force and effect.
SECTION 3.05. Financial Statements. (a) The Borrower has heretofore
furnished to the Lenders its consolidated balance sheets and related statements
of income, changes in stockholders' equity and cash flows (i) as of and for the
fiscal year ended December 31, 1998, audited by and accompanied by the opinion
of Arthur Andersen LLP, independent public accountants, and (ii) as of and for
the fiscal quarter and the portion of the fiscal year ended March 31, 1999,
certified by its Financial Officer. Such financial statements present fairly the
financial condition and results of operations of the Borrower and its
consolidated Subsidiaries as of such dates and for such periods (except, in the
case of such unaudited financial statements, for normal year-end adjustments).
Such balance sheets and the notes thereto disclose all material liabilities,
direct or contingent, of the Borrower and its consolidated Subsidiaries as of
the dates thereof of the kind required to be disclosed on a balance sheet in
accordance with GAAP. Such financial statements were prepared in accordance with
GAAP applied on a consistent basis.
(b) The Borrower has heretofore delivered to the Lenders (i) its
unaudited pro forma consolidated balance sheet as of March 31, 1999, prepared
giving effect to the Transactions as if they had occurred on such date and (ii)
its unaudited pro forma statements of operations for the fiscal year ended
December 31, 1998 and the three months ended March 31, 1999, prepared giving
effect to the transactions as if they had occurred on January 1, 1998. Such pro
forma financial statements have been prepared in good faith by the Borrower,
based on the assumptions used to prepare the pro forma financial information
contained in the Confidential Information Memorandum (which assumptions are
believed by the Borrower on the date hereof and on the Closing Date to be
reasonable), accurately reflect all adjustments required to be made to give
effect to the Transactions and present fairly on a pro forma basis the estimated
consolidated financial position of the Borrower and its consolidated
Subsidiaries as of the respective dates thereof, assuming that the Transactions
had actually occurred on the applicable date set forth above.
SECTION 3.06. No Material Adverse Change. There has been no material
adverse change in the business, assets, operations, properties, financial
condition, contingent liabilities or material agreements of the Borrower and the
Subsidiaries, taken as a whole, since December 31, 1998.
SECTION 3.07. Title to Properties; Possession Under Leases. (a) Each
of the Borrower and the Subsidiaries has good and marketable title to, or valid
leasehold interests in, all its material properties and assets (including all
Mortgaged Property). All such material properties and assets are free and clear
of Liens, other than Liens expressly permitted by Section 6.02, and no material
portion of any Mortgaged Property is subject to any lease, license, sublease or
other agreement granting to any person any right to use, occupy or enjoy the
same, except as set forth on Schedule 3.07(a).
(b) Each of the Borrower and the Subsidiaries has complied with all
obligations under all material leases to which it is a party and all such leases
are in full force and effect. Each of the Borrower and the Subsidiaries enjoys
peaceful and undisturbed possession under all such material leases, except where
the failure to have such possession could not reasonably be expected to result
in a Material Adverse Effect.
<PAGE>
(c) Except as set forth on Schedule 3.07(c), as of the Closing Date,
neither the Borrower nor any of the Subsidiaries has received any notice of, nor
has any knowledge of, any pending or contemplated condemnation proceeding
affecting the Mortgaged Properties or any sale or disposition thereof in lieu of
condemnation.
(d) Neither the Borrower nor any of the Subsidiaries is obligated
under any right of first refusal, option or other contractual right to sell,
assign or otherwise dispose of any Mortgaged Property or any interest therein.
SECTION 3.08. Subsidiaries. Schedule 3.08 sets forth as of the
Closing Date a list of all Subsidiaries and the percentage ownership interest of
the Borrower therein. The shares of capital stock or other ownership interests
so indicated on Schedule 3.08 are fully paid and non-assessable and are owned by
the Borrower, directly or indirectly, free and clear of all Liens (other than
Liens created under the Security Documents).
SECTION 3.09. Litigation; Compliance with Laws. (a) Except as set
forth on Schedule 3.09(a), there are not any actions, suits or proceedings at
law or in equity or by or before any Governmental Authority now pending or, to
the knowledge of the Borrower, threatened against or affecting the Borrower or
any Subsidiary or any business, property or rights of any such person (i) that
involve any Loan Document or the Transactions or (ii) as to which there is a
reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect.
(b) Except as set forth on Schedule 3.09(b), none of the Borrower or
any of the Subsidiaries or any of their respective material properties or assets
(including the Mortgaged Properties) is in violation of, nor will the continued
operation of such material properties and assets as currently conducted violate,
any law, rule or regulation (including any zoning, building, Environmental Law,
ordinance, code or approval or any building permits) or any restrictions of
record or agreements affecting the Mortgaged Property, or is in default with
respect to any judgment, writ, injunction, decree or order of any Governmental
Authority, where such violation or default could reasonably be expected to
result in a Material Adverse Effect.
(c) Except as contemplated in Section 5.16 hereof, certificates of
occupancy (or other documents expressly provided for under applicable law in
lieu thereof) are in effect for each Mortgaged Property as currently
constructed, and true and complete copies of such certificates of occupancy have
been delivered to the Collateral Agent as mortgagee with respect to each
Mortgaged Property.
SECTION 3.10. Agreements . (a) Neither the Borrower nor any of the
Subsidiaries is a party to any agreement or instrument or subject to any
corporate restriction that has resulted or could reasonably be expected to
result in a Material Adverse Effect.
(b) Neither the Borrower nor any of the Subsidiaries is in default
in any manner under any provision of any indenture or other agreement or
instrument evidencing Indebtedness, or any other material agreement or
instrument to which it is a party or by which it or any of its properties or
assets are or may be bound, where such default could reasonably be expected to
result in a Material Adverse Effect.
SECTION 3.11. Federal Reserve Regulations. (a) Neither the
Borrower nor any of the Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
buying or carrying Margin Stock.
(b) No part of the proceeds of any Loan or any Letter of Credit will
be used, whether directly or indirectly, and whether immediately, incidentally
or ultimately, for any purpose that entails a violation of, or that is
inconsistent with, the provisions of the Regulations of the Board, including
Regulation U or X.
SECTION 3.12. Investment Company Act; Public Utility Holding Company
Act . Neither the Borrower nor any Subsidiary is (a) an "investment company" as
defined in, or subject to regulation under, the Investment Company Act of 1940
or (b) a "holding company" as defined in, or subject to regulation under, the
Public Utility Holding Company Act of 1935.
<PAGE>
SECTION 3.13. Use of Proceeds . The Borrower will use the proceeds
of the Loans and will request the issuance of Letters of Credit only for the
purposes specified in the preamble to this Agreement.
SECTION 3.14. Tax Returns . Each of the Borrower and the
Subsidiaries has filed or caused to be filed all Federal, state, local and
foreign tax returns or materials required to have been filed by it and has paid
or caused to be paid all material taxes due and payable by it and all material
assessments received by it, except taxes that are being contested in good faith
by appropriate proceedings and for which the Borrower or such Subsidiary, as
applicable, shall have set aside on its books adequate reserves.
SECTION 3.15. No Material Misstatements . None of (a) the
Confidential Information Memorandum or (b) any other information, report,
financial statement, exhibit or schedule furnished by or on behalf of the
Borrower to the Administrative Agent or any Lender in connection with the
negotiation of any Loan Document or included therein or delivered pursuant
thereto contained, contains or will contain (in each case, at the time
furnished) any material misstatement of fact or omitted, omits or will omit to
state any material fact necessary to make the statements therein, taken as a
whole and in the light of the circumstances under which they were, are or will
be (in each case, at the time furnished) made, not misleading; PROVIDED that to
the extent any such information, report, financial statement, exhibit or
schedule was based upon or constitutes a forecast or projection, the Borrower
represents only that it acted in good faith and utilized reasonable assumptions
and due care in the preparation of such information, report, financial
statement, exhibit or schedule at the time prepared.
SECTION 3.16. Employee Benefit Plans . Each of the Borrower and its
ERISA Affiliates is in compliance with the applicable provisions of ERISA and
the Code and the regulations and published interpretations thereunder, and no
ERISA Event has occurred or could reasonably be expected to occur, except in
each case for any such failures to so comply and ERISA Events that, individually
or in the aggregate, could not reasonably be expected to result in a liability
of the Borrower and any ERISA Affiliate in excess of $3,000,000. The present
value of all benefit liabilities under each Plan (based on those assumptions
used for purposes of Statement of Financial Accounting Standards No. 87) did
not, as of the last valuation date applicable thereto prior to the Closing Date,
exceed by more than $5,347,044 the fair market value of the assets of such Plan,
and the present value of all benefit liabilities of all underfunded Plans (based
on those assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the last valuation dates applicable thereto
prior to the Closing Date, exceed by more than $7,233,951 the fair market value
of the assets of all such underfunded Plans.
SECTION 3.17. Environmental Matters . Except as set forth in
Schedule 3.17:
(a) The Borrower and the Subsidiaries have obtained all
Environmental Permits with respect to the facilities and properties owned,
leased or operated by the Borrower or any of the Subsidiaries (the
"Properties"), and the Borrower and the Subsidiaries are in compliance, and in
the last six years have been in compliance, with all Environmental Laws and all
Environmental Permits, except in each case, to the extent that such failure to
obtain any Environmental Permits or noncompliance with Environmental Laws could
not reasonably be expected to result in a Material Adverse Effect (without
taking into account any anticipated recoveries from third party sources);
(b) There have been no Releases or threatened Releases at, from,
under or proximate to the Properties or otherwise in connection with the
operations of the Borrower or the Subsidiaries, which Releases or threatened
Releases could reasonably be expected to result in a Material Adverse Effect
(without taking into account any anticipated recoveries from third party
sources);
(c) Neither the Borrower nor any of the Subsidiaries has received
written notice of an Environmental Claim in connection with (1) the Properties,
(2) the operations of the Borrower or the Subsidiaries or (3) any person whose
liabilities for environmental matters the Borrower or the Subsidiaries has
retained or assumed, in whole or in part, contractually, by operation of law or
otherwise that, in the aggregate, could reasonably be expected to result in a
Material Adverse Effect (without taking into account any anticipated recoveries
from third party sources), nor, to the best knowledge of the Borrower and the
Subsidiaries, is any such Environmental Claim being threatened;
<PAGE>
(d) Hazardous Materials have not been transported, generated,
treated, stored or disposed of from, at, on or under any of the Properties in
violation of, or in any manner or to a location that could give rise to
liability under, any Environmental Law, except to the extent that such
violations or liabilities, in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect (without taking into account any anticipated
recoveries from third party sources);
(e) There are no underground or aboveground storage tanks or
Hazardous Materials present at any of the Properties at levels, volumes,
locations or for durations of time that, in any such case, would constitute a
violation of any Environmental Law, in any such case, except for any
noncompliance with Environmental Laws that could not reasonably be expected to
have a Material Adverse Effect.
(f) There are no past or present actions, activities, events,
conditions or circumstances, including the Release, threatened Release,
generation, treatment or storage of Hazardous Materials at any location, that
could reasonably be expected to give rise to liability of the Borrower or any of
the Subsidiaries under any Environmental Law or any contract or agreement,
except to the extent that any such liabilities, individually or in the
aggregate, could not result in a Material Adverse Effect (without taking into
account any anticipated recoveries from third party sources).
SECTION 3.18. Insurance . Schedule 3.18 sets forth a true, complete
and correct summary description of all insurance maintained by or for the
Borrower or any Subsidiary (other than JAIX Leasing or any subsidiary thereof)
as of the date hereof and the Closing Date. As of each such date, such insurance
is in full force and effect and all premiums then due have been duly paid. The
Borrower and its Subsidiaries have insurance in such amounts and covering such
risks and liabilities as are in accordance with normal industry practice,
including business interruption insurance.
SECTION 3.19. Security Documents . (a) The Pledge Agreement is
effective to create in favor of the Collateral Agent, for the ratable benefit of
the Secured Parties, a legal, valid and enforceable security interest in the
Collateral (as defined in the Pledge Agreement) and, when the Collateral is
delivered to the Collateral Agent, the Pledge Agreement shall constitute a fully
perfected first priority Lien on, and security interest in, all right, title and
interest of the pledgor thereunder in such Collateral, in each case prior and
superior in right to any other person.
(b) The Security Agreement is effective to create in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid
and enforceable security interest in the Collateral (as defined in the Security
Agreement) and, when financing statements in appropriate form are filed in the
offices specified on Schedule 6 to the Perfection Certificate, the Security
Agreement shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the grantors thereunder in such Collateral
(other than the Intellectual Property (as defined in the Security Agreement) or
Equipment (as defined in the Security Agreement) consisting of railcars), in
each case prior and superior in right to any other person, other than with
respect to Liens expressly permitted by Section 6.02.
(c) When the Security Agreement is filed in the United States Patent
and Trademark Office and the United States Copyright Office, the Security
Agreement shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the Loan Parties in the Intellectual Property
(as defined in the Security Agreement) in which a security interest may be
perfected by filing, recording or registering a security agreement, financing
statement or analogous document in the United States Patent and Trademark Office
or the United States Copyright Office, as applicable, in each case prior and
superior in right to any other person (it being understood that subsequent
recordings in the United States Patent and Trademark Office and the United
States Copyright Office may be necessary to perfect a lien on registered
trademarks, trademark applications and copyrights acquired by the Loan Parties
after the date hereof). When the Security Agreement is filed in appropriate form
with the Interstate Commerce Commission, the Security Agreement shall constitute
a fully perfected Lien on, and security interest in, all right, title and
interest of the Loan Parties in the Equipment (as defined in the Security
Agreement) consisting of railcars.
<PAGE>
(d) The Mortgages are effective to create, subject to the exceptions
listed in each title insurance policy covering such Mortgage, in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid
and enforceable Lien on all of the Loan Parties' right, title and interest in
and to the Mortgaged Properties thereunder and the proceeds thereof, and when
the Mortgages are filed in the offices specified on Schedule 3.19(d), the
Mortgages shall constitute a Lien on, and security interest in, all right, title
and interest of the Loan Parties in such Mortgaged Properties and the proceeds
thereof, in each case prior and superior in right to any other person, other
than with respect to the rights of persons pursuant to Liens expressly permitted
by Section 6.02.
(e) The Bostrom Pledge and Security Agreement is effective to create
in favor of the Collateral Agent, for the ratable benefit of the Secured
Parties, a legal, valid and enforceable security interest in the Bostrom Bonds
and, when any of the Bostrom Bonds are delivered to the Collateral Agent, the
Bostrom Pledge and Security Agreement shall constitute a fully perfected first
priority Lien on, and security interest in, all right, title and interest of the
pledgor thereunder in such Bostrom Bonds, in each case prior and superior in
right to any other person.
SECTION 3.20. Location of Real Property and Leased Premises . (a)
Schedule 3.20(a) lists completely and correctly as of the Closing Date all real
property owned by the Borrower and the Subsidiaries (other than JAIX Leasing or
any subsidiary thereof) and the addresses thereof. The Borrower and such
Subsidiaries own in fee all the real property set forth on Schedule 3.20(a).
(b) Schedule 3.20(b) lists completely and correctly as of the
Closing Date all real property leased by the Borrower and the Subsidiaries
(other than JAIX Leasing or any subsidiary thereof) and the addresses thereof.
The Borrower and such Subsidiaries have valid leasehold interests in all the
real property set forth on Schedule 3.20(b).
SECTION 3.21. Labor Matters. As of the date hereof and the Closing
Date, there are no strikes, lockouts or slowdowns against the Borrower or any
Subsidiary pending or, to the knowledge of the Borrower, threatened. The hours
worked by and payments made to employees of the Borrower and the Subsidiaries
have not been in a material violation of the Fair Labor Standards Act or any
other applicable Federal, state, local or foreign law dealing with such matters.
All payments due from the Borrower or any Subsidiary, or for which any claim may
be made against the Borrower or any Subsidiary, on account of wages and employee
health and welfare insurance and other benefits, have been paid or accrued as a
liability on the books of the Borrower or such Subsidiary. The consummation of
the Transactions will not give rise to any right of termination or right of
renegotiation on the part of any union under any collective bargaining agreement
to which the Borrower or any Subsidiary is bound.
SECTION 3.22. Solvency . Immediately after the consummation of the
Transactions and the execution of the Loan Documents, and immediately following
the making of each Loan made on the Closing Date and after giving effect to the
application of the proceeds of such Loans, (i) the fair value of the assets of
each Loan Party, at a fair valuation on a going concern basis, will exceed its
debts and liabilities, subordinated, contingent or otherwise; (ii) the present
fair saleable value of the property of each Loan Party will be greater than the
amount that will be required to pay the probable liability on its debts and
other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (iii) each Loan Party will be
able to pay its debts and liabilities, subordinated, contingent or otherwise, as
such debts and liabilities become absolute and matured; and (iv) each Loan Party
will not have unreasonably small capital with which to conduct the business in
which it is engaged as such business is now conducted and is proposed to be
conducted following the Closing Date.
<PAGE>
SECTION 3.23. Existing Letters of Credit . Schedule 3.23 accurately
and completely describes each letter of credit outstanding immediately prior to
the Closing Date and issued for the account of the Borrower or any Subsidiary
(other than JAIX Leasing or any subsidiary thereof).
SECTION 3.24. Senior Indebtedness . The Obligations constitute
"SENIOR INDEBTEDNESS" under and as defined in the Subordinated Debt Documents.
SECTION 3.25. Year 2000 . Any reprogramming required to permit the
proper functioning, in and following the year 2000, of (a) the computer systems
of the Borrower and the Subsidiaries and (b) equipment containing embedded
microchips (including systems and equipment supplied by others or with which the
Borrower's or any Subsidiary's systems interface) and the testing of all such
systems and equipment, as so reprogrammed, will be completed by September 30,
1999. The cost to the Borrower and its Subsidiaries of such reprogramming and
testing and of the reasonably foreseeable consequences of year 2000 to the
Borrower and the Subsidiaries (including reprogramming errors and the failure of
others' systems or equipment) could not reasonably be expected to result in a
Default or a Material Adverse Effect.
ARTICLE IV
Conditions of Lending
The obligations of the Lenders to make Loans and of the Issuing Bank
to issue, amend, renew or extend Letters of Credit hereunder are subject to the
satisfaction of the following conditions:
SECTION 4.01. All Credit Events . On the date of each Borrowing
(other than (i) any Revolving Credit Borrowing made pursuant to Section 2.02(f),
(ii) any continuation or conversion of a Revolving Credit Borrowing pursuant to
Section 2.10 into a Revolving Credit Borrowing that does not increase the
aggregate principal amount of Revolving Loans outstanding and (iii) any
continuation or conversion of a Term Loan pursuant to Section 2.10), including
each Borrowing of a Swingline Loan, and on the date of each issuance, amendment,
renewal or extension of a Letter of Credit (each such event being called a
"CREDIT EVENT"):
(a) The Administrative Agent shall have received a notice of such
Borrowing as required by Section 2.03 or, in the case of the issuance,
amendment, renewal or extension of a Letter of Credit, the Issuing Bank
and the Administrative Agent shall have received a notice requesting
the same as required by Section 2.23(b) or, in the case of the
Borrowing of a Swingline Loan, the Swingline Lender and the
Administrative Agent shall have received a notice requesting such
Swingline Loan as required by Section 2.22(b).
(b) The representations and warranties set forth in Article III
hereof shall be true and correct in all material respects on and as of
the date of such Credit Event with the same effect as though made on
and as of such date, except to the extent such representations and
warranties expressly relate to an earlier date.
(c) Each Loan Party shall be in compliance with all the terms and
provisions set forth herein and in each other Loan Document on its part
to be observed or performed, and at the time of and immediately after
such Credit Event, no Event of Default or Default shall have occurred
and be continuing.
Each Credit Event shall be deemed to constitute a representation and warranty by
the Borrower on the date of such Credit Event as to the matters specified in
paragraphs (b) and (c) of this Section 4.01.
<PAGE>
SECTION 4.02. First Credit Event . On the Closing Date:
(a) The Administrative Agent shall have received, on behalf of itself,
the Lenders and the Issuing Bank, a favorable written opinion of
(i) Winston & Strawn, counsel for the Borrower, substantially to the
effect set forth in Exhibit J-1, and (ii) each local counsel listed
on Schedule 4.02(a), substantially to the effect set forth in
Exhibit J-2, in each case (A) dated the Closing Date, (B) addressed
to the Issuing Bank, the Administrative Agent and the Lenders, and
(C) covering such other matters relating to the Loan Documents and
the Transactions as the Administrative Agent shall reasonably
request, and the Borrower hereby requests such counsel to deliver
such opinions.
(b) All legal matters incident to this Agreement, the Borrowings and
extensions of credit hereunder and the other Loan Documents shall be
reasonably satisfactory to the Lenders, to the Issuing Bank and to
Cravath, Swaine & Moore, counsel for the Administrative Agent.
(c) The Administrative Agent shall have received (i) a copy of the
certificate or articles of incorporation, including all amendments
thereto, of each Loan Party, certified as of a recent date by the
Secretary of State of the state of its organization, and a
certificate as to the good standing of each Loan Party as of a
recent date, from such Secretary of State; (ii) a certificate of the
Secretary or Assistant Secretary of each Loan Party dated the
Closing Date and certifying (A) that attached thereto is a true and
complete copy of the by-laws of such Loan Party as in effect on the
Closing Date and at all times since a date prior to the date of the
resolutions described in clause (B) below, (B) that attached thereto
is a true and complete copy of resolutions duly adopted by the Board
of Directors of such Loan Party authorizing the execution, delivery
and performance of the Loan Documents to which such person is a
party and, in the case of the Borrower, the borrowings hereunder,
and that such resolutions have not been modified, rescinded or
amended and are in full force and effect, (C) that the certificate
or articles of incorporation of such Loan Party have not been
amended since the date of the last amendment thereto shown on the
certificate of good standing furnished pursuant to clause (i) above,
and (D) as to the incumbency and specimen signature of each officer
executing any Loan Document or any other document delivered in
connection herewith on behalf of such Loan Party; (iii) a
certificate of another officer as to the incumbency and specimen
signature of the Secretary or Assistant Secretary executing the
certificate pursuant to (ii) above; and (iv) such other documents as
the Lenders, the Issuing Bank or Cravath, Swaine & Moore, counsel
for the Administrative Agent, may reasonably request.
(d) The Administrative Agent shall have received a certificate, dated the
Closing Date and signed by a Financial Officer of the Borrower,
confirming compliance with the conditions precedent set forth in
paragraphs (b) and (c) of Section 4.01.
(e) The Administrative Agent shall have received all Fees and other amounts
due and payable on or prior to the Closing Date, including, to the
extent invoiced, reimbursement or payment of all out-of-pocket expenses
required to be reimbursed or paid by the Borrower hereunder or under
any other Loan Document.
(f) The Bostrom Pledge and Security Agreement shall have been duly executed
by the Borrower, Bostrom, the custodian (as identified therein) and
delivered to the Collateral Agent and shall be in full force and
effect.
(g) The Pledge Agreement shall have been duly executed by the Borrower
and each Guarantor party thereto and delivered to the Collateral
Agent and shall be in full force and effect, and all the outstanding
capital stock of the Subsidiaries and promissory notes evidencing
all intercompany indebtedness owed to any Loan Party shall have been
duly and validly pledged thereunder to the Collateral Agent for the
ratable benefit of the Secured Parties and certificates representing
such shares or promissory notes, accompanied by instruments of
transfer (stock powers or note powers, as applicable), endorsed in
blank, with respect to such stock certificates and promissory notes,
shall be in the actual possession of the Collateral Agent; PROVIDED
that (i) neither the Borrower nor any Domestic Subsidiary shall be
required to pledge more than 65% of the voting stock of any Foreign
Subsidiary and (ii) no Foreign Subsidiary shall be required to
pledge the capital stock of any of its Foreign Subsidiaries .
<PAGE>
(h) The Security Agreement shall have been duly executed by the
Borrower and each Guarantor and shall have been delivered to the
Collateral Agent and shall be in full force and effect on such date
and each document (including each Uniform Commercial Code financing
statement) required by law or reasonably requested by the
Administrative Agent to be filed, registered or recorded in order to
create in favor of the Collateral Agent for the benefit of the
Secured Parties a valid, legal and perfected first-priority security
interest in and lien on the Collateral (subject to the post-closing
conditions set forth in Section 5.17 and any Lien expressly
permitted by Section 6.02) described in such agreement shall have
been delivered to the Collateral Agent.
(i) The Collateral Agent shall have received the results of a search
of the Uniform Commercial Code (or equivalent filings) filings made
with respect to the Loan Parties in the states (or other
jurisdictions) in which the chief executive office of each such
person is located, any offices of such persons in which records have
been kept relating to Accounts and the other jurisdictions in which
Uniform Commercial Code filings (or equivalent filings) are to be
made pursuant to the preceding paragraph, together with copies of
the financing statements (or similar documents) disclosed by such
search, and accompanied by evidence satisfactory to the Collateral
Agent that the Liens indicated in any such financing statement (or
similar document) would be permitted under Section 6.02, have been
released or shall be released upon the disbursement of the proceeds
of the initial Borrowing.
(j) The Collateral Agent shall have received a Perfection Certificate with
respect to the Loan Parties dated the Closing Date and duly executed by
a Responsible Officer of the Borrower.
(k) (i) Each of the Security Documents, in form and substance
reasonably satisfactory to the Lenders, relating to each of the
Mortgaged Properties shall have been duly executed by the parties
thereto and delivered to the Collateral Agent and shall be in full
force and effect, (ii) each of such Mortgaged Properties shall not
be subject to any Lien other than those permitted under Section 6.02
and those exceptions to title reasonably acceptable to the
Collateral Agent and its counsel and listed in each loan title
insurance policy, (iii) each of such Security Documents shall have
been filed and recorded in the recording office as specified on
Schedule 3.19(d) (or a lender's title insurance policy, in form and
substance reasonably acceptable to the Collateral Agent, insuring
such Security Document as a first lien on such Mortgaged Property
(subject to any Lien permitted by Section 6.02) shall have been
received by the Collateral Agent) and, in connection therewith, the
Collateral Agent shall have received evidence reasonably
satisfactory to it of each such filing and recordation and (iv) the
Collateral Agent shall have received such other documents, including
a policy or policies of title insurance issued by a nationally
recognized title insurance company, together with such endorsements,
coinsurance and reinsurance as may be reasonably requested by the
Collateral Agent and the Lenders, insuring the Mortgages as valid
first liens on the Mortgaged Properties, free of Liens other than
those permitted under Section 6.02, together with such surveys,
abstracts, appraisals and legal opinions required to be furnished
pursuant to the terms of the Mortgages or as reasonably requested by
the Collateral Agent or the Lenders.
(l) The Guarantee Agreement shall have been duly executed by each
Guarantor, shall have been delivered to the Collateral Agent and shall
be in full force and effect.
(m) The Indemnity, Subrogation and Contribution Agreement shall have been
duly executed by each Loan Party, shall have been delivered to the
Collateral Agent and shall be in full force and effect.
<PAGE>
(n) All conditions to the Acquisition in the Acquisition Agreement
shall have been satisfied (without giving effect to any waiver
thereof that is, in the reasonable judgment of the Lenders, adverse
to the interests of the Lenders), in all material respects, and the
Acquisition shall have been, or shall simultaneously with the first
Credit Event be, consummated in accordance with applicable law and,
in all material respects, the Acquisition Agreement (without giving
effect to any amendment thereof that is, in the reasonable judgment
of the Lenders, adverse to the interests of the Lenders).
(o) Substantially contemporaneously with the first Credit Event, the
Loan Parties shall have repaid in full the principal of all loans
outstanding, interest thereon and other amounts due and payable
under the Existing Loan Agreement and under each other agreement
related thereto, and the Administrative Agent shall have received
duly executed documentation either evidencing or necessary for
(i) the termination of the Existing Loan Agreement and each other
agreement related thereto, (ii) the cancelation of all commitments
thereunder and (iii) the termination of all related agreements and
guarantees and security interests granted by any Loan Party or any
Subsidiary or any other person in connection therewith and the
discharge of all obligations or interests thereunder.
(p) The Lenders shall have received a pro forma consolidated balance sheet
of the Borrower as of March 31, 1999, after giving effect to the
Acquisition and the consummation of the other Transactions, which shall
not be materially inconsistent with the forecasts previously provided
to the Lenders.
(q) After giving effect to the Acquisition and the other Transactions, the
Borrower and the Subsidiaries shall have outstanding no Indebtedness or
preferred stock other than (a) the Loans hereunder and (b) the
Indebtedness shown on Schedule 6.01(a) or otherwise permitted pursuant
to Section 6.01.
(r) The Lenders shall be reasonably satisfied as to the amount and nature
of any material environmental and employee health and safety exposures
to which the Borrower and the Subsidiaries may be subject, and the
plans of the Borrower with respect thereto, after giving effect to the
Acquisition and the consummation of the other Transactions.
(s) The aggregate level of fees and expenses to be paid in connection with
the Transactions, the financing therefor and the other transactions
contemplated hereby shall not exceed $3,000,000.
(t) The Lenders shall have received the Borrower's consolidated
balance sheets and related statements of income, changes in
stockholders' equity and cash flows and the Seller's combined
balance sheets and related statements of income, changes in
stockholders' equity and cash flows (i) as of and for the fiscal
year ended December 31, 1998, audited by and accompanied by the
opinion of Arthur Andersen LLP, independent public accountants for
the Borrower, and Bumpus, Hall, Myatt, Thompson & Emery, P.C.,
independent public accountants for the Sellers, respectively, and
(ii) as of and for the fiscal quarter and the portion of the fiscal
year ended March 31, 1999, certified by a Financial Officer of the
Borrower and the Sellers, respectively, and shall not be materially
inconsistent with the forecasts for such periods previously provided
to the Lenders.
(u) All requisite Governmental Authorities and third parties shall have
approved or consented to the Acquisition and the other Transactions to
the extent required, all applicable appeal periods shall have expired
and there shall be no governmental or judicial action, actual or
threatened, that has a reasonable likelihood of restraining, preventing
or imposing material and burdensome conditions on the Acquisition or
the other Transactions.
<PAGE>
(v) There shall be no litigation or administrative proceedings or other
legal or regulatory developments, actual or threatened, that, in the
reasonable judgment of the Lenders, involve a reasonable possibility of
a Material Adverse Effect or which would be materially inconsistent
with the assumptions underlying the projections contained in the
Confidential Information Memorandum.
(w) The Lenders shall be satisfied that the consummation of the
Transactions will not (i) violate any applicable law, statute, rule
or regulation or (ii) conflict with, or result in a default or event
of default under, (A) any indenture relating to any existing
Indebtedness of any Loan Party or any subsidiary of any Loan Party
that is not being repaid, repurchased or redeemed in full on or
prior to the Closing Date in connection with the Transactions or any
other indenture of any Loan Party or any subsidiary of any Loan
Party to be in effect after the Closing Date or (B) any other
material agreement of any Loan Party or any subsidiary of any Loan
Party.
(x) The Administrative Agent shall have received a copy of, or a
certificate as to coverage under, the insurance policies required by
Section 5.02 and the applicable provisions of the Security Documents.
(y) The Administrative Agent shall have received for each Mortgaged
Property one of the following: (A) a written confirmation from the
applicable zoning commission or other appropriate Governmental
Authority stating that each Mortgaged Property complies with
existing land use and zoning ordinances, regulations and
restrictions applicable to such Mortgaged Property, (B) an opinion
from local counsel acceptable to the Administrative Agent to the
same effect as covered by clause (A) above or (C) a zoning
endorsement satisfactory to the Administrative Agent in connection
with the Collateral Agent's mortgagee title insurance policy of such
Mortgaged Property.
(z) The Administrative Agent shall have received one or more environmental
assessment reports in form, scope and substance reasonably satisfactory
to the Lenders, from First Environment, Inc. as to any environmental
hazards, liabilities or Remedial Action to which the assets being
acquired in the Acquisition may be subject.
ARTICLE V
Affirmative Covenants
The Borrower covenants and agrees with each Lender that so long as
this Agreement shall remain in effect and until the Commitments have been
terminated and the principal of and interest on each Loan, all Fees and all
other expenses or amounts payable under any Loan Document shall have been paid
in full and all Letters of Credit have been canceled or have expired and all
amounts drawn thereunder have been reimbursed in full, unless the Required
Lenders shall otherwise consent in writing, the Borrower will, and will cause
each of the Subsidiaries to:
SECTION 5.01. Existence; Businesses and Properties . (a) Do or cause
to be done all things necessary to preserve, renew and keep in full force and
effect its legal existence, except as otherwise expressly permitted under
Section 6.05.
(b) Do or cause to be done all things necessary to obtain, preserve,
renew, extend and keep in full force and effect the rights, licenses, permits,
franchises, authorizations, patents, copyrights, trademarks and trade names
material to the conduct of the business of the Borrower and its Subsidiaries,
taken as a whole; maintain and operate such business in substantially the manner
in which it is presently conducted and operated, except where the failure to do
so could not reasonably be expected to result in a Material Adverse Effect;
comply in all material respects with all building permits and restrictions of
record affecting the Mortgaged Property; and at all times maintain and preserve
all property material to the conduct of such business and keep such property in
good repair, working order and condition and from time to time make, or cause to
be made, all needful and proper repairs, renewals, additions, improvements and
replacements thereto necessary in order that the business carried on in
connection therewith may be properly conducted at all times.
<PAGE>
SECTION 5.02. Insurance . (a) Keep its insurable properties
adequately insured at all times by financially sound and reputable insurers and
maintain such other insurance, all to such extent and against such risks,
including fire, casualty and other risks insured against by extended coverage,
as is customary with companies in the same or similar businesses operating in
the same or similar locations.
(b) Cause all such policies to be endorsed or otherwise amended to
include a "standard" or "New York" lender's loss payable endorsement, in form
and substance reasonably satisfactory to the Administrative Agent and the
Collateral Agent, which endorsement shall provide that, from and after the
Closing Date, if the insurance carrier shall have received written notice from
the Administrative Agent or the Collateral Agent of the occurrence of an Event
of Default, the insurance carrier shall (unless otherwise instructed by the
Administrative Agent pursuant hereto) pay all proceeds otherwise payable to the
Borrower or the Loan Parties under such policies directly to the Collateral
Agent; cause all such policies to provide that neither the Borrower, the
Administrative Agent, the Collateral Agent nor any other party shall be a
coinsurer thereunder and to contain a "Replacement Cost Endorsement", without
any deduction for depreciation, and such other provisions as the Administrative
Agent or the Collateral Agent may reasonably require from time to time to
protect their interests; deliver original or certified copies of all such
policies or certificates to the Collateral Agent; cause each such policy or
certificate to provide that it shall not be canceled, modified or not renewed
(i) by reason of nonpayment of premium upon not less than 10 days' prior written
notice thereof by the insurer to the Administrative Agent and the Collateral
Agent (giving the Administrative Agent and the Collateral Agent the right to
cure defaults in the payment of premiums) or (ii) for any other reason upon not
less than 30 days' prior written notice thereof by the insurer to the
Administrative Agent and the Collateral Agent; deliver to the Administrative
Agent and the Collateral Agent, prior to the cancelation, modification or
nonrenewal of any such policy of insurance, a copy of a renewal or replacement
policy (or other evidence of renewal of a policy previously delivered to the
Administrative Agent and the Collateral Agent) together with evidence reasonably
satisfactory to the Administrative Agent and the Collateral Agent of payment of
the premium therefor.
(c) If at any time the area in which the Premises (as defined in the
Mortgages) are located is designated (i) a "flood hazard area" in any Flood
Insurance Rate Map published by the Federal Emergency Management Agency (or any
successor agency), obtain flood insurance in such total amount as the
Administrative Agent, the Collateral Agent or the Required Lenders may from time
to time reasonably require, or (ii) a "Zone 1" area, obtain earthquake insurance
in such total amount as the Administrative Agent, the Collateral Agent or the
Required Lenders may from time to time reasonably require.
(d) With respect to any Mortgaged Property, carry and maintain
comprehensive general liability insurance, including the "broad form CGL
endorsement" and coverage on an occurrence basis against claims made for
personal injury (including bodily injury, death and property damage) and
umbrella liability insurance against any and all claims, in no event for a
combined single limit of less than $5,000,000, naming the Collateral Agent as an
additional insured, on forms reasonably satisfactory to the Collateral Agent.
(e) Notify the Administrative Agent and the Collateral Agent
promptly whenever any separate insurance concurrent in form or contributing in
the event of loss with that required to be maintained under this Section 5.02 is
taken out by the Borrower or applicable Subsidiary; and promptly deliver to the
Administrative Agent and the Collateral Agent a duplicate original copy of, or a
certificate as to cover under, such policy or policies.
<PAGE>
(f) In connection with the covenants set forth in this Section 5.02,
it is understood and agreed that:
(i) none of the Administrative Agent, the Lenders, the Issuing Bank,
or their respective agents or employees shall be liable for any loss or
damage insured by the insurance policies required to be maintained
under this Section 5.02, it being understood that (A) the Borrower and
the other Loan Parties shall look solely to their insurance companies
or any other parties other than the aforesaid parties for the recovery
of such loss or damage and (B) such insurance companies shall have no
rights of subrogation against the Administrative Agent, the Collateral
Agent, the Lenders, the Issuing Bank or their agents or employees. If,
however, the insurance policies do not provide waiver of subrogation
rights against such parties, as required above, then the Borrower
hereby agrees, to the extent permitted by law, to waive, or cause the
applicable Subsidiary to waive, its right of recovery, if any, against
the Administrative Agent, the Collateral Agent, the Lenders, the
Issuing Bank and their agents and employees; and
(ii) the designation of any form, type or amount of insurance
coverage by the Administrative Agent, the Collateral Agent or the
Required Lenders under this Section 5.02 shall in no event be deemed a
representation, warranty or advice by the Administrative Agent, the
Collateral Agent or the Lenders that such insurance is adequate for the
purposes of the business of the Borrower and the Subsidiaries or the
protection of their properties and the Administrative Agent, the
Collateral Agent and the Required Lenders shall have the right from
time to time to require the Borrower and the other Loan Parties to keep
other insurance in such form and amount as the Administrative Agent,
the Collateral Agent or the Required Lenders may reasonably request,
PROVIDED that such insurance shall be obtainable on commercially
reasonable terms.
SECTION 5.03. Obligations and Taxes . Pay its material obligations
promptly and pay and discharge promptly when due all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits or
in respect of its property, before the same shall become delinquent or in
default, as well as all lawful claims for labor, materials and supplies or
otherwise that, with respect to any of the foregoing, if unpaid, could
reasonably be expected to give rise to a Lien upon such properties or any part
thereof which is not permitted by Section 6.02; PROVIDED, HOWEVER, that such
payment and discharge shall not be required with respect to any such tax,
assessment, charge, levy or claim so long as the validity or amount thereof
shall be contested in good faith by appropriate proceedings and the Borrower
shall have set aside on its books adequate reserves with respect thereto in
accordance with GAAP and such contest operates to suspend collection of the
contested obligation, tax, assessment or charge and enforcement of such Lien
and, in the case of a Mortgaged Property, there is no risk of forfeiture of such
property.
SECTION 5.04. Financial Statements, Reports, etc . In the case
of the Borrower, furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year, its
consolidated and consolidating balance sheets and related statements of
operations, stockholders' equity and cash flows showing the financial
condition of the Borrower and its consolidated Subsidiaries as of the
close of such fiscal year and the results of its operations and the
operations of such Subsidiaries during such year, in the case of such
consolidated financial statements, audited by Arthur Andersen LLP or
other independent public accountants of recognized national standing
and accompanied by an opinion of such accountants (which shall not be
qualified in any material respect) to the effect that such consolidated
financial statements fairly present the financial condition and results
of operations of the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied;
<PAGE>
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year, its consolidated and consolidating
balance sheets and related statements of operations, stockholders'
equity and cash flows showing the financial condition of the Borrower
and its consolidated Subsidiaries as of the close of such fiscal
quarter and the results of its operations and the operations of such
Subsidiaries during such fiscal quarter and the then elapsed portion of
the fiscal year, all certified by one of its Financial Officers as
fairly presenting the financial condition and results of operations of
the Borrower and its consolidated Subsidiaries on a consolidated basis
in accordance with GAAP consistently applied, subject to normal
year-end audit adjustments;
(c) concurrently with any delivery of financial statements under
paragraph (a) or (b) above, a certificate of the accounting firm or
Financial Officer opining on or certifying such statements (which
certificate, when furnished by an accounting firm, may be limited to
accounting matters and disclaim responsibility for legal
interpretations) (i) certifying that no Event of Default or Default has
occurred or, if such an Event of Default or Default has occurred,
specifying the nature and extent thereof and any corrective action
taken or proposed to be taken with respect thereto, (ii) setting forth
computations in reasonable detail satisfactory to the Administrative
Agent demonstrating compliance with the covenants contained in Sections
6.01, 6.04, 6.06, 6.09, 6.10, 6.11 and 6.12, and (iii) if such
computations include a computation of Consolidated EBITDA, Consolidated
Interest Expense or Consolidated Capital Expenditures for any period on
a pro forma basis as provided in the second sentence of the definition
of each such term, certifying that such computations (A) have been
prepared in good faith by the Borrower, based on the best information
available to the Borrower as of the date of delivery of such
certificate and on assumptions believed by the Borrower on such date to
be reasonable, (B) accurately reflect all adjustments required to be
made to give effect to the Transactions and any Permitted Acquisition,
as the case may be, and (C) present fairly on a pro forma basis the
Consolidated EBITDA or Consolidated Capital Expenditures, as the case
may be, of the Borrower and its consolidated Subsidiaries for such
period, based on the assumptions required to be made by each such
definition;
(d) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other final materials
filed by the Borrower or any Subsidiary with the Securities and
Exchange Commission, or any Governmental Authority succeeding to any or
all of the functions of said Commission, or with any national
securities exchange, or distributed to its shareholders, as the case
may be; and
(e) promptly, from time to time, such other information regarding
the operations, business affairs and financial condition of the
Borrower or any Subsidiary, or compliance with the terms of any Loan
Document, as the Administrative Agent or any Lender may reasonably
request.
SECTION 5.05. Litigation and Other Notices . Furnish to the
Administrative Agent, the Issuing Bank and each Lender, promptly (and, in any
event, no later than five days thereafter) upon the Borrower's knowledge or
receipt thereof, written notice of the following:
(a) any Event of Default or Default, specifying the nature and
extent thereof and the corrective action (if any) taken or proposed to
be taken with respect thereto;
(b) the filing or commencement of, or any threat or notice of
intention of any person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any
Governmental Authority, against the Borrower or any Affiliate thereof
that could reasonably be expected to result in a Material Adverse
Effect; and
(c) any development that has resulted in, or could reasonably be
expected to result in, a Material Adverse Effect.
SECTION 5.06. Employee Benefits. (a) Comply in all material respects
with the applicable provisions of ERISA and the Code and (b) furnish to the
Administrative Agent, as soon as possible after, and in any event within 10
Business Days after any Responsible Officer of the Borrower or any ERISA
Affiliate knows or has reason to know that any ERISA Event has occurred that,
alone or together with any other ERISA Event could reasonably be expected to
result in liability of the Borrower in an aggregate amount exceeding $1,000,000,
a statement of a Financial Officer of the Borrower setting forth details as to
such ERISA Event and the action, if any, that the Borrower has taken or proposes
to take with respect thereto.
<PAGE>
SECTION 5.07. Maintaining Records; Access to Properties and
Inspections . Keep proper books of record and account in which full, true and
correct entries in conformity with GAAP and all requirements of law are made of
all dealings and transactions in relation to its business and activities. The
Borrower will, and will cause each of its Subsidiaries to, at reasonable times
and as often as reasonably requested (a) permit any representatives designated
by the Administrative Agent or any Lender to visit and inspect the financial
records and the properties of the Borrower or any Subsidiary and to make
extracts from and copies of such financial records, and (b) permit any
representatives designated by the Administrative Agent or any Lender to discuss
the affairs, finances and condition of the Borrower or any Subsidiary with the
officers thereof and independent accountants therefor.
SECTION 5.08. Use of Proceeds . Use the proceeds of the Loans and
request the issuance of Letters of Credit only for the purposes set forth in the
preamble to this Agreement.
SECTION 5.09. Compliance with Environmental Laws . Except where the
failure so to comply could not reasonably be expected to result in a Material
Adverse Effect, comply, and require all lessees and other persons occupying its
Properties to comply, with all Environmental Laws and Environmental Permits
applicable to its operations and Properties; obtain and renew all Environmental
Permits necessary for its operations and Properties; and conduct any Remedial
Action in accordance with Environmental Laws; PROVIDED, HOWEVER, that neither
the Borrower nor any of the Subsidiaries shall be required to obtain or comply
with any Environmental Permits, to comply with Environmental Laws, or to
undertake any Remedial Action to the extent that its obligation to do so, in
each case, is being contested in good faith before the appropriate Governmental
Authority and appropriate reserves are being maintained in accordance with GAAP
with respect to such circumstances.
SECTION 5.10. Preparation of Environmental Reports . If a Default
caused by reason of a breach of Section 3.17 or 5.09 shall have occurred and be
continuing, at the request of the Required Lenders through the Administrative
Agent, provide to the Lenders within 60 days after receipt of such request, at
the expense of the Borrower, an environmental site assessment report for the
Properties which are the subject of such Default, prepared by an environmental
consulting firm reasonably acceptable to the Administrative Agent and indicating
the presence or absence of Hazardous Materials and the estimated cost of any
compliance or Remedial Action in connection with such Properties.
SECTION 5.11. Further Assurances . Execute any and all further
documents, financing statements, agreements and instruments, and take all
further action (including filing Uniform Commercial Code and other financing
statements, mortgages and deeds of trust) that may be required under applicable
law, or that the Required Lenders, the Administrative Agent or the Collateral
Agent may reasonably request, in order to effectuate the transactions
contemplated by the Loan Documents and in order to grant, preserve, protect and
perfect the validity and first priority (with such exceptions as are expressly
permitted by the Loan Documents) of the security interests created or intended
to be created by the Security Documents. The Borrower will notify the
Administrative Agent prior to the Borrower or any Subsidiary (other than
Johnstown America Corporation, Freight Car Services, Inc. and JAIX Leasing)
<PAGE>
acquiring any rail cars. The Borrower will cause any subsequently acquired or
organized Domestic Subsidiary (other than any Inactive Subsidiary or any
subsidiary of JAIX Leasing) to execute a Guarantee Agreement, Indemnity
Subrogation and Contribution Agreement and each applicable Security Document in
favor of the Collateral Agent. In addition, from time to time, the Borrower
will, at its cost and expense, promptly secure the Obligations by pledging or
creating, or causing to be pledged or created, perfected security interests with
respect to such of its assets and properties as the Administrative Agent or the
Required Lenders shall designate (it being understood that it is the intent of
the parties that the Obligations shall be secured by, among other things,
substantially all the assets of the Borrower (including real and other
properties acquired subsequent to the Closing Date)). Such security interests
and Liens will be created under the Security Documents and other security
agreements, mortgages, deeds of trust and other instruments and documents in
form and substance reasonably satisfactory to the Collateral Agent, and the
Borrower shall deliver or cause to be delivered to the Lenders all such
instruments and documents (including legal opinions, title insurance commitments
and lien searches) as the Collateral Agent shall reasonably request to evidence
compliance with this Section. The Borrower agrees to provide such evidence as
the Collateral Agent shall reasonably request as to the perfection and priority
status of each such security interest and Lien
SECTION 5.12. Mortgaged Property Casualty and Condemnation . (a)
Notwithstanding any other provision of this Agreement or the Security Documents,
the Collateral Agent is authorized, at its option (for the benefit of the
Secured Parties), to collect and receive, to the extent payable to the Borrower
or any other Loan Party, all insurance proceeds, damages, claims and rights of
action under any insurance policies with respect to any insured casualty or
other insured damage ("CASUALTY") to any portion of any Mortgaged Property
(collectively, "INSURANCE PROCEEDS"), unless the amount of the related Insurance
Proceeds is less than $2,500,000 and an Event of Default shall not have occurred
and be continuing. The Borrower agrees to notify, and cause each applicable
Subsidiary to notify, the Collateral Agent and the Administrative Agent, in
writing, promptly after the Borrower or such Subsidiary obtains notice or
knowledge of any Casualty to a Mortgaged Property as to which the related
insurance proceeds or replacement costs are estimated in good faith to be
greater than $2,000,000, which notice shall set forth a description of such
Casualty and the Borrower's or such Subsidiary's good faith estimate of the
amount of related damages. The Borrower agrees, subject to the foregoing
limitations and exceptions, to endorse and transfer or cause to be endorsed or
transferred any Insurance Proceeds received by it or any other Loan Party to the
Collateral Agent.
(b) The Borrower will notify, and cause each applicable Subsidiary
to notify, the Collateral Agent and the Administrative Agent promptly upon
obtaining knowledge of the institution of any action or proceeding for the
taking of any Mortgaged Property, or any part thereof or interest therein, for
public or quasi-public use under the power of eminent domain, by reason of any
public improvement or condemnation proceeding, or in any other manner (a
"CONDEMNATION"). No settlement or compromise of any claim in connection with any
such action or proceeding shall be made without the consent of the Collateral
Agent, which consent shall not be unreasonably withheld. The Collateral Agent is
authorized, at its option (for the benefit of the Secured Parties), to collect
and receive all proceeds of any such Condemnation (in each case, the
"CONDEMNATION PROCEEDS"), all of which shall be applied pursuant to this Section
5.12. The Borrower agrees to execute or cause to be executed such further
assignments of any Condemnation Proceeds as the Collateral Agent may reasonably
require.
(c) In the event of any Condemnation of the Mortgaged Property, or
any part thereof and subject to the provisions of paragraph (e) below, the
Collateral Agent shall apply the Condemnation Proceeds FIRST, in the case of a
partial Condemnation, to the repair or restoration of any integrated structure
subject to such Condemnation or, in the case of a total Condemnation or a
Condemnation of substantially all of a Mortgaged Property (a "substantially all"
Condemnation), to the location of a replacement property, acquisition of such
replacement property and construction of the replacement structures, and SECOND,
shall apply the remainder of such Condemnation Proceeds (less the reasonable
costs, if any, incurred by the Collateral Agent in the recovery of such
Condemnation Proceeds, and net of taxes and other obligations required to be
paid out of such Condemnation Proceeds in accordance with the terms of the
agreements governing such obligations and this Agreement and the other Loan
Documents) to prepay obligations outstanding under this Agreement, with any
remaining Condemnation Proceeds being returned promptly thereafter to the
Borrower.
(d) In the event of any Casualty of less than 50% of the useable
square footage of the improvements of any Mortgaged Property, the Borrower shall
and shall cause each Subsidiary to, subject to the conditions contained in
paragraph (e), restore the Mortgaged Property to substantially its same
condition immediately prior to such Casualty. In the event of any Casualty of
50% or more of the useable square footage of the improvements of any Mortgaged
Property and so long as no Default or Event of Default has occurred and is
continuing, the Borrower shall have the option to either:
<PAGE>
(i) restore, or cause the applicable Loan Party to restore, the
Mortgaged Property to a condition substantially similar to its
condition immediately prior to such Casualty and to invest the balance,
if any, of any Insurance Proceeds in equipment or other assets used in
any Loan Party's principal lines of business within 180 days after the
receipt thereof, PROVIDED that the Borrower or the applicable Loan
Party, pending such reinvestment, promptly deposits such excess
Insurance Proceeds in a cash collateral account established with the
Collateral Agent for the benefit of the Secured Parties; or
(ii) replace, or cause the applicable Loan Party to replace, the
Mortgaged Property with property of utility comparable to that of the
replaced Mortgaged Property and to invest the balance, if any, of any
Insurance Proceeds, in equipment, vehicles or other assets used in any
Loan Party's principal lines of business within 180 days after the
receipt thereof, PROVIDED that the Borrower or the applicable
Subsidiary, pending such reinvestment, promptly deposits such excess
Insurance Proceeds in a cash collateral account established with the
Collateral Agent for the benefit of the Secured Parties; or
(iii) direct, or cause the applicable Loan Party to direct, the
Collateral Agent to apply the related Insurance Proceeds to prepay
obligations outstanding under this Agreement, with any remaining
Insurance Proceeds being returned to the Borrower.
The Borrower agrees that any excess Insurance Proceeds that are not reinvested
in any Loan Party's principal lines of business as contemplated above will be
applied to prepay the Obligations, with any remainder being returned promptly
thereafter to the Borrower.
If required to do so, the Borrower shall make, or cause the
applicable Subsidiary to make, the election contemplated by the immediately
preceding paragraph by notifying the Collateral Agent and the Administrative
Agent promptly after the later to occur of (A) 10 days after the Borrower or the
applicable Subsidiary and its insurance carrier reach a final determination of
the amount of any Insurance Proceeds and (B) 45 days after the occurrence of the
Casualty. If the Borrower or the applicable Subsidiary shall be required or
shall elect to restore the Mortgaged Property, the insufficiency of any
Insurance Proceeds or Condemnation Proceeds to defray the entire expense of such
restoration shall in no way relieve the Borrower or the applicable Subsidiary of
such obligation so to restore. In the event the Borrower or the applicable
Subsidiary shall be required to restore or shall notify the Collateral Agent and
the Administrative Agent of its election to restore, the Borrower or the
applicable Subsidiary shall diligently and, as permitted by the circumstances
thereof, continuously prosecute the restoration of the Mortgaged Property to
completion. In the event of a Casualty where the Borrower or the applicable
Subsidiary is required to make the election set forth above and the Borrower or
the applicable Subsidiary shall fail to notify the Collateral Agent and the
Administrative Agent of its election within the period set forth above or shall
elect not to restore or replace the Mortgaged Property, the Collateral Agent
shall (after being reimbursed for all reasonable costs of recovery of such
Insurance Proceeds) apply such Insurance Proceeds to prepay the Obligations. In
addition, upon such prepayment, the Borrower shall be obligated to place, or
require the applicable Subsidiary to place, the remaining portion, if any, of
the Mortgaged Property in a safe condition that is otherwise in material
compliance with the requirements of applicable Governmental Authorities and the
provisions of this Agreement and the applicable Mortgage.
(e) Except as otherwise specifically provided in this Section 5.12,
all Insurance Proceeds and all Condemnation Proceeds (net of taxes and other
obligations required to be paid out of such Insurance Proceeds or Condemnation
Proceeds in accordance with the terms of the agreements governing such
obligations and this Agreement and the other Loan Documents) recovered by the
Collateral Agent (A) are to be applied to the restoration of the applicable
Mortgaged Property (less the reasonable cost, if any, to the Collateral Agent of
such recovery and of paying out such proceeds, including reasonable attorneys'
fees, other charges and disbursements and costs allocable to inspecting the Work
(as defined below)) and (B) shall be applied by the Collateral Agent to the
payment of the cost of restoring or replacing the Mortgaged Property so damaged,
destroyed or taken or of the portion or portions of the Mortgaged Property not
so taken (the "WORK") and (C) shall be paid out from time to time to the
Borrower or the applicable Subsidiary as and to the extent the Work (or the
location and acquisition of any replacement of any Mortgaged Property)
progresses for the payment thereof, but subject to each of the following
conditions:
<PAGE>
(i) the Borrower or the applicable Subsidiary must, as promptly as
possible under the circumstances, commence the restoration process or
the location, acquisition and replacement process in connection with
the Mortgaged Property;
(ii) the Work shall be in the charge of an architect or engineer
(which may be an employee of the Borrower or any Subsidiary) and before
the Borrower or the applicable Subsidiary commences any Work, other
than temporary work to protect property or prevent interference with
business, the Collateral Agent shall have received the plans and
specifications and the general contract for the Work from the Borrower
or the applicable Subsidiary. The plans and specifications shall
provide for such Work that, upon completion thereof, the improvements
shall (A) be in material compliance with all requirements of applicable
Governmental Authorities such that all representations and warranties
of the Borrower or the applicable Subsidiary relating to the compliance
of such Mortgaged Property with applicable laws, rules or regulations
in this Agreement or the Security Documents will be correct in all
material respects and (B) be at least equal in value and general
utility to the improvements that were on such Mortgaged Property (or
that were on the Mortgaged Property that has been replaced, if
applicable) prior to the Casualty or Taking, and in the case of a
Taking, subject to the effect of such Taking;
(iii) except as provided in (iv) below, each request for payment
shall be made on seven days' prior notice to the Collateral Agent and
shall be accompanied by a certificate to be made by such architect or
engineer, stating (A) that all the Work completed has been done in
substantial compliance with the plans and specifications, (B) that the
sum requested is justly required to reimburse the Borrower or the
applicable Subsidiary for payments by the Borrower or the applicable
Subsidiary to, or is justly due to, the contractor, subcontractors,
materialmen, laborers, engineers, architects or other persons rendering
services or materials for the Work (giving a brief description of such
services and materials) and that, when added to all sums previously
paid out by the Collateral Agent, does not exceed the value of the Work
done to the date of such certificate;
(iv) each request for payment in connection with the acquisition of
a replacement Mortgaged Property shall be made on 30 days' (or such
lesser time period as to which the Collateral Agent shall, in any case,
agree) prior notice to the Collateral Agent and, in connection
therewith, (A) each such request shall be accompanied by a copy of the
sales contract or other document governing the acquisition of the
replacement property by the Borrower or the applicable Subsidiary and a
certificate of the Borrower or the applicable Subsidiary stating that
the sum requested represents the sales price under such contract or
document and the related reasonable transaction fees and expenses
(including brokerage fees) and setting forth in sufficient detail the
various components of such requested sum and (B) the Borrower or the
applicable Subsidiary shall (I) in addition to any other items required
to be delivered under this Section 5.12, provide the Administrative
Agent and the Collateral Agent with such opinions, documents,
certificates, title insurance policies, surveys and other insurance
policies as they may reasonably request and (II) take such other
actions as the Administrative Agent and the Collateral Agent may
reasonably deem necessary or appropriate (including actions with
respect to the delivery to the Collateral Agent of a first priority
Mortgage with respect to such real property for the ratable benefit of
the Secured Parties);
<PAGE>
(v) each request shall be accompanied by waivers of lien reasonably
satisfactory to the Collateral Agent covering that part of the Work for
which payment or reimbursement is being requested and, if reasonably
required by the Collateral Agent, by a search prepared by a title
company or licensed abstractor or by other evidence satisfactory to the
Collateral Agent, that there has not been filed with respect to such
Mortgaged Property any mechanics' or other lien or instrument for the
retention of title in respect of any part of the Work not discharged of
record or bonded to the reasonable satisfaction of the Collateral
Agent;
(vi) there shall be no Default or Event of Default that has occurred
and is continuing;
(vii) the request for any payment after the Work has been completed
shall be accompanied by a copy of any certificate or certificates
required by law to render occupancy of the improvements being rebuilt,
repaired or restored legal; and
(viii) after commencing the Work, the Borrower shall, and shall
cause the applicable Subsidiary to, continue to perform the Work
diligently and in good faith to completion in accordance with the
approved plans and specifications.
Upon completion of the Work and payment in full therefor, the Collateral Agent
will disburse to the Borrower or the applicable Subsidiary the amount of any
Insurance Proceeds or Condemnation Proceeds then or thereafter in the hands of
the Collateral Agent on account of the Casualty or Taking that necessitated such
Work to be applied (x) to prepay the Obligations, with any excess being retained
by the Borrower or the applicable Subsidiary, or (y) to be reinvested in the
Borrower's or Subsidiary's principal lines of business within 180 days after the
receipt thereof.
(f) Notwithstanding any other provisions of this Section 5.12, if
the Borrower or the applicable Subsidiary shall have elected to replace a
Mortgaged Property as contemplated in paragraphs (c) and (d) above, all
Condemnation Proceeds or Insurance Proceeds held by the Collateral Agent in
connection therewith shall be applied to prepay the Obligations if (i) the
Borrower notifies the Collateral Agent and the Administrative Agent that it or
the applicable Subsidiary does not intend to replace the related Mortgaged
Property, (ii) a Responsible Officer of the Borrower shall not have notified the
Administrative Agent and the Collateral Agent in writing that the Borrower or
the applicable Subsidiary has acquired or has entered into a binding contract to
acquire land upon which it will construct the replacement property within 180
days after the related Condemnation or (iii) the Borrower shall have not
notified the Administrative Agent and the Collateral Agent in writing that it or
the applicable Subsidiary has begun construction of the replacement structures
within one year after the related Condemnation or Condemnation.
(g) Nothing in this Section 5.12 shall prevent the Collateral Agent
from applying at any time all or any part of the Insurance Proceeds or
Condemnation Proceeds to the curing of any Event of Default under this
Agreement.
(h) The execution of a Mortgage by any Subsidiary shall be deemed to
be an acknowledgment and acceptance of the provisions of this Section 5.12.
SECTION 5.13. Compliance with Laws . Comply with the requirements of
all laws, rules and regulations, and all judgments, writs, injunctions, decrees
and orders of any Governmental Authority, that are applicable to it or to any of
its properties, except where noncompliance could not reasonably be expected to
result in a Material Adverse Effect.
SECTION 5.14. Information Regarding Collateral . (a) The Borrower
will furnish to the Administrative Agent prompt written notice of any change (i)
in any Loan Party's corporate name or in any trade name used to identify it in
the conduct of its business or in the ownership of its properties, (ii) in the
location of any Loan Party's chief executive office, its principal place of
business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility),
(iii) in any Loan Party's identity or corporate structure or (iv) in any Loan
Party's Federal Taxpayer Identification Number. The Borrower agrees, with
respect to any change referred to in the preceding sentence, to cooperate with
the Administrative Agent to make all filings under the Uniform Commercial Code
or otherwise that are required (including filing of a name change with the
United States Patent and Trademark Office and the United States Copyright
Office) in order for the Administrative Agent to continue at all times following
such change to have a valid, legal and perfected security interest in all the
Collateral. The Borrower also agrees promptly to notify the Administrative Agent
if any material portion of the Collateral is damaged or destroyed.
<PAGE>
(b) Each year, at the time of delivery of annual financial
statements with respect to the preceding fiscal year pursuant to clause (a) of
Section 5.04, the Borrower shall deliver to the Administrative Agent a
certificate of a Financial Officer of the Borrower (i) setting forth the
information required pursuant to Section 2 of the Perfection Certificate or
confirming that there has been no change in such information since the date of
the Perfection Certificate delivered on the Closing Date or the date of the most
recent certificate delivered pursuant to this Section and (ii) certifying that
all Uniform Commercial Code financing statements (including fixture filings, as
applicable) or other appropriate filings, recordings or registrations, including
all refilings, rerecordings and reregistrations, containing a description of the
Collateral have been filed of record or delivered to the Administrative Agent
for filing in each governmental, municipal or other appropriate office in each
jurisdiction identified pursuant to clause (i) above to the extent necessary to
protect and perfect the security interests under the Security Agreement for a
period of not less than 18 months after the date of such certificate (except as
noted therein with respect to any continuation statements to be filed within
such period).
SECTION 5.15. Delivery of Post-Closing Leasehold Mortgage . Within
90 days following the execution of the Tennessee Build-to-Suit Lease listed on
Schedule 3.20(b), (i) a Mortgage relating to such leasehold substantially in the
form of Exhibit G-2 and such other Security Documents relating thereto, in form
and substance reasonably satisfactory to the Lenders, shall have been duly
executed by the parties thereto and delivered to the Collateral Agent and shall
be in full force and effect, (ii) such Mortgaged Property shall not be subject
to any Lien other than those permitted under Section 6.02 and those exceptions
to title reasonably acceptable to the Collateral Agent and its counsel and
listed in the loan title insurance policy, (iii) each of such Security Documents
shall have been filed and recorded in the recording office as specified on
Schedule 3.19(d) (or a lender's title insurance policy, in form and substance
reasonably acceptable to the Collateral Agent, insuring the lien of such
Security Document as a first lien on the Mortgaged Property (subject to any Lien
permitted by Section 6.02) shall have been received by the Collateral Agent)
and, in connection therewith, the Collateral Agent shall have received evidence
reasonably satisfactory to it of each such filing and recordation and (iv) the
Collateral Agent shall have received such other documents, including a policy or
policies of title insurance issued by a nationally recognized title insurance
company, together with such endorsements, coinsurance and reinsurance as may be
reasonably requested by the Collateral Agent and the Lenders, insuring the
Mortgage as a valid first leasehold lien on the Mortgage Property free of Liens
other than those permitted under Section 6.02, together with such surveys,
abstracts, appraisals, landlords' consents, estoppels and legal opinions as may
be reasonably requested by the Collateral Agent or the Lenders.
SECTION 5.16. Delivery of Post-Closing Certificates of Occupancy .
Within 120 days following the Closing Date, the Administrative Agent shall have
received for each Mortgaged Property the following: (A) a copy of the original
permanent or temporary certificate of occupancy, if any, issued upon completion
of each Mortgaged Property (or any amendment issued upon completion of any
alteration) by the appropriate Governmental Authority, (B) a letter from an
appropriate Government Authority stating that at the time of construction
certificates of occupancy were not required for each such Mortgaged Property for
which a certificate as described above has not been delivered or, if reasonably
requested by the Administrative Agent or Collateral Agent, suitable evidence of
the date of construction of each improvement on such Mortgaged Property or (C)
other appropriate evidence of authorized use.
SECTION 5.17. Delivery of Post-Closing Intellectual Property
Schedules to the Security Agreement . Within 10 days following the Closing Date,
the Administrative Agent shall have received from the Borrower Schedule II to
the Security Agreement. Within 30 days following the Closing Date, the
Administrative Agent shall have received from the Borrower Schedules III through
VI to the Security Agreement.
<PAGE>
ARTICLE VI
Negative Covenants
The Borrower covenants and agrees with each Lender that, so long as
this Agreement shall remain in effect and until the Commitments have been
terminated and the principal of and interest on each Loan, all Fees and all
other expenses or amounts payable under any Loan Document have been paid in full
and all Letters of Credit have been canceled or have expired and all amounts
drawn thereunder have been reimbursed in full, unless the Required Lenders shall
otherwise consent in writing, the Borrower will not, and will not cause or
permit any of the Subsidiaries to:
SECTION 6.01. Indebtedness . Incur, create, assume or permit to
exist any Indebtedness, except:
(a) Indebtedness for borrowed money existing on the date hereof and set
forth on Schedule 6.01(a);
(b) Indebtedness the net proceeds of which are used substantially
concurrently to refinance Indebtedness described in subparagraph
(a), (e), (h) or (l) so long as (i) such refinancing Indebtedness is
in an aggregate principal amount not greater than the aggregate
principal amount of the Indebtedness being refinanced plus the
amount of any premiums required to be paid thereon and fees and
expenses associated therewith, (ii) such Indebtedness has a later or
equal final maturity and a longer or equal weighted average life
than the Indebtedness being refinanced, (iii) the interest rate
applicable to such Indebtedness shall be a market interest rate as
of the time of the incurrence thereof and (iv) each of the
covenants, events of default and other provisions thereof (including
any Guarantees thereof and, if the Indebtedness being refinanced is
subordinated, the subordination provisions thereof) shall be no less
favorable to the Lenders than those contained in the Indebtedness
being refinanced unless each of such provisions is approved in
writing by the Required Lenders;
(c) Indebtedness created hereunder and under the other Loan Documents;
(d) the Subordinated Notes;
(e) Indebtedness consisting of purchase money Indebtedness or Capital
Lease Obligations incurred in the ordinary course of business after
the Closing Date to finance Capital Expenditures, PROVIDED that
(i) a description of the assets financed thereby shall have been
furnished to the Administrative Agent for any assets for which the
purchase price is greater than $2,000,000 and (ii) the aggregate
principal amount of any Indebtedness or Capital Lease Obligations
incurred pursuant to this paragraph (f) outstanding at any time
shall not exceed $20,000,000;
(f) intercompany loans and advances permitted by Section 6.04(c);
(g) Guarantees in respect of the Indebtedness described in paragraphs
(a) through (f) above;
(h) Indebtedness under the Bond Documents not exceeding in the
aggregate at any one time $8,600,000;
<PAGE>
(i) Hedging Agreements;
(j) ordinary course workers compensation related surety bond
Guarantees, letters of credit, and promissory notes;
(k) Guarantees with respect to surety, appeal, performance and return of
money bonds and other similar obligations incurred in the ordinary
course of business not exceeding in the aggregate at any one time
$5,000,000;
(l) Indebtedness incurred by JAIX Leasing, PROVIDED that such Indebtedness
is not Guaranteed by, or recourse to the assets of, the Borrower or any
other Subsidiary (except any subsidiary of JAIX Leasing);
(m) unsecured Indebtedness in addition to that permitted by paragraphs (a)
through (l) above in an aggregate principal amount not to exceed
$5,000,000 at any time outstanding, so long as such Indebtedness is
created under agreements or instruments imposing covenants on the
Borrower and the Subsidiaries no less favorable to them than the
covenants imposed under this Agreement ;
(n) the Imperial Earn-Out Obligation in an aggregate principal amount
at any time outstanding not exceeding $4,000,000; and
(o) Indebtedness of any person acquired as a Permitted Acquisition pursuant
to Section 6.05(a)(v); PROVIDED that (i) such Indebtedness exists at
the time such person becomes a Subsidiary and is not created in
contemplation of or in connection with such person becoming a
Subsidiary and (ii) the aggregate principal amount of Indebtedness
permitted by this clause (o) shall not exceed $10,000,000 at any time
outstanding.
SECTION 6.02. Liens . Create, incur, assume or permit to exist any
Lien on any property or assets (including stock or other securities of any
person, including any Subsidiary) now owned or hereafter acquired by it or on
any income or revenues or rights in respect of any thereof, except:
(a) Liens on property or assets of the Borrower and its Subsidiaries
existing on the date hereof and set forth on Schedule 6.02(a) (and any
extensions, renewals, replacements or refinancing thereof, PROVIDED
that such Liens as so extended, renewed, replaced or refinanced shall
secure only those obligations which they secure on the date hereof and
shall not extend to any other property or assets of the Borrower or any
Subsidiary);
(b) any Lien created under the Loan Documents;
(c) any Lien existing on any property or asset prior to the acquisition
thereof by the Borrower or any Subsidiary (except any property or
asset acquired in connection with a Permitted Acquisition), PROVIDED
that (i) such Lien is not created in contemplation of or in
connection with such acquisition, (ii) such Lien does not apply to
any other property or assets of the Borrower or any Subsidiary and
(iii) such Lien does not (A) materially interfere with the use,
occupancy and operation of any Mortgaged Property, (B) materially
reduce the fair market value of such Mortgaged Property but for such
Lien or (C) result in any material increase in the cost of
operating, occupying or owning or leasing such Mortgaged Property;
(d) any Lien existing on any property or asset of any person acquired
as a Permitted Acquisition and prior to the time such person becomes
a Subsidiary; PROVIDED that (i) such Lien is not created in
contemplation of or in connection with such person becoming a
Subsidiary, (ii) such Lien shall not apply to any other property or
assets of the Borrower or any Subsidiary and (iii) such Lien shall
secure only those obligations which it secures on the date such
person becomes a Subsidiary (and any extensions, renewals,
replacements or refinancing thereof, PROVIDED that such Liens as so
extended, renewed, replaced or refinanced shall secure only those
obligations which they secure on the date hereof and shall not
extend to any other property or assets of the Borrower or any
Subsidiary);
<PAGE>
(e) Liens for taxes not yet due or which are being contested in
compliance with Section 5.03;
(f) carriers', warehousemen's, mechanics', materialmen's, repairmen's,
landlord's, lessor's or other like Liens arising in the ordinary course
of business and securing obligations that are not due and payable or
which are being contested in compliance with Section 5.03;
(g) pledges and deposits made in the ordinary course of business in
compliance with workmen's compensation, unemployment insurance and
other social security laws or regulations;
(h) deposits to secure the performance of bids, trade contracts (other than
for Indebtedness), leases (other than Capital Lease Obligations),
statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature incurred in the ordinary course of
business;
(i) zoning restrictions, easements, rights-of-way, restrictions on use of
real property and other similar encumbrances incurred in the ordinary
course of business which, in the aggregate, are not substantial in
amount and do not materially detract from the value of the property
subject thereto or interfere with the ordinary conduct of the business
of the Borrower or any of its Subsidiaries;
(j) purchase money security interests in real property, improvements
thereto or equipment hereafter acquired (or, in the case of
improvements, constructed) by the Borrower or any Subsidiary,
PROVIDED that (i) such security interests secure Indebtedness
permitted by Section 6.01(e), (ii) such security interests are
incurred, and the Indebtedness secured thereby is created, within
90 days after such acquisition (or construction), (iii) the
Indebtedness secured thereby does not exceed 85% of the lesser of
the cost or the fair market value of such real property,
improvements or equipment at the time of such acquisition (or
construction) and (iv) such security interests do not apply to any
other property or assets of the Borrower or any Subsidiary;
(k) attachment or judgment Liens so long as the claims secured thereby do
not exceed $1,000,000 in the aggregate and are being contested in good
faith pursuant to appropriate proceedings;
(l) Liens to secure Capital Lease Obligations permitted by Section 6.01(e),
PROVIDED that such Liens do not extend to any other property or assets
of the Borrower or any Subsidiary;
(m) Liens on the assets of JAIX Leasing, PROVIDED that such Liens do not
extend to the assets of the Borrower or any other Subsidiary (other
than any subsidiary of JAIX Leasing); and
(n) Liens arising in favor of an Issuing Bank under the Bond Documents in
bonds issued thereunder which are repurchased with the proceeds of an
L/C Disbursement and held in the Borrower's or a Guarantor's name
subject to a pledge in favor of the Issuing Bank until such bonds are
successfully remarketed, PROVIDED that each Issuing Bank agrees to hold
any such Lien for and on behalf of the Administrative Agent and each of
the Lenders.
SECTION 6.03. Sale and Lease-Back Transactions . Enter into any
arrangement, directly or indirectly, with any person whereby it shall sell or
transfer any property, real or personal, used or useful in its business, whether
now owned or hereafter acquired, and thereafter rent or lease such property or
other property which it intends to use for substantially the same purpose or
purposes as the property being sold or transferred, PROVIDED that the Borrower
and the Subsidiaries may enter into any such transaction to the extent the
Capital Lease Obligation and Liens associated therewith would be permitted by
Sections 6.01(e) and 6.02(l), respectively, or Section 6.02(m).
<PAGE>
SECTION 6.04. Investments, Loans and Advances . Except for
investments, loans or advances made by JAIX Leasing or any subsidiary thereof,
hold or acquire any capital stock, evidences of indebtedness or other securities
of, make or permit to exist any loans or advances to, or make or permit to exist
any investment or any other interest in, any other person, except:
(a) investments by the Borrower existing on the date hereof in the capital
stock of the Subsidiaries, other investments existing on the date
hereof and identified on Schedule 6.04(a) and investments by the
Borrower or any Subsidiary in any Guarantor;
(b) Permitted Investments;
(c) investments, loans or advances made by any Loan Party to any other Loan
Party, PROVIDED that any such loans or advances are evidenced by an
Intercompany Note pledged to the Collateral Agent pursuant to the
Pledge Agreement for the benefit of the Secured Parties;
(d) investments, loans or advances by any Loan Party in or to JAIX Leasing
in an aggregate amount not to exceed $3,000,000 in any calendar year;
PROVIDED, HOWEVER, that (A) any such loans or advances are evidenced by
an Intercompany Note pledged to the Collateral Agent pursuant to the
Pledge Agreement for the benefit of the Secured Parties, and (B) no
Default or Event of Default shall have occurred and be continuing;
(e) investments consisting of non-cash consideration received in
connection with a sale of assets permitted by Section 6.05(b);
(f) investments made as Capital Expenditures permitted by Section 6.09;
(g) investments not otherwise permitted above so long as the amount of such
investments does not exceed $10,000,000 in the aggregate at any time
outstanding;
(h) loans and advances to employees and officers of the Borrower or
any of the Subsidiaries for travel, entertainment and relocation
expenses in the ordinary course of business in an aggregate principal
amount outstanding at any one time not to exceed $2,000,000; and
(i) Permitted Acquisitions pursuant to Section 6.05(a)(v).
SECTION 6.05. Mergers, Consolidations, Sales of Assets and
Acquisitions . (a) In the case of the Borrower or any Subsidiary (other than
JAIX Leasing or any subsidiary thereof), merge into or consolidate with any
other person, or permit any other person to merge into or consolidate with it,
or sell, transfer, lease or otherwise dispose of (in one transaction or in a
series of transactions) assets constituting all or substantially all the assets
of the Borrower (whether now owned or hereafter acquired) or less than all the
capital stock of any Subsidiary (other than JAIX Leasing), or purchase, lease or
otherwise acquire (in one transaction or a series of transactions) all or
substantially all the assets of any other person, except that:
(i) the Borrower and any Subsidiary may purchase and sell
inventory and sell scrap, obsolete or worn out assets in the
ordinary course of business;
(ii) the Borrower and any wholly owned Domestic Subsidiary may
purchase, lease or otherwise acquire all or substantially all of the
assets of any other wholly owned Domestic Subsidiary;
(iii) any Subsidiary may merge into any third party in an
Asset Sale permitted by Section 6.05(b);
<PAGE>
(iv) if at the time thereof and immediately after giving
effect thereto no Event of Default or Default shall have occurred
and be continuing (x) any wholly owned Subsidiary may merge into the
Borrower in a transaction in which the Borrower is the surviving
corporation and (y) any wholly owned Subsidiary may merge into or
consolidate with any other wholly owned Domestic Subsidiary in a
transaction in which the surviving entity is a wholly owned Domestic
Subsidiary and no person other than the Borrower or a wholly owned
Domestic Subsidiary receives any consideration; and
(v) the Borrower or any Subsidiary may make acquisitions
("PERMITTED ACQUISITIONs") of not less than 100% of the outstanding
capital stock of any person or of substantially all the assets and
business of any person; PROVIDED that (i) after giving effect to
such acquisition, the Revolving Credit Commitments, as reduced by
the Revolving Credit Exposure, are equal to or greater than
$40,000,000, (ii) the Administrative Agent shall have received one
or more environmental assessment reports in form and substance and
from an independent environmental consulting firm satisfactory to
the Administrative Agent, with respect to the acquired person and
its properties and (iii) the Borrower shall have delivered to the
Administrative Agent a certificate of a Financial Officer certifying
that at the time of and immediately after giving effect to such
Permitted Acquisition: (A) the acquired person is engaged in
substantially the same business as the Borrower or any Subsidiary or
another business reasonably related or incidental thereto, (B) in
the case of an acquisition of capital stock, such acquisition was
not preceded by an unsolicited tender offer for such capital stock
by the Borrower or any Affiliate, (C) such acquisition has been
approved by the board of directors of the acquired person prior to
the commencement of any tender offer or the acquisition by the
Borrower and any acquiring Subsidiary of any shares of capital stock
thereof and such approval has not been withdrawn or revoked, (D) at
the time of and after giving effect to such acquisition, no Event of
Default or Default has occurred and is continuing, and (E) the
Borrower shall be in compliance on a pro forma basis with the
covenants set forth in Sections 6.10, 6.11 and 6.12 as of the last
day of the fiscal quarter immediately preceding the date of the
acquisition (the "PRO FORMA DATE"), as if the acquisition had
occurred on the first day of the four fiscal quarter period ending
on the Pro Forma Date; PROVIDED FURTHER that the adjustments and
calculations set forth in the certificate delivered pursuant to
clause (iii) above shall be based on assumptions and otherwise in
form and substance satisfactory to the Administrative Agent.
(b) Neither the Borrower nor any Subsidiary (other than JAIX Leasing
or any subsidiary thereof) shall engage in any Asset Sale otherwise permitted
under paragraph (a) above unless (i) such Asset Sale is for consideration at
least 80% of which is cash, (ii) such consideration is at least equal to the
fair market value of the assets being sold, transferred, leased or disposed of
and (iii) the fair market value of all assets sold, transferred, leased or
disposed of pursuant to this paragraph (b) shall not exceed (i) $30,000,000 in
any fiscal year or (ii) $50,000,000 in the aggregate. Notwithstanding the
foregoing, the preceding sentence shall not apply to any sale or other
disposition of all or any portion of the capital stock of JAIX Leasing.
SECTION 6.06. Dividends and Distributions; Restrictions on Ability
of Subsidiaries to Pay Dividends . (a) In the case of the Borrower or any
Subsidiary (other than JAIX Leasing or any subsidiary thereof), declare or pay,
directly or indirectly, any dividend or make any other distribution (by
reduction of capital or otherwise), whether in cash, property, securities or a
combination thereof, with respect to any shares of its capital stock or directly
or indirectly redeem, purchase, retire or otherwise acquire for value (or permit
any Subsidiary to purchase or acquire) any shares of any class of its capital
stock or set aside any amount for any such purpose; PROVIDED, HOWEVER, that
<PAGE>
(i) any Subsidiary may declare and pay dividends or make other
distributions to the Borrower or to any Domestic Subsidiary (or, in
the case of a Foreign Subsidiary, to another Foreign Subsidiary)
that is such Subsidiary's parent;
(ii) the Borrower or any Subsidiary may declare and pay dividends, pro
rata to its stockholders, solely in shares of its common stock; and
(iii) the Borrower may purchase, redeem, retire or otherwise acquire
any shares of any class of its capital stock for aggregate
consideration not to exceed $10,000,000 in cash.
(b) Permit its subsidiaries (other than JAIX Leasing or any subsidiary
thereof) to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
such subsidiary to (i) pay any dividends or make any other distributions on its
capital stock or any other interest or (ii) make or repay any loans or advances
to the Borrower or any subsidiary that is the parent of such subsidiary, except
for encumbrances and restrictions that (A) arise under the Loan Documents or the
JAIX Loan Agreement or (B) existed prior to the time such subsidiary became a
Subsidiary and were not incurred in contemplation thereof or in connection
therewith.
SECTION 6.07. Transactions with Affiliates . Sell or transfer any property
or assets to, or purchase or acquire any property or assets from, or otherwise
engage in any other transactions with, any of its Affiliates, except (a) that
the Borrower or any Subsidiary may engage in any of the foregoing transactions
in the ordinary course of business at prices and on terms and conditions not
less favorable to the Borrower or such Subsidiary than could be obtained on an
arm's-length basis from unrelated third parties, (b) for transactions between
and among Loan Parties, (c) pursuant to the JAIX Tax Sharing Agreement and (d)
transfers of rail cars to JAIX Leasing at cost. Notwithstanding the foregoing,
the preceding sentence shall not apply to any transaction between JAIX Leasing
and any subsidiary thereof.
SECTION 6.08. Other Indebtedness and Agreements . (a) Permit any waiver,
supplement, modification, amendment, termination or release of any indenture,
instrument or agreement pursuant to which any Indebtedness or preferred stock of
the Borrower or any Subsidiary is outstanding in an aggregate outstanding
principal amount in excess of $3,000,000, to the extent that any such waiver,
supplement, modification, amendment, termination or release would be adverse to
the Lenders in any material respect.
(b) Permit any waiver, supplement, modification, amendment, termination or
release of the Acquisition Agreement (i) on or prior to the Closing Date, to the
extent that any such waiver, supplement, modification, amendment, termination or
release would, in the reasonable judgment of any Lender, be adverse to the
interests of such Lender, without the consent of such Lender and (ii) after the
Closing Date, to the extent that any such waiver, supplement, modification,
amendment, termination or release would, in the reasonable judgment of the
Required Lenders, be adverse to the interest of the Lenders in any material
respect, without the consent of the Required Lenders.
(c) Make any distribution, whether in cash, property, securities or a
combination thereof, other than scheduled (or with respect to senior
indebtedness held by a person that is not an Affiliate of the obligor,
mandatory) payments of principal and interest as and when due (to the extent not
prohibited by applicable subordination provisions), in respect of, or pay, or
offer or commit to pay, or directly or indirectly redeem, repurchase, retire or
otherwise acquire for consideration, or set apart any sum for the aforesaid
purposes, any Indebtedness for borrowed money (other than Intercompany
Indebtedness) of any Loan Party or any Subsidiary (other than JAIX Leasing or
any subsidiary thereof) in an outstanding principal amount exceeding $500,000,
except for (i) any refinancing of Indebtedness permitted by Section 6.01(b),
(ii) the refinancing of Indebtedness in connection with the consummation of the
Transactions, (iii) the prepayment, redemption or repurchase of Indebtedness in
an aggregate principal amount not to exceed $10,000,000, and (iv) the Loans.
(d) Enter into any waiver, supplement, modification, amendment,
termination or release of the JAIX Tax Sharing Agreement that would increase the
payments required to be made thereunder by any Loan Party to JAIX Leasing or
would, in the reasonable judgment of the Required Lenders, be adverse to the
interests of the Lenders in any material respect.
<PAGE>
SECTION 6.09. Capital Expenditures . Incur Consolidated Capital
Expenditures in excess of (i) for the fiscal year ending December 31, 1999,
$25,000,000, and (ii) for any fiscal year ending after December 31, 1999,
$30,000,000 per year; PROVIDED, HOWEVER, that the amount of permitted Capital
Expenditures in any fiscal year ending after December 31, 2000, shall be
increased by the total amount of unused permitted Capital Expenditures for the
immediately preceding year (less an amount equal to any unused permitted Capital
Expenditures carried forward to such preceding year pursuant to this proviso).
SECTION 6.10. Total Debt Ratio . Permit the Total Debt Ratio as of
the last day of any fiscal quarter ending during any period set forth below
to be in excess of the ratio set forth below for such period:
PERIOD RATIO
- ------------------------------- -----------------
September 30, 1999 through and 4.00 to 1
including December 31, 1999
March 31, 2000 through and 3.75 to 1
including December 31, 2001
March 31, 2002 and thereafter 3.50 to 1
SECTION 6.11. Interest Coverage Ratio . Permit the ratio of (i)
Consolidated EBITDA minus Consolidated Capital Expenditures to (ii) Consolidated
Interest Expense for any four quarter period ending during any period set forth
below to be less than the ratio set forth below opposite such period:
PERIOD RATIO
- ------------------------------- -------------------
September 30, 1999 through and 1:50 to 1
including December 31, 2001
March 31, 2002 and thereafter 1:75 to 1
SECTION 6.12. Net Worth. Permit Consolidated Net Worth, as at any date of
determination, to be less than (i) $102,500,000 plus (ii) 50% of the cumulative
amount of positive Consolidated Net Income for each fiscal quarter ending after
the Closing Date.
SECTION 6.13. Bank Accounts . Establish or maintain any bank account or
similar account with any financial institution that is not a Lender, other than
(i) the accounts specified in Section 2 of the Perfection Certificate, (ii) the
Collection Deposit Accounts (as defined in the Security Agreement), (iii) any
deposit account used exclusively for payroll and (iv) any other accounts of the
Borrower or any Subsidiary so long as the aggregate amount on deposit in such
accounts does not exceed $500,000 at any time.
SECTION 6.14. Business of Borrower and Subsidiaries . Engage at any time
in any business or business activity other than the business currently conducted
by it and business activities reasonably complementary or incidental thereto.
SECTION 6.15. Fiscal Year . Change the end of its fiscal year from
December 31 to any other date.
<PAGE>
ARTICLE VII
EVENTS OF DEFAULT
In case of the happening of any of the following events ("EVENTS OF
DEFAULT"):
(a) any representation or warranty of any Loan Party made or deemed
made in or in connection with any Loan Document or the borrowings or
issuances of Letters of Credit hereunder, or any representation, warranty,
statement or information contained in any report, certificate, financial
statement or other instrument furnished in connection with or pursuant to
any Loan Document, shall prove to have been false or misleading in any
material respect when so made, deemed made or furnished;
(b) default shall be made in the payment of any principal of any
Loan or the reimbursement with respect to any L/C Disbursement when and as
the same shall become due and payable, whether at the due date thereof or
at a date fixed for prepayment thereof or by acceleration thereof or
otherwise;
(c) default shall be made in the payment of any interest on any Loan
or any Fee or L/C Disbursement or any other amount (other than an amount
referred to in (b) above) due under any Loan Document, when and as the
same shall become due and payable, and such default shall continue
unremedied for a period of five Business Days;
(d) default shall be made in the due observance or performance by
the Borrower or any Subsidiary of any covenant, condition or agreement
contained in Section 5.01(a), 5.05(a) or 5.08 or in Article VI;
(e) default shall be made in the due observance or performance by
the Borrower or any Subsidiary of any covenant, condition or agreement
contained in any Loan Document (other than those specified in (b), (c) or
(d) above) and such default shall continue unremedied for a period of 30
days after notice thereof from the Administrative Agent or any Lender to
the Borrower;
(f) the Borrower or any Subsidiary shall (i) fail to pay any
principal or interest, regardless of amount, due in respect of any
Indebtedness in a principal amount in excess of $5,000,000 when and as the
same shall become due and payable, or (ii) fail to observe or perform any
other term, covenant, condition or agreement contained in any agreement or
instrument evidencing or governing any such Indebtedness if the effect of
any failure referred to in this clause (ii) is to cause, or to permit the
holder or holders of such Indebtedness or a trustee on its or their behalf
(with or without the giving of notice, the lapse of time or both) to
cause, such Indebtedness to become due prior to its stated maturity;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i)
relief in respect of the Borrower or any Subsidiary (other than any
Inactive Subsidiary), or of a substantial part of the property or assets
of the Borrower or any such Subsidiary, under Title 11 of the United
States Code, as now constituted or hereafter amended, or any other
Federal, state or foreign bankruptcy, insolvency, receivership or similar
law, (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any such Subsidiary or
for a substantial part of the property or assets of the Borrower or any
such Subsidiary or (iii) the winding-up or liquidation of the Borrower or
any such Subsidiary; and such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or ordering any of
the foregoing shall be entered;
(h) the Borrower or any Subsidiary (other than any Inactive
Subsidiary) shall (i) voluntarily commence any proceeding or file any
petition seeking relief under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other Federal, state or foreign
bankruptcy, insolvency, receivership or similar law, (ii) consent to the
<PAGE>
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or the filing of any petition described in (g) above, (iii)
apply for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower or any such
Subsidiary or for a substantial part of the property or assets of the
Borrower or any such Subsidiary, (iv) file an answer admitting the
material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors,
(vi) become unable, admit in writing its inability or fail generally to
pay its debts as they become due or (vii) take any action for the purpose
of effecting any of the foregoing;
(i) one or more judgments for the payment of money in an aggregate
amount in excess of $3,000,000 shall be rendered against the Borrower, any
Subsidiary or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution
shall not be effectively stayed, or any action shall be legally taken by a
judgment creditor to levy upon assets or properties of the Borrower or any
Subsidiary to enforce any such judgment;
(j) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other such ERISA Events,
could reasonably be expected to result in liability of the Borrower and
its ERISA Affiliates in an aggregate amount exceeding $3,000,000;
(k) any security interest purported to be created by any Security
Document shall cease to be, or shall be asserted by the Borrower or any
other Loan Party not to be, a valid, perfected, first priority (except as
otherwise expressly provided in this Agreement or such Security Document)
security interest in the securities, assets or properties covered thereby,
except to the extent that any such loss of perfection or priority results
from the failure of the Collateral Agent to maintain possession of
certificates representing securities pledged under the Pledge Agreement
and except to the extent that such loss is covered by a lender's title
insurance policy and the related insurer promptly after such loss shall
have acknowledged in writing that such loss is covered by such title
insurance policy;
(l) any Loan Document shall not be for any reason, or shall be
asserted by any Loan Party not to be, in full force and effect and
enforceable in accordance with its terms; or
(m) there shall have occurred a Change in Control;
then, and in every such event (other than an event with respect to the Borrower
described in paragraph (g) or (h) above), and at any time thereafter during the
continuance of such event, the Administrative Agent may, and at the request of
the Required Lenders shall, by notice to the Borrower, take either or both of
the following actions, at the same or different times: (i) terminate forthwith
the Commitments and (ii) declare the Loans then-outstanding to be forthwith due
and payable in whole or in part, whereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and any
unpaid accrued Fees and all other liabilities of the Borrower accrued hereunder
and under any other Loan Document, shall become forthwith due and payable,
without presentment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived by the Borrower, anything contained herein or
in any other Loan Document to the contrary notwithstanding; and in any event
with respect to the Borrower described in paragraph (g) or (h) above, the
Commitments shall automatically terminate and the principal of the Loans
then-outstanding, together with accrued interest thereon and any unpaid accrued
Fees and all other liabilities of the Borrower accrued hereunder and under any
other Loan Document, shall automatically become due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by the Borrower, anything contained herein or in any
other Loan Document to the contrary notwithstanding.
In the event that any of the Bond Documents gives an Issuing Bank
the right to direct a bond trustee to cause an acceleration, redemption or
repurchase of bonds upon the occurrence of an Event of Default hereunder, each
Issuing Bank agrees to give such a direction in accordance with, and only in
accordance with, the direction of the Administrative Agent, which direction may
be given by the Administrative Agent at any time during the continuance of such
event and shall be given by the Administrative Agent at the request of the
Required Lenders.
<PAGE>
ARTICLE VIII
The Administrative Agent and the Collateral Agent
In order to expedite the transactions contemplated by this
Agreement, The Chase Manhattan Bank is hereby appointed to act as Administrative
Agent and Collateral Agent on behalf of the Lenders and the Issuing Bank (for
purposes of this Article VIII, the Administrative Agent and the Collateral Agent
are referred to collectively as the "AGENTS"). Each of the Lenders and each
assignee of any such Lender, hereby irrevocably authorizes the Agents to take
such actions on behalf of such Lender or assignee or the Issuing Bank and to
exercise such powers as are specifically delegated to the Agents by the terms
and provisions hereof and of the other Loan Documents, together with such
actions and powers as are reasonably incidental thereto. The Administrative
Agent is hereby expressly authorized by the Lenders and the Issuing Bank,
without hereby limiting any implied authority, (a) to receive on behalf of the
Lenders and the Issuing Bank all payments of principal of and interest on the
Loans, all payments in respect of L/C Disbursements and all other amounts due to
the Lenders hereunder, and promptly to distribute to each Lender or the Issuing
Bank its proper share of each payment so received; (b) to give notice on behalf
of each of the Lenders to the Borrower of any Event of Default specified in this
Agreement of which the Administrative Agent has actual knowledge acquired in
connection with its agency hereunder; and (c) to distribute to each Lender
copies of all notices, financial statements and other materials delivered by the
Borrower pursuant to this Agreement as received by the Administrative Agent.
Without limiting the generality of the foregoing, the Agents are hereby
expressly authorized to execute any and all documents (including releases) with
respect to the Collateral and the rights of the Secured Parties with respect
thereto, as contemplated by and in accordance with the provisions of this
Agreement and the Security Documents. None of the Lenders identified herein as
Co-Agents shall have any separate duties, responsibilities, obligations or
authority as Co-Agents hereunder.
Neither the Agents nor any of their respective directors, officers,
employees or agents shall be liable as such for any action taken or omitted by
any of them except for its or his own gross negligence or wilful misconduct, or
be responsible for any statement, warranty or representation herein or the
contents of any document delivered in connection herewith, or be required to
ascertain or to make any inquiry concerning the performance or observance by the
Borrower or any other Loan Party of any of the terms, conditions, covenants or
agreements contained in any Loan Document. The Agents shall not be responsible
to the Lenders for the due execution, genuineness, validity, enforceability or
effectiveness of this Agreement or any other Loan Documents, instruments or
agreements. The Agents shall in all cases be fully protected in acting, or
refraining from acting, in accordance with written instructions signed by the
Required Lenders (and such other Lenders as may be expressly required by Section
9.08) and, except as otherwise specifically provided herein, such instructions
and any action or inaction pursuant thereto shall be binding on all the Lenders.
Each Agent shall, in the absence of knowledge to the contrary, be entitled to
rely on any instrument or document believed by it in good faith to be genuine
and correct and to have been signed or sent by the proper person or persons.
Neither the Agents nor any of their respective directors, officers, employees or
agents shall have any responsibility to the Borrower or any other Loan Party on
account of the failure of or delay in performance or breach by any Lender or the
Issuing Bank of any of its obligations hereunder or to any Lender or the Issuing
Bank on account of the failure of or delay in performance or breach by any other
Lender or the Issuing Bank or the Borrower or any other Loan Party of any of
their respective obligations hereunder or under any other Loan Document or in
connection herewith or therewith. Each of the Agents may execute any and all
duties hereunder by or through agents or employees and shall be entitled to rely
upon the advice of legal counsel selected by it with respect to all matters
arising hereunder and shall not be liable for any action taken or suffered in
good faith by it in accordance with the advice of such counsel.
The Lenders hereby acknowledge that neither Agent shall be under any
duty to take any discretionary action permitted to be taken by it pursuant to
the provisions of this Agreement unless it shall be requested in writing to do
so by the Required Lenders (and such other Lenders as may be expressly required
by Section 9.08).
<PAGE>
Subject to the appointment and acceptance of a successor Agent as
provided below, either Agent may resign at any time by notifying the Lenders and
the Borrower. Upon any such resignation, the Required Lenders shall have the
right to appoint a successor. If no successor shall have been so appointed by
the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Agent gives notice of its resignation, then the retiring
Agent may, on behalf of the Lenders, appoint a successor Agent which shall be a
bank with an office in New York, New York, having a combined capital and surplus
of at least $500,000,000 or an Affiliate of any such bank. The appointment of
any successor Agent shall be subject to the prior approval of the Borrower,
which approval shall not be unreasonably withheld. Upon the acceptance of any
appointment as Agent hereunder by a successor bank, such successor shall succeed
to and become vested with all the rights, powers, privileges and duties of the
retiring Agent and the retiring Agent shall be discharged from its duties and
obligations hereunder. After the Agent's resignation hereunder, the provisions
of this Article and Section 9.05 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
Agent.
With respect to the Loans made by it hereunder, each Agent in its
individual capacity and not as Agent shall have the same rights and powers as
any other Lender and may exercise the same as though it were not an Agent, and
the Agents and their Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower or any Subsidiary or
other Affiliate thereof as if it were not an Agent.
Each Lender agrees (a) to reimburse the Agents, on demand, in the
amount of its pro rata share (based on its Commitments or, in the case of
Commitments that have been terminated, its outstanding Loans hereunder) of any
expenses incurred for the benefit of the Lenders by the Agents, including
counsel fees and compensation of agents and employees paid for services rendered
on behalf of the Lenders, that shall not have been reimbursed by the Borrower
and (b) to indemnify and hold harmless each Agent and any of its directors,
officers, employees or agents, on demand, in the amount of such pro rata share,
from and against any and all liabilities, taxes, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by or asserted
against it in its capacity as Agent or any of them in any way relating to or
arising out of this Agreement or any other Loan Document or any action taken or
omitted by it or any of them under this Agreement or any other Loan Document, to
the extent the same shall not have been reimbursed by the Borrower, PROVIDED
that no Lender shall be liable to an Agent or any such other indemnified person
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
gross negligence or wilful misconduct of such Agent or any of its directors,
officers, employees or agents.
Each Lender acknowledges that it has, independently and without
reliance upon the Agents or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agents or any other Lender and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement or any other Loan Document, any related
agreement or any document furnished hereunder or thereunder.
<PAGE>
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices . Notices and other communications provided
for herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by telecopy, as
follows:
(a) if to the Borrower, to it at Johnstown America Industries, Inc.,
980 North Michigan Avenue, Suite 1000, Chicago, IL 60611, Attention of Mr.
Andrew M. Weller (Telecopy No. (312) 280-4820);
(b) if to the Administrative Agent, to The Chase Manhattan Bank,
Loan and Agency Services Group, One Chase Manhattan Plaza, 8th Floor, New
York, New York 10081, Attention of Janet Belden (Telecopy No. (212)
552-5658), with a copy to The Chase Manhattan Bank, at 270 Park Avenue,
New York, NY 10017, Attention of Julie Long (Telecopy No. (212) 972-9854);
(c) if to the Issuing Bank, to it at Chase Manhattan Bank Delaware,
1201 Market Street, Wilmington, DE 19801, Attention of Michael P. Handago
(Telecopy No. (302) 984-4904 ), with a copy to The Chase Manhattan Bank at
270 Park Avenue, New York NY 10017, Attention of Julie Long (Telecopy No.
(212) 972-9854); and
(d) if to a Lender, to it at its address (or telecopy number) set
forth in Schedule 2.01 or in the Assignment and Acceptance pursuant to
which such Lender shall have become a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 9.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 9.01.
SECTION 9.02. Survival of Agreement . All covenants, agreements,
representations and warranties made by the Borrower herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Lenders and the Issuing Bank and shall survive the
making by the Lenders of the Loans and the issuance of Letters of Credit by the
Issuing Bank, regardless of any investigation made by the Lenders or the Issuing
Bank or on their behalf, and shall continue in full force and effect as long as
the principal of or any accrued interest on any Loan or any Fee or any other
amount payable under this Agreement or any other Loan Document is outstanding
and unpaid or any Letter of Credit is outstanding and so long as the Commitments
have not been terminated. The provisions of Sections 2.14, 2.16, 2.20 and 9.05
shall remain operative and in full force and effect regardless of the expiration
of the term of this Agreement, the consummation of the transactions contemplated
hereby, the repayment of any of the Loans, the expiration of the Commitments,
the expiration of any Letter of Credit, the invalidity or unenforceability of
any term or provision of this Agreement or any other Loan Document, or any
investigation made by or on behalf of the Administrative Agent, the Collateral
Agent, any Lender or the Issuing Bank.
SECTION 9.03. Binding Effect . This Agreement shall become effective
when it shall have been executed by the Borrower and the Administrative Agent
and when the Administrative Agent shall have received counterparts hereof which,
when taken together, bear the signatures of each of the other parties hereto,
and thereafter shall be binding upon and inure to the benefit of the parties
hereto and their respective permitted successors and assigns.
SECTION 9.04. Successors and Assigns . (a) Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the permitted successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of the Borrower, the
Administrative Agent, the Issuing Bank or the Lenders that are contained in this
Agreement shall bind and inure to the benefit of their respective successors and
assigns.
(b) Each Lender may assign to one or more assignees all or a portion
of its interests, rights and obligations under this Agreement (including all or
a portion of its Commitment and the Loans at the time owing to it); PROVIDED,
HOWEVER, that (i) except in the case of an assignment to a Lender or an
Affiliate of a Lender or an Approved Fund of a Lender, (x) the Borrower and the
Administrative Agent (and, in the case of any assignment of a Revolving Credit
<PAGE>
Commitment, the Issuing Bank and the Swingline Lender) must give their prior
written consent to such assignment (which consent shall not be unreasonably
withheld) and (y) the amount of the Commitment or Loans of the assigning Lender
subject to each such assignment (determined as of the date the Assignment and
Acceptance with respect to such assignment is delivered to the Administrative
Agent) shall not be less than $5,000,000 (or, if less, the entire remaining
amount of such Lender's Commitment or Loans, as applicable), (ii) the parties to
each such assignment shall execute and deliver to the Administrative Agent an
Assignment and Acceptance, together with a processing and recordation fee of
$3,500 and (iii) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire; and PROVIDED FURTHER that
any consent of the Borrower otherwise required under this paragraph shall not be
required if an Event of Default under clause (g) or (h) of Article VII has
occurred and is continuing. Upon acceptance and recording pursuant to paragraph
(e) of this Section 9.04, from and after the effective date specified in each
Assignment and Acceptance, (A) the assignee thereunder shall be a party hereto
and, to the extent of the interest assigned by such Assignment and Acceptance,
have the rights and obligations of a Lender under this Agreement and (B) the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto but shall continue to be
entitled to the benefits of Sections 2.14, 2.16, 2.20 and 9.05, as well as to
any Fees accrued for its account and not yet paid).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim and that
its Term Loan Commitment and Revolving Credit Commitment, and the outstanding
balances of its Term Loans and Revolving Loans, in each case without giving
effect to assignments thereof which have not become effective, are as set forth
in such Assignment and Acceptance, (ii) except as set forth in (i) above, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Document or any other instrument or document furnished pursuant
hereto, or the financial condition of the Borrower or any Subsidiary or the
performance or observance by the Borrower or any Subsidiary of any of its
obligations under this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such Assignment and
Acceptance; (iv) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements referred
to in Section 3.05(a) or delivered pursuant to Section 5.04 and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (v) such
assignee will independently and without reliance upon the Administrative Agent,
the Collateral Agent, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (vi) such assignee appoints and authorizes the Administrative
Agent and the Collateral Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Administrative
Agent and the Collateral Agent, respectively, by the terms hereof, together with
such powers as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all the obligations which by
the terms of this Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices in The City of New York a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the "REGISTER"). The entries in the Register shall be
conclusive and the Borrower, the Administrative Agent, the Issuing Bank, the
Collateral Agent and the Lenders may treat each person whose name is recorded in
the Register pursuant to the terms hereof as a Lender hereunder for all purposes
of this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower, the Issuing Bank, the Collateral Agent
and any Lender, at any reasonable time and from time to time upon reasonable
prior notice.
<PAGE>
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, an Administrative Questionnaire
completed in respect of the assignee (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) above and, if required, the written consent of the Borrower, the Swingline
Lender, the Issuing Bank and the Administrative Agent to such assignment, the
Administrative Agent shall (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii) give prompt
notice thereof to the Lenders, the Issuing Bank and the Swingline Lender. No
assignment shall be effective unless it has been recorded in the Register as
provided in this paragraph (e).
(f) Each Lender may without the consent of the Borrower, the
Swingline Lender, the Issuing Bank or the Administrative Agent sell
participations to one or more banks or other entities in all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); PROVIDED, HOWEVER, that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) the participating banks or other entities shall be
entitled to the benefit of the cost protection provisions contained in Sections
2.14, 2.16, 2.20 and 9.05 to the same extent as if they were Lenders, PROVIDED
that the Borrower shall not be required to reimburse the participating banks or
other entities pursuant to Section 2.14, 2.16, 2.20 or 9.05 in an amount in
excess of the amount that would have been payable thereunder to such Lender had
such Lender not sold such participation, and (iv) the Borrower, the
Administrative Agent, the Issuing Bank and the Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, and such Lender shall retain the sole right to
enforce the obligations of the Borrower relating to the Loans or L/C
Disbursements and to approve any amendment, modification or waiver of any
provision of this Agreement (other than amendments, modifications or waivers
decreasing any fees payable hereunder or the amount of principal of or the rate
at which interest is payable on the Loans, extending any scheduled principal
payment date or date fixed for the payment of interest on the Loans, increasing
or extending the Commitments, or releasing any Guarantor or all or any
substantial part of the Collateral (except as expressly permitted by the Loan
Documents)).
(g) Any Lender or participant may, in connection with any assignment
or participation or proposed assignment or participation pursuant to this
Section 9.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrower furnished to such Lender by
or on behalf of the Borrower; PROVIDED that, prior to any such disclosure of any
Information, each such assignee or participant or proposed assignee or
participant shall execute an agreement whereby such assignee or participant
shall agree to preserve the confidentiality of such Information on terms
substantially similar to, and, in any event, no less restrictive than those
applicable to the Lenders pursuant to Section 9.16.
(h) Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations
of such Lender; PROVIDED that no such pledge or assignment of a security
interest shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto. In
order to facilitate such an assignment, the Borrower shall, at the request of
the pledging or assigning Lender, duly execute and deliver to the pledging or
assigning Lender a promissory note or notes evidencing the Loans made to the
Borrower by the pledging or assigning Lender hereunder.
(i) The Borrower shall not assign or delegate any of its rights or
duties hereunder without the prior written consent of the Administrative Agent,
the Issuing Bank and each Lender, and any attempted assignment without such
consent shall be null and void.
<PAGE>
(j) In the event that Standard & Poor's Ratings Services, Moody's
Investors Service and Thompson BankWatch (or Best's Insurance Reports, for an
insurance company) shall, after the date that any Lender becomes a Revolving
Credit Lender, downgrade the long-term certificate of deposit ratings of such
Lender, and the resulting ratings shall be below BBB-, Baa3 and C (or B, in the
case of a Lender that is an insurance company), then the Issuing Bank, shall
have the right, but not the obligation, at its own expense, upon notice to such
Lender and the Administrative Agent, to replace (or to request the Borrower to
use its reasonable efforts to replace) such Lender with an assignee (in
accordance with and subject to the restrictions contained in paragraph (b)
above), and such Lender hereby agrees to transfer and assign without recourse
(in accordance with and subject to the restrictions contained in paragraph (b)
above) all its interests, rights and obligations in respect of its Revolving
Credit Commitment to such assignee; PROVIDED, HOWEVER, that (i) no such
assignment shall conflict with any law, rule and regulation or order of any
Governmental Authority and (ii) the Issuing Bank or such assignee, as the case
may be, shall pay to such Lender in immediately available funds on the date of
such assignment the principal of and interest accrued to the date of payment on
the Loans made by such Lender hereunder and all other amounts accrued for such
Lender's account or owed to it hereunder.
SECTION 9.05. Expenses; Indemnity . (a) The Borrower agrees to pay
all reasonable out-of-pocket expenses incurred by the Administrative Agent, the
Collateral Agent, the Issuing Bank and the Swingline Lender in connection with
the syndication of the credit facilities provided for herein and the preparation
and administration of this Agreement and the other Loan Documents or in
connection with any amendments, modifications or waivers of the provisions
hereof or thereof (whether or not the transactions hereby or thereby
contemplated shall be consummated) or incurred by the Administrative Agent, the
Collateral Agent, the Issuing Bank or any Lender in connection with the
enforcement or protection of its rights in connection with this Agreement and
the other Loan Documents or in connection with the Loans made or Letters of
Credit issued hereunder, including the reasonable fees, charges and
disbursements of Cravath, Swaine & Moore, counsel for the Administrative Agent,
the Collateral Agent and the Issuing Bank, and, in connection with any such
enforcement or protection, the reasonable fees, charges and disbursements of any
other counsel for the Administrative Agent, the Collateral Agent, the Issuing
Bank or any Lender.
(b) The Borrower agrees to indemnify the Administrative Agent, the
Collateral Agent, each Lender and the Issuing Bank, each Affiliate of any of the
foregoing persons and each of their respective directors, trustees, officers,
employees and agents (each such person being called an "Indemnitee") against,
and to hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including reasonable counsel fees, charges and
disbursements, incurred by or asserted against any Indemnitee arising out of, in
any way connected with, or as a result of (i) the execution or delivery of this
Agreement or any other Loan Document or any agreement or instrument contemplated
thereby, the performance by the parties thereto of their respective obligations
thereunder or the consummation of the Transactions and the other transactions
contemplated thereby, (ii) the use of the proceeds of the Loans or issuance of
Letters of Credit, (iii) any claim, litigation, investigation or proceeding
relating to any of the foregoing, whether or not any Indemnitee is a party
thereto, or (iv) any actual or alleged presence, Release or threatened Release
of Hazardous Materials on any of the Properties (as defined in Section 3.17
hereof), or any Environmental Claim related in any way to the Borrower or the
Subsidiaries; PROVIDED that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or wilful
misconduct of such Indemnitee.
(c) The provisions of this Section 9.05 shall remain operative and
in full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the expiration of the Commitments, the expiration
of any Letter of Credit, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of the Administrative Agent, the Collateral Agent, any
Lender or the Issuing Bank. All amounts due under this Section 9.05 shall be
payable on written demand therefor.
<PAGE>
SECTION 9.06. Right of Setoff . If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender to or
for the credit or the account of the Borrower against any or all the obligations
of the Borrower now or hereafter existing under this Agreement and other Loan
Documents held by such Lender, irrespective of whether or not such Lender shall
have made any demand under this Agreement or such other Loan Document and
although such obligations may be unmatured. The rights of each Lender under this
Section are in addition to other rights and remedies (including other rights of
setoff) which such Lender may have. Any Lender exercising its rights under this
Section 9.06 shall promptly notify the Borrower after such exercise.
SECTION 9.07. Applicable Law . THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (OTHER THAN LETTERS OF CREDIT AND AS EXPRESSLY SET FORTH IN OTHER LOAN
DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK. EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED IN ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF
CREDIT, OR IF NO SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM CUSTOMS AND
PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION), INTERNATIONAL CHAMBER OF
COMMERCE, PUBLICATION NO. 500 (THE "UNIFORM CUSTOMS") AND, AS TO MATTERS NOT
GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.08. Waivers; Amendment . (a) No failure or delay of the
Administrative Agent, the Collateral Agent, any Lender or the Issuing Bank in
exercising any power or right hereunder or under any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the
Administrative Agent, the Collateral Agent, the Issuing Bank and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or any other Loan Document or consent to any
departure by the Borrower therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice or demand on the Borrower in any case shall entitle the
Borrower to any other or further notice or demand in similar or other
circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower and the Required Lenders; PROVIDED, HOWEVER, that
no such agreement (i) shall (A) decrease the principal amount of, or extend the
maturity of or any scheduled principal payment date or date for the payment of
any interest on any Loan or any date for reimbursement of an L/C Disbursement,
or waive or excuse any such payment or any part thereof, or decrease the rate of
interest on any Loan or L/C Disbursement, without the prior written consent of
each Lender affected thereby, (B) increase or extend the Commitment or decrease
the Fees of any Lender without the prior written consent of such Lender, or (C)
amend or modify the pro rata sharing requirements of Section 2.17, or the
provisions of Section 9.04(i), the provisions of this Section or the definition
of the term "Required Lenders", or release any Guarantor or all or any
substantial part of the Collateral (except as expressly permitted by the Loan
Documents), without the prior written consent of each Lender affected thereby,
(ii) shall amend, modify or otherwise affect the rights or duties of any Agent,
the Issuing Bank or the Swingline Lender hereunder or under any other Loan
Document without the prior written consent of such Agent, the Issuing Bank or
the Swingline Lender, as applicable, or (iii) shall change the provisions of any
Loan Document in a manner that by its terms adversely affects the rights in
respect of payments due to Lenders holding Revolving Loans, Tranche A Term Loans
or Tranche B Term Loans (as used in this Section, each a "CLASS" of Loans)
differently from the rights in respect of payments due to Lenders holding any
other Class of Loans without the prior written consent of Lenders holding a
majority of the aggregate outstanding principal amount of the Loans (or, if no
Revolving Loans are outstanding, the Revolving Credit Commitments) of the
adversely affected Class of Loans.
<PAGE>
SECTION 9.09. Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any Loan
or participation in any L/C Disbursement, together with all fees, charges and
other amounts which are treated as interest on such Loan or participation in
such L/C Disbursement under applicable law (collectively the "CHARGES"), shall
exceed the maximum lawful rate (the "MAXIMUM RATE") which may be contracted for,
charged, taken, received or reserved by the Lender holding such Loan or
participation in accordance with applicable law, the rate of interest payable in
respect of such Loan or participation hereunder, together with all Charges
payable in respect thereof, shall be limited to the Maximum Rate and, to the
extent lawful, the interest and Charges that would have been payable in respect
of such Loan or participation but were not payable as a result of the operation
of this Section shall be cumulated and the interest and Charges payable to such
Lender in respect of other Loans or participations or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
SECTION 9.10. Entire Agreement . This Agreement, the Fee Letter and
the other Loan Documents constitute the entire contract between the parties
relative to the subject matter hereof. Any other previous agreement among the
parties with respect to the subject matter hereof is superseded by this
Agreement and the other Loan Documents. Nothing in this Agreement or in the
other Loan Documents, expressed or implied, is intended to confer upon any party
other than the parties hereto and thereto any rights, remedies, obligations or
liabilities under or by reason of this Agreement or the other Loan Documents.
SECTION 9.11. WAIVER OF JURY TRIAL . EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 9.11.
SECTION 9.12. Severability . In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby. The parties shall endeavor
in good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
SECTION 9.13. Counterparts . This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original but all of which when taken together shall
constitute a single contract, and shall become effective as provided in Section
9.03. Delivery of an executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Agreement.
SECTION 9.14. Headings . Article and Section headings and the Table
of Contents used herein are for convenience of reference only, are not part of
this Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
<PAGE>
SECTION 9.15. Jurisdiction; Consent to Service of Process . (a) The
Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender may
otherwise have to bring any action or proceeding relating to this Agreement or
the other Loan Documents against the Borrower or its properties in the courts of
any jurisdiction.
(b) The Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the other Loan
Documents in any New York State or Federal court. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.16. Confidentiality . The Administrative Agent, the
Collateral Agent, the Issuing Bank and each of the Lenders agrees to keep
confidential (and to use its best efforts to cause its respective officers,
directors, employees, affiliates, agents and representatives to keep
confidential) the Information (as defined below) and all copies thereof,
extracts therefrom and analyses or other materials based thereon, except that
the Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender
shall be permitted to disclose Information (a) to such of its respective
officers, directors, employees, agents, affiliates and representatives as need
to know such Information, (b) to the extent requested by any regulatory
authority, including the National Association of Insurance Commissioners, (c) to
the extent otherwise required by applicable laws and regulations or by any
subpoena or similar legal process, (d) in connection with any suit, action or
proceeding relating to the enforcement of its rights hereunder or under the
other Loan Documents or (e) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section 9.16 or (ii)
becomes available to the Administrative Agent, the Issuing Bank, any Lender or
the Collateral Agent on a nonconfidential basis from a source other than the
Borrower. For the purposes of this Section, "INFORMATION" shall mean all
financial statements, certificates, reports, agreements and information
(including all analyses, compilations and studies prepared by the
<PAGE>
Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender based
on any of the foregoing) that are received from the Borrower and related to the
Borrower, any shareholder of the Borrower or any employee, customer or supplier
of the Borrower, other than any of the foregoing that were available to the
Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender on a
nonconfidential basis prior to its disclosure thereto by the Borrower, and which
are in the case of Information provided after the date hereof, clearly
identified at the time of delivery as confidential. The provisions of this
Section 9.16 shall remain operative and in full force and effect regardless of
the expiration and term of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
JOHNSTOWN AMERICA INDUSTRIES, INC.,
by
/S/ANDREW M. WELLER
- --------------------------------------
Name:Andrew M. Weller
Title: Executive Vice President and
Chief Financial Officer
THE CHASE MANHATTAN BANK, individually and as Administrative Agent,
Collateral Agent and Swingline Lender,
by
/S/JULIE S. LONG
- --------------------------------------
Name:Julie S. Long
Title: Vice President
CHASE MANHATTAN BANK DELAWARE, as Issuing Bank,
by
/S/MICHAEL P. HANDAGO
- --------------------------------------
Name:Michael P. Handago
Title: Vice President
THE BANK OF NEW YORK,
by
/S/JOHN-PAUL MAROTTA
- --------------------------------------
Name:John-Paul Marotta
Title: Vice President
BANKBOSTON, N.A.,
by
/S/MARK FAWCETT
- --------------------------------------
Name:Mark Fawcett
Title: Vice President
<PAGE>
COMERICA BANK,
by
/S/MICHAEL T. SHEA
- --------------------------------------
Name:Michael T. Shea
Title: Vice President
CREDIT AGRICOLE INDOSUEZ,
by
/S/ERNEST V. HODGE
- --------------------------------------
Name:Ernest V. Hodge
Title: Vice President
Senior Relationship Manager
by
/S/RAYMOND A. FALKENBERG
- --------------------------------------
Name:Raymond A. Falkenberg
Title: Vice President, Manager
FIRST NATIONAL BANK OF CHICAGO,
by
/S/BARRY P. LITWIN
- --------------------------------------
Name:Barry P. Litwin
Title: Senior Vice President
FIRST UNION NATIONAL BANK,
by
/S/KENT DAVIS
- --------------------------------------
Name:Kent Davis
Title: Vice President
FLOATING RATE PORTFOLIO,
By: INVESCO Senior Secured Management, Inc. as attorney in fact,
by
/S/ANNE MCCARTHY
- --------------------------------------
Name:Anne McCarthy
Title: Authorized Signatory
LAUREL BANK,
by
/S/DANIEL J. ROHAL
- --------------------------------------
Name:Vice President
Title: Commercial Services Officer
<PAGE>
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC.,
by
/S/PAUL TRAVERS
- --------------------------------------
Name:Paul Travers
Title: Authorized Signatory
MERRILL LYNCH SENIOR FLOATING RATE FUND II, INC.,
by
/S/PAUL TRAVERS
- --------------------------------------
Name:Paul Travers
Title: Authorized Signatory
NATIONAL BANK OF CANADA, a Canadian chartered bank,
by
/S/LEROY A. IRWIN
- --------------------------------------
Name:Leroy A. Irwin
Title: Vice President and Manager
by
/S/JONATHAN M. MILLARD
- --------------------------------------
Name:Jonathan M. Millard
Title: Vice President
NATIONAL CITY BANK,
by
/S/PAUL M. STEVENS
- --------------------------------------
Name:Paul M. Stevens
Title: Vice President
NATIONSBANK, N.A.,
by
/S/EDWARD A. HAMILTON
- --------------------------------------
Name:Edward A. Hamilton
Title: Managing Director
THE NORTHERN TRUST COMPANY,
by
/S/FREDRIC MCCLENDON
- --------------------------------------
Name:Fredric McClendon
Title: Vice President
<PAGE>
STEIN ROE FLOATING RATE LIMITED LIABILITY COMPANY,
by
/S/BRIAN W. GOOD
- --------------------------------------
Name:Vice President
Title: Stein Roe & Farnham Incorporated,
as Advisor to the Stein Roe
Floating Rate Limited
Liability Company
VAN KAMPEN PRIME RATE INCOME TRUST,
by
/S/LISA M. MINCHESKI
- --------------------------------------
Name:Lisa M. Mincheski
Title: Vice President
VAN KAMPEN SENIOR INCOME TRUST,
by
/S/LISA M. MINCHESKI
- --------------------------------------
Name:Lisa M. Mincheski
Title: Vice President
BOND GUARANTY AGREEMENT
THIS BOND GUARANTY AGREEMENT dated March 1, 1999 is entered into by
BOSTROM SEATING, INC. (herein collectively the "Guarantor") for the benefit of
NBD BANK, a banking corporation with its principal place of business in Detroit,
Michigan (the "Trustee"), as trustee under the Indenture referred to below.
RECITALS
The Industrial Development Board of the City of Piedmont (the "Issuer")
has duly authorized the creation, execution and delivery, under and pursuant to
that certain Trust Indenture dated March 1, 1999 (the "Indenture") from the
Issuer to the Trustee, $3,100,000 aggregate principal amount of Variable/Fixed
Rate Industrial Development Revenue Bonds (Bostrom Seating, Inc. Project) dated
the date of delivery (the "Bonds").
The proceeds of the Bonds shall be applied by the Issuer to pay the
costs of acquiring, constructing and installing buildings, structures,
facilities and related machinery and equipment on certain realty heretofore
acquired by the Issuer for use in the manufacturing, processing, assembling,
storing and distribution of seats for heavy trucks and buses and related
products (said real estate, buildings, structures, facilities, machinery,
equipment and related personal property being hereinafter collectively referred
to as the "Project").
Simultaneously with the issuance of the Bonds the Issuer and Bostrom
Seating, Inc., a Delaware corporation (the "Guarantor") will enter into a Lease
Agreement dated March 1, 1999 (the "Lease Agreement"), whereby the Issuer will
agree to lease the Project to the Guarantor and the Guarantor will agree to pay
rentals to the Issuer at such times and in such amounts as shall be sufficient
to pay when due the principal of, premium (if any) and interest ("Debt Service")
on the Bonds and the purchase price of Bonds tendered for purchase pursuant to
the mandatory or optional tender provisions of the Indenture.
The Bonds shall be limited obligations of the Issuer payable solely out
of the rentals payable by the Guarantor pursuant to the Lease Agreement and any
other revenues, rentals or receipts derived by the Issuer from the leasing or
sale of the Project (the "Lease Revenues").
As additional security for the payment of Debt Service on the Bonds, the
Guarantor will enter into this Bond Guaranty Agreement dated March 1, 1999 (the
"Bond Guaranty") in favor of the Trustee, whereby the Guarantor will guarantee
payment when due of Debt Service on the Bonds.
As additional security for the payment of the Bonds, the Guarantor will
cause Chase Manhattan Bank Delaware (in its capacity as issuer of the initial
letter of credit referred to below, the "Credit Obligor") to issue an
irrevocable letter of credit in favor of the Trustee in the amount of (i) the
aggregate principal amount of the Bonds, to enable the Trustee to pay the
principal amount of the Bonds when due and to pay the principal portion of the
purchase price of Bonds
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tendered (or deemed tendered) for purchase, plus (ii) interest on the Bonds for
a period of 56 days at the rate of 12% per annum, to enable the Trustee to pay
interest on the Bonds when due and to pay the interest portion of the purchase
price of Bonds tendered (or deemed tendered) for purchase. The initial letter of
credit to be delivered to the Trustee and any substitute letter of credit
delivered to the Trustee pursuant to this Indenture are herein referred to as
the "Letter of Credit".
The Letter of Credit is initially issued pursuant to various credit,
guaranty and security agreements among the Credit Obligor, the Issuer, the User,
and persons related to the User, which evidence, guarantee or provide security
for the obligations of the User to reimburse the Credit Obligor for draws under
the Letter of Credit and the observance and performance of various agreements of
the User related thereto (collectively the "Credit Documents").
NOW, THEREFORE, for and in consideration of the premises, the
consummation by the Issuer and the Trustee of the transactions contemplated by
the Indenture and the Lease Agreement and the purchase of the Bonds by all
Holders thereof, the Guarantor hereby covenants, agrees and binds itself as
follows:
ARTICLE I
PROVISIONS OF GENERAL APPLICATION
SECTION 1.01 DEFINITIONS
For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
"BENEFICIAL OWNERS" shall mean the owners of the beneficial interests in
the Bonds.
"CODE" means the Internal Revenue Code of 1986, as amended.
"DEFAULT" shall mean an event or condition the occurrence of which
would, with or without the lapse of time or the giving of notice or both, be an
Event of Default.
"EVENT OF DEFAULT" shall mean an event as defined in Article VI.
"FINANCING DOCUMENTS" shall mean collectively the Indenture, the Lease
Agreement, the Bond Guaranty Agreement, the Credit Documents, and the
Remarketing Agreement (as defined in the Indenture).
"FINANCING PARTICIPANTS" shall mean the parties to the Financing
Documents.
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"HOLDER" means the Beneficial Owners of any of the Bonds or a former
Beneficial Owner of any of the Bonds entitled to enforce any rights hereunder.
"LIEN" shall mean any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and including but not
limited to the security interest or lien arising from a mortgage, encumbrance,
pledge, conditional sale or trust receipt or a lease assignment or bailment for
security purposes. For the purposes of this Agreement, the Guarantor shall be
deemed to be the owner of any Property which it shall have acquired or holds or
hold subject to a conditional sale agreement, financing lease or other
arrangement pursuant to which title to the Property has been retained by or
vested in some other person for security purposes.
"MATERIAL ADVERSE EFFECT" shall mean any act or circumstance or event
which (i) causes an Event of Default or Default, (ii) otherwise might be
material and adverse to the financial condition or business operations of the
Guarantor or (iii) would adversely affect the validity or enforceability of any
of the papers executed in connection with the Bonds.
"PERSON" shall mean and include an individual, a partnership, a joint
venture, a corporation, an association, a trust, an unincorporated organization
and a government or any department, agency or political subdivision thereof.
"PROPERTY" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"TRIBUNAL" shall mean any state, commonwealth, federal, foreign,
district, territorial, or other court or governmental department, board, bureau,
agency or instrumentality having jurisdiction over Guarantor.
SECTION 1.02 ACCOUNTING PRINCIPLES
Where the character or amount of any asset or liability or item of
income or expense is required to be determined is required to be made for the
purposes of this Agreement, this shall be done in accordance with the system of
accounting used by Guarantor preparation of its federal income tax returns. The
User shall maintain books and records in accordance with generally accepted
accounting principles ("GAAP") consistently applied.
SECTION 1.03 ACTION TAKEN DIRECTLY OR INDIRECTLY
Where any provision in this Agreement refers to action to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be applicable whether such action is taken directly or indirectly by such
Person.
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SECTION 1.04 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the State of Alabama.
SECTION 1.05 GENERAL RULES OF CONSTRUCTION
(1) Capitalized terms used herein without definition shall have the
meaning assigned to them in the Indenture.
(2) Singular terms shall include the plural as well as the singular, and
vice versa.
(3) All references in this instrument to designated "Articles",
"Sections" and other subdivisions are to the designated Articles, Sections and
subdivisions of this instrument as originally executed.
(4) The terms "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
SECTION 1.06 EFFECT OF HEADINGS AND TABLE OF CONTENTS
The Article and Section headings herein and in the Table of Contents are
for convenience only and shall not affect the construction hereof.
ARTICLE II
GUARANTY
SECTION 2.01 GUARANTY OF PAYMENT OF BONDS
(a) The Guarantor hereby absolutely and unconditionally guarantees (i)
the punctual payment when due (whether at stated maturity, by acceleration or
call for redemption or otherwise), in lawful money of the United States of
America, of any and all sums which may become due at any time or from time to
time to each Holder as Debt Service on the Bonds, including interest on any past
due amounts of Debt Service (but without regard to any provision set forth in
the Bonds or the Indenture limiting the sources of payment of amounts becoming
due on the Bonds), (ii) the full and prompt payment of all costs and expenses,
including court costs and reasonable attorneys' fees, incurred by the Trustee or
any Holder in attempting to collect or enforce any such obligations), and (iii)
the prompt payment of all other amounts payable by the Issuer under the
Indenture. If a Holder or the Trustee shall fail to receive any such payment
when due as aforesaid, the Guarantor shall immediately pay to the Holder or the
Trustee, as appropriate, in lawful money of the United States of America, an
amount equal to the required payment;
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provided, anything herein to the contrary notwithstanding, there shall be
credited against any amounts owing to the Holders hereunder all amounts
theretofore paid to the Trustee by the Guarantor pursuant to any of the
Financing Documents with respect to the Bonds held by such Holders.
(b) The guaranty set forth in this Section is an absolute and
irrevocable guaranty of payment and not of collectibility or performance and is
in no way conditioned or contingent upon any attempt to collect from the Issuer
or any other Person or to realize upon any Property subject to the Lien of the
Indenture or upon any other direct or indirect security for the Bonds, or to
resort to any other remedies.
(c) Each default in payment of Debt Service shall give rise to a
separate cause of action hereunder and separate suits may be brought hereunder
as each cause of action arises.
(d) The Guarantor hereby waives all of the following and all defenses,
counterclaims, or offsets which the Guarantor may have by reason thereof: (1)
notice of acceptance hereof, notice of any action taken or omitted in reliance
hereon, notice of any defaults by the Issuer in the payment of any such sums,
and notice of the creation, renewal, or accrual of any liability of the Issuer,
(2) any presentment, demand, notice or protest of any kind, (3) any right (i) to
have the Issuer joined with the Guarantor in any suit brought against the
Guarantor on this Agreement, (ii) to require the Trustee or a Holder to
forthwith bring suit against the Issuer on the Bonds, and (iii) to require that
the Trustee or a Holder obtain any judgment against the Issuer on the Bonds in
connection with the enforcement of any rights against the Guarantor hereunder,
and (4) any other act or thing (including without limitation alteration of the
Bonds, Letter of Credit or the Financing Documents or debt evidenced thereby or
security therefor), or omission or delay to do any other act or thing which may,
by operation of law or otherwise, in any manner or to any extent vary the risk
of the Guarantor or which might otherwise operate as a discharge of the
Guarantor.
(e) The guaranty set forth in this Section shall remain in full force
and effect without reference to future changes in conditions, including, to the
extent permitted by applicable law, changes in law, until all Holders shall have
been indefeasibly paid in full all sums due under the terms and provisions of
the Bonds and the Lease Agreement notwithstanding any terms or provisions
contained in the Bonds (including any discharge or termination of the Indenture
as a result of deposits being made with the Trustee), and until such sums are
not subject to rescission or repayment upon any bankruptcy, insolvency,
arrangement, reorganization, moratorium, receivership or similar proceeding
affecting the Issuer or the Guarantor.
SECTION 2.02 INDEMNIFICATION AGAINST INVALIDITY
(a) If, at any time and for any reason whatsoever, an Adjudication of
Invalidity (as defined hereinafter) shall have been made, the Guarantor hereby
agrees to indemnify and save the Holders harmless from the consequences of such
an event by purchasing the Bonds at a price equal to the
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outstanding principal amount thereof plus interest accrued thereon to the date
of the purchase. A purchase will be made within thirty days after receipt by the
Guarantor of a written request from a Holder, which written request shall
specify that an Adjudication of Invalidity has occurred. The Guarantor shall be
obligated to make such purchase without the necessity of any showings or proofs
on the part of a Holder that such Holder has suffered any losses or damages
(such losses and damages being conclusively presumed upon the occurrence of an
Adjudication of Invalidity). The term "ADJUDICATION OF INVALIDITY" shall mean
either (i) a final, unappealable adjudication by any court of competent
jurisdiction, binding upon the Guarantor or the Issuer (or any of them), or if
not binding upon the Guarantor or the Issuer (or any of them), applicable to the
Bonds in the unqualified Opinion of Bond Counsel satisfactory to the Trustee,
such opinion being in form and substance reasonably satisfactory to the
Guarantor, that, under the constitution or general laws of the State of Alabama,
the Issuer or the Trustee or the Credit Obligor lacked authority to do any one
or more of the following at the time any one of the following was done: (a)
issue the Bonds, (b) enter into the Indenture, (c) issue the Letter of Credit,
or (d) enter into the Lease Agreement; or (ii) a final, unappealable
adjudication by any such court that the Bonds (or, on a ground applicable to the
Bonds, that any other obligations) are otherwise invalid for any other reason
whatsoever, including, without limitation, any invalidity or irregularity in any
statutory, judicial or other proceedings relating to the formation or existence
of the Issuer, relating to the issuance of the Bonds or the Letter of Credit or
relating to the execution and delivery of any of the Financing Documents. The
obligation to purchase the Bonds in the event of an Adjudication of Invalidity
shall apply even though the Bonds or a part thereof may have been called for
redemption and shall apply even after the date set for redemption if the Bonds
shall not yet have been redeemed. The Guarantor shall give or cause to be given
at their expense to the Trustee prompt written notice of any Adjudication of
Invalidity of which the Guarantor may become aware, and the Trustee shall give
written notice of such Adjudication of Invalidity to the Holders.
(b) No purchase of the Bonds by the Guarantor pursuant to this Section
shall relieve the Guarantor of its obligation to pay Basic Rental Payments upon
the occurrence of a Determination of Taxability.
(c) Whether or not there is an Adjudication of Invalidity and in
addition to the foregoing, the Guarantor hereby agrees to indemnify and save
each Holder and the Trustee harmless from and against all damage, loss, cost or
expense (including reasonable attorneys' fees) which any Holder or the Trustee
may incur or be subject to as a consequence, direct or indirect, of (1) such
Adjudication of Invalidity, (2) any breach by the Guarantor or the Issuer (or
any of them) of any representation, warranty, covenant, term or condition in, or
the occurrence of any default or any Event of Default under any Financing
Document, the Letter of Credit, or the Bonds, together with all reasonable
expenses resulting from the compromise or defense of any claims or liabilities
arising as a result of any such breach or default or Event of Default, (3) any
legal action commenced to challenge the validity of any of the Financing
Documents, the Letter of Credit or the Bonds, and (4) any other cause relating
to any of the Financing Documents, the Letter of Credit or the Bonds. The
Guarantor shall be obligated to make the payments described in this paragraph
only after receipt from a Holder of written notice requesting that such payments
be
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made, identifying the reason for such payments and specifying the amounts to be
paid. The Guarantor shall make such payments to the Holder within thirty days
after receipt of such notice.
(d) The obligations of the Guarantor under this Section constitute
original undertakings on the part of the Guarantor, are not collateral to the
obligations of the Issuer or any other person or entity with respect to the
Bonds, and are independent, separate and apart from the guaranty obligations of
the Guarantor set forth under Section 2.01.
SECTION 2.03 CHARACTER OF OBLIGATIONS HEREUNDER
(a) All obligations of the Guarantor under this Agreement are
unconditional, primary, absolute and irrevocable under any and all
circumstances. Without limiting the generality of the foregoing, to the fullest
extent permitted under applicable law, the obligations of the Guarantor
hereunder shall not be subject to or impaired by:
(i) any inability or failure on the part of any party thereto to
perform or comply with the Letter of Credit, the Financing Documents or
the Bonds;
(ii) any invalidity or irregularity in any statutory or other
proceedings relating to the formation or existence of the Issuer, to the
issuance of the Bonds or to the execution and delivery of any Financing
Document;
(iii) any invalidity or unenforceability of, or any impairment,
modification or release of liability of any party under, or any
impossibility, impracticability, illegality or frustration of
performance by any party of, the Letter of Credit, the Financing
Documents or the Bonds, for any reason whatsoever, including, without
limitation, any decision by any court invalidating or otherwise
affecting the obligations of any party under or in connection with the
Letter of Credit, the Financing Documents or the Bonds;
(iv) any inability or failure on the part of the Guarantor to
perform or comply with the Lease Agreement;
(v) any invalidity or unenforceability of, or any impairment,
modification or release of liability of the Guarantor under, or any
impossibility, impracticability, illegality or frustration of
performance by the Guarantor of this Agreement;
(vi) the voluntary or involuntary liquidation, dissolution,
merger, consolidation, sale or other disposition of all or substantially
all of the assets, marshalling of assets and liabilities, receivership,
insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, moratorium, arrangement, composition with creditors or
readjustment of debt of, or other similar proceedings affecting, the
Issuer (including any payments to be received by the Issuer under the
Lease Agreement in connection with any of the aforementioned proceedings
or events), the Credit Obligor or the Guarantor;
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(vii) any waiver, consent, extension, indulgence or other action
or inaction in respect of the Letter of Credit, any Financing Document,
or the Bonds, including any modification, amendment or supplement to any
of the foregoing, the renewal or extension of the Bonds, the release of
any Property subject to the Lien of the Indenture or the Lease Agreement
or any other similar act;
(viii) any right of setoff, counterclaim or defense, or any act,
omission or breach on the part of the Issuer, the Credit Obligor or the
Guarantor;
(ix) any claim whatsoever against the Issuer;
(x) any defect in the title, compliance with specifications,
value, condition, design, operation, merchantability, quality,
durability or suitability of, consequences of use or misuse of, or
unfitness for use of, the Project or any part thereof, any abandonment,
destruction, noncompletion, requisition, condemnation, foreclosure of or
damage to the Project or any part thereof, or any event of FORCE MAJEURE
relating to the Project or any part thereof;
(xi) any breach of any representation or warranty relating to the
Bonds or the Project;
(xii) any release, extinguishment or satisfaction of the Issuer's
obligations to make payments of Debt Service until there have been paid
to the Trustee or the Holders in lawful currency of the United States an
amount sufficient to pay all Debt Service (including interest on overdue
amounts of Debt Service including, to the extent permitted by applicable
law, interest) that would have been due and owing to the Holders by the
Issuer had the Issuer's obligations not been so released, extinguished
or satisfied;
(xiii) the failure to give notice to the Guarantor of the
occurrence of any default or event of default under the Bonds, the
Letter of Credit or the Financing Documents;
(xiv) the compromise, settlement, release or termination of any
or all of the obligations, covenants or agreements of any of the parties
to any of the Financing Documents (the "FINANCING PARTICIPANTS") under
the Bonds, the Letter of Credit or the Financing Documents;
(xv) any assignment, pledge or mortgage of all or any part of the
interest of any of the Financing Participants in the Project or the
Trust Estate;
(xvi) any waiver of the payment, performance or observance by any
of the Financing Participants of any obligation, agreement or covenant
of any of them contained in the Bonds, the Letter of Credit or the
Financing Documents;
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(xvii) the extension of the time for payment of Debt Service on
the Bonds or any part thereof or of the time for performance of any
other obligations, agreements or covenants of any of the Financing
Participants under the Bonds, the Letter of Credit or the Financing
Documents;
(xviii)the modification or amendment (whether material or
otherwise) of any obligation, agreement or covenant contained in the
Bonds, the Letter of Credit or the Financing Documents;
(xix) any failure, omission, or delay on the part of any of the
Financing Participants to enforce, assert or exercise any right, power
or remedy conferred upon any of them by the Bonds, the Letter of Credit
or the Financing Documents;
(xx) the bankruptcy, insolvency, reorganization, appointment of a
receiver for, or dissolution of any of the Financing Participants, or
the entering by any or all of them into an agreement of composition with
creditors, or the making by any or all of them of an assignment for the
benefit of creditors;
(xxi) any rights of set-off, recoupment, counterclaim or other
defense, whether similar or dissimilar to the foregoing, which the
Guarantor might otherwise have against any of the Financing Participants
or any other person;
(xxii) the default or failure of any one or more of the Financing
Participants to perform fully any obligation, covenant or agreement
contained in the Bonds, the Letter of Credit or the Financing Documents;
(xxiii)the release or discharge of any one or more of the
Financing Participants by operation of law, to the extent that such
release or discharge may be lawfully avoided, from the performance or
observance of any agreement or covenant contained in the Bonds, the
Letter of Credit or the Financing Documents;
(xxiv) the invalidity or unenforceability of the Bonds, the
Letter of Credit or the Financing Documents or of any provision of such
instruments.
(b) The Guarantor acknowledges that this Agreement is executed for the
benefit of the Holders and the Trustee and that the Bonds will be purchased in
reliance on this Agreement. No act of commission or omission of any kind at any
time on the part of the Trustee or any Holder in respect of any matter
whatsoever shall in any way affect or impair any right, power or benefit of the
Trustee, or any Holder under this Agreement and, to the extent permitted by
applicable law, no setoff, claim, reduction, diminution of any obligation, or
any defense of any kind or nature which the Guarantor may have against the
Trustee or any Holder, shall be available against the Trustee or any Holder in
any suit or action brought by the Trustee or any Holder to enforce any right,
power or benefit under this Agreement. Any conflict or ambiguity between this
Agreement
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and the other Financing Documents shall be interpreted and determined in the
manner most favorable to the Trustee and the Holders.
ARTICLE III
DETERMINATION OF TAXABILITY
SECTION 3.01 PAYMENTS BY THE GUARANTOR
In connection with a Determination of Taxability, the Guarantor agrees
to pay, in addition to the amounts specified in the Bonds and in the Lease
Agreement, the reasonable fees and expenses of the Trustee incurred in
connection therewith.
SECTION 3.02 NO OBLIGATION TO CONTEST OR APPEAL
No Holder shall have any duty to make any contest of such a
Determination of Taxability or to pursue any appeal of, or have any
communication with the Internal Revenue Service concerning, such Determination
of Taxability.
ARTICLE IV
BUSINESS COVENANTS
SECTION 4.01 AFFIRMATIVE COVENANTS
The Guarantor covenants that so long as this Agreement is in effect, the
Guarantor shall
(a) EXISTENCE, PROPERTIES, ETC. (i) Do or cause to be done all things
necessary to preserve and keep in full force and effect the legal existence of
the Guarantor and all privileges, rights and franchises and comply with all laws
where failure to so comply would have a Material Adverse Effect; (ii) at all
times maintain, preserve and protect all of its property used or useful in the
conduct of its business where the failure to so maintain, preserve and protect
would have a Material Adverse Effect, and keep the same in good repair, working
order and condition, and from time to time make, or cause to be made, all
necessary and proper repairs, renewals and replacements, betterments and
improvements thereto so that (a) the business carried on in connection therewith
may be properly and advantageously conducted at all times and (b) the failure to
so repair or replace would not have a Material Adverse Effect; (iii) at all
times keep its insurable properties adequately insured and maintain, where the
failure to so keep and maintain would have a Material Adverse Effect, (a)
insurance to such extent and against such risks, including fire, as is customary
with companies in the same or similar business, (b) necessary worker's
compensation insurance, and (c) such other insurance as may be required by law
or as
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may be reasonably required in writing by the Trustee; and (iv) cause the Credit
Obligor to be named as loss payee on each of said policies relating to the
Project.
(b) PAYMENT OF INDEBTEDNESS, TAXES, ETC. (i) Pay all of its indebtedness
and obligations promptly and in accordance with normal terms where failure to
pay would have a Material Adverse Effect, and (ii) pay and discharge or cause to
be paid or discharged promptly all taxes, assessments and governmental charges
or levies imposed upon it or upon its income and profits, or upon any of its
Property, real, personal or mixed, or upon any part thereof, before the same
shall become in default, as well as all lawful claims for labor, materials and
supplies or otherwise, which, if unpaid, might become a lien upon such
properties or any part thereof where failure to pay would have a Material
Adverse Effect; provided, however, that the Guarantor shall not be required to
pay and discharge any such tax, assessment, charge, levy or claim so long as the
validity thereof shall be contested in good faith by appropriate proceedings and
the Guarantor shall have set aside on its books adequate reserves with respect
to any such tax, assessment, charge, levy or claim so contested.
(c) FURTHER ASSURANCES. On request of the Trustee, promptly correct any
defect, error or omission which may be discovered in the contents of any of the
papers executed in connection with the Bonds or in the execution or
acknowledgement thereof, and execute, acknowledge and deliver such further
instruments and do such further acts as may be necessary or as may be requested
by the Trustee to carry out more effectively the purposes of this Agreement and
the papers executed in connection with the Bonds.
SECTION 4.02 INFORMATION AS TO GUARANTOR
FINANCIAL AND BUSINESS INFORMATION. The Guarantor shall deliver to the
Trustee:
(a) NOTICE OF DEFAULT OR EVENT OF DEFAULT. Immediately upon becoming
aware of the existence of any condition or event which constitutes a default or
an event of default under any Financing Document, a written notice specifying
the nature and period of existence thereof and what action the Guarantor is
taking or proposes to take with respect thereto;
(b) NOTICE OF CLAIMED DEFAULT. Immediately upon becoming aware that a
Holder or the holder of any evidence of indebtedness or other security of the
Guarantor has given notice or taken any other action with respect to a claimed
default or event of default thereunder which would cause a default or event of
default which would have a Material Adverse Effect, a written notice specifying
the notice given or action taken by such holder and the nature of the claimed
default or event of default and what action the Guarantor are taking or proposes
to take with respect thereto;
(c) REQUESTED INFORMATION AND AUDITS. With reasonable promptness, such
financial and other data and information as from time to time may be reasonably
requested;
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(d) NOTICE OF LITIGATION. Immediately upon becoming aware of the
existence of any proceedings before any Tribunal involving the Guarantor which
involves the probability of any final judgment or liability against such
Guarantor in an amount which would have a Material Adverse Effect, a written
notice specifying the nature thereof and what action such Guarantor is taking
and proposes to take with respect thereto; and
(e) NOTICE FROM REGULATORY AGENCIES. Promptly upon receipt thereof,
information with respect to and copies of any notices received from federal or
state regulatory agencies or any Tribunal relating to an order, ruling, statute
or other law or information which might have a Material Adverse Effect on the
franchises, permits, licenses, or rights, or the condition, financial or
otherwise, of the Guarantor.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
The Guarantor represents, warrants and agrees that:
SECTION 5.01 NO MATERIAL ADVERSE EFFECT
Since the date of application to the Credit Obligor for the loan
represented by the Letter of Credit, (i) there has been no change in the
business, prospects, profits, Properties or condition (financial or otherwise)
of the Guarantor, except changes in the ordinary course of business, none of
which individually or in the aggregate has a Material Adverse Effect, (ii) the
Guarantor has not incurred any material liability which has a Material Adverse
Effect, and (iii) there exists no default under the provisions of any instrument
evidencing any such liabilities or under any agreement relating thereto which
would have a Material Adverse Effect.
SECTION 5.02 FULL DISCLOSURE
No written statement furnished by the Guarantor to the Trustee contains
any untrue statement of a material fact or omits to state a material fact
necessary to make the statements contained therein or herein not misleading.
There is no fact which the Guarantor has not disclosed to the Trustee in writing
which has a Material Adverse Effect or, so far as the Guarantor can now foresee,
will have a Material Adverse Effect.
SECTION 5.03 PENDING LITIGATION
To the Guarantor's knowledge, there are no proceedings pending, or to
the knowledge of the Guarantor threatened, against or affecting the Guarantor in
any court or before any governmental authority or arbitration board or Tribunal
which involve the possibility of a Material Adverse Effect, or the ability of
the Guarantor to perform this Agreement or to perform the Lease
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Agreement. The Guarantor is not in default with respect to any order of any
court, governmental authority, arbitration board or Tribunal which would have a
Material Adverse Effect.
SECTION 5.04 TITLE TO PROPERTIES
Except as set forth in the Indenture, the Issuer has good and marketable
title in fee simple to the Project.
SECTION 5.05 NO DEFAULTS
No event has occurred and no conditions exist which would, in any
material respect, upon the issuance of the Bonds, constitute (i) a default under
any note or other evidence of indebtedness or under any agreement of the
Guarantor if the effect of such default would have a Material Adverse Effect or
(ii) a default or event of default under the Financing Documents or any of them,
and the Guarantor is not in violation in any material respect of any term of any
agreement or other instrument to which it is a party or by which it may be bound
that would have a Material Adverse Effect.
SECTION 5.06 GOVERNMENTAL CONSENT
No consent, approval or authorization of, or filing, registration or
qualification with, any governmental authority on the part of the Guarantor is
required in connection with the execution and delivery of the Financing
Documents to which the Guarantor is a party.
SECTION 5.07 USE OF PROCEEDS
The Guarantor will cause the proceeds from the sale of the Bonds to be
applied as provided in the Indenture. None of the transactions contemplated
(including, without limitation thereof, the use of the proceeds from the sale of
the Bonds) will violate or result in a violation of Section 7 of the Securities
Exchange Act of 1934, as amended, or any regulations issued pursuant thereto,
including, without limitation, Regulations G, T, U and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R., Chapter II. The Guarantor
does not own or intend to carry or purchase any "margin security" within the
meaning of said Regulation G including margin securities originally issued by
the Guarantor. None of the proceeds from the sale of the Bonds will be used to
purchase or carry (or refinance any borrowing the proceeds of which were used to
purchase or carry) any "security" within the meaning of the Securities Exchange
Act of 1934, as amended.
SECTION 5.08 COMPLIANCE WITH LAW
The Guarantor:
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(a) is not in violation of any laws, ordinances, governmental rules or
regulations to which Guarantor is subject, or
(b) has not failed to obtain any licenses, permits, franchises or other
governmental authorizations necessary to the ownership of the Property, or to
the conduct of the business, of Guarantor,
which violation or failure to obtain would have a Material Adverse Effect.
SECTION 5.09 RESTRICTIONS ON GUARANTOR
The Guarantor is not a party to any contract or agreement which requires
consent of any creditor of the Guarantor or other party thereto to the right or
ability of the Guarantor to incur debt or guarantee indebtedness hereunder.
SECTION 5.10 MAINTENANCE OF TAX EXEMPTION
The Guarantor represents that it has not taken any action, and it knows
of no action that any other Person has taken, which would cause interest on the
Bonds to be includible in the gross income of the holder thereof for federal
income tax purposes, and covenants that it will not take any action or omit to
take any action at any time, or permit any Person to take any action or omit to
take any action at any time, which action or omission would result in the loss
of the exemption from federal income taxation of the interest on the Bonds;
provided that no such representation or covenant is made with respect to any
Bonds for any period during which they are held by a "substantial user" or a
"related person" as those terms are used in Section 147 of the Code. The
Guarantor further represents that it will not take or omit to take any action,
or permit any Person to take any action or omit to take any action, which action
or omission will in any way cause the proceeds from the sale of the Bonds to be
applied, or result in such proceeds being applied, in any manner other than as
provided in the Indenture and the Lease Agreement.
SECTION 5.11 INDEMNIFICATION
(a) The Guarantor will indemnify and hold harmless any Holder and each
Person, if any, who controls any Holder within the meaning of Section 15 of the
Securities Act of 1933, as amended, (any Holder and any such person being in
this Section collectively called a "Holder") against any and all losses, claims,
damages or liabilities, joint and several, or actions in respect thereof, to
which any Holder may become subject under any statute or common law or
otherwise, insofar as such losses, claims, damages or liabilities, or actions in
respect thereof, arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in this Agreement, including the
financial statements referred to herein, or any omission or alleged omission to
state herein a material fact necessary in order to make the statements herein
not misleading; and will reimburse any Holder for all legal or other expenses
reasonably incurred by such Holder in connection with investigating or defending
any such action or claim.
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(b) If any such action or claim shall be brought or asserted against any
Holder and in respect of which indemnity may be sought from the Guarantor, such
Holder shall promptly notify the Guarantor in writing and the Guarantor shall
assume the defense thereof, including the employment of counsel and the payment
of all expenses. Any Holder shall have the right to employ separate counsel in
any such action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Holder unless (a) the
employment thereof has been specifically authorized by the Guarantor in writing,
(b) the Guarantor has failed to assume the defense and to employ counsel, or (c)
the named parties to any such action (including any impleaded parties) include
both such Holder and the Guarantor, and such Holder shall have been advised by
such counsel that there may be one or more legal defenses available to it which
are different from or additional to those available to the Guarantor (in which
case, if such Holder notifies the Guarantor in writing that it elects to employ
separate counsel at the Guarantor' expense, the Guarantor shall not have the
right to assume the defense of such action on behalf of such Holder, it being
understood, however, that the Guarantor shall not, in connection with any one
such action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys for all such Holders, which firm shall be designated in writing by
such Holders). Each Holder, as a condition of such indemnity, shall use its best
efforts to cooperate with the Guarantor in the defense of any such action or
claim. The Guarantor shall not be liable for any settlement of any such action
effected without its written consent, but if settled with the written consent of
the Guarantor, or if there be a final judgment for the plaintiff in any such
action, the Guarantor agrees to indemnify and hold harmless any such Holder from
and against any loss or liability by reason of such settlement or judgment.
SECTION 5.12 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
The representations, warranties and covenants of the Guarantor contained
in this Agreement, and any other document, instrument and agreement referred to
or contemplated by this Agreement, shall remain operative and in full force and
effect regardless of (i) any investigation made by or on behalf of the Issuer,
any Holder or any other Person, or (ii) delivery of, and payment for, the Bonds.
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.01 EVENTS OF DEFAULT
An "Event of Default" shall exist under this Agreement if any of the
following occurs and is continuing (whatever the reason for such event and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
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(a) PARTICULAR COVENANT DEFAULTS. The Guarantor fails to perform or
observe any covenant or agreement contained in Sections 2.01 or 2.02 for a
period of five business days after the earlier of (i) notification by the
Trustee or a Holder of such failure or (ii) such other time as the Guarantor
shall have actual knowledge thereof;
(b) OTHER DEFAULTS. The Guarantor fails to comply with any other
provision of this Agreement, and such failure continues for a period of thirty
days after the earlier of (i) notification by the Trustee or a Holder of such
failure or (ii) such other time as the Guarantor shall have actual knowledge
thereof;
(c) WARRANTIES OR REPRESENTATIONS. Any warranty, representation or other
statement by or on behalf of the Guarantor contained in this Agreement, or in
any instrument furnished in compliance with or in reference to this Agreement,
is false or misleading in any material respect and action which eliminates such
falsity or misleading character is not completed for a period of thirty days
after the earlier of (i) notification by the Trustee or any Holder of such false
or misleading statement or (ii) such other time as the Guarantor shall have
actual knowledge thereof;
(d) DEFAULT ON OTHER INDEBTEDNESS. Default by the Guarantor in any
payment of any obligation for money received as an advance (or any obligation
under any conditional sale or other title retention agreement or any obligation
issued or assumed as full or partial payment for property whether or not secured
by purchase money lien or any obligation under notes payable or drafts accepted
representing extensions of credit) beyond any grace period provided with respect
thereto, or default in the performance of any other agreement, term or condition
contained in any agreement under which such obligation is created (or any other
default under any such agreement which shall occur and be continuing beyond any
period of grace provided with respect thereto), if the effect of such default
would have a Material Adverse Effect, and such default shall remain uncured for
a period of ten days after the Guarantor has notice thereof;
(e) INVOLUNTARY BANKRUPTCY PROCEEDINGS. A receiver, liquidator or
trustee of the Guarantor, or of any of its Property, is appointed by court order
and such order remains in effect for more than sixty days, or an order or decree
for relief in an involuntary bankruptcy case is entered with respect to the
Guarantor, or any of its Property is sequestered by court order and such order
remains in effect for more than sixty days, or a petition is filed against the
Guarantor under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction,
whether now or hereafter in effect, and is not dismissed within sixty days after
such filing;
(f) VOLUNTARY PETITIONS. The Guarantor files a petition in voluntary
bankruptcy or seeking relief under any provision of any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or hereafter in effect, or
consents to the filing of any petition against it under any such law;
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(g) GENERAL ASSIGNMENT FOR BENEFIT OF CREDITORS, ETC. The Guarantor
makes a general assignment for the benefit of its creditors, or is unable to pay
its debts generally as they become due, or consents to the appointment of a
receiver, trustee or liquidator of the Guarantor, or of all or any part of its
Property;
(h) UNDISCHARGED FINAL JUDGMENTS OR SETTLEMENTS. One or more final
judgments shall be entered against the Guarantor, or the Guarantor shall enter
into settlement of any litigation, which judgments and settlements are not
covered by insurance, and which judgments and settlements will have a Material
Adverse Effect on the Guarantor; or
(i) OTHER DEFAULTS. The occurrence of an event of default, as therein
defined, under any other Financing Document (other than the Credit Documents)
and the expiration of the applicable grace period, if any, specified therein.
SECTION 6.02 REMEDIES
If an Event of Default exists, the Trustee may, only with the consent of
the Credit Obligor if the Letter of Credit is in effect and the Credit Obligor
has not dishonored a draft thereunder (presented in strict conformance with such
Letter of Credit) and a Credit Obligor Insolvency Date shall not have occurred,
proceed to protect its rights and the rights of the Holders of the Bonds by suit
in equity, action at law or other appropriate proceedings, whether for the
specific performance of any covenant or agreement of any of the Guarantor herein
contained or in aid of the exercise of any power or remedy granted to the
Trustee under the other Financing Documents. The Trustee may proceed directly
against the Guarantor as provided herein without resorting to any other remedies
which it may have and without proceeding against any other security held by the
Trustee.
SECTION 6.03 LIMITATION ON SUITS
No Holder shall have any right to institute any proceeding, judicial or
otherwise, under or with respect to this Agreement, unless
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Bonds shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
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(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity shall have failed to institute any such
proceedings; and
(5) no direction inconsistent with such written consent has been
given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Bonds,
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Agreement to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Agreement, except in the manner herein
provided and for the equal and ratable benefit of all Outstanding Bonds.
SECTION 6.04 UNCONDITIONAL RIGHT OF BONDHOLDERS TO RECEIVE PRINCIPAL,
PREMIUM AND INTEREST
Notwithstanding any other provision in this Agreement, the Holder of any
Bond shall have the right, which is absolute and unconditional, to receive
payment of the principal of (and premium, if any) and interest on such Bond on
the respective stated maturity and due dates expressed in such Bond (or, in the
case of redemption, on the redemption date) and to institute suit for the
enforcement of any such payment, and such rights shall not be impaired without
the consent of such Holder.
SECTION 6.05 APPLICATION OF MONEY COLLECTED
Any money collected by the Trustee pursuant to this Agreement shall be
applied to the payment of the whole amount then due and unpaid upon the
Outstanding Bonds for principal (and premium, if any) and interest, in respect
of which or for the benefit of which such money has been collected; and in case
such money shall be insufficient to pay in full the whole amount so due and
unpaid upon such Bonds, then to the payment of such principal (and premium, if
any) and interest, without any preference or priority, ratably according to the
aggregate amount so due.
SECTION 6.06 AGREEMENT TO PAY ATTORNEYS' FEES
In the event the Guarantor should default under any of the provisions of
this Agreement and the Trustee (in its own name or in the name and on behalf of
the Holders) should employ attorneys or incur other expenses for the collection
of any payments due hereunder or the enforcement of performance or observance of
any agreement or covenant on the part of the Guarantor herein contained, the
Guarantor will on demand therefor pay to the Trustee the reasonable fees of such
attorneys and such other reasonable expenses so incurred.
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SECTION 6.07 WAIVER OF PAST DEFAULTS
(a) Before any judgment or decree for payment of money due has been
obtained by the Trustee, the Holders of not less than a majority in principal
amount of the Outstanding Bonds may, by Act of such Holders delivered to the
Trustee and the Guarantor, on behalf of the Holders of all the Bonds, waive any
past default hereunder and its consequences, except for a default in the payment
of any sums due pursuant to Article 2.
(b) Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Agreement and the Indenture; but no such waiver shall extend to
any subsequent or other default or impair any right consequent thereon.
SECTION 6.08 NO ADDITIONAL WAIVER IMPLIED BY ONE WAIVER
If any agreement contained in this Agreement should be breached by the
Guarantor and thereafter waived by the Holders of not less than a majority in
principal amount of the Outstanding Bonds, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder.
SECTION 6.09 REMEDIES SUBJECT TO APPLICABLE LAW
All rights, remedies and powers provided by this Article may be
exercised only to the extent the exercise thereof does not violate any
applicable provision of law in the premises, and all the provisions of this
Article are intended to be subject to all applicable mandatory provisions of law
which may be controlling in the premises and to be limited to the extent
necessary so that they will not render this Agreement invalid or unenforceable.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01 CONSENT TO SERVICE OF PROCESS
The Guarantor irrevocably (a) agrees that any suit, action or other
legal proceeding arising out of this Agreement may be brought in the courts of
record of the State of Alabama or the courts of the United States located in the
State of Alabama; (b) consents to the jurisdiction of each such court in any
such suit, action or proceeding, and (c) waives any objection which the
Guarantor may have to trial by jury or the laying of venue of any such suit,
action or proceeding in any of such courts.
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SECTION 7.02 BENEFIT OF THE AGREEMENT
This Agreement is entered into by the Guarantor for the benefit of the
Trustee and the Holders from time to time of the Bonds, all of whom shall,
subject to the provisions hereof, be entitled to enforce performance and
observance of each and every provision of this Agreement to the same extent as
if they were parties signatory hereto. The Guarantor hereby expressly waives
notice from the Trustee or the Holders from time to time of the Bonds of their
acceptance and reliance on this Agreement.
SECTION 7.03 NOTICES
(a) Any request, demand, authorization, direction, notice, consent, or
other document provided or permitted by this Agreement to be made upon, given or
furnished to, or filed with, the Guarantor or the Trustee shall be sufficient
for every purpose hereunder if in writing and (except as otherwise provided in
this Agreement) either (i) delivered personally to the party or, if such party
is not an individual, to an officer, or other legal representative of the party
to whom the same is directed (provided that any document delivered personally to
the Trustee must be delivered at its Principal Office during normal business
hours) at the address specified in Section 1.10 of the Indenture or (ii) mailed
by first-class, registered or certified mail, postage prepaid and addressed as
so specified. Either party may change the address for receiving any such notice
or document by giving notice of the change to the other party as provided in
this Section.
(b) Any such notice or other document shall be deemed delivered when
actually received by the party to whom directed (or, if such party is not an
individual, to an officer, or other legal representative of the party) at the
address specified pursuant to this Section, or, if sent by mail, three days
after such notice or document is deposited in the United States mail, proper
postage prepaid, addressed as provided above.
SECTION 7.04 AMENDMENTS
(a) This Agreement may not be amended without the prior written consent
of each party hereto and unless there has first been delivered to the Trustee,
the Guarantor and the Remarketing Agent an Opinion of Bond Counsel that such
action will not, whether solely or in conjunction with any other fact or
circumstance, cause the interest on the Bonds to be or to become Taxable.
(b) Without the consent of the Holders of any Bonds, the Guarantor may
from time to time enter into one or more amendments hereto, in form satisfactory
to the Trustee, for any of the following purposes:
(1) to add to the covenants of the Guarantor for the benefit of
the Holders and to make the occurrence, or the occurrence and
continuance, of a default in any of such additional covenants an Event
of Default permitting the enforcement of all or any of the several
remedies provided in this Agreement or the Indenture; provided, however,
that
20
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with respect to any such additional covenant such amendment to this
Agreement may provide for a particular period of grace after default
(which period may be shorter or longer than that allowed in the case of
other defaults) or may provide for an immediate enforcement upon such
default or may limit the remedies available to the Trustee and the
Holders upon such default; or
(2) to surrender any right or power herein conferred upon the
Guarantor; or
(3) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein or to
make any other provision, with respect to matters or questions arising
under this Agreement, which shall not be inconsistent with provisions of
this Agreement; provided such action shall not, in the judgment of the
Trustee, adversely affect the interests of the Holders.
(c) With the consent of the Holders of not less than a majority in
principal amount of the Bonds then Outstanding, by Act of such Holders delivered
to the Trustee, the Guarantor may enter into an amendment hereto for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Trustee or of the Holders under this Agreement; provided, however, that no such
amendment shall, without the consent of the Holder of each Outstanding Bond
affected thereby,
(1) reduce the amount, coverage or scope of the obligations contained in
Article 2,
(2) change the absolute and unconditional nature of such
obligations, or
(3) reduce the principal amount of Outstanding Bonds, the Holders
of which are required to consent to such amendment, change or
modification.
(d) If the Credit Obligor is not in default under the Letter of Credit,
no amendment or change to this Agreement may be made without the prior written
consent of the Credit Obligor.
SECTION 7.05 REPRODUCTION OF DOCUMENTS
The Guarantor hereby agrees that any Financing Document and all
documents relating thereto, including, without limitation, (a) supplements,
consents, waivers and modifications which may hereafter be executed, (b)
documents received by any Holder at any closing of any purchase of the Bonds and
(c) financial statements, certificates and other information previously or
hereafter furnished to the Trustee or any Holder, may be reproduced by the
Trustee or such Holder by any photographic, photostatic, microfilm, microcard,
miniature photographic or other similar process and they may destroy any
original document so reproduced. To the extent permitted by law, the Guarantor
agrees and stipulates that any such reproduction shall be admissible in evidence
as the original itself in any judicial or administrative proceeding (whether or
not the original is in
21
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existence and whether or not such reproduction was made by them in the regular
course of business) and that any enlargement, facsimile or further reproduction
of such reproduction shall likewise be admissible in evidence.
SECTION 7.06 SURVIVAL
All warranties, representations and covenants made by the Guarantor
herein or on any certificate or other instrument delivered by them or on their
behalf under this Agreement shall be considered to have been relied upon by the
Trustee and the Holders regardless of any investigation made by them or on their
behalf. All statements in any such certificate or other instrument shall
constitute warranties and representations by the Guarantor hereunder.
SECTION 7.07 SUCCESSORS AND ASSIGNS
The terms of this Agreement shall inure to the benefit of and be binding
upon the heirs, executors, administrators, successors and assigns of each of the
parties. The provisions of this Agreement are intended to be for the benefit of
all Holders, and shall be enforceable for the benefit of any such Holder,
whether or not an express assignment to such Holder of rights under this
Agreement has been made by any previous Holder or its successors or assigns.
SECTION 7.08 EFFECTIVE DATE OF AGREEMENT
The obligations of the Guarantor hereunder shall arise absolutely and
unconditionally when the Bonds shall have been issued, sold and delivered by the
Issuer.
SECTION 7.09 ENTIRE AGREEMENT; COUNTERPARTS
This Agreement constitutes the entire agreement, and supersedes all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof and may be executed simultaneously in
several counterparts, each of which shall be deemed an original, and all of
which together shall constitute one and the same instrument.
SECTION 7.10 SEVERABILITY
The invalidity or unenforceability of any one or more phrases,
sentences, clauses or sections contained in this Agreement shall not affect the
validity or enforceability of the remaining portions of this Agreement, or any
part thereof.
SECTION 7.11 DATE FOR IDENTIFICATION PURPOSES ONLY
The date of this Agreement is for identification purposes only and is
not intended to indicate that this Agreement was executed on such date.
22
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SECTION 7.12 EXCEPTIONS TO COVENANTS
The Guarantor shall not be deemed to be permitted to take any action or
fail to take any action which is permitted as an exception to any of the
covenants contained herein or which is within the permissible limits of any of
the covenants contained herein if such action or omission would result in the
breach of any other covenant contained herein.
SECTION 7.13 WAIVERS
The Guarantor hereby waives, as to the enforcement of this Agreement,
(i) all rights of exemption that it may have under the constitution and laws of
the State of Alabama or any other state as to any levy on and sale of property,
and (ii) until the Bonds have been Fully Paid, any rights of subrogation it may
have against the Issuer or others by reason of the Guarantor's performance under
this Agreement.
SECTION 7.14 TERMINATION OF AGREEMENT
This Agreement shall terminate when the Bonds shall have been Fully
Paid.
23
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IN WITNESS WHEREOF, the Guarantor has caused this Agreement to be
executed in its name and behalf under its corporate seal, and the same to be
attested, all by officers thereof duly authorized thereunto, and the Trustee has
executed this Agreement by causing its name to be hereunto subscribed by one of
its duly authorized officers, all as of the day and year first above written.
BOSTROM SEATING, INC.
By
--------------------------------------
Its President
S E A L
Attest:
--------------------------------
Its Secretary
Accepted:
NBD BANK
Detroit, Michigan
By:
-------------------------------------
Its
-------------------------------------
24
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- --------------------------------------------------------------------------------
BOND GUARANTY AGREEMENT
DATED MARCH 1, 1999
BY
BOSTROM SEATING, INC.
IN FAVOR OF
NBD BANK
AS TRUSTEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
PAGE
<S> <C>
Parties......................................................................................1
Recitals.....................................................................................1
ARTICLE I
PROVISIONS OF GENERAL APPLICATION
SECTION 1.01 Definitions.......................................................... 2
SECTION 1.02 Accounting Principles................................................ 3
SECTION 1.03 Action Taken Directly or Indirectly.................................. 3
SECTION 1.04 Governing Law........................................................ 4
SECTION 1.05 General Rules of Construction........................................ 4
SECTION 1.06 Effect of Headings and Table of Contents............................. 4
ARTICLE II
GUARANTY
SECTION 2.01 Guaranty of Payment of Bonds......................................... 4
SECTION 2.02 Indemnification Against Invalidity................................... 5
SECTION 2.03 Character of Obligations Hereunder................................... 7
ARTICLE III
DETERMINATION OF TAXABILITY
SECTION 3.01 Payments by the Guarantor............................................ 10
SECTION 3.02 No Obligation to Contest or Appeal................................... 10
ARTICLE IV
BUSINESS COVENANTS
SECTION 4.01 Affirmative Covenants................................................ 10
SECTION 4.02 Information as to Guarantor.......................................... 11
ARTICLE V
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
<PAGE>
SECTION 5.01 No Material Adverse Effect........................................... 12
SECTION 5.02 Full Disclosure...................................................... 12
SECTION 5.03 Pending Litigation................................................... 12
SECTION 5.04 Title to Properties.................................................. 13
SECTION 5.05 No Defaults.......................................................... 13
SECTION 5.06 Governmental Consent................................................. 13
SECTION 5.07 Use of Proceeds...................................................... 13
SECTION 5.08 Compliance with Law.................................................. 13
SECTION 5.09 Restrictions on Guarantor............................................ 14
SECTION 5.10 Maintenance of Tax Exemption......................................... 14
SECTION 5.11 Indemnification...................................................... 14
SECTION 5.12 Survival of Representations, Warranties and Covenants................ 15
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.01 Events of Default.................................................... 15
SECTION 6.02 Remedies............................................................. 17
SECTION 6.03 Limitation on Suits.................................................. 17
SECTION 6.04 Unconditional Right of Bondholders to Receive Principal,
Premium and Interest........................................................ 18
SECTION 6.05 Application of Money Collected....................................... 18
SECTION 6.06 Agreement to Pay Attorneys' Fees..................................... 18
SECTION 6.07 Waiver of Past Defaults.............................................. 18
SECTION 6.08 No Additional Waiver Implied by One Waiver........................... 19
SECTION 6.09 Remedies Subject to Applicable Law................................... 19
ARTICLE VII
MISCELLANEOUS
SECTION 7.01 Consent to Service of Process........................................ 19
SECTION 7.02 Benefit of the Agreement............................................. 19
SECTION 7.03 Notices.............................................................. 20
SECTION 7.04 Amendments........................................................... 20
SECTION 7.05 Reproduction of Documents............................................ 21
SECTION 7.06 Survival............................................................. 22
SECTION 7.07 Successors and Assigns............................................... 22
SECTION 7.08 Effective Date of Agreement.......................................... 22
SECTION 7.09 Entire Agreement; Counterparts....................................... 22
SECTION 7.10 Severability......................................................... 22
SECTION 7.11 Date For Identification Purposes Only................................ 22
SECTION 7.12 Exceptions to Covenants.............................................. 22
SECTION 7.13 Waivers.............................................................. 23
<PAGE>
SECTION 7.14 Termination of Agreement............................................. 23
Testimonium.................................................................................24
Signatures..................................................................................24
</TABLE>
<PAGE>
LEASE AGREEMENT
DATED MARCH 1, 1999
BY AND BETWEEN
THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF PIEDMONT
AND
BOSTROM SEATING, INC.
THE INTEREST OF THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF PIEDMONT
IN ANY RENTS, REVENUES AND RECEIPTS DERIVED BY IT UNDER THIS LEASE AGREEMENT HAS
BEEN ASSIGNED TO NBD BANK, AS TRUSTEE UNDER THE TRUST INDENTURE DATED AS OF
MARCH 1, 1999.
THIS LEASE AGREEMENT WAS PREPARED BY HEYWARD C. HOSCH OF WALSTON, WELLS,
ANDERSON & BAINS, LLP, FINANCIAL CENTER, 505 20TH STREET NORTH, SUITE 500,
BIRMINGHAM, ALABAMA 35203
<PAGE>
STATE OF ALABAMA
CALHOUN COUNTY
LEASE AGREEMENT
LEASE AGREEMENT dated as of March 1, 1999, between THE INDUSTRIAL
DEVELOPMENT BOARD OF THE CITY OF PIEDMONT, a public corporation under the laws
of the State of Alabama (the "ISSUER"), and BOSTROM SEATING, INC., a Delaware
corporation (the "USER").
RECITALS
Pursuant to and for the purposes expressed in Division 1 of Article 4 of
Chapter 54 of Title 11 of the Code of Alabama 1975 (the "ENABLING LAW"), the
Issuer and the User are parties to that certain Lease Agreement dated as of
September 1, 1973, as defined herein (the "1973 LEASE"), and the Issuer and the
User have executed and delivered this Lease Agreement simultaneously with the
issuance and sale by the Issuer of its $3,100,000 Variable\Fixed Rate Industrial
Development Revenue Bonds (Bostrom Seating, Inc. Project), dated the date of
delivery and payment therefor, under and pursuant to that certain Trust
Indenture dated as of March 1, 1999 from the Issuer to NBD Bank, as trustee, to
finance the acquisition, construction and installation of a "project" within the
meaning of the Enabling Law, as more particularly described in said Trust
Indenture.
AGREEMENT
NOW, THEREFORE, for and in consideration of the premises, and the mutual
covenants and agreements herein contained, the Issuer and the User hereby
covenant, agree and bind themselves as follows:
The 1973 Lease is hereby amended by deleting the provisions of Articles
I through XII, inclusive, save and excepting Section 5.1 of the 1973 Lease, in
the entirety thereof and substituting therefor the following:
ARTICLE 1
Definitions For all purposes of this Lease Agreement:
(A) CAPITALIZED TERMS USED HEREIN WITHOUT DEFINITION SHALL HAVE THE
RESPECTIVE MEANINGS ASSIGNED THERETO IN THE INDENTURE.
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(b) The following general rules of construction shall apply:
(1) The terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the singular.
(2) All accounting terms not otherwise defined herein have the
meanings assigned to them, and all computations herein provided for
shall be made, in accordance with generally accepted accounting
principles. All references herein to "generally accepted accounting
principles" refer to such principles as they exist at the date of
application thereof.
(3) All references in this instrument to designated "Articles",
"Sections" and other subdivisions are to the designated Articles,
Sections and subdivisions of this instrument as originally executed.
(4) The terms "herein", "hereof" and "hereunder" and other words
of similar import refer to this Lease Agreement as a whole and not to
any particular Article, Section or other subdivision.
(c) The following terms shall have the following meanings:
ADDITIONAL RENTAL PAYMENTS shall mean the payments to be made pursuant
to Section 5.03.
BASIC RENTAL PAYMENTS shall mean the Payments payable pursuant to
Section 5.02.
BOND FUND shall mean the fund established pursuant to Section 8.01 of
the Indenture.
BOND GUARANTY shall mean that certain Bond Guaranty Agreement dated
March 1, 1999, executed by User in favor of the Trustee.
BOND PAYMENT DATE shall mean each date on which any principal of,
premium (if any) or interest on the Bonds is due and payable (whether on the
maturity or due dates thereof, by call for optional or mandatory or
extraordinary redemption, by acceleration, or by optional or mandatory tender).
CITY shall mean the City of Piedmont, Alabama and any successor to its
functions.
CONSTRUCTION FUND shall mean the fund established pursuant to Section
7.02 of the Indenture.
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CREDIT DOCUMENTS shall mean collectively all agreements, documents,
guaranties, instruments, notes, notices, and other writings executed and
delivered by the User or any other persons or persons which evidence, guarantee
or provide security for the obligations of the User with respect to the Letter
of Credit, including any amendments or supplements to any thereof from time to
time entered into pursuant to the applicable provisions thereof, until a
Substitute Letter of Credit shall have been accepted by the Trustee, and
thereafter "Credit Documents" shall mean collectively all agreements, documents,
guaranties, instruments, notes, notices, and other writings which evidence,
guarantee or provide security for the obligations of the User with respect to
such Substitute Letter of Credit.
DEBT SERVICE shall mean the principal of, premium (if any) and interest
on the Bonds.
ENABLING LAW shall mean Division 1 of Article 4 of Chapter 54 of Title
11 of the Code of Alabama 1975.
ENVIRONMENTAL LAW shall mean and include all laws, rules, regulations,
ordinances, judgments, decrees, codes, orders, injunctions, notices and demand
letters of any Governmental Authority applicable to the User or the Project Site
(including the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, 42 U.S.C. Sections 9601, et seq.) relating to pollution
or protection of human health or the environment, including any relating to
Hazardous Substances.
EQUIPMENT shall have the meaning assigned in Demising Clause III of
Article 3.
FINANCING DOCUMENTS shall mean the Indenture, the Lease Agreement, the
Bond Guaranty, the Credit Documents, the Remarketing Agreement, and the Letter
of Credit.
GOVERNMENTAL AUTHORITY shall mean any federal, state, county, municipal,
or other government, domestic or foreign, and any agency, authority, department,
commission, bureau, board, court or other instrumentality thereof.
HAZARDOUS SUBSTANCES shall mean and include all pollutants,
contaminants, toxic or hazardous wastes and other substances (including
asbestos, urea formaldehyde, foam insulation and materials containing either
petroleum or any of the substances referenced in Section 101(14) of CERCLA), the
removal of which is required or the manufacture, use, maintenance and handling
of which is regulated, restricted, prohibited or penalized by an Environmental
Law, or, even though not so regulated, restricted, prohibited or penalized,
might pose a hazard to the health and safety of the public or the occupants of
the property on which it is located or the occupants of the property adjacent
thereto.
IMPROVEMENTS shall have the meaning assigned in Demising Clause II of
Article 3.
INDENTURE shall mean that certain Trust Indenture dated as of March 1,
1999 between the Issuer and the Trustee as originally executed or as it may from
time to time be supplemented, modified or amended by one or more indentures or
other instruments supplemental hereto entered into pursuant to the applicable
provisions thereof.
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INDENTURE INDEBTEDNESS shall mean all indebtedness of the Issuer at the
time secured by the Indenture, including without limitation (i) all principal
of, premium (if any) and interest on the Bonds and (ii) all reasonable and
proper fees, charges and disbursements of the Trustee and Paying Agent for
services performed and disbursements made under the Indenture.
INTERNAL REVENUE CODE shall mean whichever of the following shall be
applicable in the context: the Internal Revenue Code of 1954, as amended; the
Internal Revenue Code of 1986, as amended; and the transition rules of related
legislation.
ISSUER shall mean The Industrial Development Board of the City of
Piedmont, a public corporation under the laws of the State of Alabama, until a
successor corporation shall have become such pursuant to the applicable
provisions of the Indenture and this Lease Agreement, and thereafter "Issuer"
shall mean such successor corporation.
LEASE AGREEMENT shall mean this instrument including any amendments or
supplements to such instrument from time to time entered into pursuant to the
applicable provisions thereof.
LEASE DEFAULT shall have the meaning stated in Article 10 of this Lease
Agreement.
LEASE TERM means the duration of the leasehold estate granted in Section
5.01 of this Lease Agreement.
NET PROCEEDS, when used with respect to any insurance or condemnation
award, means the gross proceeds from the insurance or condemnation award with
respect to which that term is used remaining after payment of all reasonable
expenses (including reasonable attorneys' fees and any extraordinary fee of the
Trustee) incurred in the collection of such gross proceeds.
1973 LEASE shall mean that certain Lease Agreement dated as of September
1, 1973 between the Issuer and Universal Oil Products Company, recorded in Book
1362 at page 123 et seq. in the Office of the Judge of Probate of Calhoun
County, Alabama, as assigned to and assumed by the User pursuant to Lease
Assignment and Assumption Agreement dated May 14, 1993 between the User and
Universal Oil Products Company, recorded in Book ____ at Page ____ et seq. in
said office.
PERMITTED ENCUMBRANCES means, as of any particular time, (i) the
Financing Documents, (ii) liens for taxes, assessments or other governmental
charges or levies not due and payable or which are currently being contested in
good faith by appropriate proceedings, (iii) utility, access and other easements
and rights of way, party walls, restrictions and exceptions that may be granted
or are permitted under this Lease Agreement, (iv) any mechanic's, laborer's,
materialman's, supplier's or vendor's lien or right or purchase money security
interest if payment is not yet due and payable under the contract in question,
(v) such minor defects, irregularities, encumbrances, easements, rights of way
and clouds on title as do not, in the opinion of an independent Counsel,
materially impair the Project for the purpose for which it was acquired or is
held by the Issuer, and (vi) such encumbrances, mortgages, and other matters
which appear of public record prior to the date of recording of this Lease
Agreement.
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PROJECT shall mean the Project Site, the Improvements and the Equipment,
as the same may at any time exist, and all other property and rights referred to
or intended so to be in Demising Clauses I through III, inclusive, hereof.
PROJECT COSTS shall mean all costs of acquiring, constructing, equipping
and improving the Project, including without limitation:
(1) the purchase price and related costs for the acquisition of
real property or any interest therein,
(2) the cost of labor, materials and supplies furnished or used
in the acquisition, construction and installation of the Improvements
and the costs of acquiring and installing the Equipment,
(3) acquisition, transportation and installation costs for
personal property and fixtures,
(4) fees for architectural, engineering and supervisory services
to such architects, engineers, developers and construction supervisors
as the User shall approve,
(5) expenses incurred in the enforcement of any remedy against
any contractor, subcontractor, materialmen, vendor, supplier or surety,
(6) interest accruing on the Bonds until the Project is placed in
service,
(7) expenses incurred by the Issuer and the User in connection
with the financing of the Project including legal, consulting and
accounting fees,
(8) reimbursement to the User for any of the foregoing costs,
fees and expenses set forth in (1) through (7) above, paid by it with
its own funds.
PROJECT SITE shall mean the real property described in Demising Clause I
of Article 3.
RENTAL PAYMENTS shall mean collectively the Basic Rental Payments and
the Additional Rental Payments.
STATE shall mean the State of Alabama.
TRUSTEE shall mean NBD Bank, until a successor Trustee shall have become
such pursuant to the applicable provisions of the Indenture, and thereafter
"Trustee" shall mean such successor.
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UNIMPROVED when used with reference to the Project Site shall mean any
part of the Project Site upon which no part of a building or other structure
rests.
USER shall mean Bostrom Seating, Inc., and its successors and assigns.
ARTICLE 2
Representations
SECTION 2.01 REPRESENTATIONS BY THE ISSUER
The Issuer makes the following representations
(a) The Issuer is duly incorporated under the provisions of the Enabling
Law and has the power to enter into the transactions contemplated by this Lease
Agreement and to carry out its obligations hereunder. The Issuer is not in
default under any of the provisions contained in its certificate of
incorporation, its by-laws, or in the laws of the State. By proper corporate
action the Issuer has duly authorized the execution and delivery of this Lease
Agreement, the Indenture, and the Bonds.
(b) The Issuer has determined that the issuance of the Bonds, the
acquisition, construction and equipping of the Project and the leasing of the
Project to the User will be in furtherance of the purposes of the Enabling Law.
(c) The Bonds will be issued and delivered contemporaneously with the
delivery of this Lease Agreement.
SECTION 2.02 REPRESENTATIONS BY THE USER
The User makes the following representations:
(1) The User is duly organized and in good standing as a
corporation under the laws of the State of Delaware and is not in
default under any of the provisions contained in its articles of
incorporation, as amended, or bylaws or in the laws of the State of
Delaware. The User is duly qualified to do business in the State.
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(2) The User has the corporate power and authority to own its
properties, carry on the business in which it is presently engaged, and
consummate the transactions contemplated by the Financing Documents to
which it is a party.
(3) By proper corporate action the User has duly authorized the
execution, delivery and performance of the Financing Documents to which
it is a party and the consummation of the transactions contemplated
therein.
(4) The User has obtained all consents, approvals, authorizations
and orders of, and made all filings with, each Governmental Authority
that are required to be obtained or made by it as a condition to the
execution and delivery of the Financing Documents to which it is a
party.
(5) The execution and delivery by the User of the Financing
Documents to which it is a party and the consummation by it of the
transactions contemplated therein will not conflict with, be in
violation of, or result in a default under, its articles of
incorporation or bylaws, or any agreement, contract, instrument, order,
writ, decree or judgment to which the User is a party or is subject.
(6) The Financing Documents to which the User is a party
constitute legal, valid and binding obligations of the User and are
enforceable against the User in accordance with the terms of such
instruments, except as enforcement thereof may be limited by (i) the
exercise of judicial discretion and (ii) bankruptcy, insolvency, or
other similar laws affecting the enforcement of creditors' rights, to
the extent constitutionally applicable.
(7) There is no action, suit, proceeding, inquiry or
investigation pending before any Governmental Authority, or threatened
against or affecting the User or its properties, that (a) involves (i)
the consummation of the transactions contemplated by, or the validity or
enforceability of, the Financing Documents, (ii) its organization, (iii)
the election or qualification of its directors or officers, (iv) its
powers, or (b) could have a materially adverse effect upon the financial
condition or operations of the User.
(8) The User is not an "investment company" or a company
"controlled" by an "investment company", as such terms are defined in
the Investment Company Act of 1940, as amended.
(9) The financing of the Project through the issuance of the
Bonds and the leasing of the Project to the User has induced the User to
enlarge, expand and improve existing operations in the State as provided
in the Enabling Law.
(10) The User intends to operate the Project for manufacturing,
production, assembling, processing, storing and distribution of such
agricultural, manufactured or mineral products as the User shall
determine and in such a manner that it will constitute a "project"
within the meaning of the Enabling Law.
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(11) This Lease Agreement is necessary to promote and further the
financial and economic interests of the User and the assumption by the
User of its obligations hereunder will result in direct financial
benefits to the User.
ARTICLE 3
Demising Clauses; 1973 Lease to Remain
in Effect; Construction of
Lease Agreement
The Issuer, for and in consideration of the rents, covenants and
agreements hereinafter reserved, mentioned and contained on the part of the User
to be paid, kept and performed, does hereby demise and lease to the User, and
the User does hereby lease, take and hire from the Issuer, the following
property:
I.
The real property described on Exhibit A hereto and all other
real property, or interests therein, acquired by the Issuer with
proceeds of the Bonds or with funds advanced or paid pursuant to this
Lease Agreement (the "PROJECT SITE"), together with all easements,
permits, licenses, rights-of-way, contracts, leases, tenements,
hereditaments, appurtenances, rights, privileges and immunities
pertaining or applicable to said real property.
II.
All buildings, structures and other improvements now or hereafter
constructed or situated on the Project Site, including without
limitation all buildings, structures and other improvements constructed
on the Project Site with proceeds of the Bonds or with funds advanced or
paid by the User pursuant to this Lease Agreement (the "IMPROVEMENTS").
III.
The machinery, equipment, personal property and fixtures
described on Exhibit B attached hereto and all other machinery,
equipment, personal property and fixtures acquired with the proceeds of
the Bonds or with funds advanced or paid by the User pursuant to this
Lease Agreement, together with all personal property and fixtures
acquired in substitution therefor or as a renewal or replacement thereof
(the "EQUIPMENT").
SUBJECT, HOWEVER, to Permitted Encumbrances;
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PROVIDED; this Lease Agreement is executed and delivered in continuation of the
leasehold estate created by the Issuer in the Project pursuant to the 1973
Lease, in accordance with Section 5.1 thereof and as amendatory to the
provisions of the 1973 Lease, and the 1973 Lease shall remain in effect, as
amended by this Lease Agreement, solely with respect to the leasehold estate
created in the property covered hereby.
ARTICLE 4
Acquisition of the Project
SECTION 4.01 AGREEMENT TO ACQUIRE
(a) Simultaneously with the delivery of this Lease Agreement the Issuer
shall cause the Bond proceeds to be deposited in the Construction Fund. The
Issuer shall cause the proceeds of the Bonds to be advanced to the User by
withdrawal from the Construction Fund, in accordance with the requirements of
the Indenture, for the payment of Project Costs at such times and in such
amounts as shall be directed by the User. The proceeds of the Bonds shall be
used solely for the payment of Project Costs as provided in the Indenture.
(b) The User will acquire and construct the Project with all reasonable
dispatch and due diligence and will cause the Project to be placed in service as
promptly as practicable. The Issuer will not execute any contract or purchase
orders for the Project without the prior written consent of the User.
(c) Compliance with laws and regulations necessary to realize any sales
and use tax exemption with respect to the acquisition, construction and
equipping of the Project shall be the sole responsibility of the User and the
Issuer does not assume any responsibility or give any assurance with respect to
any possible exemption from sales and use taxes.
(d) The User may, with the prior written consent of the Credit Obligor,
cause changes or amendments to be made in the plans and specifications for such
acquisition and construction of the Project, provided (1) such changes or
amendments will not change the nature of the Project to the extent that it would
not constitute a "project" as authorized by the Enabling Law, and (2) such
changes or amendments will not materially affect the utility of the Project for
its intended use. The Issuer will make only such changes or amendments in the
plans and specifications for the acquisition and construction of the Project as
may be requested in writing by the User.
(e) The Issuer and the User shall from time to time each appoint by
written instrument an agent or agents authorized to act for each respectively in
any or all matters relating to the acquisition and construction of the Project
and payments to be made out of the Construction Fund. One of the agents
appointed by the User shall be designated its Project Supervisor. Either the
Issuer or the User may from time to time revoke, amend or otherwise limit the
authorization of any agent appointed by such party to act on such party's behalf
or designate another agent or agents to act on such party's behalf, provided
that there shall be at all times at least one agent authorized to act on behalf
of the Issuer, and at least one agent (who shall be the Project Supervisor)
authorized to act on behalf of the User, with reference to all the foregoing
matters. The Project Supervisor at any time designated by the User is hereby
irrevocably appointed as agent for the Issuer to issue and execute, for and in
the name and behalf of the Issuer and without any further approval of the
governing body or any officer, employee or other agent thereof, a payment
requisition on the Construction Fund.
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(f) In the event the proceeds derived from the sale of the Bonds are
insufficient to pay in full all Project Costs, the User shall be obligated to
complete the acquisition and construction of the Project at its own expense and
the User shall pay any such deficiency and shall save the Issuer whole and
harmless from any obligation to pay such deficiency. The User shall not by
reason of the payment of such deficiency from its own funds be entitled to any
diminution in Rental Payments.
SECTION 4.02 NO WARRANTY OF SUITABILITY OF ISSUER
THE USER RECOGNIZES AND AGREES THAT THE ISSUER MAKES NO WARRANTY, EITHER
EXPRESS OR IMPLIED, NOR OFFERS ANY ASSURANCES THAT THE PROJECT WILL BE SUITABLE
FOR THE USER'S PURPOSES OR NEEDS OR THAT THE PROCEEDS DERIVED FROM THE SALE OF
THE BONDS WILL BE SUFFICIENT TO PAY IN FULL ALL PROJECT COSTS.
SECTION 4.03 PURSUIT OF REMEDIES AGAINST VENDORS, CONTRACTORS AND
SUBCONTRACTORS AND THEIR SURETIES
The User may, in its own name or in the name of the Issuer, prosecute or
defend any action or proceeding or take any other action involving any vendor,
contractor, subcontractor or surety under any contract or purchase order for
acquisition and construction of the Project which the User deems reasonably
necessary, and the Issuer hereby irrevocably appoints the User as its agent with
respect to any such action or proceeding and agrees that it will cooperate fully
with the User and will take all action requested by the User in any such action
or proceeding. Any amounts recovered by way of damages, refunds, adjustments or
otherwise in connection with the foregoing shall be paid into the Construction
Fund and applied as provided for funds on deposit therein. The User will pay all
costs, fees and expenses incurred which are not paid from the Construction Fund.
SECTION 4.04 COMPLETION OF THE PROJECT
(a) The completion of the Project shall be evidenced to the Trustee by a
certificate signed by the Project Supervisor on behalf of the User stating that
(1) construction of the Improvements has been completed in accordance with the
plans and specifications approved by the User, (2) the Equipment has been
acquired and installed in accordance with the User's instructions, (3) all
Project Costs have been paid, and (4) all facilities and improvements necessary
in connection with the Project have been acquired and installed and all costs
and expenses incurred in connection therewith have been paid. Notwithstanding
the foregoing, such certificate shall state that it is given without prejudice
to any rights against any vendor, contractor, subcontractor or other person not
a party to this Lease Agreement which exist at the date of such certificate or
which may subsequently come into being. The Issuer and the User will cooperate
in causing such certificate to be furnished to the Trustee.
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(b) After the delivery of the aforesaid certificate to the Trustee, any
moneys then remaining in the Construction Fund shall be applied as provided in
the Indenture.
ARTICLE 5
Duration of Lease Term
and Rental Provisions
SECTION 5.01 DURATION OF TERM
The term of this Lease Agreement and of the lease herein made shall
begin on the date of the delivery of this Lease Agreement and, subject to the
provisions of this Lease Agreement, shall continue until midnight of March 1,
2014. The Issuer will deliver to the User possession of the Project on the
commencement date of the Lease Term, subject to the inspection and other rights
reserved in this Lease Agreement, and the User will accept possession thereof at
such time; provided, however, the Issuer will be permitted such possession of
the Project as shall be necessary and convenient for it to construct or install
any additions or improvements and to make any repairs or restorations required
or permitted to be constructed, installed or made by the Issuer pursuant to the
provisions hereof.
SECTION 5.02 BASIC RENTAL PAYMENTS; DRAWS UNDER LETTER OF CREDIT
(a) On or before 10:00 a.m. (Birmingham, Alabama time) on each Bond
Payment Date, the User shall pay to the Trustee, for the account of the Issuer,
an amount equal to the Debt Service on the Bonds (other than Pledged Bonds) due
and payable on such Bond Payment Date; provided, however, that (i) any amount
already on deposit in the Bond Fund on the due date of such Basic Rental Payment
and available for the payment of the Debt Service on the Bonds on such Bond
Payment Date shall be credited against the amount of such Basic Rental Payment,
and (ii) any amount drawn by the Trustee pursuant to the Letter of Credit for
the payment of the Debt Service on the Bonds on such Bond Payment Date shall be
credited against such Basic Rental Payment.
(b) On each Bond Payment Date prior to 10:30 a.m. (Birmingham, Alabama
time) the Trustee shall, without making any prior claim or demand on the User
for the payment of Basic Rental Payments with respect to Bonds other than
Pledged Bonds, make a draw on the Letter of Credit in an amount equal to the
amount of Debt Service on the Bonds due and payable on such Bond Payment Date on
Bonds other than Pledged Bonds (except as may otherwise be provided in Section
8.02(f) of the Indenture). The User shall receive a credit against Basic Rental
Payments for the amount so drawn. No draw shall be made under the Letter of
Credit with respect to Pledged Bonds, and the User shall receive no credit
against Basic Rental Payments with respect to Pledged Bonds for any amounts
drawn under the Letter of Credit.
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(c) The User hereby authorizes and directs the Trustee to draw moneys
under the Letter of Credit in accordance with the provisions of the Indenture
and this Lease Agreement to the extent necessary to pay the Debt Service on the
Bonds (other than Pledged Bonds) when due and payable pursuant to the Indenture
and the Bonds.
(d) All Basic Rental Payments shall be made in funds immediately
available to the Trustee at its Principal Office on the related Bond Payment
Date.
(e) If any Basic Rental Payment is due on a day which is not a Business
Day, such payment may be made on the first succeeding day which is a Business
Day with the same effect as if made on the day such payment was due.
(f) The User acknowledges, covenants, and agrees that until the
Indenture Indebtedness is paid in full the User shall make Basic Rent Payments
in such amounts and at such times as shall be necessary to enable the Trustee to
pay in full in accordance with the Indenture the Debt Service on the Bonds
(other than Pledged Bonds) when and as the same becomes due and payable.
(g) Any overdue Basic Rental Payment shall bear interest from the
related Bond Payment Date until paid at the Post-Default Rate for overdue Debt
Service payments specified in the Indenture.
SECTION 5.03 ADDITIONAL RENTAL PAYMENTS
(a) The User shall make Additional Rental Payments as follows:
(1) the acceptance fee of the Trustee and the annual (or other
regular) fees, charges and expenses of the Trustee, Paying Agent and
Remarketing Agent;
(2) any amount to which the Trustee may be entitled under Section
13.07 of the Indenture; and
(3) the reasonable expenses of the Issuer incurred at the request
of the User, or in the performance of its duties under any of the
Financing Documents, or in connection with any litigation which may at
any time be instituted involving the Project, the Financing Documents,
or in the pursuit of any remedies under the Financing Documents.
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(b) All Additional Rental Payments shall be due and payable within 10
days after receipt by the User of an invoice therefor.
(c) Any overdue Additional Rental Payment shall bear interest from the
date due until paid at the Post-Default Rate for such Additional Rental Payments
specified in the Indenture.
SECTION 5.04 ADVANCES BY ISSUER OR TRUSTEE
If the User shall fail to perform any of its covenants in this Lease
Agreement, the Issuer or the Trustee may, at any time and from time to time,
after written notice to the User if no Lease Default exists, make advances to
effect performance of any such covenant on behalf of the User. Any money so
advanced by the Issuer or the Trustee, together with interest at the base or
prime rate of the Trustee plus two percent, shall be paid upon demand.
SECTION 5.05 INDEMNITY OF ISSUER, TRUSTEE AND PAYING AGENT
(a) The User covenants and agrees to pay and to indemnify and hold the
Issuer, the Trustee and the Paying Agent (and each officer, director, member,
employee or agent of each thereof) harmless against, any and all liabilities,
losses, damages, claims or actions (including all reasonable attorneys' fees and
expenses of the Issuer, Trustee and the Paying Agent), of any nature whatsoever
incurred by the Issuer, the Trustee and the Paying Agent without gross
negligence or willful misconduct on their part arising from or in connection
with (i) their performance or observance of any covenant or condition on their
part to be observed or performed under any of the Financing Documents, (ii) any
injury to, or the death of, any person or any damage to property at the Project,
or in any manner growing out of or connected with the use, nonuse, condition or
occupation of the Project or any part thereof, (iii) any damage, injury, loss or
destruction of the Project, (iv) any other act or event occurring upon, or
affecting, any part of the Project, (v) violation by the User of any contract,
agreement or restriction affecting the Project or the use thereof of which the
User has notice and which shall have existed at the commencement of the Lease
Term hereof or shall have been approved by the User, or of any law, ordinance or
regulation affecting the Project or any part thereof or the ownership, occupancy
or use thereof, (vi) any violation of, or non-compliance of the Project Site
with, Environmental Laws, or the presence of Hazardous Substances now or
hereafter on or under or included in the Project Site and any investigation,
clean up or removal of, or other remedial action or response costs with respect
to, any Hazardous Substances now or hereafter located on or under or included in
the Project Site, or any part thereof, that may be required by any Environmental
Law or Governmental Authority (specifically including without limitation any and
all liabilities, damages, fines, penalties, response costs, investigatory or
other costs pursuant to the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601 et seq.) and
including without limitation claims alleging non-compliance with Environmental
Laws which seek relief under or are based on state or common law theories such
as trespass or nuisance, and (vii) liabilities, losses, damages, claims or
actions arising out of the offer and sale of the Bonds or a subsequent sale or
distribution of any of the Bonds, unless the same resulted from a representation
or warranty of the Issuer or the Trustee or the Paying Agent in any of the
Financing Documents or any certificate delivered by the Issuer or the Trustee or
the Paying Agent pursuant thereto being false or misleading in a material
respect and such representation or warranty was not based upon a similar
representation or warranty of the User furnished to the Issuer or the Trustee or
the Paying Agent in connection therewith.
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(b) The User hereby agrees that the Issuer, the Trustee and the Paying
Agent shall not incur any liability to the User, and shall be indemnified
against all liabilities, in exercising or refraining from asserting, maintaining
or exercising any right, privilege or power of the Issuer, or the Trustee, or
the Paying Agent under any of the Financing Documents if the Issuer, or the
Trustee, or the Paying Agent as the case may be is acting in good faith and
without willful misconduct or in reliance upon a written request by the User.
(c) If any indemnifiable party (whether the Issuer or the Trustee) shall
be obligated to pay any claim, liability or loss, and if in accordance with all
applicable provisions of this Section the User shall be obligated to indemnify
and hold such indemnifiable party harmless against such claim, liability or
loss, then, in such case, the User shall have a primary obligation to pay such
claim, liability or loss on behalf of such indemnifiable party and may not defer
discharge of its indemnity obligation hereunder until such indemnifiable party
shall have first paid such claim, liability or loss and thereby incurred actual
loss.
(d) The covenants of indemnity by the User contained in this Section
shall survive the termination of this Lease Agreement with respect to events or
occurrences happening prior to or upon the termination of this Lease Agreement
and shall remain in full force and effect until the commencement of an action
with respect to any such event or occurrence shall be prohibited by law.
SECTION 5.06 OBLIGATIONS OF USER UNCONDITIONAL
The obligation of the User to make all Rental Payments and all other
payments provided for herein and to perform and observe the other agreements and
covenants on its part herein contained shall be absolute and unconditional,
irrespective of any rights of set-off, recoupment or counterclaim it might
otherwise have against the Issuer. The User will not suspend or discontinue any
such payment or fail to perform and observe any of its other agreements and
covenants contained herein or terminate any of the Financing Documents, for any
cause whatsoever, including, without limiting the generality of the foregoing,
any acts or circumstances that may constitute an eviction or constructive
eviction, failure of consideration or commercial frustration of purpose, the
invalidity or unenforceability of the Bonds or any of the Financing Documents or
any provision thereof, the invalidity or unconstitutionality of the Enabling Law
or any provision thereof, any damage to or destruction of the Project or any
part thereof, the taking by eminent domain of title to or the right to temporary
use of all or any part of the Project, any failure of the Credit Obligor to make
a payment pursuant to the Letter of Credit or to reinstate the appropriate
amount thereof, any change in the tax or other laws or administrative rulings,
actions or regulations of the United States of America or of the State or any
political or taxing subdivision of either thereof, or any failure of the Issuer
to perform and observe any agreement or covenant, whether express or implied,
any duty, liability or obligation arising out of or in connection with this
Lease Agreement. Notwithstanding the foregoing, the User may, at its own cost
and expense and in its own name or in the name of the Issuer, prosecute or
defend any action or proceeding, or take any other action involving third
persons which the User deems reasonably necessary in order to secure or protect
its rights of use and occupancy and the other rights hereunder. The provisions
of the first and second sentences of this Section shall apply only so long as
any of the Bonds remains Outstanding.
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SECTION 5.07 THIS LEASE A NET LEASE
The User recognizes, understands and acknowledges that it is the
intention hereof that this Lease Agreement be a net lease and that as long as
any of the Bonds are Outstanding all Basic Rent be available for payment of the
Debt Service on the Bonds and that all Additional Rent shall be available for
the purposes specified therefor. This Lease Agreement shall be construed to
effectuate such intent.
ARTICLE 6
Maintenance, Alterations, Replacements, Insurance
SECTION 6.01 MAINTENANCE AND REPAIRS, ALTERATIONS AND IMPROVEMENTS,
PARTY WALLS; AND LIENS; UTILITY CHARGES
(a) The User shall, at its own expense, (1) keep the Project in as
reasonably safe condition as its operations permit, (2) from time to time make
all necessary and proper repairs, renewals and replacements thereto, including
external and structural repairs, renewals and replacements, and (3) pay all gas,
electric, water, sewer and other charges for the operation, maintenance, use and
upkeep of the Project.
(b) The User may, at its own expense, make structural changes,
additions, improvements, alterations or replacements to the Improvements that it
may deem desirable, provided such structural changes, additions, improvements,
alterations or replacements do not change the character of the Project as a
"project" under the Enabling Law, and that such additions, improvements,
alterations or replacements will not adversely affect the utility of the Project
or substantially reduce its value. All such changes, additions, improvements,
alterations and replacements whether made by the User or the Issuer shall become
a part of the Project and shall be covered by this Lease Agreement.
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(c) The User may connect or "tie-in" walls of the Improvements and
utility and other facilities located on the Project Site to other structures and
facilities owned or leased by it on real property adjacent to the Project Site.
The User may use as a party wall any wall of the Improvements which is on or
contiguous to the boundary line of real property owned or leased by it, and in
the event of such use, each party hereto hereby grants to the other a ten-foot
easement adjacent to any such party wall for the purpose of inspection,
maintenance, repair and replacement thereof and the tying in of new
construction. If the User utilizes any wall of the Improvements as a party wall
for the purpose of tying in new construction that will be utilized under common
control with the Project, the User may also remove any non-loadbearing wall
panel in the party wall; provided however, if the adjacent property ceases to be
operated under common control with the Project, the User shall, at its own
expense, install wall panels similar in quality to those that have been removed.
Prior to the exercise of any one or more of the rights granted by this
subsection (c), the User shall demonstrate to the reasonable satisfaction of the
Issuer and Trustee that the operation of the Project will not be adversely
affected by the exercise of such rights.
(d) The Issuer shall also, upon request of the User, grant such utility
and other similar easements over, across or under the Project Site as shall be
necessary or convenient for the furnishing of utility and other similar services
to the Project or to real property adjacent to or near the Project Site and
owned or leased by the User; provided that such easements shall not adversely
affect the operation of the facilities forming a part of the Project.
(e) The User shall not permit any mechanics' or other liens to stand
against the Project for labor or material furnished with respect to the Project.
The User may, however, in good faith contest any such mechanics' or other liens
and in such event may permit any such liens to remain unsatisfied and
undischarged during the period of such contest and any appeal therefrom unless
by such action the lien of the Indenture on the Project or any part thereof, or
the Project or any part thereof shall be subject to loss or forfeiture, in
either of which events such mechanics' or other liens shall be promptly
satisfied.
SECTION 6.02 REMOVAL OF, SUBSTITUTION AND REPLACEMENT FOR EQUIPMENT
If the User in its sole discretion determines that any item of
Equipment has become inadequate, obsolete, worn-out, unsuitable, undesirable
or unnecessary in the operation of the Project, the User may remove such
Equipment from the Improvements or the Project Site and (on behalf of the
Issuer) sell, trade in, exchange or otherwise dispose of it without any
responsibility or accountability to the Issuer or the Trustee therefor,
provided that the User shall either:
(a) substitute and install in or on the Project Site other
personal property or fixtures which shall (1) have equal or greater
utility (but not necessarily the same value or function) in the
operation of the Project, (2) be free of all liens and encumbrances
except for purchase money liens or encumbrances reasonably acceptable to
the Trustee, (3) be the sole property of the Issuer, subject to the
demise hereof, (4) be held by the User on the same terms and conditions
as the items originally comprising the Equipment, and (5) not impair the
Project or change the nature of the Project as a "project" under the
Enabling Law; or
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(b) forthwith upon such sale apply the price or amount obtained
upon the sale of such Equipment to the redemption of the principal of
the Bonds in accordance with the terms thereof.
SECTION 6.03 INSTALLATION OF MACHINERY AND EQUIPMENT OWNED OR LEASED BY
THE USER OR SUBJECT TO A SECURITY INTEREST IN THIRD PARTIES
(a) The User, may, at its own expense, or permit any sublessee of the
Project to, at its own expense, install at the Project any machinery, equipment
or other personal property which will facilitate the operation of the Project.
Any such property which is installed and does not constitute a part of the
Project under the terms of this Lease Agreement shall be and remain the property
of the User or such sublessee and may be removed thereby at any time while no
Lease Default exists under this Lease Agreement; provided, that any damage to
the Project occasioned by such removal shall be repaired by such party at its
own expense.
(b) If (i) any machinery, equipment or other personal property is leased
by the User or the User shall have granted a security interest in any such
property in connection with the acquisition thereof by the User, (ii) such
property is installed or is located on the Project Site, and (iii) such property
does not constitute a part of the Project under the terms of this Lease
Agreement, then the lessor of such property or the party holding a security
interest therein, as the case may be, may remove such property from the Project
Site even though a Lease Default may then exist hereunder or this Lease
Agreement may have been terminated following a Lease Default hereunder,
provided, that the foregoing permission to remove shall be subject to the
agreement by such lessor or secured party to repair at its own expense any
damage to the Project occasioned by such removal.
SECTION 6.04 INSURANCE
(a) The User will cause to be taken out and continuously maintained in
effect the following insurance with respect to the Project, paying as the same
become due all premiums with respect thereto:
(1) Insurance to the extent of the full insurable value of the
Project against loss or damage by fire, tornado, windstorm, flood and
other hazards and casualties, with uniform standard extended coverage
endorsement limited only as may be provided in the standard form of
extended coverage endorsement at the time in use in the State.
(2) Insurance against liability for bodily injury to or death of
persons and for damage to or loss of property occurring on or about the
Project or in any way related to the condition or operation of the
Project, in the minimum amounts of $1,000,000 combined single limit for
death of or bodily injury to any one person, and for property damage, all
on a per occurrence basis.
(3) Flood insurance under the national flood insurance program
established by the Flood Disaster Protection Act of 1973, as at any time
amended, only during such times while the Project is eligible under such
program, in an amount at least equal to the principal amount of the Bonds
Outstanding or to the maximum limit of coverage made available with
respect to the Project under said Act, whichever is less.
(4) Title insurance in an amount equal to the initial stated amount
of the Letter of Credit, insuring the Credit Documents subject to no liens
and encumbrances other than such encumbrances as shall be approved by the
Trustee and the Credit Obligor. Any proceeds of such title insurance shall
be applied, at the direction of the Credit Obligor, to cure the title
defect in respect of which such proceeds are made available or shall be
deposited in the Bond Fund with the Trustee and applied to the
extraordinary redemption of the Bonds in accordance with the terms of the
Indenture and the Bonds.
(5) Use and occupancy insurance (or business interruption or risk
insurance) covering suspension or interruption of the User's operations at
the Project in whole or in part, with such exemptions as are customarily
imposed by insurers, covering a period of suspension or interruption of at
least six months with a minimum limit in an amount equal to 100% of the
maximum amount to be paid as Rental Payments and other payments under
Article 5 hereof during the then current or any subsequent year.
(6) During the period of acquisition and construction of any part of
the Project builders' risk insurance in the amount of the full replacement
value of the Project against all losses which are normally covered by such
builders' risk insurance. The User may satisfy its obligations with
respect to the builder's risk insurance by causing such insurance to be
carried by a construction contractor for any part of the Project.
(b) All policies evidencing the insurance required by the terms of the
preceding paragraph shall be taken out and maintained in generally recognized
responsible insurance companies, qualified under the laws of the State to assume
the respective risks undertaken. All such insurance policies shall name as
either loss payee or additional insureds the Credit Obligor, the Issuer and the
Trustee (as their respective interests shall appear) and shall contain, where
appropriate, standard mortgage clauses providing for all losses thereunder in
excess of $250,000 to be paid to the Credit Obligor or, if there be no Credit
Obligor, to the Trustee; provided that all losses (including those in excess of
$250,000) may be adjusted by the User, subject, in the case of any single loss
in excess of $250,000, to the approval of the Credit Obligor, or if there be no
Credit Obligor, the Trustee. The User may insure under a blanket policy or
policies.
(c) Each insurance policy required to be carried by this Section shall
contain, to the extent obtainable, an agreement by the insurer that (1) the User
may not, without the consent of the Credit Obligor, the Issuer and Trustee,
cancel or materially amend such insurance or sell, assign or dispose of any
interest in such insurance, policy or any proceeds thereof, (2) such insurer
shall notify the Credit Obligor, the Issuer and the Trustee if any premium is
not paid when due or if any such policy is not renewed prior to the expiration
thereof, and (3) such insurer shall not materially amend or cancel any such
policy except on 30 days' prior written notice to the Credit Obligor, the Issuer
and the Trustee.
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(d) The User shall deposit with the Trustee a certificate or certificates
of the respective insurers attesting the fact that all policies evidencing the
insurance required to be carried by this Section are in force and effect. Upon
the expiration of any such policy, the User shall furnish to the Trustee
evidence reasonably satisfactory to the Trustee that such policy has been
renewed or replaced by another policy or that there is no necessity therefor
under this Lease Agreement.
ARTICLE 7
Provisions Respecting Damage,
Destruction and Condemnation
SECTION 7.01 DAMAGE AND DESTRUCTION
(a) If no Lease Default shall have occurred and be continuing and the
Letter of Credit is in effect and the Credit Obligor has not dishonored any
draws thereunder and a Credit Obligor Insolvency Date shall not have occurred,
then all Net Proceeds of insurance resulting from claims for losses in respect
of damage to or destruction of the Project (in whole or in part) shall be
applied as provided in the Credit Documents.
(b) If no Lease Default shall have occurred and be continuing and the
Letter of Credit is not in effect, or if the Credit Obligor has dishonored any
draw thereunder or if a Credit Obligor Insolvency Date shall have occurred, then
the following provisions shall apply in event of damage to or destruction of the
Project(in whole or in part):
(1) If the Project is destroyed (in whole or in part) or is damaged
the User shall continue to make Rental Payments and will promptly give
written notice of such damage and destruction to the Trustee and the
Issuer. All Net Proceeds of insurance resulting from claims for such
losses shall be paid to the Trustee and deposited in the Construction
Fund, whereupon (i) the User, or the Issuer at the User's direction, shall
proceed promptly to repair, rebuild or restore the property damaged or
destroyed to substantially the same condition in which it existed prior to
the event causing such damage or destruction, with such changes,
alterations and modifications (including the substitution and addition of
other property) as may be desired by the User and as will not impair the
operating unity or productive capacity of the Project or its character as
a "project" under the Enabling Law, and (2) the User shall cause
withdrawals to be made from the Construction Fund to pay the costs of such
repair, rebuilding or restoration, either on completion thereof or as the
work progresses. The balance (if any) of Net Proceeds remaining after the
payment of all of the costs of such repair, rebuilding or restoration
shall be deposited in the Bond Fund and applied to the extraordinary
redemption of Bonds in accordance with the provisions thereof and of the
Indenture, or, if none of the Bonds are then Outstanding, shall be paid to
the User.
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(2) In the event the Net Proceeds are not sufficient to pay in full
the costs of repairing, rebuilding and restoring the Project as provided
in this Section, the User shall nonetheless complete the work thereof and
shall pay that portion of the costs thereof in excess of the amount of
said proceeds or shall pay to the Trustee for the account of the Issuer
the moneys necessary to complete said work. The User shall not by reason
of the payment of such excess costs (whether by direct payment thereof or
payment to the Trustee therefor) be entitled to any reimbursement from the
Issuer or any abatement or diminution of the Rental Payments hereunder.
(3) Anything in this Section to the contrary notwithstanding, if, as
a result of such damage or destruction the User is entitled to exercise an
option to purchase the Project and duly does so in accordance with the
applicable provisions of Section 11.03 hereof, then neither the User nor
the Issuer shall be required to repair, rebuild or restore the property
damaged or destroyed, and so much (which may be all) of any Net Proceeds
referable to such damage or destruction as shall be necessary to provide
for full payment of the Indenture Indebtedness shall be paid to the
Trustee for deposit in the Bond Fund and applied to the extraordinary
redemption of the Bonds in accordance with the Indenture and the Bonds and
the excess thereafter remaining (if any) shall be paid to the User.
(c) If a Lease Default shall have occurred and be continuing, and the
Letter of Credit is not in effect or the Credit Obligor has dishonored any draw
thereunder or a Credit Obligor Insolvency Date shall have occurred, then all Net
Proceeds of insurance resulting from claims for losses in respect to damage to
or destruction of the Project (in whole or in part) shall be deposited in the
Bond Fund and applied to the extraordinary redemption of the Bonds in accordance
with the terms of the Indenture and the Bonds.
SECTION 7.02 CONDEMNATION
(a) If no Lease Default shall have occurred and be continuing and the
Letter of Credit is in effect and the Credit Obligor has not dishonored any
draws thereunder and a Credit Obligor Insolvency Date shall have occurred, then
all Net Proceeds resulting from any taking by eminent domain of the Project (in
whole or in part) shall be applied as provided in the Credit Documents.
(b) If no Lease Default shall have occurred and be continuing and the
Letter of Credit is not in effect, or if the Credit Obligor has dishonored any
draw thereunder or if a Credit Obligor Insolvency Date shall have occurred, then
the following provisions shall apply in event of any taking by eminent domain of
the Project (in whole or in part):
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(1) In the event that title to, or the temporary use of, the Project
or any part thereof shall be taken under the exercise of the power of
eminent domain and as a result thereof the User is entitled to exercise an
option to purchase the Project and duly does so in accordance with the
applicable provisions of Section 11.03 hereof, so much (which may be all)
of the Net Proceeds referable to such taking, including the amounts
awarded to the Issuer and the Trustee and the amount awarded to the User
for the taking of all or any part of the leasehold estate of the User in
the Project created by this Lease Agreement, as shall be necessary to
provide for full payment of the Indenture Indebtedness shall be paid to
the Trustee for deposit in the Bond Fund and applied to the extraordinary
redemption of the Bonds in accordance with the Indenture and the Bonds and
the excess of such Net Proceeds remaining (if any) shall be paid to the
User.
(2) If as a result of such taking, the User is not entitled to
exercise an option to purchase the Project under Section 11.03 hereof, or,
having such option, fails to exercise the same in accordance with the
terms thereof or notifies the Issuer and the Trustee in writing that it
does not propose to exercise such option, the User shall be obligated to
continue to make the Rental Payments and the entire Net Proceeds
hereinabove referred to shall, be paid to the Trustee and applied in one
or more of the following ways as shall be directed in writing by the User:
(i) To the restoration of the remaining improvements located
on the Project Site to substantially the same condition in which
they existed prior to the exercise of the power of eminent domain;
(ii) To the acquisition, by construction or otherwise, by the
Issuer of other lands or improvements suitable for the User's
operations at the Project, which land or improvements shall be
deemed a part of the Project and available for use and occupancy by
the User without the payment of any Rental Payments other than that
herein provided to the same extent as if such land or other
improvements were specifically described herein and demised hereby,
and which land or improvements shall be acquired by the Issuer
subject to no liens or encumbrances.
(3) Any balance of such Net Proceeds remaining after the application
thereof as provided in subsection (b) of this Section shall be deposited
in the Bond Fund and applied to the extraordinary redemption of the Bonds
in accordance with the terms of the Indenture and the Bonds, or, if the
Indenture Indebtedness is paid in full, shall be paid to the User.
(4) The Issuer shall cooperate fully with the User in the handling
and conduct of any prospective or pending condemnation proceeding with
respect to the Project or any part thereof and shall, to the extent it may
lawfully do so, permit the User to litigate in any such proceeding in the
name and behalf of the Issuer. In no event shall the Issuer settle, or
consent to the settlement of, any prospective or pending condemnation
proceeding without the prior written consent of the User.
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(5) The User shall be entitled to the Net Proceeds of any award or
portion thereof made for damage to or taking of its own property not
included in the Project, provided that any Net Proceeds resulting from the
taking of all or any part of the leasehold estate of the User in the
Project created by this Lease Agreement shall be paid and applied in the
manner provided in this Section 7.02.
(c) If a Lease Default shall have occurred and be continuing, and the
Letter of Credit is not in effect or the Credit Obligor has dishonored any draw
thereunder or a Credit Obligor Insolvency Date shall have occurred, then all Net
Proceeds of condemnation awards resulting from condemnation of the Project (in
whole or in part) shall be deposited in the Bond Fund and applied to the
extraordinary redemption of the Bonds in accordance with the terms of the Bonds
and the Indenture.
ARTICLE 8
Certain Provisions Relating to Assignment,
Subleasing, Mortgaging
and the Bonds
SECTION 8.01 PROVISIONS RELATING TO ASSIGNMENT AND SUBLEASING
With the consent of the Trustee and the Credit Obligor, the User may
assign this Lease Agreement and the leasehold interest created hereby and may
sublet the Project or any part thereof, subject, however, to the following
conditions:
(1) No such assignment or subleasing and no dealings or transactions
between the Issuer or the Trustee and any assignee or sublessee shall in
any way relieve the User from primary liability for any of its obligations
hereunder. In the event of any such assignment or subleasing the User
shall continue to remain primarily liable for the payment of all Rental
Payments herein provided to be paid by it and for the performance and
observance of the other agreements and covenants on its part herein
provided to be performed and observed by it.
(2) The User will not assign the leasehold interest created hereby
nor sublease the Project to any person unless the operations of such
assignee or sublessee are consistent with, and in furtherance of, the
purpose of the Enabling Law. The User shall, prior to any such assignment
or sublease, demonstrate to the reasonable satisfaction of the Trustee
that the operations of such assignee or sublessee will preserve the
character of the Project as a "project" under the Enabling Law, if
applicable, and deliver to the Trustee an Opinion of Bond Counsel
acceptable to the Trustee to the effect that such assignment or sublease
will not cause the interest on the Bonds to be Taxable.
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(3) The User shall, within 30 days after the delivery thereof,
furnish to the Issuer and the Trustee a true and complete copy of each
such assignment or sublease.
SECTION 8.02 ASSIGNMENT OF LEASE AGREEMENT AND RENTS BY THE ISSUER
The Issuer has, simultaneously with the delivery of this Lease Agreement,
assigned its interest in and pledged any money receivable under this Lease
Agreement (other than certain rights to indemnification and reimbursement) to
the Trustee as security for payment of the Bonds, and the User hereby consents
to such assignment and pledge. The Issuer has in the Indenture obligated itself
to follow the instructions of the Trustee or the Owners or a certain percentage
thereof in the election or pursuit of any remedies herein vested in it. The
Trustee shall have all rights and remedies herein accorded to the Issuer and any
reference herein to the Issuer shall be deemed, with the necessary changes in
detail, to include the Trustee, and the Trustee and the Owners are deemed to be
third party beneficiaries of the covenants, agreements and representations of
the User herein contained. Neither the Issuer nor the User will unreasonably
withhold any consent herein or in the Indenture required of either of them. The
User shall not be deemed to be a party to the Indenture or the Bonds and
reference in this Lease Agreement to the Indenture and the Bonds shall not
impose any liability or obligation upon the User other than its specific
obligations and liabilities undertaken in this Lease Agreement.
SECTION 8.03 TRANSFER OR ENCUMBRANCE CREATED BY ISSUER; CORPORATE
EXISTENCE OF ISSUER
(a) Without the prior written consent of the Trustee, the Credit Obligor,
and the User, the Issuer (1) will not sell, transfer or convey the Project or
any part thereof, except as provided in this Lease Agreement, and (2) will not
create or incur or suffer or permit to be created or incurred or to exist any
mortgage, lien, charge or encumbrance on the Project or any part thereof.
(b) The Issuer shall not consolidate with or merge into any other
corporation or transfer its property substantially as an entirety, except as
provided in the Indenture.
SECTION 8.04 REDEMPTION OF BONDS
(a) The Issuer will redeem any or all of the Bonds in accordance with the
Indenture and upon the occurrence of any event or contingency requiring the
mandatory redemption of Bonds, all in accordance with the applicable provisions
of the Bonds and the Indenture.
(b) If no Lease Default exists, the Issuer will exercise any right of
optional redemption with respect to the Bonds only upon the written request of
the User.
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ARTICLE 9
Covenants of the User
Until the Indenture
Indebtedness is paid in full:
(a) The User shall not do or permit anything to be done at the Project
that will affect, impair or contravene any policies of insurance that may be
carried on the Project. The User will, in the use of the Project and the public
ways abutting the same comply with all lawful requirements, the violation of
which would have a material adverse effect on the Project, of all governmental
bodies; provided, however, the User may, at its own expense in good faith
contest the validity or applicability of any such requirement.
(b) The User shall permit the Issuer, the Trustee, the Credit Obligor
and their duly authorized agents at all reasonable times to enter upon, examine
and inspect the Project.
(c) The User will maintain proper books of record and account, in which
full and correct entries will be made, in accordance with generally accepted
accounting principles, of all its business and affairs. The User shall furnish
to the Trustee with reasonable promptness such financial information of the User
as the Trustee shall reasonably request.
(d) The User will duly pay and discharge all taxes, assessments and
other governmental charges and liens lawfully imposed on the User and upon the
properties of the User, and the Project; provided, however, the User will not be
required to pay any taxes, assessments or other governmental charges so long as
in good faith it shall contest the validity thereof by appropriate legal
proceedings, the User has given notice of such contest to the Trustee, the User
has established reasonable reserves therefor, and no part of the Project shall,
in the opinion of the Trustee, be subject to loss or forfeiture.
(e) The User will maintain and preserve its existence (as a corporation
or as another form of entity as may be determined by the User) and will not
voluntarily dissolve without first discharging its obligations under this Lease
Agreement (except as permitted herein) and will comply with all valid laws,
ordinances, regulations and requirements applicable to it or to its property and
the Project.
(f) The User will not in any manner transfer or convey any substantial
portion of its property, assets and licenses without receipt of adequate
consideration therefor.
(g) The User will do, execute, acknowledge and deliver such further
acts, conveyances, mortgages, financing statements and assurances as the Issuer
or the Trustee shall require for accomplishing the purposes of the Financing
Documents. The User will cause this Lease Agreement, any amendments to this
Lease Agreement and other instruments of further assurance, including financing
statements and continuation statements, to be promptly recorded, registered and
filed, and at all times to be kept recorded, registered and filed in such places
as may be required by law fully to preserve and protect the rights of the Issuer
and the Trustee to all property comprising the Project.
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ARTICLE 10
Events of Default and Remedies
SECTION 10.01 EVENTS OF DEFAULT
Any one or more of the following shall constitute an event of default (a
"Lease Default") under this Lease Agreement (whatever the reason for such event
and whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(1) default in the payment of any Basic Rental Payment when such
Basic Rental Payment becomes due and payable; or
(2) default in the performance, or breach, of any covenant or
warranty of the User in this Lease Agreement (other than a covenant or
warranty, a default in the performance or breach of which is elsewhere in
this Section specifically described), and the continuance of such default
or breach for a period of 30 days after there has been given, by
registered or certified mail, to the User and the Credit Obligor by the
Issuer or by the Trustee a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a
"notice of default" hereunder; or
(3) The dissolution or liquidation of the User or the filing by the
User of a voluntary petition in bankruptcy, or failure by the User
promptly to lift any execution, garnishment or attachment of such
consequence as will impair its ability to carry on its operations at the
Project, or the User's seeking of or consenting to or acquiescing in the
appointment of a receiver of all or substantially all its property or of
the Project, or the adjudication of the User as a bankrupt, or any
assignment by the User for the benefit of its creditors, or the entry by
the User into an agreement of composition with its creditors, or if a
petition or answer is filed by the User proposing the adjudication of the
User as a bankrupt or its reorganization, arrangement or debt readjustment
under any present or future federal bankruptcy code or any similar federal
or state law in any court, or if any such petition or answer is filed by
any other person and such petition or answer shall not be stayed or
dismissed within 60 days;
(4) The occurrence of an event of default under any of the other
Financing Documents and the expiration of any applicable grace period; or
25
<PAGE>
(5) Receipt by the Trustee of written notice from the Credit Obligor
that an event of default has occurred and is continuing under the Credit
Documents or any other related documents to which the User and the Credit
Obligor are parties thereto.
SECTION 10.02 REMEDIES ON DEFAULT
Whenever any such Lease Default shall have occurred and be continuing, the
Issuer or the Trustee may, with the consent of the Credit Obligor (if the Letter
of Credit is in effect and the Credit Obligor shall not have dishonored a draw
thereunder and a Credit Obligor Insolvency Date shall not have occurred), take
any of the following remedial steps:
(1) Declare all installments of Basic Rental Payments for the
remainder of the Lease Term to be immediately due and payable, whereupon
the same shall become immediately due and payable;
(2) Reenter the Project, without terminating this Lease Agreement,
and, upon ten days' prior written notice to the User and Credit Obligor,
relet the Project or any part thereof for the account of the User, for
such term (including a term extending beyond the Lease Term) and at such
rentals and upon such other terms and conditions, including the right to
make alterations to the Project or any part thereof, as the Issuer may,
with the approval of the Trustee and Credit Obligor, deem advisable, and
such reentry and reletting of the Project shall not be construed as an
election to terminate this Lease Agreement nor relieve the User of its
obligations to pay Basic Rent and Additional Rent or to perform any of its
other obligations under this Lease Agreement, all of which shall survive
such reentry and reletting, and the User shall continue to pay Basic Rent
and all Additional Rent provided for in this Lease Agreement until the end
of the Lease Term, less the net proceeds, if any, of any reletting of the
Project after deducting all of the Issuer's and Trustee's expenses in
connection with such reletting, including, without limitation, all
repossession costs, brokers' commissions, attorneys' fees, alteration
costs and expenses of preparation for reletting;
(3) Terminate this Lease Agreement, exclude the User from possession
of the Project and, if the Issuer or Trustee elects so to do, lease the
same for the account of the Issuer, holding the User liable for all rent
due up to the date such lease is made for the account of the Issuer; or
(4) Take whatever legal proceedings may appear necessary or
desirable to collect the Rental Payments then due, whether by declaration
or otherwise, or to enforce any obligation or covenant or agreement of the
User under this Lease Agreement or by law.
26
<PAGE>
SECTION 10.03 AVAILABILITY OF REMEDIES
(a) No remedy herein conferred upon or reserved to the Issuer or the
Trustee is intended to be exclusive of any other available remedy or remedies,
but each and every such remedy shall be cumulative and shall be in addition to
every other remedy given under this Lease Agreement or now or hereafter existing
at law or in equity or by statute.
(b) No delay or omission to exercise any right or power accruing upon any
default shall impair any such right or power or shall be construed to be a
waiver thereof but any such right or power may be exercised from time to time
and as often as may be deemed expedient.
(c) In the event any agreement contained in this Lease Agreement should be
breached by either party and thereafter waived by the other party, such waiver
shall be limited to the particular breach so waived and shall not be deemed to
waive any other breach hereunder.
(d) All rights, remedies and powers provided by this Article may be
exercised only to the extent the exercise thereof does not violate any
applicable provision of law in the premises, and all the provisions of this
Article are intended to be subject to all applicable mandatory provisions of law
which may be controlling in the premises and to be limited to the extent
necessary so that they will not render this Lease Agreement invalid or
unenforceable.
SECTION 10.04 AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES
In the event the User should default under any of the provisions of this
Lease Agreement and the Issuer or the Trustee (in its own name or in the name
and on behalf of the Issuer) should employ attorneys or incur other expenses for
the collection of Rental Payments or the enforcement of performance or
observance of any obligation or agreement on the part of the User herein
contained, the User will on demand therefor pay to the Issuer or the Trustee (as
the case may be) the reasonable fee of such attorneys and such other reasonable
expenses so incurred.
ARTICLE 11
OPTIONS
SECTION 11.01 OPTIONS TO TERMINATE
The User shall have, if it is not in default hereunder, the option to
cancel or terminate the term of this Lease Agreement at any time after full
payment of the Indenture Indebtedness and termination of the Letter of Credit by
giving the Issuer notice in writing of such termination and such termination
shall forthwith become effective. This Lease Agreement may not be terminated
prior to payment in full of the Indenture Indebtedness even if all amounts due
hereunder have been paid in full.
27
<PAGE>
SECTION 11.02 OPTION TO RENEW
There shall be no option to renew the term of this Lease Agreement.
SECTION 11.03 OPTION TO PURCHASE PRIOR TO PAYMENT OF THE BONDS
(a) The User, if not in default hereunder, shall have the option to
purchase the Project at any time prior to the full payment of the Indenture
Indebtedness if any of the following shall have occurred:
(i) The Project or any part thereof shall have been damaged or
destroyed (A) to such extent that, in the opinion of the User, it
cannot be reasonably restored within a period of four consecutive
months substantially to the condition thereof immediately preceding
such damage or destruction, or (B) to such extent that, in the
opinion of the User, the User is thereby prevented from carrying on
its normal operations at the Project for a period of four
consecutive months, or (C) to such extent that the cost of
restoration thereof would exceed by more than $50,000 the Net
Proceeds of insurance carried thereon pursuant to the requirements
of this Lease Agreement; or
(ii) Title to the Project or any part thereof or the leasehold
estate of the User in the Project created by this Lease Agreement or
any part thereof shall have been taken under the exercise of the
power of eminent domain by any governmental authority or person,
firm or corporation acting under governmental authority, which
taking may result, in the opinion of the User, in the User being
thereby prevented from carrying on its normal operations at the
Project for a period of four consecutive months; or
(iii) As a result of any changes in the Constitution of the
State or the Constitution of the United States of America or of
legislative or administrative action (whether state or Federal), or
by final decree, judgment or order of any court or administrative
body (whether state or Federal) entered after the contest thereof by
the User in good faith, this Lease Agreement shall have become void
or unenforceable or impossible of performance in accordance with the
intent and purpose of the parties as expressed herein, or
unreasonable burdens or excessive liabilities shall have been
imposed on the Issuer or the User, including without limitation, the
imposition of taxes of any kind on the Project or the income or
profits of the Issuer therefrom, or upon the interest of the User
therein, which taxes were not being imposed on the date of this
Lease Agreement.
(b) To exercise such option, the User shall, within 30 days following the
event authorizing the exercise of such option, give written notice to the Issuer
and to the Trustee and shall specify therein the date of closing such purchase,
which date shall be not less than 30 days from the date such notice is mailed,
and shall make arrangements satisfactory to the Trustee for the giving of the
required notice for the redemption of the Bonds. The purchase price payable by
the User in the event of its exercise of the option granted in this Section
shall be that amount required to pay in full all Indenture Indebtedness and
shall be paid to the Trustee for deposit in the Bond Fund for application to the
extraordinary redemption of the Bonds in accordance with the terms of the Bonds
and the Indenture.
(c) Upon the exercise of the option granted in this Section and the
payment of the option price, any Net Proceeds of insurance or condemnation award
then on hand or thereafter received shall be paid to the User.
28
<PAGE>
SECTION 11.04 OPTION TO PURCHASE PROJECT AFTER PAYMENT OF THE INDENTURE
INDEBTEDNESS
(a) The User shall have the option to purchase the Project at any time
following full payment of the Indenture Indebtedness for a purchase price of ten
dollars plus all expenses of the Issuer incurred in connection therewith. To
exercise the option granted in this Section, the User shall notify the Issuer of
its intention so to exercise such option prior to the proposed date of purchase
and shall on the date of purchase pay such purchase price to the Issuer. The
User may not purchase the Project prior to payment in full of all Indenture
Indebtedness even if all amounts due hereunder shall have been paid in full.
(b) In the event the option granted in this Section 11.04 shall not have
been exercised prior to the end of the Lease Term, then said option shall be
automatically exercised upon the end of the Lease Term.
SECTION 11.05 OPTION TO PURCHASE PORTIONS OF PROJECT SITE
(a) The User, if not in default hereunder, shall have the option to
purchase any Unimproved portion of the Project Site at any time and from time to
time with the prior written consent of the Trustee and for a purchase price
equal to the pro-rata cost of such portion of the Project Site to be so
purchased, provided that the User furnish the Issuer and the Trustee with the
following:
(1) A notice in writing containing (i) an adequate legal description
of that portion of the Project Site with respect to which such option is
to be exercised, which portion may include rights granted in party walls,
the right to "tie-into" existing utilities, the right to connect and join
any building, structure or improvement with existing structures,
facilities and improvements on the Project Site, and the right of ingress
or egress to and from the public highway which shall not interfere with
the use and occupancy of existing structures, improvements and buildings,
and (ii) a statement that the User intends to exercise such option to
purchase such portion of the Project Site on a date stated.
29
<PAGE>
(2) A certificate of an Independent Engineer or of an Independent
Architect stating that, in the opinion of the person signing such
certificate, (i) the portion of the Project Site with respect to which the
option is exercised is not needed for the operation of the then existing
Project and (ii) the severance of such portion of the Project Site and the
location or construction thereon of buildings, structures and
improvements, if any, will not impair the usefulness of the then existing
Project or the means of ingress and egress to and from the remaining
portions of the Project or impair or deny highway access, rail access or
utility services to such remaining portions of the Project.
(3) An amount of money equal to the purchase price computed as
provided in this Section, which amount shall be paid to the Trustee and
applied to the redemption of the Bonds in accordance with the terms
thereof.
(b) Upon receipt of the notice and certificate required in this Section to
be furnished by the User and the payment by the User to the Trustee of the
purchase price, the Issuer will promptly deliver to the User the documents
referred to in Section 11.06.
(c) If such option relates to portions of the Project Site on which
transportation or utility facilities are located, the Issuer shall retain an
easement to use such transportation or utility facilities to the extent
necessary for the efficient operation of the Project.
(d) No purchase effected under the provisions of this Section shall affect
the obligation of the User for the payment of Rental Payments and other payments
in the amounts and at the times provided in this Lease Agreement or the
performance of any other agreement, covenant or provision hereof, and there
shall be no abatement or adjustment in Rental Payments by reason of the release
of any such portion of the Project Site and the obligations of the User shall
continue in all respects as provided in this Lease Agreement, excluding,
however, any portion of the Project Site so purchased.
SECTION 11.06 CONVEYANCE OF EXERCISE OF OPTION TO PURCHASE
At the closing of the purchase pursuant to the exercise of any option to
purchase granted herein, the Issuer shall upon receipt of the purchase price
deliver to the User documents conveying to the User the property with respect to
which such option was exercised, as such property then exists, subject to the
following: (a) all easements or other rights, if any, required to be reserved by
the Issuer under the terms and provisions of the option being exercised by the
User; (b) those liens and encumbrances, if any, to which title to said property
was subject when conveyed to the Issuer; (c) those liens and encumbrances
created by the User or to the creation or suffering of which the User consented;
and (d) those liens and encumbrances resulting from the failure of the User to
perform or observe any of the agreements on its part contained in this Lease
Agreement.
30
<PAGE>
ARTICLE 12
INTERNAL REVENUE CODE
SECTION 12.01 COVENANTS REGARDING SECTION 103 AND SECTIONS 141-150 OF
THE INTERNAL REVENUE CODE
(a) The Issuer and the User do each hereby covenant and agree for the
benefit of the Bondholders that neither the Issuer nor the User will take any
action, omit to take any action, permit any action to be taken or fail to
require any action to be taken, which would cause the interest on the Bonds to
be or become Taxable. Without limiting the generality of the foregoing, the User
covenants and agrees that (a) the proceeds of the Bonds shall not be used or
applied in such manner as to cause any Bond to be or become an "arbitrage bond"
as that term is defined in Section 148 of the Internal Revenue Code, (b)
ninety-five percent (95%) or more of the net proceeds will be used for the
acquisition, construction, reconstruction, or improvement of land or property of
a character subject to the allowance for depreciation, within the meaning of
Section 144(a) of the Internal Revenue Code, (c) the proceeds will be used
solely for the acquisition and construction of the Project, which shall
constitute facilities solely for the manufacturing, including processing, of
tangible personal property, or for issuance expenses, or shall be rebated to the
United States of America as provided in this Lease Agreement and the Indenture,
and no part of the proceeds will be used by the User, directly or indirectly,
for working capital or to finance inventory, or to acquire any facility or asset
which may not be financed, in whole or in part, with the proceeds of obligations
the interest on which is excludable from gross income for federal income
taxation, (d) the net proceeds shall not be used for the acquisition,
construction, reconstruction or improvement of any property which would cause
the average maturity of the Bonds to exceed one hundred twenty percent (120%) of
the average reasonably expected economic life of the facilities financed with
the net proceeds of the Bonds, within the meaning of Section 147(b) of the
Internal Revenue Code, (e) none of the net proceeds shall be used to acquire
(directly or indirectly) any land (or any interest therein) to be used for
farming purposes; (f) less than twenty-five percent (25%) of the net proceeds
shall be used to acquire (directly or indirectly) the Project Site or any other
land (or any interest therein), (g) none of the net proceeds shall be used to
acquire any property or any interest therein (including, without limitation,
buildings, structures, facilities, improvements, equipment, machinery or other
personal property) the first use of which property was not pursuant to such
acquisition with the proceeds, (h) neither the Bonds nor any proceeds therefrom
shall ever be federally guaranteed, as such term is defined in Section 149(b) of
the Internal Revenue Code, except as expressly permitted by said Section 149(b),
(i) neither the User nor any related person shall ever have allocated to it and
outstanding tax-exempt facility-related bonds (as such term is used in Section
144(a) (10) of the Internal Revenue Code) in an aggregate principal amount
exceeding $40,000,000, (j) no party shall ever be allowed to use or otherwise
occupy or derive any benefit whatsoever from the Project, or any part thereof,
if the effect of the foregoing shall result in a test period beneficiary (as
defined in Section 144(a) (10) of the Internal Revenue Code) having allocated to
it and outstanding in excess of $40,000,000 in aggregate principal amount of
tax-exempt facility related bonds, (k) no more than two percent of the face
amount of the Bonds shall be used to pay issuance costs.
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<PAGE>
(b) The Issuer has elected and does hereby elect to have the provisions
relating to the $10,000,000 limit in Section 144(a)(4) of the Internal Revenue
Code apply to the Bonds.
(c) The User covenants and agrees that (i) the limitation set forth in
Section 144(a)(4)(A) of the Code will not be exceeded during the applicable
six-year period with respect to "facilities" described in Section 144(a)(4)(B)
of the Code, and (ii) during such six-year period it will not make, or permit to
be made, "capital expenditures" (as described in Section 144(a)(4) of the Code
and applicable regulations thereunder) in an aggregate amount that would exceed
the limitation set forth in said Section.
(d) The Issuer and the User will each cooperate to assure compliance with
the provisions of Section 12.03 of this Lease Agreement and Article XVII of the
Indenture.
SECTION 12.02 USER'S OBLIGATION UPON DETERMINATION OF TAXABILITY
(a) Upon the occurrence of a Determination of Taxability, the Trustee
shall notify the User in writing that all Outstanding Bonds shall be subject to
mandatory redemption on the date specified by the Trustee in accordance with the
Indenture irrespective of whether a Lease Default shall have occurred and be
continuing. Within seven days after the receipt of such notice the User shall
purchase the Project from the Issuer for the price specified in subsection (b)
of this Section, which purchase price shall be paid to the Trustee.
(b) The price payable by the User for the Project in the event of a
Determination of Taxability shall be equal to the amount required to pay in full
all Indenture Indebtedness. There shall be credited against such payment
otherwise required by this paragraph all amounts which shall have been paid to
the Trustee pursuant to the Letter of Credit with respect to such payment of the
Bonds then Outstanding.
(c) Any other options of the User to purchase the Project shall be
superseded by its mandatory obligation to purchase the Project pursuant to this
section 12.02.
SECTION 12.03 FEDERAL REBATE PAYMENTS
The provisions of Article XVII of the Indenture are incorporated herein by
reference, and the User shall comply with said provisions and shall perform and
discharge all obligations, duties and responsibilities imposed upon the User
under said Article, including without limitation the payment of all required
rebates to the United States of America.
32
<PAGE>
ARTICLE 13
Provisions of General Application
SECTION 13.01 COVENANT OF QUIET ENJOYMENT
So long as the User performs and observes all the covenants and agreements
on its part herein contained, it shall peaceably and quietly have, hold and
enjoy the Project during the Lease Term subject to all the terms and provisions
hereof.
SECTION 13.02 INVESTMENT OF FUNDS
The Issuer shall cause any money held as a part of the Special Funds which
may by the terms of the Indenture be invested to be so invested or reinvested by
the Trustee solely at the request of, and solely as directed in writing by, the
User and as provided in the Indenture.
SECTION 13.03 ISSUER'S LIABILITIES LIMITED
(a) The covenants and agreements contained in this Lease Agreement shall
never constitute or give rise to a personal or pecuniary liability or charge
against the general credit of the Issuer, and in the event of a breach of any
such covenant or agreement, no personal or pecuniary liability or charge payable
directly or indirectly from the general assets or revenues of the Issuer shall
arise therefrom. Nothing contained in this Section, however, shall relieve the
Issuer from the observance and performance of the covenants and agreements on
its part contained herein.
(b) No recourse under or upon any covenant or agreement of this Lease
Agreement shall be had against any past, present or future incorporator, officer
or member of the Board of Directors of the Issuer, or of any successor
corporation, either directly or through the Issuer, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise; it being expressly understood that this Lease Agreement is
solely a corporate obligation, and that no personal liability whatever shall
attach to, or is or shall be incurred by, any incorporator, officer or member of
the Board of Directors of the Issuer or any successor corporation, or any of
them, under or by reason of the covenants or agreements contained in this Lease
Agreement.
SECTION 13.04 PRIOR AGREEMENTS
Except for any deed, bill of sale, or other instrument by which the
Project, any part thereof, or any interest therein has been transferred and
conveyed by the User to the Issuer, this Lease Agreement shall completely and
fully supersede all prior agreements, both written and oral, between the Issuer
and the User relating to the acquisition of the Project Site, the construction
of the Improvements, the acquisition and installation of the Equipment, the
leasing of the Project and any options to purchase. Neither the Issuer nor the
User shall hereafter have any rights under such prior agreements, except as
otherwise herein provided, but shall look solely to this Lease Agreement for
definition and determination of all of their respective rights, liabilities and
responsibilities relating to the Project.
33
<PAGE>
SECTION 13.05 EXECUTION COUNTERPARTS
This Lease Agreement may be executed in several counterparts, each of
which shall be an original and all of which shall constitute but one and the
same instrument.
SECTION 13.06 BINDING EFFECT; GOVERNING LAW
This Lease Agreement shall inure to the benefit of, and shall be binding
upon, the Issuer, the User and their respective successors and assigns. This
Lease Agreement shall be governed exclusively by the applicable laws of the
State.
SECTION 13.07 ENFORCEABILITY
In the event any provision of this Lease Agreement shall be held invalid
or unenforceable by any court of competent jurisdiction, such holding shall not
invalidate or render unenforceable any other provision hereof.
SECTION 13.08 ARTICLE AND SECTION CAPTIONS
The Article and Section headings and captions contained herein are
included for convenience only and shall not be considered a part hereof or
affect in any manner the construction or interpretation hereof.
SECTION 13.09 NOTICES
(a) Any request, demand, authorization, direction, notice, consent, or
other document provided or permitted by this Lease Agreement to be made upon,
given or furnished to, or filed with, the Issuer, the User, the Trustee or the
Credit Obligor shall be sufficient for every purpose hereunder if in writing and
(except as otherwise provided in this Lease Agreement) either (i) delivered
personally to the party or, if such party is not an individual, to an officer,
or other legal representative of the party to whom the same is directed
(provided that any document delivered personally to the Trustee must be
delivered to a corporate trust officer at its Principal Office during normal
business hours) at the hand delivery address specified in Section 1.10 of the
Indenture or (ii) mailed by registered or certified mail, postage prepaid,
addressed as specified in Section 1.10 of the Indenture. Any of such parties may
change the address for receiving any such notice or other document by giving
notice of the change to the other parties as provided in this Section.
34
<PAGE>
(b) Any such notice or other document shall be deemed delivered when
actually received by the party to whom directed (or, if such party is not an
individual, to an officer, or other legal representative of the party) at the
address specified pursuant to this Section, or, if sent by mail, three days
after such notice or document is deposited in the United States mail, proper
postage prepaid, addressed as provided above.
SECTION 13.10 AMENDMENT OF INDENTURE AND THIS LEASE AGREEMENT
(a) The Issuer will not cause or permit the amendment of the Indenture or
the execution of any amendment or supplement to the Indenture without the prior
written consent of the User and the Credit Obligor. The Issuer and the User
shall have no power to modify, alter, amend or terminate this Lease Agreement
without the prior written consent of the Credit Obligor. Prior to the payment in
full of the Indenture Indebtedness, the Issuer and the User shall have no power
to modify, alter, amend or terminate this Lease Agreement without the prior
written consent of the Trustee and then only as provided in the Indenture.
(b) This Lease Agreement may not be amended unless there has first been
delivered to the Trustee, the User and the Remarketing Agent an opinion of Bond
Counsel that such action will not, whether solely or in conjunction with any
other fact or circumstance, cause the interest on the Bonds to be or to become
Taxable.
35
<PAGE>
IN WITNESS WHEREOF, the Issuer and the User have each caused this Lease
Agreement to be executed, sealed and attested in its name by officers thereof
duly authorized thereunto, and the parties hereto have caused this Lease
Agreement to be dated as of March 1, 1999.
THE INDUSTRIAL DEVELOPMENT BOARD
OF THE CITY OF PIEDMONT
BY
-----------------------------------------
Chairman
S E A L
Attest: _________________________________
Secretary
BOSTROM SEATING, INC.
BY
-----------------------------------------
ITS
----------------------------------------
S E A L
Attest: _________________________________
ITS _____________________________________
36
<PAGE>
STATE OF ALABAMA )
CALHOUN COUNTY )
I, the undersigned, a Notary Public in and for said County in said State,
hereby certify that James Bennett, whose name as Chairman of The Industrial
Development Board of the City of Piedmont, a public corporation, is signed to
the foregoing Lease Agreement and who is known to me, acknowledged before me on
this day that, being informed of the contents of said Lease Agreement, he, as
such officer and with full authority, executed the same voluntarily for and as
the act of said municipal corporation.
Given under my hand and seal this the 24th day of February, 1999.
------------------------------------
Notary Public
NOTARIAL SEAL
My commission expires: June 19, 2000
37
<PAGE>
STATE OF ___________ )
_______________ COUNTY )
I, the undersigned, a Notary Public in and for said County in said State,
hereby certify that ________________ whose name as President of Bostrom Seating,
Inc., a Delaware corporation, is signed to the foregoing Lease Agreement, and
who is known to me, acknowledged before me on this day that, being informed of
the contents of said Lease Agreement, he, as such officer and with full
authority, executed the same voluntarily for and as the act of said corporation.
Given under my hand and seal this the _____ day of _______________, 1999.
------------------------------------
Notary Public
NOTARIAL SEAL
My commission expires:
38
<PAGE>
EXHIBIT A
TO
LEASE AGREEMENT
DATED AS OF MARCH 1, 1999
BETWEEN
THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF PIEDMONT
AND
BOSTROM SEATING, INC.
DESCRIPTION OF REAL PROPERTY
<PAGE>
EXHIBIT B
TO
LEASE AGREEMENT
DATED AS OF MARCH 1, 1999
BETWEEN
THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF PIEDMONT
AND
BOSTROM SEATING, INC.
EQUIPMENT LIST
DESCRIPTION OF PERSONAL PROPERTY AND FIXTURES
(a) Heating and air conditioning and ventilating equipment, electrical
equipment, plumbing fixtures and furnishings, fire detection, suppression and
extinguishment apparatus, equipment and fixtures, and building materials and
supplies to be incorporated in the Project.
(b) The personal property and fixtures described on the following pages.
<PAGE>
LEASE AGREEMENT
TABLE OF CONTENTS
RECITALS.................................................................. 1
ARTICLE 1
DEFINITIONS................................ 1
ARTICLE....................................... 2
REPRESENTATIONS
SECTION 2.01 Representations by the Issuer........................ 6
SECTION 2.02 Representations by the User.......................... 7
ARTICLE 3
DEMISING CLAUSES.............................. 8
ARTICLE 4
ACQUISITION OF THE PROJECT
SECTION 4.01 Agreement to Acquire................................. 9
SECTION 4.02 No Warranty of Suitability of Issuer.................10
SECTION 4.03 Pursuit of Remedies Against Vendors,
Contractors and Subcontractors and Their Sureties................10
SECTION 4.04 Completion of the Project............................11
ARTICLE 5
DURATION OF LEASE TERM
AND RENTAL PROVISIONS
SECTION 5.01 Duration of Term.....................................11
SECTION 5.02 Basic Rental Payments; Draws Under Letter of
Credit...............................................11
SECTION 5.03 Additional Rental Payments...........................12
SECTION 5.04 Advances by Issuer or Trustee........................13
SECTION 5.05 Indemnity of Issuer, Trustee and Paying Agent........13
SECTION 5.06 Obligations of User Unconditional....................14
SECTION 5.07 This Lease a Net Lease...............................15
<PAGE>
ARTICLE 6
MAINTENANCE, ALTERATIONS, REPLACEMENTS, INSURANCE
SECTION 6.01 Maintenance and Repairs, Alterations and
Improvements, Party Walls; and Liens; Utility Charges............15
SECTION 6.02 Removal of, Substitution and Replacement for
Equipment........................................................16
SECTION 6.03 Installation of Machinery and Equipment Owned
or Leased by the User or Subject to a
Security Interest in Third Parties...............................17
SECTION 6.04 Insurance............................................17
ARTICLE 7
PROVISIONS RESPECTING DAMAGE,
DESTRUCTION AND CONDEMNATION
SECTION 7.01 Damage and Destruction...............................19
SECTION 7.02 Condemnation.........................................20
ARTICLE 8
CERTAIN PROVISIONS RELATING TO ASSIGNMENT,
SUBLEASING, MORTGAGING AND THE BONDS
SECTION 8.01 Provisions Relating to Assignment and Subleasing.....22
SECTION 8.02 Assignment of Lease Agreement and Rents by the
Issuer...........................................................23
SECTION 8.03 Transfer or Encumbrance Created by Issuer;
Corporate Existence of Issuer....................................23
SECTION 8.04 Redemption of Bonds..................................23
ARTICLE 9
COVENANTS OF THE USER
ARTICLE 10
EVENTS OF DEFAULT AND REMEDIES
SECTION 10.01 Events of Default....................................25
SECTION 10.02 Remedies on Default..................................26
SECTION 10.03 Availability of Remedies.............................27
SECTION 10.04 Agreement to Pay Attorneys' Fees and Expenses........27
<PAGE>
ARTICLE 11
OPTIONS
SECTION 11.01 Options to Terminate.................................27
SECTION 11.02 Option to Renew......................................28
SECTION 11.03 Option to Purchase Prior to Payment of the Bonds.....28
SECTION 11.04 Option to Purchase Project After Payment of the
Indenture Indebtedness.............................29
SECTION 11.05 Option to Purchase Portions of Project Site..........29
SECTION 11.06 Conveyance of Exercise of Option to Purchase.........30
ARTICLE 12
INTERNAL REVENUE CODE
SECTION 12.01 Covenants Regarding Section 103 and Sections
141-150 of the Internal Revenue Code................31
SECTION 12.02 User's Obligation Upon Determination of Taxability...32
SECTION 12.03 Federal Rebate Payments..............................32
ARTICLE 13
PROVISIONS OF GENERAL APPLICATION
SECTION 13.01 Covenant of Quiet Enjoyment..........................32
SECTION 13.02 Investment of Funds..................................33
SECTION 13.03 Issuer's Liabilities Limited.........................33
SECTION 13.04 Prior Agreements.....................................33
SECTION 13.05 Execution Counterparts...............................33
SECTION 13.06 Binding Effect; Governing Law........................34
SECTION 13.07 Enforceability.......................................34
SECTION 13.08 Article and Section Captions.........................34
SECTION 13.09 Notices..............................................34
SECTION 13.10 Amendment of Indenture and this Lease Agreement......34
TESTIMONIAL..................................................................35
SIGNATURES...................................................................35
ACKNOWLEDGMENTS...........................................................36-37
EXHIBIT A
EXHIBIT B
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<NAME> JOHNSTOWN AMERICA INDUSTRIES, INC.
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