<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 8, 1998
REGISTRATION NO. 333-53987
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO.1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
JACKSON PRODUCTS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 3231 75-2470881
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION NUMBER) IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
JACKSON PRODUCTS, INC.
2997 CLARKSON ROAD
CHESTERFIELD, MISSOURI 63017
(314) 207-2700
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
CHRISTOPHER T. PAULE
JACKSON PRODUCTS, INC.
2997 CLARKSON ROAD
CHESTERFIELD, MISSOURI 63017
(314) 207-2700
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
---------------
WITH A COPY TO:
JAMES B. CARLSON, ESQ.
MAYER, BROWN & PLATT
1675 BROADWAY
NEW YORK, NEW YORK 10019
(212) 506-2515
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
CALCULATION OF REGISTRATION FEE
================================================================================
<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
9 1/2% Series B Senior
Subordinated Notes
Due 2005.............. $115,000,000 100% $115,000,000 $33,925(2)
</TABLE>
================================================================================
(1)Estimated solely for the purpose of calculating the registration fee.
(2)Previously paid.
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
(a) The Delaware General Corporation Law (Section 145) gives Delaware
corporations broad powers to indemnify their present and former directors and
officers and those of affiliated corporations against expenses incurred in the
defense of any lawsuit to which they are made parties by reason of being or
having been such directors or officers, subject to specified conditions and
exclusions; gives a director or officer who successfully defends an action the
right to be so indemnified; and authorizes the registrant to buy directors'
and officers' liability insurance. Such indemnification is not exclusive of
any other rights to which those indemnified may be entitled under any by-laws,
agreement, vote of stockholders or otherwise.
(b) The Certificate of Incorporation of the registrant requires, and the By-
Laws of the registrant provides for, indemnification of directors, officers,
employees and agents to the full extent permitted by law.
(c) The Purchase Agreement and the Registration Rights Agreement (the forms
of which are included as Exhibits 1 and 4.3 to this Registration Statement)
provide for the identification under certain circumstances of the registrant,
its directors and certain of its officers by the Underwriters.
(d) In accordance with Section 102(b(7) of the Delaware General Corporation
Law, the registrant's Amended and Restated Certificate of Incorporation
provides that directors shall not be personally liable for monetary damages
for breaches of their fiduciary duty as directors except for (1) breaches of
their duty of loyalty to the registrant or its stockholders, (2) acts or
omissions not in good faith or which involve intentional misconduct or knowing
violations of law, (3) under Section 174 of the Delaware General Corporation
Law (unlawful payment of dividends or stock purchase or redemption) or (4)
transactions from which a director derives an improper personal benefit.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
A list of the exhibits included as part of this Registration Statement is
set forth in the Exhibit Index that immediately precedes such exhibits and is
incorporated herein by reference.
(b) Financial Statement Schedules:
All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission have been omitted
because they are not required, are inapplicable or the required information
has already been provided elsewhere in the registration statement.
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registrant statement;
II-1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this amended registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of New
York, State of New York, on June 8, 1998.
JACKSON PRODUCTS, INC.
By: /s/ A.Richard Caputo,Jr.
_________________________
A. Richard Caputo, Jr.
Vice President and
Director
Pursuant to the requirements of the Securities Act of 1933, as amended, this
amended registration statement has been signed by the following persons in the
capacities indicated on .
SIGNATURE TITLE
--------- -----
* Chairman, President,
- --------------------------------- Chief Executive Officer
Robert H. Elkin and a Director
(Principal Executive
Officer)
* Vice President, Chief
- --------------------------------- Financial Officer and
Christopher T. Paule Secretary (Principal
Financial and
Accounting Officer)
Vice President and
* Director
- ---------------------------------
A. Richard Caputo, Jr.
* Director
- ---------------------------------
Jonathan F. Boucher
* Director
- ---------------------------------
John W. Jordan, II
* Director
- ---------------------------------
David W. Zalaznick
By: /s/ A. Richard Caputo,Jr.
_________________________
As Attorney-in-Fact
II-2
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ----------- ------------
<C> <S> <C>
1 Purchase Agreement, dated as of April 16, 1998, by and
among Jackson Products, Inc. (the "Registrant"),
Jefferies & Company, Inc. and Goldman, Sachs & Co..... +
2.1 Stock Purchase Agreement, dated as of March 30, 1998,
by and among Jackson Acquisition, Inc., NCH
Corporation, American Allsafe Company and
Silencio/Safety Direct, Inc.*......................... +
2.2 Stock Purchase Agreement, dated as of March 31, 1998,
by and among Crystaloid Technologies, Inc., the
Management Sellers party thereto, Dahl Partners
Incorporated and Crystaloid Electronics Company*...... +
3.1 Certificate of Incorporation of the Registrant........ +
3.2 Bylaws of the Registrant.............................. +
4.1 Indenture, dated as of April 22, 1998, between the
Registrant and State Street Bank and Trust Company, as
Trustee............................................... +
4.2 Form of Global Series A Senior Note................... +
4.3 Form of Global Series B Senior Note .................. ++
4.4 Registration Rights Agreement, dated as of April 22,
1998, by and among the Registrant, Jefferies &
Company, Inc. and Goldman, Sachs & Co. ............... +
5 Opinion of Mayer, Brown & Platt....................... ++
10.1 Credit Agreement, dated as of April 22, 1998, by and
among the Registrant, BankBoston, N.A., as Agent,
Mercantile Bank National Association, as Co-agent, the
other lenders party thereto, and BancBoston
Securities, Inc., as Syndication Agent and Arranger... +
10.2 Revolving Note in the aggregate principal amount of
$19,500,000........................................... +
10.3 Revolving Note in the aggregate principal amount of
$10,500,000........................................... +
10.4 Acquisition Note in the aggregate principal amount of
$61,750, 000.......................................... +
10.5 Acquisition Note in the aggregate principal amount of
$33,250,000........................................... +
10.6 Guaranty, dated as of April 22, 1998, by and among
Flex-O-Lite, Inc., OSD Envizion, Inc., Crystaloid
Technologies, Inc., Jackson Acquisition, Inc.,
American Allsafe Company, Silencio/Safety Direct, Inc.
and BankBoston, N.A., as Agent........................ +
10.7 Stock Pledge Agreement, dated as of April 22, 1998, by
and between the Registrant and BankBoston, N.A., as
Agent................................................. +
10.8 Stock Pledge Agreement (Subsidiaries), dated as of
April 22, 1996, by and between Flex-O-Lite, Inc. and
BankBoston, N.A., as Agent............................ +
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ----------- ------------
<C> <S> <C>
10.9 Stock Pledge Agreement (Subsidiaries), dated as of
April 22, 1998, by and between Jackson Acquisition,
Inc. and BankBoston, NM.A., as Agent................. +
10.10 Security Agreement, dated as of April 22, 1998, by
and between the Registrant and BankBoston, N.A., as
Agent................................................ +
10.11 Security Agreement (Subsidiaries), dated as of April
22, 1998 by and among Flex-O-Lite, Inc., OSD
Envizion, Inc., Crystaloid Technologies, Inc.,
Jackson Acquisition, Inc., American Allsafe Company,
Silencio/Safety Direct, Inc. and BankBoston, N.A., as
Agent................................................ +
10.12 Patent Collateral Assignment and Security Agreement,
dated as of April 22, 1998, by and between the
Registrant and BankBoston, N.A., as Agent............ +
10.13 Patent Collateral Assignment and Security Agreement,
dated as of April 22, 1998, by and between the Flex-
O-Lite, Inc. and BankBoston, N.A., as Agent.......... +
10.14 Patent Collateral Assignment and Security Agreement,
dated as of April 22, 1998, by and between the OSD
Envizion, Inc. and BankBoston, N.A., as Agent........ +
10.15 Patent Collateral Assignment and Security Agreement,
dated as of April 22, 1998, by and between American
Life Allsafe Company and BankBoston, N.A., as Agent.. +
10.16 Patent Collateral Assignment and Security Agreement,
dated as of April 22, 1998, by and between the
Silencio/Safety Direct, Inc. and BankBoston, N.A., as
Agent................................................ +
10.17 Patent Collateral Assignment and Security Agreement,
dated as of April 22, 1998, by and between the
Crystaloid Technologies, Inc. and BankBoston, N.A.,
as Agent............................................. +
10.18 Trademark Collateral Assignment and Security
Agreement, dated as of April 22, 1998, by and between
the Registrant and BankBoston, N.A., as Agent........ +
10.19 Trademark Collateral Assignment and Security
Agreement, dated as of April 22, 1998, by and between
the Flex-O-Lite, Inc. and BankBoston, N.A., as Agent. +
10.20 Trademark Collateral Assignment and Security
Agreement, dated as of April 22, 1998, by and between
the OSD Envizion, Inc. and BankBoston, N.A., as
Agent................................................ +
10.21 Trademark Collateral Assignment and Security
Agreement, dated as of April 22, 1998, by and between
American Allsafe Company and BankBoston, N.A., as
Agent................................................ +
10.22 Trademark Collateral Assignment and Security
Agreement, dated as of April 22, 1998, by and between
the Silencio/Safety Direct, Inc. and BankBoston,
N.A., as Agent....................................... +
10.23 Trademark Collateral Assignment and Security
Agreement, dated as of April 22, 1998, by and between
the Crystaloid Technologies, Inc. and BankBoston,
N.A., as Agent....................................... +
10.24 Form of Indemnification Agreement, dated as of August
16, 1995, between the Registrant and its directors... +
10.25 TJC Management Consulting Agreement, dated as of
August 16, 1995, by and among, the Registrant, Flex-
O-Lite, Inc. and TJC Management Corporation.......... +
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ----------- ------------
<C> <S> <C>
10.26 Employment and Non-Interference Agreement, dated as
of August 15, 1995, by and between the Registrant
and Robert H. Elkin................................. +
10.27 Amendment to Employment Agreement, dated as of April
22, 1998, by and between the Registrant and Robert
H. Elkin............................................ +
10.28 Employment and Non-Interference Agreement, dated as
of August 15, 1995, by and between the Registrant
and Christopher T. Paule............................ +
10.29 Amendment to Employment Agreement, dated as of April
22, 1998, by and between the Registrant and
Christopher T. Paule................................ +
10.30 Employment and Non-Interference Agreement, dated as
of August 16, 1995, by and between Flex-O-Lite, Inc.
and Allan Huning.................................... +
10.31 Employment and Non-Interference Agreement, dated as
of April 22, 1998, by and between the Registrant and
Mark R. Hefty....................................... +
10.32 Employment and Non-Interference Agreement, dated as
of April 22, 1998, by and between the Registrant,
Crystaloid Technologies, Inc. and Edward D. Surjan,
Jr.................................................. +
10.33 Employment and Non-Interference Agreement, dated as
of April 22, 1998, by between Registrant, Crystaloid
Technologies, Inc. and Edward M. Stiles............. +
10.34 Employment and Non-Interference Agreement, dated as
of April 22, 1998, by between Registrant, Crystaloid
Technologies, Inc. and Michael A. Fout.............. +
10.35 Employment and Non-Interference Agreement, dated as
of April 22, 1998, by between Registrant, Crystaloid
Technologies, Inc. and Gregory J. Putman............ +
10.36 Employment and Non-Interference Agreement, dated as
of April 22, 1998, by between American Allsafe
Company and Lincoln M. Kennedy...................... +
10.37 Stock Appreciation Rights Agreement, dated as of
April 22, 1998, between the Registrant and Robert H.
Elkin............................................... +
10.38 Stock Appreciation Rights Agreement, dated as of
April 22, 1998, between the Registrant and
Christopher T. Paule................................ +
10.39 Stock Appreciation Rights Agreement, dated as of
April 22, 1998, between the Registrant and Mark R.
Hefty............................................... +
10.40 Stock Appreciation Rights Agreement, dated as of
April 22, 1998, between the Registrant Crystaloid
Technologies, Inc. and Edward D. Surjan, Jr......... +
10.41 Stock Appreciation Rights Agreement, dated as of
April 22, 1998, between Registrant, Crystaloid
Technologies, Inc. and Edward M. Stiles............. +
10.42 Stock Appreciation Rights Agreement, dated as of
April 22, 1998, between Registrant, Crystaloid
Technologies, Inc. and Michael A. Fout.............. +
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ----------- ------------
<C> <S> <C>
12 Statements regarding computation of ratios............ +
22 List of Subsidiaries of the Registrant................ +
23.1 Consent of Mayer, Brown & Platt (included in the
opinion filed as Exhibit 5)...........................
23.2 Consent of KPMG Peat Marwick LLP (St. Louis office)... **
23.3 Consent of KPMG Peat Marwick LLP (Dallas office)...... **
24 Power of Attorney .................................... +
25 Statement on Form T-1 of eligibility of the Trustee
under the Trust Indenture Act ........................ ++
27 Financial Data Schedule............................... ++
99.1 Form of Letter of Transmittal......................... ++
99.2 Form of Letter to Clients............................. ++
99.3 Form of Notice of Guaranteed Delivery................. ++
99.4 Form of Letter to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.................... ++
</TABLE>
- --------
* Schedules and exhibits not included, however, they will be provided upon
written request delivered to the address set forth on the cover of this
Registration Statement.
++To be filed separately.
**Filed previously.
<PAGE>
EXHIBIT 1
================================================================================
JACKSON PRODUCTS, INC.
AS ISSUER
JACKSON ACQUISITION, INC.
CRYSTALOID TECHNOLOGIES, INC.
OSD ENVIZION, INC.
FLEX-O-LITE, INC.
AS GUARANTORS
________________________________________
$115,000,000
9.5% SENIOR SUBORDINATED NOTES DUE 2005
________________________________________
___________________
PURCHASE AGREEMENT
Dated as of April 16, 1998
___________________
JEFFERIES & COMPANY, INC. GOLDMAN, SACHS & CO.
================================================================================
<PAGE>
April 16, 1998
JEFFERIES & COMPANY, INC.
GOLDMAN, SACHS & CO.
c/o Jefferies & Company, Inc.
11100 Santa Monica Boulevard
Los Angeles, California 90025
Ladies and Gentlemen:
Jackson Products, Inc., a Delaware corporation (the "COMPANY"), proposes to
issue and sell (the "OFFERING") an aggregate of $115,000,000 in principal amount
of 9.5% Senior Subordinated Notes due 2005 (the "SERIES A NOTES") of the Company
to Jefferies & Company, Inc. ("JEFFERIES") and Goldman, Sachs & Co. ("GOLDMAN"
and, together with Jefferies, the "INITIAL PURCHASERS"). The payment of
principal, premium, interest and liquidated damages on the Notes (as defined)
will be unconditionally guaranteed, jointly and severally, on a senior
subordinated basis by Jackson Acquisition, Inc., a Delaware corporation,
Crystaloid Technologies, Inc., a Delaware corporation, OSD Envizion, Inc., a
Delaware corporation, and Flex-O-Lite, Inc., a Delaware corporation, as
guarantors (collectively, the "GUARANTORS" and, together with the Company, the
"ISSUERS"), pursuant to their respective guarantees (the "GUARANTEES"). The
Series A Notes and the Series B Notes (as defined) will be issued pursuant to an
indenture (the "INDENTURE") among the Issuers and State Street Bank and Trust
Company, as trustee (the "TRUSTEE").
Concurrently with the Offering, the Company will (i) enter into a credit
agreement, dated as of the Closing Date (as defined), among the Company, certain
of its subsidiaries, the lenders party thereto and BankBoston, N.A., as agent
(the "CREDIT AGREEMENT"), (ii) acquire all of the outstanding capital stock of
American Allsafe Company and Silencio/Safety Direct, Inc. (the "ALLSAFE
ACQUISITION"), pursuant to that certain stock purchase agreement, dated as of
March 30, 1998 (the "ALLSAFE AGREEMENT"), (iii) acquire all of the outstanding
capital stock of Crystaloid Electronics Company (the "CRYSTALOID ACQUISITION"
and, together with the Allsafe Acquisition, the "ACQUISITIONS"), pursuant to
that certain stock purchase agreement, dated as of March 31, 1998 (the
"CRYSTALOID AGREEMENT"), and (iv) repurchase all of the Company's 12-1/4% Senior
Subordinated Notes due 2004 and 13-1/4% Exchangeable Preferred Stock and certain
of the Company's common stock (the "REPURCHASE"), pursuant to that certain
Consent and Repurchase Agreement, dated on or prior to the Closing Date, among
the Company and the parties thereto, and that certain Stock Repurchase
Agreement, dated on or prior to the Closing Date, among the Company and the
parties thereto (collectively, the "REPURCHASE AGREEMENTS"). The Credit
Agreement, the Allsafe Agreement, the Crystaloid Agreement and the Repurchase
Agreements are hereinafter referred to collectively as the "TRANSACTION
DOCUMENTS." This Agreement, the Indenture, the Registration Rights Agreement
(as defined), the Series A Notes and the Transaction Documents are hereinafter
referred to collectively as the "OPERATIVE DOCUMENTS." The consummation of the
Offering, the execution of the Credit Agreement, the consummation of the
Acquisitions and the Repurchase and the application of the net proceeds
therefrom are collectively referred to herein as the "TRANSACTIONS."
1
<PAGE>
1. ISSUANCE OF SECURITIES. The Series A Notes will be offered and sold to
the Initial Purchasers pursuant to an exemption from the registration
requirements under the Securities Act of 1933, as amended (the "ACT"). The
Company has prepared a preliminary offering circular, dated April 3, 1998 (the
"PRELIMINARY OFFERING CIRCULAR"), and a final offering circular, dated April 16,
1998 (the "OFFERING CIRCULAR" and, together with the Preliminary Offering
Circular, the "OFFERING DOCUMENTS"), relating to the Issuers and the Series A
Notes.
Upon original issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the Act, the Series A Notes
(and all securities issued in exchange therefor or in substitution thereof)
shall bear the following legend:
"THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY HAS NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED
OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH BELOW. BY ITS
ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS
ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7)
OF REGULATION D UNDER THE SECURITIES ACT (AN "ACCREDITED INVESTOR"),
(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE
EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON
WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, (C) IN AN OFFSHORE
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES
ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER
THE SECURITIES ACT, (E) TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE
(THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE
WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH
THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR
ANY OTHER APPLICABLE JURISDICTION AND (3) AGREES THAT IT WILL DELIVER
TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED
A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN,
THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE MEANING
GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT.
THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING."
2
<PAGE>
2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the representations
and warranties contained in, and subject to the terms and conditions of, this
Agreement, (i) the Company agrees to issue and sell the Series A Notes to the
Initial Purchasers, and (ii) each Initial Purchaser agrees, severally and not
jointly, to purchase Series A Notes from the Company in the principal amount set
forth opposite the name of such Initial Purchaser in Schedule I at a price of
96.390% of the principal amount of the Series A Notes (the "PURCHASE PRICE").
3. TERM OF OFFERING. The Initial Purchasers have advised the Company
that the Initial Purchasers will make offers (the "EXEMPT RESALES") of the
Series A Notes purchased by the Initial Purchasers hereunder on the terms set
forth in the Offering Circular, as amended or supplemented, solely to (i)
persons (each, a "144A PURCHASER") whom the Initial Purchasers reasonably
believe to be "qualified institutional buyers" as defined in Rule 144A under the
Act ("QIBs"), (ii) a limited number of other institutional "accredited
investors," as defined in Rule 501(a) (1), (2), (3) and (7) under the Act, that
make certain representations and agreements to the Company (each, an "ACCREDITED
INVESTOR") and (iii) to non-U.S. persons ("NON-U.S. PERSONS") outside the United
States in reliance upon Regulation S ("REGULATION S") under the Act (such
persons specified in clauses (i), (ii) and (iii) being referred to herein as the
"ELIGIBLE PURCHASERS"). The Initial Purchasers will offer the Series A Notes to
Eligible Purchasers initially at a price equal to 99.371% of the principal
amount thereof. Such price may be changed at any time without notice.
Holders (including subsequent transferees) of the Series A Notes will have
the registration rights set forth in the registration rights agreement (the
"REGISTRATION RIGHTS AGREEMENT"), to be dated the Closing Date, in substantially
the form of Exhibit A hereto, for so long as such Series A Notes constitute
"TRANSFER RESTRICTED SECURITIES" (as defined in the Registration Rights
Agreement). Pursuant to the Registration Rights Agreement, the Issuers will
agree to file with the Securities and Exchange Commission (the "COMMISSION"),
under the circumstances set forth therein, (i) a registration statement under
the Act (the "EXCHANGE OFFER REGISTRATION STATEMENT") relating to (A) the
Company's 9.5% Senior Subordinated Notes due 2005 (the "SERIES B NOTES" and,
together with the Series A Notes, the "NOTES") to be offered in exchange for the
Series A Notes (such offer to exchange being referred to as the "REGISTERED
EXCHANGE OFFER") and/or (ii) a shelf registration statement pursuant to Rule 415
under the Act (the "SHELF REGISTRATION STATEMENT" and, together with the
Exchange Offer Registration Statement, the "REGISTRATION STATEMENTS") relating
to the resale by certain holders of the Series A Notes, and to use their
reasonable best efforts to cause such Registration Statements to be declared
effective.
4. DELIVERY AND PAYMENT. Delivery to the Initial Purchasers by the
Company of, and payment by the Initial Purchasers for, the Series A Notes shall
be made at 9:00 A.M., New York City time, on April 22, 1998 (or such other date
as the Issuers and the Initial Purchasers may agree) (the "CLOSING DATE") at the
offices of Mayer, Brown & Platt, 1675 Broadway, New York, New York 10019.
Series A Notes sold by the Initial Purchasers to QIBs and pursuant to
Regulation S will be represented by one or more Series A Notes in definitive
global form, registered in the name of Cede & Co., as nominee of The Depository
Trust Company ("DTC"), having an aggregate principal amount corresponding to the
aggregate principal amount of the Series A Notes sold to such QIBs and pursuant
to Regulation S (collectively, the "GLOBAL NOTE"). Series A Notes sold by the
Initial Purchasers to Accredited Investors will be represented by one or more
Series A Notes in definitive form, registered in the name of such Accredited
Investors, having an aggregate principal amount corresponding to the aggregate
principal amount
3
<PAGE>
of the Series A Notes sold to such Accredited Investors (collectively, the
"ACCREDITED INVESTORS NOTE"). The Global Note and the Accredited Investor Note
shall be delivered by the Company to the Initial Purchasers (or as the Initial
Purchasers direct), in each case, with any transfer taxes thereon duly paid by
the Company against payment by the Initial Purchasers of the purchase price
thereof by wire transfer in immediately available funds to the order of the
Company. The Global Note and the Accredited Investors Note shall be made
available to the Initial Purchasers for inspection not later than 9:30 a.m., New
York City time, on the business day immediately preceding the Closing Date.
5. AGREEMENTS OF THE ISSUERS.
The Issuers agree with the Initial Purchasers:
(a) To advise the Initial Purchasers promptly and, if requested by the
Initial Purchasers, to confirm such advice in writing, (i) of receipt of any
notification with respect to the issuance by any state securities commission of
any stop order suspending the qualification or exemption from qualification of
any of the Series A Notes for offering or sale in any jurisdiction designated by
the Initial Purchasers pursuant to Section 5(f), or the initiation of any
proceeding for such purpose by any state securities commission or other
regulatory authority, and (ii) of the happening of any event that makes any
statement of a material fact made in the Offering Documents (or any amendment or
supplement thereto) untrue or that requires the making of any additions to or
changes in the Offering Documents (or any amendment or supplement thereto) in
order to make the statements therein, in the light of the circumstances in which
they are made, not misleading. The Issuers shall use their best efforts to
prevent the issuance of any stop order or order suspending the qualification or
exemption from qualification of the Series A Notes under any state securities or
Blue Sky laws, and, if at any time any state securities commission or other
regulatory authority shall issue any stop order or order suspending the
qualification or exemption from qualification of any of the Series A Notes under
any state securities or Blue Sky laws, the Issuers shall use their best efforts
to obtain the withdrawal or lifting of such order at the earliest possible time.
(b) To furnish to the Initial Purchasers, without charge, as many copies
of the Offering Documents, and any amendments or supplements thereto, as the
Initial Purchasers may reasonably request. Each of the Issuers consents to the
use of the Offering Documents, and any amendments or supplements thereto, by the
Initial Purchasers in connection with Exempt Resales.
(c) Not to amend or supplement the Offering Circular, whether before or
after the Closing Date, unless (i) the Initial Purchasers have been previously
advised thereof and (ii) the Initial Purchasers have not reasonably objected
thereto (unless, in the opinion of counsel to the Issuers, such amendment or
supplement is necessary, in the judgment of counsel to the Issuers, to make the
statements made in the Offering Circular not misleading); and to prepare,
promptly upon the Initial Purchasers' request, any amendment or supplement to
the Offering Circular that the Initial Purchasers deem necessary or advisable in
connection with Exempt Resales (except to the extent any such amendment or
supplement requested would, in the judgment of counsel to the Issuers, render
the statements made in the Offering Circular, as proposed to be amended or
supplemented, misleading).
(d) If, after the date hereof, in the opinion of counsel for the Initial
Purchasers, any event shall occur as a result of which it becomes necessary to
amend or supplement the Offering Circular to comply with any law or to make the
statements therein, in the light of the circumstances at the time that the
Offering Circular is delivered to an Eligible Purchaser which is a prospective
purchaser, not misleading, to promptly
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(i) prepare an appropriate amendment or supplement to the Offering Circular so
that the statements in the Offering Circular, as so amended or supplemented,
will comply with all applicable laws and will not, in the light of the
circumstances at the time it is so delivered, be misleading, and (ii) furnish
each Initial Purchaser with such number of copies of the Offering Circular, as
amended or supplemented, as such Initial Purchaser may reasonably request.
(e) Prior to the earlier of consummation of the Exchange Offer or the
effectiveness of a Shelf Registration Statement if, in the reasonable judgment
of the Initial Purchasers, the Initial Purchasers or any of their affiliates (as
such term is defined in the rules and regulations under the Act) are required to
deliver an offering circular in connection with sales of, or market-making
activities with respect to, the Notes, (i) to periodically amend or supplement
the Offering Circular so that the information contained in the Offering Circular
complies with the requirements of Rule 144A of the Act, (ii) to amend or
supplement the Offering Circular when necessary to reflect any material changes
in the information provided therein so that the Offering Circular will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in light of the
circumstances existing as of the date the Offering Circular is so delivered, not
misleading, and (iii) to provide the Initial Purchasers with copies of each such
amended or supplemented Offering Circular, as the Initial Purchasers may
reasonably request.
Following the consummation of the Exchange Offer or the effectiveness of a
Shelf Registration Statement and for so long as the Notes are outstanding if, in
the reasonable judgment of the Initial Purchasers, the Initial Purchasers or any
of their affiliates (as such term is defined in the rules and regulations under
the Act) are required to deliver a prospectus in connection with sales of, or
market-making activities with respect to, the Notes, (i) to periodically amend
the applicable registration statement so that the information contained therein
complies with the requirements of Section 10(a) of the Act, (ii) to amend the
applicable registration statement or supplement the related prospectus or the
documents incorporated therein when necessary to reflect any material changes in
the information provided therein so that the registration statement and the
prospectus will not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances existing as of the date the prospectus is so
delivered, not misleading, and (iii) to provide the Initial Purchasers with
copies of each amendment or supplement filed and such other documents as the
Initial Purchasers may reasonably request.
The Issuers hereby expressly acknowledge that the indemnification and
contribution provisions of Section 8 hereof are specifically applicable and
relate to each offering circular, registration statement, prospectus, amendment
or supplement referred to in this Section 5(e).
(f) To (i) cooperate with the Initial Purchasers and counsel for the
Initial Purchasers in connection with the qualification of the Series A Notes
for offer and sale by the Initial Purchasers under the state securities or Blue
Sky laws of such jurisdictions as the Initial Purchasers may request, (ii)
continue such qualification in effect so long as required for Exempt Resales of
the Series A Notes and (iii) file such consents to service of process or other
documents as may be necessary in order to effect such qualification; provided
that in no event shall any Issuer be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or take any action which would
subject it to general service of process in any jurisdiction where it is not now
so subject.
(g) So long as any of the Notes are outstanding, to file reports pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), and, during the period of three years following the date of
this Agreement, to deliver to the Initial Purchasers, promptly upon their
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becoming available, (i) copies of all current, regular and periodic reports
filed by the Company with any securities exchange or with the Commission or any
governmental authority succeeding to any of the Commission's functions, and (ii)
copies of each report or other publicly available information of the Company
mailed to the holders of Notes and such other publicly available information
concerning the Company and its subsidiaries as the Initial Purchasers may
request.
(h) To use the proceeds from the sale of the Series A Notes in the manner
specified in the Offering Documents (and any amendments or supplements thereto)
under the caption "Use of Proceeds."
(i) Not to voluntarily claim, and to resist actively any attempts to
claim, the benefit of any usury laws against the holders of the Notes.
(j) Except as otherwise agreed to by the parties hereto, to pay all costs,
expenses, fees and taxes incident to:
(1) the preparation, printing and distribution of the Offering
Documents (including financial statements and exhibits) and all amendments
and supplements to any of them;
(2) the printing and delivery of the Operative Documents, the Series
A Notes, the preliminary and supplemental Blue Sky memoranda and all other
agreements, memoranda, correspondence and other documents printed and
delivered in connection herewith and with the Exempt Resales (including, in
each case, any disbursements of counsel to the Initial Purchasers relating
to such printing and delivery);
(3) the issuance and delivery by the Issuers of the Series A Notes
and the Guarantees;
(4) the registration or qualification of the Series A Notes and the
Guarantees for offer and sale under the securities or Blue Sky laws of the
several states (including, in each case, the fees and disbursements of
counsel to the Initial Purchasers relating to such registration or
qualification and memoranda relating thereto);
(5) furnishing such copies of the Offering Documents (including all
documents incorporated by reference therein) and all amendments and
supplements thereto as may be reasonably requested for use in connection
with the Exempt Resales;
(6) the rating of the Series A Notes by rating agencies, if any;
(7) all expenses and listing fees in connection with the application
for quotation of the Series A Notes in the National Association of
Securities Dealers, Inc. Automated Quotation System - PORTAL ("PORTAL");
(8) all fees and expenses (including fees and expenses of counsel) of
the Issuers in connection with approval of the Series A Notes by DTC for
"book-entry" transfer; and
(9) the performance by the Issuers of their other obligations under
this Agreement.
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(k) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than a default by the Initial Purchasers) or, if
for any reason the Issuers shall be unable or unwilling to perform their
obligations hereunder, the Issuers shall, except as otherwise agreed by the
parties hereto, reimburse the Initial Purchasers for the fees and expenses to be
paid or reimbursed pursuant to Section 5(j) above, and reimburse the Initial
Purchasers for all reasonable out-of-pocket expenses (including the reasonable
fees and expenses of counsel to the Initial Purchasers) incurred by the Initial
Purchasers in connection with the transactions contemplated by this Agreement.
(l) Prior to the Closing Date, to furnish to the Initial Purchasers, as
soon as they have been prepared by the Company, a copy of any consolidated
financial statements of the Company for any period subsequent to the period
covered by the financial statements appearing in the Offering Documents.
(m) Not to distribute prior to the Closing Date any offering material in
connection with the Offering other than the Offering Documents.
(n) Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Act) that would be
integrated with the sale of the Series A Notes in a manner that would require
the registration under the Act of the sale to the Initial Purchasers or the
Eligible Purchasers of Series A Notes.
(o) For so long as any of the Notes remain outstanding and during any
period in which the Company is not subject to Section 13 or 15(d) of the
Exchange Act, to make available to any Eligible Purchaser or beneficial owner of
Notes in connection with any sale thereof and any prospective purchaser of such
Notes from such Eligible Purchaser or beneficial owner, the information required
by Rule 144A(d)(4) under the Act.
(p) To comply with their agreements in the Registration Rights Agreement,
and all agreements set forth in the representation letters of the Company to DTC
relating to the approval of the Series A Notes by DTC for "book-entry" transfer.
(q) To cause the Registered Exchange Offer, if available, to be made in
the appropriate form, as contemplated by the Registration Rights Agreement, to
permit registration of the Series B Notes to be offered in exchange for the
Series A Notes and to comply with all applicable federal and state securities
laws in connection with the Registered Exchange Offer.
(r) To use their best efforts to effect the inclusion of the Series A
Notes in PORTAL.
(s) To use their best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by the Company prior to
the Closing Date and to satisfy all conditions precedent to the delivery of the
Series A Notes and the issuance of the Guarantees.
(t) During the period beginning from the date hereof and continuing to and
including the date that is 180 days after the Closing Date, not to offer, sell,
contract to sell or otherwise dispose of, except as provided hereunder, any
securities of the Company (other than the Series B Notes) that are substantially
similar to the Notes including, without limitation, any securities that are
convertible into or exchangeable for, or that represent the right to receive,
Notes or any such substantially similar securities (other than pursuant to
employee stock option plans existing on, or upon the conversion or exchange of
convertible or
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exchangeable securities outstanding as of, the date of this Agreement), without
the prior written consent of the Initial Purchasers.
(u) Not to cause any advertisement of the Notes to be published in any
newspaper or periodical or posted in any public place and not to issue any
circular relating to the Notes, except such advertisements that include the
statements required by Regulation S.
(v) The Company and its affiliates and all persons acting on its behalf
(other than the Initial Purchasers, as to whom the Company makes no
representation) have complied with and will comply with the offering
restrictions requirements of Regulation S in connection with the Offering of the
Series A Notes outside the United States and, in connection therewith, the
Offering Circular will contain the disclosure required by Rule 902(h).
(w) The Series A Notes sold in reliance on Regulation S will be
represented upon issuance by a temporary global security that may not be
exchanged for definitive securities until the expiration of the 40-day
restricted period referred to in Rule 903(c)(3) of the Act and only upon
certification of beneficial ownership of such Series A Notes by non-U.S. persons
or U.S. persons who purchased such Series A Notes in transactions that were
exempt from the registration requirements of the Act.
6. REPRESENTATIONS AND WARRANTIES OF THE ISSUERS. The Issuers, jointly
and severally, represent and warrant to each Initial Purchaser that (for
purposes of this Section 6, references to the "Company" shall be deemed to refer
to the Company after giving pro forma effect to the Transactions):
(a) The Offering Documents have been prepared in connection with the
Exempt Resales. The Preliminary Offering Circular as of its date did not, and
the Offering Circular as of its date does not and as of the Closing Date will
not, and any amendment or supplement thereto will not, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, except that the representations and
warranties contained in this paragraph (a) shall not apply to statements or
omissions in the Offering Documents (or any amendment or supplement thereto)
based upon information relating to the Initial Purchasers furnished to the
Company in writing by or on behalf of the Initial Purchasers expressly for use
therein. No stop order preventing the use of the any of the Offering Documents,
or any amendment or supplement thereto, or any order asserting that any of the
transactions contemplated by this Agreement are subject to the registration
requirements of the Act, have been issued.
(b) The Company and each of its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has full corporate power and authority to
carry on its business as it is currently being and is proposed to be conducted
and to own, lease and operate its properties, and is duly qualified and in good
standing as a foreign corporation registered to do business in each jurisdiction
in which the nature of its business or its ownership or leasing of property
requires or will require such qualification, except where the failure to be so
qualified would not be reasonably likely to have a material adverse effect on
the condition (financial or other), business, property, prospects, net worth or
results of operations of the Company and its subsidiaries, taken as a whole (a
"MATERIAL ADVERSE EFFECT"). All outstanding shares of capital stock of the
Company have been duly authorized and validly issued, are fully paid and
nonassessable and are not subject to preemptive or similar rights. All of the
outstanding shares of capital stock of each of the Company's subsidiaries have
been duly authorized and validly issued and are fully paid and non-assessable,
and are owned by the Company, directly or
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indirectly through one or more subsidiaries, free and clear of any security
interest, claim, lien, encumbrance or adverse interest of any nature (each, a
"LIEN"), other than pursuant to the Credit Agreement. Each of the Issuers has
all necessary corporate power and authority to enter into and perform its
obligations under the Operative Documents and, in the case of the Company, to
issue, sell and deliver the Series A Notes to the Initial Purchasers.
(c) Neither the Company nor any of its subsidiaries is in violation of its
charter or bylaws or in default in any material respect in the performance of
any obligation, agreement or condition contained in any bond, debenture, note or
any other evidence of indebtedness or in any other agreement, indenture or
instrument material to the conduct of the business of the Company and its
subsidiaries to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or their respective property is
bound.
(d) The execution, delivery and performance of the Operative Documents by
each of the Issuers, compliance by each of the Issuers with the provisions of
the Operative Documents and the Series A Notes, and the consummation of the
transactions contemplated by the Operative Documents and the Series A Notes do
not conflict with or constitute a breach of any of the terms or provisions of,
or a default under, or result in the imposition of a lien or encumbrance on any
properties of the Company or any of its subsidiaries or an acceleration of
indebtedness pursuant to, (i) the charter or bylaws of the Company or any of its
subsidiaries, (ii) any bond, debenture, note, indenture, mortgage, deed of trust
or other agreement or instrument to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries or their
respective property is bound, or (iii) any law or administrative regulation
applicable to the Company or any of its subsidiaries or any of their respective
assets or properties, or any judgment, order or decree of any court or
governmental agency or authority entered in any proceeding to which the Company
or any of its subsidiaries was or is now a party or to which the Company or any
of its subsidiaries or their respective properties may be subject, except, in
the case of clauses (ii) and (iii), for any such conflict, breach, default or
imposition of a lien that would not be reasonably likely to have a Material
Adverse Effect. No consent, approval, authorization or order of, or filing or
registration with, any regulatory body, administrative agency, or other
governmental agency (except as securities or Blue Sky laws of the various states
may require) that has not been made or obtained is required for the execution,
delivery and performance of the Operative Documents and the valid issuance and
sale of the Series A Notes. No consents or waivers from any person are required
to consummate the transactions contemplated by the Operative Documents and the
Offering Documents, except (i) such consents and waivers as have been or, prior
to the Closing Date, will be obtained and (ii) where the failure to obtain such
consents or waivers would not reasonably be likely to have a Material Adverse
Effect.
(e) This Agreement has been duly authorized and validly executed and
delivered by each of the Issuers and (assuming the due execution and delivery
thereof by the Initial Purchasers) is a legally valid and binding obligation of
each of the Issuers, enforceable against each of the Issuers in accordance with
its terms, except as the enforceability thereof may be (i) subject to applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws in effect
which affect the enforcement of creditors rights generally, (ii) limited by
general principles of equity (whether considered in a proceeding at law or in
equity) and (iii) limited by securities laws prohibiting or limiting the
availability of, and public policy against, indemnification or contribution.
(f) Each of the Issuers has duly authorized the Indenture, and when each
of the Issuers has duly executed and delivered it (assuming the due
authorization, execution and delivery thereof by the Trustee),
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the Indenture will be a legally valid and binding obligation of each of the
Issuers, enforceable against each of the Issuers in accordance with its terms,
except as the enforceability thereof may be (i) subject to applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws in effect
which affect the enforcement of creditors rights generally and (ii) limited by
general principles of equity (whether considered in a proceeding at law or in
equity).
(g) The Company has duly authorized the Series A Notes and, when issued
and authenticated in accordance with the terms of the Indenture and delivered to
and paid for by the Initial Purchasers in accordance with the terms hereof, the
Series A Notes will conform to the description thereof in the Offering Circular,
and will be legally valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as the enforceability
thereof may be (i) subject to applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws in effect which affect the enforcement of
creditors rights generally and (ii) limited by general principles of equity
(whether considered in a proceeding at law or in equity).
(h) Each of the Guarantors has duly authorized its Guarantee to be
endorsed on the Series A Notes and, when executed and delivered in accordance
with the terms of the Indenture and when the Series A Notes have been issued and
authenticated in accordance with the terms of the Indenture and delivered to and
paid for by the Initial Purchasers in accordance with the terms hereof, the
Guarantees will conform to the description thereof in the Offering Circular, and
will be the legally valid and binding obligations of each of the Guarantors,
enforceable against each of them in accordance with its terms, except as the
enforceability thereof may be (i) subject to applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws in effect which affect the
enforcement of creditors rights generally and (ii) limited by general principles
of equity (whether considered in a proceeding at law or in equity).
(i) The Company has duly authorized the Series B Notes.
(j) Each of the Guarantors has duly authorized its Guarantee of the Series
B Notes.
(k) Each of the Issuers has duly authorized the Registration Rights
Agreement, and when each of the Issuers has executed and delivered it (assuming
the due execution and delivery thereof by the Initial Purchasers), the
Registration Rights Agreement will be a legally valid and binding obligation of
each of the Issuers, enforceable against each of the Issuers in accordance with
its terms, except as the enforceability thereof may be (i) subject to applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws in effect
which affect the enforcement of creditors rights generally, (ii) limited by
general principles of equity (whether considered in a proceeding at law or in
equity) and (iii) limited by securities laws prohibiting or limiting the
availability of, and public policy against, indemnification or contribution.
(l) There is (i) no action, suit or proceeding before or by any court,
arbitrator or governmental agency, body or official, domestic or foreign, now
pending or, to the knowledge of any Issuer, threatened or contemplated to which
the Company or any of its subsidiaries is or may be a party or to which the
business or property of the Company or any of its subsidiaries is or may be
subject, (ii) no statute, rule, regulation or order that has been enacted,
adopted or issued by any governmental agency or, to the knowledge of any Issuer,
proposed by any governmental body and (iii) no injunction, restraining order or
order of any nature issued by a federal or state court of competent jurisdiction
to which the Company or any of its subsidiaries is or may be subject that, in
the case of clauses (i), (ii) and (iii) above, (A) is required to be disclosed
in the Offering Circular and that is not so disclosed, (B) would be reasonably
likely to have a Material Adverse
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Effect, (C) would interfere with or adversely affect the issuance of the Series
A Notes or the consummation of the Transactions or (D) in any manner draw into
question the validity of the Operative Documents or the Series A Notes.
(m) No holder of any security of any Issuer has any right to require
registration of any security of any Issuer, other than pursuant to the
Stockholders Agreement dated as of August 16, 1995 (the "STOCKHOLDERS
AGREEMENT") and the Registration Rights Agreement.
(n) Neither the Company nor any of its subsidiaries is involved in any
material labor dispute nor, to the knowledge of any Issuer, is any material
dispute threatened which, if such dispute were to occur, would be reasonably
likely to have a Material Adverse Effect.
(o) Neither the Company nor any of its subsidiaries has violated any
safety or similar law applicable to its business, nor any federal or state law
relating to discrimination in the hiring, promotion or pay of employees nor any
applicable federal or state wages and hours laws, nor any provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or the
rules and regulations promulgated thereunder, except for such instances of
noncompliance that, either singly or in the aggregate, would not be reasonably
likely to have a Material Adverse Effect.
(p) Except as set forth in the Offering Circular, the Company and each of
its subsidiaries is in compliance with all applicable existing federal, state,
local and foreign laws and regulations (collectively, "ENVIRONMENTAL LAWS")
relating to protection of human health or the environment or imposing liability
or standards of conduct concerning any Hazardous Material (as defined below),
except for such instances of noncompliance that, either singly or in the
aggregate, would not be reasonably likely to have a Material Adverse Effect.
The term "HAZARDOUS MATERIAL" means (i) any "hazardous substance" as defined by
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, (ii) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act, as amended, (iii) any petroleum or petroleum
product, (iv) any polychlorinated biphenyl and (v) any pollutant or contaminant
or hazardous, dangerous or toxic chemical, material, waste or substance
regulated under or within the meaning of any other Environmental Law. Except as
set forth in the Offering Circular, there is, to the knowledge of any Issuer, no
alleged or potential liability (including, without limitation, alleged or
potential liability for investigatory costs, cleanup costs, governmental
response costs, natural resources damages, property damages, personal injuries,
or penalties) of the Company or any of its subsidiaries arising out of, based
on, or resulting from (1) the presence or release into the environment of any
Hazardous Material at any location currently or previously owned by the Company
or any of its subsidiaries or at any location currently or previously used or
leased by the Company or any of its subsidiaries, or (2) any violation or
alleged violation of any Environmental Law, except, in each case, with respect
to clause (1) and (2), alleged or potential liabilities that, singly or in the
aggregate, would not be reasonably likely to have a Material Adverse Effect.
(q) The Company and each of its subsidiaries owns or possesses the pate
nts, patent rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks and trade names
(collectively, "INTELLECTUAL PROPERTY") presently or proposed to be employed by
it in connection with the businesses now or proposed to be operated by it,
except where the failure to own or possess such Intellectual Property would not,
either singly or in the aggregate, be reasonably likely to have a Material
Adverse Effect, and none of the Company and its subsidiaries has received any
notice that its use of any
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Intellectual Property allegedly infringes upon, or conflicts with, rights
asserted by others, except for such instances that, singly or in the aggregate,
would not be reasonably likely to have a Material Adverse Effect if an
unfavorable decision, judgment, ruling or finding is rendered against the
Company or any of its subsidiaries.
(r) All income tax returns required to be filed by the Company or any of
its subsidiaries in any jurisdiction have been filed, and all material taxes
(including, without limitation, withholding taxes, penalties and interest,
assessments, fees and other charges due or claimed to be due from any taxing
authority) have been paid other than those (i) being contested in good faith and
for which adequate reserves have been provided, or (ii) currently payable
without penalty or interest.
(s) Except as set forth in the Offering Circular or that, singly or in the
aggregate, would not be reasonably likely to have a Material Adverse Effect, (i)
the Company and each of its subsidiaries has (A) such permits, licenses,
franchises and authorizations of governmental or regulatory authorities
("PERMITS") as are necessary to own, lease and operate its respective properties
and to conduct its business as presently conducted, and (B) fulfilled and
performed all of its material obligations with respect to the Permits, and (ii)
no event has occurred that would allow, or after notice or lapse of time would
allow, revocation or termination of any Permit or that would result in any other
material impairment of the rights granted to the Company or any of its
subsidiaries under any Permit, and the Company has no reason to believe that any
governmental body or agency is considering limiting, suspending or revoking any
Permit.
(t) Except as set forth in the Offering Circular or that, singly or in the
aggregate, would not be reasonably likely to have a Material Adverse Effect, (i)
the Company and each of its subsidiaries has good and marketable title, free and
clear of all liens, claims, encumbrances and restrictions except liens for taxes
not yet due and payable, to all property and assets described in the Offering
Circular as being owned by it, (ii) each lease to which the Company or any of
its subsidiaries is a party is valid and binding and no default has occurred or
is continuing thereunder and (iii) the Company and each of its subsidiaries
enjoys peaceful and undisturbed possession under all such leases to which it is
a party as lessee.
(u) The Company and each of its subsidiaries maintains adequate insurance
for its businesses and the value of its properties (including, without
limitation, public liability insurance, third party property damage insurance
and replacement value insurance), and all such insurance is outstanding and in
force as of the date hereof.
(v) The historical financial statements, together with related schedules
and notes forming part of the Offering Documents (and any amendment or
supplement thereto), present fairly the consolidated financial position, results
of operations and changes in financial position of the Company and its
subsidiaries on the basis stated in the Offering Documents at the respective
dates or for the respective periods to which they apply, and such financial
statements and related schedules and notes have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved, except as disclosed in the Offering Documents. The pro forma
financial statements, together with related notes forming part of the Offering
Documents (and any amendment or supplement thereto), are, in all material
respects, accurately presented and prepared in good faith on the basis of the
assumptions described therein, and such assumptions are reasonable and the
adjustments used therein are appropriate to give effect to the transactions and
circumstances referred to therein.
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(w) The Company and each of its subsidiaries maintains a system of
internal accounting controls sufficient to provide assurance that: (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; and (iii) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect thereto.
(x) Subsequent to the dates for which information is given in the Offering
Documents and up to the Closing Date, unless set forth in the Offering Circular:
(1) none of the Company or any of its subsidiaries has incurred any liabilities
or obligations, direct or contingent, which are material, individually or in the
aggregate, to the Company and its subsidiaries, taken as a whole, nor entered
into any material transactions not in the ordinary course of business; (2) there
has not been any decrease in the capital stock of the Company or any of its
subsidiaries or any increase in long-term indebtedness to meet working capital
requirements or any material increase in short-term indebtedness of the Company
or any of its subsidiaries or any payment of or declaration to pay any dividends
or any other distribution with respect to the Company's or any of its
subsidiaries' capital stock, as the case may be; and (3) there has not been any
event or series of events that would be reasonably likely to have a Material
Adverse Effect.
(y) Prior to and after the issuance of the Series A Notes, (i) the present
fair salable value of the assets of the Company and its subsidiaries exceeded
and will exceed the amount that will be required to be paid on, or in respect
of, the debts and other liabilities (including contingent liabilities) of the
Company and its subsidiaries as they become absolute and matured, (ii) the
assets of the Company and its subsidiaries do not constitute and will not
constitute unreasonably small capital to carry out its business as conducted or
as proposed to be conducted, and (iii) the Company and its subsidiaries do not
intend to, or believe that they will, incur debts or other liabilities beyond
their ability to pay such debts and liabilities as they mature. None of the
Issuers intends to permit any of its subsidiaries to incur debts or other
liabilities beyond its ability to pay such debts and liabilities as they mature.
(z) None of the Issuers or any agent thereof acting on its behalf has
taken or will take any action that might cause this Agreement or the issuance or
sale of the Series A Notes to violate Regulation G (12 C.F.R. Part 207),
Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or
Regulation X (12 C.F.R. Part 224) of the Board of Governors of the Federal
Reserve System, in each case, as in effect now or as the same may hereafter be
in effect on the Closing Date.
(aa) None of the Issuers is an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(bb) KPMG Peat Marwick LLP are independent public accountants with respect
to the Company as required by the Act.
(cc) When the Series A Notes are issued and delivered pursuant to this
Agreement, such Series A Notes will not be of the same class (within the meaning
of Rule 144A under the Act) as securities of the Company that are listed on a
national securities exchange registered under Section 6 of the Exchange Act or
that are quoted in a United States automated inter-dealer quotation system.
(dd) Each of the Preliminary Offering Circular and the Offering Circular,
as of its date, contains all the information specified in, and meeting the
requirements of, Rule 144A(d)(4) under the Act.
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(ee) Prior to the effectiveness of any Registration Statement, the
Indenture is not required to be qualified under the Trust Indenture Act of 1939,
as amended (the "TRUST INDENTURE ACT").
(ff) The sale of the Series A Notes pursuant to Regulation S is not part of
a plan or scheme to evade the registration provisions of the Act.
(gg) Assuming (i) that the representations and warranties of the Initial
Purchasers in Section 7 hereof are true, (ii) that the representations of the
Accredited Investors set forth in the certificates of such Accredited Investors
in the form set forth in Annex A to the Offering Circular are true, (iii)
compliance by the Initial Purchasers with their covenants set forth in Section 7
hereof and (iv) that each of the Eligible Purchasers is a QIB or an Accredited
Investor or is a non-U.S. Person, the purchase and resale of the Series A Notes
pursuant hereto (including pursuant to the Exempt Resales) is exempt from the
registration requirements of the Act. No form of general solicitation or
general advertising was or will be used by any Issuer or any of its
representatives (other than the Initial Purchasers, as to whom the Issuers make
no representation) in connection with the offer and sale of the Series A Notes,
including, without limitation, articles, notices or other communications
published in any newspaper, magazine, or similar medium or broadcast over
television or radio, or any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising. No securities of the same
class as the Series A Notes have been issued and sold by any Issuer within the
six-month period immediately prior to the date hereof. Neither the Issuers nor
any of their affiliates or any person acting on their behalf (other than the
Initial Purchasers, as to whom the Issuers make no representation) have engaged
or will engage in any directed selling efforts within the meaning of Regulation
S with respect to the Series A Notes.
(hh) The execution and delivery of this Agreement and the other Operative
Documents and the sale of the Series A Notes to be purchased by the Eligible
Purchasers will not involve any prohibited transaction within the meaning of
Section 406 of ERISA or Section 4975 of the Code. The representation made by
the Issuers in the preceding sentence is made in reliance upon and subject to
the accuracy of, and compliance with, the representations and covenants made or
deemed made by the Eligible Purchasers as set forth in the Offering Documents
under the section entitled "Notice to Investors."
7. REPRESENTATIONS AND WARRANTIES OF THE INITIAL PURCHASERS. Each Initial
Purchaser, severally and not jointly, represents and warrants to the Issuers as
follows:
(a) Such Initial Purchaser is either a QIB or an Accredited Investor, in
either case with such knowledge and experience in financial and business matters
as are necessary in order to evaluate the merits and risks of an investment in
the Series A Notes.
(b) Such Initial Purchaser (i) is not acquiring the Series A Notes with a
view to any distribution thereof or with any present intention of offering or
selling any of the Series A Notes in a transaction that would violate the Act or
the securities laws of any State of the United States or any other applicable
jurisdiction, (ii) will be reoffering and reselling the Series A Notes only to
QIBs in reliance on the exemption from the registration requirements of the Act
provided by Rule 144A, to a limited number of Accredited Investors that execute
and deliver a letter containing certain representations and agreements in the
form attached as Annex A to the Offering Documents and in offshore transactions
in reliance upon Regulation S under the Act.
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(c) Such Initial Purchaser agrees that no form of general solicitation or
general advertising (within the meaning of Regulation D under the Act) has been
or will be used by such Initial Purchaser or any of its representatives in
connection with the offer and sale of the Series A Notes pursuant hereto,
including, without limitation, articles, notices or other communications
published in any newspaper, magazine or similar medium or broadcast over
television or radio, or any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising.
(d) Such Initial Purchaser further agrees that, in connection with the
Exempt Resales, it will solicit offers to buy the Series A Notes only from, and
will offer to sell the Series A Notes only to, the Eligible Purchasers. Such
Initial Purchaser further agrees that it will offer to sell the Series A Notes
only to, and will solicit offers to buy the Series A Notes only from, Eligible
Purchasers who in purchasing such Series A Notes will be deemed to have
represented and agreed that such Series A Notes will not have been registered
under the Act and may be resold, pledged or otherwise transferred, only (A) (I)
inside the United States to a person who the seller reasonably believes is a
"qualified institutional buyer" within the meaning of Rule 144A under the Act in
a transaction meeting the requirements of Rule 144A, (II) in a transaction
meeting the requirements of Rule 144 under the Act, (III) outside the United
States to a foreign person in a transaction meeting the requirements of Rule 904
under the Act or (IV) in accordance with another exemption from the registration
requirements of the Act (and based upon an opinion of counsel if the Company so
requests), (B) to the Company or (C) pursuant to an effective registration
statement under the Act, in each case, in accordance with any applicable
securities laws of any State of the United States or any other applicable
jurisdiction, and (3) that the holder will, and each subsequent holder is
required to, notify any purchaser from it of the security evidenced thereby of
the resale restrictions set forth in (2) above. Accordingly, each Initial
Purchaser represents and agrees that neither it, its affiliates nor any persons
acting on its or their behalf has engaged or will engage in any directed selling
efforts within the meaning of Rule 901(b) of Regulation S with respect to the
Notes, and it, its affiliates and all persons acting on its or their behalf have
complied and will compl y with the offering restrictions requirements of
Regulation S.
(e) The Series A Notes offered and sold by such Initial Purchaser pursuant
hereto in reliance on Regulation S have been and will be offered and sold only
in offshore transactions.
(f) The sale of the Series A Notes offered and sold by such Initial
Purchaser pursuant hereto in reliance on Regulation S is not part of a plan or
scheme to evade the registration provisions of the Act.
(g) Such Initial Purchaser agrees that it has not offered or sold and will
not offer or sell the Series A Notes in the United States or to, or for the
benefit or account of, a U.S. Person (other than a distributor), in each case,
as defined in Rule 902 under the Act (i) as part of its distribution at any time
and (ii) otherwise until 40 days after the later of the commencement of the
offering of the Series A Notes pursuant hereto and the Closing Date, other than
in accordance with Regulation S of the Act or another exemption from the
registration requirements of the Act. Such Initial Purchaser agrees that, during
such 40-day restricted period, it will not cause any advertisement with respect
to the Series A Notes (including any "tombstone" advertisement) to be published
in any newspaper or periodical or posted in any public place and will not issue
any circular relating to the Series A Notes, except such advertisements as
permitted by and include the statements required by Regulation S.
(h) Such Initial Purchaser agrees that, at or prior to confirmation of a
sale of Series A Notes by it to any distributor, dealer or person receiving a
selling concession, fee or other remuneration during the 40-day restricted
period referred to in Rule 903(c)(3) under the Act, it will send to such
distributor, dealer or
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person receiving a selling concession, fee or other remuneration a confirmation
or notice to substantially the following effect:
"The Series A Notes covered hereby have not been registered under the
U.S. Securities Act of 1933, as amended (the "SECURITIES ACT"), and
may not be offered and sold within the United States or to, or for the
account or benefit of, U.S. persons (i) as part of the distribution by
the Initial Purchasers at any time or (ii) otherwise until 40 days
after the later of the commencement of the Offering and the Closing
Date, except in either case in accordance with Regulation S under the
Securities Act (or Rule 144A or to Accredited Investors in
transactions that are exempt from the registration requirements of the
Securities Act), and in connection with any subsequent sale by the
Initial Purchasers of the Series A Notes covered hereby in reliance on
Regulation S during the period referred to above to any distributor,
dealer or person receiving a selling concession, fee or other
remuneration, you must deliver a notice to substantially the foregoing
effect. Terms used above have the meanings assigned to them in
Regulation S."
(i) Such Initial Purchaser agrees that the Series A Notes offered and
sold in reliance on Regulation S will be represented upon issuance by a global
security that may not be exchanged for definitive securities until the
expiration of the 40-day restricted period referred to in Rule 903(c)(3) of the
Act and only upon certification of beneficial ownership of such Series A Notes
by non-U.S. persons or U.S. persons who purchased such Series A Notes in
transactions that were exempt from the registration requirements of the Act.
(j) Such Initial Purchaser further represents and agrees that (i) it
has not offered or sold and will not offer or sell any Notes to persons in the
United Kingdom prior to the expiry of the period of six months from the issue
date of the Notes, except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or agent)
for the purposes of their businesses or otherwise in circumstances which have
not resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995, (ii) it
has complied and will comply with all applicable provisions of the Financial
Services Act 1986 with respect to anything done by it in relation to the Notes
in, from or otherwise involving the United Kingdom, and (iii) it has only issued
or passed on and will only issue or pass on in the United Kingdom any document
received by it in connection with the issuance of the Notes to a person who is
of a kind described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1996 or is a person to whom the
document may otherwise lawfully be issued or passed on.
(k) Such Initial Purchaser agrees that it will not offer, sell or
deliver any of the Notes in any jurisdiction outside the United States except
under circumstances that will result in compliance with the applicable laws
thereof, and that it will take at its own expense whatever action is required to
permit its purchase and resale of the Notes in such jurisdictions. Such Initial
Purchaser understands that no action has been taken to permit a public offering
in any jurisdiction outside the United States where action would be required for
such purpose.
(l) Such Initial Purchaser also understands that the Issuers and, for
purposes of the opinions to be delivered to the Initial Purchasers pursuant
hereto, counsel to the Issuers and counsel to the Initial Purchasers will rely
upon the accuracy and truth of the foregoing representations and the Initial
Purchasers hereby consent to such reliance.
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Terms used in this Section 7 that have meanings assigned to them in
Regulation S are used herein as so defined.
8. INDEMNIFICATION.
(a) The Issuers, jointly and severally, agree to indemnify and hold
harmless each Initial Purchaser and each person, if any, who controls either
Initial Purchaser within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, from and against any and all losses, claims, damages,
liabilities and judgments caused by any untrue statement or alleged untrue
statement of a material fact contained in the Offering Documents (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except insofar as such losses, claims, damages, liabilities or
judgments are caused by any such untrue statement or omission or alleged untrue
statement or omission based upon information relating to such Initial Purchaser
furnished in writing to the Company by such Initial Purchaser expressly for use
therein; provided that the indemnification contained in this paragraph (a) with
respect to the Preliminary Offering Circular shall not inure to the benefit of
an Initial Purchaser (or to the benefit of any person controlling such Initial
Purchaser) on account of any such loss, claim, damage, liability or judgment
arising from the sale of the Series A Notes by such Initial Purchaser to any
person if a copy of the Offering Circular shall not have been delivered or sent
to such person, at or prior to the written confirmation of such sale, and the
untrue statement or alleged untrue statement or omission or alleged omission of
a material fact contained in the Preliminary Offering Circular was corrected in
the Offering Circular, provided that the Company has delivered the Offering
Circular to the Initial Purchasers in requisite quantity on a timely basis to
permit such delivery or sending; and provided further that the foregoing
exception shall not affect the indemnity with respect to any other Initial
Purchaser not otherwise subject to such exception.
(b) In case any action shall be brought against either Initial Purchaser
or any person controlling such Initial Purchaser, based upon any Offering
Document or any amendment or supplement thereto and with respect to which
indemnity may be sought against the Issuers, such Initial Purchaser shall
promptly notify the Company in writing, and the Company shall assume the defense
thereof, including the employment of counsel reasonably satisfactory to such
indemnified party and payment of all fees and expenses. Either Initial Purchaser
or any such controlling person shall have the right to employ separate counsel
in any such action and participate in the defense thereof, but the reasonable
fees and expenses of such counsel shall be at the expense of such Initial
Purchaser or such controlling person unless (i) the employment of such counsel
has been specifically authorized in writing by the Company, (ii) the Issuers
have failed to assume the defense and employ counsel or (iii) the named parties
to any such action (including any impleaded parties) include both such Initial
Purchaser or such controlling person and the Issuers, and such Initial Purchaser
or such controlling person shall have been advised by such counsel in writing
that there may be one or more legal defenses available to it which are different
from or additional to those available to the Issuers (in which case the Issuers
shall not have the right to assume the defense of such action on behalf of such
Initial Purchaser or such controlling person, it being understood, however, that
the Issuers shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) for all such Initial Purchasers and controlling persons, which firm
shall be designated in writing by Jefferies, and that all such fees and expenses
shall be reimbursed as they are incurred). The indemnifying party shall
indemnify and hold harmless the indemnified party from and against any and all
losses, claims, damages, liabilities and judgments by reason of any settlement
of any
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action effected with its written consent. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement or
compromise of, or consent to the entry of judgment with respect to, any pending
or threatened action in respect of which the indemnified party is or could have
been a party and indemnity or contribution may be or could have been sought
hereunder by the indemnified party, unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability on claims that are or could have been the subject matter of such
action and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of the indemnified party.
(c) Each Initial Purchaser agrees, severally and not jointly, to indemnify
and hold harmless the Issuers, their directors and officers, and any person
controlling them within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act (collectively the "ISSUER INDEMNIFIED PARTIES"), to the same
extent as the foregoing indemnity from the Issuers to each Initial Purchaser but
only with reference to information relating to such Initial Purchaser furnished
in writing by such Initial Purchaser expressly for use in the Offering
Documents. In case any action shall be brought against any Issuer Indemnified
Party in respect of which indemnity may be sought against an Initial Purchaser,
such Initial Purchaser shall have the rights and duties given to the Issuers
(except that if the Issuers shall have assumed the defense thereof, such Initial
Purchaser shall not be required to do so, but may employ separate counsel
therein and participate in the defense thereof but the fees and expenses of such
counsel shall be at the expense of such Initial Purchaser), and the Issuer
Indemnified Parties shall have the rights and duties given to such Initial
Purchaser by Section 8(b) hereof.
(d) If the indemnification provided for in this Section 8 is unavailable
to an indemnified party in respect of any losses, claims, damages, liabilities
or judgments referred to therein, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities and judgments (i) in such proportion as is appropriate to reflect
the relative benefits received by the Issuers on the one hand and the Initial
Purchasers on the other hand from the offering of the Series A Notes or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Issuers and
the Initial Purchasers in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or judgments, as well as
any other relevant equitable considerations. The relative benefits received by
the Issuers and the Initial Purchasers shall be deemed to be in the same
proportion as the total proceeds from the offering of the Series A Notes (before
deducting expenses) received by the Company, and the total discounts and
commissions received by the Initial Purchasers, bear to the total price to
investors of the Series A Notes, in each case, as set forth in the table on the
cover page of the Offering Circular. The relative fault of the Issuers and the
Initial Purchasers shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the Issuers
or the Initial Purchasers and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Issuers and the Initial Purchasers agree that it would not be just and
equitable if contribution pursuant to this paragraph were determined by pro rata
allocation (even if the Initial Purchasers were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The losses, claims, damages, liabilities or judgments of an indemnified party
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred
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by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 8, no Initial
Purchaser shall be required to contribute any amount in excess of the amount by
which the discounts and commissions received by it exceeds the amount of any
damages which such Initial Purchaser has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Initial Purchasers'
obligations to contribute pursuant to this Section 8(d) are several in
proportion to the respective principal amount of Series A Notes purchased by
each of the Initial Purchasers hereunder and not joint.
(e) The Issuers hereby designate The Jordan Company, 9 West 57th Street,
New York, New York 10019, as their authorized agent, upon which process may be
served in any action, suit or proceeding which may be instituted in any state or
federal court in the State of New York by any Initial Purchaser or person
controlling such Initial Purchaser asserting a claim for indemnification or
contribution under or pursuant to this Section 8, and the Issuers will accept
the jurisdiction of such court in such action, and waive, to the fullest extent
permitted by applicable law, any defense based upon lack of personal
jurisdiction or venue. A copy of any such process shall be sent or given to the
Issuers, at the address for notices specified in Section 11(a) hereof.
(f) The indemnity and contribution agreements contained in this Section 8
are in addition to any liability which the indemnifying persons may otherwise
have to the indemnified persons referred to above.
9. CONDITIONS OF THE INITIAL PURCHASERS' OBLIGATIONS. The several
obligations of the Initial Purchasers to purchase the Series A Notes under this
Agreement are subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Issuers contained in
this Agreement shall be true and correct on the Closing Date with the same force
and effect as if made on and as of the Closing Date. The Issuers shall have
performed or complied with all of the agreements and satisfied all conditions to
be performed, complied with or satisfied by them under this Agreement on or
prior to the Closing Date.
(b) (i) The Offering Circular shall have been printed and copies
distributed to the Initial Purchasers not later than 9:00 a.m., New York City
time, on the second business day following the date of this Agreement, or at
such later date and time as the Initial Purchasers may approve in writing; (ii)
no injunction, restraining order or order of any nature by a federal or state
court of competent jurisdiction shall have been issued as of the Closing Date
which would prevent the issuance of the Series A Notes; and (iii) at the Closing
Date, (A) no stop order preventing the use of the Offering Documents, or any
amendment or supplement thereto, or suspending the qualification or exemption
from qualification of the Series A Notes for sale in any jurisdiction designated
by the Initial Purchasers pursuant to Section 5(f) hereof shall have been issued
and (B) no proceedings for that purpose shall have been commenced or shall be
pending before or, to the knowledge of any Issuer, be contemplated.
(c) (1) Since the date of the latest balance sheet included in the
Offering Documents, there shall not have been any event that had a Material
Adverse Effect, or any development involving a prospective change that would be
reasonably likely to have a Material Adverse Effect, whether or not arising in
the ordinary course of business; (2) since the date of the latest balance sheet
included in the Offering Documents, there has not been any change, or any
development involving a prospective change, in the capital stock or
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in the long-term debt of the Company and its subsidiaries from that set forth in
the Offering Documents (other than as a result of the Transactions); (3) the
Company and its subsidiaries shall have no material liability or obligation,
direct or contingent, other than those reflected in the Offering Circular; and
(4) on the Closing Date, the Initial Purchasers shall have received certificates
dated the Closing Date, signed on behalf of each Issuer by the President and
Chief Financial Officer of each such Issuer, confirming all matters set forth in
Sections 9(a), (b) and (c) hereof.
(d) The Initial Purchasers shall have received on the Closing Date an
opinion (satisfactory to the Initial Purchasers and counsel to the Initial
Purchasers) dated the Closing Date, of Mayer, Brown & Platt, counsel for the
Issuers, to the effect that:
(1) Each of the Issuers is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, has full corporate power and authority to carry on its
respective business as it is currently being conducted and to own, lease
and operate its respective properties, and, to such counsel's knowledge, is
duly qualified and is in good standing as a foreign corporation registered
to do business in each jurisdiction in which the nature of its business or
its ownership or leasing of property requires such qualification, except
where the failure to be so qualified would not be reasonably likely to have
a Material Adverse Effect;
(2) All of the outstanding capital stock of the Company and each of
its domestic subsidiaries has been duly authorized and validly issued and
is fully paid and nonassessable and is not subject to preemptive or similar
rights;
(3) Each Issuer has all necessary corporate power and authority to
enter into and perform its obligations under the Operative Documents and to
issue, sell and deliver the Series A Notes to the Initial Purchasers to be
sold by the Initial Purchasers pursuant hereto;
(4) No consent, approval, authorization or order of, or filing or
registration with, any regulatory body, administrative agency, or other
governmental agency (except as securities or Blue Sky laws of the various
states may require) which has not been made or obtained is required for the
execution, delivery and performance of the Operative Documents and the
valid issuance and sale of the Series A Notes to the Initial Purchasers as
contemplated by this Agreement or the offering of the Series A Notes as
contemplated by the Offering Circular, except where the failure to obtain
any such consents or waivers, individually or in the aggregate, would not
be reasonably likely to have a Material Adverse Effect or adversely affect
the Company's ability to consummate the Transactions;
(5) To such counsel's knowledge, no consents or waivers from any
person are required to consummate the transactions contemplated by the
Operative Documents or the Offering Documents other than such consents and
waivers as have been or will be obtained;
(6) (A) None of the Company or any of its domestic subsidiaries is in
violation of its charter or bylaws, and (B) to such counsel's knowledge,
none of the Company or any of its subsidiaries is in default in the
performance of any obligation, agreement or condition contained in any
bond, debenture, note or any other evidence of indebtedness or in any other
agreement, indenture or instrument material to the conduct of the business
of the Company or any of its subsidiaries, to which the Company or any of
its subsidiaries is a party or by which the Company or any of its
subsidiaries or their property is bound, except (x) in the case of clause
(B), for such consents or
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waivers which, individually or in the aggregate, would not be reasonably
likely to have a Material Adverse Effect or adversely affect the Company's
ability to consummate the Transactions and (y) as will be obtained
concurrently with the consummation of the Transactions;
(7) The execution, delivery and performance of the Operative Documents
by each of the Issuers, compliance by each of the Issuers with the
provisions thereof and the Series A Notes, and the consummation of the
transactions contemplated hereby and thereby does not conflict with or
constitute a breach of any of the terms or provisions of, or a default
under, or result in the imposition of a lien or encumbrance on any
properties of the Company or any of its subsidiaries, or an acceleration of
indebtedness pursuant to, (1) the charter or bylaws of the Company or any
of its domestic subsidiaries, (2) any bond, debenture, note, indenture,
mortgage, deed of trust or other agreement or instrument known to such
counsel to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or any of their property is
bound, or (3) to such counsel's knowledge, any domestic law or
administrative regulation applicable to the Company or any of its
subsidiaries or any of their assets or properties, or any judgment, order
or decree of any court or governmental agency or authority entered in any
proceeding to which the Company or any of its subsidiaries was or is now a
party or to which the Company or any of its subsidiaries or any of their
property may be subject, except, in the case of clause (2), as would not,
individually or in the aggregate, reasonably be likely to have a Material
Adverse Effect or adversely affect the Company's ability to consummate the
Transactions;
(8) This Agreement has been duly authorized and validly executed by
each of the Issuers and (assuming the due execution and delivery thereof by
the Initial Purchasers) is a legally valid and binding obligation of each
of the Issuers, enforceable against each of the Issuers in accordance with
its terms, except as the enforceability thereof may be (i) subject to
applicable bankruptcy, insolvency, moratorium, reorganization or similar
laws in effect which affect the enforcement of creditors rights generally,
(ii) limited by general principles of equity (whether considered in a
proceeding at law or in equity) and (iii) limited by securities laws
prohibiting or limiting the availability of, and public policy against,
indemnification or contribution;
(9) Each of the Issuers has duly authorized, executed and delivered
the Indenture, and (assuming due authorization, execution and delivery
thereof by the Trustee) the Indenture is a legally valid and binding
obligation of each of the Issuers, enforceable against each of the Issuers
in accordance with its terms, except as the enforceability thereof may be
(i) subject to applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws in effect which affect the enforcement of
creditors rights generally and (ii) limited by general principles of equity
(whether considered in a proceeding at law or in equity);
(10) The Company has duly authorized the Series A Notes and, when
issued and authenticated in accordance with the terms of the Indenture and
delivered to and paid for by the Initial Purchasers in accordance with the
terms hereof, the Series A Notes will conform to the description thereof in
the Offering Circular, and will be the legally valid and binding
obligations of the Company, enforceable against the Company in accordance
with their terms, except as the enforceability thereof may be (i) subject
to applicable bankruptcy, insolvency, moratorium, reorganization or similar
laws in effect which affect the enforcement of creditors rights generally
and (ii) limited by general principles of equity (whether considered in a
proceeding at law or in equity);
21
<PAGE>
(11) Each of the Guarantors has duly authorized its Guarantee to be
endorsed on the Series A Notes and, when executed and delivered in
accordance with the terms of the Indenture and when the Series A Notes have
been issued and authenticated in accordance with the terms of the Indenture
and delivered to and paid for by the Initial Purchasers in accordance with
the terms hereof, the Guarantees will conform to the description thereof in
the Offering Circular, and will be the legally valid and binding
obligations of each of the Guarantors, enforceable against each of them in
accordance with its terms, except as the enforceability thereof may be (i)
subject to applicable bankruptcy, insolvency, moratorium, reorganization or
similar laws in effect which affect the enforcement of creditors rights
generally and (ii) limited by general principles of equity (whether
considered in a proceeding at law or in equity);
(12) The Company has duly authorized the Series B Notes;
(13) Each of the Guarantors has duly authorized its Guarantee of the
Series B Notes;
(14) Each of the Issuers has duly authorized, executed and delivered
the Registration Rights Agreement, and (assuming the due execution and
delivery thereof by the Initial Purchasers) the Registration Rights
Agreement is a legally valid and binding obligation of each of the Issuers,
enforceable against each of the Issuers in accordance with its terms,
except as the enforceability thereof may be (i) subject to applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws in
effect which affect the enforcement of creditors rights generally, (ii)
limited by general principles of equity (whether considered in a proceeding
at law or in equity) and (iii) limited by securities laws prohibiting or
limiting the availability of, and public policy against, indemnification or
contribution;
(15) To such counsel's knowledge, there is (i) no action, suit or
proceeding before or by any court, arbitrator or governmental agency, body
or official, domestic or foreign, now pending, threatened or contemplated
to which the Company or any of its subsidiaries is or may be a party or to
which the business or property of the Company or any of its subsidiaries is
or may be subject, (ii) no statute, rule, regulation or order that has been
enacted, adopted or issued by any governmental agency or proposed by any
governmental body, or (iii) no injunction, restraining order or order of
any nature by a federal or state court of competent jurisdiction applicable
to the Company or any of its subsidiaries has been issued that, in the case
of clauses (i), (ii) and (iii) above, (a) is required to be disclosed in
the Offering Circular and that is not so disclosed, (b) would interfere
with or adversely affect the issuance of the Series A Notes or the
consummation of the Transactions, or (c) would reasonably be likely to
invalidate any provision or the validity of the Operative Documents or the
Series A Notes;
(16) To such counsel's knowledge, no holder of any security of any
Issuer has any right to require registration of any of such Issuer's
securities, other than pursuant to the Stockholders Agreement and the
Registration Rights Agreement;
(17) The statements under the captions "Certain Transactions,"
"Description of Certain Indebtedness," and "Certain Tax Considerations" in
the Offering Circular, insofar as such statements constitute a summary of
legal matters, documents or proceedings referred to therein, are correct in
all material respects;
22
<PAGE>
(18) None of the Issuers is an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended;
(19) When the Series A Notes are issued and delivered pursuant to this
Agreement, such Series A Notes will not be of the same class (within the
meaning of Rule 144A under the Act) as securities of any Issuer that are
listed on a national securities exchange registered under Section 6 of the
Exchange Act or that are quoted in a United States automated inter-dealer
quotation system;
(20) The Indenture is not required to be qualified under the Trust
Indenture Act prior to the first to occur of (i) the Registered Exchange
Offer and (ii) the effectiveness of the Shelf Registration Statement;
(21) No registration under the Act of the Series A Notes is required
for the sale of the Series A Notes to the Initial Purchasers as
contemplated hereby or for the Exempt Resales (assuming (i) that the
Eligible Purchasers who buy the Series A Notes in the Exempt Resales are
QIBs or Accredited Investors or non-U.S. Persons, (ii) the accuracy of, and
compliance with, the representations of the Initial Purchasers and those of
the Issuers contained in Sections 6 and 7 hereof and (iii) the accuracy of
the representations made by each Accredited Investor who purchases Series A
Notes pursuant to an Exempt Resale as set forth in the letters of
representation executed by such Accredited Investors in the form of Annex A
to the Offering Circular).
In addition, such counsel shall state that it has participated in
conferences with officers and other representatives of the Issuers,
representatives of the independent public accountants for the Company, the
Initial Purchasers' representatives and counsel for the Initial Purchasers, at
which conferences the contents of the Offering Circular and related matters were
discussed, and, although such counsel is not passing upon and assumes no
responsibility for the accuracy, completeness or fairness of the statements
contained in the Offering Circular, and have not made any independent check or
verification thereof, during the course of such participation (relying as to
materiality to the extent such counsel deemed appropriate upon the statements of
officers and other representatives of the Company), no facts came to such
counsel's attention that caused such counsel to believe that the Offering
Circular, as of its date or as of the Closing Date, contained an untrue
statement of material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading; it
being understood that such counsel expresses no belief with respect to the
financial statements, schedules and other financial and statistical data
included in the Offering Circular or incorporated therein.
(e) The Initial Purchasers shall have received copies, addressed to the
Initial Purchasers, of each opinion of counsel to the Company delivered in
connection with the Transactions, including, without limitation, in connection
with the Acquisitions and the Credit Agreement.
(f) The Initial Purchasers shall have received on the Closing Date an
opinion, dated the Closing Date, of Latham & Watkins, in form and substance
satisfactory to the Initial Purchasers, and the Company shall have provided
Latham & Watkins such papers and information as it requests to enable it to pass
upon the matters contained in such opinion.
(g) The Initial Purchasers shall have received letters from KPMG Peat
Marwick, LLP, independent public accountants, on the date hereof and on the
Closing Date, in form and substance
23
<PAGE>
satisfactory to the Initial Purchasers, with respect to the financial statements
and certain financial information contained in the Offering Circular.
(h) All Transaction Documents shall have been entered into by the parties
thereto, and the Initial Purchasers shall have received counterparts, conformed
as executed, thereof and of all other documents and agreements entered into in
connection therewith. Each material condition to the closing contemplated by
the Transaction Documents (other than the Crystaloid Agreement) shall have been
satisfied or, with the Initial Purchasers' specific approval, waived. There
shall exist at and as of the Closing Date (after giving effect to the
transactions contemplated by this Agreement) no condition of which any Issuer
has knowledge that would constitute a default (or an event that with notice or
the lapse of time, or both, would constitute a default) under the Transaction
Documents. Prior to, or simultaneously with, the closing of the Offering, each
of the Transactions (other than the Crystaloid Acquisition) pursuant to the
terms of the Transaction Documents (other than the Crystaloid Agreement) shall
have been consummated on terms that conform in all material respects to the
description thereof in the Offering Documents, and the Initial Purchasers shall
have received true and correct copies of all documents pertaining thereto and
evidence satisfactory to the Initial Purchasers of the consummation thereof.
(i) Each of the Issuers shall have entered into each of the Operative
Documents to which it is a party on or prior to the Closing Date.
(j) The Issuers shall have performed or complied in all material respects
with any of the agreements herein contained and required to be performed or
complied with by the Issuers on or prior to the Closing Date.
10. EFFECTIVE DATE OF AGREEMENT AND TERMINATION. This Agreement shall
become effective at the time that the Issuers and the Initial Purchasers execute
this Agreement.
The Initial Purchasers may terminate this Agreement at any time prior to
the Closing Date by written notice to the Company if any of the following has
occurred:
(a) since the respective dates as of which information is given in the
Offering Documents, any adverse change or development involving a prospective
adverse change, whether or not arising in the ordinary course of business, which
would, in the Initial Purchasers' judgment, make it impracticable to market the
Series A Notes on the terms and in the manner contemplated in the Offering
Documents;
(b) any outbreak or escalation of hostilities or other national or
international calamity or crisis or material change in economic conditions, if
the effect of such outbreak, escalation, calamity, crisis or change on the
financial markets of the United States or elsewhere would, in the Initial
Purchasers' judgment, make it impracticable to market the Series A Notes on the
terms and in the manner contemplated in the Offering Documents;
(c) the suspension or material limitation of trading in securities on the
New York Stock Exchange, the American Stock Exchange or the Nasdaq National
Market or limitation on prices for securities on any such exchange;
24
<PAGE>
(d) the enactment, publication, decree or other promulgation of any
federal or state statute, regulation, rule or order of any court or other
governmental authority which, in the Initial Purchasers' opinion, causes or
could cause a Material Adverse Effect;
(e) the declaration of a banking moratorium by either federal or New York
State authorities;
(f) the taking of any action by any federal, state or local government or
agency in respect of its monetary or fiscal affairs which, in the Initial
Purchasers' opinion, has a material adverse effect on the financial markets in
the United States; or
(g) any of the Company's securities shall have been downgraded or placed
on any "watch list" for possible downgrading by any nationally recognized
statistical rating organization, provided that, in the case of such "watch list"
placement, termination shall be permitted only if such placement would, in the
judgment of the Initial Purchasers, make it impracticable or inadvisable to
market the Series A Notes or to enforce contracts for the sale of the Series A
Notes or materially impair the investment quality of the Series A Notes.
If, on the Closing Date, any one or more of the Initial Purchasers shall
fail or refuse to purchase the Series A Notes which it or they have agreed to
purchase hereunder on such date and the aggregate principal amount of the Series
A Notes which such defaulting Initial Purchaser or Initial Purchasers, as the
case may be, agreed but failed or refused to purchase is not more than one-tenth
of the aggregate principal amount of the Series A Notes to be purchased on such
date by all Initial Purchasers, each non-defaulting Initial Purchaser shall be
obligated severally, in the proportion which the principal amount of the Series
A Notes set forth opposite its name in Schedule B bears to the aggregate
principal amount of the Series A Notes which all the non-defaulting Initial
Purchasers, as the case may be, have agreed to purchase, or in such other
proportion as the Initial Purchasers may specify, to purchase the Series A Notes
which such defaulting Initial Purchaser or Initial Purchasers, as the case may
be, agreed but failed or refused to purchase on such date; provided that in no
event shall the aggregate principal amount of the Series A Notes which any
Initial Purchaser has agreed to purchase pursuant to Section 2 hereof be
increased pursuant to this Section 10 by an amount in excess of one-ninth of
such principal amount of the Series A Notes without the written consent of such
Initial Purchaser. If, on the Closing Date, any Initial Purchaser or Initial
Purchasers shall fail or refuse to purchase the Series A Notes and the aggregate
principal amount of the Series A Notes with respect to which such default occurs
is more than one-tenth of the aggregate principal amount of the Series A Notes
to be purchased by all Initial Purchasers and arrangements satisfactory to the
Initial Purchasers and the Issuers for purchase of such the Series A Notes are
not made within 48 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Initial Purchaser and the
Company. In any such case which does not result in termination of this
Agreement, either the Initial Purchasers or the Company shall have the right to
postpone the Closing Date, but in no event for longer than seven days, in order
that the required changes, if any, in the Offering Circular or any other
documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Initial Purchaser from liability in
respect of any default of any such Initial Purchaser under this Agreement.
11. MISCELLANEOUS.
(a) Notices given pursuant to any provision of this Agreement shall be
addressed as follows: (i) if to the Issuers, The Jordan Company, 9 West 57th
Street, 40th Floor, New York, New York 10019, Attention: A. Richard Caputo, Jr.
and (ii) if to the Initial Purchasers, c/o Jefferies & Company, Inc., 11100
25
<PAGE>
Santa Monica Boulevard, Los Angeles, California 90025, Attention: Syndicate
Department, or in any case to such other address as the person to be notified
may have requested in writing.
(b) The respective indemnities, contribution agreements, representations,
warranties and other statements of the Issuers and the Initial Purchasers set
forth in or made pursuant to this Agreement shall remain operative and in full
force and effect, and will survive delivery of and payment for the Series A
Notes, regardless of (i) any investigation, or statement as to the results
thereof, made by or on behalf of any such person, (ii) acceptance of the Series
A Notes and payment for them hereunder and (iii) termination of this Agreement.
(c) Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Issuers, the Initial
Purchasers, any controlling persons referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Series A Notes from any of the several Initial Purchasers merely
because of such purchase.
(d) This Agreement shall be construed, interpreted and the rights of the
parties determined in accordance with the laws of the State of New York without
reference to its choice of law provisions.
This Agreement may be signed in various counterparts which together shall
constitute one and the same instrument.
[SIGNATURE PAGE IS THE NEXT PAGE]
26
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between the Issuers and the Initial Purchasers.
Very truly yours,
Jackson Products, Inc.
By: /s/ Christopher T. Paule
----------------------------------
Name: Christopher T. Paule
Title: Vice President
Jackson Acquisition, Inc.
By: /s/ Christopher T. Paule
----------------------------------
Name: Christopher T. Paule
Title: Vice President
Crystaloid Technologies, Inc.
By: /s/ Christopher T. Paule
----------------------------------
Name: Christopher T. Paule
Title: Vice President
OSD Envizion, Inc.
By: /s/ Christopher T. Paule
----------------------------------
Name: Christopher T. Paule
Title: Vice President
Flex-O-Lite, Inc.
By: /s/ Christopher T. Paule
----------------------------------
Name: Christopher T. Paule
Title: Vice President
27
<PAGE>
Jefferies & Company, Inc.
By: /s/ Andrew Booth
-------------------------------
Name: Andrew Booth
Title: Vice President
Goldman, Sachs & Co.
By: /s/ Goldman, Sachs & Co.
-------------------------------
(Goldman, Sachs & Co.)
28
<PAGE>
SCHEDULE I
----------
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
OF SERIES A NOTES
INITIAL PURCHASER TO BE PURCHASED
- ----------------- ---------------
<S> <C>
Jefferies & Company, Inc. ............................ $ 80,500,000
Goldman, Sachs & Co.. ................................ 34,500,000
------------
$115,000,000
============
</TABLE>
29
<PAGE>
EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
among
JACKSON ACQUISITION, INC.,
NCH CORPORATION,
AMERICAN ALLSAFE COMPANY
and
SILENCIO/SAFETY DIRECT, INC.
Dated as of March 30, 1998
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
ARTICLE I
DEFINITIONS
1.1. Definitions......................................................... 1
ARTICLE II
PURCHASE AND SALE OF SHARES
2.1. Basic Transaction................................................... 7
2.2. Payment of Purchase Price........................................... 7
2.3. Deposit............................................................. 7
2.4. The Closing......................................................... 7
2.5. Closing Deliveries by Seller........................................ 7
2.6. Closing Deliveries by Buyer......................................... 8
2.7. Purchase Price Allocation........................................... 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
3.1. Organization of Seller.............................................. 9
3.2. Authorization of Transaction........................................ 9
3.3. Noncontravention.................................................... 9
3.4. Brokers' Fees....................................................... 10
3.5. Shares.............................................................. 10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANIES AND THE SELLER
4.1. Organization, Qualification, and Corporate Power.................... 10
4.2. Capitalization...................................................... 11
4.3. Noncontravention.................................................... 11
4.4. Brokers' Fees....................................................... 11
4.5. Title to Assets..................................................... 12
4.6. Subsidiaries........................................................ 12
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ---
<S> <C>
4.7. Financial Statements............................................... 12
4.8. Events Subsequent to Latest Balance Sheet.......................... 12
4.9. Undisclosed Liabilities............................................ 14
4.10. Legal Compliance................................................... 14
4.11. SEC Compliance..................................................... 14
4.12. Tax Matters........................................................ 15
4.13. Real Property...................................................... 17
4.14. Intellectual Property.............................................. 19
4.15. Assets of the Companies............................................ 21
4.16. Inventory.......................................................... 22
4.17. Contracts.......................................................... 22
4.18. Notes and Accounts Receivable...................................... 24
4.19. Powers of Attorney................................................. 24
4.20. Insurance.......................................................... 24
4.21. Litigation......................................................... 25
4.22. Product Warranty................................................... 25
4.23. Employees.......................................................... 26
4.24. Employee Benefits.................................................. 26
4.25. Environmental Matters.............................................. 28
4.26. Permits............................................................ 30
4.27. No Conflict of Interest............................................ 30
4.28. Bank Accounts...................................................... 31
4.29. Customers and Suppliers............................................ 31
4.30. Claims Against Officers and Directors.............................. 31
4.31. Improper and Other Payments........................................ 31
4.32. Accuracy of Statements............................................. 32
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER
5.1. Organization of the Buyer.......................................... 32
5.2. Authorization of Transaction....................................... 32
5.3. Noncontravention................................................... 32
5.4. Brokers' Fees...................................................... 33
5.5. Investment Purpose................................................. 33
5.6. Litigation......................................................... 33
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
ARTICLE VI
COVENANTS
6.1. General............................................................ 33
6.2. Operation of Business.............................................. 33
6.3. Full Access........................................................ 35
6.4. Exclusivity........................................................ 35
6.5. Efforts............................................................ 36
6.6. Maintenance of Insurance........................................... 36
6.7. Notice and Supplemental Information................................ 36
6.8. Post-Closing Access and Cooperation................................ 37
6.9. Consistent Tax Reporting........................................... 37
6.10. Section 338(h)(10) Election........................................ 37
6.11. Termination of Shareholder Agreements.............................. 38
6.12. Resignation of Officers and Directors.............................. 38
6.13. Interim Financial Statements....................................... 38
6.14. Transition......................................................... 38
6.15. Confidentiality.................................................... 38
6.16. Post-Closing Covenants............................................. 39
6.17. Transfer Taxes..................................................... 39
6.18. Business Name...................................................... 40
6.19. Noncompetition..................................................... 40
6.20. Assumption and Termination of Certain Contracts.................... 41
6.21. Employee Benefits.................................................. 41
6.22. Title Insurance.................................................... 42
6.23. Financial Condition at Closing..................................... 42
6.24. Foreign Trademarks................................................. 43
ARTICLE VII
CONDITIONS TO OBLIGATION OF BUYER
7.1. Warranties True as of Closing Date................................. 43
7.2. Compliance with Covenants.......................................... 43
7.3. Consents........................................................... 43
7.4. Actions or Proceedings............................................. 43
7.5. Certificate........................................................ 44
7.6. Opinion of Counsel................................................. 44
7.7. Resignations....................................................... 44
7.8. Financing.......................................................... 44
7.9. Termination of Certain Agreements.................................. 44
</TABLE>
-iii-
<PAGE>
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
7.10. Government Approvals............................................... 44
7.11. Collateral Agreements.............................................. 44
7.12. Lamba Assets....................................................... 44
7.13. Documents.......................................................... 44
7.14. FIRPTA Certificate................................................. 45
7.15. Assumption and Termination of Certain Contracts.................... 45
7.16. Replatting and conveyance of Allsafe property...................... 45
ARTICLE VIII
CONDITIONS TO OBLIGATION OF THE SELLER
8.1. Warranties True as of Closing...................................... 46
8.2. Compliance with Covenants.......................................... 46
8.3. Actions or Proceedings............................................. 46
8.4. Certificate........................................................ 46
8.5. Opinion of Counsel................................................. 46
8.6. Documents.......................................................... 46
8.7. Government Approvals............................................... 46
ARTICLE IX
SURVIVAL AND REMEDY; INDEMNIFICATION
9.1. Survival of Representations and Warranties......................... 47
9.2. Indemnification by the Seller...................................... 47
9.3. Indemnification by the Buyer....................................... 48
9.4. Third-Party Claims................................................. 49
9.5. Other Indemnification Provisions................................... 50
ARTICLE X
TAX MATTERS
10.1. Filing of Tax Returns and Payment of Taxes......................... 51
10.2. Refunds of Taxes................................................... 51
10.3. Cooperation on Tax Matters......................................... 52
10.4. Certain Taxes...................................................... 52
</TABLE>
-iv-
<PAGE>
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
ARTICLE XI
11.1 Termination of Agreement.......................................... 53
11.2. Effect of Termination............................................. 53
ARTICLE XII
MISCELLANEOUS
12.1. Expenses.......................................................... 54
12.2. Press Releases and Public Announcements........................... 54
12.3. No Third-Party Beneficiaries...................................... 54
12.4. Entire Agreement.................................................. 54
12.5. Succession and Assignment......................................... 54
12.6. Counterparts...................................................... 54
12.7. Headings.......................................................... 54
12.8. Notices........................................................... 55
12.9. Governing Law..................................................... 56
12.10. Amendments and Waivers............................................ 56
12.11. Severability...................................................... 56
12.12. Construction...................................................... 56
12.13. Incorporation of Exhibits, Annexes, and Schedules................. 56
12.14. Specific Performance.............................................. 57
</TABLE>
Exhibits
- ---------
Exhibit A - Form of Opinion of Counsel to the Seller
Exhibit B - Form of Opinion of Counsel to the Buyer
Exhibit C - Form of Transition Services Agreement
Exhibit D - Form of Easement (Driveway)
Exhibit E - Form of Easement (Turnaround)
Schedules
- ---------
Schedule 4.2 Capitalization
Schedule 4.4 Broker's Fee
Schedule 4.5 Title to Assets
Schedule 4.7 Financial Statements
Schedule 4.8 Events Subsequent to latest Balance Sheet
Schedule 4.10 Legal Compliance
Schedule 4.12 Tax Returns
-v-
<PAGE>
Schedule 4.13(a) Owned Property
Schedule 4.13(b) Leased Property
Schedule 4.14(b) Intellectual Property Infringements
Schedule 4.14(c) Intellectual Property of the Companies
Schedule 4.14(d) Third Party Intellectual Property
Schedule 4.17 Contracts
Schedule 4.20 Insurance
Schedule 4.21 Litigation
Schedule 4.22 Warranties
Schedule 4.23 Employees
Schedule 4.24(a) Employee Benefits
Schedule 4.24(b) Plan Documents and Reports
Schedule 4.24(c) Compliance with Employee Benefit Laws
Schedule 4.25 Environmental Matters
Schedule 4.26 Permits
Schedule 4.28 Bank Accounts
Schedule 4.29 Customers and Suppliers
Schedule 6.2 Operation of Business
Schedule 6.18 Business Name
Schedule 6.24 Foreign Trademarks
Schedule 7.15 Assumption and Termination of Certain Contracts
Schedule 9.2(c) Seller Indemnification
Schedule 9.2(d) Buyer Assumed Claims with Certain Seller Liability
-vi-
<PAGE>
STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT, dated as of March 30, 1998, is by and among
Jackson Acquisition, Inc., a Delaware corporation (the "Buyer"), NCH
-----
Corporation, a Delaware corporation (the "Seller"), American Allsafe Company, a
------
Texas corporation ("Allsafe"), and Silencio/Safety Direct, Inc., a Nevada
-------
corporation ("Silencio" and, together with Allsafe, the "Companies").
-------- ---------
WHEREAS, the Seller owns all of the outstanding capital stock of the
Companies (the "Shares");
------
WHEREAS, the Buyer wishes to purchase the Shares from the Seller and the
Seller desires to sell to the Buyer all of the Shares;
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. The following terms shall have the following
-----------
meanings for the purposes of this Agreement.
"Accounts Receivable" means the rights of the Companies to cash payment for
-------------------
their sales and other amounts that would be classified as an account receivable
on the asset side of a consolidated balance sheet of either of the Companies
prepared in accordance with GAAP.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
--------------------
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and attorneys' fees and expenses.
"Affiliate" means, with respect to any specified Person, a Person that
---------
directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with, the Person specified.
"Affiliated Group" means any affiliated group within the meaning of Code
----------------
(S)1504(a) or any similar group defined under a similar provision of state,
local or foreign Law.
"Agreement" means this Stock Purchase Agreement, including all exhibits and
---------
schedules hereto, as it may be amended from time to time.
<PAGE>
"Authority" means any governmental, regulatory or administrative body,
---------
agency, subdivision or authority, any court or judicial authority, any public
regulatory authority, whether foreign, national, federal, state or local or
otherwise, or any Person lawfully empowered by any of the foregoing to enforce
or seek compliance with any regulation.
"Business" means the safety products manufacturing business of the Seller,
--------
which shall include, all of the inventory, sales and distributor information,
Intellectual Property and other intangibles (collectively, the "Lamba Assets")
------------
of Lamba Systems U.K., a division of NCH U.K., Limited, a corporation organized
under the laws of the United Kingdom ("Lamba U.K."); provided, however, that all
---------- -------- -------
Accounts Receivable of Lamba U.K. shall be excluded from the Business and the
definition of Lamba Assets.
"Buyer" has the meaning set forth in the preface above.
-----
"Buyer Indemnified Parties" has the meaning set forth in Section 9.2.
------------------------- -----------
below.
"Closing" has the meaning set forth in Section 2.4 below.
------- -----------
"Closing Date" has the meaning set forth in Section 2.4 below.
------------ -----------
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Companies" has the meaning set forth in the preface above.
---------
"Company Indemnifying Party" has the meaning set forth in Section 9.2
-------------------------- -----------
below.
"Confidential Information" means any information concerning the businesses
------------------------
and affairs of the Companies other than information which is (i) generally
available to the public through no fault of the disclosing party or (ii) which
the disclosing party knew or to which the disclosing party had access prior to
disclosure.
"Contract" means any contract, lease, commitment, understanding, sales
--------
order, purchase order, agreement, indenture, mortgage, note, bond, right,
warrant, instrument, plan, permit or license, whether written or oral, which is
intended or purports to be binding and enforceable.
"Current Liabilities" shall mean any indebtedness or other obligation
-------------------
coming due within one year that in either case would be classified as a current
liability on the liability side of a consolidated balance sheet of either of the
Companies in accordance with GAAP.
"Deposit Amount" means $295,000.
--------------
"Employee" has the meaning set forth in Section 4.23 below.
-------- ------------
-2-
<PAGE>
"Employee Benefit Plan" means any (a) nonqualified deferred compensation or
---------------------
retirement plan or arrangement, (b) qualified defined contribution retirement
plan or arrangement which is an Employee Pension Benefit Plan, (c) qualified
defined benefit retirement plan or arrangement which is an Employee Pension
Benefit Plan (including any Multiemployer Plan), or (d) Employee Welfare Benefit
Plan or material fringe benefit or other retirement, bonus, or incentive plan
or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA (S)3(2).
-----------------------------
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA (S)3(1).
-----------------------------
"Encumbrances" means all liens, claims, easements, rights-of-way,
------------
reservations, restrictions, encroachments, tenancies and any other encumbrances
of whatsoever kind, type or nature which affect the Owned Property.
"Environmental Laws" means all Federal, state, and local statutes,
------------------
regulations, ordinances and other provisions having the force or effect of law,
all judicial and administrative orders and determinations, all contractual
obligations and all common law concerning public health and safety, worker
health and safety, and pollution or protection of the environment, including
without limitation all those relating to the presence, use, production,
generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control, or cleanup of any Hazardous Substances, materials or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation, each as amended and as now or hereafter in
effect, including (but not limited to) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, as amended, the Resource Conservation and Recovery
Act of 1976, as amended, the Toxic Substances Control Act of 1976, as amended,
the Federal Water Pollution Control Act Amendments of 1972, the Clean Water Act
of 1977, as amended, any so-called "Superlien" law, and any other similar
Federal, state or local statutes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended.
"Financial Statements" has the meaning set forth in Section 4.7 below.
-------------------- -----------
"GAAP" means United States generally accepted accounting principles as in
----
effect from time to time.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust Improvements
---------------------
Act of 1976, as amended.
"Hazardous Substance" means any material or substance which (i) constitutes
-------------------
a hazardous substance, toxic substance or pollutant (as such terms are defined
by or pursuant to any Environmental Laws) or (ii) is regulated or controlled as
a hazardous substance, toxic substance,
-3-
<PAGE>
pollutant or other regulated or controlled material, substance or matter
pursuant to any Environmental Laws.
"Indemnified Party" has the meaning set forth in Section 9.4 below.
----------------- -----------
"Indemnifying Party" has the meaning set forth in Section 9.4 below.
------------------ -----------
"Intellectual Property" means (a) all inventions (whether patentable or
---------------------
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (e) all computer software (including data and related
documentation), (f) all other proprietary rights, and (g) all copies and
tangible embodiments thereof (in whatever form or medium).
"Knowledge" means with respect to a specified party hereto, actual
---------
knowledge of (i) the executive officers of such party and (ii) the officers and
employees of such party who have operational responsibility for the subject
matter associated with the relevant representation.
"Latest Balance Sheet" means the unaudited balance sheet of each of the
--------------------
Companies dated as of January 31, 1998.
"Law" means any law, statute, regulation, ordinance, rule, order, decree,
---
judgment, consent decree, settlement agreement or governmental requirement
enacted, promulgated, entered into, agreed or imposed by any Authority.
"Liability" means any liability (whether asserted or unasserted, whether
---------
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due), including any liability for
Taxes.
"Lien" means any mortgage, lien (except for any lien for Taxes not yet due
----
and payable), charge, restriction, pledge, security interest, option, lease or
sublease, claim, right of any third party, easement, encroachment or encumbrance
(other than, in each such case, any restriction on transfer imposed pursuant to
applicable securities laws).
-4-
<PAGE>
"Material", "material"or "materially" means any circumstance or state of
-------- -------- ----------
facts which results in, or would reasonably be expected to result in the
expenditure or commitment of $150,000 or more.
"Material Adverse Effect" means any change or effect that would be, or
-----------------------
would reasonably be expected to be, materially adverse to the properties,
assets, condition (financial or otherwise), results of operations, or business
of a specified Person.
"Most Recent Financial Statements" has the meaning set forth in Section 4.7
-------------------------------- -----------
below.
"Most Recent Fiscal Month End" has the meaning set forth in Section 4.7
---------------------------- -----------
below.
"Most Recent Fiscal Year End" has the meaning set forth in Section 4.7
--------------------------- -----------
below.
"Multiemployer Plan" has the meaning set forth in ERISA (S)3(37).
------------------
"Ordinary Course of Business" means the ordinary course of business
---------------------------
consistent with past custom and practice (including with respect to quantity and
frequency).
"PBGC" means the Pension Benefit Guaranty Corporation.
----
"Permits" has the meaning set forth in Section 4.26 below.
------- ------------
"Permitted Encumbrances" means and shall include:
----------------------
(a) all Encumbrances reflected on the Title Commitment approved by the
Buyer: and
(b) liens and other encumbrances created by Buyer.
"Person" means an individual, a partnership, a corporation, an association,
------
a joint stock company, a trust, a joint venture, an unincorporated organization,
or a governmental entity (or any department, agency, or political subdivision
thereof).
"Purchase Price" means $29,500,000.
--------------
"SEC" means the United States Securities and Exchange Commission.
---
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
-----------------------
amended.
"Seller Affiliate" means Seller and any other person which is directly or
----------------
indirectly controlled by Seller. A person shall be deemed to be "controlled by"
Seller if Seller possesses, directly or
-5-
<PAGE>
indirectly, (i) the power to vote 50% or more of the securities (on a fully
diluted basis) having ordinary voting power for the election of directors or
managing general partners, or (ii) power to direct or cause the direction of the
management and policies or such person by Contract or otherwise.
"Seller" has the meaning set forth in the preface above.
------
"Shares" means all shares of capital stock of the Companies held of record
------
by the Seller.
"Subsequent Monthly Financial Statements" has the meaning set forth in
---------------------------------------
Section 6.13 below.
- ------------
"Subsidiary" of a specified Person means any corporation, partnership,
----------
limited liability company, joint venture or other legal entity of which the
specified Person (either alone or through or together with any other subsidiary)
owns, directly or indirectly, 50% or more of the stock or other equity interest
or partnership interest the holders of which are generally entitled to vote for
the election of the board of directors or other governing body of such
corporation or other legal entity.
"Tax" means any federal, state, local, or foreign income, gross receipts,
---
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code (S)59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
----------
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Terminated Contracts" has the meaning set forth in Section 7.15 below.
-------------------- ------------
"Third Party Claim" has the meaning set forth in Section 9.4 below.
----------------- -----------
"Title Commitment" means a commitment for an owner's policy of title
----------------
insurance with respect to the Owned Property issued by the Title Company, on the
most recent form promulgated by ALTA, setting forth the status of the title of
the Owned Property and showing all Encumbrances and other matters relating to
the Owned Property.
"Title Company" means reputable title insurance company reasonably
-------------
acceptable to Seller and Buyer.
"Title Policy" means an owner's policy of title insurance with respect to
------------
the Owned Property on the most recent form promulgated by ALTA, issued by the
Title Company, which policy shall initially be in the amount as determined in
Section 6.22 of this Agreement subject only to the Permitted Encumbrances.
- ------------
-6-
<PAGE>
"Working Capital" has the meaning set forth in Section 6.23(a) below.
--------------- ---------------
ARTICLE II
PURCHASE AND SALE OF SHARES
SECTION 2.1. Basic Transaction. On and subject to the terms and
-----------------
conditions of this Agreement, the Buyer agrees to purchase from the Seller, and
the Seller agrees to sell, or cause to be sold, to the Buyer, all of the Shares
for the consideration specified herein.
SECTION 2.2. Payment of Purchase Price. On the Closing Date, in
-------------------------
consideration for the Shares, the Buyer shall pay to the Seller an amount equal
to the Purchase Price less the Deposit Amount (the "Net Purchase Price"). The
---- ------------------
Net Purchase Price shall be paid to the Seller by means of wire transfer of
immediately available funds to an account or accounts designated by the Seller.
SECTION 2.3. Deposit. Upon the execution and delivery of this
-------
Agreement, the Buyer shall present to the Seller the Deposit Amount, which shall
be placed in an escrow account and shall be released to the Seller (i) in the
event the Closing occurs on or prior to April 30, 1998 on the Closing Date or
(ii) in the event that the Buyer fails to purchase the Shares on or prior to
April 30, 1998, other than as a result of the failure of the Seller or the
Company, as the case may be, to meet any of the closing conditions expressly set
forth in Section 7.1, 7.2, 7.3, 7.4, 7.5, 7.6, 7.7, 7.9, 7.10, 7.11 or 7.14, on
------- --- --- --- --- --- --- --- ---- ---- ---- ----
April 30, 1998.
SECTION 2.4. The Closing. The closing of the transactions contemplated
-----------
by this Agreement (the "Closing") shall take place at the offices of Mayer,
-------
Brown & Platt, 1675 Broadway, New York, NY 10019, commencing at 10:00 a.m.
local time on the earlier of (i) April 15, 1998, (ii) five (5) business days
following the satisfaction or waiver of all conditions to the obligations of the
parties to consummate the transactions contemplated hereby (other than
conditions with respect to actions the respective parties will take at the
Closing itself) or (iii) such other date as the parties may mutually determine,
but in no event later than April 30, 1998 (the "Closing Date").
------------
SECTION 2.5. Closing Deliveries by Seller. To effect the transfer
----------------------------
referred to in Section 2.1 hereof and the delivery of the consideration
-----------
described in Section 2.2 hereof, the Seller shall, on the Closing Date, deliver
-----------
the following:
(a) Seller shall cause to be delivered to Buyer certificates
evidencing the Shares, free and clear of any and all Liens, duly endorsed
in blank for transfer or accompanied by stock powers duly executed in
blank;
(b) Seller shall have delivered to Buyer all consents, approvals,
releases and waivers from governmental Authorities and other third parties
required or necessary as a result of the transactions contemplated hereby,
reasonably satisfactory in form and substance to Buyer and its counsel;
-7-
<PAGE>
(c) Seller shall have delivered all other documents required to be
delivered pursuant to Article VII hereof not specifically mentioned above
-----------
in this Section 2.5 ; and
-----------
(d) Seller shall have delivered two executed counterparts of access
easements substantially in the form as set forth on Exhibits D and E;
---------- -
(e) All instruments and documents executed and delivered to Buyer
pursuant hereto shall be in form and substance, and shall be executed in a
manner, reasonably satisfactory to Buyer and its counsel.
SECTION 2.6. Closing Deliveries by Buyer. To effect the transfer
---------------------------
referred to in Section 2.1 hereof and the delivery of the consideration
-----------
described in Section 2.2 hereof, the Buyer shall, on the Closing Date, deliver
-----------
the following:
(a) Buyer shall have tendered to Seller the Net Purchase Price by
wire transfer of immediately available funds to such account or accounts of
which Seller shall have given notice to Buyer hereunder not later than two
(2) business days prior to the Closing Date;
(b) Buyer shall have delivered two executed counterparts of access
easements substantially in the form as set forth on Exhibits D and E.
---------- -
(c) Buyer shall have released the Deposit Amount from the escrow
account to the Seller;
(d) Buyer shall have tendered all other documents required to be
delivered pursuant to Article VIII hereof not specifically mentioned above
------------
in this Section 2.6; and
(e) All instruments and documents executed and delivered to Seller
pursuant hereto shall be in form and substance, and shall be executed in a
manner, reasonably satisfactory to Seller and its counsel.
SECTION 2.7. Purchase Price Allocation. The Purchase Price for the Shares
-------------------------
(including assumed liabilities of the Companies) shall be allocated among the
assets of each of the Companies as mutually agreed by Buyer and Seller within 60
days after the Closing Date. In the event the Buyer and Seller fail to agree to
a purchase price allocation within 60 days of the Closing Date, they shall
submit their respective allocation to a nationally recognized mutually
acceptable independent accounting firm, which shall make an allocation binding
upon both parties within 30 days of its engagement. Each of the Buyer and
Seller shall bear 50% of the costs of such independent allocation. Following
the consummation of the transactions contemplated by this Agreement, Buyer and
Seller in connection with their respective U.S. Federal, state and local income
Tax Returns shall not take any position inconsistent with such allocation (or
any adjustment to such allocations). Any adjustment to the Purchase Price (or
the assumed liabilities of the Companies) shall be allocated
-8-
<PAGE>
among the assets of each of the Companies in accordance with Temp. Treas. Reg.
(S) 1.338(b)-3T(d) or Temp. Treas. Reg. (S) 1.338(b)-3T(e), whichever is
applicable.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Buyer that the statements
contained in this Article III are correct and complete as of the date of this
-----------
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article III) with respect to itself. All information
-----------
set forth in the Schedules shall be deemed by this reference to be set forth in
all such other Schedules delivered under this Article III. Without limiting the
generality of the foregoing, the mere listing (or inclusion of a copy) of a
document or other item shall not be deemed adequate to disclose an exception to
a representation or warranty made herein (unless the representation or warranty
has to do with the existence of the document or other item itself).
SECTION 3.1. Organization of Seller. Seller is duly organized, validly
----------------------
existing and in good standing under the laws of the State of Delaware.
SECTION 3.2. Authorization of Transaction. Seller has the requisite
----------------------------
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of the Seller (assuming due authorization, execution
and delivery hereof by the Buyer), enforceable in accordance with its terms and
conditions, except as the same may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and by general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or
equity).
SECTION 3.3. Noncontravention. Neither the execution and the delivery of
----------------
this Agreement, nor the consummation of the transactions contemplated hereby,
will (A) violate any constitution, Law, injunction, ruling, charge, or other
restriction of any Authority to which the Seller is subject, (B) violate any
provision of the certificate of incorporation or bylaws of the Seller or (C)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any Contract, lease, license, instrument,
or other arrangement to which the Seller is a party or by which it is bound or
to which any of its assets are subject, except for any violations or conflicts
that, individually or in the aggregate, would not be material to the Companies
(taken as a whole), impair the ability of the Seller to perform its obligations
under this Agreement or prevent the consummation of any of the transactions
contemplated hereby.
-9-
<PAGE>
SECTION 3.4. Brokers' Fees. The Seller has no Liability or obligation to
-------------
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Buyer could become
liable or obligated.
SECTION 3.5. Shares. The Seller holds of record and owns beneficially
------
all of the Shares, free and clear of any restrictions on transfer (other than
any restrictions under the Securities Act and state securities Laws), Taxes,
Liens, options, warrants, purchase rights, Contracts, commitments, equities,
claims, or demands. The Seller is not a party to any option, warrant, purchase
right, or other Contract or commitment that could require the Seller to sell,
transfer, or otherwise dispose of any Shares (other than this Agreement). The
Seller is not a party to any voting trust, proxy, or other agreement or
understanding with respect to the voting of any of the Shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANIES AND THE SELLER
Each of the Companies and the Seller, jointly and severally hereby
represents and warrants to the Buyer that the statements contained in this
Article IV are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Article IV), except as set forth in the Schedules hereto. All information set
forth in the Schedules shall be deemed by this reference to be set forth in all
such other Schedules delivered under this Article IV, An item disclosed in any
----------
Schedule shall be deemed disclosed for purposes of all Schedules. Without
limiting the generality of the foregoing, the mere listing (or inclusion of a
copy) of a document or other item shall not be deemed adequate to disclose an
exception to a representation or warranty made herein (unless the representation
or warranty has to do with the existence of the document or other item itself).
SECTION 4.1. Organization, Qualification, and Corporate Power. Each of
------------------------------------------------
the Companies is a corporation duly organized, validly existing, and in good
standing under the Laws of its jurisdiction of incorporation. Each of the
Companies is duly authorized to conduct business and is in good standing under
the Laws of each jurisdiction where such qualification is required, except where
the failure to be so qualified or be in good standing would not be material to
the Companies (taken as a whole). Each of the Companies has full corporate
power and authority and all licenses, Permits, and authorizations necessary to
carry on the business in which it is engaged and to own and use the properties
owned and used by it, except where the failure to have such power and authority
and hold such licenses, Permits and authorizations would not be material to the
Companies (taken as a whole). The Seller has delivered to the Buyer correct and
complete copies of the articles of incorporation and bylaws of each of the
Companies (as amended to date). The minute books (containing the records of
meetings of the stockholders, the board of directors, and any committees of the
board of directors), the stock certificate books, and the stock record books of
each of the Companies are correct and complete in all material respects. None
of the Companies is, in any
-10-
<PAGE>
material respect, in default under or in violation of any provision of its
articles of incorporation or bylaws.
SECTION 4.2. Capitalization.
--------------
(a) The entire authorized capital stock of each of the Companies is
set forth on Schedule 4.2. All of the issued and outstanding Shares have
------------
been duly authorized, are validly issued, fully paid, and nonassessable,
and are held of record by the Seller. There are no outstanding or
authorized options, warrants, purchase rights, subscription rights,
conversion rights, exchange rights, or other Contracts or commitments that
could require any of the Companies to issue, sell, or otherwise cause to
become outstanding any of the Shares. There are no outstanding or
authorized stock appreciation, phantom stock, profit participation, or
similar rights with respect to the Shares. There are no voting trusts,
proxies, or other agreements or understandings with respect to the voting
of the Shares.
(b) The assignments, endorsements, stock powers and other instruments
of transfer delivered by the Seller to Buyer at the Closing will be
sufficient to transfer the Seller's entire interest, legal and beneficial,
in the Shares. The Seller has full power and authority to convey good and
marketable title to all of the Shares, and upon transfer to Buyer of the
certificates representing such Shares, Buyer will receive good and
marketable title to such Shares, free and clear of all Liens.
SECTION 4.3. Noncontravention. Neither the execution and the delivery of
----------------
this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, Law, injunction, ruling, charge, or other
restriction of any Authority to which any of the Companies or Lamba U.K. is
subject or any provision of the articles of incorporation or bylaws of any of
the Companies or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
material Contract, lease, license, instrument, or other arrangement to which any
of the Companies or Lamba U.K. is a party or by which it is bound or to which
any of its assets is subject (or result in the imposition of any Lien upon any
of its assets). Except for filings under the Hart-Scott-Rodino Act, neither the
Seller nor any of the Companies needs to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any Authority in
order for the parties to consummate the transactions contemplated by this
Agreement, except for such consents, approvals, orders, authorizations,
registrations, declarations, filings, notices or Permits the failure of which to
be obtained or made would not be material to the Companies (taken as a whole),
impair the ability of the Seller or any of the Companies to perform their
respective obligations under this Agreement or prevent the consummation of any
of the transactions contemplated thereby.
SECTION 4.4. Brokers' Fees. Except as set forth on Schedule 4.4, neither
------------- ------------
the Seller nor any of the Companies has any Liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
-11-
<PAGE>
SECTION 4.5. Title to Assets. Except as set forth on Schedule 4.5
--------------- ------------
hereto, each of the Companies has good and marketable title to, or a valid
leasehold or license interest in, the properties and assets used by it, located
on its premises, or shown on the Latest Balance Sheet or acquired after the date
thereof and that are material to the Companies (taken as a whole), free and
clear of all Liens, except for (i) properties and assets disposed of in the
Ordinary Course of Business since the date of the Latest Balance Sheet and (ii)
Liens that, individually or in the aggregate, are not material to the Companies,
taken as a whole.
SECTION 4.6. Subsidiaries. None of the Companies has any direct or
------------
indirect Subsidiaries, either wholly or partially owned, and none of the
Companies holds any direct or indirect economic, voting or management interest
in any Person or owns any securities issued by any Person.
SECTION 4.7. Financial Statements. Attached hereto as Schedule 4.7 are
-------------------- ------------
the following financial statements (collectively the "Financial Statements"):
--------------------
(i) audited consolidated balance sheets and statements of income (including all
notes thereto) as of and for the fiscal year ended April 30, 1997 (the "Most
----
Recent Fiscal Year End") for each of the Companies; (ii) unaudited consolidated
- ----------------------
balance sheets and statements of income (including all notes thereto) as of and
for the fiscal year ended April 30, 1995 and 1996; and (iii) unaudited
consolidated balance sheets and statements of income (including all notes
thereto) (the "Most Recent Financial Statements") as of and for the 9 months
--------------------------------
ended January 31, 1998 (the "Most Recent Fiscal Month End") for each of the
----------------------------
Companies. The Financial Statements (including the notes thereto) have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby and present fairly the financial condition of each of
the Companies as of such dates and the results of operations of each of the
Companies for such periods. The Seller maintains a separate cash account for
each of the Companies (into which the Seller deposits all of the receipts of the
Business and out of which the Seller makes all of the disbursements of the
Business).
SECTION 4.8. Events Subsequent to Latest Balance Sheet. Except as set
-----------------------------------------
forth on Schedule 4.8 hereto, since the date of the Latest Balance Sheet, there
------------
has not been any adverse change in the business, financial condition, operations
or results of operations of any of the Companies (taken as whole), that,
individually or together with other similar events, could reasonably be expected
to constitute or cause a Material Adverse Effect on the Companies, taken as a
whole. Without limiting the generality of the foregoing, since that date:
(a) none of the Companies has sold, leased, transferred, or assigned
any of its material assets, tangible or intangible, other than in the
Ordinary Course of Business;
(b) except purchase orders and sales contracts entered into in the
Ordinary Course of Business, none of the Companies has entered into any
Contract (or series of related Contracts) involving more than $150,000;
(c) no party (including any of the Companies) has accelerated,
terminated, modified, or canceled any material Contract (or series of
related Contracts) to which any of the Companies is a party or by which any
of the Companies is bound;
-12-
<PAGE>
(d) except in the Ordinary Course of Business, none of the Companies
has imposed any Lien upon any of its assets, tangible or intangible;
(e) except in accordance with the capital expenditure budget provided
to the Buyer and as set forth on Schedule 4.8, none of the Companies has
------------
made any capital expenditure (or series of related capital expenditures) in
an amount in excess of $150,000 either individually or in the aggregate;
(f) except in accordance with the capital expenditure budget provided
to the Buyer and as set forth on Schedule 4.8, none of the Companies has
------------
made any capital investment in, any loan to, or any acquisition of the
securities or assets, except in the Ordinary Course of Business (such as,
without limitation, the purchase of inventory and supplies), of, any other
Person (or series of related capital investments, loans, and acquisitions);
(g) none of the Companies has issued any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any indebtedness for
borrowed money or capitalized lease obligation involving more than $150,000
either individually or in the aggregate;
(h) none of the Companies has delayed or postponed the payment of any
material accounts payable or other Liabilities outside the Ordinary Course
of Business;
(i) none of the Companies has canceled, compromised, waived, or
released any right or claim (or series of related rights and claims) either
involving more than $150,000 or outside the Ordinary Course of Business;
(j) none of the Companies has granted any license or sublicense of
any rights under or with respect to any Intellectual Property;
(k) there has been no change made or authorized in the articles of
incorporation or bylaws of any of the Companies;
(l) none of the Companies has issued, sold, or otherwise disposed any
of its capital stock, or granted any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or exercise) any
of its capital stock;
(m) none of the Companies has declared, set aside, or paid any
dividend or made any distribution with respect to its capital stock
(whether in cash or in kind) or redeemed, purchased, or otherwise acquired
any of its capital stock, or otherwise made any payments or dispositions of
the Companies' cash outside of the Ordinary Course of Business; provided,
that Seller shall be entitled to withdraw substantially all monies from the
Companies' cash accounts immediately prior to the Closing Date.
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<PAGE>
(n) none of the Companies has experienced any damage, destruction, or
loss (whether or not covered by insurance) to its property that is material
to the Companies (taken as a whole);
(o) except as identified on Schedule 4.8, none of the Companies has
------------
made any loan to, or entered into any other transaction with, any of its
directors, officers, employees or Affiliates;
(p) other than in the Ordinary Course of Business, none of the
Companies has entered into any employment Contract or collective bargaining
agreement or modified the terms of any existing such Contract or agreement;
(q) other than in the Ordinary Course of Business, none of the
Companies has granted any increase in the base compensation of any of its
directors or officers, or made any other change in employment terms for any
of its directors, officers, and employees or, except for wage and salary
increases made in the Ordinary Course of Business, increased the
compensation of any other employee of any of the Companies;
(r) none of the Companies has adopted, amended, modified, or
terminated any bonus, profit-sharing, incentive, severance, or other plan,
Contract, or commitment for the benefit of any of its directors or officers
(or taken any such action with respect to any other Employee Benefit Plan);
(s) none of the Companies has made or pledged to make any charitable
or other capital contribution outside the Ordinary Course of Business; and
(t) none of the Companies has committed to any of the foregoing.
SECTION 4.9. Undisclosed Liabilities. None of the Companies has any
-----------------------
material Liability (and, to the Knowledge of the Companies and the Sellers,
there is no basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of the Companies
giving rise to any material Liability), except for (i) Liabilities which are
reflected, reserved or disclosed in the Latest Balance Sheet and (ii)
Liabilities which have arisen after the date of the Latest Balance Sheet in the
Ordinary Course of Business.
SECTION 4.10. Legal Compliance. Except as set forth on Schedule 4.10,
---------------- -------------
each of the Companies and their respective predecessors and Affiliates have
complied in all material respects with all applicable Laws, and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand, or notice
has been filed or commenced against any of them alleging any failure to so
comply.
SECTION 4.11. SEC Compliance. The Seller and the Companies have complied
--------------
with all applicable provisions of the Securities Act and the Securities Exchange
Act and with all SEC regulations and have filed and registered all forms,
agreements, securities and documents required
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<PAGE>
by Law and by the regulations promulgated by the SEC, including, but not limited
to, all required registration statements, proxy statements, annual and quarterly
reports and all other necessary filings except to the extent such failure to
comply would not be material to the Companies (taken as a whole). To the
Knowledge of the Companies and the Seller, no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against any of them alleging any failure so to comply.
SECTION 4.12. Tax Matters.
-----------
(a) Each of the Companies has duly and timely filed (taking into
account all valid extensions of filing dates) all Tax Returns that it has
been required to file for all periods through and including the Closing
Date. All such Tax Returns were correct and complete in all material
respects. All material Taxes owed by any of the Companies (whether or not
shown on any Tax Return) have been timely paid, except for Taxes being
contested in good faith by appropriate proceedings and for which adequate
reserves have been established in accordance with GAAP. None of the
Companies currently is the beneficiary of any extension of time within
which to file any Tax Return. Each of the Companies has maintained an
adequate provision for, and adequate funds to pay Taxes payable for such
Company as of January 31, 1998, and such provision and funds (as adjusted
for the passage of time through the Closing Date in accordance with the
past custom and practices of each of the Companies in filing their
respective Tax Returns) will be adequate for Taxes payable by such Company
as of the Closing Date. No claim has ever been made by an Authority in a
jurisdiction where any Company does not pay Taxes or file Tax Returns that
it is or may be subject to taxation by that jurisdiction. There are no
Liens on any of the assets of any of the Companies that arose in connection
with any failure (or alleged failure) to pay any Tax.
(b) Except as set forth on Schedule 4.12, none of the Tax Returns that
-------------
include the operations of the Companies has ever been audited or
investigated by any taxing Authority, and, to the Knowledge of the
Companies and the Seller no fact exists which would constitute grounds for
the assessment of any additional material Taxes by any taxing Authority
with respect to the taxable years covered in such Tax Returns. To the
Knowledge of the Companies and the Seller, no issues have been raised in
any examination by any taxing Authority with respect to the businesses and
operations of the Companies which, by application of similar principals,
reasonably could be expected to result in a proposed adjustment to the
Liability for material Taxes for any other period not so examined. To the
Knowledge of the Company and the Seller, neither the Companies nor the
Seller has received, or expects to receive, from any taxing Authority any
written notice of a proposed adjustment, deficiency, underpayment of Taxes
or any other such notice which has not been satisfied by payment or been
withdrawn, and no claims have been asserted relating to such Taxes against
the Companies.
(c) Schedule 4.12 lists all federal, state, local, and foreign income
-------------
Tax Returns filed with respect to each of the Companies for taxable periods
for which the applicable statute of limitations has not expired. The
Seller has delivered to the Buyer correct and complete
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<PAGE>
copies of all federal, state, local and foreign income Tax Returns,
examination reports, and statements of deficiencies assessed against or
agreed to by each of the Companies for taxable periods for which the
applicable statue of limitations has not expired. None of the Companies
has waived any statute of limitations in respect of Taxes or agreed to any
extension of time with respect to a Tax assessment or deficiency.
(d) To the Knowledge of the Companies and the Seller, neither the
Seller nor any of the Companies (i) expects any Authority to assess any
material additional Taxes for any period for which Tax Returns have been
filed or has received from any taxing Authority any written notice of a
proposed adjustment, deficiency, underpayment of Taxes or any other such
notice which has not been satisfied by payment or been withdrawn, and no
claims have been asserted relating to such Taxes against any of the
Companies.
(e) Each of the Companies has withheld and paid all material Taxes
required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent Contractor, creditor, stockholder, or
other third party.
(f) None of the Companies has filed a consent to the application of
Section 341(f) of the Code.
(g) None of the Companies will be required, as a result of (i) a
change in accounting method for a Tax period beginning on or before the
Closing Date, to include any adjustment under Section 481(c) of the Code
(or any corresponding provision of state, local or foreign Tax Law) in
taxable income for any Tax period beginning on or after the Closing Date,
or (ii) any "closing agreement," as described in Section 7121 of the Code
(or any corresponding provision of state, local or foreign Tax Law), to
include any item of income in or exclude any item of deduction from any Tax
period beginning on or after the Closing Date.
(h) None of the Companies has made any payments, is obligated to make
any payments or is a party to any agreement that under certain
circumstances could obligate it to make any "excess parachute payment" as
defined in Section 280G of the Code (without regard to subsection (b)(4)
thereof) any payments that will not be deductible under Section 280G or
Section 162(m) of the Code.
(i) None of the Companies has been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code
during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code.
(j) None of the Companies is a party to any Tax allocation or sharing
agreement. None of the Companies is subject to any joint venture,
partnership or other arrangement or Contract which is treated as a
partnership for federal income Tax purposes.
(k) None of the assets of the Companies constitutes tax-exempt bond
financed property or tax-exempt use property within the meaning of Section
168 of the Code, and
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<PAGE>
none of the assets reflected on the Financial Statements is subject to a
lease, safe harbor lease or other arrangement as a result of which none of
the Companies is treated as the owner for federal income Tax purposes.
(l) Seller is not a "foreign person" as defined in Section 1445(f)(3)
of the Code.
(m) Except as set forth on Schedule 4.12, none of the Companies (A)
-------------
has been a member of an Affiliated Group filing a consolidated federal
income Tax Return or (B) has any Liability for the Taxes of any Person
(other than the Company) under Treas. Reg. (S)1.1502-6 (or any similar
provision of state, local, or foreign Law), as a transferee or successor,
by Contract, or otherwise.
SECTION 4.13. Real Property.
-------------
(a) Schedule 4.13(a) lists and describes briefly all real property
----------------
that each of the Companies owns (the "Owned Property"). Except as set
--------------
forth on Schedule 4.13(a) with respect to each such parcel of Owned
----------------
Property:
(i) the identified owner has good and marketable title to the
parcel of Owned Property, free and clear of all Liens, easements,
covenants, or other restrictions, except for installments of special
assessments of real estate Taxes not yet delinquent and recorded
easements, covenants, and other restrictions which do not impair the
current use, occupancy, or value, or the marketability of title, of
the property subject thereto; other than Liens, easements, covenants,
or other restrictions that would not be material to the Companies
(taken as a whole);
(ii) there are no pending or, to the Knowledge of the Companies
and the Seller, threatened condemnation proceedings, lawsuits, or
administrative actions relating to the property which are reasonably
likely to have a Material Adverse Effect on the current use, occupancy
or value thereof;
(iii) To the Knowledge of the Seller and the Companies, all
facilities have received all approvals of governmental Authorities
(including licenses and Permits) required in connection with the
ownership or operation thereof except where the failure to obtain such
approvals would not be material to the Companies (taken as a whole)
and have been operated and maintained in accordance with applicable
Laws, rules, and regulations in all material respects;
(iv) there are no material leases, subleases, licenses,
concessions, or other Contracts granting to any party or parties the
right of use or occupancy of any portion of the parcel of Owned
Property;
(v) there are no outstanding unrecorded options or rights of
first refusal to purchase any Owned Property, or any portion thereof
or interest therein;
-17-
<PAGE>
(vi) there are no parties (other than the Companies and the
Seller) in possession of any Owned Property; and
(vii) all facilities located on the parcels of Owned Property
are supplied with utilities and other services necessary for the
current operation of such facilities in the Ordinary Course of
Business, including gas, electricity, water, telephone, sanitary
sewer, and storm sewer;
(b) Schedule 4.13(b) lists and describes briefly all real property
----------------
leased or subleased to each of the Companies providing for lease or other
payments thereunder in excess of $150,000 per annum (the "Leased
------
Property"). The Seller has delivered to the Buyer correct and complete
--------
copies of the leases and subleases and other agreements for occupancy,
including all amendments, extensions and other modifications thereto
("Leases") with respect to each Leased Property, as listed in Schedule
------ --------
4.13(b) (as amended to date). Except as set forth on Schedule 4.13(b),
------- ----------------
with respect to each Lease:
(i) the Lease is legal, valid, binding, enforceable against
the Seller or the Companies (as applicable), and in full force and
effect, except as the same may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and by
general principles of equity (regardless of whether enforcement is
sought in a proceeding at law or equity);
(ii) the Lease will be legal, valid, binding, enforceable, and
in full force and effect on identical terms immediately following the
consummation of the transactions contemplated hereby;
(iii) no party to the Lease is in breach or default in any
material respect, and to the Knowledge of the Companies and the
Seller, no event has occurred which, with notice or lapse of time,
would constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(iv) no party to the Lease has repudiated any material
provision thereof;
(v) there are no material disputes, oral agreements, or
forbearance programs in effect as to the Lease;
(vi) none of the Companies has assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered in any material respect any
interest in the leasehold or subleasehold;
(vii) all facilities leased or subleased thereunder have
received all material approvals of governmental Authorities (including
licenses and permits) required in connection with the operation
thereof; and
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<PAGE>
(viii) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for the operation
of said facilities in the Ordinary Course of Business.
SECTION 4.14. Intellectual Property.
---------------------
(a) Each of the Companies owns or has the right to use pursuant to
Contract all Intellectual Property necessary for the operation of the
Business as presently conducted and proposed to be conducted. Each such
item of Intellectual Property owned or used by each of the Companies
immediately prior to the Closing hereunder will be owned or available for
use by such Company on identical terms and conditions immediately
subsequent to the Closing hereunder. Each of the Companies has taken all
necessary action to maintain and protect each item of Intellectual Property
that it owns or uses, except where the failure to take such action would
not be material to the Companies (taken as a whole).
(b) Except as disclosed on Schedule 4.14(b), none of the Companies has
----------------
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of third parties in any
material respect, and the Companies and the Seller have no Knowledge of any
charge, complaint, claim, demand, or notice alleging any such interference,
infringement, misappropriation, or violation (including any claim that any
of the Companies must license or refrain from using any Intellectual
Property rights of any third party), except for such interference,
infringements, misappropriations, conflicts, charges, complaints, claims,
demands and notices that would not be material to the Companies (taken as a
whole). Except as disclosed on Schedule 4.14(b), to the Knowledge of the
----------------
Companies and the Seller, no third party has interfered with, infringed
upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of any of the Companies.
(c) Schedule 4.14(c) identifies each patent or registration which has
----------------
been issued to each of the Companies with respect to any of its
Intellectual Property, identifies each pending patent application or
application for registration which each of the Companies has made with
respect to any of its Intellectual Property, and identifies each Contract
which each of the Companies has granted to any third party with respect to
any of its Intellectual Property (together with any exceptions). The
Seller has delivered to the Buyer correct and complete copies of all such
patents, registrations, applications and Contracts (as amended to date) and
has made available to the Buyer correct and complete copies of all other
written documentation evidencing ownership and prosecution (if applicable)
of each such item. Schedule 4.14(c) also identifies each trade name or
----------------
unregistered trademark used by each of the Companies in connection with the
Business. Schedule 4.14(c) also identifies each material software program
----------------
owned by the Companies, and the Seller has delivered to the Buyer all
source and object code and documentation for or relating to such software
programs. Except as disclosed on Schedule 4.14(c), with respect to each
item of Intellectual Property required to be identified in Schedule
--------
4.14(c):
-------
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<PAGE>
(i) each of the Companies possesses all right, title, and
interest in and to the item, free and clear of any Lien, license, or
other restriction, except for such other Liens, licenses or other
restrictions that would not be material to the Companies (taken as a
whole);
(ii) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(iii) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the Knowledge of
the Companies and the Seller, is threatened which challenges the
legality, validity, enforceability, use, or ownership of the item; and
(iv) none of the Companies has ever agreed to indemnify any
Person for or against any interference, infringement,
misappropriation, or other conflict with respect to the item.
(v) the Seller has not abandoned any of the U.S. registered
trademarks set forth on Schedule 4.14(c).
----------------
(d) Schedule 4.14(d) identifies each material item of Intellectual
----------------
Property that any third party owns and that each of the Companies uses
pursuant to any Contract. The Seller has delivered to the Buyer correct
and complete copies of all such Contracts (as amended to date). Schedule
--------
4.14(d) also identifies each material Contract providing for support or
-------
maintenance of software used by the Companies. Except as set forth on
Schedule 4.14(d), with respect to each item of Intellectual Property
----------------
required to be identified in Schedule 4.14(d):
----------------
(i) the Contract covering the item is legal, valid, binding,
enforceable, and in full force and effect, except as the same may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and by general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or
equity);
(ii) the Contract will be legal, valid, binding, enforceable,
and in full force and effect on identical terms immediately following
the consummation of the transactions contemplated hereby;
(iii) no party to the Contract is in breach or default in any
material respect, and to the Knowledge of the Companies and the
Seller, no event has occurred which with notice or lapse of time would
constitute a breach or default or permit termination, modification, or
acceleration thereunder;
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<PAGE>
(iv) no party to the Contract has repudiated any material
provision of such Contract;
(v) to the Knowledge of the Companies and the Seller, the
underlying item of Intellectual Property is not subject to any
outstanding injunction, judgment, order, decree, ruling, or charge
that would be material to the Companies (taken as a whole);
(vi) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the Knowledge of
the Companies and the Seller, is threatened, which challenges the
legality, validity, or enforceability of the underlying item of
Intellectual Property; and
(vii) none of the Companies has granted any sublicense or
similar right with respect to the Contract.
(e) To the Knowledge of the Companies and the Seller and except as
set forth on Schedule 4.14(b), none of the Companies will interfere with,
----------------
infringe upon, misappropriate, or otherwise come into conflict with, any
Intellectual Property rights of third parties (including but not limited to
the failure of Silencio to obtain the requisite permission or license for
the use of trademarks and service marks from any third party) as a result
of the continued operation of its Business as presently conducted, except
for such interference, infringements, misappropriations or conflicts that
would not be material to the Companies (taken as a whole).
(f) None of the Companies and the Seller have any Knowledge of any
new products, inventions, procedures, or methods of manufacturing or
processing that any competitors or other third parties have developed which
would reasonably be expected to supersede or make obsolete any product or
process of any of the Companies.
(g) The Companies have (i) undertaken a review and assessment of all
areas within their business and operations that could be materially
adversely affected by the "Year 2000 Problem" (that is, the risk that
computer applications used by the Companies may be unable to recognize and
properly perform date-sensitive functions involving dates prior to and any
date after December 31, 1999), (ii) developed a plan and time line for
addressing the Year 2000 Problem on a timely basis, and (iii) to date,
implemented that plan in accordance with that timetable. The Companies
reasonably anticipate that all computer applications that are material to
the Companies' business and operations will on a timely basis be able to
record, store, process, manage, specify or print dates falling on or after
January 1, 2000 substantially in the same manner, and with substantially
the same functionality, accuracy, data integrity and performance as such
computer applications record, store, process, manage, specify and print
dates falling on or before December 31, 1999 (that is, be "Year 2000
Compliant").
SECTION 4.15. Assets of the Companies. Each of the Companies owns or
-----------------------
leases all buildings, machinery, equipment, and other assets necessary for the
conduct of its Business as
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presently conducted and as presently proposed to be conducted. Each such asset
is free from defects (patent and latent), has been maintained in accordance with
normal industry practice, is in good operating condition and repair (subject to
normal wear and tear), and is suitable for the purposes for which it presently
is used and presently is proposed to be used, except where the existence of such
defects, failure to maintain, condition and repair, or suitability would not be
material to the Companies (taken as a whole). The assets of the Companies at
the Closing, when taken together with the Lamba Assets and the Transition
Services Agreement will be sufficient in all material respects to permit the
Buyer to operate the Business as currently conducted and as proposed to be
conducted.
SECTION 4.16. Inventory. The inventory of each of the Companies consists
---------
of raw materials and supplies, manufactured and purchased parts, goods in
process, and finished goods, all of which is merchantable in all material
respects and fit in all material respects for the purpose for which it was
procured or manufactured, subject only to the reserve for inventory writedown
which is reflected on a net basis in inventory on the face of the Latest Balance
Sheet, as adjusted for the passage of time through the Closing Date in the
Ordinary Course of Business.
SECTION 4.17. Contracts. Except for purchase orders and sales contracts
---------
entered into in the Ordinary Course of Business, Schedule 4.17 lists the
-------------
following Contracts and other agreements to which each of the Companies is a
party:
(a) any material Contract (or group of related Contracts) that
requires the consent of any person in connection with the execution of this
Agreement and the transactions contemplated thereby;
(b) any Contract (or group of related Contracts) for the lease of
personal property to or from any Person providing for lease payments in
excess of $150,000 per annum;
(c) any Contract (or group of related Contracts) for the purchase or
sale of raw materials, commodities, supplies, products, or other personal
property, or for the furnishing or receipt of services, the performance of
which will, result in a loss to any of the Companies, or involve
consideration in excess of $150,000;
(d) any capitalized lease, pledge, conditional sale or title
retention agreement involving the payment of more than $150,000 in the
aggregate;
(e) any Contract creating a partnership or joint venture;
(f) any Contract with a sales representative, manufacturer's
representative, distributor, dealer, broker, sales agency, advertising
agency or other Person engaged in sales, distributing or promotional
activities, or any agreement to act as one of the foregoing on behalf of
any Person the performance of which will involve consideration in excess of
$150,000;
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<PAGE>
(g) any Contract (or group of related Contracts) under which it has
created, incurred, assumed, or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation, or under which it has imposed a
Lien on any of its material assets, tangible or intangible;
(h) any Contract pursuant to which any of the Companies has made or
will make loans or advances, or has or will have incurred debts or become a
guarantor or surety or pledged its credit on or otherwise become
responsible with respect to any undertaking of another Person (except for
the negotiation or collection of negotiable instruments in transactions in
the Ordinary Course of Business);
(i) any mortgage, indenture, note, bond or other agreement evidencing
indebtedness incurred or provided by any of the Companies;
(j) any Contract concerning confidentiality or noncompetition or
otherwise prohibiting any of the Companies from freely engaging in any
business;
(k) any Contract with the Seller or any Affiliate thereof (other than
standard purchase and sale agreements between the Companies and their
Affiliates);
(l) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors, officers,
and employees;
(m) any Contract involving a governmental body the performance of
which will involve consideration in excess of $150,000;
(n) any collective bargaining agreement;
(o) any Contract for the employment of any individual on a full-time,
part-time, consulting, or other basis providing annual compensation in
excess of $100,000 or providing severance benefits;
(p) any Contract, whether or not fully performed, relating to any
acquisition or disposition of any of the Companies or any predecessor in
interest or any acquisition or disposition of any subsidiary, division,
line of business, or real property of any of the Companies;
(q) any Contract under which it has advanced or loaned any amount to
any of its directors, officers, and employees;
(r) any Contract under which the consequences of a default or
termination could have a Material Adverse Effect on the Business;
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<PAGE>
(s) any other Contract (or group of related Contracts) the
performance of which involves consideration in excess of $150,000;
(t) any Material Contract between each of the Companies, on the one
hand, and the Seller and any Seller affiliate (other than any of the
Companies) on the other hand;
(u) any commitment to do any of the foregoing described in clauses
(a) through (t).
The Seller has delivered to the Buyer a correct and complete copy of each
written Contract listed in Schedule 4.17 (as amended to date) and a written
-------------
summary setting forth the material terms and conditions of each oral Contract
referred to in Schedule 4.17. With respect to each such Contract: (A) the
-------------
Contract is legal, valid, binding, enforceable, and in full force and effect,
except as the same may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and by general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or equity);
(B) the Contract will continue to be legal, valid, binding, enforceable, and in
full force and effect on identical terms immediately following the consummation
of the transactions contemplated hereby; (C) to the Knowledge of the Companies
and the Seller, no party is in breach or default, and no event has occurred
which with notice or lapse of time would constitute a breach or default, or
permit termination, modification, or acceleration, under the Contract; and (D)
no party has repudiated any material provision of the Contract.
SECTION 4.18. Notes and Accounts Receivable. All material notes and
-----------------------------
Accounts Receivable of each of the Companies are reflected properly on their
respective books and records and are valid receivables subject to no material
setoffs or to the Knowledge of the Companies and the Sellers, counterclaims. In
the event the Companies use the same collection efforts following the Closing as
prior to the Closing, the Seller believes that such notes and Accounts
Receivable will be collected in accordance with their terms at their recorded
amounts, subject only to the reserve for bad debts set forth on the face of the
Latest Balance Sheet. as adjusted for operations and transactions through the
Closing Date in the Ordinary Course of Business.
SECTION 4.19. Powers of Attorney. There are no outstanding powers of
------------------
attorney executed on behalf of any of the Companies that are material to the
Companies (taken as a whole).
SECTION 4.20. Insurance. Schedule 4.20 sets forth the following
--------- -------------
information with respect to each insurance policy (including policies providing
property, casualty, Liability, and workers' compensation coverage and bond and
surety arrangements) to which each of the Companies is a party, a named insured,
or otherwise the beneficiary of coverage:
(a) the name, address, and telephone number of the agent;
(b) the name of the insurer, the name of the policyholder, and the
name of each covered insured; and
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<PAGE>
(c) the policy number and the period of coverage;
The Companies or Seller have provided to Buyer a copy of each of the policies
described on Schedule 4.20. With respect to each such insurance policy: (A)
-------------
the policy is legal, valid, binding, enforceable, and in full force and effect,
except as the same may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or equity);
(B) the policy will continue to be legal, valid, binding, enforceable, and in
full force and effect (subject to the qualifications noted in Clause (A) above)
on identical terms immediately following the consummation of the transactions
contemplated hereby; (C) neither any of the Companies nor to the Knowledge of
the Companies and the Seller, any other party to the policy is in breach or
default (including with respect to the payment of premiums or the giving of
notices), and no event has occurred which, with notice or the lapse of time,
would constitute such a breach or default, or permit termination, modification,
or acceleration, under the policy; and (D) to the Knowledge of the Companies and
the Seller, no event has occurred which, with notice or lapse of time, would
result in retroactive increases in premiums; and (E) no party to the policy has
repudiated any material provision thereof. Each of the Companies is covered by
insurance in scope and amount customary and reasonable for the business in which
it has engaged. Schedule 4.20 describes any self-insurance arrangements
-------------
affecting each of the Companies. Schedule 4.20 sets forth known claims, if any,
-------------
made against each of the Companies that are covered by insurance. Such claims
have been disclosed to the appropriate insurance companies and are being
defended by such appropriate insurance companies. Except as set forth on
Schedule 4.20, no claims have been denied coverage during the last three years.
- -------------
SECTION 4.21. Litigation. Schedule 4.21 sets forth each instance in
---------- -------------
which each of the Companies (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge of any Authority or (ii) is a party
or, to the Knowledge of the Companies and the Seller, is threatened to be made a
party to any action, suit, proceeding, hearing, or investigation of, in, or
before any Authority, including with respect to any material Liability arising
out of any injury to individuals or property as a result of the ownership,
possession, or use of any product manufactured, sold, leased, or delivered by
any of the Companies. Neither the Companies nor the Seller believes that any of
the actions, suits, proceedings, hearings, and investigations set forth in
Schedule 4.21 will result in any Material Liability to the Companies (taken as a
- -------------
whole). None of the Companies or the Seller have any Knowledge of any matter
that would cause them to believe that any such action, suit, proceeding,
hearing, or investigation may be brought or threatened against any of the
Companies.
SECTION 4.22. Product Warranty. Each product manufactured, sold, leased,
----------------
or delivered by each of the Companies has been in conformity in all material
respects with all applicable contractual commitments and all express and implied
warranties, and none of the Companies has any material Liability for replacement
or repair thereof or other damages in connection therewith, subject only to the
reserve for product warranty claims set forth on the face of the Latest Balance
Sheet as adjusted for operations and transactions through the Closing Date in
the Ordinary Course of Business. No product manufactured, sold, leased, or
delivered by any of the Companies is subject to any guaranty, warranty, or other
indemnity beyond the applicable standard terms and conditions
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<PAGE>
of sale or lease other than which would not be material to the Companies, taken
as a whole. Schedule 4.22 includes copies of the standard terms and conditions
-------------
of sale or lease for each of the Companies (containing applicable guaranty,
warranty, and indemnity provisions).
SECTION 4.23. Employees. Schedule 4.23 contains a true, complete and
--------- -------------
accurate list of the names, titles, annual compensation and all bonuses and
similar payments made with respect to each such individual for the current and
preceding fiscal years for all directors, officers and employees of each of the
Companies whose annual compensation, including any bonuses, equals or exceeds
$100,000 (collectively, the "Employees"). To the Knowledge of the Companies and
---------
the Seller, no executive, key employee, or group of employees has any plans to
terminate employment with any of the Companies. None of the Companies is a
party to or bound by any collective bargaining agreement, nor has it experienced
any strikes, grievances, claims of unfair labor practices, or other collective
bargaining disputes. To the Knowledge of the Companies and the Seller, none of
the Companies has committed any unfair labor practice. To the Knowledge of the
Companies and the Seller, there is no organizational effort presently being made
or threatened by or on behalf of any labor union with respect to employees of
any of the Companies. None of the Companies has engaged in any plant closing or
employee layoff activities that would violate or require notification pursuant
to, the Worker Adjustment Retraining and Notification Act of 1988, as amended,
or any similar state, local or foreign plant closing or mass layoff statute,
rule or regulation.
SECTION 4.24. Employee Benefits.
-----------------
(a) General. Except as set forth on Schedule 4.24(a), none of the
------- ----------------
Companies is a party to, participates in or has any Liability or contingent
Liability with respect to:
(i) any Employee Welfare Benefit Plan or Employee Pension
Benefit Plan, other than a Multiemployer Plan;
(ii) any retirement or deferred compensation plan, incentive
compensation plan, stock plan, unemployment compensation plan,
vacation pay, severance pay, bonus or benefit arrangement, insurance
or hospitalization program or any other fringe benefit arrangements
for any current or former employee, director, consultant or agent,
whether pursuant to Contract, arrangement, custom or informal
understanding, which does not constitute an employee benefit plan (as
defined in section 3(3) of ERISA); or
(iii) any employment agreement.
(b) Plan Documents and Reports. Except as set forth on Schedule
-------------------------- --------
4.24(b), a true and correct copy of each of the plans, arrangements, and
-------
agreements listed on Schedule 4.24(a) (referred to hereinafter as "Employee
---------------- --------
Benefit Plans"), and all Contracts relating thereto, or to the funding
-------------
thereof, including, without limitation, all trust agreements, insurance
Contracts, administration Contracts, investment management agreements,
subscription and
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participation agreements, and recordkeeping agreements, each as in effect
on the date hereof, has been made available to the Buyer. In the case of
any Employee Benefit Plan which is not in written form, the Buyer has been
supplied with an accurate description of such Employee Benefit Plan as in
effect on the date hereof. A true and correct copy of the most recent
annual report, actuarial report, accountant's opinion of the plan's
financial statements, summary plan description and Internal Revenue Service
determination letter with respect to each Employee Benefit Plan, to the
extent applicable, and a current schedule of assets (and the fair market
value thereof assuming liquidation of any asset which is not readily
tradable) held with respect to any funded Employee Benefit Plan has been
supplied to the Purchasers, and, to the Knowledge of the Companies and the
Seller, there have been no material changes in the financial condition in
the respective plans from that stated in the annual reports and actuarial
reports supplied.
(c) Compliance with Employee Benefit Laws; Liabilities. As to all
--------------------------------------------------
Employee Benefit Plans, except as set forth on Schedule 4.24(c):
----------------
(i) All Employee Benefit Plans comply and have been
administered in form and in operation in all material respects with
all applicable requirements of Law, and, to the Knowledge of the
Companies and the Seller, no event has occurred which will or could
cause any such Employee Benefit Plan to fail to comply in all material
respects with such requirements and no notice has been issued by any
governmental Authority questioning or challenging such compliance.
(ii) To the Knowledge of the Companies and the Seller, all
Employee Benefit Plans which are employee pension benefit plans comply
in all material respects in form and in operation with all applicable
requirements of sections 401(a) and 501(a) of the Code; there have
been no amendments to such plans which are not the subject of a
favorable determination letter issued with respect thereto by the
Internal Revenue Service; and no event has occurred which will or
could give rise to disqualification of any such plan under such
sections.
(iii) None of the assets of any Employee Benefit Plan is
invested in employer securities or employer real property.
(iv) To the Knowledge of the Companies and the Seller, there
have been no "prohibited transactions" (as described in section 406 of
ERISA or section 4975 of the Code) with respect to any Employee
Benefit Plan and none of the Companies has engaged in any prohibited
transaction.
(v) To the Knowledge of the Companies and the Seller, there
have been no acts or omissions which have given rise to or may give
rise to any material fines, penalties, taxes or related charges under
section 502 of ERISA or Chapters 43, 47, 68 or 100 of the Code for
which any of the Companies may be liable.
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<PAGE>
(vi) None of the payments contemplated by the Employee Benefit
Plans would, in the aggregate, constitute excess parachute payments
(as defined in section 280G of the Code (without regard to subsection
(b)(4) thereof)).
(vii) There are no actions, suits or claims (other than routine
claims for benefits) pending or, to the Knowledge of the Companies and
the Seller, threatened involving any Employee Benefit Plan or the
assets thereof and no facts exist which could give rise to any
material actions, suits or claims (other than routine claims for
benefits).
(viii) There are no Employee Benefit Plans that are subject to
the provisions of Title IV of ERISA.
(ix) Each Employee Benefit Plan which constitutes a "group
health plan" (as defined in section 607(1) of ERISA or section
4980B(g)(2) of the Code), including any plans of current and former
affiliates which must be taken into account under sections 4980B and
414(t) of the Code or section 601 of ERISA, has been operated in
compliance in all respects with applicable Law, (except to the extent
that such noncompliance would not be material to the Companies (taken
as a whole)), including coverage requirements of section 4980B of the
Code and section 601 of ERISA to the extent such requirements are
applicable.
(x) None of the Companies has any Liability or contingent
Liability for providing, under any Employee Benefit Plan or otherwise,
any post-retirement medical or life insurance benefits, other than
statutory Liability for providing group health plan continuation
coverage under Part 6 of Title I of ERISA and section 4980B of the
Code.
(xi) Actuarially adequate accruals for all obligations under
the Employee Benefit Plans are reflected in the financial statements
of each of the Companies and such obligations include a pro rata
amount of the contributions which would otherwise have been made in
accordance with past practices and applicable Law for the plan years
which include the Closing Date.
(d) Multiemployer Plans. None of the Companies contributes to, has
-------------------
contributed to, or has any Liability or contingent Liability with respect
to any Multiemployer Plan.
SECTION 4.25. Environmental Matters.
---------------------
Except as set forth in Schedule 4.25:
--------------
(a) To the Knowledge of the Companies and the Seller, each of the
Companies and their Affiliates (which shall be deemed to include, solely
for the purposes of this Section 4.25, only those Affiliates of the
------------
Companies as to which either of the Companies could
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<PAGE>
reasonably be expected to share any material liability under applicable
Environmental Laws):
(i) has complied and is in compliance with all Environmental
Laws (and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand or notice has been filed or commenced against
any of them alleging any such failure to comply) except where the
failure to comply would not be material to the Companies, taken as a
whole;
(ii) has obtained and complied with, and is in compliance with,
all Permits, licenses and other authorizations that are required
pursuant to Environmental Laws except where the failure to comply or
obtain authorizations, as the case may be, would not be material to
the Companies, taken as a whole; and
(iii) has complied in all respects with all other limitations,
restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables which are contained in the
Environmental Laws; except, where the failure to comply or obtain
authorizations, as the case may be, would not be material to the
Companies (taken as a whole).
(b) None of the Companies or their Affiliates has received any
written or oral notice, report or other information from an Authority or
third party regarding any unresolved actual or alleged material violation
of Environmental Laws, or any Liabilities or potential Liabilities,
including any investigatory, remedial or corrective obligations, relating
to any of them or their respective facilities under Environmental Laws.
(c) To the Knowledge of the Companies and the Seller, none of the
Companies has any Liability, and each of the Companies and their respective
Affiliates have not handled or disposed of any substance, arranged for the
disposal of any substance, exposed any employee or other individual to any
substance or condition, or owned or operated any property or facility in
any manner that could give rise to any material Liability for damage to any
site, location or body of water (surface or subsurface), for any illness of
or personal injury to any employee or other individual, or for any reason
under any Environmental Law.
(d) Except as set forth on Schedule 4.25, to the Knowledge of the
-------------
Companies and the Seller, all properties and equipment used in the Business
of each of the Companies and their respective Affiliates have been free of
asbestos, PCB's, methylene chloride, trichloroethylene, 1,2-
transdichloroethylene, dioxins, dibenzofurans and other Hazardous
Substances except to the extent that the presence of such substances would
not be material to the Companies, taken as a whole.
(e) To the Knowledge of the Companies and the Seller, none of the
following exists at any property or facility owned or operated by any of
the Companies: (1) underground storage tanks, (2) asbestos-containing
material in any form or condition, (3) materials or
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<PAGE>
equipment containing polychlorinated biphenyls, or (4) landfills, surface
impoundments or Hazardous Substance disposal areas.
(f) To the knowledge of the Companies and the Seller, none of the
Companies or their respective Affiliates has treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled, or
released any substance, including without limitation any Hazardous
Substance, or owned or operated any property or facility (and no such
property or facility is contaminated by any such substance) in a manner
that has given or would reasonably be expected to give rise to material
Liabilities, including any material Liability for response costs,
corrective action costs, personal injury, property damage, natural
resources damages or attorney fees, or any investigative, corrective or
remedial obligations, pursuant to Environmental Laws.
(g) To the Knowledge of the Companies and the Seller, neither this
Agreement nor the consummation of the transaction that is the subject of
this Agreement will result in any obligations for site investigation or
cleanup, or notification to or consent of government agencies or third
parties, pursuant to any of the so-called "transaction-triggered" or
"responsible property transfer" Environmental Laws.
(h) To the Knowledge of the Companies and the Seller, none of the
Companies or any of their respective Affiliates has, either expressly or by
operation of Law, assumed or undertaken any Liability, including without
limitation any obligation for corrective or remedial action, of any other
Person relating to Environmental Laws.
(i) To the Knowledge of the Companies and the Seller, no facts,
events or conditions relating to the past or present facilities, properties
or operations of any of the Companies or Affiliates will prevent, hinder or
limit continued compliance with Environmental Laws, give rise to any
investigatory, remedial or corrective obligations pursuant to Environmental
Laws, or give rise to any other material Liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise) pursuant to Environmental
Laws, including without limitation any relating to onsite or offsite
releases or threatened releases of Hazardous Substances or wastes, personal
injury, property damage or natural resources damage.
SECTION 4.26. Permits. Schedule 4.26 is a true and accurate list of all
------- -------------
material licenses, certificates, permits, franchises, rights, code approvals and
private product approvals (collectively, "Permits"), which are necessary for the
-------
lawful operation of the Business of each of the Companies as presently
conducted.
SECTION 4.27. No Conflict of Interest. Neither the Seller nor any
-----------------------
Affiliate thereof has or claims to have any direct or indirect interest in any
tangible or intangible property used in the Business of any of the Companies
except as a holder of Shares. Neither the Seller nor any Affiliate thereof has
any direct or indirect interest in any other Person which conducts a business
similar to, has any Contract or arrangement with, or does business or is
involved in any way with, any of the
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<PAGE>
Companies except for the ownership of less than 5% of the outstanding stock of
any publicly held corporation.
SECTION 4.28. Bank Accounts. Schedule 4.28 sets forth the names and
------------- -------------
locations of each bank or other financial institution at which each of the
Companies has accounts (giving the account numbers) or safe deposit box and the
names of all Persons authorized to draw thereon or have access thereto, and the
names of all Persons, if any, now holding powers of attorney or comparable
delegation of authority from each of the Companies and a summary statement
thereof.
SECTION 4.29. Customers and Suppliers.
-----------------------
(a) Schedule 4.29 sets forth:
-------------
(i) a list of the 10 largest customers of each of the Companies,
in terms of revenue during each of the 1996 and 1997 calendar years
(collectively, the "Major Customers"); and
---------------
(ii) a list of the 10 largest suppliers of each of the Companies
in terms of purchases during the 1996 and 1997 calendar years
(collectively, the "Major Suppliers").
---------------
(b) Since the date of the Latest Balance Sheet, there has not been
any material adverse change in the business relationship, and there has
been no material dispute, between any of the Companies and any Major
Customer or Major Supplier, and neither the Companies nor the Seller has
any Knowledge that any Major Customer or Major Supplier intends to reduce
its purchases from, or sales to, any of the Companies.
SECTION 4.30. Claims Against Officers and Directors. To the Knowledge of
-------------------------------------
the Companies and the Seller, there are no pending or threatened claims against
any director, officer, employee or agent of any of the Companies or any other
Person which could give rise to any material claim for indemnification against
any of the Companies.
SECTION 4.31. Improper and Other Payments.
---------------------------
To the Knowledge of the Companies and the Seller, none of the Companies,
any director, officer, employee, agent or representative of the any of the
Companies, the Seller, their respective Affiliates or any Person acting on
behalf of any of them, has:
(a) made, paid or received any bribes, kickbacks or other similar
payments to or from any Person, whether lawful or unlawful;
(b) made unlawful contributions, directly or indirectly, to a
domestic or foreign political party or candidate; or
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<PAGE>
(c) made improper payments (as defined in the Foreign Corrupt
Practices Act of 1977, as amended).
SECTION 4.32. Accuracy of Statements. Neither this Agreement nor any
----------------------
schedule, exhibit or certificate furnished or to be furnished by or on behalf of
each of the Companies or the Seller to Buyer or any representative or Affiliate
of Buyer in connection with this Agreement or any of the transactions
contemplated hereby contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary to make the
statements contained herein or therein, in light of the circumstances in which
they are made, not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller that the statements
contained in this Article V are correct and complete as of the date of this
---------
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article V).
SECTION 5.1. Organization of the Buyer. The Buyer is a corporation duly
-------------------------
organized, validly existing, and in good standing under the laws of the State of
Delaware.
SECTION 5.2. Authorization of Transaction. The Buyer has full power and
----------------------------
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of the Buyer, enforceable
in accordance with its terms and conditions, except as the same may be limited
by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally
and to general principles of equity (regardless of whether enforcement is sought
in a proceeding at law or equity). Except for filings under the Hart-Scott-
Rodino Act, the Buyer need not give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or governmental
agency in order to consummate the transactions contemplated by this Agreement.
SECTION 5.3. Noncontravention. Neither the execution and the delivery of
----------------
this Agreement, nor the consummation of the transactions contemplated hereby,
will (A) violate any constitution, Law, injunction, ruling, charge, or other
restriction of any Authority, to which the Buyer is subject, (B) violate any
provision of the charter or bylaws of Buyer or (C) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any
notice under any Contract, lease, license, instrument, or other arrangement to
which the Buyer is a party or by which it is bound or to which any of its assets
is subject, except for any violations or conflicts that, individually or in the
aggregate, would not be material to the Seller, impair the ability of the Buyer
to perform its obligations under this Agreement or prevent the consummation of
any of the transactions contemplated hereby.
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<PAGE>
SECTION 5.4. Brokers' Fees. The Buyer has no Liability or obligation to
-------------
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which Seller could become liable
or obligated.
SECTION 5.5. Investment Purpose. The Buyer is acquiring the Shares for
------------------
its own account and not with a view to or in connection with a sale or
distribution thereof in violation of any securities laws, and it has no present
intention of selling or distributing any of the Shares in violation of any
securities laws.
SECTION 5.6. Litigation. There are no actions, suits, investigations or
----------
proceedings (including any proceedings in arbitration) pending, or, to the
Knowledge of the Buyer, threatened, against the Buyer or any of its assets, at
law or in equity, in any court or before or by any Authority that could
reasonably be expected to render the Agreement invalid or not enforceable in any
material respect or the ability of the Buyer to perform its obligations under
this Agreement.
ARTICLE VI
COVENANTS
SECTION 6.1. General. Each of the parties will use his or its
-------
commercially reasonable efforts to take all action and to do all things
necessary in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver, of the
closing conditions set forth in Articles VII and VIII below).
------------ ----
SECTION 6.2. Operation of Business. Except as contemplated by this
---------------------
Agreement or to the extent that Buyer shall otherwise consent in writing, from
the date of this Agreement until the Closing Date, each of the Companies shall
be operated in the Ordinary Course of Business and shall use commercially
reasonable efforts to preserve intact the present business organization and
personnel of each Company and preserve the business relationships of each
Company with other Persons material to the operation of each Company. The Seller
and the Companies shall use commercially reasonable efforts not to permit any
action or omission which would cause any of the representations or warranties of
each Company contained herein to become inaccurate or any of the covenants of
each Company to be breached. Without limiting the generality of the foregoing,
except as set forth in Schedule 6.2, prior to the Closing, none of the Companies
------------
will, without the prior written consent of the Buyer:
(a) Except in the Ordinary Course of Business, (i) incur any
obligation or enter into any Contract which requires a payment by any party
in excess of, or a series of payments which in the aggregate exceed,
$150,000, or (ii) incur any obligation to enter into any material Contract
which has a term of, or requires the performance of any obligations by any
of the Companies over a period in excess of six months;
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<PAGE>
(b) sell, transfer, convey, assign or otherwise dispose of any of its
material assets or properties other than in the Ordinary Course of
Business;
(c) waive, release or cancel any material claims against third
parties or material debts owing to it, or any material rights other than in
the Ordinary Course of Business;
(d) make any material changes in its accounting systems, policies,
principles or practices;
(e) other than in the Ordinary Course of Business, enter into,
authorize, or permit any transaction with the Seller or any Affiliate
thereof, or enter into any Contract relating to compensation or benefits
with any executive officer of either Company, or modify any compensation
amounts or levels of any executive officer of either Company or employee
other than in the Ordinary Course of Business;
(f) except as required for the transactions contemplated in this
Agreement, change or amend its articles of incorporation or by-laws;
(g) except as required for the transactions contemplated in this
Agreement, authorize for issuance, issue, sell, deliver or agree or commit
to issue, sell or deliver (whether through the issuance or granting of
options, warrants, convertible or exchangeable securities, commitments,
subscriptions, rights to purchase or otherwise) any shares of its capital
stock or any other securities of such Company, or amend any of the terms of
any such capital stock or other securities;
(h) except as required for the transactions contemplated in this
Agreement, split, combine, or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution in property
other than cash in respect of its capital stock, or redeem or otherwise
acquire any capital stock or other securities of such Company;
(i) make any borrowings, incur any debt (other than trade payables
and accrued expenses in the Ordinary Course of Business), or assume,
guarantee, endorse (except for the negotiation or collection of negotiable
instruments in the Ordinary Course of Business) or otherwise become liable
(whether directly, contingently or otherwise) for the obligations of any
other Person, or make any payment or repayment in respect of any
indebtedness (other than trade payables and accrued expenses in the
Ordinary Course of Business);
(j) Other than trade receivables in the Ordinary Course of Business,
make any loans, advances or capital contributions to, or investments in,
any other Person;
(k) enter into, adopt, amend or terminate any bonus, profit sharing,
compensation, termination, stock option, stock appreciation right,
restricted stock, performance unit, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreements,
trusts, plans, funds or other arrangements for the benefit or welfare of
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<PAGE>
any director or executive officer, or, except in the Ordinary Course of
Business, increase in any manner the compensation or fringe benefits of
any director, or executive officer or pay any benefit not required by any
existing plan and arrangement or, except in the Ordinary Course of
Business, enter into any Contract, commitment or arrangement to do any of
the foregoing;
(l) acquire, lease, encumber or otherwise impose a material Lien on
any assets, whether tangible or intangible, other than in the Ordinary
Course of Business;
(m) other than as contemplated in the Companies' capital expenditure
budget, authorize or make any capital expenditures which individually or in
the aggregate are in excess of $150,000;
(n) make any Tax election or settle or compromise any federal, state,
local or foreign income Tax Liability, or waive or extend the statute of
limitations in respect of any such Taxes;
(o) except for the Liabilities set forth on Schedule 9.2(c), pay any
---------------
amount, perform any obligation or agree to pay any amount or perform any
obligation, in settlement or compromise of any suits or claims of Liability
against any of the Companies or any of their respective directors,
officers, employees or agents other than in the Ordinary Course of
Business;
(p) except in the Ordinary Course of Business terminate, modify,
amend or otherwise alter or change any of the terms or provisions of any
material agreement, or pay any amount not required by Law or by any
material Contract; or
(r) other than overnight deposits or money market instruments and
investments existing on the date hereof, make any investments with cash or
the proceeds of existing investments.
SECTION 6.3. Full Access. The Seller will permit and cause each of the
-----------
Companies to permit representatives of the Buyer to have full access to all
premises, properties, personnel, books, records (including Tax records),
Contracts, and documents of or pertaining to each of the Companies and shall
make the officers and employees of each of the Companies available to the Buyer
and its representatives as the Buyer and their representatives shall from time
to time reasonably request, in each case to the extent that such access and
disclosure would not obligate the Companies to take any actions that would
disrupt the normal course of its business or violate the terms of any agreement
to which any Company is bound or any applicable Law.
SECTION 6.4. Exclusivity. The Seller will not (and the Seller will not
-----------
cause or permit any of the Companies or its or their respective representatives,
advisors or Affiliates to) (i) solicit, initiate, or encourage the submission of
any proposal or offer from any Person (other than the Buyer) relating to the
acquisition of any capital stock or other voting securities, or any substantial
portion
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<PAGE>
of the assets, of any of the Companies (including any acquisition structured as
a merger, consolidation, or share exchange) or (ii) participate in any
discussions or negotiations regarding, furnish any information with respect to,
assist or participate in, or facilitate in any other manner any effort or
attempt by any Person (other than the Buyer) to do or seek any of the foregoing.
The Seller will not vote its Shares in favor of any such acquisition, whether
structured as a merger, consolidation, share exchange or otherwise. The Seller
will notify the Buyer immediately if any Person makes any firm proposal, offer,
inquiry, or contact with respect to any of the foregoing.
SECTION 6.5. Efforts.
-------
(a) Subject to the terms and conditions hereof, each party hereto
shall use commercially reasonable efforts to consummate the transactions
contemplated hereby. An undertaking of a Person under this Agreement to
use such Person's commercially reasonable efforts shall not require such
Person to incur unreasonable expenses or obligations in order to satisfy
such undertaking.
(b) The Seller, each of the Companies and the Buyer will, as promptly
as practicable (i) make the required filings with, and use their respective
commercially reasonable efforts to obtain all required authorizations,
approvals, consents and other actions of, governmental Authorities,
including, but not limited to, filing (and the Seller will cause each of
the Companies to file) all required forms, agreements and related documents
required by the SEC and making (and the Seller will cause each of the
Companies to make) any further filings pursuant thereto that may be
necessary in connection therewith; and (ii) use their respective
commercially reasonable efforts to obtain all other required consents of
other Persons with respect to the transactions contemplated hereby.
SECTION 6.6. Maintenance of Insurance. Each of the Companies will keep
------------------------
in full force and effect its existing insurance through the Closing Date, and
shall not allow any material breach, default or cancellation (other than
expiration and replacement of policies in the Ordinary Course of Business) of
such insurance policies or agreements to occur or exist.
SECTION 6.7. Notice and Supplemental Information. The Seller, each of
-----------------------------------
the Companies and the Buyer shall each give prompt notice to the other parties
of a breach of any of its own representations and warranties in Articles III, IV
------------ --
and V, respectively or the failure of such party to comply with or satisfy in
-
any respect any covenant, condition or agreement to be complied with or
satisfied by it hereunder when such noncompliance or unsatisfactory performance
would, or would reasonably be expected to, be material to any of the other
parties to this Agreement. In addition, the Seller and each of the Companies
will, from time to time, as necessary, prior to three business days preceding
the Closing, by notice in accordance with the terms of this Agreement,
supplement or amend the Schedules, including one or more supplements or
amendments to correct any matter which would constitute a breach of any
representation, warranty, agreement or covenant contained herein. No
information provided to a party pursuant to this Section shall be deemed to cure
any breach of any representation or covenant made in this Agreement unless such
information has been
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accepted in writing by such party. No such supplement or amendment to the
Schedules shall be deemed to cure any breach for purposes of Section 7.1 or
Section 8.1.
SECTION 6.8. Post-Closing Access and Cooperation. The Buyer and the
-----------------------------------
Companies, after the Closing Date, will afford the Seller and its
representatives reasonable access during normal business hours to the offices,
facilities, books, records, officers and employees of the Companies to the
extent reasonably requested by such Persons to defend any litigation, to prepare
Tax returns, to conduct negotiations with Tax Authorities, to fulfill an
obligation to any Authority imposed by Law and to implement the provisions of,
or to investigate or defend any claims between the parties arising under, this
Agreement or otherwise and to the extent such access does not disrupt in any
material respect the operation of the Business of the Companies. Without
limiting the generality of the foregoing, the Buyer will, and will cause each of
the Companies to, cooperate with the Seller in the defense of any litigation
(including, without limitation, making personnel, including, without limitation,
Lincoln Kennedy, available for purposes of trial preparation and testimony,
maintaining the Airgard and its related press and other product samples in
working order and keeping all records, files and letters relating to such
products) and providing information requested by any such Person for the
preparation of any such Person's Tax Returns. Each of the parties hereto will
preserve and retain all schedules, work papers and other documents relating to
any Tax Returns of the Companies or to any claims, audits or other proceedings
affecting the Companies until the expiration of the statute of limitations
(including extensions) applicable to the taxable period to which such documents
relate or until the final determination of any controversy with respect to such
taxable period, and until the final determination of any payments that may be
required with respect to such taxable period under this Agreement.
SECTION 6.9. Consistent Tax Reporting. The Seller, each of the Companies
------------------------
and the Buyer shall treat and report the transactions contemplated by this
Agreement in all respects consistently for purposes of any Federal, state, local
or foreign Tax. The parties hereto shall not take any actions or positions
inconsistent with the obligations set forth herein.
SECTION 6.10. Section 338(h)(10) Election.
---------------------------
(a) The Seller acknowledges that the purchase of the Shares
constitutes "qualified stock purchases" for purposes of Section 338(d)(3)
of the Code. Seller and Buyer agree to join in making elections under
Section 338(h)(10) of the Code with respect to the purchase of the Shares.
Seller shall deliver to Buyer at, and as a condition to, Closing (1)
Internal Revenue Service Forms 8023 and any applicable similar forms
required by state or local law fully completed with respect to the purchase
of the Shares and executed by a duly authorized officer of Seller, and (2)
all additional data and materials required to be attached to such Forms
8023 and any applicable similar forms required by state or local law
pursuant to Temp. Treas. Reg. (S)1.338-1T or otherwise. Seller shall have
attached a copy of such Forms 8023 to the consolidated Federal income Tax
Return for its taxable period which includes the Closing Date and otherwise
shall cooperate fully with Buyer in making the elections under Section
338(h)(10) of the Code.
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(b) The parties hereto acknowledge that for Federal income Tax
purposes (and for state income Tax purposes for those states that use a
taxpayer's Federal income Tax Liability or Federal taxable income as a base
for computing such taxpayer's state income Tax Liability, or whose income
Tax provisions are otherwise similar to the Federal income Tax in this
respect), the purchase of the Shares will be treated in all respects as a
sale of assets by the Companies to Buyer followed by a complete liquidation
of the Companies into Seller, and the parties agree to report the
transaction in a matter consistent with this treatment. The parties also
agree that neither Buyer nor the Companies shall be liable for any Taxes
resulting from the purchase of the Shares.
SECTION 6.11. Termination of Shareholder Agreements. Prior to or at the
-------------------------------------
Closing each of the Companies shall cause the termination, and render void and
of no effect, (i) any existing shareholder agreements between or among holders
of Shares and any of the Companies affecting the ownership or disposition of the
capital stock of any of the Companies and (ii) any options or warrants to
purchase or rights to subscribe for, any capital stock of any of the Companies
to which any Company is a party and which has not been previously exercised,
canceled or redeemed.
SECTION 6.12. Resignation of Officers and Directors. The Seller shall
-------------------------------------
cause each officer and member of the Board of Directors of, and each trustee or
fiduciary of any plan or arrangement involving employee benefits of, each of the
Companies, if so requested by Buyer, to tender his or her resignation from such
position effective as of the Closing.
SECTION 6.13. Interim Financial Statements. Each of the Companies agrees
----------------------------
to provide to the Buyer as soon as practicable after the end of each calendar
month financial statements of each of the Companies, consisting of a balance
sheet as of the end of such month and an income statement for that month and for
the portion of the year then ended (the "Subsequent Monthly Financial
----------------------------
Statements").
- ----------
SECTION 6.14. Transition. The Seller will not take any action that is
----------
designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier, or other business associate of any of the Companies from
maintaining the same business relationships with such Company after the Closing
as it maintained prior to the Closing. The Seller will refer all customer
inquiries relating to the Business of each of the Companies to the Buyer from
and after the Closing.
SECTION 6.15. Confidentiality. The Buyer and the Buyer's representatives
---------------
will not use any of the Confidential Information that they receive from the
Seller or the Companies except in connection with this Agreement, and, if this
Agreement is terminated for any reason whatsoever, the Buyer and the Buyer's
representatives will return within 15 days to the Companies all tangible
embodiments (and all summaries and copies, including electronically stored
information) of the Confidential Information that they receive from the Seller
or the Companies which are in its or its representatives' possession. Buyer
shall indemnify and hold harmless Seller, the Companies and their employees from
any damages, loss or expense incurred as a result of other use of Confidential
Information by Buyer, its Affiliates, agents or representatives contrary to the
terms of this Agreement. In the event that any party is requested or required
(by oral question or request for
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information or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any Confidential
Information, such party will notify the non-disclosing party promptly of the
request or requirement so that the non-disclosing party may seek an appropriate
protective order or waive compliance with the provisions of this Section 6.15.
------------
If, in the absence of a protective order or the receipt of a waiver hereunder, a
party is, on the advice of counsel, compelled to disclose any Confidential
Information to any tribunal or else stand liable for contempt, such party may
disclose the Confidential Information to the tribunal; provided, however, that
-------- -------
such party shall use commercially reasonable efforts to obtain, at the request
and expense of the non-disclosing party, an order or other assurance that
confidential treatment will be accorded to such portion of the Confidential
Information required to be disclosed as a party shall designate.
SECTION 6.16. Post-Closing Covenants. The Seller, each of the Companies
----------------------
and the Buyer agree as follows with respect to the period following the Closing:
(a) In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, each of
the parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other party
hereto reasonably may request, all at the sole cost and expense of the
requesting party (unless the requesting party is entitled to
indemnification therefor under Article IX). From and after the Closing, the
----------
Buyer will be entitled to access all documents, books, records, agreements,
and financial data of any sort relating to any of the Companies, as the
Buyer and its representatives shall from time to time reasonably request,
in each case to the extent that such access and disclosure would not
obligate the Seller or its Subsidiaries to take any actions that would
disrupt the normal course of its business or violate the terms of any
agreement to which the Seller or its Subsidiaries is bound or any
applicable Law.
(b) In the event and for so long as any party hereto actively is
contesting or defending against any charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand in connection with any
fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or
prior to the Closing Date involving any of the Companies (other than any
such charge, complaint, action, suit, proceeding, hearing, investigation,
claim or demand between Buyer, on the one hand, and Seller and the
Companies, on the other, relating to the transactions contemplated hereby),
each of the other parties hereto will cooperate with it and its counsel in
the contest or defense, make available their personnel, and provide such
testimony and access to their books and records as shall be necessary in
connection with the contest or defense, all at the sole cost and expense of
the contesting or defending party (unless the contesting or defending party
is entitled to indemnification therefor under Article IX).
----------
SECTION 6.17. Transfer Taxes. The Seller shall be responsible for the
--------------
timely payment of, and shall indemnify and hold harmless the Buyer against, all
sales (including, without limitation, bulk sales), use, value added,
documentary, stamp, gross receipts, registration, transfer, conveyance, excise,
recording, license and other similar Taxes and fees ("Transfer Taxes"), arising
out of or in connection with or attributable to the transactions effected
pursuant to this Agreement and any
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collateral agreements. The Seller shall prepare and timely file (taking into
account all valid extensions of time) all Tax Returns required to filed in
respect of Transfer Taxes (including, without limitation, all notices required
to be given with respect to bulk sales taxes), provided that the Buyer shall be
permitted to prepare any such Tax Returns that are the primary responsibility of
the Buyer under applicable law. The Buyer's preparation of any such Tax Returns
shall be subject to Seller's approval, which approval shall not be withheld
unreasonably.
SECTION 6.18. Business Name. After the Closing, Seller will not,
-------------
directly or indirectly, use or do business, or allow any Affiliate to use or do
business, or assist any third party in using or doing business, under the names
and trade marks set forth on Schedule 6.18 (or any other name confusingly
-------------
similar to such names and marks), except for the use of such names and
trademarks used in the Ordinary Course of Business of selling and distributing
the Companies' products.
SECTION 6.19. Noncompetition.
--------------
(a) The Seller acknowledges that it has a special knowledge of the
Business and the proprietary and confidential information included in the
Business, and that the Buyer is making a considerable investment in the
Business from which the Seller has benefitted. In consideration of this
Agreement and such investment and benefit, and as an inducement to the
Buyer to enter into this Agreement and consummate the transactions
contemplated herein, the Seller, agrees that, for a period of five years
after the Closing Date, Seller will not, directly or indirectly, own,
manage, operate, control or participate in the ownership, management,
operation or control of, or be connected as a partner or otherwise with, or
have any financial interest in, or aid or assist anyone else in the conduct
of, any business that directly or indirectly designs and manufactures
safety products in any way similar to those of the Companies as of the
Closing Date, or for use in a similar manner or application as those of the
Buyer and its Affiliates as of the Closing Date ("Competitive Business");
--------------------
provided, however, that the Seller may own less than 5% of any outstanding
-------- -------
class of securities registered pursuant to the Securities Exchange Act of
1934, as amended, of an issuer that is a Competitive Business; provided,
--------
further, that (i) Seller and its Affiliates may continue to sell and
-------
distribute (but not manufacture or assemble) safety related products
purchased from the Companies or from any other third party provided that no
more than 15% of such sales are made to parties other than end users, and
(ii) the Seller and its Affiliates may continue to manufacture, assemble
and sell first aid, identification and other related safety products that
do not compete with the products that the Companies currently design and
manufacture.
(b) For a period of five years following the Closing Date, the
Seller will not, without the express prior written approval of the of the
Buyer, (A) directly or indirectly recruit, solicit or otherwise induce or
influence any sales agent, joint venturer, lessor, supplier, agent,
representative or any other person that has a business relationship with
either of the Companies as of the Closing Date to discontinue, reduce or
adversely modify such employment, agency or business relationship with the
Buyer or such Company as it relates to the Business as conducted by the
Company as of the Closing Date, or (B) employ or seek
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<PAGE>
to employ or cause any Competitive Business to employ or seek to employ any
person or agent who is employed or retained by the Buyer or either of the
Companies. Notwithstanding the foregoing, nothing herein shall prevent
Seller from providing a letter of recommendation to an employee with
respect to a future employment opportunity.
(c) For a period of five years following the Closing Date, the Buyer
will not, without the express prior written approval of the Seller, employ
or seek to employ any person or agent who is employed or retained by the
Seller or its Subsidiaries. Notwithstanding the foregoing, nothing herein
shall prevent Buyer from providing a letter of recommendation to an
employee with respect to a future employment opportunity.
(d) If, at the time of enforcement of any provision of this Section
-------
6.19, a court shall hold that the duration, scope or other restrictions
----
stated herein are unreasonable under circumstances then existing, the
parties agree that the maximum duration, scope or other restrictions
reasonable under such circumstances shall be substituted for the stated
duration, scope or other restrictions and that the court shall be allowed
to revise the restrictions contained herein to cover the maximum period,
scope and other restrictions permitted by law.
SECTION 6.20. Assumption and Termination of Certain Contracts. The Seller
-----------------------------------------------
shall terminate the Terminated Contracts.
SECTION 6.21. Employee Benefits. The Seller, each of the Companies and
-----------------
the Buyer agree as follows with respect to employee benefits:
(a) Prior to the Closing, Seller will transfer the sponsorship of the
American Allsafe Profit Sharing and Savings Plan (the "American Allsafe
Plan") to a member of the Seller's controlled group of corporations other
than either of the Companies. The American Allsafe Plan will not be
assumed by the Buyer as a result of the sale of the Shares to Buyer.
(b) Any Seller Active Employee (as defined below) who continues
employment immediately after Closing will be permitted to participate in
the Buyer's 401(k) Plan (as defined below) in accordance with the terms and
provisions of such 401(k) Plan if the employee accepts such offer. Buyer's
401(k) Plan shall accept rollovers by Transferred Employees (as defined
below) of their distributions from the American Allsafe Plan, including
direct rollovers of plan loans. The term "Buyer's 401(k) Plan" shall mean
the 401(k) Plan currently in place or to be adopted for the Transferred
Employees by the Buyer. The term "Transferred Employee" shall mean any
Seller Active Employee who accepts employment with Buyer effective
immediately after Closing. The term "Seller Active Employee" means an
individual who was employed by Seller performing his normal duties on the
day before Closing, provided however, an individual who is not at work
-------- -------
performing his normal duties on the day before Closing, but is on paid
leave under the Seller's vacation, holiday or sick leave policy, or jury
duty policy or any other short-term or long-term leave shall be considered
to be a Seller Active Employee. To the extent allowed by applicable
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law, to determine the entry date for participation in the Buyer's 401(k)
Plan and vesting, the Buyer will credit all prior service with the Seller
for any Transferred Employee.
(c) Buyer agrees to continue to maintain after Closing for the
benefit of the Transferred Employees, the Employee Welfare Benefit Plans
maintained for the Transferred Employees immediately prior to Closing,
provided that Buyer will not provide or be in any way liable for any
retiree medical or retiree life insurance benefits. Except with respect to
any retiree medical or retiree life insurance benefits, the applicable
plans shall continue to provide a level of benefits for the Transferred
Employees equal to the level of benefits available immediately prior to
Closing for a period of six months.
SECTION 6.22. Title Insurance. Within 60 days from the date hereof,
---------------
Seller, at its sole cost and expense, shall provide to Buyer the Title
Commitments. The Title Commitments shall include endorsements for access,
contiguity, zoning and other such endorsements reasonably requested by Buyer.
If Buyer chooses to convert the Title Commitments to a Title Policy, the cost of
the Title Policy, including premiums, shall be paid by the Seller with the
amount of the insurance for the Owned Property being at least the appraised
value of such property as mutually agreed between the Buyer and the Seller.
SECTION 6.23. Financial Condition at Closing.
------------------------------
(a) As of the Closing Date, the Working Capital of the Companies, as
reflected on the Closing Balance Sheet of the Companies, shall be at least
90% of the Working Capital of the Companies as expressed on the Latest
Balance Sheet as determined in accordance with GAAP. For purposes of this
Section 6.23(a), "Working Capital" shall mean Accounts Receivable plus
---------------
inventory (determined in accordance with GAAP) less Current Liabilities.
----
Any shortfall in the Working Capital will result in a dollar-for-dollar
reduction of the Purchase Price.
(b) The Seller shall, within 5 business days after the Closing Date,
deliver to the Buyer a balance sheet as of the Closing Date (the "Closing
Balance Sheet") noting any material changes between the Closing Balance
Sheet and the Latest Balance Sheet together with a certificate of the Chief
Financial Officer of the Seller stating that the Closing Balance Sheet was
prepared so as to present fairly in all material respects the combined
financial position of the Companies on a basis consistent with the
Financial Statements. In the event the Working Capital of the Companies
reflected on the Closing Balance Sheet is less than 90% of the Working
Capital expressed on the Latest Balance Sheet (the "Shortfall"), Seller
---------
shall pay to Buyer, within 10 business days of the Closing Date, an amount
equal to the Shortfall.
SECTION 6.24. Foreign Trademarks. Seller shall use commercially
------------------
reasonable efforts to effect the assignment of the foreign trademarks listed on
Schedule 6.24 herein to the Companies before the Closing, and Seller shall
- -------------
continue to use its commercially reasonable efforts after the Closing to effect
such assignments.
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ARTICLE VII
CONDITIONS TO OBLIGATION OF BUYER
The obligation of the Buyer to consummate the transactions to be performed
by it in connection with the Closing is subject to satisfaction of the following
conditions:
SECTION 7.1. Warranties True as of Closing Date. The representations and
----------------------------------
warranties set forth in Articles III and IV shall have been accurate, true and
------------ --
correct in all material respects on and as of the date of this Agreement (except
to the extent that such representations and warranties speak as of an earlier
date), and shall also be materially accurate, true and correct in all material
respects on and as of the Closing Date with the same force and effect as though
made on and as of the Closing Date (except to the extent that such
representations and warranties speak as of an earlier date) except, with respect
to such representations and warranties, for changes that are a result of actions
of Seller or the Companies that are expressly permitted by this Agreement;
provided, that (i) any representation or warranty which is by its terms
- --------
qualified by materiality shall be accurate, true and correct in all respects and
(ii) each representation and warranty made as of the Closing Date shall give
effect to the amendment of any Schedules made in accordance with Section 6.7.
-----------
SECTION 7.2. Compliance with Covenants. The Seller and each of the
-------------------------
Companies shall have performed and complied with all of the covenants hereunder
in all material respects through the Closing.
SECTION 7.3. Consents. Each of the Companies shall have procured third
--------
party consents from the appropriate parties to any Contract set forth on
Schedule 4.17 whose consent is required and necessary for the execution of this
- -------------
Agreement.
SECTION 7.4. Actions or Proceedings. No action, suit, or proceeding
----------------------
shall be pending or, to the Knowledge of the parties hereto, threatened before
any Authority wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement, (B) cause any of the transactions contemplated
by this Agreement to be rescinded following consummation, (C) affect adversely
the right of the Buyer to own the Shares and to control each of the Companies in
any Material respect, or (D) affect adversely the right of any of the Companies
to own its assets and to operate its Business (and no such injunction, judgment,
order, decree, ruling, or charge shall be in effect) in any Material respect.
SECTION 7.5. Certificate. The Seller shall have delivered to the Buyer a
-----------
certificate to the effect that each of the conditions specified above in
Sections 7.1-7.4 is satisfied in all respects.
- ----------------
SECTION 7.6. Opinion of Counsel. The Buyer shall have received from
------------------
Joseph Cleveland, the general counsel of the Seller, an opinion in form and
substance substantially as set forth in Exhibit A attached hereto, addressed to
---------
the Buyer, and dated as of the Closing Date.
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SECTION 7.7. Resignations. The Buyer shall have received the
------------
resignations, effective as of the Closing, of each director and officer of each
of the Companies other than those whom the Buyer shall have specified in writing
at least five business days prior to the Closing.
SECTION 7.8. Financing. The Buyer shall have obtained on terms and
---------
conditions reasonably satisfactory to it all of the financing it needs in order
to consummate the transactions contemplated hereby and fund the working capital
requirements of each of the Companies after the Closing.
SECTION 7.9. Termination of Certain Agreements. The Seller shall have,
---------------------------------
and the Seller shall have caused its Affiliates and each of the Companies to,
and each of the Companies and their respective Affiliates shall have, effective
as of the Closing, terminated, rescinded, canceled and rendered void and of no
effect any and all Contracts between any Company on the one hand and the Seller
or any Affiliate thereof (other than any of the Companies) on the other hand.
The Seller agrees that effective as of the Closing, all rights of the Seller or
any Affiliate thereof or any Affiliates of any of the Companies to
indemnification by any Company (whether by Contract, by-law, Law or otherwise)
are terminated, void, of no effect and unenforceable by them except as may arise
pursuant to this Agreement.
SECTION 7.10. Government Approvals. The Seller and each of the Companies
--------------------
shall have received all authorizations, consents and approvals required in
connection with the execution delivery, and performance of this Agreement.
SECTION 7.11. Collateral Agreements. Seller or one of its Affiliates, as
---------------------
the case may be, shall have entered into a transition services agreement in the
form attached hereto as Exhibit C.
---------
SECTION 7.12. Lamba Assets. The Buyer shall have received evidence
------------
reasonably satisfactory to it that the Lamba Assets shall have been transferred
to the Companies.
SECTION 7.13. Documents. All actions to be taken by the Seller in
---------
connection with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to the Buyer.
SECTION 7.14. FIRPTA Certificate. Buyer shall have received from the
------------------
Seller a duly executed certificate in the form specified by Treasury Regulation
(S)1.1445-2(b)(2).
SECTION 7.15. Assumption and Termination of Certain Contracts. As of the
-----------------------------------------------
Closing Date, the Seller shall have transferred the sponsorship of the American
Allsafe Profit Sharing and Savings Plan (the "American Allsafe Plan") to a
member of the Seller's controlled group of corporations other than either of the
Companies and delivered to the Buyer a certificate of transfer evidencing such
transfer of sponsorship. Furthermore, as of the Closing Date, the Seller shall
have fully assumed any obligations of any of the Companies under any of the
Contracts listed on Schedule 7.15 hereto and delivered to the Buyer a
-------------
certificate of assumption evidencing such assumption of the
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Contracts listed on Schedule 7.15 hereto (the "Terminated Contracts"),
------------- --------------------
including, but not limited to:
(a) any deferred compensation Contract between either the of Companies
and Lincoln Kennedy;
(b) any deferred compensation Contract between either of the Companies
and Jeff Millen;
(c) any deferred compensation Contract between either of the Companies
and Tim Swift; and
(d) any Contract between either of the Companies and any member of
NCH's management group.
SECTION 7.16. Replatting and conveyance of Allsafe property. Buyer shall
---------------------------------------------
be satisfied, in its reasonable discretion, with the replatting of the real
property known as 99 Wales and 101 Wales (also known as 480 Fillmore) located in
Tonawanda, New York. Buyer's satisfaction shall include, without limitation,
Buyer's reasonable satisfaction with all easements on such real property for
access and truck use.
The Buyer may waive any condition specified in this Article VII if it
-----------
executes a writing so stating at or prior to the Closing.
ARTICLE VIII
CONDITIONS TO OBLIGATION OF THE SELLER
The obligation of the Seller to consummate the transactions to be performed
by it in connection with the Closing is subject to satisfaction of the following
conditions:
SECTION 8.1. Warranties True as of Closing. The representations and
-----------------------------
warranties set forth in Article V shall have been accurate, true and correct in
---------
all material respects on and as of the date of this Agreement (except to the
extent that such representation or warranties speak as of an earlier date), and
shall also be accurate, true and correct in all material respects on and as of
the Closing Date (except to the extent that such representation or warranties
speak as of an earlier date) with the same force and effect as though made on
and as of the Closing Date; provided, that any representation of warranty which
is by its terms qualified by materiality shall be accurate, true and correct in
all respects.
SECTION 8.2. Compliance with Covenants. The Buyer shall have performed
-------------------------
and complied with all of its covenants hereunder in all material respects
through the Closing.
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SECTION 8.3. Actions or Proceedings. No action, suit, or proceeding
----------------------
shall be pending before any Authority wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would prevent consummation of any of
the transactions contemplated by this Agreement.
SECTION 8.4. Certificate. The Buyer shall have delivered to the Seller a
-----------
certificate to the effect that each of the conditions specified above in
Sections 8.1 - 8.3 is satisfied in all respects.
- ------------------
SECTION 8.5. Opinion of Counsel. The Seller shall have received from
------------------
Mayer, Brown & Platt, counsel to the Buyer, an opinion in form and substance as
set forth in Exhibit B attached hereto, addressed to the Seller, and dated as of
---------
the Closing Date.
SECTION 8.6. Documents. All actions to be taken by the Buyer in
---------
connection with the consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to the Seller.
SECTION 8.7. Government Approvals. All applicable waiting periods (and
--------------------
any extensions thereof) under the Hart-Scott-Rodino Act shall have expired or
otherwise terminated and the Buyer shall have received all other authorizations,
consents and approvals necessary for the performance of this Agreement.
The Seller may waive any condition specified in this Article VIII if it
------------
executes a writing so stating at or prior to the Closing.
ARTICLE IX
SURVIVAL AND REMEDY; INDEMNIFICATION
SECTION 9.1. Survival of Representations and Warranties. All of the
------------------------------------------
terms and conditions of this Agreement, together with the warranties,
representations, agreements and covenants contained herein or in any instrument
or document delivered or to be delivered pursuant to this Agreement, shall
survive the execution of this Agreement and the Closing Date, notwithstanding
any investigation heretofore or hereafter made by or on behalf of any party
hereto; provided, however, that unless otherwise stated herein, the agreements
-------- -------
and covenants set forth in this Agreement shall survive and continue until all
obligations set forth therein shall have been performed and satisfied.
Notwithstanding the foregoing, (a) the representations and warranties of the
Seller and each of the Companies contained in Sections 3.1 and 3.5 and Sections
------------ --- --------
4.1 and 4.2 of this Agreement and the representations and warranties of the
- --- ---
Buyer contained in Sections 5.1, 5.2, 5.3 and 5.5 of this Agreement shall
------------ --- --- ---
survive the Closing and continue in full force and effect indefinitely; (b) the
representations and warranties of the Seller and each of the Companies contained
in Sections 4.12 and 4.24 of this Agreement and the covenants set forth in
-------- ---- ----
Article X shall survive the Closing and continue in full force and effect until
the expiration of the applicable statute of limitations, including any
extensions or waivers thereof; (c) the representations and warranties of the
Seller and each of the Companies contained in Section 4.25 of this Agreement
------------
shall survive
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<PAGE>
the Closing and continue in full force and effect until two years from the
Closing Date; and (d) all other representations and warranties, and the related
agreements of the Seller, each of the Companies and the Buyer to indemnify each
other set forth in this Article IX, shall survive and continue for, and all
----------
indemnification claims with respect thereto shall be made prior to the end of,
547 days from the Closing Date, except for representations, warranties and
related indemnities for which an indemnification claim shall be pending, in
accordance with the terms of this Agreement, as of the end of the applicable
period referred to above, in which event such indemnities shall survive with
respect to such indemnification claim until the final disposition thereof (the
"Indemnification Period").
----------------------
SECTION 9.2. Indemnification by the Seller.
-----------------------------
(a) In the event that, during the Indemnification Period there is a
breach of any of the representations or warranties made by, or any breach
of or failure to perform any covenant, agreement or obligation of, any of
the Companies or the Seller in this Agreement or Agreement otherwise and
delivered contained in any exhibit or schedule to this Agreement, and, if
there is an applicable survival period pursuant to Section 9.1, then, in
-----------
each case, provided that the Buyer makes a written claim for
indemnification against the Seller within the applicable survival period,
the Seller agrees (subject to the limitations set forth in this Article IX)
----------
to indemnify the Buyer and its Affiliates, directors, officers, employees,
stockholders, representatives and agents (collectively the "Buyer
-----
Indemnified Parties") from and against the entirety of any Adverse
-------------------
Consequences the Buyer Indemnified Parties may suffer through and after the
date of the claim for indemnification (including any Adverse Consequences
the Buyer Indemnified Parties may suffer through and after the end of the
applicable survival period) resulting from, arising out of or caused by any
breach (or alleged breach) of the foregoing; provided, however, that (A)
-------- -------
other than as set forth in Sections 9.2(b), (c) and (d), the Seller shall
--------------- --- ---
not have any obligation to indemnify the Buyer Indemnified Parties from and
against any Adverse Consequences resulting from, arising out of, or caused
by any breach by any of the Companies or the Seller until the Buyer
Indemnified Parties have suffered Adverse Consequences by reason of all
such breaches in excess of a $295,000, aggregate threshold (at which point
the Seller will be obligated to indemnify the Buyer Indemnified Parties
from and against all such Adverse Consequences above such $295,000
threshold) and (B) there will be a $2,950,000 aggregate ceiling (the
"Indemnification Cap") on the obligation to indemnify the Buyer Indemnified
Parties from and against Adverse Consequences resulting from, arising out
of, or relating to the items identified in this Article IX.
----------
Notwithstanding the foregoing or any other provision or term of this
Agreement, Buyer shall not be entitled to be indemnified hereunder for any
Adverse Consequences resulting from breaches of representations or
warranties of which Buyer had Knowledge on or prior to the Closing Date.
(b) The Seller agrees to indemnify the Buyer Indemnified Parties from
and against the entirety of any Adverse Consequences the Buyer Indemnified
Parties may suffer resulting from or arising out of relating to, in the
nature of, or caused by any Liability of any of the Companies (x) for any
Taxes of any of the Companies and any predecessor entities
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owned by or affiliated with any of the Companies with respect to any Tax
period or portion thereof ending on or before the Closing Date (or for any
Tax year beginning before and ending after the Closing Date to the extent
allocable (as determined in accordance with the next sentence) to the
portion of such period beginning before and ending on the Closing Date), to
the extent such Taxes are not reflected in the reserve for Tax Liability
(rather than any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) shown on the face of the Latest
Balance Sheet, and (y) for the unpaid Taxes of any Person (other than any
of the Companies) under Reg. (S)1.1502-6 (or any similar provision of
state, local, or foreign Law), as a transferee or successor, by Contract,
or otherwise. For purposes of allocating gross income and deductions
between deemed short taxable periods, all amounts of income and deduction
shall be deemed to have accrued pro rata during each Company's actual
taxable year, except for items of income or loss arising from an
extraordinary event, which shall be reflected in the period in which such
event occurred.
(c) The Seller agrees to indemnify the Buyer Indemnified Parties from
and against the entirety of any Adverse Consequences the Buyer Indemnified
Parties may suffer resulting from or arising out of any matters disclosed
on Schedule 9.2(c).
---------------
(d) With respect to the two claims set forth on Schedule 9.2(d):
---------------
(i) Buyer shall have the right to defend such claims as if Buyer
were the Indemnifying Party subject to Seller's rights under Section
-------
9.4 as if Seller were an Indemnified Party; and
---
(ii) Buyer shall assume all Liability for such claims; provided,
--------
that Seller shall be obligated, notwithstanding any survival period
set forth in this Article IX, to indemnify Buyer for any Adverse
----------
Consequences with respect to such claims to the extent that such
Adverse Consequences are not covered by either the Seller's or the
Buyers's insurance.
SECTION 9.3. Indemnification by the Buyer. Provided that the Seller
----------------------------
makes a written claim for indemnification against the Buyer within the survival
period set forth in Section 9.1, the Buyer and, from and after the Closing, the
-----------
Companies, jointly and severally, agree to indemnify the Seller against, and
agree to hold Seller and its Affiliates, directors, officers, employees,
stockholders, representatives and agents harmless from, any and all Adverse
Consequences incurred or suffered by them arising out of, relating to or caused
by, (i) any breach of or any inaccuracy in any representation or warranty made
by the Buyer pursuant to this Agreement, any agreement executed and delivered in
connection herewith or contained in any exhibit or schedule to this Agreement;
(ii) any breach of or failure by the Buyer to perform any agreement, covenant or
obligation of the Buyer set out in this Agreement, any agreement executed and
delivered in connection herewith or contained in any exhibit or schedule to this
Agreement; and (iii) any obligations and Liabilities in respect of the Companies
from and after the Closing Date.
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SECTION 9.4. Third-Party Claims.
------------------
(a) If any third party shall notify any party hereto (the
"Indemnified Party") with respect to any matter (a "Third Party Claim")
----------------- -----------------
which may give rise to a claim for indemnification against any other party
hereto (the "Indemnifying Party") under this Article IX, then the
------------------ ----------
Indemnified Party shall promptly notify each Indemnifying Party thereof in
writing; provided, however, that no delay on the part of the Indemnified
-------- -------
Party in notifying any Indemnifying Party shall relieve the Indemnifying
Party from any obligation hereunder unless (and then solely to the extent)
the Indemnifying Party is prejudiced thereby.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of the
Indemnifying Party's choice reasonably satisfactory to the Indemnified
Party so long as (A) the Indemnifying Party notifies the Indemnified Party
in writing after the Indemnified Party has given notice of the Third Party
Claim that, subject to the limitations set forth in this Article IX, the
----------
Indemnifying Party will indemnify the Indemnified Party from and against
the entirety of any Adverse Consequences the Indemnified Party may suffer
resulting from, arising out of, or caused by the Third Party Claim, and (B)
the Indemnifying Party conducts the defense of the Third Party Claim
actively and diligently.
(c) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 9.4(b) above, (A) the
--------------
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (B) the
Indemnified Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnifying Party (not to be withheld
unreasonably), (C) the Indemnifying Party will not consent to the entry of
any judgment or enter into any settlement with respect to the Third Party
Claim without the prior written consent of the Indemnified Party (not to be
unreasonably withheld or delayed) (unless such entry or settlement includes
as an unconditional term thereof the giving by each claimant or plaintiff
to each Indemnified Party a release from all liability, in which case no
such consent will be required), and (D) with respect to any Third Party
claim relating to Taxes, the Seller, as Indemnifying Party, will not
consent to the entry of any judgment or enter into any settlement with
respect to the Third Party claim without the consent of Buyer, as
Indemnified Party, if such judgment or settlement could reasonably be
expected to be material to the Buyer for any post-Closing Tax Periods.
(d) Seller shall be entitled to have sole control over the defense,
settlement, compromise, admission or acknowledgment of all claims set forth
on Schedule 9.2(c).The Indemnifying Party shall not be entitled to control
---------------
(but shall be entitled to participate at its own expense in the defense
of), and the Indemnified Party shall be entitled to have sole control over,
the defense or settlement, compromise, admission, or acknowledgment of any
Third Party Claim (1) as to which the Indemnifying Party fails to assume
the defense within a reasonable length of time, (2) to the extent the Third
Party Claim seeks an order,
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<PAGE>
injunction, or other equitable relief against the Indemnified Party which,
if successful, would materially adversely affect the business, operations,
assets or financial condition of the Indemnified Party or (3) settlement
of, or an adverse judgment with respect to, such Third Party Claim is
reasonably likely, in the good faith judgment of the Indemnified Party, to
establish a precedential custom or practice which would be reasonably
likely to materially adversely affect the business, operations, assets or
financial condition of the Indemnified Party; provided, however, that, in
-------- -------
each case, the Indemnified Party shall make no settlement, compromise,
admission or acknowledgment that would reasonably be expected to give rise
to liability on the part of any Indemnifying Party without the prior
written consent of such Indemnifying Party.
(e) The parties hereto shall extend reasonable cooperation in
connection with the defense of any Third Party Claim pursuant to this
Article IX and, in connection therewith, shall furnish such records,
information, and testimony and attend such conferences, discovery
proceedings, hearings, trials, and appeals as may be reasonably requested.
SECTION 9.5. Other Indemnification Provisions.
--------------------------------
(a) The liability of any party under this Article IX shall be in
addition to, and not exclusive of any other liability that such party may
have at law or equity based on a party's fraudulent acts or omissions.
None of the provisions of this Agreement shall be deemed a waiver of any
defenses which may be available in respect of actions or claims for fraud,
including but not limited to, defenses of statutes of limitations or
limitations of damages.
(b) Seller hereby agrees that he will not make any claim for
indemnification against any of the Companies by reason of the fact that he
was a director, manager, officer, employee or agent of any such entity or
was serving at the request of any such entity as a partner, member,
trustee, director, manager, officer, employee, or agent of another entity
(whether such claim is for judgments, damages, penalties, fines, costs,
amounts paid in settlement, losses, expenses, or otherwise and whether such
claim is pursuant to any statute, charter document, bylaw, agreement, or
otherwise) with respect to any action, suit, proceeding, complaint, claim
or demand brought by the Buyer against the Seller (whether such action,
suit, proceeding, complaint, claim or demand is pursuant to this Agreement,
applicable Law, or otherwise).
(c) Indemnification claims shall be reduced, by and to the extent,
that Seller or the Buyer Indemnified Parties, as applicable, with respect
to such claim shall be entitled to receive proceeds under insurance
policies, risk sharing pools, or similar arrangements specifically as a
result of, and in compensation for, the subject matter of an
indemnification claim by such party, net of any increased premiums or
similar costs arising out of the making of such claims against such
arrangements. In addition, indemnification claims shall be reduced by and
to the extent that the Seller or the Buyer Indemnified Parties, as
applicable, with respect to such claim shall lawfully be entitled to
realize a Tax benefit as a result of an indemnification claim. For purposes
of this Section 9.5(c), a party will be considered to
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<PAGE>
realize an actual tax benefit if there is an actual reduction in Taxes
payable or a refund of Taxes previously paid.
(d) Except as otherwise provided in this Agreement, Buyer and the
Companies hereby release and forever discharge Seller and its Subsidiaries
from any and all suits, legal or administrative proceedings, claims,
demands, damages, losses, costs, liabilities, interest or causes of action
whatsoever in law or in equity, known or unknown, which Buyer and the
Companies might now or subsequently may have based on or relating to, or
arising out of this Agreement or Seller's use, maintenance, ownership and
operation of the Shares and the Companies' Business, including with
limitation, rights to contribution under the Environmental Laws, breaches
of statutory or implied warranties or otherwise, nuisance or other tort
actions and common law rights of contribution.
ARTICLE X
TAX MATTERS
SECTION 10.1. Filing of Tax Returns and Payment of Taxes. As soon as
------------------------------------------
practicable after the Closing Date, Seller and the Companies will prepare and
file all appropriate Tax Returns for the operations of the Companies for all
periods ending on or before the Closing Date, including, for those jurisdictions
and tax authorities that permit or require a short period Tax Return, for the
period ending on the Closing Date and Seller will timely pay the amount of Taxes
shown to be due on such Tax Returns. The books and records of Seller and the
Companies will be maintained, and the Federal, state and other income Tax
Returns of the "affiliated group" (as defined in Section 1504(a) of the Code) of
which Seller and each of the Companies is a member (the "Seller Group") will be
filed, so as to accurately reflect the operations of the Companies through the
end of the Closing Date. Buyer shall prepare and file all appropriate Tax
Returns for the operations of the Companies for all periods ending after the
Closing Date and will timely pay the amount of Taxes shown to be due on such Tax
Returns.
SECTION 10.2. Refunds of Taxes. Seller will be entitled to any refunds
----------------
of Taxes (including interest thereon) payable with respect to the operations of
the Companies for any period ending on or prior to the Closing Date. Buyer
shall be entitled to all other refunds of Taxes with respect to the operations
of the Companies. Refunds to which Seller is not entitled shall be retained by
the Companies, and shall not be paid to Seller, and if received by Seller, shall
be paid over to Buyer within 15 business days after receipt.
SECTION 10.3. Cooperation on Tax Matters.
--------------------------
(a) Buyer, each of the Companies and Seller shall cooperate fully, as
and to the extent reasonably requested by the other party, in connection
with the filing of Tax Returns pursuant to this Article X and any audit,
litigation or other proceeding with respect to Taxes. Such cooperation
shall include the retention and (upon the other party's request) the
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provision of records and information which are reasonably relevant to any
such audit, litigation or other proceeding and making employees available
on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. Each of the Companies and
the Seller agree (A) to retain all books and records with respect to Tax
matters pertinent to the Companies relating to any taxable period beginning
before the Closing Date until the expiration of the statute of limitations
(and, to the extent notified by Buyer or Seller, any extensions thereof) of
the respective taxable periods, and to abide by all record retention
agreements entered into with any taxing Authority, and (B) to give the
other party reasonable written notice prior to transferring, destroying or
discarding any such books and records and, if the other party so requests,
the Companies or Seller, as the case may be, shall allow the other party to
take possession of such books and records.
(b) Buyer and Seller further agree, upon request, to use commercially
reasonable efforts to obtain any certificate or other document from any
governmental Authority or any other Person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including, but not
limited to, with respect to the transactions contemplated hereby).
(c) Seller shall promptly notify Buyer and the Companies of any
proposed adjustment of any item on any Tax Return of the Seller Group for
any period ending on or prior to the Closing Date (including a deemed short
taxable period ending on and including the Closing Date with respect to
those jurisdictions in which the Companies' taxable years do not end on the
Closing Date), if such proposed adjustment may affect the Tax liability of
the Companies or Buyer for any period beginning after the close of such
period, including, without limitation, any proposed adjustments to the
allocation among assets of amounts received by Seller pursuant to the
transactions contemplated by this Agreement.
SECTION 10.4. Certain Taxes. All transfer, documentary, sales, use,
-------------
stamp, registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement (including any New York
City Transfer Tax and any similar tax imposed in other states or subdivisions),
shall be paid by Seller when due with respect to all such transfer, documentary,
sales, use, stamp, registration and other Taxes and fees, and, if required by
applicable Law, Buyer will, and will cause its Affiliates to join in the
execution of any such Tax Returns and other documentation.
ARTICLE XI
TERMINATION
SECTION 11.1. Termination of Agreement. Certain of the parties may
------------------------
terminate this Agreement as provided below:
(a) the Buyer and the Seller may terminate this Agreement by mutual
written consent at any time prior to the Closing;
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<PAGE>
(b) the Buyer may terminate this Agreement by giving written notice
to the Seller at any time prior to the Closing (A) in the event the Seller
has breached any representation, warranty, or covenant contained in this
Agreement in any material respect, the Buyer has notified in writing the
Seller of the breach, and the breach has continued without cure for a
period of 30 days after the notice of breach or (B) if the Closing shall
not have occurred on or before April 30, 1998, by reason of the failure of
any condition precedent under Article VII hereof (unless the failure
-----------
results primarily from the Buyer itself breaching any representation,
warranty, or covenant contained in this Agreement);
(c) the Seller may terminate this Agreement by giving written notice
to the Buyer at any time prior to the Closing (A) in the event the Buyer
has breached any material representation, warranty, or covenant contained
in this Agreement in any material respect, the Seller have notified in
writing the Buyer of the breach, and the breach has continued without cure
for a period of 30 days after the notice of breach; provided, however, that
-------- -------
there shall be no cure period with respect to the condition to closing set
forth in Section 7.8; or (B) if the Closing shall not have occurred on or
-----------
before April 30, 1998, by reason of the failure of any condition precedent
under Article VIII hereof (unless the failure results primarily from the
------------
Seller breaching any representation, warranty, or covenant contained in
this Agreement); and
(d) the Buyer or Seller may terminate this Agreement by giving
written notice to the other if a court of competent jurisdiction or other
Authority shall have issued an order, decree, or ruling or taken any other
action (which order, decree or ruling the parties hereto shall use
commercially reasonable efforts to lift), in each case permanently
restraining, enjoying, or otherwise prohibiting the transactions
contemplated by this Agreement, and such order, decree, ruling, or other
action shall have become final and nonappealable.
SECTION 11.2. Effect of Termination. If any party terminates this
---------------------
Agreement pursuant to Section 11.1 above, all rights and obligations of the
------------
parties hereunder shall terminate without any Liability of any party to any
other party (except for any Liability of any party then in breach).
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. Expenses. Each party will bear his or its own costs and
--------
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby. The Seller agrees that none
of the Companies has borne or will bear any of the Seller's costs and expenses
(including any of their legal fees and expenses) in connection with this
Agreement or any of the transactions contemplated hereby.
SECTION 12.2. Press Releases and Public Announcements. No party shall
---------------------------------------
issue any press release or make any public announcement relating to the subject
matter of this Agreement without
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the prior written approval of the Buyer and the Seller; provided, however, that
-------- -------
any party may make any public disclosure it believes in good faith is required
by applicable Law or any listing or trading agreement concerning its publicly-
traded securities (in which case the disclosing party will use commercially
reasonable efforts to advise the other parties prior to making the disclosure).
SECTION 12.3. No Third-Party Beneficiaries. Subject to the provisions of
----------------------------
Section 12.5, this Agreement shall not confer any rights or remedies upon any
- ------------
Person other than the parties and their respective successors and permitted
assigns, provided, however, that Section 6.21 shall confer the rights and
-------- ------- ------------
remedies stated therein to the Transferred Employees.
SECTION 12.4. Entire Agreement. This Agreement (including the documents
----------------
referred to herein) constitutes the entire agreement among the parties and
supersedes any prior understandings, agreements, or representations by or among
the parties, written or oral, to the extent they related in any way to the
subject matter hereof.
SECTION 12.5. Succession and Assignment. This Agreement shall be binding
-------------------------
upon and inure to the benefit of the parties named herein and their respective
successors and permitted assigns. No party may assign either this Agreement or
any of his or its rights, interests, or obligations hereunder without the prior
written approval of the Buyer and the Seller; provided, however, that the Buyer
-------- -------
may (i) assign any or all of its rights and interests (but not obligations)
hereunder to one or more of its Affiliates, (ii) designate one or more of its
Affiliates to perform its obligations hereunder (in any or all of which cases
the Buyer nonetheless shall remain responsible for the performance of all of its
obligations hereunder) and (iii) grant a security interest in respect of its
rights hereunder to its lenders.
SECTION 12.6. Counterparts. This Agreement may be executed in one or
------------
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
SECTION 12.7. Headings. The section headings contained in this Agreement
--------
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 12.8. Notices. All notices, requests, demands, claims, and other
-------
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
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(a) If to the Seller, to the addressed as follows:
NCH Corporation
2727 Chemsearch Boulevard
Irving, Texas 75062
Attn: Mr. Jack B. Rubin
Senior Vice President
Facsimile No.: (972) 721-6135
Attn: Joe Cleveland
General Counsel
Facsimile No.: (972) 438-0100
with a copy to:
Vinson & Elkins L.L.P.
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201-2975
Attention: Jeffrey A. Chapman
Facsimile No.: (214) 220-7716
(b) If to the Buyer, addressed as follows:
Jackson Products, Inc.
2997 Clackson Road
Chesterfield, Missouri 63017
Attention: Christopher T. Paule
Facsimile No.: (314) 207-2800
with a copy to:
Mayer, Brown & Platt
1675 Broadway, Suite 1900
New York, New York 10019
Attention: James B. Carlson
Facsimile No.: (212) 262-1910
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, ordinary mail, or electronic mail), but no such notice, request,
demand, claim, or other communication shall be deemed to have been duly given
unless and until it actually is received by the intended recipient. Any party
may change the address
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<PAGE>
to which notices, requests, demands, claims, and other communications hereunder
are to be delivered by giving the other parties notice in the manner herein set
forth.
SECTION 12.9. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the domestic Laws of the State of New York without
giving effect to any choice or conflict of Law provision or rule (whether of the
State of New York or any other jurisdiction) that would cause the application of
the Laws of any jurisdiction other than the State of New York.
SECTION 12.10. Amendments and Waivers. No amendment of any provision of
----------------------
this Agreement shall be valid unless the same shall be in writing and signed by
the Buyer and Seller. No waiver by any party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
SECTION 12.11. Severability. Any term or provision of this Agreement
------------
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
SECTION 12.12. Construction. The parties have participated jointly in
------------
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local,
or foreign statute or Law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
party has not breached shall not detract from or mitigate the fact that the
party is in breach of the first representation, warranty, or covenant.
SECTION 12.13. Incorporation of Exhibits, Annexes, and Schedules. The
-------------------------------------------------
exhibits, annexes, and schedules identified in this Agreement are incorporated
herein by reference and made a part hereof.
SECTION 12.14. Specific Performance. Each of the parties acknowledges
--------------------
and agrees that the other parties would be damaged irreparably in the event that
Sections 6.5, 6.15 and 6.19 of this Agreement are not performed in accordance
- ------------ ---- ----
with its specific terms or otherwise are breached. Accordingly, each of the
parties agrees that the other parties shall be entitled to an injunction or
injunctions to prevent breaches of such provision of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in any
action instituted in any court of the United
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<PAGE>
States or any state thereof having jurisdiction over the parties and the matter,
in addition to any other remedy to which they may be entitled, at law or in
equity.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
JACKSON PRODUCTS, INC.
By: /s/ Christopher T. Paule
---------------------------------------------
Name: Christopher T. Paule
Title: Vice President
NCH CORPORATION
By: /s/ Tom Hetzer
---------------------------------------------
Name: Tom Hetzer
Title: Vice President - Finance
AMERICAN ALLSAFE COMPANY
By: /s/ Jack B. Rubin
---------------------------------------------
Name: Jack B. Rubin
Title: Senior Vice President
SILENCIO/SAFETY DIRECT, INC.
By: /s/ Jack B. Rubin
---------------------------------------------
Name: Jack B. Rubin
Title: Senior Vice President
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EXHIBIT 2.2
EXECUTION COPY
STOCK PURCHASE AGREEMENT
among
CRYSTALOID TECHNOLOGIES, INC.
The Management Sellers party hereto
and
DAHL PARTNERS INCORPORATED
CRYSTALOID ELECTRONICS COMPANY
Dated as of March 31, 1998
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
ARTICLE I
DEFINITIONS
1.1. Definitions...................................................... 1
ARTICLE II
PURCHASE AND SALE OF SHARES
2.1. Basic Transaction................................................ 6
2.2. Payment of Purchase Price........................................ 7
2.3. Holdback......................................................... 7
2.4. The Closing...................................................... 7
2.5. Closing Deliveries by Sellers.................................... 7
2.6. Closing Deliveries by Buyer...................................... 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
3.1. Authorization of Transaction..................................... 8
3.2. Noncontravention................................................. 8
3.3. Brokers' Fees.................................................... 9
3.4. Shares........................................................... 9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLERS
4.1. Organization, Qualification, and Corporate Power................. 9
4.2. Capitalization................................................... 10
4.3. Noncontravention................................................. 10
4.4. Brokers' Fees.................................................... 11
4.5. Title to Assets.................................................. 11
4.6. Subsidiaries..................................................... 11
4.7. Financial Statements; Projections................................ 11
4.8. Events Subsequent to Latest Balance Sheet........................ 12
4.9. Undisclosed Liabilities.......................................... 14
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
4.10. Legal Compliance................................................. 14
4.11. Tax Matters...................................................... 14
4.12. Real Property.................................................... 16
4.13. Intellectual Property............................................ 19
4.14. Tangible Assets.................................................. 22
4.15. Inventory........................................................ 23
4.16. Contracts........................................................ 23
4.17. Notes and Accounts Receivable.................................... 25
4.18. Powers of Attorney............................................... 25
4.19. Insurance........................................................ 25
4.20. Litigation....................................................... 26
4.21. Product Warranty................................................. 26
4.22. Product Liability................................................ 27
4.23. Employees........................................................ 27
4.24. Employee Benefits................................................ 27
4.25. Environmental Matters............................................ 30
4.26. Permits.......................................................... 32
4.27. Backlog.......................................................... 32
4.28. No Conflict of Interest.......................................... 32
4.29. Bank Accounts.................................................... 32
4.30. Customers and Suppliers.......................................... 33
4.31. Claims Against Officers and Directors............................ 33
4.32. Improper and Other Payments...................................... 33
4.33. Accuracy of Statements........................................... 34
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER
5.1. Organization of the Buyer........................................ 34
5.2. Authorization of Transaction..................................... 34
5.3. Noncontravention................................................. 34
5.4. Brokers' Fees.................................................... 35
5.5. Legal Compliance................................................. 35
5.6. Litigation....................................................... 35
5.7. Accuracy of Statements........................................... 35
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
ARTICLE VI
COVENANTS
6.1. General.......................................................... 36
6.2. Notices and Consents............................................. 36
6.3. Operation of Business............................................ 36
6.4. Full Access...................................................... 38
6.5. Exclusivity...................................................... 39
6.6. Efforts.......................................................... 39
6.7. Maintenance of Insurance......................................... 39
6.8. Notice and Supplemental Information.............................. 39
6.9. Employment Agreement............................................. 40
6.10. Public Announcements............................................. 40
6.11. Consistent Tax Reporting......................................... 40
6.12. Termination of Shareholder Agreements............................ 40
6.13. Resignation of Officers and Directors............................ 40
6.14. Capital Projects................................................. 40
6.15. SERP Agreements.................................................. 40
6.16. Lindblom Transaction............................................. 40
6.17. Transition....................................................... 40
6.18. Confidentiality.................................................. 41
6.19. Noncompetition................................................... 41
6.20. Jackson Guaranty................................................. 42
6.21. Post-Closing Covenants........................................... 42
ARTICLE VII
CONDITIONS TO OBLIGATION OF BUYER
7.1. Representations and Warranties True as of Closing Date........... 43
7.2. Compliance with Covenants........................................ 43
7.3. Consents......................................................... 43
7.4. Actions or Proceedings........................................... 44
7.5. Certificate...................................................... 44
7.6. Financial Condition at Closing................................... 44
7.7. Opinion of Counsel............................................... 45
7.8. Resignations..................................................... 45
7.9. Financing........................................................ 45
7.10. Employment Agreements............................................ 45
7.11. Capital Projects................................................. 45
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
SECTION PAGE
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<S> <C>
7.12. SERP Agreements.................................................. 45
7.13. Lindblom Transaction............................................. 45
7.14. FIRPTA Certificate............................................... 45
7.15. Termination of Certain Agreements................................ 45
7.16. Insurance........................................................ 45
7.17. Contracts........................................................ 46
7.18. Board Approval................................................... 46
7.19. No Material Adverse Effect....................................... 46
7.20. Documents........................................................ 46
ARTICLE VIII
CONDITIONS TO OBLIGATION OF THE SELLERS
8.1. Representations and Warranties True as of Closing................ 46
8.2. Compliance with Covenants........................................ 46
8.3. Actions or Proceedings........................................... 46
8.4. Certificate...................................................... 47
8.5. Opinion of Counsel............................................... 47
8.6. Documents........................................................ 47
ARTICLE IX
SURVIVAL AND REMEDY; INDEMNIFICATION
9.1. Survival of Representations and Warranties....................... 47
9.2. Indemnification by the Management Sellers........................ 48
9.3. Indemnification by the Buyer..................................... 49
9.4. Third-Party Claims............................................... 49
9.5. Other Indemnification Provisions................................. 51
9.6. Holdback......................................................... 51
ARTICLE X
TAX MATTERS
10.1. Tax Matters...................................................... 52
10.2. Tax Periods Ending on or Before the Closing Date................. 52
10.3. Tax Periods Beginning Before and Ending After the Closing Date... 52
10.4. Cooperation on Tax Matters....................................... 53
10.5. Tax Sharing Agreements........................................... 53
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
10.6. Certain Taxes.................................................... 54
ARTICLE XI
TERMINATION
11.1. Termination of Agreement......................................... 54
11.2. Effect of Termination............................................ 55
ARTICLE XII
MISCELLANEOUS
12.1. Expenses......................................................... 55
12.2. Press Releases and Public Announcements.......................... 55
12.3. No Third-Party Beneficiaries..................................... 55
12.4. Entire Agreement................................................. 55
12.5. Succession and Assignment........................................ 55
12.6. Counterparts..................................................... 56
12.7. Headings......................................................... 56
12.8. Notices.......................................................... 56
12.9. Governing Law.................................................... 57
12.10. Amendments and Waivers........................................... 57
12.11. Jackson.......................................................... 57
12.12. Severability..................................................... 57
12.13. Construction..................................................... 57
12.14. Incorporation of Exhibits, Annexes, and Schedules................ 58
12.15. Specific Performance............................................. 58
12.16. Submission to Jurisdiction....................................... 58
</TABLE>
Exhibits
- ---------
Exhibit A - Form of Employment Agreement
Exhibit B - Form of Opinion of Counsel to the Seller
Exhibit C - Form of Opinion of Counsel to the Buyer
-v-
<PAGE>
Schedules
- ---------
Schedule 3.2 Noncontravention
Schedule 3.3 Brokers
Schedule 3.4 Shares
Schedule 4.2 Sellers
Schedule 4.3 Noncontravention
Schedule 4.4 Brokers
Schedule 4.5 Title to Assets
Schedule 4.7(a) Financial Statements
Schedule 4.7(b) Projections
Schedule 4.8(b) Contracts
Schedule 4.8(c) Changes to Contracts
Schedule 4.8(e) Capital Expenditures
Schedule 4.8(g) Indebtedness
Schedule 4.8(l) Changes in Capital Stock
Schedule 4.8(q) Changes in Employment Terms
Schedule 4.8(r) Changes in Benefit Plans
Schedule 4.9 Undisclosed Liabilities
Schedule 4.10 Legal Compliance
Schedule 4.11 Tax Returns
Schedule 4.12(a) Owned Property
Schedule 4.12(b) Leased Property
Schedule 4.13(a) Ownership of Intellectual Property
Schedule 4.13(b) Intellectual Property Infringement
Schedule 4.13(c) Company Intellectual Property
Schedule 4.13(d) Third Party Intellectual Property
Schedule 4.13(e) Rockwell Agreement
Schedule 4.16 Contracts
Schedule 4.19 Insurance
Schedule 4.20 Litigation
Schedule 4.21 Warranties
Schedule 4.23 Employees
Schedule 4.24 Employee Benefits
Schedule 4.25(c) Environmental Liabilities
Schedule 4.25(d) Hazardous Substances
Schedule 4.26 Permits
Schedule 4.27 Backlog
Schedule 4.29 Bank Accounts
Schedule 4.30 Customers and Suppliers
Schedule 4.31 Claims Against Officers and Directors
Schedule 5.5 Legal Compliance
Schedule 5.6 Litigation
Schedule 6.3 Operation of Business
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<PAGE>
STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT, dated as of March 31, 1998, by and among
Crystaloid Technologies, Inc., a Delaware corporation (the "Buyer"), the
-----
Management Sellers, Dahl Partners Incorporated, an Ohio corporation ("Dahl"),
----
and Crystaloid Electronics Company, an Ohio corporation (the "Company").
-------
WHEREAS, for good and valuable consideration, including the transactions
contemplated by the Trust Agreements and the Stock Redemption Agreement, Dahl
has acquired all of the outstanding capital stock of the Company (the "Shares");
------
and
WHEREAS, the Buyer wishes to purchase the Shares from Dahl and Dahl desires
to sell to the Buyer all of the Shares.
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. The following terms shall have the following
-----------
meanings for the purposes of this Agreement.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
--------------------
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and attorneys' fees and expenses.
"Affiliate" means, with respect to any specified Person, a Person that
---------
directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with, the Person specified.
"Affiliated Group" means any affiliated group within the meaning of Code
----------------
(S)1504(a) or any similar group defined under a similar provision of state,
local or foreign Law.
"Agreement" means this Stock Purchase Agreement, including all exhibits and
---------
schedules hereto, as it may be amended from time to time.
"Authority" means any governmental regulatory or administrative body,
---------
governmental agency, governmental subdivision or authority, any court or
judicial authority, any public, private or industry governmental regulatory
authority, whether foreign, national, federal, state or local or
<PAGE>
otherwise, or any Person lawfully empowered by any of the foregoing to enforce
or seek compliance with any regulation.
"Backlog" has the meaning set forth in Section 4.27 below.
------- ------------
"Business" means the design, manufacture and distribution of liquid crystal
--------
displays and modules.
"Buyer" has the meaning set forth in the preface above.
-----
"Buyer Indemnified Parties" has the meaning set forth in Section 9.2 below.
------------------------- -----------
"Capital Projects" means, collectively, the Polarizer Cutting Machine, the
----------------
Aqueous Cleaning System and the Spacer Applicator Machine.
"Cash Amount" means $2,700,000 less the sum of: (i) any adjustment pursuant
----------- ----
to Section 7.6 plus (ii) the Holdback Amount.
----------- ----
"Closing" has the meaning set forth in Section 2.4 below.
------- -----------
"Closing Date" has the meaning set forth in Section 2.4 below.
------------ -----------
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Company" has the meaning set forth in the preface above.
-------
"Company Indemnifying Parties" has the meaning set forth in Section 9.2
---------------------------- -----------
below.
"Confidential Information" means any information concerning the businesses
------------------------
and affairs of the Company that is not already generally available to the
public.
"Contract" means any contract, lease, commitment, understanding, sales
--------
order, purchase order, agreement, indenture, mortgage, note, bond, right,
warrant, instrument, plan, permit or license, whether written or oral, which is
intended or purports to be binding and enforceable.
"Directors" shall mean all of the members of the Board of Directors of the
---------
Company except for Leonard C. Lindblom.
"Employee Benefit Plan" means any (a) nonqualified deferred compensation or
---------------------
retirement plan or arrangement, (b) qualified defined contribution retirement
plan or arrangement which is an Employee Pension Benefit Plan, (c) qualified
defined benefit retirement plan or arrangement which is an Employee Pension
Benefit Plan (including any Multiemployer Plan), or (d) Employee Welfare Benefit
Plan or material fringe benefit or other retirement, bonus, or incentive plan
or program.
-2-
<PAGE>
"Employee Pension Benefit Plan" has the meaning set forth in ERISA (S)3(2).
-----------------------------
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA (S)3(1).
-----------------------------
"Employment Agreements" means the Employment and Non-Interference
---------------------
Agreements between the Company and each of Edward D. Surjan, Jr., Michael A.
Fout, Edward M. Stiles, III and Gregory J. Putman, dated the Closing Date, in
the form attached hereto as Exhibit A.
---------
"Environmental Laws" means all federal, state, local and foreign statutes,
------------------
regulations, ordinances and other provisions having the force or effect of law,
all judicial and administrative orders and determinations, all contractual
obligations and all common law concerning public health and safety, worker
health and safety, and pollution or protection of the environment, including
without limitation all those relating to the presence, use, production,
generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control, or cleanup of any Hazardous Substances, materials or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation, each as amended and as now or hereafter in
effect, including (but not limited to) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, as amended, the Resource Conservation and Recovery
Act of 1976, as amended, the Toxic Substances Control Act of 1976, as amended,
the Federal Water Pollution Control Act Amendments of 1972, the Clean Water Act
of 1977, as amended, any so-called "Superlien" law, and any other similar
federal, state or local statutes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended.
"Financial Statements" means the following:
--------------------
(a) the audited financial statements of the Company for the 1994
fiscal year and the reviewed financial statements of the Company for the
1995, 1996 and 1997 fiscal years, respectively (including all notes
thereto), which are included in Schedule 4.7 consisting of the balance
------------
sheet at such dates and the related statements of earnings and cash flows
for the twelve month periods then ended;
(b) the unaudited financial statements of the Company as of January
31, 1998 (which shall include, for comparative purposes, financial
statements as of January 31, 1997), which are included in Schedule 4.7,
------------
consisting of the balance sheet at such date and the related statement of
earnings for the one month period then ended.
"GAAP" means United States generally accepted accounting principles as in
----
effect from time to time.
"Hazardous Substance" means any material or substance which (i) constitutes
-------------------
a hazardous substance, toxic substance or pollutant (as such terms are defined
by or pursuant to any Environmental Laws) or (ii) is regulated or controlled as
a hazardous substance, toxic substance,
-3-
<PAGE>
pollutant or other regulated or controlled material, substance or matter
pursuant to any Environmental Laws.
"Holdback Amount" has the meaning set forth in Section 2.3 below.
--------------- -----------
"Holdback Release Date" has the meaning set forth in Section 2.3 below.
--------------------- -----------
"Indemnified Party" has the meaning set forth in Section 9.4 below.
----------------- -----------
"Indemnifying Party" has the meaning set forth in Section 9.4 below.
------------------ -----------
"Intellectual Property" means (a) all inventions (whether patentable or
---------------------
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f) all computer software (including data and
related documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"Jackson" means Jackson Products, Inc., a Delaware corporation and the sole
-------
stockholder of the Buyer.
"Knowledge" means actual knowledge after reasonable investigation.
---------
"Latest Balance Sheet" means the unaudited balance sheet of the Company
--------------------
dated as of October 31, 1997.
"Law" means any law, statute, regulation, ordinance, rule, order, decree,
---
judgment, consent decree, settlement agreement or governmental requirement
enacted, promulgated, entered into, agreed or imposed by any Authority.
"Liability" means any liability (whether known or unknown, whether asserted
---------
or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes.
-4-
<PAGE>
"Lien" means any mortgage, lien (except for any lien for Taxes not yet due
----
and payable), charge, restriction, pledge, security interest, option, lease or
sublease, claim, right of any third party, easement, encroachment or
encumbrance.
"Lindblom Transaction" means the redemption by the Company of 4,913 Shares
--------------------
pursuant to the Stock Redemption Agreement, dated as of March 31, 1998, by and
among the Company, the Lindblom Family Limited Partnership and Leonard C.
Lindblom (the "Stock Redemption Agreement").
--------------------------
"Management Sellers" means Edward D. Surjan, Jr. and Robert R. Dahl.
------------------
"Material Adverse Effect" shall mean any circumstances, developments or
-----------------------
matters whose effect on the Company's Business, properties, assets, results,
operations, condition (financial and other) and prospects, either alone or in
the aggregate, is or would reasonably expected to be materially adverse.
"Multiemployer Plan" has the meaning set forth in ERISA (S)3(37).
------------------
"Ordinary Course of Business" means the ordinary course of business
---------------------------
consistent with past custom and practice (including with respect to quantity and
frequency).
"Outside Sellers" means Beverly J. Dahl, Robert A. Dahl and Betty D. Dahl.
---------------
"PBGC" means the Pension Benefit Guaranty Corporation.
----
"Permits" has the meaning set forth in Section 4.26 below.
------- ------------
"Person" means an individual, a partnership, a corporation, an association,
------
a joint stock company, a trust, a joint venture, an unincorporated organization,
or a governmental entity (or any department, agency, or political subdivision
thereof).
"Projections" means all financial projections and forward-looking
-----------
statements concerning the Company which have been furnished by the Company or
the Sellers to Buyer or its Affiliates or representatives and which have been
attached to Schedule 4.7(b).
---------------
"Purchase Price"means $2,700,000, minus any adjustment pursuant to Section
-------------- ----- -------
7.6.
- ---
"Rockwell Agreement" has the meaning set forth in Section 4.13 below.
------------------ ------------
"Schedules" means the disclosure schedules accompanying this Agreement.
---------
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
-----------------------
amended.
-5-
<PAGE>
"Sellers" means collectively, Dahl, the Management Sellers and the Outside
-------
Sellers.
"Shares" means the 3,525 shares of common stock, no par value per share, of
------
the Company held of record by Dahl.
"Subsidiary" means any corporation, partnership or limited liability
----------
company with respect to which a specified Person (or a Subsidiary thereof) owns
a majority of the common stock or has the power to vote or direct the voting of
sufficient securities to elect a majority of the directors.
"Tax" means any federal, state, local, or foreign income, gross receipts,
---
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code (S)59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
----------
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 9.4 below.
----------------- -----------
"Trust Agreements" means the trust agreements entered into by the
----------------
Management Sellers and the Outside Sellers.
ARTICLE II
PURCHASE AND SALE OF SHARES
SECTION 2.1. Basic Transaction. On and subject to the terms and
-----------------
conditions of this Agreement, the Buyer agrees to purchase from Dahl, and Dahl
agrees to sell, or cause to be sold, to the Buyer, all of the Shares for the
consideration specified herein.
SECTION 2.2. Payment of Purchase Price. On the Closing Date, in
-------------------------
consideration for the Shares, the Buyer shall pay to Dahl the Cash Amount. The
Cash Amount shall be paid to Dahl by means of wire transfers of immediately
available funds to an account or accounts designated by Dahl.
SECTION 2.3. Holdback. The Buyer will withhold $500,000 of the Purchase
--------
Price (the "Holdback Amount") from Dahl until eighteen months from the Closing
---------------
Date (the "Holdback Release Date"). The Holdback Amount shall be deposited in
---------------------
an interest bearing account and shall serve as a source for any indemnification
claims pursuant to Article IX. On the Holdback Release Date, if there are no
----------
pending claims for indemnification by the Buyer, the Buyer shall cause the
-6-
<PAGE>
Holdback Amount and interest calculated at 5% per annum on the entire Holdback
Amount to be distributed to Dahl.
SECTION 2.4. The Closing. The closing of the transactions contemplated
-----------
by this Agreement (the "Closing") shall take place at the offices of Stark &
-------
Knoll, 76 South Main Street, Suite 1512, Akron, Ohio 44308, commencing at 10:00
a.m. local time on the later of (i) April 15, 1998, or (ii) five business days
following the satisfaction or waiver of all conditions to the obligations of the
parties to consummate the transactions contemplated hereby (other than
conditions with respect to actions the respective parties will take at the
Closing itself) or such other date as the parties may mutually determine, but in
any event no later than April 30, 1998 (the "Closing Date"). It is the intent
------------
of the parties that Buyer shall assume control of the Company immediately after
the close of business on the Closing Date.
SECTION 2.5. Closing Deliveries by Sellers. To effect the transfer
-----------------------------
referred to in Section 2.1 hereof and the delivery of the consideration
-----------
described in Section 2.2 hereof, the Sellers shall, on the Closing Date, deliver
-----------
the following:
(a) Sellers shall cause to be delivered to Buyer certificates
evidencing the Shares, free and clear of any and all Liens, duly endorsed
in blank for transfer or accompanied by stock powers duly executed in
blank;
(b) Sellers shall have delivered to Buyer all consents, approvals,
releases and waivers from governmental Authorities and other third parties
required or necessary as a result of the transactions contemplated hereby,
reasonably satisfactory in form and substance to Buyer and its counsel;
(c) Sellers shall have delivered all other documents required to be
delivered pursuant to Article VII hereof not specifically mentioned above
-----------
in this Section;
(d) Sellers shall have delivered all documents in connection with the
Lindblom Transaction; and
(e) All instruments and documents executed and delivered to Buyer
pursuant hereto shall be in form and substance, and shall be executed in a
manner, reasonably satisfactory to Buyer and its counsel.
SECTION 2.6. Closing Deliveries by Buyer. To effect the transfer
---------------------------
referred to in Section 2.1 hereof and the delivery of the consideration
-----------
described in Section 2.2 hereof, the Buyer shall, on the Closing Date, deliver
-----------
the following:
(a) Buyer shall have tendered to Dahl the Cash Amount by wire
transfer of immediately available funds to such account or accounts of
which Dahl shall have given notice to Buyer hereunder not later than five
(5) business days prior to the Closing Date;
-7-
<PAGE>
(b) Buyer shall have deposited the Holdback Amount;
(c) Buyer shall have tendered all other documents required to be
delivered pursuant to Article VIII hereof not specifically mentioned above
------------
in this Section; and
(d) All instruments and documents executed and delivered to Sellers
pursuant hereto shall be in form and substance, and shall be executed in a
manner, reasonably satisfactory to Sellers and their counsel.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers represent and warrant to the Buyer that the statements
contained in this Article III are correct and complete as of the date of this
-----------
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article III) with respect to himself or itself.
-----------
SECTION 3.1. Authorization of Transaction. Each Seller has full power
----------------------------
and authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform his or its obligations hereunder. This
Agreement constitutes the valid and legally binding obligation of each Seller,
enforceable in accordance with its terms and conditions. The Sellers need not
give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order to consummate the
transactions contemplated by this Agreement.
SECTION 3.2. Noncontravention. Except as set forth on Schedule 3.2,
---------------- ------------
neither the execution and the delivery of this Agreement, nor the consummation
of the transactions contemplated hereby, will (A) violate any constitution, Law,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which any Seller
is subject or any provision of the Trust Agreements or the Stock Redemption
Agreement or (B) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice or consent under
any Contract, lease, license, instrument, or other arrangement to which any
Seller is a party or by which he or it is bound or to which any of his or its
assets is subject.
SECTION 3.3. Brokers' Fees. Except as set forth on Schedule 3.3, the
------------- ------------
Sellers have no Liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions contemplated by this
Agreement for which the Buyer could become liable or obligated.
SECTION 3.4. Shares. Except as set forth on Schedule 3.4, Dahl holds of
------ ------------
record and owns beneficially all of the Shares, free and clear of any
restrictions on transfer (other than any restrictions
-8-
<PAGE>
under the Securities Act and state securities Laws), Taxes, Liens, options,
warrants, purchase rights, Contracts, commitments, equities, claims, and
demands. No Seller is a party to any option, warrant, purchase right, or other
Contract or commitment that could require such Seller to sell, transfer, or
otherwise dispose of any Shares (other than this Agreement). Except as set forth
on Schedule 3.4, no Seller is a party to any voting trust, proxy, or other
------------
agreement or understanding with respect to the voting of any Shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLERS
The Company and the Sellers hereby represent and warrant to the Buyer that
the statements contained in this Article IV are correct and complete as of the
----------
date of this Agreement, and, except as amended pursuant to Section 6.8, will be
-----------
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Article IV), except as set forth in the Schedules hereto. Nothing in the
- ----------
Schedules shall be deemed adequate to disclose an exception to a representation
or warranty made herein, however, unless the Schedule identifies the exception
with reasonable particularity. Without limiting the generality of the foregoing,
the mere listing (or inclusion of a copy) of a document or other item shall not
be deemed adequate to disclose an exception to a representation or warranty made
herein (unless the representation or warranty has to do with the existence of
the document or other item itself). An item disclosed in any Schedule shall be
deemed disclosed for purposes of all Schedules, provided that reasonably
particular cross references have been included.
SECTION 4.1. Organization, Qualification, and Corporate Power. The
------------------------------------------------
Company is a corporation duly organized, validly existing, and in good standing
under the Laws of the State of Ohio. The Company is duly authorized to conduct
business and is in good standing under the Laws of each jurisdiction except
where the failure to be so qualified would not have a Material Adverse Effect on
the Company. The Company has full corporate power and authority and all
licenses, Permits, and authorizations necessary to carry on the Business in
which it is engaged and to own and use the properties owned and used by it. The
Sellers have delivered to the Buyer correct and complete copies of the articles
of incorporation and code of regulations of the Company (as amended to date).
The minute books (containing the records of meetings of the stockholders, the
board of directors, and any committees of the board of directors), the stock
certificate books, and the stock record books of the Company are correct and
complete. The Company is not in default under or in violation of any provision
of its articles of incorporation or code of regulations.
SECTION 4.2. Capitalization.
--------------
(a) The entire authorized capital stock of the Company consists of
15,000 shares of common stock, no par value, of which 3,525 shares are
issued and outstanding and 4,913 shares are held in treasury. All of the
issued and outstanding Shares have been duly authorized, are validly
issued, fully paid, and nonassessable, and are held of record by Dahl.
-9-
<PAGE>
Except as set forth on Schedule 4.2, there are no outstanding or authorized
------------
options, warrants, purchase rights, subscription rights, conversion rights,
exchange rights, or other Contracts or commitments that could require the
Company to issue, sell, or otherwise cause to become outstanding any of the
Shares. There are no outstanding or authorized stock appreciation, phantom
stock, profit participation, or similar rights with respect to the Shares.
There are no voting trusts, proxies, or other agreements or understandings
with respect to the voting of the Shares.
(b) The assignments, endorsements, stock powers and other instruments
of transfer delivered by Dahl to Buyer at the Closing will be sufficient to
transfer Dahl's entire interest, legal and beneficial, in the Shares and,
after such transfer, the Buyer shall acquire all of the Shares. Dahl has
full power and authority (including full corporate power and authority) to
convey good and marketable title to all of the Shares, and upon transfer to
Buyer of the certificates representing such Shares, Buyer will receive good
and marketable title to such Shares, free and clear of all Liens.
SECTION 4.3. Noncontravention. Neither the execution and the delivery of
----------------
this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, Law, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Company is subject or any provision
of the articles of incorporation or code of regulations of the Company or (ii)
except as set forth on Schedule 4.3, conflict with, result in a breach of,
------------
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any Contract, lease, license, instrument, or other arrangement to which
the Company is a party or by which it is bound or to which any of its assets is
subject (or result in the imposition of any Lien upon any of its assets). The
Company does not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the parties to consummate the transactions contemplated by this
Agreement.
SECTION 4.4. Brokers' Fees. Except as set forth on Schedule 4.4, the
------------- ------------
Company has no Liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions contemplated by this
Agreement.
SECTION 4.5. Title to Assets. Except as set forth on Schedule 4.5, the
--------------- ------------
Company has good and marketable title to, or a valid leasehold interest in, the
properties and assets used by it, located on its premises, or shown on the
Latest Balance Sheet or acquired after the date thereof, free and clear of all
Liens, except for properties and assets disposed of in the Ordinary Course of
Business since the date of the Latest Balance Sheet.
SECTION 4.6. Subsidiaries. The Company has no direct or indirect
------------
Subsidiaries, either wholly or partially owned, and the Company does not hold
any direct or indirect economic, voting or management interest in any Person or
own any securities issued by any Person.
SECTION 4.7. Financial Statements; Projections.
---------------------------------
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<PAGE>
(a) The Financial Statements of the Company are set forth on Schedule
--------
4.7(a). The Financial Statements have been and will be prepared in
------
accordance with GAAP consistently applied and present fairly the financial
position, assets and Liabilities of the Company as of the dates thereof and
the revenues, expenses, results of operations of the Company for the
periods covered thereby. The Financial Statements are the books and
records of the Company and do not reflect any transactions which are not
bona fide transactions.
(b) The Projections of the Company are set forth on Schedule 4.7(b).
---------------
All of the Projections are based upon assumptions made in good faith and
considered reasonable by the Company in light of historical financial
information concerning the Company and its industry. The Projections
represent each Seller's and the Company's best estimate of the results of
operations and cash flows for the periods covered thereby and the financial
position as of the dates set forth therein of the Company. The Company's
failure to meet the Projections, other than as the result of assumptions
made negligently or in bad faith, shall not be deemed to be a breach of
this Agreement.
SECTION 4.8. Events Subsequent to Latest Balance Sheet. Since the date
-----------------------------------------
of the Latest Balance Sheet, there has not been any change in the business,
financial condition, operations, results of operations, or future prospects of
the Company, or in any item set forth on any of the Schedules attached hereto,
which would have a Material Adverse Effect on the Company. Without limiting the
generality of the foregoing, since that date:
(a) the Company has not sold, leased, transferred, or assigned any of
its assets, tangible or intangible, other than for a fair consideration in
the Ordinary Course of Business;
(b) except as set forth on Schedule 4.8(b), the Company has not
---------------
entered into any Contract, lease, or license (or series of related
Contracts, leases, and licenses) involving more than $25,000 and outside
the Ordinary Course of Business;
(c) except as set forth on Schedule 4.8(c), no party (including the
---------------
Company) has accelerated, terminated, modified, or canceled any agreement,
Contract, lease or license (or series of related Contracts, leases and
licenses) to which the Company is a party or by which it is bound outside
the Ordinary Course of Business;
(d) the Company has not imposed any Lien upon any of its assets,
tangible or intangible;
(e) except as set forth on Schedule 4.8(e), the Company has not made
---------------
any capital expenditure (or series of related capital expenditures) in an
amount in excess of $25,000 either individually or in the aggregate;
(f) the Company has not made any capital investment in, any loan to,
or any acquisition of the securities or assets of, any other Person (or
series of related capital investments, loans, and acquisitions);
-11-
<PAGE>
(g) except as set forth on Schedule 4.8(g), the Company has not
---------------
issued any note, bond, or other debt security or created, incurred,
assumed, or guaranteed any indebtedness for borrowed money or capitalized
lease obligation involving more than $25,000 either individually or in the
aggregate;
(h) the Company has not delayed or postponed the payment of accounts
payable and other Liabilities outside the Ordinary Course of Business;
(i) the Company has not cancelled, compromised, waived, or released
any right or claim (or series of related rights and claims) either
involving more than $25,000 or outside the Ordinary Course of Business;
(j) the Company has not granted any license or sublicense of any
rights under or with respect to any Intellectual Property;
(k) there has been no change made or authorized in the articles of
incorporation or code of regulations of the Company;
(l) except as set forth on Schedule 4.8(l), the Company has not
---------------
issued, sold, or otherwise disposed any of its capital stock, or granted
any options, warrants, or other rights to purchase or obtain (including
upon conversion, exchange, or exercise) any of its capital stock;
(m) the Company has not declared, set aside, or paid any dividend or
made any distribution with respect to its capital stock (whether in cash or
in kind) or redeemed, purchased, or otherwise acquired any of its capital
stock;
(n) the Company has not experienced any damage, destruction, or loss
(whether or not covered by insurance) to its property;
(o) the Company has not made any loan to, or entered into any other
transaction with, any of its directors, officers, employees or Affiliates;
(p) the Company has not entered into any employment Contract or
collective bargaining agreement, written or oral, or modified the terms of
any existing such Contract or agreement;
(q) except for hourly employees and except as set forth on Schedule
--------
4.8(q), the Company has not granted any increase in the base compensation
------
of any of its directors, officers, and employees or made any other change
in employment terms for any of its directors, officers, and employees, in
each case, with respect to those directors, officers and employees, whose
annual compensation, including any bonuses, equals or exceeds $50,000;
-12-
<PAGE>
(r) except as set forth on Schedule 4.8(r), the Company has not
---------------
adopted, amended, modified, or terminated any bonus, profit-sharing,
incentive, severance, or other plan, Contract, or commitment for the
benefit of any of its directors, officers, and employees (or taken any such
action with respect to any other Employee Benefit Plan);
(s) the Company has not made or pledged to make any charitable or
other capital contribution outside the Ordinary Course of Business;
(t) there has not been any other occurrence, event, incident, action,
failure to act, or transaction outside the Ordinary Course of Business
involving the Company; and
(u) the Company has not committed to any of the foregoing.
SECTION 4.9. Undisclosed Liabilities. Except as set forth on Schedule
----------------------- --------
4.9, the Company has no Liability (and to the Knowledge of the Sellers and the
- ---
Directors and officers of the Company, there is no basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against it giving rise to any Liability) including, but not
limited to, any Liability related in any manner to the Trust Agreements or the
Lindblom Transaction, except for (i) Liabilities set forth on the face of the
Latest Balance Sheet (rather than in any notes thereto) and (ii) Liabilities
which have arisen after the date of the Latest Balance Sheet in the Ordinary
Course of Business (none of which results from, arises out of, relates to, is in
the nature of, or was caused by any breach of Contract, breach of warranty,
tort, infringement, or violation of Law or arose out of any charge, complaint,
actions, suit, claim, proceeding or demand).
SECTION 4.10. Legal Compliance. Except as set forth on Schedule 4.10,
---------------- -------------
the Company and its Affiliates have complied with all applicable Laws (including
rules, regulations, codes, plans, injunctions, judgments, orders, decrees,
rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), and, to the Knowledge of the Sellers and
the Directors and officers of the Company, no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against any of them alleging any failure so to comply.
SECTION 4.11. Tax Matters.
-----------
(a) The Company has duly and timely filed all Tax Returns that it has
been required to file for all periods through and including the Closing
Date. All such Tax Returns were correct and complete in all respects. All
Taxes owed by the Company (whether or not shown on any Tax Return) have
been timely paid. The Company currently is not the beneficiary of any
extension of time within which to file any Tax Return. The Company has
maintained adequate provision for, and adequate funds to pay, all unpaid
Liabilities for Taxes, whether or not disputed, that have accrued with
respect to or are applicable to the period ended on and including the
Closing Date or to any years and periods prior thereto and for which the
Company may be directly or contingently liable in its own right or as a
transferee of the assets of, or successor to, any Person. The Company has
not incurred any Tax Liabilities
-13-
<PAGE>
other than in the Ordinary Course of Business for any taxable year for
which the applicable statute of limitations has not expired. No claim has
ever been made by an Authority in a jurisdiction where the Company does not
pay Taxes or file Tax Returns that it is or may be subject to taxation by
that jurisdiction. There are no Liens on any of the assets of the Company
that arose in connection with any failure (or alleged failure) to pay any
Tax.
(b) None of the Tax Returns that include the operations of the
Company has ever been audited or investigated by any taxing Authority, and
no facts exist which would constitute grounds for the assessment of any
additional Taxes by any taxing Authority with respect to the taxable years
covered in such Tax Returns. No issues have been raised in any examination
by any taxing Authority with respect to the businesses and operations of
the Company which, by application of similar principals, reasonably could
be expected to result in a proposed adjustment to the Liability for Taxes
for any other period not so examined. Neither the Sellers nor the Directors
and officers (and employees responsible for Tax matters) of the Company
have received, or expect to receive, from any taxing Authority any written
notice of a proposed adjustment, deficiency, underpayment of Taxes or any
other such notice which has not been satisfied by payment or been
withdrawn, and no claims have been asserted relating to such Taxes against
the Company.
(c) Schedule 4.11 lists all federal, state, local, and foreign income
-------------
Tax Returns filed with respect to the Company for taxable periods for which
the applicable statue of limitations has not expired, indicates those Tax
Returns that have been audited, and indicates those Tax Returns that
currently are the subject of audit. The Sellers have delivered to the
Buyer correct and complete copies of all federal, state, local and foreign
income Tax Returns, examination reports, and statements of deficiencies
assessed against or agreed to by the Company for taxable periods for which
the applicable statute of limitations has not expired. The Company has not
waived any statute of limitations in respect of Taxes or agreed to any
extension of time with respect to a Tax assessment or deficiency.
(d) The Company has withheld and paid all Taxes required to have been
withheld and paid, including without limitation, sales and use taxes, and
all Taxes in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party.
(e) The Company has not filed a consent to the application of Section
341(f) of the Code.
(f) The Company will not be required, as a result of (i) a change in
accounting method for a Tax period beginning on or before the Closing Date,
to include any adjustment under Section 481(c) of the Code (or any
corresponding provision of state, local or foreign Tax Law) in taxable
income for any Tax period beginning on or after the Closing Date, or (ii)
any "closing agreement," as described in Section 7121 of the Code (or any
corresponding provision of state, local or foreign Tax Law), to include any
item of income in or exclude any item of deduction from any Tax period
beginning on or after the Closing Date.
-14-
<PAGE>
(g) The Company has disclosed on its income Tax Returns all positions
taken therein that could give rise to an accuracy-related penalty under
Section 6662 of the Code (or any corresponding provision of Tax Law).
(h) The Company has not made any payments, is not obligated to make
any payments and is not a party to any agreement that under certain
circumstances could obligate it to make any "excess parachute payment" as
defined in Section 280G of the Code or any payments that will not be
deductible under Section 162(m) of the Code.
(i) The Company is not a party to any Tax allocation or sharing
agreement. The Company is not subject to any joint venture, partnership or
other arrangement or Contract which is treated as a partnership for federal
income Tax purposes.
(j) None of the assets of the Company constitutes tax-exempt bond
financed property or tax-exempt use property within the meaning of Section
168 of the Code, and none of the assets reflected on the Financial
Statements is subject to a lease, safe harbor lease or other arrangement as
a result of which the Company is not treated as the owner for federal
income Tax purposes.
(k) The basis of all depreciable or amortizable assets, and the
methods used in determining allowable depreciation or amortization
(including cost recovery) deductions of the Company, are correct and in
compliance with the Code and the regulations thereunder in all material
respects.
(l) No Seller is a "foreign person" as defined in Section 1445(f)(3)
of the Code.
(m) The Company (A) has not been a member of an Affiliated Group
filing a consolidated federal income Tax Return or (B) has any Liability
for the Taxes of any Person (other than the Company) under Treas. Reg.
(S)1.1502-6 (or any similar provision of state, local, or foreign Law), as
a transferee or successor, by Contract, or otherwise.
(n) The Company is not a party to or otherwise subject to any
arrangement having the effect of or giving rise to the recognition of a
deduction or loss in a taxable period ending on or before the Closing Date,
and a corresponding recognition of taxable income or gain in a taxable
period ending after the Closing Date, or any other arrangement that would
have the effect of or give rise to the recognition of taxable income or
gain in a taxable period ending after the Closing Date without the receipt
of or entitlement to a corresponding amount of cash.
SECTION 4.12. Real Property.
-------------
(a) Schedule 4.12(a) lists and describes briefly all real property
----------------
that the Company owns (the "Owned Property"). With respect to each such
--------------
parcel of Owned Property:
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<PAGE>
(i) except as set forth on Schedule 4.12(a), the identified
----------------
owner has good and marketable title to the parcel of Owned Property,
free and clear of all Liens, easements, covenants, or other
restrictions, except for installments of special assessments of real
estate Taxes not yet delinquent and recorded easements, covenants, and
other restrictions which do not impair the current use, occupancy, or
value, or the marketability of title, of the property subject thereto;
(ii) except as set forth on Schedule 4.12(a), there are no
----------------
pending or,to the Knowledge of the Sellers and the Directors and
officers (and employees with responsibility for real estate matters)
of the Company, threatened condemnation proceedings, lawsuits, or
administrative actions relating to the property or other matters
affecting adversely the current use, occupancy, or value thereof;
(iii) the legal description for the parcel contained in the deed
thereof describes such parcel fully and adequately, the buildings and
improvements are located within the boundary lines of the described
parcels of land, are not in violation of applicable setback
requirements, zoning Laws, and ordinances (and none of the properties
or buildings or improvements thereon are subject to "permitted non-
conforming use" or "permitted non-conforming structure"
classifications), and do not encroach on any easement which may burden
the land, and the land does not serve any adjoining property for any
purpose inconsistent with the use of the land, and the property is not
located within any flood plain or subject to any similar type
restriction for which any permits or licenses necessary to the use
thereof have not been obtained;
(iv) all facilities have received all approvals of governmental
Authorities (including licenses and permits) required in connection
with the ownership or operation thereof and have been operated and
maintained in accordance with applicable Laws, rules, and regulations;
(v) there are no leases, subleases, licenses, concessions, or
other Contracts, written or oral, granting to any party or parties the
right of use or occupancy of any portion of the parcel of Owned
Property;
(vi) except as set forth on Schedule 4.12(a), there are no
----------------
outstanding options or rights of first refusal to purchase the parcel
of Owned Property, or any portion thereof or interest therein;
(vii) there are no parties (other than the Company) in
possession of the parcel of real property, other than tenants under
any leases disclosed in Schedule 4.12(a) who are in possession of
----------------
space to which they are entitled;
(viii) all facilities located on the parcel of real property are
supplied with utilities and other services necessary for the operation
of such facilities, including
-16-
<PAGE>
gas, electricity, water, telephone, sanitary sewer, and storm sewer,
all of which services are adequate in accordance with all applicable
Laws, ordinances, rules, and regulations and are provided via public
roads or via permanent, irrevocable, appurtenant easements benefitting
the parcel of real property; and
(ix) except as set forth on Schedule 4.12(a), each parcel of
----------------
real property abuts on and has direct vehicular access to a public
road, or has access to a public road via a permanent, irrevocable,
appurtenant easement benefitting the parcel of real property, and
access to the property is provided by paved public right-of-way with
adequate curb cuts available.
(b) Schedule 4.12(b) lists and describes briefly all real property
----------------
leased or subleased to the Company (the "Leased Property"). Schedule
--------------- --------
4.12(b) also identifies the leased or subleased properties for which title
-------
insurance policies are to be procured. The Sellers have delivered to the
Buyer correct and complete copies of the leases and subleases and other
agreements for occupancy, including all amendments, extensions and other
modifications thereto ("Leases") with respect to each Leased Property, as
------
listed in Schedule 4.12(b) (as amended to date). With respect to each Lease
----------------
listed in Schedule 4.12(b):
----------------
(i) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(ii) the lease or sublease will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated hereby;
(iii) no party to the lease or sublease is in breach or
default, and no event has occurred which, with notice or lapse of
time, would constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(iv) no party to the lease or sublease has repudiated any
provision thereof;
(v) there are no disputes, oral agreements, or forbearance
programs in effect as to the lease or sublease;
(vi) with respect to each sublease, the representations and
warranties set forth in subsections (i) through (v) above are true and
correct with respect to the underlying lease;
(vii) the Company has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold;
(viii) all facilities leased or subleased thereunder have
received all approvals of governmental Authorities (including licenses
and permits) required in connection
-17-
<PAGE>
with the operation thereof and have been operated and maintained in
accordance with applicable Laws, rules, and regulations;
(ix) all facilities leased or subleased thereunder are supplied
with utilities and other services necessary for the operation of said
facilities; and
(x) the owner of the facility leased or subleased has good and
marketable title to the parcel of real property, free and clear of all
Liens, easements, covenants, or other restrictions, except for
installments of special easements of real estate Taxes not yet
delinquent and recorded easements, covenants, and other restrictions
which do not impair the current use, occupancy, or value, or the
marketability of title, of the property subject thereto.
SECTION 4.13. Intellectual Property.
---------------------
(a) Except as set forth on Schedule 4.13(a), the Company owns or has
----------------
the right to use pursuant to license, sublicense, Contract, or permission
all Intellectual Property necessary for the operation of the Business as
presently conducted and as proposed to be conducted as set forth in the
Projections. Each item of Intellectual Property owned or used by the
Company immediately prior to the Closing hereunder will be owned or
available for use by the Company on identical terms and conditions
immediately subsequent to the Closing hereunder. The Company has taken all
necessary action to maintain and protect each item of Intellectual Property
that it owns or uses.
(b) Except as set forth on Schedule 4.13(b), the Company has not
----------------
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of third parties, and
neither the Sellers nor the directors and officers (and employees with
responsibility for Intellectual Property matters) of the Company have ever
received any charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation (including any
claim that the Company must license or refrain from using any Intellectual
Property rights of any third party). To the Knowledge of the Sellers and
the Directors and officers (and employees with responsibility for
Intellectual Property matters) of the Company, no third party has
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of the Company.
(c) Schedule 4.13(c) identifies each patent or registration which has
----------------
been issued to the Company with respect to any of its Intellectual
Property, identifies each pending patent application or application for
registration which the Company has made with respect to any of its
Intellectual Property, and identifies each license, Contract or other
permission which the Company has granted to any third party with respect to
any of its Intellectual Property (together with any exceptions). The
Sellers have delivered to the Buyer correct and complete copies of all such
patents, registrations, applications, licenses, Contracts and permissions
(as amended to date) and has made available to the Buyer correct and
complete
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<PAGE>
copies of all other written documentation evidencing ownership and
prosecution (if applicable) of each such item. Schedule 4.13(c) also
----------------
identifies each trade name or unregistered trademark used by the Company in
connection with its Business. With respect to each item of Intellectual
Property required to be identified in Schedule 4.13(c):
----------------
(i) the Company possesses all right, title, and interest in and
to the item, free and clear of any Lien, license, or other
restriction;
(ii) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(iii) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the Knowledge of
the Sellers and the Directors and officers (and employees with
responsibility for Intellectual Property matters) of the Company, is
threatened which challenges the legality, validity, enforceability,
use, or ownership of the item; and
(iv) the Company has never agreed to indemnify any Person for or
against any interference, infringement, misappropriation, or other
conflict with respect to the item.
(d) Schedule 4.13(d) identifies each item of Intellectual Property
----------------
that any third party owns and that the Company uses pursuant to license,
sublicense, Contract or permission. The Sellers have delivered to the
Buyer correct and complete copies of all such licenses, sublicenses,
Contracts and permissions (as amended to date). With respect to each item
of Intellectual Property required to be identified in Schedule 4.13(d):
----------------
(i) the license, sublicense, Contract or permission covering
the item is legal, valid, binding, enforceable, and in full force and
effect;
(ii) the license, sublicense, Contract or permission will
continue to be legal, valid, binding, enforceable, and in full force
and effect on identical terms following the consummation of the
transactions contemplated hereby;
(iii) no party to the license, sublicense, Contract or
permission is in breach or default, and no event has occurred which
with notice or lapse of time would constitute a breach or default or
permit termination, modification, or acceleration thereunder;
(iv) no party to the license, sublicense, Contract or permission
has repudiated any provision thereof;
-19-
<PAGE>
(v) with respect to each sublicense, the representations and
warranties set forth in subsections (i) through (iv) above are true
and correct with respect to the underlying license;
(vi) the underlying item of Intellectual Property is not
subject to any outstanding injunction, judgment, order, decree,
ruling, or charge;
(vii) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the Knowledge of
the Sellers and the Directors and officers (and employees with
responsibility for Intellectual Property matters) of the Company, is
threatened which challenges the legality, validity, or enforceability
of the underlying item of Intellectual Property; and
(viii) the Company has not granted any sublicense or similar
right with respect to the license, sublicense, agreement, or
permission.
(e) Schedule 4.13(e) sets forth a true, correct and complete copy of
----------------
the Technical Information and Patent License, dated as of March 13, 1987,
between the Company and Rockwell International Corporation (the "Rockwell
--------
Agreement"). With respect to the Rockwell Agreement other than as set forth
---------
on Schedule 4.13(e):
----------------
(i) other than the non-exclusive license granted to the Company
under the patents (the "Licensed Patents") licensed in the Rockwell
----------------
Agreement, to the Knowledge of the Sellers and the Directors and
officers (and employees with responsibility for Intellectual Property
matters) of the Company, no licenses under the Licensed Patents gave
been granted by Rockwell to any third party;
(ii) the Rockwell Agreement is valid, binding, enforceable, and
in full force and effect and will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated hereby;
(iii) to the Knowledge of the Sellers and the Directors and
officers (and employees with responsibility for Intellectual Property
matters) of the Company, the Licensed Patents are valid, subsisting
and legally enforceable against any third party;
(iv) the Company has timely made all scheduled royalty payments
set forth in the Rockwell Agreement;
(v) to the Knowledge of the Sellers and the Directors and
officers (and employees with responsibility for Intellectual Property
matters) of the Company, no third party infringes or is suspected of
infringing any of the Licensed Patents, whether or not such
infringement has been reported to Rockwell;
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<PAGE>
(vi) the Company is in possession of detailed books and
records of account of all liquid crystal displays to the extent
required by the Rockwell Agreement;
(vii) the Company and its past and present employees are and
have been in full compliance with all material provisions of the
Rockwell Agreement, including the obligation to maintain in confidence
and protect from disclosure any Technical Information (as defined in
the Rockwell Agreement);
(viii) the Company has not been called upon to, and it is not in
the possession of any facts relating to a claim which shall cause the
Company to, indemnify and hold Rockwell harmless from any claim
brought or threatened to be brought by any third party;
(ix) the Company is not in receipt of and, to the Knowledge of
the Sellers and the Directors and officers (and employees with
responsibility for Intellectual Property matters) of the Company,
there are no facts which would support, a claim by Rockwell that the
Company is in breach of the Rockwell Agreement;
(x) the Company has validly and effectively extended the term
of the Rockwell Agreement by written notice, duly given and, except
for as set forth on Schedule 4.13(e), in accordance with the terms of
----------------
the Rockwell Agreement prior to the end of its first term, which
notice extends the term of the Rockwell Agreement to March 12, 2002;
and
(xi) the Company has neither assigned or transferred, nor
attempted to assign or transfer, any of the Company's rights or
obligations under the Rockwell Agreement, either with or without the
prior written consent of Rockwell.
(f) To the Knowledge of the Sellers and the Directors and officers
(and employees with responsibility for Intellectual Property matters) of
the Company, the Company will not interfere with, infringe upon,
misappropriate, or otherwise come into conflict with, any Intellectual
Property rights of third parties as a result of the continued operation of
its Business as presently conducted and as presently proposed to be
conducted.
(g) Neither the Sellers nor the Directors and officers (and employees
with responsibility for Intellectual Property matters) of the Company have
any Knowledge of any new products, inventions, procedures, or methods of
manufacturing or processing that any competitors or other third parties
have developed which reasonably could be expected to supersede or make
obsolete any product or process of the Company.
SECTION 4.14. Tangible Assets. The Company owns or leases all buildings,
---------------
machinery, equipment, and other tangible assets necessary for the conduct of its
Business as presently conducted and as presently proposed to be conducted. Each
such tangible asset has been maintained in accordance with normal industry
practice, is in good operating condition and
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<PAGE>
repair (subject to normal wear and tear), is suitable for the purposes for which
it presently is used and, to the Knowledge of the Sellers and the Directors and
officers of the Company, free from defects (patent and latent). The assets of
the Company at the Closing will be sufficient to permit the Buyer to operate the
Business as currently conducted.
SECTION 4.15. Inventory. The inventory of the Company consists of raw
---------
materials and supplies, manufactured and purchased parts, goods in process, and
finished goods, all of which is merchantable and fit for the purpose for which
it was procured or manufactured, and none of which is slow-moving, obsolete,
damaged, or defective, subject only to the reserve for inventory writedown set
forth on the face of the Latest Balance Sheet (rather than in any notes thereto)
as adjusted for the passage of time through the Closing Date in accordance with
the past custom and practice of the Company.
SECTION 4.16. Contracts. Schedule 4.16 lists the following Contracts and
--------- -------------
other agreements to which the Company is a party:
(a) any Contract (or group of related Contracts) for the lease of
personal property to or from any Person providing for lease payments in
excess of $25,000 per annum;
(b) any Contract (or group of related contracts) between the Company
and any Major Customer or Major Supplier;
(c) any capitalized lease, pledge, conditional sale or title
retention agreement involving the payment of more than $25,000 in the
aggregate;
(d) any Contract concerning a partnership or joint venture;
(e) any Contract with a sales representative, manufacturer's
representative, distributor, dealer, broker, sales agency, advertising
agency or other Person engaged in sales, distributing or promotional
activities, or any agreement to act as one of the foregoing on behalf of
any Person;
(f) any Contract (or group of related Contracts) under which it has
created, incurred, assumed, or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation, or under which it has imposed a
Lien on any of its assets, tangible or intangible;
(g) any Contract pursuant to which the Company has made or will make
loans or advances, or has or will have incurred debts or become a guarantor
or surety or pledged its credit on or otherwise become responsible with
respect to any undertaking of another Person (except for the negotiation or
collection of negotiable instruments in transactions in the ordinary course
of business);
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<PAGE>
(h) any mortgage, indenture, note, bond or other agreement relating
to indebtedness incurred or provided by the Company;
(i) any form of Contract concerning confidentiality or noncompetition
or otherwise prohibiting the Company from freely engaging in any business;
(j) any Contract with any Seller or any Affiliate thereof;
(k) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors, officers,
and employees;
(l) any license, royalty or other Contract relating to Intellectual
Property;
(m) any Contract involving a governmental body;
(n) any collective bargaining agreement;
(o) any Contract for the employment of any individual on a full-time,
part-time, consulting, or other basis providing annual compensation in
excess of $50,000 or providing severance benefits;
(p) any Contract, whether or not fully performed, relating to any
acquisition or disposition of the Company or any predecessor in interest or
any acquisition or disposition of any subsidiary, division, line of
business, or real property;
(q) any Contract under which it has advanced or loaned any amount to
any of its directors, officers, and employees;
(r) any Contract under which the consequences of a default or
termination could have an adverse effect on the business, financial
condition, operations, results of operations, or future prospects of the
Company;
(s) any other Contract (or group of related Contracts) the
performance of which involves consideration in excess of $25,000;
(t) any commitment to do any of the foregoing described in clauses
(a) through (s).
The Sellers have delivered to the Buyer a correct and complete copy (or form of
Contract for certain Contracts so identified on Schedule 4.16) of each written
Contract listed in Schedule 4.16 (as amended to date) and a written summary
-------------
setting forth the terms and conditions of each oral Contract referred to in
Schedule 4.16. With respect to each such Contract: (A) the Contract is legal,
- -------------
valid, binding, enforceable, and in full force and effect; (B) the Contract will
continue to be legal, valid, binding, enforceable, and in full force and effect
on identical terms following the
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<PAGE>
consummation of the transactions contemplated hereby; (C) no party is in breach
or default, and no event has occurred which with notice or lapse of time would
constitute a breach or default, or permit termination, modification, or
acceleration, under the Contract; and (D) no party has repudiated any provision
of the Contract.
SECTION 4.17. Notes and Accounts Receivable. All notes and accounts
-----------------------------
receivable of the Company are reflected properly on their books and records, are
valid receivables subject to no setoffs or counterclaims, are current and
collectible, and will be collected in accordance with their terms at their
recorded amounts, subject only to the reserve for bad debts set forth on the
face of the Latest Balance Sheet (rather than in any notes thereto) as adjusted
for operations and transactions through the Closing Date in accordance with the
past custom and practices of the Company.
SECTION 4.18. Powers of Attorney. There are no outstanding powers of
------------------
attorney executed on behalf of the Company.
SECTION 4.19. Insurance. Schedule 4.19 sets forth the following
--------- -------------
information with respect to each insurance policy (including policies providing
property, casualty, Liability, and workers' compensation coverage and bond and
surety arrangements) to which the Company has been a party, a named insured, or
otherwise the beneficiary of coverage:
(a) the name, address, and telephone number of the agent;
(b) the name of the insurer, the name of the policyholder, and the
name of each covered insured;
(c) the policy number and the period of coverage;
(d) the scope (including an indication of whether the coverage was on
a claims made, occurrence, or other basis) and amount (including a
description of how deductibles and ceilings are calculated and operate) of
coverage; and
(e) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, enforceable, and in full force and effect; (B) the policy will continue
to be legal, valid, binding, enforceable, and in full force and effect on
identical terms following the consummation of the transactions contemplated
hereby; (C) neither the Company nor any other party to the policy is in breach
or default (including with respect to the payment of premiums or the giving of
notices), and no event has occurred which, with notice or the lapse of time,
would constitute such a breach or default, or permit termination, modification,
or acceleration, under the policy; and (D) no party to the policy has repudiated
any provision thereof. The Company has been covered by insurance in scope and
amount customary and reasonable for the Business in which it has engaged.
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<PAGE>
Schedule 4.19 describes any self-insurance arrangements affecting the Company.
- -------------
Schedule 4.19 sets forth known claims, if any, made against the Company that are
- -------------
covered by insurance. Such claims have been disclosed to and accepted by the
appropriate insurance companies and are being defended by such appropriate
insurance companies. Except as set forth on Schedule 4.19, no claims have been
-------------
denied coverage during the last five years.
SECTION 4.20. Litigation. Schedule 4.20 sets forth each instance in
---------- -------------
which the Company (i) is subject to any outstanding injunction, judgment, order,
decree, ruling, or charge or (ii) is a party or to the Knowledge of the Sellers
and the Directors and officers (and employees with responsibility for litigation
matters) of the Company, is threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court or quasi-
judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator. None of the actions, suits, proceedings,
hearings, and investigations set forth in Schedule 4.20 would reasonably be
-------------
expected to result in any adverse change in the business, financial condition,
operations, results of operations, or future prospects of the Company. Neither
the Sellers nor the Directors and officers (and employees with responsibility
for litigation matters) of the Company have any reason to believe that any such
action, suit, proceeding, hearing, or investigation may be brought or threatened
against the Company. Neither the Sellers nor the Company have any Liability
with respect to any claims or threatened claims by third parties relating to any
sale or proposed sale of the Company (whether structured as a sale of stock, a
sale of assets, a merger or otherwise) or any division of the Company, including
any claims or threatened claims by the Crystal Corridor Group. Neither the
Sellers nor the Company is a party to any litigation relating to such claims
and, to the Knowledge of the Sellers and the Directors and officers (and
employees with responsibility for litigation matters) of the Company, no such
litigation is threatened.
SECTION 4.21. Product Warranty. Each product manufactured, sold, leased,
----------------
or delivered by the Company has been in conformity with all applicable
contractual commitments and all express and implied warranties, and the Company
has no Liability (whether known or unknown, whether asserted or unasserted,
whether absolute or contingent, whether accrued or unaccrued, whether liquidated
or unliquidated, and whether due or to become due) for replacement or repair
thereof or other damages in connection therewith, subject only to a $250,000 pro
forma reserve for product warranty claims. Any setoffs against the pro forma
reserve shall be calculated on the basis of the net cost to the Company to
repair or replace the defective product. No product manufactured, sold, leased,
or delivered by the Company is subject to any guaranty, warranty, or other
indemnity beyond the applicable standard terms and conditions of sale or lease.
Schedule 4.21 includes copies of the standard terms and conditions of sale or
- -------------
lease for the Company (containing applicable guaranty, warranty, and indemnity
provisions).
SECTION 4.22. Product Liability. The Company has no Liability (whether
-----------------
known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due) arising out of
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<PAGE>
any injury to individuals or property as a result of the ownership, possession,
or use of any product manufactured, sold, leased, or delivered by the Company.
SECTION 4.23. Employees. Schedule 4.23 contains a true, complete and
--------- -------------
accurate list of the names, titles, annual compensation and all bonuses and
similar payments made for the current and preceding fiscal years for all
directors, officers and employees of the Company whose annual compensation,
including any bonuses, equals or exceeds $50,000. To the Knowledge of the
Sellers and the Directors and officers (and employees with responsibility for
employment matters) of the Company, no executive, key employee, or group of
employees has any plans to terminate employment with the Company. The Company is
not a party to or bound by any collective bargaining agreement, nor has it
experienced any strikes, grievances, claims of unfair labor practices, or other
collective bargaining disputes. The Company has not committed any unfair labor
practice. Neither the Sellers nor the Directors and officers (and employees with
responsibility for employment matters) of the Company have any Knowledge of any
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of the Company. The Company has not
engaged in any plant closing or employee layoff activities that would violate or
require notification pursuant to, the Worker Adjustment Retraining and
Notification Act of 1988, as amended, or any similar state, local or foreign
plant closing or mass layoff statute, rule or regulation.
SECTION 4.24. Employee Benefits.
-----------------
(a) General. Except as set forth on Schedule 4.24, the Company is
------- -------------
not a party to, participates in or has any Liability or contingent
Liability with respect to:
(i) any Employee Welfare Benefit Plan or Employee Pension
Benefit Plan, other than a Multiemployer Plan;
(ii) any retirement or deferred compensation plan, incentive
compensation plan, stock plan, unemployment compensation plan,
vacation pay, severance pay, bonus or benefit arrangement, insurance
or hospitalization program or any other fringe benefit arrangements
for any current or former employee, director, consultant or agent,
whether pursuant to Contract, arrangement, custom or informal
understanding, which does not constitute an employee benefit plan (as
defined in section 3(3) of ERISA); or
(iii) any employment agreement.
(b) Plan Documents and Reports. A true and correct copy of each of
--------------------------
the plans, arrangements, and agreements listed on Schedule 4.24 (referred
-------------
to hereinafter as "Employee Benefit Plans"), and all Contracts relating
----------------------
thereto, or to the funding thereof, including, without limitation, all
trust agreements, insurance Contracts, administration Contracts, investment
management agreements, subscription and participation agreements, and
recordkeeping agreements, each as in effect on the date hereof, has been
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<PAGE>
supplied to the Buyer. In the case of any Employee Benefit Plan which is
not in written form, the Buyer has been supplied with an accurate
description of such Employee Benefit Plan as in effect on the date hereof.
A true and correct copy of the most recent annual report, actuarial report,
accountant's opinion of the plan's financial statements, summary plan
description and Internal Revenue Service determination letter with respect
to each Employee Benefit Plan, to the extent applicable, and a current
schedule of assets (and the fair market value thereof assuming liquidation
of any asset which is not readily tradable) held with respect to any funded
Employee Benefit Plan has been supplied to the Buyer, and there have been
no material changes in the financial condition in the respective plans
other than market gains or losses to date from that stated in the annual
reports and actuarial reports supplied.
(c) Compliance with Employee Benefit Laws; Liabilities. As to all
--------------------------------------------------
Employee Benefit Plans:
(i) All Employee Benefit Plans comply and have been
administered in form and in operation in all material respects with
all applicable requirements of Law, and no event has occurred which
will or could cause any such Employee Benefit Plan to fail to comply
with such requirements and no notice has been issued by any
governmental Authority questioning or challenging such compliance.
(ii) All Employee Benefit Plans which are employee pension
benefit plans comply in form and in operation with all applicable
requirements of sections 401(a) and 501(a) of the Code; there have
been no amendments to such plans which are not the subject of a
favorable determination letter issued with respect thereto by the
Internal Revenue Service; and no event has occurred which will or
could give rise to disqualification of any such plan under such
sections or to a tax under section 511 of the Code.
(iii) None of the assets of any Employee Benefit Plan is
invested in employer securities or employer real property.
(iv) There have been no "prohibited transactions" (as described
in section 406 of ERISA or section 4975 of the Code) with respect to
any Employee Benefit Plan and the Company has not engaged in any
prohibited transaction.
(v) There have been no acts or omissions which have given rise
to or may give rise to fines, penalties, taxes or related charges
under section 502 of ERISA or Chapters 43, 47, 68 or 100 of the Code
for which the Company may be liable.
(vi) None of the payments contemplated by the Employee Benefit
Plans would, in the aggregate, constitute excess parachute payments
(as defined in section 280G of the Code (without regard to subsection
(b)(4) thereof)).
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<PAGE>
(vii) There are no actions, suits or claims (other than routine
claims for benefits) pending or, to the Knowledge of the Sellers and
the Directors and officers (and employees with responsibility for
employee benefit matters) of the Company, threatened involving any
Employee Benefit Plan or the assets thereof and, to the Knowledge of
the Sellers and the Directors and officers (and employees with
responsibility for employee benefit matters) of the Company, no facts
exist which could give rise to any such actions, suits or claims
(other than routine claims for benefits).
(viii) With respect to each Employee Benefit Plan that is
subject to Title IV of ERISA:
(A) there has been no reportable event (as described in
section 4043 of ERISA) which has not been reported and for which
notice is not waived under applicable regulations;
(B) no steps have been taken to terminate any such plan;
(C) there has been no withdrawal (within the meaning of
section 4063 of ERISA) of a "substantial employer" (as defined in
section 4001(a)(2) of ERISA);
(D) no event or condition has occurred which would
constitute grounds under section 4042 of ERISA for the
termination of or the appointment of a trustee to administer any
such plan; and
(E) except as disclosed on actuarial reports supplied to
the Buyer, if each such plan were terminated immediately after
the closing, there would be no unfunded Liabilities with respect
to any such plan, its participants or beneficiaries or the
Pension Benefit Guaranty Corporation (the "PBGC").
----
(ix) Each Employee Benefit Plan which constitutes a "group
health plan" (as defined in section 607(1) of ERISA or section
4980B(g)(2) of the Code), including any plans of current and former
affiliates which must be taken into account under sections 4980B and
414(t) of the Code or section 601 of ERISA, has been operated in
compliance in all material respects with applicable Law, including
coverage requirements of section 4980B of the Code and section 601 of
ERISA to the extent such requirements are applicable.
(x) The Company has no Liability or contingent Liability for
providing, under any Employee Benefit Plan or otherwise, any post-
retirement medical or life insurance benefits, other than statutory
Liability for providing group health
-28-
<PAGE>
plan continuation coverage under Part 6 of Title I of ERISA and
section 4980B of the Code.
(xi) Actuarially adequate accruals for all obligations under the
Employee Benefit Plans are reflected in the financial statements of
the Company and such obligations include a pro rata amount of the
contributions and PBGC premiums which would otherwise have been made
in accordance with past practices and applicable Law for the plan
years which include the Closing Date.
(xii) There has been no act or omission by the Company that
would impair the ability of the Company (or any successor thereto) to
unilaterally amend or terminate (in compliance with and subject to
applicable Laws) any Employee Benefit Plan.
(d) Multiemployer Plans. The Company does not contribute to, has not
-------------------
contributed to, and does not have any Liability or contingent Liability
with respect to any Multiemployer Plan.
SECTION 4.25. Environmental Matters.
---------------------
(a) Each of the Company and Affiliates:
(i) has complied and is in compliance with all Environmental
Laws (and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand or notice has been filed or, to the Knowledge
of the Sellers and the Directors and officers (and employees with
responsibility for environmental matters), commenced against any of
them alleging any such failure to comply);
(ii) has obtained and complied with, and is in compliance with,
all Permits, licenses and other authorizations that are required
pursuant to Environmental Laws; and
(iii) has complied in all material respects with all other
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables which are
contained in the Environmental Laws.
(b) Neither the Company nor its Affiliates has received any written
or oral notice, report or other information regarding any actual or alleged
violation of Environmental Laws, or any Liabilities or potential
Liabilities (whether known or unknown, whether asserted or unasserted,
whether absolute or contingent, whether accrued or unaccrued, whether
liquidated or unliquidated, and whether due or to become due), including
any investigatory, remedial or corrective obligations, relating to any of
them or its facilities arising under Environmental Laws.
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<PAGE>
(c) Except as set forth on Schedule 4.25(c), the Company has no
----------------
Liability (whether known or unknown, whether asserted or unasserted,
whether absolute or contingent, whether accrued ir unaccrued, whether
liquidated or unliquidated, and whether due or to become due), and the
Company and its Affiliates have not handled or disposed of any substance,
arranged for the disposal of any substance, exposed any employee or other
individual to any substance or condition, or owned or operated any property
or facility in any manner that could give rise to any Liability, for damage
to any site, location or body of water (surface or subsurface), for any
illness of or personal injury to any employee or other individual, or for
any reason under any Environmental Law.
(d) Schedule 4.25(d) sets forth all properties and equipment used in
----------------
the business of the Company and its Affiliates that contain, or have
contained, asbestos, PCB's, methylene chloride, trichloroethylene, 1,2-
transdichloroethylene, dioxins, dibenzofurans and other Hazardous
Substances.
(e) None of the following exists at any property or facility owned or
operated by the Company: (1) underground storage tanks, (2) asbestos-
containing material in any form or condition, (3) materials or equipment
containing polychlorinated biphenyls, or (4) landfills, surface
impoundments, or disposal areas.
(f) Neither the Company nor its Affiliates has treated, stored,
disposed of, arranged for or permitted the disposal of, transported,
handled, or released any substance, including without limitation any
Hazardous Substance, or owned or operated any property or facility (and no
such property or facility is contaminated by any such substance) in a
manner that has given or would give rise to Liabilities, including any
Liability for response costs, corrective action costs, personal injury,
property damage, natural resources damages or attorney fees, or any
investigative, corrective or remedial obligations, pursuant to
Environmental Laws.
(g) Neither this Agreement nor the consummation of the transaction
that is the subject of this Agreement will result in any obligations for
site investigation or cleanup, or notification to or consent of government
agencies or third parties, pursuant to any of the so-called "transaction-
triggered" or "responsible property transfer" Environmental Laws.
(h) Neither the Company nor any of its Affiliates has, either
expressly or by operation of Law, assumed or undertaken any Liability,
including without limitation any obligation for corrective or remedial
action, of any other Person relating to Environmental Laws.
(i) No facts, events or conditions relating to the past or present
facilities, properties or operations of the Company or any of its
Affiliates will prevent, hinder or limit continued compliance with
Environmental Laws, give rise to any investigatory,
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<PAGE>
remedial or corrective obligations pursuant to Environmental Laws, or give
rise to any other Liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise) pursuant to Environmental Laws, including
without limitation any relating to onsite or offsite releases or threatened
releases of Hazardous Substances or wastes, personal injury, property
damage or natural resources damage.
SECTION 4.26. Permits. Schedule 4.26 is a true and accurate list of all
------- -------------
licenses, certificates, permits, franchises, rights, code approvals and private
product approvals (collectively, "Permits") held by the Company. Except for the
-------
Permits listed on Schedule 4.26, there are no Permits, whether federal, state,
-------------
local or foreign, which are necessary for the lawful operation of the Business
of the Company as presently conducted.
SECTION 4.27. Backlog. Schedule 4.27 sets forth a true, complete and
------- -------------
correct list of all customer orders of the Company which constitute backlog
("Backlog") and the dollar amount represented by each such order as of March 18,
-------
1998. Except as set forth on Schedule 4.27, none of the Backlog orders have
-------------
been canceled and, to the Knowledge of the Sellers and the Directors and
officers (and employees with responsibility for Backlog matters) of the Company,
there are no threats of cancellation with respect to the Backlog orders.
SECTION 4.28. No Conflict of Interest. Neither any Seller nor any
-----------------------
Affiliate thereof has or claims to have any direct or indirect interest in any
tangible or intangible property used in the Business of the Company except as a
holder of Shares. Neither any Seller nor any Affiliate thereof has any direct
or indirect interest in any other Person which conducts a business similar to,
has any Contract or arrangement with, or does business or is involved in any way
with, the Company, except for the ownership of less than 1% of the outstanding
stock of any publicly held corporation.
SECTION 4.29. Bank Accounts. Schedule 4.29 sets forth the names and
------------- -------------
locations of each bank or other financial institution at which the Company has
accounts (giving the account numbers) or safe deposit box and the names of all
Persons authorized to draw thereon or have access thereto, and the names of all
Persons, if any, now holding powers of attorney or comparable delegation of
authority from the Company and a summary statement thereof.
SECTION 4.30. Customers and Suppliers.
-----------------------
(a) Schedule 4.30 sets forth:
-------------
(i) a list of the 10 largest customers of the Company, in terms
of revenue during each of the 1996 and 1997 calendar years
(collectively, the "Major Customers"), showing the total revenue
---------------
received in each such period from each such customer;
(ii) a list of the 10 largest suppliers of the Company in terms
of purchases during the 1996 and 1997 calendar years (collectively,
the "Major Suppliers"),
---------------
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<PAGE>
and showing the approximate total purchases in each such period from
each such supplier; and
(iii) a list of the 10 products with the largest sales volume
sold by the Company in terms of revenue during each of the 1996 and
1997 calendar years (collectively, the "Major Products"), showing the
--------------
approximate total revenue received in each such period with respect to
each such product.
(b) Since the date of the Latest Balance Sheet, there has not been
any adverse change in the business relationship, and there has been no
dispute, between the Company and any Major Customer or Major Supplier, and,
to the Knowledge of the Sellers and the Directors and officers of the
Company, there are no indications that any Major Customer or Major Supplier
intends to reduce its purchases from, or sales to, the Company, other than
as set forth in the Projections. Since the date of the Latest Balance
Sheet, there have been no decreases in the profit margins on any Major
Product and, to the Knowledge of the Sellers and the Directors and officers
of the Company, there are no indications that the profit margins on any
Major Product will decrease in the next two fiscal years, other than as set
forth in the Projections.
SECTION 4.31. Claims Against Officers and Directors. Schedule 4.31 sets
------------------------------------- -------------
forth each pending or, to the Knowledge of the Sellers and the Directors and
officers (and employees with responsibility for insurance matters) of the
Company, threatened claims against any director, officer, employee or agent of
the Company or any other Person which could give rise to any claim for
indemnification against the Company, including any claims or threatened claims
by the Crystal Corridor Group.
SECTION 4.32. Improper and Other Payments.
---------------------------
(a) Neither the Company, any director, officer, employee, agent or
representative of the Company, any Seller, their respective Affiliates nor
any Person acting on behalf of any of them, has made, paid or received any
bribes, kickbacks or other similar payments to or from any Person, whether
lawful or unlawful;
(b) no contributions have been made, directly or indirectly, to a
domestic or foreign political party or candidate.
(c) no improper foreign payment (as defined in the Foreign Corrupt
Practices Act) has been made; and
(d) the internal accounting controls of the Company are adequate to
detect any of the foregoing.
SECTION 4.33. Accuracy of Statements. Neither this Agreement nor any
----------------------
Schedule, exhibit, statement, list, document, certificate or other information
furnished or to be furnished by
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<PAGE>
or on behalf of the Company or any Seller to Buyer or any representative or
Affiliate of Buyer in connection with this Agreement or any of the transactions
contemplated hereby contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary to make the
statements contained herein or therein, in light of the circumstances in which
they are made, not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Sellers that the statements
contained in this Article V are correct and complete as of the date of this
---------
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article V).
SECTION 5.1. Organization of the Buyer. The Buyer is a corporation duly
-------------------------
organized, validly existing, and in good standing under the laws of the State of
Delaware and legally authorized to do business in Ohio. The Buyer is not in
default under or in violation of any provision of its articles of incorporation
or bylaws.
SECTION 5.2. Authorization of Transaction. The Buyer has full power and
----------------------------
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of the Buyer, enforceable
in accordance with its terms and conditions. The Buyer need not give any notice
to, make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order to consummate the transactions
contemplated by this Agreement.
SECTION 5.3. Noncontravention. Neither the execution and the delivery of
----------------
this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, Law, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Buyer is subject or any provision of
its charter or bylaws or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice or consent under
any agreement, Contract, lease, license, instrument, or other arrangement to
which the Buyer is a party or by which it is bound or to which any of its assets
is subject.
SECTION 5.4. Brokers' Fees. The Buyer has no Liability or obligation to
-------------
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which Seller could become liable
or obligated.
SECTION 5.5. Legal Compliance. The Company and its Affiliates have
----------------
complied with all applicable Laws (including rules, regulations, codes, plans,
injunctions, judgments, orders,
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decrees, rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or to the Knowledge of the Directors and officers of the Buyer commenced
against any of them alleging any failure so to comply with respect to the
transactions contemplated by this Agreement.
SECTION 5.6. Litigation. Schedule 5.6 sets forth each instance in which
---------- ------------
the Company (i) is subject to any outstanding injunction, judgment, order,
decree, ruling, or charge or (ii) is a party or to the Knowledge of the
Directors and officers (and employees with responsibility for litigation
matters) of the Buyer, is threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court or quasi-
judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator as a result of the transactions
contemplated by this Agreement. None of the actions, suits, proceedings,
hearings, and investigations set forth in Schedule 5.6 would reasonably be
------------
expected to result in any adverse change in the business, financial condition,
operations, results of operations, or future prospects of the Buyer. The
Directors and officers (and employees with responsibility for litigation
matters) of the Buyer have no reason to believe that any such action, suit,
proceeding, hearing, or investigation may be brought or to the Knowledge of the
Directors and officers (and employees with responsibility for litigation
matters) of the Buyer, threatened against the Buyer.
SECTION 5.7. Accuracy of Statements. Neither this Agreement nor any
----------------------
Schedule, exhibit, statement, list, document, certificate or other information
furnished or to be furnished by or on behalf of the Buyer to Seller or any
representative or Affiliate of Seller in connection with this Agreement or any
of the transactions contemplated hereby contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein, in light of the
circumstances in which they are made, not misleading.
ARTICLE VI
COVENANTS
SECTION 6.1. General. Each of the parties will use his or its best
-------
efforts to take all action and to do all things necessary in order to consummate
and make effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in Articles
--------
VII and VIII below).
- --- ----
SECTION 6.2. Notices and Consents. The Sellers will cause the Company
--------------------
to give any notices to third parties, and will cause the Company to obtain any
third party consents, that the Buyer may reasonably request. Each of the
parties will (and the Sellers will cause the Company to) give any notices to,
make any filings with, and use its best efforts to obtain any authorizations,
consents, and approvals of governments and governmental agencies in connection
with the matters referred to in Sections 4.3 and 5.3 above.
------------ ---
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<PAGE>
SECTION 6.3. Operation of Business. From the date of this Agreement
---------------------
until the Closing Date, the Company shall be operated in the Ordinary Course of
Business and each of the Sellers and the Company shall use commercially
reasonable efforts to preserve intact the present business organization and
personnel of the Company, preserve the business relationships of the Company
with other Persons material to the operation of the Company, and not permit any
action or omission which would cause any of the representations or warranties of
the Company contained herein to become inaccurate or any of the covenants of the
Company to be breached. Without limiting the generality of the foregoing, except
as set forth in Schedule 6.3, prior to the Closing, the Company will not,
------------
without the prior written consent of the Buyer:
(a) incur any obligation or enter into any Contract, other than in
the Ordinary Course of Business, which (i) requires a payment by any party
in excess of, or a series of payments which in the aggregate exceed,
$25,000 and (ii) has a term of, or requires the performance of any
obligations by the Company over a period in excess of six months;
(b) take any action, or enter into or authorize any Contract or
transaction involving more than $25,000 and outside the Ordinary Course of
Business, other than any transactions contemplated by this Agreement;
(c) sell, transfer, convey, assign or otherwise dispose of any of its
assets or properties other than in the Ordinary Course of Business;
(d) waive, release or cancel any claims against third parties or
debts owing to it, or any rights which have any value involving more than
$25,000 and outside in the Ordinary Course of Business;
(e) make any changes in its accounting systems, policies, principles
or practices;
(f) enter into, authorize, or permit any transaction with any Seller
or any Affiliate thereof, or enter into any Contract relating to
compensation or benefits with any Person, or, other than in the Ordinary
Course of Business, modify any compensation amounts or levels of any
officer or employee;
(g) except as required for the transactions contemplated in this
Agreement, change or amend its articles of incorporation or code of
regulations;
(h) authorize for issuance, issue, sell, deliver or agree or commit
to issue, sell or deliver (whether through the issuance or granting of
options, warrants, convertible or exchangeable securities, commitments,
subscriptions, rights to purchase or otherwise) any shares of capital stock
or any other securities of the Company, or amend any of the terms of any
such capital stock or other securities, except as required for the
transactions contemplated in this Agreement;
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<PAGE>
(i) except as required for the transactions contemplated in this
Agreement, split, combine, or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution in property
other than cash in respect of its capital stock, or redeem or otherwise
acquire any capital stock or other securities of the Company;
(j) make any borrowings, incur any debt, or assume, guarantee,
endorse (except for the negotiation or collection of negotiable instruments
in the Ordinary Course of Business and consistent with past practice) or
otherwise become liable (whether directly, contingently or otherwise) for
the obligations of any other Person, or make any payment or repayment in
respect of any indebtedness in excess of $25,000 (other than trade payables
and accrued expenses in the Ordinary Course of Business and consistent with
past practice);
(k) make any loans, advances or capital contributions to, or
investments in, any other Person;
(l) enter into, adopt, amend or terminate any bonus, profit sharing,
compensation, termination, stock option, stock appreciation right,
restricted stock, performance unit, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreements,
trusts, plans, funds or other arrangements for the benefit or welfare of
any director, manager, officer or employee, or increase in any manner the
compensation or fringe benefits of any director, manager, officer or
employee or pay any benefit not required by any existing plan and
arrangement or enter into any Contract, agreement, commitment or
arrangement to do any of the foregoing;
(m) acquire, lease, encumber or otherwise impose a Lien on any
assets, whether tangible or intangible;
(n) authorize or make any capital expenditures which individually or
in the aggregate are in excess of $25,000;
(o) make any Tax election or settle or compromise any federal, state,
local or foreign income Tax Liability, or waive or extend the statute of
limitations in respect of any such Taxes;
(p) pay any amount, perform any obligation or agree to pay any amount
or perform any obligation, in settlement or compromise of any suits or
claims of Liability against the Company or any of its directors, managers,
officers, employees or agents;
(q) terminate, modify, amend or otherwise alter or change any of the
terms or provisions of any agreement, or pay any amount not required by Law
or by any Contract; or
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<PAGE>
(r) other than overnight deposits or money market instruments and
investments existing on the date hereof, make any investments with cash or
the proceeds of existing investments.
SECTION 6.4. Full Access. The Sellers will permit and cause the Company
-----------
to permit, representatives of the Buyer to have full access to all premises,
properties, personnel, books, records (including Tax records), Contracts, and
documents of or pertaining to the Company and shall make the officers and
employees of the Company available to the Buyer and its representatives as the
Buyer and their representatives shall from time to time reasonably request, in
each case to the extent that such access and disclosure would not obligate the
Company to take any actions that would disrupt the normal course of its business
or violate the terms of any agreement to which the Company is bound or any
applicable Law or regulation. The Buyer and the Buyer's representatives will
not use any of the Confidential Information that they receive from the Company
except in connection with this Agreement, and, if this Agreement is terminated
for any reason whatsoever, the Buyer and the Buyer's representatives will return
to the Company all tangible embodiments (and all summaries and copies, including
electronically stored information) of the Confidential Information that they
receive from the Company or copied from Confidential Information received from
the Company which are in its possession and will only use such Confidential
Information in the defense of any litigation related to this Agreement;
provided, however, that the Buyer and the Buyer's representatives shall not be
- -------- -------
responsible for the confidentiality of any information (i) which, at the time of
disclosure, is available publicly, through no fault of the Buyer (ii) which,
after disclosure, becomes available publicly through no fault of the Buyer, or
(iii) which the Buyer knew or to which the Buyer had access prior to disclosure.
SECTION 6.5. Exclusivity. Except as may be necessary to consummate the
-----------
Lindblom Transaction, the Sellers will not (and the Sellers will not cause or
permit the Company to) (i) solicit, initiate, or encourage the submission of any
proposal or offer from any Person relating to the acquisition of any capital
stock or other voting securities, or any substantial portion of the assets, of
the Company (including any acquisition structured as a merger, consolidation, or
share exchange) or (ii) participate in any discussions or negotiations
regarding, furnish any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any Person to do or seek
any of the foregoing. The Sellers will not vote their Shares in favor of any
such acquisition structured as a merger, consolidation, or share exchange. The
Sellers will notify the Buyer immediately if any Person makes any proposal,
offer, inquiry, or contact with respect to any of the foregoing.
SECTION 6.6. Efforts.
-------
(a) Subject to the terms and conditions hereof, each party hereto
shall use all reasonable efforts to consummate the transactions
contemplated hereby as promptly as practicable. An undertaking of a Person
under this Agreement to use such Person's best efforts shall not require
such Person to incur unreasonable expenses or obligations in order to
satisfy such undertaking.
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<PAGE>
(b) The Sellers, the Company and the Buyer will, as promptly as
practicable (i) make the required filings with, and use their respective
best efforts to obtain all required authorizations, approvals, consents and
other actions of, governmental Authorities and (ii) use their respective
best efforts to obtain all other required consents of other Persons with
respect to the transactions contemplated hereby.
(c) The Buyer will use its best efforts to obtain the financing
necessary to consummate the transactions contemplated hereby.
SECTION 6.7. Maintenance of Insurance. The Company will continue to
------------------------
carry its existing insurance through the Closing Date, and shall not allow any
material breach, default or cancellation (other than expiration and replacement
of policies in the ordinary cause of business) of such insurance policies or
agreements to occur or exist.
SECTION 6.8. Notice and Supplemental Information. The Sellers, the
-----------------------------------
Company and the Buyer shall each give prompt notice to the other parties of any
material adverse development causing a breach of any of its own representations
and warranties in Articles III, IV and V respectively. In addition, the Sellers
------------ -- -
and the Company will, from time to time, as necessary, within a reasonable
period of time preceding the Closing, by notice in accordance with the terms of
this Agreement, supplement or amend the Schedules, including one or more
supplements or amendments to correct any matter which would constitute a breach
of any representation, warranty, agreement or covenant contained herein. If the
Sellers or the Company supplement or amend the Schedules with facts or
circumstances that would reasonably be expected to have a Material Adverse
Effect on the Company, the sole remedy of the Buyer under this Section 6.8 shall
-----------
be termination of the Agreement as provided for in Section 11.1(e).
---------------
SECTION 6.9. Employment Agreement. The Company shall enter into the
--------------------
Employment Agreements.
SECTION 6.10. Public Announcements. The Sellers, the Company and the
--------------------
Buyer will consult with each other before issuing any press release or otherwise
making any public statements with respect to the transactions contemplated by
this Agreement and no party shall, without the prior written consent of the
others, issue any such press release or make any such public statement, except
as may be required by applicable Law.
SECTION 6.11. Consistent Tax Reporting. The Sellers, the Company and the
------------------------
Buyer shall treat and report the transactions contemplated by this Agreement in
all respects consistently for purposes of any federal, state, local or foreign
Tax. The parties hereto shall not take any actions or positions inconsistent
with the obligations set forth herein.
SECTION 6.12. Termination of Shareholder Agreements. Prior to or at the
-------------------------------------
Closing the Company shall cause the termination, and render void and of no
effect, (i) any existing shareholder agreements between or among holders of
Shares and the Company effecting the ownership or disposition of the capital
stock of the Company and (ii) any options or warrants to
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<PAGE>
purchase or rights to subscribe for, any capital stock of the Company to which
the Company is a party and which has not been previously exercised, canceled or
redeemed.
SECTION 6.13. Resignation of Officers and Directors. The Sellers shall
-------------------------------------
cause each officer and member of the Board of Directors of, and each trustee or
fiduciary of any plan or arrangement involving employee benefits of, the
Company, if so requested by Buyer, to tender his or her resignation from such
position effective as of the Closing.
SECTION 6.14. Capital Projects. The Company shall purchase the Capital
----------------
Projects.
SECTION 6.15. SERP Agreements. The Company shall enter into the SERP
---------------
agreement modifications in form and substance reasonably satisfactory to Buyer,
with Edward D. Surjan, Jr., Michael A. Fout, Edward M. Stiles, III, and Gregory
J. Putman.
SECTION 6.16. Lindblom Transaction. The Company shall consummate or
--------------------
cause the consummation of the Lindblom Transaction and Dahl will own all of the
outstanding capital stock of the Company.
SECTION 6.17. Transition. The Sellers will not take any action that is
----------
designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier, or other business associate of the Company from maintaining
the same business relationships with the Company after the Closing as it
maintained with the Company prior to the Closing. The Sellers will refer all
customer inquiries relating to the Business of the Company to the Buyer from and
after the Closing.
SECTION 6.18. Confidentiality. The Sellers will, and will cause Lindblom
---------------
to, treat and hold as such all of the Confidential Information, refrain from
using any of the Confidential Information except in connection with this
Agreement, and, in the event of a Closing, deliver promptly to the Buyer or
destroy, at the request and option of the Buyer, all tangible embodiments (and
all copies) of the Confidential Information which are in their possession. In
the event that any Seller is requested or required (by oral question or request
for information or documents in any legal proceeding, interrogatory, subpoena,
civil investigative demand, or similar process) to disclose any Confidential
Information, such Seller will notify the Buyer promptly of the request or
requirement so that the Buyer may seek an appropriate protective order or waive
compliance with the provisions of this Section 6.18. If, in the absence of a
------------
protective order or the receipt of a waiver hereunder, a party is, on the advice
of counsel, compelled to disclose any Confidential Information to any tribunal
or else stand liable for contempt, such Seller may disclose the Confidential
Information to the tribunal; provided, however, that such Seller shall use his
-------- -------
or its best efforts to obtain, at the request of the Buyer, an order or other
assurance that confidential treatment will be accorded to such portion of the
Confidential Information required to be disclosed as the Buyer shall designate.
The foregoing provisions shall not apply to any Confidential Information which
is generally available to the public immediately prior to the time of
disclosure.
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<PAGE>
SECTION 6.19. Noncompetition.
--------------
(a) The Sellers acknowledge that they have a special knowledge of the
Business and the proprietary and confidential information included in the
Business, and that the Buyer is making a considerable investment in the
Business from which the Sellers have benefitted. In consideration of this
Agreement and such investment and benefit, and as an inducement to the
Buyer to enter into this Agreement and consummate the transactions
contemplated herein, each of the Sellers agrees that, for a period of five
years after the Closing Date, no Seller will, directly or indirectly, own,
manage, operate, control or participate in the ownership, management,
operation or control of, or be connected as an officer, employee, partner,
director or otherwise with, or have any financial interest in, or aid or
assist anyone else in the conduct of, any business that directly or
indirectly designs and manufactures liquid crystal displays and modules
("Competitive Business"); provided, however, that any Seller may own less
-------------------- -------- -------
than 1% of any outstanding class of securities registered pursuant to the
Securities Exchange Act of 1934, as amended, of an issuer that is a
Competitive Business.
(b) For a period of five years following the Closing Date, none of
the Sellers will, without the express prior written approval of the Board
of Directors of the Buyer, (A) directly or indirectly recruit, solicit or
otherwise induce or influence any sales agent, joint venturer, lessor,
supplier, agent, representative or any other person that has or had during
the one year period initially preceding the Closing Date a business
relationship with the Company, to discontinue, reduce or adversely modify
such employment, agency or business relationship with the Buyer or the
Company as it relates to the Business as conducted by the Buyer or the
Company after the Closing Date, or (B) employ or seek to employ or cause
any Competitive Business to employ or seek to employ any person or agent
who is employed or retained by the Buyer or the Company. Notwithstanding
the foregoing, nothing herein shall prevent a Seller from providing a
letter of recommendation to an employee with respect to a future employment
opportunity.
(c) For a period of five years following the Closing Date, none of
the Sellers will without the express prior written approval of the Board of
Directors of the Buyer, directly or indirectly, recruit, solicit or
otherwise induce or influence any customer of the Buyer or the Company to
discontinue, reduce or modify such business relationship with the Buyer or
the Company.
(d) Each of the Sellers agrees that the violation or threatened
violation of any of the provisions of this Section 6.19 shall cause
------------
immediate and irreparable harm to the Buyer and that the damage to the
Buyer will be difficult or impossible to calculate with precision.
Therefore, in the event any Seller violates this Section 6.19, an
------------
injunction restraining such Seller from such violation may be entered
against such Seller in addition to any other relief available to the Buyer.
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<PAGE>
(e) If, at the time of enforcement of any provision of this Section
-------
6.19, a court shall hold that the duration, scope or other restrictions
----
stated herein are unreasonable under circumstances then existing, the
parties agree that the maximum duration, scope or other restrictions
reasonable under such circumstances shall be substituted for the stated
duration, scope or other restrictions and that the court shall be allowed
to revise the restrictions contained herein to cover the maximum period,
scope and other restrictions permitted by law; provided, however, that the
-------- -------
substituted period shall not exceed the period contemplated by this
Agreement.
SECTION 6.20. Jackson Guaranty. Jackson hereby guarantees the payment of
----------------
the Buyer's obligations pursuant to Section 2.3 solely in the event that Buyer
-----------
fails to pay such obligation to Dahl when due. The foregoing guaranty is a
guaranty of payment only and shall only be enforceable in the event Buyer fails
to make the payments required by Section 2.3.
-----------
SECTION 6.21. Post-Closing Covenants. The Sellers, the Company and the
----------------------
Buyer agree as follows with respect to the period following the Closing:
(a) In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, each of
the parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other party
hereto reasonably may request, all at the sole cost and expense of the
requesting party (unless the requesting party is entitled to
indemnification therefor under Article IX). From and after the Closing,
----------
the Buyer will be entitled to access all documents, books, records,
agreements, and financial data of any sort relating to the Company.
(b) In the event and for so long as any party hereto actively is
contesting or defending against any charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand in connection with (i)
any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or
prior to the Closing Date involving the Company, each of the other parties
hereto will cooperate with him or it and his or its counsel in the contest
or defense, make available their personnel, and provide such testimony and
access to their books and records as shall be necessary in connection with
the contest or defense, all at the sole cost and expense of the contesting
or defending party (unless the contesting or defending party is entitled to
indemnification therefor under Article IX).
----------
ARTICLE VII
CONDITIONS TO OBLIGATION OF BUYER
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<PAGE>
The obligation of the Buyer to consummate the transactions to be performed
by it in connection with the Closing is subject to satisfaction of the following
conditions:
SECTION 7.1. Representations and Warranties True as of Closing Date. The
------------------------------------------------------
representations and warranties set forth in Articles III and IV shall have been
------------ --
accurate, true and correct on and as of the date of this Agreement, and shall
also be accurate, true and correct on and as of the Closing Date with the same
force and effect as though made on and as of the Closing Date.
SECTION 7.2. Compliance with Covenants. The Sellers and the Company
-------------------------
shall have performed and complied with all of the covenants hereunder in all
material respects through the Closing.
SECTION 7.3. Consents. The Company shall have procured all of the third
--------
party consents specified in Sections 4.3 and 6.2 above.
--------------------
SECTION 7.4. Actions or Proceedings. No action, suit, or proceeding
----------------------
shall be pending or threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator wherein an unfavorable injunction, judgment, order,
decree, ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation, (C)
affect adversely the right of the Buyer to own the Shares and to control the
Company, or (D) affect adversely the right of the Company to own its assets and
to operate its Business (and no such injunction, judgment, order, decree,
ruling, or charge shall be in effect).
SECTION 7.5. Certificate. The Sellers shall have delivered to the Buyer
-----------
a certificate to the effect that each of the conditions specified above in
Sections 7.1-7.4 is satisfied in all respects.
- ----------------
SECTION 7.6. Financial Condition at Closing. All of the following
------------------------------
financial conditions shall exist as of March 31, 1998:
(a) the Company shall have not more than $3.8 million in outstanding
indebtedness at the Closing Date. For purposes of this Section 7.6, the
-----------
term indebtedness shall include notes payable and the short-term and long-
term portions of any and all indebtedness for borrowed money or other
obligations, including capitalized lease obligations, including accrued
interest, fees and prepayment penalties with respect thereto, but shall not
include accounts payable that are payable other than to the Sellers or
their Affiliates, all as determined in accordance with GAAP in a manner
consistent with prior periods;
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<PAGE>
(b) the minimum level of working capital of the Company shall be at
least $1.65 million. The term "working capital" shall be defined as net
accounts receivable plus inventory less current liabilities (to the extent
---- ----
not included in Section 7.6(a)); and
--------------
(c) the mix of assets and liabilities of the Companies and their
Subsidiaries shall be substantially the same as at October 31, 1997;
provided, however, that the failure to satisfy the conditions in this Section
- -------- ------- -------
7.6 will serve to reduce the Purchase Price payable to the Seller by the
- ---
following sum: (i) the amount by which working capital of the Company is less
than $1.65 million plus (ii) the amount of indebtedness assumed or refinanced by
----
Buyer in excess of $3.8 million, and; provided, further, that if the Company
-------- -------
does anything outside of the Ordinary Course of Business to affect the working
capital of the Company between the date hereof and the Closing Date, the Buyer
shall be able to terminate this Agreement as provided in Section 11.1(e).
---------------
SECTION 7.7. Opinion of Counsel. The Buyer shall have received from
------------------
counsel to the Sellers an opinion in form and substance as set forth in Exhibit
-------
B attached hereto, addressed to the Buyer, and dated as of the Closing Date.
- -
SECTION 7.8. Resignations. The Buyer shall have received the
------------
resignations, effective as of the Closing, of each director and officer of the
Company other than those whom the Buyer shall have specified in writing at least
five business days prior to the Closing.
SECTION 7.9. Financing. The Buyer shall have obtained on terms and
---------
conditions which are commercially reasonable all of the financing it needs in
order to consummate the transactions contemplated hereby and fund the working
capital requirements of the Company after the Closing.
SECTION 7.10. Employment Agreements. The Company shall have entered into
---------------------
the Employment Agreements.
SECTION 7.11. Capital Projects. The Company shall have purchased the
----------------
Capital Projects.
SECTION 7.12. SERP Agreements. The Company shall have entered into the
---------------
SERP agreement modifications in form and substance reasonably satisfactory to
Buyer.
SECTION 7.13. Lindblom Transaction. The Lindblom Transaction shall have
--------------------
been consummated and Dahl shall be the owner of all of the outstanding capital
stock of the Company.
SECTION 7.14. FIRPTA Certificate. Buyer shall have received from each
------------------
Seller a duly executed certificate in the form specified by Treasury Regulation
(S) 1.1445-2(b)(2).
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<PAGE>
SECTION 7.15. Termination of Certain Agreements. The Sellers shall have,
---------------------------------
and the Sellers shall have caused their Affiliates and the Company to, and that
the Company and its Affiliates shall have, effective as of the Closing, without
any cost to the Company, terminated, rescinded, canceled and rendered void and
of no effect any and all Contracts between the Company on the one hand and any
Seller or any Affiliate thereof (other than the Company) on the other hand. The
Sellers agree that effective as of the Closing, all rights of any Seller or any
Affiliate thereof or any Affiliates of the Company to indemnification by the
Company (whether by Contract, code of regulations, Law or otherwise) are
terminated, void, of no effect and unenforceable by them except as may arise
pursuant to this Agreement.
SECTION 7.16. Insurance. Buyer shall be satisfied as to the availability
---------
and cost of adequate and reasonable insurance covering the business and assets
of the Company.
SECTION 7.17. Contracts. None of the Contracts entered into by the
---------
Company shall be breached or subject to termination, modification or change as a
result of the transactions contemplated by this Agreement, and none of the
customers of the Company shall have stated or indicated their determination or
intention to reduce or otherwise adversely change their orders or business.
SECTION 7.18. Board Approval. The Board of Directors of Buyer shall have
--------------
authorized the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby.
SECTION 7.19. No Material Adverse Effect. Since the date of this
--------------------------
Agreement, no event has occurred which could reasonably be expected to have a
Material Adverse Effect on the Company or on any item set forth on any Schedule.
SECTION 7.20. Documents. All actions to be taken by the Sellers in
---------
connection with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to the Buyer.
ARTICLE VIII
CONDITIONS TO OBLIGATION OF THE SELLERS
The obligation of the Sellers to consummate the transactions to be
performed by them in connection with the Closing is subject to satisfaction of
the following conditions:
SECTION 8.1. Representations and Warranties True as of Closing. The
-------------------------------------------------
representations and warranties set forth in Article V shall have been accurate,
---------
true and correct on and as of the date of this Agreement, and shall also be
accurate, true and correct on and as of the Closing Date with the same force and
effect as though made on and as of the Closing Date.
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SECTION 8.2. Compliance with Covenants. The Buyer shall have
-------------------------
performed and complied with all of its covenants hereunder in all material
respects through the Closing.
SECTION 8.3. Actions or Proceedings. No action, suit, or proceeding
----------------------
shall be pending before any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this Agreement or (B)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation (and no such injunction, judgment, order, decree, ruling,
or charge shall be in effect).
SECTION 8.4. Certificate. The Buyer shall have delivered to the
-----------
Sellers a certificate to the effect that each of the conditions specified above
in Sections 8.1 - 8.3 is satisfied in all respects.
------------------
SECTION 8.5. Opinion of Counsel. The Sellers shall have received
------------------
from counsel to the Buyer an opinion in form and substance as set forth in
Exhibit D attached hereto, addressed to the Sellers, and dated as of the Closing
- ---------
Date.
SECTION 8.6. Documents. All actions to be taken by the Buyer in
---------
connection with the consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to the Sellers.
ARTICLE IX
SURVIVAL AND REMEDY; INDEMNIFICATION
SECTION 9.1. Survival of Representations and Warranties. All of the
------------------------------------------
terms and conditions of this Agreement, together with the warranties,
representations, agreements and covenants contained herein or in any instrument
or document delivered or to be delivered pursuant to this Agreement, shall
survive the execution of this Agreement and the Closing Date, notwithstanding
any investigation heretofore or hereafter made by or on behalf of any party
hereto; provided, however, that unless otherwise stated, the agreements and
-------- -------
covenants set forth in this Agreement shall survive and continue until all
obligations set forth therein shall have been performed and satisfied.
Notwithstanding the foregoing, (a) the representations and warranties contained
in Article III and Sections 4.1, 4.2, 4.3, 4.4, 5.1, 5.2, 5.3 and 5.4 of this
----------- -------- --- --- --- --- --- --- --- ---
Agreement shall survive the Closing and continue in full force and effect
indefinitely; (b) the representations and warranties of the Sellers and the
Company contained in Sections 4.11, 4.25 and the covenants set forth in Section
------------- ---- -------
10.6 of this Agreement shall survive the Closing and continue in full force and
- ----
effect until the expiration of the applicable statute of limitations (including
any extensions or waivers thereof); and (c) all other representations and
warranties, and the related agreements of the Sellers, the
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Company and the Buyer to indemnify each other set forth in this Article IX,
----------
shall survive and continue for, and all indemnification claims with respect
thereto shall be made prior to the end of, eighteen (18) months from the Closing
Date, except for representations, warranties and related indemnities for which
an indemnification claim shall be pending as of the end of the applicable period
referred to above, in which event such indemnities shall survive with respect to
such indemnification claim until the final disposition thereof (the
"Indemnification Period").
----------------------
SECTION 9.2. Indemnification by the Management Sellers.
-----------------------------------------
(a) In the event that, during the Indemnification Period there is
(i) a breach (or an alleged breach) of any of the representations or
warranties made by, or any breach of or failure to perform any covenant,
agreement or obligation of, the Company or any Seller in this Agreement or
any other document contemplated hereby, or in any document relating hereto
or thereto or contained in any exhibit or Schedule to this Agreement, (ii)
any Liabilities, Adverse Consequences or remediation, clean-up or similar
obligations or costs under Environmental Laws and relating to the Business
and activities or the ownership, operation or lease by the Company of
facilities in respect of any periods prior to the Closing, or (iii) any
demands, assessments, judgments, costs and reasonable legal and other
expenses or other Adverse Consequences arising from, or in connection with,
any investigation, action, suit, proceeding or other claim incident to any
of the foregoing and, if there is an applicable survival period pursuant
to Section 9.1, then, in each case, provided that the Buyer make a written
claim for indemnification against the Company within such survival period,
the Management Sellers (the "Company Indemnifying Parties") agree (subject
----------------------------
to the limitations set forth in this Section 9.2) to, jointly and
-----------
severally, indemnify the Buyer and its Affiliates, directors, officers.
employees, stockholders, representatives and agents (collectively the
"Buyer Indemnified Parties") from and against the entirety of any Adverse
-------------------------
Consequences the Buyer Indemnified Parties may suffer through and after the
date of the claim for indemnification (including any Adverse Consequences
the Buyer Indemnified Parties may suffer through and after the end of the
applicable survival period) resulting from, arising out of, relating to, in
the nature of, or caused by any breach (or alleged breach) of the
foregoing; provided, however, that (A) except for breaches of the
-------- -------
representations and warranties contained in Sections 4.11 and 4.25 of this
------------- ----
Agreement, the Company Indemnified Parties shall not have any obligation to
indemnify the Buyer Indemnified Parties from and against any Adverse
Consequences resulting from, arising out of, relating to, in the nature of,
or caused by any breach (or alleged breach) by the Company until the Buyer
Indemnified Parties have suffered Adverse Consequences by reason of all
such breaches (or alleged breaches) in excess of a $50,000 aggregate
threshold (at which point the Company Indemnifying Parties will be
obligated to indemnify the Buyer Indemnified Parties from and against all
such Adverse Consequences) and (B) there will be a $1,500,000 aggregate
ceiling on the obligation to indemnify the Buyer Indemnified Parties from
and against Adverse Consequences resulting from, arising out of, or
relating to, the items identified in this Article IX.
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(b) Subject to the provisions of Section 9.2(a) (including any
--------------
applicable threshold and ceiling provisions), the Management Sellers agree
to indemnify the Buyer, jointly and severally, from and against the
entirety of any Adverse Consequences the Buyer may suffer resulting from,
arising out of, relating to, in the nature of, or caused by any Liability
of the Company (x) for any Taxes of the Company and any entities owned by
or affiliated with the Company with respect to any Tax year or portion
thereof ending on or before the Closing Date (or for any Tax period
beginning before and ending after the Closing Date to the extent allocable
(determined in a manner consistent with Section 10.3) to the portion of
------------
such period beginning before and ending on the Closing Date), to the extent
such Taxes are not reflected in the reserve for Tax Liability (rather than
any reserve for deferred Taxes established to reflect timing differences
between book and Tax income) shown on the face of the Latest Balance Sheet,
(y) for the unpaid Taxes of any Person (other than the Company) under Reg.
(S)1.1502-6 (or any similar provision of state, local, or foreign Law), as
a transferee or successor, by Contract, or otherwise and (z) for any Taxes
imposed upon the Company as a result of the Trust Agreements or the
Lindblom Transaction.
(c) Subject to the provisions of Section 9.2(a) (including any
--------------
applicable threshold and ceiling provisions), the Management Sellers agree
to indemnify the Buyer, jointly and severally, from and against the
entirety of any Adverse Consequences the Buyer may suffer resulting from,
arising out of, relating to, in the nature of, or caused by any unknown,
undisclosed, or contingent debts or obligations (including but not limited
to environmental, legal, employee benefit and product Liability exposures)
of the Company to the extent such debts or obligations relate to any time
periods prior to the Closing Date.
SECTION 9.3. Indemnification by the Buyer. Provided that the Sellers
----------------------------
make a written claim for indemnification against the Buyer within the survival
period set forth in Section 9.1, the Buyer agrees to indemnify the Sellers
-----------
against, and agrees to hold them harmless from, any and all Adverse Consequences
the Sellers may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences the Sellers may suffer
through and after the end of the applicable survival period) resulting from,
arising out of, relating to, in the nature of, or caused by (i) any breach of or
any inaccuracy in any representation or warranty made by the Buyer pursuant to
this Agreement, any agreement, or instrument contemplated hereby, any document
relating hereto or thereto or contained in any exhibit or Schedule to this
Agreement; (ii) any breach of or failure by the Buyer to perform any agreement,
covenant or obligation of the Buyer set out in this Agreement, any agreement, or
instrument contemplated hereby, any document relating hereto or thereto or
contained in any exhibit or Schedule to this Agreement; and (iii) any
obligations and Liabilities in respect of the Company from and after the Closing
Date.
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SECTION 9.4. Third-Party Claims.
------------------
(a) If any third party shall notify any party (the "Indemnified
-----------
Party") with respect to any matter (a "Third Party Claim") which may give
----- -----------------
rise to a claim for indemnification against any other party (the
"Indemnifying Party") under this Article IX, then the Indemnified Party
------------------ ----------
shall promptly notify each Indemnifying Party thereof in writing; provided,
--------
however, that no delay on the part of the Indemnified Party in notifying
-------
any Indemnifying Party shall relieve the Indemnifying Party from any
obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced. For purposes of this Section
-------
9.4, in all instances where the Indemnifying Party would be the Company or
---
any Seller, the term "Indemnifying Party" shall be limited to the
Management Sellers.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (A) the
Indemnifying Party notifies the Indemnified Party in writing within 15 days
after the Indemnified Party has given notice of the Third Party Claim that
the Indemnifying Party will indemnify the Indemnified Party from and
against the entirety of any Adverse Consequences the Indemnified Party may
suffer resulting from, arising out of, relating to, in the nature of, or
caused by the Third Party Claim, (B) the Indemnifying Party provides the
Indemnified Party with evidence reasonably acceptable to the Indemnified
Party that the Indemnifying Party will have the financial resources to
defend against the Third Party Claim and fulfill its indemnification
obligations hereunder, (C) the Third Party Claim involves only money
damages and does not seek an injunction or other equitable relief, (D)
settlement of, or an adverse judgment with respect to, the Third Party
Claim is not, in the good faith judgment of the Indemnified Party, likely
to establish a precedential custom or practice materially adverse to the
continuing business interests of the Indemnified Party, and (E) the
Indemnifying Party conducts the defense of the Third Party Claim actively
and diligently.
(c) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 9.4(b) above, (A) the
--------------
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (B) the
Indemnified Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnifying Party (not to be withheld
unreasonably), and (C) the Indemnifying Party will not consent to the entry
of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnified Party (not
to be withheld unreasonably).
(d) In the event any of the conditions in Section 9.4(b) above is or
--------------
becomes unsatisfied in the reasonable judgment of the Indemnified Party,
however, (A) the Indemnified Party may defend against, and consent to the
entry of any judgment or enter into any settlement with respect to, the
Third Party Claim in any manner it reasonably
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<PAGE>
may deem appropriate (and the Indemnified Party need not consult with, or
obtain any consent from, any Indemnifying Party in connection therewith),
(B) the Indemnifying Parties will reimburse the Indemnified Party promptly
and periodically for the reasonable costs of defending against the Third
Party Claim (including attorneys' fees and expenses), and (C) the
Indemnifying Parties will remain responsible for any Adverse Consequences
the Indemnified Party may suffer resulting from, arising out of, relating
to, in the nature of, or caused by the Third Party Claim to the fullest
extent provided in this Article IX.
----------
SECTION 9.5. Other Indemnification Provisions.
--------------------------------
(a) The liability of any party under this Article IX shall be in
----------
addition to, and not exclusive of any other liability that such party may
have at law or equity based on a party's fraudulent acts or omissions.
None of the provisions of this Agreement shall be deemed a waiver of any
defenses which may be available in respect of actions or claims for fraud,
including but not limited to, defenses of statutes of limitations or
limitations of damages.
(b) Each Seller hereby agrees that he will not make any claim for
indemnification against the Company by reason of the fact that he was a
director, manager, officer, employee, or agent of any such entity or was
serving at the request of any such entity as a partner, member, trustee,
director, manager, officer, employee, or agent of another entity (whether
such claim is for judgments, damages, penalties, fines, costs, amounts paid
in settlement, losses, expenses, or otherwise and whether such claim is
pursuant to any statute, charter document, bylaw, agreement, or otherwise)
with respect to any action, suit, proceeding, complaint, claim, or demand
brought by the Buyer against the Seller (whether such action, suit,
proceeding, complaint, claim, or demand is pursuant to this Agreement,
applicable Law, or otherwise).
(c) Indemnification claims shall be reduced, by and to the extent,
that an Indemnified Party shall be entitled to receive proceeds under
insurance policies, risk sharing pools, or similar arrangements
specifically as a result of, and in compensation for, the subject matter of
an indemnification claim by such Indemnified Party, net of any increased
premiums or similar costs arising out of the making of such claims against
such arrangements; provided, however, that indemnification claims shall not
be reduced by Tax benefits, if any.
(d) The Buyer shall have the right to offset indemnification amounts
due either of them or from the Company Indemnifying Parties pursuant to
this Agreement against payments due to the Company Indemnifying Parties
pursuant to this Agreement or any other agreement between the Buyer and any
Company Indemnifying Party.
SECTION 9.6. Holdback. Buyer agrees that to the fullest extent permitted
--------
by Law, after the Closing and with respect to any claim or cause of action
asserted by Buyer relating to or
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<PAGE>
arising from breaches of the representations, warranties or covenants of the
Company or the Sellers contained in this Agreement, Buyer will first take any
amounts owed to the Buyer by the Company Indemnifying Parties pursuant to this
Article IX from the Holdback Amount. The Holdback Amount shall be the Buyer's
sole and exclusive remedy against the Company Indemnifying Parties until the
Holdback Amount is completely depleted, at which point the Buyer shall look to
collect any additional amounts owed hereunder from the Company Indemnifying
Parties.
ARTICLE X
TAX MATTERS
SECTION 10.1. Tax Matters. The following provisions shall govern the
-----------
allocation of responsibility as between Buyer and Sellers for certain tax
matters following the Closing Date:
SECTION 10.2. Tax Periods Ending on or Before the Closing Date. The
------------------------------------------------
Sellers shall prepare or cause to be prepared and file or cause to be filed all
Tax Returns for the Company for all periods ending on or prior to the Closing
Date which are filed after the Closing Date. The Sellers shall permit the Buyer
to review and comment on each such Tax Return described in the preceding
sentence prior to filing. Buyer and Seller shall attempt in good faith to
resolve any disagreements regarding such Tax Returns; provided, however, that
-------- -------
the final decision regarding any such Tax Return shall rest with the Sellers.
The Sellers shall reimburse Buyer for Taxes of the Company with respect to such
periods within fifteen (15) days after payment by Buyer or the Company of such
Taxes to the extent such Taxes are not reflected in the reserve for Tax
Liability (rather than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) shown on the face of the Latest
Balance Sheet.
SECTION 10.3. Tax Periods Beginning Before and Ending After the Closing
---------------------------------------------------------
Date. Buyer shall prepare or cause to be prepared and file or cause to be filed
- ----
any Tax Returns of the Company for Tax periods which begin before the Closing
Date and end after the Closing Date. Buyer shall permit the Sellers to review
and comment on each such Tax Return described in the preceding sentence prior to
filing. Buyer and the Sellers shall attempt in good faith to resolve any
disagreements regarding such Tax Returns; provided, however, that the final
-------- -------
decision regarding any such Tax Return shall rest with Buyer. The Sellers shall
pay to Buyer within fifteen (15) days after the date on which Taxes are paid
with respect to such periods an amount equal to the portion of such Taxes which
relates to the portion of such Tax period ending on the Closing Date to the
extent such Taxes are not reflected in the reserve for Tax Liability (rather
than any reserve for deferred Taxes established to reflect timing differences
between book and Tax income) shown on the face of the Latest Balance Sheet.
Buyer shall pay to the Sellers the amount, if any, by which Taxes prepaid by the
Sellers exceed the portion of such Taxes which relates to the portion of such
Tax period ending on the Closing Date. For purposes of this Section, in the
case of any Taxes that are imposed on a periodic basis and are payable for a Tax
period that includes (but does not end on) the Closing Date, the portion of such
Tax which
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relates to the portion of such Tax period ending on the Closing Date
shall (x) in the case of any Taxes other than Taxes based upon or related to
income or receipts, be deemed to be the amount of such Tax for the entire Tax
period multiplied by a fraction the numerator of which is the number of days in
the Tax period ending on the Closing Date and the denominator of which is the
number of days in the entire Tax period, and (y) in the case of any Tax based
upon or related to income or receipts be deemed equal to the amount which would
be payable if the relevant Tax period ended on the Closing Date. Any credits
relating to a Tax period that begins before and ends after the Closing Date
shall be taken into account as though the relevant Tax period ended on the
Closing Date. All determinations necessary to give effect to the foregoing
allocations shall be made in a manner consistent with prior practice of the
Company.
SECTION 10.4. Cooperation on Tax Matters.
--------------------------
(a) Buyer, the Company and Sellers shall cooperate fully, as and to
the extent reasonably requested by the other party, in connection with the
filing of Tax Returns pursuant to this Article X and any audit, litigation
---------
or other proceeding with respect to Taxes. Such cooperation shall include
the retention and (upon the other party's request) the provision of records
and information which are reasonably relevant to any such audit, litigation
or other proceeding and making employees available on a mutually convenient
basis to provide additional information and explanation of any material
provided hereunder. The Company and the Sellers agree (A) to retain all
books and records with respect to Tax matters pertinent to the Company
relating to any taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent notified by
Buyer or Sellers, any extensions thereof) of the respective taxable
periods, and to abide by all record retention agreements entered into with
any taxing Authority, and (B) to give the other party reasonable written
notice prior to transferring, destroying or discarding any such books and
records and, if the other party so requests, the Company or Sellers, as the
case may be, shall allow the other party to take possession of such books
and records.
(b) Buyer and Sellers further agree, upon request, to use their
reasonable efforts to obtain any certificate or other document from any
governmental Authority or any other Person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including, but not
limited to, with respect to the transactions contemplated hereby);
provided, however, that no party shall be required to take any action which
-------- -------
would reasonably be expected to have an adverse effect on such party.
(c) Buyer and Sellers further agree, upon request, to provide the
other party with all information that either party may be required to
report pursuant to Section 6043 of the Code and all Treasury Department
Regulations promulgated thereunder.
SECTION 10.5. Tax Sharing Agreements. All Tax sharing agreements or
----------------------
similar agreements with respect to or involving the Company shall be terminated
as of the Closing Date
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and, after the Closing Date, the Company shall not be bound thereby or have any
Liability thereunder.
SECTION 10.6. Certain Taxes. All transfer, documentary, sales, use,
-------------
stamp, registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement, shall be paid by Sellers
when due, and Sellers will, at their own expense, file all necessary Tax Returns
and other documentation with respect to all such transfer, documentary, sales,
use, stamp, registration and other Taxes and fees, and, if required by
applicable Law, Buyer will, and will cause its affiliates to, join in the
execution of any such Tax Returns and other documentation.
ARTICLE XI
TERMINATION
SECTION 11.1. Termination of Agreement. Certain of the parties may
------------------------
terminate this Agreement as provided below:
(a) the Buyer and the Sellers may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(b) the Buyer may terminate this Agreement by giving written notice
to the Sellers on or before the 30th day following the date of this
Agreement, but prior to the Closing, if the Buyer is not reasonably
satisfied with the results of its continuing business, legal,
environmental, and accounting due diligence regarding the Company;
(c) the Buyer may terminate this Agreement by giving written notice
to the Sellers at any time prior to the Closing (A) in the event any Seller
has breached any material representation, warranty, or covenant contained
in this Agreement in any material respect, the Buyer has notified the
Sellers of the breach, and the breach has continued without cure for a
period of 30 days after the notice of breach or (B) if the Closing shall
not have occurred on or before April 30, 1998 by reason of the failure of
any condition precedent under Article VII hereof (unless the failure
-----------
results primarily from the Buyer itself breaching any representation,
warranty, or covenant contained in this Agreement); and
(d) the Sellers may terminate this Agreement by giving written notice
to the Buyer at any time prior to the Closing (A) in the event that the
Buyer has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, the Sellers have
notified the Buyer of the breach, and the breach has continued without cure
for a period of 30 days after the notice of breach or (B) if the Closing
shall not have occurred on or before April 30, 1998, by reason of the
failure of any condition precedent under Article VIII hereof (unless the
------------
failure results primarily
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<PAGE>
from any Seller breaching any representation, warranty, or covenant
contained in this Agreement).
(e) the Buyer may terminate this Agreement by giving written notice
to the Sellers at any time prior to the Closing in the event: (x) the
Sellers or the Company supplement or amend the Schedules with facts or
circumstances that would reasonably be expected to have a Material Adverse
Effect on the Company or (y) the Company does anything outside of the
Ordinary Course of Business to affect the working capital of the Company
between the date hereof and the Closing Date.
SECTION 11.2. Effect of Termination. If any party terminates this
---------------------
Agreement pursuant to Section 11.1 above, all rights and obligations of the
------------
parties hereunder shall terminate other than those set forth in Sections 6.4 and
------------
6.18, without any Liability of any party to any other party (except for any
- ----
Liability of any party then in breach).
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. Expenses. Each party will bear his or its own costs and
--------
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.
SECTION 12.2. Press Releases and Public Announcements. No party shall
---------------------------------------
issue any press release or make any public announcement relating to the subject
matter of this Agreement without the prior written approval of the Buyer and the
Sellers; provided, however, that any party may make any public disclosure it
-------- -------
believes in good faith is required by applicable Law or any listing or trading
agreement concerning its publicly-traded securities (in which case the
disclosing party will use its best efforts to advise the other parties prior to
making the disclosure).
SECTION 12.3. No Third-Party Beneficiaries. Subject to the provisions of
----------------------------
Section 12.5, this Agreement shall not confer any rights or remedies upon any
- ------------
Person other than the parties and their respective successors and permitted
assigns.
SECTION 12.4. Entire Agreement. This Agreement (including the documents
----------------
referred to herein) constitutes the entire agreement among the parties and
supersedes any prior understandings, agreements, or representations by or among
the parties, written or oral, to the extent they related in any way to the
subject matter hereof.
SECTION 12.5. Succession and Assignment. This Agreement shall be
-------------------------
binding upon and inure to the benefit of the parties named herein and their
respective successors and permitted assigns. No party may assign either this
Agreement or any of his or its rights, interests, or
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<PAGE>
obligations hereunder without the prior written approval of the Buyer and the
Sellers; provided, however, that the Buyer may, upon prior written notice (i)
-------- -------
assign any or all of its rights and interests hereunder to one or more of its
Affiliates, (ii) designate one or more of its Affiliates to perform its
obligations hereunder (in any or all of which cases the Buyer nonetheless shall
remain responsible for the performance of all of its obligations hereunder) and
(iii) grant a security interest in respect of its rights hereunder to its
lenders.
SECTION 12.6. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
SECTION 12.7. Headings. The section headings contained in this
--------
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 12.8. Notices. All notices, requests, demands, claims, and other
-------
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
(a) If to the Sellers, to the addresses set forth in the Company's records:
with a copy to:
Stark & Knoll
Ohio Edison Building
76 South Main Street, Suite 1512
Akron, Ohio 44308
Attention: James L. Rench
Facsimile No.: (330) 376-6237
(b) If to the Buyer, addressed as follows:
Crystaloid Technologies, Inc.
c/o Jackson Products, Inc.
2997 Clarkson Road
Chesterfield, Missouri 63017
Attention: Christopher T. Paule
Facsimile No.: (314) 207-2800
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<PAGE>
with a copy to:
Mayer, Brown & Platt
1675 Broadway, Suite 1900
New York, New York 10019-5820
Attention: James B. Carlson
Facsimile No.: (212) 262-1910
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, ordinary mail, or electronic mail), but no such notice, request,
demand, claim, or other communication shall be deemed to have been duly given
unless and until it actually is received by the intended recipient. Any party
may change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other parties notice
in the manner herein set forth.
SECTION 12.9. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the domestic Laws of the State of Missouri without
giving effect to any choice or conflict of Law provision or rule (whether of the
State of Missouri or any other jurisdiction) that would cause the application of
the Laws of any jurisdiction other than the State of Missouri.
SECTION 12.10. Amendments and Waivers. No amendment of any provision of
----------------------
this Agreement shall be valid unless the same shall be in writing and signed by
the Buyer and Sellers. No waiver by any party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
SECTION 12.11. Jackson. Unless otherwise stated in this Agreement,
-------
neither Jackson nor any of its Affiliates (other than the Buyer) will have any
obligations or liabilities in respect of this Agreement, except with respect to
the obligations of Jackson pursuant to Section 6.20.
SECTION 12.12. Severability. Any term or provision of this Agreement that
------------
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
SECTION 12.13. Construction. The parties have participated jointly in the
------------
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or Law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
-55-
<PAGE>
SECTION 12.14. Incorporation of Exhibits, Annexes, and Schedules. The
-------------------------------------------------
Exhibits, Annexes, and Schedules identified in this Agreement are incorporated
herein by reference and made a part hereof.
SECTION 12.15. Specific Performance. Each of the parties acknowledges and
--------------------
agrees that the other parties would be damaged irreparably in the event any of
the provisions of Sections 6.4, 6.5, 6.10, 6.18, 6.19 and 6.21 of this Agreement
--- --- ---- ---- ---- ----
are not performed in accordance with their specific terms or otherwise are
breached. Accordingly, each of the parties agrees that the other parties shall
be entitled to an injunction or injunctions to prevent breaches of the
aforementioned provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
parties and the matter (subject to the provisions set forth in Section 12.15
below), in addition to any other remedy to which they may be entitled, at law or
in equity.
SECTION 12.16. Submission to Jurisdiction. Each of the parties submits to
--------------------------
the jurisdiction of any state or federal court sitting in St. Louis, Missouri in
any action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court. Each
of the parties waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety, or other
security that might be required of any other party with respect thereto. Any
party may make service on any other party by sending or delivering a copy of the
process to the Party to be served at the address and in the manner provided for
the giving of notices in Section 12.8 above. Nothing in this Section 12.15,
------------ -------------
however, shall affect the right of any party to bring any action or proceeding
arising out of or relating to this Agreement in any other court or to serve
legal process in any other manner permitted by law or at equity. Each party
agrees that a final judgment in any action or proceeding so brought shall be
conclusive and may be enforced by suit on the judgment or in any other manner
provided by law or at equity.
-56-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
CRYSTALOID TECHNOLOGIES, INC.
By: /s/ Christopher T. Paule
-------------------------------------
Name: Christopher T. Paule
Title: Vice President
CRYSTALOID ELECTRONICS COMPANY
By: /s/ Robert R. Dahl
--------------------------------------
Name: Robert R. Dahl
Title: Chairman and Chief Executive
Officer
DAHL PARTNERS INCORPORATED
By: /s/ Robert R. Dahl
--------------------------------------
Name: Robert R. Dahl
Title: Chairman and Chief Executive
Officer
MANAGEMENT SELLERS:
/s/ Robert R. Dahl
-------------------------------------
Robert R. Dahl
/s/ Edward D. Surjan, Jr.
-------------------------------------
Edward D. Surjan, Jr.
JACKSON PRODUCTS, INC.
(for purposes of Section 6.20 only)
------------
By: /s/ Christopher T. Paule
---------------------------------
Name: Chritopher T. Paule
Title: Vice President
-56-
<PAGE>
EXHIBIT 3.1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
________________________________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED
CERTIFICATE OF "JACKSON HOLDING COMPANY", FILED IN THIS OFFICE ON THE
SEVENTEENTH DAY OF AUGUST, A.D. 1995, AT 9 O'CLOCK A.M.
(SEAL) /s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
2326979 8100 AUTHENTICATION: 9023384
981139885 DATE: 04-13-98
<PAGE>
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
JACKSON HOLDING COMPANY
1. The Certificate of Incorporation of Jackson Holding Company (the
"Corporation") was filed in the Office of the Secretary of State on February 24,
1993, under the name of JHC, Inc.
2. In the manner prescribed by Sections 242 and 245 of the General
Corporation Law of the State of Delaware, as amended (the "GCL"), does hereby
certify resolutions were duly adopted by the Board of Directors of the
Corporation duly adopting this Amended and Restated Certificate of
Incorporation.
3. Pursuant to the provisions of Section 103(d) of the GCL, this Amended
and Restated Certificate of Incorporation is not to become effective until 9:00
AM EDT on August 17, 1995 (the "Effective Date").
4. The text of the Certificate of Incorporation, as amended and restated
herein, shall, at the Effective Date read as follows:
FIRST: The name of the Corporation is "Jackson Holding Company."
-----
SECOND: The address of the Corporation's registered office in the State of
------
Delaware is 1209 Orange Street, in the city of Wilmington, County of New Castle.
The name of its registered agent at such address is The Corporation Trust
Company.
THIRD: The nature or purpose of the business to be conducted or promoted
-----
by the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the GCL.
FOURTH: The total number of shares of stock which the Corporation shall
------
have authority to issue is sixteen million, two hundred thousand (16,200,000)
shares, consisting of:
(i) Ten million (10,000,000) shares of Class A Common Stock, par
value $.01 per share (the "Class A Common Stock");
--------------------
<PAGE>
(ii) Four million, five hundred thousand (4,500,000) shares of Class
B Common Stock, par value $.01 per share (the "Class B Common Stock");
--------------------
(iii) One million, five hundred thousand (1,500,000) shares of Class
C Common Stock, par value $.01 per share (the "Class C Common Stock";
--------------------
together with the Class A Common Stock and the Class B Common Stock, the
"Common Stock"); and
------------
(iv) Two hundred thousand (200,000) shares of Serial Preferred Stock,
par value $.01 per share (the "Preferred Stock").
---------------
A statement of the powers, designations, preferences, and relative
participating, optional or other special rights and the qualifications,
limitations and restrictions of the Common Stock and the Preferred Stock is as
follows
1. Common Stock.
------------
(a) Dividends. All shares of Common Stock of the Corporation shall
---------
be of equal rank and shall be identical, except as hereinafter specifically
set forth. No dividend or other distribution shall be paid upon, or
declared or set apart for, any share of any class of Common Stock of the
Corporation for any dividend period unless at the same time a dividend or
distribution for the same period shall be paid upon, or declared and set
apart for, all shares of each other class of Common Stock then issued and
outstanding, in the same amount with respect to each issued and outstanding
share of Common Stock, as though all shares of Common Stock were of a
single class, except that the Corporation may at any time concurrently
declare and pay an equal dividend, on a share for share basis, in each
respective class of Common Stock in shares of such class of Common Stock.
(b) Liquidation Rights. In the event of a voluntary or involuntary
------------------
liquidation, dissolution or winding-up of the Corporation, the holders of
each class of Common Stock shall be entitled to share in the distribution
of any remaining assets available for distribution to the holders of Common
Stock ratably in proportion to the total number of shares of all classes of
Common Stock then issued and outstanding as though all such shares were of
a single class.
(c) Corporate Event. There shall be no increase, decrease or other
---------------
alteration of the issued and outstanding shares of any class of Common
Stock of the Corporation by or as a result of any stock split, stock
dividend, combination of shares, recapitalization, reclassification,
merger,
-2-
<PAGE>
consolidation, sale of all or substantially all of the assets of the
Corporation, reorganization, liquidation, dissolution or other similar
corporate transaction (each, a "Corporate Event") unless at the same time
---------------
the shares of the other class or classes of Common Stock then issued and
outstanding are also increased, decreased or otherwise altered, as the case
may be, in the same manner and to the same extent. Without limiting the
generality of the foregoing, the number of shares of each class of Common
Stock issued and outstanding immediately following any such Corporate Event
shall bear the same ratio to the number of shares of that class of Common
Stock issued and outstanding immediately prior to such Corporate Event as
the number of shares of each other class of Common Stock issued and
outstanding immediately following such Corporate Event shall bear to the
number of shares of that class of Common Stock issued and outstanding
immediately prior to such Corporate Event.
(d) Voting Rights. The holders of Class A Common Stock and Class C
-------------
Common Stock shall be entitled to one vote per share in voting or
consenting to the election of directors and for all other corporate
purposes to the extent authorized by this Certificate of Incorporation or
law; provided, that as soon as any holder of Class C Common Stock who has
--------
been employed by the Corporation or a subsidiary of the Corporation (a
"Management Holder") ceases to be employed by the Corporation or a
-----------------
subsidiary of the Corporation for any reason ("Terminated Management
---------------------
Holder"), such Terminated Management Holder's right to cast votes shall
------
thereupon terminate, and any Person who was transferred Class C Common
Stock from such Terminated Management Holder shall have no voting rights
once such Terminated Management Holder ceases to be employed by the
Corporation or a subsidiary of the Corporation. The holders of Class B
Common Stock shall not be entitled to vote at any meeting of stockholders
or to express consent or dissent to any corporate action taken without a
meeting (including, without limitation, any election or removal of the
directors of the Corporation). The Class B Common Stock and any Class C
Common Stock held by a Terminated Management Holder or his transferee,
shall not be included in determining the number of shares voting or
consenting or entitled to vote or consent on such matters; provided,
--------
however, that without the affirmative vote or prior written consent of the
-------
holders of a majority of the outstanding shares of Class B Common Stock and
Class C Common Stock each voting or consenting as a separate class, the
Corporation shall not (i) merge with or into, or consolidate with, any
other corporation if, under the terms pursuant to which such merger or
consolidation is to be effected (w) the holders of Class B Common Stock and
-3-
<PAGE>
Class C Common Stock would receive consideration in exchange for each share
of such stock outstanding immediately prior to such merger or consolidation
that is less in amount than, or different in form from, the consideration
to be received in connection with such merger or consolidation by the
holders of Class A Common Stock in exchange for each share of such stock
outstanding immediately prior to such merger or consolidation, or (x) the
holders of Class B Common Stock would receive any consideration (whether in
the form of cash, property or securities) in exchange for the shares of
Class B Common Stock held by them immediately prior to such merger or
consolidation and any holder of Class A Common Stock (other than a
subsidiary of the Corporation) would retain the shares of such stock held
by it immediately prior to such merger or consolidation, or (ii) effectuate
any amendment to, or modification or waiver of, any provision of this
Restated Certificate of Incorporation that alters or changes the powers,
designations, preferences or rights of the shares of Class B Common Stock
and Class C Common Stock (including, without limitation, any provision of
this subdivision (d) of paragraph 1 of this ARTICLE FOURTH).
--------------- -----------
(e) Conversion Rights - Class B Common Stock.
----------------------------------------
1. (a) Upon the sale of shares of Class B Common Stock pursuant
to (a) an effective registration statement filed under Section 5 of
the Securities Act of 1933, as amended (the "Securities Act") or (b)
--------------
pursuant to a sale under Rule 144, promulgated under the Securities
Act ("Rule 144"), each share of Class B Common Stock so sold, shall
--------
without any action on the part of the holder thereof, be converted
into a share of Class A Common Stock. Upon the surrender of any
certificate or certificates which prior to the registration under
Section 5 of the Securities Act or sale under Rule 144 represented
shares of Class B Common Stock (a) the Corporation shall issue one or
more new certificates, in such denominations as may be requested, for
the same aggregate number of shares of Class A Common Stock
represented by the certificate or certificates so surrendered, and
registered as the purchaser or holder of such shares may request and
(b) the rights of the holder of such shares of Class B Common Stock
shall cease with respect to the number of shares so sold and the
person or persons in whose name or names the certificates for shares
of Class A Common Stock are to be issued upon such sale shall be
deemed to have become the holder or holders of record of the shares of
Class A Common Stock represented thereby.
-4-
<PAGE>
(b) Any holder of Class B Common Stock shall, subject to
subparagraph 4 below, be entitled at any time and from time to time to
convert any shares of Class B Common Stock held by it into an equal
number of shares of Class A Common Stock upon the surrender of the
certificate or certificates representing the shares of Class B Common
Stock to be converted at the principal office of the Corporation,
together with written notice by such holder stating that such holder
desires to convert the shares of Class B Common Stock represented by
such certificate or certificates into shares of Class A Common Stock.
Promptly after such surrender and receipt of such written notice, the
Corporation will issue and deliver in accordance with such
instructions the certificate or certificates for the shares of Class A
Common Stock issuable upon such conversion. In case less than all the
shares represented by any such certificate are to be converted, a new
certificate shall be issued to such holder representing the shares not
to be converted, without cost to such holder.
2. Immediately upon the transfer of any shares of Class B Common
Stock to any Person other than an Affiliate of the holder of such
shares, such shares shall, without any action on the part of the
holder thereof, be converted into the same number of fully paid and
non-assessable shares of Class A Common Stock as the number of shares
of Class B Common Stock so being transferred. Upon the surrender of
any certificates which prior to the transfer thereof represented
shares of Class B Common Stock for registration of transfer (a) the
Corporation shall issue one or more new certificates, in such
denomination or denominations as may be requested, for the same
aggregate number of shares of Class A Common Stock represented by the
certificates so surrendered, and registered as the holder thereof may
request and (b) the rights of the holder of such shares of Class B
Common Stock shall cease with respect to the number of shares so
transferred and the person or persons in whose name or names the
certificates of shares of Class A Common Stock are to be issued upon
such transfer shall be deemed to have become the holder or holders of
record of the shares of Class A Common Stock represented thereby.
Notwithstanding the foregoing, any holder of Class B Common Stock or
the transferee of such holder may waive, in a writing delivered to the
Corporation at the time of any transfer of shares to any Person other
than an Affiliate of such holder, the requirement that such shares of
Class B Common Stock be
-5-
<PAGE>
converted into shares of Class A Common Stock pursuant to this
subparagraph 1. For purposes of this subparagraph 1, the transfer of
-------------- --------------
shares of Class B Common Stock shall not be determined to occur until
the transfer is registered on the stock transfer books of the
Corporation.
3. Immediately upon the transfer of any shares of Class A Common
Stock to any person who is a holder of Class B Common Stock, such
shares of Class A Common Stock shall, without any action on the part
of the holder thereof, be converted into the same number of fully paid
and non-assessable shares of Class B Common Stock as the number of
shares of Class A Common Stock so being transferred. Upon the
surrender of any certificates, for registration of transfer, which
prior to the transfer thereof represented shares of Class A Common
Stock (a) the Corporation shall issue one or more new certificates, in
such denomination or denominations as may be requested, for the same
aggregate number of shares of Class B Common Stock represented by the
certificate or certificates so surrendered, and registered as the
purchaser of such shares may request and (b) the rights of the holder
of such shares of Class A Common Stock shall cease with respect to the
number of shares so sold and the person or persons in whose name or
names the certificates for shares of Class B Common Stock are to be
issued upon such sale shall be deemed to have become the holder or
holders of record of the shares of Class B Common Stock represented
thereby.
4. A holder of Class B Common Stock shall be allowed to convert
shares of Class B Common Stock to shares of Class A Common Stock, or
be allowed to participate in a transaction, (including, but not
limited to, the transactions contemplated in paragraphs 1 and 2
above), by which participation such holder would be deemed to have
converted shares of Class B Common Stock to shares of Class A Common
Stock only to the extent the holder is not restricted by the Bank
Holding Company Act, as amended, or other applicable law from
acquiring or holding additional shares of Class A Common Stock.
5. The Corporation shall at all times reserve and keep available
out of its authorized but unissued shares of Class A Common Stock, or
its treasury shares, solely for the purpose of issue upon the
conversion of the Class B Common Stock as provided in this paragraph
---------
(e), such number of shares of Class A Common Stock as
---
-6-
<PAGE>
are then issuable upon the conversion of all outstanding shares of
Class B Common Stock. The Corporation shall at all times reserve and
keep available (or cause such shares to be reserved and kept
available) out of its authorized but unissued shares of Class B Common
Stock, or its treasury shares, solely for the purpose of issue upon
the conversion of the Class A Common Stock as provided in this
paragraph (e), such number of shares of Class B Common Stock as are
-------------
then issuable upon the conversion of all outstanding shares of Class A
Common Stock.] The Corporation covenants that all shares of Class A
Common Stock and Class B Common Stock which are issuable upon
conversion shall, when issued, be duly and validly issued, fully paid
and nonassessable and free from all liens and charges. The Corporation
shall take all such actions as may be necessary to assure that all
such shares of Class A Common Stock and Class B Common Stock may be so
issued without violation of any law or any regulation, rule or other
requirement of any governmental domestic securities exchanges upon
which shares of Class A Common Stock or Class B Common Stock may be
listed. The Corporation shall not take any action which would affect
the number of shares of Class A Common Stock or Class B Common Stock
outstanding or issuable for any purposes unless immediately following
such action the Corporation would have authorized but unissued shares
of Class A Common Stock and Class B Common Stock, or treasury shares,
not then reserved or required to be reserved for any purpose other
than the purpose of issue upon conversion of Class B Common Stock or
Class A Common Stock, as the case may be, sufficient to meet the
reservation requirements of the first two sentences of this
subparagraph 5.
--------------
6. If any shares of Class A Common Stock or Class B Common Stock
required to be reserved for purposes of conversion hereunder require,
before such shares may be issued upon conversion, registration with or
approval of any governmental authority under any federal or state law
(other than any registration under the Securities Act or any state
securities law required by reason of any transfer involved in such
conversion), or listing on any domestic securities exchange, the
Corporation shall, at its expense and as promptly as possible, use its
best efforts to cause such shares to be duly registered or approved or
listed, as the case may be.
7. The issue of certificates for shares of Class A Common Stock
upon conversion of shares of
-7-
<PAGE>
Class B Common Stock and certificates for shares of Class B Common
Stock upon conversion of shares of Class A Common Stock shall be made
without charge to the holder of such shares of any issue tax in
respect thereof or other costs incurred by the Corporation in
connection with such conversion and the related issue of shares of
Class A Common Stock or Class B Common Stock, as the case may be;
provided that the Corporation shall not be required to pay any tax
--------
which may be payable in respect of any transfer involved in the issue
and delivery of any certificate in a name other than that of the
holder of the Class B Common Stock converted or the holder of the
Class A Common Stock converted, as the case may be.
8. Any holder of Class B Common Stock who receives certificates
representing shares of Class A Common Stock that have been converted
into shares of Class B Common Stock pursuant to paragraph 3 above,
shall be entitled at any time and from time to time to surrender the
certificate or certificates representing shares of Class A Common
Stock at the principal office of the Corporation, together with
written notice by such holder stating that such holder desires to
receive in exchange therefor a certificate or certificates
representing the same number of shares of Class B Common Stock.
Promptly after such surrender and receipt of such written notice, the
Corporation will issue and deliver in accordance with such
instructions the certificate or certificates for the shares of Class B
Common Stock issuable upon such conversion. In case less than all the
shares represented by any such certificate are to be converted, a new
certificate shall be issued to such holder representing the shares not
to be converted, without cost to such holder.
(f) Conversion Rights - Class C Common Stock.
----------------------------------------
1. Upon the sale of shares of Common Stock pursuant to (a) an
effective registration statement filed under Section 5 of the
Securities Act, (b) pursuant to a sale under Rule 144, or (c) the
prior written approval by the Board of Directors of the Corporation,
each share of Class C Common Stock issued and outstanding shall,
without any action on the part of the holder thereof, be converted
into a share of Class A Common Stock. Upon the surrender of any
certificate or certificates which prior to the registration under
Section 5 of the Securities Act or sale under Rule 144 represented
shares of Class C Common Stock (x) the Corporation shall issue one or
-8-
<PAGE>
more new certificates, in such denominations as may be requested, for
the same aggregate number of shares of Class A Common Stock
represented by the certificate or certificates so surrendered, and
registered by the certificate or certificates so surrendered, and
registered as the purchaser or holder of such shares may request, (y)
the rights of the holder of such shares of Class C Common Stock shall
cease and the person or persons in whose name or names the
certificates for shares of Class A Common Stock are to be issued shall
be deemed to have become the holder or holders of record of the shares
of Class A Common Stock represented thereby.
2. Immediately upon the transfer of any shares of Class A Common
Stock to any Person who is a holder of Class C Common Stock, such
shares of Class A Common Stock shall, without any action on the part
of the holder thereof, be converted into the same number of shares of
Class C Common Stock as the number of shares of Class A Common Stock
so being transferred. Upon the surrender of any certificates, for
registration of transfer, which prior to the transfer thereof
represented shares of Class A Common Stock (a) the Corporation shall
issue one or more new certificates, in such denomination or
denominations as may be requested, for the same aggregate number of
shares of Class C Common Stock represented by the certificate or
certificates so surrendered, and registered as the purchaser of such
shares may request and (b) the rights of the holder of such shares of
Class A Common Stock shall cease with respect to the number of shares
so sold and the person or persons in whose name or names the
certificates for shares of Class C Common Stock are to be issued upon
such sale shall be deemed to have become the holder or holders of
record of the shares of Class C Common Stock represented thereby.
3. The Corporation shall at all times reserve and keep available
out of its authorized but unissued shares of Class A Common Stock, or
its treasury shares, solely for the purpose of issue upon the
conversion of the Class C Common Stock as provided in this paragraph
---------
(f), such number of shares of Class A Common Stock as are then
---
issuable upon the conversion of all outstanding shares of Class C
Common Stock. The Corporation shall reserve and keep available (or
cause such shares to be reserved and kept available) out of its
authorized but unissued shares of Class C Common Stock, or its
treasury shares, solely for the purpose of issue upon the conversion
of the Class A Common
-9-
<PAGE>
Stock as provided in this paragraph (f), such number of shares of
-------------
Class C Common Stock as are then issuable upon the conversion of all
outstanding shares of Class A Common Stock. The Corporation covenants
that all shares of Class A Common Stock and Class C Common Stock which
are issuable upon conversion shall, when issued, be duly and validly
issued, fully paid and nonassessable and free from all liens and
charges. The Corporation shall take all such actions as may be
necessary to assure that all such shares of Class A Common Stock and
Class C Common Stock may be so issued without violation of any law or
any regulation, rule or other requirement of any governmental domestic
securities exchanges upon which shares of Class A Common Stock or
Class C Common Stock may be listed. The Corporation shall not take any
action which would affect the number of shares of Class A Common Stock
or Class C Common Stock outstanding or issuable for any purposes
unless immediately following such action the Corporation would have
authorized but unissued shares of Class A Common Stock and Class C
Common Stock, or treasury shares, not then reserved or required to be
reserved for any purpose other than the purpose of issue upon
conversion of Class C Common Stock or Class A Common Stock, as the
case may be, sufficient to meet the reservation requirements of the
first two sentences of this subparagraph 3.
--------------
4. If any shares of Class A Common Stock or Class C Common Stock
required to be reserved for purposes of conversion hereunder require,
before such shares may be issued upon conversion, registration with or
approval of any governmental authority under any federal or state law
(other than any registration under the Securities Act or any state
securities law required by reason of any transfer involved in such
conversion), or listing on any domestic securities exchange, the
Corporation shall, at its expense and as promptly as possible, use its
best efforts to cause such shares to be duly registered or approved or
listed, as the case may be.
5. The issue of certificates for shares of Class A Common Stock
upon conversion of shares of Class C Common Stock and certificates for
shares of Class C Common Stock upon conversion of shares of Class A
Common Stock shall be made without charge to the holder of such shares
of any issue tax in respect thereof or other costs incurred by the
Corporation in connection with such conversion and the related issue
of shares of Class A Common Stock or Class C Common Stock, as the
-10-
<PAGE>
case may be; provided that the Corporation shall not be required to
--------
pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of any certificate in a name other than that
of the holder of the Class C Common Stock converted or the holder of
the Class A Common Stock converted, as the case may be.
6. Any holder of Class C Common Stock who receives certificates
representing shares of Class A Common Stock that have been converted
into shares of Class C Common Stock pursuant to paragraph 2 above,
shall be entitled at any time and from time to time to surrender the
certificate or certificates representing shares of Class A Common
Stock at the principal office of the Corporation, together with
written notice by such holder stating that such holder desires to
receive in exchange therefor a certificate or certificates
representing the same number of shares of Class C Common Stock.
Promptly after such surrender and receipt of such written notice, the
Corporation will issue and deliver in accordance with such
instructions the certificate or certificates for the shares of Class C
Common Stock issuable upon such conversion. In case less than all the
shares represented by any such certificate are to be converted, a new
certificate shall be issued to such holder representing the shares not
to be converted, without cost to such holder.
(g) Certain Definitions. As used in this ARTICLE FOURTH, the
-------------------
following terms shall have the following respective meanings:
"Affiliate" means a Person that directly or indirectly through
---------
one or more intermediaries, controls or is controlled by or is under
common control with another Person and shall include any portfolio or
investment fund of which such other Person is the sole investment
advisor. The term "control" means possession, directly or
-------
indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of
voting securities, by contract or otherwise.
"Person" means any individual, firm, corporation, business
------
enterprise, trust, association, joint venture, partnership, any
foreign, federal, state, municipal or other government or any
department, commission, board, bureau, agency, public authority or
instrumentality thereof, or any court or arbitrator or other entity,
whether acting in an individual, fiduciary or other capacity.
-11-
<PAGE>
2. Preferred Stock. The Board of Directors is authorized, subject to
---------------
limitations prescribed by law, to provide for the issuance of the Preferred
Stock in series, and by filing a certificate pursuant to the applicable law of
the State of Delaware, to establish from time to time the number of shares to be
included in each such series, and to fix the designation, powers, preferences
and rights of the shares of each such series and the qualifications, limitations
or restrictions thereof.
The authority of the Board of Directors with respect to each series shall
include, but not be limited to, determination of the following:
(a) The number of shares constituting that series and the distinctive
designation of that series;
(b) The rate of dividend, and whether (and if so, on what terms and
conditions) dividends shall be cumulative (and if so, whether unpaid dividends
shall compound or accrue interest) or shall be payable in preference or in any
other relation to the dividends payable on any other class or classes of stock
or any other series of the Preferred Stock;
(c) Whether that series shall have voting rights in addition to the voting
rights provided by law and, if so, the terms and extent of such voting rights;
(d) Whether the shares must or may be redeemed and, if so, the terms and
conditions of such redemption (including, without limitation, the dates upon or
after which they must or may be redeemed and the price or prices at which they
must or may be redeemed, which price or prices may be different in different
circumstances or at different redemption dates);
(e) Whether the shares shall be issued with the privilege of conversion or
exchange and, if so, the terms and conditions of such conversion or exchange
(including without limitation the price or prices or the rate or rates of
conversion or exchange or any terms for adjustment thereof);
(f) The amounts, if any, payable upon the shares in the event of voluntary
liquidation, dissolution or winding up of the Corporation in preference of
shares of any other class or series and whether the shares shall be entitled to
participate generally in distributions on the Common Stock under such
circumstances;
(g) The amounts, if any, payable under the shares thereof in the event of
involuntary liquidation, dissolution or winding up of the Corporation in
preference of shares of any other class or series and whether the shares shall
be entitled to participate
-12-
<PAGE>
generally in distributions in the Common Stock under such circumstances;
(h) Sinking fund provisions, if any, for the redemption or purchase of the
shares (the term "sinking fund" being understood to include any similar fund,
however designated); and
(i) Any other relative rights, preferences, limitations and powers of that
series.
FIFTH: At all meetings of stockholders, each stockholder shall be entitled
-----
to vote, in person or by proxy, the shares of voting stock owned by such
stockholders of record on the record date for the meeting. When a quorum is
present or represented at any meeting, the vote of the holders of a majority in
interest of the stockholders present in person or by proxy at such meeting and
entitled to vote thereon shall decide any question, matter or proposal brought
before such meeting unless the question is one upon which, by express provision
of law, this Certificate of Incorporation or the By-laws applicable thereto, a
different vote is required, in which case such express provision shall govern
and control the decision of such question.
SIXTH:
-----
1. Number of Directors. The number of directors of the Corporation shall
-------------------
be fixed from time to time by the vote of a majority of the entire Board of
Directors, but such number shall in no case be less than one (1) nor more than
five (5). Any such determination made by the Board of Directors shall continue
in effect unless and until changed by the Board of Directors, but no such
changes shall affect the term of any directors then in office.
2. Term of Office; Quorum; Vacancies. A director shall hold office until
---------------------------------
the annual meeting for the year in which his or her term expires and until his
or her successor shall be elected and shall qualify, subject, however, to prior
death, resignation, retirement, disqualification or removal from office.
Subject to the By-laws, a majority of the entire Board of Directors shall
constitute a quorum for the transaction of business. Any vacancies and newly
created directorships resulting from an increase in the number of directors
shall be filled by a majority of the Board of Directors then in office even
though less than a quorum and shall hold office until his successor is elected
and qualified or until his earlier death, resignation, retirement,
disqualification or removal from office.
3. Removal. Subject to the By-laws and the Stockholders Agreement, dated
-------
as of August 16, 1995, by and among the Corporation and the Corporation's
Stockholders (the "Stockholders
-13-
<PAGE>
Agreement"), any director may be removed upon the affirmative vote of the
holders of a majority of the votes which could be cast by the holders of all
outstanding shares of capital stock entitled to vote for the election of
directors, voting together as a class, given at a duly called annual or special
meeting of stockholders.
SEVENTH: For the management of the business and for the conduct of the
-------
affairs of the Corporation, and in further definition, limitation and regulation
of the powers of the Corporation and of its directors and of its stockholders or
any class thereof, as the case may be, it is further provided:
(1) The business and affairs of the Corporation shall be managed by
or under the direction of the Board of Directors.
(2) The directors shall have the power, subject to the terms and
conditions of the Stockholders Agreement and the By-laws of Corporation, to
make, adopt, alter, amend, change, add to or repeal the By-laws of the
Corporation.
(3) In addition to the powers and authority hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered
to exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation, subject, nevertheless, to the
provisions of the GCL, this Certificate of Incorporation, and any By-laws
adopted by the stockholders; provided, however, that no By-Laws hereafter
adopted by the stockholders shall invalidate any prior act of the directors
which would have been valid if such By-Laws had not been adopted.
EIGHTH:
------
1. Stockholder Meetings; Keeping of Books and Records. Meetings of
--------------------------------------------------
stockholders may be held within or outside the State of Delaware as the By-laws
may provide. The books of the Corporation may be kept (subject to any provision
contained in the GCL) outside the State of Delaware at such place or places as
may be designated from time to time by the Board of Directors or in the By-laws
of the Corporation.
2. Special Stockholders Meetings. Special meetings of the shareholders,
-----------------------------
for any purpose or purposes, unless otherwise prescribed by law, may be called
by the President or the Chairman of the Board, if one is elected, and shall be
called by the Secretary at the direction of a majority of the Board of
Directors, or at the request in writing of shareholders owning a
-14-
<PAGE>
majority in amount of the Class A Common Stock of the Company issued and
outstanding and entitled to vote.
3. No Written Ballot. Elections of directors need not be by written
-----------------
ballot unless the By-laws of the Corporation shall so provide.
NINTH:
-----
1. Limits on Director Liability. Directors of the Corporation shall have
----------------------------
no personal liability to the Corporation or its stockholders for monetary
damages for breach of a fiduciary duty as a director; provided that nothing
--------
contained in this Article NINTH shall eliminate or limit the liability of a
director (i) for any breach of a director's duty of loyalty to the Corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or knowing violations of law, (iii) under Section
174 of the GCL, or (iv) for any transaction from which a director derived an
improper personal benefit. If the GCL is amended to authorize corporate action
further eliminating or limiting the personal liability of directors, then by
virtue of this Article NINTH the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the GCL, as so
amended.
2. Indemnification.
---------------
(a) The Corporation shall indemnify, in accordance with the By-laws of the
Corporation and to the fullest extent permitted from time to time by the GCL or
any other applicable laws as presently or hereafter in effect, any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, including, without limitation, an action by or in the right of
the Corporation, by reason of his acting as a director or officer of the
Corporation (and the Corporation, in the discretion of the Board of Directors,
may so indemnify a person by reason of the fact that he is or was an employee or
agent of the Corporation or is or was serving at the request of the Corporation
in any other capacity for or on behalf of the Corporation) against any liability
or expense actually and reasonably incurred by such person in respect thereof;
provided, however, the Corporation shall be required to indemnify an officer or
- -------- -------
director in connection with an action, suit or proceeding (or part thereof)
initiated by such person only if (i) such action, suit or proceeding (or part
thereof) was authorized by the Board of Directors and (ii) the indemnification
does not relate to any liability arising under Section 16(b) of the Securities
Exchange Act of 1934, as amended, or any rules or regulations promulgated
thereunder. Such
-15-
<PAGE>
indemnification is not exclusive of any other right to indemnification provided
by law or otherwise. The right to indemnification conferred by this Section 2
shall be deemed to be a contract between the Corporation and each person
referred to herein.
(b) If a claim under subdivision (a) of this paragraph 2 of this Article
SIXTH is not paid in full by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
any undertaking required by the By-laws of the Corporation has been tendered to
the Corporation) that the claimant has not met the standards of conduct which
make it permissible under the GCL and subdivision (a) of this paragraph 2 of
this Article NINTH for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board of Directors, legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the GCL, nor an actual determination by the Corporation (including
its Board of Directors, legal counsel, or its stockholders) that the claimant
has not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that the claimant has not met the applicable
standard of conduct.
(c) Indemnification shall include payment by the Corporation of expenses
in defending an action or proceeding in advance of the final disposition of such
action or proceeding upon receipt of an undertaking by the person indemnified to
repay such payment if it is ultimately determined that such person is not
entitled to indemnification under this Article NINTH, which undertaking may be
accepted without reference to the financial ability of such person to make such
repayment.
3. Insurance. The Corporation shall have the power (but not the
---------
obligation) to purchase and maintain insurance on behalf of any person who is or
was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss incurred by such person in any
such capacity or arising out of his status as such, whether or not the
Corporation would have the power to
-16-
<PAGE>
indemnify him against such liability under the ARTICLE NINTH or the GCL.
4. Other Rights. The rights and authority conferred in this ARTICLE NINTH
------------
shall not be exclusive of any other right which any person may otherwise have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, by-law, agreement, contract, vote of stockholders or
disinterested directors or otherwise.
5. Additional Indemnification. The Corporation may, by action of its
--------------------------
Board of Directors, provide indemnification to such of the directors, officers,
employees and agents of the Corporation to such extent and to such effect as the
Board of Directors shall determine to be appropriate and authorized by the GCL.
6. Effect of Amendments. Neither the amendment, change, alteration nor
--------------------
repeal of this ARTICLE NINTH, nor the adoption of any provision of this
Certificate of Incorporation or the by-laws of the Corporation, nor, to the
fullest extent permitted by GCL, any modification of law, shall eliminate or
reduce the effect of this ARTICLE NINTH or the rights or any protection afforded
under this ARTICLE NINTH in respect of any acts or omissions occurring prior to
such amendment, repeal, adoption or modification.
TENTH: Subject to the Corporation's Stockholders Agreement, the
-----
Corporation reserves the right to repeal, alter, change or amend any provision
contained in this Certificate of Incorporation in the manner now or hereafter
prescribed by statute and all rights conferred upon stockholders herein are
granted subject to this reservation. No repeal, alteration or amendment of this
Certificate of Incorporation shall be made unless the same is first approved by
the Board of Directors of the Corporation pursuant to a resolution adopted by
the directors then in office in accordance with the By-laws and applicable law
and thereafter approved by the stockholders.
ELEVENTH: The Corporation has elected to not be governed by Section 203 of
--------
the GCL. This election shall take effect on August 17, 1995.
-17-
<PAGE>
IN WITNESS WHEREOF, the undersigned, being the Assistant Secretary, does
hereby certify that the facts hereinabove stated are truly set forth and,
accordingly, hereby executes this Amended and Restated Certificate of
Incorporation this 17th day of August, 1995.
By: /s/ James B. Carlson
---------------------------
James B. Carlson
Assistant Secretary
-18-
<PAGE>
PAGE 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
______________________________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF MERGER,
WHICH MERGES:
"JACKSON ACQUISITION CORP.", A DELAWARE CORPORATION, WITH AND INTO "JACKSON
HOLDING COMPANY" UNDER THE NAME OF "JACKSON HOLDING COMPANY", A CORPORATION
ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE, AS RECEIVED AND
FILED IN THIS OFFICE THE SEVENTEENTH DAY OF AUGUST, A.D. 1995, AT 9 O'CLOCK A.M.
(SEAL) /s/ Edward J. Freel
------------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 9023386
2326979 8100M
DATE: 04-13-98
981139885
<PAGE>
CERTIFICATE OF MERGER
OF
JACKSON ACQUISITION CORP.
WITH AND INTO
JACKSON HOLDING COMPANY
UNDER SECTION 251 OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
Pursuant to Section 251 of the General Corporation Law of the State of
Delaware, Jackson Holding Company, a Delaware corporation ("Company"), hereby
-------
certifies to the following information relating to the merger of Jackson
Acquisition Corp., a Delaware corporation ("Jackson"), with and into the Company
-------
(the "Merger"), pursuant to the Agreement and Plan of Merger, dated as of August
------
14, 1995, between the Company and Jackson (the "Merger Agreement")
----------------
1. The names and states of incorporation of Jackson and Company, which
are the constituent corporations in the Merger (the "Constituent Corporations"),
------------------------
are:
Name State
---- -----
Jackson Acquisition Corp............................ Delaware
Jackson Holding Company............................. Delaware
2. A Merger Agreement between the parties to the Merger has been
approved, adopted, certified, executed and acknowledged by each of the
Constituent Corporations in accordance with the requirements of Section 251 of
the General Corporation Law of Delaware.
3. The name of the surviving corporation with respect to the Merger is
Jackson Holding Company (the "Surviving Corporation").
---------------------
4. Pursuant to the Merger Agreement, the Certificate of Incorporation of
Company, as set forth in Exhibit A, shall be the Certificate of Incorporation of
---------
the Surviving Corporation.
5. Pursuant to the Merger Agreement, the By-Laws of Jackson shall be the
By-Laws of the Surviving Corporation.
<PAGE>
6. Pursuant to the Merger Agreement, the Directors of Jackson will be the
Directors of the Surviving Corporation.
7. Pursuant to the Merger Agreement, the Officers of Jackson will be the
Officers of the Surviving Corporation.
8. Pursuant to the Merger Agreement, and as a result of the Merger, all
shares of the Company are cancelled and shall be entitled to receive the
consideration payable in respect thereof pursuant to the Merger Agreement and
all shares of Jackson will be converted into an equal number of shares of the
Company and, following the Merger, shall represent all of the issued and
outstanding capital stock of the Surviving Corporation.
9. The executed Merger Agreement is on file at the principal place of
business of the Surviving Corporation, 101 S. Hanley Road St. Louis, Missouri
63105, and a copy of the Merger Agreement will be furnished by the Surviving
Corporation without cost, upon the request of any stockholder of the Constituent
Corporations.
10. The effective date of the Merger shall be 9:00 a.m. EDT on August 17,
1995.
-2-
<PAGE>
IN WITNESS WHEREOF, this Certificate of Merger has been executed on this
17th day of August, 1995.
JACKSON ACQUISITION CORP.
By /s/ Robert H. Elkin
--------------------------------------
Name: Robert H. Elkin
Title: President
Attest:
By /s/ Christopher T. Paule
-----------------------------------
Name: Christopher T. Paule
Title: Secretary
JACKSON HOLDING COMPANY
By /s/ Robert H. Elkin
--------------------------------------
Name: Robert H. Elkin
Title: President
Attest:
By /s/ Christopher T. Paule
-----------------------------------
Name: Christopher T. Paule
Title: Secretary
-3-
<PAGE>
Exhibit A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
JACKSON HOLDING COMPANY
1. The Certificate of Incorporation of Jackson Holding Company (the
"Corporation") was filed in the Office of the Secretary of State on February 24,
1993, under the name of JHC, Inc.
2. In the manner prescribed by Sections 242 and 245 of the General
Corporation Law of the State of Delaware, as amended (the "GCL"), does hereby
certify resolutions were duly adopted by the Board of Directors of the
Corporation duly adopting this Amended and Restated Certificate of
Incorporation.
3. Pursuant to the provisions of Section 103(d) of the GCL, this Amended
and Restated Certificate of Incorporation is not to become effective until 9:00
AM EDT on August 17, 1995 (the "Effective Date").
4. The text of the Certificate of Incorporation, as amended and restated
herein, shall, at the Effective Date read as follows:
FIRST: The name of the Corporation is "Jackson Holding Company."
-----
SECOND: The address of the Corporation's registered office in the State of
------
Delaware is 1209 Orange Street, in the city of Wilmington, County of New Castle.
The name of its registered agent at such address is The Corporation Trust
Company.
THIRD: The nature or purpose of the business to be conducted or promoted
-----
by the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the GCL.
FOURTH: The total number of shares of stock which the Corporation shall
------
have authority to issue is sixteen million, two hundred thousand (16,200,000)
shares, consisting of:
(i) Ten million (10,000,000) shares of Class A Common Stock, par
value $.01 per share (the "Class A Common Stock");
--------------------
<PAGE>
(ii) Four million, five hundred thousand (4,500,000) shares of Class
B Common Stock, par value $.01 per share (the "Class B Common Stock");
--------------------
(iii) One million, five hundred thousand (1,500,000) shares of Class
C Common Stock, par value $.01 per share (the "Class C Common Stock";
--------------------
together with the Class A Common Stock and the Class B Common Stock, the
"Common Stock"); and
------------
(iv) Two hundred thousand (200,000) shares of Serial Preferred
Stock, par value $.01 per share (the "Preferred Stock").
---------------
A statement of the powers, designations, preferences, and relative
participating, optional or other special rights and the qualifications,
limitations and restrictions of the Common Stock and the Preferred Stock is as
follows
1. Common Stock.
------------
(a) Dividends. All shares of Common Stock of the Corporation shall
---------
be of equal rank and shall be identical, except as hereinafter specifically
set forth. No dividend or other distribution shall be paid upon, or
declared or set apart for, any share of any class of Common Stock of the
Corporation for any dividend period unless at the same time a dividend or
distribution for the same period shall be paid upon, or declared and set
apart for, all shares of each other class of Common Stock then issued and
outstanding, in the same amount with respect to each issued and outstanding
share of Common Stock, as though all shares of Common Stock were of a
single class, except that the Corporation may at any time concurrently
declare and pay an equal dividend, on a share for share basis, in each
respective class of Common Stock in shares of such class of Common Stock.
(b) Liquidation Rights. In the event of a voluntary or involuntary
------------------
liquidation, dissolution or winding-up of the Corporation, the holders of
each class of Common Stock shall be entitled to share in the distribution
of any remaining assets available for distribution to the holders of Common
Stock ratably in proportion to the total number of shares of all classes of
Common Stock then issued and outstanding as though all such shares were of
a single class.
(c) Corporate Event. There shall be no increase, decrease or other
---------------
alteration of the issued and outstanding shares of any class of Common
Stock of the Corporation by or as a result of any stock split, stock
dividend, combination of shares, recapitalization, reclassification,
merger,
-2-
<PAGE>
consolidation, sale of all or substantially all of the assets of the
Corporation, reorganization, liquidation, dissolution or other similar
corporate transaction (each, a "Corporate Event") unless at the same time
---------------
the shares of the other class or classes of Common Stock then issued and
outstanding are also increased, decreased or otherwise altered, as the case
may be, in the same manner and to the same extent. Without limiting the
generality of the foregoing, the number of shares of each class of Common
Stock issued and outstanding immediately following any such Corporate Event
shall bear the same ratio to the number of shares of that class of Common
Stock issued and outstanding immediately prior to such Corporate Event as
the number of shares of each other class of Common Stock issued and
outstanding immediately following such Corporate Event shall bear to the
number of shares of that class of Common Stock issued and outstanding
immediately prior to such Corporate Event.
(d) Voting Rights. The holders of Class A Common Stock and Class C
-------------
Common Stock shall be entitled to one vote per share in voting or
consenting to the election of directors and for all other corporate
purposes to the extent authorized by this Certificate of Incorporation or
law; provided, that as soon as any holder of Class C Common Stock who has
--------
been employed by the Corporation or a subsidiary of the Corporation (a
"Management Holder") ceases to be employed by the Corporation or a
-----------------
subsidiary of the Corporation for any reason ("Terminated Management
---------------------
Holder"), such Terminated Management Holder's right to cast votes shall
------
thereupon terminate, and any Person who was transferred Class C Common
Stock from such Terminated Management Holder shall have no voting rights
once such Terminated Management Holder ceases to be employed by the
Corporation or a subsidiary of the Corporation. The holders of Class B
Common Stock shall not be entitled to vote at any meeting of stockholders
or to express consent or dissent to any corporate action taken without a
meeting (including, without limitation, any election or removal of the
directors of the Corporation). The Class B Common Stock and any Class C
Common Stock held by a Terminated Management Holder or his transferee,
shall not be included in determining the number of shares voting or
consenting or entitled to vote or consent on such matters; provided,
--------
however, that without the affirmative vote or prior written consent of the
-------
holders of a majority of the outstanding shares of Class B Common Stock and
Class C Common Stock each voting or consenting as a separate class, the
Corporation shall not (i) merge with or into, or consolidate with, any
other corporation if, under the terms pursuant to which such merger or
consolidation is to be effected (w) the holders of Class B Common Stock and
-3-
<PAGE>
Class C Common Stock would receive consideration in exchange for each share
of such stock outstanding immediately prior to such merger or consolidation
that is less in amount than, or different in form from, the consideration
to be received in connection with such merger or consolidation by the
holders of Class A Common Stock in exchange for each share of such stock
outstanding immediately prior to such merger or consolidation, or (x) the
holders of Class B Common Stock would receive any consideration (whether in
the form of cash, property or securities) in exchange for the shares of
Class B Common Stock held by them immediately prior to such merger or
consolidation and any holder of Class A Common Stock (other than a
subsidiary of the Corporation) would retain the shares of such stock held
by it immediately prior to such merger or consolidation, or (ii) effectuate
any amendment to, or modification or waiver of, any provision of this
Restated Certificate of Incorporation that alters or changes the powers,
designations, preferences or rights of the shares of Class B Common Stock
and Class C Common Stock (including, without limitation, any provision of
this subdivision (d) of paragraph 1 of this ARTICLE FOURTH).
--------------- -----------
(e) Conversion Rights - Class B Common Stock.
----------------------------------------
1. (a) Upon the sale of shares of Class B Common Stock
pursuant to (a) an effective registration statement filed under
Section 5 of the Securities Act of 1933, as amended (the "Securities
----------
Act") or (b) pursuant to a sale under Rule 144, promulgated under the
---
Securities Act ("Rule 144"), each share of Class B Common Stock so
--------
sold, shall without any action on the part of the holder thereof, be
converted into a share of Class A Common Stock. Upon the surrender of
any certificate or certificates which prior to the registration under
Section 5 of the Securities Act or sale under Rule 144 represented
shares of Class B Common Stock (a) the Corporation shall issue one or
more new certificates, in such denominations as may be requested, for
the same aggregate number of shares of Class A Common Stock
represented by the certificate or certificates so surrendered, and
registered as the purchaser or holder of such shares may request and
(b) the rights of the holder of such shares of Class B Common Stock
shall cease with respect to the number of shares so sold and the
person or persons in whose name or names the certificates for shares
of Class A Common Stock are to be issued upon such sale shall be
deemed to have become the holder or holders of record of the shares of
Class A Common Stock represented thereby.
-4-
<PAGE>
(b) Any holder of Class B Common Stock shall, subject to
subparagraph 4 below, be entitled at any time and from time to time to
convert any shares of Class B Common Stock held by it into an equal
number of shares of Class A Common Stock upon the surrender of the
certificate or certificates representing the shares of Class B Common
Stock to be converted at the principal office of the Corporation,
together with written notice by such holder stating that such holder
desires to convert the shares of Class B Common Stock represented by
such certificate or certificates into shares of Class A Common Stock.
Promptly after such surrender and receipt of such written notice, the
Corporation will issue and deliver in accordance with such
instructions the certificate or certificates for the shares of Class A
Common Stock issuable upon such conversion. In case less than all the
shares represented by any such certificate are to be converted, a new
certificate shall be issued to such holder representing the shares not
to be converted, without cost to such holder.
2. Immediately upon the transfer of any shares of Class B
Common Stock to any Person other than an Affiliate of the holder of
such shares, such shares shall, without any action on the part of the
holder thereof, be converted into the same number of fully paid and
non-assessable shares of Class A Common Stock as the number of shares
of Class B Common Stock so being transferred. Upon the surrender of
any certificates which prior to the transfer thereof represented
shares of Class B Common Stock for registration of transfer (a) the
Corporation shall issue one or more new certificates, in such
denomination or denominations as may be requested, for the same
aggregate number of shares of Class A Common Stock represented by the
certificates so surrendered, and registered as the holder thereof may
request and (b) the rights of the holder of such shares of Class B
Common Stock shall cease with respect to the number of shares so
transferred and the person or persons in whose name or names the
certificates of shares of Class A Common Stock are to be issued upon
such transfer shall be deemed to have become the holder or holders of
record of the shares of Class A Common Stock represented thereby.
Notwithstanding the foregoing, any holder of Class B Common Stock or
the transferee of such holder may waive, in a writing delivered to the
Corporation at the time of any transfer of shares to any Person other
than an Affiliate of such holder, the requirement that such shares of
Class B Common Stock be
-5-
<PAGE>
converted into shares of Class A Common Stock pursuant to this
subparagraph 1. For purposes of this subparagraph 1, the transfer
-------------- --------------
of shares of Class B Common Stock shall not be determined to occur
until the transfer is registered on the stock transfer books of the
Corporation.
3. Immediately upon the transfer of any shares of Class A
Common Stock to any person who is a holder of Class B Common Stock,
such shares of Class A Common Stock shall, without any action on the
part of the holder thereof, be converted into the same number of fully
paid and non-assessable shares of Class B Common Stock as the number
of shares of Class A Common Stock so being transferred. Upon the
surrender of any certificates, for registration of transfer, which
prior to the transfer thereof represented shares of Class A Common
Stock (a) the Corporation shall issue one or more new certificates, in
such denomination or denominations as may be requested, for the same
aggregate number of shares of Class B Common Stock represented by the
certificate or certificates so surrendered, and registered as the
purchaser of such shares may request and (b) the rights of the holder
of such shares of Class A Common Stock shall cease with respect to the
number of shares so sold and the person or persons in whose name or
names the certificates for shares of Class B Common Stock are to be
issued upon such sale shall be deemed to have become the holder or
holders of record of the shares of Class B Common Stock represented
thereby.
4. A holder of Class B Common Stock shall be allowed to convert
shares of Class B Common Stock to shares of Class A Common Stock, or
be allowed to participate in a transaction, (including, but not
limited to, the transactions contemplated in paragraphs 1 and 2
above), by which participation such holder would be deemed to have
converted shares of Class B Common Stock to shares of Class A Common
Stock only to the extent the holder is not restricted by the Bank
Holding Company Act, as amended, or other applicable law from
acquiring or holding additional shares of Class A Common Stock.
5. The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Class A Common
Stock, or its treasury shares, solely for the purpose of issue upon
the conversion of the Class B Common Stock as provided in this
paragraph (e), such number of shares of Class A Common Stock as
--------- ---
-6-
<PAGE>
are then issuable upon the conversion of all outstanding shares of
Class B Common Stock. The Corporation shall at all times reserve and
keep available (or cause such shares to be reserved and kept
available) out of its authorized but unissued shares of Class B Common
Stock, or its treasury shares, solely for the purpose of issue upon
the conversion of the Class A Common Stock as provided in this
paragraph (e), such number of shares of Class B Common Stock as are
-------------
are then issuable upon the conversion of all outstanding shares of
Class A Common Stock.] The Corporation covenants that all shares of
Class A Common Stock and Class B Common Stock which are issuable upon
conversion shall, when issued, be duly and validly issued, fully paid
and nonassessable and free from all liens and charges. The Corporation
shall take all such actions as may be necessary to assure that all
such shares of Class A Common Stock and Class B Common Stock may be so
issued without violation of any law or any regulation, rule or other
requirement of any governmental domestic securities exchanges upon
which shares of Class A Common Stock or Class B Common Stock may be
listed. The Corporation shall not take any action which would affect
the number of shares of Class A Common Stock or Class B Common Stock
outstanding or issuable for any purposes unless immediately following
such action the Corporation would have authorized but unissued shares
of Class A Common Stock and Class B Common Stock, or treasury shares,
not then reserved or required to be reserved for any purpose other
than the purpose of issue upon conversion of Class B Common Stock or
Class A Common Stock, as the case may be, sufficient to meet the
reservation requirements of the first two sentences of this
subparagraph 5.
--------------
6. If any shares of Class A Common Stock or Class B Common
Stock required to be reserved for purposes of conversion hereunder
require, before such shares may be issued upon conversion,
registration with or approval of any governmental authority under any
federal or state law (other than any registration under the Securities
Act or any state securities law required by reason of any transfer
involved in such conversion), or listing on any domestic securities
exchange, the Corporation shall, at its expense and as promptly as
possible, use its best efforts to cause such shares to be duly
registered or approved or listed, as the case may be.
7. The issue of certificates for shares of Class A Common Stock
upon conversion of shares of
-7-
<PAGE>
Class B Common Stock and certificates for shares of Class B Common
Stock upon conversion of shares of Class A Common Stock shall be made
without charge to the holder of such shares of any issue tax in
respect thereof or other costs incurred by the Corporation in
connection with such conversion and the related issue of shares of
Class A Common Stock or Class B Common Stock, as the case may be;
provided that the Corporation shall not be required to pay any tax
--------
which may be payable in respect of any transfer involved in the issue
and delivery of any certificate in a name other than that of the
holder of the Class B Common Stock converted or the holder of the
Class A Common Stock converted, as the case may be.
8. Any holder of Class B Common Stock who receives certificates
representing shares of Class A Common Stock that have been converted
into shares of Class B Common Stock pursuant to paragraph 3 above,
shall be entitled at any time and from time to time to surrender the
certificate or certificates representing shares of Class A Common
Stock at the principal office of the Corporation, together with
written notice by such holder stating that such holder desires to
receive in exchange therefor a certificate or certificates
representing the same number of shares of Class B Common Stock.
Promptly after such surrender and receipt of such written notice, the
Corporation will issue and deliver in accordance with such
instructions the certificate or certificates for the shares of Class B
Common Stock issuable upon such conversion. In case less than all the
shares represented by any such certificate are to be converted, a new
certificate shall be issued to such holder representing the shares not
to be converted, without cost to such holder.
(f) Conversion Rights - Class C Common Stock.
----------------------------------------
1. Upon the sale of shares of Common Stock pursuant to (a) an
effective registration statement filed under Section 5 of the
Securities Act, (b) pursuant to a sale under Rule 144, or (c) the
prior written approval by the Board of Directors of the Corporation,
each share of Class C Common Stock issued and outstanding shall,
without any action on the part of the holder thereof, be converted
into a share of Class A Common Stock. Upon the surrender of any
certificate or certificates which prior to the registration under
Section 5 of the Securities Act or sale under Rule 144 represented
shares of Class C Common Stock (x) the Corporation shall issue one or
-8-
<PAGE>
more new certificates, in such denominations as may be requested, for
the same aggregate number of shares of Class A Common Stock
represented by the certificate or certificates so surrendered, and
registered by the certificate or certificates so surrendered, and
registered as the purchaser or holder of such shares may request, (y)
the rights of the holder of such shares of Class C Common Stock shall
cease and the person or persons in whose name or names the
certificates for shares of Class A Common Stock are to be issued shall
be deemed to have become the holder or holders of record of the shares
of Class A Common Stock represented thereby.
2. Immediately upon the transfer of any shares of Class A
Common Stock to any Person who is a holder of Class C Common Stock,
such shares of Class A Common Stock shall, without any action on the
part of the holder thereof, be converted into the same number of
shares of Class C Common Stock as the number of shares of Class A
Common Stock so being transferred. Upon the surrender of any
certificates, for registration of transfer, which prior to the
transfer thereof represented shares of Class A Common Stock (a) the
Corporation shall issue one or more new certificates, in such
denomination or denominations as may be requested, for the same
aggregate number of shares of Class C Common Stock represented by the
certificate or certificates so surrendered, and registered as the
purchaser of such shares may request and (b) the rights of the holder
of such shares of Class A Common Stock shall cease with respect to the
number of shares so sold and the person or persons in whose name or
names the certificates for shares of Class C Common Stock are to be
issued upon such sale shall be deemed to have become the holder or
holders of record of the shares of Class C Common Stock represented
thereby.
3. The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Class A Common
Stock, or its treasury shares, solely for the purpose of issue upon
the conversion of the Class C Common Stock as provided in this
paragraph (f), such number of shares of Class A Common Stock as are
-------------
then issuable upon the conversion of all outstanding shares of Class C
Common Stock. The Corporation shall reserve and keep available (or
cause such shares to be reserved and kept available) out of its
authorized but unissued shares of Class C Common Stock, or its
treasury shares, solely for the purpose of issue upon the conversion
of the Class A Common
-9-
<PAGE>
Stock as provided in this paragraph (f), such number of shares of
-------------
Class C Common Stock as are then issuable upon the conversion of all
outstanding shares of Class A Common Stock. The Corporation covenants
that all shares of Class A Common Stock and Class C Common Stock which
are issuable upon conversion shall, when issued, be duly and validly
issued, fully paid and nonassessable and free from all liens and
charges. The Corporation shall take all such actions as may be
necessary to assure that all such shares of Class A Common Stock and
Class C Common Stock may be so issued without violation of any law or
any regulation, rule or other requirement of any governmental domestic
securities exchanges upon which shares of Class A Common Stock or
Class C Common Stock may be listed. The Corporation shall not take any
action which would affect the number of shares of Class A Common Stock
or Class C Common Stock outstanding or issuable for any purposes
unless immediately following such action the Corporation would have
authorized but unissued shares of Class A Common Stock and Class C
Common Stock, or treasury shares, not then reserved or required to be
reserved for any purpose other than the purpose of issue upon
conversion of Class C Common Stock or Class A Common Stock, as the
case may be, sufficient to meet the reservation requirements of the
first two sentences of this subparagraph 3.
--------------
4. If any shares of Class A Common Stock or Class C Common
Stock required to be reserved for purposes of conversion hereunder
require, before such shares may be issued upon conversion,
registration with or approval of any governmental authority under any
federal or state law (other than any registration under the Securities
Act or any state securities law required by reason of any transfer
involved in such conversion), or listing on any domestic securities
exchange, the Corporation shall, at its expense and as promptly as
possible, use its best efforts to cause such shares to be duly
registered or approved or listed, as the case may be.
5. The issue of certificates for shares of Class A Common Stock
upon conversion of shares of Class C Common Stock and certificates for
shares of Class C Common Stock upon conversion of shares of Class A
Common Stock shall be made without charge to the holder of such shares
of any issue tax in respect thereof or other costs incurred by the
Corporation in connection with such conversion and the related issue
of shares of Class A Common Stock or Class C Common Stock, as the
-10-
<PAGE>
case may be; provided that the Corporation shall not be required to
--------
pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of any certificate in a name other than that
of the holder of the Class C Common Stock converted or the holder of
the Class A Common Stock converted, as the case may be.
6. Any holder of Class C Common Stock who receives certificates
representing shares of Class A Common Stock that have been converted
into shares of Class C Common Stock pursuant to paragraph 2 above,
shall be entitled at any time and from time to time to surrender the
certificate or certificates representing shares of Class A Common
Stock at the principal office of the Corporation, together with
written notice by such holder stating that such holder desires to
receive in exchange therefor a certificate or certificates
representing the same number of shares of Class C Common Stock.
Promptly after such surrender and receipt of such written notice, the
Corporation will issue and deliver in accordance with such
instructions the certificate or certificates for the shares of Class C
Common Stock issuable upon such conversion. In case less than all the
shares represented by any such certificate are to be converted, a new
certificate shall be issued to such holder representing the shares not
to be converted, without cost to such holder.
(g) Certain Definitions. As used in this ARTICLE FOURTH, the
-------------------
following terms shall have the following respective meanings:
"Affiliate" means a Person that directly or indirectly through
---------
one or more intermediaries, controls or is controlled by or is under
common control with another Person and shall include any portfolio or
investment fund of which such other Person is the sole investment
advisor. The term "control" means possession, directly or indirectly,
-------
of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Person" means any individual, firm, corporation, business
------
enterprise, trust, association, joint venture, partnership, any
foreign, federal, state, municipal or other government or any
department, commission, board, bureau, agency, public authority or
instrumentality thereof, or any court or arbitrator or other entity,
whether acting in an individual, fiduciary or other capacity.
-11-
<PAGE>
2. Preferred Stock. The Board of Directors is authorized, subject to
---------------
limitations prescribed by law, to provide for the issuance of the Preferred
Stock in series, and by filing a certificate pursuant to the applicable law of
the State of Delaware, to establish from time to time the number of shares to be
included in each such series, and to fix the designation, powers, preferences
and rights of the shares of each such series and the qualifications, limitations
or restrictions thereof.
The authority of the Board of Directors with respect to each series shall
include, but not be limited to, determination of the following:
(a) The number of shares constituting that series and the distinctive
designation of that series;
(b) The rate of dividend, and whether (and if so, on what terms and
conditions) dividends shall be cumulative (and if so, whether unpaid dividends
shall compound or accrue interest) or shall be payable in preference or in any
other relation to the dividends payable on any other class or classes of stock
or any other series of the Preferred Stock;
(c) Whether that series shall have voting rights in addition to the voting
rights provided by law and, if so, the terms and extent of such voting rights;
(d) Whether the shares must or may be redeemed and, if so, the terms and
conditions of such redemption (including, without limitation, the dates upon or
after which they must or may be redeemed and the price or prices at which they
must or may be redeemed, which price or prices may be different in different
circumstances or at different redemption dates);
(e) Whether the shares shall be issued with the privilege of conversion or
exchange and, if so, the terms and conditions of such conversion or exchange
(including without limitation the price or prices or the rate or rates of
conversion or exchange or any terms for adjustment thereof);
(f) The amounts, if any, payable upon the shares in the event of voluntary
liquidation, dissolution or winding up of the Corporation in preference of
shares of any other class or series and whether the shares shall be entitled to
participate generally in distributions on the Common Stock under such
circumstances;
(g) The amounts, if any, payable under the shares thereof in the event of
involuntary liquidation, dissolution or winding up of the Corporation in
preference of shares of any other class or series and whether the shares shall
be entitled to participate
-12-
<PAGE>
generally in distributions in the Common Stock under such circumstances;
(h) Sinking fund provisions, if any, for the redemption or purchase of the
shares (the term "sinking fund" being understood to include any similar fund,
however designated); and
(i) Any other relative rights, preferences, limitations and powers of that
series.
FIFTH: At all meetings of stockholders, each stockholder shall be entitled
-----
to vote, in person or by proxy, the shares of voting stock owned by such
stockholders of record on the record date for the meeting. When a quorum is
present or represented at any meeting, the vote of the holders of a majority in
interest of the stockholders present in person or by proxy at such meeting and
entitled to vote thereon shall decide any question, matter or proposal brought
before such meeting unless the question is one upon which, by express provision
of law, this Certificate of Incorporation or the By-laws applicable thereto, a
different vote is required, in which case such express provision shall govern
and control the decision of such question.
SIXTH:
-----
1. Number of Directors. The number of directors of the Corporation shall
-------------------
be fixed from time to time by the vote of a majority of the entire Board of
Directors, but such number shall in no case be less than one (1) nor more than
five (5). Any such determination made by the Board of Directors shall continue
in effect unless and until changed by the Board of Directors, but no such
changes shall affect the term of any directors then in office.
2. Term of Office; Quorum; Vacancies. A director shall hold office until
---------------------------------
the annual meeting for the year in which his or her term expires and until his
or her successor shall be elected and shall qualify, subject, however, to prior
death, resignation, retirement, disqualification or removal from office. Subject
to the By-laws, a majority of the entire Board of Directors shall constitute a
quorum for the transaction of business. Any vacancies and newly created
directorships resulting from an increase in the number of directors shall be
filled by a majority of the Board of Directors then in office even though less
than a quorum and shall hold office until his successor is elected and qualified
or until his earlier death, resignation, retirement, disqualification or removal
from office.
3. Removal. Subject to the By-laws and the Stockholders Agreement, dated
-------
as of August 16, 1995, by and among the Corporation and the Corporation's
Stockholders (the "Stockholders
-13-
<PAGE>
Agreement"), any director may be removed upon the affirmative vote of the
holders of a majority of the votes which could be cast by the holders of all
outstanding shares of capital stock entitled to vote for the election of
directors, voting together as a class, given at a duly called annual or special
meeting of stockholders.
SEVENTH: For the management of the business and for the conduct of the
-------
affairs of the Corporation, and in further definition, limitation and regulation
of the powers of the Corporation and of its directors and of its stockholders or
any class thereof, as the case may be, it is further provided:
(1) The business and affairs of the Corporation shall be managed by
or under the direction of the Board of Directors.
(2) The directors shall have the power, subject to the terms and
conditions of the Stockholders Agreement and the By-laws of Corporation, to
make, adopt, alter, amend, change, add to or repeal the By-laws of the
Corporation.
(3) In addition to the powers and authority hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered
to exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation, subject, nevertheless, to the
provisions of the GCL, this Certificate of Incorporation, and any By-laws
adopted by the stockholders; provided, however, that no By-Laws hereafter
adopted by the stockholders shall invalidate any prior act of the directors
which would have been valid if such By-Laws had not been adopted.
EIGHTH:
------
1. Stockholder Meetings; Keeping of Books and Records. Meetings of
--------------------------------------------------
stockholders may be held within or outside the State of Delaware as the By-laws
may provide. The books of the Corporation may be kept (subject to any provision
contained in the GCL) outside the State of Delaware at such place or places as
may be designated from time to time by the Board of Directors or in the By-laws
of the Corporation.
2. Special Stockholders Meetings. Special meetings of the shareholders,
-----------------------------
for any purpose or purposes, unless otherwise prescribed by law, may be called
by the President or the Chairman of the Board, if one is elected, and shall be
called by the Secretary at the direction of a majority of the Board of
Directors, or at the request in writing of shareholders owning a
-14-
<PAGE>
majority in amount of the Class A Common Stock of the Company issued and
outstanding and entitled to vote.
3. No Written Ballot. Elections of directors need not be by written
-----------------
ballot unless the By-laws of the Corporation shall so provide.
NINTH:
-----
1. Limits on Director Liability. Directors of the Corporation shall have
----------------------------
no personal liability to the Corporation or its stockholders for monetary
damages for breach of a fiduciary duty as a director; provided that nothing
--------
contained in this Article NINTH shall eliminate or limit the liability of a
director (i) for any breach of a director's duty of loyalty to the Corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or knowing violations of law, (iii) under Section
174 of the GCL, or (iv) for any transaction from which a director derived an
improper personal benefit. If the GCL is amended to authorize corporate action
further eliminating or limiting the personal liability of directors, then by
virtue of this Article NINTH the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the GCL, as so
amended.
2. Indemnification.
---------------
(a) The Corporation shall indemnify, in accordance with the By-laws of the
Corporation and to the fullest extent permitted from time to time by the GCL or
any other applicable laws as presently or hereafter in effect, any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, including, without limitation, an action by or in the right of
the Corporation, by reason of his acting as a director or officer of the
Corporation (and the Corporation, in the discretion of the Board of Directors,
may so indemnify a person by reason of the fact that he is or was an employee or
agent of the Corporation or is or was serving at the request of the Corporation
in any other capacity for or on behalf of the Corporation) against any liability
or expense actually and reasonably incurred by such person in respect thereof;
provided, however, the Corporation shall be required to indemnify an officer or
- -------- -------
director in connection with an action, suit or proceeding (or part thereof)
initiated by such person only if (i) such action, suit or proceeding (or part
thereof) was authorized by the Board of Directors and (ii) the indemnification
does not relate to any liability arising under Section 16(b) of the Securities
Exchange Act of 1934, as amended, or any rules or regulations promulgated
thereunder. Such
-15-
<PAGE>
indemnification is not exclusive of any other right to indemnification provided
by law or otherwise. The right to indemnification conferred by this Section 2
shall be deemed to be a contract between the Corporation and each person
referred to herein.
(b) If a claim under subdivision (a) of this paragraph 2 of this Article
SIXTH is not paid in full by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
any undertaking required by the By-laws of the Corporation has been tendered to
the Corporation) that the claimant has not met the standards of conduct which
make it permissible under the GCL and subdivision (a) of this paragraph 2 of
this Article NINTH for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board of Directors, legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the GCL, nor an actual determination by the Corporation (including
its Board of Directors, legal counsel, or its stockholders) that the claimant
has not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that the claimant has not met the applicable
standard of conduct.
(c) Indemnification shall include payment by the Corporation of expenses
in defending an action or proceeding in advance of the final disposition of such
action or proceeding upon receipt of an undertaking by the person indemnified to
repay such payment if it is ultimately determined that such person is not
entitled to indemnification under this Article NINTH, which undertaking may be
accepted without reference to the financial ability of such person to make such
repayment.
3. Insurance. The Corporation shall have the power (but not the
---------
obligation) to purchase and maintain insurance on behalf of any person who is or
was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss incurred by such person in any
such capacity or arising out of his status as such, whether or not the
Corporation would have the power to
-16-
<PAGE>
indemnify him against such liability under the ARTICLE NINTH or the GCL.
4. Other Rights. The rights and authority conferred in this ARTICLE NINTH
------------
shall not be exclusive of any other right which any person may otherwise have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, by-law, agreement, contract, vote of stockholders or
disinterested directors or otherwise.
5. Additional Indemnification. The Corporation may, by action of its
--------------------------
Board of Directors, provide indemnification to such of the directors, officers,
employees and agents of the Corporation to such extent and to such effect as the
Board of Directors shall determine to be appropriate and authorized by the GCL.
6. Effect of Amendments. Neither the amendment, change, alteration nor
--------------------
repeal of this ARTICLE NINTH, nor the adoption of any provision of this
Certificate of Incorporation or the by-laws of the Corporation, nor, to the
fullest extent permitted by GCL, any modification of law, shall eliminate or
reduce the effect of this ARTICLE NINTH or the rights or any protection afforded
under this ARTICLE NINTH in respect of any acts or omissions occurring prior to
such amendment, repeal, adoption or modification.
TENTH: Subject to the Corporation's Stockholders Agreement, the
-----
Corporation reserves the right to repeal, alter, change or amend any provision
contained in this Certificate of Incorporation in the manner now or hereafter
prescribed by statute and all rights conferred upon stockholders herein are
granted subject to this reservation. No repeal, alteration or amendment of this
Certificate of Incorporation shall be made unless the same is first approved by
the Board of Directors of the Corporation pursuant to a resolution adopted by
the directors then in office in accordance with the By-laws and applicable law
and thereafter approved by the stockholders.
ELEVENTH: The Corporation has elected to not be governed by Section 203 of
--------
the GCL. This election shall take effect on August 17, 1995.
-17-
<PAGE>
IN WITNESS WHEREOF, the undersigned, being the Assistant Secretary, does
hereby certify that the facts hereinabove stated are truly set forth and,
accordingly, hereby executes this Amended and Restated Certificate of
Incorporation this 17th day of August, 1995.
By: /s/ James B. Carlson
---------------------------
James B. Carlson
Assistant Secretary
-18-
<PAGE>
PAGE 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
___________________________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF MERGER,
WHICH MERGES:
"JACKSON PRODUCTS, INC.", A DELAWARE CORPORATION, WITH AND INTO "JACKSON
HOLDING COMPANY" UNDER THE NAME OF "JACKSON PRODUCTS, INC.", A CORPORATION
ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE, AS RECEIVED AND
FILED IN THIS OFFICE THE SEVENTEENTH DAY OF AUGUST, A.D. 1995, AT 9:01 O'CLOCK
A.M.
/s/ Edward J. Freel
[SEAL] --------------------------------------------
Edward J. Freel, Secretary of State
2326979 8100M AUTHENTICATION: 9023385
981139885 DATE: 04-13-98
<PAGE>
CERTIFICATE OF MERGER
OF
JACKSON PRODUCTS, INC.
WITH AND INTO
JACKSON HOLDING COMPANY
UNDER SECTION 251 OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
Pursuant to Section 251 of the General Corporation Law of the State of
Delaware, Jackson Holding Company, a Delaware corporation ("Company"), hereby
-------
certifies to the following information relating to the merger of Jackson
Products, Inc., a Delaware corporation ("Jackson"), with and into the Company
-------
(the "Merger"), pursuant to the Agreement and Plan of Merger, dated as of August
------
16, 1995, between the Company and Jackson (the "Merger Agreement").
1. The names and states of incorporation of Jackson and Company, which are
the constituent corporations in the Merger (the "Constituent Corporations"),
------------------------
are:
Name State
---- -----
Jackson Products, Inc..................... Delaware
Jackson Holding Company................... Delaware
2. A Merger Agreement between the parties to the Merger has been approved,
adopted, certified, executed and acknowledged by each of the Constituent
Corporations in accordance with the requirements of Section 251 of the General
Corporation Law of Delaware.
3. The name of the surviving corporation with respect to the Merger is
Jackson Holding Company, which shall be renamed Jackson Products, Inc. (the
"Surviving Corporation").
---------------------
4. Pursuant to the Merger Agreement, the Restated Certificate of
Incorporation of the Company shall be the Restated Certificate of Incorporation
of the Surviving Corporation, except that ARTICLE FIRST therein shall be amended
as follows:
FIRST: The name of the Corporation is Jackson Products, Inc.
-----
<PAGE>
5. Pursuant to the Merger Agreement, the By-Laws of the Company shall be
the By-Laws of the Surviving Corporation.
6. Pursuant to the Merger Agreement, the Directors of the Company will be
the Directors of the Surviving Corporation.
7. Pursuant to the Merger Agreement, the Officers of the Company will be
the Officers of the Surviving Corporation.
8. Pursuant to the Merger Agreement, and as a result of the Merger, all
shares of Jackson are cancelled while all shares of the Company will continue
unchanged and represent the same number of shares and will evidence ownership of
the Surviving Corporation, with the stock certificates representing such shares
to read "Jackson Products, Inc."
9. The executed Merger Agreement is on file at the principal place of
business of the Surviving Corporation, 101 S. Hanley Road St. Louis, Missouri
63105, and a copy of the Merger Agreement will be furnished by the Surviving
Corporation without cost, upon the request of any stockholder of the Constituent
Corporations.
10. This Merger is subject to and shall become effective immediately after
the merger of Jackson Acquisition Corp. with and into the Company with Company
being the surviving corporation.
-2-
<PAGE>
IN WITNESS WHEREOF, this Certificate of Merger has been executed on this
17th day of August, 1995.
JACKSON ACQUISITION CORP.
By /s/ Robert H. Elkin
--------------------------------------------
Name: Robert H. Elkin
Title: President and Chief Executive Officer
Attest:
By /s/ Christopher T. Paule
-----------------------------------
Name: Christopher T. Paule
Title: Secretary
JACKSON HOLDING COMPANY
By /s/ Robert H. Elkin
--------------------------------------------
Name: Robert H. Elkin
Title: President and Chief Executive Officer
Attest:
By /s/ Christopher T. Paule
-----------------------------------
Name: Christopher T. Paule
Title: Secretary
-3-
<PAGE>
PAGE 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
______________________________
I, EDWARD J, FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "JACKSON PRODUCTS, INC.", FILED IN THIS OFFICE ON THE SEVENTEENTH
DAY OF AUGUST, A.D. 1995, AT 9:02 O'CLOCK A.M.
(SEAL) /s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
2326979 8100 AUTHENTICATION: 9023387
981139885 DATE: 04-13-98
<PAGE>
CERTIFICATE OF DESIGNATION OF
PREFERENCES AND RIGHTS
OF
SERIES A CUMULATIVE EXCHANGEABLE PREFERRED STOCK
OF
JACKSON PRODUCTS, INC.
______________________________________________
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
______________________________________________
Jackson Products, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), hereby certifies that the Board of Directors of the Corporation,
at a meeting duly called and held, did duly adopt the following resolutions:
RESOLVED, that pursuant to the authority vested in the Board of Directors
of the Corporation by Article IV of the Corporation's Certificate of
Incorporation, as amended (the "Certificate"), a series of preferred stock of
the Corporation be, and it hereby is, created out of the authorized but unissued
shares of the capital stock of the Corporation, such series to be designated
Series A Cumulative Exchangeable Preferred Stock (the "Preferred Stock"), to
consist of 170,000 shares, par value $.01 per share, of which the preferences
and relative and other rights, and the qualifications, limitations or
restrictions thereof, shall be (in addition to those set forth in the
Certificate) as follows:
1. Certain Definitions. Unless the context otherwise requires, the terms
defined in this paragraph 1 shall have, for all purposes hereof, the meanings
herein specified.
"Acquisition Agreement" shall mean the Agreement and Plan of Merger, dated
as of August 14, 1995, among Jackson Acquisition Corporation, Jackson Holding
Company, the Stockholders identified therein, the Optionholders identified
therein and Mills & Partners, Inc., including the Exhibits and Schedules
thereto.
<PAGE>
"Affiliate" of any specified Person shall mean any other Person (a) that
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person, (b) that
beneficially owns or holds 10% or more of the Voting Stock of such specified
Person or (c) 10% or more of the Voting Stock (or in the case of a Person that
is not a corporation, 10% or more of the Equity Interest) of which is
beneficially owned or held by such specified Person or one of its subsidiaries.
The term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of Voting Stock, by contract or otherwise.
Notwithstanding the foregoing to the contrary, (i) the Principals and their
respective Affiliates shall be deemed to be Affiliates of the Company and (ii)
none of Jefferies & Company, Inc., the original purchasers of Preferred Stock
nor any of their respective Affiliates shall be deemed to be Affiliates of the
Company; provided, that solely for purposes of the definition of Affiliate
--------
Transaction and paragraph 6(b)(v) hereof, this clause (ii) shall not apply to
MCIT PLC.
"Affiliate Transaction" shall mean, with respect to any person, any single
transaction or series of related transactions, pursuant to which such person
sells, leases, transfers or otherwise disposes of any of its properties or
assets to, or purchases or leases any property or assets from, or enters into
any contract, agreement, understanding, loan, advance or guarantee with, or for
the benefit of, any Affiliate of such person or of the Corporation or any of its
Subsidiaries.
"Capital Stock" shall mean any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock, including,
without limitation, partnership interests and other indicia of ownership of a
business entity.
"Change of Control" shall mean (a) the sale, assignment, transfer,
conveyance or other disposition of all or substantially all the assets of the
Corporation to any person or group (as such term is used in Section 13(d)(3) or
(5) of the Exchange Act) other than (i) the Principals and (ii) any group that
includes any of the original purchasers of Preferred Stock, (b) a Liquidation or
the adoption of a plan of Liquidation by the Corporation, (c) any transaction or
event the result of which is that any person or group (as such term is used in
Section 13(d)(3) or (5) of the Exchange Act), other than any group that includes
any of the original purchasers of Preferred Stock, beneficially owns, directly
or indirectly, more of the Voting Stock than is owned beneficially, directly or
indirectly, by the Principals, or (d) the occurrence of any event specified in
Section 8.1(T) of the Credit Agreement as in effect on the Issue Date.
"Common Stock" shall mean all shares now or hereafter authorized of any
class of common stock of the Corporation and any other stock of the Corporation,
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<PAGE>
howsoever designated that has the right (subject always to prior rights of any
class or series of preferred stock) to participate in the distribution of the
assets and earnings of the Corporation without limit as to per share amount.
"Consolidated Net Worth" shall mean, with respect to any person, the total
stockholders' equity (exclusive of any Disqualified Stock) of such person and
its consolidated subsidiaries determined on a consolidated basis in accordance
with generally accepted accounting principles consistently applied.
"Credit Agreement" shall mean the Second Amended and Restated Credit
Agreement, dated as of August 16, 1995, among Jackson Products, Inc., Jackson
Holding Company, the Lenders identified therein and Heller Financial, Inc., as
Agent.
"Determination Date" shall mean with respect to any dividend or other
distribution, the date fixed for the determination of the holders of shares of
Common Stock entitled to receive such dividend or distribution, or if a dividend
or distribution is paid or made without fixing such a date, the date of such
dividend or distribution.
"Disqualified Stock" shall mean (a) in the case of the Corporation, any
Equity Interest that, (i) either by its terms or the terms of any security into
which it is convertible or for which it is exchangeable or otherwise is, or upon
the happening of an event or the passage of time would be, required to be
redeemed or repurchased (in whole or in part) prior to August 15, 2005 or is
redeemable (in whole or in part) at the option of the holder thereof at any time
prior to such date or (ii) is convertible into or exchangeable at the option of
the issuer thereof or any other person for debt securities or Disqualified Stock
and (b) in the case of any other person, any Equity Interest other than Capital
Stock issued to the Corporation or a Wholly Owned Subsidiary of the Corporation.
"Equity Interests" shall mean Capital Stock or warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Exchange Date" shall have the meaning set forth in paragraph 7(b) below.
"Exchange Notes" shall mean the subordinated notes of the Corporation, due
August 15, 2005, bearing interest at the rate of 13.25% per annum, payable in
cash semi-annually, substantially in the form of Exhibit 2 of the Purchase
Agreement,
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<PAGE>
which may be issued at the Corporation's option in exchange for Preferred Stock
in accordance with the terms hereof.
"Final Exchange Date" shall have the meaning set forth in subparagraph 7(c)
below.
"Final Redemption Date" shall have the meaning set forth in subparagraph
5(f) below.
"Issue Date" shall mean the date that shares of Preferred Stock are first
issued by the Corporation.
"Junior Stock" shall mean the Common Stock and any class or series of
capital stock of the Corporation not entitled to receive any assets upon any
Liquidation until the Preferred Stock shall have received the entire amount to
which such stock is entitled upon such Liquidation.
"Liquidation" shall mean the voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation.
"Liquidation Preference" per share of Preferred Stock shall mean, on any
date, $100.00 plus any accretion thereon pursuant to paragraph 2(a) below less
the amount of any distributions thereon pursuant to paragraph 2(b) below, in
each case from the Issue Date through such date.
"Note Agreement" shall mean the several Note Agreements, dated as of the
Issue Date, between the Corporation and the Purchasers named therein, relating
to $34 million aggregate principal amount of the Corporation's 12 1/4% Senior
Subordinated Notes due 2004, as in effect on the Issue Date.
"Parity Stock" shall mean any class or series of capital stock of the
Corporation on a parity with the Preferred Stock in respect of the right to
receive dividends and/or assets upon any Liquidation.
"Permitted Affiliate Transaction" shall mean (a) any Affiliate Transaction
of aggregate value less than $2 million that is conducted in good faith on terms
that are no less favorable to the Corporation or the relevant Subsidiary of the
Corporation than those that would have been obtained in a comparable transaction
by the Corporation or such Subsidiary with an unrelated person, (b) any
Affiliate Transaction for which the Corporation delivers to the holders of the
Preferred Stock an opinion as to the fairness to the Corporation or such
Subsidiary from a financial point of view issued by an investment banking firm
of national standing, (c) any employment agreement entered into by the
Corporation or any of its Subsidiaries in
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<PAGE>
the ordinary course of business with the approval of the Board of Directors of
the Corporation, including the employment agreements entered into by the
Corporation on the Issue Date, (d) transactions between or among the Corporation
and/or its wholly owned Subsidiaries, (e) transactions pursuant to, and in
accordance with, the terms of the Acquisition Agreement as in effect on the
Issue Date, including the payment of "performance" bonus and "sale of the
company" bonuses to management investors pursuant to such Acquisition Agreement,
(f) Restricted Payments permitted by Section 5.11 of the Note Agreement and
Restricted Investments permitted by Section 5.12 of the Note Agreement, (g)
payments pursuant to the Management Consulting Agreement, dated as of the Issue
Date, by and among TJC Management and the Company, as in effect on the Issue
Date, (h) reasonable directors' fees not to exceed $100,000 in the aggregate per
year, reimbursements for reasonable and customary out-of-pocket expenses
incurred in the performance of a director's duties, and options to purchase up
to 172,414 shares of Common Stock issued pursuant to the Corporation's 1995
Stock Option Plan as in effect on the Issue Date to Persons other than the
Principals and their Affiliates, (i) payments to directors and officers of the
Corporation or any of its Subsidiaries pursuant to customary rights of
indemnification provided in the charter documents of, or indemnification
agreements with, the Company or any of its Subsidiaries, provided that such
indemnification is otherwise consistent with applicable law, (j) transactions
made from time to time pursuant to, and in accordance with, the terms of the
Note Agreement, the Notes issued thereunder, the Purchase Agreement, the
Preferred Stock, this Certificate, the Exchange Notes, the Stockholders
Agreement, dated as of the Issue Date, by and among the Company and its
stockholders, as in effect on the Issue Date, or the Common Stock Purchase
Warrants of the Corporation issued as contemplated by the Purchase Agreement,
(k) arm's-length purchases or sales of goods made in the ordinary course of
business, (l) management share and option repurchases pursuant to Section 8 of
the Management Subscription Agreement as in effect at the Issue Date, and (m)
loans of up to $500,000 by the Company to management investors pursuant to the
Management Subscription Agreement as in effect at the Issue Date.
"Principals" shall mean The Jordan Company and Jordan/Zalaznick Capital
Corporation and their respective Affiliates, principals, partners and employees,
family members of any of the foregoing and trusts for the benefit of any of the
foregoing, including, without limitation, Leucadia Investors, Inc. and its
respective subsidiaries. Notwithstanding the foregoing, MCIT PLC shall be
deemed not to be a Principal or an Affiliate of a Principal.
"Purchase Agreement" shall mean the several Securities Purchase Agreements,
dated as of the Issue Date, between the Corporation and the Purchasers named
therein, relating to the purchase and sale of the Preferred Stock and certain
other securities of the Corporation, as in effect on the Issue Date.
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<PAGE>
"Redemption Date" shall have the meaning set forth in subparagraph 5(d)
below.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Senior Stock" shall mean any class or series of capital stock of the
Corporation issued ranking senior to the Preferred Stock in respect of the right
to receive dividends and/or assets upon any Liquidation.
"Subsidiary" shall mean, with respect to any person, (a) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
person or one or more of the other Subsidiaries of that person or a combination
thereof and (b) any partnership in which such person or any of its Subsidiaries
is a general partner.
"Voting Stock" shall mean (i) one or more classes of the Capital Stock of
the Corporation having general voting power to elect at least a majority of the
board of directors, managers or trustees of the Corporation (irrespective of
whether or not at the time Capital Stock of any other class or classes have or
might have voting power by reason of the happening of any contingency) and (ii)
any Capital Stock of the Corporation convertible or exchangeable without
restriction at the option of the holder thereof into Capital Stock of the
Corporation described in clause (i) above.
"Wholly Owned Subsidiary" shall mean, with respect to any person, a
Subsidiary all the Capital Stock of which (other than director's qualifying
shares) is owned by such person or another Wholly Owned Subsidiary of such
person.
2. Liquidation Preference. (1) Commencing on the Issue Date, the
Liquidation Preference of each share of Preferred Stock shall accrete and accrue
daily, at the rate of 13.25%. Such accretion shall be computed on the basis of a
360-day year of twelve 30-day months, and shall be compounded semiannually on
February 15 and August 15 of each year, commencing February 15, 1996.
(b) At any time that the Liquidation Preference of each share of Preferred
Stock exceeds $100.00, the Board of Directors of the Corporation may fix a
record date for, and declare and the Corporation may pay in cash, a dividend on
the shares of Preferred Stock in an amount equal to such excess or any portion
thereof. Immediately following the payment of such dividend, the Liquidation
Preference per
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<PAGE>
share shall be reduced by the amount thereof; provided, that in no event shall
the Corporation declare and pay a dividend on the Preferred Stock that would
result in the Liquidation Preference per share being reduced below $100.00.
3. Priority.
(a) Dividends. So long as any shares of Preferred Stock shall be
outstanding, the Corporation shall not, and shall not permit any of its
Subsidiaries to, (i) declare or pay on any Junior Stock any dividend whatsoever,
whether in cash, property or otherwise (other than dividends payable in shares
of the class or series upon which such dividends are declared or paid), or (ii)
make any distribution on any Junior Stock.
(b) Redemption. The Corporation shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly, redeem, purchase or otherwise
acquire for value any Junior Stock or Parity Stock (or pay, set aside or make
available any money for the purchase or redemption thereof) unless, at the time
of making such redemption, purchase or other acquisition the Corporation shall
have redeemed, or shall contemporaneously redeem, all of the then outstanding
shares of Preferred Stock at the applicable redemption price set forth in
paragraph 5 hereof; provided, that notwithstanding the foregoing, (i) the
Corporation may at any time issue the Exchange Notes in exchange for the
Preferred Stock, (ii) the Corporation may issue non-negotiable junior
subordinated promissory notes to repurchase shares of Common Stock and options
pursuant to Section 8 of the Corporation's Management Subscription Agreement as
in effect at the Issue Date, and (iii) so long as no default has occurred and is
continuing hereunder, the Corporation may repurchase shares of Capital Stock
held by bona fide full-time employees of the Company or any of its Subsidiaries
for cash in connection with the death, disability or termination of such
employees; provided, that the sum of (x) the aggregate principal amount of
promissory notes issued pursuant to clause (ii) above plus the aggregate amount
of all such repurchases pursuant to clause (iii) above shall not exceed
$2,500,000 in the aggregate.
4. Distributions Upon Liquidation, Dissolution or Winding Up. In the
event of any Liquidation, subject to the prior preferences and other rights of
any Senior Stock, but before any distribution or payment shall be made to the
holders of Junior Stock, the holders of the Preferred Stock shall be entitled to
be paid, in cash, out of the assets of the Corporation available for
distribution to its stockholders, the Liquidation Preference of all outstanding
shares of Preferred Stock as of the date of such Liquidation (or, in the case of
a voluntary Liquidation, the then applicable redemption price per share for the
Preferred Stock pursuant to subparagraph 4(a) or (b)). If, upon any such
Liquidation, the net assets of the Corporation distributable among the holders
of all outstanding shares of the
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<PAGE>
Preferred Stock and of any Parity Stock shall be insufficient to permit the
payment in full to such holders of the preferential amounts to which they are
entitled, then the entire net assets of the Corporation remaining after the
distributions to holders of any Senior Stock of the full amounts to which they
may be entitled shall be distributed among the holders of the Preferred Stock
and of any Parity Stock ratably in proportion to the full amounts to which they
would otherwise be respectively entitled.
Written notice of any Liquidation, stating a payment date and the place
where the distributive amounts shall be payable, shall be given by mail, postage
prepaid, not less than 30 days prior to the payment date stated therein, to the
holders of record of the Preferred Stock at their respective addresses as the
same shall appear on the books of the Corporation.
5. Redemption by the Corporation.
(a) Except as set forth in paragraphs 5(b) and 5(c) below, the
Preferred Stock shall not be redeemed in whole or in part prior to August 15,
2000. On and after August 15, 2000, the Preferred Stock may be redeemed by the
Corporation, in cash, at any time in whole or, from time to time, in part (but
if in part, then in an amount not less than $1,000,000 and integral multiples of
$100,000 if such partial redemption exceeds $1,000,000), at the option of the
Corporation at the following redemption prices (expressed as percentages of the
Liquidation Preference on the date of redemption) if redeemed during the 12-
month period beginning on August 15 of the years set forth below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2000 106%
2001 103
2002 and thereafter 100
</TABLE>
If less than all of the outstanding shares of Preferred Stock are to be redeemed
pursuant to this paragraph 5(a) or paragraph 5(b) below, such shares shall be
redeemed pro rata. Upon redemption of only a portion of the number of shares of
Preferred Stock covered by a certificate, the Corporation shall issue and
deliver to or upon the written order of the holder of the certificate so
surrendered, at the expense of the Corporation, a new certificate representing
the number of shares of Preferred Stock not redeemed.
(b) Prior to August 15, 2000, the Corporation may redeem up to 68,000
shares of Preferred Stock with the net proceeds of a bona fide underwritten
public offering of Common Stock, at a redemption price equal to 112% of the
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Liquidation Preference on the date of redemption; provided, that (i) such public
offering results in gross proceeds to the Corporation of not less than
$20,000,000 and (ii) such redemption will occur on, or within 30 days of, the
date of the closing of such public offering.
(c) In the event that any Change of Control shall occur or the
Corporation shall have knowledge of any proposed Change of Control, the
Corporation shall give written notice (the "Corporation Notice") to the holders
of record of the Preferred Stock. The Corporation Notice shall be delivered
promptly upon receipt of such knowledge by the Corporation and in any event no
more than sixty (60) days nor less than thirty (30) days prior to the occurrence
of any Change of Control. The Corporation Notice shall (i) describe the facts
and circumstances of such Change of Control in reasonable detail, (ii)) make
reference to this Section 5(c) and the right of the holders of shares of
Preferred Stock to require payment on the terms and conditions provided for in
this Section 5(c), and (iii) offer in writing to redeem the outstanding shares
of Preferred Stock at a redemption price equal to 101% of the Liquidation
Preference thereof on the date of redemption. Each holder of shares of
Preferred Stock shall have the right to accept such offer and require prepayment
of the shares of Preferred Stock held by such holder by giving written notice to
the Corporation not later than 25 days following receipt of the Corporation
Notice. The Corporation shall redeem in accordance with this Section 5(c) all
shares of Preferred Stock held by holders who have accepted such offer, which
redemption shall occur on the date upon which the Change of Control giving rise
to such request occurs, and no redemption requested pursuant to this Section
5(c) shall be effected unless the Change of Control giving rise to such request
shall occur.
(d) The Corporation shall redeem all then outstanding shares of
Preferred Stock on August 15, 2005, at a redemption price equal to the
Liquidation Preference on the date of redemption.
(e) Notice of every proposed redemption of Preferred Stock shall be
sent by or on behalf of the Corporation to the holders of record of the shares
of Preferred Stock so to be redeemed not less than thirty (30) days nor more
than sixty (60) days prior to the date fixed for redemption (the "Redemption
Date") (i) notifying such holders of the election or obligation of the
Corporation to redeem such shares of Preferred Stock and of the Redemption Date,
(ii) stating the place or places at which the shares of Preferred Stock called
for redemption shall, upon presentation and surrender of the certificates
evidencing such shares of Preferred Stock, be redeemed, and the redemption price
therefor, (iii) stating the name and address of the Redemption Agent selected by
the Corporation in accordance with this paragraph 5(e), and the name and address
of the Corporation's transfer agent for the Preferred Stock and (iv) stating
that unless the Corporation defaults in making the redemption payment, the
Liquidation Preference shall cease to accrete and accrue on
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<PAGE>
the Redemption Date. If less than all the shares of the Preferred Stock owned by
such holder are then to be redeemed, such notice shall also specify the number
of shares thereof which are to be redeemed and the numbers of the certificates
representing such shares.
(f) If the Corporation shall default in making payment or delivery as
aforesaid on the Redemption Date, then each holder of the shares called for
redemption shall be entitled to all preferences and relative and other rights
accorded to such shares of Preferred Stock until and including the date (the
"Final Redemption Date") when the Corporation makes payment or delivery as
aforesaid to the holders of the Preferred Stock. From and after the Redemption
Date or, if the Corporation shall default in making payment or delivery as
aforesaid, the Final Redemption Date, the shares of Preferred Stock called for
redemption shall no longer be deemed to be outstanding, and all rights of the
holders of such shares shall cease and terminate, except the right of the
holders of such shares, upon surrender of certificates therefor, to receive
amounts to be paid hereunder.
6. Voting Rights.
(a) The holders of the issued and outstanding shares of Preferred
Stock shall have no voting rights except as set forth in this paragraph 6 or as
otherwise required by law.
(b) In addition to any other rights provided by law, so long as any
Preferred Stock is outstanding, the Corporation, without first obtaining the
affirmative vote or written consent of the holders of not less than 66 2/3% of
the then outstanding shares of Preferred Stock (assuming for such purpose that
Shares held by the Company or Affiliates of the Company are not outstanding)
voting separately as a class, will not:
(i) amend or repeal any provision of, or add any provision to,
the Corporation's Certificate of Incorporation or By-laws in either case if such
action would alter adversely the preferences, rights, privileges or powers of,
or the restrictions provided for the benefit of, any holder of shares of
Preferred Stock, or increase or decrease the number of shares of Preferred Stock
authorized hereby;
(ii) authorize or issue shares of any class or series of Senior
Stock or Parity Stock;
(iii) reclassify any class or series of any Junior Stock into
Parity Stock or Senior Stock or reclassify any series of Parity Stock into
Senior Stock;
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(iv) consolidate with or merge with or into another
corporation, (whether or not the Corporation is the surviving corporation), or
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of the Corporation's assets, whether in a single transaction
or a series of transactions unless:
(1) the Corporation, or the person formed by or surviving any
such consolidation or merger or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made (the "Surviving
Corporation") is a corporation organized and existing under the laws of the
United States, any state thereof or the District of Columbia; and
(2) the Surviving Corporation shall have a Consolidated Net
Worth (immediately after the transaction but prior to any purchase
accounting adjustments resulting from the transaction) equal to or greater
than the Consolidated Net Worth of the Corporation immediately preceding
the transaction; and
(3) the Surviving Corporation shall, concurrently with the
consummation of such transaction, (x) expressly assume the Corporation's
obligations hereunder in writing and (y) furnish to the holders of the
Preferred Stock an opinion of counsel satisfactory to such holders to such
effect; or
(v) enter into, or permit any of its Subsidiaries to enter
into, any Affiliate Transaction other than a Permitted Affiliate Transaction.
For purposes of clause (iv) above, the sale, lease, conveyance, assignment,
transfer or other disposition of all or substantially all of the properties and
assets of one or more Subsidiaries of the Corporation, which properties and
assets, if held by the Corporation instead of such Subsidiaries, would
constitute all or substantially all of the properties and assets of the
Corporation, on a consolidated basis, shall be deemed to be the transfer of all
or substantially all of the properties and assets of the Corporation.
7. Exchange Rights.
(a) Subject to and upon compliance with the provisions of this
paragraph 7, the Corporation shall have the right, at its option, at any time,
to exchange all, but not less than all, shares of then outstanding Preferred
Stock for Exchange Notes. Each holder of outstanding shares of Preferred Stock
shall be issued Exchange Notes in exchange therefor in an aggregate principal
amount equal to the Liquidation Preference of the Preferred Stock so exchanged
on the date of
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<PAGE>
such exchange; provided, however, that Exchange Notes shall be issued only in
denominations of $100 and integral multiples thereof and the Corporation shall
pay to each such holder a cash amount in lieu of any fraction of an Exchange
Note to which such holder would otherwise be entitled. The Corporation shall pay
interest on the Exchange Notes at the rate and on the dates specified therein
from the Exchange Date.
(b) Prior to giving notice the of exchange contemplated in paragraph
7(c), the Corporation shall obtain and deliver to each holder of Preferred Stock
an opinion of counsel, reasonably satisfactory in form and substance to counsel
to the holders of Preferred Stock, to the effect that, (a) upon the issuance
thereof, the Exchange Notes will be legal, valid and binding obligations of the
Corporation, enforceable against the Corporation, in accordance with their
respective terms, except that such enforcement may be subject to (x) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other similar
laws now or hereafter in effect relating to creditors' rights generally and (y)
general principles of equity, (b) no authorization, approval, consent, license
or order of, or filing, registration or qualification with, any government
authority or any other person is required in connection with, or as a condition
to, the execution, delivery or performance of the Exchange Notes, and (c)
neither the execution, issuance, delivery nor performance of the Exchange Notes,
will conflict with, violate, constitute a breach of or a default (with the
passage of time or otherwise) under, require the consent of any person (other
than consents already obtained) under, or result in the imposition of a lien on
any properties of the Corporation or any of its Subsidiaries or an acceleration
of indebtedness pursuant to, (i) the charter documents of the Corporation or any
of its Subsidiaries or (ii) any material contract to which the Corporation or
any of its Subsidiaries is a party or to which any of their respective assets or
properties is subject, or (iii) any law, statute, rule or regulation or any
order, writ, injunction or decree of any court or governmental authority, except
in each where such contravention could not reasonably be expected to have a
material adverse effect on the Corporation's ability to repay the Exchange Notes
or perform its obligations thereunder.
(c) Notice of every proposed exchange of Preferred Stock shall be
sent by or on behalf of the Corporation, to the holders of record of the shares
of Preferred Stock so to be exchanged, not less than thirty (30) days nor more
than sixty (60) days prior to the date fixed for exchange (the "Exchange Date")
(i) notifying such holders of the election of the Corporation to exchange such
shares of Preferred Stock and of the Exchange Date, and (ii) stating the place
or places at which the shares of Preferred Stock called for exchange shall, upon
presentation and surrender of the certificates evidencing such shares of
Preferred Stock, be exchanged, and the face value of the Exchange Notes
exchanged therefor.
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(d) Upon surrender in accordance with said notice of the certificates
for any shares of Preferred Stock so exchanged (properly endorsed or assigned
for transfer, if the notice shall so state), such shares shall be exchanged by
the Corporation into Exchange Notes as aforesaid and such Exchange Notes
(together with cash in lieu of any fractional Exchange Note) shall be delivered
to the surrendering stockholders within 20 days of receipt of such certificates
by the Corporation. If the Corporation shall default in making delivery as
aforesaid on the Exchange Date, then each holder of the shares called for
exchange shall be entitled to all preferences and relative and other rights
accorded to such shares of Preferred Stock until and including the date (the
"Final Exchange Date") when the Corporation makes delivery as aforesaid to the
holders of the Preferred Stock. From and after the Exchange Date or, if the
Corporation shall default in making delivery as aforesaid, the Final Exchange
Date, the shares of Preferred Stock called for exchange, notwithstanding that
any certificate therefor shall not have been surrendered for cancellation, shall
no longer be deemed to be outstanding, and all rights of the holders of such
shares shall cease and terminate, except the right of the holders of such
shares, upon surrender of certificates therefor, to receive the principal amount
of Exchange Notes issuable (together with cash in lieu of any fractional
Exchange Note) in exchange therefor.
8. Certain Other Matters.
(a) Payment of Taxes. The Corporation shall pay all documentary,
stamp, transfer and other taxes (other than taxes on income of the holders of
shares of Preferred Stock) and other governmental charges attributable to the
issuance or delivery of shares of Preferred Stock or of Exchange Notes upon
exchange of shares of Preferred Stock; provided, however, that the Corporation
shall not be required to pay any taxes payable in respect of any transfer
involved in the issuance or delivery of any certificate for such shares in a
name other than that of the holder of the shares of Preferred Stock in respect
of which such shares or Exchange Notes are being issued.
(b) Valid Issuance; Approvals. The Corporation shall (i) take all
necessary action so that all Exchange Notes that are issued upon exchange of the
shares of the Preferred Stock will, upon issuance, be duly authorized and
validly issued and (ii) take no action which will cause a contrary result. If
any Exchange Notes require registration with or approval of any governmental
authority under any Federal or state law before such Exchange Notes may be
validly issued or delivered upon exchange, then the Corporation shall secure
such registration or approval, as the case may be.
(c) Reports. The Corporation will mail to each such holder within 90
days after the close of each
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of the first three quarters of each fiscal year, respectively, audited
annual financial statements prepared in accordance with generally accepted
accounting principles and unaudited condensed quarterly financial statements.
The Corporation shall take such action as any holder of Preferred Stock may
request to the extent required to enable such holder to sell shares of Preferred
Stock without registration under the Securities Act pursuant to the exemptions
provided by Rule 144A (including, without limitation, providing to the holder of
such Preferred Stock or any person to whom such Preferred Stock is proposed to
be transferred, the information required to be delivered pursuant to Section
(d)(4)(1) of Rule 144A).
(d) Notices. All notices and other correspondence to holders of
shares of Preferred Stock hereunder shall be sent by first class mail, postage
prepaid, return receipt requested, to such holders at their respective addresses
as they shall appear on the records of the Corporation.
9. Exclusion of Other Rights. Except as may otherwise be required by
law, the shares of Preferred Stock shall not have any preferences or relative,
participating, optional or other special rights, other than those specifically
set forth herein and in the Corporation's Certificate of Incorporation. The
shares of Preferred Stock shall have no preemptive or subscription rights.
10. Headings of Subdivisions. The headings of the various subdivisions
hereof are for convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.
11. Severability. If any right, preference or limitation of the Preferred
Stock set forth herein (as so amended) is invalid, unlawful or incapable of
being enforced by reason of any rule of law or public policy, all other rights,
preferences and limitations set forth herein (as so amended) which can be given
effect without the invalid, unlawful or unenforceable right, preference or
limitation shall, nevertheless, remain in full force and effect, and no right,
preference or limitation herein set forth shall be deemed dependent upon any
other such right, preference or limitation unless so expressed herein.
12. Status of Reacquired Shares. Shares of Preferred Stock that have been
issued and reacquired in any manner shall (upon compliance with any applicable
provisions of the laws of the State of Delaware) have the status of authorized
and unissued shares of Preferred Stock issuable in series undesignated as to
series and may be redesignated and reissued.
-14-
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation of Preferences and Rights of Series A Cumulative Exchangeable
Preferred Stock of the Corporation to be duly executed this 17th day of August,
1995.
JACKSON PRODUCTS, INC.
By: /s/ Robert H. Elkin
--------------------------------
Name: Robert H. Elkin
Title: Chairman of the Board
Attest:
/s/ Christopher T. Paule
- ---------------------------------
Secretary
<PAGE>
PAGE 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
________________________________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED CERTIFICATE OF
"JACKSON PRODUCTS, INC.", FILED IN THIS OFFICE ON THE FIRST DAY OF JULY, A.D.
1996, AT 4:15 O'CLOCK P.M.
(SEAL) /s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
2326979 8100 AUTHENTICATION: 9023388
981139885 DATE: 04-13-98
<PAGE>
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
JACKSON PRODUCTS, INC.
1. The Certificate of Incorporation of Jackson Products, Inc. (the
"Corporation") was filed in the Office of the Secretary of State on February 24,
-----------
1993 and was amended and restated on August 17, 1995.
2. The Board of Directors of the Corporation, by the unanimous written
consent of its members, filed with the minutes of the Board on June 10, 1996,
adopted a resolution proposing and declaring advisable that the Certificate of
Incorporation be amended and restated and duly adopting this Amended and
Restated Certificate of Incorporation.
3. In lieu of a special meeting of the stockholders, written consents
were obtained from a majority of the outstanding shares entitled to vote thereon
and a majority of the outstanding shares of each class entitled to vote thereon
as a class in favor of this Amended and Restated Certificate of Incorporation in
accordance with the provisions of Sections 228 and 242 of the General
Corporation Law of the State of Delaware.
4. The text of the Certificate of Incorporation, as amended and restated
herein, shall read as follows:
FIRST: The name of the Corporation is "Jackson Products, Inc."
-----
SECOND: The address of the Corporation's registered office in the State of
------
Delaware is 1209 Orange Street, in the city of Wilmington, County of New Castle.
The name of its registered agent at such address is The Corporation Trust
Company.
THIRD: The nature or purpose of the business to be conducted or promoted
-----
by the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the GCL.
FOURTH: The total number of shares of stock which the Corporation shall
------
have authority to issue is one hundred sixty-two thousand (162,000) shares,
consisting of:
(i) One hundred thousand (100,000) shares of Class A Common Stock,
par value $.01 per share (the "Class A Common Stock");
--------------------
<PAGE>
(ii) Forty-five thousand (45,000) shares of Class B Common Stock,
par value $.01 per share (the "Class B Common Stock");
--------------------
(iii) Fifteen thousand (15,000) shares of Class C Common Stock, par
value $.01 per share (the "Class C Common Stock"; together with the Class A
--------------------
Common Stock and the Class B Common Stock, the "Common Stock"); and
------------
(iv) Two thousand (2,000) shares of Serial Preferred Stock, par
value $.01 per share (the "Preferred Stock").
---------------
A statement of the powers, designations, preferences, and relative
participating, optional or other special rights and the qualifications,
limitations and restrictions of the Common Stock and the Preferred Stock is as
follows
1. Common Stock.
------------
(a) Dividends. All shares of Common Stock of the Corporation shall
---------
be of equal rank and shall be identical, except as hereinafter specifically
set forth. No dividend or other distribution shall be paid upon, or
declared or set apart for, any share of any class of Common Stock of the
Corporation for any dividend period unless at the same time a dividend or
distribution for the same period shall be paid upon, or declared and set
apart for, all shares of each other class of Common Stock then issued and
outstanding, in the same amount with respect to each issued and outstanding
share of Common Stock, as though all shares of Common Stock were of a
single class, except that the Corporation may at any time concurrently
declare and pay an equal dividend, on a share for share basis, in each
respective class of Common Stock in shares of such class of Common Stock.
(b) Liquidation Rights. In the event of a voluntary or involuntary
------------------
liquidation, dissolution or winding-up of the Corporation, the holders of
each class of Common Stock shall be entitled to share in the distribution
of any remaining assets available for distribution to the holders of Common
Stock ratably in proportion to the total number of shares of all classes of
Common Stock then issued and outstanding as though all such shares were of
a single class.
(c) Corporate Event. There shall be no increase, decrease or other
---------------
alteration of the issued and outstanding shares of any class of Common
Stock of the Corporation by or as a result of any stock split, stock
dividend, combination of shares, recapitalization, reclassification,
merger, consolidation, sale of all or substantially all of the assets of
the Corporation, reorganization, liquidation,
-2-
<PAGE>
dissolution or other similar corporate transaction (each, a "Corporate
---------
Event") unless at the same time the shares of the other class or classes of
-----
Common Stock then issued and outstanding are also increased, decreased or
otherwise altered, as the case may be, in the same manner and to the same
extent. Without limiting the generality of the foregoing, the number of
shares of each class of Common Stock issued and outstanding immediately
following any such Corporate Event shall bear the same ratio to the number
of shares of that class of Common Stock issued and outstanding immediately
prior to such Corporate Event as the number of shares of each other class
of Common Stock issued and outstanding immediately following such Corporate
Event shall bear to the number of shares of that class of Common Stock
issued and outstanding immediately prior to such Corporate Event.
(d) Voting Rights. The holders of Class A Common Stock and Class C
-------------
Common Stock shall be entitled to one vote per share in voting or
consenting to the election of directors and for all other corporate
purposes to the extent authorized by this Certificate of Incorporation or
law; provided, that as soon as any holder of Class C Common Stock who has
--------
been employed by the Corporation or a subsidiary of the Corporation (a
"Management Holder") ceases to be employed by the Corporation or a
-----------------
subsidiary of the Corporation for any reason ("Terminated Management
---------------------
Holder"), such Terminated Management Holder's right to cast votes shall
------
thereupon terminate, and any Person who was transferred Class C Common
Stock from such Terminated Management Holder shall have no voting rights
once such Terminated Management Holder ceases to be employed by the
Corporation or a subsidiary of the Corporation. The holders of Class B
Common Stock shall not be entitled to vote at any meeting of stockholders
or to express consent or dissent to any corporate action taken without a
meeting (including, without limitation, any election or removal of the
directors of the Corporation). The Class B Common Stock and any Class C
Common Stock held by a Terminated Management Holder or his transferee,
shall not be included in determining the number of shares voting or
consenting or entitled to vote or consent on such matters; provided,
--------
however, that without the affirmative vote or prior written consent of the
-------
holders of a majority of the outstanding shares of Class B Common Stock and
Class C Common Stock each voting or consenting as a separate class, the
Corporation shall not (i) merge with or into, or consolidate with, any
other corporation if, under the terms pursuant to which such merger or
consolidation is to be effected (w) the holders of Class B Common Stock and
Class C Common Stock would receive consideration in exchange for each share
of such stock outstanding immediately prior
-3-
<PAGE>
to such merger or consolidation that is less in amount than, or different
in form from, the consideration to be received in connection with such
merger or consolidation by the holders of Class A Common Stock in exchange
for each share of such stock outstanding immediately prior to such merger
or consolidation, or (x) the holders of Class B Common Stock would receive
any consideration (whether in the form of cash, property or securities) in
exchange for the shares of Class B Common Stock held by them immediately
prior to such merger or consolidation and any holder of Class A Common
Stock (other than a subsidiary of the Corporation) would retain the shares
of such stock held by it immediately prior to such merger or consolidation,
or (ii) effectuate any amendment to, or modification or waiver of, any
provision of this Restated Certificate of Incorporation that alters or
changes the powers, designations, preferences or rights of the shares of
Class B Common Stock and Class C Common Stock (including, without
limitation, any provision of this subdivision (d) of paragraph 1 of this
--------------- -----------
ARTICLE FOURTH).
(e) Conversion Rights - Class B Common Stock.
----------------------------------------
1. (a) Upon the sale of shares of Class B Common Stock pursuant
to (a) an effective registration statement filed under Section 5 of
the Securities Act of 1933, as amended (the "Securities Act") or (b)
--------------
pursuant to a sale under Rule 144, promulgated under the Securities
Act ("Rule 144"), each share of Class B Common Stock so sold, shall
--------
without any action on the part of the holder thereof, be converted
into a share of Class A Common Stock. Upon the surrender of any
certificate or certificates which prior to the registration under
Section 5 of the Securities Act or sale under Rule 144 represented
shares of Class B Common Stock (a) the Corporation shall issue one or
more new certificates, in such denominations as may be requested, for
the same aggregate number of shares of Class A Common Stock
represented by the certificate or certificates so surrendered, and
registered as the purchaser or holder of such shares may request and
(b) the rights of the holder of such shares of Class B Common Stock
shall cease with respect to the number of shares so sold and the
person or persons in whose name or names the certificates for shares
of Class A Common Stock are to be issued upon such sale shall be
deemed to have become the holder or holders of record of the shares of
Class A Common Stock represented thereby.
(b) Any holder of Class B Common Stock shall, subject to
subparagraph 4 below, be entitled at any time and from time to time to
convert any shares of
-4-
<PAGE>
Class B Common Stock held by it into an equal number of shares of
Class A Common Stock upon the surrender of the certificate or
certificates representing the shares of Class B Common Stock to be
converted at the principal office of the Corporation, together with
written notice by such holder stating that such holder desires to
convert the shares of Class B Common Stock represented by such
certificate or certificates into shares of Class A Common Stock.
Promptly after such surrender and receipt of such written notice, the
Corporation will issue and deliver in accordance with such
instructions the certificate or certificates for the shares of Class A
Common Stock issuable upon such conversion. In case less than all the
shares represented by any such certificate are to be converted, a new
certificate shall be issued to such holder representing the shares not
to be converted, without cost to such holder.
2. Immediately upon the transfer of any shares of Class B Common
Stock to any Person other than an Affiliate of the holder of such
shares, such shares shall, without any action on the part of the
holder thereof, be converted into the same number of fully paid and
non-assessable shares of Class A Common Stock as the number of shares
of Class B Common Stock so being transferred. Upon the surrender of
any certificates which prior to the transfer thereof represented
shares of Class B Common Stock for registration of transfer (a) the
Corporation shall issue one or more new certificates, in such
denomination or denominations as may be requested, for the same
aggregate number of shares of Class A Common Stock represented by the
certificates so surrendered, and registered as the holder thereof may
request and (b) the rights of the holder of such shares of Class B
Common Stock shall cease with respect to the number of shares so
transferred and the person or persons in whose name or names the
certificates of shares of Class A Common Stock are to be issued upon
such transfer shall be deemed to have become the holder or holders of
record of the shares of Class A Common Stock represented thereby.
Notwithstanding the foregoing, any holder of Class B Common Stock or
the transferee of such holder may waive, in a writing delivered to the
Corporation at the time of any transfer of shares to any Person other
than an Affiliate of such holder, the requirement that such shares of
Class B Common Stock be converted into shares of Class A Common Stock
pursuant to this subparagraph 1. For purposes of this subparagraph 1,
-------------- --------------
the transfer of shares of Class B
-5-
<PAGE>
Common Stock shall not be determined to occur until the transfer is
registered on the stock transfer books of the Corporation.
3. Immediately upon the transfer of any shares of Class A Common
Stock to any person who is a holder of Class B Common Stock, such
shares of Class A Common Stock shall, without any action on the part
of the holder thereof, be converted into the same number of fully paid
and non-assessable shares of Class B Common Stock as the number of
shares of Class A Common Stock so being transferred. Upon the
surrender of any certificates, for registration of transfer, which
prior to the transfer thereof represented shares of Class A Common
Stock (a) the Corporation shall issue one or more new certificates, in
such denomination or denominations as may be requested, for the same
aggregate number of shares of Class B Common Stock represented by the
certificate or certificates so surrendered, and registered as the
purchaser of such shares may request and (b) the rights of the holder
of such shares of Class A Common Stock shall cease with respect to the
number of shares so sold and the person or persons in whose name or
names the certificates for shares of Class B Common Stock are to be
issued upon such sale shall be deemed to have become the holder or
holders of record of the shares of Class B Common Stock represented
thereby.
4. A holder of Class B Common Stock shall be allowed to convert
shares of Class B Common Stock to shares of Class A Common Stock, or
be allowed to participate in a transaction, (including, but not
limited to, the transactions contemplated in paragraphs 1 and 2
above), by which participation such holder would be deemed to have
converted shares of Class B Common Stock to shares of Class A Common
Stock only to the extent the holder is not restricted by the Bank
Holding Company Act, as amended, or other applicable law from
acquiring or holding additional shares of Class A Common Stock.
5. The Corporation shall at all times reserve and keep available
out of its authorized but unissued shares of Class A Common Stock, or
its treasury shares, solely for the purpose of issue upon the
conversion of the Class B Common Stock as provided in this paragraph
---------
(e), such number of shares of Class A Common Stock as are then
---
issuable upon the conversion of all outstanding shares of Class B
Common Stock. The Corporation shall at all times reserve and keep
-6-
<PAGE>
available (or cause such shares to be reserved and kept available) out
of its authorized but unissued shares of Class B Common Stock, or its
treasury shares, solely for the purpose of issue upon the conversion
of the Class A Common Stock as provided in this paragraph (e), such
-------------
number of shares of Class B Common Stock as are then issuable upon the
conversion of all outstanding shares of Class A Common Stock.] The
Corporation covenants that all shares of Class A Common Stock and
Class B Common Stock which are issuable upon conversion shall, when
issued, be duly and validly issued, fully paid and nonassessable and
free from all liens and charges. The Corporation shall take all such
actions as may be necessary to assure that all such shares of Class A
Common Stock and Class B Common Stock may be so issued without
violation of any law or any regulation, rule or other requirement of
any governmental domestic securities exchanges upon which shares of
Class A Common Stock or Class B Common Stock may be listed. The
Corporation shall not take any action which would affect the number of
shares of Class A Common Stock or Class B Common Stock outstanding or
issuable for any purposes unless immediately following such action the
Corporation would have authorized but unissued shares of Class A
Common Stock and Class B Common Stock, or treasury shares, not then
reserved or required to be reserved for any purpose other than the
purpose of issue upon conversion of Class B Common Stock or Class A
Common Stock, as the case may be, sufficient to meet the reservation
requirements of the first two sentences of this subparagraph 5.
--------------
6. If any shares of Class A Common Stock or Class B Common Stock
required to be reserved for purposes of conversion hereunder require,
before such shares may be issued upon conversion, registration with or
approval of any governmental authority under any federal or state law
(other than any registration under the Securities Act or any state
securities law required by reason of any transfer involved in such
conversion), or listing on any domestic securities exchange, the
Corporation shall, at its expense and as promptly as possible, use its
best efforts to cause such shares to be duly registered or approved or
listed, as the case may be.
7. The issue of certificates for shares of Class A Common Stock
upon conversion of shares of Class B Common Stock and certificates for
shares of Class B Common Stock upon conversion of shares of Class A
Common Stock shall be made without charge to
-7-
<PAGE>
the holder of such shares of any issue tax in respect thereof or other
costs incurred by the Corporation in connection with such conversion
and the related issue of shares of Class A Common Stock or Class B
Common Stock, as the case may be; provided that the Corporation shall
--------
not be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of any certificate in a
name other than that of the holder of the Class B Common Stock
converted or the holder of the Class A Common Stock converted, as the
case may be.
8. Any holder of Class B Common Stock who receives certificates
representing shares of Class A Common Stock that have been converted
into shares of Class B Common Stock pursuant to paragraph 3 above,
shall be entitled at any time and from time to time to surrender the
certificate or certificates representing shares of Class A Common
Stock at the principal office of the Corporation, together with
written notice by such holder stating that such holder desires to
receive in exchange therefor a certificate or certificates
representing the same number of shares of Class B Common Stock.
Promptly after such surrender and receipt of such written notice, the
Corporation will issue and deliver in accordance with such
instructions the certificate or certificates for the shares of Class B
Common Stock issuable upon such conversion. In case less than all the
shares represented by any such certificate are to be converted, a new
certificate shall be issued to such holder representing the shares not
to be converted, without cost to such holder.
(f) Conversion Rights - Class C Common Stock.
----------------------------------------
1. Upon the sale of shares of Common Stock pursuant to (a) an
effective registration statement filed under Section 5 of the
Securities Act, (b) pursuant to a sale under Rule 144, or (c) the
prior written approval by the Board of Directors of the Corporation,
each share of Class C Common Stock issued and outstanding shall,
without any action on the part of the holder thereof, be converted
into a share of Class A Common Stock. Upon the surrender of any
certificate or certificates which prior to the registration under
Section 5 of the Securities Act or sale under Rule 144 represented
shares of Class C Common Stock (x) the Corporation shall issue one or
more new certificates, in such denominations as may be requested, for
the same aggregate number of shares of Class A Common Stock
represented by the certificate or
-8-
<PAGE>
certificates so surrendered, and registered by the certificate or
certificates so surrendered, and registered as the purchaser or holder
of such shares may request, (y) the rights of the holder of such
shares of Class C Common Stock shall cease and the person or persons
in whose name or names the certificates for shares of Class A Common
Stock are to be issued shall be deemed to have become the holder or
holders of record of the shares of Class A Common Stock represented
thereby.
2. Immediately upon the transfer of any shares of Class A Common
Stock to any Person who is a holder of Class C Common Stock, such
shares of Class A Common Stock shall, without any action on the part
of the holder thereof, be converted into the same number of shares of
Class C Common Stock as the number of shares of Class A Common Stock
so being transferred. Upon the surrender of any certificates, for
registration of transfer, which prior to the transfer thereof
represented shares of Class A Common Stock (a) the Corporation shall
issue one or more new certificates, in such denomination or
denominations as may be requested, for the same aggregate number of
shares of Class C Common Stock represented by the certificate or
certificates so surrendered, and registered as the purchaser of such
shares may request and (b) the rights of the holder of such shares of
Class A Common Stock shall cease with respect to the number of shares
so sold and the person or persons in whose name or names the
certificates for shares of Class C Common Stock are to be issued upon
such sale shall be deemed to have become the holder or holders of
record of the shares of Class C Common Stock represented thereby.
3. The Corporation shall at all times reserve and keep available
out of its authorized but unissued shares of Class A Common Stock, or
its treasury shares, solely for the purpose of issue upon the
conversion of the Class C Common Stock as provided in this paragraph
---------
(f), such number of shares of Class A Common Stock as are then
---
issuable upon the conversion of all outstanding shares of Class C
Common Stock. The Corporation shall reserve and keep available (or
cause such shares to be reserved and kept available) out of its
authorized but unissued shares of Class C Common Stock, or its
treasury shares, solely for the purpose of issue upon the conversion
of the Class A Common Stock as provided in this paragraph (f), such
-------------
number of shares of Class C Common Stock as are then issuable upon the
conversion of all outstanding shares of
-9-
<PAGE>
Class A Common Stock. The Corporation covenants that all shares of
Class A Common Stock and Class C Common Stock which are issuable upon
conversion shall, when issued, be duly and validly issued, fully paid
and nonassessable and free from all liens and charges. The Corporation
shall take all such actions as may be necessary to assure that all
such shares of Class A Common Stock and Class C Common Stock may be so
issued without violation of any law or any regulation, rule or other
requirement of any governmental domestic securities exchanges upon
which shares of Class A Common Stock or Class C Common Stock may be
listed. The Corporation shall not take any action which would affect
the number of shares of Class A Common Stock or Class C Common Stock
outstanding or issuable for any purposes unless immediately following
such action the Corporation would have authorized but unissued shares
of Class A Common Stock and Class C Common Stock, or treasury shares,
not then reserved or required to be reserved for any purpose other
than the purpose of issue upon conversion of Class C Common Stock or
Class A Common Stock, as the case may be, sufficient to meet the
reservation requirements of the first two sentences of this
subparagraph 3.
--------------
4. If any shares of Class A Common Stock or Class C Common Stock
required to be reserved for purposes of conversion hereunder require,
before such shares may be issued upon conversion, registration with or
approval of any governmental authority under any federal or state law
(other than any registration under the Securities Act or any state
securities law required by reason of any transfer involved in such
conversion), or listing on any domestic securities exchange, the
Corporation shall, at its expense and as promptly as possible, use its
best efforts to cause such shares to be duly registered or approved or
listed, as the case may be.
5. The issue of certificates for shares of Class A Common Stock
upon conversion of shares of Class C Common Stock and certificates for
shares of Class C Common Stock upon conversion of shares of Class A
Common Stock shall be made without charge to the holder of such shares
of any issue tax in respect thereof or other costs incurred by the
Corporation in connection with such conversion and the related issue
of shares of Class A Common Stock or Class C Common Stock, as the case
may be; provided that the Corporation shall not be required to pay any
--------
tax which may be payable in respect of any transfer involved in the
issue and delivery of
-10-
<PAGE>
any certificate in a name other than that of the holder of the Class C
Common Stock converted or the holder of the Class A Common Stock
converted, as the case may be.
6. Any holder of Class C Common Stock who receives certificates
representing shares of Class A Common Stock that have been converted
into shares of Class C Common Stock pursuant to paragraph 2 above,
shall be entitled at any time and from time to time to surrender the
certificate or certificates representing shares of Class A Common
Stock at the principal office of the Corporation, together with
written notice by such holder stating that such holder desires to
receive in exchange therefor a certificate or certificates
representing the same number of shares of Class C Common Stock.
Promptly after such surrender and receipt of such written notice, the
Corporation will issue and deliver in accordance with such
instructions the certificate or certificates for the shares of Class C
Common Stock issuable upon such conversion. In case less than all the
shares represented by any such certificate are to be converted, a new
certificate shall be issued to such holder representing the shares not
to be converted, without cost to such holder.
(g) Certain Definitions. As used in this ARTICLE FOURTH, the
-------------------
following terms shall have the following respective meanings:
"Affiliate" means a Person that directly or indirectly through
---------
one or more intermediaries, controls or is controlled by or is under
common control with another Person and shall include any portfolio or
investment fund of which such other Person is the sole investment
advisor. The term "control" means possession, directly or indirectly,
-------
of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Person" means any individual, firm, corporation, business
------
enterprise, trust, association, joint venture, partnership, any
foreign, federal, state, municipal or other government or any
department, commission, board, bureau, agency, public authority or
instrumentality thereof, or any court or arbitrator or other entity,
whether acting in an individual, fiduciary or other capacity.
2. Preferred Stock. The Board of Directors is authorized, subject to
---------------
limitations prescribed by law, to provide for the
-11-
<PAGE>
issuance of the Preferred Stock in series, and by filing a certificate pursuant
to the applicable law of the State of Delaware, to establish from time to time
the number of shares to be included in each such series, and to fix the
designation, powers, preferences and rights of the shares of each such series
and the qualifications, limitations or restrictions thereof.
The authority of the Board of Directors with respect to each series shall
include, but not be limited to, determination of the following:
(a) The number of shares constituting that series and the distinctive
designation of that series;
(b) The rate of dividend, and whether (and if so, on what terms and
conditions) dividends shall be cumulative (and if so, whether unpaid dividends
shall compound or accrue interest) or shall be payable in preference or in any
other relation to the dividends payable on any other class or classes of stock
or any other series of the Preferred Stock;
(c) Whether that series shall have voting rights in addition to the voting
rights provided by law and, if so, the terms and extent of such voting rights;
(d) Whether the shares must or may be redeemed and, if so, the terms and
conditions of such redemption (including, without limitation, the dates upon or
after which they must or may be redeemed and the price or prices at which they
must or may be redeemed, which price or prices may be different in different
circumstances or at different redemption dates);
(e) Whether the shares shall be issued with the privilege of conversion or
exchange and, if so, the terms and conditions of such conversion or exchange
(including without limitation the price or prices or the rate or rates of
conversion or exchange or any terms for adjustment thereof);
(f) The amounts, if any, payable upon the shares in the event of voluntary
liquidation, dissolution or winding up of the Corporation in preference of
shares of any other class or series and whether the shares shall be entitled to
participate generally in distributions on the Common Stock under such
circumstances;
(g) The amounts, if any, payable under the shares thereof in the event of
involuntary liquidation, dissolution or winding up of the Corporation in
preference of shares of any other class or series and whether the shares shall
be entitled to participate generally in distributions in the Common Stock under
such circumstances;
-12-
<PAGE>
(h) Sinking fund provisions, if any, for the redemption or purchase of the
shares (the term "sinking fund" being understood to include any similar fund,
however designated); and
(i) Any other relative rights, preferences, limitations and powers of that
series.
3. Series A Preferred Stock. Pursuant to the authority vested in
------------------------
the Board of Directors of the Corporation by Article IV of this Certificate, the
Board of Directors on June 10, 1996, created out of the authorized but unissued
shares of the capital stock of the Corporation, the Series A Cumulative
Exchangeable Preferred Stock (the "Series A Preferred Stock"), consisting of
1,700 shares, par value $.01 per share, of which the preferences and relative
and other rights, and the qualifications, limitations or restrictions thereof,
shall be (in addition to those set forth in the Certificate) as follows:
Certain Definitions. Unless the context otherwise requires, the terms
defined in this paragraph 3 shall have, for all purposes hereof, the meanings
herein specified.
"Acquisition Agreement" shall mean the Agreement and Plan of Merger, dated
as of August 14, 1995, among Jackson Acquisition Corporation, Jackson Holding
Company, the Stockholders identified therein, the Optionholders identified
therein and Mills & Partners, Inc., including the Exhibits and Schedules
thereto.
"Affiliate" of any specified Person shall mean any other Person (a) that
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person, (b) that
beneficially owns or holds 10% or more of the Voting Stock of such specified
Person or (c) 10% or more of the Voting Stock (or in the case of a Person that
is not a corporation, 10% or more of the Equity Interest) of which is
beneficially owned or held by such specified Person or one of its subsidiaries.
The term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of Voting Stock, by contract or otherwise.
Notwithstanding the foregoing to the contrary, (i) the Principals and their
respective Affiliates shall be deemed to be Affiliates of the Company and (ii)
none of Jefferies & Company, Inc., the original purchasers of Preferred Stock
nor any of their respective Affiliates shall be deemed to be Affiliates of the
Company; provided, that solely for purposes of the definition of Affiliate
--------
Transaction and subparagraph (5)(b)(v) hereof, this clause (ii) shall not apply
to MCIT PLC.
"Affiliate Transaction" shall mean, with respect to any person, any single
transaction or series of related transactions,
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pursuant to which such person sells, leases, transfers or otherwise disposes of
any of its properties or assets to, or purchases or leases any property or
assets from, or enters into any contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate of such person
or of the Corporation or any of its Subsidiaries.
"Capital Stock" shall mean any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock, including,
without limitation, partnership interests and other indicia of ownership of a
business entity.
"Change of Control" shall mean (a) the sale, assignment, transfer,
conveyance or other disposition of all or substantially all the assets of the
Corporation to any person or group (as such term is used in Section 13(d)(3) or
(5) of the Exchange Act) other than (i) the Principals and (ii) any group that
includes any of the original purchasers of Preferred Stock, (b) a Liquidation or
the adoption of a plan of Liquidation by the Corporation, (c) any transaction or
event the result of which is that any person or group (as such term is used in
Section 13(d)(3) or (5) of the Exchange Act), other than any group that includes
any of the original purchasers of Preferred Stock, beneficially owns, directly
or indirectly, more of the Voting Stock than is owned beneficially, directly or
indirectly, by the Principals, or (d) the occurrence of any event specified in
Section 8.1(T) of the Credit Agreement as in effect on the Issue Date.
"Common Stock" shall mean all shares now or hereafter authorized of any
class of common stock of the Corporation and any other stock of the Corporation,
howsoever designated that has the right (subject always to prior rights of any
class or series of preferred stock) to participate in the distribution of the
assets and earnings of the Corporation without limit as to per share amount.
"Consolidated Net Worth" shall mean, with respect to any person, the total
stockholders' equity (exclusive of any Disqualified Stock) of such person and
its consolidated subsidiaries determined on a consolidated basis in accordance
with generally accepted accounting principles consistently applied.
"Credit Agreement" shall mean the Second Amended and Restated Credit
Agreement, dated as of August 16, 1995, among Jackson Products, Inc., Jackson
Holding Company, the Lenders identified therein and Heller Financial, Inc., as
Agent.
"Determination Date" shall mean with respect to any dividend or other
distribution, the date fixed for the determination of
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the holders of shares of Common Stock entitled to receive such dividend or
distribution, or if a dividend or distribution is paid or made without fixing
such a date, the date of such dividend or distribution.
"Disqualified Stock" shall mean (a) in the case of the Corporation, any
Equity Interest that, (i) either by its terms or the terms of any security into
which it is convertible or for which it is exchangeable or otherwise is, or upon
the happening of an event or the passage of time would be, required to be
redeemed or repurchased (in whole or in part) prior to August 15, 2005 or is
redeemable (in whole or in part) at the option of the holder thereof at any time
prior to such date or (ii) is convertible into or exchangeable at the option of
the issuer thereof or any other person for debt securities or Disqualified Stock
and (b) in the case of any other person, any Equity Interest other than Capital
Stock issued to the Corporation or a Wholly Owned Subsidiary of the Corporation.
"Equity Interests" shall mean Capital Stock or warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Exchange Date" shall have the meaning set forth in subparagraph (6)(c)
below.
"Exchange Notes" shall mean the subordinated notes of the Corporation, due
August 15, 2005, bearing interest at the rate of 13.25% per annum, payable in
cash semi-annually, substantially in the form of Exhibit 2 of the Purchase
Agreement, which may be issued at the Corporation's option in exchange for
Preferred Stock in accordance with the terms hereof.
"Final Exchange Date" shall have the meaning set forth in subparagraph
(6)(d) below.
"Final Redemption Date" shall have the meaning set forth in subparagraph
(4)(f) below.
"Issue Date" shall mean the date that shares of Preferred Stock are first
issued by the Corporation.
"Junior Stock" shall mean the Common Stock and any class or series of
capital stock of the Corporation not entitled to receive any assets upon any
Liquidation until the Preferred Stock
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shall have received the entire amount to which such stock is entitled upon such
Liquidation.
"Liquidation" shall mean the voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation.
"Liquidation Preference" per share of Preferred Stock shall mean, on any
date, $10,000.00 plus any accretion thereon pursuant to subparagraph (1)(a)
below less the amount of any distributions thereon pursuant to subparagraph
(1)(b) below, in each case from the Issue Date through such date.
"Note Agreement" shall mean the several Note Agreements, dated as of the
Issue Date, between the Corporation and the Purchasers named therein, relating
to $34 million aggregate principal amount of the Corporation's 12 1/4% Senior
Subordinated Notes due 2004, as in effect on the Issue Date.
"Parity Stock" shall mean any class or series of capital stock of the
Corporation on a parity with the Preferred Stock in respect of the right to
receive dividends and/or assets upon any Liquidation.
"Permitted Affiliate Transaction" shall mean (a) any Affiliate Transaction
of aggregate value less than $2 million that is conducted in good faith on terms
that are no less favorable to the Corporation or the relevant Subsidiary of the
Corporation than those that would have been obtained in a comparable transaction
by the Corporation or such Subsidiary with an unrelated person, (b) any
Affiliate Transaction for which the Corporation delivers to the holders of the
Preferred Stock an opinion as to the fairness to the Corporation or such
Subsidiary from a financial point of view issued by an investment banking firm
of national standing, (c) any employment agreement entered into by the
Corporation or any of its Subsidiaries in the ordinary course of business with
the approval of the Board of Directors of the Corporation, including the
employment agreements entered into by the Corporation on the Issue Date, (d)
transactions between or among the Corporation and/or its wholly owned
Subsidiaries, (e) transactions pursuant to, and in accordance with, the terms of
the Acquisition Agreement as in effect on the Issue Date, including the payment
of "performance" bonus and "sale of the company" bonuses to management investors
pursuant to such Acquisition Agreement, (f) Restricted Payments permitted by
Section 5.11 of the Note Agreement and Restricted Investments permitted by
Section 5.12 of the Note Agreement, (g) payments pursuant to the Management
Consulting Agreement, dated as of the Issue Date, by and among TJC Management
and the Company, as in effect on the Issue Date, (h) reasonable directors' fees
not to exceed $100,000 in the aggregate per year,
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reimbursements for reasonable and customary out-of-pocket expenses incurred in
the performance of a director's duties, and options to purchase up to 1724.14
shares of Common Stock issued pursuant to the Corporation's 1995 Stock Option
Plan as in effect on the Issue Date to Persons other than the Principals and
their Affiliates, (i) payments to directors and officers of the Corporation or
any of its Subsidiaries pursuant to customary rights of indemnification provided
in the charter documents of, or indemnification agreements with, the Company or
any of its Subsidiaries, provided that such indemnification is otherwise
consistent with applicable law, (j) transactions made from time to time pursuant
to, and in accordance with, the terms of the Note Agreement, the Notes issued
thereunder, the Purchase Agreement, the Preferred Stock, this Certificate, the
Exchange Notes, the Stockholders Agreement, dated as of the Issue Date, by and
among the Company and its stockholders, as in effect on the Issue Date, or the
Common Stock Purchase Warrants of the Corporation issued as contemplated by the
Purchase Agreement, (k) arm's-length purchases or sales of goods made in the
ordinary course of business, (l) management share and option repurchases
pursuant to Section 8 of the Management Subscription Agreement as in effect at
the Issue Date, and (m) loans of up to $500,000 by the Company to management
investors pursuant to the Management Subscription Agreement as in effect at the
Issue Date.
"Principals" shall mean The Jordan Company and Jordan/Zalaznick Capital
Corporation and their respective Affiliates, principals, partners and employees,
family members of any of the foregoing and trusts for the benefit of any of the
foregoing, including, without limitation, Leucadia Investors, Inc. and its
respective subsidiaries. Notwithstanding the foregoing, MCIT PLC shall be
deemed not to be a Principal or an Affiliate of a Principal.
"Purchase Agreement" shall mean the several Securities Purchase Agreements,
dated as of the Issue Date, between the Corporation and the Purchasers named
therein, relating to the purchase and sale of the Preferred Stock and certain
other securities of the Corporation, as in effect on the Issue Date.
"Redemption Date" shall have the meaning set forth in subparagraph (4)(e)
below.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Senior Stock" shall mean any class or series of capital stock of the
Corporation issued ranking senior to the Preferred
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Stock in respect of the right to receive dividends and/or assets upon any
Liquidation.
"Subsidiary" shall mean, with respect to any person, (a) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
person or one or more of the other Subsidiaries of that person or a combination
thereof and (b) any partnership in which such person or any of its Subsidiaries
is a general partner.
"Voting Stock" shall mean (i) one or more classes of the Capital Stock of
the Corporation having general voting power to elect at least a majority of the
board of directors, managers or trustees of the Corporation (irrespective of
whether or not at the time Capital Stock of any other class or classes have or
might have voting power by reason of the happening of any contingency) and (ii)
any Capital Stock of the Corporation convertible or exchangeable without
restriction at the option of the holder thereof into Capital Stock of the
Corporation described in clause (i) above.
"Wholly Owned Subsidiary" shall mean, with respect to any person, a
Subsidiary all the Capital Stock of which (other than director's qualifying
shares) is owned by such person or another Wholly Owned Subsidiary of such
person.
(1) Liquidation Preference. (a) Commencing on the Issue Date, the
Liquidation Preference of each share of Preferred Stock shall accrete and accrue
daily, at the rate of 13.25%. Such accretion shall be computed on the basis of a
360-day year of twelve 30-day months, and shall be compounded semiannually on
February 15 and August 15 of each year, commencing February 15, 1996.
(b) At any time that the Liquidation Preference of each share of Preferred
Stock exceeds $10,000.00, the Board of Directors of the Corporation may fix a
record date for, and declare and the Corporation may pay in cash, a dividend on
the shares of Preferred Stock in an amount equal to such excess or any portion
thereof. Immediately following the payment of such dividend, the Liquidation
Preference per share shall be reduced by the amount thereof; provided, that in
no event shall the Corporation declare and pay a dividend on the Preferred Stock
that would result in the Liquidation Preference per share being reduced below
$10,000.00.
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(2) Priority.
(a) Dividends. So long as any shares of Preferred Stock shall be
outstanding, the Corporation shall not, and shall not permit any of its
Subsidiaries to, (i) declare or pay on any Junior Stock any dividend whatsoever,
whether in cash, property or otherwise (other than dividends payable in shares
of the class or series upon which such dividends are declared or paid), or (ii)
make any distribution on any Junior Stock.
(b) Redemption. The Corporation shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly, redeem, purchase or otherwise
acquire for value any Junior Stock or Parity Stock (or pay, set aside or make
available any money for the purchase or redemption thereof) unless, at the time
of making such redemption, purchase or other acquisition the Corporation shall
have redeemed, or shall contemporaneously redeem, all of the then outstanding
shares of Preferred Stock at the applicable redemption price set forth in
paragraph 5 hereof; provided, that notwithstanding the foregoing, (i) the
Corporation may at any time issue the Exchange Notes in exchange for the
Preferred Stock, (ii) the Corporation may issue non-negotiable junior
subordinated promissory notes to repurchase shares of Common Stock and options
pursuant to Section 8 of the Corporation's Management Subscription Agreement as
in effect at the Issue Date, and (iii) so long as no default has occurred and is
continuing hereunder, the Corporation may repurchase shares of Capital Stock
held by bona fide full-time employees of the Company or any of its Subsidiaries
for cash in connection with the death, disability or termination of such
employees; provided, that the sum of (x) the aggregate principal amount of
promissory notes issued pursuant to clause (ii) above plus the aggregate amount
of all such repurchases pursuant to clause (iii) above shall not exceed
$2,500,000 in the aggregate.
(3) Distributions Upon Liquidation, Dissolution or Winding Up. In the
event of any Liquidation, subject to the prior preferences and other rights of
any Senior Stock, but before any distribution or payment shall be made to the
holders of Junior Stock, the holders of the Preferred Stock shall be entitled to
be paid, in cash, out of the assets of the Corporation available for
distribution to its stockholders, the Liquidation Preference of all outstanding
shares of Preferred Stock as of the date of such Liquidation (or, in the case of
a voluntary Liquidation, the then applicable redemption price per share for the
Preferred Stock pursuant to subparagraph (4)(a) or (b)). If, upon any such
Liquidation, the net assets of the Corporation distributable among the holders
of all outstanding shares of the Preferred Stock and of any Parity Stock shall
be insufficient to permit the payment in full to such holders of the
preferential amounts to which they are entitled, then the entire net assets of
the
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Corporation remaining after the distributions to holders of any Senior Stock
of the full amounts to which they may be entitled shall be distributed among the
holders of the Preferred Stock and of any Parity Stock ratably in proportion to
the full amounts to which they would otherwise be respectively entitled.
Written notice of any Liquidation, stating a payment date and the place
where the distributive amounts shall be payable, shall be given by mail, postage
prepaid, not less than 30 days prior to the payment date stated therein, to the
holders of record of the Preferred Stock at their respective addresses as the
same shall appear on the books of the Corporation.
(4) Redemption by the Corporation.
(a) Except as set forth in paragraphs (4)(b) and (4)(c) below, the
Preferred Stock shall not be redeemed in whole or in part prior to August 15,
2000. On and after August 15, 2000, the Preferred Stock may be redeemed by the
Corporation, in cash, at any time in whole or, from time to time, in part (but
if in part, then in an amount not less than $1,000,000 and integral multiples of
$100,000 if such partial redemption exceeds $1,000,000), at the option of the
Corporation at the following redemption prices (expressed as percentages of the
Liquidation Preference on the date of redemption) if redeemed during the 12-
month period beginning on August 15 of the years set forth below:
Year Percentage
==== ==========
2000 106%
2001 103%
2002 and thereafter 100%
If less than all of the outstanding shares of Preferred Stock are to be redeemed
pursuant to this paragraph (4)(a) or paragraph (4)(b) below, such shares shall
be redeemed pro rata. Upon redemption of only a portion of the number of shares
of Preferred Stock covered by a certificate, the Corporation shall issue and
deliver to or upon the written order of the holder of the certificate so
surrendered, at the expense of the Corporation, a new certificate representing
the number of shares of Preferred Stock not redeemed.
(b) Prior to August 15, 2000, the Corporation may redeem up to 680
shares of Preferred Stock with the net proceeds of a bona fide underwritten
public offering of Common Stock, at a redemption price equal to 112% of the
Liquidation Preference on the date of redemption; provided, that (i) such public
offering results in gross proceeds to the Corporation of not less than
$20,000,000 and (ii) such redemption will occur on, or within 30 days of, the
date of the closing of such public offering.
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(c) In the event that any Change of Control shall occur or the
Corporation shall have knowledge of any proposed Change of Control, the
Corporation shall give written notice (the "Corporation Notice") to the holders
of record of the Preferred Stock. The Corporation Notice shall be delivered
promptly upon receipt of such knowledge by the Corporation and in any event no
more than sixty (60) days nor less than thirty (30) days prior to the occurrence
of any Change of Control. The Corporation Notice shall (i) describe the facts
and circumstances of such Change of Control in reasonable detail, (ii)) make
reference to this Section (4)(c) and the right of the holders of shares of
Preferred Stock to require payment on the terms and conditions provided for in
this Section (4)(c), and (iii) offer in writing to redeem the outstanding shares
of Preferred Stock at a redemption price equal to 101% of the Liquidation
Preference thereof on the date of redemption. Each holder of shares of
Preferred Stock shall have the right to accept such offer and require prepayment
of the shares of Preferred Stock held by such holder by giving written notice to
the Corporation not later than 25 days following receipt of the Corporation
Notice. The Corporation shall redeem in accordance with this Section (4)(c) all
shares of Preferred Stock held by holders who have accepted such offer, which
redemption shall occur on the date upon which the Change of Control giving rise
to such request occurs, and no redemption requested pursuant to this Section
(4)(c) shall be effected unless the Change of Control giving rise to such
request shall occur.
(d) The Corporation shall redeem all then outstanding shares of
Preferred Stock on August 15, 2005, at a redemption price equal to the
Liquidation Preference on the date of redemption.
(e) Notice of every proposed redemption of Preferred Stock shall be
sent by or on behalf of the Corporation to the holders of record of the shares
of Preferred Stock so to be redeemed not less than thirty (30) days nor more
than sixty (60) days prior to the date fixed for redemption (the "Redemption
Date") (i) notifying such holders of the election or obligation of the
Corporation to redeem such shares of Preferred Stock and of the Redemption Date,
(ii) stating the place or places at which the shares of Preferred Stock called
for redemption shall, upon presentation and surrender of the certificates
evidencing such shares of Preferred Stock, be redeemed, and the redemption price
therefor, (iii) stating the name and address of the Redemption Agent selected by
the Corporation in accordance with this paragraph (4)(e), and the name and
address of the Corporation's transfer agent for the Preferred Stock and (iv)
stating that unless the Corporation defaults in making the redemption payment,
the Liquidation Preference shall cease to accrete and accrue on the Redemption
Date. If less than all the shares of the
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Preferred Stock owned by such holder are then to be redeemed, such notice shall
also specify the number of shares thereof which are to be redeemed and the
numbers of the certificates representing such shares.
(f) If the Corporation shall default in making payment or delivery as
aforesaid on the Redemption Date, then each holder of the shares called for
redemption shall be entitled to all preferences and relative and other rights
accorded to such shares of Preferred Stock until and including the date (the
"Final Redemption Date") when the Corporation makes payment or delivery as
aforesaid to the holders of the Preferred Stock. From and after the Redemption
Date or, if the Corporation shall default in making payment or delivery as
aforesaid, the Final Redemption Date, the shares of Preferred Stock called for
redemption shall no longer be deemed to be outstanding, and all rights of the
holders of such shares shall cease and terminate, except the right of the
holders of such shares, upon surrender of certificates therefor, to receive
amounts to be paid hereunder.
(5) Voting Rights.
(a) The holders of the issued and outstanding shares of Preferred
Stock shall have no voting rights except as set forth in this paragraph (5) or
as otherwise required by law.
(b) In addition to any other rights provided by law, so long as any
Preferred Stock is outstanding, the Corporation, without first obtaining the
affirmative vote or written consent of the holders of not less than 66% of the
then outstanding shares of Preferred Stock (assuming for such purpose that
Shares held by the Company or Affiliates of the Company are not outstanding)
voting separately as a class, will not:
(i) amend or repeal any provision of, or add any provision to,
the Corporation's Certificate of Incorporation or By-laws in either case if such
action would alter adversely the preferences, rights, privileges or powers of,
or the restrictions provided for the benefit of, any holder of shares of
Preferred Stock, or increase or decrease the number of shares of Preferred Stock
authorized hereby;
(ii) authorize or issue shares of any class or series of Senior
Stock or Parity Stock;
(iii) reclassify any class or series of any Junior Stock into
Parity Stock or Senior Stock or reclassify any series of Parity Stock into
Senior Stock;
(iv) consolidate with or merge with or into another corporation,
(whether or not the Corporation is the
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surviving corporation), or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of the Corporation's assets, whether in a
single transaction or a series of transactions unless:
(A) the Corporation, or the person formed by or surviving any
such consolidation or merger or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made (the "Surviving
Corporation") is a corporation organized and existing under the laws of the
United States, any state thereof or the District of Columbia; and
(B) the Surviving Corporation shall have a Consolidated Net
Worth (immediately after the transaction but prior to any purchase
accounting adjustments resulting from the transaction) equal to or greater
than the Consolidated Net Worth of the Corporation immediately preceding
the transaction; and
(C) the Surviving Corporation shall, concurrently with the
consummation of such transaction, (x) expressly assume the Corporation's
obligations hereunder in writing and (y) furnish to the holders of the
Preferred Stock an opinion of counsel satisfactory to such holders to such
effect; or
(v) enter into, or permit any of its Subsidiaries to enter into,
any Affiliate Transaction other than a Permitted Affiliate Transaction.
For purposes of clause (iv) above, the sale, lease, conveyance, assignment,
transfer or other disposition of all or substantially all of the properties and
assets of one or more Subsidiaries of the Corporation, which properties and
assets, if held by the Corporation instead of such Subsidiaries, would
constitute all or substantially all of the properties and assets of the
Corporation, on a consolidated basis, shall be deemed to be the transfer of all
or substantially all of the properties and assets of the Corporation.
(6) Exchange Rights.
(a) Subject to and upon compliance with the provisions of this
paragraph (6), the Corporation shall have the right, at its option, at any time,
to exchange all, but not less than all, shares of then outstanding Preferred
Stock for Exchange Notes. Each holder of outstanding shares of Preferred Stock
shall be issued Exchange Notes in exchange therefor in an aggregate principal
amount equal to the Liquidation Preference of the Preferred Stock so exchanged
on the date of such exchange;
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provided, however, that Exchange Notes shall be issued only in denominations of
$100 and integral multiples thereof and the Corporation shall pay to each such
holder a cash amount in lieu of any fraction of an Exchange Note to which such
holder would otherwise be entitled. The Corporation shall pay interest on the
Exchange Notes at the rate and on the dates specified therein from the Exchange
Date.
(b) Prior to giving notice the of exchange contemplated in paragraph
(6)(c), the Corporation shall obtain and deliver to each holder of Preferred
Stock an opinion of counsel, reasonably satisfactory in form and substance to
counsel to the holders of Preferred Stock, to the effect that, (i) upon the
issuance thereof, the Exchange Notes will be legal, valid and binding
obligations of the Corporation, enforceable against the Corporation, in
accordance with their respective terms, except that such enforcement may be
subject to (A) bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws now or hereafter in effect relating to
creditors' rights generally and (B) general principles of equity, (ii) no
authorization, approval, consent, license or order of, or filing, registration
or qualification with, any government authority or any other person is required
in connection with, or as a condition to, the execution, delivery or performance
of the Exchange Notes, and (iii) neither the execution, issuance, delivery nor
performance of the Exchange Notes, will conflict with, violate, constitute a
breach of or a default (with the passage of time or otherwise) under, require
the consent of any person (other than consents already obtained) under, or
result in the imposition of a lien on any properties of the Corporation or any
of its Subsidiaries or an acceleration of indebtedness pursuant to, (A) the
charter documents of the Corporation or any of its Subsidiaries or (B) any
material contract to which the Corporation or any of its Subsidiaries is a party
or to which any of their respective assets or properties is subject, or (C) any
law, statute, rule or regulation or any order, writ, injunction or decree of any
court or governmental authority, except in each where such contravention could
not reasonably be expected to have a material adverse effect on the
Corporation's ability to repay the Exchange Notes or perform its obligations
thereunder.
(c) Notice of every proposed exchange of Preferred Stock shall be sent
by or on behalf of the Corporation, to the holders of record of the shares of
Preferred Stock so to be exchanged, not less than thirty (30) days nor more than
sixty (60) days prior to the date fixed for exchange (the "Exchange Date") (i)
notifying such holders of the election of the Corporation to exchange such
shares of Preferred Stock and of the Exchange Date, and (ii) stating the place
or places at which the shares of Preferred Stock called for exchange shall, upon
presentation and surrender of the certificates evidencing such
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shares of Preferred Stock, be exchanged, and the face value of the Exchange
Notes exchanged therefor.
(d) Upon surrender in accordance with said notice of the certificates
for any shares of Preferred Stock so exchanged (properly endorsed or assigned
for transfer, if the notice shall so state), such shares shall be exchanged by
the Corporation into Exchange Notes as aforesaid and such Exchange Notes
(together with cash in lieu of any fractional Exchange Note) shall be delivered
to the surrendering stockholders within 20 days of receipt of such certificates
by the Corporation. If the Corporation shall default in making delivery as
aforesaid on the Exchange Date, then each holder of the shares called for
exchange shall be entitled to all preferences and relative and other rights
accorded to such shares of Preferred Stock until and including the date (the
"Final Exchange Date") when the Corporation makes delivery as aforesaid to the
holders of the Preferred Stock. From and after the Exchange Date or, if the
Corporation shall default in making delivery as aforesaid, the Final Exchange
Date, the shares of Preferred Stock called for exchange, notwithstanding that
any certificate therefor shall not have been surrendered for cancellation, shall
no longer be deemed to be outstanding, and all rights of the holders of such
shares shall cease and terminate, except the right of the holders of such
shares, upon surrender of certificates therefor, to receive the principal amount
of Exchange Notes issuable (together with cash in lieu of any fractional
Exchange Note) in exchange therefor.
(7) Certain Other Matters.
(a) Payment of Taxes. The Corporation shall pay all documentary,
stamp, transfer and other taxes (other than taxes on income of the holders of
shares of Preferred Stock) and other governmental charges attributable to the
issuance or delivery of shares of Preferred Stock or of Exchange Notes upon
exchange of shares of Preferred Stock; provided, however, that the Corporation
shall not be required to pay any taxes payable in respect of any transfer
involved in the issuance or delivery of any certificate for such shares in a
name other than that of the holder of the shares of Preferred Stock in respect
of which such shares or Exchange Notes are being issued.
(b) Valid Issuance; Approvals. The Corporation shall (i) take all
necessary action so that all Exchange Notes that are issued upon exchange of the
shares of the Preferred Stock will, upon issuance, be duly authorized and
validly issued and (ii) take no action which will cause a contrary result. If
any Exchange Notes require registration with or approval of any governmental
authority under any Federal or state law before such Exchange Notes may be
validly issued or delivered upon exchange,
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then the Corporation shall secure such registration or approval, as the case may
be.
(c) Reports. The Corporation will mail to each such holder within 90
days after the close of each fiscal year and within 45 days after the close of
each of the first three quarters of each fiscal year, respectively, audited
annual financial statements prepared in accordance with generally accepted
accounting principles and unaudited condensed quarterly financial statements.
The Corporation shall take such action as any holder of Preferred Stock may
request to the extent required to enable such holder to sell shares of Preferred
Stock without registration under the Securities Act pursuant to the exemptions
provided by Rule 144A (including, without limitation, providing to the holder of
such Preferred Stock or any person to whom such Preferred Stock is proposed to
be transferred, the information required to be delivered pursuant to Section
(d)(4)(1) of Rule 144A).
(d) Notices. All notices and other correspondence to holders of
shares of Preferred Stock hereunder shall be sent by first class mail, postage
prepaid, return receipt requested, to such holders at their respective addresses
as they shall appear on the records of the Corporation.
(8) Exclusion of Other Rights. Except as may otherwise be required by law,
the shares of Preferred Stock shall not have any preferences or relative,
participating, optional or other special rights, other than those specifically
set forth herein and in the Corporation's Certificate of Incorporation. The
shares of Preferred Stock shall have no preemptive or subscription rights.
(9) Headings of Subdivisions. The headings of the various subdivisions
hereof are for convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.
(10) Severability. If any right, preference or limitation of the Preferred
Stock set forth herein (as so amended) is invalid, unlawful or incapable of
being enforced by reason of any rule of law or public policy, all other rights,
preferences and limitations set forth herein (as so amended) which can be given
effect without the invalid, unlawful or unenforceable right, preference or
limitation shall, nevertheless, remain in full force and effect, and no right,
preference or limitation herein set forth shall be deemed dependent upon any
other such right, preference or limitation unless so expressed herein.
(11) Status of Reacquired Shares. Shares of Preferred Stock that have been
issued and reacquired in any manner shall (upon compliance with any applicable
provisions of the laws of the
-26-
<PAGE>
State of Delaware) have the status of authorized and unissued shares of
Preferred Stock issuable in series undesignated as to series and may be
redesignated and reissued.
FIFTH: At all meetings of stockholders, each stockholder shall be entitled
-----
to vote, in person or by proxy, the shares of voting stock owned by such
stockholders of record on the record date for the meeting. When a quorum is
present or represented at any meeting, the vote of the holders of a majority in
interest of the stockholders present in person or by proxy at such meeting and
entitled to vote thereon shall decide any question, matter or proposal brought
before such meeting unless the question is one upon which, by express provision
of law, this Certificate of Incorporation or the By-laws applicable thereto, a
different vote is required, in which case such express provision shall govern
and control the decision of such question.
SIXTH:
-----
1. Number of Directors. The number of directors of the Corporation shall
-------------------
be fixed from time to time by the vote of a majority of the entire Board of
Directors, but such number shall in no case be less than one (1) nor more than
five (5). Any such determination made by the Board of Directors shall continue
in effect unless and until changed by the Board of Directors, but no such
changes shall affect the term of any directors then in office.
2. Term of Office; Quorum; Vacancies. A director shall hold office until
---------------------------------
the annual meeting for the year in which his or her term expires and until his
or her successor shall be elected and shall qualify, subject, however, to prior
death, resignation, retirement, disqualification or removal from office.
Subject to the By-laws, a majority of the entire Board of Directors shall
constitute a quorum for the transaction of business. Any vacancies and newly
created directorships resulting from an increase in the number of directors
shall be filled by a majority of the Board of Directors then in office even
though less than a quorum and shall hold office until his successor is elected
and qualified or until his earlier death, resignation, retirement,
disqualification or removal from office.
3. Removal. Subject to the By-laws and the Stockholders Agreement, dated
-------
as of August 16, 1995, by and among the Corporation and the Corporation's
Stockholders (the "Stockholders Agreement"), any director may be removed upon
the affirmative vote of the holders of a majority of the votes which could be
cast by the holders of all outstanding shares of capital stock entitled to vote
for the election of directors, voting together as a class, given at a duly
called annual or special meeting of stockholders.
-27-
<PAGE>
SEVENTH: For the management of the business and for the conduct of the
-------
affairs of the Corporation, and in further definition, limitation and regulation
of the powers of the Corporation and of its directors and of its stockholders or
any class thereof, as the case may be, it is further provided:
(1) The business and affairs of the Corporation shall be managed by
or under the direction of the Board of Directors.
(2) The directors shall have the power, subject to the terms and
conditions of the Stockholders Agreement and the By-laws of Corporation, to
make, adopt, alter, amend, change, add to or repeal the By-laws of the
Corporation.
(3) In addition to the powers and authority hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered
to exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation, subject, nevertheless, to the
provisions of the GCL, this Certificate of Incorporation, and any By-laws
adopted by the stockholders; provided, however, that no By-Laws hereafter
adopted by the stockholders shall invalidate any prior act of the directors
which would have been valid if such By-Laws had not been adopted.
EIGHTH:
------
1. Stockholder Meetings; Keeping of Books and Records. Meetings of
--------------------------------------------------
stockholders may be held within or outside the State of Delaware as the By-laws
may provide. The books of the Corporation may be kept (subject to any provision
contained in the GCL) outside the State of Delaware at such place or places as
may be designated from time to time by the Board of Directors or in the By-laws
of the Corporation.
2. Special Stockholders Meetings. Special meetings of the shareholders,
-----------------------------
for any purpose or purposes, unless otherwise prescribed by law, may be called
by the President or the Chairman of the Board, if one is elected, and shall be
called by the Secretary at the direction of a majority of the Board of
Directors, or at the request in writing of shareholders owning a majority in
amount of the Class A Common Stock of the Company issued and outstanding and
entitled to vote.
3. No Written Ballot. Elections of directors need not be by written
-----------------
ballot unless the By-laws of the Corporation shall so provide.
-28-
<PAGE>
NINTH:
-----
1. Limits on Director Liability. Directors of the Corporation shall have
----------------------------
no personal liability to the Corporation or its stockholders for monetary
damages for breach of a fiduciary duty as a director; provided that nothing
--------
contained in this Article NINTH shall eliminate or limit the liability of a
director (i) for any breach of a director's duty of loyalty to the Corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or knowing violations of law, (iii) under Section
174 of the GCL, or (iv) for any transaction from which a director derived an
improper personal benefit. If the GCL is amended to authorize corporate action
further eliminating or limiting the personal liability of directors, then by
virtue of this Article NINTH the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the GCL, as so
amended.
2. Indemnification.
---------------
(a) The Corporation shall indemnify, in accordance with the By-laws of the
Corporation and to the fullest extent permitted from time to time by the GCL or
any other applicable laws as presently or hereafter in effect, any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, including, without limitation, an action by or in the right of
the Corporation, by reason of his acting as a director or officer of the
Corporation (and the Corporation, in the discretion of the Board of Directors,
may so indemnify a person by reason of the fact that he is or was an employee or
agent of the Corporation or is or was serving at the request of the Corporation
in any other capacity for or on behalf of the Corporation) against any liability
or expense actually and reasonably incurred by such person in respect thereof;
provided, however, the Corporation shall be required to indemnify an officer or
- -------- -------
director in connection with an action, suit or proceeding (or part thereof)
initiated by such person only if (i) such action, suit or proceeding (or part
thereof) was authorized by the Board of Directors and (ii) the indemnification
does not relate to any liability arising under Section 16(b) of the Securities
Exchange Act of 1934, as amended, or any rules or regulations promulgated
thereunder. Such indemnification is not exclusive of any other right to
indemnification provided by law or otherwise. The right to indemnification
conferred by this Section 2 shall be deemed to be a contract between the
Corporation and each person referred to herein.
-29-
<PAGE>
(b) If a claim under subdivision (a) of this paragraph 2 of this Article
SIXTH is not paid in full by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
any undertaking required by the By-laws of the Corporation has been tendered to
the Corporation) that the claimant has not met the standards of conduct which
make it permissible under the GCL and subdivision (a) of this paragraph 2 of
this Article NINTH for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board of Directors, legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the GCL, nor an actual determination by the Corporation (including
its Board of Directors, legal counsel, or its stockholders) that the claimant
has not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that the claimant has not met the applicable
standard of conduct.
(c) Indemnification shall include payment by the Corporation of expenses
in defending an action or proceeding in advance of the final disposition of such
action or proceeding upon receipt of an undertaking by the person indemnified to
repay such payment if it is ultimately determined that such person is not
entitled to indemnification under this Article NINTH, which undertaking may be
accepted without reference to the financial ability of such person to make such
repayment.
3. Insurance. The Corporation shall have the power (but not the
---------
obligation) to purchase and maintain insurance on behalf of any person who is or
was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss incurred by such person in any
such capacity or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability under
the ARTICLE NINTH or the GCL.
4. Other Rights. The rights and authority conferred in this ARTICLE NINTH
------------
shall not be exclusive of any other right which any person may otherwise have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, by-
-30-
<PAGE>
law, agreement, contract, vote of stockholders or disinterested directors or
otherwise.
5. Additional Indemnification. The Corporation may, by action of its
--------------------------
Board of Directors, provide indemnification to such of the directors, officers,
employees and agents of the Corporation to such extent and to such effect as the
Board of Directors shall determine to be appropriate and authorized by the GCL.
6. Effect of Amendments. Neither the amendment, change, alteration nor
--------------------
repeal of this ARTICLE NINTH, nor the adoption of any provision of this
Certificate of Incorporation or the by-laws of the Corporation, nor, to the
fullest extent permitted by GCL, any modification of law, shall eliminate or
reduce the effect of this ARTICLE NINTH or the rights or any protection afforded
under this ARTICLE NINTH in respect of any acts or omissions occurring prior to
such amendment, repeal, adoption or modification.
TENTH: Subject to the Corporation's Stockholders Agreement, the
-----
Corporation reserves the right to repeal, alter, change or amend any provision
contained in this Certificate of Incorporation in the manner now or hereafter
prescribed by statute and all rights conferred upon stockholders herein are
granted subject to this reservation. No repeal, alteration or amendment of this
Certificate of Incorporation shall be made unless the same is first approved by
the Board of Directors of the Corporation pursuant to a resolution adopted by
the directors then in office in accordance with the By-laws and applicable law
and thereafter approved by the stockholders.
ELEVENTH: The Corporation has elected to not be governed by Section 203 of
--------
the GCL. This election shall take effect on August 16, 1995.
-31-
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
hereunto affixed and this Amended and Restated Certificate of Incorporation to
be signed by Robert H. Elkin, its President, and attested by Christopher T.
Paule, its Secretary, as of July 1, 1996.
JACKSON PRODUCTS, INC.
[Corporate Seal] By: /s/ Robert H. Elkin
-----------------------
Robert H. Elkin
President
ATTEST:
By: /s/ Christopher T. Paule
------------------------------
Christopher T. Paule
Secretary
-32-
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on this 1st day of July, 1996, personally came before
me, a Notary Public in and for the County and State aforesaid, Robert H. Elkin,
President of Jackson Products, Inc., a corporation of the State of Delaware, and
he duly executed the above Amended and Restated Certificate of Incorporation of
said corporation before me and acknowledged the same to be authorized by
resolution of the Board of Directors of Jackson Products, Inc. and to be his act
and deed and the act and deed of said corporation and the facts stated therein
are true; and that the seal affixed to said Amended and Restated Certificate of
Incorporation and attested by the Secretary of said corporation is the common or
corporate seal of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of office the day
and year aforesaid.
/s/ Christopher P. Moon
-----------------------------
Notary Public
My commission expires:
Sept. 5, 1997
-----------------------------
<PAGE>
PAGE 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
________________________________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "JACKSON PRODUCTS, INC.", FILED IN THIS OFFICE ON THE TWENTY-THIRD DAY OF
APRIL, A.D. 1998, AT 12 O'CLOCK P.M.
(CORPORATE SEAL)
(SEAL) /s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
2326979 8100 AUTHENTICATION: 9042449
981154933 DATE: 04-23-98
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF DESIGNATION
OF
JACKSON PRODUCTS, INC.
Pursuant to Section 242 of the
General Corporation Law of the
State of Delaware
------------------------------
JACKSON PRODUCTS, INC., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify as follows:
1. Resolutions of the Board of Directors of the Corporation, were duly
adopted proposing the following amendment to the Certificate of Incorporation of
the Corporation. The proposed amendment is as follows:
RESOLVED, that the Board of Directors hereby declares it advisable to amend
Section 5 of the Certificate of Designation of the Certificate of
Incorporation of the Corporation by deleting Sections 5(a) and 5(b) in
their entirety and inserting in their place the following:
"(a) Except as set forth in paragraphs 5(b) and 5(c) below,
the Preferred Stock shall not be redeemed in whole or in part
prior to April 1, 1998. On and after April 1, 1998, the Preferred
Stock may be redeemed by the Corporation, in cash, at any time in
whole or, from time to time, in part, at the option of the
Corporation for a redemption price equal to $10,000.00 per share,
plus accrued dividends, if any, on the date of redemption.
If less than all of the outstanding shares of Preferred
Stock are to be redeemed pursuant to this paragraph 5(a), such
shares shall be redeemed pro rata. Upon redemption of only a
portion of the number of shares of Preferred Stock covered by a
certificate, the Corporation shall issue and deliver to or upon
the written order of the holder of the certificate so
surrendered, at the expense of the Corporation, a new certificate
representing the number of shares of Preferred Stock not
redeemed.
<PAGE>
(b) [Reserved]"
2. Pursuant to a written consent signed by the stockholders of the
Corporation, resolutions were duly adopted setting forth the aforementioned
amendment to the Certificate of Incorporation of the Corporation.
3. Such amendment was duly adopted in accordance with Sections 141(f),
228(a), 228(d) and 242 of the General Corporation Law of the State of Delaware.
4. Except as specifically set forth herein, the remaining articles of the
Corporation's Certificate of Incorporation shall not be amended, modified or
otherwise altered.
-2-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the
22nd day of April, 1998.
JACKSON PRODUCTS, INC.
By: /s/ Christopher T. Paule
---------------------------------
Christopher T. Paule
Vice President
-3-
<PAGE>
EXHIBIT 3.2
BY-LAWS
OF
JACKSON PRODUCTS, INC.
I.
OFFICES
Section A. The registered office of the Corporation shall be in the
City of Wilmington, County of New Castle, State of Delaware and the name and
address of its registered agent is The Corporation Trust Company, 1209 Orange
Street, Wilmington, Delaware. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
II.
STOCKHOLDERS
Section A. Time and Place of Meetings and Annual Meeting. All
---------------------------------------------
meetings of the stockholders for the election of directors or for any other
purpose shall be held at such time and place, within or without the State of
Delaware, as shall be designated by the Board of Directors. In the absence of
any such designation by the Board of Directors, each such meeting shall be held
at the principal office of the Corporation. An annual meeting of stockholders
shall be held for the purpose of electing directors and transacting such other
business as may properly be brought before the meeting. The date of the annual
meeting shall be determined by the Board of Directors.
Section B. Time and Place of Special Meetings. Unless otherwise
----------------------------------
prescribed by law or by the Certificate of Incorporation, Special Meetings of
Stockholders, for any purpose or purposes, may be called by either (i) the
Chairman or (ii) the President, and shall be called by any such officer at the
request in writing of 2 members of the Board of Directors or at the request in
writing of stockholders holding fifty percent (50%) of the Class A Common Stock
of the Corporation issued and outstanding and entitled to vote generally in the
election of
<PAGE>
directors pursuant to the Certificate of Incorporation. Such request shall state
the purpose of the proposed meeting.
All special meetings of the stockholders shall be held at such place,
within or without the State of Delaware, as shall be designated by the Board of
Directors. In the absence of any such designation by the Board of Directors,
each such meeting shall be held at the principal office of the Corporation.
Section C. Notice of Meetings. Written notice of each meeting of the
------------------
stockholders stating the place, date and time of the meeting shall be given not
less than ten nor more than sixty days before the date of the meeting, to each
stockholder entitled to vote at such meeting. The notice of any special meeting
of stockholders shall state the purpose or purposes for which the meeting is
called.
Section D. Quorum. The holders of a majority of the Common Stock
------
issued and outstanding and entitled to vote under the Certificate of
Incorporation, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders for the transaction of business,
provided that, the holders of a majority of shares of Class A Common Stock, also
are present in person or represented by proxy, for a quorum to be constituted,
except as otherwise provided by law. For purposes of determining whether the
holders of a majority of shares of Common Stock entitled to vote is present,
each share of Class C Common Stock shall be treated as one share of Class A
Common Stock. If a quorum is not present or represented, the holders of the
stock present in person or represented by proxy at the meeting and entitled to
vote thereat shall have power, by the affirmative vote of the holders of a
majority of such stock, to adjourn the meeting to another time and/or place,
without notice other than announcement at the meeting, until a quorum shall be
presented or represented. At such adjourned meeting, at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the original meeting. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
Section E. Voting. Unless otherwise required by law, the Certificate
------
of Incorporation, these By-Laws or the Stockholders Agreement, dated August 16,
1995, among the Company and the Stockholders of the Company, any question
brought before any meeting of stockholders shall be decided by a majority of
votes cast by holders of the stock represented and entitled to vote thereon,
with each such holder having the number of votes per share and voting as a
member of such classes of stockholders as may be provided in the Certificate of
Incorporation, unless the
<PAGE>
question is one upon which, by express provision of law or of the Certificate of
Incorporation, a different vote is required, in which case such express
provision shall govern and control the decision of such question. Such votes may
be cast in person or by proxy but no proxy shall be voted on or after one year
from its date, unless such proxy provides for a longer period. The Board of
Directors, in its discretion, or the officer of the Corporation presiding at a
meeting of stockholders, in his discretion, may require that any votes cast at
such meeting shall be cast by written ballot.
Section F. Informal Action By Stockholders. Any action required to
-------------------------------
be taken at a meeting of the stockholders, or any other action which may be
taken at a meeting of the stockholders, may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by
stockholders having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all members
having a right to vote thereon were present and voted. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing.
Section G. List of Stockholders Entitled to Vote. The officer of the
-------------------------------------
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make, at least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder of the Corporation who is
present.
Section H. Stock Ledger. The stock ledger of the Corporation shall
------------
be the only evidence as to who are the stockholders entitled to examine the
stock ledger, the list required by Section G of this Article II or the books of
the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
<PAGE>
III.
DIRECTORS
Section A. General Powers. The business and affairs of the
--------------
Corporation shall be managed and controlled by or under the direction of a Board
of Directors, which may exercise all such powers of the Corporation and do all
such lawful acts and things as are not by law or by the Certificate of
Incorporation or by these By-Laws directed or required to be exercised or done
by the stockholders.
Section B. Number and Election of Directors. The number of directors
--------------------------------
of the Corporation shall be fixed from time to time by the vote of the entire
Board of Directors, but such number shall in no case be less than one (1) nor
more then five (5). Except as provided in Section C of this Article, directors
shall be elected by a plurality of the votes cast at Annual Meetings of
Stockholders, and each director so elected shall hold office until the next
Annual Meeting and until his successor is duly elected and qualified, or until
his earlier resignation or removal. Any director may resign at any time upon
notice to the Corporation. Directors need not be stockholders.
Section C. Vacancies. Except as provided in the Certificate of
---------
Incorporation, vacancies and newly created directorships resulting from any
increase in the number of directors may be filled by a majority of the Directors
then in office though less than a quorum, and each Director so chosen shall hold
office until his successor is elected and qualified or until his earlier
resignation or removal. If there are no Directors in office, then an election
of Directors may be held in the manner provided by law.
Section D. Place of Meetings. The Board of Directors may hold
-----------------
meetings, both regular and special, either within or without the State of
Delaware.
Section E. Regular Meetings. The Board of Directors shall hold a
----------------
regular meeting, to be known as the annual meeting, immediately following each
annual meeting of the stockholders. Other regular meetings of the Board of
Directors shall be held at such time and at such place as shall from time to
time be determined by the Board. No notice of regular meetings need be given.
Section F. Special Meetings. Special meetings of the Board may be
----------------
called by the Chairman or the President or any two directors. Special meetings
shall be called by the Secretary on the written request of any two directors.
Two days written or telephonic notice of special meetings need be given.
<PAGE>
Section G. Quorum. Except as may be otherwise specifically provided
------
by law, the Certificate of Incorporation or these By-Laws, at all meetings of
the Board of Directors, a majority of the entire Board of Directors shall
constitute a quorum for the transaction of business, provided that, two of the
directors (the "Jordan Directors") chosen by the Jordan Investors (as defined in
the Stockholders Agreement, dated as of August 16, 1995, by and among the
Corporation and certain of the Corporation's stockholders (the "Stockholders
Agreement")), as provided in the Stockholders Agreement, also must be present
for a quorum to be constituted. The act of a majority of the directors present
at any meeting at which there is a quorum shall be the act of the Board of
Directors. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
Section H. Organization. The Chairman of the Board, if elected,
------------
shall act as chairman at all meetings of the Board of Directors. If a Chairman
of the Board is not elected or, if elected, is not present, the President, or if
the President is not present, a Director chosen by a majority of the Directors
present, shall act as chairman at meetings of the Board of Directors.
Section I. Executive Committee. The Board of Directors, by
-------------------
resolution adopted by a majority of the whole Board, may designate one or more
Directors to constitute an Executive Committee, to serve as such, unless the
resolution designating the Executive Committee is sooner amended or rescinded by
the Board of Directors, until the next annual meeting of the Board or until
their respective successors are designated. The Board of Directors, by
resolution adopted by a majority of the whole Board, may also designate
additional Directors as alternate members of the Executive Committee to serve as
members of the Executive Committee in the place and stead of any regular member
or members thereof who may be unable to attend a meeting or otherwise
unavailable to act as a member of the Executive Committee. In the absence or
disqualification of a member and all alternate members who may serve in the
place and stead of such member, the member or members thereof present at any
meeting and not disqualified from voting, whether or not such member or members
constitute a quorum, may unanimously appoint another Director to act at the
meeting in the place of any such absent or disqualified member.
Except as expressly limited by the General Corporation Law of the
State of Delaware or the Certificate of Incorporation, the Executive Committee
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the
<PAGE>
business and affairs of the Corporation between the meetings of the Board of
Directors. The Executive Committee shall keep a record of its acts and
proceedings, which shall form a part of the records of the Corporation in the
custody of the Secretary, and all actions of the Executive Committee shall be
reported to the Board of Directors at the next meeting of the Board.
Meetings of the Executive Committee may be called at any time by the
President or any two of its members. Two days written or telephonic notice of
meetings need be given. A majority of the members of the Executive Committee
shall constitute a quorum for the transaction of business, provided that, a
majority of the members designated by the Jordan Investors, as provided in the
Stockholders Agreement, also must be present for a quorum to be constituted,
and, except as expressly limited by this section, the act of a majority of the
members present at any meeting at which there is a quorum shall be the act of
the Executive Committee. Except as expressly provided in this Section, the
Executive Committee shall fix its own rules of procedure.
Section J. Other Committees. The Board of Directors, by resolution
----------------
adopted by a majority of the whole Board, may designate one or more other
committees, each such committee to consist of one or more Directors. Except as
expressly limited by the General Corporation Law of the State of Delaware or the
Certificate of Incorporation, any such committee shall have and may exercise
such powers as the Board of Directors may determine and specify in the
resolution designating such committee. The Board of Directors, by resolution
adopted by a majority of the whole Board, also may designate one or more
additional Directors as alternate members of any such committee to replace any
absent or disqualified member at any meeting of the committee, and at any time
may change the membership of any committee or amend or rescind the resolution
designating the committee. In the absence or disqualification of a member or
alternate member of a committee, the member or members thereof present at any
meeting and not disqualified from voting, whether or not such member or members
constitute a quorum, may unanimously appoint another Director to act at the
meeting in the place of any such absent or disqualified member, provided that
the Director so appointed meets any qualifications stated in the resolution
designating the committee. Each committee shall keep a record of proceedings
and report the same to the Board of Directors to such extent and in such form as
the Board of Directors may require. Unless otherwise provided in the resolution
designating a committee, a majority of all of the members of any such committee
may select its Chairman, fix its rules or procedure, fix the time and place of
its meetings and specify what notice of meetings, if any, shall be given,
provided that any action taken by the committee is approved by a majority of the
members of the committee chosen
<PAGE>
by the Jordan Investors as provided in the Stockholders Agreement.
Section K. Action without Meeting. Unless otherwise restricted by
----------------------
the Certificate of Incorporation or these By-Laws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all members of the Board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board or committee.
Section L. Attendance by Telephone. Unless otherwise restricted by
-----------------------
the Certificate of Incorporation or these By-Laws, members of the Board of
Directors, or of any committee designated by the Board of Directors, may
participate in a meeting of the Board of Directors, or any committee, by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at the meeting.
Section M. Compensation. Directors may be paid such compensation for
------------
their services and such reimbursement for expenses of attendance at meetings of
the Board of Directors or any committee of the Board of Directors as the Board
of Directors may from time to time determine. No such payment shall preclude
any director from serving the Corporation or any of its parent or subsidiary
corporations or any of its stockholders in any other capacity and receiving
compensation for such service.
Section N. Interested Directors. No contract or transaction between
--------------------
the Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or their votes are
counted for such purpose if (i) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee, and the Board of Directors
or committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or (ii) the material facts as to
his or their relationship or interest and as to the contract or transaction are
disclosed or are known to the stockholders entitled to vote thereon, and the
contract or
<PAGE>
transaction is specifically approved in good faith by vote of the stockholders;
or (iii) the contract or transaction is fair as to the Corporation as of the
time it is authorized, approved or ratified, by the Board of Directors, a
committee thereof or the stockholders; provided, that the Certificate of
--------
Incorporation, these By-Laws, the Stockholders Agreement, dated as of August 16,
1995, by and among the Corporation and the Corporation's stockholders, (the
"Stockholders Agreement"), the Jordan Investors Subscription Agreement, dated as
of August 16, 1995, by and among the Corporation and the parties listed on the
signature pages thereto (the "Jordan Investors Subscription Agreement"), the
Advisor Subscription Agreement, dated August 16, 1995, by and among the
Corporation and the parties listed on the signature pages thereto (the "Advisor
Subscription Agreement"), the Management Subscription Agreement, dated August
16, 1995, by and among the Corporation and the parties listed on the signature
pages thereto (the "Management Subscription Agreement"), the Pledge Agreements,
dated as of August 16, 1995, executed by the Management Investors (as defined in
the Stockholders Agreement) pursuant to the Management Subscription Agreement,
the Note Agreement, dated August 16, 1995, by and between the Corporation and
the parties listed on the signature pages thereto (the "Note Agreement"), the
Securities Purchase Agreement, dated as of August 16, 1995, executed by the
Corporation in favor of the Purchasers (as defined therein), the Second Amended
and Restated Credit Agreement dated as of August 16, 1995, among Jackson
Products, Inc., the Corporation, the Lenders named therein and Heller Financial,
Inc. as Agent (the "Credit Agreement"), the Management Consulting Agreement,
dated as of August 16, 1995, by and among TJC Management Corporation and the
Corporation, the Intercompany Management Consulting Agreement, dated as of
August 16, 1995, by and among the Corporation and Flex-O-Lite, Inc., the Tax
Sharing Agreement, dated August 16, 1995, by and among the Corporation and Flex-
O-Lite, Inc., the Agreement and Plan of Merger, dated August 14, 1995, by and
among the Corporation and the other parties listed on the signature pages
thereto, and the other Transaction Documents (as defined in the Stockholders
Agreement) and the agreements, instruments and transactions contemplated
thereby, shall not be voidable, and shall be deemed to have satisfied each of
the conditions listed in clauses (i), (ii) and (iii) above, and be duly
authorized by the Corporation. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of Directors or
of a committee which authorizes the contract or transaction.
Section O. Removal. Except as otherwise provided in the Certificate
-------
of Incorporation, any one or more or all of the directors may be removed, with
or without cause, by the holders of a majority of the shares then entitled to
vote at an election of directors, provided that the Jordan Directors, or any one
--------
of them, may be removed, with or without cause, solely by the
<PAGE>
holders of a majority of the Class A Common Stock then entitled to vote at an
election of directors.
IV.
OFFICERS
Section A. Enumeration. The officers of the Corporation shall be
-----------
chosen by the Board of Directors and shall include a Chairman of the Board,
Chief Executive Officer, President, a Secretary and a Chief Financial Officer.
The Board of Directors may also elect one or more Vice Chairmen, one or more
Senior or other Vice Presidents, one or more Assistant Secretaries and Assistant
Chief Financial Officers and such other officers and agents as it shall deem
appropriate. Any number of offices may be held by the same person. The
officers of the Corporation need not be stockholders of the Corporation nor,
except in the case of the Chairmen of the Board of Directors, need such officers
be directors of the Corporation.
Section B. Term of Office. The officers of the Corporation shall be
--------------
elected at the annual meeting of the Board of Directors and shall hold office
until their successors are elected and qualified. Any officer elected or
appointed by the Board of Directors may be removed at any time by the Board of
Directors. Any vacancy occurring in any office of the Corporation required by
this Article shall be filled by the Board of Directors, and any vacancy in any
other office may be filled by the Board of Directors. Each successor shall hold
office for the unexpired term of his predecessor and until his successor is
elected and qualified, or until his earlier death, resignation or removal.
Section C. Chairman of the Board. The Chairman of the Board, when
---------------------
elected, shall have general supervision, direction and control of the business
and affairs of the Corporation, subject to the control of the Board of
Directors, shall preside at meetings of stockholders and shall have such other
functions, authority and duties as customarily appertain to the Chairman of the
Board of a business corporation or as may be prescribed by the Board of
Directors. During the absence or disability of the President, the Chairman of
the Board of Directors shall exercise all the powers and discharge all the
duties of the President. The Chairman of the Board of Directors shall also
perform such other duties and exercise such other powers as from time to time
may be assigned to him by these By-Laws or the Board of Directors.
Section D. President. The President shall, subject to the control of
---------
the Board of Directors and, if there be one, the Chairman of the Board of
Directors, have general supervision of
<PAGE>
the business of the Corporation and shall see that all orders and resolutions of
the Board of Directors are carried into effect. He shall execute all bonds,
mortgages, contracts and other instruments of the Corporation requiring a seal,
under the seal of the Corporation, except where required or permitted by law to
be otherwise signed and executed and except that the other officers of the
Corporation may sign and execute documents when so authorized by these By-Laws,
the Board of Directors or the President. In the absence or disability of the
Chairman of the Board of Directors, or if there be none, the President shall
preside at all meetings of the stockholders and the Board of Directors. If there
be no Chairman of the Board of Directors, the President shall be the Chief
Executive Officer of the Corporation. The President shall also perform such
other duties and may exercise such other powers as from time to time may be
assigned to him by these By-Laws or by the Board of Directors.
Section E. Vice President. At the request of the President or in his
--------------
absence or in the event of his inability or refusal to act, the Vice President
or the Vice Presidents if there is more than one (in the order designated by the
Board of Directors) shall perform the duties of the President, and when so
acting, shall have all the powers of and be subject to all the restrictions upon
the President. Each Vice President shall perform such other duties and have
such other powers as the Board of Directors from time to time may prescribe. If
there be no Vice President, the Board of Directors shall designate the officer
of the Corporation who, in the absence of the President or in the event of the
inability or refusal of the President to act, shall perform the duties of the
President, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the President.
Section F. Secretary. The Secretary shall keep a record of all
---------
proceedings of the stockholders of the Corporation and of the Board of
Directors, and shall perform like duties for the standing committees when
required. The Secretary shall give, or cause to be given, notice, if any, of
all meetings of the stockholders and shall perform such other duties as may be
prescribed by the Board of Directors, the Chairman of the Board or the
President. The Secretary shall have custody of the corporate seal of the
Corporation and the Secretary, or in the absence of the Secretary any Assistant
Secretary, shall have authority to affix the same to any instrument requiring
it, and when so affixed it may be attested by the signature of the Secretary or
an Assistant Secretary. The Board of Directors may give general authority to
any other officer to affix the seal of the corporation and to attest such
affixing of the seal. The Secretary shall also keep a register of the post
office address of each stockholder which shall be furnished to the Secretary by
such stockholder, sign with the President or Vice President,
<PAGE>
certificates for shares of the Corporation, the issuance of which shall be
authorized by resolution of the Board of Directors, and have general charge of
the stock transfer books of the Corporation.
Section G. Assistant Secretary. The Assistant Secretary, or if there
-------------------
be more than one, the Assistant Secretaries in the order determined by the Board
of Directors (or if there be no such determination, then in the order of their
election), shall, in the absence of the Secretary or in the event of the
Secretary's inability or refusal to act, perform the duties and exercise the
powers of the Secretary and shall perform such other duties as may from time to
time be prescribed by the Board of Directors, the Chairman of the Board, the
President or the Secretary.
Section H. Chief Financial Officer. The Chief Financial Officer
-----------------------
shall have the custody of the corporate funds and securities and shall keep full
and accurate accounts of receipts and disbursements in books belonging to the
Corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the Corporation in such depositories as may be designated
by the Board of Directors. The Chief Financial Officer shall disburse the funds
of the Corporation as may be ordered by the Board of Directors, taking proper
vouchers for such disbursements, and shall render to the Chairman of the Board,
the President and the Board of Directors, at its regular meetings or when the
Board of Directors so requires, an account of all transactions as Chief
Financial Officer and of the financial condition of the Corporation. The Chief
Financial Officer shall perform such other duties as may from time to time be
prescribed by the Board of Directors, the Chairman of the Board or the
President.
Section I. Assistant Chief Financial Officer. The Assistant Chief
---------------------------------
Financial Officer, or if there shall be more than one, the Assistant Chief
Financial Officers in the order determined by the Board of Directors (or if
there be no such determination, then in the order of their election), shall, in
the absence of the Chief Financial Officer or in the event of the Chief
Financial Officer's inability or refusal to act, perform the duties and exercise
the powers of the Chief Financial Officer and shall perform such other duties
and have such other powers as may from time to time be prescribed by the Board
of Directors, the Chairman of the Board, the President or the Chief Financial
Officer.
Section J. Controller. The Board of Directors may elect a Controller
----------
who shall be responsible for all accounting and auditing functions of the
Corporation and who shall perform such
<PAGE>
other duties as may from time to time be required of him by the Board of
Directors.
Section K. Other Officers. The President or Board of Directors may
--------------
appoint other officers and agents for any Group, Division or Department into
which this Corporation may be divided by the Board of Directors, with titles as
the President or Board of Directors may from time to time deem appropriate. All
such officers and agents shall receive such compensation, have such tenure and
exercise such authority as the President or Board of Directors may specify. All
appointments made by the President hereunder and all the terms and conditions
thereof must be reported to the Board of Directors.
In no case shall an officer or agent of any one Group, Division or
Department have authority to bind another Group, Division or Department of the
Company or to bind the Company except as to the business and affairs of the
Group, Division or Department of which he or she is an officer or agent.
Section L. Salaries. The salaries of the elected officers shall be
--------
fixed from time to time by the Board of Directors and no officer shall be
prevented from receiving such salary by reason of the fact that he is also a
director of the Corporation.
Section M. Voting Securities Held by the Corporation. Unless
-----------------------------------------
otherwise provided by the Board of Directors, powers of attorney, proxies,
waivers of notice of meeting, consents and other instruments relating to
securities owned by the Corporation may be executed in the name of and on behalf
of the Corporation by the President or any Vice President and any such officer
may, in the name of and on behalf of the Corporation, take all such action as
any such officer may deem advisable to vote in person or by proxy at any meeting
of security holders of any corporation in which the Corporation may own
securities and at any such meeting shall possess and may exercise any and all
rights and powers incidental to the ownership of such securities and which, as
the owner thereof, the Corporation might have exercised and possessed if
present. The Board of Directors, may, by resolution, from time to time confer
like powers upon any other person or persons.
V.
CERTIFICATES OF STOCK
Section A. Form. The shares of the Corporation shall be represented
----
by certificates. Certificates of stock in the Corporation, if any, shall be
signed by or in the name of the Corporation by the Chairman of the Board or the
President or a
<PAGE>
Vice President and by the Chief Financial Officer or an Assistant Chief
Financial Officer or the Secretary or an Assistant Secretary of the Corporation.
Where a certificate is countersigned by a transfer agent, other than the
Corporation or an employee of the Corporation, or by a registrar, the signatures
of the Chairman of the Board, the President or a Vice President and the Chief
Financial Officer or an Assistant Chief Financial Officer or the Secretary or an
Assistant Secretary may be facsimiles. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, the certificate may be issued by the
Corporation with the same effect as if such officer, transfer agent or registrar
were such officer, transfer agent or registrar at the date of its issue.
Section B. Transfer. Except as otherwise established by rules or
--------
regulations adopted by the Board of Directors, upon surrender to the Corporation
or the transfer agent of the Corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the Corporation to issue a new
certificate of stock or uncertificated shares in place of any certificate
therefor issued by the Corporation to the person entitled thereto, cancel the
old certificate and record the transaction on its books.
Section C. Replacement. In case of the loss, destruction or theft of
-----------
a certificate for any stock of the Corporation, a new certificate of stock or
uncertificated shares in place of any certificate therefor issued by the
Corporation may be issued upon satisfactory proof of such loss, destruction or
theft and upon such terms as the Board of Directors may prescribe. The Board of
Directors may in its discretion require the owner of the lost, destroyed or
stolen certificate, or his legal representative, to give the Corporation a bond,
in such sum and in such form and with such surety or sureties as it may direct,
to indemnify the Corporation against any claim that may be made against it with
respect to a certificate alleged to have been lost, destroyed or stolen.
Section D. Record Date. In order that the Corporation may determine
-----------
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or entitled to express consent to corporate action
in writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock, or for the
purpose of any other lawful action, the Board of Directors may fix, in advance,
a record date, which shall not be more than sixty days nor less than ten days
before
<PAGE>
the date of such meeting, nor more than sixty days prior to any other
action. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
If no record date is fixed, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day before the day on which notice is given, or, if
notice is waived, at the close of business on the day before the day on which
the meeting is held. The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when no prior
action by the Board of Directors is necessary, shall be the day on which the
first written consent is expressed. The record date for determining stockholders
for any other purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating to such purpose.
Section E. Beneficial Owners. The Corporation shall be entitled to
-----------------
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
law. The Corporation shall not be required to register any transfer of shares
made in violation of the Stockholders Agreement, or in violation of any other
agreement among a stockholder or investor in the Corporation and the
Corporation, or recognize as a holder of any such shares any transferee in such
a violative transaction.
VI.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section A. Power to Indemnify in Actions, Suits or Proceedings Other Than
--------------------------------------------------------------
Those by or in the Right of the Corporation. Subject to Section D of this
- --------------------------------------------
Article VI, the Corporation shall indemnify to the fullest extent permitted by
applicable law, now or hereafter in effect, any director or officer of the
Corporation, and may, upon the act of the Board of Directors, indemnify to the
fullest extent permitted by applicable law, now or hereafter in effect, any
other person whom it shall have the power to indemnify, who was or is a party or
is threatened to be made a party to any threatened, pending or
<PAGE>
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was acting in his official capacity as a
director, officer, employee or agent of the Corporation, as the case may be, or
is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise (including attorneys' fees and expenses and court costs),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful;
provided, however, the Corporation shall be required to indemnify an officer or
director in connection with any actions, suits or proceedings initiated by such
person only if (i) such action, suit or proceeding was authorized by the Board
of Directors and (ii) the indemnification does not relate to any liability
arising under Section 16(b) of the Securities Exchange Act of 1934, as amended,
or any rules or regulations promulgated thereunder. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
---- ----------
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
Section B. Power to Indemnify in Actions, Suits or Proceedings by or
---------------------------------------------------------
in the Right of the Corporation. Subject to Section D of this Article VI, the
- -------------------------------
Corporation shall indemnify to the fullest extent permitted by applicable law,
now or hereafter in effect, any director or officer of the Corporation, and may,
upon the act of the Board of Directors, indemnify to the fullest extent
permitted by applicable law, now or hereafter in effect, any other person whom
it shall have the power to indemnify, who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was acting in his official capacity as a director, officer,
employee or agent of the Corporation, as the case may be, or is or was serving
at the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees and expenses and court costs)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably
<PAGE>
believed to be in or not opposed to the best interests of the Corporation;
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable in the
performance of his duty to the Corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
Section C. Indemnification for Expenses. To the extent that a director,
----------------------------
officer, employee or agent of the Corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in
Sections A and B of this Article, or in defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorneys' fees and
expenses and court costs) actually and reasonably incurred by him in connection
therewith.
Section D. Determination of Board of Directors to Indemnify. Any
------------------------------------------------
indemnification under Sections A and B of this Article (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer, employee or
agent is proper in the circumstances because he has met the applicable standard
of conduct set forth in Sections A and B of this article. Such determination
shall be made (i) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or proceeding,
or (ii) if such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (iii) by the stockholders.
Section E. Good Faith Defined. For purposes of any determination under
------------------
Section D of this Article VI, a person shall be deemed to have acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation, or, with respect to any criminal action or
proceeding, to have had no reasonable cause to believe his conduct was unlawful,
if his action is based on the records or books of account of the Corporation or
another enterprise, or on information supplied to him by the officers of the
Corporation or another enterprise in the course of their duties, or on the
advice of legal counsel for the Corporation or another enterprise or on
information or records given or reports made to the Corporation or another
enterprise by an independent certified public accountant or by an appraiser or
other expert selected with reasonable care by the Corporation or another
enterprise.
<PAGE>
The term "another enterprise" as used in this Section D shall mean any other
corporation or any partnership, joint venture, trust, employee benefit plan or
other enterprise of which such person is or was serving at the request of the
Corporation as a director or executive officer. The provisions of this Section D
shall not be deemed to be exclusive or to limit in any way the circumstances in
which a person may be deemed to have met the applicable standard of conduct set
forth in Section A or B of this Article VI, as the case may be.
Section F. Payment of Expenses in Advance of Final Disposition. Expenses
---------------------------------------------------
incurred in defending a civil or criminal action, suit or proceeding may be paid
by the Corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board of Directors in the manner provided in
Section D of this article upon receipt of an undertaking by or on behalf of the
director, officer, employee or agent to repay such amount if it shall ultimately
be determined that he is not entitled to be indemnified by the Corporation under
this article.
Section G. Indemnification With Regard to Employment Matters. The
-------------------------------------------------
Corporation shall indemnify any director or officer of the Corporation and may,
upon the act of the Board of Directors, indemnify any other person whom it shall
have power to indemnify under applicable law (as in effect from time to time),
who was or is a party or is threatened to be made a party to any threatened,
pending, or completed action, suit or proceeding, or financial obligation,
whether civil, criminal, administrative or investigative, (i) arising under the
Employee Retirement Income Security Act of 1974 or regulations promulgated
thereunder, or under any other law or regulation of the United States or any
agency or instrumentality thereof or law or regulation of any state or political
subdivision or any agency or instrumentality of either, or under the common law
of any of the foregoing, against expenses (including attorneys' fees and
expenses and court costs), judgments, fines, penalties, taxes and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding by reason of the fact that he is or was a fiduciary,
disqualified person or party in interest with respect to an employee benefit
plan covering employees of the Corporation or of a subsidiary corporation, or is
or was serving in any other capacity with respect to such plan, or has or had
any obligations or duties with respect to such plan by reason of such laws or
regulations, provided that such person was or is a director, officer, employee
or agent of the Corporation, (ii) in connection with any matter arising under
federal, state or local revenue or taxation laws or regulations, against
expenses (including attorneys' fees), judgments, fines, penalties, taxes,
amounts paid in settlement and amounts paid as penalties or fines necessary to
contest the imposition of such
<PAGE>
penalties or fines, actually and reasonably incurred by him in connection with
such action, suit or proceeding by reason of the fact that he is or was acting
in his official capacity as the director, officer, employee or agent of the
Corporation, as the case may be, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise and had responsibility for
or participated in activities relating to compliance with such revenue or
taxation laws and regulations; provided, however, that such person did not act
dishonestly or in willful or reckless violation of the provisions of the law or
regulation under which such suit or proceeding arises or (iii) in connection
with and to the extent of any liability, cost or expense that any director or
officer has incurred as a personal obligor for any obligation of the
Corporation. Unless the Board of Directors determines that under the
circumstances then existing, it is probable that such director, officer,
employee or agent will not be entitled to be indemnified by the Corporation
under this section, expenses incurred in defending such suit or proceeding,
including the amount of any penalties or fines necessary to be paid to contest
the imposition of such penalties or fines, shall be paid by the Corporation in
advance of the final disposition of such suit or proceeding upon receipt of an
undertaking by or on behalf of the director, officer, employee or agent to repay
such amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Corporation under this section.
Section H. Indemnification Not Exclusive. The indemnification and
-----------------------------
advancement of expenses provided by, and granted pursuant to, this Article shall
not be deemed exclusive of any other rights to which those indemnified or
advanced expenses may be entitled under the Certificate of Incorporation, any
by-law, agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding such office, and shall continue as to a director or officer who
has ceased to be a director or officer agent and shall inure to the benefit of
the heirs, executors and administrators of the director or officer, and may,
upon such act of the Board of Directors, continue as to such other persons and
inure to the benefit of the heirs, executors and administrators of such other
persons. It is the policy of the Corporation that indemnification of the
persons specified in Sections A and B of Article VI shall be to the fullest
extent permitted by law. The provisions of this Article VI shall not be deemed
to preclude the indemnification of any person who is not specified in Section A
or B of this Article VI but whom the Corporation has the power or obligation to
indemnify under the provisions of the General Corporation Law of the State of
Delaware.
<PAGE>
Section I. Indemnification by a Court. Notwithstanding any contrary
--------------------------
determination in the specific case under Section D of this Article VI, and
notwithstanding the absence of any determination thereunder, any director or
executive officer may apply to any court of competent jurisdiction in the State
of Delaware for indemnification to the extent otherwise permissible under
Sections A and B of this Article VI. The basis of such indemnification by a
court shall be a determination by such court that indemnification of the
director or executive officer is proper in the circumstances because he has met
the applicable standards of conduct set forth in Section A or B of this Article
VI, as the case may be. Neither a contrary determination in the specific case
under Section D of this Article VI nor the absence of any determination
thereunder shall be a defense to such application or create a presumption that
the director or executive officer seeking indemnification has not met any
applicable standard of conduct. Notice of any application for indemnification
pursuant to this Section I shall be given to the Corporation promptly upon the
filing of such application. If successful, in whole or in part, the director or
executive officer seeking indemnification shall also be entitled to be paid the
expense of prosecuting such application.
Section J. Purchase of Insurance by the Corporation. The Corporation may
----------------------------------------
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not he would be
entitled to indemnity against such liability under the provisions of this
Article VI.
Section K. Survival of Indemnification and Advancement of Expenses.
-------------------------------------------------------
The indemnification and advancement of expenses provided by, or granted pursuant
to, this Article VI shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director or executive
officer and shall inure to the benefit of the heirs, executors and
administrators of such a person.
Section L. Limitation on Indemnification. Notwithstanding anything
-----------------------------
contained in this Article VI to the contrary, except for proceedings to enforce
rights to indemnification (which shall be governed by Section I hereof), the
Corporation shall not be obligated to indemnify any director or executive
officer in connection with a proceeding (or part thereof) initiated by such
person unless such proceeding (or part thereof) was authorized or consented to
by the Board of Directors of the Corporation.
<PAGE>
VII.
GENERAL PROVISIONS
Section A. Fiscal Year. The fiscal year of the Corporation shall be fixed
-----------
by resolution of the Board of Directors.
Section B. Corporate Seal. The corporate seal shall be in such form as
--------------
may be approved from time to time by the Board of Directors. The seal may be
used by causing it or a facsimile thereof to be impressed or affixed or in any
other manner reproduced.
Section C. Notices. Whenever written notice is required by law, the
-------
Certificate of Incorporation or these By-Laws, to be given to any director,
member of a committee or stockholder, such notice may be given by mail,
addressed to such director, member of a committee or stockholder, at his address
as it appears on the records of the Corporation, with postage thereon prepaid,
and such notice shall be deemed to be given at the time when the same shall be
deposited in the United States mail. Written notice may also be given
personally or by telegram, telex or cable.
Section D. Waiver of Notice. Whenever any notice is required to be
----------------
given under law or the provisions of the Certificate of Incorporation or these
By-Laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent to notice.
Section E. Resignations. Any director or any officer, whenever elected
------------
or may appointed, may resign at any time by serving written notice of such
resignation on the President or the Secretary, and such resignation shall be
deemed to be effective as of the close of business on the date said notice is
received by the President or Secretary. No formal action shall be required of
the Board of Directors or the stockholders to make any such resignation
effective. Except as the Board of Directors may otherwise determine, no officer
who resigns or is removed shall have any right to any compensation as an officer
for any period following his resignation or removal, or any right to damages on
account of such removal, whether his compensation be by the month or by the year
or otherwise, unless such compensation is expressly provided in a duly
authorized written agreement with the Corporation.
Section F. Disbursements. All checks or demands for money and notes
-------------
of the Corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time designate.
<PAGE>
VIII.
AMENDMENTS
Subject to the Stockholders Agreement, as amended in accordance with
the provisions thereof, these By-Laws may be altered, amended or repealed or new
By-Laws may be adopted by the Board of Directors. The fact that the power to
amend, alter, repeal or adopt the By-Laws has been conferred upon the Board of
Directors shall not divest the stockholders of the same powers.
IX.
SUBJECT TO CERTIFICATE OF INCORPORATION
These By-Laws and the provisions hereof are subject to the terms and
conditions of the Certificate of Incorporation of the Corporation (including any
certificates of designations filed thereunder), and in the event of any conflict
between these By-Laws and the Certificate of Incorporation, the Certificate of
Incorporation shall control.
<PAGE>
EXHIBIT 4.1
================================================================================
________________________________
JACKSON PRODUCTS, INC.
$115,000,000
9 1/2% SENIOR SUBORDINATED NOTES DUE 2005
SERIES A AND SERIES B
_______________________________
INDENTURE
Dated as of April 22, 1998
_______________________________
STATE STREET BANK AND TRUST COMPANY,
as Trustee
_______________________________
================================================================================
<PAGE>
INDENTURE dated as of April 22, 1998, among Jackson Products, Inc., a
Delaware corporation (the "Company"), the Guarantors (as defined) party hereto
and State Street Bank and Trust Company, as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each other
and for the equal and ratable benefit of the Holders of the 9 1/2% Senior
Subordinated Notes due 2005 (the "Notes"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.
"144A Global Note" means a global note in the form of Exhibit A-1 hereto
bearing the Global Note Legend and the Private Placement Legend and deposited
with or on behalf of, and registered in the name of, the Depositary or its
nominee that will be issued in a denomination equal to the outstanding principal
amount of the Notes sold in reliance on Rule 144A.
"Affiliate" means any of the following: (i) any person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company; (ii) any spouse, immediate family member or other
relative who has the same principal residence as any person described in clause
(i) above; (iii) any trust in which any such persons described in clause (i) or
(ii) above has a beneficial interest; and (iv) any corporation or other
organization of which any such persons described above collectively own 50% or
more of the equity of such entity.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or exchange of
or for beneficial interests in any Global Note, the rules and procedures of the
Depositary, Euroclear and Cedel that apply to such transfer or exchange.
"Asset Sale" means the sale, lease, conveyance or other disposition by
the Company or a Restricted Subsidiary of assets or property whether owned on
the date of original issuance of the Notes or thereafter acquired, in a single
transaction or in a series of related transactions; provided that Asset Sales
will not include such sales, leases, conveyances or dispositions in connection
with (i) the sale or disposition of any Restricted Investment, (ii) any Equity
Offering by (a) the Company or (b) any Restricted Subsidiary if the proceeds
therefrom are used to make mandatory prepayments of Indebtedness under the
Credit Agreement or Indebtedness of the Restricted Subsidiaries or to redeem
Notes in accordance with Section 3.07 hereof, (iii) the sale or lease of
equipment, inventory, accounts receivable or other assets in the ordinary course
of business, (iv) the surrender or waiver of contract rights or the settlement,
release or surrender of contract, tort or other claims of any kind,
<PAGE>
(v) the grant of any license of patents, trademarks, registration therefor and
other similar intellectual property, (vi) a transfer of assets by the Company or
a Restricted Subsidiary to the Company or another Restricted Subsidiary, (vii)
the designation of a Restricted Subsidiary as a Non-Restricted Subsidiary
pursuant to Section 4.13 hereof, (viii) the sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company as
permitted under Section 5.01 hereof, (ix) the sale or disposition of obsolete
equipment or other obsolete assets, (x) Restricted Payments permitted by Section
4.07 hereof, or (xi) the exchange of assets for other non-cash assets that (A)
are useful in the business of the Company and its Restricted Subsidiaries and
(B) have a fair market value at least equal to the fair market value of the
assets being exchanged (as determined by the Board of Directors in good faith).
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state
law for the relief of debtors.
"Board of Directors" means the Company's board of directors or any
authorized committee of such board of directors.
"Business Day" means any day other than a Legal Holiday.
"Capital Stock" means any and all shares, interests, participations or
other equivalents (however designated) of corporate stock, including any
preferred stock.
"Cash Flow Coverage Ratio" means, for any given period and person, the
ratio of (i) EBITDA, divided by (ii) the sum of Consolidated Interest Expense
and all dividend payments on any series of preferred stock of such person
(except dividends paid or payable in additional shares of Capital Stock (other
than Disqualified Stock) and except for accrued and unpaid dividends with
respect to preferred stock outstanding on the date of original issuance of the
Notes), in each case, without duplication; provided that, if any such
calculation includes any period during which an acquisition or sale of a person
or the incurrence or repayment of Indebtedness occurred, then such calculation
for such period shall be made on a Pro Forma Basis.
"Cedel" means Cedel Bank, societe anonyme.
"Change of Control" means the occurrence of each of the following: (i) any
"person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the
Exchange Act), excluding the Existing Stockholders, is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that a person shall be deemed to have "beneficial ownership" of all
securities that such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 50% of the total Voting Stock of the Company; and (ii)
the Company consolidates with, or merges with or into, another person or sells,
assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any person, or any person consolidates with,
or merges with or into, the Company, in any such event pursuant to a transaction
in which the outstanding Voting Stock of the Company is converted into or
exchanged for cash, securities or other property, other than any such
transaction where (A)
<PAGE>
the outstanding Voting Stock of the Company is converted into or exchanged for
(1) Voting Stock (other than Redeemable Capital Stock) of the surviving or
transferee corporation or (2) cash, securities and other property in an amount
which could be paid by the Company as a Restricted Payment under this Indenture
and (B) immediately after such transaction no "person" or "group" (as such terms
are used in Sections 13(d) and 14(d) of the Exchange Act), excluding the
Existing Stockholders, is the "beneficial owner" (as defined in Rules 13d-3 and
13d-5 under the Exchange Act, except that a person shall be deemed to have
"beneficial ownership" of all securities that such person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of more than 50% of the total Voting Stock of
the surviving or transferee corporation; and (iii) during any consecutive two-
year period, individuals who at the beginning of such period constituted the
Board of Directors of the Company (together with any new directors whose
election by such Board of Directors or whose nomination for election by the
stockholders of the Company was approved by a vote of a majority of the
directors then still in office who are entitled to vote to elect such new
director and were either directors at the beginning of such period or persons
whose election as directors or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of the Company then in office.
"Commission" means the Securities and Exchange Commission.
"Company" means Jackson Products, Inc. and any and all successors thereto.
"Consolidated Interest Expense" means, for any given period and person, the
aggregate of the interest expense in respect of all Indebtedness of such person
and its Restricted Subsidiaries for such period, on a consolidated basis,
determined in accordance with GAAP (including amortization of original issue
discount on any such Indebtedness, all non-cash interest payments, the interest
portion of any deferred payment obligation and the interest component of capital
lease obligations, but excluding amortization of deferred financing fees if such
amortization would otherwise be included in interest expense); provided that,
for the purpose of the Cash Flow Coverage Ratio, Consolidated Interest Expense
shall be calculated on a Pro Forma Basis; and provided further that any
premiums, fees and expenses (including the amortization thereof) payable in
connection with the Offering and the application of the net proceeds therefrom
or any other refinancing of Indebtedness will be excluded.
"Consolidated Net Income" means, for any given period and person, the
aggregate of the Net Income of such person and its Restricted Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided that: (i) the Net Income of any person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded; and (ii) Consolidated Net Income of any person will not include,
without duplication, any deduction for (A) any increased amortization or
depreciation resulting from the write-up of assets pursuant to Accounting
Principles Board Opinion Nos. 16 and 17, as amended or supplemented from time to
time, (B) the amortization of all intangible assets (including amortization
attributable to inventory write-ups, goodwill, debt and financing costs, and
Incentive Arrangements), (C) any non-capitalized transaction costs incurred in
connection with actual or proposed financings, acquisitions
<PAGE>
or divestitures (including, but not limited to, financing and refinancing fees),
(D) any extraordinary or nonrecurring charges relating to any premium or penalty
paid, write-off or deferred financing costs or other financial recapitalization
charges in connection with redeeming or retiring any Indebtedness prior to its
stated maturity, and (E) any Restructuring Charges; and provided further that,
for purposes of determining the Cash Flow Coverage Ratio, Consolidated Net
Income shall be calculated on a Pro Forma Basis.
"Consolidated Net Worth" with respect to any person means, as of any date,
the consolidated equity of the common stockholders of such person (excluding the
cumulated foreign currency translation adjustment), all determined on a
consolidated basis in accordance with GAAP, but without any reduction in respect
of the payment of dividends on any series of such person's preferred stock if
such dividends are paid in additional shares of Capital Stock (other than
Disqualified Stock); provided that Consolidated Net Worth shall also include,
without duplication, (a) the amortization of all write-ups of inventory, (b) the
amortization of all intangible assets (including amortization of goodwill, debt
and financing costs, and Incentive Arrangements), (c) any non-capitalized
transaction costs incurred in connection with actual or proposed financings,
acquisitions or divestitures (including, but not limited to, financing and
refinancing fees), (d) any increased amortization or depreciation resulting from
the write-up of assets pursuant to Accounting Principles Board Opinion Nos. 16
and 17, as amended and supplemented from time to time, (e) any extraordinary or
nonrecurring charges or expenses relating to any premium or penalty paid, write-
off or deferred financing costs or other financial recapitalization charges
incurred in connection with redeeming or retiring any Indebtedness prior to its
stated maturity, (f) any Restructuring Charges, and (g) any extraordinary or
non-recurring charge arising out of the implementation of SFAS 106 or SFAS 109;
and provided further that Consolidated Net Worth shall be calculated on a Pro
Forma Basis.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 12.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Credit Agreement" means the Credit Agreement, dated the date hereof, among
the Company, certain of its Subsidiaries, the lenders party thereto and
BankBoston, N.A., as agent, together with all loan documents and instruments
thereunder (including, without limitation, any guarantee agreements and security
documents), in each case, as such agreements may be amended, modified, extended,
restated, replaced, or (including any amendment and restatement thereof),
supplemented or otherwise modified from time to time, including any agreement
extending the maturity of, refinancing, replacing or otherwise restructuring
(including, without limitation, increasing the amount of available borrowings
thereunder, and all Obligations with respect thereto, in each case, to the
extent permitted by Section 4.09 hereof, or adding Subsidiaries of the Company
as additional borrowers or guarantors thereunder) all or any portion of the
Indebtedness under such agreement or any successor or replacement agreement and
whether by the same or any other agent, lender or group of lenders.
"Crystaloid Holdback" means an amount equal to $500,000 plus accrued
interest thereon, payable in accordance with the terms of the stock purchase
agreement, dated as of March 31, 1998,
<PAGE>
relating to the the Company's purchase of all of the outstanding capital stock
of Crystaloid Electronics Company (to be merged with and into Crystaloid
Technologies, Inc.) for $6.5 million, as contemplated by a stock purchase
agreement entered into by the Company, dated as of March 31, 1998.
"Custodian" means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Definitive Note" means a certificated Note registered in the name of the
Holder thereof and issued in accordance with Section 2.06 hereof, in the form of
Exhibit A-1 hereto except that such Note shall not bear the Global Note Legend
and shall not have the "Schedule of Exchanges of Interests in the Global Note"
attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in whole
or in part in global form, the Person specified in Section 2.03 hereof as the
Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Designated Senior Indebtedness" means (a) any Indebtedness outstanding
under the Credit Agreement and (b) any other Senior Indebtedness permitted under
this Indenture the principal amount of which is $25.0 million or more and that
has been designated by the Company and, for so long as the Credit Agreement is
in effect, the Representative in a written notice to the Trustee as "Designated
Senior Indebtedness."
"Disqualified Stock" means any Capital Stock that by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the holder thereof, in whole or in part on, or prior to, the
maturity date of the Notes.
"Domestic Subsidiary" of a Person means any direct or indirect Subsidiary
of such Person that is organized under the laws of any jurisdiction within the
United States, any district or territoriality thereof and The Commonwealth of
Puerto Rico.
"EBITDA" means, for any given period and person, the sum of, without
duplication, Consolidated Net Income, plus (a) the portion of Net Income
attributable to the minority interests in its Restricted Subsidiaries, to the
extent not included in calculating Consolidated Net Income, plus (b) any
provision for taxes based on income or profits to the extent such income or
profits were included in computing Consolidated Net Income, plus (c)
Consolidated Interest Expense, to the extent deducted in computing Consolidated
Net Income, plus (d) the amortization of all intangible assets, to the extent
such amortization was deducted in computing Consolidated Net Income
<PAGE>
(including, but not limited to, inventory write-ups, goodwill, debt and
financing costs, and Incentive Arrangements), plus (e) any non-capitalized
transaction costs incurred in connection with actual or proposed financings,
acquisitions or divestitures (including, but not limited to, financing and
refinancing fees, including those in connection with the Offering, to the extent
deducted in computing Consolidated Net Income), plus (f) all depreciation and
all other non-cash charges (including, without limitation, those charges
relating to purchase accounting adjustments and LIFO adjustments), to the extent
deducted in computing Consolidated Net Income, plus (g) any interest income, to
the extent such income was not included in computing Consolidated Net Income,
plus (h) all dividend payments on preferred stock (whether or not paid in cash)
to the extent deducted in computing Consolidated Net Income, plus (i) any
extraordinary or nonrecurring charge or expense arising out of the
implementation of SFAS 106 or SFAS 109 to the extent deducted in computing
Consolidated Net Income, plus (j) to the extent not covered in clause (e) above,
fees paid or payable in respect of the TJC Management Agreement to the extent
deducted in computing Consolidated Net Income, plus (k) the net loss of any
person, other than those of a Restricted Subsidiary, to the extent deducted in
computing Consolidated Net Income, plus (l) net losses in respect of any
discontinued operations as determined in accordance with GAAP, to the extent
deducted in computing Consolidated Net Income, plus (m) payments made in
connection with SAR Agreements and grants of stock options, plus (n) the portion
of Net Income attributable to the minority interests in other persons to the
extent received in cash by the Company or its Restricted Subsidiaries; provided
that, if any such calculation includes any period during which an acquisition or
sale of a person or the incurrence or repayment of Indebtedness occurred, then
such calculation for such period shall be made on a Pro Forma Basis.
"Equity Interests" means Capital Stock or partnership interests or
warrants, options or other rights to acquire Capital Stock or partnership
interests (but excluding (i) any debt security that is convertible into, or
exchangeable for, Capital Stock or partnership interests, and (ii) any other
Indebtedness or Obligation); provided that Equity Interests will not include any
Incentive Arrangements or obligations or payments thereunder.
"Equity Offering" means a public or private offering by the Company for
cash of Capital Stock or other Equity Interests and all warrants, options or
other rights to acquire Capital Stock, other than (i) an offering of
Disqualified Stock or (ii) Incentive Arrangements or obligations or payments
thereunder.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means the Notes issued in the Exchange Offer pursuant to
Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.
<PAGE>
"Exchange Offer Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
"Existing Stockholders" means (a) The Jordan Company and its affiliates,
and their respective principals, partners and employees, former employees,
family members of any of the foregoing and trusts for the benefit of any of the
foregoing, including, without limitation, MCIT PLC, Leucadia National
Corporation and Jordan Industries, Inc., and their respective Subsidiaries and
(b) the officers and directors of the Company on the date of original issuance
of the Notes and their respective affiliates and family members and trusts for
the benefit of any of the foregoing.
"GAAP" means generally accepted accounting principles, consistently
applied, as of the date of original issuance of the Notes. All financial and
accounting determinations and calculations under this Indenture will be made in
accordance with GAAP.
"Global Notes" means, individually and collectively, each of the Restricted
Global Notes and the Unrestricted Global Notes, in the form of Exhibit A hereto
issued in accordance with Section 2.01, 2.06(b)(iv), 2.06(d)(ii) or 2.06(f)
hereof.
"Global Note Legend" means the legend set forth in Section 2.06(g)(ii),
which is required to be placed on all Global Notes issued under this Indenture.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Guarantors" means (i) each of the Domestic Subsidiaries of the Company on
the date of this Indenture and (ii) any other subsidiary that executes a Note
Guarantee in accordance with the provisions of this Indenture, and their
respective successors and assigns.
"Hedging Obligations" means, with respect to any person, the Obligations of
such persons under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements, (ii) foreign exchange contracts,
currency swap agreements or similar agreements, and (iii) other agreements or
arrangements designed to protect such person against fluctuations, or otherwise
to establish financial hedges in respect of, exchange rates, currency rates or
interest rates.
"Holder" means a Person in whose name a Note is registered.
"Incentive Arrangements" means any earn-out agreements, stock appreciation
rights, "phantom" stock plans, employment agreements, non-competition
agreements, subscription and
<PAGE>
stockholders agreements and other incentive and bonus plans and similar
arrangements made in connection with acquisitions of persons or businesses by
the Company or the Restricted Subsidiaries or the retention of executives,
officers or employees by the Company or the Restricted Subsidiaries.
"Indebtedness" means, with respect to any person, any indebtedness, whether
or not contingent, in respect of borrowed money or evidenced by bonds, notes,
debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereof) or representing the deferred and unpaid balance
of the purchase price of any property (including pursuant to capital leases),
except any such balance that constitutes an accrued expense or a trade payable,
and any Hedging Obligations, if and to the extent such indebtedness (other than
a Hedging Obligation) would appear as a liability upon a balance sheet of such
person prepared on a consolidated basis in accordance with GAAP, and also
includes, to the extent not otherwise included, the guarantee of items that
would be included within this definition; provided that "Indebtedness" will not
include any Incentive Arrangements or obligations or payments thereunder.
"Indenture" means this Indenture, as amended or supplemented from time to
time.
"Indirect Participant" means a Person who holds a beneficial interest in a
Global Note through a Participant.
"Insolvency or Liquidation Proceeding" means (i) any insolvency or
bankruptcy or similar case or proceeding, or any reorganization, receivership,
liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary, or (ii) any assignment for the benefit of creditors or any other
marshalling of assets and liabilities of the Company.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.
"Investment" means any capital contribution to, or other debt or equity
investment in, any Person.
"Issue" means create, issue, assume, guarantee, incur or otherwise become
directly or indirectly liable for any Indebtedness or Capital Stock, as
applicable; provided that any Indebtedness or Capital Stock of a person existing
at the time such person becomes a Restricted Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be issued by such
Restricted Subsidiary at the time it becomes a Restricted Subsidiary. For this
definition, the terms "issuing," "issuer," "issuance" and "issued" have meanings
correlative to the foregoing.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York (or where the principal corporate trust
office of the Trustee is located) or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
<PAGE>
"Letter of Transmittal" means the letter of transmittal to be prepared by
the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell and any filing of or
agreement to give any financing statement under the Uniform Commercial Code (or
equivalent statutes) of any jurisdiction).
"Liquidated Damages" means all liquidated damages then owing pursuant to
Section 5 of the Registration Rights Agreement.
"Net Income" means, with respect to any person, the net income (loss) of
such person, determined in accordance with GAAP, excluding, however, any gain or
loss, together with any related provision for taxes, realized in connection with
any Asset Sale (including, without limitation, dispositions pursuant to sale and
leaseback transactions).
"Net Proceeds" means, with respect to any Asset Sale, the aggregate amount
of cash proceeds (including any cash received by way of deferred payment
pursuant to a note receivable issued in connection with such Asset Sale, other
than the portion of such deferred payment constituting interest, and including
any amounts received as disbursements or withdrawals from any escrow or similar
account established in connection with any such Asset Sale, but, in either such
case, only as and when so received) received by the Company or any of its
Restricted Subsidiaries in respect of such Asset Sale, net of (i) the cash
expenses of such Asset Sale (including, without limitation, the payment of
principal of, and premium, if any, and interest on, Indebtedness required to be
paid as a result of such Asset Sale (other than the Notes) and legal,
accounting, management and advisory and investment banking fees and sales secs),
(ii) taxes paid or payable as a result thereof, (iii) any portion of cash
proceeds that the Company determines in good faith should be reserved for post-
closing adjustments, it being understood and agreed that on the day that all
such post-closing adjustments have been determined, the amount (if any) by which
the reserved amount in respect of such Asset Sale exceeds the actual post-
closing adjustments payable by the Company or any of its Restricted Subsidiaries
shall constitute Net Proceeds on such date, (iv) any relocation expenses and
pension, severance and shutdown costs incurred as a result thereof, and (v) any
deduction or appropriate amounts to be provided by the Company or any of its
Restricted Subsidiaries as a reserve in accordance with GAAP against any
liabilities associated with the asset disposed of in such transaction and
retained by the Company or such Restricted Subsidiary after such sale or other
disposition thereof, including, without limitation, pension and other post-
employment benefit liabilities and liabilities related to environmental matters
or against any indemnification obligations associated with such transaction.
"Non-Restricted Subsidiary" means any Subsidiary of the Company other than
a Restricted Subsidiary.
<PAGE>
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Note Custodian" means the Trustee, as custodian with respect to the Notes
in global form, or any successor entity thereto.
"Note Guarantee" means the Guarantee by each Guarantor of the Company's
payment obligations under this Indenture and the Notes, executed pursuant to the
provisions of this Indenture.
"Notes" has the meaning assigned to it in the preamble to this Indenture.
"Obligations" means, with respect to any Indebtedness, all principal,
interest (including post-petition interest thereon), premiums, penalties, fees,
indemnities, expenses (including legal fees and expenses), reimbursement
obligations (contingent or otherwise) and other liabilities payable to the
holder of such Indebtedness under the documentation governing such Indebtedness,
and any other claims of such holder arising in respect of such Indebtedness.
"Offering" means the offering of the Notes by the Company.
"Officer" means, with respect to any Person, the Chairman of the Board, the
Chief Executive Officer, the President, the Chief Operating Officer, the Chief
Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the
secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the Company
by two Officers of the Company, one of whom must be the principal executive
officer, the principal financial officer, the treasurer or the principal
accounting officer of the Company, that meets the requirements of Sections 12.04
and 12.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is reasonably
acceptable to the Trustee, that meets the requirements of Sections 12.04 and
12.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Other Permitted Indebtedness" means:
(i) Indebtedness of the Company and its Restricted Subsidiaries
existing as of the date of original issuance of the Notes and all related
Obligations as in effect on such date;
(ii) Indebtedness of the Company and its Restricted Subsidiaries in
respect of bankers acceptances and letters of credit (including, without
limitation, letters of credit in respect of workers' compensation claims) issued
in the ordinary course of business, or other Indebtedness in respect of respect
to reimbursement-type obligations regarding workers' compensation claims;
(iii) Refinancing Indebtedness, provided that: (A) the principal
amount of such Refinancing Indebtedness shall not exceed the outstanding
principal amount of Indebtedness (including unused commitments) extended,
refinanced, renewed, replaced, substituted or refunded,
<PAGE>
plus any amounts incurred to pay premiums, fees and expenses in connection
therewith; (B) the Refinancing Indebtedness shall have a Weighted Average Life
to Maturity equal to or greater than the Weighted Average Life to Maturity of
the Indebtedness being extended, refinanced, renewed, replaced, substituted or
refunded; provided that this limitation in this clause (B) does not apply to
Refinancing Indebtedness of Senior Indebtedness; and (C) in the case of
Refinancing Indebtedness of Subordinated Indebtedness, such Refinancing
Indebtedness shall be subordinated to the Notes at least to the same extent as
the Subordinated Indebtedness being extended, refinanced, renewed, replaced,
substituted or refunded;
(iv) intercompany Indebtedness of and among the Company and its
Restricted Subsidiaries (excluding guarantees by Restricted Subsidiaries of
Indebtedness of the Company not issued in compliance with Section 4.17 hereof);
(v) Indebtedness of the Company and its Restricted Subsidiaries
incurred in connection with making permitted Restricted Payments under clauses
(iii), (iv) (but only to the extent that such Indebtedness is provided by the
Company or a Restricted Subsidiary) or (x) of Section 4.07 hereof; provided that
any Indebtedness incurred pursuant to this clause (v) is expressly subordinated
in right of payment to the Notes;
(vi) Indebtedness of any Non-Restricted Subsidiary created after the
date of original issuance of the Notes, provided that such Indebtedness is
nonrecourse to the Company and its Restricted Subsidiaries and the Company and
its Restricted Subsidiaries have no Obligations with respect to such
Indebtedness;
(vii) Indebtedness of the Company and its Restricted Subsidiaries
under Hedging Obligations;
(viii) Indebtedness of the Company and its Restricted Subsidiaries
arising from the honoring by a bank or other financial institution of a check,
draft or similar instrument inadvertently (except in the case of daylight
overdrafts, which will not be, and will not be deemed to be, inadvertent) drawn
against insufficient funds in the ordinary course of business;
(ix) Indebtedness of any person at the time it is acquired as a
Restricted Subsidiary, provided that such Indebtedness was not issued by such
person in connection with or in anticipation of such acquisition;
(x) guarantees by Restricted Subsidiaries of Indebtedness of any
Restricted Subsidiary, if the Indebtedness so guaranteed is permitted under this
Indenture;
(xi) guarantees by a Restricted Subsidiary of Indebtedness of the
Company, if the Indebtedness so guaranteed is permitted under this Indenture
and, to the extent required by Section 4. 17 hereof, guarantees of the Notes by
such Restricted Subsidiary;
(xii) guarantees by the Company of Indebtedness of any Restricted
Subsidiary, if
<PAGE>
the Indebtedness so guaranteed is permitted under this Indenture;
(xiii) Indebtedness of the Company and its Restricted Subsidiaries in
connection with performance, surety, statutory, appeal or similar bonds in the
ordinary course of business;
(xiv) Indebtedness of the Company and its Restricted Subsidiaries in
connection with agreements providing for indemnification, purchase price
adjustments and similar obligations in connection with the sale or disposition
of any of their business, properties or assets; and
(xv) Indebtedness of the Company represented by the Notes and
Indebtedness of the Guarantors represented by the Note Guarantees.
"Participant" means, with respect to the Depositary, Euroclear or Cedel, a
Person who has an account with the Depositary, Euroclear or Cedel, respectively
(and, with respect to DTC, shall include Euroclear and Cedel).
"Participating Broker-Dealer" has the meaning set forth in the Registration
Rights Agreement.
"Permitted Junior Securities" means Equity Interests in the Company or debt
securities of the Company that are subordinated to all Senior Indebtedness (and
any debt securities issued in exchange for Senior Indebtedness) to substantially
the same extent as, or to a greater extent than, the Notes are subordinated to
Senior Indebtedness.
"Permitted Liens" means:
(a) with respect to the Company and its Restricted Subsidiaries,
(1) Liens for taxes, assessments, governmental charges or claims
which are being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted and if a reserve or other
appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made therefor;
(2) statutory Liens of landlords and carriers', warehousemen's,
mechanics', suppliers', materialmen's, repairmen's or other like Liens
arising in the ordinary course of business and with respect to amounts
not yet delinquent or being contested in good faith by appropriate
proceedings, if a reserve or other appropriate provision, if any, as
shall be required in conformity with GAAP shall have been made
therefor;
(3) Liens incurred on deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security;
(4) Liens incurred on deposits made to secure the performance of
tenders, bids,
<PAGE>
leases, statutory obligations, surety and appeal bonds, government
contracts, performance and return of money bonds and other obligations
of a like nature incurred in the ordinary course of business
(exclusive of obligations for the payment of borrowed money);
(5) easements, rights-of-way, zoning or other restrictions, minor
defects or irregularities in title and other similar charges or
encumbrances not interfering in any material respect with the business
of the Company or any of its Restricted Subsidiaries incurred in the
ordinary course of business;
(6) Liens (including extensions, renewals and replacements thereof)
upon property acquired (the "Acquired Property") after the date of
original issuance of the Notes, provided that: (A) any such Lien is
created solely for the purpose of securing Indebtedness representing,
or issued to finance, refinance or refund, the cost (including the
cost of construction) of the Acquired Property, (B) the principal
amount of the Indebtedness secured by such Lien does not exceed 100%
of the cost of the Acquired Property, (C) such Lien does not extend to
or cover any property other than the Acquired Property and any
improvements on such Acquired Property, and (D) the issuance of the
Indebtedness to purchase the Acquired Property is permitted by Section
4.09 hereof;
(7) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with
the importation of goods;
(8) judgment and attachment Liens not giving rise to an Event of
Default;
(9) leases or subleases granted to others not interfering in any
material respect with the business of the Company or any of its
Restricted Subsidiaries;
(10) Liens securing Indebtedness under Hedging Obligations;
(11) Liens encumbering deposits made to secure obligations arising
from statutory, regulatory, contractual or warranty requirements;
(12) Liens arising out of consignment or similar arrangements for the
sale of goods entered into by the Company or its Restricted
Subsidiaries in the ordinary course of business;
(13) any interest or title of a lessor in property subject to any
capital lease obligation or operating lease;
(14) Liens arising from filing Uniform Commercial Code financing
statements regarding leases;
<PAGE>
(15) Liens existing on the date of original issuance of the Notes and
any extensions, refinancings, renewals, replacements, substitutions or
refundings thereof;
(16) any Lien granted to the Trustee and any substantially equivalent
Lien granted to any trustee or similar institution under any indenture
for Senior Indebtedness permitted by the terms of this Indenture; and
(17) additional Liens at any one time outstanding in respect of
properties or assets where aggregate fair market value does not exceed
$10,000,000 (the fair market value to be determined on the date such
Lien is granted on such properties or assets);
(b) with respect to the Restricted Subsidiaries,
(1) Liens securing Restricted Subsidiaries' reimbursement Obligations
with respect to letters of credit that encumber documents and other
property relating to such letters of credit and the products and
proceeds thereof;
(2) Liens securing Indebtedness issued by Restricted Subsidiaries if
such Indebtedness is (A) under the Credit Agreement, or (B) permitted
by Section 4.09(a), clauses (i), (ii) or (iii) of Section 4.09(b)
hereof, or clauses (i), (iii) (to the extent the Indebtedness subject
to such Refinancing Indebtedness was subject to Liens), (vi), (vii),
(ix) or (x) of the definition of Other Permitted Indebtedness;
(3) Liens securing intercompany Indebtedness issued by any Restricted
Subsidiary to the Company or another Restricted Subsidiary; and
(4) Liens securing guarantees by Restricted Subsidiaries of
Indebtedness issued by the Company if such guarantees permitted by
clause (xi) (but only in respect of the property, rights and assets of
the Restricted Subsidiaries issuing such guarantees) of the definition
of Other Permitted Indebtedness;
(c) with respect to the Company,
(1) Liens securing Indebtedness issued by the Company if such
Indebtedness is (A) under the Credit Agreement, or (B) if such
Indebtedness is permitted by Section 4.09 hereof (including, but not
limited to, Indebtedness issued by the Company under the Credit
Agreement pursuant to clause (i) and/or clause (iii) of Section
4.09(b) hereof);
(2) Liens securing Indebtedness of the Company if such Indebtedness
is permitted by clauses (i), (iii) (to the extent the Indebtedness
subject to such Refinancing Indebtedness was subject to Liens) or
(vii) of the definition of Other Permitted Indebtedness;
<PAGE>
(3) Liens securing guarantees by the Company of Indebtedness issued
by Restricted Subsidiaries if such Indebtedness is permitted by
Section 4.09 hereof (including, but not limited to, Indebtedness
issued by Restricted Subsidiaries under the Credit Agreement pursuant
to clause (i) and/or clause (iii) of Section 4.09(b) hereof) and if
such guarantees are permitted by clause (xii) (but only in respect of
Indebtedness issued by the Restricted Subsidiaries under the Credit
Agreement pursuant to Section 4.09) of the definition of Other
Permitted Indebtedness; and
(4) Liens securing the Company's reimbursement obligations with
respect to letters of credit that encumber documents and other
property relating to such letters of credit and the products and
proceeds thereof.
provided that, notwithstanding any of the foregoing, the Permitted Liens
referred to in clause (c) of this definition shall not include any Lien on
Capital Stock of Restricted Subsidiaries held directly by the Company (as
distinguished from Liens on Capital Stock of Restricted Subsidiaries held by
other Restricted Subsidiaries) other than Liens securing (A) Indebtedness of the
Company issued under the Credit Agreement pursuant to Section 4.09 hereof and
any permitted Refinancing Indebtedness of such Indebtedness, and (B) guarantees
by the Company of Indebtedness issued by Restricted Subsidiaries under the
Credit Agreement pursuant to Section 4.09 hereof and any permitted Refinancing
Indebtedness of such Indebtedness.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof (including any subdivision
or ongoing business of any such entity or substantially all of the assets of any
such entity, subdivision or business).
"Private Placement Legend" means the legend set forth in Section 2.06(g)(i)
to be placed on all Notes issued under this Indenture except where otherwise
permitted by the provisions of this Indenture.
"Pro Forma Basis" means, for purposes of determining Consolidated Net
Income in connection with the Cash Flow Coverage Ratio (including in connection
with Sections 4.07, 4.13 and 5.01(a), the incurrence of Indebtedness pursuant to
Section 4.09(b) and Consolidated Net Worth for purposes of Section 5.01(a))
giving pro forma effect to (x) any acquisition or sale of a person, business or
asset, related incurrence, repayment or refinancing of Indebtedness or other
related transactions, including any Restructuring Charges which would otherwise
be accounted for as an adjustment permitted by Regulation S-X under the
Securities Act or on a pro forma basis under GAAP, or (y) any incurrence,
repayment or refinancing of any Indebtedness and the application of the proceeds
therefrom, in each case, as if such acquisition or sale and related
transactions, restructurings, consolidations, cost savings, reductions,
incurrence, repayment or refinancing were realized on the first day of the
relevant period permitted by Regulation S-X under the Securities Act or on a pro
forma basis under GAAP. Furthermore, in calculating the Cash Flow Coverage
Ratio, (1) interest on outstanding Indebtedness determined on a fluctuating
basis as of the determination date and which will continue to be so determined
thereafter shall be deemed to have accrued at a
<PAGE>
fixed rate per annum equal to the rate of interest on such Indebtedness in
effect on the determination date, (2) if interest on any Indebtedness actually
incurred on the determination date may optionally be determined at an interest
rate based upon a factor of a prime or similar rate, a eurocurrency interbank
offered rate, or other rates, then the interest rate in effect on the
determination date will be deemed to have been in effect during the relevant
period, and (3) notwithstanding clause (1) above, interest on Indebtedness
determined on a fluctuating basis, to the extent such interest is covered by
agreements relating to interest rate swaps or similar interest rate protection
Hedging Obligations, shall be deemed to accrue at the rate per annum resulting
after giving effect to the operation of such agreements.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Redeemable Preferred Stock" means preferred stock that by its terms or
otherwise is required to be redeemed or is redeemable at the option of the
holder thereof on, or prior to, the maturity date of the Notes.
"Refinancing Indebtedness" means (i) Indebtedness of the Company and its
Restricted Subsidiaries issued or given in exchange for, or the proceeds of
which are used to, extend, refinance, renew, replace, substitute or refund any
Indebtedness permitted under this Indenture or any Indebtedness issued to so
extend, refinance, renew, replace, substitute or refund such Indebtedness, (ii)
any refinancings of Indebtedness issued under the Credit Agreement, and (iii)
any additional Indebtedness issued to pay premiums and fees in connection with
clauses (i) and (ii).
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of the date hereof, by and among the Company and the other parties
named on the signature pages thereof, as such agreement may be amended, modified
or supplemented from time to time.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Regulation S Global Note" means a Regulation S Temporary Global Note or
Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent global Note in the
form of Exhibit A-1 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Restricted Period.
"Regulation S Temporary Global Note" means a temporary global Note in the
form of Exhibit A-2 hereto bearing the Private Placement Legend and deposited
with or on behalf of and registered in the name of the Depositary or its
nominee, issued in a denomination equal to the outstanding principal amount of
the Notes initially sold in reliance on Rule 903 of Regulation S.
"Representative" means the agent or other representative in respect of the
Credit Agreement.
<PAGE>
"Responsible Officer," when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the Private
Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private Placement
Legend.
"Restricted Investment" means any Investment in any person; provided that
Restricted Investments will not include: (i) Investments in marketable
securities and other negotiable instruments permitted by this Indenture; (ii)
any Incentive Arrangements; (iii) Investments in the Company; (iv) Investments
in any Restricted Subsidiary (provided that any Investment in a Restricted
Subsidiary was made for fair market value (as determined by the Board of
Directors in good faith)); or (v) other Investments in an aggregate amount not
to exceed $15,000,000 at any time outstanding. The amount of any Restricted
Investment shall be the amount of cash and the fair market value at the time of
transfer of all other property (as determined by the Board of Directors in good
faith) initially invested or paid for such Restricted Investment, plus all
additions thereto, without any adjustments for increases or decreases in value
of or write-ups, write-downs or write-offs with respect to, such Restricted
Investment.
"Restricted Period" means the 40-day restricted period as defined in
Regulation S.
"Restricted Subsidiary" means (i) any domestic Subsidiary of the Company
existing on the date of original issuance of the Notes, and (ii) any other
Subsidiary of the Company formed, acquired or existing after the date of
original issuance of the Notes that is designated as a "Restricted Subsidiary"
by the Company pursuant to a resolution approved a majority of the Board of
Directors, provided that the term Restricted Subsidiary shall not include any
Subsidiary of the Company that has been redesignated by the Company pursuant to
a resolution approved by a majority of the Board of Directors as a Non-
Restricted Subsidiary in accordance with Section 4.13 hereof, unless such
Subsidiary shall have subsequently been redesignated a Restricted Subsidiary in
accordance with clause (ii) of this definition.
"Restructuring Charges" means any charges or expenses in respect of
restructuring or consolidating any business, operations or facilities, any
compensation or headcount reduction, or any other cost savings, of any persons
or businesses either alone or together with the Company or any Restricted
Subsidiary, as permitted by GAAP or Regulation S-X under the Securities Act.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
<PAGE>
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated under the Securities Act.
"SAR Agreements" means stock appreciation rights agreements, dated on or
prior to the date of this Indenture, between the Company and each of Robert H.
Elkin, Christopher T. Paule and Mark R. Hefty, providing for, under certain
circumstances, an aggregate payment to such persons of up to 3.0% of the equity
value of the Company.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" means, with respect to any Person, (a) all
Indebtedness of such Person outstanding under the Credit Agreement and all
guarantees thereof and all Hedging Obligations with respect thereto, (b) any
other Indebtedness of such person permitted to be incurred under the terms of
this Indenture, provided that Senior Indebtedness shall not include any
Indebtedness which by the terms of the instrument creating or evidencing the
same is subordinated or junior in right of payment to any other Senior
Indebtedness in any respect, and (c) all Obligations (including any interest
accruing subsequent to the filing of a petition of bankruptcy at the rate
provided for in the documentation with respect thereto, whether or not such
interest is an allowable claim under applicable law) with respect to the
foregoing, in each case, whether outstanding on the date of this Indenture or
thereafter incurred. Notwithstanding anything to the contrary in the foregoing,
Senior Indebtedness will not include (i) any liability for federal, state, local
or other taxes owed or owing by the Company, (ii) any Indebtedness of such
Person to any of its Subsidiaries or other Affiliates (other than pursuant to
the Credit Facility), (iii) any trade payables or other liability to trade
creditors arising in the ordinary course of business (including guarantees
thereof or instruments evidencing such liabilities) or (iv) any Indebtedness
that is incurred in violation of this Indenture.
"SFAS 106" means Statement of Financial Accounting Standards No. 106.
"SFAS 109" means Statement of Financial Accounting Standards No. 109.
"Shelf Registration Statement" means the Shelf Registration Statement as
defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Restricted Subsidiary of the Company
that would be a "significant subsidiary" as defined in clause (2) of the
definition of such term in Rule 1-02 of Regulation S-X under the Securities Act
and the Exchange Act.
"Subordinated Indebtedness" means all Obligations with respect to
Indebtedness if the instrument creating or evidencing the same, or pursuant to
which the same is outstanding, designates such Obligations as subordinated or
junior in right of payment to Senior Indebtedness.
"Subsidiary" of any person means any entity of which the Equity Interests
entitled to cast at least a majority of the votes that may be cast by all Equity
Interests having ordinary voting power
<PAGE>
for the election of directors or other governing body of such entity are owned
by such person (regardless of whether such Equity Interests are owned directly
by such person or through one or more Subsidiaries).
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-77bbbb)
as in effect on the date on which this Indenture is qualified under the TIA.
"TJC Management Agreement" means the Management Consulting Agreement,
between the Company and The Jordan Company Management Corporation, as in effect
on the date of this Indenture.
"Trustee" means the party named as such above until a successor replaces it
in accordance with the applicable provisions of this Indenture and thereafter
means the successor serving hereunder.
"Unrestricted Global Note" means a permanent global Note in the form of
Exhibit A attached hereto that bears the Global Note Legend and that has the
"Schedule of Exchanges of Interests in the Global Note" attached thereto, and
that is deposited with or on behalf of and registered in the name of the
Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"Unrestricted Definitive Note" means one or more Definitive Notes that do
not bear and are not required to bear the Private Placement Legend.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"Voting Stock" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect the board of directors.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the then outstanding
principal amount of such Indebtedness into (ii) the sum of the product(s)
obtained by multiplying (a) the amount of each then remaining installment,
sinking fund, serial maturity or other requirement payment of principal,
including payment at final maturity, in respect thereof, by (b) the number of
years (calculated to the nearest one-twelfth) which will elapse between such
date and the making of such payment.
Section 1.02. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
---- -------
<S> <C>
"Affiliate Transaction" 4.11
"Asset Sale Disposition Date" 4.10
"Asset Sale Trigger Date" 4.10
"Authentication Order" 2.02
</TABLE>
<PAGE>
<TABLE>
<S> <C>
"Change of Control Offer" 4.15
"Change of Control Payment" 4.15
"Change of Control Payment Date" 4.15
"Change of Trigger Date" 4.14
"Covenant Defeasance" 8.03
"Event of Default" 6.01
"Excess Proceeds" 4.10
"incur" 4.09
"Legal Defeasance" 8.02
"Offer" 3.08
"Other Company Indebtedness" 4.17
"Other Company Indebtedness Guarantee" 4.17
"Paying Agent" 2.03
"Payment Blockage Notice" 10.04
"Purchase Date" 3.08
"Registrar" 2.03
"Restricted Payments" 4.07
</TABLE>
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes and the Note Guarantees means the Company and the
Guarantors, respectively, and any successor obligor upon the Notes and the Note
Guarantees, respectively.
All other terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by Commission rule under the TIA
have the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
<PAGE>
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) references to Sections of or rules under the Securities Act shall
be deemed to include substitute, replacement of successor
Sections or rules adopted by the Commission from time to time.
ARTICLE 2.
THE NOTES
Section 2.01. Form and Dating.
(a) General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes
shall be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and are
hereby expressly made, a part of this Indenture and the Company, the Guarantors
and the Trustee, by their execution and delivery of this Indenture, expressly
agree to such terms and provisions and to be bound thereby. However, to the
extent any provision of any Note conflicts with the express provisions of this
Indenture, the provisions of this Indenture shall govern and be controlling.
(b) Global Notes. Notes issued in global form shall be substantially in
the form of Exhibits A-1 or A-2 attached hereto (including the Global Note
Legend thereon and the "Schedule of Exchanges of Interests in the Global Note"
attached thereto). Notes issued in definitive form shall be substantially in
the form of Exhibit A-1 attached hereto (but without the Global Note Legend
thereon and without the "Schedule of Exchanges of Interests in the Global Note"
attached thereto). Each Global Note shall represent such of the outstanding
Notes as shall be specified therein and each shall provide that it shall
represent the aggregate principal amount of outstanding Notes from time to time
endorsed thereon and that the aggregate principal amount of outstanding Notes
represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Note to reflect the amount of any increase or decrease in the aggregate
principal amount of outstanding Notes represented thereby shall be made by the
Trustee or the Note Custodian, at the direction of the Trustee, in accordance
with instructions given by the Holder thereof as required by Section 2.06
hereof.
(c) Temporary Global Notes. Notes offered and sold in reliance on
Regulation S shall
<PAGE>
be issued initially in the form of the Regulation S Temporary Global Note, which
shall be deposited on behalf of the purchasers of the Notes represented thereby
with the Trustee, as custodian for the Depositary, and registered in the name of
the Depositary or the nominee of the Depositary for the accounts of designated
agents holding on behalf of Euroclear or Cedel Bank, duly executed by the
Company and authenticated by the Trustee as hereinafter provided. The Restricted
Period shall be terminated upon the receipt by the Trustee of (i) a written
certificate from the Depositary, together with copies of certificates from
Euroclear and Cedel Bank certifying that they have received certification of
non-United States beneficial ownership of 100% of the aggregate principal amount
of the Regulation S Temporary Global Note (except to the extent of any
beneficial owners thereof who acquired an interest therein during the Restricted
Period pursuant to another exemption from registration under the Securities Act
and who will take delivery of a beneficial ownership interest in a 144A Global
Note bearing a Private Placement Legend, all as contemplated by Section
2.06(a)(ii) hereof), and (ii) an Officers' Certificate from the Company.
Following the termination of the Restricted Period, beneficial interests in the
Regulation S Temporary Global Note shall be exchanged for beneficial interests
in Regulation S Permanent Global Notes pursuant to the Applicable Procedures.
Simultaneously with the authentication of Regulation S Permanent Global Notes,
the Trustee shall cancel the Regulation S Temporary Global Note. The aggregate
principal amount of the Regulation S Temporary Global Note and the Regulation S
Permanent Global Notes may from time to time be increased or decreased by
adjustments made on the records of the Trustee and the Depositary or its
nominee, as the case may be, in connection with transfers of interest as
hereinafter provided.
<PAGE>
(d) Euroclear and Cedel Procedures Applicable. The provisions of the
"Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank"
and "Customer Handbook" of Cedel Bank shall be applicable to transfers of
beneficial interests in the Regulation S Temporary Global Note and the
Regulation S Permanent Global Notes that are held by Participants through
Euroclear or Cedel Bank.
Section 2.02. Execution and Authentication.
One Officer shall sign the Notes for the Company by manual or facsimile
signature. The Company's seal may be reproduced on the Notes and may be in
facsimile form.
If an Officer whose signature is on a Note no longer holds that office at
the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature of
the Trustee. The signature shall be conclusive evidence that the Note has been
authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by one
Officer (an "Authentication Order"), authenticate Notes for original issue up to
the aggregate principal amount stated in paragraph 4 of the Notes. The
aggregate principal amount of Notes outstanding at any time may not exceed such
amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Notes. An authenticating agent may authenticate Notes whenever
the Trustee may do so. Each reference in this Indenture to authentication by
the Trustee includes authentication by such agent. An authenticating agent has
the same rights as an Agent to deal with Holders or an Affiliate of the Company.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where Notes may be presented
for registration of transfer or for exchange ("Registrar") and an office or
agency where Notes may be presented for payment ("Paying Agent"). The Registrar
shall keep a register of the Notes and of their transfer and exchange. The
Company may appoint one or more co-registrars and one or more additional paying
agents. The term "Registrar" includes any co-registrar and the term "Paying
Agent" includes any additional paying agent. The Company may change any Paying
Agent or Registrar without notice to any Holder. The Company shall notify the
Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to act
as Depositary with respect to the Global Notes.
<PAGE>
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
Section 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to agree
in writing that the Paying Agent will hold in trust for the benefit of Holders
or the Trustee all money held by the Paying Agent for the payment of principal,
premium or Liquidated Damages, if any, or interest on the Notes, and will notify
the Trustee of any default by the Company in making any such payment. While any
such default continues, the Trustee may require a Paying Agent to pay all money
held by it to the Trustee. The Company at any time may require a Paying Agent
to pay all money held by it to the Trustee. Upon payment over to the Trustee,
the Paying Agent (if other than the Company or a Subsidiary) shall have no
further liability for the money. If the Company or a Subsidiary acts as Paying
Agent, it shall segregate and hold in a separate trust fund for the benefit of
the Holders all money held by it as Paying Agent. Upon any bankruptcy or
reorganization proceedings relating to the Company, the Trustee shall serve as
Paying Agent for the Notes.
Section 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA (S) 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA (S) 312(a).
Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, the Depositary or any such nominee to a successor Depositary or a
nominee of such successor Depositary. All Global Notes will be exchanged by the
Company for Definitive Notes if (i) the Company delivers to the Trustee notice
from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company within 90 days after the date of such notice from the Depositary, (ii)
the Company in its sole discretion determines that the Global Notes (in whole
but not in part) should be exchanged for Definitive Notes and delivers a written
notice to such effect to the Trustee or (iii) there shall have occurred and be
continuing a Default or an Event of Default with respect to the Notes; provided
that in no event shall the Regulation S Temporary Global Note be exchanged by
the Company for Definitive Notes prior to (x) the expiration of the Restricted
Period and (y) the receipt by the Registrar of any certificates required
pursuant to Rule 903(c)(3)(ii)(B) under the Securities Act. Upon the occurrence
of either of the preceding events in (i) or (ii) above, Definitive Notes shall
be issued in such names as the Depositary shall instruct the Trustee. Global
<PAGE>
Notes also may be exchanged or replaced, in whole or in part, as provided in
Sections 2.07 and 2.10 hereof. Every Note authenticated and delivered in
exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to
this Section 2.06 or Section 2.07 or 2.10 hereof, shall be authenticated and
delivered in the form of, and shall be, a Global Note. A Global Note may not be
exchanged for another Note other than as provided in this Section 2.06(a),
however, beneficial interests in a Global Note may be transferred and exchanged
as provided in Section 2.06(b),(c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes. The
transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer comparable to those
set forth herein to the extent required by the Securities Act. Transfers of
beneficial interests in the Global Notes also shall require compliance with
either subparagraph (i) or (ii) below, as applicable, as well as one or more of
the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in
the same Restricted Global Note in accordance with the transfer
restrictions set forth in the Private Placement Legend ; provided that,
prior to the expiration of the Restricted Period, transfers of beneficial
interests in the Temporary Regulation S Global Note may not be made to a
U.S. Person or for the account or benefit of a U.S. Person (other than an
Initial Purchaser). Beneficial interests in any Unrestricted Global Note
may be transferred to Persons who take delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note. No written orders or
instructions shall be required to be delivered to the Registrar to effect
the transfers described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of beneficial
interests that are not subject to Section 2.06(b)(i) above, the transferor
of such beneficial interest must deliver to the Registrar either (A) (1) a
written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the
Depositary to credit or cause to be credited a beneficial interest in
another Global Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given in accordance with the
Applicable Procedures containing information regarding the Participant
account to be credited with such increase or (B) (1) a written order from a
Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to cause
to be issued a Definitive Note in an amount equal to the beneficial
interest to be transferred or exchanged and (2) instructions given by the
Depositary to the Registrar containing information regarding the Person in
whose name such Definitive Note shall be registered to effect the transfer
or exchange referred to in (1) above; provided that in no event shall
Definitive Notes be issued upon the transfer or exchange of beneficial
interests in the Regulation S Temporary Global Note prior to (x) the
expiration of the Restricted Period and (y) the receipt by the Registrar of
any certificates required
<PAGE>
pursuant to Rule 903 under the Securities Act. Upon consummation of an
Exchange Offer by the Company in accordance with Section 2.06(f) hereof,
the requirements of this Section 2.06(b)(ii) shall be deemed to have been
satisfied upon receipt by the Registrar of the instructions contained in
the Letter of Transmittal delivered by the Holder of such beneficial
interests in the Restricted Global Notes. Upon satisfaction of all of the
requirements for transfer or exchange of beneficial interests in Global
Notes contained in this Indenture and the Notes or otherwise applicable
under the Securities Act, the Trustee shall adjust the principal amount of
the relevant Global Note(s) pursuant to Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global
Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 2.06(b)(ii) above and the
Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof; and
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Temporary Global Note or the
Regulation S Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted
Global Note for Beneficial Interests in the Unrestricted Global Note. A
beneficial interest in any Restricted Global Note may be exchanged by any
holder thereof for a beneficial interest in an Unrestricted Global Note or
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note if the exchange or
transfer complies with the requirements of Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of the beneficial interest to be transferred, in the
case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of the
Exchange Notes or (3) a Person who is an affiliate (as defined in Rule
144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance
with the Registration Rights Agreement; or
<PAGE>
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a beneficial interest in an Unrestricted Global
Note, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the form
of a beneficial interest in an Unrestricted Global Note, a
certificate from such holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Registrar
so requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Registrar to the effect that
such exchange or transfer is in compliance with the Securities Act and that
the restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the
Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D) above
at a time when an Unrestricted Global Note has not yet been issued, the Company
shall issue and, upon receipt of an Authentication Order in accordance with
Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted
Global Notes in an aggregate principal amount equal to the aggregate principal
amount of beneficial interests transferred pursuant to subparagraph (B) or (D)
above.
Beneficial interests in an Unrestricted Global Note cannot be exchanged
for, or transferred to Persons who take delivery thereof in the form of, a
beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(i) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. If any holder of a beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a Restricted
Definitive Note or to transfer such beneficial interest to a Person who
takes delivery thereof in the form of a Restricted Definitive Note, then,
upon receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note, a certificate from such holder in the form
of Exhibit C hereto, including the certifications in item (2)(a)
thereof;
(B) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications
in item (1) thereof;
<PAGE>
(C) if such beneficial interest is being transferred to a Non-
U.S. Person in an offshore transaction in accordance with Rule 903 or
Rule 904 under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (2)
thereof;
(D) if such beneficial interest is being transferred pursuant to
an exemption from the registration requirements of the Securities Act
in accordance with Rule 144 under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications
in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to the
effect set forth in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3) thereof, if
applicable;
(F) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (3)(b)
thereof; or
(G) if such beneficial interest is being transferred pursuant to
an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Company shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive Note in
the appropriate principal amount. Any Definitive Note issued in exchange
for a beneficial interest in a Restricted Global Note pursuant to this
Section 2.06(c) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions from the
Depositary and the Participant or Indirect Participant. The Trustee shall
deliver such Definitive Notes to the Persons in whose names such Notes are
so registered. Any Definitive Note issued in exchange for a beneficial
interest in a Restricted Global Note pursuant to this Section 2.06(c)(i)
shall bear the Private Placement Legend and shall be subject to all
restrictions on transfer contained therein.
Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a beneficial
interest in the Regulation S Temporary Global Note may not be exchanged for
a Definitive Note or transferred to a Person who takes delivery thereof in
the form of a Definitive Note prior to (x) the expiration of the Restricted
Period and (y) the receipt by the Registrar of any certificates required
pursuant to Rule 903(c)(3)(ii)(B) under the Securities Act, except in the
case of a transfer pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 903 or Rule 904.
<PAGE>
(ii) Beneficial Interests in Restricted Global Notes to Unrestricted
Definitive Notes. A holder of a beneficial interest in a Restricted Global
Note may exchange such beneficial interest for an Unrestricted Definitive
Note or may transfer such beneficial interest to a Person who takes
delivery thereof in the form of an Unrestricted Definitive Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of such beneficial interest, in the case of an
exchange, or the transferee, in the case of a transfer, certifies in
the applicable Letter of Transmittal that it is not (1) a broker-
dealer, (2) a Person participating in the distribution of the Exchange
Notes or (3) a Person who is an affiliate (as defined in Rule 144) of
the Company;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance
with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in item (1)(b)
thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the form
of a Definitive Note that does not bear the Private Placement
Legend, a certificate from such holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Registrar
so requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Registrar to the effect that
such exchange or transfer is in compliance with the Securities Act and that
the restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the
Securities Act.
(iii) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial interest in an
Unrestricted Global Note proposes to exchange such beneficial interest for
a Definitive Note or to transfer such beneficial interest to a Person who
takes delivery thereof in the form of a Definitive Note, then, upon
<PAGE>
satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof, the
Trustee shall cause the aggregate principal amount of the applicable Global
Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the
Company shall execute and the Trustee shall authenticate and deliver to the
Person designated in the instructions a Definitive Note in the appropriate
principal amount. Any Definitive Note issued in exchange for a beneficial
interest pursuant to this Section 2.06(c)(iii) shall be registered in such
name or names and in such authorized denomination or denominations as the
holder of such beneficial interest shall instruct the Registrar through
instructions from the Depositary and the Participant or Indirect
Participant. The Trustee shall deliver such Definitive Notes to the
Persons in whose names such Notes are so registered. Any Definitive Note
issued in exchange for a beneficial interest pursuant to this Section
2.06(c)(iii) shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
(i) Restricted Definitive Notes to Beneficial Interests in Restricted
Global Notes. If any Holder of a Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global Note or
to transfer such Restricted Definitive Notes to a Person who takes delivery
thereof in the form of a beneficial interest in a Restricted Global Note,
then, upon receipt by the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global
Note, a certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to a
QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule 903
or Rule 904 under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (2)
thereof;
(D) if such Restricted Definitive Note is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to the
effect set forth in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3) thereof,
<PAGE>
if applicable;
(F) if such Restricted Definitive Note is being transferred to
the Company or any of its Subsidiaries, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in item
(3)(b) thereof; or
(G) if such Restricted Definitive Note is being transferred
pursuant to an effective registration statement under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or cause
to be increased the aggregate principal amount of, in the case of clause
(A) above, the appropriate Restricted Global Note, in the case of clause
(B) above, the 144A Global Note, in the case of clause (c) above, the
Regulation S Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note
or transfer such Restricted Definitive Note to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global Note
only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance
with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes to
exchange such Notes for a beneficial interest in the Unrestricted
Global Note, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery thereof in the
form of a beneficial
<PAGE>
interest in the Unrestricted Global Note, a certificate from such
Holder in the form of Exhibit B hereto, including the certifications
in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Registrar
so requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Registrar to the effect that
such exchange or transfer is in compliance with the Securities Act and that
the restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the
Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note
or transfer such Definitive Notes to a Person who takes delivery thereof in
the form of a beneficial interest in an Unrestricted Global Note at any
time. Upon receipt of a request for such an exchange or transfer, the
Trustee shall cancel the applicable Unrestricted Definitive Note and
increase or cause to be increased the aggregate principal amount of one of
the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a beneficial
interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above
at a time when an Unrestricted Global Note has not yet been issued, the Company
shall issue and, upon receipt of an Authentication Order in accordance with
Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted
Global Notes in an aggregate principal amount equal to the principal amount of
Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon
request by a Holder of Definitive Notes and such Holder's compliance with the
provisions of this Section 2.06(e), the Registrar shall register the transfer or
exchange of Definitive Notes. Prior to such registration of transfer or
exchange, the requesting Holder shall present or surrender to the Registrar the
Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by his attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes. Any
Restricted Definitive Note may be transferred to and registered in the name
of Persons who take delivery thereof in the form of a Restricted Definitive
Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under the
Securities Act, then the transferor must deliver a certificate in the
form of Exhibit B
<PAGE>
hereto, including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule
904, then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2) thereof;
and
(C) if the transfer will be made pursuant to any other exemption
from the registration requirements of the Securities Act, then the
transferor must deliver a certificate in the form of Exhibit B hereto,
including the certifications, certificates and Opinion of Counsel
required by item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes.
Any Restricted Definitive Note may be exchanged by the Holder thereof for
an Unrestricted Definitive Note or transferred to a Person or Persons who
take delivery thereof in the form of an Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Participating Broker-
Dealer pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes proposes
to exchange such Notes for an Unrestricted Definitive Note, a
certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive Notes proposes
to transfer such Notes to a Person who shall take delivery thereof in
the form of an Unrestricted Definitive Note, a certificate from such
Holder in the form of Exhibit B hereto, including the certifications
in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Registrar
so requests, an Opinion of Counsel in form reasonably acceptable to the
Company to the effect that such
<PAGE>
exchange or transfer is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the
Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes.
A Holder of Unrestricted Definitive Notes may transfer such Notes to a
Person who takes delivery thereof in the form of an Unrestricted Definitive
Note. Upon receipt of a request to register such a transfer, the Registrar
shall register the Unrestricted Definitive Notes pursuant to the
instructions from the Holder thereof.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal that (x) they are not broker-
dealers, (y) they are not participating in a distribution of the Exchange Notes
and (z) they are not affiliates (as defined in Rule 144) of the Company, and
accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an
aggregate principal amount equal to the principal amount of the Restricted
Definitive Notes accepted for exchange in the Exchange Offer. Concurrently with
the issuance of such Notes, the Trustee shall cause the aggregate principal
amount of the applicable Restricted Global Notes to be reduced accordingly, and
the Company shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted Definitive
Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all Global
Notes and Definitive Notes issued under this Indenture unless specifically
stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global
Note and each Definitive Note (and all Notes issued in exchange
therefor or substitution thereof) shall bear the legend in
substantially the following form:
"THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY HAS NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED
OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH BELOW. BY
ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS
ACQUIRING THIS NOTE IN AN
<PAGE>
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT (AN "ACCREDITED INVESTOR")), (2) AGREES THAT IT WILL
NOT RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY
OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER THE
SECURITIES ACT, (C) IN AN OFFSHORE TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (D) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES
ACT, (E) TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE
(THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE
WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH
THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR
ANY OTHER APPLICABLE JURISDICTION AND (3) AGREES THAT IT WILL DELIVER
TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED
A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN,
THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE MEANING
GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT.
THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING."
(B) Notwithstanding the foregoing, any Global Note or Definitive
Note issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii),
(d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06 (and
all Notes issued in exchange therefor or substitution thereof) shall
not bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS
MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL
NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a)
OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE
FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS
GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR
<PAGE>
DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY."
(iii) Regulation S Temporary Global Note Legend. The Regulation S
Temporary Global Note shall bear a legend in substantially the following
form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES,
ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER
NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL
BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON."
(h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
cancelled in whole and not in part, each such Global Note shall be returned to
or retained and cancelled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for or transferred to a Person who will take delivery thereof
in the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Global Notes and
Definitive Notes upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer taxes
or similar governmental charge payable upon exchange or transfer pursuant
to Sections 2.10, 3.06, 3.08, 4.10, 4.15 and 9.05 hereof).
(iii) The Registrar shall not be required to register the transfer of
or exchange any Note selected for redemption in whole or in part, except
the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes
shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Global Notes
or Definitive Notes surrendered upon such registration of transfer or
exchange.
(v) The Company shall not be required (A) to issue, to register the
transfer of or to exchange any Notes during a period beginning at the
opening of business 15 days before the day of any selection of Notes for
redemption under Section 3.02 hereof and ending at the close of business
<PAGE>
on the day of selection, (B) to register the transfer of or to exchange any
Note so selected for redemption in whole or in part, except the unredeemed
portion of any Note being redeemed in part or (c) to register the transfer
of or to exchange a Note between a record date and the next succeeding
Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer of
any Note, the Trustee, any Agent and the Company may deem and treat the
Person in whose name any Note is registered as the absolute owner of such
Note for the purpose of receiving payment of principal of and interest on
such Notes and for all other purposes, and none of the Trustee, any Agent
or the Company shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and Definitive
Notes in accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 2.06 to
effect a registration of transfer or exchange may be submitted by
facsimile.
Section 2.07. Replacement Notes.
If any mutilated Note is surrendered to the Trustee or the Company and the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Note, the Company shall issue and the Trustee, upon receipt of an
Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and shall
be entitled to all of the benefits of this Indenture equally and proportionately
with all other Notes duly issued hereunder.
Section 2.08. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section 4.01
hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an Affiliate
of any thereof) holds, on a redemption date or maturity date, money sufficient
to pay Notes payable on that date, then on and after that date such Notes shall
be deemed to be no longer outstanding and shall cease to accrue interest.
<PAGE>
Section 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that the Trustee knows are so owned shall be so disregarded.
Section 2.10. Temporary Notes.
Until certificates representing Notes are ready for delivery, the Company
may prepare and the Trustee, upon receipt of an Authentication Order, shall
authenticate temporary Notes. Temporary Notes shall be substantially in the
form of certificated Notes but may have variations that the Company considers
appropriate for temporary Notes and as shall be reasonably acceptable to the
Trustee. Without unreasonable delay, the Company shall prepare and the Trustee
shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of this
Indenture.
Section 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all cancelled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.
Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, it shall pay
the defaulted interest in any lawful manner plus, to the extent lawful, interest
payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case, at the rate provided in the Notes
and in Section 4.01 hereof. The Company shall notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each Note and the date
of the proposed payment. The Company shall fix or cause to be fixed each such
special record date and payment date, provided that no such special record date
shall be less than 10 days prior to the related payment date for such defaulted
interest. At least 15 days before the special record date, the Company (or, upon
the written request of the Company, the Trustee in the name and at the expense
of the Company) shall mail or cause to be mailed to Holders a notice that states
the special record date, the related payment date and the amount of such
interest to be paid.
ARTICLE 3.
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.
<PAGE>
If the Company elects to redeem Notes pursuant to Section 3.07, it shall
furnish to the Trustee, at least 45 days prior to the redemption date and at
least 10 days prior to the date notice of redemption is to be mailed to Holders,
an Officers' Certificate stating that the Company has elected to redeem Notes
pursuant to Section 3.07(a) or 3.07(b), as the case may be, the date notice of
redemption is to be mailed to Holders, the redemption date, the aggregate
principal amount of Notes to be redeemed, the redemption price for such Notes
and the amount of accrued and unpaid interest on and Liquidated Damages, if any,
with respect to such Notes as of the redemption date and such other information
as set forth in Section 3.03 hereof. If the Trustee is not the Registrar, the
Company shall, concurrently with delivery of its notice to the Trustee of a
redemption, cause the Registrar to deliver to the Trustee a certificate (upon
which the Trustee may rely) setting forth the name of, and the aggregate
principal amount of Notes held by, each Holder.
If the Company is required to offer to purchase Notes pursuant to Section
4.10 or 4.15, it shall furnish to the Trustee, at least two Business Days before
notice of the Offer is to be mailed to Holders, an Officers' Certificate setting
forth that the Offer is being made pursuant to Section 4.10 or 4.15, as the case
may be, the Purchase Date, the maximum principal amount of Notes the Company is
offering to purchase pursuant to the Offer, the purchase price for such Notes,
and the amount of accrued and unpaid interest on and Liquidated Damages, if any,
with respect to such Notes as of the Purchase Date.
The Company will also provide the Trustee with any additional information
that the Trustee reasonably requests in connection with any redemption or Offer.
Section 3.02. Selection of Notes to Be Redeemed.
In the event of a redemption or purchase of less than all of the Notes, the
Notes to be redeemed or purchased will be chosen by the Trustee pro rata, by lot
or by any other method that the Trustee considers fair and appropriate and, if
the Notes are listed on any securities exchange, by a method that complies with
the requirements of such exchange; provided that, if less than all of a holder's
Notes are to be redeemed or accepted for payment, only principal amounts of
$1,000 or multiples thereof may be selected for redemption or accepted for
payment. On and after any redemption or purchase date, interest and Liquidated
Damages, if any, shall cease to accrue on the Notes or portions thereof called
for redemption or accepted for payment. Notice of any redemption or offer to
purchase will be mailed at least 30 days but not more than 60 days before the
redemption or purchase date to each holder of Notes to be redeemed or purchased
at such holder's registered address.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Except as provided in
the preceding sentence, provisions of this Indenture that apply to Notes called
for redemption also apply to portions of Notes called for redemption.
Section 3.03. Notice of Redemption.
At least 30 days but not more than 60 days before a redemption date, the
Company shall mail a notice of redemption to each Holder of Notes or portions
thereof that are to be redeemed.
The notice shall identify the Notes or portions thereof to be redeemed and
shall state:
(a) the redemption date;
<PAGE>
(b) the redemption price for the Notes and separately stating the amount
of unpaid and accrued interest on, and Liquidated Damages, if any, with respect
to, such Notes as of the date of redemption;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Notes to be redeemed and that, after the redemption date, upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion will be issued;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price for, and any accrued and unpaid interest
on, and Liquidated Damages, if any, with respect to such Notes;
(f) that, unless the Company defaults in making such redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
redemption date;
(g) the paragraph of the Notes pursuant to which the Notes called for
redemption are being redeemed; and
(h) the CUSIP number; provided that no representation is made as to the
correctness or accuracy of the CUSIP number listed in such notice and printed on
the Notes.
At the Company's request, the Trustee shall (at the Company's expense) give
the notice of redemption in the Company's name at least 30 but not more than 60
days before a redemption; provided that the Company shall deliver to the
Trustee, at least 45 days prior to the redemption date and at least 10 days
prior to the date that notice of the redemption is to be mailed to Holders, an
Officers' Certificate that (i) requests the Trustee to give notice of the
redemption to Holders, (ii) sets forth the information to be provided to Holders
in the notice of redemption, as set forth in the preceding paragraph, (iii)
states that the Company has elected to redeem Notes pursuant to Section 3.07(a)
or 3.07(b), as the case may be, and (iv) sets forth the aggregate principal
amount of Notes to be redeemed and the amount of accrued and unpaid interest and
Liquidated Damages, if any, thereon as of the redemption date. If the Trustee
is not the Registrar, the Company shall, concurrently with any such request,
cause the Registrar to deliver to the Trustee a certificate (upon which the
Trustee may rely) setting forth the name of, the address of, and the aggregate
principal amount of Notes held by, each Holder.
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed, Notes called for redemption become due
and payable on the redemption date at the price set forth in the Note. Upon
surrender to the Trustee or Paying Agent, such Notes called for redemption shall
be paid at the redemption price (which shall include accrued interest thereon to
the redemption date) but installments of interest, the maturity of which is on
or prior to the redemption date, shall be payable to Holders of record at the
close of business on the relevant record dates.
Section 3.05. Deposit of Redemption Price.
Prior to 10 a.m. on any redemption date, the Company shall deposit with the
Trustee or with the Paying Agent money sufficient to pay the redemption price
of, and accrued interest on, and Liquidated Damages, if any, with respect to all
Notes to be redeemed on that date. The Trustee or the Paying Agent shall
<PAGE>
return to the Company any money that the Company deposited with the Trustee or
the Paying Agent in excess of the amounts necessary to pay the redemption price
of, and accrued interest on, and Liquidated Damages, if any, with respect to all
Notes to be redeemed.
If the Company complies with the preceding paragraph, interest on the Notes
to be redeemed will cease to accrue on such Notes on the applicable redemption
date, whether or not such Notes are presented for payment. If a Note is
redeemed on or after an interest record date but on or prior to the related
interest payment date, then any accrued and unpaid interest and Liquidated
Damages, if any, shall be paid to the Person in whose name such Note was
registered at the close of business on such record date. If any Note called for
redemption shall not be so paid upon surrender for redemption because of the
failure of the Company to comply with the preceding paragraph, interest will be
paid on the unpaid principal, premium, if any, interest and Liquidated Damages,
if any, from the redemption date until such principal, premium, interest and
Liquidated Damages, if any, is paid, at the rate of interest provided in the
Notes and Section 4.01.
Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company shall issue
and, upon the Company's written request, the Trustee shall authenticate for the
Holder at the expense of the Company a new Note equal in principal amount to the
unredeemed portion of the Note surrendered.
Section 3.07. Optional Redemption.
(a) Except as provided in Section 3.07(b), the Notes may not be redeemed
at the option of the Company prior to April 15, 2001. During the 12-month period
beginning on April 15 of the years indicated below, the Notes will be
redeemable, at the option of the Company, in whole or in part, on at least 30
but not more than 60 days' notice to each holder of Notes to be redeemed, at the
redemption prices in cash (expressed as percentages of the principal amount) set
forth below, plus any accrued and unpaid interest and Liquidated Damages, if
any, to the redemption date:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2001................................ 104.750%
2002................................ 103.167%
2003................................ 101.583%
2004 and thereafter................. 100.000%
</TABLE>
(b) Prior to April 15, 2001, the Company may (but shall not have the
obligation to) redeem up to one-third of the aggregate principal amount of Notes
ever issued under this Indenture at a redemption price in cash of 109 1/2% of
the principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, to the redemption date, with the net proceeds of one or more
Equity Offerings; provided that at least two-thirds of the aggregate principal
amount of Notes ever issued under this Indenture remains outstanding immediately
after the occurrence of any such redemption; and provided further that any such
redemption shall occur within 60 days of the date of the closing of any such
Equity Offering. The foregoing restrictions do not limit the Company's right to
separately make open market, privately negotiated or other purchases of Notes
from time to time.
(c) Any redemption pursuant to this Section 3.07 shall be made pursuant to
the provisions of
<PAGE>
Section 3.01 through 3.06 hereof.
Section 3.08. Mandatory Offers to Purchase Notes.
(a) Within 30 days following any Change of Control Trigger Date or Asset
Sale Trigger Date, subject to the provisions of this Indenture, the Company
shall mail a notice to each holder of Notes at such holder's registered address
a notice stating: (a) that an offer (an "Offer") is being made pursuant to a
Change of Control (as required by Section 4.15 hereof) or an Asset Sale Trigger
Date (as required by Section 4.10 hereof), as the case may be, the length of
time the Offer shall remain open and the maximum principal amount of Notes that
will be accepted for payment pursuant to such Offer; (b) the purchase price (as
set forth in Section 4.15 or Section 4.10, as the case may be), the amount of
accrued and unpaid interest and Liquidated Damages, if any, as of the purchase
date, and the purchase date (which shall be no earlier than 30 days and no later
than 40 days from the date such notice is mailed (the "Purchase Date")); (c)
that any Note not accepted for payment will continue to accrue interest and
Liquidated Damages, if any; (d) that, unless the Company fails to deposit with
the Paying Agent on the Purchase Date an amount sufficient to purchase all Notes
accepted by the Company for payment, interest shall cease to accrue on such
Notes after the Purchase Date; (e) that Holders electing to tender any Note or
portion thereof will be required to surrender their Note, with a form entitled
"Option of Holder to Elect Purchase" completed, to the Paying Agent at the
address specified in the notice prior to the close of business on the Business
Day preceding the Purchase Date, provided that Holders electing to tender only a
portion of any Note must tender a principal amount of $1,000 or integral
multiples thereof; (f) that Holders will be entitled to withdraw their election
to tender Notes, if the Paying Agent receives, not later than the close of
business on the third Business Day preceding the Purchase Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the Holder,
the principal amount of Notes delivered for purchase, and a statement that such
Holder is withdrawing his election to have such Note purchased; and (g) that
Holders whose Notes are accepted for payment in part will be issued new Notes
equal in principal amount to the unpurchased portion of Notes surrendered;
provided that only Notes in a principal amount of $1,000 or integral multiples
thereof will be accepted for payment in part.
(b) On the Purchase Date for any Offer, the Company will, to the extent
required by this Indenture and such Offer, (1) in the case of an Offer resulting
from a Change of Control, accept for payment all Notes or portions thereof
tendered pursuant to such Offer and, in the case of an Offer resulting from an
Asset Sale Trigger Date, accept for payment the maximum principal amount of
Notes or portions thereof tendered pursuant to such Offer that can be purchased
out of Excess Proceeds, (2) deposit with the Paying Agent the aggregate purchase
price of all Notes or portions thereof accepted for payment and any accrued and
unpaid interest and Liquidated Damages, if any, on such Notes as of the Purchase
Date, and (3) deliver or cause to be delivered to the Trustee all Notes tendered
pursuant to the Offer.
(c) With respect to any Offer, if less than all of the Notes tendered
pursuant to an Offer are to be purchased by the Company, the Trustee shall
select on the Purchase Date the Notes or portions thereof to be accepted for
payment pursuant to Section 3.02.
(d) The Paying Agent shall promptly mail to each holder of Notes or
portions thereof accepted for payment an amount equal to the purchase price for
such Notes plus any accrued and unpaid interest and Liquidated Damages, if any,
thereon, and the Trustee shall promptly authenticate and mail (or cause to be
transferred by book-entry) to such holder of Notes accepted for payment in part
a new Note equal in principal amount to any unpurchased portion of the Notes and
any Note not accepted for payment in whole or in part shall be promptly returned
to the holder thereof.
<PAGE>
(e) The Company will publicly announce the results of the Offer on or as
soon as practicable after the Purchase Date.
(f) The Company will comply with any tender offer rules under the Exchange
Act which may then be applicable, including Rule 14e-1, in connection with an
offer required to be made by the Company to repurchase the Notes as a result of
a Change of Control or an Asset Sale Trigger Date. To the extent that the
provisions of any securities laws or regulations conflict with provisions of
this Indenture, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Indenture by virtue thereof.
(g) With respect to any Offer, if the Company deposits prior to 10 a.m.
New York City time with the Paying Agent on the Purchase Date an amount in
available funds sufficient to purchase all Notes accepted by the Company for
payment, interest shall cease to accrue on such Notes after the Purchase Date;
provided that, if the Company fails to deposit such amount on the Purchase Date,
interest shall continue to accrue on such Notes until such deposit is made.
Section 3.09. Mandatory Redemption.
The Company shall not be required to make mandatory redemption payments
with respect to the Notes.
ARTICLE 4.
COVENANTS
Section 4.01. Payment of Notes.
The Company shall pay or cause to be paid the principal of, premium, if
any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest then due. The Company shall pay all
Liquidated Damages, if any, in the same manner on the dates and in the amounts
set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
Section 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Company in respect of the Notes and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the
<PAGE>
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided that no
such designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in the Borough of Manhattan, the City
of New York for such purposes. The Company shall give prompt written notice to
the Trustee of any such designation or rescission and of any change in the
location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee as
one such office or agency of the Company in accordance with Section 2.03.
Section 4.03. Reports.
(a) From June 1, 1998 and so long as the Notes are outstanding, whether or
not the Company is subject to the reporting requirements of Section 13 or 15(d)
of the Exchange Act, the Company and the Guarantors shall submit for filing with
the Commission (unless the Commission will not accept such filing) the annual
reports, quarterly reports and other documents relating to the Company and its
Restricted Subsidiaries that the Company would have been required to file with
the Commission pursuant to Section 13 or 15(d) if the Company were subject to
such reporting requirements. The Company and the Guarantors will also provide to
all holders of Notes and file with the Trustee copies of such annual reports,
quarterly reports and other documents required to be furnished to stockholders
generally under the Exchange Act.
(b) So long as any Notes remain outstanding, the Company and the
Guarantors shall furnish to the Holders and to securities analysts employed by
the Initial Purchasers and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.
Section 4.04. Compliance Certificate.
(a) The Company and each Guarantor (to the extent that such Guarantor is
so required under the TIA) shall deliver to the Trustee, within 90 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall
<PAGE>
be a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.
Section 4.05. Taxes.
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders of the Notes.
Section 4.06. Stay, Extension and Usury Laws.
The Company and each of the Guarantors covenants (to the extent that it may
lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay, extension
or usury law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and the Company and
each of the Guarantors (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
shall not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law has been enacted.
Section 4.07. Limitation on Restricted Payments.
The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, (i) declare or pay any dividend or make any distribution
on account of the Company's or such Restricted Subsidiary's Capital Stock or
other Equity Interests (other than dividends or distributions payable in Capital
Stock or other Equity Interests (other than Disqualified Stock) of the Company
or a Restricted Subsidiary and dividends or distributions payable by a
Restricted Subsidiary to another Restricted Subsidiary or to the Company); (ii)
purchase, redeem or otherwise acquire or retire for value any Capital Stock or
other Equity Interests of the Company or any of its Restricted Subsidiaries
(other than any such Equity Interests purchased from the Company or any
Restricted Subsidiary for fair market value (as determined by the Board of
Directors in good faith)); (iii) voluntarily prepay any Subordinated
Indebtedness of the Company, whether any such Subordinated Indebtedness is
outstanding on, or issued after, the date of original issuance of the Notes
except as specifically permitted by the covenants of this Indenture as described
herein; or (iv) make any Restricted Investment (all such dividends,
distributions, purchases, redemptions, acquisitions, retirements, prepayments
and Restricted Investments being collectively referred to as "Restricted
Payments"), if, at the time of such Restricted Payment:
(a) a Default or Event of Default shall have occurred and be
continuing or shall occur as a consequence thereof; or
<PAGE>
(b) immediately after such Restricted Payment and after giving effect
thereto on a Pro Forma Basis, the Company shall not be able to issue $1.00
of additional Indebtedness pursuant to Section 4.09(a) hereof; or
(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made after the date of original issuance of the Notes,
without duplication, exceeds the sum of: (1) 50% of the aggregate
Consolidated Net Income (including, for this purpose, gains from Asset
Sales and, to the extent not included in Consolidated Net Income, any gain
from a sale or disposition of a Restricted Investment) of the Company (or,
in case such aggregate is a loss, 100% of such loss) for the period (taken
as one accounting period) from the beginning of the first fiscal quarter
commencing immediately after the date of original issuance of the Notes and
ended as of the Company's most recently ended fiscal quarter at the time of
such Restricted Payment; plus (2) 100% of the aggregate net cash proceeds
and the fair market value of any property or securities (as determined by
the Board of Directors in good faith) received by the Company from the
issue or sale of Capital Stock or other Equity Interests of the Company
subsequent to the date of original issuance of the Notes (other than (x)
Capital Stock or other Equity Interests issued or sold to a Restricted
Subsidiary and (y) the issuance or sale of Disqualified Stock); plus (3)
$5,000,000; plus (4) the amount by which the principal amount of and any
accrued interest on either (A) Senior Indebtedness of the Company or (B)
any Indebtedness of any Restricted Subsidiary is reduced on the Company's
consolidated balance sheet upon the conversion or exchange other than by a
Restricted Subsidiary subsequent to the date of original issuance of the
Notes of any Indebtedness of the Company or any Restricted Subsidiary (not
held by the Company or any Restricted Subsidiary) for Capital Stock or
other Equity Interests (other than Disqualified Stock) of the Company (less
the amount of any cash, or the fair market value of any other property or
securities (as determined by the Board of Directors in good faith),
distributed by the Company or any Restricted Subsidiary (to persons other
than the Company or any other Restricted Subsidiary) upon such conversion
or exchange); plus (5) if any Non-Restricted Subsidiary is redesignated as
a Restricted Subsidiary, the value of the Restricted Payment that would
result if such Subsidiary were redesignated as a Non-Restricted Subsidiary
at such time, as determined in accordance with Section 4.13(a) hereof;
provided that for purposes of this clause (5), the value of any
redesignated Non-Restricted Subsidiary shall be reduced by the amount that
any such redesignation replenishes or increases the amount of Restricted
Investments permitted to be made pursuant to clause (ii) of the next
paragraph.
Notwithstanding the foregoing, the following are not Restricted Payments
prohibited by this Section 4.07:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration, such payment would
comply with all covenants of this Indenture (including, but not limited to,
this Section 4.07);
(ii) making Restricted Investments at any time, and from time to time,
in an aggregate outstanding amount of $15,000,000 after the date of
original issuance of the Notes (it being understood that if any Restricted
Investment after the date of original issuance of the Notes pursuant to
this clause (ii) is sold, transferred or otherwise conveyed to any person
other than the Company or a Restricted Subsidiary, the portion of the net
cash proceeds or fair market value of securities or properties paid or
transferred to the Company and its Restricted Subsidiaries in connection
with such sale, transfer or conveyance that relates or corresponds to the
repayment or return of the original cost of such a Restricted Investment
will replenish or increase the amount of Restricted Investments
<PAGE>
permitted to be made pursuant to this clause (ii), so that up to
$15,000,000 of Restricted Investments may be outstanding under this clause
(ii) at any given time); provided that, without otherwise limiting this
clause (ii), any Restricted Investment in a Subsidiary made pursuant to
this clause (ii) is made for fair market value (as determined by the Board
of Directors in good faith);
(iii) the repurchase, redemption, retirement or acquisition of the
Company's stock from the executives, management, employees or consultants
of the Company or its Subsidiaries pursuant to the terms of any
subscription, stockholder or other agreement or plan, up to an aggregate
amount not to exceed $5,000,000;
(iv) any loans, advances, distributions or payments from the Company
to its Restricted Subsidiaries, or any loans, advances, distributions or
payments by a Restricted Subsidiary to the Company or to another Restricted
Subsidiary, in each case, pursuant to intercompany Indebtedness,
intercompany management agreements and other intercompany agreements and
obligations;
(v) the purchase, redemption, retirement or other acquisition of
the Notes pursuant to Sections 4.10 or 4.15 hereof;
(vi) the payment of (a) consulting, financial and investment banking
fees under the TJC Management Agreement, provided, that no Default or Event
of Default shall have occurred and be continuing or shall occur as a
consequence thereof, and the Company's Obligations to pay such fees under
the TJC Management Agreement shall be subordinated expressly to the
Company's Obligations in respect of the Notes, and (b) indemnities,
expenses and other amounts under the TJC Management Agreement;
(vii) the redemption, repurchase, retirement or other acquisition of
any Capital Stock or other Equity Interests of the Company or any
Restricted Subsidiary in exchange for, or out of the proceeds of, the
substantially concurrent sale (other than to a Subsidiary of the Company)
of other Capital Stock or other Equity Interests of the Company (other than
any Disqualified Stock) or the redemption, repurchase, retirement or other
acquisition of any Capital Stock or other Equity Interests of any
Restricted Subsidiary in exchange for, or out of the proceeds of, the
substantially concurrent sale (other than to the Company or a Subsidiary of
the Company) of other Capital Stock or other Equity Interests of such
Restricted Subsidiary; provided that, in each case, any net cash proceeds
that are utilized for any such redemption, repurchase, retirement or other
acquisition, and any Net Income resulting therefrom, shall be excluded from
clauses (c)(1) and (c)(2) of Section 4.07(a) hereof;
(viii) the defeasance, redemption or repurchase of pari passu or
Subordinated Indebtedness with the net cash proceeds from an issuance of
permitted Refinancing Indebtedness or the substantially concurrent sale
(other than to a Subsidiary of the Company) of Capital Stock or other
Equity Interests of the Company (other than Disqualified Stock); provided
that any net cash proceeds that are utilized for any such defeasance,
redemption or repurchase, and any Net Income resulting therefrom, shall be
excluded from clauses (c)(1) and (c)(2) of Section 4.07(a) hereof;
(ix) Restricted Investments made or received in connection with the
sale, transfer or disposition of any business, properties or assets of the
Company or any Restricted Subsidiary, provided that, if such sale, transfer
or disposition constitutes an Asset Sale, the Company complies with Section
4.10 hereof;
<PAGE>
(x) any Restricted Investment constituting securities or
instruments of a person issued in exchange for trade or other claims
against such person in connection with a financial reorganization or
restructuring of such person;
(xi) payments in connection with the application of the net proceeds
of the Offering as described under "Use of Proceeds" in the Offering
Circular relating to the Offering;
(xii) payments of fees, expenses and indemnities to the directors of
the Company and its Restricted Subsidiaries;
(xiii) payments in respect of the Crystaloid Holdback; and
(xiv) payments with respect to the SAR Agreements.
Section 4.08. Limitation on Dividends and Other Payment Restrictions Affecting
Restricted Subsidiaries.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective, any encumbrance or restriction on the ability of any
Restricted Subsidiary to: (a) pay dividends or make any other distributions on
its Capital Stock or any other interest or participation in, or measured by, its
profits, owned by the Company or any Restricted Subsidiary, or pay any
Indebtedness owed to, the Company or any Restricted Subsidiary, (b) make loans
or advances to the Company, or (c) transfer any of its properties or assets to
the Company, except for such encumbrances or restrictions existing under or by
reason of:
(i) applicable law;
(ii) Indebtedness permitted (A) under Section 4.09(a) hereof, (B)
under clauses (i) and (iii) of Section 4.09(b) hereof and clauses (i), (v),
(vi), (vii), (ix), (x) and (xi) of the definition of Other Permitted
Indebtedness, or (C) by agreements and transactions permitted under Section
4.07 hereof;
(iii) customary provisions restricting subletting or assignment of
any lease or license of the Company or any Restricted Subsidiary;
(iv) customary provisions of any franchise, distribution or similar
agreement;
(v) any instrument governing Indebtedness or any other encumbrance
or restriction of a person acquired by the Company or any Restricted
Subsidiary at the time of such acquisition, which encumbrance or
restriction is not applicable to any person, or the properties or assets of
any person, other than the person, or the property or assets of the person,
so acquired;
(vi) Indebtedness or other agreements existing on the date of
original issuance of the Notes;
(vii) any Refinancing Indebtedness permitted under Section 4.09
hereof and clauses (i), (v), (vi), (vii), (ix), (x) and (xi) of the
definition of Other Permitted Indebtedness; provided that the encumbrances
and restrictions created in connection with such Refinancing Indebtedness
are no more
<PAGE>
restrictive in any material respect with regard to the interests of the
holders of Notes than the encumbrances and restrictions in the refinanced
Indebtedness;
(viii) any restrictions, with respect to a Restricted Subsidiary,
imposed pursuant to an agreement that has been entered into for the sale or
disposition of the stock, business, assets or properties of such Restricted
Subsidiary;
(ix) the terms of any Indebtedness of the Company incurred in
connection with Section 4.09 hereof, provided that the terms of such
Indebtedness constitute no greater encumbrance or restriction on the
ability of any Restricted Subsidiary to pay dividends or make
distributions, make loans or advances or transfer properties or assets than
is otherwise permitted by this covenant; and
(x) the terms of purchase money obligations, but only to the extent
such purchase money obligations restrict or prohibit the transfer of the
property so acquired.
Nothing contained in this Section 4.08 shall prevent the Company from
entering into any agreement or instrument providing for the incurrence of
Permitted Liens or restricting the sale or other disposition of property or
assets of the Company or any of its Restricted Subsidiaries that are subject to
Permitted Liens.
Section 4.09. Limitation on Incurrence of Indebtedness.
(a) The Company will not, and will not permit any Restricted Subsidiary
to, issue any Indebtedness (other than the Indebtedness represented by the
Notes) unless the Company's Cash Flow Coverage Ratio for its four full fiscal
quarters next preceding the date such additional Indebtedness is issued would
have been at least 2.0 to 1 determined on a Pro Forma Basis (including, for this
purpose, any other Indebtedness incurred since the end of the applicable four
quarter period) as if such additional Indebtedness and any other Indebtedness
issued since the end of such four quarter period had been issued at the
beginning of such four-quarter period.
(b) The limitations set forth in Section 4.09(a) hereof will not apply to
the issuance of:
(i) Indebtedness of the Company and/or its Restricted Subsidiaries
under the Credit Agreement in an aggregate principal amount outstanding on
any such date of issuance not exceeding $135,000,000; provided that the
aggregate principal amount of Indebtedness outstanding under this clause
(i) together with the aggregate principal amount of Indebtedness
outstanding under clause (iii) below shall not exceed $135,000,000 in
aggregate principal amount at any one time outstanding;
(ii) Indebtedness of the Company and its Restricted Subsidiaries in
connection with capital leases, sale and leaseback transactions, purchase
money obligations, capital expenditures or similar financing transactions
relating to: (A) their properties, assets and rights as of the date of
original issuance of the Notes up to $5,000,000 in aggregate principal
amount at any one time outstanding, or (B) their properties, assets and
rights acquired after the date of original issuance of the Notes, provided
that the aggregate principal amount of such Indebtedness under this clause
(ii)(B) does not exceed 100% of the cost of such properties, assets and
rights;
(iii) additional Indebtedness of the Company and its Restricted
Subsidiaries in an aggregate principal amount up to $25,000,000 (all or any
portion of which may be issued as additional Indebtedness under the Credit
Agreement); provided that the aggregate principal amount
<PAGE>
of Indebtedness outstanding under this clause (iii) together with the
aggregate principal amount of Indebtedness outstanding under clause (i)
above shall not exceed $135,000,000 in aggregate principal amount at any
one time outstanding; and
(iv) Other Permitted Indebtedness.
Notwithstanding the foregoing, no Restricted Subsidiary shall under any
circumstances issue a guarantee of any Indebtedness of the Company except for
guarantees issued by Restricted Subsidiaries pursuant to Section 4.17 hereof,
provided that the foregoing will not limit or restrict guarantees issued by
Restricted Subsidiaries in respect of Indebtedness of other Restricted
Subsidiaries.
For purposes of determining compliance with this Section 4.09, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories described in clauses (i) through (iv) above or is entitled to be
incurred pursuant to Section 4.09(a) hereof, the Company shall, in its sole
discretion, classify such item of Indebtedness in any manner that complies with
this Section 4.09 and such item of Indebtedness will be treated as having been
incurred pursuant to only one of such clauses or pursuant to the first paragraph
hereof. Accrual of interest, accretion or amortization of original issue
discount will not be deemed to be an incurrence of Indebtedness for purposes of
this Section 4.09.
Section 4.10. Asset Sales
The Company may not, and may not permit any Restricted Subsidiary to,
directly or indirectly, consummate an Asset Sale (including the sale of any of
the Capital Stock of any Restricted Subsidiary) providing for Net Proceeds in
excess of $5,000,000 unless at least 75% of the Net Proceeds from such Asset
Sale are applied (in any manner otherwise permitted by this Indenture) to one or
more of the following purposes in such combination as the Company shall elect:
(a) an investment in another asset or business in the same line of business as,
or a line of business similar to that of, the line of business of the Company
and its Restricted Subsidiaries at the time of the Asset Sale; provided that
such investment occurs on or prior to the 365th day following the date of such
Asset Sale (the "Asset Sale Disposition Date"); (b) to reimburse the Company or
its Subsidiaries for expenditures made, and costs incurred, to repair, rebuild,
replace or restore property subject to loss, damage or taking to the extent that
the Net Proceeds consist of insurance proceeds received on account of such loss,
damage or taking; (c) the purchase, redemption or other prepayment or repayment
of outstanding Senior Indebtedness of the Company or Indebtedness of the
Company's Restricted Subsidiaries on or prior to the 365th day following the
Asset Sale Disposition Date; or (d) an Offer expiring on or prior to the
Purchase Date (as defined herein). In addition, the Company may not, and may not
permit any Restricted Subsidiary to, directly or indirectly, consummate an Asset
Sale unless at least 75% of the consideration thereof received by the Company or
such Restricted Subsidiary is in the form of cash, cash equivalents or
marketable securities; provided that, solely for purposes of calculating such
75% of the consideration, the amount of (x) any liabilities (as shown on the
Company's or such Restricted Subsidiary's most recent balance sheet or in the
notes thereto, excluding contingent liabilities and trade payables) of the
Company or any Restricted Subsidiary (other than liabilities that are by their
terms subordinated to the Notes) that are assumed by the transferee of any such
assets and (y) any notes or other obligations received by the Company or any
such Restricted Subsidiary from such transferee that are promptly, but in no
event more than 30 days after receipt, converted by the Company or such
Restricted Subsidiary into cash (to the extent of the cash received), shall be
deemed to be cash and cash equivalents for purposes of this provision. Any Net
Proceeds from any Asset Sale that are not applied or invested as provided in the
first sentence of this paragraph shall constitute "Excess Proceeds."
<PAGE>
When the aggregate amount of Excess Proceeds exceeds $10,000,000 (such date
being an "Asset Sale Trigger Date"), the Company shall make an Offer to all
holders of Notes to purchase the maximum principal amount of the Notes then
outstanding that may be purchased out of Excess Proceeds, at an offer price in
cash equal to 100% of principal amount thereof, plus any accrued and unpaid
interest and Liquidated Damages, if any, to the Purchase Date, in accordance
with the procedures set forth in this Indenture. Notwithstanding the foregoing,
to the extent that any or all of the Net Proceeds of an Asset Sale is prohibited
or delayed by applicable local law from being repatriated to the United States,
the portion of such Net Proceeds so affected will not be required to be applied
as described in this or the preceding paragraph, but may be retained for so
long, but only for so long, as the applicable local law prohibits repatriation
to the United States.
To the extent that any Excess Proceeds remain after completion of an Offer,
the Company may use such remaining amount for general corporate purposes. If the
aggregate principal amount of Notes surrendered by holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on
a pro rata basis. Upon completion of an Asset Sale Offer, the amount of Excess
Proceeds shall be reset at zero.
Section 4.11. Limitations on Transactions with Affiliates.
(a) Neither the Company nor any of its Restricted Subsidiaries may make
any loan, advance, guarantee or capital contribution to, or for the benefit of,
or sell, lease, transfer or dispose of any properties or assets to, or for the
benefit of, or purchase or lease any property or assets from, or enter into any
or amend any contract, agreement or understanding with, or for the benefit of,
an Affiliate (each such transaction or series of related transactions that are
part of a common plan are referred to as an "Affiliate Transaction"), except in
good faith and on terms that are no less favorable to the Company or the
relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction on an arm's length basis from an unrelated person. In
addition, the Company will not, and will not permit any Restricted Subsidiary
to, engage in any Affiliate Transaction involving aggregate payments or other
transfers by the Company and its Restricted Subsidiaries in excess of $5,000,000
(including cash and non-cash payments and benefits valued at their fair market
value by the Board of Directors of the Company in good faith) unless the Company
delivers to the Trustee:
(i) a resolution of the Board of Directors of the Company stating
that the Board of Directors (including a majority of the disinterested
directors, if any) has, in good faith, determined that such Affiliate
Transaction complies with the provisions of this Indenture; and
(ii) (A) with respect to any Affiliate Transaction involving the
incurrence of Indebtedness, a written opinion of a nationally recognized
investment banking or accounting firm experienced in the review of similar
types of transactions, (B) with respect to any Affiliate Transaction
involving the transfer of real property, fixed assets or equipment, either
directly or by a transfer of 50% or more of the Capital Stock of a
Restricted Subsidiary which holds any such real property, fixed assets or
equipment, a written appraisal from a nationally recognized appraiser,
experienced in the review of similar types of transactions or (C) with
respect to any Affiliate Transaction not otherwise described in (A) and (B)
above, a written certification from a nationally recognized professional or
firm experienced in evaluating similar types of transactions, in each case,
stating that the terms of such transaction are fair to the Company or such
Restricted Subsidiary, as the case may be, from a financial point of view.
(b) Notwithstanding the foregoing, Section 4.11(a) hereof will not apply
to:
<PAGE>
(i) transactions between the Company and any Restricted Subsidiary
or between Restricted Subsidiaries;
(ii) any other payments or transactions permitted pursuant to Section
4.07 hereof;
(iii) (A) payments and transactions pursuant to employment agreements
between officers of the Company and its Restricted Subsidiaries and the
Company and its Restricted Subsidiaries and (B) reasonable compensation
paid to officers, employees or consultants of the Company or any Restricted
Subsidiary as determined in good faith by the Company's Board of Directors
or executives; and
(iv) payments and transactions in connection with the Offering and
the application of the net proceeds therefrom as described under "Use of
Proceeds" in the offering circular relating to the Offering.
Section 4.12. Limitation on Liens.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien (other than Permitted Liens) upon any property or asset now owned
or hereafter acquired by them, or any income or profits therefrom, or assign or
convey any right to receive income therefrom; provided that, in addition to
creating Permitted Liens on its properties or assets, the Company and any of its
Restricted Subsidiaries may create any Lien upon any of their properties or
assets (including, but not limited to, any Capital Stock of its Subsidiaries) if
the Notes are equally and ratably secured until such time as such obligations
are no longer secured by a Lien; and provided further that, in any case
involving a Lien securing Subordinated Indebtedness of the Company, such Lien is
subordinated to the Lien securing the Notes to the same extent that such
Subordinated Indebtedness is subordinated to the Notes.
Section 4.13. Designation of Restricted and Non-Restricted Subsidiaries.
(a) Subject to the exceptions described below, from and after the date of
original issuance of the Notes, the Company may designate any existing or newly
formed or acquired Subsidiary as a Non-Restricted Subsidiary; provided that (i)
either (A) the Subsidiary to be so designated has total assets of $1,000,000 or
less or (B) immediately before and after giving effect to such designation on a
Pro Forma Basis: (1) the Company could incur $1.00 of additional Indebtedness
pursuant to Section 4.09(a) hereof, determined on a Pro Forma Basis, and (2) no
Default or Event of Default shall have occurred and be continuing, and (ii) all
transactions between the Subsidiary to be so designated and its Affiliates
remaining in effect are permitted pursuant to Section 4.11 hereof. Any
Investment made by the Company or any Restricted Subsidiary which is
redesignated from a Restricted Subsidiary to a Non-Restricted Subsidiary shall
thereafter be considered as having been a Restricted Payment (to the extent not
previously included as a Restricted Payment) made on the day such Subsidiary is
designated a Non-Restricted Subsidiary in the amount of the greater of (i) the
fair market value (as determined by the Board of Directors of the Company in
good faith) of the Equity Interests of such Subsidiary held by the Company and
its Restricted Subsidiaries on such date, and (ii) the amount of the Investments
determined in accordance with GAAP made by the Company and any of its Restricted
Subsidiaries in such Subsidiary.
(b) A Non-Restricted Subsidiary may be redesignated as a Restricted
Subsidiary. The Company may not, and may not permit any Restricted Subsidiary
to, take any action or enter into any transaction or
<PAGE>
series of transactions that would result in a Person becoming a Restricted
Subsidiary (whether through an acquisition, the redesignation of a Non-
Restricted Subsidiary or otherwise, but not including through the creation of a
new Restricted Subsidiary) unless, immediately before and after giving effect to
such action, transaction or series of transactions on a Pro Forma Basis, (a) the
Company could incur at least $1.00 of additional Indebtedness pursuant to the
first sentence of Section 4.09(a) and (b) no Default or Event of Default shall
have occurred and be continuing.
(c) The designation of a Subsidiary as a Restricted Subsidiary or the
removal of such designation is required to be made by a resolution adopted by a
majority of the Board of Directors of the Company stating that the Board of
Directors has made such designation in accordance with this Indenture, and the
Company is required to deliver to the Trustee such resolution together with an
Officers' Certificate certifying that the designation complies with this
Indenture. Such designation will be effective as of the date specified in the
applicable resolution, which may not be before the date the applicable Officers'
Certificate is delivered to the Trustee.
Section 4.14. Corporate Existence.
Subject to Article 5 hereof, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect (i) its corporate
existence, and the corporate, partnership or other existence of each of its
Subsidiaries, in accordance with the respective organizational documents (as the
same may be amended from time to time) of the Company or any such Subsidiary and
(ii) the rights (charter and statutory), licenses and franchises of the Company
and its Subsidiaries; provided that the Company shall not be required to
preserve any such right, license or franchise, or the corporate, partnership or
other existence of any of its Subsidiaries, if the Board of Directors shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company and its Subsidiaries, taken as a whole, and that the
loss thereof is not adverse in any material respect to the Holders of the Notes.
Section 4.15. Change of Control.
(a) Upon the occurrence of a Change of Control (such date being the
"Change of Control Trigger Date"), each holder of Notes shall have the right to
require the Company to purchase all or any part (equal to $1,000 or an integral
multiple thereof) of such holder's Notes pursuant to an Offer (as defined
herein) at a purchase price in cash equal to 101% of the aggregate principal
amount thereof, plus any accrued and unpaid interest and Liquidated Damages, if
any, to the date of purchase. At least two Business Days before notice of an
Offer is mailed to all holders of Notes pursuant to Section 3.08(a) hereof, the
Company shall furnish to the Trustee notice that the Offer is being made.
Although the failure of the Company to purchase all Notes tendered in such an
Offer shall be a Default, if the Company is unable to purchase all Notes
tendered in such an Offer, the Company shall nevertheless purchase the maximum
principal amount of Notes that it is able to purchase at that time.
(b) Prior to the mailing of the notice referred to in Section 3.08(a)
hereof, but in any event within 30 days following any Change of Control Trigger
Date, the Company shall (i) repay in full and terminate all commitments under
Indebtedness under the Credit Agreement and all other Senior Indebtedness the
terms of which require repayment upon a Change of Control or offer to repay in
full and terminate all commitments under all Indebtedness under the Credit
Agreement and all other such Senior Indebtedness and to repay the Indebtedness
owed to each lender which has accepted such offer or (ii) obtain the requisite
consents under the Credit Agreement and all such other Senior Indebtedness to
permit the repurchase of the Notes as provided below. The Company shall first
comply with the covenant in the immediately preceding sentence
<PAGE>
before it shall be required to repurchase Notes pursuant to the provisions of
this Section 4.15. The Company's failure to comply with this covenant shall
constitute an Event of Default described in clause (a)(iii) and not in clause
(a)(ii) under Section 6.01 below.
(c) Notwithstanding anything to the contrary in this Section 4.15, the
Company shall not be required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer in the manner, at the
times and otherwise in compliance with the requirements set forth in this
Section 4.15 and Section 3.09 hereof and purchases all Notes validly tendered
and not withdrawn under such Change of Control Offer.
(d) In the event of a Change of Control, the Company shall not offer to
purchase or redeem any Subordinated Indebtedness required or entitled by its
terms to be redeemed or purchased until the Change of Control Offer for the
Notes has been consummated and all Notes tendered pursuant to such Offer have
been accepted for payment.
Section 4.16. No Senior Subordinated Debt.
(a) The Company will not incur, create, issue, assume, guarantee or
otherwise become liable for any Indebtedness that is subordinate or junior in
right of payment to any Senior Indebtedness and senior in any respect in right
of payment to the Notes.
(b) No Guarantor will incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is subordinate or junior in right of
payment to any Senior Indebtedness and senior in any respect in right of payment
to the Note Guarantees.
Section 4.17. Limitation on Guarantees of Company Indebtedness by Restricted
Subsidiaries.
The Company will not permit any Restricted Subsidiary, directly or
indirectly, to guarantee any Indebtedness of the Company other than the Notes
(the "Other Company Indebtedness") unless (A) such Restricted Subsidiary
contemporaneously executes and delivers a supplemental indenture to this
Indenture providing for a guarantee of payment of the Notes then outstanding by
such Restricted Subsidiary to the same extent as the guarantee of payment (the
"Other Company Indebtedness Guarantee") of the Other Company Indebtedness
(including waiver of subrogation, if any) and (B) if the Other Company
Indebtedness guaranteed by such Restricted Subsidiary is (1) Senior
Indebtedness, the guarantee for the Notes shall be subordinated in right of
payment to the Other Company Indebtedness Guarantee to the same extent as the
Notes are subordinated to Senior Indebtedness of the Company and (2)
Subordinated Indebtedness, the guarantee for the Notes shall be senior in right
of payment to the Other Company Indebtedness Guarantee; provided that the
foregoing will not (i) limit or restrict guarantees issued by Restricted
Subsidiaries in respect of Indebtedness of other Restricted Subsidiaries or (ii)
apply to guarantees of Indebtedness under the Credit Agreement.
Each guarantee of the Notes created by a Restricted Subsidiary pursuant to
the provisions described in the foregoing paragraph shall be in form and
substance satisfactory to the Trustee and shall provide, among other things,
that it will be automatically and unconditionally released and discharged upon
(i) any sale, exchange or transfer permitted by this Indenture of (a) all of the
Company's Capital Stock in such Restricted Subsidiary or (b) the sale of all or
substantially all of the assets of the Restricted Subsidiary and upon the
application of the Net Proceeds from such sale in accordance with Section 4.10
hereof or (ii) the release or discharge of the Other Company Indebtedness
Guarantee that resulted in the creation of such guarantee of
<PAGE>
the Notes, except a discharge or release by or as a result of direct payment
under such Other Company Indebtedness Guarantee.
Section 4.18. Payments for Consent.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or is
paid to all Holders of the Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
Section 4.19. Additional Note Guarantees.
If any Restricted Subsidiary of the Company that is a Domestic Subsidiary
guarantees any Indebtedness under the Credit Agreement, then such Restricted
Subsidiary shall become a Guarantor by executing a Supplemental Indenture in the
form attached hereto as Exhibit F and deliver an Opinion of Counsel to the
Trustee to the effect that such Supplemental Indenture has been duly authorized,
executed and delivered by such Subsidiary and constitutes a valid and binding
obligation of such Subsidiary, enforceable against such Subsidiary in accordance
with its terms (subject to customary exceptions).
ARTICLE 5.
SUCCESSORS
Section 5.01. Merger or Consolidation
(a) The Company shall not consolidate or merge with or into, or sell,
convey or otherwise dispose of all or substantially all of its assets to, any
person (any such consolidation, merger or sale being a "Disposition") unless:
(i) the successor corporation of such Disposition or the corporation to which
such Disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; (ii) the successor corporation of such Disposition or the corporation
to which such Disposition shall have been made expressly assumes the Obligations
of the Company, pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee, under this Indenture and the Notes; (iii)
immediately after such Disposition, no Default or Event of Default shall exist;
and (iv) the corporation formed by or surviving any such Disposition, or the
corporation to which such Disposition shall have been made, shall (a) have
Consolidated Net Worth (immediately after the Disposition but prior to giving
any pro forma effect to purchase accounting adjustments or Restructuring Charges
resulting from the Disposition) equal to or greater than the Consolidated Net
Worth of the Company immediately preceding the Disposition, (b) be permitted
immediately after the Disposition by the terms of this Indenture to issue at
least $1.00 of additional Indebtedness determined on a Pro Forma Basis, and (c)
have a Cash Flow Coverage Ratio, for the four fiscal quarters immediately
preceding the applicable Disposition, and determined on a Pro Forma Basis, equal
to or greater than the actual Cash Flow Coverage Ratio of the Company for such
four quarter period. In addition, the Company shall not lease all or
substantially all of its assets to any Person.
(b) Prior to the consummation of any proposed Disposition, the Company
shall deliver to the Trustee an Officers' Certificate to the foregoing effect
and an opinion of counsel stating that the proposed
<PAGE>
Disposition and such supplemental indenture comply with this Indenture.
Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer,
conveyance or other disposition of all or substantially all of the assets of the
Company in accordance with Section 5.01 hereof, the successor corporation formed
by such consolidation or into or with which the Company is merged or to which
such sale, assignment, transfer, conveyance or other disposition is made shall
succeed to, and be substituted for (so that from and after the date of such
consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; provided that the
predecessor Company shall not be relieved from the obligation to pay the
principal of and interest and Liquidated Damages, if any, on the Notes except in
the case of a sale of all of the Company's assets that meets the requirements of
Section 5.01 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
(a) An Event of Default is:
(i) a default for 30 days in payment of interest or Liquidated
Damages, if any, on the Notes (whether or not prohibited by Article 10
hereof);
(ii) a default in payment when due of principal or premium, if any,
with respect to the Notes (whether or not prohibited by Article 10 hereof);
(iii) the failure of the Company to comply with any of its other
agreements or covenants in, or provisions of, this Indenture or the Notes
and the Default continues for the period, if applicable, and after the
notice specified in Section 6.01(b) hereof;
(iv) a default by the Company or any Restricted Subsidiary under any
mortgage, indenture or instrument under which there may be issued or by
which there may be secured or evidenced any Indebtedness for money borrowed
by the Company or any Restricted Subsidiary (or the payment of which is
guaranteed by the Company or any Restricted Subsidiary), whether such
Indebtedness or guarantee now exists or shall be created hereafter, if (A)
either (I) such default results from the failure to pay principal of or
interest on any such Indebtedness at or after the final maturity thereof
(after giving effect to any extensions thereof) and such default continues
for 30 days beyond any applicable grace period, or (II) as a result of such
default the maturity of such Indebtedness has been accelerated prior to its
expressed maturity, and (B) the principal amount of such Indebtedness,
together with the principal amount of any other such Indebtedness in
default for failure to pay principal or interest thereon at final maturity,
or, because of the acceleration of the maturity thereof, aggregates in
excess of $10,000,000;
(v) a failure by the Company or any Restricted Subsidiary to pay
final judgments (not covered by insurance) aggregating in excess of
$5,000,000, which judgments a court of competent
<PAGE>
jurisdiction does not rescind, annul or stay within 45 days after their
entry and the Default or an Event of Default continues for such period and
after the notice specified in Section 6.01(b) hereof; and
(vi) in existence when the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary pursuant to or within the meaning of
Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against it in
an involuntary case,
(C) consents to the appointment of a Custodian of it or for all
or substantially all of its property,
(D) makes a general assignment for the benefit of its
creditors, or
(E) generally is not paying its debts as they become due; or
(vii) in existence when a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that:
(A) is for relief against the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary or for all or
substantially all of the property of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary; or
(C) orders the liquidation of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60
consecutive days; or
(viii) except as permitted by this Indenture, any Note Guarantee is
held in any judicial proceeding to be unenforceable or invalid or shall
cease for any reason to be in full force and effect or any Guarantor, or
any Person acting on behalf of any Guarantor, shall deny or disaffirm its
obligations under such Guarantor's Note Guarantee.
(b) A Default or Event of Default under 6.01(a)(iii) hereof (other than an
Event of Default arising under Section 5.01 hereof which shall be an Event of
Default with the notice but without the passage of time specified in this
Section 6.01(b)) is not an Event of Default under this Indenture until the
Trustee or the holders of at least 25% in principal amount of the Notes then
outstanding notify the Company of the Default and the Company does not cure the
Default within 30 days after receipt of the notice. The notice must specify
<PAGE>
the Default, demand that it be remedied, and state that the notice is a "Notice
of Default."
(c) In the case of any Event of Default pursuant to Section 6.01(a)(i) or
(ii) hereof occurring by reason of any willful action (or inactions) taken (or
not taken) by or on behalf of the Company with the intention of avoiding payment
of the premium that the Company would have to pay if the Company then had
elected to redeem the Notes pursuant to Paragraph 5 of the Notes, an equivalent
premium shall also become and be immediately, due and payable to the extent
permitted by law anything in this Indenture or in the Notes to the contrary
notwithstanding.
Section 6.02. Acceleration.
(a) Upon the occurrence of an Event of Default (other than an Event of
Default under Sections 6.01(a)(vi) and (vii) hereof), the Trustee or the holders
of at least 25% in principal amount of the then outstanding Notes may declare
all Notes (i) to be due and payable immediately by notice in writing to the
Company and the Trustee specifying the respective Event of Default and that it
is a "notice of acceleration" (the "Acceleration Notice") and, upon receipt by
the Company of such Acceleration Notice, the principal of, premium, if any, and
any accrued and unpaid interest on, and Liquidated Damages, if any, with respect
to all Notes shall be due and payable immediately; or (ii) if there are any
amounts outstanding under the Credit Agreement, to be due and payable
immediately upon the first to occur of (A) an acceleration under the Credit
Agreement or (B) five business days after receipt by the Company and the
Representative of such Acceleration Notice, but only if such Event of Default is
then continuing; provided that if an Event of Default arises under Section
6.01(a)(vi) or (vii) hereof, the principal of, premium, if any, and any accrued
and unpaid interest on, and Liquidated Damages, if any, with respect to all
Notes, shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holders of Notes.
(b) The holders of a majority in principal amount of the Notes then
outstanding under this Indenture, by notice to the Trustee, may rescind any
declaration of acceleration of such Notes and its consequences (if the
rescission would not conflict with any judgment or decree) if all existing
Events of Default (other than the nonpayment of principal of or interest on such
Notes that shall have become due by such declaration) shall have been cured or
waived.
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of principal, premium, if any, and
interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
Subject to certain limitations, holders of a majority in principal amount
of the Notes then outstanding under this Indenture may direct the Trustee in its
exercise of any trust or power. Holders of the Notes may not enforce this
Indenture, except as provided therein. The Trustee may withhold from holders of
Notes notice of any continuing Default or Event of Default (except a Default or
an Event of Default in payment of
<PAGE>
principal, premium, if any, or interest or Liquidated Damages, if any) if the
Trustee determines that withholding notice is in their interest.
Section 6.04. Waiver of Past Defaults.
Holders of not less than a majority in aggregate principal amount of the
then outstanding Notes by notice to the Trustee may on behalf of the Holders of
all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium and Liquidated Damages, if any, or interest
on, the Notes (including in connection with an offer to purchase) (provided that
the Holders of a majority in aggregate principal amount of the then outstanding
Notes may rescind an acceleration and its consequences, including any related
payment default that resulted from such acceleration). Upon any such waiver,
such Default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.
Section 6.05. Control by Majority.
Holders of a majority in principal amount of the then outstanding Notes may
direct the time, method and place of conducting any proceeding for exercising
any remedy available to the Trustee or exercising any trust or power conferred
on it. However, the Trustee may refuse to follow any direction that conflicts
with law or this Indenture that the Trustee determines may be unduly prejudicial
to the rights of other Holders of Notes or that may involve the Trustee in
personal liability.
Section 6.06. Limitation on Suits.
A Holder of a Note may pursue a remedy with respect to this Indenture or
the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then outstanding
Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal amount
of the then outstanding Notes do not give the Trustee a direction inconsistent
with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of
another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
Section 6.07. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the
<PAGE>
respective due dates expressed in the Note (including in connection with an
offer to purchase), or to bring suit for the enforcement of any such payment on
or after such respective dates, shall not be impaired or affected without the
consent of such Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(a) or (b) occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall pay
out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes for
principal, premium and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Liquidated Damages, if any, and
interest, respectively; and
<PAGE>
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as a
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section does
not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to
Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount
of the then outstanding Notes.
ARTICLE 7.
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
<PAGE>
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), (c), (e) and (f) of this Section 7.01 and Section 7.02 hereof.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
Section 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely upon any document believed by it to
be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction.
(g) Except with respect to Section 4.01 hereof, the Trustee shall have no
duty to inquire as to the performance of the Company's covenants in Article 4
hereof. In addition, the Trustee shall not be deemed to have knowledge of any
Default or Event of Default except (i) any Event of Default occurring pursuant
to Sections 6.01(a)(i) or (ii) or Section 4.01 hereof or (ii) any Default or
Event of Default of which the Trustee shall have received written notification
or obtained actual knowledge.
(h) The Trustee shall not be bound to make any investigation into the
facts or matter stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order,
<PAGE>
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee may, in its discretion, make such further inquiry or
investigation into such facts or matters as it may see fit and if the Trustee
shall determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Company personally or
by agent or attorney.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Notes and may otherwise deal with the Company or any Affiliate of the
Company with the same rights it would have if it were not Trustee. However, in
the event that the Trustee acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
as trustee or resign. Any Agent may do the same with like rights and duties.
The Trustee is also subject to Sections 7.10 and 7.11 hereof.
Section 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, premium, if any, or
interest on any Note, the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of the Holders of the Notes.
Section 7.06. Reports by Trustee to Holders of the Notes.
Within 60 days after each May 15 beginning with the May 15 following the
date of this Indenture, and for so long as Notes remain outstanding, the Trustee
shall mail to the Holders of the Notes a brief report dated as of such reporting
date that complies with TIA (S) 313(a) (but if no event described in TIA (S)
313(a) has occurred within the twelve months preceding the reporting date, no
report need be transmitted). The Trustee also shall comply with TIA (S)
313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA (S) 313(c).
A copy of each report at the time of its mailing to the Holders of Notes
shall be mailed to the Company and filed with the Commission and each stock
exchange on which the Notes are listed in accordance with TIA (S) 313(d). The
Company shall promptly notify the Trustee when the Notes are listed on any stock
exchange.
Section 7.07. Compensation and Indemnity.
<PAGE>
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses
shall include the reasonable compensation, disbursements and expenses of the
Trustee's agents and counsel.
The Company and the Guarantors shall indemnify the Trustee (including its
directors, officers, employees and agents) against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder. The Company
shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company and the Guarantors under this Section 7.07
shall survive the satisfaction and discharge of this Indenture.
To secure the Company's and the Guarantors' payment obligations in this
Section, the Trustee shall have a Lien prior to the Notes on all money or
property held or collected by the Trustee, except that held in trust to pay
principal and interest on particular Notes. Such Lien shall survive the
satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(a)(vi) or (vii) hereof occurs, the expenses
and the compensation for the services (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA (S) 313(b)(2) to the
extent applicable.
Section 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect
<PAGE>
to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who has been
a Holder of a Note for at least six months, fails to comply with Section 7.10,
such Holder of a Note may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to
Holders of the Notes. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, provided that all sums owing to
the Trustee hereunder have been paid and subject to the Lien provided for in
Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant to
this Section 7.08, the Company's obligations under Section 7.07 hereof shall
continue for the benefit of the retiring Trustee.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA (S) 310(a)(1), (2) and (5). The Trustee is subject to TIA (S) 310(b).
Section 7.11. Preferential Collection of Claims Against Company.
<PAGE>
The Trustee is subject to TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Discharge of Liability on Notes; Defeasance.
(a) When (i) the Company delivers to the Trustee all outstanding Notes
(other than Notes replaced pursuant to Section 2.07) for cancellation, or (ii)
all outstanding Notes have become due and payable and the Company irrevocably
deposits with the Trustee funds sufficient to pay at maturity all outstanding
Notes, including interest, premium and Liquidated Damages thereon (other than
Notes replaced pursuant to Section 2.07), and if in either case the Company pays
all other sums payable under this Indenture by the Company, then this Indenture
shall, subject to Sections 8.01(c) and 8.06, cease to be of further effect.
(b) Subject to Sections 8.01(c), 8.02, and 8.06, the Company at any time
may terminate (i) all its and the Guarantors' obligations under the Notes, the
Note Guarantees and this Indenture ("legal defeasance option") or (ii) its
obligations under Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16,
4.17, 4.18 and 4.19 hereof, and the operation of Sections 5.01(a)(iii),
5.01(a)(iv), or 6.01(a)(iii) through (a)(v) ("covenant defeasance option"). The
Company may exercise its legal defeasance option notwithstanding its prior
exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment of the Notes
may not be accelerated because of an Event of Default. If the Company exercises
its covenant defeasance option, payment of the Notes shall not be accelerated
because of an Event of Default specified in Sections 6.01(a)(iii) through (a)(v)
hereof or because of the Company's failure to comply with Section 5.01(a)(iii)
and 5.01(a)(iv) hereof.
Upon satisfaction of the conditions set forth herein and upon the Company's
request (and at the Company's expense), the Trustee shall acknowledge in writing
the discharge of those obligations that the Company has terminated.
(c) Notwithstanding clauses (a) and (b) above, the Company's obligations
in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 4.01, 4.02, 4.03, 4.04, 4.05, 4.06,
4.14, 7.07, 7.08, 8.04, 8.05 and 8.06, and the Trustee's and the Paying Agent's
obligations in Section 8.04 shall survive until the Notes have been paid in
full. Thereafter, the Company's obligations in Sections 7.07 and 8.05 and the
Company's, the Trustee's and the Paying Agent's obligations in Section 8.04
shall survive.
Section 8.02. Conditions to Defeasance.
The Company may exercise its legal defeasance option or its covenant
defeasance option only if:
(1) the Company irrevocably deposits in trust (the "defeasance trust")
with the Trustee money or U.S. Government Obligations sufficient for
the payment in full of the principal of, premium, if any, and any
accrued and unpaid interest on, and Liquidated Damages, if any, with
respect to the Notes then outstanding, as of the maturity date, the
redemption date or the Purchase Date, as the case may be;
(2) the Company delivers to the Trustee a certificate from a nationally
recognized firm of
<PAGE>
independent accountants or an investment bank expressing its opinion
that the payments of principal and interest when due and without
reinvestment of the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and
in such amounts as will be sufficient to pay when due principal of,
premium, if any, and any accrued and unpaid interest on, and
Liquidated Damages, if any, with respect to all the Notes to maturity
or redemption, as the case may be;
(3) since the Company's irrevocable deposit provided for in Section
8.02(1) hereof, 91 days have passed;
(4) no Default has occurred and is continuing on the date of such deposit
and after giving effect to it;
(5) the deposit does not constitute a default under any other agreement
binding on the Company;
(6) the Company delivers to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute,
or is qualified as, a regulated investment company under the
Investment Company Act of 1940, as amended;
(7) in the case of the legal defeasance option, the Company shall have
delivered to the Trustee an Opinion of Counsel stating that (i) the
Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (ii) under applicable federal
income tax law, in either case, to the effect that, and based thereon
such Opinion of Counsel shall confirm that, the Holders will not
recognize income, gain or loss for federal income tax purposes as a
result of such deposit and defeasance and will be subject to federal
income tax on the same amount, in the same manner and at the same
times as would have been the case if such defeasance had not occurred;
(8) in the case of the covenant defeasance option, the Company shall have
delivered to the Trustee an Opinion of Counsel to the effect that the
Holders will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit and covenant defeasance and will
be subject to federal income tax on the same amount, in the same
manner and at the same times as would have been the case if such
covenant defeasance had not occurred (and, in the case of legal
defeasance only, such opinion of counsel must be based on a ruling of
the Internal Revenue Service or other change in applicable federal
income tax law); and
(9) the Company delivers to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Notes contemplated by this Article 8
have been satisfied.
Before or after a deposit, the Company may make arrangements satisfactory
to the Trustee for the redemption or purchase of Notes at a future date in
accordance with Article 3.
Section 8.03. Application of Trust Money.
The Trustee shall hold in trust money or U.S. Government Obligations
deposited with it pursuant to this Article 8. It shall apply the deposited money
and the money from U.S. Government Obligations through the Paying Agent and in
accordance with this Indenture to the payment of principal of, premium, if any,
and
<PAGE>
any accrued and unpaid interest on, and Liquidated Damages, if any, with respect
to the Notes.
Section 8.04. Repayment to the Company.
After the Notes have been paid in full, the Trustee and the Paying Agent
shall promptly turn over to the Company any excess money or securities they
hold.
The Trustee and the Paying Agent shall pay to the Company upon written
request by the Company any money they hold for the payment of principal,
premium, interest or Liquidated Damages that remains unclaimed for one year
after the date upon which such payment shall have become due; provided that the
Company shall have either caused notice of such payment to be mailed to each
Holder entitled thereto no less than 30 days prior to such repayment or within
such period shall have published such notice in a financial newspaper of
widespread circulation published in The City of New York (including, without
limitation, The Wall Street Journal). After payment to the Company, Holders
entitled to the money must look to the Company for payment as general creditors
unless an applicable abandoned property law designates another Person, and all
liability of the Trustee and such Paying Agent with respect to such money shall
cease.
Section 8.05. Indemnity for Government Obligations.
The Company shall pay and shall indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against deposited U.S. Government
Obligations or the principal and interest received on such U.S. Government
Obligations.
Section 8.06. Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with this Article 8 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Notes shall be revived and
reinstated as though no deposit had occurred pursuant to this Article 8 until
such time as the Trustee or Paying Agent is permitted to apply all such money or
U.S. Government Obligations in accordance with this Article 8; provided that, if
the Company has made any payment of principal of, premium, if any, and any
accrued and unpaid interest on, and Liquidated Damages, if any, with respect to
any Notes because of the reinstatement of its Obligations, the Company shall be
subrogated to the Holders' rights to receive such payment from the money or U.S.
Government Obligations the Trustee or Paying Agent holds.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes.
Notwithstanding Section 9.02 of this Indenture, the Company, the Guarantors
and the Trustee may amend or supplement this Indenture, the Note Guarantees or
the Notes without the consent of any holder of Notes:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes or to alter
<PAGE>
the provisions of Article 2 hereof (including the related definitions) in a
manner that does not materially adversely affect any Holder;
(c) to provide for the assumption of the Company's or a Guarantor's
obligations to the Holders of the Notes by a successor corporation in the case
of a Disposition;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights hereunder of any Holder of the Note;
(e) to comply with requirements of the Commission in order to effect or
maintain the qualification of this Indenture under the TIA; or
(f) to allow any Guarantor to execute a supplemental indenture and/or a
Note Guarantee with respect to the Notes.
Upon the request of the Company accompanied by a resolution of its Board of
Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company and the Guarantors in the
execution of any amended or supplemental Indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental Indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.
Section 9.02. With Consent of Holders of Notes.
Except as provided below in this Section 9.02, the Company, the Guarantors
and the Trustee may amend or supplement this Indenture (including Section 3.09,
4.10 and 4.15 hereof), the Note Guarantees and the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the Notes then outstanding voting as a single class (including
consents obtained in connection with a tender offer or exchange offer for, or
purchase of, the Notes), and, subject to Sections 6.04 and 6.07 hereof, any
existing Default or Event of Default (other than a Default or Event of Default
in the payment of the principal of, premium, if any, or interest on the Notes,
except a payment default resulting from an acceleration that has been rescinded)
or compliance with any provision of this Indenture, the Note Guarantees or the
Notes may be waived with the consent of the Holders of a majority in principal
amount of the then outstanding Notes voting as a single class (including
consents obtained in connection with a tender offer or exchange offer for, or
purchase of, the Notes).
Without the consent of at least 75% in aggregate principal amount of the
Notes then outstanding (including consents obtained in connection with a tender
offer or exchange offer for, or purchase of, such Notes), no waiver or amendment
to this Indenture may make any change in the provisions of Article 10 of this
Indenture (which relate to subordination), if such amendment would adversely
affect the rights of Holders of Notes.
Upon the request of the Company accompanied by a resolution of its Board of
Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company and the Guarantors in the execution of such amended or
supplemental Indenture unless such amended or
<PAGE>
supplemental Indenture directly affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion, but shall not be obligated to, enter into such amended or
supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding voting as a
single class may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Notes. However, without the consent of
each Holder affected, an amendment or waiver under this Section 9.02 may not
(with respect to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to an
amendment to this Indenture or a waiver under this Indenture;
(b) reduce the rate of or change the interest payment time of the Notes, or
alter the redemption provisions with respect thereto (other than Sections 4.10
and 4.15 hereof) or the price at which the Company is required to offer to
purchase the Notes;
(c) reduce the principal of or change the fixed maturity of the Notes;
(d) make the Notes payable in money other than stated in the Notes;
(e) make any change in the provisions concerning waiver of Defaults or
Events of Default by holders of the Notes, or rights of holders of the Notes to
receive payment of principal or interest;
(f) waive any default in the payment of principal of, premium, if any, or
unpaid interest on, or Liquidated Damages, if any, with respect to the Notes;
(g) make any change in Section 6.04 or 6.07 hereof or in the foregoing
amendment and waiver provisions; or
(h) release any Guarantor from any of its obligations under its Note
Guarantee or this Indenture, except in accordance with the terms of this
Indenture.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes shall be set
forth in a amended or supplemental Indenture that complies with the TIA as then
in effect.
Section 9.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent to it
by a Holder of a Note
<PAGE>
is a continuing consent by the Holder of a Note and every subsequent Holder of a
Note or portion of a Note that evidences the same debt as the consenting
Holder's Note, even if notation of the consent is not made on any Note. However,
any such Holder of a Note or subsequent Holder of a Note may revoke the consent
as to its Note if the Trustee receives written notice of revocation before the
date the waiver, supplement or amendment becomes effective. An amendment,
supplement or waiver becomes effective in accordance with its terms and
thereafter binds every Holder.
Section 9.05. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article Nine if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The
Company may not sign an amendment or supplemental Indenture until the Board of
Directors approves it. In executing any amended or supplemental indenture, the
Trustee shall be entitled to receive and (subject to Section 7.01 hereof) shall
be fully protected in relying upon, in addition to the documents required by
Section 12.04 hereof, an Officer's Certificate and an Opinion of Counsel stating
that the execution of such amended or supplemental indenture is authorized or
permitted by this Indenture.
ARTICLE 10.
SUBORDINATION
Section 10.01. Agreement to Subordinate.
The Company agrees, and each Holder by accepting a Note agrees, that the
payment of principal of, premium and interest and Liquidated Damages, if any, on
the Notes is subordinated in right of payment, to the extent and in the manner
provided in this Article 10, to the prior payment in full in cash of all Senior
Indebtedness (whether outstanding on the date hereof or thereafter created,
incurred, assumed or guaranteed), and that the subordination is for the benefit
of the holders of Senior Indebtedness.
Section 10.02. Liquidation; Dissolution; Bankruptcy.
The holders of Senior Indebtedness will be entitled to receive payment in
full in cash of all Obligations due in respect of such Senior Indebtedness
(including interest after the commencement of any such proceeding at the rate
specified in the applicable Senior Indebtedness whether or not a claim therefor
is allowed in such proceeding) before the Holders of Notes will be entitled to
receive any payment with respect to the Notes, and until all Obligations with
respect to Senior Indebtedness are paid in full in cash, any distribution to
which the Holders of Notes would be entitled shall be made to the holders of
Senior Indebtedness (except that Holders of Notes may receive and retain
Permitted Junior Securities and payments made from the trust referred to in
Article 8 hereof.
<PAGE>
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, an
assignment for the benefit of creditors or any marshaling of the Company's
assets and liabilities:
(a) holders of Senior Indebtedness will be entitled to receive payment in
full in cash of all Obligations due in respect of such Senior Indebtedness
(including interest after the commencement of any such proceeding at the rate
specified in the applicable Senior Indebtedness whether or not a claim therefor
is allowed in such proceeding) before Holders of the Notes shall be entitled to
receive any payment with respect to the Notes (except that Holders may receive
(i) Permitted Junior Securities and (ii) payments and other distributions made
from any defeasance trust created pursuant to Article 8 hereof); and
(b) until all Obligations with respect to Senior Indebtedness (as provided
in clause (a) above) are paid in full in cash, any distribution to which Holders
would be entitled but for this Article 10 shall be made to holders of Senior
Indebtedness (except that Holders of Notes may receive (i) Permitted Junior
Securities and (ii) payments and other distributions made from any defeasance
trust created pursuant to Article 8 hereof).
Section 10.03. Default on Designated Senior Indebtedness.
The Company may not make any payment upon or in respect of the Notes
(except (i) in Permitted Junior Securities or (ii) from payments and other
distributions made from any defeasance trust created pursuant to Article 8
hereof) or acquire any of the Notes (including repurchases of the Notes at the
option of the holders upon a Change of Control (pursuant to Section 4.15
hereof)) or on account of the redemption provisions of the Notes or on account
of any other obligations under the Notes or this Indenture, until all principal
and other Obligations with respect to the Senior Indebtedness have been paid in
full in cash if:
(a) a default in the payment of the principal of, premium, if any, or
interest on Designated Senior Indebtedness occurs and is continuing beyond any
applicable period of grace; or
(b) a default, other than a payment default, occurs and is continuing with
respect to Designated Senior Indebtedness that permits holders of the Designated
Senior Indebtedness as to which such default relates to accelerate its maturity
and, as to this clause (b), the Trustee receives a written notice (with a copy
to the Company) of such default (a "Payment Blockage Notice") from the Company
or the holders of any Designated Senior Indebtedness.
Payments on the Notes may and shall be resumed: (i) in the case of a
payment default, upon the date on which such default is cured or waived in
writing and (ii) in case of a nonpayment default, the earlier of the date on
which such nonpayment default is cured or waived in writing or 179 days after
the date on which the applicable Payment Blockage Notice is received by the
Trustee, unless the maturity of any Designated Senior Indebtedness has been
accelerated. No new period of payment blockage under clause (b) above may be
commenced unless and until 360 days have elapsed since the date of receipt by
the Trustee of the immediately prior Payment Blockage Notice. No nonpayment
default that existed or was continuing on the date of delivery of any Payment
Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent
Payment Blockage Notice, unless such default shall have been cured or waived for
a period of not less than 90 consecutive days (it being understood that any
subsequent action, or any breach of any covenant for a period commencing after
the date of receipt by the Trustee of such Payment Blockage Notice, that, in
either case, would give rise to such a default pursuant to any provisions under
which a default
<PAGE>
previously existed or was continuing shall constitute a new default for this
purpose).
Section 10.04. Acceleration of Notes.
The Company shall promptly notify holders of Senior Indebtedness if payment
of the Notes is accelerated because of an Event of Default.
Section 10.05. When Distribution Must Be Paid Over.
In the event that the Trustee or any Holder receives any payment of any
Obligations with respect to the Notes at a time when the Trustee or such Holder,
as applicable, has actual knowledge that such payment is prohibited by Section
10.03 hereof, such payment shall be held by the Trustee or such Holder, in trust
for the benefit of, and shall be paid forthwith over and delivered, upon written
request, to, the holders of Senior Indebtedness as their interests may appear or
their Representative under the indenture or other agreement (if any) pursuant to
which Senior Indebtedness may have been issued, as their respective interests
may appear, for application to the payment of all Obligations with respect to
Senior Indebtedness remaining unpaid to the extent necessary to pay such
Obligations in full in accordance with their terms, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Indebtedness.
With respect to the holders of Senior Indebtedness, the Trustee undertakes
to perform only such obligations on the part of the Trustee as are specifically
set forth in this Article 10, and no implied covenants or obligations with
respect to the holders of Senior Indebtedness shall be read into this Indenture
against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty
to the holders of Senior Indebtedness, and shall not be liable to any such
holders if the Trustee shall pay over or distribute to or on behalf of Holders
or the Company or any other Person money or assets to which any holders of
Senior Indebtedness shall be entitled by virtue of this Article 10, except if
such payment is made as a result of the willful misconduct or gross negligence
of the Trustee.
Section 10.06. Notice by Company.
The Company shall promptly notify the Trustee and the Paying Agent of any
facts known to the Company that would cause a payment of any Obligations with
respect to the Notes to violate this Article 10, but failure to give such notice
shall not affect the subordination of the Notes to the Senior Indebtedness as
provided in this Article 10.
Section 10.07. Subrogation.
After all Senior Indebtedness is paid in full and until the Notes are paid
in full, Holders of Notes shall be subrogated (equally and ratably with all
other Indebtedness pari passu with the Notes) to the rights of holders of Senior
Indebtedness to receive distributions applicable to Senior Indebtedness to the
extent that distributions otherwise payable to the Holders of Notes have been
applied to the payment of Senior Indebtedness. A distribution made under this
Article 10 to holders of Senior Indebtedness that otherwise would have been made
to Holders of Notes is not, as between the Company and Holders, a payment by the
Company on the Notes.
Section 10.08. Relative Rights.
This Article 10 defines the relative rights of Holders of Notes and holders
of Senior Indebtedness.
<PAGE>
Nothing in this Indenture shall:
(1) impair, as between the Company and Holders of Notes, the obligation of
the Company, which is absolute and unconditional, to pay principal of and
interest on the Notes in accordance with their terms;
(2) affect the relative rights of Holders of Notes and creditors of the
Company other than their rights in relation to holders of Senior Indebtedness;
or
(3) prevent the Trustee or any Holder of Notes from exercising its
available remedies upon a Default or Event of Default, subject to the rights of
holders and owners of Senior Indebtedness to receive distributions and payments
otherwise payable to Holders of Notes.
If the Company fails because of this Article 10 to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.
Section 10.09. Subordination May Not Be Impaired by Company.
No right of any holder of Senior Indebtedness to enforce the subordination
of the Indebtedness evidenced by the Notes shall be impaired by any act or
failure to act by the Company or any Holder or by the failure of the Company or
any Holder to comply with this Indenture.
Section 10.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of
Senior Indebtedness, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Trustee and the Holders of Notes shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction or upon any
certificate of such Representative or of the liquidating trustee or agent or
other Person making any distribution to the Trustee or to the Holders of Notes
for the purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Indebtedness and other Indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
10.
Section 10.11. Rights of Trustee and Paying Agent.
Notwithstanding the provisions of this Article 10 or any other provision of
this Indenture, the Trustee shall not be charged with knowledge of the existence
of any facts that would prohibit the making of any payment or distribution by
the Trustee, and the Trustee and the Paying Agent may continue to make payments
on the Notes, unless the Trustee shall have received at its Corporate Trust
Office at least five Business Days prior to the date of such payment written
notice of facts that would cause the payment of any Obligations with respect to
the Notes to violate this Article 10. Only the Company or a Representative may
give the notice. Nothing in this Article 10 shall impair the claims of, or
payments to, the Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights.
<PAGE>
Section 10.12. Authorization to Effect Subordination.
Each Holder of Notes, by the Holder's acceptance thereof, authorizes and
directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as such Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in
Section 6.09 hereof at least 30 days before the expiration of the time to file
such claim, the Representative is hereby authorized to file an appropriate claim
for and on behalf of the Holders of the Notes.
Section 10.13. Amendments.
The provisions of this Article 10 shall not be amended or modified without
the written consent of the holders of all Senior Indebtedness.
ARTICLE 11.
NOTE GUARANTEES
Section 11.01. Guarantee.
Subject to this Article 11, each of the Guarantors hereby, jointly and
severally, unconditionally guarantees to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the Notes or
the obligations of the Company hereunder or thereunder, that: (a) the principal
of and interest on the Notes will be promptly paid in full when due, whether at
maturity, by acceleration, redemption or otherwise, and interest on the overdue
principal of and interest on the Notes, if any, if lawful, and all other
obligations of the Company to the Holders or the Trustee hereunder or thereunder
will be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; and (b) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, that same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed or any performance so
guaranteed for whatever reason, the Guarantors shall be jointly and severally
obligated to pay the same immediately. Each Guarantor agrees that this is a
guarantee of payment and not a guarantee of collection.
The Guarantors hereby agree that their obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any action
to enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor. Each Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenant that this Note Guarantee shall not be discharged except by complete
performance of the obligations contained in the Notes and this Indenture.
If any Holder or the Trustee is required by any court or otherwise to
return to the Company, the Guarantors or any custodian, trustee, liquidator or
other similar official acting in relation to either the Company or the
Guarantors, any amount paid by either to the Trustee or such Holder, this Note
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect.
<PAGE>
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Each
Guarantor further agrees that, as between the Guarantors, on the one hand, and
the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6 hereof
for the purposes of this Note Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article 6 hereof, such obligations (whether or
not due and payable) shall forthwith become due and payable by the Guarantors
for the purpose of this Note Guarantee. The Guarantors shall have the right to
seek contribution from any non-paying Guarantor so long as the exercise of such
right does not impair the rights of the Holders under the Guarantee.
Section 11.02. Subordination of Note Guarantee.
The Obligations of each Guarantor under its Note Guarantee pursuant to this
Article 11 shall be subordinated to prior payment in full of all Senior
Indebtedness of such Guarantor (including such Guarantor's guarantee of the
Credit Agreement) to the same extent that the Notes are subordinated to Senior
Indebtedness of the Company. For the purposes of the foregoing sentence, the
Trustee and the Holders shall have the right to receive and/or retain payments
by any of the Guarantors only at such times as they may receive and/or retain
payments in respect of the Notes pursuant to this Indenture, including Article
10 hereof.
Section 11.03. Limitation on Guarantor Liability.
Each Guarantor, and by its acceptance of Notes, each Holder, hereby
confirms that it is the intention of all such parties that the Note Guarantee of
such Guarantor not constitute a fraudulent transfer or conveyance for purposes
of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to any
Note Guarantee. To effectuate the foregoing intention, the Trustee, the Holders
and the Guarantors hereby irrevocably agree that the obligations of such
Guarantor under its Note Guarantee and this Article 11 shall be limited to the
maximum amount as will, after giving effect to such maximum amount and all other
contingent and fixed liabilities of such Guarantor that are relevant under such
laws, and after giving effect to any collections from, rights to receive
contribution from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under this Article 11, result
in the obligations of such Guarantor under its Note Guarantee not constituting a
fraudulent transfer or conveyance.
Section 11.04. Execution and Delivery of Note Guarantee.
To evidence its Note Guarantee set forth in Section 11.01, each Guarantor
hereby agrees that this Indenture shall be executed on behalf of such Guarantor
by its President or one of its Vice Presidents.
Each Guarantor hereby agrees that its Note Guarantee set forth in Section
11.01 shall remain in full force and effect notwithstanding any failure to
endorse on each Note a notation of such Note Guarantee.
If an Officer whose signature is on this Indenture no longer holds that
office at the time the Trustee authenticates the Note, the Note Guarantee shall
be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of the Note Guarantee set forth in this
Indenture on behalf of the Guarantors.
<PAGE>
In the event that the Company creates or acquires any new Subsidiaries
subsequent to the date of this Indenture, if required by Section 4.24 hereof,
the Company shall cause such Subsidiaries to execute supplemental indentures to
this Indenture in accordance with Section 4.24 hereof and this Article 11, to
the extent applicable.
Section 11.05. Guarantors May Consolidate, etc., on Certain Terms.
No Guarantor may consolidate with or merge with or into (whether or not
such Guarantor is the surviving Person), another corporation, Person or entity
whether or not affiliated with such Guarantor unless:
(a) subject to Section 11.06 hereof, the Person formed by or surviving any
such consolidation or merger (if other than such Guarantor) assumes all the
obligations of such Guarantor pursuant to a supplemental indenture in form and
substance reasonably satisfactory to the Trustee, under the Notes, this
Indenture, the Note Guarantee and the Registration Rights Agreement;
(b) immediately after giving effect to such transaction, no Default or
Event of Default exists;
(c) such Guarantor, or any Person formed by or surviving any such
consolidation or merger, would have Consolidated Net Worth (immediately after
giving effect to such transaction) equal to or greater than the Consolidated Net
Worth of such Guarantor immediately preceding such transaction; and
(d) the Company would be permitted by virtue of the Company's pro forma
Cash Flow Coverage Ratio, immediately after giving effect to such transaction,
to incur at least $1.00 of additional Indebtedness pursuant to the Cash Flow
Coverage Ratio test set forth in Section 4.07 hereof;
provided that the requirements of clauses (c) and (d) of this paragraph will not
apply in the case of a consolidation with or merger with or into the Company or
another Guarantor.
In case of any such consolidation, merger, sale or conveyance and upon the
assumption by the successor Person, by supplemental indenture, executed and
delivered to the Trustee in the form of Exhibt E attached hereto or otherwise
satisfactory in form to the Trustee, of the due and punctual performance of all
of the covenants and conditions of this Indenture to be performed by the
Guarantor, such successor Person shall succeed to and be substituted for the
Guarantor with the same effect as if it had been named herein as a Guarantor.
All the Note Guarantees so issued shall in all respects have the same legal rank
and benefit under this Indenture as the Note Guarantees theretofore and
thereafter issued in accordance with the terms of this Indenture as though all
of such Note Guarantees had been issued at the date of the execution hereof.
Except as set forth in Articles 4 and 5 hereof, and notwithstanding clauses
(a) and (b) above, nothing contained in this Indenture or in any of the Notes
shall prevent any consolidation or merger of a Guarantor with or into the
Company or another Guarantor, or shall prevent any sale or conveyance of the
property of a Guarantor as an entirety or substantially as an entirety to the
Company or another Guarantor.
Section 11.06. Releases Following Sale of Assets.
In the event of a sale or other disposition of all of the assets of any
Guarantor, by way of merger, consolidation or otherwise, or a sale or other
disposition of all of the capital stock of any Guarantor, then such Guarantor
(in the event of a sale or other disposition, by way of such a merger,
consolidation or otherwise, of all of the capital stock of such Guarantor) or
the corporation acquiring the property (in the event of a sale
<PAGE>
or other disposition of all of the assets of such Guarantor) will be released
and relieved of any obligations under its Note Guarantee; provided that the Net
Proceeds of such sale or other disposition are applied in accordance with the
applicable provisions of this Indenture, including, without limitation, Sections
4.10 and 4.15 hereof. Upon delivery by the Company to the Trustee of an
Officers' Certificate and an Opinion of Counsel to the effect that such sale or
other disposition was made by the Company in accordance with the applicable
provisions of this Indenture, including, without limitation, Section 4.10
hereof, the Trustee shall execute any documents reasonably required in order to
evidence the release of any Guarantor from its obligations under its Note
Guarantee.
Any Guarantor not released from its obligations under its Note Guarantee
shall remain liable for the full amount of principal of and interest on the
Notes and for the other obligations of any Guarantor under this Indenture as
provided in this Article 11.
ARTICLE 12.
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA (S) 318(c), the imposed duties shall control.
Section 12.02. Notices.
Any notice or communication by the Company, any Guarantor or the Trustee to
the others is duly given if in writing and delivered in Person or mailed by
first class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address
If to the Company and/or any Guarantor:
Jackson Products, Inc.
2997 Clarkson Road
Chesterfield, Missouri 63017
Telecopier No.: (314) 207-2800
Attention: Chief Financial Officer
With a copy to:
Mayer, Brown & Platt
1675 Broadway
New York, NY 10019-5820
Telecopier No.: (212) 262-1910
Attention: James B. Carlson, Esq.
If to the Trustee:
State Street Bank and Trust Company
225 Asylum Street, 23rd Floor
Hartford, Connecticut 06103
<PAGE>
Telecopier No.: (860) 244-1889
Attention: Corporate Trust Administration
The Company, any Guarantor or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA (S) 313(c), to the extent required by the TIA. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.
If the Company mails a notice or communication to Holders, it shall mail a
copy to the Trustee and each Agent at the same time.
Section 12.03. Communication by Holders of Notes with Other Holders of Notes.
Holders may communicate pursuant to TIA (S) 312(b) with other Holders with
respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA (S)
312(c).
Section 12.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 12.05
hereof) stating that, in the opinion of the signers, all conditions precedent
and covenants, if any, provided for in this Indenture relating to the proposed
action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee (which shall include the statements set forth in Section 12.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
Section 12.05. Statements Required in Certificate or Opinion.
<PAGE>
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA (S) 314(a)(4)) shall comply with the provisions of TIA (S)
314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has read
such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been satisfied.
Section 12.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 12.07. No Personal Liability of Directors, Officers, Employees and
Stockholders.
No past, present or future director, officer, employee, incorporator or
stockholder of the Company or any Guarantor, as such, shall have any liability
for any obligations of the Company or such Guarantor under the Notes, the Note
Guarantees or this Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
<PAGE>
Section 12.08. Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES WITHOUT GIVING EFFECT
TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION
OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
Section 12.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
Section 12.10. Successors.
All agreements of the Company in this Indenture and the Notes shall bind
its successors. All agreements of the Trustee in this Indenture shall bind its
successors.
Section 12.11. Severability.
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
Section 12.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
Section 12.13. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
<PAGE>
SIGNATURES
Jackson Products, Inc.
By: /s/ Christopher T. Paule
----------------------------------
Name: Christopher T. Paule
Title: Vice President
Jackson Acquisition, Inc.
By: /s/ Christopher T. Paule
----------------------------------
Name: Christopher T. Paule
Title: Vice President
Crystaloid Technologies, Inc.
By: /s/ Christopher T. Paule
----------------------------------
Name: Christopher T. Paule
Title: Vice President
OSD Evnizion, Inc.
By: /s/ Christopher T. Paule
----------------------------------
Name: Christopher T. Paule
Title: Vice President
Flex-O-Lite, Inc.
By: /s/ Christopher T. Paule
----------------------------------
Name: Christopher T. Paule
Title: Vice President
State Street Bank and Trust Company
By: /s/ Jacqueline Connor
----------------------------------
Name: Jacqueline Connor
Title: Assistant Vice President
<PAGE>
EXHIBIT A-1
(Face of Note)
================================================================================
CUSIP __________
9 1/2% Senior Subordinated Notes due 2005
No. ____ $__________
JACKSON PRODUCTS, INC.
promises to pay to ___________ or registered assigns, the principal sum of
_____________ Dollars on April 15, 2005.
Interest Payment Dates: April 15 and October 15
Record Dates: April 1 and October 1
================================================================================
<PAGE>
Dated:___________, 199__
Jackson Products, Inc.
By: _________________________
Name:
Title:
This is one of the [Global]
Notes referred to in the
within-mentioned Indenture:
State Street Bank and Trust Company,
as Trustee
By:___________________________________
Dated:________________________________
A-1-84
<PAGE>
(Back of Note)
9 1/2% Senior Subordinated Notes due 2005
[THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.]/1/
[THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN
THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT
AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST
HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS
ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S
UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
ACT (AN "ACCREDITED INVESTOR")), (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO
A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A UNDER THE SECURITIES ACT, (C) IN AN OFFSHORE TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (D) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) TO AN ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF
THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (3)
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST
HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS
USED HEREIN, THE TERMS
______________________
/1/ This should be included only if the Note is being issued in global form.
A-1-85
<PAGE>
"OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE MEANING GIVEN TO THEM BY
RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE
IN VIOLATION OF THE FOREGOING.]
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. Interest. Jackson Products, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at 9
1/2% per annum from April 22, 1998 until maturity and shall pay the Liquidated
Damages payable pursuant to Section 5 of the Registration Rights Agreement
referred to below. The Company will pay interest and Liquidated Damages semi-
annually on April 15 and October 15 of each year, or if any such day is not a
Business Day, on the next succeeding Business Day (each, an "Interest Payment
Date"). Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from April 22, 1998;
provided that if there is no existing Default in the payment of interest, and if
this Note is authenticated between a record date referred to on the face hereof
and the next succeeding Interest Payment Date, interest shall accrue from such
next succeeding Interest Payment Date; and provided further that the first
Interest Payment Date shall be October 15, 1998. The Company shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue principal and premium, if any, from time to time on demand at a rate
that is 1% per annum in excess of the rate then in effect; it shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest and Liquidated Damages (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Notes (except
defaulted interest) and Liquidated Damages to the Persons who are registered
Holders of Notes at the close of business on the April 1 or October 1 next
preceding the Interest Payment Date, even if such Notes are cancelled after such
record date and on or before such Interest Payment Date, except as provided in
Section 2.12 of the Indenture with respect to defaulted interest. The Notes
will be payable as to principal, premium and Liquidated Damages, if any, and
interest at the office of the Paying Agent and Registrar. Holders of Notes must
surrender their Notes to the Paying Agent to collect principal payments, and the
Company may pay principal and interest and Liquidating Damages, if any, by check
and may mail checks to a Holder's registered address; provided that all payments
with respect to Global Notes and Definitive Notes, the Holders of which have
given wire transfer instructions to the Company, will be required to be made by
wire transfer of immediately available funds to the accounts specified by the
Holders thereof. Such payment shall be in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts.
3. Paying Agent and Registrar. Initially, State Street Bank and Trust
Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. Indenture. The Company issued the Notes under an Indenture dated as of
April 22, 1998 ("Indenture") among the Company, the Guarantors and the Trustee.
The terms of the Notes include those stated in the Indenture and those made part
of the Indenture by reference to the Trust Indenture Act of 1939,
A-1-86
<PAGE>
as amended (15 U.S. Code (S)(S) 77aaa-77bbbb). The Notes are subject to all
such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. To the extent any provision of this Note conflicts
with the express provisions of the Indenture, the provisions of the Indenture
shall govern and be controlling. The Notes are obligations of the Company
limited to $115.0 million in aggregate principal amount.
5. Optional Redemption.
(a) Except as provided in subparagraph (b) of this Paragraph 5, the Notes
may not be redeemed at the option of the Company prior to April 15, 2001.
During the 12-month period beginning on April 15 of the years indicated below,
the Notes will be redeemable, at the option of the Company, in whole or in part,
on at least 30 but not more than 60 days' notice to each Holder of Notes to be
redeemed, at the redemption prices in cash (expressed as percentages of the
principal amount) set forth below, plus any accrued and unpaid interest and
Liquidated Damages, if any, to the redemption date:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2001.......................... 104.750%
2002.......................... 103.167%
2003.......................... 101.583%
2004 and thereafter........... 100.000%
</TABLE>
(b) Notwithstanding the provisions of subparagraph (a) of this Paragraph
5, prior to April 15, 2001, the Company may (but shall not have the obligation
to) redeem up to one-third of the aggregate principal amount of Notes ever
issued under the Indenture at a redemption price in cash of 109 1/2% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, to the redemption date, with the net proceeds of one or more
Equity Offerings (as defined in the Indenture); provided that at least two-
thirds of the aggregate principal amount of Notes ever issued under the
Indenture remains outstanding immediately after the occurrence of any such
redemption; and provided further that any such redemption shall occur within 60
days of the date of the closing of any such Equity Offering.
6. Mandatory Redemption.
Except as set forth in paragraph 7 below, the Company shall not be required
to make mandatory redemption payments with respect to the Notes.
7. Repurchase at Option of Holder.
(a) Upon the occurrence of a Change of Control (such date being the
"Change of Control Trigger Date"), each Holder of Notes shall have the right
to require the Company to purchase all or any part (equal to $1,000 or an
integral multiple thereof) of such Holder's Notes pursuant to an Offer (as
defined in the Indenture) pursuant to Section 3.08 of the Indenture at a
purchase price in cash equal to 101% of the aggregate principal amount thereof,
plus any accrued and unpaid interest and Liquidated Damages, if any, to the date
of purchase. Within 30 days following any Change of Control Trigger Date,
subject to the provisions of the Indenture, the Company shall mail a notice to
each Holder of Notes at such Holder's registered address setting forth the
procedures governing the Offer as required by the Indenture.
A-1-87
<PAGE>
(b) When the aggregate amount of Excess Proceeds (as defined in the
Indenture) in connection with an Asset Sale exceeds $10,000,000 (such date being
an "Asset Sale Trigger Date"), the Company shall make an Offer pursuant to
Section 3.08 of the Indenture to all Holders of Notes to purchase the maximum
principal amount of the Notes then outstanding that may be purchased out of
Excess Proceeds, at an offer price in cash equal to 100% of principal amount
thereof, plus any accrued and unpaid interest and Liquidated Damages, if any, to
the Purchase Date, in accordance with the procedures set forth in the Indenture.
Notwithstanding the foregoing, to the extent that any or all of the Net Proceeds
of an Asset Sale is prohibited or delayed by applicable local law from being
repatriated to the United States, the portion of such Net Proceeds so affected
will not be required to be applied as described in this or the preceding
paragraph, but may be retained for so long, but only for so long, as the
applicable local law prohibits repatriation to the United States. To the extent
that any Excess Proceeds remain after completion of an Offer, the Company may
use such remaining amount for general corporate purposes. If the aggregate
principal amount of Notes surrendered by Holders thereof exceeds the amount of
Excess Proceeds, the Trustee shall select the Notes to be purchased on a pro
rata basis. Holders of Notes that are subject to an offer to purchase will
receive an Asset Sale Offer from the Company prior to any related purchase date
and may elect to have such Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" on the reverse side of this Note.
8. Notice of Redemption. Notice of any redemption or offer to purchase
will be mailed at least 30 days but not more than 60 days before the redemption
or purchase date to each Holder of Notes to be redeemed or purchased at such
Holder's registered address. Notes in denominations larger than $1,000 may be
redeemed in part but only in whole multiples of $1,000, unless all of the Notes
held by a Holder are to be redeemed. On and after the redemption date interest
and Liquidated Damages, if any, will cease to accrue on Notes or portions
thereof called for redemption.
9. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000.
The transfer of Notes may be registered and Notes may be exchanged as provided
in the Indenture. The Registrar and the Trustee may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
10. Persons Deemed Owners. The registered Holder of a Note may be treated
as its owner for all purposes.
11. Amendment, Supplement and Waiver. Subject to certain exceptions set
forth in the Indenture, the Indenture, the Note Guarantees or the Notes may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount of the Notes then outstanding under the Indenture voting as
a single class and any existing default (other than a payment default) or
compliance with any provision of the Indenture, the Note Guarantees or the Notes
may be waived with the consent of the Holders of a majority in principal amount
of the Notes then outstanding under the Indenture voting as a single class.
Without the consent of any Holder of Notes, the Company and the Trustee may
amend or supplement the Indenture, the Note Guarantees or the Notes to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes, to provide for the assumption by
a successor corporation of the Company's or Guarantors' obligations to Holders
of the Notes in case of a
A-1-88
<PAGE>
Disposition, to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights under the Indenture of any such Holder, to comply with the requirements
of the SEC in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act or to allow any Guarantor to execute a
supplemental indenture to the Indenture and/or a Note Guarantee with respect to
the Notes.
12. Defaults and Remedies. Events of Default include: (a) a default for
30 days in payment of interest or Liquidated Damages, if any, on the Notes
(whether or not prohibited by the subordination provisions of the Indenture);
(b) a default in payment when due of principal or premium, if any, with respect
to the Notes (whether or not prohibited by the subordination provisions of the
Indenture); (c) the failure of the Company to comply with any of its other
agreements or covenants in, or provisions of, such Indenture or the Notes
outstanding under such Indenture and the Default continues for the period, if
applicable, and after the notice specified in the next paragraph; (d) a default
by the Company or any Restricted Subsidiary under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any Restricted
Subsidiary (or the payment of which is guaranteed by the Company or any
Restricted Subsidiary), whether such Indebtedness or guarantee now exists or
shall be created hereafter, if (1) either (A) such default results from the
failure to pay principal of or interest on any such Indebtedness at or after the
final maturity thereof (after giving effect to any extensions thereof) and such
default continues for 30 days beyond any applicable grace period, or (B) as a
result of such default the maturity of such Indebtedness has been accelerated
prior to its expressed maturity, and (2) the principal amount of such
Indebtedness, together with the principal amount of any other such Indebtedness
in default for failure to pay principal or interest thereon at final maturity,
or, because of the acceleration of the maturity thereof, aggregates in excess of
$10,000,000; (e) a failure by the Company or any Restricted Subsidiary to pay
final judgments (not covered by insurance) aggregating in excess of $5,000,000
which judgments a court of competent jurisdiction does not rescind, annul or
stay within 45 days after their entry and the Default or an Event of Default
continues for such period and after the notice specified in the next paragraph;
(f) certain events of bankruptcy or insolvency involving the Company or any
Significant Subsidiary; and (g) except as permitted by the Indenture, any Note
Guarantee shall be held in any judicial proceeding unenforceable or invalid or
shall cease for any reason to be in full force and effect or any Guarantor, or
any Person acting on behalf of any Guarantor, shall deny or disaffirm its
obligations under its Note Guarantee. A Default or Event of Default under
clause (c) of this Paragraph 12 (other than an Event of Default arising pursuant
to Section 5.01 of the Indenture which shall be an Event of Default with the
notice but without the passage of time specified in this paragraph) is not an
Event of Default under the Indenture until the Trustee or the Holders of at
least 25% in principal amount of the Notes then outstanding notify the Company
of the Default and the Company does not cure the Default within 30 days after
receipt of the notice. A Default or Event of Default under clause (f) of this
Paragraph 12 will result in the Notes automatically becoming due and payable
without further action or notice. Upon the occurrence of an Event of Default
(other than under clause (f) of this Paragraph 12), the Trustee or the Holders
of at least 25% in principal amount of the then outstanding Notes may declare
all Notes to be due and payable by notice in writing to the Company and the
Trustee as specified in the Indenture, and, upon receipt by the Company of such
notice, the principal of, premium, if any, and any accrued and unpaid interest
on, and Liquidated Damages, if any, with respect to all Notes shall be due and
payable immediately; or (ii) if there are any amounts outstanding under the
Credit Agreement, to be due and payable immediately upon the first to occur of
(A) an acceleration under the Credit Agreement or (B) five business days after
receipt by the Company of such notice, but only if such Event of Default is then
continuing.
13. Subordination. The payment of principal of, premium, and interest and
Liquidated Damages, if any, on the Notes will be subordinated in right of
payment, as set forth in the Indenture, to the
A-1-89
<PAGE>
prior payment in full in cash of all Senior Indebtedness, whether outstanding on
the date of the Indenture or thereafter incurred. The Company agrees, and each
Holder by accepting a Note agrees, that the payment of principal of, premium and
interest and Liquidated Damages, if any, on the Notes is subordinated in right
of payment, to the extent and in the manner provided in the Indenture, to the
prior payment in full in cash of all Senior Indebtedness (whether outstanding on
the date hereof or thereafter created, incurred, assumed or guaranteed), and
that the subordination is for the benefit of the holders of Senior Indebtedness.
14. Note Guarantees. The payment of principal of, premium, and interest
and Liquidated Damages, if any, on the Notes will be unconditionally guaranteed,
jointly and severally, on a senior subordinated basis by the Guarantors.
15. Additional Rights of Holders of Restricted Global Notes and Restricted
Definitive Notes. In addition to the rights provided to Holders of Notes under
the Indenture, Holders of Restricted Global Notes and Restricted Definitive
Notes shall have the rights set forth in the Registration Rights Agreement dated
as of April 22, 1998, among the Company, the Guarantors and the parties named on
the signature pages thereof (the "Registration Rights Agreement").
16. Trustee Dealings with Company. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not the Trustee.
17. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the Notes.
18. Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
19. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
20. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Jackson Products, Inc.
2997 Clarkson Road
Chesterfield, Missouri 63017
Attention: Chief Financial Officer
A-1-90
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
________________________________________________________________________________
Date:_______________
Your Signature:___________________________________
(Sign exactly as your name appears on the face of
this Note)
Signature Guarantee:
A-1-92
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant to
Section 4.10 or 4.15 of the Indenture, check the box below:
[_] Section 4.10 [_] Section 4.15
If you want to elect to have only part of the Note purchased by the Company
pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you
elect to have purchased: $______________
Date:___________________ Your Signature:___________________________________
(Sign exactly as your name appears on the
Note)
Tax Identification No:____________________________
Signature Guarantee:
A-1-93
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE/2/
The following exchanges of a part of this Global Note for an interest in
another Global Note or for a Definitive Note, or exchanges of a part of another
Global Note or Definitive Note for an interest in this Global Note, have been
made:
<TABLE>
<CAPTION>
Amount of Amount of
decrease in increase in Principal Amount Signature of
Principal Amount Principal of this Global Note authorized officer
of this Amount of this following such of Trustee or
Date of Exchange Global Note Global Note decrease (or increase) Note Custodian
- ---------------- ----------- ----------- ---------------------- --------------
<S> <C> <C> <C> <C>
</TABLE>
_______________________
/2/ This should be included only if the Note is being issued in global form.
A-1-94
<PAGE>
EXHIBIT A-2
(Face of Regulation S Temporary Global Note)
================================================================================
CUSIP: __________
% Senior Subordinated Notes due 2005
No. _____ $_________
JACKSON PRODUCTS, INC.
promises to pay to ____________ or registered assigns, the principal sum of
_______ Dollars on April 15, 2005.
Interest Payment Dates: April 15 and October 15.
Record Dates: April 1 and October 1.
================================================================================
<PAGE>
Dated:_____________, 199
Jackson Products, Inc.
By: __________________________
Name:
Title:
This is one of the Global
Notes referred to in the
within-mentioned Indenture:
State Street Bank and Trust Company,
as Trustee
By:___________________________________
Dated:________________________________
A-2-2
<PAGE>
(Back of Note)
9 1/2% Senior Subordinated Notes due 2005
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON.
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.
THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN
THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT
AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST
HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS
ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S
UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
ACT (AN "ACCREDITED INVESTOR")), (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO
A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A UNDER THE SECURITIES ACT, (C) IN AN OFFSHORE TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (D) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) TO AN ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF
THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (3)
AGREES THAT IT WILL
A-2-3
<PAGE>
DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE MEANING GIVEN TO THEM BY
RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE
IN VIOLATION OF THE FOREGOING.
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. Interest. Jackson Products, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at 9
1/2% per annum from April 22, 1998 until maturity and shall pay the Liquidated
Damages payable pursuant to Section 5 of the Registration Rights Agreement
referred to below. The Company will pay interest and Liquidated Damages semi-
annually on April 15 and October 15 of each year, or if any such day is not a
Business Day, on the next succeeding Business Day (each, an "Interest Payment
Date"). Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from April 22, 1998;
provided that if there is no existing Default in the payment of interest, and if
this Note is authenticated between a record date referred to on the face hereof
and the next succeeding Interest Payment Date, interest shall accrue from such
next succeeding Interest Payment Date; and provided further that the first
Interest Payment Date shall be October 15, 1998. The Company shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue principal and premium, if any, from time to time on demand at a rate
that is 1% per annum in excess of the rate then in effect; it shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest and Liquidated Damages (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Notes (except
defaulted interest) and Liquidated Damages to the Persons who are registered
Holders of Notes at the close of business on the April 1 or October 1 next
preceding the Interest Payment Date, even if such Notes are cancelled after such
record date and on or before such Interest Payment Date, except as provided in
Section 2.12 of the Indenture with respect to defaulted interest. The Notes
will be payable as to principal, premium and Liquidated Damages, if any, and
interest at the office of the Paying Agent and Registrar. Holders of Notes must
surrender their Notes to the Paying Agent to collect principal payments, and the
Company may pay principal and interest and Liquidating Damages, if any, by check
and may mail checks to a Holder's registered address; provided that all payments
with respect to Global Notes and Definitive Notes, the Holders of which have
given wire transfer instructions to the Company, will be required to be made by
wire transfer of immediately available funds to the accounts specified by the
Holders thereof. Such payment shall be in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts.
3. Paying Agent and Registrar. Initially, State Street Bank and Trust
Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. Indenture. The Company issued the Notes under an Indenture dated as
of April 22, 1998 ("Indenture") among the Company, the Guarantors and the
Trustee. The terms of the Notes include those
A-2-4
<PAGE>
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbbb). The
Notes are subject to all such terms, and Holders are referred to the Indenture
and such Act for a statement of such terms. To the extent any provision of this
Note conflicts with the express provisions of the Indenture, the provisions of
the Indenture shall govern and be controlling. The Notes are obligations of the
Company limited to $115.0 million in aggregate principal amount.
5. Optional Redemption.
(a) Except as provided in subparagraph (b) of this Paragraph 5, the Notes
may not be redeemed at the option of the Company prior to April 15, 2001.
During the 12-month period beginning on April 15 of the years indicated below,
the Notes will be redeemable, at the option of the Company, in whole or in part,
on at least 30 but not more than 60 days' notice to each Holder of Notes to be
redeemed, at the redemption prices in cash (expressed as percentages of the
principal amount) set forth below, plus any accrued and unpaid interest and
Liquidated Damages, if any, to the redemption date:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2001........................... 104.750%
2002........................... 103.167%
2003........................... 101.583%
2004 and thereafter............ 100.000%
</TABLE>
(b) Notwithstanding the provisions of subparagraph (a) of this Paragraph
5, prior to April 15, 2001, the Company may (but shall not have the obligation
to) redeem up to one-third of the aggregate principal amount of Notes ever
issued under the Indenture at a redemption price in cash of 109 1/2% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, to the redemption date, with the net proceeds of one or more
Equity Offerings (as defined in the Indenture); provided that at least two-
thirds of the aggregate principal amount of Notes ever issued under the
Indenture remains outstanding immediately after the occurrence of any such
redemption; and provided further that any such redemption shall occur within 60
days of the date of the closing of any such Equity Offering.
6. Mandatory Redemption.
Except as set forth in paragraph 7 below, the Company shall not be required
to make mandatory redemption payments with respect to the Notes.
7. Repurchase at Option of Holder.
(a) Upon the occurrence of a Change of Control (such date being the
"Change of Control Trigger Date"), each Holder of Notes shall have the right to
require the Company to purchase all or any part (equal to $1,000 or an integral
multiple thereof) of such Holder's Notes pursuant to an Offer (as defined in the
Indenture) pursuant to Section 3.08 of the Indenture at a purchase price in cash
equal to 101% of the aggregate principal amount thereof, plus any accrued and
unpaid interest and Liquidated Damages, if any, to the date of purchase. Within
30 days following any Change of Control Trigger Date, subject to the provisions
of the Indenture, the Company shall mail a notice to each Holder of Notes at
such Holder's registered address setting forth the procedures governing the
Offer as required by the Indenture.
A-2-5
<PAGE>
(b) When the aggregate amount of Excess Proceeds (as defined in the
Indenture) in connection with an Asset Sale exceeds $10,000,000 (such date being
an "Asset Sale Trigger Date"), the Company shall make an Offer pursuant to
Section 3.08 of the Indenture to all Holders of Notes to purchase the maximum
principal amount of the Notes then outstanding that may be purchased out of
Excess Proceeds, at an offer price in cash equal to 100% of principal amount
thereof, plus any accrued and unpaid interest and Liquidated Damages, if any, to
the Purchase Date, in accordance with the procedures set forth in the Indenture.
Notwithstanding the foregoing, to the extent that any or all of the Net Proceeds
of an Asset Sale is prohibited or delayed by applicable local law from being
repatriated to the United States, the portion of such Net Proceeds so affected
will not be required to be applied as described in this or the preceding
paragraph, but may be retained for so long, but only for so long, as the
applicable local law prohibits repatriation to the United States. To the extent
that any Excess Proceeds remain after completion of an Offer, the Company may
use such remaining amount for general corporate purposes. If the aggregate
principal amount of Notes surrendered by Holders thereof exceeds the amount of
Excess Proceeds, the Trustee shall select the Notes to be purchased on a pro
rata basis. Holders of Notes that are subject to an offer to purchase will
receive an Asset Sale Offer from the Company prior to any related purchase date
and may elect to have such Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" on the reverse side of this Note.
8. Notice of Redemption. Notice of any redemption or offer to purchase
will be mailed at least 30 days but not more than 60 days before the redemption
or purchase date to each Holder of Notes to be redeemed or purchased at such
Holder's registered address. Notes in denominations larger than $1,000 may be
redeemed in part but only in whole multiples of $1,000, unless all of the Notes
held by a Holder are to be redeemed. On and after the redemption date interest
and Liquidated Damages, if any, will cease to accrue on Notes or portions
thereof called for redemption.
9. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000.
The transfer of Notes may be registered and Notes may be exchanged as provided
in the Indenture. The Registrar and the Trustee may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
10. Persons Deemed Owners. The registered Holder of a Note may be treated
as its owner for all purposes.
11. Amendment, Supplement and Waiver. Subject to certain exceptions set
forth in the Indenture, the Indenture, the Note Guarantees or the Notes may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount of the Notes then outstanding under the Indenture voting as
a single class and any existing default (other than a payment default) or
compliance with any provision of the Indenture, the Note Guarantees or the Notes
may be waived with the consent of the Holders of a majority in principal amount
of the Notes then outstanding under the Indenture voting as a single class.
Without the consent of any Holder of Notes, the Company and the Trustee may
amend or supplement the Indenture, the Note Guarantees or the Notes to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes, to provide for the assumption by
a successor corporation of the Company's or Guarantors' obligations to Holders
of the Notes in case of a
A-2-6
<PAGE>
Disposition, to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights under the Indenture of any such Holder, to comply with the requirements
of the SEC in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act or to allow any Guarantor to execute a
supplemental indenture to the Indenture and/or a Note Guarantee with respect to
the Notes.
12. Defaults and Remedies. Events of Default include: (a) a default for
30 days in payment of interest or Liquidated Damages, if any, on the Notes
(whether or not prohibited by the subordination provisions of the Indenture);
(b) a default in payment when due of principal or premium, if any, with respect
to the Notes (whether or not prohibited by the subordination provisions of the
Indenture); (c) the failure of the Company to comply with any of its other
agreements or covenants in, or provisions of, such Indenture or the Notes
outstanding under such Indenture and the Default continues for the period, if
applicable, and after the notice specified in the next paragraph; (d) a default
by the Company or any Restricted Subsidiary under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any Restricted
Subsidiary (or the payment of which is guaranteed by the Company or any
Restricted Subsidiary), whether such Indebtedness or guarantee now exists or
shall be created hereafter, if (1) either (A) such default results from the
failure to pay principal of or interest on any such Indebtedness at or after the
final maturity thereof (after giving effect to any extensions thereof) and such
default continues for 30 days beyond any applicable grace period, or (B) as a
result of such default the maturity of such Indebtedness has been accelerated
prior to its expressed maturity, and (2) the principal amount of such
Indebtedness, together with the principal amount of any other such Indebtedness
in default for failure to pay principal or interest thereon at final maturity,
or, because of the acceleration of the maturity thereof, aggregates in excess of
$10,000,000; (e) a failure by the Company or any Restricted Subsidiary to pay
final judgments (not covered by insurance) aggregating in excess of $5,000,000
which judgments a court of competent jurisdiction does not rescind, annul or
stay within 45 days after their entry and the Default or an Event of Default
continues for such period and after the notice specified in the next paragraph;
(f) certain events of bankruptcy or insolvency involving the Company or any
Significant Subsidiary; and (g) except as permitted by the Indenture, any Note
Guarantee shall be held in any judicial proceeding unenforceable or invalid or
shall cease for any reason to be in full force and effect or any Guarantor, or
any Person acting on behalf of any Guarantor, shall deny or disaffirm its
obligations under its Note Guarantee. A Default or Event of Default under
clause (c) of this Paragraph 12 (other than an Event of Default arising pursuant
to Section 5.01 of the Indenture which shall be an Event of Default with the
notice but without the passage of time specified in this paragraph) is not an
Event of Default under the Indenture until the Trustee or the Holders of at
least 25% in principal amount of the Notes then outstanding notify the Company
of the Default and the Company does not cure the Default within 30 days after
receipt of the notice. A Default or Event of Default under clause (f) of this
Paragraph 12 will result in the Notes automatically becoming due and payable
without further action or notice. Upon the occurrence of an Event of Default
(other than under clause (f) of this Paragraph 12), the Trustee or the Holders
of at least 25% in principal amount of the then outstanding Notes may declare
all Notes to be due and payable by notice in writing to the Company and the
Trustee as specified in the Indenture, and, upon receipt by the Company of such
notice, the principal of, premium, if any, and any accrued and unpaid interest
on, and Liquidated Damages, if any, with respect to all Notes shall be due and
payable immediately; or (ii) if there are any amounts outstanding under the
Credit Agreement, to be due and payable immediately upon the first to occur of
(A) an acceleration under the Credit Agreement or (B) five business days after
receipt by the Company of such notice, but only if such Event of Default is then
continuing.
13. Subordination. The payment of principal of, premium, and interest and
Liquidated Damages, if any, on the Notes will be subordinated in right of
payment, as set forth in the Indenture, to the
A-2-7
<PAGE>
prior payment in full in cash of all Senior Indebtedness, whether outstanding on
the date of the Indenture or thereafter incurred. The Company agrees, and each
Holder by accepting a Note agrees, that the payment of principal of, premium and
interest and Liquidated Damages, if any, on the Notes is subordinated in right
of payment, to the extent and in the manner provided in the Indenture, to the
prior payment in full in cash of all Senior Indebtedness (whether outstanding on
the date hereof or thereafter created, incurred, assumed or guaranteed), and
that the subordination is for the benefit of the holders of Senior Indebtedness.
14. Note Guarantees. The payment of principal of, premium, and interest
and Liquidated Damages, if any, on the Notes will be unconditionally guaranteed,
jointly and severally, on a senior subordinated basis by the Guarantors.
15. Additional Rights of Holders of Restricted Global Notes and Restricted
Definitive Notes. In addition to the rights provided to Holders of Notes under
the Indenture, Holders of Restricted Global Notes and Restricted Definitive
Notes shall have the rights set forth in the Registration Rights Agreement dated
as of April 22, 1998, among the Company, the Guarantors and the parties named on
the signature pages thereof (the "Registration Rights Agreement").
16. Trustee Dealings with Company. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not the Trustee.
17. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the Notes.
18. Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
19. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
20. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Jackson Products, Inc.
2997 Clarkson Road
Chesterfield, Missouri 63017
Attention: Chief Financial Officer
A-2-8
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
________________________________________________________________________________
Date:_____________________
Your Signature:___________________________________
(Sign exactly as your name appears on the face of
this Note)
Signature Guarantee:
A-2-10
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant to
Section 4.10 or 4.15 of the Indenture, check the box below:
[_] Section 4.10 [_] Section 4.15
If you want to elect to have only part of the Note purchased by the Company
pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you
elect to have purchased: $______________________
Date:_____________________ Your Signature:_____________________________
(Sign exactly as your name appears
on the Note)
Tax Identification No:______________________
Signature Guarantee:
A-2-11
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an interest in
another Global Note or for a Definitive Note, or exchanges of a part of another
Global Note or Definitive Note for an interest in this Global Note, have been
made:
<TABLE>
<CAPTION>
Amount of Amount of Signature of
decrease in increase in Principal Amount authorized
Principal Amount Principal of this Global Note officer
of this Amount of this following such of Trustee or
Date of Exchange Global Note Global Note decrease (or increase) Note Custodian
- ------------------ ---------------- -------------- ---------------------- --------------
<S> <C> <C> <C> <C>
</TABLE>
A-2-12
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Jackson Products, Inc.
2997 Clarkson Road
Chesterfield, Missouri 63017
State Street Bank and Trust Company
225 Asylum Street, 23rd Floor
Hartford, Connecticut 06103
Re: 9 1/2% Senior Subordinated Notes due 2005 of Jackson Products, Inc., a
----------------------------------------------------------------------
Delaware corporation
--------------------
Reference is hereby made to the Indenture, dated as of April 22, 1998 (the
"Indenture"), among Jackson Products, Inc., as issuer (the "Company"), the
guarantors party thereto and State Street Bank and Trust Company, as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
______________, (the "Transferor") owns and proposes to transfer the
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to __________ (the "Transferee"), as further specified in Annex A hereto. In
connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
----------------------------------------------------------------------
144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer is
- -----------------------------------------------------------
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky Securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.
2. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
----------------------------------------------------------------------
TEMPORARY REGULATION S GLOBAL NOTE, THE REGULATION S GLOBAL NOTE OR A DEFINITIVE
- --------------------------------------------------------------------------------
NOTE PURSUANT TO REGULATION S. The Transfer is being effected pursuant to and
- -----------------------------
in accordance with Rule 903 or Rule 904 under the Securities Act and,
accordingly, the Transferor hereby further certifies that (i) the Transfer is
not being made to a person in the United States and (x) at the time the buy
order was originated, the Transferee was outside the United States or such
Transferor and any Person acting on its behalf reasonably believed and believes
that the Transferee was outside the United States or (y) the transaction was
executed in, on or through the facilities
<PAGE>
of a designated offshore Securities market and neither such Transferor nor any
Person acting on its behalf knows that the transaction was prearranged with a
buyer in the United States, (ii) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S
under the Securities Act, (iii) the transaction is not part of a plan or scheme
to evade the registration requirements of the Securities Act and (iv) if the
proposed transfer is being made prior to the expiration of the Restricted
Period, the transfer is not being made to a U.S. Person or for the account or
benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation
of the proposed transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will be subject to the
restrictions on Transfer enumerated in the Private Placement Legend printed on
the Regulation S Global Note, the Temporary Regulation S Global Note and/or the
Definitive Note and in the Indenture and the Securities Act.
3. [_] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
-------------------------------------------------------------------
INTEREST IN THE IAI GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY PROVISION
- ------------------------------------------------------------------------------
OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is
- ----------------------------------------------------------
being effected in compliance with the transfer restrictions applicable to
beneficial interests in Restricted Global Notes and Restricted Definitive Notes
and pursuant to and in accordance with the Securities Act and any applicable
blue sky Securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that (check one):
(a) [_] such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act;
or
(b) [_] such Transfer is being effected to the Company or a subsidiary
thereof;
or
(c) [_] such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d) [_] such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements of
the Securities Act other than Rule 144A, Rule 144 or Rule 904, and the
Transferor hereby further certifies that it has not engaged in any general
solicitation within the meaning of Regulation D under the Securities Act
and the Transfer complies with the transfer restrictions applicable to
beneficial interests in a Restricted Global Note or Restricted Definitive
Notes and the requirements of the exemption claimed, which certification is
supported by (1) a certificate executed by the Transferee in the form of
Exhibit D to the Indenture and (2) if such Transfer is in respect of a
principal amount of Notes at the time of transfer of less than $250,000, an
Opinion of Counsel provided by the Transferor or the Transferee (a copy of
which the Transferor has attached to this certification), to the effect
that such Transfer is in compliance with the Securities Act. Upon
consummation of the proposed transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Note will be
subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the Definitive Notes and in the Indenture and the
Securities Act.
B-2
<PAGE>
2.. [_] Check if Transferee will take delivery of a beneficial interest in an
Unrestricted Global Note or of an Unrestricted Definitive Note.
(a) [_] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky Securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will no longer be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.
(b) [_] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer is
being effected pursuant to and in accordance with Rule 903 or Rule 904 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky Securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.
(c) [_] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The Transfer
is being effected pursuant to and in compliance with an exemption from the
registration requirements of the Securities Act other than Rule 144, Rule 903 or
Rule 904 and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky Securities laws of any State of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will not be subject to the restrictions on transfer enumerated
in the Private Placement Legend printed on the Restricted Global Notes or
Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
____________________________________________
[Insert Name of Transferor]
By:_________________________________________
Name:
Title:
Dated:__________________,____
B-3
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [_] a beneficial interest in the:
(i) [_] 144A Global Note (CUSIP 468694-AA-2), or
(ii) [_] Regulation S Global Note (CUSIP V4684V-AA-1); or
(b) [_] a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [_] a beneficial interest in the:
(i) [_] 144A Global Note (CUSIP 468694-AA-2), or
(ii) [_] Regulation S Global Note (CUSIP V4684V-AA-1), or
(iii) [_] Unrestricted Global Note (CUSIP 468694-AA-2); or
(b) [_] a Restricted Definitive Note; or
(c) [_] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-4
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Jackson Products, Inc.
2997 Clarkson Road
Chesterfield, Missouri 63017
State Street Bank and Trust Company
225 Asylum Street, 23rd Floor
Hartford, Connecticut 06103
Re: 9 1/2% Senior Subordinated Notes due 2005 of Jackson Products, Inc., a
----------------------------------------------------------------------
Delaware corporation
--------------------
(CUSIP: )
Reference is hereby made to the Indenture, dated as of April 22, 1998 (the
"Indenture"), among Jackson Products, Inc., as issuer (the "Company"), the
guarantors party thereto and State Street Bank and Trust Company, as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
____________, (the "Owner") owns and proposes to exchange the Note[s] or
interest in such Note[s] specified herein, in the principal amount of
$____________ in such Note[s] or interests (the "Exchange"). In connection with
the Exchange, the Owner hereby certifies that:
1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A
RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN AN UNRESTRICTED GLOBAL NOTE
(a) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
-------------------------------------------------------------
GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In
- -----------------------------------------------------------------
connection with the Exchange of the Owner's beneficial interest in a Restricted
Global Note for a beneficial interest in an Unrestricted Global Note in an equal
principal amount, the Owner hereby certifies (i) the beneficial interest is
being acquired for the Owner's own account without transfer, (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to the
Global Notes and pursuant to and in accordance with the United States Securities
Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
beneficial interest in an Unrestricted Global Note is being acquired in
compliance with any applicable blue sky Securities laws of any state of the
United States.
(b) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
-------------------------------------------------------------
GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
- -------------------------------------------
the Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky Securities laws of any state of the United States.
<PAGE>
(c) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
-------------------------------------------------------
BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the
- --------------------------------------------------
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky Securities laws of any state
of the United States.
(d) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
-------------------------------------------------------
UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a
- ----------------------------
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky Securities laws of any state of the United States.
2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN RESTRICTED GLOBAL NOTES
(a) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
-------------------------------------------------------------
GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
- -----------------------------------------
the Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount, the Owner hereby certifies that
the Restricted Definitive Note is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Restricted Definitive Note issued will continue
to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture
and the Securities Act.
(b) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
-------------------------------------------------------
BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the
- -----------------------------------------------
Exchange of the Owner's Restricted Definitive Note for a beneficial interest in
the [CHECK ONE] " 144A Global Note, -- Regulation S Global Note, with an equal
principal amount, the Owner hereby certifies (i) the beneficial interest is
being acquired for the Owner's own account without transfer and (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, and in compliance with any applicable blue sky Securities
laws of any state of the United States. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the beneficial interest
issued will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the relevant Restricted Global Note and in the
Indenture and the Securities Act.
C-2
<PAGE>
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
_____________________________
[Insert Name of Owner]
By:__________________________
Name:
Title:
Dated: ________________, ____
C-3
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Jackson Products, Inc.
2997 Clarkson Road
Chesterfield, Missouri 63017
State Street Bank and Trust Company
225 Asylum Street, 23rd Floor
Hartford, Connecticut 06103
Re: 9 1/2% Senior Subordinated Notes due 2005 of Jackson Products, Inc., a
----------------------------------------------------------------------
Delaware corporation
--------------------
(CUSIP: 468694-AB-0)
Reference is hereby made to the Indenture, dated as of April 22, 1998 (the
"Indenture"), among Jackson Products, Inc., as issuer (the "Company"), the
guarantors party thereto and State Street Bank and Trust Company, as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
In connection with our proposed purchase of $____________ aggregate
principal amount of:
(a) [_] a beneficial interest in a Global Note, or
(b) [_] a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest therein
may not be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell the Notes or any interest therein,
we will do so only (A) to the Company or any subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (c) to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has furnished on its
behalf by a U.S. broker-dealer) to you and to the Company a signed letter
substantially in the form of this letter and, if such transfer is in respect of
a principal amount of Notes, at the time of transfer of less than $250,000, an
Opinion of Counsel in form reasonably acceptable to the Company to the effect
that such transfer is in compliance with the Securities Act, (D) outside the
United States in accordance with Rule 904 of Regulation S under the Securities
Act, (E)
<PAGE>
pursuant to the provisions of Rule 144(k) under the Securities Act or (F)
pursuant to an effective registration statement under the Securities Act, and we
further agree to provide to any person purchasing the Definitive Note or
beneficial interest in a Global Note from us in a transaction meeting the
requirements of clauses (A) through (E) of this paragraph a notice advising such
purchaser that resales thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Notes or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by
us will bear a legend to the foregoing effect. We further understand that any
subsequent transfer by us of the Notes or beneficial interest therein acquired
by us must be effected through one of the Placement Agents.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Notes or beneficial interest therein
purchased by us for our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
______________________________________
[Insert Name of Accredited Investor]
By:___________________________________
Name:
Title:
Dated: __________________, ____
D-2
<PAGE>
EXHIBIT E
FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT GUARANTORS
Supplemental Indenture (this "Supplemental Indenture"), dated as of
________________, among __________________ (the "Guarantor"), a subsidiary of
Jackson Products, Inc. (or its permitted successor), a Delaware corporation (the
"Company"), the Company, the other Guarantors (as defined in the Indenture
referred to herein) and State Street Bank and Trust Company, as trustee under
the Indenture referred to below (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the Trustee
an indenture (the "Indenture"), dated as of April 22, 1998, providing for the
issuance of an aggregate principal amount of up to $115,000,000 of 9 1/2% Senior
Subordinated Notes due 2005 (the "Notes");
WHEREAS, the Indenture provides that under certain circumstances the
Guarantor shall execute and deliver to the Trustee a supplemental indenture
pursuant to which the Guarantor shall unconditionally guarantee all of the
Company's Obligations under the Notes and the Indenture on the terms and
conditions set forth herein (the "Note Guarantee"); and
WHEREAS, pursuant to Section 9.06 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Guarantor and the Trustee mutually covenant and agree for the equal and ratable
benefit of the Holders of the Notes as follows:
1. Capitalized Terms. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. Agreement to Guarantee. The Guarantor hereby agrees as follows:
(a) Along with all Guarantors named in the Indenture, to jointly and
severally Guarantee to each Holder of a Note authenticated and delivered by the
Trustee and to the Trustee and its successors and assigns, irrespective of the
validity and enforceability of the Indenture, the Notes or the obligations of
the Company hereunder or thereunder, that:
(i) the principal of and interest on the Notes will be promptly paid
in full when due, whether at maturity, by acceleration, redemption or
otherwise, and interest on the overdue principal of and interest on the
Notes, if any, if lawful, and all other obligations of the Company to the
Holders or the Trustee hereunder or thereunder will be promptly paid in
full or performed, all in accordance with the terms hereof and thereof; and
(ii)) in case of any extension of time of payment or renewal of any
Notes or any of such other obligations, that same will be promptly paid in
full when due or performed in accordance with the terms of the extension or
renewal, whether at stated maturity, by acceleration or otherwise.
<PAGE>
Failing payment when due of any amount so guaranteed or any performance so
guaranteed for whatever reason, the Guarantors shall be jointly and
severally obligated to pay the same immediately.
(b) The obligations hereunder shall be unconditional, irrespective of the
validity, regularity or enforceability of the Notes or the Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
of the Notes with respect to any provisions hereof or thereof, the recovery of
any judgment against the Company, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a guarantor.
(c) The following is hereby waived: diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against the Company,
protest, notice and all demands whatsoever.
(d) This Note Guarantee shall not be discharged except by complete
performance of the obligations contained in the Notes and the Indenture.
(e) If any Holder or the Trustee is required by any court or otherwise to
return to the Company, the Guarantors, or any Custodian, Trustee, liquidator or
other similar official acting in relation to either the Company or the
Guarantors, any amount paid by either to the Trustee or such Holder, this Note
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect.
(f) The Guarantor shall not be entitled to any right of subrogation in
relation to the Holders in respect of any obligations guaranteed hereby until
payment in full of all obligations guaranteed hereby.
(g) As between the Guarantors, on the one hand, and the Holders and the
Trustee, on the other hand, (x) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article 6 of the Indenture for the
purposes of this Note Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article 6 of the Indenture, such obligations
(whether or not due and payable) shall forthwith become due and payable by the
Guarantors for the purpose of this Note Guarantee.
(h) The Guarantors shall have the right to seek contribution from any non-
paying Guarantor so long as the exercise of such right does not impair the
rights of the Holders under the Guarantee.
(i) Pursuant to Section 11.03 of the Indenture, after giving effect to any
maximum amount and any other contingent and fixed liabilities that are relevant
under any applicable Bankruptcy or fraudulent conveyance laws, and after giving
effect to any collections from, rights to receive contribution from or payments
made by or on behalf of any other Guarantor in respect of the obligations of
such other Guarantor under Article 11 of the Indenture shall result in the
obligations of such Guarantor under its Note Guarantee not constituting a
fraudulent transfer or conveyance.
3. Execution and Delivery. Each Guarantor agrees that the Note
Guarantees shall remain in full force and effect notwithstanding any failure to
endorse on each Note a notation of such Note Guarantee.
E-2
<PAGE>
4. Guarantor May Consolidate, Etc. on Certain Terms.
(a) No Guarantor may consolidate with or merge with or into (whether or
not such Guarantor is the surviving Person), another corporation, Person or
entity whether or not affiliated with such Guarantor unless:
(i) subject to Section 11.06 of the Indenture, the Person formed
by or surviving any such consolidation or merger (if other than such
Guarantor) assumes all the obligations of such Guarantor pursuant to a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee, under the Notes, this Indenture, the Note Guarantee and the
Registration Rights Agreement;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default exists;
(iii)) such Guarantor, or any Person formed by or surviving any such
consolidation or merger, would have Consolidated Net Worth (immediately
after giving effect to such transaction) equal to or greater than the
Consolidated Net Worth of such Guarantor immediately preceding such
transaction; and
(iv) the Company would be permitted by virtue of the Company's pro
forma Cash Flow Coverage Ratio, immediately after giving effect to such
transaction, to incur at least $1.00 of additional Indebtedness pursuant to
the Cash Flow Coverage Ratio test set forth in Section 4.07 of the
Indenture;
provided that, the requirements of clauses (iii) and (iv) of this Section 4(a)
will not apply in the case of a consolidation with or merger with or into the
Company or another Guarantor.
(b) In case of any such consolidation, merger, sale or conveyance and upon
the assumption by the successor Person, by supplemental indenture, executed and
delivered to the Trustee in the form of Exhibit E to the Indenture or otherwise
satisfactory in form to the Trustee, of the Note Guarantee endorsed upon the
Notes and the due and punctual performance of all of the covenants and
conditions of this Indenture to be performed by the Guarantor, such successor
Person shall succeed to and be substituted for the Guarantor with the same
effect as if it had been named herein as a Guarantor. Such successor Person
thereupon may cause to be signed any or all of the Note Guarantees to be
endorsed upon all of the Notes issuable hereunder which theretofore shall not
have been signed by the Company and delivered to the Trustee. All the Note
Guarantees so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Note Guarantees theretofore and thereafter issued in
accordance with the terms of this Indenture as though all of such Note
Guarantees had been issued at the date of the execution hereof.
(c) Except as set forth in Articles 4 and 5 of the Indenture, and
notwithstanding clauses (a) and (b) above, nothing contained in this Indenture
or in any of the Notes shall prevent any consolidation or merger of a Guarantor
with or into the Company or another Guarantor, or shall prevent any sale or
conveyance of the property of a Guarantor as an entirety or substantially as an
entirety to the Company or another Guarantor.
E-3
<PAGE>
5. Releases.
(a) In the event of a sale or other disposition of all of the assets of
any Guarantor, by way of merger, consolidation or otherwise, or a sale or other
disposition of all of the capital stock of any Guarantor, then such Guarantor
(in the event of a sale or other disposition, by way of such a merger,
consolidation or otherwise, of all of the capital stock of such Guarantor) or
the corporation acquiring the property (in the event of a sale or other
disposition of all of the assets of such Guarantor) will be released and
relieved of any obligations under its Note Guarantee; provided that the Net
Proceeds of such sale or other disposition are applied in accordance with the
applicable provisions of this Indenture, including without limitation Sections
4.10 of the Indenture. Upon delivery by the Company to the Trustee of an
Officers' Certificate and an Opinion of Counsel to the effect that such sale or
other disposition was made by the Company in accordance with the applicable
provisions of the Indenture, including, without limitation, Section 4.10 of the
Indenture, the Trustee shall execute any documents reasonably required in order
to evidence the release of any Guarantor from its obligations under its Note
Guarantee.
(b) Any Guarantor not released from its obligations under its Note
Guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other obligations of any Guarantor under the Indenture
as provided in Article 11 of the Indenture.
6. No Recourse Against Others. No past, present or future director,
officer, employee, incorporator, stockholder or agent of the Guarantor, as such,
shall have any liability for any obligations of the Company or any Guarantor
under the Notes, any Note Guarantees, the Indenture or this Supplemental
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of the Notes by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
Commission that such a waiver is against public policy.
7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
8. Counterparts The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
9. Effect of Headings. The Section headings herein are for convenience
only and shall not affect the construction hereof.
10. The Trustee. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guarantor and the Company.
E-4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
[Guarantor]
By: _________________________________
Name:
Title:
JACKSON PRODUCTS, INC.
By: _________________________________
Name:
Title:
[EXISTING GUARANTORS]
By: _________________________________
Name:
Title
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: _________________________________
Name:
Title:
E-5
<PAGE>
EXHIBIT 4.2
(Face of Note)
================================================================================
CUSIP __________
9 1/2% Senior Subordinated Notes due 2005
No. ____ $__________
JACKSON PRODUCTS, INC.
promises to pay to ___________ or registered assigns, the principal sum of
_____________ Dollars on April 15, 2005.
Interest Payment Dates: April 15 and October 15
Record Dates: April 1 and October 1
================================================================================
<PAGE>
Dated: _, 199__
Jackson Products, Inc.
By:
Name:
Title:
This is one of the [Global]
Notes referred to in the
within-mentioned Indenture:
State Street Bank and Trust Company,
as Trustee
By:
Dated:
<PAGE>
(Back of Note)
9 1/2% Senior Subordinated Notes due 2005
[THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.]/1/
[THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN
THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT
AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST
HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS
ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S
UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
ACT (AN "ACCREDITED INVESTOR")), (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO
A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A UNDER THE SECURITIES ACT, (C) IN AN OFFSHORE TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (D) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) TO AN ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF
THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (3)
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST
HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS
USED HEREIN, THE TERMS
_______________________
/1/ This should be included only if the Note is being issued in global form.
<PAGE>
"OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE MEANING GIVEN TO THEM BY
RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE
IN VIOLATION OF THE FOREGOING.]
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. Interest. Jackson Products, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note
at 9 1/2% per annum from April 22, 1998 until maturity and shall pay the
Liquidated Damages payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company will pay interest and Liquidated
Damages semi-annually on April 15 and October 15 of each year, or if any
such day is not a Business Day, on the next succeeding Business Day (each,
an "Interest Payment Date"). Interest on the Notes will accrue from the
most recent date to which interest has been paid or, if no interest has
been paid, from April 22, 1998; provided that if there is no existing
Default in the payment of interest, and if this Note is authenticated
between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; and provided further that the first
Interest Payment Date shall be October 15, 1998. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time
on demand at a rate that is 1% per annum in excess of the rate then in
effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest
and Liquidated Damages (without regard to any applicable grace periods)
from time to time on demand at the same rate to the extent lawful. Interest
will be computed on the basis of a 360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Notes (except
defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the April 1 or
October 1 next preceding the Interest Payment Date, even if such Notes are
cancelled after such record date and on or before such Interest Payment
Date, except as provided in Section 2.12 of the Indenture with respect to
defaulted interest. The Notes will be payable as to principal, premium and
Liquidated Damages, if any, and interest at the office of the Paying Agent
and Registrar. Holders of Notes must surrender their Notes to the Paying
Agent to collect principal payments, and the Company may pay principal and
interest and Liquidating Damages, if any, by check and may mail checks to a
Holder's registered address; provided that all payments with respect to
Global Notes and Definitive Notes, the Holders of which have given wire
transfer instructions to the Company, will be required to be made by wire
transfer of immediately available funds to the accounts specified by the
Holders thereof. Such payment shall be in such coin or currency of the
United States of America as at the time of payment is legal tender for
payment of public and private debts.
3. Paying Agent and Registrar. Initially, State Street Bank and Trust
Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company or any of its Subsidiaries may act in
any such capacity.
<PAGE>
4. Indenture. The Company issued the Notes under an Indenture dated as
of April 22, 1998 ("Indenture") among the Company, the Guarantors and the
Trustee. The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbbb). The Notes are subject
to all such terms, and Holders are referred to the Indenture and such Act
for a statement of such terms. To the extent any provision of this Note
conflicts with the express provisions of the Indenture, the provisions of
the Indenture shall govern and be controlling. The Notes are obligations of
the Company limited to $115.0 million in aggregate principal amount.
5. Optional Redemption.
a. Except as provided in subparagraph (b) of this Paragraph 5, the
Notes may not be redeemed at the option of the Company prior to April
15, 2001. During the 12-month period beginning on April 15 of the
years indicated below, the Notes will be redeemable, at the option of
the Company, in whole or in part, on at least 30 but not more than 60
days' notice to each Holder of Notes to be redeemed, at the redemption
prices in cash (expressed as percentages of the principal amount) set
forth below, plus any accrued and unpaid interest and Liquidated
Damages, if any, to the redemption date:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2001.......................... 104.750%
2002.......................... 103.167%
2003.......................... 101.583%
2004 and thereafter........... 100.000%
</TABLE>
b. Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, prior to April 15, 2001, the Company may (but shall not
have the obligation to) redeem up to one-third of the aggregate
principal amount of Notes ever issued under the Indenture at a
redemption price in cash of 109 1/2% of the principal amount thereof,
plus accrued and unpaid interest and Liquidated Damages, if any, to
the redemption date, with the net proceeds of one or more Equity
Offerings (as defined in the Indenture); provided that at least two-
thirds of the aggregate principal amount of Notes ever issued under
the Indenture remains outstanding immediately after the occurrence of
any such redemption; and provided further that any such redemption
shall occur within 60 days of the date of the closing of any such
Equity Offering.
6. Mandatory Redemption.
Except as set forth in paragraph 7 below, the Company shall not be required
to make mandatory redemption payments with respect to the Notes.
7. Repurchase at Option of Holder.
a. Upon the occurrence of a Change of Control (such date being the
"Change of Control Trigger Date"), each Holder of Notes shall have
the right to require the Company to purchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes
pursuant to an Offer (as defined in the Indenture) pursuant to Section
3.08 of the Indenture at a purchase price in cash equal to 101% of the
aggregate principal amount
<PAGE>
thereof, plus any accrued and unpaid interest and Liquidated Damages,
if any, to the date of purchase. Within 30 days following any Change
of Control Trigger Date, subject to the provisions of the Indenture,
the Company shall mail a notice to each Holder of Notes at such
Holder's registered address setting forth the procedures governing the
Offer as required by the Indenture.
b. When the aggregate amount of Excess Proceeds (as defined in the
Indenture) in connection with an Asset Sale exceeds $10,000,000 (such
date being an "Asset Sale Trigger Date"), the Company shall make an
Offer pursuant to Section 3.08 of the Indenture to all Holders of
Notes to purchase the maximum principal amount of the Notes then
outstanding that may be purchased out of Excess Proceeds, at an offer
price in cash equal to 100% of principal amount thereof, plus any
accrued and unpaid interest and Liquidated Damages, if any, to the
Purchase Date, in accordance with the procedures set forth in the
Indenture. Notwithstanding the foregoing, to the extent that any or
all of the Net Proceeds of an Asset Sale is prohibited or delayed by
applicable local law from being repatriated to the United States, the
portion of such Net Proceeds so affected will not be required to be
applied as described in this or the preceding paragraph, but may be
retained for so long, but only for so long, as the applicable local
law prohibits repatriation to the United States. To the extent that
any Excess Proceeds remain after completion of an Offer, the Company
may use such remaining amount for general corporate purposes. If the
aggregate principal amount of Notes surrendered by Holders thereof
exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes to be purchased on a pro rata basis. Holders of Notes that are
subject to an offer to purchase will receive an Asset Sale Offer from
the Company prior to any related purchase date and may elect to have
such Notes purchased by completing the form entitled "Option of Holder
to Elect Purchase" on the reverse side of this Note.
8. Notice of Redemption. Notice of any redemption or offer to purchase
will be mailed at least 30 days but not more than 60 days before the
redemption or purchase date to each Holder of Notes to be redeemed or
purchased at such Holder's registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest and Liquidated Damages, if any, will
cease to accrue on Notes or portions thereof called for redemption.
9. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged
as provided in the Indenture. The Registrar and the Trustee may require a
Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes
and fees required by law or permitted by the Indenture. The Company need
not exchange or register the transfer of any Note or portion of a Note
selected for redemption, except for the unredeemed portion of any Note
being redeemed in part. Also, the Company need not exchange or register
the transfer of any Notes for a period of 15 days before a selection of
Notes to be redeemed or during the period between a record date and the
corresponding Interest Payment Date.
10. Persons Deemed Owners. The registered Holder of a Note may be treated
as its owner for all purposes.
<PAGE>
11. Amendment, Supplement and Waiver. Subject to certain exceptions set
forth in the Indenture, the Indenture, the Note Guarantees or the Notes may
be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the Notes then outstanding under the
Indenture voting as a single class and any existing default (other than a
payment default) or compliance with any provision of the Indenture, the
Note Guarantees or the Notes may be waived with the consent of the Holders
of a majority in principal amount of the Notes then outstanding under the
Indenture voting as a single class. Without the consent of any Holder of
Notes, the Company and the Trustee may amend or supplement the Indenture,
the Note Guarantees or the Notes to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Notes in addition to or in
place of certificated Notes, to provide for the assumption by a successor
corporation of the Company's or Guarantors' obligations to Holders of the
Notes in case of a Disposition, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder,
to comply with the requirements of the SEC in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act or to
allow any Guarantor to execute a supplemental indenture to the Indenture
and/or a Note Guarantee with respect to the Notes.
12. Defaults and Remedies. Events of Default include: (a) a default for
30 days in payment of interest or Liquidated Damages, if any, on the Notes
(whether or not prohibited by the subordination provisions of the
Indenture); (b) a default in payment when due of principal or premium, if
any, with respect to the Notes (whether or not prohibited by the
subordination provisions of the Indenture); (c) the failure of the Company
to comply with any of its other agreements or covenants in, or provisions
of, such Indenture or the Notes outstanding under such Indenture and the
Default continues for the period, if applicable, and after the notice
specified in the next paragraph; (d) a default by the Company or any
Restricted Subsidiary under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any Restricted Subsidiary
(or the payment of which is guaranteed by the Company or any Restricted
Subsidiary), whether such Indebtedness or guarantee now exists or shall be
created hereafter, if (1) either (A) such default results from the failure
to pay principal of or interest on any such Indebtedness at or after the
final maturity thereof (after giving effect to any extensions thereof) and
such default continues for 30 days beyond any applicable grace period, or
(B) as a result of such default the maturity of such Indebtedness has been
accelerated prior to its expressed maturity, and (2) the principal amount
of such Indebtedness, together with the principal amount of any other such
Indebtedness in default for failure to pay principal or interest thereon at
final maturity, or, because of the acceleration of the maturity thereof,
aggregates in excess of $10,000,000; (e) a failure by the Company or any
Restricted Subsidiary to pay final judgments (not covered by insurance)
aggregating in excess of $5,000,000 which judgments a court of competent
jurisdiction does not rescind, annul or stay within 45 days after their
entry and the Default or an Event of Default continues for such period and
after the notice specified in the next paragraph; (f) certain events of
bankruptcy or insolvency involving the Company or any Significant
Subsidiary; and (g) except as permitted by the Indenture, any Note
Guarantee shall be held in any judicial proceeding unenforceable or invalid
or shall cease for any reason to be in full force and effect or any
Guarantor, or any Person acting on behalf of any Guarantor, shall deny or
disaffirm its obligations under its Note Guarantee. A Default or Event of
Default under clause (c) of this Paragraph 12 (other than an Event of
Default arising pursuant to Section 5.01 of the Indenture which shall be an
Event of Default with the notice but without the passage of time specified
in this paragraph) is not an Event of Default under the Indenture until the
Trustee or the Holders of at least 25% in principal amount of the Notes
then outstanding notify the Company of the Default and the
<PAGE>
Company does not cure the Default within 30 days after receipt of the
notice. A Default or Event of Default under clause (f) of this Paragraph 12
will result in the Notes automatically becoming due and payable without
further action or notice. Upon the occurrence of an Event of Default
(other than under clause (f) of this Paragraph 12), the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes
may declare all Notes to be due and payable by notice in writing to the
Company and the Trustee as specified in the Indenture, and, upon receipt by
the Company of such notice, the principal of, premium, if any, and any
accrued and unpaid interest on, and Liquidated Damages, if any, with
respect to all Notes shall be due and payable immediately; or (ii) if there
are any amounts outstanding under the Credit Agreement, to be due and
payable immediately upon the first to occur of (A) an acceleration under
the Credit Agreement or (B) five business days after receipt by the Company
of such notice, but only if such Event of Default is then continuing.
13. Subordination. The payment of principal of, premium, and interest and
Liquidated Damages, if any, on the Notes will be subordinated in right of
payment, as set forth in the Indenture, to the prior payment in full in
cash of all Senior Indebtedness, whether outstanding on the date of the
Indenture or thereafter incurred. The Company agrees, and each Holder by
accepting a Note agrees, that the payment of principal of, premium and
interest and Liquidated Damages, if any, on the Notes is subordinated in
right of payment, to the extent and in the manner provided in the
Indenture, to the prior payment in full in cash of all Senior Indebtedness
(whether outstanding on the date hereof or thereafter created, incurred,
assumed or guaranteed), and that the subordination is for the benefit of
the holders of Senior Indebtedness.
14. Note Guarantees. The payment of principal of, premium, and interest
and Liquidated Damages, if any, on the Notes will be unconditionally
guaranteed, jointly and severally, on a senior subordinated basis by the
Guarantors.
15. Additional Rights of Holders of Restricted Global Notes and Restricted
Definitive Notes. In addition to the rights provided to Holders of Notes
under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have the rights set forth in the Registration Rights
Agreement dated as of April 22, 1998, among the Company, the Guarantors and
the parties named on the signature pages thereof (the "Registration Rights
Agreement").
16. Trustee Dealings with Company. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
17. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
18. Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
19. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT
<PAGE>
TEN (= joint tenants with right of survivorship and not as tenants in
common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
20. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes and the Trustee may use
CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed
on the Notes or as contained in any notice of redemption and reliance may
be placed only on the other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Jackson Products, Inc.
2997 Clarkson Road
Chesterfield, Missouri 63017
Attention: Chief Financial Officer
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
(Print or type assignee's name, address and zip code)
and irrevocably appoint
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:
Your Signature:
(Sign exactly as your name appears on the face of
this Note)
Signature Guarantee:
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant to
Section 4.10 or 4.15 of the Indenture, check the box below:
[_] Section 4.10 [_] Section 4.15
If you want to elect to have only part of the Note purchased by the Company
pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you
elect to have purchased: $
Date: Your Signature:
(Sign exactly as your name appears on the Note)
Tax Identification No:
Signature Guarantee:
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE/2/
The following exchanges of a part of this Global Note for an interest in
another Global Note or for a Definitive Note, or exchanges of a part of another
Global Note or Definitive Note for an interest in this Global Note, have been
made:
<TABLE>
<CAPTION>
Amount of Amount of Signature of
decrease in increase in Principal Amount authorized
Principal Amount Principal of this Global Note officer
of this Amount of this following such of Trustee or
Date of Exchange Global Note Global Note decrease (or increase) Note Custodian
- ---------------- ---------------- --------------- ---------------------- ------------------
<S> <C> <C> <C> <C>
</TABLE>
_______________________
/2/ This should be included only if the Note is being issued in global form.
<PAGE>
EXHIBIT 4.4
================================================================================
JACKSON PRODUCTS, INC.
AS ISSUER
JACKSON ACQUISITION, INC.
CRYSTALOID TECHNOLOGIES, INC.
OSD ENVIZION, INC.
FLEX-O-LITE, INC.
AS GUARANTORS
________________________________________
$115,000,000
9.5% SENIOR SUBORDINATED NOTES DUE 2005
________________________________________
___________________
REGISTRATION RIGHTS AGREEMENT
Dated as of April 22, 1998
___________________
JEFFERIES & COMPANY, INC. GOLDMAN, SACHS & CO.
================================================================================
<PAGE>
This Registration Rights Agreement (this "Agreement") is made and entered
into as of April 22, 1998 by and among Jackson Products Inc., a Delaware
corporation (the "Company"), Jackson Acquisition, Inc., a Delaware corporation,
Crystaloid Technologies, Inc., a Delaware corporation, OSD Envizion, Inc., a
Delaware corporation, and Flex-o-Lite, Inc., a Delaware corporation, as
guarantors (collectively, the "Guarantors"), and Jefferies & Company, Inc. and
Goldman, Sachs & Co. (each a "Purchaser" and, collectively, the "Purchasers"),
each of which has agreed to purchase the Company's 9.5% Senior Subordinated
Notes due 2005 (the "Series A Notes") pursuant to the Purchase Agreement (as
defined).
This Agreement is made pursuant to the Purchase Agreement, dated April 16,
1998 (the "Purchase Agreement"), by and among the Company, the Guarantors and
the Purchasers. In order to induce the Purchasers to purchase the Series A
Notes, the Company and the Guarantors have agreed to provide the registration
rights set forth in this Agreement. The execution and delivery of this
Agreement is a condition to the obligations of the Purchasers set forth in the
Purchase Agreement.
The parties hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Act: The Securities Act of 1933, as amended.
---
Business Day: Any day except a Saturday, Sunday or other day in the City
------------
of New York, or in the city of the corporate trust office of the Trustee, on
which banks are authorized to close.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
-------------
Broker-Dealer Transfer Restricted Notes: Series B Notes that are acquired
---------------------------------------
by a Broker-Dealer in the Exchange Offer in exchange for Series A Notes that
such Broker-Dealer acquired for its own account as a result of market-making
activities or other trading activities (other than Series A Notes acquired
directly from the Company or any of its affiliates).
Closing Date: The date hereof.
------------
Commission: The Securities and Exchange Commission.
----------
Consummate: An Exchange Offer shall be deemed "Consummated" for purposes
----------
of this Agreement upon the occurrence of (a) the filing and effectiveness under
the Act of the Exchange Offer Registration Statement relating to the Series B
Notes to be issued in the Exchange Offer, (b) the maintenance of such
Registration Statement continuously effective and the keeping of the Exchange
Offer open for a period not less than the minimum period required pursuant to
Section 3(b) hereof and (c) the delivery by the Company to the Registrar under
the Indenture of Series B Notes in the same aggregate principal amount as the
aggregate principal amount of Series A Notes tendered by Holders thereof
pursuant to the Exchange Offer.
Damages Payment Date: Each Interest Payment Date.
--------------------
Effectiveness Target Date: As defined in Section 5.
-------------------------
1
<PAGE>
Exchange Act: The Securities Exchange Act of 1934, as amended.
------------
Exchange Offer: The registration by the Company under the Act of the
--------------
Series B Notes pursuant to the Exchange Offer Registration Statement pursuant to
which the Company shall offer the Holders of all outstanding Transfer Restricted
Notes the opportunity to exchange all such outstanding Transfer Restricted Notes
for Series B Notes in an aggregate principal amount equal to the aggregate
principal amount of the Transfer Restricted Notes tendered in such exchange
offer by such Holders.
Exchange Offer Registration Statement: The Registration Statement relating
-------------------------------------
to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Purchasers propose to sell
--------------
the Series A Notes to certain "qualified institutional buyers," as such term is
defined in Rule 144A under the Act, certain "accredited investors," as such term
is defined in Rule 501(a)(1), (2), (3) and (7) of Regulation D under the Act and
to certain persons in offshore transactions pursuant to Regulation S under the
Act.
Guarantors: The Guarantors defined in the preamble hereto and any Person
----------
who becomes a guarantor after the date hereof pursuant to the terms of the
Indenture.
Holders: As defined in Section 2 hereof.
-------
Indemnified Holder: As defined in Section 8(a) hereof.
------------------
Indenture: The Indenture, dated the Closing Date, among the Company, the
---------
Guarantors and State Street Bank and Trust Company, as trustee (the "Trustee"),
pursuant to which the Notes are to be issued, as such Indenture is amended or
supplemented from time to time in accordance with the terms thereof.
Interest Payment Date: As defined in the Indenture and the Notes.
---------------------
NASD: National Association of Securities Dealers, Inc.
----
Notes: The Series A Notes and the Series B Notes.
-----
Person: An individual, partnership, corporation, trust, unincorporated
------
organization, or a government or agency or political subdivision thereof.
Prospectus: The prospectus included in a Registration Statement at the
----------
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
Record Holder: With respect to any Damages Payment Date, each Person who
-------------
is a Holder of Notes on the record date with respect to the Interest Payment
Date on which such Damages Payment Date shall occur.
Registration Default: As defined in Section 5 hereof.
--------------------
2
<PAGE>
Registration Statement: Any registration statement of the Company and the
----------------------
Guarantors relating to (a) an offering of Series B Notes pursuant to an Exchange
Offer or (b) the registration for resale of Transfer Restricted Notes pursuant
to the Shelf Registration Statement, in each case, (i) which is filed pursuant
to the provisions of this Agreement and (ii) including the Prospectus included
therein, all amendments and supplements thereto (including post-effective
amendments) and all exhibits and material incorporated by reference therein.
Restricted Broker-Dealer: Any Broker-Dealer which holds Broker-Dealer
------------------------
Transfer Restricted Notes.
Series B Notes: The Company's 9.5% Senior Subordinated Notes due 2005 to
--------------
be issued pursuant to the Indenture (i) in the Exchange Offer or (ii) upon the
request of any Holder of Series A Notes covered by a Shelf Registration
Statement, in exchange for such Series A Notes.
Shelf Registration Statement: As defined in Section 4 hereof.
----------------------------
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as
---
in effect on the date of the Indenture.
Transfer Restricted Notes: Each Note, until the earliest to occur of (a)
-------------------------
the date on which such Note is exchanged in the Exchange Offer and entitled to
be resold to the public by the Holder thereof without complying with the
prospectus delivery requirements of the Act, (b) the date on which such Note has
been disposed of in accordance with a Shelf Registration Statement, (c) the date
on which such Note is disposed of by a Broker-Dealer pursuant to the "Plan of
Distribution" contemplated by the Exchange Offer Registration Statement
(including delivery of the Prospectus contained therein) or (d) the date on
which such Note is distributed to the public pursuant to Rule 144 under the Act.
Underwritten Registration or Underwritten Offering: A registration in
------------------------- ---------------------
which securities of the Company are sold to an underwriter for reoffering to the
public.
2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Notes (each, a
"Holder") whenever such Person owns Transfer Restricted Notes.
3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable federal
law (after the procedures set forth in Section 6(a)(i) below have been complied
with), the Company and the Guarantors shall (i) cause to be filed with the
Commission as soon as practicable after the Closing Date, but in no event later
than 90 days after the Closing Date, the Exchange Offer Registration Statement,
(ii) use their reasonable best efforts to cause such Exchange Offer Registration
Statement to become effective at the earliest possible time, but in no event
later than 150 days after the Closing Date, (iii) in connection with the
foregoing, (A) file all pre-effective amendments to such Exchange Offer
Registration Statement as may be necessary in order to cause such Exchange Offer
Registration Statement to become effective, (B) file, if applicable, a post-
effective amendment to such Exchange Offer Registration Statement pursuant to
Rule 430A under the Act and (C) cause all necessary filings, if any, in
connection with the registration and qualification of the Series B Notes to be
made under the Blue Sky laws of such jurisdictions as are necessary to permit
Consummation of the Exchange Offer, and (iv) upon the effectiveness of such
Exchange Offer Registration Statement, commence
3
<PAGE>
and Consummate the Exchange Offer. The Exchange Offer shall be on the
appropriate form permitting registration of the Series B Notes to be offered in
exchange for the Series A Notes that are Transfer Restricted Notes and to permit
sales of Broker-Dealer Transfer Restricted Notes by Restricted Broker-Dealers as
contemplated by Section 3(c) below.
(b) The Company and the Guarantors shall use their reasonable best efforts
to cause the Exchange Offer Registration Statement to be effective continuously,
and shall keep the Exchange Offer open, for a period of not less than the
minimum period required under applicable federal and state securities laws to
Consummate the Exchange Offer; provided that in no event shall such period be
less than 20 Business Days. The Company shall cause the Exchange Offer to
comply with all applicable federal and state securities laws. No securities
other than the Notes shall be included in the Exchange Offer Registration
Statement. The Company shall use its reasonable best efforts to cause the
Exchange Offer to be Consummated on the earliest practicable date after the
Exchange Offer Registration Statement has become effective, but in no event
later than 30 Business Days thereafter.
(c) The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Restricted Broker-Dealer who holds Series A Notes that are
Transfer Restricted Notes and that were acquired for the account of such Broker-
Dealer as a result of market-making activities or other trading activities, may
exchange such Series A Notes (other than Transfer Restricted Notes acquired
directly from the Company) pursuant to the Exchange Offer; however, such Broker-
Dealer may be deemed to be an "underwriter" within the meaning of the Act and
must, therefore, deliver a prospectus meeting the requirements of the Act in
connection with its initial sale of each Series B Note received by such Broker-
Dealer in the Exchange Offer, which prospectus delivery requirement may be
satisfied by the delivery by such Broker-Dealer of the Prospectus contained in
the Exchange Offer Registration Statement. Such "Plan of Distribution" section
shall also contain all other information with respect to such sales of Broker-
Dealer Transfer Restricted Notes by Restricted Broker-Dealers that the
Commission may require in order to permit such sales pursuant thereto, but such
"Plan of Distribution" shall not name any such Broker-Dealer or disclose the
amount of Notes held by any such Broker-Dealer except to the extent required by
the Commission as a result of a change in policy after the date of this
Agreement.
The Company and the Guarantors shall use their reasonable best efforts to
keep the Exchange Offer Registration Statement continuously effective,
supplemented and amended as required by the provisions of Section 6(c) below to
the extent necessary to ensure that it is available for sales of Broker-Dealer
Transfer Restricted Notes by Restricted Broker-Dealers, and to ensure that such
Registration Statement conforms with the requirements of this Agreement, the Act
and the policies, rules and regulations of the Commission as announced from time
to time, for a period of 120 days from the date on which the Exchange Offer is
Consummated.
The Company shall promptly provide sufficient copies of the latest version
of such Prospectus to such Restricted Broker-Dealers upon such Restricted
Broker-Dealers' reasonable request, and in no event later than two Business Days
after such request, at any time during such 120-day period in order to
facilitate such sales.
4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Company is not required to file an
------------------
Exchange Offer Registration Statement with respect to the Series B Notes because
the Exchange Offer is not permitted by applicable law (after the procedures set
forth in Section 6(a)(i) below have been complied with) or (ii) if any Holder of
Transfer Restricted Notes shall notify the Company in writing within 20 Business
Days following the
4
<PAGE>
Consummation of the Exchange Offer that (A) such Holder is prohibited by law or
Commission policy from participating in the Exchange Offer or (B) such Holder
may not resell the Series B Notes acquired by it in the Exchange Offer to the
public without delivering a prospectus and the Prospectus contained in the
Exchange Offer Registration Statement is not appropriate or available for such
resales by such Holder or (C) such Holder is a Broker-Dealer and holds Series A
Notes acquired directly from the Company or one of its affiliates, then the
Company and the Guarantors shall (x) cause to be filed on or prior to the
earliest of (1) 90 days after the date on which the Company is notified by the
Commission or otherwise determines that it is not required to file the Exchange
Offer Registration Statement pursuant to clause (i) above and (2) 90 days after
the date on which the Company receives the notice specified in clause (ii)
above, a shelf registration statement pursuant to Rule 415 under the Act, (which
may be an amendment to the Exchange Offer Registration Statement (in either
event, the "Shelf Registration Statement")), relating to all Transfer Restricted
Notes the Holders of which shall have provided the information required pursuant
to Section 4(b) hereof, and (y) use their reasonable best efforts to cause such
Shelf Registration Statement to become effective at the earliest possible time,
but in no event later than 150 days after the date on which the Company becomes
obligated to file such Shelf Registration Statement. If, after the Company and
the Guarantors have filed an Exchange Offer Registration Statement which
satisfies the requirements of Section 3(a) above, the Company is required to
file and make effective a Shelf Registration Statement solely because the
Exchange Offer shall not be permitted under applicable federal law, then the
filing of the Exchange Offer Registration Statement shall be deemed to satisfy
the requirements of clause (x) above. Such an event shall have no effect on the
requirements of clause (y) above, or on the Effectiveness Target Date as defined
in Section 5 below. The Company and the Guarantors shall use their reasonable
best efforts to keep the Shelf Registration Statement discussed in this Section
4(a) continuously effective, supplemented and amended as required by and subject
to the provisions of Sections 6(b) and (c) hereof to the extent necessary to
ensure that it is available for sales of Transfer Restricted Notes by the
Holders thereof entitled to the benefit of this Section 4(a), and to ensure that
it conforms with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of at least two years (as extended pursuant to Section 6(c)(i)) following
the date on which such Shelf Registration Statement first becomes effective
under the Act or such shorter period that will terminate when all Transfer
Restricted Notes covered by the Shelf Registration Statement have been sold
pursuant thereto.
(b) Provision by Holders of Certain Information in Connection with the
------------------------------------------------------------------
Shelf Registration Statement. No Holder of Transfer Restricted Notes may
- ----------------------------
include any of its Transfer Restricted Notes in any Shelf Registration Statement
pursuant to this Agreement unless and until such Holder furnishes to the Company
in writing, within 20 days after receipt of a request therefor, such information
specified in item 507 of Regulation S-K under the Act for use in connection with
any Shelf Registration Statement or Prospectus or preliminary Prospectus
included therein. No Holder of Transfer Restricted Notes shall be entitled to
Liquidated Damages pursuant to Section 5 hereof unless and until such Holder
shall have used its reasonable best efforts to provide all such information.
Each Holder as to which any Shelf Registration Statement is being effected
agrees to furnish promptly to the Company all information required to be
disclosed in order to make the information previously furnished to the Company
by such Holder not materially misleading.
5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not filed
with the Commission on or prior to the date specified for such filing in this
Agreement, (ii) any such Registration Statement has not been declared effective
by the Commission on or prior to the date specified for such effectiveness in
this Agreement (the "Effectiveness Target Date"), (iii) the Exchange Offer has
not been Consummated within 30 Business Days after the Effectiveness Target Date
with respect to the Exchange Offer Registration Statement
5
<PAGE>
or (iv) subject to the provisions of Section 6(c)(i) below, any Registration
Statement required by this Agreement is filed and declared effective but shall
thereafter cease to be effective or fail to be usable for its intended purpose
without being succeeded immediately (but in any event within five Business Days
thereafter) by a post-effective amendment to such Registration Statement that
cures such failure and that is itself declared effective within such five
Business Day period, other than, in the case of clause (iv) above, for such
period in which such Registration Statement shall cease to be effective as a
result of post-effective amendments to incorporate annual filings which the
Company is required to file with the Commission or post-effective amendments not
otherwise covered by Section 6(c)(i) hereof, provided that the Company and the
Guarantors in good faith attempt to cause such Registration Statement to be
declared effective as soon as reasonably practicable (each such event referred
to in clauses (i) through (iv), a "Registration Default"), the Company and the
Guarantors hereby agree to pay to each Holder of Transfer Restricted Notes, for
the first 90-day period immediately following the occurrence of such
Registration Default, liquidated damages in an amount equal to $.05 per week per
$1,000 principal amount of Notes constituting Transfer Restricted Notes held by
such Holder for so long as the Registration Default continues. The amount of
liquidated damages payable to each Holder shall increase by an additional $.05
per week per $1,000 in principal amount of Transfer Restricted Notes held by
such Holder for each subsequent 90-day period up to a maximum of $.40 per week
per $1,000 in principal amount of Notes constituting Transfer Restricted Notes
held by such Holder; provided that (1) upon filing of the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration
Statement), in the case of (i) above, (2) upon the effectiveness of the Exchange
Offer Registration Statement (and/or, if applicable, the Shelf Registration
Statement), in the case of (ii) above, (3) upon Consummation of the Exchange
Offer, in the case of (iii) above, or (4) upon the filing of a post-effective
amendment to the Registration Statement or an additional Registration Statement
that causes the Exchange Offer Registration Statement (and/or, if applicable,
the Shelf Registration Statement) to again be declared effective or made usable
in the case of (iv) above, the liquidated damages payable with respect to such
Transfer Restricted Notes as a result of such clause (i), (ii), (iii) or (iv),
as applicable, shall cease.
All accrued liquidated damages shall be paid by the Company and the
Guarantors to the Global Note Holder by wire transfer of immediately available
funds or by federal funds check and to Holders of Certificated Securities by
wire transfer to the accounts specified by them or by mailing checks to their
registered addresses if no such accounts have been specified on each Damages
Payment Date. All obligations of the Company and the Guarantors set forth in
the preceding paragraph that are outstanding with respect to any Transfer
Restricted Note at the time such security ceases to be a Transfer Restricted
Note shall survive until such time as all such obligations with respect to such
security shall have been satisfied in full.
6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the Exchange
-------------------------------------
Offer, the Company and the Guarantors shall comply with all applicable
provisions of Section 6(c) below, shall use their reasonable best efforts to
effect such exchange and to permit the sale of Broker-Dealer Transfer Restricted
Notes being sold in accordance with the intended method or methods of
distribution thereof, and shall comply with all of the following provisions:
(i) If, following the date hereof there has been published a change
in Commission policy with respect to exchange offers such as the Exchange
Offer, such that in the reasonable opinion of counsel to the Company and
the Guarantors there is a substantial question as to whether the Exchange
Offer is permitted by applicable federal law or Commission policy, the
Company and the Guarantors hereby agree to seek a no-action letter or other
favorable decision from the Commission allowing the Company and the
Guarantors to Consummate an Exchange Offer for such Series A
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<PAGE>
Notes. The Company and the Guarantors hereby agree to pursue the issuance
of such a decision to the Commission staff level but shall not be required
to take commercially unreasonable action to effect a change of Commission
policy. In connection with the foregoing, the Company and the Guarantors
hereby agree, however, to take all such other actions as are requested by
the Commission or otherwise required in connection with the issuance of
such decision, including without limitation (A) participating in telephonic
conferences with the Commission, (B) delivering to the Commission staff an
analysis prepared by counsel to the Company and the Guarantors setting
forth the legal bases, if any, upon which such counsel has concluded that
such an Exchange Offer should be permitted and (C) diligently pursuing a
resolution (which need not be favorable) by the Commission staff of such
submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer Restricted
Notes shall furnish, upon the request of the Company, prior to the
Consummation of the Exchange Offer, a written representation to the Company
(which may be contained in the letter of transmittal contemplated by the
Exchange Offer Registration Statement) to the effect that (A) it is not an
affiliate of the Company, (B) it is not engaged in, and does not intend to
engage in, and has no arrangement or understanding with any person to
participate in, a distribution of the Series B Notes to be issued in the
Exchange Offer and (C) it is acquiring the Series B Notes in its ordinary
course of business. Each Holder hereby acknowledges and agrees that any
Broker-Dealer and any such Holder using the Exchange Offer to participate
in a distribution of the securities to be acquired in the Exchange Offer
(1) could not under Commission policy as in effect on the date of this
Agreement rely on the position of the Commission enunciated in Morgan
------
Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings
--------------------- ----------------------
Corporation (available May 13, 1988), as interpreted in the Commission's
-----------
letter to Shearman & Sterling dated July 2, 1993, and similar no-action
letters (including, if applicable, any no-action letter obtained pursuant
to clause (i) above), and (2) must comply with the registration and
prospectus delivery requirements of the Act in connection with a secondary
resale transaction and that such a secondary resale transaction must be
covered by an effective registration statement containing the selling
security holder information required by Item 507 or 508, as applicable, of
Regulation S-K if the resales are of Series B Notes obtained by such Holder
in exchange for Series A Notes acquired by such Holder directly from the
Company or an affiliate thereof.
(iii) To the extent required by the Commission, prior to
effectiveness of the Exchange Offer Registration Statement, the Company and
the Guarantors shall provide a supplemental letter to the Commission (A)
stating that the Company and the Guarantors are registering the Exchange
Offer in reliance on the position of the Commission enunciated in Exxon
-----
Capital Holdings Corporation (available May 13, 1988), Morgan Stanley and
---------------------------- ------------------
Co., Inc. (available June 5, 1991) and, if applicable, any no-action letter
---------
obtained pursuant to clause (i) above, (B) including a representation that
neither the Company nor any Guarantor has entered into any arrangement or
understanding with any Person to distribute the Series B Notes to be
received in the Exchange Offer and that, to the best of the Company's and
the Guarantors' information and belief, each Holder participating in the
Exchange Offer is acquiring the Series B Notes in its ordinary course of
business and has no arrangement or understanding with any Person to
participate in the distribution of the Series B Notes received in the
Exchange Offer and (C) any other undertaking or representation required by
the Commission as set forth in any no-action letter obtained pursuant to
clause (i) above.
(b) Shelf Registration Statement. In connection with the Shelf
----------------------------
Registration Statement, the Company and the Guarantors shall comply with all the
provisions of Section 6(c) below and shall use their
7
<PAGE>
reasonable best efforts to effect such registration to permit the sale of the
Transfer Restricted Notes being sold in accordance with the intended method or
methods of distribution thereof (as indicated in the information furnished to
the Company pursuant to Section 4(b) hereof), and pursuant thereto the Company
and the Guarantors will prepare and file with the Commission a Registration
Statement relating to the registration on any appropriate form under the Act,
which form shall be available for the sale of the Transfer Restricted Notes in
accordance with the intended method or methods of distribution thereof within
the time periods and otherwise in accordance with the provisions hereof.
(c) General Provisions. In connection with any Registration Statement and
------------------
any related Prospectus required by this Agreement to permit the sale or resale
of Transfer Restricted Notes (including, without limitation, any Exchange Offer
Registration Statement and the related Prospectus, to the extent that the same
are required to be available to permit sales of Broker-Dealer Transfer
Restricted Notes by Restricted Broker-Dealers), the Company and the Guarantors
shall:
(i) use their reasonable best efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements for the period specified in Section 3 or 4 of this Agreement, as
applicable. Upon the occurrence of any event that would cause any such
Registration Statement or the Prospectus contained therein (A) to contain a
material misstatement or omission or (B) not to be effective and usable for
resale of Transfer Restricted Notes during the period required by this
Agreement, the Company and the Guarantors shall file promptly an
appropriate amendment to such Registration Statement, (1) in the case of
clause (A), correcting any such misstatement or omission, and (2) in the
case of either clause (A) or (B), use its reasonable best efforts to cause
such amendment to be declared effective and such Registration Statement and
the related Prospectus to become usable for their intended purpose(s) as
soon as practicable thereafter. Notwithstanding the foregoing, if (A) the
Board of Directors of the Company determines in good faith that it is in
the best interests of the Company not to disclose the existence of or facts
surrounding any proposed or pending material corporate transaction
involving the Company or its subsidiaries and (B) the Company notifies the
Trustee within two Business Days after the Board of Directors makes such
determination, the Company and the Guarantors may allow the Shelf
Registration Statement to fail to be effective and usable as a result of
such nondisclosure for up to 90 days during the two-year period of
effectiveness required by Section 4 hereof, but in no event for any period
in excess of 30 consecutive days; provided that the two-year period
referred to in Section 4 hereof during which the Shelf Registration
Statement is required to be effective and usable shall be extended by the
number of days during which such registration statement was not effective
or usable pursuant to the foregoing provisions.
(ii) prepare and file with the Commission such amendments and post-
effective amendments to the Registration Statement as may be necessary to
keep the Registration Statement effective for the applicable period set
forth in Section 3 or 4 hereof, or such shorter period as will terminate
when all Transfer Restricted Notes covered by such Registration Statement
have been sold; cause the Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to Rule
424 under the Act, and to comply fully with Rules 424 and 430A, as
applicable, under the Act in a timely manner; and comply with the
provisions of the Act with respect to the disposition of all securities
covered by such Registration Statement during the applicable period in
accordance with the intended method or methods of distribution by the
sellers thereof set forth in such Registration Statement or supplement to
the Prospectus;
8
<PAGE>
(iii) advise the underwriter(s), if any, and selling Holders
promptly upon becoming aware and, if requested by such Persons, confirm
such advice in writing, (A) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to
any Registration Statement or any post-effective amendment thereto, when
the same has become effective, (B) of any request by the Commission for
amendments to the Registration Statement or amendments or supplements to
the Prospectus or for additional information relating thereto, (C) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement under the Act or of the suspension by any
state securities commission of the qualification of the Transfer Restricted
Notes for offering or sale in any jurisdiction, or the initiation of any
proceeding for any of the preceding purposes, (D) of the existence of any
fact or the happening of any event that makes any statement of a material
fact made in the Registration Statement, the Prospectus, any amendment or
supplement thereto or any document incorporated by reference therein
untrue, or that requires the making of any additions to or changes in the
Registration Statement in order to make the statements therein not
misleading, or that requires the making of any additions to or changes in
the Prospectus in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If at any time
the Commission shall issue any stop order suspending the effectiveness of
the Registration Statement, or any state securities commission or other
regulatory authority shall issue an order suspending the qualification or
exemption from qualification of the Transfer Restricted Notes under state
securities or Blue Sky laws, the Company and the Guarantors shall use their
reasonable best efforts to obtain the withdrawal or lifting of such order
at the earliest possible time;
(iv) in the case of a Shelf Registration Statement, use reasonable
best efforts to furnish to the Purchaser, each selling Holder named in any
Registration Statement or Prospectus and each of the underwriter(s) in
connection with such sale, if any, before filing with the Commission,
copies of any Registration Statement or any Prospectus included therein or
any amendments or supplements to any such Registration Statement or
Prospectus (including all documents incorporated by reference after the
initial filing of such Registration Statement) prior to filing, reasonably
respond to comments received from such persons, and make the Company's and
the Guarantors' representatives available for discussion of such documents
and other customary due diligence matters.
(v) subject to execution of confidentiality agreements that are
reasonably satisfactory to the Company as to the disclosure of any non-
public information obtained pursuant to this Section 6(c)(v) and upon
reasonable notice and at reasonable times, make available for inspection at
the Company's headquarters as specified in Section 12(e) hereof by the
selling Holders, any managing underwriter participating in any disposition
pursuant to such Registration Statement and any attorney or accountant
retained by such selling Holders or any of such underwriter(s), all
financial and other records, pertinent corporate documents and properties
of the Company and the Guarantors and cause the Company's and the
Guarantors' officers, directors and employees to supply all information
reasonably requested by any such Holder, underwriter, attorney or
accountant in connection with such Registration Statement or any post-
effective amendment thereto subsequent to the filing thereof and prior to
its effectiveness;
(vi) in the case of a Shelf Registration Statement, if requested by
any selling Holders or the underwriter(s) in connection with such sale, if
any, promptly include in any Registration Statement or Prospectus, pursuant
to a supplement or post-effective amendment if necessary, such information
as such selling Holders and underwriter(s), if any, may reasonably request
to have included therein, including, without limitation, information
relating to the "Plan of Distribution" of
9
<PAGE>
the Transfer Restricted Notes, information with respect to the principal
amount of Transfer Restricted Notes being sold to such underwriter(s), the
purchase price being paid therefor and any other terms of the offering of
the Transfer Restricted Notes to be sold in such offering; and make all
required filings of such Prospectus supplement or post-effective amendment
as soon as practicable after the Company is notified of the matters
reasonably requested to be included in such Prospectus supplement or post-
effective amendment;
(vii) in the case of a Shelf Registration Statement, furnish to each
selling Holder and each of the underwriter(s) in connection with such sale,
if any, without charge, at least one copy of the Registration Statement, as
first filed with the Commission, and of each amendment thereto, including
all documents incorporated by reference therein and all exhibits (including
exhibits incorporated therein by reference);
(viii) deliver to each selling Holder and each of the underwriter(s),
if any, without charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto as such
Persons reasonably may request; the Company and the Guarantors hereby
consent to the use (in accordance with law) of the Prospectus and any
amendment or supplement thereto by each of the selling Holders and each of
the underwriter(s), if any, in connection with the offering and the sale of
the Transfer Restricted Notes covered by the Prospectus or any amendment or
supplement thereto;
(ix) enter into such customary agreements and make such customary
representations and warranties and take all such other customary actions in
connection therewith in order to expedite or facilitate the disposition of
the Transfer Restricted Notes pursuant to any Registration Statement
contemplated by this Agreement as may be reasonably requested by any Holder
of Transfer Restricted Notes or underwriter in connection with any sale or
resale pursuant to any Registration Statement contemplated by this
Agreement, and in such connection, whether or not an underwriting agreement
is entered into and whether or not the registration is an Underwritten
Registration, the Company and the Guarantors shall:
(A) furnish (or in the case of paragraphs (2) and (3), use
their reasonable best efforts to furnish) to each selling Holder and
each underwriter, if any, upon the effectiveness of the Shelf
Registration Statement and to each Restricted Broker-Dealer upon
Consummation of the Exchange Offer:
(1) a certificate, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, signed on behalf of
the Company by (x) the President or any Vice President and (y)
a principal financial or accounting officer of the Company and
each of the Guarantors confirming, as of the date thereof, the
matters set forth in paragraphs (a) through (c) of Section 9 of
the Purchase Agreement and such other similar matters as the
Holders and/or underwriter(s) may reasonably request;
(2) an opinion, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, of counsel for the
Company and the Guarantors, covering matters customarily
covered in opinions requested in Underwritten Offerings and
dated the date of
10
<PAGE>
effectiveness of the Shelf Registration Statement or the date of
Consummation of the Exchange Offer, as the case may be; and
(3) a customary comfort letter, dated as of the date of
effectiveness of the Shelf Registration Statement or the date of
Consummation of the Exchange Offer, as the case may be, from the
Company's and the Guarantors' independent accountants, in the
customary form and covering matters of the type customarily
covered in comfort letters to underwriters in connection with
Underwritten Offerings, and affirming the matters set forth in
the comfort letters delivered pursuant to Section 9(g) of the
Purchase Agreement, without exception;
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, in connection with any sale or resale
pursuant to any Shelf Registration Statement the indemnification
provisions and procedures of Section 8 hereof with respect to all
parties to be indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as may be
reasonably requested by the selling Holders or the underwriter(s), if
any, to evidence compliance with clause (A) above and with any
customary conditions contained in the underwriting agreement or other
agreement entered into by the Company and the Guarantors pursuant to
this clause (x).
The above shall be done at each closing under such underwriting or similar
agreement, as and to the extent required thereunder, and if at any time the
representations and warranties of the Company and the Guarantors contemplated in
(A)(1) above cease to be true and correct, the Company and the Guarantors shall
so advise the underwriter(s), if any, and selling Holders promptly and if
requested by such Persons, shall confirm such advice in writing;
(x) prior to any public offering of Transfer Restricted Notes,
cooperate with the selling Holders, the underwriter(s), if any, and their
respective counsel in connection with the registration and qualification of
the Transfer Restricted Notes under the securities or Blue Sky laws of such
jurisdictions as the selling Holders or underwriter(s), if any, may request
and do any and all other acts or things necessary or advisable to enable
the disposition in such jurisdictions of the Transfer Restricted Notes
covered by the applicable Registration Statement; provided that neither the
Company nor any Guarantor shall be required to register or qualify as a
foreign corporation where it is not now so qualified or to take any action
that would subject it to the service of process in suits or to taxation,
other than as to matters and transactions relating to the Registration
Statement, in any jurisdiction where it is not now so subject;
(xi) issue, upon the request of any Holder of Series A Notes covered
by any Shelf Registration Statement contemplated by this Agreement, Series
B Notes, having an aggregate principal amount equal to the aggregate
principal amount of Series A Notes surrendered to the Company by such
Holder in exchange therefor or being sold by such Holder; such Series B
Notes to be registered in the name of such Holder or in the name of the
purchaser(s) of such Notes, as the case may be; in return, the Series A
Notes held by such Holder shall be surrendered to the Company for
cancellation;
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<PAGE>
(xii) in connection with any sale of Transfer Restricted Notes that
will result in such securities no longer being Transfer Restricted Notes,
cooperate with the selling Holders and the underwriter(s), if any, to
facilitate the timely preparation and delivery of certificates representing
Transfer Restricted Notes to be sold and not bearing any restrictive
legends; and to register such Transfer Restricted Notes in such
denominations and such names as the Holders or the underwriter(s), if any,
may request at least two Business Days prior to such sale of Transfer
Restricted Notes;
(xiii) use their reasonable best efforts to cause the disposition of
the Transfer Restricted Notes covered by the Registration Statement to be
registered with or approved by such other U.S. governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof or
the underwriter(s), if any, to consummate the disposition of such Transfer
Restricted Notes, subject to the proviso contained in clause (xi) above;
(xiv) subject to Section 6(c)(i), if any fact or event contemplated
by Section 6(c)(iii)(D) above shall exist or have occurred, prepare a
supplement or post-effective amendment to the Registration Statement or
related Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of Transfer Restricted Notes, the Prospectus will not contain an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(xv) provide a CUSIP number for all Transfer Restricted Notes not
later than the effective date of a Registration Statement covering such
Transfer Restricted Notes and provide the Trustee under the Indenture with
printed certificates for the Transfer Restricted Notes that are in a form
eligible for deposit with The Depository Trust Company;
(xvi) cooperate and assist in any filings required to be made with
the NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and regulations of the
NASD, and use their reasonable best efforts to cause such Registration
Statement to become effective and approved by such governmental agencies or
authorities as may be necessary to enable the Holders selling Transfer
Restricted Notes to consummate the disposition of such Transfer Restricted
Notes;
(xvii) otherwise use their reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders with regard to any applicable
Registration Statement, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not be audited)
covering a twelve-month period beginning after the effective date of the
Registration Statement (as such term is defined in paragraph (c) of Rule
158 under the Act);
(xviii) cause the Indenture to be qualified under the TIA not later
than the effective date of the first Registration Statement required by
this Agreement and, in connection therewith, cooperate with the Trustee and
the Holders of Notes to effect such changes to the Indenture as may be
required for such Indenture to be so qualified in accordance with the terms
of the TIA; and execute, and use their reasonable best efforts to cause the
Trustee to execute, all documents that may be required to
12
<PAGE>
effect such changes and all other forms and documents required to be filed
with the Commission to enable such Indenture to be so qualified in a timely
manner; and
(xix) provide promptly to each Holder upon request each document
filed with the Commission pursuant to the requirements of Section 13 or
Section 15(d) of the Exchange Act.
(d) Restrictions on Holders. Each Holder agrees by acquisition of a
-----------------------
Transfer Restricted Note that, upon receipt of the notice referred to in Section
6(c)(i) or any notice from the Company of the existence of any fact of the kind
described in Section 6(c)(iii)(D) hereof, such Holder will forthwith discontinue
disposition of Transfer Restricted Notes pursuant to the applicable Registration
Statement until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 6(c)(xv) hereof, or until it is
advised in writing by the Company that the use of the Prospectus may be resumed,
and has received copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus (the "Advice"). If so directed by
the Company, each Holder will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies then in such Holder's possession,
of the Prospectus covering such Transfer Restricted Notes that was current at
the time of receipt of either such notice. In the event the Company shall give
any such notice, the time period regarding the effectiveness of such
Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall
be extended by the number of days during the period from and including the date
of the giving of such notice pursuant to Section 6(c)(i) or Section 6(c)(iii)(D)
hereof to and including the date when each selling Holder covered by such
Registration Statement shall have received the copies of the supplemented or
amended Prospectus contemplated by Section 6(c)(xv) hereof or shall have
received the Advice.
7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's and the Guarantors' performance
of or compliance with this Agreement will be borne by the Company and the
Guarantors, regardless of whether a Registration Statement becomes effective,
including without limitation: (i) all registration and filing fees and expenses
(including filings made with the NASD and counsel fees in connection therewith);
(ii) all fees and expenses of compliance with federal securities and state Blue
Sky or securities laws; (iii) all printing expenses of printing (including
printing certificates for the Series B Notes and printing of Prospectuses); (iv)
all fees and disbursements of counsel for the Company and the Guarantors and, in
accordance with Section 7(b) below, the Holders of Transfer Restricted Notes;
and (v) all fees and disbursements of independent certified public accountants
of the Company and the Guarantors (including the expenses of any special audit
and comfort letters required by or incident to such performance).
The Company will, in any event, bear its and the Guarantors' internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expenses of
any annual audit and the fees and expenses of any Person, including special
experts, retained by the Company and the Guarantors.
(b) In connection with any Shelf Registration Statement required by this
Agreement, the Company and the Guarantors will reimburse the Holders of Transfer
Restricted Notes the distribution of which is being registered pursuant to the
Shelf Registration Statement for the reasonable fees and disbursements of not
more than one counsel chosen by the Holders of a majority of the principal
amount of such Transfer Restricted Notes, which counsel shall be satisfactory to
the Company in its sole discretion.
13
<PAGE>
8. INDEMNIFICATION
(a) The Company and the Guarantors, jointly and severally, agree to
indemnify and hold harmless (i) each Holder and (ii) each person, if any, who
controls (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) any Holder (any of the persons referred to in this clause (ii)
being hereinafter referred to as a "controlling person") and (iii) the
respective officers, directors, partners, employees, representatives and agents
of any Holder or any controlling person (any person referred to in clause (i),
(ii) or (iii) may hereinafter be referred to as an "Indemnified Holder"), from
and against any and all losses, claims, damages, liabilities and judgments
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement or Prospectus (or any amendment or
supplement thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except insofar as such losses, claims, damages, liabilities or
judgments (i) are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any of the
Holders furnished in writing to the Company by or on behalf of any of the
Holders expressly for use therein, (ii) with respect to the preliminary
prospectus, result from the fact that the Holder sold Transfer Restricted Notes
to a person to whom there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the prospectus, as amended or supplemented,
if the Company shall have previously furnished copies thereof to the Holder in
accordance with this Agreement and the prospectus, as amended or supplemented,
would have corrected such untrue statement or omission or (iii) are a result of
the use by the Indemnified Holder of any prospectus, when, upon receipt of a
notice from the Company of the existence of any fact of the kind described in
Section 6(c)(iii)(D) hereof contemplated by the last paragraph of Section 6
hereof, the Indemnified Holder was not permitted to do so.
In case any action or proceeding shall be brought against any of the
Indemnified Holders with respect to which indemnity may be sought against the
Company or the Guarantors, such Indemnified Holder (or the Indemnified Holder
controlled by such controlling person) shall promptly notify the Company in
writing (provided that the failure to give such notice shall not relieve the
Company and the Guarantors of their obligations pursuant to this Agreement).
Such Indemnified Holder shall have the right to employ its own counsel in any
such action but the fees and expenses of such counsel shall be at the expense of
the Indemnified Holder or such controlling person unless (i) the employment of
such counsel shall have been specifically authorized in writing by the Company,
(ii) the Company and the Guarantors shall have failed to assume the defense and
employ counsel or (iii) the named parties to any such action (including any
impleaded parties) include both the Indemnified Holder or such controlling
person and the Company or the Guarantors and the Indemnified Holder or such
controlling person shall have been advised in writing by such counsel that there
may be one or more legal defenses available to it which are different from or
additional to those available to the Company and the Guarantors (in which case
the Company and the Guarantors shall not have the right to assume the defense of
such action on behalf of the Indemnified Holder or such controlling person), it
being understood, however, that the Company and the Guarantors shall not, in
connection with any one such action or proceeding or separate but substantially
similar or related actions or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys (in addition to
any local counsel) at any time for such Indemnified Holders, which firm shall be
designated by the Holders and be reasonably satisfactory to the Company. The
Company and the Guarantors shall not be liable for any settlement of any such
action or proceeding effected without the Company's prior written consent, which
consent shall not be withheld unreasonably, but if settled with the Company's
written consent, and the Company and the Guarantors agree to indemnify and hold
harmless any Indemnified Holder from and against any loss or liability by reason
of such settlement. The Company and the Guarantors shall not, without the prior
written consent of each
14
<PAGE>
Indemnified Holder, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Holder is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Holder,
unless such settlement includes an unconditional release of such Indemnified
Holder from all liability on claims that are the subject matter of such
proceeding.
(b) Each Holder of Transfer Restricted Notes agrees, severally and not
jointly, to indemnify and hold harmless (i) the Company, (ii) each of the
Guarantors, (iii) any person controlling the Company or any Guarantor (within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act) and (iv)
the directors, officers, partners, employees, representatives, and agents of the
Company and each of the Guarantors to the same extent as the foregoing indemnity
from the Company and the Guarantors to each of the Indemnified Holders, but only
with respect to information relating to such Holder furnished in writing by such
Holder expressly for use in any Registration Statement. In case any action or
proceeding shall be brought against the Company, any Guarantor or its directors
or officers or any such controlling person in respect of which indemnity may be
sought against a Holder of Transfer Restricted Notes, such Holder shall have the
rights and duties given the Company and the Guarantors, and the Company, such
Guarantor or its directors or officers or such controlling person shall have the
rights and duties given to each Holder by the preceding paragraph. In no event
shall the liability of any selling Holder hereunder be greater in amount than
the dollar amount of the proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation.
(c) If the indemnification provided for in this Section 8 is unavailable to
an indemnified party under Section 8(a) or Section 8(b) hereof (other than by
reason of exceptions provided in those Sections) in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
applicable indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities or judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Holders on the other hand from their sale of
Transfer Restricted Notes or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect the relative fault of the Company and the Guarantors on the one hand and
of the Indemnified Holder on the other in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The relative
fault of the Company and the Guarantors on the one hand and of the Indemnified
Holder on the other shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the Company
and the Guarantors or by the Indemnified Holder and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount paid or payable by a party as a result
of the losses, claims, damages, liabilities and judgments referred to above
shall be deemed to include, subject to the limitations set forth in the second
paragraph of Section 8(a), any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim.
The Company, the Guarantors and each Holder of Transfer Restricted Notes
agree that it would not be just and equitable if contribution pursuant to this
Section 8(c) were determined by pro rata allocation (even if the Holders were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The losses, claims, damages, liabilities or
judgments referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 8, none of the Holders (and its related Indemnified Holders)
15
<PAGE>
shall be required to contribute, in the aggregate, any amount in excess of the
amount by which the dollar amount of proceeds received by any such Holder upon
the sale of Transfer Restricted Notes exceeds the amount of any damages that
such Holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Holders' obligations to contribute pursuant
to this Section 8(c) are several in proportion to the respective principal
amount of Series A Notes held by each of the Holders hereunder and not joint.
9. RULE 144A
The Company and the Guarantors hereby agree with each Holder, for so long
as any Transfer Restricted Notes remain outstanding and during any period in
which the Company is not subject to Section 13 or 15(d) of the Securities
Exchange Act, to make available, upon request of any Holder of Transfer
Restricted Notes, to any Holder or beneficial owner of Transfer Restricted Notes
in connection with any sale thereof and any prospective purchaser of such
Transfer Restricted Notes designated by such Holder or beneficial owner, the
information required by Rule 144A(d)(4) under the Act in order to permit resales
of such Transfer Restricted Notes pursuant to Rule 144A.
10. UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder unless
such Holder (a) agrees to sell such Holder's Transfer Restricted Notes on the
basis provided in customary underwriting arrangements entered into in connection
therewith and (b) completes and executes all reasonable questionnaires, powers
of attorney, lock-up letters and other documents required under the terms of
such underwriting arrangements.
11. SELECTION OF UNDERWRITERS
Subject to the Company's consent, for any Underwritten Offering, the
investment banker or investment bankers and manager or managers for any
Underwritten Offering that will administer such offering will be selected by the
Holders of a majority in aggregate principal amount of the Transfer Restricted
Notes included in such offering. Such investment bankers and managers are
referred to herein as the "underwriters."
12. MISCELLANEOUS
(a) Remedies. Each Holder, in addition to being entitled to exercise all
--------
rights provided herein, in the Indenture, the Purchase Agreement or granted by
law, including recovery of liquidated or other damages, will be entitled to
specific performance of its rights under this Agreement. The Company and the
Guarantors agree that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of the provisions of this
Agreement and hereby agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not, and will cause the
--------------------------
Guarantors not to, on or after the date of this Agreement, enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. Neither the Company nor any Guarantor has previously entered
into any agreement granting any registration rights with respect to its
securities to any Person. The rights granted to the Holders
16
<PAGE>
hereunder do not in any way conflict with and are not inconsistent with the
rights granted to the holders of the Company's or any Guarantors' securities
under any agreement in effect on the date hereof.
(c) Adjustments Affecting the Notes. The Company will not take any action,
-------------------------------
or voluntarily permit any change to occur, with respect to the Notes that would
materially and adversely affect the ability of the Holders to Consummate any
Exchange Offer.
(d) Amendments and Waivers. The provisions of this Agreement may not be
----------------------
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless the Company has obtained the
written consent of Holders of a majority of the outstanding principal amount of
Transfer Restricted Notes. Notwithstanding the foregoing, a waiver or consent
to departure from the provisions hereof that relates exclusively to the rights
of Holders whose securities are being tendered pursuant to the Exchange Offer
and that does not affect directly or indirectly the rights of other Holders
whose securities are not being tendered pursuant to such Exchange Offer may be
given by the Holders of a majority of the outstanding principal amount of
Transfer Restricted Notes subject to such Exchange Offer.
(e) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Company or the Guarantors:
Jackson Products, Inc.
2997 Clarkson Road
Chesterfield, Missouri 63017
Telecopier No.: (314) 207-2700
Attention: Chief Financial Officer
With copies to:
The Jordan Company
9 West 57th Street, 40th Floor
New York, NY 10019
Telecopier No.: (212) 755-5263
Attention: A. Richard Caputo, Jr.
Mayer, Brown & Platt
1675 Broadway
New York, NY 10019
Telecopier No.: (212) 506-2500
Attention: James B. Carlson, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if
17
<PAGE>
mailed; when receipt acknowledged, if telecopied; and on the next Business Day,
if timely delivered to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
----------------------
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders of Transfer Restricted Notes; provided that this Agreement shall not
inure to the benefit of or be binding upon a successor or assign of a Holder
unless and to the extent such successor or assign acquired Transfer Restricted
Notes directly from such Holder at a time when such Holder could not transfer
such Transfer Restricted Notes pursuant to a Shelf Registration Statement.
(g) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement together with the other Operative
----------------
Documents (as defined in the Purchase Agreement) is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company with respect to
the Transfer Restricted Notes. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter
[NEXT PAGE IS SIGNATURE PAGE]
18
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
Very truly yours,
JACKSON PRODUCTS, INC.
By: /s/ Christopher T. Paule
--------------------------------------------
Name: Christopher T. Paule
Title: Vice President
JACKSON ACQUISITION, INC.
By: /s/ Christopher T. Paule
--------------------------------------------
Name: Christopher T. Paule
Title: Vice President
CRYSTALOID TECHNOLOGIES, INC.
By: /s/ Christopher T. Paule
--------------------------------------------
Name: Christopher T. Paule
Title: Vice President
OSD ENVIZION, INC.
By: /s/ Christopher T. Paule
--------------------------------------------
Name: Christopher T. Paule
Title: Vice President
FLEX-O-LITE, INC.
By: /s/ Christopher T. Paule
--------------------------------------------
Name: Christopher T. Paule
Title: Vice President
<PAGE>
JEFFERIES & COMPANY, INC.
By: /s/ Andrew Booth
-----------------------------------
Name Andrew Booth
Title: Vice President
GOLDMAN, SACHS & CO.
By: /s/ Goldman, Sachs & Co.
-----------------------------------
(Goldman, Sachs & Co.)
<PAGE>
EXHIBIT 10.1
________________________________________________________________________________
REVOLVING CREDIT
----------------
AND
---
ACQUISITION LOAN AGREEMENT
--------------------------
dated as of April 22, 1998
among
JACKSON PRODUCTS, INC.
AND
THE LENDING INSTITUTIONS
LISTED ON SCHEDULE 1 HERETO
----------
and
BANKBOSTON, N.A., as Agent,
MERCANTILE BANK NATIONAL ASSOCIATION, as Co-Agent
BANCBOSTON SECURITIES, INC.,
as Syndication Agent and Arranger
________________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
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1. DEFINITIONS AND RULES OF INTERPRETATION...............................................1
1.1. Definitions................................................................1
1.2. Rules of Interpretation....................................................21
2. THE REVOLVING CREDIT FACILITY.........................................................22
2.1. Commitment to Lend.........................................................22
2.2. Commitment Fee.............................................................22
2.3. Reduction of Total Commitment..............................................23
2.4. The Revolving Credit Notes.................................................23
2.5. Interest on Revolving Credit Loans.........................................23
2.6. Requests for Revolving Credit Loans........................................24
2.7. Conversion Options.........................................................24
2.7.1. Conversion to Different Type of Revolving Credit Loan..........24
2.7.2. Continuation of Type of Revolving Credit Loan..................25
2.7.3. LIBOR Rate Loans...............................................25
2.8. Funds for Revolving Credit Loan............................................26
2.8.1. Funding Procedures.............................................26
2.8.2. Advances by Agent..............................................26
2.9. Change in Borrowing Base...................................................27
3. REPAYMENT OF THE REVOLVING CREDIT LOANS...............................................27
3.1. Maturity...................................................................27
3.2. Mandatory Repayments of Revolving Credit Loans.............................27
3.3. Optional Repayments of Revolving Credit Loans..............................27
4. THE ACQUISITION LOAN..................................................................28
4.1. Commitment to Lend. 4.1.1.................................................28
4.1.1. Commitment.....................................................28
4.1.2. Conditions to Advances.........................................28
4.2. Commitment Fee.............................................................29
4.3. Reduction of Total Acquisition Commitment..................................30
4.4. The Acquisition Notes......................................................30
4.5. Mandatory Payments of Principal of Acquisition Loan........................30
4.5.1. Acquisition Loan...............................................31
4.5.2. Proceeds.......................................................31
4.5.3. Crystaloid Acquisition.........................................32
4.6. Optional Prepayment of Acquisition Loan....................................32
4.7. Interest on Acquisition Loan...............................................32
4.7.1. Interest Rates.................................................32
4.7.2. Notification by Borrower.......................................33
4.7.3. Amounts, etc...................................................33
4.8. Funds for Advances........................................................33
4.8.1. Funding Procedures.............................................33
4.8.2. Advances by Agent..............................................34
5. LETTERS OF CREDIT.....................................................................34
5.1. Letter of Credit Commitments...............................................34
5.1.1. Commitment to Issue Letters of Credit..........................34
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5.1.2. Letter of Credit Applications..................................35
5.1.3. Terms of Letters of Credit.....................................35
5.1.4. Reimbursement Obligations of Banks.............................35
5.1.5. Participations of Banks........................................36
5.2. Reimbursement Obligation of the Borrower...................................36
5.3. Letter of Credit Payments..................................................37
5.4. Obligations Absolute.......................................................37
5.5. Reliance by Issuer.........................................................38
5.6. Letter of Credit Fee.......................................................38
6. CERTAIN GENERAL PROVISIONS............................................................39
6.1. Closing and Advisory Fees..................................................39
6.2. Agent's Fee................................................................39
6.3. Funds for Payments.........................................................39
6.3.1. Payments to Agent..............................................39
6.3.2. No Offset, etc.................................................39
6.4. Computations...............................................................40
6.5. Inability to Determine LIBOR Rate..........................................40
6.6. Illegality.................................................................40
6.7. Additional Costs, etc......................................................41
6.8. Capital Adequacy...........................................................43
6.9. Certificate................................................................44
6.10. Indemnity.................................................................44
6.11. Interest After Default....................................................44
6.12 Replacement Banks..........................................................45
7. COLLATERAL SECURITY AND GUARANTIES....................................................45
7.1. Security of Borrower.......................................................45
7.2. Guaranties and Security of Subsidiaries....................................46
8. REPRESENTATIONS AND WARRANTIES........................................................46
8.1. Corporate Authority........................................................46
8.1.1. Incorporation; Good Standing...................................46
8.1.2. Authorization..................................................46
8.1.3. Enforceability.................................................47
8.2. Governmental Approvals.....................................................47
8.3. Title to Properties; Leases................................................47
8.4. Financial Statements and Projections.......................................47
8.4.1. Fiscal Year....................................................47
8.4.2. Financial Statements...........................................47
8.4.3. Projections....................................................48
8.5. No Material Changes, etc...................................................48
8.6. Franchises, Patents, Copyrights, etc.......................................49
8.7. Litigation.................................................................49
8.8. No Materially Adverse Contracts, etc.......................................49
8.9. Compliance with Other Instruments, Laws, etc...............................49
8.10. Tax Status................................................................50
8.11. No Event of Default.......................................................50
8.12. Holding Company and Investment Company Acts...............................50
8.13. Absence of Financing Statements, etc......................................50
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8.14. Perfection of Security Interest...........................................50
8.15. Certain Transactions......................................................51
8.16. Employee Benefit Plans....................................................51
8.16.1. In General....................................................51
8.16.2. Terminability of Welfare Plans................................51
8.16.3. Guaranteed Pension Plans......................................51
8.16.4. Multiemployer Plans...........................................52
8.17. Use of Proceeds...........................................................52
8.17.1. General.......................................................52
8.17.2. Regulations U and X...........................................52
8.18. Environmental Compliance..................................................53
8.19. Subsidiaries, etc.........................................................54
8.20. Year 2000 Problem.........................................................55
8.21. Disclosure................................................................55
8.22. No Amendments to Certain Documents........................................55
8.23. Representations Under Stock Purchase Agreements...........................55
8.24. Insurance.................................................................56
9. AFFIRMATIVE COVENANTS OF THE BORROWER.................................................56
9.1. Punctual Payment...........................................................56
9.2. Maintenance of Office......................................................56
9.3. Records and Accounts.......................................................56
9.4. Financial Statements, Certificates and Information.........................57
9.5. Notices....................................................................59
9.5.1. Defaults.......................................................59
9.5.2. Environmental Events...........................................59
9.5.3. Notification of Claim against Collateral.......................60
9.5.4. Notice of Litigation and Judgments.............................60
9.6. Corporate Existence; Maintenance of Properties.............................60
9.7. Insurance..................................................................61
9.8. Taxes......................................................................61
9.9. Inspection of Properties and Books, etc....................................61
9.9.1. General........................................................61
9.9.2. Collateral Reports.............................................61
9.9.3. Appraisals.....................................................62
9.9.4. Environmental Assessments......................................62
9.9.5. Communications with Accountants................................63
9.10. Compliance with Laws, Contracts, Licenses, and Permits....................63
9.11. Employee Benefit Plans....................................................63
9.12. Use of Proceeds...........................................................63
9.13. Mortgaged Property........................................................64
9.14. Title Insurance...........................................................64
9.15. Landlord Waivers..........................................................65
9.16. Taxes.....................................................................65
9.17. Interest Rate Protection..................................................65
9.18. Crystaloid Acquisition....................................................65
9.19. Foreign Stock Pledge......................................................65
9.20. Further Assurances........................................................65
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10. CERTAIN NEGATIVE COVENANTS OF THE BORROWER............................................66
10.1. Restrictions on Indebtedness..............................................66
10.2. Restrictions on Liens.....................................................68
10.3. Restrictions on Investments...............................................70
10.4. Distributions; Restricted Payments........................................71
10.5. Merger, Consolidation and Disposition of Assets...........................72
10.5.1. Mergers and Acquisitions......................................72
10.5.2. Disposition of Assets.........................................74
10.6. Sale and Leaseback........................................................75
10.7. Compliance with Environmental Laws........................................75
10.8. Subordinated Debt and Preferred Stock.....................................76
10.9. Employee Benefit Plans....................................................76
10.10. Fiscal Year..............................................................77
10.11. Transactions with Affiliates.............................................77
10.12. Change in Terms of Capital Stock.........................................77
10.13. Modification of Documents................................................78
10.14. Negative Pledges.........................................................78
10.15. Upstream Limitations.....................................................78
10.16. Inconsistent Agreements..................................................78
10.17. Location of Inventory....................................................78
11. FINANCIAL COVENANTS OF THE BORROWER...................................................79
11.1. EBITDA to Total Interest Expense..........................................79
11.2. Leverage Ratio............................................................80
11.3. Consolidated Operating Cash Flow to Total Debt Service....................80
12. CLOSING CONDITIONS....................................................................81
12.1. Loan Documents etc........................................................81
12.1.1. Loan Documents................................................81
12.1.2. Subordinated Debt Documents...................................81
12.2. Certified Copies of Charter Documents.....................................81
12.3. Corporate Action..........................................................81
12.4. Incumbency Certificate....................................................81
12.5. Validity of Liens.........................................................82
12.6. Perfection Certificates and UCC Search Results............................82
12.7. Certificates of Insurance.................................................82
12.8. Borrowing Base Report.....................................................82
12.9. Hazardous Waste Assessments...............................................82
12.10. Solvency Certificate.....................................................83
12.11. Opinion of Counsel.......................................................83
12.12. Payment of Fees..........................................................83
12.13. Satisfaction of Conditions of Stock Purchase Agreements..................83
12.14. Completion of Acquisition, etc...........................................83
12.15. Completion of Successful Financial Inquiry...............................83
12.16. Consents and Approvals...................................................83
12.17. Payoff Letter............................................................84
12.18. Disbursement Instructions................................................84
13. CONDITIONS TO ALL BORROWINGS..........................................................84
13.1. Representations True; No Event of Default.................................84
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13.2. No Legal Impediment.......................................................85
13.3. Governmental Regulation...................................................85
13.4. Proceedings and Documents.................................................85
13.5. Borrowing Base Report.....................................................85
14. EVENTS OF DEFAULT; ACCELERATION; ETC..................................................85
14.1. Events of Default and Acceleration........................................85
14.2. Termination of Commitments................................................89
14.3. Remedies..................................................................89
14.4. Distribution of Collateral Proceeds.......................................89
15. SETOFF................................................................................90
16. THE AGENT.............................................................................91
16.1. Authorization.............................................................91
16.2. Employees and Agents......................................................92
16.3. No Liability..............................................................92
16.4. No Representations........................................................92
16.4.1. General.......................................................92
16.4.2. Closing Documentation, etc....................................93
16.5. Payments..................................................................93
16.5.1. Payments to Agent.............................................93
16.5.2. Distribution by Agent.........................................93
16.5.3. Delinquent Banks..............................................94
16.6. Holders of Notes..........................................................94
16.7. Indemnity.................................................................94
16.8. Agent as Bank.............................................................95
16.9. Resignation...............................................................95
16.10. Notification of Defaults and Events of Default...........................95
16.11. Duties in the Case of Enforcement........................................95
17. EXPENSES AND INDEMNIFICATION..........................................................96
17.1. Expenses..................................................................96
17.2. Indemnification...........................................................96
17.3. Survival..................................................................97
18. SURVIVAL OF COVENANTS, ETC............................................................97
19. ASSIGNMENT AND PARTICIPATION..........................................................98
19.1. Conditions to Assignment by Banks.........................................98
19.2. Certain Representations and Warranties; Limitations; Covenants............98
19.3. Register..................................................................99
19.4. New Notes.................................................................100
19.5. Participations............................................................100
19.6. Disclosure................................................................101
19.7. Assignee or Participant Affiliated with the Borrower......................101
19.8. Miscellaneous Assignment Provisions.......................................101
19.9. Assignment by Borrower....................................................102
20. NOTICES, ETC..........................................................................102
21. GOVERNING LAW.........................................................................103
22. HEADINGS..............................................................................103
23. COUNTERPARTS..........................................................................103
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24. ENTIRE AGREEMENT, ETC.................................................................104
25. WAIVER OF JURY TRIAL..................................................................104
26. CONSENTS, AMENDMENTS, WAIVERS, ETC....................................................104
27. SEVERABILITY..........................................................................105
</TABLE>
<PAGE>
EXHIBITS
--------
Exhibit A Form of Borrowing Base Report
Exhibit B Form of Guaranty
Exhibit C Form of Revolving Credit Note
Exhibit D Form of Acquisition Loan Note
Exhibit E-1 Form of Security Agreement (Borrower)
Exhibit E-2 Form of Security Agreement (Subsidiaries)
Exhibit F-1 Form of Stock Pledge Agreement (Borrower)
Exhibit F-2 Form of Stock Pledge Agreement (Subsidiaries)
Exhibit G Form of Loan Request
Exhibit H Form of Advance Request
Exhibit I Form of Compliance Certificate
Exhibit J Form of Assignment and Acceptance
Exhibit K Form of Collateral Assignment of Acquisition
Documents
SCHEDULES
---------
Schedule 1 Banks
Schedule 1.1 Jordan Affiliates
Schedule 5.1 Letters of Credit
Schedule 8.3 Title to Property; Leases
Schedule 8.6 Franchises, Patents, Copyrights, Etc.
Schedule 8.7 Litigation
Schedule 8.15 Certain Transactions
Schedule 8.18 Environmental Compliance
Schedule 8.19 Subsidiaries
Schedule 8.24 Insurance
Schedule 9.13 Mortgaged Property
Schedule 10.1 Indebtedness
Schedule 10.2 Liens
Schedule 10.3 Investments
<PAGE>
REVOLVING CREDIT AND
--------------------
ACQUISITION LOAN AGREEMENT
--------------------------
This REVOLVING CREDIT AND ACQUISITION LOAN AGREEMENT is made as of April
22, 1998, by and among JACKSON PRODUCTS, INC., a Delaware corporation having its
principal place of business at 2997 Clarkson Road, Chesterfield, Missouri 63017,
and BANKBOSTON, N.A., a national banking association and the other lending
institutions listed on Schedule 1, BANKBOSTON, N.A. as agent for itself and such
-------- --
other lending institutions and MERCANTILE BANK NATIONAL ASSOCIATION, as co-
agent.
1. DEFINITIONS AND RULES OF INTERPRETATION.
---------------------------------------
1.1. DEFINITIONS. The following terms shall have the meanings set forth
-----------
in this (S)1 or elsewhere in the provisions of this Credit Agreement referred to
below:
Accounts Receivable. All rights of the Borrower or any of its Restricted
-------------------
Subsidiaries to payment for goods sold, leased or otherwise marketed in the
ordinary course of business and all rights of the Borrower or any of its
Restricted Subsidiaries to payment for services rendered in the ordinary course
of business and all sums of money or other proceeds due thereon pursuant to
transactions with account debtors, except for that portion of the sum of money
or other proceeds due thereon that relate to sales, use or property taxes in
conjunction with such transactions, recorded on books of account in accordance
with generally accepted accounting principles.
Acquisition Commitment. With respect to each Bank, the amount set forth on
----------------------
Schedule 1 hereto as the amount of such Bank's commitment to make Advances to
- ----------
the Borrower during the Disbursement Period, as the same may be reduced from
time to time; or, after the Disbursement Period or if such commitment is
terminated pursuant to the provisions hereof, zero.
Acquisition Commitment Percentage. With respect to each Bank, the
---------------------------------
percentage set forth on Schedule 1 hereto as such Bank's percentage of the Total
----------
Acquisition Commitment.
Acquisition Documents. Collectively, the Crystaloid Acquisition Documents
---------------------
and the NCH Acquisition Documents.
Acquisition Incentives. With respect to any Person, any earn-out
----------------------
arrangements, non-competition agreements and similar arrangements made in
connection with the acquisition of entities or businesses by such Person or any
of its Subsidiaries.
Acquisition Loan. Advances made or to be made by the Banks to the Borrower
----------------
during the Disbursement Period pursuant to (S)4.
<PAGE>
-2-
Acquisition Loan Maturity Date. April 30, 2004.
------------------------------
Acquisition Notes. See (S)4.4.
-----------------
Acquisition Note Record. A Record with respect to an Acquisition Note.
-----------------------
Acquisitions. The NCH Acquisition and the Crystaloid Acquisition.
------------
Adjustment Date. The first day of the month immediately following the month
---------------
in which a Compliance Certificate is to be delivered by the Borrower pursuant to
(S)9.4(d).
Advances. See (S)4.1.2.
--------
Advance Request. See (S)4.1.2.
---------------
Affected Bank. See (S)6.12.
-------------
Affiliate. Any Person that would be considered to be an affiliate of the
---------
Borrower under Rule 144(a) of the Rules and Regulations of the Securities and
Exchange Commission, as in effect on the date hereof, if the Borrower were
issuing securities.
Agent. BankBoston, N.A. acting as agent for the Banks.
-----
Agent's Head Office. The Agent's head office located at 100 Federal Street,
-------------------
Boston, Massachusetts 02110, or at such other location as the Agent may
designate from time to time.
Agent's Special Counsel. Bingham Dana LLP or such other counsel as may be
-----------------------
approved by the Agent.
Allsafe. American Allsafe Company, a Texas corporation.
-------
<PAGE>
-3-
Applicable Margin. For each period commencing on an Adjustment Date through
-----------------
the date immediately preceding the next Adjustment Date (each a "Rate Adjustment
Period"), the Applicable Margin shall be the applicable margin set forth below
with respect to the Borrower's Leverage Ratio, as determined on a Pro Forma
Basis for the Reference Period ending on the fiscal quarter ended immediately
preceding the applicable Rate Adjustment Period.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
BASE LIBOR LETTER OF
RATE RATE COMMITMENT CREDIT
LEVEL LEVERAGE RATIO LOANS LOANS FEES FEES
--------------------------------------------------------------------------
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
I greater than 4.50:1.00 0.75% 2.25% 0.50% 2.25%
--------------------------------------------------------------------------
II less than or equal to
4.50:1.00 and greater 0.50% 2.00% 0.375% 2.00%
than 3.50:1.00
--------------------------------------------------------------------------
III less than or equal to 0.25% 1.75% 0.375% 1.75%
3.50
--------------------------------------------------------------------------
</TABLE>
Notwithstanding the foregoing, (a) until the delivery by the Borrower to
the Agent of the Compliance Certificate pursuant to (S)9.4(d) for the period
ending September 30, 1998, the Applicable Margin shall be the Applicable Margin
set forth above in Level I, and (b) if the Borrower fails to deliver any
Compliance Certificate when required by (S)9.4(d) hereof then, for the period
commencing on the next Adjustment Date to occur subsequent to such failure
through the date immediately following the date on which such Compliance
Certificate is delivered, the Applicable Margin shall be the Applicable Margin
set forth above in Level I.
Arranger. BancBoston Securities, Inc.
--------
Assignment and Acceptance. See (S)19.1.
-------------------------
Balance Sheet Date. December 31, 1997.
------------------
Banks. BKB and the other lending institutions listed on Schedule 1 hereto
----- ----------
and any other Person who becomes an assignee of any rights and obligations of a
Bank pursuant to (S)19.
Base Rate. The higher of (i) the annual rate of interest announced from
---------
time to time by BKB at its head office in Boston, Massachusetts, as its "base
rate" and (ii) one-half of one percent (1/2%) above the Federal Funds Effective
Rate. For the purposes of this definition, "Federal Funds Effective Rate" shall
mean for any day, the rate per annum equal to the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day that
is a Business Day, the average of the quotations for such day on such
<PAGE>
-4-
transactions received by the Agent from three funds brokers of recognized
standing selected by the Agent.
Base Rate Loans. Revolving Credit Loans and all or any portion of the
---------------
Acquisition Loan bearing interest calculated by reference to the Base Rate.
BKB. BankBoston, N.A., a national banking association, in its individual
---
capacity.
Borrower. Jackson Products, Inc., a Delaware corporation.
--------
Borrowing Base. At the relevant time of reference thereto, an amount
--------------
determined by the Agent by reference to the most recent Borrowing Base Report
delivered to the Banks and the Agent pursuant to (S)9.4(e), which is equal to
the sum of:
(a) 85% of Eligible Accounts Receivable for which invoices have
been issued and are payable; plus
----
(b) 65% of the Net Book Value of Eligible Inventory
provided, however, the Agent reserves its right to decrease the advance rates
-------- -------
set forth herein if, in the Agent's reasonable discretion, the results of
commercial finance examinations indicate a material deterioration in the
Borrower's or its Restricted Subsidiaries' Eligible Accounts Receivable or
Eligible Inventory from the Closing Date, such that a lower advance rate for
Eligible Accounts Receivable and/or Eligible Inventory is warranted.
For purposes of determining the Borrowing Base, each Eligible Account
Receivable which is denominated in currency other than Dollars shall be
converted to Dollars at the actual exchange rate (as quoted in The Wall Street
Journal) in effect on the date of the Borrowing Base Report which reflects such
Eligible Account Receivable.
Borrowing Base Report. A Borrowing Base Report signed by the chief
---------------------
financial officer of the Borrower and in substantially the form of Exhibit A
hereto.
Business Day. Any day on which banking institutions in Boston,
------------
Massachusetts, New York, New York and St. Louis, Missouri, are open for the
transaction of banking business and, in the case of LIBOR Rate Loans, also a day
which is a LIBOR Business Day.
Capital Assets. Fixed assets, both tangible (such as land, buildings,
--------------
fixtures, machinery and equipment) and intangible (such as patents, copyrights,
trademarks, franchises and good will); provided that Capital Assets shall not
--------
include any item customarily charged directly to expense or depreciated over a
<PAGE>
-5-
useful life of twelve (12) months or less in accordance with generally accepted
accounting principles.
Capital Expenditures. Amounts paid or Indebtedness incurred by the Borrower
--------------------
or any of its Restricted Subsidiaries in connection with the purchase or lease
by the Borrower or any of its Restricted Subsidiaries of Capital Assets that
would be required to be capitalized and shown on the balance sheet of such
Person in accordance with generally accepted accounting principles, provided,
--------
however, that (a) amounts paid in connection with the purchase or lease of
- -------
Capital Assets with insurance or condemnation proceeds, or (b) amounts paid or
indebtedness incurred in connection with the purchase of assets constituting a
Permitted Acquisition, shall not be included as Capital Expenditures.
Capitalized Leases. Leases under which the Borrower or any of its
------------------
Subsidiaries is the lessee or obligor, the discounted future rental payment
obligations under which are required to be capitalized on the balance sheet of
the lessee or obligor in accordance with generally accepted accounting
principles.
CERCLA. See (S)8.18(a).
------
Closing Date. The first date on which the conditions set forth in (S)12
------------
have been satisfied and any Revolving Credit Loans and any Advances are to be
made or any Letter of Credit is to be issued hereunder.
Co-Agent. Mercantile Bank National Association, in its capacity as co-
--------
agent.
Code. The Internal Revenue Code of 1986, as amended.
----
Collateral. All of the property, rights and interests of the Borrower and
----------
its Restricted Subsidiaries that are or are intended to be subject to the
security interests and mortgages created by the Security Documents.
Collateral Assignment of Acquisition Documents. The Collateral Assignments,
----------------------------------------------
dated as of the Closing Date, made by Jackson Acquisition, Inc. and Crystaloid
Technologies, Inc., in favor of the Agent, each substantially in the form of
Exhibit K attached hereto.
- ---------
Commitment. With respect to each Bank, the amount set forth on Schedule 1
---------- -------- -
hereto as the amount of such Bank's commitment to make Revolving Credit Loans
to, and to participate in the issuance, extension and renewal of Letters of
Credit for the account of, the Borrower, as the same may be reduced from time to
time; or if such commitment is terminated pursuant to the provisions hereof,
zero.
<PAGE>
-6-
Commitment Percentage. With respect to each Bank, the percentage set forth
---------------------
on Schedule 1 hereto as such Bank's percentage of the aggregate Commitments of
----------
all of the Banks.
Consolidated or consolidated. With reference to any term defined herein,
----------------------------
shall mean that term as applied to the accounts of the Borrower and its
Restricted Subsidiaries, consolidated in accordance with generally accepted
accounting principles.
Consolidated Net Income. The consolidated net income (or deficit) of the
-----------------------
Borrower and its Restricted Subsidiaries, after deduction of all expenses,
taxes, and other proper charges, determined in accordance with generally
accepted accounting principles, after eliminating therefrom all extraordinary
nonrecurring items of income.
Consolidated Operating Cash Flow. For any period, an amount equal to EBITDA
--------------------------------
of the Borrower and its Restricted Subsidiaries for such period minus the sum of
-----
(i) Capital Expenditures made in such period, plus (ii) cash payments for all
----
taxes paid during such period by the Borrower and its Restricted Subsidiaries.
Consolidated Total Interest Expense. For any period, the aggregate amount
-----------------------------------
of interest required to be paid or accrued by the Borrower and its Restricted
Subsidiaries during such period on all Indebtedness of the Borrower and its
Restricted Subsidiaries outstanding during all or any part of such period,
whether such interest was or is required to be reflected as an item of expense
or capitalized, including payments consisting of interest in respect of any
Capitalized Lease, or any synthetic lease referred to in clause (vi) of the
definition of the term "Indebtedness," and including commitment fees, agency
fees, facility fees, balance deficiency fees and similar fees or expenses in
connection with the borrowing of money.
Conversion Request. A notice given by the Borrower to the Agent of the
------------------
Borrower's election to convert or continue a Loan in accordance with (S)2.7.
Credit Agreement. This Revolving Credit and Acquisition Loan Agreement,
----------------
including the Schedules and Exhibits hereto.
Crystaloid. Crystaloid Technologies, Inc., a Delaware corporation.
----------
Crystaloid Acquisition. The acquisition by the Borrower or a Restricted
----------------------
Subsidiary of all of the outstanding shares of capital stock of Crystaloid,
pursuant to the Crystaloid Acquisition Documents.
Crystaloid Acquisition Documents. The Crystaloid Stock Purchase Agreement
--------------------------------
and all agreements and documents required to be entered into or delivered in
connection with the Crystaloid Acquisition, each in the form delivered to the
Agent on or before the Closing Date.
<PAGE>
-7-
Crystaloid Sellers. Collectively, Dahl, the Management Sellers (as defined
------------------
in the Crystaloid Stock Purchase Agreement), and the Outside Sellers (as defined
in the Crystaloid Stock Purchase Agreement).
Crystaloid Stock Purchase Agreement. The Stock Purchase Agreement, dated as
-----------------------------------
of March 31, 1998, among Crystaloid, the Crystaloid Sellers and Crystaloid
Electronics Company, an Ohio corporation.
Dahl. Dahl Partners, Incorporated, an Ohio corporation.
----
Default. See (S)14.1.
-------
Delinquent Bank. See (S)16.5.3.
---------------
Disbursement Period. See (S)4.1.2.
-------------------
Distribution. The declaration or payment of any dividend on or in respect
------------
of any shares of any class of capital stock of a Person, other than dividends
payable solely in shares of common stock of a Person; the purchase, redemption,
or other retirement of any shares of any class of capital stock of a Person,
directly or indirectly through a Subsidiary of a Person or otherwise; the return
of capital by a Person to its shareholders as such; or any other distribution on
or in respect of any shares of any class of capital stock of such Person.
Dollars or $. Dollars in lawful currency of the United States of America.
------- -
Domestic Lending Office. Initially, the office of each Bank designated as
-----------------------
such in Schedule 1 hereto; thereafter, such other office of such Bank, if any,
-------- -
located within the United States that will be making or maintaining Base Rate
Loans.
Domestic Subsidiaries. Each Subsidiary (direct or indirect, existing on the
---------------------
date hereof or acquired or formed hereafter in accordance with the provisions
hereof) of the Borrower which is incorporated under the laws of the United
States, or a State or other subdivision of the United States of America.
Drawdown Date. The date on which any Revolving Credit Loan or any Advance
-------------
is made or is to be made, and the date on which any Revolving Credit Loan is
converted or continued in accordance with (S)2.7 or all or any portion of the
Acquisition Loan is converted or continued in accordance with (S)4.5.2.
EBITDA. With respect to a Person and its Subsidiaries for any fiscal
------
period, an amount equal to Consolidated Net Income for such period, plus, to the
----
extent deducted in the calculation of Consolidated Net Income and without
duplication, (a) depreciation and amortization for such period, (b) other
noncash charges for such period, (c) income tax expense for such period, (d)
Consolidated Total Interest Expense paid or accrued during such period, (e) non-
cash expenses relating to Financial Accounting Standards Board Statement Nos.
106
<PAGE>
-8-
and 109 for such period, (f) the aggregate amount of non-capitalized transaction
costs incurred in connection with financings, acquisitions, joint ventures or
joint alliance (including, but not limited to, financing fees) for such period,
(g) payments made to TJC Management Corp. pursuant to the terms of the
Management Agreement to the extent permitted under (S)10.4, (h) payments made in
connection with Incentive Arrangements and Acquisition Incentives, and (i)
Restructuring Costs for such period, minus, to the extent added in computing
-----
Consolidated Net Income and without duplication, all noncash gains (including
income tax benefits) for such period, all as determined in accordance with
generally accepted accounting principles.
Eligible Accounts Receivable. The aggregate of the unpaid portions of
----------------------------
Accounts Receivable (net of any credits, rebates, offsets, holdbacks or other
adjustments or commissions payable to third parties that are adjustments to such
Accounts Receivable) (a) that the Borrower reasonably and in good faith
determines to be collectible; (b) that are with account debtors or other
obligors that (i) are not Affiliates of the Borrower, (ii) purchased the goods
or services giving rise to the relevant Account Receivable in an arm's length
transaction, (iii) are not insolvent or involved in any case or proceeding,
whether voluntary or involuntary, under any bankruptcy, reorganization,
arrangement, insolvency, adjustment of debt, dissolution, liquidation or similar
law of any jurisdiction, (iv) are, in the Agent's reasonable judgment,
creditworthy; or should not otherwise be excluded in the Agent's reasonable
discretion; and (v) are not agencies or instrumentalities of the United States
of America subject to the Assignment of Claims Act unless the applicable
Borrower or Restricted Subsidiary has complied with such Act; (c) that are in
payment of obligations that have been fully performed and are not subject to
dispute or any other similar claims that would reduce the cash amount payable
therefor; (d) that are not subject to any pledge, restriction, security interest
or other lien or encumbrance other than those created by the Loan Documents; (e)
in which the Agent has a valid and perfected first priority security interest
(other than Accounts Receivable payable from offices in Canada or from offices
in countries in Europe); (f) that are not outstanding for more than ninety (90)
days past the date payment is due; (g) that are not due from any single account
debtor or other obligor if more than twenty-five percent (25%) of the aggregate
amount of all Accounts Receivable owing from such account debtor would otherwise
not be Eligible Accounts Receivable; (h) that are payable in Dollars (other than
Accounts Receivable payable from offices in Canada or from offices in countries
in Europe); (i) that are not payable from an office outside of the United
States, (except that Accounts Receivable payable from offices in Canada in an
aggregate amount not to exceed $3,000,000 and Accounts Receivable payable from
offices in countries in Europe, in an aggregate amount not to exceed $3,000,000
shall not be excluded by virtue of this clause (i)); and (j) that are not
secured by a letter of credit unless the Agent has a prior, perfected security
interest in such letter of credit.
Eligible Assignee. Any of (a) a commercial bank or finance company
-----------------
organized under the laws of the United States, or any State thereof or the
<PAGE>
-9-
District of Columbia, and having total assets in excess of $1,000,000,000; (b) a
savings and loan association or savings bank organized under the laws of the
United States, or any State thereof or the District of Columbia, and having a
net worth of at least $100,000,000, calculated in accordance with generally
accepted accounting principles; (c) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having total assets in excess of $1,000,000,000, provided that such
--------
bank is acting through a branch or agency located in the country in which it is
organized or another country which is also a member of the OECD; (d) the central
bank of any country which is a member of the OECD; (e) any investment company,
investment fund, financial institution or other institutional lender (other than
any financial institution which but for the amount of its total assets would
have been an Eligible Assignee under clauses (a) through (d) above) having total
assets in excess of $100,000,000; and (f) if, but only if, any Event of Default
has occurred and is continuing, any other bank, insurance company, commercial
finance company or other financial institution or other Person approved by the
Agent, such approval not to be unreasonably withheld.
Eligible Inventory. With respect to the Borrower or any of its Restricted
------------------
Subsidiaries, finished goods, work in progress and raw materials and component
parts inventory owned by the Borrower or such Restricted Subsidiary; provided
--------
that Eligible Inventory shall not include any inventory (a) held on consignment,
or not otherwise owned by the Borrower or such Restricted Subsidiary, or of a
type no longer sold by the Borrower or such Restricted Subsidiary, (b) which has
been returned by a customer or is damaged or subject to any legal encumbrance
other than Permitted Liens, (c) which is not in the possession of the Borrower
or such Restricted Subsidiary unless the Agent has received a waiver from the
party in possession of such inventory in form and substance satisfactory to the
Agent, (d) which is held by the Borrower or such Restricted Subsidiary on
property leased by the Borrower or a Restricted Subsidiary, unless the Agent has
received a waiver from the lessor of such leased property and, if any, sublessor
thereof in form and substance satisfactory to the Agent, (e) as to which
appropriate Uniform Commercial Code financing statements showing the Borrower or
such Restricted Subsidiary as debtor and the Agent as secured party have not
been filed in the proper filing office or offices in order to perfect the
Agent's security interest therein (except with respect to inventory located in
Canada or in countries in Europe in an aggregate amount not to exceed
$3,000,000), (f) which has been shipped to a customer of the Borrower or such
Restricted Subsidiary regardless of whether such shipment is on a consignment
basis, (g) which is not located within the United States of America (other than
inventory located in Canada or in countries in Europe in an aggregate amount not
to exceed $3,000,000), or (h) which the Agent reasonably deems to be obsolete or
not marketable.
Employee Benefit Plan. Any employee benefit plan within the meaning of
---------------------
(S)3(3) of ERISA maintained of contributed to by the Borrower or any ERISA
Affiliate, other than a Guaranteed Pension Plan or a Multiemployer Plan.
<PAGE>
-10-
Environmental Laws. See (S)8.18(a).
------------------
EPA. See (S)8.18(b).
---
ERISA. The Employee Retirement Income Security Act of 1974.
-----
ERISA Affiliate. Any Person which is treated as a single employer with the
---------------
Borrower under (S)414 of the Code.
ERISA Reportable Event. A reportable event with respect to a Guaranteed
----------------------
Pension Plan within the meaning of (S)4043 of ERISA and the regulations
promulgated thereunder.
Eurocurrency Reserve Rate. For any day with respect to a LIBOR Rate Loan,
-------------------------
the maximum rate (expressed as a decimal) at which any lender subject thereto
would be required to maintain reserves under Regulation D of the Board of
Governors of the Federal Reserve System (or any successor or similar regulations
relating to such reserve requirements) against "Eurocurrency Liabilities" (as
that term is used in Regulation D), if such liabilities were outstanding. The
Eurocurrency Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in the Eurocurrency Reserve Rate.
Event of Default. See (S)14.1.
----------------
Fee Letter. The fee letter dated or to be dated on or prior to the Closing
----------
Date between the Borrower and the Agent, in form and substance satisfactory to
the Agent.
Foreign Subsidiaries. Each Subsidiary (direct or indirect, existing on the
--------------------
date hereof or acquired or formed hereafter in accordance with the provisions
hereof) of the Borrower which is incorporated under the laws of a jurisdiction
other than the United States, or a State or other subdivision of the United
States of America.
generally accepted accounting principles. (a) When used in (S)11, whether
----------------------------------------
directly or indirectly through reference to a capitalized term used therein,
means (i) principles that are consistent with the principles promulgated or
adopted by the Financial Accounting Standards Board and its predecessors, in
effect for the fiscal year ended on the Balance Sheet Date, and (ii) to the
extent consistent with such principles, the accounting practice of the Borrower
reflected in its financial statements for the year ended on the Balance Sheet
Date, and (b) when used in general, other than as provided above, means
principles that are (i) consistent with the principles promulgated or adopted by
the Financial Accounting Standards Board and its predecessors, as in effect from
time to time, and (ii) consistently applied with past financial statements of
the Borrower adopting the same principles, provided that in each case referred
to in this definition of "generally accepted accounting principles" a certified
public accountant would, insofar as the use of such accounting principles is
<PAGE>
-11-
pertinent, be in a position to deliver an unqualified opinion (other than a
qualification regarding changes in generally accepted accounting principles) as
to financial statements in which such principles have been properly applied.
Guaranteed Pension Plan. Any employee pension benefit plan within the
-----------------------
meaning of (S)3(2) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate the benefits of which are guaranteed on termination in full or
in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer
Plan.
Guaranty. The Guaranty, dated or to be dated on or prior to the Closing
--------
Date, made by each Domestic Subsidiary of the Borrower in favor of the Banks and
the Agent pursuant to which each Domestic Subsidiary of the Borrower guaranties
to the Banks and the Agent the payment and performance of the Obligations,
substantially in the form of Exhibit B attached hereto.
------- -
Hazardous Substances. See (S)8.18(b).
--------------------
Incentive Arrangement. With respect to any Person, any stock appreciation
---------------------
rights, "phantom" stock plans, subscription and stockholders agreements and
other incentive and bonus plans and similar arrangements made in connection with
the retention of executives, officers or employees by such Person or any of its
Subsidiaries.
Indebtedness. All obligations, contingent and otherwise, that in accordance
------------
with generally accepted accounting principles should be classified upon the
obligor's balance sheet as liabilities, or to which reference should be made by
footnotes thereto, including in any event and whether or not so classified: (a)
all debt and similar monetary obligation, whether direct or indirect; (b) all
liabilities secured by any mortgage, pledge, security interest, lien, charge or
other encumbrance existing on property owned or acquired subject thereto,
whether or not the liability secured thereby shall have been assumed; and (c)
all guarantees, endorsements and other contingent obligations whether direct or
indirect in respect of indebtedness of others, including any obligation to
supply funds to or in any manner to invest in, directly or indirectly, the
debtor, to purchase indebtedness, or to assure the owner of indebtedness against
loss, through an agreement to purchase goods, supplies, or services for the
purpose of enabling the debtor to make payment of the indebtedness held by such
owner or otherwise, and the obligations to reimburse the issuer in respect of
any letter of credit, and excluding all obligations in respect of Acquisition
Incentives and Incentive Arrangements.
Ineligible Securities. Securities which may not be underwritten or dealt in
---------------------
by member banks of the Federal Reserve System under Section 16 of the Banking
Act of 1993 (12 U.S.C. (S)24, Seventh), as amended.
Intercompany Management Agreement. The Second Amended and Restated
---------------------------------
Intercompany Management Consulting Agreement, dated on or prior to
<PAGE>
-12-
the Closing Date, by and among the Borrower and each of its Domestic
Subsidiaries and in form and substance satisfactory to the Banks and the Agent.
Interest Payment Date. (a) As to any Base Rate Loan, the last day of the
---------------------
calendar quarter with respect to interest accrued during such calendar quarter,
including, without limitation, the calendar quarter which includes the Drawdown
Date of such Base Rate Loan; and (b) as to any LIBOR Rate Loan in respect of
which the Interest Period is (i) three (3) months or less, the last day of such
Interest Period and (ii) more than three (3) months, the date that is three (3)
months from the first day of such Interest Period and, in addition, the last day
of such Interest Period.
Interest Period. With respect to each Revolving Credit Loan or all or any
---------------
relevant portion of the Acquisition Loan, (a) initially, the period commencing
on the Drawdown Date of such Loan and ending on the last day of one of the
periods set forth below, as selected by the Borrower in a Loan Request or as
otherwise required by the terms of this Credit Agreement (i) for any Base Rate
Loan, the last day of the calendar quarter; and (ii) for any LIBOR Rate Loan, 1,
2, 3, or 6 months; and (b) thereafter, each period commencing on the last day of
the next preceding Interest Period applicable to such Revolving Credit Loan or
all or such portion of the Acquisition Loan and ending on the last day of one of
the periods set forth above, as selected by the Borrower in a Conversion
Request; provided that all of the foregoing provisions relating to Interest
--------
Periods are subject to the following:
(i) if any Interest Period with respect to a LIBOR Rate Loan
would otherwise end on a day that is not a LIBOR Business Day, that
Interest Period shall be extended to the next succeeding LIBOR Business Day
unless the result of such extension would be to carry such Interest Period
into another calendar month, in which event such Interest Period shall end
on the immediately preceding LIBOR Business Day;
(ii) if any Interest Period with respect to a Base Rate Loan would
end on a day that is not a Business Day, that Interest Period shall end on
the next succeeding Business Day;
(iii) if the Borrower shall fail to give notice as provided in
(S)2.7, the Borrower shall be deemed to have requested a conversion of the
affected LIBOR Rate Loan to a Base Rate Loan and the continuance of all
Base Rate Loans as Base Rate Loans on the last day of the then current
Interest Period with respect thereto;
(iv) any Interest Period relating to any LIBOR Rate Loan that
begins on the last LIBOR Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last LIBOR Business Day
of a calendar month; and
<PAGE>
-13-
(v) any Interest Period relating to any LIBOR Rate Loan that
would otherwise extend beyond the Revolving Credit Loan Maturity Date (if
comprising a Revolving Credit Loan) or the Acquisition Loan Maturity Date
(if comprising the Acquisition Loan or a portion thereof) shall end on the
Revolving Credit Loan Maturity Date or the Acquisition Loan Maturity Date,
as the case may be.
Investments. All expenditures made and all liabilities incurred
-----------
(contingently or otherwise) for the acquisition of stock or Indebtedness of, or
for loans, advances, capital contributions or transfers of property to, or in
respect of any guaranties (or other commitments as described under
Indebtedness), or obligations of, any Person. In determining the aggregate
amount of Investments outstanding at any particular time: (a) the amount of any
Investment represented by a guaranty shall be taken at not less than the
principal amount of the obligations guaranteed and still outstanding; (b) there
shall be included as an Investment all interest accrued with respect to
Indebtedness constituting an Investment unless and until such interest is paid;
(c) there shall be deducted in respect of each such Investment any amount
received as a return of capital (but only by repurchase, redemption, retirement,
repayment, liquidating dividend or liquidating distribution); (d) there shall
not be deducted in respect of any Investment any amounts received as earnings on
such Investment, whether as dividends, interest or otherwise, except that
accrued interest included as provided in the foregoing clause (e) may be
deducted when paid; and (f) there shall not be deducted from the aggregate
amount of Investments any decrease in the value thereof.
Issuing Banks. BKB and Mercantile.
-------------
JAI. Jackson Acquisition, Inc., a Delaware corporation.
---
Jordan Affiliates. (a) The Jordan Company and Jordan/Zalaznick Capital
-----------------
Company, and their respective Affiliates (including Leucadia Investors, Inc. and
Jordan Industries, Inc.); (b) partners, principals, directors, officers,
employees and agents of the Persons referred to in clause (a) hereof or other
parties listed on Schedule 1.1; (c) any other trust established by the Persons
------------
referred to in clause (b) hereof; and (d) any corporation, partnership or other
entity controlled by, or which is an Affiliate of, the Persons referred to in
clauses (a), (b), and (c) hereof.
Junior Subordinated Notes. Any Junior Subordinated Notes issued pursuant to
-------------------------
and in substantially the form attached to the Management Subscription Agreement.
Letter of Credit. See (S)5.1.1.
----------------
Letter of Credit Application. See (S)5.6.
----------------------------
Letter of Credit Fee. See (S)5.1.1.
--------------------
<PAGE>
-14-
Letter of Credit Participation. See (S)5.1.4.
------------------------------
Leverage Ratio. As at any date of determination, the ratio of (a) Total
--------------
Funded Indebtedness of the Borrower and its Restricted Subsidiaries outstanding
on such date, to (b) the EBITDA of the Borrower and its Restricted Subsidiaries
for the Reference Period ending on such date, in each case calculated on a Pro
Forma Basis.
LIBOR Business Day. Any day on which commercial banks are open for
------------------
international business (including dealings in Dollar deposits) in London.
LIBOR Lending Office. Initially, the office of each Bank designated as such
--------------------
in Schedule 1 hereto; thereafter, such other office of such Bank, if any, that
-------- -
shall be making or maintaining LIBOR Rate Loans.
LIBOR Rate. For any Interest Period with respect to a LIBOR Rate Loan, the
----------
rate of interest equal to (a) the rate per annum (rounded upwards to the nearest
1/16 of one percent) at which Dollar deposits for such Interest Period are
offered to the Agent in the London interbank eurodollar market on the second
LIBOR Business Day prior to the first day of such Interest Period for delivery
on the first day of such Interest Period in an amount comparable to the amount
of such LIBOR Rate Loan, divided by (b) a number equal to 1.00 minus the
Eurocurrency Reserve Rate, if applicable.
LIBOR Rate Loans. Revolving Credit Loans and all or any portion of the
----------------
Acquisition Loan bearing interest calculated by reference to the LIBOR Rate.
Loan Documents. This Credit Agreement, the Notes, the Letter of Credit
--------------
Applications, the Letters of Credit, the Security Documents and the Fee Letter.
Loan Request. See (S)2.6.
------------
Loans. The Revolving Credit Loans and the Acquisition Loans.
-----
Majority Banks. As of any date, (a) if there are less than three (3) Banks
--------------
on such date, all Banks, and (b) if there are three (3) or more Banks on such
date, the Banks holding at least fifty one percent (51%) of the outstanding
principal amount of the Notes and the unfunded portion of the Commitments and
the Acquisition Commitments on such date; and if no such principal is
outstanding, the Banks whose aggregate Commitments and Acquisition Commitments
constitutes at least fifty one percent (51%) of the sum of the Total Commitment
plus the Total Acquisition Commitment.
- ----
Management Agreement. The Second Amended and Restated Management Consultig
--------------------
Agreement, dated on or prior to the Closing Date by and between TJC Management
Corporation and the Borrower, in the form delivered to the Agent on or prior to
the Closing Date.
<PAGE>
-15-
Management Subscription Agreement. The Management Subscription Agreement,
---------------------------------
dated as of August 17, 1995, by and among the Borrower and the Stockholders (as
defined therein).
Maximum Drawing Amount. The maximum aggregate amount that the beneficiaries
----------------------
may at any time draw under outstanding Letters of Credit, as such aggregate
amount may be reduced from time to time pursuant to the terms of the Letters of
Credit.
Mercantile. Mercantile Bank National Association, a national banking
----------
association, in its individual capacity.
Mortgaged Property. Any Real Estate which is subject to any Mortgage.
------------------
Mortgages. Collectively, (a) the several mortgages and deeds of trust,
---------
dated or to be dated in accordance with the provision of (S)9.13 hereto, from
the Borrower and its Restricted Subsidiaries to the Agent with respect to the
fee and leasehold interests of the Borrower and its Restricted Subsidiaries in
the Real Estate, and (b) such additional mortgages and deeds of trust as may be
dated after the Closing Date from the Borrower and its Restricted Subsidiaries
with respect to fee and leasehold interests in Real Estate acquired after the
Closing Date.
Multiemployer Plan. Any multiemployer plan within the meaning of (S)3(37)
------------------
of ERISA maintained or contributed to by the Borrower or any ERISA Affiliate.
NCH Acquisition. The acquisition by the Borrower or a Restricted Subsidiary
---------------
of all of the outstanding shares of capital stock of Allsafe and Silencio
pursuant to the NCH Acquisition Documents.
NCH Acquisition Documents. The NCH Stock Purchase Agreement and all other
-------------------------
agreements and documents required to be entered into or delivered in connection
with the NCH Acquisition, each in the form delivered to the Agent on or prior to
the Closing Date.
NCH Seller. NCH Corporation, a Delaware corporation.
----------
NCH Stock Purchase Agreement. The Stock Purchase Agreement, dated as of
----------------------------
March 30, 1998, among JAI, the NCH Seller, Allsafe and Silencio.
Net Book Value. At the relevant time of reference thereto, the net book
--------------
value of Eligible Inventory determined on a first-in first-out basis and at
lower of cost or market.
Non-Affected Bank(s). As of any date of determination, those Banks which
--------------------
are not Affected Banks.
Notes. The Acquisition Notes and the Revolving Credit Notes.
-----
<PAGE>
-16-
Obligations. All indebtedness, obligations and liabilities of any of the
-----------
Borrower and its Restricted Subsidiaries to any of the Banks and the Agent,
individually or collectively, existing on the date of this Credit Agreement or
arising thereafter, direct or indirect, joint or several, absolute or
contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise, arising or
incurred under this Credit Agreement or any of the other Loan Documents or in
respect of any of the Loans made or Reimbursement Obligations incurred or any of
the Notes, Letter of Credit Applications, Letters of Credit or arising or
incurred in connection with any interest rate protection arrangements
contemplated by (S)9.17 or any documents, agreements or instruments executed in
connection therewith, or other instruments at any time evidencing any thereof.
outstanding. With respect to the Loans, the aggregate unpaid principal
-----------
thereof as of any date of determination.
Patent Assignments. The several Patent Assignments, dated or to be dated on
------------------
or prior to the Closing Date, made by the Borrower and its Subsidiaries in favor
of the Agent and in form and substance satisfactory to the Banks and the Agent.
PBGC. The Pension Benefit Guaranty Corporation created by (S)4002 of ERISA
----
and any successor entity or entities having similar responsibilities.
Perfection Certificates. The Perfection Certificates as defined in the
-----------------------
Security Agreements.
Permitted Acquisition Closing Date. The first date on which the conditions
----------------------------------
set forth in the relevant Permitted Acquisition Purchase Agreement have been
satisfied and such Permitted Acquisition has occurred.
Permitted Acquisition Indebtedness. Indebtedness permitted under (S)10.1(m)
----------------------------------
hereof.
Permitted Acquisition Liens. Liens permitted under (S)10.2(j) hereof.
---------------------------
Permitted Acquisition Purchase Agreement. Any of the asset and/or stock
----------------------------------------
purchase agreements relating to a Permitted Acquisition dated on or prior to
April 30, 2001 between the Borrower or any of its Restricted Subsidiaries and
the sellers of such assets and/or stock, each such agreement to be in form and
substance reasonably satisfactory to the Agent.
Permitted Acquisitions. See (S)10.5.1 hereof.
----------------------
Permitted Liens. Liens, security interests and other encumbrances permitted
---------------
by (S)10.2.
<PAGE>
-17-
Person. Any individual, corporation, partnership, trust, unincorporated
------
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
Pro Forma Basis. For the purposes of determining the Debt Service Coverage
---------------
Ratio, the Leverage Ratio and the Interest Coverage Ratio, for calculations
involving the Leverage Ratio for purposes of the Applicable Margin and for
purposes of determining Permitted Acquisitions under (S)10.5, (a) Consolidated
Net Income and EBITDA shall be calculated on a pro forma basis as if all
---------
businesses acquired or sold, as the case may be, during the relevant period had
been acquired or sold, as the case may be, on the first day of such period, (b)
Indebtedness and Consolidated Total Interest Expense shall be calculated on a
pro forma basis as if all Loans borrowed on the Closing Date and, without
- ---------
duplication, all Indebtedness created, incurred, issued, assumed or repaid
during the relevant period in connection with any acquisition or sale referred
to in clause (a) above had been created, incurred, issued, assumed or repaid on
the first day of such period; in each case after making the adjustments and
accruals permitted pursuant to Rule 11.02 under Regulation S-X under the
Securities Act of 1933 or permitted by generally accepted accounting principles,
with such adjustments being made in a manner, and with such other adjustments as
may be approved by the Agent, and in making such pro forma calculation, interest
---------
on any such Indebtedness at a variable rate shall be calculated using the rate
in effect at the time the calculation is made; and (c) Capital Expenditures
shall be calculated on a pro forma basis to include Capital Expenditures made
---------
during the relevant period of all businesses acquired during the relevant period
and to exclude Capital Expenditures incurred during the relevant period of all
businesses sold during the relevant period.
Rate Adjustment Period. See the definition of Applicable Margin.
----------------------
RCRA. See (S)8.18(a).
----
Real Estate. All real property at any time owned or leased (as lessee or
-----------
sublessee) by the Borrower or any of its Restricted Subsidiaries.
Record. The grid attached to a Note, or the continuation of such grid, or
------
any other similar record, including computer records, maintained by any Bank
with respect to any Loan referred to in such Note.
Reference Bank. BKB.
--------------
Register. See (S)19.3.
--------
Reimbursement Obligation. The Borrower's obligation to reimburse the Agent
------------------------
and the Banks on account of any drawing under any Letter of Credit as provided
in (S)5.2.
<PAGE>
-18-
Restricted Payment. In relation to the Borrower and its Subsidiaries, any
------------------
(a) Distribution, (b) any payment or prepayment by the Borrower or its
Subsidiaries to any other Affiliate of the Borrower or (c) any payment in
respect of any Subordinated Debt.
Restricted Subsidiary. Any Subsidiary of the Borrower which is not an
---------------------
Unrestricted Subsidiary.
Restructuring Costs. Any nonrecurring charges arising out of the
-------------------
restructuring, consolidation, severance or discontinuance of operations of any
entities or lines of business (a "Restructuring") of a Person incurred within
twelve (12) months following the acquisition of such entity or line of business
by such Person of a type reasonably approved by the Agent and in an aggregate
amount not to exceed $500,000 for each Restructuring.
Revolving Credit Loan Maturity Date. April 30, 2004.
-----------------------------------
Revolving Credit Loans. Revolving credit loans made or to be made by the
----------------------
Banks to the Borrower pursuant to (S)2.
Revolving Credit Note Record. A Record with respect to a Revolving Credit
----------------------------
Note.
Revolving Credit Notes. See (S)2.4.
----------------------
SARA. See (S)8.18(a).
----
Section 20 Subsidiary. A Subsidiary of the bank holding company controlling
---------------------
any Bank, which Subsidiary has been granted authority by the Federal Reserve
Board to underwrite and deal in certain Ineligible Securities.
Security Agreements. The several Security Agreements, dated or to be dated
-------------------
on or prior to the Closing Date, between the Borrower and its Restricted
Subsidiaries and the Agent, substantially in the form of Exhibit E-1 and E-2
----------- ---
hereto.
Security Documents. The Guaranty, the Security Agreements, the Mortgages,
------------------
the Patent Assignments, the Trademark Assignments, the Stock Pledge Agreements,
the Collateral Assignments of Acquisition Documents, and all other instruments
and documents, including without limitation Uniform Commercial Code financing
statements, required to be executed or delivered pursuant to any Security
Document.
Sellers. Collectively, the NCH Sellers and the Crystaloid Sellers.
-------
Silencio. Silencio/Safety Direct, Inc., a Nevada corporation.
--------
Stock Pledge Agreements. The several Stock Pledge Agreements, dated or to
-----------------------
be dated on or prior to the Closing Date, between the Borrower, each of its
<PAGE>
-19-
Subsidiaries and the Agent, substantially in the form of Exhibit F-1 and Exhibit
------------ -------
F-2 hereto.
- ---
Stock Purchase Agreements. Collectively, the Crystaloid Stock Purchase
-------------------------
Agreement and the NCH Stock Purchase Agreement.
Subordinated Debt. The Subordinated Notes, and such other Unsecured
-----------------
Indebtedness of the Borrower or any of its Subsidiaries that is expressly
subordinated and made junior to the payment and performance in full of the
Obligations on terms, and containing subordination provisions in form and
substance reasonably acceptable to the Majority Banks.
Subordinated Debt Documents. The Subordinated Indenture and the
---------------------------
Subordinated Notes.
Subordinated Indenture. The Indenture dated as of April 22, 1998, pursuant
----------------------
to which certain Subordinated Notes in the original principal amount of
$115,000,000 were issued by the Borrower.
Subordinated Notes. The 9.5% Senior Subordinated Notes due April 15, 2005,
------------------
issued by the Borrower pursuant to the Subordinated Indenture, in the original
principal amount of $115,000,000.
Subsidiary. Any corporation, association, trust, or other business entity
----------
of which the designated parent shall at any time own directly or indirectly
through a Subsidiary or Subsidiaries at least a majority (by number of votes) of
the outstanding Voting Stock.
Title Insurance Company. Any title insurance company reasonably acceptable
-----------------------
to the Agent.
Title Policy. In relation to each Mortgaged Property, an ALTA standard form
------------
title insurance policy issued by the Title Insurance Company (with such
reinsurance or co-insurance as the Agent may require, any such reinsurance to be
with direct access endorsements) in such amount as may be determined by the
Agent insuring the priority of the Mortgage of such Mortgaged Property and that
the Borrower or one of its Subsidiaries holds marketable fee simple or leasehold
title to such Mortgaged Property, subject only to the encumbrances permitted by
such Mortgage and which shall not contain exceptions for mechanics liens,
persons in occupancy or matters which would be shown by a survey (except as may
be permitted by such Mortgage), shall not insure over any matter except to the
extent that any such affirmative insurance is acceptable to the Agent in its
sole discretion, and shall contain such endorsements and affirmative insurance
as the Agent in its discretion may require, including but not limited to (a)
comprehensive endorsement, (b) variable rate of interest endorsement, (c) usury
endorsement, (d) revolving credit endorsement, (e) tie-in endorsement, and (f)
doing business endorsement.
<PAGE>
-20-
Total Acquisition Commitment. The sum of the Acquisition Commitments of the
----------------------------
Banks, to make Advances to the Borrower, as in effect from time to time. As of
the date hereof, the Total Acquisition Commitment is $95,000,000.
Total Commitment. The sum of the Commitments of the Banks to make Revolving
----------------
Credit Loans to, and to participate in the issuance, extension and renewal of
Letters of Credit for the account of, the Borrower, as in effect from time to
time. As of the date hereof, the Total Commitment is $30,000,000.
Total Funded Indebtedness. All Indebtedness of the Borrower and its
-------------------------
Restricted Subsidiaries in respect of borrowed money, the deferred purchase
price of assets (other than current liabilities on open account), capitalized
leases and reimbursement obligations in respect of letters of credit.
Trademark Assignments. The several Trademark Assignments, dated or to be
---------------------
dated on or prior to the Closing Date, made by the Borrower and its Restricted
Subsidiaries in favor of the Agent and in form and substance satisfactory to the
Banks and the Agent.
Type. As to any Revolving Credit Loan or all or any portion of the
----
Acquisition Loan, its nature as a Base Rate Loan or a LIBOR Rate Loan.
Uniform Customs. With respect to any Letter of Credit, the Uniform Customs
---------------
and Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500 or any successor version thereto adopted by the
Agent in the ordinary course of its business as a letter of credit issuer and in
effect at the time of issuance of such Letter of Credit.
Unpaid Reimbursement Obligation. Any Reimbursement Obligation for which the
-------------------------------
Borrower does not reimburse the Agent and the Banks on the date specified in,
and in accordance with, (S)5.2.
Unrestricted Subsidiary. Each Subsidiary of the Borrower formed or acquired
-----------------------
after the Closing Date as to which (a) the Board of Directors of the Borrower
has designated such Subsidiary as an Unrestricted Subsidiary at or prior to the
time such Subsidiary is formed or acquired by the Borrower, as the case may be,
and the Borrower has provided written notice to the Agent in reasonable detail
of such designation within five (5) Business Days after designation thereof; (b)
the Borrower owns not less than eighty percent (80%) of the capital stock of
such Subsidiary and eighty percent (80%) of the Voting Stock of such Subsidiary;
(c) all of such Subsidiary's liabilities are non-recourse as to the Borrower or
any Restricted Subsidiary; and (d) no Jordan Affiliate owns capital stock of
such Subsidiary (except indirectly through the Borrower).
Voting Stock. Stock or similar interests, of any class or classes (however
------------
designated), the holders of which are at the time entitled, as such holders, to
vote for the election of a majority of the directors (or persons performing
similar
<PAGE>
-21-
functions) of the corporation, association, trust or other business entity
involved, whether or not the right so to vote exists by reason of the happening
of a contingency.
1.2. RULES OF INTERPRETATION.
-----------------------
(a) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to
time in accordance with its terms and the terms of this Credit Agreement.
(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any law includes any amendment or modification
to such law.
(d) A reference to any Person includes its permitted successors
and permitted assigns.
(e) Accounting terms not otherwise defined herein have the
meanings assigned to them by generally accepted accounting principles
applied on a consistent basis by the accounting entity to which they refer.
(f) The words "include", "includes" and "including" are not
limiting.
(g) All terms not specifically defined herein or by generally
accepted accounting principles, which terms are defined in the Uniform
Commercial Code as in effect in The Commonwealth of Massachusetts, have the
meanings assigned to them therein, with the term "instrument" being that
defined under Article 9 of the Uniform Commercial Code.
(h) Reference to a particular "(S)" refers to that section of this
Credit Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of like
import shall refer to this Credit Agreement as a whole and not to any
particular section or subdivision of this Credit Agreement.
(j) Unless otherwise expressly indicated, in the computation of
periods of time from a specified date to a later specified date, the word
"from" means "from and including," the words "to" and "until" each mean "to
but excluding," and the word "through" means "to and including."
(k) This Credit Agreement and the other Loan Documents may use
several different limitations, tests or measurements to regulate the same
or similar matters. All such limitations, tests and measurements are,
<PAGE>
-22-
however, cumulative and are to be performed in accordance with the terms
thereof.
(l) This Credit Agreement and the other Loan Documents are the
result of negotiation among, and have been reviewed by counsel to, among
others, the Agent and the Borrower and are the product of discussions and
negotiations among all parties. Accordingly, this Credit Agreement and the
other Loan Documents are not intended to be construed against the Agent or
any of the Banks merely on account of the Agent's or any Bank's involvement
in the preparation of such documents.
2. THE REVOLVING CREDIT FACILITY.
-----------------------------
2.1. COMMITMENT TO LEND. Subject to the terms and conditions set forth in
------------------
this Credit Agreement, each of the Banks severally agrees to lend to the
Borrower and the Borrower may borrow, repay, and reborrow from time to time from
the Closing Date up to but not including the Revolving Credit Loan Maturity Date
upon notice by the Borrower to the Agent given in accordance with (S)2.6, such
sums as are requested by the Borrower up to a maximum aggregate amount
outstanding (after giving effect to all amounts requested) at any one time equal
to such Bank's Commitment minus such Bank's Commitment Percentage of the sum of
-----
the Maximum Drawing Amount and all Unpaid Reimbursement Obligations, provided
--------
that the sum of the outstanding amount of the Revolving Credit Loans (after
giving effect to all amounts requested) plus the Maximum Drawing Amount and all
----
Unpaid Reimbursement Obligations shall not at any time exceed the lesser of (a)
the Total Commitment and (b) the Borrowing Base. The Revolving Credit Loans
shall be made pro rata in accordance with each Bank's Commitment Percentage.
--- ----
Each request for a Revolving Credit Loan hereunder shall constitute a
representation and warranty by the Borrower that the conditions set forth in
(S)12 and (S)13, in the case of the initial Revolving Credit Loans to be made on
the Closing Date, and (S)13, in the case of all other Revolving Credit Loans,
have been satisfied on the date of such request.
2.2. COMMITMENT FEE. The Borrower agrees to pay to the Agent for the
--------------
accounts of the Banks in accordance with their respective Commitment Percentages
a commitment fee calculated at the rate per annum equal to the Applicable Margin
for the Commitment Fee on the average daily amount during each calendar quarter
or portion thereof from the Closing Date to the Revolving Credit Loan Maturity
Date by which the Total Commitment minus the sum of the Maximum Drawing Amount
-----
and all Unpaid Reimbursement Obligations exceeds the outstanding amount of
Revolving Credit Loans during such calendar quarter or portion thereof. The
commitment fee shall be payable quarterly in arrears on the first day of each
calendar quarter for the immediately preceding calendar quarter commencing on
the first such date following the date hereof, with a final payment on the
Revolving Credit Maturity Date or any earlier date on which the Commitments
shall terminate.
<PAGE>
-23-
2.3. REDUCTION OF TOTAL COMMITMENT. The Borrower shall have the right at
-----------------------------
any time and from time to time upon three (3) Business Days prior written notice
to the Agent to reduce by $500,000 or an integral multiple of $100,000 in excess
thereof of the unborrowed portion of the Total Commitment or terminate entirely
the Total Commitment, whereupon the Commitments of the Banks shall be reduced
pro rata in accordance with their respective Commitment Percentages of the
- --- ----
amount specified in such notice or, as the case may be, terminated. Promptly
after receiving any notice of the Borrower delivered pursuant to this (S)2.3,
the Agent will notify the Banks of the substance thereof. Upon the effective
date of any such reduction or termination, the Borrower shall pay to the Agent
for the respective accounts of the Banks the full amount of any commitment fee
then accrued on the amount of the reduction. No reduction or termination of the
Commitments may be reinstated.
2.4. THE REVOLVING CREDIT NOTES. The Revolving Credit Loans shall be
--------------------------
evidenced by separate promissory notes of the Borrower in substantially the form
of Exhibit C hereto (each a "Revolving Credit Note"), dated as of the Closing
---------
Date and completed with appropriate insertions. One Revolving Credit Note shall
be payable to the order of each Bank in a principal amount equal to such Bank's
Commitment or, if less, the outstanding amount of all Revolving Credit Loans
made by such Bank, plus interest accrued thereon, as set forth below. The
Borrower irrevocably authorizes each Bank to make or cause to be made, at or
about the time of the Drawdown Date of any Revolving Credit Loan or at the time
of receipt of any payment of principal on such Bank's Revolving Credit Note, an
appropriate notation on such Bank's Revolving Credit Note Record reflecting the
making of such Revolving Credit Loan or (as the case may be) the receipt of such
payment. The outstanding amount of the Revolving Credit Loans set forth on such
Bank's Revolving Credit Note Record shall be prima facie evidence of the
----- -----
principal amount thereof owing and unpaid to such Bank, but the failure to
record, or any error in so recording, any such amount on such Bank's Revolving
Credit Note Record shall not limit or otherwise affect the obligations of the
Borrower hereunder or under any Revolving Credit Note to make payments of
principal of or interest on any Revolving Credit Note when due.
2.5. INTEREST ON REVOLVING CREDIT LOANS. Except as otherwise provided in
----------------------------------
(S)6.11,
(a) Each Base Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day of the
Interest Period with respect thereto at the rate per annum equal to the
Base Rate plus the Applicable Margin.
----
(b) Each LIBOR Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day of the
Interest Period with respect thereto at the rate per annum equal to the
LIBOR Rate determined for such Interest Period plus the Applicable Margin.
----
<PAGE>
-24-
(c) The Borrower promises to pay interest on each Revolving Credit
Loan in arrears on each Interest Payment Date with respect thereto.
2.6. REQUESTS FOR REVOLVING CREDIT LOANS.
-----------------------------------
The Borrower shall give to the Agent written notice in the form of
Exhibit G hereto (or telephonic notice confirmed in a writing in the form of
- ------- -
Exhibit G hereto) of each Revolving Credit Loan requested hereunder (a "Loan
- ------- -
Request") no later than 10:00 a.m. (Central Standard Time) (a) on the Drawdown
Date of any Base Rate Loan and (b) three (3) LIBOR Business Days prior to the
proposed Drawdown Date of any LIBOR Rate Loan, provided, however, the Borrower
-------- -------
shall not request any LIBOR Rate Loan with an Interest Period of more than one
month until the earlier to occur of (i) the date on which the Agent notifies the
Borrower that the Loans hereunder have been syndicated to the satisfaction of
the Agent or (ii) the date which is sixty (60) days following the Closing Date,
and all Interest Periods during such period shall end on the same date. Each
such notice shall specify (i) the principal amount of the Revolving Credit Loan
requested, (ii) the proposed Drawdown Date of such Revolving Credit Loan, (iii)
the Interest Period for such Revolving Credit Loan and (iv) the Type of such
Revolving Credit Loan. Promptly upon receipt of any such notice, the Agent shall
notify each of the Banks thereof. Each Loan Request shall be irrevocable and
binding on the Borrower and shall obligate the Borrower to accept the Revolving
Credit Loan requested from the Banks on the proposed Drawdown Date. Each Loan
Request for a Base Rate Loan shall be in a minimum aggregate amount of $100,000
or a larger integral multiple of $100,000, and each Loan Request for a LIBOR
Rate Loan shall be in a minimum aggregate amount of $500,000 or a larger
integral multiple of $100,000.
2.7. CONVERSION OPTIONS.
------------------
2.7.1. CONVERSION TO DIFFERENT TYPE OF REVOLVING CREDIT LOAN. The
-----------------------------------------------------
Borrower may elect from time to time to convert any outstanding Revolving
Credit Loan to a Revolving Credit Loan of another Type, provided that (a)
--------
with respect to any such conversion of a Revolving Credit Loan to a Base
Rate Loan, the Borrower shall give the Agent prior written notice of such
election by 10:00 a.m. (Central Standard Time); (b) with respect to any
such conversion of a Base Rate Loan to a LIBOR Rate Loan, the Borrower
shall give the Agent at least three (3) LIBOR Business Days prior written
notice of such election; (c) with respect to any such conversion of a LIBOR
Rate Loan into a Revolving Credit Loan of another Type, such conversion
shall only be made on the last day of the Interest Period with respect
thereto; (d) no Base Rate Loan may be converted into a LIBOR Rate Loan when
any Default or Event of Default has occurred and is continuing and not
earlier than the earlier to occur of (i) the date on which the Agent
notifies the Borrower that the Loans hereunder have been syndicated to the
satisfaction of the Agent or (ii) the date which is sixty (60) days after
the Closing Date, and (e) no more than
<PAGE>
-25-
eight (8) LIBOR Rate Loans having different Interest Periods may be
outstanding at any time. On the date on which such conversion is being made
each Bank shall take such action as is necessary to transfer its Commitment
Percentage of such Revolving Credit Loans to its Domestic Lending Office or
its LIBOR Lending Office, as the case may be. All or any part of
outstanding Revolving Credit Loans of any Type may be converted into a
Revolving Credit Loan of another Type as provided herein, provided that any
--------
partial conversion into a Base Rate Loan shall be in an aggregate principal
amount of $100,000 or a larger integral multiple of $100,000 and any
partial conversion into a LIBOR Rate Loan shall be in an aggregate
principle amount of $500,000 or a larger integral multiple of $100,000 in
excess thereof. Each Conversion Request relating to the conversion of a
Revolving Credit Loan to a LIBOR Rate Loan shall be irrevocable by the
Borrower.
2.7.2. CONTINUATION OF TYPE OF REVOLVING CREDIT LOAN. Any
---------------------------------------------
Revolving Credit Loan of any Type may be continued as a Revolving Credit
Loan of the same Type upon the expiration of an Interest Period with
respect thereto by compliance by the Borrower with the notice provisions
contained in (S)2.7.1; provided that no LIBOR Rate Loan may be continued as
--------
such when any Default or Event of Default has occurred and is continuing,
but shall be automatically converted to a Base Rate Loan on the last day of
the first Interest Period relating thereto ending during the continuance of
any Default or Event of Default of which officers of the Agent active upon
the Borrower's account have actual knowledge. In the event that the
Borrower fails to provide any such notice with respect to the continuation
of any LIBOR Rate Loan, then such LIBOR Rate Loan shall be automatically
converted to a Base Rate Loan on the last day of the first Interest Period
relating thereto. The Agent shall notify the Banks promptly when any such
automatic conversion contemplated by this (S)2.7 is scheduled to occur.
2.7.3. LIBOR RATE LOANS. Any conversion to or from LIBOR Rate
----------------
Loans shall be in such amounts and be made pursuant to such elections so
that, after giving effect thereto, the aggregate principal amount of all
LIBOR Rate Loans having the same Interest Period shall not be less than
$500,000 or a larger integral multiple of $100,000 in excess thereof.
2.8. FUNDS FOR REVOLVING CREDIT LOAN.
-------------------------------
2.8.1. FUNDING PROCEDURES. Not later than 1:00 p.m. (Central
------------------
Standard Time) on the proposed Drawdown Date of any Revolving Credit Loans,
each of the Banks will make available to the Agent, at the Agent's Head
Office, in immediately available funds, the amount of such Bank's
Commitment Percentage of the amount of the requested Revolving Credit
Loans. Upon receipt from each Bank of such amount, and upon receipt of the
documents required by (S)(S)12 and 13 and the satisfaction of the other
conditions set forth therein, to the extent applicable, the Agent will make
<PAGE>
-26-
available to the Borrower the aggregate amount of such Revolving Credit
Loans made available to the Agent by the Banks. The failure or refusal of
any Bank to make available to the Agent at the aforesaid time and place on
any Drawdown Date the amount of its Commitment Percentage of the requested
Revolving Credit Loans shall not relieve any other Bank from its several
obligation hereunder to make available to the Agent the amount of such
other Bank's Commitment Percentage of any requested Revolving Credit Loans.
2.8.2. ADVANCES BY AGENT. The Agent may, unless notified to the
-----------------
contrary by any Bank prior to a Drawdown Date, assume that such Bank has
made available to the Agent on such Drawdown Date the amount of such Bank's
Commitment Percentage of the Revolving Credit Loans to be made on such
Drawdown Date, and the Agent may (but it shall not be required to), in
reliance upon such assumption, make available to the Borrower a
corresponding amount. If any Bank makes available to the Agent such amount
on a date after such Drawdown Date, such Bank shall pay to the Agent on
demand an amount equal to the product of (a) the average computed for the
period referred to in clause (c) below, of the weighted average interest
rate paid by the Agent for federal funds acquired by the Agent during each
day included in such period, times (b) the amount of such Bank's Commitment
-----
Percentage of such Revolving Credit Loans, times (c) a fraction, the
-----
numerator of which is the number of days that elapse from and including
such Drawdown Date to the date on which the amount of such Bank's
Commitment Percentage of such Revolving Credit Loans shall become
immediately available to the Agent, and the denominator of which is 360. A
statement of the Agent submitted to such Bank with respect to any amounts
owing under this paragraph shall be prima facie evidence of the amount due
----- -----
and owing to the Agent by such Bank. If the amount of such Bank's
Commitment Percentage of such Revolving Credit Loans is not made available
to the Agent by such Bank within three (3) Business Days following such
Drawdown Date, the Agent shall be entitled to recover such amount from the
Borrower on demand, with interest thereon at the rate per annum applicable
to the Revolving Credit Loans made on such Drawdown Date.
2.9. CHANGE IN BORROWING BASE. The Borrowing Base shall be determined
------------------------
monthly (or at such other interval as may be specified pursuant to (S)9.4(e)) by
the Agent by reference to the Borrowing Base Report, delivered to the Banks and
the Agent pursuant to (S)9.4(e).
3. REPAYMENT OF THE REVOLVING CREDIT LOANS.
---------------------------------------
3.1. MATURITY. The Borrower promises to pay on the Revolving Credit Loan
--------
Maturity Date, and there shall become absolutely due and payable on the
Revolving Credit Loan Maturity Date, all of the Revolving Credit Loans
outstanding on such date, together with any and all accrued and unpaid interest
thereon.
<PAGE>
-27-
3.2. MANDATORY REPAYMENTS OF REVOLVING CREDIT LOANS. If at any time the
----------------------------------------------
sum of the outstanding amount of the Revolving Credit Loans, the Maximum Drawing
Amount and all Unpaid Reimbursement Obligations exceeds the lesser of (a) the
Total Commitment and (b) the Borrowing Base, then the Borrower shall immediately
pay the amount of such excess to the Agent for the respective accounts of the
Banks for application: first, to any Unpaid Reimbursement Obligations; second,
to the Revolving Credit Loans; and third, to provide to the Agent cash
collateral for Reimbursement Obligations as contemplated by (S)5.2(b) and (c).
Each payment of any Unpaid Reimbursement Obligations or prepayment of Revolving
Credit Loans shall be allocated among the Banks, in proportion, as nearly as
practicable, to each Reimbursement Obligation or (as the case may be) the
respective unpaid principal amount of each Bank's Revolving Credit Note, with
adjustments to the extent practicable to equalize any prior payments or
repayments not exactly in proportion.
3.3. OPTIONAL REPAYMENTS OF REVOLVING CREDIT LOANS. The Borrower shall
---------------------------------------------
have the right, at its election, to repay the outstanding amount of the
Revolving Credit Loans, as a whole or in part, at any time without penalty or
premium, provided that any full or partial prepayment of the outstanding amount
--------
of any LIBOR Rate Loans pursuant to this (S)3.3 may be made only on the last day
of the Interest Period relating thereto. The Borrower shall give the Agent, no
later than 10:00 a.m. (Central Standard Time) at least one (1) Business Day
prior written notice of any proposed prepayment pursuant to this (S)3.3 of Base
Rate Loans, and three (3) LIBOR Business Days notice of any proposed prepayment
pursuant to this (S)3.3 of LIBOR Rate Loans, in each case specifying the
proposed date of prepayment of Revolving Credit Loans and the principal amount
to be prepaid. Each such partial prepayment of the Revolving Credit Loans shall
be in an integral multiple of $100,000, shall be accompanied by the payment of
accrued interest on the principal prepaid to the date of prepayment and shall be
applied, in the absence of instruction by the Borrower, first to the principal
of Base Rate Loans and then to the principal of LIBOR Rate Loans. Each partial
prepayment shall be allocated among the Banks, in proportion, as nearly as
practicable, to the respective unpaid principal amount of each Bank's Revolving
Credit Note, with adjustments to the extent practicable to equalize any prior
repayments not exactly in proportion.
4. THE ACQUISITION LOAN.
--------------------
4.1. COMMITMENT TO LEND. 4.1.1. COMMITMENT. Subject to the terms and
------------------ ----------
conditions set forth in this Credit Agreement (including, but not limited
to those requirements set forth in (S)4.1.2 below), each of the Banks
severally agrees during the Disbursement Period (as hereinafter defined),
upon the request of the Borrower, to make its Acquisition Commitment
Percentage of the Advances (as hereinafter defined) of the Acquisition Loan
to the Borrower on each Permitted Acquisition Closing Date. The aggregate
amount of all Advances of the Acquisition Loan shall be in the maximum
principal amount of the Total Acquisition Commitment or such lesser amount
as shall have been disbursed during the Disbursement
<PAGE>
-28-
Period pursuant to (S)4.1.2 below, provided, that the aggregate amount of
--------
all Advances made on the Closing Date shall not exceed $61,000,000, and
provided further, that each Bank's Acquisition Loan shall not exceed its
-------- -------
Acquisition Commitment. The several Acquisition Commitments of the Banks to
make Advances shall terminate on April 30, 2001, and the then outstanding
Acquisition Loan shall be repaid in accordance with (S) 4.5.1.
4.1.2. CONDITIONS TO ADVANCES. Advances of principal may be
----------------------
requested by the Borrower during the period from the Closing Date through
and including April 30, 2001 (the "Disbursement Period") on the following
terms and conditions (each portion of the Acquisition Loan so advanced on a
particular date being an "Advance", and such term shall only apply to
advances of the Acquisition Loan and not any other Loan). The Borrower
shall give to the Agent written notice in the form of Exhibit H hereto (or
---------
telephonic notice confirmed in writing in the form of Exhibit H hereto) of
---------
each Advance requested hereunder (an "Advance Request") no later than 12:00
noon (Central Standard Time) (a) one (1) Business Day prior to the proposed
Drawdown Date of any Base Rate Loan and (b) three (3) LIBOR Business Days
prior to the proposed Drawdown of any LIBOR Rate Loan, provided, however,
-------- -------
the Borrower shall not request any LIBOR Rate Loan with an Interest Period
of more than one month until the earlier to occur of (i) the date on which
the Agent notifies the Borrower that the Loans hereunder have been
syndicated to the satisfaction of the Agent or (ii) date which is sixty
(60) days following the Closing Date, and all Interest Periods during such
sixty (60) day period shall end on the same date. Each such notice shall
specify (i) the principal amount of the Advance requested, (ii) the
proposed Drawdown Date of such Advance; (iii) the Interest Period of such
Advance, and (iv) the Type of such Advance. Promptly upon receipt of any
such notice, the Agent shall notify each of the Banks thereof. Each Advance
Request shall be irrevocable and binding on the Borrower and shall obligate
the Borrower to accept the Advance requested from the Banks on the proposed
Drawdown Date. Each Advance Request shall be in a minimum amount of
$100,000. In addition, the Borrower shall deliver to the Agent not less
than five (5) Business Days prior to the proposed Drawdown Date of any
Advance a written notification describing the relevant Permitted
Acquisition to be consummated, copies of all documents, agreement and
instruments to be entered into by the Borrower in connection with such
Permitted Acquisition, and the purchase price for such Permitted
Acquisition (which purchase price plus all transaction costs related
thereto shall not be less than the amount of the Advance so requested).
Subject to the foregoing, and subject to satisfaction of the conditions set
forth in (S)14, so long as no Default or Event of Default shall have
occurred and is continuing, and all of the applicable conditions set forth
in this Credit Agreement have been met, including, but not limited to the
Borrower taking all action necessary and which is required pursuant to the
terms of this Credit Agreement and the other Loan Documents to
<PAGE>
-29-
perfect the Agent's first priority security interest in the assets being
acquired (or, in the event any Subsidiary is formed as a result of or in
connection with such acquisition, such Subsidiary will be a Restricted
Subsidiary and will enter into a Guaranty and such Security Documents as
may be necessary to provide the Agent with a first priority perfected
security interest in its assets), and the Agent being satisfied with the
terms of the proposed Permitted Acquisition, each Bank shall lend to the
Borrower such Bank's Commitment Percentage of the Advance so requested in
immediately available funds not later than the close of business on such
Drawdown Date.
4.2. COMMITMENT FEE. The Borrower agrees to pay to the Agent for the
--------------
accounts of the Banks in accordance with their respective Acquisition
Commitments a commitment fee calculated at the rate per annum equal to the
Applicable Margin for the Commitment Fee on the average daily amount during each
calendar quarter or portion thereof from the Closing Date to April 30, 2001 by
which the Total Acquisition Commitment exceeds the outstanding amount of
Acquisition Loan during such calendar quarter or portion thereof. The commitment
fee shall be payable quarterly in arrears on the first day of each calendar
quarter for the immediately preceding calendar quarter commencing on the first
such date following the date hereof, with a final payment on April 30, 2001 or
any earlier date on which the Acquisition Commitments shall terminate.
4.3. REDUCTION OF TOTAL ACQUISITION COMMITMENT. The Borrower shall have
-----------------------------------------
the right at any time and from time to time upon five (5) Business Days prior
written notice to the Agent to reduce by $500,000 or an integral multiple of
$100,000 in excess thereof the unborrowed portion of the Total Acquisition
Commitment or terminate entirely the Total Acquisition Commitment, whereupon the
Acquisition Commitments of the Banks shall be reduced pro rata in accordance
--- ----
with their respective Commitment Percentages of the amount specified in such
notice or, as the case may be, terminated. Promptly after receiving any notice
of the Borrower delivered pursuant to this (S)4.3, the Agent will notify the
Banks of the substance thereof. Upon the effective date of any such reduction or
termination, the Borrower shall pay to the Agent for the respective accounts of
the Banks the full amount of any commitment fee then accrued on the amount of
the reduction. No reduction or termination of the Acquisition Commitments may be
reinstated. In addition, on April 30, 2001, the Acquisition Commitments shall
terminate, and all outstanding Acquisition Loans shall be repaid in accordance
with (S)4.5.
4.4. THE ACQUISITION NOTES. The Acquisition Loan shall be evidenced by
---------------------
separate promissory notes of the Borrower in substantially the form of Exhibit D
------- -
hereto (each an "Acquisition Note"), dated the Closing Date and completed with
appropriate insertions. One Acquisition Note shall be payable to the order of
each Bank in a principal amount equal to such Bank's Acquisition Commitment of
the Acquisition Loan and representing the obligation of the Borrower to pay to
such Bank such principal amount or, if less, the outstanding amount of such
Bank's Commitment Percentage of the Acquisition Loan, plus
<PAGE>
-30-
interest accrued thereon, as set forth below. The Borrower irrevocably
authorizes each Bank to make or cause to be made a notation on such Bank's
Acquisition Note Record reflecting the original principal amount of such Bank's
Commitment Percentage of the Acquisition Loan and, at or about the time of such
Bank's receipt of any principal payment on such Bank's Acquisition Note, an
appropriate notation on such Bank's Acquisition Note Record reflecting such
payment. The aggregate unpaid amount set forth on such Bank's Acquisition Note
Record shall be prima facie evidence of the principal amount thereof owing and
----- -----
unpaid to such Bank, but the failure to record, or any error in so recording,
any such amount on such Bank's Acquisition Note Record shall not affect the
obligations of the Borrower hereunder or under any Acquisition Note to make
payments of principal of and interest on any Acquisition Note when due.
4.5. MANDATORY PAYMENTS OF PRINCIPAL OF ACQUISITION LOAN.
---------------------------------------------------
4.5.1. ACQUISITION LOAN. The Borrower promises to pay to the Agent
----------------
for the account of the Banks the principal amount of the Acquisition Loan
in twelve (12) consecutive quarterly payments payable on the last Business
Day of each calendar quarter ending within any period set forth below in
the amount set forth opposite such period, commencing June 30, 2001, with a
final payment on the Acquisition Loan Maturity Date in an amount equal to
the unpaid balance of the Acquisition Loan.
<TABLE>
<CAPTION>
Quarter Ending Amount of Each Payment
-------------- ----------------------
<S> <C>
June 30, 2001 through March 31, 3.125% of the Acquisition Loan
2002 outstanding on April 30, 2001
April 1, 2002 through March 31, 3.125% of the Acquisition Loan
2003 outstanding on April 30, 2001
April 1, 2003 through March 31, 18.75% of the Acquisition Loan
2004 outstanding on April 30, 2001
Acquisition Loan Maturity Date Remaining Unpaid Balance of
Acquisition Loan
</TABLE>
4.5.2. PROCEEDS. In the event the Borrower or any of its
--------
Subsidiaries receives any (a) net cash proceeds from the sale or other
disposition of assets permitted by (S)10.5.2 which net cash proceeds are
required by (S)10.5.2 to be repaid to the Agent hereunder; (b) proceeds of
insurance claims which have not been reinvested by the Company or such
Subsidiary in replacement assets or to repair the asset so damaged, as the
case may be, within 360 days of receipt by such Person of such proceeds or
(c) net cash proceeds from any equity issuances by the Borrower or its
Subsidiaries after the Closing Date, the Borrower shall, within thirty (30)
days of receipt thereof, repay the outstanding
<PAGE>
-31-
Acquisition Loans in an amount equal to 100% of such net cash proceeds,
provided, however, that notwithstanding the foregoing, (i) in the event the
-------- -------
Borrower receives any net cash proceeds from its Initial Public Offering or
any subsequent public offering of its capital stock, the Borrower shall
only be required to pay 50% of the net cash proceeds of such public
offering and (ii) in the event that the Borrower receives cash proceeds of
private equity issuances to officers, directors and employees, not in
excess of $7,500,000, no prepayment shall be required hereunder. All such
payments made after the end of the Disbursement Period shall be applied
against the installments of principal due on the Acquisition Loan in the
inverse order of maturity. All such payments made in accordance with 10.5.2
prior to the end of the Disbursement Period shall permanently reduce the
Total Acquisition Commitment by the amount of such net cash proceeds in
accordance with (S)10.5.2.
4.5.3. CRYSTALOID ACQUISITION. In the event that the Borrower has
----------------------
not consummated the Crystaloid Acquisition on or before April 30, 1998, the
Borrower shall make a repayment of the Acquisition Loan in an amount equal
to $6,000,000.
4.6. OPTIONAL PREPAYMENT OF ACQUISITION LOAN. The Borrower shall have the
---------------------------------------
right at any time to prepay the Acquisition Notes on or before the Acquisition
Loan Maturity Date, as a whole, or in part, upon not less than five (5) Business
Days prior written notice to the Agent, without premium or penalty, provided
--------
that (a) each partial prepayment shall be in the principal amount of $500,000 or
a larger integral multiple of $100,000 in excess thereof, (b) no portion of the
Acquisition Loan bearing interest at the LIBOR Rate may be prepaid pursuant to
this (S)4.4 except on the last day of the Interest Period relating thereto, and
(c) each partial prepayment shall be allocated among the Banks, in proportion,
as nearly as practicable, to the respective outstanding amount of each Bank's
Acquisition Note, with adjustments to the extent practicable to equalize any
prior prepayments not exactly in proportion. Any prepayment of principal of the
Acquisition Loan shall include all interest accrued to the date of prepayment
and shall be applied against the scheduled installments of principal due on the
Acquisition Loan in the inverse order of maturity. No amount repaid with respect
to the Acquisition Loan may be reborrowed.
4.7. INTEREST ON ACQUISITION LOAN.
----------------------------
4.7.1. INTEREST RATES. Except as otherwise provided in (S)6.11,
--------------
the Acquisition Loan shall bear interest during each Interest Period
relating to all or any portion of the Acquisition Loan at the following
rates:
(a) To the extent that all or any portion of the
Acquisition Loan bears interest during such Interest Period at the
Base Rate, the Acquisition Loan or such portion shall bear interest
during
<PAGE>
-32-
such Interest Period at the rate per annum equal to the Base Rate,
plus the Applicable Margin.
----
(b) To the extent that all or any portion of the Acquisition
Loan bears interest during such Interest Period at the LIBOR Rate, the
Acquisition Loan or such portion shall bear interest during such
Interest Period at the rate per annum equal to the LIBOR Rate, plus
----
the Applicable Margin.
(c) The Borrower promises to pay interest on the Acquisition
Loan or any portion thereof outstanding during each Interest Period in
arrears on each Interest Payment Date applicable to such Interest
Period.
4.7.2. NOTIFICATION BY BORROWER. The Borrower shall notify the
------------------------
Agent, such notice to be irrevocable, at least one (1) Business Day prior
to the Drawdown Date of any advance if all or any portion of the
Acquisition Loan is to bear interest at the Base Rate and at least three
(3) LIBOR Business Days prior to the Drawdown Date of the Advance if all or
any portion of the Advance is to bear interest at the LIBOR Rate, provided,
--------
however, the Borrower shall not request any LIBOR Rate Loan with an
-------
Interest Period of more than one (1) month until the earlier to occur of
(i) the date on which the Loans hereunder have been syndicated to the
satisfaction of the Agent or (ii) the date which is sixty (60) days after
the Closing Date and all interest periods selected during such period shall
end on the same date. After any Advance has been made, the provisions of
(S)2.7 shall apply mutatis mutandis with respect to all or any portion of
------- --------
the Acquisition Loan so that the Borrower may have the same interest rate
options with respect to all or any portion of the Acquisition Loan as it
would be entitled to with respect to the Revolving Credit Loans.
4.7.3. AMOUNTS, ETC. Any portion of the Acquisition Loan bearing
------------
interest at the LIBOR Rate relating to any Interest Period shall be in the
amount of $500,000 or a larger integral multiple of $100,000 in excess
thereof. No Interest Period relating to the Acquisition Loan or any portion
thereof bearing interest at the LIBOR Rate shall extend beyond the date on
which a regularly scheduled installment payment of the principal of the
Acquisition Loan is to be made unless a portion of the Acquisition Loan at
least equal to such installment payment has an Interest Period ending on
such date or is then bearing interest at the Base Rate.
4.8. FUNDS FOR ADVANCES.
------------------
4.8.1. FUNDING PROCEDURES. Not later than 12:00 noon (Central
------------------
Standard Time) on the proposed Drawdown Date of any Advance, each of the
Banks will make available to the Agent, at the Agent's Head Office, in
immediately available funds, such Bank's Acquisition Commitment
<PAGE>
-33-
Percentage of the amount of the requested Advance. Upon receipt from each
Bank of such amount, and upon receipt of the documents required by (S)(S)12
and 13 and the satisfaction of the other conditions set forth therein, to
the extent applicable, the Agent will make available to the Borrower the
aggregate amount of such Advances made available to the Agent by the Banks.
The failure or refusal of any Bank to make available to the Agent at the
aforesaid time and place on any Drawdown Date its Commitment Percentage of
the requested Advance shall not relieve any other Bank from its several
obligation hereunder to make available to the Agent such other Bank's
Commitment Percentage of any requested Advance.
4.8.2. ADVANCES BY AGENT. The Agent may, unless notified to the
-----------------
contrary by any Bank prior to a Drawdown Date, assume that such Bank has
made available to the Agent on such Drawdown Date such Bank's Acquisition
Commitment Percentage of the Advance to be made on such Drawdown Date, and
the Agent may (but it shall not be required to), in reliance upon such
assumption, make available to the Borrower a corresponding amount. If any
Bank makes available to the Agent such amount on a date after such Drawdown
Date, such Bank shall pay to the Agent on demand an amount equal to the
product of (a) the average computed for the period referred to in clause
(c) below, of the weighted average interest rate paid by the Agent for
federal funds acquired by the Agent during each day included in such
period, times (b) the amount of such Bank's Acquisition Commitment
-----
Percentage of such Advance, times (c) a fraction, the numerator of which is
-----
the number of days that elapse from and including such Drawdown Date (or,
if the Drawdown Date occurs prior to twenty-four hours after such Bank has
received notice of a loan request, twenty-four hours after receipt of such
notice of a loan request) to the date on which the amount of such Bank's
Acquisition Commitment Percentage of such Advance shall become immediately
available to the Agent, and the denominator of which is 360. A statement of
the Agent submitted to such Bank with respect to any amounts owing under
this paragraph shall be prima facie evidence of the amount due and owing to
----- -----
the Agent by such Bank. If the amount of such Bank's Acquisition Commitment
Percentage of such Advance is not made available to the Agent by such Bank
within three (3) Business Days following such Drawdown Date, the Agent
shall be entitled to recover such amount from the Borrower on demand, with
interest thereon at the rate per annum applicable to the Advance made on
such Drawdown Date.
5. LETTERS OF CREDIT.
-----------------
5.1. LETTER OF CREDIT COMMITMENTS.
----------------------------
5.1.1. COMMITMENT TO ISSUE LETTERS OF CREDIT. Subject to the terms
-------------------------------------
and conditions hereof and the execution and delivery by the Borrower of a
letter of credit application on an Issuing Bank's customary form (a
<PAGE>
-34-
"Letter of Credit Application"), each of the Issuing Banks on behalf of the
Banks and in reliance upon the agreement of the Banks set forth in (S)5.1.4
and upon the representations and warranties of the Borrower contained
herein, agrees, in its individual capacity, to issue, extend and renew for
the account of the Borrower one or more standby or documentary letters of
credit (individually, a "Letter of Credit"), in such form as may be
requested from time to time by the Borrower and agreed to by such Issuing
Bank and the Agent; provided, however, that, after giving effect to such
-------- -------
request, (a) the sum of the aggregate Maximum Drawing Amount and all Unpaid
Reimbursement Obligations shall not exceed $5,000,000 at any one time and
(b) the sum of (i) the Maximum Drawing Amount of all Letters of Credit,
(ii) all Unpaid Reimbursement Obligations, and (iii) the amount of all
Revolving Credit Loans outstanding shall not exceed the lesser of (A) the
Total Commitment and (B) the Borrowing Base. The parties agree that the
existing Letters of Credit set forth on Schedule 5.1 hereto are Letters of
------------
Credit as defined in and for purposes of this (S)5.1.1.
5.1.2. LETTER OF CREDIT APPLICATIONS. Each Letter of Credit
-----------------------------
Application shall be completed to the satisfaction of the applicable
Issuing Bank and the Agent. In the event that any provision of any Letter
of Credit Application shall be inconsistent with any provision of this
Credit Agreement, then the provisions of this Credit Agreement shall, to
the extent of any such inconsistency, govern.
5.1.3. TERMS OF LETTERS OF CREDIT. Each Letter of Credit issued,
--------------------------
extended or renewed hereunder shall, among other things, (a) provide for
the payment of sight drafts for honor thereunder when presented in
accordance with the terms thereof and when accompanied by the documents
described therein, and (b) have an expiry date no later than the date which
is fourteen (14) days (or, if the Letter of Credit is confirmed by a
confirmer or otherwise provides for one or more nominated persons, forty-
five (45) days) prior to the Revolving Credit Loan Maturity Date. Each
Letter of Credit so issued, extended or renewed shall be subject to the
Uniform Customs.
5.1.4. REIMBURSEMENT OBLIGATIONS OF BANKS. Each Bank severally
----------------------------------
agrees that it shall be absolutely liable, without regard to the occurrence
of any Default or Event of Default or any other condition precedent
whatsoever, to the extent of such Bank's Commitment Percentage, to
reimburse the applicable Issuing Bank on demand for the amount of each
draft paid by such Issuing Bank under each Letter of Credit issued by such
Issuing Bank to the extent that such amount is not reimbursed by the
Borrower pursuant to (S)5.2 (such agreement for a Bank being called herein
the "Letter of Credit Participation" of such Bank).
5.1.5. PARTICIPATIONS OF BANKS. Each such payment made by a Bank
-----------------------
shall be treated as the purchase by such Bank of a participating interest
in the Borrower's Reimbursement Obligation under (S)5.2 in an amount
<PAGE>
-35-
equal to such payment. Each Bank shall share in accordance with its
participating interest in any interest which accrues pursuant to (S)5.2.
5.2. REIMBURSEMENT OBLIGATION OF THE BORROWER. In order to induce each of
-----------------------------------------
the Issuing Banks to issue, extend and renew each Letter of Credit and the Banks
to participate therein, the Borrower hereby agrees to reimburse or pay to such
Issuing Bank, for the account of such Issuing Bank or (as the case may be) the
Banks, with respect to each Letter of Credit issued, extended or renewed by such
Issuing Bank hereunder,
(a) except as otherwise expressly provided in (S)5.2(b) and (c), on
each date that any draft presented under such Letter of Credit is honored
by such Issuing Bank, or such Issuing Bank otherwise makes a payment with
respect thereto, (i) the amount paid by such Issuing Bank under or with
respect to such Letter of Credit, and (ii) the amount of any taxes, fees,
charges or other costs and expenses whatsoever incurred by such Issuing
Bank or any Bank in connection with any payment made by such Issuing Bank
or any Bank under, or with respect to, such Letter of Credit,
(b) upon the reduction (but not termination) of the Total
Commitment to an amount less than the Maximum Drawing Amount, an amount
equal to such difference, which amount shall be held by the Agent for the
benefit of the Banks and the Agent as cash collateral for all Obligations,
and
(c) upon the termination of the Total Commitment, or the
acceleration of the Reimbursement Obligations with respect to all Letters
of Credit in accordance with (S)14, an amount equal to the then Maximum
Drawing Amount of all Letters of Credit, which amount shall be held by the
Agent for the benefit of the Banks and the Agent as cash collateral for all
Obligations.
Each such payment shall be made to the Agent for the benefit of the Issuing
Bank at the Agent's Head Office in immediately available funds. Interest on any
and all amounts remaining unpaid by the Borrower under this (S)5.2 at any time
from the date such amounts become due and payable (whether as stated in this
(S)5.2, by acceleration or otherwise) until payment in full (whether before or
after judgment) shall be payable to the Issuing Bank on demand at the rate
specified in (S)6.11 for overdue principal on the Revolving Credit Loans.
5.3. LETTER OF CREDIT PAYMENTS. If any draft shall be presented or other
-------------------------
demand for payment shall be made under any Letter of Credit, the Issuing Bank
shall notify the Agent and the Borrower of the date and amount of the draft
presented or demand for payment and of the date and time when it expects to pay
such draft or honor such demand for payment. If the Borrower fails to reimburse
such Issuing Bank as provided in (S)5.2 on or before the date that such draft is
paid or other payment is made by the Issuing Bank, the Issuing Bank
<PAGE>
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may at any time thereafter notify the Agent and the Banks of the amount of any
such Unpaid Reimbursement Obligation. No later than 2:00 p.m. (Central Standard
Time) on the Business Day next following the receipt of such notice, each Bank
shall make available to the Agent for the benefit of the Issuing Bank, at the
Agent's Head Office, in immediately available funds, such Bank's Commitment
Percentage of such Unpaid Reimbursement Obligation, together with an amount
equal to the product of (a) the average, computed for the period referred to in
clause (c) below, of the weighted average interest rate paid by the Issuing Bank
for federal funds acquired by the Issuing Bank during each day included in such
period, times (b) the amount equal to such Bank's Commitment Percentage of such
-----
Unpaid Reimbursement Obligation, times (c) a fraction, the numerator of which is
-----
the number of days that elapse from and including the date the Issuing Bank paid
the draft presented for honor or otherwise made payment to the date on which
such Bank's Commitment Percentage of such Unpaid Reimbursement obligation shall
become immediately available to the Issuing Bank, and the denominator of which
is 360. The responsibility of each Issuing Bank to the Borrower and the Banks
shall be only to determine that the documents (including each draft) delivered
under each Letter of Credit issued by it in connection with such presentment
shall be in conformity in all material respects with such Letter of Credit.
5.4. OBLIGATIONS ABSOLUTE. The Borrower's obligations under this (S)5
--------------------
shall be absolute and unconditional under any and all circumstances and
irrespective of the occurrence of any Default or Event of Default or any
condition precedent whatsoever or any setoff, counterclaim or defense to payment
which the Borrower may have or have had against any Issuing Bank, the Agent, any
Bank or any beneficiary of a Letter of Credit. The Borrower further agrees with
the Issuing Banks, the Agent and the Banks that the Issuing Banks, the Agent and
the Banks shall not be responsible for, and the Borrower's Reimbursement
Obligations under (S)5.2 shall not be affected by, among other things, the
validity or genuineness of documents or of any endorsements thereon, even if
such documents should in fact prove to be in any or all respects invalid,
fraudulent or forged, or any dispute between or among the Borrower, the
beneficiary of any Letter of Credit or any financing institution or other party
to which any Letter of Credit may be transferred or any claims or defenses
whatsoever of the Borrower against the beneficiary of any Letter of Credit or
any such transferee. The Issuing Banks, the Agent and the Banks shall not be
liable for any error, omission, interruption or delay in transmission, dispatch
or delivery of any message or advice, however transmitted, in connection with
any Letter of Credit. The Borrower agrees that any action taken or omitted by
any Issuing Bank, the Agent or any Bank under or in connection with each Letter
of Credit and the related drafts and documents, if done in good faith, shall be
binding upon the Borrower and shall not result in any liability on the part of
any Issuing Bank, the Agent or any Bank to the Borrower.
5.5. RELIANCE BY ISSUER. To the extent not inconsistent with (S)5.4, any
------------------
Issuing Bank shall be entitled to rely, and shall be fully protected in relying
upon, any Letter of Credit, draft, writing, resolution, notice, consent,
certificate,
<PAGE>
-37-
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document believed by it to be genuine and correct and
to have been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel, independent accountants and other
experts selected by such Issuing Bank. Each Issuing Bank shall be fully
justified in failing or refusing to take any action under this Credit Agreement
unless it shall first have received such advice or concurrence of the Majority
Banks as it reasonably deems appropriate or it shall first be indemnified to its
reasonable satisfaction by the Banks against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action. Each Issuing Bank shall in all cases be fully protected in acting, or in
refraining from acting, under this Credit Agreement in accordance with a request
of the Majority Banks, and such request and any action taken or failure to act
pursuant thereto shall be binding upon the Banks and all future holders of the
Revolving Credit Notes or of a Letter of Credit Participation.
5.6. LETTER OF CREDIT FEE. The Borrower shall, on the date of issuance
--------------------
or any extension or renewal of any Letter of Credit pay a fee (in each case, a
"Letter of Credit Fee") to the Agent (i) in respect of each standby Letter of
Credit an amount equal to the Applicable Margin with respect to Letters of
Credit per annum of the face amount of such standby Letter of Credit, of which
an amount equal to one-quarter percent (1/4%) per annum of the face amount of
such standby Letter of Credit shall be for the account of the Issuing Bank of
such Letter of Credit, as a fronting fee, and the balance of which Letter of
Credit Fee shall be for the accounts of the Banks in accordance with their
respective Commitment Percentages and (ii) in respect of each documentary Letter
of Credit an amount equal to the Applicable Margin minus one-half percent (1/2%)
per annum on the face amount of such documentary Letter of Credit, of which an
amount equal to one-quarter percent (1/4%) per annum of the face amount of such
documentary Letter of Credit shall be for the account of the Issuing Bank of
such Letter of Credit, as a fronting fee, and the balance of which Letter of
Credit Fee shall be for the accounts of the Banks in accordance with their
respective Commitment Percentages. In respect of each Letter of Credit, the
Borrower shall also pay to each Issuing Bank for such Issuing Bank's own account
with respect to Letters of Credit issued by it, at such other time or times as
such charges are customarily made by such Issuing Bank, the Issuing Bank's
customary issuance, amendment, negotiation or document examination and other
administrative fees as in effect from time to time.
6. CERTAIN GENERAL PROVISIONS.
--------------------------
6.1. CLOSING AND ADVISORY FEES. The Borrower agrees to pay to the Agent
-------------------------
and the Arranger certain fees in the amounts and at the times set forth in the
Fee Letter.
6.2. AGENT'S FEE. The Borrower shall pay to the Agent an Agent's fee as
-----------
provided in the Fee Letter.
<PAGE>
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6.3. FUNDS FOR PAYMENTS.
------------------
6.3.1. PAYMENTS TO AGENT. All payments of principal, interest,
-----------------
Reimbursement Obligations, commitment fees, Letter of Credit Fees and any
other amounts due hereunder or under any of the other Loan Documents shall
be made to the Agent, for the respective accounts of the Banks and the
Agent, at the Agent's Head Office or at such other location in the Boston,
Massachusetts, area that the Agent may from time to time designate, in each
case in immediately available funds.
6.3.2. NO OFFSET, ETC. All payments by the Borrower hereunder and
--------------
under any of the other Loan Documents shall be made without setoff or
counterclaim and free and clear of and without deduction for any taxes,
levies, imposts, duties, charges, fees, deductions, withholdings,
compulsory loans, restrictions or conditions of any nature now or hereafter
imposed or levied by any jurisdiction or any political subdivision thereof
or taxing or other authority therein unless the Borrower is compelled by
law to make such deduction or withholding. If any such obligation is
imposed upon the Borrower with respect to any amount payable by it
hereunder or under any of the other Loan Documents, the Borrower will pay
to the Agent, for the account of the Banks or (as the case may be) the
Agent, on the date on which such amount is due and payable hereunder or
under such other Loan Document, such additional amount in Dollars as shall
be necessary to enable the Banks or the Agent to receive the same net
amount which the Banks or the Agent would have received on such due date
had no such obligation been imposed upon the Borrower. The Borrower will
deliver promptly to the Agent certificates or other valid vouchers for all
taxes or other charges deducted from or paid with respect to payments made
by the Borrower hereunder or under such other Loan Document.
6.4. COMPUTATIONS. All computations of interest on the Base Rate Loans
------------
and of commitment fees and Letter of Credit Fees shall be based on a 365-day
year and paid for the actual number of days elapsed. All computations of
interest on the LIBOR Rate Loans shall be based on a 360-day year and paid for
the actual number of days elapsed. Except as otherwise provided in the
definition of the term "Interest Period" with respect to LIBOR Rate Loans,
whenever a payment hereunder or under any of the other Loan Documents becomes
due on a day that is not a Business Day, the due date for such payment shall be
extended to the next succeeding Business Day, and interest shall accrue during
such extension. The outstanding amount of the Loans as reflected on the
Revolving Credit Note Records and the Acquisition Note Records from time to time
shall be considered correct and binding on the Borrower unless within five (5)
Business Days after receipt of any notice by the Agent or any of the Banks of
such outstanding amount, the Agent or such Bank shall notify the Borrower to the
contrary.
<PAGE>
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6.5. INABILITY TO DETERMINE LIBOR RATE. In the event, prior to the
---------------------------------
commencement of any Interest Period relating to any LIBOR Rate Loan, the Agent
shall determine or be notified by the Majority Banks that adequate and
reasonable methods do not exist for ascertaining the LIBOR Rate that would
otherwise determine the rate of interest to be applicable to any LIBOR Rate Loan
during any Interest Period, the Agent shall forthwith give notice of such
determination (which shall be conclusive and binding on the Borrower and the
Banks) to the Borrower and the Banks. In such event (a) any Loan Request or
Conversion Request with respect to LIBOR Rate Loans shall be automatically
withdrawn and shall be deemed a request for Base Rate Loans, (b) each LIBOR Rate
Loan will automatically, on the last day of the then current Interest Period
relating thereto, become a Base Rate Loan, and (c) the obligations of the Banks
to make LIBOR Rate Loans shall be suspended until the Agent or the Majority
Banks determines that the circumstances giving rise to such suspension no longer
exist, whereupon the Agent or, as the case may be, the Agent upon the
instruction of the Majority Banks, shall so notify the Borrower and the Banks.
6.6. ILLEGALITY. Notwithstanding any other provisions herein, if any
----------
present or future law, regulation, treaty or directive or change in the
interpretation or application thereof shall make it unlawful for any Bank to
make or maintain LIBOR Rate Loans, such Bank shall forthwith give notice of such
circumstances to the Borrower and the other Banks and thereupon (a) the
commitment of such Bank to make LIBOR Rate Loans or convert Loans of another
Type to LIBOR Rate Loans shall forthwith be suspended and (b) such Bank's
Revolving Credit Loans then outstanding as LIBOR Rate Loans, if any, shall be
converted automatically to Base Rate Loans on the last day of each Interest
Period applicable to such LIBOR Rate Loans or within such earlier period as may
be required by law. The Borrower hereby agrees promptly to pay the Agent for the
account of such Bank, upon demand by such Bank, any additional amounts necessary
to compensate such Bank for any costs incurred by such Bank in making any
conversion in accordance with this (S)6.6, including any interest or fees
payable by such Bank to lenders of funds obtained by it in order to make or
maintain its LIBOR Rate Loans hereunder.
6.7. ADDITIONAL COSTS, ETC. If any present or future applicable law,
---------------------
which expression, as used herein, includes statutes, rules and regulations
thereunder and interpretations thereof by any competent court or by any
governmental or other regulatory body or official charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon or
otherwise issued to any Bank or the Agent by any central bank or other fiscal,
monetary or other authority (whether or not having the force of law), shall:
(a) subject any Bank or the Agent to any tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature with respect to this
Credit Agreement, the other Loan Documents, any Letters of Credit, such
Bank's Commitment, Acquisition Commitment, or the Loans (other than
<PAGE>
-40-
taxes based upon or measured by the income or profits of such Bank or the
Agent), or
(b) materially change the basis of taxation (except for changes in
taxes on income or profits) of payments to any Bank of the principal of or
the interest on any Loans or any other amounts payable to any Bank or the
Agent under this Credit Agreement or any of the other Loan Documents, or
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Credit Agreement) any
special deposit, reserve, assessment, liquidity, capital adequacy or other
similar requirements (whether or not having the force of law) against
assets held by, or deposits in or for the account of, or loans by, or
letters of credit issued by, or commitments of an office of any Bank, or
(d) impose on any Bank or the Agent any other conditions or
requirements with respect to this Credit Agreement, the other Loan
Documents, any Letters of Credit, the Loans, such Bank's Commitment,
Acquisition Commitment, or any class of loans, letters of credit or
commitments of which any of the Loans or such Bank's Commitment or
Acquisition Commitment forms a part, and the result of any of the foregoing
is
(i) to increase the cost to any Bank of making, funding,
issuing, renewing, extending or maintaining any of the Loans or such
Bank's Commitment, Acquisition Commitment or any Letter of Credit, or
(ii) to reduce the amount of principal, interest, Reimbursement
Obligation or other amount payable to such Bank or the Agent hereunder
on account of such Bank's Commitment, Acquisition Commitment, any
Letter of Credit or any of the Loans, or
(iii) to require such Bank or the Agent to make any payment or to
forego any interest or Reimbursement Obligation or other sum payable
hereunder, the amount of which payment or foregone interest or
Reimbursement Obligation or other sum is calculated by reference to
the gross amount of any sum receivable or deemed received by such Bank
or the Agent from the Borrower hereunder,
then, and in each such case, the Borrower will, upon demand made by such Bank or
(as the case may be) the Agent at any time and from time to time and as often as
the occasion therefor may arise, pay to such Bank or the Agent such additional
amounts as will be sufficient to compensate such Bank or the Agent
<PAGE>
-41-
for such additional cost, reduction, payment or foregone interest or
Reimbursement Obligation or other sum.
On or before the date it becomes a party to this Credit Agreement and from
time to time thereafter upon any change in status rendering any certificate or
document previously delivered pursuant to this (S)6.7 invalid or inaccurate,
each Bank that is organized under the laws of a jurisdiction outside the United
States shall (but, with respect to any renewal or change in status, if legally
able to do so) deliver to the Borrower such certificates, documents or other
evidence, as required by the Code or Treasury Regulations issued pursuant
thereto, including Internal Revenue Service Form 1001 or Form 4224 and any other
certificate or statement of exemption required by Treasury Regulation Section
1.1441-1, 1.1441-4 or 1.1441-6(c) or any subsequent version thereof or
subsequent version thereto, properly completed and duly executed by such Bank
establishing that such payment is (a) not subject to United States Federal
withholding tax under the Code because such payment is effectively connected
with conduct by such Bank of a trade or business in the United States or (b)
totally exempt from United States Federal withholding tax, or (other than in the
case of such Bank on the date such Bank became a party to this Credit
Agreement), subject to a reduced rate of such tax under a provision of an
applicable tax treaty. The Borrower shall not be required to pay any additional
amounts to any Bank pursuant to (S)6.3 or this (S)6.7 to the extent that the
obligation to pay such additional amounts would not have arisen but for a
failure by such Bank to comply with the provisions of the preceding sentence.
Any Bank claiming any additional amounts payable pursuant to (S)6.3 or this
(S)6.7 shall use reasonable efforts (consistent with legal and regulatory
restrictions) to file any certificate or document reasonably requested in
writing by the Borrower or to change the jurisdiction of its applicable lending
certificate office if the making of such a filing or change would avoid the need
for or substantially reduce the amount of any such additional amounts which may
thereafter accrue and would not, in the sole and absolute determination of such
Bank be otherwise disadvantageous to such Bank, which determination by such Bank
shall be conclusive.
If a Bank or the Agent shall become aware that it is entitled to receive
a refund in respect of taxes as to which it has been indemnified by the Borrower
pursuant to (S)6.3 or this (S)6.7, it shall promptly notify the Borrower of the
availability of such refund and shall, within thirty (30) days after receipt of
a request by the Borrower, apply for such refund at the Borrower's expense. If
any Bank or the Agent, as applicable, receives a refund in respect of any taxes
to which it has been indemnified by the Borrower pursuant to (S)6.3 or this
(S)6.7, it shall promptly repay such refund to the Borrower (to the extent of
amounts that have been paid by the Borrower under (S)6.3 or this (S)6.7 with
respect to such refund), net of all out-of-pocket expenses (including taxes
imposed with respect to such refund) of such Bank or the Agent, as applicable,
and without interest; provided, however, that the Borrower, upon the request of
-------- ---------
such Bank or the Agent, as applicable, agrees to return such refund (plus
penalties, interest or
<PAGE>
-42-
other charges) to such Bank or the Agent in the event such Bank or the Agent is
required to repay such refund.
6.8. CAPITAL ADEQUACY. If after the date hereof any Bank or the Agent
------- --------
determines that (a) the adoption of or change in any law, governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law) regarding capital requirements for banks or bank holding companies or any
change in the interpretation or application thereof by a court or governmental
authority with appropriate jurisdiction, or (b) compliance by such Bank or the
Agent or any corporation controlling such Bank or the Agent with any law,
governmental rule, regulation, policy, guideline or directive (whether or not
having the force of law) of any such entity regarding capital adequacy, has the
effect of reducing the return on such Bank's or the Agent's commitment with
respect to any Loans to a level below that which such Bank or the Agent could
have achieved but for such adoption, change or compliance (taking into
consideration such Bank's or the Agent's then existing policies with respect to
capital adequacy and assuming full utilization of such entity's capital) by any
amount deemed by such Bank or (as the case may be) the Agent to be material,
then such Bank or the Agent may notify the Borrower of such fact. To the extent
that the amount of such reduction in the return on capital is not reflected in
the Base Rate, the Borrower and such Bank shall thereafter attempt to negotiate
in good faith, within thirty (30) days of the day on which the Borrower receives
such notice, an adjustment payable hereunder that will adequately compensate
such Bank in light of these circumstances. If the Borrower and such Bank are
unable to agree to such adjustment within thirty (30) days of the date on which
the Borrower receives such notice, then commencing on the date of such notice
(but not earlier than the effective date of any such increased capital
requirement), the fees payable hereunder shall increase by an amount that will,
in such Bank's reasonable determination, provide adequate compensation. Each
Bank shall allocate such cost increases among its customers in good faith and on
an equitable basis.
6.9. CERTIFICATE. A certificate setting forth any additional amounts
-----------
payable pursuant to (S)(S)6.7 or 6.8 and a brief explanation of such amounts
which are due, submitted by any Bank or the Agent to the Borrower, shall be
conclusive, absent manifest error, that such amounts are due and owing.
6.10. INDEMNITY. The Borrower agrees to indemnify each Bank and to hold
---------
each Bank harmless from and against any loss, cost or expense (including loss of
anticipated profits) that such Bank may sustain or incur as a consequence of (a)
default by the Borrower in payment of the principal amount of or any interest on
any LIBOR Rate Loans as and when due and payable, including any such loss or
expense arising from interest or fees payable by such Bank to lenders of funds
obtained by it in order to maintain its LIBOR Rate Loans, (b) default by the
Borrower in making a borrowing or conversion after the Borrower has given (or is
deemed to have given) a Loan Request, an Advance Request, notice (in the case of
all or any portion of the Acquisition Loans pursuant to (S)4.5.2) or a
Conversion Request relating thereto in accordance with
<PAGE>
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(S)2.6 or (S)2.7 or (S)4.5 or (a) the making of any payment of a LIBOR Rate Loan
or the making of any conversion of any such Loan to a Base Rate Loan on a day
that is not the last day of the applicable Interest Period with respect thereto,
including interest or fees payable by such Bank to lenders of funds obtained by
it in order to maintain any such Loans.
6.11. INTEREST AFTER DEFAULT. After the occurrence and during the
----------------------
continuance of any Event of Default under (S)14.1(a), (b) or (c) (only with
regard to (S)11), from and after the date the Agent so notifies the Borrower,
all Loans and other amounts payable hereunder and under any of the other Loan
Documents shall bear interest compounded monthly and payable on demand at a rate
per annum equal to two percent (2.0%) above the highest interest rate applicable
to Revolving Credit Loans pursuant to (S)2.5 and the Acquisition Loan pursuant
to (S)4.5 until such amount shall be paid in full or such Event of Default shall
have been cured or waived (after as well as before judgment).
6.12 REPLACEMENT BANKS. Within thirty (30) days after (a) any Bank has
-----------------
failed to make available to the Agent, the amount of its Acquisition Commitment
Percentage or its Commitment Percentage on any Drawdown Date in accordance with
(S)(S)2.8.2 or 4.8.2, (b) any Bank has demanded compensation from the Borrower
pursuant to (S)(S)6.7 or 6.8 hereof, or (c) there shall have occurred a change
in law with respect to any Bank as a consequence of which it shall have become
unlawful for such Bank to make a LIBOR Rate Loan on any Drawdown Date, as
described in (S)6.6 hereof (any such Bank described in the foregoing clauses
(a), (b) or (c) is hereinafter referred to as an "Affected Bank"), the Borrower
-------- ----
may request that the Non-Affected Banks acquire all, but not less than all, of
the Affected Bank's outstanding Loans, and assume all, but not less than all, of
the Affected Bank's Acquisition Commitment and its Commitment. If the Borrower
so requests, the Non Affected Banks may elect to acquire all or any portion of
the Affected Bank's outstanding Loans, and to assume all or any portion of the
Affected Bank's Acquisition Commitment and its Commitment. If the Non-Affected
Banks do not elect to acquire and assume all of the Affected Bank's outstanding
Loans, the Acquisition Commitment and the Commitment, the Borrower may designate
a replacement bank or banks, which must be satisfactory to the Agent, to acquire
and assume that portion of the outstanding Loans, the Acquisition Commitment and
the Commitment of the Affected Bank not being acquired and assumed by the Non-
Affected Banks. The provisions of (S)19 hereof shall apply to all reallocations
pursuant to this (S)6.12, and the Affected Bank and any Non-Affected Banks
and/or replacement banks which are to acquire the Loans, the Acquisition
Commitment and the Commitment of the Affected Bank shall execute and deliver to
the Agent, in accordance with the provisions of (S)19 hereof, such Assignments
and Acceptances and other instruments, including, without limitation, Notes, as
are required pursuant to (S)19 hereof to give effect to such reallocations. Any
Non-Affected Banks and/or replacement banks which are to acquire the Loans, the
Acquisition Commitment and the Commitment of the Affected Bank shall be deemed
to be Eligible Assignees for all purposes of (S)19 hereof. On the effective date
of the applicable Assignments and Acceptances, the Borrower shall pay to the
Affected Bank all
<PAGE>
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interest accrued on its Loans up to but excluding such date, along with any fees
payable to such Affected Bank hereunder up to but excluding such date.
7. COLLATERAL SECURITY AND GUARANTIES.
----------------------------------
7.1. SECURITY OF BORROWER. The Obligations shall be secured by (a) a
--------------------
perfected first priority security interest (subject only to Permitted Liens
entitled to priority under applicable law) in all of the assets of the Borrower,
whether now owned or hereafter acquired, pursuant to the terms of the Security
Documents to which the Borrower is a party, and (b) a pledge by the Borrower of
(i) one hundred percent (100%) of the capital stock of each of its Domestic
Subsidiaries owned by the Borrower and (ii) all of the capital stock of each of
its Foreign Subsidiaries owned by the Borrower up to a maximum sixty-six percent
(66%) of such Foreign Subsidiary's capital stock, pursuant to the terms of its
Stock Pledge Agreement.
7.2. GUARANTIES AND SECURITY OF SUBSIDIARIES. The Obligations shall also
---------------------------------------
be guaranteed pursuant to the terms of the Guaranty. The obligations of the
Borrower's Domestic Subsidiaries under the Guaranty shall be in turn secured by
(a) a perfected first priority security interest (subject only to Permitted
Liens entitled to priority under applicable law) in all of the assets of each
such Domestic Subsidiary, whether now owned or hereafter acquired, pursuant to
the terms of the Security Documents to which such Domestic Subsidiary is a
party, and (b) a pledge by each such Domestic Subsidiary of (i) one hundred
percent (100%) of the capital stock of each of its Domestic Subsidiaries owned
by such Domestic Subsidiary, and (ii) all of the capital stock of each such
Subsidiary's Foreign Subsidiaries owned by such Domestic Subsidiary up to a
maximum sixty-six percent (66%) of each Foreign Subsidiary's capital stock,
pursuant to the terms of the Stock Pledge Agreement.
8. REPRESENTATIONS AND WARRANTIES.
------------------------------
The Borrower represents and warrants to the Banks and the Agent as follows:
8.1. CORPORATE AUTHORITY.
-------------------
8.1.1. INCORPORATION; GOOD STANDING. Each of the Borrower and its
----------------------------
Subsidiaries (a) is a corporation duly organized, validly existing and in
good standing under the laws of its state of incorporation, (b) has all
requisite corporate power to own its property and conduct its business as
now conducted and as presently contemplated, and (c) is in good standing as
a foreign corporation and is duly authorized to do business in each
jurisdiction where such qualification is necessary except where a failure
to be so qualified would not have a materially adverse effect on the
business, assets or financial condition of the Borrower or such Subsidiary.
<PAGE>
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8.1.2. AUTHORIZATION. The execution, delivery and performance of
-------------
this Credit Agreement and the other Loan Documents to which the Borrower or
any of its Subsidiaries is or is to become a party and the transactions
contemplated hereby and thereby (a) are within the corporate authority of
such Person, (b) have been duly authorized by all necessary corporate
proceedings, (c) do not conflict with or result in any breach or
contravention of any provision of law, statute, rule or regulation to which
the Borrower or any of its Subsidiaries is subject or any judgment, order,
writ, injunction, license or permit applicable to the Borrower or any of
its Subsidiaries and (d) do not conflict with any provision of the
corporate charter or bylaws of, or any agreement or other instrument
binding upon, the Borrower or any of its Subsidiaries.
8.1.3. ENFORCEABILITY. The execution and delivery of this Credit
--------------
Agreement and the other Loan Documents to which the Borrower or any of its
Subsidiaries is or is to become a party will result in valid and legally
binding obligations of such Person enforceable against it in accordance
with the respective terms and provisions hereof and thereof, except as
enforceability is limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting generally the enforcement
of creditors' rights and except to the extent that availability of the
remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding therefor may be
brought.
8.2. GOVERNMENTAL APPROVALS. The execution, delivery and performance by
----------------------
the Borrower and any of its Subsidiaries of this Credit Agreement and the other
Loan Documents to which the Borrower or any of its Subsidiaries is or is to
become a party and the transactions contemplated hereby and thereby do not
require the approval or consent of, or filing with, any governmental agency or
authority other than those already obtained.
8.3. TITLE TO PROPERTIES; LEASES. Except as indicated on Schedule 8.3
--------------------------- -------- ---
hereto, the Borrower and its Subsidiaries own all of the assets reflected in the
consolidated balance sheet of the Borrower and its Subsidiaries as at the
Balance Sheet Date or acquired since that date (except property and assets sold
or otherwise disposed of in the ordinary course of business since that date),
subject to no rights of others, including any mortgages, leases, conditional
sales agreements, title retention agreements, liens or other encumbrances except
Permitted Liens.
8.4. FINANCIAL STATEMENTS AND PROJECTIONS.
------------------------------------
8.4.1. FISCAL YEAR. The Borrower and each of its Subsidiaries has
-----------
a fiscal year which is the twelve months ending on December 31 of each
calendar year.
<PAGE>
-46-
8.4.2. FINANCIAL STATEMENTS. There has been furnished to each of
--------------------
the Banks a consolidated balance sheet of the Borrower and its Subsidiaries
as at the Balance Sheet Date, and a consolidated statement of income of the
Borrower and its Subsidiaries for the fiscal year then ended, certified by
the chief financial officer of the Borrower. Such balance sheet and
statement of income have been prepared in accordance with generally
accepted accounting principles and fairly present the financial condition
of the Borrower as at the close of business on the date thereof and the
results of operations for the fiscal year then ended. There are no
contingent liabilities of the Borrower or any of its Subsidiaries as of
such date involving material amounts, known to the officers of the
Borrower, which were not disclosed in such balance sheet and the notes
related thereto.
8.4.3. PROJECTIONS. The projections of the annual operating
-----------
budgets of the Borrower and its Subsidiaries on a consolidated basis,
balance sheets and cash flow statements for the 1998 to 2004 fiscal years,
copies of which have been delivered to each Bank and have been made in good
faith on the basis of the assumptions disclosed therein. To the knowledge
of the Borrower or any of its Subsidiaries, no facts exist that
(individually or in the aggregate) would result in any material change in
any of such projections. The projections are based upon reasonable
estimates and assumptions, have been prepared on the basis of the
assumptions stated therein and reflect the reasonable estimates of the
Borrower and its Subsidiaries of the results of operations and other
information projected therein.
8.5. NO MATERIAL CHANGES, ETC. (a) Since the Balance Sheet Date there has
------------------------
occurred no materially adverse change in the assets, financial condition or
business of the Borrower and its Subsidiaries, taken as a whole, as shown on or
reflected in the consolidated balance sheet of the Borrower and its Subsidiaries
as at the Balance Sheet Date or which relate to Allsafe, Silencio or Crystaloid
as shown on the most recent financial statements delivered to the Borrower by
the Sellers thereof other than changes in the ordinary course of business that
have not had any materially adverse effect either individually or in the
aggregate on the assets, business or financial condition of the Borrower or any
of its Subsidiaries. Since December 31, 1997, there have been no changes in the
business or assets acquired in the Acquisitions which have been, either
individually or in the aggregate, materially adverse.
(b) The Borrower and each of its Subsidiaries (before and after giving
effect to the transactions contemplated by this Credit Agreement and the other
Loan Documents) (i) is solvent, (ii) has assets having a fair value in excess of
its liabilities, (iii) has assets having a fair value in excess of the amount
required to pay its liabilities on existing debts as such debts become absolute
and matured, and (iv) has, and expects to continue to have, access to adequate
capital for the conduct of its business and the ability to pay its debts from
time to time incurred in connection with the operation of its business as such
debts mature.
<PAGE>
-47-
8.6. FRANCHISES, PATENTS, COPYRIGHTS, ETC. Except as set forth in
------------------------------------
Schedule 8.6 hereto, each of the Borrower and its Subsidiaries possesses all
- ------------
franchises, copyrights, trademarks, trade names, licenses and
permits, and rights in respect of the foregoing, adequate for the conduct of its
business substantially as now conducted without known conflict with any rights
of others which would reasonably be expected to have a material adverse effect
on the Borrower or its Subsidiaries.
8.7. LITIGATION. Except as set forth in Schedule 8.7 hereto, there are no
---------- -------- ---
actions, suits, proceedings or investigations of any kind pending or threatened
against the Borrower or any of its Subsidiaries before any court, tribunal or
administrative agency or board that, if adversely determined, might, either in
any case or in the aggregate, materially adversely affect the properties,
assets, financial condition or business of the Borrower and its Subsidiaries or
materially impair the right of the Borrower and its Subsidiaries, considered as
a whole, to carry on business substantially as now conducted by them, or result
in any substantial liability not adequately covered by insurance, or for which
adequate reserves are not maintained on the consolidated balance sheet of the
Borrower and its Subsidiaries, or which question the validity of this Credit
Agreement or any of the other Loan Documents, or any action taken or to be taken
pursuant hereto or thereto.
8.8. NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Borrower nor any
------------------------------------
of its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation that has or is
expected in the future to have a materially adverse effect on the business,
assets or financial condition of the Borrower or any of its Subsidiaries.
Neither the Borrower nor any of its Subsidiaries is a party to any contract or
agreement that has or is expected, in the judgment of the Borrower's officers,
to have any materially adverse effect on the business of the Borrower or any of
its Subsidiaries.
8.9. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. Neither the Borrower
--------------------------------------------
nor any of its Subsidiaries is in violation of any provision of its charter
documents, bylaws, or any agreement or instrument to which it may be subject or
by which it or any of its properties may be bound or any decree, order,
judgment, statute, license, rule or regulation, in any of the foregoing cases in
a manner that could result in the imposition of substantial penalties or
materially and adversely affect the financial condition, properties or business
of the Borrower or any of its Subsidiaries.
8.10. TAX STATUS. The Borrower and its Subsidiaries (i) have made or filed
----------
all federal and state income and all other tax returns, reports and declarations
required by any jurisdiction to which any of them is subject, (ii) have paid all
taxes and other governmental assessments and charges shown or determined to be
due on such returns, reports and declarations, except those being contested in
good faith and by appropriate proceedings and (iii) have set aside on their
books provisions reasonably adequate for the payment of all taxes
<PAGE>
-48-
for periods subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount claimed to
be due by the taxing authority of any jurisdiction, and the officers of the
Borrower know of no basis for any such claim.
8.11. NO EVENT OF DEFAULT. No Default or Event of Default has occurred and
-------------------
is continuing.
8.12. HOLDING COMPANY AND INVESTMENT COMPANY ACTS. Neither the Borrower
-------------------------------------------
nor any of its Subsidiaries is a "holding company", or a "subsidiary company" of
a "holding company", or an affiliate" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935; nor is it an
"investment company", or an "affiliated company" or a "principal underwriter" of
an "investment company", as such terms are defined in the Investment Company Act
of 1940.
8.13. ABSENCE OF FINANCING STATEMENTS, ETC. Except with respect to
------------------------------------
Permitted Liens, there is no financing statement, security agreement, chattel
mortgage, real estate mortgage or other document filed or recorded with any
filing records, registry or other public office, that purports to cover, affect
or give notice of any present or possible future lien on, or security interest
in, any assets or property of the Borrower or any of its Subsidiaries or any
rights relating thereto.
8.14. PERFECTION OF SECURITY INTEREST. All filings, assignments, pledges
-------------------------------
and deposits of documents or instruments have been made and all other actions
have been taken that are necessary or advisable, under applicable law, to
establish and perfect the Agent's security interest in the Collateral. The
Collateral and the Agent's rights with respect to the Collateral are not subject
to any setoff, claims, withholdings or other defenses. The Borrower or a
Subsidiary of the Borrower party to one of the Security Agreements is the owner
of the Collateral free from any lien, security interest, encumbrance and any
other claim or demand, except for Permitted Liens.
8.15. CERTAIN TRANSACTIONS. Except as set forth in Schedule 8.15 hereto,
-------------------- -------------
and for arm's length transactions pursuant to which the Borrower or any of its
Subsidiaries makes payments in the ordinary course of business upon terms no
less favorable than the Borrower or such Subsidiary could obtain from third
parties, none of the officers, directors, or employees of the Borrower or any of
its Subsidiaries is presently a party to any transaction with the Borrower or
any of its Subsidiaries (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Borrower, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
<PAGE>
-49-
8.16. EMPLOYEE BENEFIT PLANS.
----------------------
8.16.1. IN GENERAL. Each Employee Benefit Plan and each Guaranteed
----------
Pension Plan has been maintained and operated in compliance in all material
respects with the provisions of ERISA and, to the extent applicable, the
Code, including but not limited to the provisions thereunder respecting
prohibited transactions and the bonding of fiduciaries and other persons
handling plan funds as required by (S)412 of ERISA.
8.16.2. TERMINABILITY OF WELFARE PLANS. No Employee Benefit Plan,
------------------------------
which is an employee welfare benefit plan within the meaning of (S)3(1) or
(S)3(2)(B) of ERISA, provides benefit coverage subsequent to termination of
employment, except as required by Title I, Part 6 of ERISA or the
applicable state insurance laws. The Borrower may terminate each such Plan
at any time (or at any time subsequent to the expiration of any applicable
bargaining agreement) in the discretion of the Borrower without liability
to any Person other than for claims arising prior to termination.
8.16.3. GUARANTEED PENSION PLANS. Each contribution required to be
------------------------
made to a Guaranteed Pension Plan, whether required to be made to avoid the
incurrence of an accumulated funding deficiency, the notice or lien
provisions of (S)302(f) of ERISA, or otherwise, has been timely made. No
waiver of an accumulated funding deficiency or extension of amortization
periods has been received with respect to any Guaranteed Pension Plan, and
neither the Borrower nor any ERISA Affiliate is obligated to or has posted
security in connection with an amendment to a Guaranteed Pension Plan
pursuant to (S)307 of ERISA or (S)401(a)(29) of the Code. No liability to
the PBGC (other than required insurance premiums, all of which have been
paid) has been incurred by the Borrower or any ERISA Affiliate with respect
to any Guaranteed Pension Plan and there has not been any ERISA Reportable
Event (other than an ERISA Reportable Event as to which the requirement of
30 days notice has been waived), or any other event or condition which
presents a material risk of termination of any Guaranteed Pension Plan by
the PBGC. Based on the latest valuation of each Guaranteed Pension Plan
(which in each case occurred within twelve months of the date of this
representation), and on the actuarial methods and assumptions employed for
that valuation, the aggregate benefit liabilities of all such Guaranteed
Pension Plans within the meaning of (S)4001 of ERISA did not exceed the
aggregate value of the assets of all such Guaranteed Pension Plans,
disregarding for this purpose the benefit liabilities and assets of any
Guaranteed Pension Plan with assets in excess of benefit liabilities.
8.16.4. MULTIEMPLOYER PLANS. Neither the Borrower nor any ERISA
-------------------
Affiliate has incurred any material liability (including secondary
liability) to any Multiemployer Plan as a result of a complete or partial
withdrawal
<PAGE>
-50-
from such Multiemployer Plan under (S)4201 of ERISA or as a result of a
sale of assets described in (S)4204 of ERISA. Neither the Borrower nor any
ERISA Affiliate has been notified that any Multiemployer Plan is in
reorganization or insolvent under and within the meaning of (S)4241 or
(S)4245 of ERISA or is at risk of entering reorganization or becoming
insolvent, or that any Multiemployer Plan intends to terminate or has been
terminated under (S)4041A of ERISA.
8.17. USE OF PROCEEDS.
---------------
8.17.1. GENERAL. The proceeds of the Loans shall be used for the
-------
Acquisitions, for Permitted Acquisitions, for Capital Expenditures, for
refinancing existing debt and preferred stock, working capital and general
corporate purposes. The Borrower will obtain Letters of Credit solely for
working capital and general corporate purposes.
8.17.2. REGULATIONS U AND X. No portion of any Loan is to be used,
-------------------
and no portion of any Letter of Credit is to be obtained, for the purpose
of purchasing or carrying any "margin security" or "margin stock" as such
terms are used in Regulations U and X of the Board of Governors of the
Federal Reserve System, 12 C.F.R. Parts 221 and 224.
8.18. ENVIRONMENTAL COMPLIANCE. The Borrower has taken all necessary steps
------------------------
to investigate the past and present condition and usage of the Real Estate and
the operations conducted thereon and, based upon such diligent investigation,
has determined that except as set forth on Schedule 8.18:
-------------
(a) none of the Borrower, its Subsidiaries or any operator of the
Real Estate or any operations thereon is in violation, or alleged
violation, of any judgment, decree, order, law, license, rule or regulation
pertaining to environmental matters, including without limitation, those
arising under the Resource Conservation and Recovery Act ("RCRA"), the
Comprehensive Environmental Response, Compensation and Liability Act of
1980 as amended ("CERCLA"), the Superfund Amendments and Reauthorization
Act of 1986 ("SARA"), the Federal Clean Water Act, the Federal Clean Air
Act, the Toxic Substances Control Act, or any state or local statute,
regulation, ordinance, order or decree relating to health, safety or the
environment (hereinafter "Environmental Laws"), which violation would have
a material adverse effect on the environment or the business, assets or
financial condition of the Borrower and its Subsidiaries;
(b) neither the Borrower nor any of its Subsidiaries has received
notice from any third party including, without limitation, any federal,
state or local governmental authority, (i) that any one of them has been
identified by the United States Environmental Protection Agency ("EPA") as
a potentially responsible party under CERCLA with respect to a site listed
on the National Priorities List, 40 C.F.R. Part 300 Appendix B; (ii)
<PAGE>
-51-
that any hazardous waste, as defined by 42 U.S.C. (S)6903(5), any hazardous
substances as defined by 42 U.S.C. (S)9601(14), any pollutant or
contaminant as defined by 42 U.S.C. (S)9601(33) and any toxic substances,
oil or hazardous materials or other chemicals or substances regulated by
any Environmental Laws ("Hazardous Substances") which any one of them has
generated, transported or disposed of has been found at any site at which a
federal, state or local agency or other third party has conducted or has
ordered that any Borrower or any of its Subsidiaries conduct a remedial
investigation, removal or other response action pursuant to any
Environmental Law; or (iii) except to the extent that the following could
not reasonably be expected to have a material adverse effect on the
Borrower and its Subsidiaries, that it is or shall be a named party to any
claim, action, cause of action, complaint, or legal or administrative
proceeding (in each case, contingent or otherwise) arising out of any third
party's incurrence of costs, expenses, losses or damages of any kind
whatsoever in connection with the release of Hazardous Substances;
(c) (i) no portion of the Real Estate has been used for the
handling, processing, storage or disposal of Hazardous Substances except in
accordance with applicable Environmental Laws; and no underground tank or
other underground storage receptacle for Hazardous Substances is located on
any portion of the Real Estate in violation of any Environmental Law; (ii)
in the course of any activities conducted by the Borrower, its Subsidiaries
or operators of its properties, no Hazardous Substances have been generated
or are being used on the Real Estate except in accordance (in all material
respects) with applicable Environmental Laws; (iii) there have been no
releases (i.e. any past or present releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, disposing or
dumping) or threatened releases of Hazardous Substances on, upon, into or
from the properties of the Borrower or its Subsidiaries, which releases
would have a material adverse effect on the value of any of the Real Estate
or adjacent properties or the environment; (iv) to the best of the
Borrower's knowledge, there have been no releases on, upon, from or into
any real property in the vicinity of any of the Real Estate which, through
soil or groundwater contamination, may have come to be located on, and
which would have a material adverse effect on the value of, the Real
Estate; and (v) in addition, any Hazardous Substances that have been
generated on any of the Real Estate have been transported offsite only by
carriers having an identification number issued by the EPA, treated or
disposed of only by treatment or disposal facilities maintaining valid
permits as required under applicable Environmental Laws, which transporters
and facilities have been and are, to the best of the Borrower's knowledge,
operating in compliance with such permits and applicable Environmental
Laws; and
<PAGE>
-52-
(d) None of the Borrower and its Subsidiaries, any Mortgaged
Property or any of the other Real Estate is subject to any applicable
environmental law requiring the performance of Hazardous Substances site
assessments, or the removal or remediation of Hazardous Substances, or the
giving of notice to any governmental agency or the recording or delivery to
other Persons of an environmental disclosure document or statement by
virtue of the transactions set forth herein and contemplated hereby, or as
a condition to the recording of any Mortgage or to the effectiveness of any
other transactions contemplated hereby.
(e) In connection with any Real Estate acquired pursuant to a
Permitted Acquisition by the Borrower or any of its Subsidiaries, the
Borrower will, or will cause such Subsidiary to, take all necessary steps
to investigate the past and present condition and usage of the Real Estate
and the operations conducted thereon, and based on such investigation the
Borrower will (i) make the representations and warranties contained in
clauses (a) through (d) above to the best of its knowledge, and (ii) will
repeat those representations and warranties received from the seller in
connection with the Permitted Acquisition.
8.19. SUBSIDIARIES, ETC. As of the Closing Date, the only Subsidiaries of
-----------------
the Borrower are as set forth on Schedule 8.19. In addition, as of the Closing
-------------
Date, the only Subsidiaries of any Subsidiary of the Borrower are as set forth
on Schedule 8.19. Neither the Borrower nor any Subsidiary of the Borrower is
-------------
engaged in any joint venture or partnership with any other Person.
8.20. YEAR 2000 PROBLEM. The Borrower and its Subsidiaries have reviewed
-----------------
the areas within their businesses and operations which could be adversely
affected by, and have developed or are developing a program to address on a
timely basis, the "Year 2000 Problem" (i.e. the risk that computer applications
used by the Borrower or any of its Subsidiaries may be unable to recognize and
perform properly date-sensitive functions involving certain dates prior to and
any date after December 31, 1999). Based upon such review, the Borrower
reasonably believes that the "Year 2000 Problem" will not have any materially
adverse effect on the business or financial condition of the Borrower or any of
its Subsidiaries.
8.21. DISCLOSURE. None of this Credit Agreement or any of the other Loan
----------
contains any untrue statement of a material fact or omits to state a material
fact (known to the Borrower or any of its Subsidiaries in the case of any
document or information not furnished by it or any of its Subsidiaries)
necessary in order to make the statements herein or therein not misleading.
There is no fact known to the Borrower or any of its Subsidiaries which
materially adversely affects, or which is reasonably likely in the future to
materially adversely affect, the business, assets or financial condition of the
Borrower or any of its Subsidiaries, exclusive of effects resulting from changes
in general economic conditions, legal standards or regulatory conditions.
<PAGE>
-53-
8.22. NO AMENDMENTS TO CERTAIN DOCUMENTS. The Borrower has not amended any
----------------------------------
of the Acquisition Documents in any material respect. Each of the
representations and warranties made by the Borrower in any of the Loan
Documents, Subordinated Debt Documents or the Acquisition Documents was true and
correct in all material respects when made and continues to be true and correct
in all material respects on the Closing Date, except to the extent that any of
such representations and warranties relate, by the express terms thereof, solely
to a date falling prior to the Closing Date, and except to the extent that any
of such representations and warranties may have been affected by the
consummation of the transactions contemplated and permitted or required by the
Loan Documents or the Acquisitions.
8.23. REPRESENTATIONS UNDER STOCK PURCHASE AGREEMENTS. (a) To the best of
-----------------------------------------------
the Borrower's knowledge, each of the representations and warranties of Allsafe,
Silencio, Crystaloid and the Borrower contained in each of the Stock Purchase
Agreements are true and correct in all material respects as of the Closing Date;
and (b) each of the representations made in certificates to be delivered
pursuant to (S)7.5 of the NCH Stock Purchase Agreement and (S)7.5 of the
Crystaloid Stock Purchase Agreement are true and correct in all material
respects as of the Closing Date.
8.24. INSURANCE. The Borrower and each of its Subsidiaries maintains with
---------
financially sound and reputable insurers insurance with respect to its
properties and businesses against such casualties and contingencies as are in
accordance with sound business practices, with the details of such coverage
being more fully described on Schedule 8.24 hereto.
-------------
9. AFFIRMATIVE COVENANTS OF THE BORROWER.
-------------------------------------
The Borrower covenants and agrees that, so long as any Loan, Unpaid
Reimbursement Obligation, Letter of Credit or Note is outstanding or any Bank
has any obligation to make any Loans or the Agent has any obligation to issue,
extend or renew any Letters of Credit:
9.1. PUNCTUAL PAYMENT. The Borrower will duly and punctually pay or cause
----------------
to be paid the principal and interest on the Loans, all Reimbursement
Obligations, the Letter of Credit Fees, the commitment fees, the Agent's fee and
all other amounts provided for in this Credit Agreement and the other Loan
Documents to which the Borrower or any of its Subsidiaries is a party, all in
accordance with the terms of this Credit Agreement and such other Loan
Documents.
9.2. MAINTENANCE OF OFFICE. The Borrower will maintain its chief
---------------------
executive office at 2997 Clarkson Road, Chesterfield, Missouri 63017, or at such
other place in the United States of America as the Borrower shall designate upon
written notice to the Agent, where notices, presentations and demands to or upon
the Borrower in respect of the Loan Documents to which the Borrower is a party
may be given or made.
<PAGE>
-54-
9.3. RECORDS AND ACCOUNTS. The Borrower will (a) keep, and cause each of
--------------------
its Subsidiaries to keep, true and accurate records and books of account in
which full, true and correct entries will be made in accordance with generally
accepted accounting principles, (b) maintain adequate accounts and reserves for
all taxes (including income taxes), depreciation, depletion, obsolescence and
amortization of its properties and the properties of its Subsidiaries,
contingencies, and other reserves, and (c) at all times engage KPMG Peat Marwick
LLP or other independent certified public accountants satisfactory to the Agent
as the independent certified public accountants of the Borrower and its
Subsidiaries and will not permit more than thirty (30) days to elapse between
the cessation of such firm's (or any successor firm's) engagement as the
independent certified public accountants of the Borrower and its Subsidiaries
and the appointment in such capacity of a successor firm as shall be
satisfactory to the Agent.
9.4. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION. The Borrower
--------------------------------------------------
will deliver to each of the Banks:
(a) as soon as practicable, but in any event not later than ninety
(90) days after the end of each fiscal year of the Borrower, (i) the
consolidated balance sheet of the Borrower and each of its Restricted
Subsidiaries as at the end of such year, and the related consolidated
statement of income and consolidated statement of cash flows for such year,
each setting forth in comparative form the figures for the previous fiscal
year and all such consolidated statements to be in reasonable detail,
prepared in accordance with generally accepted accounting principles, and
certified without qualification by KPMG Peat Marwick LLP or by other
independent certified public accountants satisfactory to the Agent, and
(ii) the unaudited consolidated balance sheets of (A) the Borrower and each
of its Subsidiaries as at the end of such year, and (B) the Borrower and
each of its Restricted Subsidiaries, and the related unaudited consolidated
statements of income, each setting forth in comparative form the figures
for the previous fiscal year and all such consolidated statements to be in
reasonable detail, prepared by management in accordance with the past
financial practice of the Borrower and such Subsidiaries and with a
certification by the principal financial or accounting officer of the
Borrower that such financial statements fairly present the financial
condition of the Borrower and such Subsidiaries on the date thereof and the
results of operations of the Borrower and such Subsidiaries for the period
covered thereby;
(b) as soon as practicable, but in any event not later than forty-
five (45) days after the end of each of the fiscal quarters of the
Borrower, copies of the unaudited consolidated balance sheets of (i) the
Borrower and its Subsidiaries, and (ii) the Borrower and its Restricted
Subsidiaries, each as at the end of such quarter, and the related
consolidated statements of income and consolidated statements of cash flow
for the portion of the Borrower's fiscal year then elapsed, all in
<PAGE>
-55-
reasonable detail and prepared in accordance with generally accepted
accounting principles (except for provisions for footnotes, reserves,
accruals and year-end adjustments), and in each case together with a
certification by the principal financial or accounting officer of the
Borrower that such financial statements fairly present the financial
condition of the Borrower and such Subsidiaries on the date thereof
(subject to the foregoing) and the results of operations of the Borrower
and such Subsidiaries for the period covered thereby;
(c) as soon as practicable, but in any event within thirty (30)
days after the end of each month in each fiscal year of the Borrower,
unaudited monthly consolidated financial statements of the Borrower and its
Subsidiaries for such month prepared in accordance with generally accepted
accounting principles (except for provisions for footnotes, reserves,
accruals and year-end adjustments), together with a certification by the
principal financial or accounting officer of the Borrower that such
financial statements fairly present the financial condition of the Borrower
and its Subsidiaries on the date thereof (subject to the foregoing) and the
results of operations of the Borrower and its Subsidiaries for the period
covered thereby;
(d) simultaneously with the delivery of the financial statements
referred to in subsections (a) and (b) above, a statement certified by the
principal financial or accounting officer of the Borrower in substantially
the form of Exhibit I (the "Compliance Certificate") hereto and setting
------- -
forth in reasonable detail computations evidencing compliance with the
covenants contained in (S)11 and (if applicable) reconciliations to reflect
changes in generally accepted accounting principles since the Balance Sheet
Date;
(e) (i) as soon as practicable, but in any event within fifteen
(15) days of the end of each calendar month, a Borrowing Base Report
setting forth the Borrowing Base with Eligible Accounts Receivable
calculated as at the end of such calendar month and Eligible Inventory
calculated as at the end of the immediately preceding calendar month; and
(ii) as soon as practicable, but in any event within (30) days of the end
of each calendar month, a Borrowing Base Report setting forth the Borrowing
Base calculated with both Eligible Accounts Receivable and Eligible
Inventory as at the end of such calendar month;
(f) upon the request of the Agent, an Accounts Receivable aging
report;
(g) within ten (10) days of the filing or mailing thereof, copies
of all material of a financial nature filed with the Securities and
Exchange Commission or sent to the stockholders of the Borrower;
<PAGE>
-56-
(h) not later than thirty (30) days after the beginning of each
fiscal year of the Borrower, projections and budgets of the Borrower and
its Subsidiaries for the upcoming fiscal year;
(i) contemporaneously with the delivery thereof, copies of all
accountants' management letters delivered to the Borrower or any of its
Subsidiaries;
(j) within ten (10) days of a request, such other financial data
and information as the Agent may reasonably request or any Bank may
reasonably request of the Agent; and
The Banks and the Agent agree that they will treat in confidence all financial
information with respect to the Borrower and its Subsidiaries which has not
become public, and will not, without the consent of the Borrower, disclose such
information to any third party, and, if any representative or agent of the Banks
or the Agent shall not be an employee of one of the Banks or the Agent or any
affiliate of the Banks or the Agent, such designee shall be reputable and of
recognized standing and shall agree to treat in confidence the information
obtained during any such inspection and, without the prior written consent of
the Borrower, not to disclose such information to any third party or make use of
such information for personal gain. Notwithstanding the foregoing, the Borrower
hereby authorizes the Agent and each of the Banks to disclose information
obtained pursuant to this Credit Agreement which has not become public to banks
or other financial institutions who are participants or assignees or potential
participants or assignees of the Loans made or to be made hereunder with the
Borrower's consent (not to be unreasonably withheld), and where required or
requested by governmental or regulatory authorities.
9.5. NOTICES.
-------
9.5.1. DEFAULTS. The Borrower will promptly notify the Agent and
--------
each of the Banks in writing of the occurrence of any Default or Event of
Default. If any Person shall give any notice or take any other action in
respect of a claimed default (whether or not constituting an Event of
Default) under this Credit Agreement or any other note, evidence of
indebtedness, indenture or other obligation to which or with respect to
which the Borrower or any of its Subsidiaries is a party or obligor,
whether as principal, guarantor, surety or otherwise, the Borrower shall
forthwith give written notice thereof to the Agent and each of the Banks,
describing the notice or action and the nature of the claimed default.
9.5.2. ENVIRONMENTAL EVENTS. The Borrower will promptly give
--------------------
notice to the Agent and each of the Banks (a) of any violation of any
Environmental Law that the Borrower or any of its Subsidiaries reports in
writing or is reportable by such Person in writing (or for which any
written report supplemental to any oral report is made) to any federal,
state or local environmental agency and (b) upon becoming aware thereof,
<PAGE>
-57-
of any inquiry, proceeding, investigation, or other action, including a
notice from any agency of potential environmental liability, of any
federal, state or local environmental agency or board, that is reasonably
likely to materially affect the assets, liabilities, financial conditions
or operations of the Borrower or any of its Subsidiaries, or the Agent's
Mortgages or security interests pursuant to the Security Documents.
9.5.3. NOTIFICATION OF CLAIM AGAINST COLLATERAL. The Borrower
----------------------------------------
will, immediately upon becoming aware thereof, notify the Agent and each of
the Banks in writing of any setoff, claims (including, with respect to the
Real Estate, environmental claims), withholdings or other defenses to which
any of the Collateral with an aggregate net book value or fair market value
of $1,500,000 or more, or the Agent's rights with respect to the
Collateral, are subject.
9.5.4. NOTICE OF LITIGATION AND JUDGMENTS. The Borrower will, and
----------------------------------
will cause each of its Subsidiaries to, give notice to the Agent and each
of the Banks in writing within ten (10) Business Days of becoming aware of
any litigation or proceedings threatened in writing or any pending
litigation and proceedings affecting the Borrower or any of its
Subsidiaries or to which the Borrower or any of its Subsidiaries is or
becomes a party involving an uninsured claim of more than $1,500,000
against the Borrower or any of its Subsidiaries that could reasonably be
expected to have a materially adverse effect on the Borrower or any of its
Subsidiaries and stating the nature and status of such litigation or
proceedings. The Borrower will, and will cause each of its Subsidiaries to,
give notice to the Agent and each of the Banks, in writing, in form and
detail satisfactory to the Agent, within ten (10) Business Days of any
judgment not covered by insurance, final or otherwise, against the Borrower
or any of its Subsidiaries in an amount in excess of $1,500,000.
9.6. CORPORATE EXISTENCE; MAINTENANCE OF PROPERTIES. The Borrower will do
----------------------------------------------
or cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence, rights and franchises and those of its
Subsidiaries except as permitted under (S)10.5.1 hereof or the dissolution of
any Subsidiary of the Borrower whose operation has been discontinued if such
dissolution is, in the judgment of the Borrower, desirable in the conduct of its
business and does not materially adversely affect the business of the Borrower
and its Subsidiaries on a consolidated basis. It (a) will cause all of its
properties and those of its Subsidiaries used or useful in the conduct of its
business or the business of its Subsidiaries to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment,
(b) will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Borrower may
be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times, and (c) will, and will cause
each of its Subsidiaries to, continue to engage primarily in the businesses now
conducted by them and in related businesses; provided that nothing in this
--------
(S)9.6 shall
<PAGE>
-58-
prevent the Borrower from discontinuing the operation and maintenance of any of
its properties or any of those of its Subsidiaries if such discontinuance is, in
the judgment of the Borrower, desirable in the conduct of its or their business
and that do not in the aggregate materially adversely affect the business of the
Borrower and its Subsidiaries on a consolidated basis.
9.7. INSURANCE. The Borrower will, and will cause each of its
---------
Subsidiaries to, maintain with financially sound and reputable insurers
insurance with respect to its properties and business against such casualties
and contingencies as shall be in accordance with the general practices of
businesses engaged in similar activities in similar geographic areas and in
amounts, containing such terms, in such forms and for such periods as may be
reasonable and prudent and in accordance with the terms of the Security
Agreements. The Borrower will, and will cause each of its Subsidiaries to,
maintain insurance on the Mortgaged Properties in accordance with the terms of
the Mortgages.
9.8. TAXES. The Borrower will, and will cause each of its Subsidiaries
-----
to, duly pay and discharge, or cause to be paid and discharged, before the same
shall become overdue, all taxes, assessments and other governmental charges
imposed upon it and its real properties, sales and activities, or any part
thereof, or upon the income or profits therefrom, as well as all claims for
labor, materials, or supplies that if unpaid might by law become a lien or
charge upon any of its property; provided that any such tax, assessment, charge,
--------
levy or claim need not be paid if the validity or amount thereof shall
currently be contested in good faith by appropriate proceedings and if the
Borrower or such Subsidiary shall have set aside on its books adequate reserves
with respect thereto; and provided further that the Borrower and each
-------- -------
Subsidiary of the Borrower will pay all such taxes, assessments, charges,
levies or claims forthwith upon the commencement of proceedings to foreclose any
lien that may have attached as security therefor.
9.9. INSPECTION OF PROPERTIES AND BOOKS, ETC.
---------------------------------------
9.9.1. GENERAL. The Borrower shall permit the Banks, through the
-------
Agent or any of the Banks' other designated representatives, to visit and
inspect any of the properties of the Borrower or any of its Subsidiaries,
to examine the books of account of the Borrower and its Subsidiaries (and
to make copies thereof and extracts therefrom), and to discuss the affairs,
finances and accounts of the Borrower and its Subsidiaries with, and to be
advised as to the same by, its and their officers, all at such reasonable
times and intervals as the Agent or any Bank may reasonably request.
9.9.2. COLLATERAL REPORTS. No more frequently than two times
------------------
during each calendar year, or more frequently as determined by the Agent if
an Event of Default shall have occurred and be continuing, upon the request
of the Agent, the Borrower will obtain and deliver to the Agent, or, if the
Agent so elects, will cooperate with the Agent in the
<PAGE>
-59-
Agent's obtaining, a report of an independent collateral auditor
satisfactory to the Agent (which may be affiliated with one of the Banks)
with respect to the Accounts Receivable and inventory components included
in the Borrowing Base, which report shall indicate whether or not the
information set forth in the Borrowing Base Report most recently delivered
is accurate and complete in all material respects based upon a review by
such auditors of the Accounts Receivable (including verification with
respect to the amount, aging, identity and credit of the respective account
debtors and the billing practices of the Borrower or its applicable
Subsidiary) and inventory (including verification as to the value, location
and respective types). All such collateral value reports shall be conducted
and made at the expense of the Borrower.
9.9.3. APPRAISALS. If an Event of Default shall have occurred and be
----------
continuing, upon the request of the Agent, the Borrower will obtain and
deliver to the Agent appraisal reports in form and substance and from
appraisers satisfactory to the Agent, stating (a) the then current fair
market, orderly liquidation and forced liquidation values of all or any
portion of the equipment or real estate owned by the Borrower or any of its
Subsidiaries and (b) the then current business value of each of the
Borrower and its Subsidiaries. All such appraisals shall be conducted and
made at the expense of the Borrower.
9.9.4. ENVIRONMENTAL ASSESSMENTS. Whether or not an Event of Default
-------------------------
shall have occurred, the Agent may, from time to time, in its discretion
for the purpose of assessing and ensuring the value of any Mortgaged
Property, obtain one or more environmental assessments or audits of such
Mortgaged Property prepared by a hydrogeologist, an independent engineer or
other qualified consultant or expert approved by the Agent to evaluate or
confirm (a) whether any Hazardous Materials are present in the soil or
water at such Mortgaged Property and (b) whether the use and operation of
such Mortgaged Property complies with all Environmental Laws. Environmental
assessments may include without limitation detailed visual inspections of
such Mortgaged Property including any and all storage areas, storage tanks,
drains, dry wells and leaching areas, and the taking of soil samples,
surface water samples and ground water samples, as well as such other
investigations or analyses as the Agent deems appropriate. All such
environmental assessments conducted after the occurrence of an Event of
Default shall be conducted and made at the expense of the Borrower.
9.9.5. COMMUNICATIONS WITH ACCOUNTANTS. The Borrower authorizes the
-------------------------------
Agent and, if accompanied by the Agent, the Banks to communicate directly
with the Borrower's independent certified public accountants and authorizes
such accountants to disclose to the Agent and the Banks any and all
financial statements and other supporting financial documents and schedules
including copies of any management letter with respect to
<PAGE>
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the business, financial condition and other affairs of the Borrower or any
of its Subsidiaries. At the request of the Agent, the Borrower shall
deliver a letter addressed to such accountants instructing them to comply
with the provisions of this (S)9.9.5.
9.10. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES, AND PERMITS. The Borrower
------------------------------------------------------
will, and will cause each of its Subsidiaries to, comply with (a) the applicable
laws and regulations wherever its business is conducted, including all
Environmental Laws, (b) the provisions of its charter documents and by-laws, (c)
all agreements and instruments by which it or any of its properties may be bound
and (d) all applicable decrees, orders, and judgments. If any authorization,
consent, approval, permit or license from any officer, agency or instrumentality
of any government shall become necessary or required in order that the Borrower
or any of its Subsidiaries may fulfill any of its obligations hereunder or any
of the other Loan Documents to which the Borrower or such Subsidiary is a party,
the Borrower will, or (as the case may be) will cause such Subsidiary to,
immediately take or cause to be taken all reasonable steps within the power of
the Borrower or such Subsidiary to obtain such authorization, consent, approval,
permit or license and furnish the Agent and the Banks with evidence thereof.
9.11. EMPLOYEE BENEFIT PLANS. The Borrower will (a) promptly upon filing
----------------------
the same with the Department of Labor or Internal Revenue Service upon request
of the Agent, furnish to the Agent a copy of the most recent actuarial statement
required to be submitted under (S)103(d) of ERISA and Annual Report, Form 5500,
with all required attachments, in respect of each Guaranteed Pension Plan and
(b) promptly upon receipt or dispatch, furnish to the Agent any notice, report
or demand sent or received in respect of a Guaranteed Pension Plan under
(S)(S)302, 4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA, or in respect
of a Multiemployer Plan, under (S)(S)4041A, 4202, 4219, 4242, or 4245 of ERISA.
9.12. USE OF PROCEEDS. The Borrower will use the proceeds of the Loans for
---------------
the Acquisitions, for Permitted Acquisitions, for Capital Expenditures, for
refinancing existing indebtedness and preferred stock, and working capital and
general corporate purposes. The Borrower will obtain Letters of Credit solely
for working capital and general corporate purposes.
9.13. MORTGAGED PROPERTY. (a) the Borrower shall deliver to the Agent (i)
------------------
within ninety (90) days of the Closing Date, a Mortgage for each Mortgaged
Property acquired pursuant to the NCH Acquisition, and (ii) within sixty (60)
days of the Closing Date, a Mortgage for each other Mortgaged Property listed on
Schedule 9.13, together with the legal opinion of Gallop, Johnson & Neuman as to
- -------- ----
such Mortgaged Property and any local counsel opinions as are reasonably
requested by the Agent; and (b) (i) if, as of April 22, 1999, the Borrower or
any of its Restricted Subsidiaries continues to own the Real Estate located in
Elwood, Indiana, or (ii) if, after the Closing Date, the Borrower or any of its
Restricted Subsidiaries acquires or leases real estate with either a fair market
value or
<PAGE>
-61-
acquisition price of more than $2,500,000, the Borrower shall, or shall cause
such Restricted Subsidiary to, forthwith deliver to the Agent a fully executed
mortgage or deed of trust over such real estate, in form and substance
satisfactory to the Agent, together with title insurance policies, surveys,
evidences of insurances with the Agent named as loss payee and additional
insured, legal opinions and other documents and certificates with respect to
such real estate as was required for Real Estate of the Borrower or such
Restricted Subsidiary as of the Closing Date; provided, however, as to any
-------- -------
existing leasehold interest or any leasehold interest obtained by the Borrower
after the Closing Date, it shall not be a Default or Event of Default hereunder
if the Borrower, after using reasonable efforts, is unable to execute and
deliver such leasehold mortgage or deed of trust due to a failure to obtain any
third party consents needed to grant such mortgage or deed of trust. The
Borrower further agrees that, following the taking of such actions with respect
to such real estate, the Agent shall have for the benefit of the Banks and the
Agent a valid and enforceable first priority mortgage or deed of trust over such
real estate, free and clear of all defects and encumbrances except for Permitted
Liens.
9.14. TITLE INSURANCE. The Borrower shall deliver to the Agent (a) within
---------------
ninety (90) days from the Closing Date, for each Mortgaged Property acquired
pursuant to the NCH Acquisition, and (b) within sixty (60) days from the Closing
Date, as to each other Mortgaged Property listed on Schedule 9.13, a Title
-------------
Policy covering such Mortgaged Property (or commitments to issue such policies,
with all conditions to issuance of the Title Policy deleted by an authorized
agent of the Title Insurance Company), together with proof of payment of all
fees and premiums for such policies, from the Title Insurance Company and in
amounts satisfactory to the Agent, insuring the interest of the Agent and each
of the Banks as mortgagee under the Mortgages.
9.15. LANDLORD WAIVERS. The Borrower shall deliver to the Agent within
----------------
sixty (60) days from the Closing Date any consents not otherwise delivered on
the Closing Date which are required for the Agent to receive as part of the
Security Documents, a collateral assignment of each material leasehold of
personal property and a mortgage of each material leasehold of real property,
together in each case with such estoppel certificates as the Agent may request,
all to be in form and substance reasonably satisfactory to the Agent, provided,
--------
however, it shall not be a Default or Event of Default hereunder if the
- -------
Borrower, after using reasonable efforts, is unable to execute and deliver such
estoppel certificate.
9.16. TAXES. The Borrower shall deliver to the Agent within sixty (60) days
-----
from the Closing Date evidence of payment of real estate taxes and municipal
charges on all Real Estate.
9.17. INTEREST RATE PROTECTION. The Borrower will, not later than ninety
------------------------
(90) days of the Closing Date, purchase an interest rate cap or swap or
<PAGE>
-62-
effect other interest rate protection arrangements for a minimum period of two
(2) years on terms and conditions satisfactory to the Agent.
9.18. CRYSTALOID ACQUISITION. If the Crystaloid Acquisition is not
----------------------
completed by April 30, 1998 pursuant to the Crystaloid Stock Purchase Agreement
and the other Crystaloid Acquisition Documents and on terms and conditions that
are satisfactory to the Agent in all respects, for a purchase price not to
exceed $6,500,000 in the aggregate, then the Acquisition Loan shall be repaid in
accordance with (S)4.5.3.
9.19. FOREIGN STOCK PLEDGE. The Borrower shall deliver to the Agent, within
--------------------
sixty (60) days from the Closing Date, a stock pledge agreement between the
Borrower and the Agent, in form and substance satisfactory to the Agent,
pursuant to which the Borrower shall pledge sixty-six percent (66%) of the
capital stock of Lansec GmbH, together with such local counsel opinion with
respect thereto as may be reasonably requested by the Agent.
9.20. FURTHER ASSURANCES. The Borrower will, and will cause each of its
------------------
Subsidiaries to, cooperate with the Banks and the Agent and execute such further
instruments and documents as the Banks or the Agent shall reasonably request to
carry out to their satisfaction the transactions contemplated by this Credit
Agreement and the other Loan Documents.
10. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.
------------------------------------------
The Borrower covenants and agrees that, so long as any Loan, Unpaid
Reimbursement Obligation, Letter of Credit or Note is outstanding or any Bank
has any obligation to make any Loans or the Agent has any obligations to issue,
extend or renew any Letters of Credit:
10.1. RESTRICTIONS ON INDEBTEDNESS. The Borrower will not, and will not
----------------------------
permit any of its Subsidiaries to, create, incur, assume, guarantee or be or
remain liable, contingently or otherwise, with respect to any Indebtedness other
than:
(a) Indebtedness to the Banks and the Agent arising under any of
the Loan Documents;
(b) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the ordinary
(b) current liabilities of the Borrower or such Subsidiary incurred in the
ordinary course of business not incurred through (i) the borrowing of
money, or (ii) the obtaining of credit except for credit on an open account
basis customarily extended and in fact extended in connection with normal
purchases of goods and services;
(c) Indebtedness in respect of taxes, assessments, governmental
charges or levies and claims for labor, worker's compensation, materials
<PAGE>
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and supplies to the extent that payment therefor shall not at the time be
required to be made in accordance with the provisions of (S)9.8;
(d) Indebtedness in respect of judgments or awards that have been
in force for less than the applicable period for taking an appeal so long
as execution is not levied thereunder or in respect of which the Borrower
or such Subsidiary shall at the time in good faith be prosecuting an appeal
or proceedings for review and in respect of which a stay of execution shall
have been obtained pending such appeal or review;
(e) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the ordinary
course of business;
(f) Indebtedness of the Borrower in an aggregate principal amount
not to exceed $115,000,000 evidenced by or incurred under the Subordinated
Debt Documents;
(g) Indebtedness of the Borrower and its Restricted Subsidiaries
consisting of (i) unsecured Indebtedness not otherwise permitted hereunder
in an amount not to exceed $15,000,000 outstanding at any one time, and
(ii) (1) obligations under Capitalized Leases and (2) purchase money
Indebtedness incurred in connection with the acquisition after the date
hereof of any real or personal property by the Borrower or such Restricted
Subsidiary, provided that the Borrower or such Restricted Subsidiary shall
--------
not be permitted to finance more than ninety percent (90%) of the purchase
price of the property acquired, and further provided, that the aggregate
------- --------
principal amount of all such Indebtedness permitted under this clause
(g)(ii) shall not exceed $20,000,000 outstanding at any one time;
(h) Indebtedness of the Borrower and its Subsidiaries existing on
the date hereof and listed and described on Schedule 10.1 hereto;
-------- ----
(i) Indebtedness of the Borrower in respect of interest rate
protection arrangements required to be maintained by (S)9.17 or in respect
of currency swap arrangements so long as such arrangements are in the
ordinary course of business and not for speculative purposes;
(j) Indebtedness in respect of performance, surety, statutory,
insurance, appeal or similar bonds obtained in the ordinary course of
business;
(k) Indebtedness of the Borrower to TJC Management Corp. under the
Management Agreement;
<PAGE>
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(l) Indebtedness in respect of the Junior Subordinated Notes issued
pursuant to the Management Subscription Agreement or in payment of
Incentive Arrangements as provided in (S)10.4.;
(m) Indebtedness secured by liens permitted by (S)10.2(j), and other
unsecured Indebtedness existing at the time a Person is merged into or
consolidated with the Borrower or any Subsidiary of the Borrower or becomes
a wholly-owned Subsidiary of the Borrower in compliance with (S)10.5.1.;
provided that such Indebtedness was not created in contemplation of such
--------
merger, consolidation or acquisition and the aggregate principal amount of
all such Indebtedness does not exceed $15,000,000 at any time;
(n) Indebtedness of the Borrower or any of its Subsidiaries in
respect of Incentive Arrangements and Acquisition Incentives;
(o) Indebtedness of any Unrestricted Subsidiary which is non
recourse to the Borrower or any Restricted Subsidiary;
(p) Indebtedness in respect of the Holdback Amount (as defined in
the Crystaloid Stock Purchase Agreement) pursuant to (S)2.3 of the
Crystaloid Stock Purchase Agreement, provided that such Indebtedness shall
--------
not exceed $500,000; and
(q) Indebtedness in respect of Investments permitted under
(S)(S)10.3(f), (j) or (l).
10.2. RESTRICTIONS ON LIENS. The Borrower will not, and will not permit
---------------------
any of its Subsidiaries to, (a) create or incur or suffer to be created or
incurred or to exist any lien, encumbrance, mortgage, pledge, charge,
restriction or other security interest of any kind upon any of its property or
assets of any character whether now owned or hereafter acquired, or upon the
income or profits therefrom; (b) transfer any of such property or assets or the
income or profits therefrom for the purpose of subjecting the same to the
payment of Indebtedness or performance of any other obligation in priority to
payment of its general creditors; (c) acquire, or agree or have an option to
acquire, any property or assets upon conditional sale or other title retention
or purchase money security agreement, device or arrangement; (d) suffer to exist
for a period of more than thirty (30) days after the same shall have been
incurred any Indebtedness or claim or demand against it that if unpaid might by
law or upon bankruptcy or insolvency, or otherwise, be given any priority
whatsoever over its general creditors; or (e) sell, assign, pledge or otherwise
transfer any "receivables" as defined in clause (vii) of the definition of the
term "Indebtedness," with or without recourse; provided that the Borrower or any
--------
of its Subsidiaries may create or incur or suffer to be created or incurred or
to exist:
<PAGE>
-65-
(a) liens against the Borrower or any of its Subsidiaries to secure
taxes, assessments and other government charges in respect of obligations
not overdue or liens on properties to secure claims for labor, material or
supplies in respect of obligations not overdue;
(b) deposits or pledges made by the Borrower or any of its
Subsidiaries in connection with, or to secure payment of, workmen's
compensation, unemployment insurance, old age pensions or other social
security obligations;
(c) liens against the Borrower or any of its Subsidiaries on
properties other than the Mortgaged Properties in respect of judgments or
awards, the Indebtedness with respect to which is permitted by (S)10.1(d);
(d) liens of carriers, warehousemen, mechanics and materialmen, and
other like liens on properties of the Borrower or any of its Subsidiaries,
in existence less than 120 days from the date of creation thereof in
respect of obligations not overdue;
(e) encumbrances on Real Estate other than the Mortgaged Properties
of the Borrower or any of its Subsidiaries consisting of easements, rights
of way, zoning restrictions, restrictions on the use of real property and
defects and irregularities in the title thereto, landlord's or lessor's
liens under leases to which the Borrower or a Subsidiary of the Borrower is
a party, and other minor liens or encumbrances none of which in the opinion
of the Borrower interferes materially with the use of the property affected
in the ordinary conduct of the business of the Borrower and its
Subsidiaries, which defects do not individually or in the aggregate have a
materially adverse effect on the business of the Borrower individually or
of the Borrower and its Subsidiaries on a consolidated basis;
(f) liens against the Borrower or any of its Subsidiaries existing on
the date hereof and listed on Schedule 10.2 hereto;
-------- ----
(g) (i) liens to secure Capitalized Lease obligations of the type and
amount permitted by (S)10.1(g)(ii), so long as such liens cover only the
property subject to such Capitalized Leases; and (ii) purchase money
security interests in or purchase money mortgages on real or personal
property of the Borrower or any of its Subsidiaries other than Mortgaged
Properties acquired after the date hereof to secure purchase money
Indebtedness of the type and amount permitted by (S)10.1(g)(ii), incurred
in connection with the acquisition of such property, which security
interests or mortgages cover only the real or personal property so
acquired;
<PAGE>
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(h) liens against the Borrower or any of its Subsidiaries in favor
of the Agent for the benefit of the Banks and the Agent under the Loan
Documents;
(i) liens and encumbrances on each Mortgaged Property of the
Borrower or any of its Subsidiaries as and to the extent permitted by the
Mortgage applicable thereto;
(j) purchase money liens on personal property or mortgage liens on
real property of a Person existing (i) at the time such Person is merged
into or consolidated with the Borrower or any Subsidiary of the Borrower
(or becomes a wholly-owned Subsidiary of the Borrower in compliance with
(S)10.5.1) or (ii) such assets are acquired by the Borrower or any
Subsidiary of the Borrower subject to such liens pursuant to a Permitted
Acquisition; provided that such liens were not created in contemplation of
--------
such merger or consolidation or acquisition and do not extend to any assets
other than those subject to such liens prior to such merger, consolidation
or other acquisition, and secure Indebtedness permitted by (S)10.1(m);
(k) the replacement, extension or renewal (without increase in
amount) of any lien permitted by clauses (f), (g) or (i) of this (S)10.2
upon or in the same property theretofore subject thereto, so long as such
liens do not extend to cover any assets other than those being refinanced;
(l) liens on assets of Unrestricted Subsidiaries securing debt
permitted under (S)10.1(o); and
(m) liens on the account in which the Holdback Amount is deposited
to secure the Borrower's obligations with respect to the Holdback Amount
under the Crystaloid Stock Purchase Agreement.
10.3. RESTRICTIONS ON INVESTMENTS. The Borrower will not, and will not
---------------------------
permit any of its Subsidiaries to, make or permit to exist or to remain
outstanding any Investment except Investments in:
(a) Investments by the Borrower in marketable direct or guaranteed
obligations of the United States of America that mature within one (1) year
from the date of purchase;
(b) Investments by the Borrower or any of its Subsidiaries in demand
deposits, certificates of deposit, bankers acceptances and time deposits of
United States banks having total assets in excess of $500,000,000;
(c) Investments by the Borrower in securities commonly known as
"commercial paper" issued by a corporation organized and existing under the
laws of the United States of America or any state thereof that at the
<PAGE>
-67-
time of purchase have been rated and the ratings for which are not less
than "P 1" if rated by Moody's Investors Services, Inc., and not less than
"A 1" if rated by Standard and Poor's;
(d) Investments by the Borrower in repurchase agreements secured by
anyone or more of the foregoing;
(e) Investments existing on the date hereof and listed on Schedule
--------
10.3 hereto and in amounts not to exceed the amounts listed on Schedule
---- --------
10.3 hereto;
----
(f) Investments consisting of (i) the Guaranty and (ii) Investments
by the Borrower in any of its Restricted Subsidiaries, provided, such
--------
Restricted Subsidiary has executed and delivered to the Agent for the
benefit of the Agent and the Banks a guaranty, security agreement and any
and all other agreements, documents or instruments necessary to grant to
the Agent a first priority perfected lien in such Subsidiary's assets;
(g) Investments by the Borrower or any of its Subsidiaries made in
connection with any Indebtedness permitted under (S)10.1(k) hereof;
(h) Investments by the Borrower or any Restricted Subsidiary
consisting of Permitted Acquisitions;
(i) Investments by the Borrower or its Subsidiaries consisting of
any promissory note or other instrument received by the Borrower or such
Subsidiary in connection with a sale of assets permitted by (S)10.5.2; and
(j) Investments by the Borrower in any of its Unrestricted
Subsidiaries provided such Investments in such Unrestricted Subsidiaries do
--------
not exceed, in the aggregate, $10,000,000 outstanding at any one time;
(k) Investments by Unrestricted Subsidiaries in Persons other than
the Borrower or any Restricted Subsidiary; and
(l) Investments by the Borrower or any Restricted Subsidiary in any
Restricted Subsidiary which is a Foreign Subsidiary; provided, that such
Investments do not exceed, in the aggregate $20,000,000 outstanding at any
one time.
10.4. DISTRIBUTIONS; RESTRICTED PAYMENTS. The Borrower will not, and will
----------------------------------
not permit its Subsidiaries to, make any Distributions or Restricted Payments,
other than dividends or payments:
<PAGE>
-68-
(a) by the Borrower, so long as no Default or Event of Default under
(S)14.1(a), (b) or, only as relates to failure to comply with (S)11 hereof,
(c), has occurred or is continuing or would result therefrom, to:
(i) the trustee for the holders of the Subordinated Notes in
each fiscal year up to an aggregate amount equal to (1) the amount of
interest due on the Subordinated Notes in such fiscal year solely for
the purpose of making such interest payments, provided, however, the
-------- --------
amount shall not include any Restricted Payments to fund any increases
in the rate of interest on the Subordinated Notes from the Closing
Date and provided, further such dividends or payments shall not be
-------- --------
made until a date which is not more than fifteen (15) days prior to
the date such interest payments are due and payable, and
(ii) TJC Management Corp. (A) consisting of quarterly
management fee payments in an aggregate annual amount not to exceed
the greater of $600,000 or 2.5% of the Borrower's consolidated net
income before interest, taxes, depreciation and amortization for such
fiscal year which are due and payable in such fiscal year pursuant to
the Management Agreement or the Intercompany Management Agreement and
indemnity payments required to be made under the Management Agreement
and the Intercompany Management Agreement, and (B) to TJC Management
Corp. consisting of ordinary investment services payments pursuant to
the Management Agreement, provided, in each case, such dividends or
--------
payments shall not be made until a date which is not more than fifteen
(15) days prior to the date such payments are due and payable pursuant
to the terms of the Management Agreement or the Intercompany
Management Agreement, as the case may be;
(b) (i) by the Borrower as a Distribution in the form of Junior
Subordinated Notes issued by the Borrower (A) to repurchase shares of its
preferred or common stock pursuant to the Management Subscription Agreement
and (B) to make payments in respect of Incentive Arrangements, and (ii) by
the Borrower, so long as no Default or Event of Default under (S)14.1(a),
(b) or (c) (only with regard to (S)11) has occurred or is continuing, to
repurchase shares of its common or preferred stock for cash, or to make
cash payments under the Junior Subordinated Notes issued pursuant to the
Management Subscription Agreement or in payment of Incentive Arrangements,
provided, however, that the aggregate amount of all payments made in cash
from time to time pursuant to this (S)10.4(b) shall not exceed $2,000,000;
<PAGE>
-69-
(c) so long as no Default or Event of Default exists or would result
therefrom by the Borrower or any of its Subsidiaries in respect of
Acquisition Incentives;
(d) by any Subsidiary to the Borrower;
(e) by the Borrower or any Subsidiary in respect of the Holdback
Amount (as defined in the Crystaloid Stock Purchase Agreement) pursuant to
(S)2.3 of the Crystaloid Stock Purchase Agreement; and
(f) by the Borrower on the Closing Date in respect of the redemption
of John Hancock Mutual Life Insurance Company equity interests in the
Borrower in an amount not to exceed $4,150,000.
10.5. MERGER, CONSOLIDATION AND DISPOSITION OF ASSETS.
-----------------------------------------------
10.5.1. MERGERS AND ACQUISITIONS. The Borrower will not, and will
------------------------
not permit any of its Subsidiaries to, become a party to any merger or
consolidation, or agree to or effect any asset acquisition or equity
acquisition (other than the acquisition of assets in the ordinary course of
business consistent with past practices) except, so long as no Default or
Event of Default has occurred or is continuing, or would exist after giving
effect thereto,
(a) the merger of one or more of the Subsidiaries of the Borrower
with and into the Borrower or any other Subsidiary of the Borrower,
provided, the survivor of such merger may not be an Unrestricted Subsidiary
--------
unless the merger involves only Unrestricted Subsidiaries and provided,
--------
further, the Borrower has taken or caused to be taken all action necessary
-------
to grant to the Agent a first perfected priority security interest in all
of the Borrower's or such Restricted Subsidiary's Collateral after such
merger;
(b) the Acquisitions;
(c) other asset or stock acquisitions of Persons in the same or a
similar line of business as the Borrower (the "Permitted Acquisition")
where (i) the Borrower has provided the Agent with five (5) Business Days
prior written notice of such Permitted Acquisition, which notice shall
include a reasonably detailed description of such Permitted Acquisition;
(ii) the business to be acquired would not subject the Agent or the Banks
to regulatory or third party approvals in connection with the exercise of
its rights and remedies under this Credit Agreement or any other Loan
Document; (iii) the business and assets so acquired in such Permitted
Acquisition shall be acquired by the Borrower free and clear of all liens
(other than Permitted Acquisition Liens) and all Indebtedness (other than
Permitted Acquisition Indebtedness); (iv) no contingent obligations or
liabilities will be incurred or assumed in connection with
<PAGE>
-70-
such Permitted Acquisition which could be expected to have a material
adverse effect on the business, assets or financial condition of the
Borrower and its Subsidiaries; (v) the Borrower has provided the Agent with
such other information as was reasonably requested by the Agent; (vi) in
the event any new Restricted Subsidiary is formed or acquired as a result
of or in connection with any acquisition or development, such Restricted
Subsidiary shall become a guarantor of the Obligations pursuant to a
guaranty in form and substance satisfactory to the Agent, and the Borrower
or Subsidiary which is the parent of such Restricted Subsidiary, as the
case may be, shall pledge to the Agent the capital stock of such Restricted
Subsidiary in accordance with (S)7.2, provided that if such Restricted
--------
Subsidiary is a Foreign Subsidiary, such Restricted Subsidiary shall not be
required to become a guarantor and the Borrower or Domestic Subsidiary
owning such Foreign Subsidiary shall only be required to pledge 66% of the
stock of such Foreign Subsidiary so long as the aggregate EBITDA of all
Foreign Subsidiaries for the period of twelve months most recently ended
calculated on a Pro Forma Basis, constitutes less than 15% of the aggregate
EBITDA of the Borrower and its Restricted Subsidiaries, taken as a whole,
for such period calculated on a Pro Forma Basis; (vii) the Borrower or the
Restricted Subsidiary, as the case may be, has taken all necessary actions
to grant to the Agent a first priority perfected lien in all assets and
stock to be acquired in connection with such Permitted Acquisition except
to the extent not required pursuant to (S)9.14, (S)10.2(j) and clause (vi)
above; (viii) the Borrower has demonstrated to the reasonable satisfaction
of the Agent, based on a pro forma Compliance Certificate, (A) compliance
--- -----
with (S)11 on a pro forma basis immediately prior to and after giving
--- -----
effect to such Permitted Acquisition and (B) that the Leverage Ratio
calculated as of the most recent fiscal quarter end preceding the proposed
Permitted Acquisition on a Pro Forma Basis for the proposed Permitted
Acquisition will not exceed (1) 6.25:1 at any time prior to April 30, 1999,
(2) 6.00:1.00 at any time from April 30, 1999 to April 30, 2000, and (3)
5.75:1 at any time thereafter; (ix) the aggregate purchase price for such
Permitted Acquisition does not exceed $30,000,000; (x) EBITDA for the last
twelve months for the entity or assets acquired in such Permitted
Acquisition is positive; and (xi) the Borrower has delivered to the Agent a
certificate of the chief financial officer of the Borrower to the effect
that (1) the Borrower will be solvent upon the consummation of the
Permitted Acquisition; (2) the pro forma Compliance Certificate fairly
--- -----
presents the financial condition of the Borrower and its Subsidiaries as of
the date thereof and after giving effect to such Permitted Acquisition and
(3) no Default or Event of Default then exists or would result after giving
effect to the Permitted Acquisition; and
(d) Acquisitions by Unrestricted Subsidiaries, so long as the
EBITDA of all Unrestricted Subsidiaries, for the period of twelve month
most recently ended calculated on a Pro Forma Basis after giving effect to
<PAGE>
-71-
such acquisition, does not exceed twenty percent (20%) of the consolidated
EBITDA of the Borrower and all Subsidiaries, on a Pro Forma Basis, for such
period.
In the event any new Restricted Subsidiary is formed as a result of
or in connection with any acquisition, simultaneously therewith, the Loan
Documents shall be amended and/or supplemented as necessary to make the
terms and conditions of the Loan Documents applicable to such Restricted
Subsidiary. In the case of the Borrower forming or purchasing such
Restricted Subsidiary, such Restricted Subsidiary shall become a guarantor
hereunder, and shall grant to the Agent for the benefit of the Banks a
perfected, first priority security interest in its assets, in accordance
with the terms of the Security Agreement.
10.5.2. DISPOSITION OF ASSETS. None of the Borrower or any
---------------------
Restricted Subsidiary will become a party to or agree to or effect any
disposition of assets, other than (a) the sale by the Borrower or a
Restricted Subsidiary of inventory in the ordinary course of business,
consistent with past practices, or (b) the sale by the Borrower or a
Restricted Subsidiary of assets pursuant to the sale-leaseback transactions
permitted under (S)10.6 hereof, (c) sales by the Borrower or a Restricted
Subsidiary to third parties of Capital Assets for fair and reasonable value
in cash, the proceeds of which are reinvested or committed to be reinvested
as Capital Expenditures in similar Capital Assets within 365 days of such
sale, or (d) sales by the Borrower or a Restricted Subsidiary to third
parties of assets for fair and reasonable value, provided that, with
--------
respect to sales under this clause (d): (i) no Default or Event of Default
pursuant to (S)14.1(a), (b) or (c) hereof (only with regard to (S)11
hereof) shall have occurred and be continuing at the time of such sale and
no such Default or Event of Default will exist after giving effect to such
sale; (ii) at least eighty percent (80%) of the purchase price for such
assets is received in cash and the cash net proceeds (after appropriate
reserves and holdbacks) from such sales in excess of $1,000,000 are applied
(A) immediately upon receipt thereof to reimburse the Borrower or its
Restricted Subsidiaries for expenditures made, and costs incurred, to
repair, rebuild, replace or restore property subject to loss, damage or
taking, (B) immediately upon receipt thereof to pay any outstanding amounts
due under the Revolving Credit Loans and the Acquisition Loans and (C)
within 365 days of receipt (1) if prior to the end of the Disbursement
Period, to permanently reduce the Acquisition Loan Commitment in an amount
equal to such net cash proceeds, or (2) if after the end of the
Disbursement Period, to prepay the Acquisition Loan, such prepayment to be
applied against the scheduled installments of principal due on the
Acquisition Loan in the inverse order of maturity; (iii) the Borrower or
such Restricted Subsidiary has delivered any promissory note or other
instrument received by the Borrower or such Restricted Subsidiary in
connection with such sale to the Agent to be held in pledge
<PAGE>
-72-
for the benefit of itself and the Banks in accordance with the terms of the
Loan Documents, and (iv) the Borrower or such Restricted Subsidiary shall
have delivered to the Agent on the date of such sale a certificate signed
by an authorized officer of the Borrower or such Restricted Subsidiary and
evidence satisfactory to the Agent showing compliance with the provisions
of clauses (i), (ii) and (iii) of this (S)10.5.2(d).
10.6. SALE AND LEASEBACK. The Borrower will not, and will not permit any
------------------
of its Restricted Subsidiaries to, enter into any arrangement, directly or
indirectly, whereby the Borrower or any Restricted Subsidiary of the Borrower
shall sell or transfer any property owned by it in order then or thereafter to
lease such property or lease other property that the Borrower or any Restricted
Subsidiary of the Borrower intends to use for substantially the same purpose as
the property being sold or transferred, provided, that the Borrower or any
--------
Restricted Subsidiary may enter into such sale-leaseback transactions to the
extent the Indebtedness incurred in connection with such transaction is
permitted under (S)10.1(g)(ii).
10.7. COMPLIANCE WITH ENVIRONMENTAL LAWS. The Borrower will not, and will
----------------------------------
not permit any of its Subsidiaries to, (a) use any of the Real Estate or any
portion thereof for the handling, processing, storage or disposal of Hazardous
Substances, (b) cause or permit to be located on any of the Real Estate any
underground tank or other underground storage receptacle for Hazardous
Substances, (c) generate any Hazardous Substances on any of the Real Estate, (d)
conduct any activity at any Real Estate or use any Real Estate in any manner so
as to cause a release (i.e. releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, disposing or
dumping) or threatened release of Hazardous Substances on, upon or into the Real
Estate or (e) otherwise conduct any activity at any Real Estate or use any Real
Estate in any manner that would violate any Environmental Law or bring such Real
Estate in violation of any Environmental Law.
10.8. SUBORDINATED DEBT AND PREFERRED STOCK. The Borrower will not, and
-------------------------------------
will not permit any of its Subsidiaries to, amend, supplement or otherwise
modify the terms of any of the Subordinated Debt, (a) which amendment,
supplement or modification effects any increase in the principal amount of the
Subordinated Debt, the interest rate thereon or any fees thereunder, or shortens
the maturity or average life to maturity thereof, adds or modifies the terms of
any required prepayments, redemptions or repurchases, modifies the terms of the
subordination provisions thereof, or makes more burdensome to the Borrower the
covenants therein or adds additional such covenants or events of default or (b)
which amendment, supplement or modification relates to other terms and
provisions of the Subordinated Debt and the cumulative effect of which is to
make the Subordinated Debt materially more restrictive on the Borrower or its
Subsidiaries, or materially adversely affect the Agent's or the Bank's rights or
interests thereunder or under the Loan Documents or the Borrower's ability to
fulfill its obligations under the Loan Documents. The Borrower will not, and
will not permit any of its Subsidiaries
<PAGE>
-73-
to, (a) prepay, redeem, repurchase or make any payment in defeasance of any of
the Subordinated Debt or send any notice of redemption, prepayment, repurchase
or defeasance with respect to any of the Subordinated Debt or (b) amend,
supplement or otherwise modify the terms of the Stockholders Agreement if such
amendment, supplement or modification of the Stockholders Agreement could
reasonably be expected to adversely affect the Agent's or the Banks' rights or
interests or impact the Borrower's abilities to fulfill its obligations under
the Loan Documents.
10.9. EMPLOYEE BENEFIT PLANS. Neither the Borrower nor any ERISA
----------------------
Affiliate will
(a) engage in any "prohibited transaction" within the meaning of
(S)406 of ERISA or (S)4975 of the Code which could result in a material
liability for the Borrower or any of its Subsidiaries; or
(b) permit any Guaranteed Pension Plan to incur an "accumulated
funding deficiency", as such term is defined in (S)302 of ERISA, whether or
not such deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension Plan to an extent
which, or terminate any Guaranteed Pension Plan in a manner which, could
result in the imposition of a lien or encumbrance on the assets of the
Borrower or any of its Subsidiaries pursuant to (S)302(f) or (S)4068 of
ERISA; or
(d) amend any Guaranteed Pension Plan in circumstances requiring
the posting of security pursuant to (S)307 of ERISA or (S)401(a)(29) of the
Code; or
(e) permit or take any action which would result in the aggregate
benefit liabilities (with the meaning of (S)4001 of ERISA) of all
Guaranteed Pension Plans exceeding the value of the aggregate assets of
such Plans, disregarding for this purpose the benefit liabilities and
assets of any such Plan with assets in excess of benefit liabilities, by
more than the amount set forth in (S)8.16.3.
10.10. FISCAL YEAR. The Borrower will not, and will not permit any of its
-----------
Subsidiaries to, change the date of the end of its fiscal year from that set
forth in (S)8.4.1.
10.11. TRANSACTIONS WITH AFFILIATES. The Borrower will not, and will not
----------------------------
permit any of its Subsidiaries to, engage in any transaction with any Affiliate
(other than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any such Affiliate or, to the
knowledge of the Borrower, any corporation, partnership, trust or other entity
in which any
<PAGE>
-74-
such Affiliate has a substantial interest or is an officer, director, trustee or
partner, on terms more favorable to such Person than would have been obtainable
on an arm's-length basis in the ordinary course of business.
10.12. CHANGE IN TERMS OF CAPITAL STOCK. The Borrower will not, and will
--------------------------------
not permit any of its Subsidiaries to effect or permit any change in or
amendment to any document or instrument pertaining to the terms of such Person's
capital stock unless such change or amendment is of an immaterial or ministerial
nature that would not have any adverse effect on the Agent's or the Banks'
rights or interests under the Loan Documents or the Borrower's obligations under
the Loan Documents.
10.13. MODIFICATION OF DOCUMENTS. The Borrower will not consent to or
-------------------------
agree to any amendment, supplement or other modification to the Management
Agreement which affects, in a manner adverse to the Borrower, the amount or
timing of payments required to be made by the Borrower thereunder, or if such
amendment, supplement or modification could reasonably be expected to adversely
affect the Agent's or the Bank' rights or interests or impact the Borrower's
abilities to fulfill its obligations under the Loan Documents.
10.14. NEGATIVE PLEDGES. The Borrower will not enter into any agreement
----------------
(excluding this Credit Agreement, the Loan Documents and the Subordinated Debt
Documents) prohibiting or restricting the creation or assumption of any lien
upon its properties, revenues or assets or those of any of its Subsidiaries,
whether now owned or hereafter acquired other than agreements with Persons
prohibiting any such lien on assets in which such Person has a prior security
interest which is permitted by (S)10.2.
10.15. UPSTREAM LIMITATIONS. The Borrower will not, nor will the Borrower
--------------------
permit any of its Subsidiaries to enter into any agreement, contract or
arrangement (other than the Credit Agreement and the other Loan Documents)
restricting the ability of any Subsidiary to pay or make dividends or
distributions in cash or kind, to make loans, advances or other payments of
whatsoever nature or to make transfers or distributions of all or any part of
its assets to the Borrower or to any Subsidiary of such Subsidiary is a
Subsidiary.
10.16. INCONSISTENT AGREEMENTS. The Borrower will not, nor will it permit
-----------------------
any of their Subsidiaries to, enter into any agreement containing any provision
which would be violated or breached by the performance by the Borrower or such
Subsidiary of its obligations hereunder or under any of the Loan Documents.
10.17. LOCATION OF INVENTORY. The Borrower will not, nor will the Borrower
---------------------
permit any of its Subsidiaries to, have any finished goods, work in progress,
supplies, packaging materials and raw materials and component parts inventory
owned by the Borrower or such Subsidiary (other than inventory held on a
consignment basis with an aggregate fair market value not in excess of
<PAGE>
-75-
$2,000,000) (a) which is not in the possession of the Borrower or such
Subsidiary unless the Agent has received a waiver from the party in possession
of such inventory, and in form and substance satisfactory to the Agent and (b)
which is held by the Borrower or such Subsidiary on property leased by the
Borrower or a Subsidiary, unless the Agent has received a waiver from the lessor
of such leased property and, if any, sublessor thereof, and in form and
substance satisfactory to the Agent, provided, however, it shall not be a
-------- -------
Default or Event of Default hereunder if the Borrower or such Subsidiary, after
using reasonable efforts, is unable to deliver such a waiver due to a failure to
obtain any third party consents needed to grant such mortgage or deed of trust.
11. FINANCIAL COVENANTS OF THE BORROWER.
-----------------------------------
The Borrower covenants and agrees that, so long as any Loan, Unpaid
Reimbursement Obligation, Letter of Credit or Note is outstanding or any Bank
has any obligation to make any Loans or the Agent has any obligation to issue,
extend or renew any Letters of Credit:
11.1. EBITDA TO TOTAL INTEREST EXPENSE. The Borrower will not permit the
--------------------------------
ratio of EBITDA of the Borrower and its Restricted Subsidiaries to Consolidated
Total Interest Expense for any period of four consecutive fiscal quarters,
calculated on a Pro Forma Basis, ending during any period described in the table
set forth below to be less than the ratio set forth opposite such period in such
table:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
6/30/98 through 6/30/00 1.60:1.00
9/30/00 through 6/30/01 1.70:1.00
9/30/01 through 6/30/02 1.90:1.00
9/30/02 through 6/30/03 2.10:1.00
Thereafter 2.25:1.00
</TABLE>
<PAGE>
-76-
11.2. LEVERAGE RATIO. The Borrower will not permit the Leverage Ratio,
--------------
calculated on a Pro Forma Basis, as at the end of any fiscal quarter ending
during any period described in the table set forth below to exceed the ratio set
forth opposite such period in such table:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
6/30/98 through 6/30/99 6.50:1.00
9/30/99 6.35:1.00
12/31/99 through 6/30/00 6.25:1.00
9/30/00 6.15:1.00
12/31/00 though 6/30/01 6.00:1.00
9/30/01 5.85:1.00
12/31/01 through 6/30/02 5.75:1.00
9/30/02 5.50:1.00
12/31/02 through 6/30/03 5.25:1.00
9/30/03 5.00:1.00
12/31/03 and thereafter 4.75:1.00
</TABLE>
11.3. CONSOLIDATED OPERATING CASH FLOW TO TOTAL DEBT SERVICE. The Borrower
-------------------------------------------------------
will not, for any period of four consecutive fiscal quarters ending during any
period described in the table set forth below, permit the ratio of (i)
Consolidated Operating Cash Flow, calculated on a Pro Forma Basis, for such
period to (ii) the sum of (a) Consolidated Total Interest Expense for such
period and (b) all required payments of principal (including the principal
component of capitalized lease payments) in respect of Indebtedness due and
payable by the Borrower and/or its Restricted Subsidiaries during such period,
in each case calculated on a Pro Forma Basis, to be less than the ratio set
forth opposite such period in such table:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
6/30/98 through 3/31/01 1.20:1.00
4/01/01 through 3/31/03 1.10:1.00
Thereafter 1.05:1.00
</TABLE>
<PAGE>
-77-
12. CLOSING CONDITIONS.
-------------------
The obligations of the Banks to make the initial Revolving Credit Loans and
the Acquisition Loan and of the Agent to issue any initial Letters of Credit
shall be subject to the satisfaction of the following conditions precedent on or
prior to the Closing Date:
12.1. LOAN DOCUMENTS ETC.
------------------
12.1.1. LOAN DOCUMENTS. Each of the Loan Documents shall have been
--------------
duly executed and delivered by the respective parties thereto, shall be in
full force and effect and shall be in form and substance satisfactory to
each of the Banks. Each Bank shall have received a fully executed copy of
each such document.
12.1.2. SUBORDINATED DEBT DOCUMENTS. Each of the Subordinated Debt
---------------------------
Documents shall have been duly executed and delivered by the respective
parties thereto, shall be in full force and effect. The Agent shall have
received a fully executed copy of each such document.
12.2. CERTIFIED COPIES OF CHARTER DOCUMENTS. The Agent shall have
-------------------------------------
received from the Borrower and each of its Subsidiaries a copy, certified by a
duly authorized officer of such Person to be true and complete on the Closing
Date, of each of (a) its charter or other incorporation documents as in effect
on such date of certification, and (b) its by-laws as in effect on such date.
12.3. CORPORATE ACTION. All corporate action necessary for the valid
----------------
execution, delivery and performance by the Borrower and each of its Subsidiaries
of this Credit Agreement and the other Loan Documents to which it is or is to
become a party shall have been duly and effectively taken, and evidence thereof
satisfactory to the Agent shall have been provided to the Agent.
12.4. INCUMBENCY CERTIFICATE. The Agent shall have received from the
----------------------
Borrower and each of its Subsidiaries an incumbency certificate, dated as of the
Closing Date, signed by a duly authorized officer of the Borrower or such
Subsidiary, and giving the name and bearing a specimen signature of each
individual who shall be authorized: (a) to sign, in the name and on behalf of
each of the Borrower of such Subsidiary, each of the Loan Documents and
Subordination Documents to which the Borrower or such Subsidiary is or is to
become a party; (b) in the case of the Borrower, to make Loan Requests and
Conversion Requests and to apply for Letters of Credit; and (c) to give notices
and to take other action on its behalf under the Loan Documents.
12.5. VALIDITY OF LIENS. The Security Documents shall be effective to
-----------------
create in favor of the Agent a legal, valid and enforceable first (except for
Permitted Liens entitled to priority under applicable law) security interest in
and lien upon the Collateral. All filings, recordings, deliveries of instruments
and other actions necessary or desirable in the opinion of the Agent to protect
<PAGE>
-78-
and preserve such security interests shall have been duly effected or provided
for. The Agent shall have received evidence thereof in form and substance
satisfactory to the Agent.
12.6. PERFECTION CERTIFICATES AND UCC SEARCH RESULTS. The Agent shall
----------------------------------------------
have received from each of the Borrower and its Subsidiaries a completed and
fully executed Perfection Certificate and the results of UCC searches with
respect to the Collateral, indicating no liens other than Permitted Liens and
otherwise in form and substance satisfactory to the Agent.
12.7. CERTIFICATES OF INSURANCE. The Agent shall have received (a) a
-------------------------
certificate of insurance from an independent insurance broker dated as of the
Closing Date, identifying insurers, types of insurance, insurance limits, and
policy terms, and otherwise describing the insurance obtained in accordance with
the provisions of the Security Agreements and (b) certified copies of all
policies evidencing such insurance (or certificates therefor signed by the
insurer or an agent authorized to bind the insurer).
12.8. BORROWING BASE REPORT. The Agent shall have received from the
---------------------
Borrower the initial Borrowing Base Report dated as of the Closing Date.
12.9. HAZARDOUS WASTE ASSESSMENTS. The Agent shall have received
---------------------------
hazardous waste site assessments from environmental engineers and in form and
substance satisfactory to the Agent, covering all Real Estate and all other real
property in respect of which the Borrower or any of its Subsidiaries may have
material liability, whether contingent or otherwise, for dumping or disposal of
Hazardous Substances.
12.10. SOLVENCY CERTIFICATE. Each of the Banks shall have received an
--------------------
officer's certificate of the Borrower dated as of the Closing Date as to the
solvency of the Borrower and its Subsidiaries following the consummation of the
transactions contemplated herein and in form and substance satisfactory to the
Banks.
12.11. OPINION OF COUNSEL. Each of the Banks and the Agent shall have
------------------
received a favorable legal opinion addressed to the Banks and the Agent, dated
as of the Closing Date, in form and substance satisfactory to the Banks and the
Agent, from Mayer, Brown & Platt, special New York counsel to the Borrower and
its Subsidiaries.
12.12. PAYMENT OF FEES. The Borrower shall have paid to the Agent the fees
---------------
set forth in the Fee Letter.
12.13. SATISFACTION OF CONDITIONS OF STOCK PURCHASE AGREEMENTS. The Agent
-------------------------------------------------------
shall have received evidence that all of the closing conditions in the Stock
Purchase Agreements have been satisfied without recourse to any provision
permitting the waiver by any party thereto of any condition, obligation,
covenant or other requirement.
<PAGE>
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12.14. COMPLETION OF ACQUISITION, ETC. The NCH Acquisition shall have been
-------------------------------
completed pursuant to the NCH Stock Purchase Agreement and the other NCH
Acquisition Documents. The purchase price of the capital stock acquired pursuant
to the NCH Acquisition and all expenditures and transaction costs associated
therewith shall not exceed $29,500,000 in the aggregate.
12.15. COMPLETION OF SUCCESSFUL FINANCIAL INQUIRY. The Agent and the Banks,
------------------------------------------
shall be satisfied that all information provided to the Agent prior to the
Closing Date accurately sets forth the cash flows for the periods specified
therein attributable to the business to be acquired in the Acquisitions.
12.16. CONSENTS AND APPROVALS. The Agent shall have received evidence that
----------------------
all consents and approvals necessary to complete the Acquisitions and the
transactions contemplated hereby, including but not limited to all consents and
approvals contemplated by (S)7.3 of the NCH Stock Purchase Agreement and (S)6.2
of the Crystaloid Stock Purchase Agreement.
12.17. PAYOFF LETTER. The Agent shall have received payoff letters from
-------------
all existing lenders, indicating the amount of the loan obligations of the
Borrower to such lender to the Borrower to be discharged on the Closing Date and
an acknowledgment by such lender that upon receipt of such funds it will release
from escrow or forthwith execute and deliver to the Agent for filing all
termination statements and take such other actions as may be necessary to
discharge all mortgages, deeds of trust and security interests granted by the
Borrower or any of its Subsidiaries in favor of such lender.
12.18. DISBURSEMENT INSTRUCTIONS. The Agent shall have received
-------------------------
disbursement instructions from the Borrower with respect to the proceeds of the
Acquisition Loan and the initial Revolving Credit Loan, indicating that a
portion of the proceeds of the Revolving Credit Loan, in an amount equal to the
aggregate loan obligations of the Borrower to any existing lenders to the
Borrower.
13. CONDITIONS TO ALL BORROWINGS.
----------------------------
The obligations of the Banks to make any Loan, including the Revolving
Credit Loan and the Acquisition Loan, and of the Agent to issue, extend or renew
any Letter of Credit, in each case whether on or after the Closing Date, shall
also be subject to the satisfaction of the following conditions precedent:
13.1. REPRESENTATIONS TRUE; NO EVENT OF DEFAULT. All factual information
-----------------------------------------
(other than projections) provided to the Agent or any Bank on behalf of the
Borrower or any of its Subsidiaries in connection with this Credit Agreement,
the other Loan Documents or any transaction contemplated thereby including,
without limitation, each of the representations and warranties of any of the
Borrower and its Subsidiaries contained in this Credit Agreement, the other Loan
Documents or in any document or instrument delivered pursuant to or in
connection with this Credit Agreement and all such other factual
<PAGE>
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information (other than projections) hereafter furnished by or on behalf of the
Borrower or any of its Subsidiaries shall be true as of the date as of which
they were made and shall also be true in all material respects at and as of the
time of the making of such Loan or the issuance, extension or renewal of such
Letter of Credit, with the same effect as if made at and as of that time (except
to the extent of changes resulting from transactions contemplated or permitted
by this Credit Agreement and the other Loan Documents and changes occurring in
the ordinary course of business that singly or in the aggregate are not
materially adverse, and to the extent that such representations and warranties
relate expressly to an earlier date) and no Default or Event of Default shall
have occurred and be continuing.
13.2. NO LEGAL IMPEDIMENT. No change shall have occurred in any law or
-------------------
regulations thereunder or interpretations thereof that in the reasonable opinion
of any Bank would make it illegal for such Bank to make such Loan or to
participate in the issuance, extension or renewal of such Letter of Credit or in
the reasonable opinion of the Agent would make it illegal for the Agent to
issue, extend or renew such Letter of Credit.
13.3. GOVERNMENTAL REGULATION. Each Bank shall have received such
-----------------------
statements in substance and form reasonably satisfactory to such Bank as such
Bank shall require for the purpose of compliance with any applicable regulations
of the Comptroller of the Currency or the Board of Governors of the Federal
Reserve System.
13.4. PROCEEDINGS AND DOCUMENTS. All proceedings in connection with the
-------------------------
transactions contemplated by this Credit Agreement, the other Loan Documents and
all other documents incident thereto shall be satisfactory in substance and in
form to the Banks and to the Agent and the Agent's Special Counsel, and the
Banks, the Agent and such counsel shall have received all information and such
counterpart originals or certified or other copies of such documents as the
Agent may reasonably request.
13.5. BORROWING BASE REPORT. The Agent shall have received the most
---------------------
recent Borrowing Base Report required to be delivered to the Agent in accordance
with (S)9.4(f) and, if requested by the Agent, a Borrowing Base Report dated
within five (5) days of the Drawdown Date of such Loan or of the date of
issuance, extension or renewal of such Letter of Credit.
14. EVENTS OF DEFAULT; ACCELERATION; ETC.
------------------------------------
14.1. EVENTS OF DEFAULT AND ACCELERATION. If any of the following events
----------------------------------
("Events of Default" or, if the giving of notice or the lapse of time or both is
required, then, prior to such notice or lapse of time, "Defaults") shall occur:
(a) the Borrower shall fail to pay any principal of the Loans or
any Reimbursement Obligation when the same shall become due and payable,
<PAGE>
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whether at the stated date of maturity or any accelerated date of maturity
or at any other date fixed for payment;
(b) the Borrower or any of its Subsidiaries shall fail to pay any
interest on the Loans, the commitment fee, any Letter of Credit Fee, the
Agent's Fee, or other sums due hereunder or under any of the other Loan
Documents, when the same shall become due and payable, whether at the
stated date of maturity or any accelerated date of maturity or at any other
date fixed for payment;
(c) the Borrower shall fail to comply with any of its covenants
contained in the first sentence of (S)(S)9.5, 9.6, 9.12, 10.1 through 10.6,
10.8, 10.10, 10.11 or 11 or any of the covenants contained in any of the
Mortgages;
(d) the Borrower or any of its Subsidiaries shall fail to perform
any term, covenant or agreement contained herein or in any of the other
Loan Documents (other than those specified elsewhere in this (S)14.1) for
thirty (30) days after written notice of such failure has been given to the
Borrower by the Agent;
(e) any representation or warranty of the Borrower or any of its
Subsidiaries in this Credit Agreement or any of the other Loan Documents or
in any other document or instrument delivered pursuant to or in connection
with this Credit Agreement shall prove to have been false in any material
respect upon the date when made or deemed to have been made or repeated;
(f) the Borrower or any of its Subsidiaries shall fail to pay at
maturity, or within any applicable period of grace, any obligation for
borrowed money or credit received or in respect of any Capitalized Leases
in an aggregate amount exceeding $5,000,000, or fail to observe or perform
any material term, covenant or agreement contained in any agreement by
which it is bound, evidencing or securing such borrowed money or credit
received or in respect of any such Capitalized Leases for such period of
time as would permit (assuming the giving of appropriate notice if
required) the holder or holders thereof or of any obligations issued
thereunder to accelerate the maturity thereof;
(g) the Borrower or any of its Subsidiaries shall make an
assignment for the benefit of creditors, or admit in writing its inability
to pay or generally fail to pay its debts as they mature or become due, or
shall petition or apply for the appointment of a trustee or other
custodian, liquidator or receiver of the Borrower or any of its
Subsidiaries or of any substantial part of the assets of the Borrower or
any of its Subsidiaries or shall commence any case or other proceeding
relating to the Borrower or any of its Subsidiaries under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt,
<PAGE>
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dissolution or liquidation or similar law of any jurisdiction, now or
hereafter in effect, or shall take any action to authorize or in
furtherance of any of the foregoing, or if any such petition or application
shall be filed or any such case or other proceeding shall be commenced
against the Borrower or any of its Subsidiaries and the Borrower or any of
its Subsidiaries shall indicate its approval thereof, consent thereto or
acquiescence therein or such petition or application shall not have been
dismissed within forty-five (45) days following the filing thereof;
(h) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating the Borrower or any of
its Subsidiaries bankrupt or insolvent, or approving a petition in any such
case or other proceeding, or a decree or order for relief is entered in
respect of the Borrower or any Subsidiary of the Borrower in an involuntary
case under federal bankruptcy laws as now or hereafter constituted and such
case or proceeding remains undismissed for sixty (60) days;
(i) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty (30) days, whether or not consecutive, any
final judgment against the Borrower or any of its Subsidiaries that, with
other outstanding final judgments, undischarged, against the Borrower or
any of its Subsidiaries exceeds in the aggregate $2,000,000;
(j) the holders of all or any part of the Subordinated Debt shall
accelerate the maturity of all or any part of the Subordinated Debt or the
Subordinated Debt shall be prepaid, redeemed or repurchased in whole or in
part;
(k) if any of the Loan Documents shall be cancelled, terminated,
revoked or rescinded or the Agent's security interests, mortgages or liens
in a substantial portion of the Collateral shall cease to be perfected, or
shall cease to have the priority contemplated by the Security Documents, in
each case otherwise than in accordance with the terms thereof or with the
express prior written agreement, consent or approval of the Banks, or any
action at law, suit or in equity or other legal proceeding to cancel,
revoke or rescind any of the Loan Documents shall be commenced by or on
behalf of the Borrower or any of its Subsidiaries party thereto or any of
their respective stockholders, or any court or any other governmental or
regulatory authority or agency of competent jurisdiction shall make a
determination that, or issue a judgment, order, decree or ruling to the
effect that, any one or more of the Loan Documents is illegal, invalid or
unenforceable in accordance with the terms thereof;
(l) the Borrower or any ERISA Affiliate incurs any liability to the
PBGC or a Guaranteed Pension Plan pursuant to Title IV of ERISA in an
aggregate amount exceeding $1,500,000, or the Borrower or any ERISA
Affiliate is assessed withdrawal liability pursuant to Title IV of ERISA by
<PAGE>
-83-
a Multiemployer Plan requiring aggregate annual payments exceeding
$1,500,000, or any of the following occurs with respect to a Guaranteed
Pension Plan: (i) an ERISA Reportable Event, or a failure to make a
required installment or other payment (within the meaning of (S)302(f)(1)
of ERISA), provided that the Agent determines in its reasonable discretion
--------
that such event (A) could be expected to result in liability of the
Borrower or any of its Subsidiaries to the PBGC or such Guaranteed Pension
Plan in an aggregate amount exceeding $1,500,000 and (B) could constitute
grounds for the termination of such Guaranteed Pension Plan by the PBGC,
for the appointment by the appropriate United States District Court of a
trustee to administer such Guaranteed Pension Plan or for the imposition of
a lien in favor of such Guaranteed Pension Plan; or (ii) the appointment by
a United States District Court of a trustee to administer such Guaranteed
Pension Plan; or (iii) the institution by the PBGC of proceedings to
terminate such Guaranteed Pension Plan;
(m) the Borrower or any of its Subsidiaries shall be enjoined,
restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting any material part of
its business and such order shall continue in effect for more than thirty
(30) days;
(n) there shall occur any material damage to, or loss, theft or
destruction of, any Collateral, whether or not insured, or any strike,
lockout, labor dispute, embargo, condemnation, act of God or public enemy,
or other casualty, which in any such case causes, for more than thirty (30)
consecutive days, the cessation or substantial curtailment of revenue
producing activities at any facility of the Borrower or any of its
Subsidiaries if such event or circumstance is not covered by business
interruption insurance and would have a material adverse effect on the
business or financial condition of the Borrower or such Subsidiary;
(o) there shall occur the loss, suspension or revocation of, or
failure to renew, any license or permit now held or hereafter acquired by
the Borrower or any of its Subsidiaries if such loss, suspension,
revocation or failure to renew would have a material adverse effect on the
business or financial condition of the Borrower or such Subsidiary;
(p) the Jordan Affiliates shall at any time comprise less than a
majority of the directors on the board of directors of the Borrower;
(q) the Jordan Affiliates shall at any time, legally or
beneficially own less than twenty-five percent (25%) of the outstanding
common stock of the Borrower, as adjusted pursuant to any stock split,
stock dividend or recapitalization or reclassification of the capital of
the Borrower; or
(r) there shall occur a "change of control" as defined in the
Subordinated Indenture;
<PAGE>
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then, and in any such event, so long as the same may be continuing, the Agent
may, and upon the request of the Majority Banks shall, by notice in writing to
the Borrower declare all amounts owing with respect to this Credit Agreement,
the Notes and the other Loan Documents and all Reimbursement Obligations to be,
and they shall thereupon forthwith become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrower; provided that in the event of any Event
--------
of Default specified in (S)(S)14.1(g), 14.1(h) or 14.1(j), all such amounts
shall become immediately due and payable automatically and without any
requirement of notice from the Agent or any Bank.
14.2. TERMINATION OF COMMITMENTS. If any one or more of the Events of
--------------------------
Default specified in (S)14.1(g), (S)14.1(h) or (S)14.1(j) shall occur, any
unused portion of the credit hereunder shall forthwith terminate and each of the
Banks shall be relieved of all further obligations to make Loans to the Borrower
and the Agent shall be relieved of all further obligations to issue, extend or
renew Letters of Credit. If any other Event of Default shall have occurred and
be continuing, the Agent may and, upon the request of the Majority Banks, shall,
by notice to the Borrower, terminate the unused portion of the credit hereunder,
and upon such notice being given such unused portion of the credit hereunder
shall terminate immediately and each of the Banks shall be relieved of all
further obligations to make Loans and the Agent shall be relieved of all further
obligations to issue, extend or renew Letters of Credit. No termination of the
credit hereunder shall relieve the Borrower or any of its Subsidiaries of any of
the Obligations.
14.3. REMEDIES. In case any one or more of the Events of Default shall
--------
have occurred and be continuing, and whether or not the Banks shall have
accelerated the maturity of the Loans pursuant to (S)14.1, each Bank, if owed
any amount with respect to the Loans or the Reimbursement Obligations, may, with
the consent of the Majority Banks but not otherwise, proceed to protect and
enforce its rights by suit in equity, action at law or other appropriate
proceeding, whether for the specific performance of any covenant or agreement
contained in this Credit Agreement and the other Loan Documents or any
instrument pursuant to which the Obligations to such Bank are evidenced,
including as permitted by applicable law the obtaining of the ex parte
-- -----
appointment of a receiver, and, if such amount shall have become due, by
declaration or otherwise, proceed to enforce the payment thereof or any other
legal or equitable right of such Bank. No remedy herein conferred upon any Bank
or the Agent or the holder of any Note or purchaser of any Letter of Credit
Participation is intended to be exclusive of any other remedy and each and every
remedy shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or any
other provision of law.
14.4. DISTRIBUTION OF COLLATERAL PROCEEDS. In the event that following
-----------------------------------
the occurrence or during the continuance of any Default or Event of Default, the
Agent or any Bank, as the case may be, receives any monies in connection with
<PAGE>
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the enforcement of any the Security Documents, or otherwise with respect to the
realization upon any of the Collateral, such monies shall be distributed for
application as follows:
(a) first, to the payment of, or (as the case may be) the
-----
reimbursement of the Agent for or in respect of all reasonable costs,
expenses, disbursements and losses which shall have been incurred or
sustained by the Agent in connection with the collection of such monies by
the Agent, for the exercise, protection or enforcement by the Agent of all
or any of the rights, remedies, powers and privileges of the Agent under
this Credit Agreement or any of the other Loan Documents or in respect of
the Collateral or in support of any provision of adequate indemnity to the
Agent against any taxes or liens which by law shall have, or may have,
priority over the rights of the Agent to such monies;
(b) second, to all other Obligations in such order or preference as
------
the Majority Banks may determine; provided, however, that (i) distributions
-------- -------
in respect of such Obligations shall be made pari passu with respect to the
---- -----
Agent's Fee payable pursuant to (S)6.2 and all other Obligations and (ii)
Obligation owing to the Banks, with respect to each type of Obligation such
as interest, principal, fees (other than the Agent's Fee) and expenses,
shall be made among the Banks pro rata, and provided, further, that the
--- ---- -------- -------
Agent may in its discretion make proper allowance to take into account any
Obligations not then due and payable;
(c) third, upon payment and satisfaction in full or other
-----
provisions for payment in full satisfactory to the Banks and the Agent of
all of the Obligations, to the payment of any obligations required to be
paid pursuant to (S)9-504(1)(c) of the Uniform Commercial Code of The
Commonwealth of Massachusetts; and
(d) fourth, the excess, if any, shall be returned to the Borrower
------
or to such other Persons as are entitled thereto.
15. SETOFF.
------
Regardless of the adequacy of any collateral, during the continuance of any
Event of Default, any deposits or other sums credited by or due from any of the
Banks to the Borrower and any securities or other property of the Borrower in
the possession of such Bank may be applied to or set off by such Bank against
the payment of Obligations and any and all other liabilities, direct, or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, of the Borrower to such Bank. Each of the Banks agrees with
each other Bank that (a) if an amount to be set off is to be applied to
Indebtedness of the Borrower to such Bank, other than Indebtedness evidenced by
the Notes held by such Bank or constituting Reimbursement Obligations owed to
such Bank, such amount shall be applied ratably to such other Indebtedness and
to the Indebtedness evidenced by all such Notes held by such Bank or
constituting
<PAGE>
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Reimbursement Obligations owed to such Bank, and (b) if such Bank shall receive
from the Borrower, whether by voluntary payment, exercise of the right of
setoff, counterclaim, cross action, enforcement of the claim evidenced by the
Notes held by, or constituting Reimbursement Obligations owed to, such Bank by
proceedings against the Borrower at law or in equity or by proof thereof in
bankruptcy, reorganization, liquidation, receivership or similar proceedings, or
otherwise, and shall retain and apply to the payment of the Note or Notes held
by, or Reimbursement Obligations owed to, such Bank any amount in excess of its
ratable portion of the payments received by all of the Banks with respect to the
Notes held by, and Reimbursement Obligations owed to, all of the Banks, such
Bank will make such disposition and arrangements with the other Banks with
respect to such excess, either by way of distribution, pro tanto assignment of
--- -----
claims, subrogation or otherwise as shall result in each Bank receiving in
respect of the Notes held by it or Reimbursement obligations owed it, its
proportionate payment as contemplated by this Credit Agreement; provided that if
--------
all or any part of such excess payment is thereafter recovered from such Bank,
such disposition and arrangements shall be rescinded and the amount restored to
the extent of such recovery, but without interest.
16. THE AGENT.
---------
16.1. AUTHORIZATION.
-------------
(a) The Agent is authorized to take such action on behalf of each
of the Banks and to exercise all such powers as are hereunder and under any
of the other Loan Documents and any related documents delegated to the
Agent, together with such powers as are reasonably incident thereto,
provided that no duties or responsibilities not expressly assumed herein or
--------
therein shall be implied to have been assumed by the Agent.
(b) The relationship between the Agent and each of the Banks is
that of an independent contractor. The use of the term "Agent" is for
convenience only and is used to describe, as a form of convention, the
independent contractual relationship between the Agent and each of the
Banks. Nothing contained in this Credit Agreement nor the other Loan
Documents shall be construed to create an agency, trust or other fiduciary
relationship between the Agent and any of the Banks.
(c) As an independent contractor empowered by the Banks to exercise
certain rights and perform certain duties and responsibilities hereunder
and under the other Loan Documents, the Agent is nevertheless a
"representative" of the Banks, as that term is defined in Article 1 of the
Uniform Commercial Code, for purposes of actions for the benefit of the
Banks and the Agent with respect to all collateral security and guaranties
contemplated by the Loan Documents. Such actions include the designation
of the Agent as "secured party", "mortgagee" or the like on all financing
statements and other documents and instruments, whether recorded or
otherwise, relating to the attachment,
<PAGE>
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perfection, priority or enforcement of any security interests, mortgages or
deeds of trust in collateral security intended to secure the payment or
performance of any of the Obligations, all for the benefit of the Banks and
the Agent.
16.2. EMPLOYEES AND AGENTS. The Agent may exercise its powers and execute
--------------------
its duties by or through employees or agents and shall be entitled to take, and
to rely on, advice of counsel concerning all matters pertaining to its rights
and duties under this Credit Agreement and the other Loan Documents. The Agent
may utilize the services of such Persons as the Agent in its sole discretion may
reasonably determine, and all reasonable fees and expenses of any such Persons
shall be paid by the Borrower.
16.3. NO LIABILITY. Neither the Agent nor any of its shareholders,
------------
directors, officers or employees nor any other Person assisting them in their
duties nor any agent or employee thereof, shall be liable for any waiver,
consent or approval given or any action taken, or omitted to be taken, in good
faith by it or them hereunder or under any of the other Loan Documents, or in
connection herewith or therewith, or be responsible for the consequences of any
oversight or error of judgment whatsoever, except that the Agent or such other
Person, as the case may be, may be liable for losses due to its willful
misconduct or gross negligence.
16.4. NO REPRESENTATIONS.
------------------
16.4.1. GENERAL. The Agent shall not be responsible for the
-------
execution or validity or enforceability of this Credit Agreement, the
Notes, the Letters of Credit, any of the other Loan Documents or any
instrument at any time constituting, or intended to constitute, collateral
security for the Notes, or for the value of any such collateral security or
for the validity, enforceability or collectability of any such amounts
owing with respect to the Notes, or for any recitals or statements,
warranties or representations made herein or in any of the other Loan
Documents or in any certificate or instrument hereafter furnished to it by
or on behalf of the Borrower or any of its Subsidiaries, or be bound to
ascertain or inquire as to the performance or observance of any of the
terms, conditions, covenants or agreements herein or in any instrument at
any time constituting, or intended to constitute, collateral security for
the Notes or to inspect any of the properties, books or records of the
Borrower or any of its Subsidiaries. The Agent shall not be bound to
ascertain whether any notice, consent, waiver or request delivered to it by
the Borrower or any holder of any of the Notes shall have been duly
authorized or is true, accurate and complete. The Agent has not made nor
does it now make any representations or warranties, express or implied, nor
does it assume any liability to the Banks, with respect to the credit
worthiness or financial conditions of the Borrower or any of its
Subsidiaries. Each Bank acknowledges that it has, independently and without
reliance upon the Agent or any other Bank, and based upon such
<PAGE>
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information and documents as it has deemed appropriate, made its own credit
analysis and decision to enter into this Credit Agreement.
16.4.2. CLOSING DOCUMENTATION, ETC. For purposes of determining
--------------------------
compliance with the conditions set forth in (S)12, each Bank that has
executed this Credit Agreement shall be deemed to have consented to,
approved or accepted, or to be satisfied with, each document and matter
either sent, or made available, by the Agent or BancBoston Securities Inc.,
as arranger to such Bank for consent, approval, acceptance or satisfaction,
or required thereunder to be to be consent to or approved by or acceptable
or satisfactory to such Bank, unless an officer of the Agent or BancBoston
Securities, Inc. active upon the Borrower's account shall have received
notice from such Bank not less than one (1) Business Day prior to the
Closing Date specifying such Bank's objection thereto and such objection
shall not have been withdrawn by notice to the Agent or BancBoston
Securities Inc. to such effect on or prior to the Closing Date.
16.5. PAYMENTS.
--------
16.5.1. PAYMENTS TO AGENT. A payment by the Borrower to the Agent
-----------------
hereunder or any of the other Loan Documents for the account of any Bank
shall constitute a payment to such Bank. The Agent agrees promptly to
distribute to each Bank such Bank's pro rata share of payments received by
--- ----
the Agent for the account of the Banks except as otherwise expressly
provided herein or in any of the other Loan Documents.
16.5.2. DISTRIBUTION BY AGENT. If in the opinion of the Agent the
---------------------
distribution of any amount received by it in such capacity hereunder, under
the Notes or under any of the other Loan Documents might involve it in
liability, it may refrain from making distribution until its right to make
distribution shall have been adjudicated by a court of competent
jurisdiction. If a court of competent jurisdiction shall adjudge that any
amount received and distributed by the Agent is to be repaid, each Person
to whom any such distribution shall have been made shall either repay to
the Agent its proportionate share of the amount so adjudged to be repaid or
shall pay over the same in such manner and to such Persons as shall be
determined by such court.
16.5.3. DELINQUENT BANKS. Notwithstanding anything to the contrary
----------------
contained in this Credit Agreement or any of the other Loan Documents, any
Bank that fails (a) to make available to the Agent its pro rata share of
--- ----
any Loan or to purchase any Letter of Credit Participation or (b) to comply
with the provisions of (S)15 with respect to making dispositions and
arrangements with the other Banks, where such Bank's share of any payment
received, whether by setoff or otherwise, is in excess of its pro rata
--- ----
share of such payments due and payable to all of the Banks, in each case
as, when and to the full extent required by the
<PAGE>
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provisions of this Credit Agreement, shall be deemed delinquent (a
"Delinquent Bank") and shall be deemed a Delinquent Bank until such time as
such delinquency is satisfied. A Delinquent Bank shall be deemed to have
assigned any and all payments due to it from the Borrower, whether on
account of outstanding Loans, Unpaid Reimbursement Obligations, interest,
fees or otherwise, to the remaining nondelinquent Banks for application to,
and reduction of, their respective pro rata shares of all outstanding Loans
--- ----
and Unpaid Reimbursement Obligations. The Delinquent Bank hereby authorizes
the Agent to distribute such payments to the nondelinquent Banks in
proportion to their respective pro rata shares of all outstanding Loans and
--- ----
Unpaid Reimbursement Obligations. A Delinquent Bank shall be deemed to have
satisfied in full a delinquency when and if, as a result of application of
the assigned payments to all outstanding Loans and Unpaid Reimbursement
Obligations of the nondelinquent Banks, the Banks' respective pro rata
--- ----
shares of all outstanding Loans and Unpaid Reimbursement Obligations have
returned to those in effect immediately prior to such delinquency and
without giving effect to the nonpayment causing such delinquency.
16.6 HOLDERS OF NOTES. The Agent may deem and treat the payee of any Note
------- -- -----
or the purchaser of any Letter of Credit Participation as the absolute owner or
purchaser thereof for all purposes hereof until it shall have been furnished in
writing with a different name by such payee or by a subsequent holder, assignee
or transferee.
16.7 INDEMNITY. The Banks ratably agree hereby to indemnify and hold
---------
harmless the Agent and its affiliates from and against any and all claims,
actions and suits (whether groundless or otherwise), losses, damages, costs,
expenses (including any expenses for which the Agent or such affiliate has not
been reimbursed by the Borrower as required by (S)17), and liabilities of every
nature and character arising out of or related to this Credit Agreement, the
Notes, or any of the other Loan Documents or the transactions contemplated or
evidenced hereby or thereby, or the Agent's actions taken hereunder or
thereunder, except to the extent that any of the same shall be directly caused
by the Agent's willful misconduct or gross negligence.
16.8 AGENT AS BANK. In its individual capacity, BKB shall have the same
----- -- ----
obligations and the same rights, powers and privileges in respect to its
Commitment and the Loans made by it, and as the holder of any of the Notes and
as the purchaser of any Letter of Credit Participations, as it would have were
it not also the Agent.
16.9 RESIGNATION. The Agent may resign at any time by giving sixty (60)
-----------
days prior written notice thereof to the Banks and the Borrower. Upon any such
resignation, the Majority Banks shall have the right to appoint a successor
Agent. Unless a Default or Event of Default shall have occurred and be
continuing, such successor Agent shall be reasonably acceptable to the
<PAGE>
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Borrower. If no successor Agent shall have been so appointed by the Majority
Banks and shall have accepted such appointment within thirty (30) days after the
retiring Agent's giving of notice of resignation, then the retiring Agent may,
on behalf of the Banks, appoint a successor Agent, which shall be a financial
institution having a rating of not less than A or its equivalent by Standard &
Poor's Corporation. Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, such successor Agent shall thereupon 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 any retiring Agent's resignation, the provisions of this Credit
Agreement and the other Loan Documents 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.
16.10. NOTIFICATION OF DEFAULTS AND EVENTS OF DEFAULT. Each Bank hereby
------------ -- -------- --- ------ -- -------
agrees that, upon learning of the existence of a Default or an Event of Default,
it shall promptly notify the Agent thereof. The Agent hereby agrees that upon
receipt of any notice under this (S)16.10 it shall promptly notify the other
Banks of the existence of such Default or Event of Default.
16.11. DUTIES IN THE CASE OF ENFORCEMENT. In case one of more Events of
------ -- --- ---- -- -----------
Default have occurred and shall be continuing, and whether or not acceleration
of the Obligations shall have occurred, the Agent shall, if (a) so requested by
the Majority Banks and (b) the Banks have provided to the Agent such additional
indemnities and assurances against expenses and liabilities as the Agent may
reasonably request, proceed to enforce the provisions of the Security Documents
authorizing the sale or other disposition of all or any part of the Collateral
and exercise all or any such other legal and equitable and other rights or
remedies as it may have in respect of such Collateral. The Majority Banks may
direct the Agent in writing as to the method and the extent of any such sale or
other disposition, the Banks hereby agreeing to indemnify and hold the Agent,
harmless from all liabilities incurred in respect of all actions taken or
omitted in accordance with such directions, provided that the Agent need not
comply with any such direction to the extent that the Agent reasonably believes
the Agent's compliance with such direction to be unlawful or commercially
unreasonable in any applicable jurisdiction.
17. EXPENSES AND INDEMNIFICATION.
-------- --- ---------------
17.1. EXPENSES. Whether or not the transactions contemplated hereby shall
--------
be consummated, the Borrower promises to pay (a) the reasonable costs of (i)
producing and reproducing this Credit Agreement, the other Loan Documents and
the other agreements and instruments mentioned herein and (ii) any taxes
(including any interest and penalties in respect thereto), filing fees or
recording fees or taxes payable by any Bank (other than taxes based upon the
Bank's net income) on or with respect to the transactions contemplated by this
Credit Agreement or the other Loan Documents (the Borrower hereby agreeing to
indemnify each Bank with respect thereto), (b) the reasonable documented fees,
<PAGE>
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expenses and disbursements of the Agent's Special Counsel or any local counsel
to the Agent incurred in connection with the preparation of this Credit
Agreement, the other Loan Documents and other instruments mentioned herein, the
closing hereunder, amendments, modifications, approvals, consents or waivers
hereto or hereunder, and the syndication and the termination hereof, (c) all
reasonable fees, expenses and disbursements incurred by the Banks in connection
with the preparation of this Credit Agreement and the other Loan Documents and
the closing hereunder, (d) all reasonable fees, expenses and disbursements
incurred by the Banks in connection with the syndication of its Commitment and
its Acquisition Loan hereunder; (e) all reasonable expenses of the Agent
(including reasonable fees and expenses of counsel to the Agent) incurred in
connection with the preparation and review of the form of any instrument
relevant to this Credit Agreement or the other Loan Documents and the
consideration of legal questions relevant thereto and hereto or to any
restructuring or "work-out" of any Obligations; and (f) all out-of-pocket
expenses (including reasonable attorneys' fees and costs), incurred by any Bank
or the Agent in connection with the enforcement of or preservation of rights
under any this Credit Agreement, the Notes and the other Loan Documents against
the Borrower or any of its Subsidiaries or the administration thereof after the
occurrence of a Default or Event of Default.
17.2 INDEMNIFICATION. The Borrower agrees to indemnify and hold harmless
---------------
the Agent, its affiliates and the Banks from and against any and all claims,
actions and suits whether groundless or otherwise, and from and against any and
all liabilities, losses, damages and expenses of every nature and character
arising out of this Credit Agreement or any of the other Loan Documents or the
transactions contemplated hereby including, without limitation, (i) any actual
or proposed use by the Borrower or any of its Subsidiaries of the proceeds of
any of the Loans or Letters of Credit, (ii) the Borrower or any of its
Subsidiaries entering into or performing this Credit Agreement or any of the
other Loan Documents or (iii) with respect to the Borrower and its Subsidiaries
and their respective properties and assets, the violation of any Environmental
Law, the presence, disposal, escape, seepage, leakage, spillage, discharge,
emission, release or threatened release of any Hazardous Substances or any
action, suit, proceeding or investigation brought or threatened with respect to
any Hazardous Substances (including, but not limited to, claims with respect to
wrongful death, personal injury or damage to property), in each case including,
without limitation, the reasonable fees and disbursements of counsel and
allocated costs of internal counsel incurred in connection with any such
investigation, litigation or other proceeding. In litigation, or the preparation
therefor, the Banks and the Agent and its affiliates shall be entitled to select
their own counsel and, in addition to the foregoing indemnity, the Borrower
agrees to pay promptly the reasonable fees and expenses of such counsel. If, and
to the extent that the obligations of the Borrower under this (S)17.2 are
unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment in satisfaction of such obligations which is
permissible under applicable law.
<PAGE>
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17.3 SURVIVAL. The covenants contained in this (S)17 shall survive payment
--------
or satisfaction in full of all other Obligations.
18. SURVIVAL OF COVENANTS, ETC.
-------- -- --------- ---
All covenants, agreements, representations and warranties made herein, in
the Notes, in any of the other Loan Documents or in any documents or other
papers delivered by or on behalf of the Borrower or any of its Subsidiaries
pursuant hereto shall be deemed to have been relied upon by the Banks and the
Agent, notwithstanding any investigation heretofore or hereafter made by any of
them, and shall survive the making by the Banks of any of the Loans and the
issuance, extension or renewal of any Letters of Credit, as herein contemplated,
and shall continue in full force and effect so long as any Letter of Credit or
any amount due under this Credit Agreement or the Notes or any of the other Loan
Documents remains outstanding or any Bank has any obligation to make any Loans
or the Agent has any obligation to issue, extend or renew any Letter of Credit,
and for such further time as may be otherwise expressly specified in this Credit
Agreement. All statements contained in any certificate or other paper delivered
to any Bank or the Agent at any time by or on behalf of the Borrower or any of
its Subsidiaries pursuant hereto or in connection with the transactions
contemplated hereby shall constitute representations and warranties by the
Borrower or such Subsidiary hereunder.
19. ASSIGNMENT AND PARTICIPATION.
---------- --- -------------
19.1 CONDITIONS TO ASSIGNMENT BY BANKS. Except as provided herein, each
---------- -- ---------- -- -----
Bank may assign to one or more Eligible Assignees all or a portion of its
interests, rights and obligations under this Credit Agreement (including all or
a portion of its Commitment Percentage and Commitment and/or Acquisition
Commitment Percentage and Acquisition Commitment and the same portion of the
Loans at the time owing to it, the Notes held by it and its participating
interest in the risk relating to any Letters of Credit); provided that (a) each
--------
of the Agent and the Borrower (except that the Borrower's consent shall not be
required if an Event to Default has occurred and is continuing) shall have given
its prior written consent to such assignment, which consent will not be
unreasonably withheld, (b) each such assignment shall be of a constant, and not
a varying, percentage of all the assigning Bank's rights and obligations under
this Credit Agreement, (c) each assignment shall be in an amount no less than
$2,500,000, or a larger integral multiple of $1,000,000, or if less, the entire
amount of such Bank's Commitment, Acquisition Commitment and Loans, and (d) the
parties to such assignment shall execute and deliver to the Agent, for recording
in the Register (as hereinafter defined), an Assignment and Acceptance,
substantially in the form of Exhibit J hereto (an "Assignment and Acceptance"),
-------
together with any Notes subject to such assignment. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall be at least five
(5) Business Days after the execution thereof, (i) the assignee thereunder shall
be a party hereto and, to the extent provided in such
<PAGE>
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Assignment and Acceptance, have the rights and obligations of a Bank hereunder,
(ii) the assigning Bank shall, to the extent provided in such assignment and
upon payment to the Agent of the registration fee referred to in (S)19.3, be
released from its obligations under this Credit Agreement, and (iii) Schedule 1
-------- -
shall be amended to reflect such assignment.
19.2 CERTAIN REPRESENTATIONS AND WARRANTIES; LIMITATIONS; COVENANTS. By
------- --------------- --- ----------- ------------ ---------
executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows:
(a) other than the representation and warranty that it is the legal
and beneficial owner of the interest being assigned thereby free and clear
of any adverse claim, the assigning Bank makes no representation or
warranty, express or implied, and assumes no responsibility with respect to
any statements, warranties or representations made in or in connection with
this Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Credit Agreement, the other Loan
Documents or any other instrument or document furnished pursuant hereto or
the attachment, perfection or priority of any security interest or
mortgage,
(b) the assigning Bank makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower and its Subsidiaries or any other Person primarily or secondarily
liable in respect of any of the Obligations, or the performance or
observance by the Borrower and its Subsidiaries or any other Person
primarily or secondarily liable in respect of any of the Obligations of any
of their obligations under this Credit Agreement or any of the other Loan
Documents or any other instrument or document furnished pursuant hereto or
thereto;
(c) such assignee confirms that it has received a copy of this Credit
Agreement, together with copies of the most recent financial statements
referred to in (S)8.4 and (S)9.4 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;
(d) such assignee will, independently and without reliance upon the
assigning Bank, the Agent or any other Bank 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 Credit
Agreement;
(e) such assignee represents and warrants that it is an Eligible
Assignee;
<PAGE>
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(f) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this Credit
Agreement and the other Loan Documents as are delegated to the Agent by the
terms hereof or thereof, together with such powers as are reasonably
incidental thereto;
(g) such assignee agrees that it will perform in accordance with
their terms all of the obligations that by the terms of this Credit
Agreement are required to be performed by it as a Bank;
(h) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance; and
(i) such assignee acknowledges that it has made arrangements with the
assigning Bank satisfactory to such assignee with respect to its pro rata
--- ----
share of Letter of Credit Fees in respect of outstanding Letters of Credit.
19.3 REGISTER. The Agent shall maintain a copy of each Assignment and
--------
Acceptance delivered to it and a register or similar list (the "Register") for
the recordation of the names and addresses of the Banks and the Commitment
Percentage of, and principal amount of the Revolving Credit Loans owing to and
Letter of Credit Participations purchased by, the Banks from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, the Agent and the Banks may treat each Person whose name is
recorded in the Register as a Bank hereunder for all purposes of this Credit
Agreement. The Register shall be available for inspection by the Borrower and
the Banks at any reasonable time and from time to time upon reasonable prior
notice. Upon each such recordation, the assigning Bank agrees to pay to the
Agent a registration fee in the sum of $2,500.
19.4 NEW NOTES. Upon its receipt of an Assignment and Acceptance executed
--- -----
by the parties to such assignment, together with each Note subject to such
assignment, the Agent shall (a) record the information contained therein in the
Register, and (b) give prompt notice thereof to the Borrower and the Banks
(other than the assigning Bank). Within five (5) Business Days after receipt of
such notice, the Borrower, at its own expense, shall execute and deliver to the
Agent, in exchange for each surrendered Note, a new Note to the order of such
Eligible Assignee in an amount equal to the amount assumed by such Eligible
Assignee pursuant to such Assignment and Acceptance and, if the assigning Bank
has retained some portion of its obligations hereunder, a new Note to the order
of the assigning Bank in an amount equal to the amount retained by it hereunder.
Such new Notes shall provide that they are replacements for the surrendered
Notes, shall be in an aggregate principal amount equal to the aggregate
principal amount of the surrendered Notes, shall be dated the effective date of
such in Assignment and Acceptance and shall otherwise be substantially the form
of the assigned Notes. Within five (5) days of issuance of any new Notes
pursuant to this (S)20.4, the Borrower shall deliver an opinion of
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counsel, addressed to the Banks and the Agent, relating to the due
authorization, execution and delivery of such new Notes and the legality,
validity and binding effect thereof, in form and substance satisfactory to the
Banks. The surrendered Notes shall be cancelled and returned to the Borrower.
19.5 PARTICIPATIONS. Each Bank may sell participations to one or more banks
--------------
or other entities in all or a portion of such Bank's rights and obligations
under this Credit Agreement and the other Loan Documents; provided that (a) each
--------
such participation shall be in an amount of not less than $2,500,000, or a
larger integral multiple of $1,000,000, (b) any such sale or participation shall
not affect the rights and duties of the selling Bank hereunder to the Borrower
and (c) the only rights granted to the participant pursuant to such
participation arrangements with respect to waivers, amendments or modifications
of the Loan Documents shall be the rights to approve waivers, amendments or
modifications that would reduce the principal of or the interest rate on any
Loans, extend the term or increase the amount of the Commitment of such Bank as
it relates to such participant, reduce the amount of any commitment fees or
Letter of Credit Fees to which such participant is entitled or extend any
regularly scheduled payment date for principal or interest.
19.6 DISCLOSURE. The Borrower agrees that in addition to disclosures made
----------
in accordance with standard and customary banking practices any Bank may
disclose information obtained by such Bank pursuant to this Credit Agreement to
assignees or participants and potential assignees or participants hereunder;
provided that such assignees or participants or potential assignees or
- --------
participants shall agree (a) to treat in confidence such information unless such
information otherwise becomes public knowledge, (b) not to disclose such
information to a third party, except as required by law or legal process and (c)
not to make use of such information for purposes of transactions unrelated to
such contemplated assignment or participation.
19.7 ASSIGNEE OR PARTICIPANT AFFILIATED WITH THE BORROWER. If any assignee
-------- -- ----------- ---------- ---- --- --------
Bank is an Affiliate of the Borrower, then any such assignee Bank shall have no
right to vote as a Bank hereunder or under any of the other Loan Documents for
purposes of granting consents or waivers or for purposes of agreeing to
amendments or other modifications to any of the Loan Documents or for purposes
of making requests to the Agent pursuant to (S)14.1 or (S)14.2, and the
determination of the Majority Banks shall for all purposes of this Credit
Agreement and the other Loan Documents be made without regard to such assignee
Bank's interest in any of the Loans or Reimbursement Obligations. If any Bank
sells a participating interest in any of the Loans or Reimbursement Obligations
to a participant, and such participant is the Borrower or an Affiliate of the
Borrower, then such transferor Bank shall promptly notify the Agent of the sale
of such participation. A transferor Bank shall have no right to vote as a Bank
hereunder or under any of the other Loan Documents for purposes of granting
consents or waivers or for purposes of agreeing to amendments or modifications
to any of the Loan Documents or for purposes of making requests to the Agent
pursuant to (S)14.1 or (S)14.2 to the extent that such participation is
<PAGE>
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beneficially owned by the Borrower or any Affiliate of the Borrower, and the
determination of the Majority Banks shall for all purposes of this Credit
Agreement and the other Loan Documents be made without regard to the interest of
such transferor Bank in the Loans or Reimbursement Obligations to the extent of
such participation.
19.8 MISCELLANEOUS ASSIGNMENT PROVISIONS. Any assigning Bank shall retain
------------- ---------- ----------
its rights to be indemnified pursuant to (S)17 with respect to any claims or
actions arising prior to the date of such assignment. If any assignee Bank is
not incorporated under the laws of the United States of America or any state
thereof, it shall, prior to the date on which any interest or fees are payable
hereunder or under any of the other Loan Documents for its account, deliver to
the Borrower and the Agent certification as to its exemption from deduction or
withholding of any United States federal income taxes. If any Reference Bank
transfers all of its interest, rights and obligations under this Credit
Agreement, the Agent shall, in consultation with the Borrower and with the
consent of the Borrower and the Majority Banks, appoint another Bank to act as a
Reference Bank hereunder. Anything contained in this (S)19 to the contrary
notwithstanding, any Bank may at any time pledge all or any portion of its
interest and rights under this Credit Agreement (including all or any portion of
its Notes) (a) to any of the twelve Federal Reserve Banks organized under (S)4
of the Federal Reserve Act, 12 U.S.C. (S)341, or (b) to a lender to such bank
(or trustee therefor) in connection with a bona fide financing transaction. No
such pledge or the enforcement thereof shall release the pledgor Bank from its
obligations hereunder or under any of the other Loan Documents, provide any
voting rights hereunder to the pledgee thereof, or affect any rights or
obligations of the Borrower or the Agent hereunder.
19.9 ASSIGNMENT BY BORROWER. The Borrower shall not assign or transfer any
---------- -- --------
of its rights or obligations under any of the Loan Documents without the prior
written consent of each of the Banks.
20. NOTICES, ETC.
-------- ---
Except as otherwise expressly provided in this Credit Agreement, all
notices and other communications made or required to be given pursuant to this
Credit Agreement or the Notes or any Letter of Credit Applications shall be in
writing and shall be delivered in hand, mailed by United States registered or
certified first class mail, postage prepaid, sent by overnight courier, or sent
by telegraph, telecopy, facsimile or telex and confirmed by delivery via courier
or postal service, addressed as follows:
(a) if to the Borrower, at 2997 Clarkson Road, Chesterfield, Missouri
63107, Attention: Chief Financial Officer or at such other address for
notice as the Borrower shall last have furnished in writing to the Person
giving the notice, with a copy to A. Richard Caputo, Jr., The Jordan
Company, 9 West 57th Street, New York, New York 10019;
<PAGE>
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(b) if to the Agent, at 100 Federal Street, Boston, Massachusetts
02110, USA, Attention: Peter van der Horst, Vice President, or such other
address for notice as the Agent shall last have furnished in writing to the
Person giving the notice; and
(c) if to any Bank, at such Bank's address set forth on Schedule 1
-------- -
hereto, or such other address for notice as such Bank shall have last
furnished in writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or made
and to have become effective (i) if delivered by hand, overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time of the receipt thereof by such officer or the sending of such facsimile and
(ii) if sent by registered or certified first-class mail, postage prepaid, on
the third Business Day following the mailing thereof.
21. GOVERNING LAW.
--------- ---
THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH OF MASSACHUSETTS
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWER
AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT
BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN (S)20. THE
BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT COURT.
22. HEADINGS.
--------
The captions in this Credit Agreement are for convenience of reference only
and shall not define or limit the provisions hereof.
23. COUNTERPARTS.
------------
This Credit Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when
executed and delivered shall be an original, and all of which together shall
constitute one instrument. In proving this Credit Agreement it shall not be
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necessary to produce or account for more than one such counterpart signed by the
party against whom enforcement is sought.
24. ENTIRE AGREEMENT, ETC.
------ ---------- ---
The Loan Documents and any other documents executed in connection herewith
or therewith express the entire understanding of the parties with respect to the
transactions contemplated hereby. Neither this Credit Agreement nor any term
hereof may be changed, waived, discharged or terminated, except as provided in
(S)26.
25. WAIVER OF JURY TRIAL.
------ -- ---- -----
The Borrower hereby waives its right to a jury trial with respect to any
action or claim arising out of any dispute in connection with this Credit
Agreement, the Notes or any of the other Loan Documents, any rights or
obligations hereunder or thereunder or the performance of which rights and
obligations. Except as prohibited by law, the Borrower hereby waives any right
it may have to claim or recover in any litigation referred to in the preceding
sentence any special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages. The Borrower (a)
certifies that no representative, agent or attorney of any Bank or the Agent has
represented, expressly or otherwise, that such Bank or the Agent would not, in
the event of litigation, seek to enforce the foregoing waivers and (b)
acknowledges that the Agent and the Banks have been induced to enter into this
Credit Agreement, the other Loan Documents to which it is a party and the
Subordination Documents to which it is a party by, among other things, the
waivers and certifications contained herein.
26. CONSENTS, AMENDMENTS, WAIVERS, ETC.
--------- ----------- -------- ---
Any consent or approval required or permitted by this Credit Agreement to
be given by the Banks may be given, and any term of this Credit Agreement, the
other Loan Documents or any other instrument related hereto or mentioned herein
may be amended, and the performance or observance by the Borrower or any of its
Subsidiaries of any terms of this Credit Agreement, the other Loan Documents or
such other instrument or the continuance of any Default or Event of Default may
be waived (either generally or in a particular instance and either retroactively
or prospectively) with, but only with, the written consent of the Borrower and
the written consent of the Majority Banks. Notwithstanding the foregoing, the
rate of interest on the Notes (other than interest accruing pursuant to
(S)6.11.2 following the effective date of any waiver by the Majority Banks of
the Default or Event of Default relating thereto), the amount of the Commitments
of the Banks, and the amount of commitment fee or Letter of Credit Fees
hereunder may not be changed without the written consent of the Borrower and the
written consent of each Bank affected thereby; the Revolving Credit Loan
Maturity Date and the Acquisition Loan Maturity Date may not be postponed
without the written consent of each Bank affected thereby; this (S)26
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and the definition of Majority Banks may not be amended, and any substantial
portion of the Collateral may not be released (except in accordance with
(S)10.5.2), without the written consent of all of the Banks; and the amount of
the Agent's Fee or any Letter of Credit Fees payable for the Agent's account and
(S)16 may not be amended without the written consent of the Agent. No waiver
shall extend to or affect any obligation not expressly waived or impair any
right consequent thereon. No course of dealing or delay or omission on the part
of the Agent or any Bank in exercising any right shall operate as a waiver
thereof or otherwise be prejudicial thereto. No notice to or demand upon the
Borrower shall entitle the Borrower to other or further notice or demand in
similar or other circumstances.
27. SEVERABILITY.
------------
The provisions of this Credit Agreement are severable and if any one clause
or provision hereof shall be held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction, and shall not
in any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision of this Credit Agreement in any jurisdiction.
<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed this Credit
Agreement as a sealed instrument as of the date first set forth above.
JACKSON PRODUCTS, INC.
By: /s/ Robert H. Elkin
-------------------------------
Name:
Title:
BANKBOSTON, N.A., individually and as Agent
By: /s/ Peter van der Horst
-------------------------------
Peter van der Horst, Vice President
MERCANTILE BANK NATIONAL ASSOCIATION, individually
and as Co-Agent
By: /s/ Karen D. Myers
------------------------------
Karen D. Myers, Vice President
<PAGE>
EXHIBIT A
---------
FORM OF
-------
BORROWING BASE REPORT
---------------------
____________,__,___
To Each of the Banks Referred to Below
c/o BankBoston, N.A., as Agent
100 Federal Street
Boston, Massachusetts 02110
Ladies and Gentlemen:
Reference is made to the Revolving Credit and Acquisition Loan Agreement,
dated as of April 22, 1998 (the "Credit Agreement"), among the undersigned, the
banks listed on the signature pages thereof and such other banks as may become
parties thereto from time to time in accordance with the provisions thereof (the
"Banks"), BankBoston, N.A., as agent for the Banks (the "Agent") and Mercantile
Bank National Association, as Co-Agent. Capitalized terms which are used herein
without definition and which are defined in the Credit Agreement shall have the
same meanings herein as therein.
The undersigned hereby certifies as follows: (a) the information furnished
in the materials attached hereto was true, correct and complete as at the last
day of the calendar month immediately preceding the date of this certificate;
(b) as of the date hereof, there exists no Default or Event of Default; and (c)
the representations and warranties contained in (S)8 of the Credit Agreement
were correct when made and are correct at and as of the date hereof.
IN WITNESS WHEREOF, the undersigned has executed this Borrowing Base
Certificate on behalf of Jackson Products, Inc. as of the date first written
above.
JACKSON PRODUCTS, INC.
By:______________________________
Chief Financial Officer
<PAGE>
BORROWING BASE CERTIFICATE
[$000's omitted]
A. ACCOUNTS OF BORROWER AND ITS SUBSIDIARIES
(As of ______,___)
1 TOTAL ACCOUNTS: $_______
The aggregate of the unpaid portions of accounts
receivables (net of any credits, rebates,
offsets, holdbacks or other adjustments or
commissions payable to third parties that are
adjustments to such accounts receivable
2 LESS INELIGIBLE ACCOUNTS:
(b)(i) Account receivables that are with Affiliates of ($_______)
the borrower.
(b)(iii) Receivables that are with account debtors that
are insolvent or involved in any case proceeding,
whether voluntary or involuntary, under any
bankruptcy, reorganization, arrangement,
insolvency, adjustment of debt, dissolution,
liquidation or similar law of any jurisdiction; ($_______)
(b)(iv) Receivables that are with account debtors that
are not creditworthy ($_______)
(c) Receivables that are subject to dispute or any
similar claim that would reduce the cash amount
payable; ($_______)
(d) Receivables that are subject to any pledge,
restriction, security interest or other lien or
encumbrance; ($_______)
(e) Receivables in which the Agent does not have a
valid and perfected first priority security
interest other than A/R payable from offices in
Canada or from offices in countries from Europe; ($_______)
(f) Receivables that are outstanding from more than
90 days past the date payment is due: ($_______)
(g) Receivables that are due from any single account
debtor or other obligor if more than 25% of the
aggregate amount of all account receivable owing
from such account debtor. ($_______)
(h) Receivables that are not payable in Dollars other
than A/R payable from offices in Canada or from
offices in countries in Europe; ($_______)
(i) Receivable that are payable from offices outside
of the United States except for accounts
receivable payable from offices in Canada in an
aggregate amount not to exceed $3,000,000 and
accounts receivable payable from offices in
countries from Europe, in an aggregate amount not
to exceed $3,000,000; ($_______)
(j) Receivable not secured by a letter of credit
unless Agent has a prior, perfected security
interest in such letter of credit. ($_______)
Total ineligible accounts: ($_______)
3 Eligible Accounts (A1 minus A2) $_______
4 Factor: 0.65
<PAGE>
5 Borrowing Base-Eligible Accounts (A3 multiplied by
A4) $_______
B. INVENTORY OF BORROWER AND ITS SUBSIDIARIES
(As of ______,___)
1 Total inventory (including Work in Process, raw
materials and finished goods) ($_______)
2 Less ineligible Inventory:
(a) Inventory held on consignment or not otherwise
owned by the borrower or such Subsidiary, or of a
type no longer sold by the Borrower or such
Subsidiary, ($_______)
(b) Inventory which has been returned by a customer or
is damaged or subject to any legal encumbrance
other than Permitted Liens, ($_______)
(c) Inventory which is not in the possession of the
Borrower or such Subsidiary unless the Agent has
received a waiver from the party in possession of
such inventory in form and substance satisfactory
to the Agent, ($_______)
(d) Inventory which is held by the Borrower of such
Subsidiary on property leased by the Borrower or a
Subsidiary, unless the Agent has received a waiver
from the lessor of such leased property and, if
any, sublessor thereof in form and substance
satisfactory to the Agent, ($_______)
(e) Inventory as to which appropriate Uniform
Commercial Code financing statements showing the
Borrower or such Subsidiary as debtor and the
Agent as secured party have not been filed in the
proper filing office or offices in order to
perfect the Agent's security interest therein, ($_______)
(f) Inventory which has been shipped to a customer of
the Borrower or such Subsidiary regardless of
whether such shipment is on a consignment basis, ($_______)
(g) Inventory which is not located within the United
States of America, or other than Inventory located
in Canada or in countries in europe in an
aggregate amount not to exceed $3,000,000, or ($_______)
(h) Inventory which the Agent deems to be obsolete or
not marketable. ($_______)
Total Ineligible Inventory: ($_______)
3 Eligible Inventory (B1 minus B2) $_______
4 Factor: 0.65
5 Borrowing Base-Inventory (B3 multiplied by B4): $_______
C. TOTAL BORROWING BASE A5 PLUS B5) $_______
<PAGE>
EXHIBIT B
---------
FORM OF GUARANTY
----------------
GUARANTY, dated as of April 22, 1998, by FLEX-O-LITE, INC., a Delaware
corporation ("Flex"), OSD ENVIZION, INC., a Delaware corporation ("OSD"),
CRYSTALOID TECHNOLOGIES, INC., a Delaware corporation ("Crystaloid"), JACKSON
ACQUISITION, INC., a Delaware corporation ("JAI"), AMERICAN ALLSAFE COMPANY, a
Texas corporation ("Allsafe"), and SILENCIO/SAFETY DIRECT, INC., a Nevada
corporation ("Silencio", and together with Flex, OSD, Crystaloid, JAI and
Allsafe, the "Guarantors") in favor of (a) BANKBOSTON, N.A., a national banking
association, as agent (hereinafter, in such capacity, the "Agent") for itself
and the other lending institutions (hereinafter, collectively, the "Banks")
which are or may become parties to the Revolving Credit and Acquisition Loan
Agreement dated as of April 22, 1998 (as amended and in effect from time to
time, the "Credit Agreement"), among JACKSON PRODUCTS, INC., a Delaware
corporation (the "Borrower"), the Banks, the Agent and MERCANTILE BANK NATIONAL
ASSOCIATION as Co-Agent and (b) each of the Banks.
WHEREAS, the Borrower and each of the Guarantors are members of a group of
related corporations, the success of any one of which is dependent in part on
the success of the other members of such group;
WHEREAS, each of the Guarantors expects to receive substantial direct and
indirect benefits from the extensions of credit to the Borrower by the Banks
pursuant to the Credit Agreement (which benefits are hereby acknowledged);
WHEREAS, it is a condition to the Banks' making any loans or otherwise
extending credit to the Borrower under the Credit Agreement that each of the
Guarantors execute and deliver to the Agent, for the benefit of the Banks and
the Agent, a guaranty substantially in the form hereof; and
WHEREAS, each of the Guarantors wishes to guaranty the Borrower's
obligations to the Banks and the Agent under or in respect of the Credit
Agreement as provided herein;
NOW, THEREFORE, each of the Guarantors hereby agrees with the Banks and the
Agent as follows:
1. DEFINITIONS. The term "Obligations" and all other capitalized terms
-----------
used herein without definition shall have the respective meanings provided
therefor in the Credit Agreement.
2. GUARANTY OF PAYMENT AND PERFORMANCE. Each of the Guarantors hereby
-----------------------------------
guarantees to the Banks and the Agent the full and punctual payment
<PAGE>
-2-
when due (whether at stated maturity, by required prepayment, by acceleration or
otherwise), as well as the performance, of all of the Obligations including all
such which would become due but for the operation of the automatic stay pursuant
to (S)362(a) of the Federal Bankruptcy Code and the operation of (S)(S)502(b)
and 506(b) of the Federal Bankruptcy Code. This Guaranty is an absolute,
unconditional and continuing guaranty by each of the Guarantors of the full and
punctual payment and performance of all of the Obligations and not of their
collectibility only and is in no way conditioned upon any requirement that the
Agent or any Bank first attempt to collect any of the Obligations from the
Borrower or resort to any collateral security or other means of obtaining
payment. Should the Borrower default in the payment or performance of any of the
Obligations, the obligations of each of the Guarantors hereunder with respect to
such Obligations in default shall, upon demand by the Agent, become immediately
due and payable to the Agent, for the benefit of the Banks and the Agent,
without demand or notice of any nature, all of which are expressly waived by the
Guarantors. Payments by each of the Guarantors hereunder may be required by the
Agent on any number of occasions. All payments by such Guarantors hereunder
shall be made to the Agent, in the manner and at the place of payment specified
therefor in the Credit Agreement, for the account of the Banks and the Agent and
shall be made without setoff or counterclaim and free and clear of and without
deduction for any taxes, levies, imposts, duties, charges, fees, deductions,
withholdings, compulsory loans, restrictions or conditions of any nature now or
hereafter imposed or levied by the United States or any jurisdiction or any
political subdivision thereof or taxing or other authority therein unless such
Guarantor is compelled by law to make such deduction or withholding.
3. GUARANTORS' AGREEMENT TO PAY ENFORCEMENT COSTS, ETC. Each of the
---------------------------------------------------
Guarantors further agrees, as the principal obligor and not as a guarantor only,
to pay to the Agent, on demand, all costs and expenses (including court costs
and reasonable legal expenses) incurred or expended by the Agent or any Bank in
connection with the Obligations, this Guaranty and the enforcement thereof,
together with interest on amounts recoverable under this (S)3 from the time when
such amounts become due until payment, whether before or after judgment, at the
rate of interest for overdue principal set forth in the Credit Agreement,
provided that if such interest exceeds the maximum amount permitted to be paid
- --------
under applicable law, then such interest shall be reduced to such maximum
permitted amount.
4. WAIVERS BY GUARANTORS; BANK'S FREEDOM TO ACT. Each of the Guarantors
--------------------------------------------
agrees that the Obligations will be paid and performed strictly in accordance
with their respective terms, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agent or any Bank with respect thereto. Each of the Guarantors
waives promptness, diligences, presentment, demand, protest, notice of
acceptance, notice of any Obligations incurred and all other notices of any
kind, all defenses which may be available by virtue of any valuation, stay,
moratorium law or other similar law now or hereafter in effect, any right to
<PAGE>
-3-
require the marshalling of assets of the Borrower or any other entity or other
person primarily or secondarily liable with respect to any of the Obligations,
and all suretyship defenses generally. Without limiting the generality of the
foregoing, each of the Guarantors agrees to the provisions of any instrument
evidencing, securing or otherwise executed in connection with any Obligation and
agrees that the obligations of each of the Guarantors hereunder shall not be
released or discharged, in whole or in part, or otherwise affected by (a) the
failure of the Agent or any Bank to assert any claim or demand or to enforce any
right or remedy against the Borrower or any other entity or other person
primarily or secondarily liable with respect to any of the Obligations; (b) any
extensions, compromise, refinancing, consolidation or renewals of any
Obligation; (c) any change in the time, place or manner of payment of any of the
Obligations or any rescissions, waivers, compromise, refinancing, consolidation
or other amendments or modifications of any of the terms or provisions of the
Credit Agreement, the Notes, the other Loan Documents or any other agreement
evidencing, securing or otherwise executed in connection with any of the
Obligations, (d) the addition, substitution or release of any entity or other
person primarily or secondarily liable for any Obligation; (e) the adequacy of
any rights which the Agent or any Bank may have against any collateral security
or other means of obtaining repayment of any of the Obligations; (f) the
impairment of any collateral securing any of the Obligations, including without
limitation the failure to perfect or preserve any rights which the Agent or any
Bank might have in such collateral security or the substitution, exchange,
surrender, release, loss or destruction of any such collateral security; or (g)
any other act or omission which might in any manner or to any extent vary the
risk of such Guarantor or otherwise operate as a release or discharge of such
Guarantor, all of which may be done without notice to such Guarantor. To the
fullest extent permitted by law, each of the Guarantors hereby expressly waives
any and all rights or defenses arising by reason of (i) any "one action" or
"anti-deficiency" law which would otherwise prevent the Agent or any Bank from
bringing any action, including any claim for a deficiency, or exercising any
other right or remedy (including any right of set-off), against such Guarantor
before or after the Agent's or such Bank's commencement or completion of any
foreclosure action, whether judicially, by exercise of power of sale or
otherwise, or (ii) any other law which in any other way would otherwise require
any election of remedies by the Agent or any Bank.
5. UNENFORCEABILITY OF OBLIGATIONS AGAINST BORROWER. If for any reason the
------------------------------------------------
Borrower has no legal existence or is under no legal obligation to discharge any
of the Obligations, or if any of the Obligations have become irrecoverable from
the Borrower by reason of the Borrower's insolvency, Bankruptcy or
reorganization or by other operation of law or for any other reason, this
Guaranty shall nevertheless be binding on each of the Guarantors to the same
extent as if such Guarantor at all times had been the principal obligor on all
such Obligations. In the event that acceleration of the time for payment of any
of the Obligations is stayed upon the insolvency, Bankruptcy or reorganization
of the Borrower, or for any other reason, all such amounts
<PAGE>
-4-
otherwise subject to acceleration under the terms of the Credit Agreement, the
Notes, the other Loan Documents or any other agreement evidencing, securing or
otherwise executed in connection with any Obligation shall be immediately due
and payable by such Guarantor.
6. SUBROGATION; SUBORDINATION.
--------------------------
6.1. WAIVER OF RIGHTS AGAINST BORROWER. Until the final payment and
---------------------------------
performance in full of all of the Obligations, none of the Guarantors shall
exercise and each of the Guarantors hereby waives any rights against the
Borrower arising as a result of payment by such Guarantor hereunder, by way
of subrogation, reimbursement, restitution, contribution or otherwise, and
will not prove any claim in competition with the Agent or any Bank in
respect of any payment hereunder in any Bankruptcy, insolvency or
reorganization case or proceedings of any nature; none of the Guarantors
will claim any setoff, recoupment or counterclaim against the Borrower in
respect of any liability of such Guarantor to the Borrower; and each of the
Guarantors waives any benefit of and any right to participate in any
collateral security which may be held by the Agent or any Bank.
6.2. SUBORDINATION. The payment of any amounts due with respect to any
-------------
indebtedness of the Borrower for money borrowed or credit received now or
hereafter owed to each of the Guarantors is hereby subordinated to the
prior payment in full of all of the Obligations. Each of the Guarantors
agrees that, after the occurrence of any default in the payment or
performance of any of the Obligations, such Guarantor will not demand, sue
for or otherwise attempt to collect any such indebtedness of the Borrower
to such Guarantor until all of the Obligations shall have been paid in
full. If, notwithstanding the foregoing sentence, such Guarantor shall
collect, enforce or receive any amounts in respect of such indebtedness
while any Obligations are still outstanding, such amounts shall be
collected, enforced and received by such Guarantor as trustee for the Banks
and the Agent and be paid over to the Agent, for the benefit of the Banks
and the Agent, on account of the Obligations without affecting in any
manner the liability of such Guarantor under the other provisions of this
Guaranty.
6.3. PROVISIONS SUPPLEMENTAL. The provisions of this (S)6 shall be
-----------------------
supplemental to and not in derogation of any rights and remedies of the
Banks and the Agent under any separate subordination agreement which the
Agent may at any time and from time to time enter into with any of the
Guarantors for the benefit of the Banks and the Agent.
7. SECURITY; SETOFF. Each of the Guarantors grants to each of the Agent and
----------------
the Banks, as security for the full and punctual payment and performance of all
of such Guarantor's obligations hereunder, a continuing lien on and security
interest in all securities or other property belonging to such Guarantor
<PAGE>
-5-
now or hereafter held by the Agent or such Bank and in all deposits (general or
special, time or demand, provisional or final) and other sums credited by or due
from the Agent or such Bank to such Guarantor or subject to withdrawal by such
Guarantor. Regardless of the adequacy of any collateral security or other means
of obtaining payment of any of the Obligations, each of the Agent and the Banks
is hereby authorized at any time and from time to time, without notice to the
Guarantors (any such notice being expressly waived by each of the Guarantors)
and to the fullest extent permitted by law, to set off and apply such deposits
and other sums against the obligations of such Guarantor under this Guaranty,
whether or not the Agent or such Bank shall have made any demand under this
Guaranty and although such obligations may be contingent or unmatured.
8. FURTHER ASSURANCES. Each of the Guarantors agrees that it will from
------------------
time to time, at the request of the Agent, do all such things and execute all
such documents as the Agent may consider necessary or desirable to give full
effect to this Guaranty and to perfect and preserve the rights and powers of the
Banks and the Agent hereunder. Each of the Guarantors acknowledges and confirms
that such Guarantor itself has established its own adequate means of obtaining
from the Borrower on a continuing basis all information desired by such
Guarantor concerning the financial condition of the Borrower and that such
Guarantor will look to the Borrower and not to the Agent or any Bank in order
for such Guarantor to keep adequately informed of changes in the Borrower's
financial condition.
9. TERMINATION; REINSTATEMENT. This Guaranty shall remain in full force
--------------------------
and effect until the Agent is given written notice of any of the Guarantors'
intention to discontinue this Guaranty, notwithstanding any intermediate or
temporary payment or settlement of the whole or any part of the Obligations. No
such notice shall be effective unless received and acknowledged by an officer of
the Agent at the address of the Agent for notices set forth in (S)21 of the
Credit Agreement. No such notice shall affect any rights of the Agent or any
Bank hereunder, including without limitation the rights set forth in (S)(S)4 and
6, with respect to any Obligations incurred or accrued prior to the receipt of
such notice or any Obligations incurred or accrued pursuant to any contract or
commitment in existence prior to such receipt, including, without limitation the
Credit Agreement and the Notes. This Guaranty shall continue to be effective or
be reinstated, notwithstanding any such notice, if at any time any payment made
or value received with respect to any Obligation is rescinded or must otherwise
be returned by the Agent or any Bank upon the insolvency, Bankruptcy or
reorganization of the Borrower, or otherwise, all as though such payment had not
been made or value received.
10. SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon each of the
----------------------
Guarantors, their successors and assigns, and shall inure to the benefit of the
Agent and the Banks and their respective successors, transferees and assigns.
Without limiting the generality of the foregoing sentence, each Bank may assign
or otherwise transfer the Credit Agreement, the Notes, the
<PAGE>
-6-
other Loan Documents or any other agreement or note held by it evidencing,
securing or otherwise executed in connection with the Obligations, or sell
participations in any interest therein, to any other entity or other person, and
such other entity or other person shall thereupon become vested, to the extent
set forth in the agreement evidencing such assignment, transfer or
participation, with all the rights in respect thereof granted to such Bank
herein, all in accordance with (S)20 of the Credit Agreement. No Guarantor may
assign any of its obligations hereunder.
11. AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
----------------------
this Guaranty nor consent to any departure by any of the Guarantors therefrom
shall be effective unless the same shall be in writing and signed by the Agent.
No failure on the part of the Agent or any Bank to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right.
12. NOTICES. All notices and other communications called for hereunder
-------
shall be made in writing and, unless otherwise specifically provided herein,
shall be deemed to have been duly made or given when delivered by hand or mailed
first class, postage prepaid, or, in the case of telegraphic or telexed notice,
when transmitted, answer back received, addressed as follows: if to a Guarantor,
at the address set forth beneath its signature hereto, and if to the Agent, at
the address for notices to the Agent set forth in (S)21 of the Credit Agreement,
or at such address as either party may designate in writing to the other.
13. GOVERNING LAW; CONSENT TO JURISDICTION. THE GUARANTY IS INTENDED TO
--------------------------------------
TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. Each of the
Guarantors agrees that any suit for the enforcement of this Guaranty may be
brought in the courts of The Commonwealth of Massachusetts or any federal court
sitting therein and consents to the nonexclusive jurisdiction of such court and
to service of process in any such suit being made upon such Guarantor by mail at
the address specified by reference in (S)12. Each of the Guarantors hereby
waives any objection that it may now or hereafter have to the venue of any such
suit or any such court or that such suit was brought in an inconvenient court.
14. WAIVER OF JURY TRIAL. EACH OF THE GUARANTORS HEREBY WAIVES ITS RIGHT
--------------------
TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE
IN CONNECTION WITH THIS GUARANTY, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE
PERFORMANCE OF ANY OF SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law,
each of the Guarantors hereby waives any right which it may have to claim or
recover in any litigation referred to in the preceding sentence any special,
exemplary, punitive or consequential
<PAGE>
-7-
damages or any damages other than, or in addition to, actual damages. Each of
the Guarantors (a) certifies that neither the Agent or any Bank nor any
representative, agent or attorney of the Agent or any Bank has represented,
expressly or otherwise, that the Agent or any Bank would not, in the event of
litigation, seek to enforce the foregoing waivers and (b) acknowledges that, in
entering into the Credit Agreement and the other Loan Documents to which the
Agent or any Bank is a party, the Agent and the Banks are relying upon, among
other things, the waivers and certifications contained in this (S)14.
15. MISCELLANEOUS. This Guaranty constitutes the entire agreement of each
-------------
of the Guarantors with respect to the matters set forth herein. The rights and
remedies herein provided are cumulative and not exclusive of any remedies
provided by law or any other agreement, and this Guaranty shall be in addition
to any other guaranty of or collateral security for any of the Obligations. The
invalidity or unenforceability of any one or more sections of this Guaranty
shall not affect the validity or enforceability of its remaining provisions.
Captions are for the ease of reference only and shall not affect the meaning of
the relevant provisions. The meanings of all defined terms used in this Guaranty
shall be equally applicable to the singular and plural forms of the terms
defined.
<PAGE>
IN WITNESS WHEREOF, each of the Guarantors has caused this Guaranty to be
executed and delivered as of the date first above written.
FLEX-O-LITE, INC.
By: ________________________________
Name:
Title:
Address:
____________________________________
____________________________________
OSD ENVIZION, INC.
By: ________________________________
Name:
Title:
Address:
____________________________________
____________________________________
CRYSTALOID TECHNOLOGIES, INC.
By: ________________________________
Name:
Title:
Address:
____________________________________
____________________________________
<PAGE>
JACKSON ACQUISITION, INC.
By: ________________________________
Name:
Title:
Address:
____________________________________
____________________________________
AMERICAN ALLSAFE COMPANY
By: ________________________________
Name:
Title:
Address:
____________________________________
____________________________________
SILENCIO/SAFETY DIRECT, INC.
By: ________________________________
Name:
Title:
Address:
____________________________________
____________________________________
<PAGE>
EXHIBIT C
---------
FORM OF REVOLVING CREDIT NOTE
-----------------------------
$________________ April 22, 1998
FOR VALUE RECEIVED, the undersigned JACKSON PRODUCTS, INC., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of [INSERT
NAME OF PAYEE BANK], a [INSERT ENTITY] (the "Bank") at the Agent's head office
as defined in the Credit Agreement referred to below):
(a) prior to or on April 30, 2004 the principal amount of
______________ DOLLARS ($__________) or, if less, the aggregate unpaid
principal amount of Revolving Credit Loans advanced by the Bank to the
Borrower pursuant to the Revolving Credit and Acquisition Loan Agreement
dated as of April 22, 1998 (as amended and in effect from time to time, the
"Credit Agreement"), among the Borrower, the Bank and the other parties
thereto; and
(b) interest on the principal balance hereof from time to time
outstanding from the Closing Date under the Credit Agreement through and
including the maturity date hereof at the times and at the rate provided in
the Credit Agreement.
This Note evidences borrowings under and has been issued by the Borrower in
accordance with the terms of the Credit Agreement. The Bank and any holder
hereof is entitled to the benefits of the Credit Agreement, the Security
Documents and the other Loan Documents, and may enforce the agreements of the
Borrower contained therein, and any holder hereof may exercise the respective
remedies provided for thereby or otherwise available in respect thereof, all in
accordance with the respective terms thereof. All capitalized terms used in
this Note and not otherwise defined herein shall have the same meanings herein
as in the Credit Agreement.
The Borrower irrevocably authorizes the Bank to make or cause to be made,
at or about the time of the Drawdown Date of any Revolving Credit Loan or at the
time of receipt of any payment of principal of this Note, an appropriate
notation on the grid attached to this Note, or the continuation of such grid, or
any other similar record, including computer records, reflecting the making of
such Revolving Credit Loan or (as the case may be) the receipt of such payment.
The outstanding amount of the Revolving Credit Loans set forth on the grid
attached to this Note, or the continuation of such grid, or any other similar
<PAGE>
-2-
record, including computer records, maintained by the Bank with respect to any
Revolving Credit Loans shall be prima facie evidence of the principal amount
----- -----
thereof owing and unpaid to the Bank, but the failure to record, or any error in
so recording, any such amount on any such grid, continuation or other record
shall not limit or otherwise affect the obligation of the Borrower hereunder or
under the Credit Agreement to make payments of principal of and interest on this
Note when due.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note on the terms and conditions specified in the Credit Agreement.
If any one or more of the Events of Default shall occur, the entire unpaid
principal amount of this Note and all of the unpaid interest accrued thereon may
become or be declared due and payable in the manner and with the effect provided
in the Credit Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Bank or such holder, nor shall any delay, omission or waiver
on any one occasion be deemed a bar or waiver of the same or any other right on
any further occasion.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY
FEDERAL COURT SITTING THEREIN AND THE CONSENT TO THE NONEXCLUSIVE JURISDICTION
OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE
BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN (S)20 OF THE CREDIT AGREEMENT. THE
BORROWER HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR
CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS NOTE, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF ANY OF SUCH RIGHTS OR OBLIGATIONS.
THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY
<PAGE>
-3-
NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT
SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
This Note shall be deemed to take effect as a sealed instrument under the
laws of The Commonwealth of Massachusetts.
<PAGE>
-4-
IN WITNESS WHEREOF, the undersigned has caused this Revolving Credit Note
to be signed in its corporate name and its corporate seal to be impressed
thereon by its duly authorized officer as of the day and year first above
written.
[Corporate Seal]
JACKSON PRODUCTS, INC.
By: _______________________________
Title:
<PAGE>
<TABLE>
<CAPTION>
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Amount of Amount of Balance of
Revolving Principal Paid Principal Notation
Date Credit Loan or Prepaid Unpaid Made By:
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<S> <C> <C> <C> <C>
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</TABLE>
<PAGE>
EXHIBIT D
---------
FORM OF ACQUISITION NOTE
------------------------
$___________ April 22, 1998
FOR VALUE RECEIVED, the undersigned JACKSON PRODUCTS, INC., a Delaware
corporation, (the "Borrower"), hereby promises to pay to the order of [INSERT
NAME OF PAYEE BANK], a [INSERT ENTITY] (the "Bank") at the Agent's Head Office
(as defined in the Credit Agreement referred to below):
(a) prior to or on April 30, 2004 the principal amount of ___________
Dollars ($________), evidencing the Acquisition Loan made by the Bank to
the Borrower pursuant to the Revolving Credit and Acquisition Loan
Agreement dated as of April 22, 1998 (as amended and in effect from time to
time, the "Credit Agreement"), by and among the Borrower, the Bank and the
other parties thereto; and
(b) interest from the date hereof on the principal amount from time
to time outstanding to and including the maturity hereof at the rates and
terms and in all cases in accordance with the terms of the Credit
Agreement.
This Note evidences borrowings under and has been issued by the Borrower in
accordance with the terms of the Credit Agreement. The Bank and any holder
hereof is entitled to the benefits of the Credit Agreement, the Security
Documents and the other Loan Documents, and may enforce the agreements of the
Borrower contained therein, and any holder hereof may exercise the respective
remedies provided for thereby or otherwise available in respect thereof, all in
accordance with the respective terms thereof. All capitalized terms used in
this Note and not otherwise defined herein shall have the same meanings herein
as in the Credit Agreement.
The Borrower irrevocably authorizes the Bank to make or cause to be made,
at the time of receipt of any payment of principal of this Note, an appropriate
notation on the grid attached to this Note, or the continuation of such grid, or
any other similar record, including computer records, reflecting the receipt of
such payment. The outstanding amount of the Acquisition Loan set forth on the
grid attached to this Note, or the continuation of such grid, or any other
similar record, including computer records, maintained by the Bank with respect
to the Acquisition Loan shall be prima facie evidence of the principal amount of
----- -----
the Acquisition Loan owing and unpaid to the Bank, but the failure to
<PAGE>
-2-
record, or any error in so recording, any such amount on any such grid,
continuation or other record shall not limit or otherwise affect the obligation
of the Borrower hereunder or under the Credit Agreement to make payments of
principal of and interest on this Note when due.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note on the terms and conditions specified in the Credit Agreement.
If any one or more of the Events of Default shall occur, the entire unpaid
principal amount of this Note and all of the unpaid interest accrued thereon may
become or be declared due and payable in the manner and with the effect provided
in the Credit Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Bank or such holder, nor shall any delay, omission or waiver
on any one occasion be deemed a bar or waiver of the same or any other right on
any future occasion.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY
FEDERAL COURT SITTING THEREIN AND THE CONSENT TO THE NONEXCLUSIVE JURISDICTION
OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE
BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN (S)20 OF THE CREDIT AGREEMENT. THE
BORROWER HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR
CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS NOTE, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF ANY OF SUCH RIGHTS OR OBLIGATIONS.
THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT COURT.
<PAGE>
-3-
This Note shall be deemed to take effect as a sealed instrument under the
laws of The Commonwealth of Massachusetts.
<PAGE>
-4-
IN WITNESS WHEREOF, the undersigned has caused this Acquisition Note to be
signed in its corporate name and its corporate seal to be impressed thereon by
its duly authorized officer as of the day and year first above written.
[Corporate Seal]
JACKSON PRODUCTS, INC.
By: _________________________________
Title:
<PAGE>
<TABLE>
<CAPTION>
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Amount of Amount of Balance of
Acquisition Principal Paid Principal Notation
Date Loan or Prepaid Unpaid Made By:
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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</TABLE>
<PAGE>
EXHIBIT E-1
-----------
SECURITY AGREEMENT
------------------
SECURITY AGREEMENT, dated as of April 22, 1998, between JACKSON PRODUCTS,
INC., a Delaware corporation (the "Borrower"), and BANKBOSTON, N.A., a national
banking association, as agent (hereinafter, in such capacity, the "Agent") for
itself and the other lending institutions (hereinafter, collectively, the
"Banks") which are or may become parties to a Revolving Credit and Acquisition
Loan Agreement, dated as of April 22, 1998 (as amended and in effect from time
to time, the "Credit Agreement"), among the Borrower, the Banks, the Agent and
Mercantile Bank National Association, as Co-Agent.
WHEREAS, it is a condition precedent to the Banks' making any loans or
otherwise extending credit to the Borrower under the Credit Agreement that the
Borrower execute and deliver to the Agent, for the benefit of the Banks and the
Agent, a security agreement in substantially the form hereof; and
WHEREAS, the Borrower wishes to grant security interests in favor of the
Agent, for the benefit of the Banks and the Agent, as herein provided;
NOW, THEREFORE, in consideration of the promises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. All capitalized terms used herein without definitions
-----------
shall have the respective meanings provided therefor in the Credit Agreement.
All terms defined in the Uniform Commercial Code of The Commonwealth of
Massachusetts and used herein shall have the same definitions herein as
specified therein.
2. GRANT OF SECURITY INTEREST.
--------------------------
2.1. COLLATERAL GRANTED. The Borrower hereby grants to the
------------------
Agent, for the benefit of the Banks and the Agent, to secure the payment
and performance in full of all of the Obligations, a security interest in
and so pledges and assigns to the Agent, for the benefit of the Banks and
the Agent, the following properties, assets and rights of the Borrower,
wherever located, whether now owned or hereafter acquired or arising, and
all proceeds and products thereof (all of the same being hereinafter called
the "Collateral"):
<PAGE>
-2-
All personal and fixture property of every kind and nature
including without limitation all furniture, fixtures, equipment, raw
materials, inventory, other goods, accounts, contract rights, rights
to the payment of money, insurance refund claims and all other
insurance claims and proceeds, tort claims, chattel paper, documents,
instruments, securities and other investment property, deposit
accounts, rights to proceeds of letters of credit and all general
intangibles including, without limitation, all tax refund claims,
license fees, patents, patent applications, trademarks, trademark
applications, trade names, copyrights, copyright applications, rights
to sue and recover for past infringement of patents, trademarks and
copyrights, computer programs, computer software, engineering
drawings, service marks, customer lists, goodwill, and all licenses,
permits, agreements of any kind or nature pursuant to which the
Borrower possesses, uses or has authority to possess or use property
(whether tangible or intangible) of others or others possess, use or
have authority to possess or use property (whether tangible or
intangible) of the Borrower, and all recorded data of any kind or
nature, regardless of the medium of recording including, without
limitation, all software, writings, plans, specifications and
schematics.
2.2. DELIVERY OF INSTRUMENTS, ETC.
----------------------------
(a) Pursuant to the terms hereof, the Borrower has endorsed,
assigned and delivered to the Agent all negotiable or non-negotiable
instruments, certificated securities and chattel paper pledged by it
hereunder, together with instruments of transfer or assignment duly
executed in blank as the Agent may have specified. In the event that
the Borrower shall, after the date of this Agreement, acquire any
other negotiable or non-negotiable instruments, certificated
securities or chattel paper to be pledged by it hereunder, the
Borrower shall forthwith endorse, assign and deliver the same to the
Agent, accompanied by such instruments of transfer or assignment duly
executed in blank as the Agent may from time to time specify.
(b) To the extent that any securities now or hereafter
acquired by the Borrower are uncertificated and are issued to the
Borrower or its nominee directly by the issuer thereof, the Borrower
shall cause the issuer to note on its books the security interest of
the Agent in such securities and shall cause the issuer, pursuant to
an agreement in form and substance satisfactory to the Agent, to agree
to comply with instructions from the Agent as to such securities,
without further consent of the Borrower or such nominee. To the extent
that any securities, whether certificated or uncertificated, or other
financial assets now or hereafter acquired by the Borrower are held by
the Borrower or its nominee through a
<PAGE>
-3-
securities intermediary, the Borrower shall (i) cause such securities
intermediary to note on its books the security interest of the Agent
in such securities or other financial assets and to confirm such
notation promptly to the Agent and (ii), at the request of the Agent,
cause such securities intermediary, pursuant to an agreement in form
and substance satisfactory to the Agent, to agree to comply with
entitlement orders or other instructions from the Agent as to such
securities or other financial assets, without further consent of the
Borrower or such nominee. The Agent agrees with the Borrower that the
Agent shall not give any such entitlement orders or instructions to
any such issuer or securities intermediary unless an Event of Default
has occurred and is continuing and the Agent has elected to exercise
its rights and remedies as contemplated by (S)14.
(c) To the extent that the Borrower is a beneficiary under any
written letter of credit now or hereafter issued in favor of the
Borrower, the Borrower shall deliver such letter of credit to the
Agent. The Agent shall from time to time, at the request and expense
of the Borrower, make such arrangements with the Borrower as are in
the Agent's reasonable judgment necessary and appropriate so that the
Borrower may make any drawing to which the Borrower is entitled under
such letter of credit, without impairment of the Agent's perfected
security interest in the Borrower's rights to proceeds of such letter
of credit or in the actual proceeds of such drawing. At the Agent's
request, the Borrower shall, for any letter of credit, whether or not
written, now or hereafter issued in favor of the Borrower as
beneficiary, execute and deliver to the issuer and any confirmer of
such letter of credit an assignment of proceeds form, in favor of the
Agent and satisfactory to the Agent and such issuer or (as the case
may be) such confirmer, requiring the proceeds of any drawing under
such letter of credit to be paid directly to the Agent for application
as provided in the Credit Agreement.
2.3. EXCLUDED COLLATERAL. Notwithstanding the foregoing provisions of
-------------------
this (S)2, such grant of security interest shall not extend to, and the
term "Collateral" shall not include, any chattel paper and general
intangibles which are now or hereafter held by the Borrower as licensee,
lessee or otherwise, to the extent that (a) such chattel paper and general
intangibles are not assignable or capable of being encumbered as a matter
of law or under the terms of the license, lease or other agreement
applicable thereto (but solely to the extent that any such restriction
shall be enforceable under applicable law), without the consent of the
licensor or lessor thereof or other applicable party thereto and (b) such
consent has not been obtained; provided, however, that the foregoing grant
-------- -------
of security interest shall extend to, and the term "Collateral" shall
include, (i) any and all proceeds of such chattel paper and general
intangibles to
<PAGE>
-4-
the extent that the assignment or encumbering of such proceeds is not so
restricted and (ii) upon any such licensor, lessor or other applicable
party consent with respect to any such otherwise excluded chattel paper or
general intangibles being obtained, thereafter such chattel paper or
general intangibles as well as any and all proceeds thereof that might have
theretofore have been excluded from such grant of a security interest and
the term "Collateral".
2.4. STOCK PLEDGE AGREEMENT. Concurrently herewith the Borrower is
----------------------
executing and delivering to the Agent, for the benefit of the Banks and the
Agent, the Stock Pledge Agreement pursuant to which the Borrower is
pledging to the Agent, for the benefit of the Banks and the Agent, (a) 100%
of the shares of capital stock of each of the Borrower's Domestic
Subsidiaries and (b) not less than 66% of the Shares of capital stock of
each of the Borrower's Foreign Subsidiaries. Such pledge shall be governed
by the terms of such stock pledge agreement and not by the terms of this
Agreement.
2.5. PATENT AND TRADEMARK ASSIGNMENTS. Concurrently herewith the
--------------------------------
Borrower is also executing and delivering to the Agent, for the benefit of
the Banks and the Agent, the Patent Assignment and the Trademark Assignment
pursuant to which the Borrower is assigning to the Agent, for the benefit
of the Banks and the Agent, certain Collateral consisting of patents and
patent rights and trademarks, service marks and trademark and service mark
rights, together with the goodwill appurtenant thereto. The provisions of
the Patent Assignment and the Trademark Assignment are supplemental to the
provisions of this Agreement, and nothing contained in the Patent
Assignment or the Trademark Assignment shall derogate from any of the
rights or remedies of the Agent or any of the Banks hereunder. Nor shall
anything contained in the Patent Assignment or the Trademark Assignment be
deemed to prevent or extend the time of attachment or perfection of any
security interest in such Collateral created hereby.
3. TITLE TO COLLATERAL, ETC. The Borrower is the owner of the Collateral
------------------------
free from any adverse lien, security interest or other encumbrance, except for
the security interest created by this Agreement and other liens permitted by the
Credit Agreement. None of the Collateral constitutes, or is the proceeds of,
"farm products" as defined in (S)9-109(3) of the Uniform Commercial Code of The
Commonwealth of Massachusetts. None of the account debtors in respect of any
accounts, chattel paper or general intangibles and none of the obligors in
respect of any instruments included in the Collateral is a governmental
authority subject to the Federal Assignment of Claims Act.
4. CONTINUOUS PERFECTION. The Borrower's place of business or, if more
---------------------
than one, chief executive office is indicated on the Perfection Certificate
delivered to the Agent herewith (the "Perfection Certificate"). The Borrower
will not change the same, or the name, identity or corporate structure of the
<PAGE>
-5-
Borrower in any manner, without providing at least thirty (30) days prior
written notice to the Agent. The Collateral, to the extent not delivered to the
Agent pursuant to (S)2.2, will be kept at those locations listed on the
Perfection Certificate and the Borrower will not remove the Collateral from such
locations, without providing at least thirty (30) days prior written notice to
the Agent.
5. NO LIENS. Except for the security interest herein granted and liens
--------
permitted by the Credit Agreement, the Borrower shall be the owner of the
Collateral free from any lien, security interest or other encumbrance, and the
Borrower shall defend the same against all claims and demands of all persons at
any time claiming the same or any interests therein adverse to the Agent or any
of the Banks. The Borrower shall not pledge, mortgage or create, or suffer to
exist a security interest in the Collateral in favor of any person other than
the Agent, for the benefit of the Banks and the Agent, except for liens
permitted by the Credit Agreement.
6. NO TRANSFERS. The Borrower will not sell or offer to sell or
------------
otherwise transfer the Collateral or any interest therein except as permitted by
(S)10.5.2 of the Credit Agreement.
7. INSURANCE.
---------
7.1. MAINTENANCE OF INSURANCE. The Borrower will maintain with
------------------------
financially sound and reputable insurers insurance with respect to its
properties and business against such casualties and contingencies as shall
be in accordance with general practices of businesses engaged in similar
activities in similar geographic areas. Such insurance shall be in such
minimum amounts that the Borrower will not be deemed a co-insurer under
applicable insurance laws, regulations and policies and otherwise shall be
in such amounts, contain such terms, be in such forms and be for such
periods as may be reasonably satisfactory to the Agent. In addition, all
such insurance shall be payable to the Agent as loss payee under a
"standard" or "New York" loss payee clause for the benefit of the Banks and
the Agent. Without limiting the foregoing, the Borrower will (a) keep all
of its physical property insured with casualty or physical hazard insurance
on an "all risks" basis, with broad form flood and earthquake coverages and
electronic data processing coverage, with a full replacement cost
endorsement and an "agreed amount" clause in an amount equal to 100% of the
full replacement cost of such property, (b) maintain all such workers'
compensation or similar insurance as may be required by law and (c)
maintain, in amounts and with deductibles equal to those generally
maintained by businesses engaged in similar activities in similar
geographic areas, general public liability insurance against claims of
bodily injury, death or property damage occurring, on, in or about the
properties of the Borrower; business interruption insurance; and product
liability insurance.
<PAGE>
-6-
7.2. INSURANCE PROCEEDS. The proceeds of any casualty insurance
------------------
in respect of any casualty loss of any of the Collateral shall, subject to
the rights, if any, of other parties with a prior interest in the property
covered thereby, (a) so long as no Default or Event of Default has occurred
and is continuing, be disbursed to the Borrower for direct application by
the Borrower in accordance with (S)10.5.2 of the Credit Agreement and (b)
in all other circumstances, be held by the Agent as cash collateral for the
Obligations. The Agent may, at its sole option, disburse from time to time
all or any part of such proceeds so held as cash collateral, upon such
terms and conditions as the Agent may reasonably prescribe, for direct
application by the Borrower solely to the repair or replacement of the
Borrower's property so damaged or destroyed, or the Agent may apply all or
any part of such proceeds to the Obligations with the Total Commitment (if
not then terminated) being reduced by the amount so applied to the
Obligations.
7.3. NOTICE OF CANCELLATION, ETC. All policies of insurance shall
---------------------------
provide for at least thirty (30) days prior written cancellation notice to
the Agent. In the event of failure by the Borrower to provide and maintain
insurance as herein provided, the Agent may, at its option, provide such
insurance and charge the amount thereof to the Borrower. The Borrower shall
furnish the Agent with certificates of insurance and policies evidencing
compliance with the foregoing insurance provision.
8. MAINTENANCE OF COLLATERAL; COMPLIANCE WITH LAW. The Borrower will
----------------------------------------------
keep the Collateral in good order and repair and will not use the same in
violation of law or any policy of insurance thereon. The Agent, or its designee,
may inspect the Collateral at any reasonable time, wherever located. The
Borrower will pay promptly when due all taxes, assessments, governmental charges
and levies upon the Collateral or incurred in connection with the use or
operation of such Collateral or incurred in connection with this Agreement,
(other than such items contested in good faith and in accordance with (S)9.8 of
the Credit Agreement). The Borrower has at all times operated, and the Borrower
will continue to operate, its business in compliance with all applicable
provisions of the federal Fair Labor Standards Act, as amended, and with all
applicable provisions of federal, state and local statutes and ordinances
dealing with the control, shipment, storage or disposal of hazardous materials
or substances.
9. COLLATERAL PROTECTION EXPENSES; PRESERVATION OF COLLATERAL.
----------------------------------------------------------
9.1. EXPENSES INCURRED BY AGENT. In its discretion, the Agent
--------------------------
may discharge taxes (other than taxes contested in good faith and in
accordance with (S)9.8 of the Credit Agreement) and other encumbrances at
any time levied or placed on any of the Collateral, make repairs thereto
(after any Event of Default has occurred and is continuing or if the
Borrower's failure to make such repairs will result in an Event of Default)
and pay any necessary filing fees. The Borrower agrees to
<PAGE>
-7-
reimburse the Agent on demand for any and all expenditures so made. The
Agent shall have no obligation to the Borrower to make any such
expenditures, nor shall the making thereof relieve the Borrower of any
default.
9.2. AGENT'S OBLIGATIONS AND DUTIES. Anything herein to the contrary
------------------------------
notwithstanding, the Borrower shall remain liable under each contract or
agreement comprised in the Collateral to be observed or performed by the
Borrower thereunder. Neither the Agent nor any Bank shall have any
obligation or liability under any such contract or agreement by reason of
or arising out of this Agreement or the receipt by the Agent or any Bank of
any payment relating to any of the Collateral, nor shall the Agent or any
Bank be obligated in any manner to perform any of the obligations of the
Borrower under or pursuant to any such contract or agreement, to make
inquiry as to the nature or sufficiency of any payment received by the
Agent or any Bank in respect of the Collateral or as to the sufficiency of
any performance by any party under any such contract or agreement, to
present or file any claim, to take any action to enforce any performance or
to collect the payment of any amounts which may have been assigned to the
Agent or to which the Agent or any Bank may be entitled at any time or
times. The Agent's sole duty with respect to the custody, safe keeping and
physical preservation of the Collateral in its possession, under (S)9-207
of the Uniform Commercial Code of The Commonwealth of Massachusetts or
otherwise, shall be to deal with such Collateral in the same manner as the
Agent deals with similar property for its own account.
10. SECURITIES AND DEPOSITS. The Agent may at any time, at its option,
-----------------------
transfer to itself or any nominee any securities constituting Collateral,
receive any income thereon and hold such income as additional Collateral or
apply it to the Obligations. Whether or not any Obligations are due, the Agent
may demand, sue for, collect, or make any settlement or compromise which it
deems desirable with respect to the Collateral. Regardless of the adequacy of
Collateral or any other security for the Obligations, any deposits or other sums
at any time credited by or due from the Agent or any Bank to the Borrower may at
any time be applied to or set off against any of the Obligations.
11. NOTIFICATION TO ACCOUNT DEBTORS AND OTHER OBLIGORS. If a Default or an
--------------------------------------------------
Event of Default shall have occurred and be continuing, the Borrower shall, at
the request of the Agent, notify account debtors on accounts, chattel paper and
general intangibles of the Borrower and obligors on instruments for which the
Borrower is an obligee of the security interest of the Agent in any account,
chattel paper, general intangible or instrument and that payment thereof is to
be made directly to the Agent or to any financial institution designated by the
Agent as the Agent's agent therefor, and the Agent may itself, if a Default or
an Event of Default shall have occurred and be continuing, without notice to or
demand upon the Borrower, so notify account debtors and obligors. After the
making of such a request or the giving of any such notification, the Borrower
<PAGE>
-8-
shall hold any proceeds of collection of accounts, chattel paper, general
intangibles and instruments received by the Borrower as trustee for the Agent,
for the benefit of the Banks and the Agent, without commingling the same with
other funds of the Borrower and shall turn the same over to the Agent in the
identical form received, together with any necessary endorsements or
assignments. The Agent shall apply the proceeds of collection of accounts,
chattel paper, general intangibles and instruments received by the Agent to the
Obligations, such proceeds to be immediately entered after final payment in cash
or solvent credits of the items giving rise to them.
12. FURTHER ASSURANCES. The Borrower, at its own expense, shall do, make,
------------------
execute and deliver all such additional and further acts, things, deeds,
assurances and instruments as the Agent may reasonably require more completely
to vest in and assure to the Agent and the Banks their respective rights
hereunder or in any of the Collateral, including, without limitation, (a)
executing, delivering and, where appropriate, filing financing statements and
continuation statements under the Uniform Commercial Code, (b) obtaining
governmental and other third party consents and approvals, including without
limitation any consent of any licensor, lessor or other applicable party
referred to in (S)2.3, (c) obtaining waivers from mortgagees and landlords and
(d) taking all actions required by Sections 8-313 and 8-321 of the Uniform
Commercial Code (1990) or Sections 8-106 and 9-115 of the Uniform Commercial
Code (1994), as applicable in each relevant jurisdiction, with respect to
certificated and uncertificated securities.
13. POWER OF ATTORNEY.
-----------------
13.1. APPOINTMENT AND POWERS OF AGENT. The Borrower hereby
-------------------------------
irrevocably constitutes and appoints the Agent and any officer or agent
thereof, with full power of substitution, as its true and lawful attorneys-
in-fact with full irrevocable power and authority in the place and stead of
the Borrower or in the Agent's own name, for the purpose of carrying out
the terms of this Agreement, to take any and all appropriate action and to
execute any and all documents and instruments that may be necessary or
desirable to accomplish the purposes of this Agreement and, without
limiting the generality of the foregoing, hereby gives said attorneys the
power and right, on behalf of the Borrower, without notice to or assent by
the Borrower, to do the following:
(a) upon the occurrence and during the continuance of an
Event of Default, generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the
Collateral in such manner as is consistent with the Uniform
Commercial Code of The Commonwealth of Massachusetts and as fully
and completely as though the Agent were the absolute owner thereof
for all purposes, and to do at the Borrower' expense, at any time,
or from time to time, all acts and things which the Agent deems
necessary to protect, preserve or realize upon the Collateral
<PAGE>
-9-
and the Agent's security interest therein, in order to effect the
intent of this Agreement, all as fully and effectively as the
Borrower might do, including, without limitation, (i) the filing
and prosecuting of registration and transfer applications with the
appropriate federal or local agencies or authorities with respect
to trademarks, copyrights and patentable inventions and processes,
(ii) upon written notice to the Borrower, the exercise of voting
rights with respect to voting securities, which rights may be
exercised, if the Agent so elects, with a view to causing the
liquidation in a commercially reasonable manner of assets of the
issuer of any such securities and (iii) the execution, delivery and
recording, in connection with any sale or other disposition of any
Collateral, of the endorsements, assignments or other instruments
of conveyance or transfer with respect to such Collateral; and
(b) to file such financing statements with respect hereto,
with or without the Borrower's signature, or a photocopy of this
Agreement in substitution for a financing statement, as the Agent
may deem appropriate and to execute in the Borrower's name such
financing statements and amendments thereto and continuation
statements which may require the Borrower's signature.
13.2. RATIFICATION BY BORROWER. To the extent permitted by law,
------------------------
the Borrower hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power
coupled with an interest and shall be irrevocable.
13.3. NO DUTY ON AGENT. The powers conferred on the Agent
----------------
hereunder are solely to protect the interests of the Agent and the Banks in
the Collateral and shall not impose any duty upon the Agent to exercise any
such powers. The Agent shall be accountable only for the amounts that it
actually receives as a result of the exercise of such powers and neither it
nor any of its officers, directors, employees or agents shall be
responsible to the Borrower for any act or failure to act, except for the
Agent's own gross negligence or willful misconduct.
14. REMEDIES. If an Event of Default shall have occurred and be
--------
continuing, the Agent may, without notice to or demand upon the Borrower,
declare this Agreement to be in default, and the Agent shall thereafter have in
any jurisdiction in which enforcement hereof is sought, in addition to all other
rights and remedies, the rights and remedies of a secured party under the
Uniform Commercial Code, including, without limitation, the right to take
possession of the Collateral, and for that purpose the Agent may, so far as the
Borrower can give authority therefor, enter upon any premises on which the
Collateral may be situated and remove the same therefrom. The Agent may in its
discretion require the Borrower to assemble all or any part of the Collateral at
such location or locations within the state(s) of the Borrower's principal
office(s) or at such other locations as the Agent may designate. Unless the
<PAGE>
-10-
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market, the Agent shall give to the
Borrower at least five (5) Business Days prior written notice of the time and
place of any public sale of Collateral or of the time after which any private
sale or any other intended disposition is to be made. The Borrower hereby
acknowledges that five Business Days prior written notice of such sale or sales
shall be reasonable notice. In addition, the Borrower waives any and all rights
that it may have to a judicial hearing in advance of the enforcement of any of
the Agent's rights hereunder, including, without limitation, its right following
an Event of Default to take immediate possession of the Collateral and to
exercise its rights with respect thereto. To the extent that any of the
Obligations are to be paid or performed by a person other than the Borrower, the
Borrower waives and agrees not to assert any rights or privileges which it may
have under (S)9-112 of the Uniform Commercial Code of The Commonwealth of
Massachusetts.
15. NO WAIVER, ETC. The Borrower waives demand, notice, protest, notice of
---------------
acceptance of this Agreement, notice of loans made, credit extended, Collateral
received or delivered or other action taken in reliance hereon and all other
demands and notices of any description. With respect to both the Obligations and
the Collateral, the Borrower assents to any extension or postponement of the
time of payment or any other indulgence, to any substitution, exchange or
release of or failure to perfect any security interest in any Collateral, to the
addition or release of any party or person primarily or secondarily liable, to
the acceptance of partial payment thereon and the settlement, compromising or
adjusting of any thereof, all in such manner and at such time or times as the
Agent may deem advisable. The Agent shall have no duty as to the collection or
protection of the Collateral or any income thereon, nor as to the preservation
of rights against prior parties, nor as to the preservation of any rights
pertaining thereto beyond the safe custody thereof as set forth in (S)9.2. The
Agent shall not be deemed to have waived any of its rights upon or under the
Obligations or the Collateral unless such waiver shall be in writing and signed
by the Agent with the consent of the Majority Banks. No delay or omission on the
part of the Agent in exercising any right shall operate as a waiver of such
right or any other right. A waiver on any one occasion shall not be construed as
a bar to or waiver of any right on any future occasion. All rights and remedies
of the Agent with respect to the Obligations or the Collateral, whether
evidenced hereby or by any other instrument or papers, shall be cumulative and
may be exercised singularly, alternatively, successively or concurrently at such
time or at such times as the Agent deems expedient.
16. MARSHALLING. Neither the Agent nor any Bank shall be required to
-----------
marshal any present or future collateral security (including but not limited to
this Agreement and the Collateral) for, or other assurances of payment of, the
Obligations or any of them or to resort to such collateral security or other
assurances of payment in any particular order, and all of the rights of the
Agent hereunder and of the Agent or any Bank in respect of such collateral
security and other assurances of payment shall be cumulative and in addition to
all other
<PAGE>
-11-
rights, however existing or arising. To the extent that it lawfully may, the
Borrower hereby agrees that it will not invoke any law relating to the
marshalling of collateral which might cause delay in or impede the enforcement
of the Agent's rights under this Agreement or under any other instrument
creating or evidencing any of the Obligations or under which any of the
Obligations is outstanding or by which any of the Obligations is secured or
payment thereof is otherwise assured, and, to the extent that it lawfully may,
the Borrower hereby irrevocably waives the benefits of all such laws.
17. PROCEEDS OF DISPOSITIONS; EXPENSES. The Borrower shall pay to the Agent
----------------------------------
on demand any and all reasonable expenses, including reasonable attorneys' fees
and disbursements, incurred or paid by the Agent in protecting, preserving or
enforcing the Agent's rights under or in respect of any of the Obligations or
any of the Collateral. After deducting all of said expenses, the residue of any
proceeds of collection or sale of the Obligations or Collateral shall, to the
extent actually received in cash, be applied to the payment of the Obligations
in such order or preference as is provided in the Credit Agreement, proper
allowance and provision being made for any Obligations not then due. Upon the
final payment and satisfaction in full of all of the Obligations and after
making any payments required by Section 9-504(1)(c) of the Uniform Commercial
Code of The Commonwealth of Massachusetts, any excess shall be returned to the
Borrower, and the Borrower shall remain liable for any deficiency in the payment
of the Obligations.
18. OVERDUE AMOUNTS. Until paid, all amounts due and payable by the
---------------
Borrower hereunder shall be a debt secured by the Collateral and shall bear,
whether before or after judgment, interest at the rate of interest for overdue
principal set forth in the Credit Agreement.
19. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT IS INTENDED TO
--------------------------------------
TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. The Borrower
agrees that any suit for the enforcement of this Agreement may be brought in the
courts of The Commonwealth of Massachusetts or any federal court sitting therein
and consents to the non-exclusive jurisdiction of such court and to service of
process in any such suit being made upon the Borrower by mail at the address
specified in (S)20 of the Credit Agreement. The Borrower hereby waives any
objection that it may now or hereafter have to the venue of any such suit or any
such court or that such suit is brought in an inconvenient court.
20. WAIVER OF JURY TRIAL. THE COMPANY WAIVES ITS RIGHT TO A JURY TRIAL WITH
--------------------
RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH
THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF ANY
SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, the Borrower waives any
right which it may have to claim or recover in any litigation referred to in the
preceding sentence any special, exemplary, punitive or consequential
<PAGE>
-12-
damages or any damages other than, or in addition to, actual damages. The
Borrower (a) certifies that neither the Agent or any Bank nor any
representative, agent or attorney of the Agent or any Bank has represented,
expressly or otherwise, that the Agent or any Bank would not, in the event of
litigation, seek to enforce the foregoing waivers and (b) acknowledges that, in
entering into the Credit Agreement and the other Loan Documents to which the
Agent or any Bank is a party, the Agent and the Banks are relying upon, among
other things, the waivers and certifications contained in this (S)20.
21. MISCELLANEOUS. The headings of each section of this Agreement are for
-------------
convenience only and shall not define or limit the provisions thereof. This
Agreement and all rights and obligations hereunder shall be binding upon the
Borrower and its respective successors and assigns, and shall inure to the
benefit of the Agent, the Banks and their respective successors and assigns. If
any term of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be
affected thereby, and this Agreement shall be construed and be enforceable as if
such invalid, illegal or unenforceable term had not been included herein. The
Borrower acknowledges receipt of a copy of this Agreement.
<PAGE>
IN WITNESS WHEREOF, intending to be legally bound, the Borrower has caused
this Security Agreement to be duly executed as of the date first above written.
JACKSON PRODUCTS, INC.
By: _______________________________
Title:
Accepted:
BANKBOSTON, N.A.,
as Agent
By: ___________________________________
Peter van der Horst, Vice President
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF ___________________)
) ss.
COUNTY OF __________________________________)
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this ___ day of ________, 1998, personally appeared ___________ to
me known personally, and who, being by me duly sworn, deposes and says that he
is the ___________ of JACKSON PRODUCTS, INC., and that said instrument was
signed and sealed on behalf of said corporation by authority of its Board of
Directors, and said ___________ acknowledged said instrument to be the free act
and deed of said corporation.
______________________________
Notary Public
My commission expires:
<PAGE>
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF ___________________)
) ss.
COUNTY OF __________________________________)
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this ___ day of ________, 1998, personally appeared Peter van der
Horst to me known personally, and who, being by me duly sworn, deposes and says
that he is the Vice President of BANKBOSTON, N.A., and that said instrument was
signed and sealed on behalf of said corporation by authority of its Board of
Directors, and said Peter van der Horst acknowledged said instrument to be the
free act and deed of said corporation.
______________________________
Notary Public
My commission expires:
<PAGE>
EXHIBIT E-2
-----------
FORM OF SECURITY AGREEMENT
--------------------------
(SUBSIDIARIES)
--------------
SECURITY AGREEMENT, dated as of April 22, 1998, among FLEX-O-LITE, INC., a
Delaware corporation ("Flex"), OSD ENVIZION, INC., a Delaware corporation
("OSD"), CRYSTALOID TECHNOLOGIES, INC., a Delaware corporation ("Crystaloid"),
JACKSON ACQUISITION, INC., a Delaware corporation ("JAI"), AMERICAN ALLSAFE
COMPANY, a Texas corporation ("Allsafe"), SILENCIO/SAFETY DIRECT, INC., a Nevada
corporation ("Silencio"), and together with Flex, OSD, Crystaloid, JAI and
Allsafe, the "Subsidiaries") and BANKBOSTON, N.A., a national banking
association, as agent (hereinafter, in such capacity, the "Agent") for itself
and the other lending institutions (hereinafter, collectively, the "Banks")
which are or may become parties to the Credit Agreement (as hereinafter
defined).
WHEREAS, Jackson Products, Inc., a Delaware corporation (the "Borrower"),
has entered into a Revolving Credit and Acquisition Loan Agreement, dated as of
April 22, 1998 (as amended and in effect from time to time, the "Credit
Agreement"), with the Banks, the Agent and Mercantile Bank National Association,
as Co-Agent, pursuant to which the Banks, subject to the terms and conditions
contained therein, provide certain financial accommodations to the Borrower; and
WHEREAS, the Subsidiaries are expected to receive substantial direct and
indirect benefits from the making of Loans and other extensions of credit to the
Borrower by the Banks pursuant to the Credit Agreement (which benefits are
hereby acknowledged); and
WHEREAS, the Subsidiaries have executed and delivered to the Agent, for the
benefit of the Banks and the Agent, a Guaranty dated as of the date hereof (as
amended and in effect from time to time, the "Guaranty"), pursuant to which the
Subsidiaries guaranteed to the Agent and the Banks the payment and performance
of the Borrower's obligations to the Banks and the Agent under or in respect of
the Credit Agreement; and
WHEREAS, it is a condition to the further effectiveness of the Credit
Agreement that the Subsidiaries execute and deliver to the Agent, for the
benefit of the Banks and the Agent, a security agreement in substantially the
form hereof;
<PAGE>
-2-
NOW, THEREFORE, in consideration of the promises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. All capitalized terms used herein without definitions shall
-----------
have the respective meanings provided therefor in the Credit Agreement. All
terms defined in the Uniform Commercial Code of The Commonwealth of
Massachusetts and used herein shall have the same definitions herein as
specified therein.
2. GRANT OF SECURITY INTEREST.
--------------------------
2.1. COLLATERAL GRANTED. Each of the Subsidiaries hereby grants to the
------------------
Agent, for the benefit of the Banks and the Agent, to secure the payment
and performance in full of all of the Obligations (as defined in the Credit
Agreement), including all of the Subsidiaries' Obligations under the
Guaranty (collectively, the "Obligations"), a security interest in and so
pledges and assigns to the Agent, for the benefit of the Banks and the
Agent, the following properties, assets and rights of the Subsidiaries,
wherever located, whether now owned or hereafter acquired or arising, and
all proceeds and products thereof (all of the same being hereinafter called
the "Collateral"):
All personal and fixture property of every kind and nature
including without limitation all furniture, fixtures, all equipment
and accessions, raw materials, inventory and all other capital assets,
other goods, accounts, contract rights, rights to the payment of
money, insurance refund claims and all other insurance claims and
proceeds, tort claims, chattel paper, documents, instruments,
securities and other investment property (as such term is defined in
the Uniform Commercial Code), deposit accounts and all general
intangibles including, without limitation, all tax refund claims,
license fees, patents, patent applications, trademarks, trademark
applications, trade names, copyrights, copyright applications, rights
to sue and recover for past infringement of patents, trademarks and
copyrights, computer programs, computer software, engineering
drawings, service marks, customer lists, goodwill, and all licenses,
permits, agreements of any kind or nature pursuant to which such
Subsidiary possesses, uses or has authority to possess or use property
(whether tangible or intangible) of others or others possess, use or
have authority to possess or use property (whether tangible or
intangible) of such Subsidiary, and all recorded data of any kind or
nature, regardless of the medium of recording including, without
limitation, all software, writings, plans, specifications and
schematics.
<PAGE>
-3-
2.2. DELIVERY OF INSTRUMENTS, ETC.
----------------------------
(a) Pursuant to the terms hereof, each of the Subsidiaries has
endorsed, assigned and delivered to the Agent all negotiable or non-
negotiable instruments, certificated securities and chattel paper
pledged by it hereunder, together with instruments of transfer or
assignment duly executed in blank as the Agent may have specified. In
the event that any Subsidiary shall, after the date of this Agreement,
acquire any other negotiable or non-negotiable instruments,
certificated securities or chattel paper to be pledged by it
hereunder, such Subsidiary shall forthwith endorse, assign and deliver
the same to the Agent, accompanied by such instruments of transfer or
assignment duly executed in blank as the Agent may from time to time
specify.
(b) To the extent that any securities now or hereafter acquired
by any Subsidiary are uncertificated and are issued to such Subsidiary
or its nominee directly by the issuer thereof, such Subsidiary shall
cause the issuer to note on its books the security interest of the
Agent in such securities and shall cause the issuer, pursuant to an
agreement in form and substance satisfactory to the Agent, to agree to
comply with instructions from the Agent as to such securities, without
further consent of such Subsidiary or such nominee. To the extent that
any securities, whether certificated or uncertificated, or other
financial assets now or hereafter acquired by any Subsidiary are held
by such Subsidiary or its nominee through a securities intermediary,
such Subsidiary shall use reasonable efforts to (i) cause such
securities intermediary to note on its books the security interest of
the Agent in such securities or other financial assets and to confirm
such notation promptly to the Agent and (ii), at the request of the
Agent, cause such securities intermediary, pursuant to an agreement in
form and substance satisfactory to the Agent, to agree to comply with
entitlement orders or other instructions from the Agent as to such
securities or other financial assets, without further consent of such
Subsidiary or such nominee. The Agent agrees with each of the
Subsidiaries that the Agent shall not give any such entitlement orders
or instructions to any such issuer or securities intermediary unless
an Event of Default has occurred and is continuing and the Agent has
elected to exercise its rights and remedies as contemplated by (S)14.
(c) To the extent that any Subsidiary is a beneficiary under
any written letter of credit now or hereafter issued in favor of such
Subsidiary, such Subsidiary shall deliver such letter of credit to the
Agent. The Agent shall from time to time, at the request and expense
of such Subsidiary, make such arrangements with such Subsidiary as are
in the Agent's reasonable judgment necessary
<PAGE>
-4-
and appropriate so that such Subsidiary may make any drawing to which
such Subsidiary is entitled under such letter of credit, without
impairment of the Agent's perfected security interest in such
Subsidiary's rights to proceeds of such letter of credit or in the
actual proceeds of such drawing. At the Agent's request, such
Subsidiary shall, for any letter of credit, whether or not written,
now or hereafter issued in favor of such Subsidiary as beneficiary,
execute and deliver to the issuer and any confirmer of such letter of
credit an assignment of proceeds form, in favor of the Agent and
satisfactory to the Agent and such issuer or (as the case may be) such
confirmer, requiring the proceeds of any drawing under such letter of
credit to be paid directly to the Agent for application as provided in
the Credit Agreement.
2.3. EXCLUDED COLLATERAL. Notwithstanding the foregoing provisions of
-------------------
this (S)2, such grant of security interest shall not extend to, and the
term "Collateral" shall not include, any chattel paper and general
intangibles which are now or hereafter held by any of the Subsidiaries as
licensee, lessee or otherwise, to the extent that (a) such chattel paper
and general intangibles are not assignable or capable of being encumbered
as a matter of law or under the terms of the license, lease or other
agreement applicable thereto (but solely to the extent that any such
restriction shall be enforceable under applicable law), without the consent
of the licensor or lessor thereof or other applicable party thereto and (b)
such consent has not been obtained; provided, however, that the foregoing
-------- -------
grant of security interest shall extend to, and the term "Collateral" shall
include, (i) any and all proceeds of such chattel paper and general
intangibles to the extent that the assignment or encumbering of such
proceeds is not so restricted and (ii) upon any such licensor, lessor or
other applicable party consent with respect to any such otherwise excluded
chattel paper or general intangibles being obtained, thereafter such
chattel paper or general intangibles as well as any and all proceeds
thereof that might have theretofore have been excluded from such grant of a
security interest and the term "Collateral".
2.4. STOCK PLEDGE AGREEMENT. Concurrently herewith each of the
----------------------
Subsidiaries is executing and delivering to the Agent, for the benefit of
the Banks and the Agent, a Stock Pledge Agreement pursuant to which such
Subsidiary is pledging to the Agent, for the benefit of the Banks and the
Agent, (a) 100% of shares of the capital stock of each of its Domestic
Subsidiaries and (b) not less than 66% of the shares of capital stock of
each of its Foreign Subsidiaries. Such pledge shall be governed by the
terms of such stock pledge agreement and not by the terms of this
Agreement.
2.5. PATENT AND TRADEMARK ASSIGNMENTS. Concurrently herewith each of
--------------------------------
the Subsidiaries is also executing and delivering to the Agent, for the
benefit of the Banks and the Agent, the Patent Assignment
<PAGE>
-5-
and the Trademark Assignment pursuant to which the Borrower is assigning to
the Agent, for the benefit of the Banks and the Agent, certain Collateral
consisting of patents and patent rights and trademarks, service marks and
trademark and service mark rights, together with the goodwill appurtenant
thereto. The provisions of the Patent Assignment and the Trademark
Assignment are supplemental to the provisions of this Agreement, and
nothing contained in the Patent Assignment or the Trademark Assignment
shall derogate from any of the rights or remedies of the Agent or any of
the Banks hereunder. Nor shall anything contained in the Patent Assignment
or the Trademark Assignment be deemed to prevent or extend the time of
attachment or perfection of any security interest in such Collateral
created hereby.
3. TITLE TO COLLATERAL, ETC. Each of the Subsidiaries is the owner of the
-------------------------
Collateral free from any adverse lien, security interest or other encumbrance,
except for the security interest created by this Agreement and other liens
permitted by the Credit Agreement. None of the Collateral constitutes, or is the
proceeds of, "farm products" as defined in (S)9-109(3) of the Uniform Commercial
Code of The Commonwealth of Massachusetts. None of the account debtors in
respect of any accounts, chattel paper or general intangibles and none of the
obligors in respect of any instruments included in the Collateral is a
governmental authority subject to the Federal Assignment of Claims Act.
4. CONTINUOUS PERFECTION. Each Subsidiary's place of business or, if more
---------------------
than one, chief executive office is indicated on the Perfection Certificate
delivered to the Agent by each Subsidiary herewith (collectively, the
"Perfection Certificates"). None of the Subsidiaries will change the same, or
the name, identity or corporate structure of such Subsidiary in any manner,
without providing at least thirty (30) days prior written notice to the Agent.
The Collateral, to the extent not delivered to the Agent pursuant to (S)2.2,
will be kept at those locations listed on the Perfection Certificate and none of
the Subsidiaries will remove the Collateral from such locations, without
providing at least thirty (30) days prior written notice to the Agent.
5. NO LIENS. Except for the security interest herein granted and liens
--------
permitted by the Credit Agreement, each of the Subsidiaries shall be the owner
of its respective Collateral free from any lien, security interest or other
encumbrance, and such Subsidiary shall defend the same against all claims and
demands of all persons at any time claiming the same or any interests therein
adverse to the Agent or any of the Banks. No Subsidiary shall pledge, mortgage
or create, or suffer to exist a security interest in the Collateral in favor of
any person other than the Agent, for the benefit of the Banks and the Agent,
except for liens permitted by the Credit Agreement.
6. NO TRANSFERS. No Subsidiary will sell or offer to sell or otherwise
------------
transfer the Collateral or any interest therein except as permitted by (S)10.5.2
of the Credit Agreement.
<PAGE>
-6-
7. INSURANCE.
---------
7.1. MAINTENANCE OF INSURANCE. Each of the Subsidiaries will maintain
------------------------
with financially sound and reputable insurers insurance with respect to its
properties and business against such casualties and contingencies as shall
be in accordance with general practices of businesses engaged in similar
activities in similar geographic areas. Such insurance shall be in such
minimum amounts that such Subsidiary will not be deemed a co-insurer under
applicable insurance laws, regulations and policies and otherwise shall be
in such amounts, contain such terms, be in such forms and be for such
periods as may be reasonably satisfactory to the Agent. In addition, all
such insurance shall be payable to the Agent as loss payee under a
"standard" or "New York" loss payee clause for the benefit of the Banks and
the Agent. Without limiting the foregoing, such Subsidiary will (a) keep
all of its physical property insured with casualty or physical hazard
insurance on an "all risks" basis, with broad form flood and earthquake
coverages and electronic data processing coverage, with a full replacement
cost endorsement and an "agreed amount" clause in an amount equal to 100%
of the full replacement cost of such property, (b) maintain all such
workers' compensation or similar insurance as may be required by law and
(c) maintain, in amounts and with deductibles equal to those generally
maintained by businesses engaged in similar activities in similar
geographic areas, general public liability insurance against claims of
bodily injury, death or property damage occurring, on, in or about the
properties of such Subsidiary; business interruption insurance; and product
liability insurance.
7.2. INSURANCE PROCEEDS. The proceeds of any casualty insurance in
------------------
respect of any casualty loss of any of the Collateral shall, subject to the
rights, if any, of other parties with a prior interest in the property
covered thereby, (a) so long as no Event of Default has occurred and is
continuing, be disbursed to the appropriate Subsidiary for direct
application by such Subsidiary in accordance with (S)10.5.2 of the Credit
Agreement and (b) in all other circumstances, be held by the Agent as cash
collateral for the Obligations. The Agent may, at its sole option, disburse
from time to time all or any part of such proceeds so held as cash
collateral, upon such terms and conditions as the Agent may reasonably
prescribe, for direct application by such Subsidiary solely to the repair
or replacement of such Subsidiary's property so damaged or destroyed, or
the Agent may apply all or any part of such proceeds to the Obligations
with the Total Commitment (if not then terminated) being reduced by the
amount so applied to the Obligations.
7.3. NOTICE OF CANCELLATION, ETC. All policies of insurance shall
----------------------------
provide for at least thirty (30) days prior written cancellation notice to
the Agent. In the event of failure by any of the Subsidiaries to provide
and maintain insurance as herein provided, the Agent may, at its option,
<PAGE>
-7-
provide such insurance and charge the amount thereof to such Subsidiary.
Each of the Subsidiaries shall furnish the Agent with certificates of
insurance and policies evidencing compliance with the foregoing insurance
provision.
8. MAINTENANCE OF COLLATERAL; COMPLIANCE WITH LAW. Each of the Subsidiaries
----------------------------------------------
will keep the Collateral in good order and repair and will not use the same in
violation of law or any policy of insurance thereon. The Agent, or its designee,
may inspect the Collateral at any reasonable time, wherever located. Each of the
Subsidiaries will pay promptly when due all taxes, assessments, governmental
charges and levies upon the Collateral or incurred in connection with the use or
operation of such Collateral or incurred in connection with this Agreement,
(other than such items contested in good faith in accordance with (S)9.8 of the
Credit Agreement). Each of the Subsidiaries has at all times operated, and such
Subsidiary will continue to operate, its business in compliance with all
applicable provisions of the federal Fair Labor Standards Act, as amended, and
with all applicable provisions of federal, state and local statutes and
ordinances dealing with the control, shipment, storage or disposal of hazardous
materials or substances.
9. COLLATERAL PROTECTION EXPENSES; PRESERVATION OF COLLATERAL.
----------------------------------------------------------
9.1. EXPENSES INCURRED BY AGENT. In its discretion, the Agent may
--------------------------
discharge taxes and other encumbrances at any time levied or placed on any
of the Collateral (other than any taxes or encumbrances contested in good
faith and in accordance with (S)9.8 of the Credit Agreement), make repairs
thereto (after any Event of Default has occurred and is continuing or if
the Borrower's failure to make such repairs will result in an Event of
Default) and pay any necessary filing fees. Each of the Subsidiaries agrees
to reimburse the Agent on demand for any and all expenditures so made. The
Agent shall have no obligation to any Subsidiary to make any such
expenditures, nor shall the making thereof relieve any Subsidiary of any
default.
9.2. AGENT'S OBLIGATIONS AND DUTIES. Anything herein to the contrary
------------------------------
notwithstanding, each of the Subsidiaries shall remain liable under each
contract or agreement comprised in the Collateral to be observed or
performed by such Subsidiary thereunder. Neither the Agent nor any Bank
shall have any obligation or liability under any such contract or agreement
by reason of or arising out of this Agreement or the receipt by the Agent
or any Bank of any payment relating to any of the Collateral, nor shall the
Agent or any Bank be obligated in any manner to perform any of the
obligations of any Subsidiary under or pursuant to any such contract or
agreement, to make inquiry as to the nature or sufficiency of any payment
received by the Agent or any Bank in respect of the Collateral or as to the
sufficiency of any performance by any party under any such contract or
agreement, to present or file any claim, to take any action to enforce any
performance or to collect the payment of
<PAGE>
-8-
any amounts which may have been assigned to the Agent or to which the Agent
or any Bank may be entitled at any time or times. The Agent's sole duty
with respect to the custody, safe keeping and physical preservation of the
Collateral in its possession, under (S)9-207 of the Uniform Commercial Code
of The Commonwealth of Massachusetts or otherwise, shall be to deal with
such Collateral in the same manner as the Agent deals with similar property
for its own account.
10. SECURITIES AND DEPOSITS. The Agent may at any time, at its option,
-----------------------
transfer to itself or any nominee any securities constituting Collateral,
receive any income thereon and hold such income as additional Collateral or
apply it to the Obligations. Whether or not any Obligations are due, the Agent
may demand, sue for, collect, or make any settlement or compromise which it
deems desirable with respect to the Collateral. Regardless of the adequacy of
Collateral or any other security for the Obligations, any deposits or other sums
at any time credited by or due from the Agent or any Bank to any of the
Subsidiaries may at any time be applied to or set off against any of the
Obligations.
11. NOTIFICATION TO ACCOUNT DEBTORS AND OTHER OBLIGORS. If a Default or an
--------------------------------------------------
Event of Default shall have occurred and be continuing, each of the Subsidiaries
shall, at the request of the Agent, notify account debtors on accounts, chattel
paper and general intangibles of such Subsidiary and obligors on instruments for
which such Subsidiary is an obligee of the security interest of the Agent in any
account, chattel paper, general intangible or instrument and that payment
thereof is to be made directly to the Agent or to any financial institution
designated by the Agent as the Agent's agent therefor, and the Agent may itself,
if a Default or an Event of Default shall have occurred and be continuing,
without notice to or demand upon any of the Subsidiaries, so notify account
debtors and obligors. After the making of such a request or the giving of any
such notification, each of the Subsidiaries shall hold any proceeds of
collection of accounts, chattel paper, general intangibles and instruments
received by such Subsidiary as trustee for the Agent, for the benefit of the
Banks and the Agent, without commingling the same with other funds of such
Subsidiary and shall turn the same over to the Agent in the identical form
received, together with any necessary endorsements or assignments. The Agent
shall apply the proceeds of collection of accounts, chattel paper, general
intangibles and instruments received by the Agent to the Obligations, such
proceeds to be immediately entered after final payment in cash or solvent
credits of the items giving rise to them.
12. FURTHER ASSURANCES. Each of the Subsidiaries, at its own expense,
------------------
shall do, make, execute and deliver all such additional and further acts,
things, deeds, assurances and instruments as the Agent may reasonably require
more completely to vest in and assure to the Agent and the Banks their
respective rights hereunder or in any of the Collateral, including, without
limitation, (a) executing, delivering and, where appropriate, filing financing
statements and continuation statements under the Uniform Commercial Code, (b)
obtaining
<PAGE>
-9-
governmental and other third party consents and approvals, including without
limitation any consent of any licensor, lessor or other applicable party
referred to in (S)2.3, (c) obtaining waivers from mortgagees and landlords and
(d) taking all actions required by Sections 8-313 and 8-321 of the Uniform
Commercial Code, as applicable in each relevant jurisdiction, with respect to
certificated and uncertificated securities.
13. POWER OF ATTORNEY.
-----------------
13.1. APPOINTMENT AND POWERS OF AGENT. Each of the Subsidiaries
-------------------------------
hereby irrevocably constitutes and appoints the Agent and any officer or
agent thereof, with full power of substitution, as its true and lawful
attorneys-in-fact with full irrevocable power and authority in the place
and stead of such Subsidiary or in the Agent's own name, for the purpose of
carrying out the terms of this Agreement, to take any and all appropriate
action and to execute any and all documents and instruments that may be
necessary or desirable to accomplish the purposes of this Agreement and,
without limiting the generality of the foregoing, hereby gives said
attorneys the power and right, on behalf of such Subsidiary, without notice
to or assent by such Subsidiary, to do the following:
(a) upon the occurrence and during the continuance of an Event
of Default, generally to sell, transfer, pledge, make any agreement
with respect to or otherwise deal with any of the Collateral in such
manner as is consistent with the Uniform Commercial Code of The
Commonwealth of Massachusetts and as fully and completely as though
the Agent were the absolute owner thereof for all purposes, and to do
at such Subsidiary's expense, at any time, or from time to time, all
acts and things which the Agent deems necessary to protect, preserve
or realize upon the Collateral and the Agent's security interest
therein, in order to effect the intent of this Agreement, all as fully
and effectively as such Subsidiary might do, including, without
limitation, (i) the filing and prosecuting of registration and
transfer applications with the appropriate federal or local agencies
or authorities with respect to trademarks, copyrights and patentable
inventions and processes, (ii) upon written notice to such Subsidiary,
the exercise of voting rights with respect to voting securities, which
rights may be exercised, if the Agent so elects, with a view to
causing the liquidation in a commercially reasonable manner of assets
of the issuer of any such securities and (iii) the execution, delivery
and recording, in connection with any sale or other disposition of any
Collateral, of the endorsements, assignments or other instruments of
conveyance or transfer with respect to such Collateral; and
(b) to file such financing statements with respect hereto, with
or without such Subsidiary's signature, or a photocopy of this
<PAGE>
-10-
Agreement in substitution for a financing statement, as the Agent may
deem appropriate and to execute in such Subsidiary's name such
financing statements and amendments thereto and continuation
statements which may require such Subsidiary's signature.
13.2. RATIFICATION BY SUBSIDIARIES. To the extent permitted by law,
----------------------------
each of the Subsidiaries hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. This power of attorney is
a power coupled with an interest and shall be irrevocable.
13.3. NO DUTY ON AGENT. The powers conferred on the Agent hereunder
----------------
are solely to protect the interests of the Agent and the Banks in the
Collateral and shall not impose any duty upon the Agent to exercise any
such powers. The Agent shall be accountable only for the amounts that it
actually receives as a result of the exercise of such powers and neither it
nor any of its officers, directors, employees or agents shall be
responsible to any of the Subsidiaries for any act or failure to act,
except for the Agent's own gross negligence or willful misconduct.
14. REMEDIES. If an Event of Default shall have occurred and be continuing,
--------
the Agent may, without notice to or demand upon any of the Subsidiaries, declare
this Agreement to be in default, and the Agent shall thereafter have in any
jurisdiction in which enforcement hereof is sought, in addition to all other
rights and remedies, the rights and remedies of a secured party under the
Uniform Commercial Code, including, without limitation, the right to take
possession of the Collateral, and for that purpose the Agent may, so far as each
of the Subsidiaries can give authority therefor, enter upon any premises on
which the Collateral may be situated and remove the same therefrom. The Agent
may in its discretion require any of the Subsidiaries to assemble all or any
part of the Collateral at such location or locations within the state(s) of such
Subsidiary's principal office(s) or at such other locations as the Agent may
designate. Unless the Collateral is perishable or threatens to decline speedily
in value or is of a type customarily sold on a recognized market, the Agent
shall give to such Subsidiary at least five (5) Business Days prior written
notice of the time and place of any public sale of Collateral or of the time
after which any private sale or any other intended disposition is to be made.
Each of the Subsidiaries hereby acknowledges that five (5) Business Days prior
written notice of such sale or sales shall be reasonable notice. In addition,
each of the Subsidiaries waives any and all rights that it may have to a
judicial hearing in advance of the enforcement of any of the Agent's rights
hereunder, including, without limitation, its right following an Event of
Default to take immediate possession of the Collateral and to exercise its
rights with respect thereto. To the extent that any of the Obligations are to be
paid or performed by a person other than a Subsidiary, each of the Subsidiaries
waives and agrees not to assert any rights or privileges which it may have under
(S)9-112 of the Uniform Commercial Code of The Commonwealth of Massachusetts.
<PAGE>
-11-
15. NO WAIVER, ETC. Each of the Subsidiaries waives demand, notice,
---------------
protest, notice of acceptance of this Agreement, notice of loans made, credit
extended, Collateral received or delivered or other action taken in reliance
hereon and all other demands and notices of any description. With respect to
both the Obligations and the Collateral, each of the Subsidiaries assents to any
extension or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of or failure to perfect any security interest
in any Collateral, to the addition or release of any party or person primarily
or secondarily liable, to the acceptance of partial payment thereon and the
settlement, compromising or adjusting of any thereof, all in such manner and at
such time or times as the Agent may deem advisable. The Agent shall have no duty
as to the collection or protection of the Collateral or any income thereon, nor
as to the preservation of rights against prior parties, nor as to the
preservation of any rights pertaining thereto beyond the safe custody thereof as
set forth in (S)9.2. The Agent shall not be deemed to have waived any of its
rights upon or under the Obligations or the Collateral unless such waiver shall
be in writing and signed by the Agent with the consent of the Majority Banks. No
delay or omission on the part of the Agent in exercising any right shall operate
as a waiver of such right or any other right. A waiver on any one occasion shall
not be construed as a bar to or waiver of any right on any future occasion. All
rights and remedies of the Agent with respect to the Obligations or the
Collateral, whether evidenced hereby or by any other instrument or papers, shall
be cumulative and may be exercised singularly, alternatively, successively or
concurrently at such time or at such times as the Agent deems expedient.
16. MARSHALLING. Neither the Agent nor any Bank shall be required to
-----------
marshal any present or future collateral security (including but not limited to
this Agreement and the Collateral) for, or other assurances of payment of, the
Obligations or any of them or to resort to such collateral security or other
assurances of payment in any particular order, and all of the rights of the
Agent hereunder and of the Agent or any Bank in respect of such collateral
security and other assurances of payment shall be cumulative and in addition to
all other rights, however existing or arising. To the extent that it lawfully
may, each of the Subsidiaries hereby agrees that it will not invoke any law
relating to the marshalling of collateral which might cause delay in or impede
the enforcement of the Agent's rights under this Agreement or under any other
instrument creating or evidencing any of the Obligations or under which any of
the Obligations is outstanding or by which any of the Obligations is secured or
payment thereof is otherwise assured, and, to the extent that it lawfully may,
each of the Subsidiaries hereby irrevocably waives the benefits of all such
laws.
17. PROCEEDS OF DISPOSITIONS; EXPENSES. Each of the Subsidiaries shall pay
----------------------------------
to the Agent on demand any and all reasonable expenses, including reasonable
attorneys' fees and disbursements, incurred or paid by the Agent in protecting,
preserving or enforcing the Agent's rights under or in respect of any of the
Obligations or any of the Collateral. After deducting all of said expenses, the
residue of any proceeds of collection or sale of the Obligations or Collateral
shall, to the extent actually received in cash, be applied to the payment of the
<PAGE>
-12-
Obligations in such order or preference as is provided in the Credit Agreement,
proper allowance and provision being made for any Obligations not then due. Upon
the final payment and satisfaction in full of all of the Obligations and after
making any payments required by Section 9-504(1)(c) of the Uniform Commercial
Code of The Commonwealth of Massachusetts, any excess shall be returned to the
appropriate Subsidiary. Such Subsidiary shall remain liable for any deficiency
in the payment of the Obligations after all proceeds of Collateral have been
applied.
18. OVERDUE AMOUNTS. Until paid, all amounts due and payable by each of
---------------
the Subsidiaries hereunder shall be a debt secured by the Collateral and shall
bear, whether before or after judgment, interest at the rate of interest for
overdue principal set forth in the Credit Agreement.
19. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT IS INTENDED TO
--------------------------------------
TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. Each of the
Subsidiaries agrees that any suit for the enforcement of this Agreement may be
brought in the courts of The Commonwealth of Massachusetts or any federal court
sitting therein and consents to the non-exclusive jurisdiction of such court and
to service of process in any such suit being made upon such Subsidiary by mail
at the address set forth below its signature hereto or at such other address as
such Subsidiary may designate in writing to the Agent. Each of the Subsidiaries
hereby waives any objection that it may now or hereafter have to the venue of
any such suit or any such court or that such suit is brought in an inconvenient
court.
20. WAIVER OF JURY TRIAL. EACH OF THE SUBSIDIARIES WAIVES ITS RIGHT TO A
--------------------
JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE
PERFORMANCE OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, each
of the Subsidiaries waives any right which it may have to claim or recover in
any litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. Each of the Subsidiaries (a) certifies that neither the Agent or
any Bank nor any representative, agent or attorney of the Agent or any Bank has
represented, expressly or otherwise, that the Agent or any Bank would not, in
the event of litigation, seek to enforce the foregoing waivers and (b)
acknowledges that, in entering into the Credit Agreement and the other Loan
Documents to which the Agent or any Bank is a party, the Agent and the Banks are
relying upon, among other things, the waivers and certifications contained in
this (S)20.
21. MISCELLANEOUS. The headings of each section of this Agreement are for
-------------
convenience only and shall not define or limit the provisions thereof. This
Agreement and all rights and obligations hereunder shall be binding upon each
<PAGE>
-13-
of the Subsidiaries and its respective successors and assigns, and shall inure
to the benefit of the Agent, the Banks and their respective successors and
assigns. If any term of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be
affected thereby, and this Agreement shall be construed and be enforceable as if
such invalid, illegal or unenforceable term had not been included herein. Each
of the Subsidiaries acknowledges receipt of a copy of this Agreement.
<PAGE>
IN WITNESS WHEREOF, intending to be legally bound, each of the Subsidiaries
has caused this Agreement to be duly executed as of the date first above
written.
FLEX-O-LITE, INC.
By: ________________________________
Name:
Title:
Address:
____________________________________
____________________________________
OSD ENVIZION, INC.
By: ________________________________
Name:
Title:
Address:
____________________________________
____________________________________
CRYSTALOID TECHNOLOGIES, INC.
By: ________________________________
Name:
Title:
Address:
____________________________________
____________________________________
<PAGE>
JACKSON ACQUISITION, INC.
By: ________________________________
Name:
Title:
Address:
____________________________________
____________________________________
AMERICAN ALLSAFE COMPANY
By: ________________________________
Name:
Title:
Address:
____________________________________
____________________________________
<PAGE>
SILENCIO/SAFETY DIRECT, INC.
By: ________________________________
Name:
Title:
Address:
____________________________________
____________________________________
ACCEPTED:
BANKBOSTON, N.A.,
As Agent
By:_________________________
Peter van der Horst,
Vice President
<PAGE>
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF _______________ )
) ss.
COUNTY OF ______________________________ )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this __ day of April, 1998, personally appeared _______________ to
me known personally, and who, being by me duly sworn, deposes and says that he
is the __________ of Flex-O-Lite, Inc., and that said instrument was signed and
sealed on behalf of said corporation by authority of its Board of Directors, and
said __________ acknowledged said instrument to be the free act and deed of said
corporation.
______________________________
Notary Public
My commission expires:
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF _______________ )
) ss.
COUNTY OF ______________________________ )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this __ day of April, 1998, personally appeared __________ to me
known personally, and who, being by me duly sworn, deposes and says that he is
the __________ of OSD Envizion, Inc., and that said instrument was signed and
sealed on behalf of said corporation by authority of its Board of Directors, and
said __________ acknowledged said instrument to be the free act and deed of said
corporation.
______________________________
Notary Public
My commission expires:
<PAGE>
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF________________ )
) ss.
COUNTY OF ______________________________ )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this __ day of April, 1998, personally appeared __________ to me
known personally, and who, being by me duly sworn, deposes and says that he is
the __________ of Crystaloid Technologies, Inc., and that said instrument was
signed and sealed on behalf of said corporation by authority of its Board of
Directors, and said __________ acknowledged said instrument to be the free act
and deed of said corporation.
______________________________
Notary Public
My commission expires:
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF _______________ )
) ss.
COUNTY OF ______________________________ )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this __ day of April, 1998, personally appeared __________ to me
known personally, and who, being by me duly sworn, deposes and says that he is
the __________ of Jackson Acquisition, Inc., and that said instrument was signed
and sealed on behalf of said corporation by authority of its Board of Directors,
and said __________ acknowledged said instrument to be the free act and deed of
said corporation.
______________________________
Notary Public
My commission expires:
<PAGE>
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF _______________ )
) ss.
COUNTY OF ______________________________ )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this __ day of April, 1998, personally appeared __________ to me
known personally, and who, being by me duly sworn, deposes and says that he is
the __________ of American Allsafe Company, and that said instrument was signed
and sealed on behalf of said corporation by authority of its Board of Directors,
and said __________ acknowledged said instrument to be the free act and deed of
said corporation.
______________________________
Notary Public
My commission expires:
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF _______________ )
) ss.
COUNTY OF ______________________________ )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this __ day of April, 1998, personally appeared __________ to me
known personally, and who, being by me duly sworn, deposes and says that he is
the __________ of Silencio/Safety Direct, Inc., and that said instrument was
signed and sealed on behalf of said corporation by authority of its Board of
Directors, and said __________ acknowledged said instrument to be the free act
and deed of said corporation.
______________________________
Notary Public
My commission expires:
<PAGE>
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF _______________ )
) ss.
COUNTY OF ______________________________ )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this __ day of April, 1998, personally appeared Peter van der
Horst, to me known personally, and who, being by me duly sworn, deposes and says
that he is a Vice President of BankBoston, N.A. (the "Agent"), and that said
instrument was signed and sealed on behalf of said Agent by authority of its
Board of Directors, and said Peter van der Horst acknowledged said instrument to
be the free act and deed of the Agent.
______________________________
Notary Public
My commission expires:
<PAGE>
EXHIBIT F-1
-----------
FORM OF STOCK PLEDGE AGREEMENT
------------------------------
STOCK PLEDGE AGREEMENT, dated as of April 22, 1998, by and between JACKSON
PRODUCTS, INC., a ERROR! REFERENCE SOURCE NOT FOUND. (the "Pledgor"), and
BANKBOSTON, N.A., a ERROR! REFERENCE SOURCE NOT FOUND., as agent (hereinafter,
in such capacity, the "Agent") for itself and the other lending institutions
(hereinafter, collectively, the "Banks") which are or may become parties to a
ERROR! REFERENCE SOURCE NOT FOUND., dated as of April 22, 1998 (as amended and
in effect from time to time, the "Credit Agreement"), among the Pledgor, the
Banks, the Agent and Mercantile Bank National Association, as Co-Agent.
WHEREAS, the Pledgor is the direct legal and beneficial owner of all of the
issued and outstanding shares of each class of the capital stock of each of the
corporations described on Annex A (the "Subsidiaries"); and
----- -
WHEREAS, it is a condition precedent to the Banks' making any loans or
otherwise extending credit to the Pledgor under the Credit Agreement that the
Pledgor execute and deliver to the Agent, for the benefit of the Banks and the
Agent, a pledge agreement in substantially the form hereof; and
WHEREAS, the Pledgor wishes to grant pledges and security interests in
favor of the Agent, for the benefit of the Banks and the Agent, as herein
provided;
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. PLEDGE OF STOCK, ETC.
---------------------
1.1 PLEDGE OF STOCK. The Pledgor hereby pledges, assigns, grants a
---------------
security interest in, and delivers to the Agent, for the benefit of the
Banks and the Agent, (a) 100% of the shares of capital stock of each of its
Domestic Subsidiaries of every class owned by the Pledgor, as more fully
described on Annex A hereto, and (b) not less than 66% of the shares of
----- -
capital stock of each of its Foreign Subsidiaries of every class owned by
the Pledgor, as more fully described on Annex A hereto, to be held by the
----- -
Agent, for the benefit of the Banks and the Agent, subject to the terms and
conditions hereinafter set forth. The certificates for such shares,
accompanied by stock powers or other appropriate instruments of assignment
thereof duly executed in blank by the Pledgor, have been delivered to the
Agent.
<PAGE>
-2-
1.2 ADDITIONAL STOCK. In case the Pledgor shall acquire any
----------------
additional shares of the capital stock of any Subsidiary or corporation
which is the successor of any Subsidiary, or any securities exchangeable
for or convertible into shares of such capital stock of any class of any
Subsidiary, by purchase, stock dividend, stock split or otherwise, then the
Pledgor shall forthwith deliver to and pledge such shares or other
securities to the Agent, for the benefit of the Banks and the Agent, under
this Agreement and shall deliver to the Agent forthwith any certificates
therefor, accompanied by stock powers or other appropriate instruments of
assignment duly executed by the Pledgor in blank. The Pledgor agrees that
the Agent may from time to time attach as Annex A hereto an updated list of
----- -
the shares of capital stock or securities at the time pledged with the
Agent hereunder.
2. DEFINITIONS. The term "Obligations" and all other capitalized terms
-----------
used herein without definition shall have the respective meanings provided
therefor in the Credit Agreement. Terms used herein and not defined in the
Credit Agreement or otherwise defined herein that are defined in the ERROR!
REFERENCE SOURCE NOT FOUND. have such defined meanings herein, unless the
context otherwise indicates or requires, and the following terms shall have the
following meanings:
Stock. Includes the shares of stock described in Annex A attached hereto
----- ----- -
and any additional shares of stock at the time pledged with the Agent hereunder.
Stock Collateral. The property at any time pledged to the Agent hereunder
----------------
(whether described herein or not) and all income therefrom, increases therein
and proceeds thereof, but excluding from the definition of "Stock Collateral"
any income, increases or proceeds received by the Pledgor to the extent
expressly permitted by (S)6.
3. SECURITY FOR OBLIGATIONS. This Agreement and the security interest in
------------------------
and pledge of the Stock Collateral hereunder are made with and granted to the
Agent, for the benefit of the Banks and the Agent, as security for the payment
and performance in full of all the Obligations.
4. LIQUIDATION, RECAPITALIZATION, ETC. Any sums or other property paid or
----------------------------------
distributed upon or with respect to any of the Stock, whether by dividend or
redemption or upon the liquidation or dissolution of the issuer thereof or
otherwise, shall, except to the limited extent provided in (S)6, be paid over
and delivered to the Agent to be held by the Agent, for the benefit of the Banks
and the Agent, as security for the payment and performance in full of all of the
Obligations. In case, pursuant to the recapitalization or reclassification of
the capital of the issuer thereof or pursuant to the reorganization thereof, any
distribution of capital shall be made on or in respect of any of the Stock or
any property shall be distributed upon or with respect to any of the Stock, the
property so distributed shall be delivered to the Agent, for the benefit of the
<PAGE>
-3-
Banks and the Agent, to be held by it as security for the Obligations. Except to
the limited extent provided in (S)6, all sums of money and property paid or
distributed in respect of the Stock, whether as a dividend or upon such a
liquidation, dissolution, recapitalization or reclassification or otherwise,
that are received by the Pledgor shall, until paid or delivered to the Agent, be
held in trust for the Agent, for the benefit of the Banks and the Agent, as
security for the payment and performance in full of all of the Obligations.
5. WARRANTY OF TITLE; AUTHORITY. The Pledgor hereby represents and
----------------------------
warrants that: (a) the Pledgor is the sole record and beneficial owner of, the
Stock described in (S)1, subject to no pledges, liens, security interests,
charges, options, restrictions or other encumbrances except the pledge and
security interest created by this Agreement, (b) all of the Stock described in
(S)1 is validly issued, fully paid and non-assessable, (c) the Pledgor has full
power, authority and legal right to execute, deliver and perform its obligations
under this Agreement and to pledge and grant a security interest in all of the
Stock Collateral pursuant to this Agreement, and the execution, delivery and
performance hereof and the pledge of and granting of a security interest in the
Stock Collateral hereunder have been duly authorized by all necessary corporate
or other action and do not contravene any law, rule or regulation or any
provision of the Pledgor's charter documents or by-laws or of any judgment,
decree or order of any tribunal or of any agreement or instrument to which the
Pledgor is a party or by which it or any of its property is bound or affected or
constitute a default thereunder, and (d) the information set forth in Annex A
----- -
hereto relating to the Stock is true, correct and complete in all respects. The
Pledgor covenants that it will defend the rights of the Banks and the Agent and
security interest of the Agent, for the benefit of the Banks and the Agent, in
such Stock against the claims and demands of all other persons whomsoever. The
Pledgor further covenants that it will have the like title to and right to
pledge and grant a security interest in the Stock Collateral hereafter pledged
or in which a security interest is granted to the Agent hereunder and will
likewise defend the rights, pledge and security interest thereof and therein of
the Banks and the Agent.
6. DIVIDENDS, VOTING, ETC., PRIOR TO MATURITY. So long as no Event of
------------------------------------------
Default shall have occurred and be continuing, the Pledgor shall be entitled to
receive all cash dividends paid in respect of the Stock, and absent receipt of
an election from the Agent as provided below, to vote the Stock and to give
consents, waivers and ratifications in respect of the Stock; provided, however,
-------- -------
that no vote shall be cast or consent, waiver or ratification given by the
Pledgor if the effect thereof would in the reasonable judgment of the Agent
impair any of the Stock Collateral or be inconsistent with or result in any
violation of any of the provisions of the Credit Agreement, the Notes or any of
the other Loan Documents. All such rights of the Pledgor to receive cash
dividends shall cease in case an Event of Default shall have occurred and be
continuing. All such rights of the Pledgor to vote and give consents, waivers
and ratifications with respect to the Stock shall, at the Agent's option, as
evidenced by the Agent's
<PAGE>
-4-
notifying the Pledgor of such election, cease in case an Event of Default shall
have occurred and be continuing.
7. REMEDIES.
--------
7.1. IN GENERAL. If an Event of Default shall have occurred and
----------
be continuing, the Agent shall thereafter have the following rights and
remedies (to the extent permitted by applicable law) in addition to the
rights and remedies of a secured party under the ERROR! REFERENCE SOURCE
NOT FOUND. UCC, all such rights and remedies being cumulative, not
exclusive, and enforceable alternatively, successively or concurrently, at
such time or times as the Agent deems expedient:
(a) if the Agent so elects and gives notice of such
election to the Pledgor, the Agent may vote any or all shares of the
Stock (whether or not the same shall have been transferred into its
name or the name of its nominee or nominees) for any lawful purpose,
including, without limitation, if the Agent so elects, for the
liquidation of the assets of the issuer thereof, and give all
consents, waivers and ratifications in respect of the Stock and
otherwise act with respect thereto as though it were the outright
owner thereof (the Pledgor hereby irrevocably constituting and
appointing the Agent the proxy and attorney-in-fact of the Pledgor,
with full power of substitution, to do so);
(b) the Agent may demand, sue for, collect or make any
compromise or settlement the Agent deems suitable in respect of any
Stock Collateral;
(c) the Agent may sell, resell, assign and deliver, or
otherwise dispose of any or all of the Stock Collateral, for cash or
credit or both and upon such terms at such place or places, at such
time or times and to such entities or other persons as the Agent
thinks expedient, all without demand for performance by the Pledgor or
any notice or advertisement whatsoever except as expressly provided
herein or as may otherwise be required by law;
(d) the Agent may cause all or any part of the Stock held
by it to be transferred into its name or the name of its nominee or
nominees; and
7.2. SALE OF STOCK COLLATERAL. In the event of any disposition of the
------------------------
Stock Collateral as provided in clause (c) of (S)7.1, the Agent shall give
to the Pledgor at least five (5) Business Days prior written notice of the
time and place of any public sale of the Stock Collateral or of the time
after which any private sale or any other intended disposition is to be
made. The Pledgor hereby acknowledges that five (5) Business Days prior
written notice of such sale or sales shall be reasonable notice. The
<PAGE>
-5-
Agent may enforce its rights hereunder without any other notice and without
compliance with any other condition precedent now or hereunder imposed by
statute, rule of law or otherwise (all of which are hereby expressly waived
by the Pledgor, to the fullest extent permitted by law). The Agent may buy
any part or all of the Stock Collateral at any public sale and if any part
or all of the Stock Collateral is of a type customarily sold in a
recognized market or is of the type which is the subject of widely-
distributed standard price quotations, the Agent may buy at private sale
and may make payments thereof by any means. The Agent may apply the cash
proceeds actually received from any sale or other disposition to the
reasonable expenses of retaking, holding, preparing for sale, selling and
the like, to reasonable attorneys' fees, travel and all other expenses
which may be incurred by the Agent in attempting to collect the Obligations
or to enforce this Agreement or in the prosecution or defense of any action
or proceeding related to the subject matter of this Agreement, and then to
the Obligations in such order or preference as the Agent may determine
after proper allowance for Obligations not then due. Only after such
applications, and after payment by the Agent of any amount required by
(S)9-504(1)(c) of the ERROR! REFERENCE SOURCE NOT FOUND. UCC, need the
Agent account to the Pledgor for any surplus. To the extent that any of the
Obligations are to be paid or performed by a person other than the Pledgor,
the Pledgor waives and agrees not to assert any rights or privileges which
it may have under (S)9-112 of the ERROR! REFERENCE SOURCE NOT FOUND. UCC
7.3. PRIVATE SALES. The Pledgor recognizes that the Agent may be
-------------
unable to effect a public sale of the Stock by reason of certain
prohibitions contained in the Securities Act, federal banking laws, and
other applicable laws, but may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers. The Pledgor
agrees that any such private sales may be at prices and other terms less
favorable to the seller than if sold at public sales and that such private
sales shall not by reason thereof be deemed not to have been made in a
commercially reasonable manner. The Agent shall be under no obligation to
delay a sale of any of the Stock for the period of time necessary to permit
the issuer of such securities to register such securities for public sale
under the Securities Act, or such other federal banking or other applicable
laws, even if the issuer would agree to do so. Subject to the foregoing,
the Agent agrees that any sale of the Stock shall be made in a commercially
reasonable manner, and the Pledgor agrees to use its best efforts to cause
the issuer or issuers of the Stock contemplated to be sold, to execute and
deliver, and cause the directors and officers of such issuer to execute and
deliver, all at the Pledgor's expense, all such instruments and documents,
and to do or cause to be done all such other acts and things as may
reasonably be necessary or, in the reasonable opinion of the Agent,
advisable to exempt such Stock from registration under the provisions of
the Securities Act, and to make all amendments to such instruments and
documents which, in the opinion of the Agent, are
<PAGE>
-6-
reasonably necessary or advisable, all in conformity with the requirements
of the Securities Act and the rules and regulations of the Securities and
Exchange Commission applicable thereto. The Pledgor further agrees to use
its best efforts to cause such issuer or issuers to comply with the
provisions of the securities or "Blue Sky" laws of any jurisdiction which
the Agent shall designate and, if required, to cause such issuer or issuers
to make available to its security holders, as soon as practicable, an
earnings statement (which need not be audited) which will satisfy the
provisions of Section 11(a) of the Securities Act.
7.4. PLEDGOR'S AGREEMENTS, ETC. The Pledgor further agrees to do or
-------------------------
cause to be done all such other acts and things as may be reasonably
necessary to make any sales of any portion or all of the Stock pursuant to
this (S)7 valid and binding and in compliance with any and all applicable
laws (including, without limitation, the Securities Act, the Securities
Exchange Act of 1934, as amended, the rules and regulations of the
Securities and Exchange Commission applicable thereto and all applicable
state securities or "Blue Sky" laws), regulations, orders, writs,
injunctions, decrees or awards of any and all courts, arbitrators or
governmental instrumentalities, domestic or foreign, having jurisdiction
over any such sale or sales, all at the Pledgor's expense. The Pledgor
further agrees that a breach of any of the covenants contained in this (S)7
will cause irreparable injury to the Agent and the Banks, that the Agent
and the Banks have no adequate remedy at law in respect of such breach and,
as a consequence, agrees that each and every covenant contained in this
(S)7 shall be specifically enforceable against the Pledgor by the Agent and
the Pledgor hereby waives and agrees not to assert any defenses against an
action for specific performance of such covenants.
8. MARSHALLING. Neither the Agent nor any Bank shall be required to
-----------
marshal any present or future collateral security for (including but not limited
to this Agreement and the Stock Collateral), or other assurances of payment of,
the Obligations or any of them, or to resort to such collateral security or
other assurances of payment in any particular order. All of the Agent's rights
hereunder and of the Banks and the Agent in respect of such collateral security
and other assurances of payment shall be cumulative and in addition to all other
rights, however existing or arising. To the extent that it lawfully may, the
Pledgor hereby agrees that it will not invoke any law relating to the
marshalling of collateral that might cause delay in or impede the enforcement of
the Agent's rights under this Agreement or under any other instrument evidencing
any of the Obligations or under which any of the Obligations is outstanding or
by which any of the Obligations is secured or payment thereof is otherwise
assured, and to the extent that it lawfully may the Pledgor hereby irrevocably
waives the benefits of all such laws.
9. PLEDGOR'S OBLIGATIONS NOT AFFECTED. The obligations of the Pledgor
----------------------------------
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by (a) any exercise or nonexercise, or any waiver, by the Agent or
<PAGE>
-7-
any Bank of any right, remedy, power or privilege under or in respect of any of
the Obligations or any security thereof (including this Agreement); (b) any
amendment to or modification of the Credit Agreement, the Notes, the other Loan
Documents or any of the Obligations; (c) any amendment to or modification of any
instrument (other than this Agreement) securing any of the Obligations,
including, without limitation, any of the Security Documents; or (d) the taking
of additional security for, or any other assurances of payment of, any of the
Obligations or the release or discharge or termination of any security or other
assurances of payment or performance for any of the Obligations; whether or not
the Pledgor shall have notice or knowledge of any of the foregoing.
10. TRANSFER, ETC., BY PLEDGOR. Without the prior written consent of the
--------------------------
Agent (which consent will not be unreasonably withheld), the Pledgor will not
sell, assign, transfer or otherwise dispose of, grant any option with respect
to, or pledge or grant any security interest in or otherwise encumber or
restrict any of the Stock Collateral or any interest therein, except for the
pledge thereof and security interest therein provided for in this Agreement.
11. FURTHER ASSURANCES. The Pledgor will do all such acts, and will
------------------
furnish to the Agent all such financing statements, certificates, legal opinions
and other documents and will obtain all such governmental consents and corporate
approvals and will do or cause to be done all such other things as the Agent may
reasonably request from time to time in order to give full effect to this
Agreement and to secure the rights of the Banks and the Agent hereunder, all
without any cost or expense to the Agent or any Bank. If the Agent so elects, a
photocopy of this Agreement may at any time and from time to time be filed by
the Agent as a financing statement in any recording office in any jurisdiction.
12. AGENT'S EXONERATION. Under no circumstances shall the Agent be deemed
-------------------
to assume any responsibility for or obligation or duty with respect to any part
or all of the Stock Collateral of any nature or kind or any matter or
proceedings arising out of or relating thereto, other than (a) to exercise
reasonable care in the physical custody of the Stock Collateral and (b) after a
Default or an Event of Default shall have occurred and be continuing to act in a
commercially reasonable manner. Neither the Agent nor any Bank shall be required
to take any action of any kind to collect, preserve or protect its or the
Pledgor's rights in the Stock Collateral or against other parties thereto. The
Agent's prior recourse to any part or all of the Stock Collateral shall not
constitute a condition of any demand, suit or proceeding for payment or
collection of any of the Obligations.
13. NO WAIVER, ETC. Neither this Agreement nor any term hereof may be
--------------
changed, waived, discharged or terminated except by a written instrument
expressly referring to this Agreement and to the provisions so modified or
limited, and executed by the Agent, with the consent of the Majority Banks, and
the Pledgor. No act, failure or delay by the Agent shall constitute a waiver of
its rights and remedies hereunder or otherwise. No single or partial waiver by
the Agent of any default or right or remedy that it may have shall operate as a
<PAGE>
-8-
waiver of any other default, right or remedy or of the same default, right or
remedy on a future occasion. The Pledgor hereby waives presentment, notice of
dishonor and protest of all instruments, included in or evidencing any of the
Obligations or the Stock Collateral, and any and all other notices and demands
whatsoever (except as expressly provided herein or in the Credit Agreement).
14. NOTICE, ETC. All notices, requests and other communications hereunder
-----------
shall be made in the manner set forth in (S)20 of the Credit Agreement.
15. TERMINATION. Upon final payment and performance in full of the
-----------
Obligations, this Agreement shall terminate and the Agent shall, at the
Pledgor's request and expense, return, free from any lien, all Stock Collateral
in the possession or control of the Agent as has not theretofore been disposed
of pursuant to the provisions hereof, together with any moneys and other
property at the time held by the Agent hereunder unless the Agent is required by
any agreement, instrument, law, regulation or order to turn such Stock
Collateral over to another party. The Agent, at the written request and expense
of the Pledgor, will promptly execute and deliver to the Pledgor the proper
instruments acknowledging the satisfaction and termination of this Agreement,
and will promptly duly assign, transfer and deliver to such Pledgor (without
recourse and without any representation or warranty) free from any lien granted
hereunder all of the Stock Collateral pledged and/or assigned by it hereunder
which has previously been delivered to the Agent except for any Stock Collateral
which has theretofore been sold or otherwise applied or released pursuant to
this Agreement.
16. OVERDUE AMOUNTS. Until paid, all amounts due and payable by the
---------------
Pledgor hereunder shall be a debt secured by the Stock Collateral and shall
bear, whether before or after judgment, interest at the rate of interest for
overdue principal set forth in the Credit Agreement.
17. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT IS INTENDED TO
--------------------------------------
TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. The Pledgor
agrees that any suit for the enforcement of this Agreement may be brought in the
courts of the Commonwealth of Massachusetts or any federal court sitting therein
and consents to the non-exclusive jurisdiction of such court and to service of
process in any such suit being made upon the Pledgor by mail at the address
specified in (S)20 of the Credit Agreement. The Pledgor hereby waives any
objection that it may now or hereafter have to the venue of any such suit or any
such court or that such suit is brought in an inconvenient court.
18. WAIVER OF JURY TRIAL. THE PLEDGOR WAIVES ITS RIGHT TO A JURY TRIAL
--------------------
WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION
WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF
ANY SUCH
<PAGE>
-9-
RIGHTS OR OBLIGATIONS. Except as prohibited by law, the Pledgor waives any right
which it may have to claim or recover in any litigation referred to in the
preceding sentence any special, exemplary, punitive or consequential damages or
any damages other than, or in addition to, actual damages. The Pledgor (a)
certifies that neither the Agent or any Bank nor any representative, agent or
attorney of the Agent or any Bank has represented, expressly or otherwise, that
the Agent or any Bank would not, in the event of litigation, seek to enforce the
foregoing waivers and (b) acknowledges that, in entering into the Credit
Agreement and the other Loan Documents to which the Agent is a party, the Agent
and the Banks are relying upon, among other things, the waivers and
certifications contained in this (S)18.
19. MISCELLANEOUS. The headings of each section of this Agreement are for
-------------
convenience only and shall not define or limit the provisions thereof. This
Agreement and all rights and obligations hereunder shall be binding upon the
Pledgor and its respective successors and assigns, and shall inure to the
benefit of the Agent and the Banks and their respective successors and assigns.
If any term of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall be in no way
affected thereby, and this Agreement shall be construed and be enforceable as if
such invalid, illegal or unenforceable term had not been included herein. The
Pledgor acknowledges receipt of a copy of this Agreement.
<PAGE>
IN WITNESS WHEREOF, intending to be legally bound, the Pledgor and the
Agent have caused this Agreement to be executed as of the date first above
written.
JACKSON PRODUCTS, INC.
By: ___________________________________
Name:
Title:
BANKBOSTON, N.A., AS AGENT
By: ___________________________________
Peter van der Horst, Vice President
The undersigned Subsidiaries hereby join in the above Agreement for the
sole purpose of consenting to and being bound by the provisions of (S)(S)4.1, 6
and 7 thereof, the undersigned hereby agreeing to cooperate fully and in good
faith with the Agent and the Pledgor in carrying out such provisions.
OSD ENVIZION, INC.
By: ___________________________________
Name:
Title:
FLEX-O-LITE, INC.
By: ___________________________________
Name:
Title:
<PAGE>
-2-
CRYSTALOID TECHNOLOGIES, INC.
By: ___________________________________
Name:
Title:
JACKSON ACQUISITION, INC.
By: ___________________________________
Name:
Title:
<PAGE>
ANNEX A TO PLEDGE AGREEMENT
---------------------------
None of the issuers has any authorized, issued or outstanding shares of its
capital stock of any class or any commitments to issue any shares of its capital
stock of any class or any securities convertible into or exchangeable for any
shares of its capital stock of any class except as otherwise stated in this
Annex A.
- ----- -
<TABLE>
<CAPTION>
Number of Number of Number of Par or
Record Class of Authorized Issued Outstanding Liquidation
Issuer Owner Shares Shares Shares Shares Value
------ ----- ------ ------ ------ ------- -----
<S> <C> <C> <C> <C> <C> <C>
OSD Envision,
Inc.
Jackson
Acquisition,
Inc.
Crystaloid
Technologies,
Inc.
Flex-O-Lite,
Inc.
</TABLE>
<PAGE>
EXHIBIT F-2
-----------
FORM OF STOCK PLEDGE AGREEMENT
------------------------------
(SUBSIDIARIES)
--------------
STOCK PLEDGE AGREEMENT, dated as of April 22, 1998, by and between [INSERT
PLEDGOR], a [INSERT ENTITY] (the "Pledgor"), and BANKBOSTON, N.A., a national
association as agent (hereinafter, in such capacity, the "Agent") for itself and
the other lending institutions (hereinafter, collectively, the "Banks") which
are or may become parties to a Revolving Credit and Acquisition Loan Agreement,
dated as of April 22, 1998 (as amended and in effect from time to time, the
"Credit Agreement"), among Jackson Products, Inc., a Delaware corporation (the
"Borrower"), the Banks, the Agent and Mercantile Bank National Association, as
Co-Agent.
WHEREAS, the Pledgor is the direct legal and beneficial owner of all of
the issued and outstanding shares of each class of the capital stock of each of
the corporations described on Annex A (the "subsidiaries"); and
----- -
WHEREAS, it is a condition precedent to the Banks' making any loans or
otherwise extending credit to the Borrower under the Credit Agreement that the
Pledgor execute and deliver to the Agent, for the benefit of the banks and the
Agent, a pledge agreement in substantially the form hereof; and
WHEREAS, the Pledgor wishes to grant pledges and security interests in
favor of the Agent, for the benefit of the Banks and the Agent, as herein
provided;
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. PLEDGE OF STOCK, ETC.
---------------------
1.1 PLEDGE OF STOCK. The Pledgor hereby pledges, assigns, grants
---------------
a security interest in, and delivers to the Agent, for the benefit of the
Banks and the Agent, (a) 100% of the shares of capital stock of each of its
Domestic Subsidiaries of every class owned by the Pledgor, as more fully
described on Annex A hereto, and (b) not less than 66% of the shares of
capital stock of each of its Foreign Subsidiaries of every class owned by
the Pledgor, as more fully described on Annex A hereto to be held by the
----- -
Agent, for the benefit of the Banks and the Agent, subject to the terms and
conditions hereinafter set forth. The certificates for such shares,
accompanied by stock powers or other appropriate instruments of assignment
thereof duly executed in blank by the Pledgor, have been delivered to the
Agent.
<PAGE>
-2-
1.2. ADDITIONAL STOCK. In case the Pledgor shall acquire any
----------------
additional shares of the capital stock of any Subsidiary or corporation
which is the successor of any Subsidiary, or any securities exchangeable
for or convertible into shares of such capital stock of any class of any
Subsidiary, by purchase, stock dividend, stock split or otherwise, then the
Pledgor shall forthwith deliver to and pledge such shares or other
securities to the Agent, for the benefit of the Banks and the Agent, under
this Agreement and shall deliver to the Agent forthwith any certificates
therefor, accompanied by stock powers or other appropriate instruments of
assignment duly executed by the Pledgor in blank. The Pledgor agrees that
the Agent may from time to time attach as Annex A hereto an updated list of
-------
the shares of capital stock or securities at the time pledged with the
Agent hereunder.
2. DEFINITIONS. The term "Obligations" and all other capitalized terms
-----------
used herein without definition shall have the respective meanings provided
therefor in the Credit Agreement. Terms used herein and not defined in the
Credit Agreement or otherwise defined herein that are defined in the have such
defined meanings herein, unless the context otherwise indicates or requires, and
the following terms shall have the following meanings:
Stock. Includes the shares of stock described in Annex A attached hereto
----- ----- -
and any additional shares of stock at the time pledged with the Agent hereunder.
Stock Collateral. The property at any time pledged to the Agent hereunder
----------------
(whether described herein or not) and all income therefrom, increases therein
and proceeds thereof, but excluding from the definition of "Stock Collateral"
any income, increases or proceeds received by the Pledgor to the extent
expressly permitted by (S)6.
3. SECURITY FOR OBLIGATIONS. This Agreement and the security interest in
------------------------
and pledge of the Stock Collateral hereunder are made with and granted to the
Agent, for the benefit of the Banks and the Agent, as security for the payment
and performance in full of all the Obligations.
4. LIQUIDATION, RECAPITALIZATION, ETC. Any sums or other property paid
----------------------------------
or distributed upon or with respect to any of the Stock, whether by dividend or
redemption or upon the liquidation or dissolution of the issuer thereof or
otherwise, shall, except to the limited extent provided in (S)6, be paid over
and delivered to the Agent to be held by the Agent, for the benefit of the Banks
and the Agent, as security for the payment and performance in full of all of the
Obligations. In case, pursuant to the recapitalization or reclassification of
the capital of the issuer thereof or pursuant to the reorganization thereof, any
distribution of capital shall be made on or in respect of any of the Stock or
any property shall be distributed upon or with respect to any of the Stock, the
property so distributed shall be delivered to the Agent, for the benefit of the
<PAGE>
-3-
Banks and the Agent, to be held by it as security for the Obligations. Except to
the limited extent provided in (S)6, all sums of money and property paid or
distributed in respect of the Stock, whether as a dividend or upon such a
liquidation, dissolution, recapitalization or reclassification or otherwise,
that are received by the Pledgor shall, until paid or delivered to the Agent, be
held in trust for the Agent, for the benefit of the Banks and the Agent, as
security for the payment and performance in full of all of the Obligations.
5. WARRANTY OF TITLE; AUTHORITY. The Pledgor hereby represents and
----------------------------
warrants that: (a) the Pledgor is the sole record and beneficial owner of, the
Stock described in (S)1, subject to no pledges, liens, security interests,
charges, options, restrictions or other encumbrances except the pledge and
security interest created by this Agreement, (b) all of the Stock described in
(S)1 is validly issued, fully paid and non-assessable, (c) the Pledgor has full
power, authority and legal right to execute, deliver and perform its obligations
under this Agreement and to pledge and grant a security interest in all of the
Stock Collateral pursuant to this Agreement, and the execution, delivery and
performance hereof and the pledge of and granting of a security interest in the
Stock Collateral hereunder have been duly authorized by all necessary corporate
or other action and do not contravene any law, rule or regulation or any
provision of the Pledgor's charter documents or by-laws or of any judgment,
decree or order of any tribunal or of any agreement or instrument to which the
Pledgor is a party or by which it or any of its property is bound or affected or
constitute a default thereunder, and (d) the information set forth in Annex A
----- -
hereto relating to the Stock is true, correct and complete in all respects. The
Pledgor covenants that it will defend the rights of the Banks and the Agent and
security interest of the Agent, for the benefit of the Banks and the Agent, in
such Stock against the claims and demands of all other persons whomsoever. The
Pledgor further covenants that it will have the like title to and right to
pledge and grant a security interest in the Stock Collateral hereafter pledged
or in which a security interest is granted to the Agent hereunder and will
likewise defend the rights, pledge and security interest thereof and therein of
the Banks and the Agent.
6. DIVIDENDS, VOTING, ETC., PRIOR TO MATURITY. So long as no Event of
------------------------------------------
Default shall have occurred and be continuing, the Pledgor shall be entitled to
receive all cash dividends paid in respect of the Stock, and absent receipt of
an election from the Agent as provided below, to vote the Stock and to give
consents, waivers and ratifications in respect of the Stock; provided, however,
-------- -------
that no vote shall be cast or consent, waiver or ratification given by the
Pledgor if the effect thereof would in the reasonable judgment of the Agent
impair any of the Stock Collateral or be inconsistent with or result in any
violation of any of the provisions of the Credit Agreement, the Notes or any of
the other Loan Documents. All such rights of the Pledgor to receive cash
dividends shall cease in case an Event of Default shall have occurred and be
continuing. All such rights of the Pledgor to vote and give consents, waivers
and ratifications with respect to the Stock shall, at the Agent's option, as
evidenced by the Agent's
<PAGE>
-4-
notifying the Pledgor of such election, cease in case an Event of Default shall
have occurred and be continuing.
7. REMEDIES.
--------
7.1 IN GENERAL. If an Event of Default shall have occurred and
----------
be continuing, the Agent shall thereafter have the following rights and
remedies (to the extent permitted by applicable law) in addition to the
rights and remedies of a secured party under the Massachusetts UCC, all
such rights and remedies being cumulative, not exclusive, and enforceable
alternatively, successively or concurrently, at such time or times as the
Agent deems expedient:
(a) if the Agent so elects and gives notice of such
election to the Pledgor, the Agent may vote any or all shares of
the Stock (whether or not the same shall have been transferred
into its name or the name of its nominee or nominees) for any
lawful purpose, including, without limitation, if the Agent so
elects, for the liquidation of the assets of the issuer thereof,
and give all consents, waivers and ratifications in respect of
the Stock and otherwise act with respect thereto as though it
were the outright owner thereof (the Pledgor hereby irrevocably
constituting and appointing the Agent the proxy and attorney-in-
fact of the Pledgor, with full power of substitution, to do so);
(b) the Agent may demand, sue for, collect or make any
compromise or settlement the Agent deems suitable in respect of
any Stock Collateral;
(c) the Agent may sell, resell, assign and deliver, or
otherwise dispose of any or all of the Stock Collateral, for cash
or credit or both and upon such terms at such place or places, at
such time or times and to such entities or other persons as the
Agent thinks expedient, all without demand for performance by the
Pledgor or any notice or advertisement whatsoever except as
expressly provided herein or as may otherwise be required by law;
(d) the Agent may cause all or any part of the Stock held
by it to be transferred into its name or the name of its nominee
or nominees; and
7.2 SALE OF STOCK COLLATERAL. In the event of any disposition of
------------------------
the Stock Collateral as provided in clause (c) of (S)7.1, the Agent shall
give to the Pledgor at least five (5) Business Days prior written notice of
the time and place of any public sale of the Stock Collateral or of the
time after which any private sale or any other intended disposition is to
be made. The Pledgor hereby acknowledges that five (5) Business Days prior
written notice of such sale or sales shall be reasonable notice. The
<PAGE>
-5-
Agent may enforce its rights hereunder without any other notice and without
compliance with any other condition precedent now or hereunder imposed by
statute, rule of law or otherwise (all of which are hereby expressly waived by
the Pledgor, to the fullest extent permitted by law). The Agent may buy any part
or all of the Stock Collateral at any public sale and if any part or all of the
Stock Collateral is of a type customarily sold in a recognized market or is of
the type which is the subject of widely-distributed standard price quotations,
the Agent may buy at private sale and may make payments thereof by any means.
The Agent may apply the cash proceeds actually received from any sale or other
disposition to the reasonable expenses of retaking, holding, preparing for sale,
selling and the like, to reasonable attorneys' fees, travel and all other
expenses which may be incurred by the Agent in attempting to collect the
Obligations or to enforce this Agreement or in the prosecution or defense of any
action or proceeding related to the subject matter of this Agreement, and then
to the Obligations in such order or preference as the Agent may determine after
proper allowance for Obligations not then due. Only after such applications, and
after payment by the Agent of any amount required by (S)9-504(1)(c) of the
Massachusetts UCC, need the Agent account to the Pledgor for any surplus. To
the extent that any of the Obligations are to be paid or performed by a person
other than the Pledgor, the Pledgor waives and agrees not to assert any rights
or privileges which it may have under (S)9-112 of the Massachusetts UCC
7.3. PRIVATE SALES. The Pledgor recognizes that the Agent may be
-------------
unable to effect a public sale of the Stock by reason of certain prohibitions
contained in the Securities Act, federal banking laws, and other applicable
laws, but may be compelled to resort to one or more private sales thereof to a
restricted group of purchasers. The Pledgor agrees that any such private sales
may be at prices and other terms less favorable to the seller than if sold at
public sales and that such private sales shall not by reason thereof be deemed
not to have been made in a commercially reasonable manner. The Agent shall be
under no obligation to delay a sale of any of the Stock for the period of time
necessary to permit the issuer of such securities to register such securities
for public sale under the Securities Act, or such other federal banking or other
applicable laws, even if the issuer would agree to do so. Subject to the
foregoing, the Agent agrees that any sale of the Stock shall be made in a
commercially reasonable manner, and the Pledgor agrees to use its best efforts
to cause the issuer or issuers of the Stock contemplated to be sold, to execute
and deliver, and cause the directors and officers of such issuer to execute and
deliver, all at the Pledgor's expense, all such instruments and documents, and
to do or cause to be done all such other acts and things as may reasonably be
necessary or, in the reasonable opinion of the Agent, advisable to exempt such
Stock from registration under the provisions of the Securities Act, and to make
all amendments to such instruments and documents which, in the opinion of the
Agent, are
<PAGE>
-6-
reasonably necessary or advisable, all in conformity with the requirements
of the Securities Act and the rules and regulations of the Securities and
Exchange Commission applicable thereto. The Pledgor further agrees to use
its best efforts to cause such issuer or issuers to comply with the
provisions of the securities or "Blue Sky" laws of any jurisdiction which
the Agent shall designate and, if required, to cause such issuer or issuers
to make available to its security holders, as soon as practicable, an
earnings statement (which need not be audited) which will satisfy the
provisions of Section 11(a) of the Securities Act.
7.4. PLEDGOR'S AGREEMENTS, ETC. The Pledgor further agrees to do or
--------------------
cause to be done all such other acts and things as may be reasonably
necessary to make any sales of any portion or all of the Stock pursuant to
this (S)7 valid and binding and in compliance with any and all applicable
laws (including, without limitation, the Securities Act, the Securities
Exchange Act of 1934, as amended, the rules and regulations of the
Securities and Exchange Commission applicable thereto and all applicable
state securities or "Blue Sky" laws), regulations, orders, writs,
injunctions, decrees or awards of any and all courts, arbitrators or
governmental instrumentalities, domestic or foreign, having jurisdiction
over any such sale or sales, all at the Pledgor's expense. The Pledgor
further agrees that a breach of any of the covenants contained in this (S)7
will cause irreparable injury to the Agent and the Banks, that the Agent
and the Banks have no adequate remedy at law in respect of such breach and,
as a consequence, agrees that each and every covenant contained in this
(S)7 shall be specifically enforceable against the Pledgor by the Agent and
the Pledgor hereby waives and agrees not to assert any defenses against an
action for specific performance of such covenants.
8. MARSHALLING. Neither the Agent nor any Bank shall be required to
-----------
marshal any present or future collateral security for (including but not limited
to this Agreement and the Stock Collateral), or other assurances of payment of,
the Obligations or any of them, or to resort to such collateral security or
other assurances of payment in any particular order. All of the Agent's rights
hereunder and of the Banks and the Agent in respect of such collateral security
and other assurances of payment shall be cumulative and in addition to all other
rights, however existing or arising. To the extent that it lawfully may, the
Pledgor hereby agrees that it will not invoke any law relating to the
marshalling of collateral that might cause delay in or impede the enforcement of
the Agent's rights under this Agreement or under any other instrument evidencing
any of the Obligations or under which any of the Obligations is outstanding or
by which any of the Obligations is secured or payment thereof is otherwise
assured, and to the extent that it lawfully may the Pledgor hereby irrevocably
waives the benefits of all such laws.
9. PLEDGOR'S OBLIGATIONS NOT AFFECTED. The obligations of the Pledgor
----------------------------------
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by (a) any exercise or nonexercise, or any waiver, by the Agent or
<PAGE>
-7-
any Bank of any right, remedy, power or privilege under or in respect of any of
the Obligations or any security thereof (including this Agreement); (b) any
amendment to or modification of the Credit Agreement, the Notes, the other Loan
Documents or any of the Obligations; (c) any amendment to or modification of any
instrument (other than this Agreement) securing any of the Obligations,
including, without limitation, any of the Security Documents; or (d) the taking
of additional security for, or any other assurances of payment of, any of the
Obligations or the release or discharge or termination of any security or other
assurances of payment or performance for any of the Obligations; whether or not
the Pledgor shall have notice or knowledge of any of the foregoing.
10. TRANSFER, ETC., BY PLEDGOR. Without the prior written consent of the
--------------------------
Agent (which consent will not be unreasonably withheld), the Pledgor will not
sell, assign, transfer or otherwise dispose of, grant any option with respect
to, or pledge or grant any security interest in or otherwise encumber or
restrict any of the Stock Collateral or any interest therein, except for the
pledge thereof and security interest therein provided for in this Agreement.
11. FURTHER ASSURANCES. The Pledgor will do all such acts, and will
------------------
furnish to the Agent all such financing statements, certificates, legal opinions
and other documents and will obtain all such governmental consents and corporate
approvals and will do or cause to be done all such other things as the Agent may
reasonably request from time to time in order to give full effect to this
Agreement and to secure the rights of the Banks and the Agent hereunder, all
without any cost or expense to the Agent or any Bank. If the Agent so elects, a
photocopy of this Agreement may at any time and from time to time be filed by
the Agent as a financing statement in any recording office in any jurisdiction.
12. AGENT'S EXONERATION. Under no circumstances shall the Agent be deemed
-------------------
to assume any responsibility for or obligation or duty with respect to any part
or all of the Stock Collateral of any nature or kind or any matter or
proceedings arising out of or relating thereto, other than (a) to exercise
reasonable care in the physical custody of the Stock Collateral and (b) after a
Default or an Event of Default shall have occurred and be continuing to act in a
commercially reasonable manner. Neither the Agent nor any Bank shall be required
to take any action of any kind to collect, preserve or protect its or the
Pledgor's rights in the Stock Collateral or against other parties thereto. The
Agent's prior recourse to any part or all of the Stock Collateral shall not
constitute a condition of any demand, suit or proceeding for payment or
collection of any of the Obligations.
13. NO WAIVER, ETC. Neither this Agreement nor any term hereof may be
--------------
changed, waived, discharged or terminated except by a written instrument
expressly referring to this Agreement and to the provisions so modified or
limited, and executed by the Agent, with the consent of the Majority Banks, and
the Pledgor. No act, failure or delay by the Agent shall constitute a waiver of
its rights and remedies hereunder or otherwise. No single or partial waiver by
the Agent of any default or right or remedy that it may have shall operate as a
<PAGE>
-8-
waiver of any other default, right or remedy or of the same default, right or
remedy on a future occasion. The Pledgor hereby waives presentment, notice of
dishonor and protest of all instruments, included in or evidencing any of the
Obligations or the Stock Collateral, and any and all other notices and demands
whatsoever (except as expressly provided herein or in the Credit Agreement).
14. NOTICE, ETC. All notices, requests and other communications hereunder
-----------
shall be made in the manner set forth in (S)20 of the Credit Agreement,
addressed as follows: if to the Pledgor, at the address set forth beneath its
signature hereto, and if to the Agent, at the address for notices to the Agent
set forth in (S)20 of the Credit Agreement, or at such other address as either
party may designate in writing to the other.
15. TERMINATION. Upon final payment and performance in full of the
-----------
Obligations, this Agreement shall terminate and the Agent shall, at the
Pledgor's request and expense, return, free of any lien, all Stock Collateral in
the possession or control of the Agent as has not theretofore been disposed of
pursuant to the provisions hereof, together with any moneys and other property
at the time held by the Agent hereunder unless the Agent is required by any
agreement, instrument, law, regulation or order to turn such Stock Collateral
over to another party. The Agent, at the written request and expense of the
Pledgor, will promptly execute and deliver to the Pledgor the proper instruments
acknowledging the satisfaction and termination of this Agreement, and will
promptly duly assign, transfer and deliver to such Pledgor (without recourse and
without any representation or warranty) free from any lien granted hereunder all
of the Stock Collateral pledged and/or assigned by it hereunder which has
previously been delivered to the Agent except for any Stock Collateral which has
theretofore been sold or otherwise applied or released pursuant to this
Agreement.
15. OVERDUE AMOUNTS. Until paid, all amounts due and payable by the
---------------
Pledgor hereunder shall be a debt secured by the Stock Collateral and shall
bear, whether before or after judgment, interest at the rate of interest for
overdue principal set forth in the Credit Agreement.
16. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT IS INTENDED TO
--------------------------------------
TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF COMMONWEALTH OF MASSACHUSETTS. The Pledgor agrees
that any suit for the enforcement of this Agreement may be brought in the courts
of The Commonwealth of Massachusetts or any federal court sitting therein and
consents to the non-exclusive jurisdiction of such court and to service of
process in any such suit being made upon the Pledgor by mail at the address
specified in (S)20 of the Credit Agreement. The Pledgor hereby waives any
objection that it may now or hereafter have to the venue of any such suit or any
such court or that such suit is brought in an inconvenient court.
<PAGE>
-9-
18. WAIVER OF JURY TRIAL. THE PLEDGOR WAIVES ITS RIGHT TO A JURY TRIAL
--------------------
WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION
WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF
ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, the Pledgor waives
any right which it may have to claim or recover in any litigation referred to in
the preceding sentence any special, exemplary, punitive or consequential damages
or any damages other than, or in addition to, actual damages. The Pledgor (a)
certifies that neither the Agent or any Bank nor any representative, agent or
attorney of the Agent or any Bank has represented, expressly or otherwise, that
the Agent or any Bank would not, in the event of litigation, seek to enforce the
foregoing waivers and (b) acknowledges that, in entering into the Credit
Agreement and the other Loan Documents to which the Agent is a party, the Agent
and the Banks are relying upon, among other things, the waivers and
certifications contained in this (S)18.
19. MISCELLANEOUS. The headings of each section of this Agreement are for
-------------
convenience only and shall not define or limit the provisions thereof. This
Agreement and all rights and obligations hereunder shall be binding upon the
Pledgor and its respective successors and assigns, and shall inure to the
benefit of the Agent and the Banks and their respective successors and assigns.
If any term of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall be in no way
affected thereby, and this Agreement shall be construed and be enforceable as if
such invalid, illegal or unenforceable term had not been included herein. The
Pledgor acknowledges receipt of a copy of this Agreement.
<PAGE>
IN WITNESS WHEREOF, intending to be legally bound, the Pledgor and the
Agent have caused this Agreement to be executed as of the date first above
written.
[INSERT PLEDGOR]
By:_________________________________
Name:
Title:
Address:____________________________
____________________________________
BANKBOSTON, N.A., AS AGENT
By:_________________________________
Name:
Title:
The undersigned Subsidiaries hereby join in the above Agreement for the
sole purpose of consenting to and being bound by the provisions of (S)(S)4.1, 6
and 7 thereof, the undersigned hereby agreeing to cooperate fully and in good
faith with the Agent and the Pledgor in carrying out such provisions.
[INSERT SUBSIDIARY]
By:____________________________________
Name:
Title:
Address:_______________________________
_______________________________________
<PAGE>
ANNEX A TO PLEDGE AGREEMENT
---------------------------
None of the issuers has any authorized, issued or outstanding shares of its
capital stock of any class or any commitments to issue any shares of its capital
stock of any class or any securities convertible into or exchangeable for any
shares of its capital stock of any class except as otherwise stated in this
Annex A.
- ----- -
<TABLE>
<CAPTION>
Number of Number of Number of Par or
Record Class of Authorized Issued Outstanding Liquidation
Issuer Owner Shares Shares Shares Shares Value
- ----------- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT G
---------
FORM OF LOAN REQUEST
--------------------
______________________, ___
BankBoston, N.A., as Agent
100 Federal Street
Boston, Massachusetts 02110
Attention: ____________________
RE: Loan Request
------------
Ladies and Gentlemen:
Reference is hereby made to that certain Revolving Credit and Acquisition
Loan Agreement, dated as of April 22, 1998 (as the same may be amended and in
effect from time to time, the "Credit Agreement"), among Jackson Products, Inc.,
a Delaware Corporation (the "Borrower"), the lending institutions which are or
may become parties thereto from time to time (collectively, the "BANKS"),
BankBoston, N.A., as agent (the "Agent") for the Banks, and Mercantile Bank
National Association, as Co-Agent. Capitalized terms which are used herein
without definition and which are defined in the Credit Agreement shall have the
same meanings herein as in the Credit Agreement.
Pursuant to (S)2.6 of the Credit Agreement, we hereby request that a
Revolving Credit Loan consisting of [a Base Rate Loan in the principal amount of
$__________,] [a LIBOR Rate Loan in the principal amount of $__________ with an
Interest Period of _________] be made on __________ __, ____. we understand
that this request is irrevocable and binding on us and obligates us to accept
the requested Revolving Credit Loan on such date.
We hereby certify (a) that the aggregate outstanding principal amount of
the Revolving Credit Loans on today's date is $_________, (b) that we will use
the proceeds of the requested revolving Credit Loan in accordance with the
provisions of the Credit Agreement, (c) that each of the representations and
warranties contained in the Credit Agreement or in any document or instrument
delivered pursuant to or in connection with the Credit Agreement was true as of
the date as of which it was made and is true at and as of the date hereof
(except to the extent of changes resulting from transactions contemplated or
permitted by the Credit Agreement and changes occurring in the ordinary course
of business that singly or in the aggregate are not materially adverse, and to
the
<PAGE>
BankBoston, N.A., as Agent
Page 2
extent that such representations and warranties related expressly to an earlier
date) and (d) that no Default or Event of Default has occurred and is
continuing.
Very truly yours,
JACKSON PRODUCTS, INC.
By:____________________________________
Name:
Title:
<PAGE>
EXHIBIT H
---------
FORM OF ADVANCE REQUEST
-----------------------
_____________ ___, ___
BankBoston, N.A., as agent
100 Federal Street
Boston, MA 02110
Attention: ____________________
Re: Advance Request
---------------
Ladies and Gentlemen:
Reference is hereby made to that certain Revolving Credit and Acquisition
Loan Agreement (as amended and in effect from time to time, the "Credit
Agreement"), dated as of April 22, 1998 by and among Jackson Products, Inc., a
Delaware Corporation (the "Borrower"), the lending institutions which are or may
become parties thereto from time to time (the "Banks"), BankBoston, N.A., as
Agent (the "Agent") for the Banks, and Mercantile Bank National Association, as
Co-Agent. Capitalized terms which are used herein without definition and which
are defined in the Credit Agreement shall have the same meanings herein as in
the Credit Agreement.
Pursuant to (S)4.1.2 of the Credit Agreement, we hereby request that an
Advance consisting of [a Base Rate Loan in the principal amount of
$______________,] [a LIBOR Rate Loan in the principal amount of
$____________ with an interest period of ____________] be made on ____________
___, ___. We understand that this request is irrevocable and binding on us and
obligates us to accept the requested Advance on such date.
We hereby certify (a) that the aggregate outstanding principal amount of
the Acquisition Loan on today's date is $____________, (b) that we will use the
proceeds of the Advance solely in accordance with the provisions of the Credit
Agreement for Permitted Acquisitions, (c) that each of the representations and
warranties contained in the Credit Agreement, any of the other Loan Documents or
any documents, certificate or other paper or notice delivered pursuant to or in
connection with the Credit Agreement was true and correct in all material
respects as of the date as of which they were made and each of the
representations and warranties contained in the Credit Agreement are true at and
as of the date hereof (except, in each case, to the extent of changes resulting
from transactions contemplated or permitted by the Credit Agreement and changes
occurring in the ordinary course of business that singly or in
<PAGE>
BankBoston, N.A., as Agent
Page 2
the aggregate are not materially adverse, and to the extent that such
representations and warranties relate expressly to an earlier date) and (d) that
no Default or Event of Default has occurred and is continuing.
Very truly yours,
JACKSON PRODUCTS, INC.
By:______________________________________
Title:
<PAGE>
EXHIBIT I
---------
FORM OF
-------
COMPLIANCE CERTIFICATE
----------------------
_______, ___
To the Banks Party to the
Credit Agreement Referred to Below
c/o BankBoston, N.A., as agent
100 Federal Street
Boston, Massachusetts 02110
Ladies and Gentlemen:
Reference is made to the Revolving Credit and Acquisition Loan Agreement,
dated as of April 22, 1998 (as amended and in effect from time to time, the
"Credit Agreement"), by and among Jackson Products, Inc., a Delaware corporation
(the "Borrower"), BankBoston, N.A., a national banking association, and the
other lending institutions that may become parties thereto from time to time
(collectively, the "Banks"), BankBoston, N.A. as agent for the Banks (the
"Agent"), and Mercantile Bank National Association, a national banking
association, as co-agent (the "Co-Agent"). Capitalized terms which are used
herein without definition and which are defined in the Credit Agreement shall
have the respective meanings assigned to such terms in the Credit Agreement.
Pursuant to (S)9.4 of the Credit Agreement, the principal financial or
accounting officer of the Borrower hereby certifies to each of you as follows:
(a) the information furnished in the calculations attached hereto was true and
correct as of the last day of the fiscal [year] [quarter] next preceding the
date of this certificate; (b) as of the date of this certificate, there exists
no Default or Event of Default or condition which would, with either or both the
giving of notice or the lapse of time, result in a Default or an Event of
Default; and (c) the financial statements delivered herewith were prepared in
accordance with generally accepted accounting principles applied on a basis
consistent with prior periods (except, in the case of quarterly statements, for
year-end adjustments and provisions for footnotes and, in all cases, except as
disclosed therein).
IN WITNESS WHEREOF, the undersigned officer has executed this Compliance
Certificate as of the date first written above.
JACKSON PRODUCTS, INC.
By:_______________________________
Title:
<PAGE>
COMPLIANCE CERTIFICATE WORKSHEET
--------------------------------
JACKSON PRODUCTS, INC.
As of ______________
<TABLE>
<CAPTION>
Section Calculation
- ------- -----------
11.1 INTEREST COVERAGE RATIO.
-----------------------
<S> <C>
A. EBITDA: $___________________
(1) Consolidated Net Income: consolidated net income, after $___________________
deduction of all expenses, taxes and other proper charges
(2) plus depreciation and amortization: $___________________
----
(3) plus non-cash charges: $___________________
----
(4) less non-cash gains: $___________________
----
(5) plus tax expense: $___________________
----
(6) less tax gains: $___________________
----
(7) plus Consolidated Total Interest Expense: $___________________
----
(8) plus non-cash expenses relating to Financial $___________________
----
Accounting Standards Board Statements Nos. 106 & 109: $___________________
(9) plus non-capitalized transaction costs: $___________________
----
(10) plus management fees paid (per definition): $___________________
----
(11) plus Acquisition Incentives and
----
Incentive Arrangements: $___________________
(12) plus Restructuring Costs $___________________
----
B. CONSOLIDATED TOTAL INTEREST EXPENSE: $___________________
C. RATIO OF A TO B: $___________________
D. MINIMUM REQUIRED INTEREST COVERAGE RATIO: $___________________
11.2 LEVERAGE RATIO.
--------------
A. TOTAL FUNDED INDEBTEDNESS: $___________________
(1) Indebtedness for borrowed money: $___________________
(2) plus Indebtedness with respect to deferred
----
purchase price of assets: $___________________
(3) plus Indebtedness with respect to capitalized leases: $___________________
----
(4) plus Reimbursement Obligations with respect to
----
Letters of Credit: $___________________
(5) minus cash and cash equivalents: $___________________
-----
</TABLE>
<PAGE>
-2-
<TABLE>
<S> <C>
B. EBITDA (SEE 11.1(A)) (AS ADJUSTED, IF APPLICABLE): $____________________
:
C. RATIO OF A TO B: ____________________
:
D. Maximum Leverage Ratio: ____________________
11.3 DEBT SERVICE COVERAGE RATIO.
---- ------- -------- -----
A. Consolidated Cash Flow:
I. EBITDA (see 11.1(A): $___________________
II. CAPITAL EXPENDITURES: $___________________
III. CASH TAXES: $___________________
IV. TOTAL NUMERATOR ((AI) MINUS (AII) MINUS (AIII)): $___________________
----- -----
B. TOTAL DEBT SERVICE:
(1) All scheduled mandatory payments of principal: $___________________
(2) plus Consolidated Total Interest Expense: $___________________
----
(3) Total Denominator ((B1) PLUS (B2)): $___________________
----
:
C. RATIO OF (A) TO (B): ___________________
D. Minimum Required Debt Service Coverage Ratio: :
___________________
</TABLE>
<PAGE>
EXHIBIT J
---------
FORM OF
-------
ASSIGNMENT AND ACCEPTANCE
-------------------------
Dated as of __________, ____
Reference is made to the Revolving Credit and Acquisition Loan
Agreement, dated as of April 22, 1998 (as from time to time amended and in
effect, the "Credit Agreement"), by and among JACKSON PRODUCTS, INC., a Delaware
corporation (the "Borrower"), the lending institutions referred to therein as
Banks (collectively, the "Banks"), BANKBOSTON, N.A., a national banking
association, as agent (in such capacity, the "Agent") for the Banks, and
MERCANTILE BANK NATIONAL ASSOCIATION, a national banking association, as Co-
Agent. Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to such terms in the Credit Agreement.
__________ (the "Assignor") and __________ (the "Assignee") hereby
agree as follows:
(S)1. ASSIGNMENT. Subject to the terms and conditions of this Assignment
----------
and Acceptance, the Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes without recourse to the Assignor, a
$______ interest in and to the rights, benefits, indemnities and obligations of
the Assignor under the Credit Agreement equal to ______% in respect of the Total
Commitment and ___% in respect of the Acquisition Commitment immediately prior
to the Effective Date (as hereinafter defined).
(S)2. ASSIGNOR'S REPRESENTATIONS. The Assignor (a) represents and warrants
--------------------------
that (i) it is legally authorized to enter into this Assignment and Acceptance,
(ii) as of the date hereof, its Commitment is $______, its Commitment Percentage
is ______%, the aggregate outstanding principal balance of its Revolving Credit
Loans equals $______, the aggregate amount of its Letter of Credit
Participations equals $______, its Acquisition Commitment is $_______, its
Acquisition Commitment Percentage is ___%, the aggregate outstanding principal
balance of its Acquisition Loans equals $_____ (in each case prior to giving
effect to the assignment contemplated hereby but after giving effect to any
contemplated assignments which have not yet become effective), and (iii)
immediately after giving effect to all assignments which have not yet become
effective, the Assignor's Commitment Percentage and its Acquisition Commitment
Percentage will be sufficient to give effect to this Assignment and Acceptance,
(b) makes no representation or warranty, express or implied, and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or any of the other Loan
Documents or the execution, legality,
<PAGE>
-2-
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement, the other Loan Documents or any other instrument or document
furnished pursuant thereto or the attachment, perfection or priority of any
security interest or mortgage, other than that it is the legal and beneficial
owner of the interest being assigned by it hereunder free and clear of any claim
or encumbrance; (c) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of, the Borrower or any
of its Subsidiaries or any other Person primarily or secondarily liable in
respect of any of the Obligations, or the performance or observance by, the
Borrower or any of its Subsidiaries or any other Person primarily or secondarily
liable in respect of any of the Obligations or any of its obligations under the
Credit Agreement or any of the other Loan Documents or any other instrument or
document delivered or executed pursuant thereto; and (d) attaches hereto the
Revolving Credit Note and the Acquisition Loan Note delivered to it under the
Credit Agreement.
The Assignor requests that the Borrower exchange the Assignor's Revolving
Credit Note and Acquisition Loan Note for new Revolving Credit and Acquisition
Loan Notes payable to the Assignor and the Assignee as follows:
<TABLE>
<CAPTION>
Notes Payable to Amount of Revolving Amount of
the Order of: Credit Note Acquisition Loan Note
---------------- ------------------- ---------------------
<S> <C> <C>
Assignor $_________________ $_________________
Assignee $_________________ $_________________
</TABLE>
(S)3. ASSIGNEE'S REPRESENTATIONS. The Assignee (a) represents and warrants
---------------------------
that (i) it is duly and legally authorized to enter into this Assignment and
Acceptance, (ii) the execution, delivery and performance of this Assignment and
Acceptance do not conflict with any provision of law or of the charter or by-
laws of the Assignee, or of any agreement binding on the Assignee, (iii) all
acts, conditions and things required to be done and performed and to have
occurred prior to the execution, delivery and performance of this Assignment and
Acceptance, and to render the same the legal, valid and binding obligation of
the Assignee, enforceable against it in accordance with its terms, have been
done and performed and have occurred in due and strict compliance with all
applicable laws; (b) confirms that it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements
delivered pursuant to (S)(S)8.4 and 9.4 thereof and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance; (c) agrees that it will,
independently and without reliance upon the Assignor, the Agent or any other
Bank 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 the Credit Agreement; (d) represents and warrants that it is an
Eligible Assignee; (e) appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers under the Credit Agreement and
the other Loan Documents as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; (f) agrees that
it will perform in accordance with their terms all the obligations which by the
terms of the Credit Agreement are required to be performed by it as a Bank[; and
(g) acknowledges that it has made arrangements with the Assignor satisfactory to
the
<PAGE>
-3-
Assignee with respect to its pro rata share of Letter of Credit Fees in
--- ----
respect of outstanding Letters of Credit].
(S)4. EFFECTIVE DATE. The effective date for this Assignment and
--------------
Acceptance shall be __________ (the "Effective Date"). Following the execution
of this Assignment and Acceptance and the consent of the Borrower hereto having
been obtained, each party hereto shall deliver its duly executed counterpart
hereof to the Agent for acceptance by the Agent and recording in the Register by
the Agent. Schedule 1 to the Credit Agreement shall thereupon be replaced as of
----------
the Effective Date by the Schedule 1 anne xed hereto.
----------
(S)5. RIGHTS UNDER CREDIT AGREEMENT. Upon such acceptance and recording,
-----------------------------
from and after the Effective Date, (a) the Assignee shall be a party to the
Credit Agreement and, to the extent provided in this Assignment and Acceptance,
have the rights and obligations of a Bank thereunder, and (b) the Assignor
shall, with respect to that portion of its interest under the Credit Agreement
assigned hereunder, relinquish its rights and be released from its obligations
under the Credit Agreement; provided, however, that the Assignor shall retain
-------- -------
its rights to be indemnified pursuant to (S)18 of the Credit Agreement with
respect to any claims or actions arising prior to the Effective Date.
(S)6. PAYMENTS. Upon such acceptance of this Assignment and Acceptance by
--------
the Agent and such recording, from and after the Effective Date, the Agent shall
make all payments in respect of the rights and interests assigned hereby
(including payments of principal, interest, fees and other amounts) to the
Assignee. The Assignor and the Assignee shall make any appropriate adjustments
in payments for periods prior to the Effective Date by the Agent or with respect
to the making of this assignment directly between themselves.
(S)7. GOVERNING LAW. THIS ASSIGNMENT AND ACCEPTANCE IS INTENDED TO TAKE
-------------
EFFECT AS A SEALED INSTRUMENT TO BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (WITHOUT REFERENCE TO
CONFLICT OF LAWS).
(S)8. COUNTERPARTS. This Assignment and Acceptance may be executed in any
------------
number of counterparts which shall together constitute but one and the same
agreement.
<PAGE>
IN WITNESS WHEREOF, intending to be legally bound, each of the undersigned
has caused this Assignment and Acceptance to be executed on its behalf by its
officer thereunto duly authorized, as of the date first above written.
[INSERT NAME OF ASSIGNOR]
By:___________________________________
Title:
[INSERT NAME OF ASSIGNEE]
By:___________________________________
Title:
CONSENTED TO:
- -------------
JACKSON PRODUCTS, INC.
By:________________________
Title:
BANKBOSTON, N.A., AS AGENT
By:________________________
Title:
<PAGE>
-2-
SCHEDULE 1
----------
<PAGE>
EXHIBIT K
---------
FORM OF
-------
COLLATERAL ASSIGNMENT OF
------------------------
ACQUISITION DOCUMENTS
---------------------
ASSIGNMENT AGREEMENT, dated as of April 22, 1998, is between [INSERT
ASSIGNOR] (the "Assignor"), and BANKBOSTON, N.A., as Agent (the "Assignee").
WHEREAS, pursuant to the terms of the Revolving Credit and Acquisition Loan
Agreement, dated as of April 22, 1998 (as amended and in effect from time to
time, the "Credit Agreement"), among the Assignor, the lending institutions
which are or may become parties to the Credit Agreement (the "Banks"),
Mercantile Bank National Association, as Co-Agent and the Assignee, the Assignor
has agreed to assign to the Assignee for the benefit of the Banks certain
collateral;
NOW, THEREFORE, the parties hereby agree as follows:
1. The Assignor hereby pledges, assigns and grants to the Assignee for
the benefit of the Banks a continuing security interest in and lien on all of
the Assignor's right, title and interest in all of the documents listed on
Exhibit A attached hereto (the "Acquisition Documents") between the Assignor and
- ------- -
[INSERT NAME OF SELLER] (the "Contract Party").
2. This Assignment is made solely for the purpose of securing the payment
and performance of all of the Obligations of the Assignor under the Credit
Agreement and the other Loan Documents (the "Obligations"). If and so long as
there shall not have occurred any Event of Default under the Credit Agreement,
the Assignee shall permit the Assignor to have the benefit of all rights under
the Acquisition Documents and the ability to enforce all the obligations of the
Contract Party under the Acquisition Documents.
3. The Assignor further agrees, represents and warrants that:
(a) The Assignor will keep and perform the obligations to be kept and
performed by it under the Acquisition Documents.
(b) The Assignor will do all things necessary and proper to keep the
Acquisition Documents in full force and effect.
(c) The Assignor specifically acknowledges and agrees that the
Assignee neither assumes, nor shall have any responsibility for, the payment of
any sums due or to become due under the Acquisition Documents or the performance
of any obligations to be performed under or with respect to the Acquisition
Documents by the Assignor, and the
<PAGE>
-2-
Assignor hereby agrees to indemnify and hold the Assignee harmless with respect
to any and all claims by any person relating thereto.
(d) If an Event of Default shall occur and be continuing, in addition
to all other rights and remedies of the Assignee pursuant to any agreements of
the Assignor in favor of or assigned to and held by the Assignee or pursuant to
applicable law or otherwise, the Assignee or its successor or designee shall
have (i) all of the rights and remedies under applicable law, including, without
limitation, the rights and remedies provided to a secured party under the
Uniform Commercial Code, (ii) all of the rights and remedies provided to the
Assignee under the Security Documents, and (iii) all rights and benefits under
the Acquisition Documents without modifying or discharging any of the
Obligations. Upon the occurrence and continuation of any such Event of Default,
the Assignor agrees to execute any and all documents requested by the Assignee
in its sole discretion to enable the Assignee to exercise all of the rights of
the Assignor under the Acquisition Documents.
(e) The Assignee may take or release other security which it may hold
for the payment of the Obligations, may release any party primarily or
secondarily liable therefor, and may apply any other security held by it to the
satisfaction, or partial satisfaction, of such Obligations without prejudice to
any of its rights under this Assignment.
(f) The Assignor hereby designates and appoints the Assignee and each
of its designees or agents as attorney-in-fact of the Assignor irrevocably and
with power of substitution, with authority to execute and deliver for and on
behalf of the Assignor after the occurrence or continuance of an Event of
Default any and all instruments, documents, agreements and other writings
necessary or advisable for the exercise on behalf of the Assignor of any rights
created or existing under or pursuant to the Acquisition Documents.
4. The Assignee hereby accepts such assignment and assumes and agrees to
perform, observe and comply with all of the Assignor's obligations under the
Acquisition Documents, but only in the event that it in fact shall have
exercised its rights as Assignee hereunder.
5. This Assignment shall be binding upon and enure to the benefit of the
respective successors and assigns of the Assignor and the Assignee.
6. All capitalized terms not specifically defined in this Agreement and
defined in the Credit Agreement shall have the same meanings herein as in the
Credit Agreement.
7. Upon the payment and satisfaction in full of the Obligations, this
Agreement shall become null and void and of no further force or effect.
8. THIS AGREEMENT IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS.
9. This Agreement may be executed in several counterparts and by each
party on a separate counterpart, each of which when so executed and delivered
shall be an
<PAGE>
-3-
original, and all of which together shall constitute one instrument.
In proving this Agreement, it shall not be necessary to produce or account for
more than one such counterpart signed by the party against whom enforcement is
sought.
<PAGE>
IN WITNESS WHEREOF, the Assignor and the Assignee have executed this
instrument as of the date first written above.
JACKSON PRODUCTS, INC.
By:____________________________
Title:
BANKBOSTON, N.A., AS AGENT
By:____________________________
Title:
<PAGE>
EXHIBIT A
---------
All [NCH][Crystaloid] Acquisition Documents as defined in the Credit
Agreement.
<PAGE>
SCHEDULES TO THE CREDIT AGREEMENT
Introduction to the Schedules
------------------------------
The Schedules set forth below are part of the Credit Agreement dated April
22, 1998 (the "Credit Agreement") by and among Jackson Products, Inc.
("Jackson"), as Borrower; BankBoston, N.A., as Agent and a Lender; and the other
parties thereto listed as Lenders. Certain of these Schedules contain
exceptions made to the representations, warranties, and covenants of Jackson in
the Credit Agreement.
Any matter specifically described and set forth herein as an exception to a
Section of the Credit Agreement or specifically described and set forth in a
Schedule to the Credit Agreement shall be deemed to constitute an exception to
all other sections of the Credit Agreement to which it applies. No general
disclosure in any Schedule herein shall be limited by any more specific
disclosure in either that Schedule or any other Schedule herein. Where the
terms of a contract or other disclosure item have been summarized or described
in the Schedules, such summary or description does not purport to be a complete
statement of the material terms of such contract or other item. Any cross
referencing is purely for the assistance of the reader and is not intended to be
exclusive as to which Schedule the information pertains.
<PAGE>
SCHEDULE 1
----------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Commitment
Revolving Acquisition Percentage of Revolving
Credit Loan Loan Credit Loans, Term Loans
Banks Commitment Commitment and Letters of Credit
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
BankBoston, N.A.
100 Federal Street $19,500,000 $61,750,000 65%
Boston, Massachusetts 02110
Attn: Mark M. Andrew, Director
- -----------------------------------------------------------------------------------------------------------
Mercantile Bank National Association $10,500,000 $33,250,000 35%
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
Totals: $30,000,000 $65,000,000 100%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Schedule 1.1
------------
JORDAN AFFILIATES
John Camp
-2-
<PAGE>
Schedule 5.1
------------
1. Letter of Credit #210-2707903 in the amount of $250,000 issued by
Mercantile Bank National Association.
2. Letter of Credit #210-2707924 in the amount of $1,000,000 issued by
Mercantile Bank National Association.
<PAGE>
SCHEDULE 8.3
------------
TITLE TO PROPERTY; LEASES
Owned Property
- --------------
1. Property located 1 mile N. 45 deg. W. 27 of the Plaza, Paris, Lamar County,
Texas, owned by Flex-O-Lite.
2. Property located at lots 19 and 20 of Muscatine Industrial sites No. 1,
Muscatine, Iowa, owned by Flex-O-Lite.
3. All that part of the Northeast 1/4, Section 20, Town 8 North, Range 11
West, of Plainfield Township, Kent County, Michigan, containing
approximately 23.503 acres of land, commonly known as 5801 Safety Drive
N.E., Belmont, Michigan 49306, owned by Borrower.
4. 5282 Hudson Drive, Hudson, Ohio, owned by Crystaloid Electronics Company.
5. All that tract or parcel of land situate in the City of Tonawanda, County
of Erie, State of New York, and being part of Lot 13, Township 12, Range 8
of the Holland Land Company survey (so-called).
6. Lots numbered 8, 9 and 10 in Block 122 in Tin Plate addition to the city of
Elwood, Madison County, Indiana, also the north half of the parcel
commencing at the northwest corner of Lot numbered 20 in Block 122 in Tin
Plate addition to the city of Elwood and running North to the Southwest
corner of Lot numbered 10, thence East to the Southeast corner of Lot
numbered 8, thence proceeding West to the point of beginning.
Leased Property
- ---------------
1. 2997 Clarkson Road, Chesterfield, Missouri 63017 (Corporate Headquarters).
2. 2025 Hitzert Court, Fenton, Missouri 63026 (Flex-O-Lite tape plant).
3. 125 Cassens Court, Fenton, Missouri 63026 (Flex-O-Lite distribution
warehouse).
4. 56 Coney Island Drive, Sparks, Nevada 89431 (Silencio/Safety Direct, Inc.).
5. 143 Borden Avenue, Belmont, Ontario, Canada, NOI 1BO (Flex-O-Lite Canada
warehouse).
6. Carl-Zeiss Str. 3 D63755 Alzenau, Germany (Lansec manufacturing and
distribution).
<PAGE>
7. Parc Club Cadera Sud Av. Ariane, BP11 F-33700 Merignac, France (Lansec
distribution).
8. Ohmstraat 3b, NL-6716 BA Ede, Netherlands (Lansec distribution).
9. Unit 9, Harvey Works Ind. Estate Shelah Road, Halesowen West Midlands,
United Kingdom (Lansec distribution).
10. Via R. del Riccio, 23 Sesto San Giovanni I-20099 Milan, Italy (Lansec sales
office).
-2-
<PAGE>
SCHEDULE 8.6
------------
FRANCHISES, PATENTS & COPYRIGHTS
None
-3-
<PAGE>
SCHEDULE 8.7
------------
LITIGATION
<TABLE>
<CAPTION>
===================================================================================================================
Case/Date of Loss/Amount State/Court/Filed Ins./Indemnity
===================================================================================================================
<S> <C> <C>
Jackson:
-------
===================================================================================================================
*Barry Battista/6-26-94: Claimant alleges injuries sustained from a welding Unknown CIGNA/ESIS
lcns. Amount claimed unknown.
- -------------------------------------------------------------------------------------------------------------------
*Keith Fagan/9-20-93: Claimant alleges injuries sustained to eye while Unknown CIGNA/ESIS
wearing safety glasses. Amount claimed in excess of $500,000.
- -------------------------------------------------------------------------------------------------------------------
Jodi Ingham/10-94 to 08-96: Plaintiff alleges sexual harassment by the MI/17th Circuit Chubb
Company and one employee. CL/98-03400
===================================================================================================================
</TABLE>
<PAGE>
SCHEDULE 8.15
-------------
AFFILIATE TRANSACTIONS
Second Amended and Restated Management Consulting Agreement
Stockholder Loans in connection with the initial acquisition in an
aggregate original principal amount as of December 31, 1997 of $343,000.
Director Indemnification Agreements with each director.
-2-
<PAGE>
SCHEDULE 8.18
-------------
ENVIRONMENTAL COMPLIANCE
The Company is in compliance with environmental regulations in all material
respects.
<PAGE>
SCHEDULE 8.19
-------------
SUBSIDIARIES
1. Flex-O-Lite, Inc., a Delaware corporation.
a. Flex-O-Lite Canada Ltd., an Ontario corporation.
2. OSD Envizion, Inc., a Delaware corporation.
3. Lansec Holdings GmbH, a German corporation.
a. Lansec SARL, a French corporation
b. Lansec Benelux B.V., a Netherlands corporation
c. Lansec GmbH, a German corporation
d. Lansec Safety Products, Ltd., a United Kingdom corporation
4. Crystaloid Technologies, Inc., a Delaware corporation.
5. Jackson Acquisition, Inc., a Delaware corporation (to be renamed after the
Closing).
a. American Allsafe Company, a Texas corporation
b. Silencio / Safety Direct, Inc., a Nevada corporation
6. Jackson Products Pty, an Australian corporation.
<PAGE>
SCHEDULE 8.24
-------------
INSURANCE
<TABLE>
<CAPTION>
=======================================================================================================================
TYPE OF INSURANCE
COMPANY POLICY PERIOD DESCRIPTION OF
BEST'S RATING AGENT COVERAGE LIMITS OF LIABILITY
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Property 11/1/97-11/198 Provides coverage for Blanket Limit (Replacement
Allendale Mutual Lockton physical damage or Cost) ........... $116,114,000
Insurance Company Company loss subject to terms,
A++X conditions, and Various Sublimits
omissions of policy,
(Building, Contents,
and Time Element)
- -----------------------------------------------------------------------------------------------------------------------
Flood 12/14/97- Provides personal Contents Limit (ACV)
American Banker 12/14/98 property coverage ..................... $500,000
Insurance Company Lockton against direct physical
A-VIII Company loss by or from flood
at the designated
premises.
- -----------------------------------------------------------------------------------------------------------------------
Crime 8/16/97-8/16/98 Provides coverage for Employee Dishonesty
Federal Insurance Lockton employee dishonestly, .................... $1,000,000
Company Company that, disappearance Depositor's Forgery
A++XIV and destruction (inside .................... $1,000,000
and outside), Loss Inside the Premises
depositor's forgery, .................... $1,000,000
and computer fraud. Loss Outside the Premises
.................... $1,000,000
Computer Fraud...... $1,000,000
- -----------------------------------------------------------------------------------------------------------------------
Kidnap & Ransom 8/16/97-8/16/98 Provides coverage for Kidnap/Abduction and
Federal Insurance Lockton loss of property and Extortion .......... $1,000,000
Company Company other consideration Delivery ........... $1,000,000
A++XIV surrendered for the Expenses ........... $1,000,000
return of such due to Legal Liability .... $1,000,000
all legal abduction or Political Threat ... $1,000,000
threat or series of
threats.
- -----------------------------------------------------------------------------------------------------------------------
Executive Protection 8/16/97-8/16/98 Provides coverage for Per loss per policy period
- - Forefront Lockton Employment .................... $3,000,000
Federal Insurance Company Liability, ERISA
Company Fiduciary Liability,
A++XIV Directions and
Officers Liability, and
Outside Directorship
Liability
=======================================================================================================================
<CAPTION>
=======================================================================
TYPE OF INSURANCE
COMPANY
BEST'S RATING DEDUCTIBLE OR RETENTION
- -----------------------------------------------------------------------
<S> <C>
Property Per Claim ................. $50,000
Allendale Mutual Except;
Insurance Company
A++X Per claim Service Interruption After
an 8 hour wait ............ $50,000
Transportation ............. $5,000
Exhibition Floater ......... $5,000
Fine Arts .................. $5,000
On wind per values combined
property damage and bodily injury
for locations along coast ...... 2%
- -----------------------------------------------------------------------
Flood Deductible ................... $500
American Banker
Insurance Company
A-VIII
- -----------------------------------------------------------------------
Crime $1,000,000
Federal Insurance Except:
Company On Employee Benefits Plans ..... $0
A++XIV
- -----------------------------------------------------------------------
Kidnap & Ransom Deductible ..................... $0
Federal Insurance
Company
A++XIV
- -----------------------------------------------------------------------
Executive Protection For Employment
- - Forefront Liability ................ $100,000
Federal Insurance For Fiduciary Liability ........ $0
Company For Directors and Officers
A++XIV Liability ................ $100,000
For Outside Directorship
Liability ...................... $0
=======================================================================
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
TYPE OF INSURANCE
COMPANY POLICY PERIOD DESCRIPTION OF
BEST'S RATING AGENT COVERAGE LIMITS OF LIABILITY DEDUCTIBLE OR RETENTION
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
General Liability 8/16/97-8/16/98 Provides coverage for Bodily Injury and Property Self Insured Retention per
United States Lockton claims for bodily Damage Aggregate .. $2,000,000 Occurrence for Bodily
Fidelity and Company injury, property Products-Completed Operations Injury .......... $100,000
Guaranty Co. damage, personal Aggregate ......... $1,000,000
(USF&G) injury and advertising Personal and Advertising Injury Self Insured Retention
A+XV injury. ................... $1,000,000 Annual Aggregate for
Bodily Injury and Property Bodily Injury and
Damage per Occurrence Property Damage
................... $1,000,000 ................ $ 400,000
Fire Legal Liability Limit Per
Occurrence ........ $ 100,000
Employee Benefit/Liability Per
Occurrence/Claim Limit Employee Benefit
................... $1,000,000 Liability ...... $ 1,000
Employee Benefit Liability
Aggregate Limit ... $1,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
Automotive 8/16/97-8/16/98 Provides coverage for Combined Single Limit Comprehensive .. $ 1,000
Wausau Insurance Lockton claims for bodily ................... $1,000,000 Collision ...... $ 1,000
Company Company injury or property
A+XV damage. Statutory Personal Injury
Projection:
Medical Payments .. $ 10,000
Uninsured Motorist. $1,000,000
Underinsured Motorist
................... $1,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
Workers 8/16/97-8/16/98 Workers Statutory Workers Per occurrence . $ 250,000
Compensation Lockton Compensation Compensation Aggregate....... $1,000,000
Wausau Insurance Company Exclude the Indiana Employer's Liability:
Company Location
A+XV Per accident Bodily Injury
by accident ....... $1,000,000
Policy limit for bodily injury
by disease ........ $1,000,000
Each Employee Limit for
Bodily Injury by disease
................... $1,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
Workers 7/3/97-7/3/98 Workers Statutory Workers Deductible ..... $ 0
Compensation Lockton Compensation Compensation
Michigan Mutual Company Includes only the Employer's Liability:
Insurance Co. Indiana Locations
A-IX Per accident Bodily Injury by
accident .......... $ 500,000
Policy limit for bodily injury
by disease ........ $ 500,000
Each Employee Limit for
Bodily Injury by disease
................... $ 500,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- 3 -
<PAGE>
<TABLE>
<CAPTION>
=================================================================================================================================
TYPE OF INSURANCE
COMPANY POLICY PERIOD DESCRIPTION OF
BEST'S RATING AGENT COVERAGE LIMITS OF LIABILITY DEDUCTIBLE OR RETENTION
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Umbrella 8/16/97-8/16/98 Provides coverage in Each occurrence combined Self-Insured
Westport Insurance Lockton excess of designated Bodily Injury and Property Retention ...... $10,000
Corporation Company primary liability Damage .......... $15,000,000
A++VII policies. General Annual Aggregate
................. $15,000,000
Products Annual Aggregate
................. $15,000,000
- ---------------------------------------------------------------------------------------------------------------------------------
Excess 8/16/97-8/16/98 Provides coverage in $20,000,000 Excess the lead Deductible ..... $ 0
Federal Insurance Lockton excess of the umbrella $15,000,000
Company Company policy.
A++XIV
- ---------------------------------------------------------------------------------------------------------------------------------
Ocean Cargo 8/16/97-8/16/98 Provides coverage of Merchandise Aboard any one Deductible ..... $ 1,000
Federal Insurance Lockton shipments of lawful conveyance ...... $ 250,000
Company Company goods and merchandise On deck, subject to an on deck
A++XIV consisting principally bill of lading .. $ 25,000
of road and industrial in any one package by mail or
safety equipment boxed parcel post ..... $ 1,000
and containerized. Aboard any one Barge or in any
one Tow as Principal
Conveyance ...... $ 100,000
- ---------------------------------------------------------------------------------------------------------------------------------
Non Owned Aviation 8/16/97-8/16/98 Provides coverage for Each occurrence for Bodily Deductible ..... $ 0
Insurance Company Lockton bodily injury, including Injury including passenger, and
of North American Company passengers, and property Property Damage Liability
A-XIII damage liability caused ................. $ 5,000,000
by the operation, Per person - Medical Payments
maintenance, or use of ................. $ 2,500
the aircraft. Per accident - Medical
Payments ........ $ 37,500
Per person - Baggage Liability
................. $ 250
Per occurrence - Baggage
Liability ....... $ 1,000
=================================================================================================================================
</TABLE>
- 4 -
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================================================
TYPE OF INSURANCE
COMPANY POLICY PERIOD DESCRIPTION OF
BEST'S RATING AGENT COVERAGE LIMITS OF LIABILITY DEDUCTIBLE OR RETENTION
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Foreign Liability 8/16/97-8/16/98 Provides excess/DIC General Liability Per
Great Northern Lockton coverage over the Occurrence
Insurance Company Company local policies in Bodily Injury Property Damage
A++XIV Germany, France, Liability .......... $1,000,000
United Kingdom, and Personal Injury & Advertising
the Netherlands. The injury ............. $1,000,000
policy also provides Products Completed Operations
products. .................... $2,000,000
Property Damage .... $ 100,000
Liability coverage on Medical Expense Coverage
experts, hired end non .................... $ 10,000
owned liability and
international Automobile Liability:
voluntary workers Bodily Injury and Property
compensation Damage ............. $1,000,000
coverage. Medical Expense Coverage,
each person ........ $ 10,000
Voluntary Worker's
Compensation:
Employer's Liability Bodily
Injury by disease/accident
.................... $ 500,000
Repatriation Expense Policy
Limits ............. $ 250,000
Repatriation Expense, each
employee ........... $ 25,000
Property:
Blanket Building and Personal Deductible ......... $1,000
Property Limit ..... $3,819,058
Business income and Extra
Expense Limit (actual/loss
sustained) ......... $2,800,000
==================================================================================================================================
</TABLE>
- 5 -
<PAGE>
SCHEDULE 9.13
-------------
MORTGAGED PROPERTY
1. Property located 1 mile N. 45 deg. W. 27 of the Plaza, Paris, Lamar County,
Texas owned by Flex-O-Lite.
2. Property located at lots 19 and 20 of Muscatine Industrial sites No. 1,
Muscatine, Iowa, owned by Flex-O-Lite.
3. All that part of the Northeast 1/4, Section 20, Town 8 North, Range 11
West, of Plainfield Township, Kent County, Michigan, containing
approximately 23.503 acres of land, commonly known as 5801 Safety Drive
N.E., Belmont, Michigan 49306, owned by Borrower.
4. 5282 Hudson Drive, Hudson, Ohio, owned by Crystaloid Electronics Company.
5. All that tract or parcel of land situate in the City of Tonawanda, County
of Erie, State of New York, and being part of Lot 13, Township 12, Range 8
of the Holland Land Company survey (so-called).
<PAGE>
SCHEDULE 10.1
-------------
INDEBTEDNESS
1. 9 1/2% Senior Subordinated Notes in the aggregate principal amount of
$115,000,000.
<PAGE>
SCHEDULE 10.2
-------------
EXISTING LIENS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
DEBTOR/LESSEE SECURED PARTY/ JURISDICTION & DATE COMMENTS
LESSOR FILE NO.
- -----------------------------------------------------------------------------------------------------------------------------
I. LIENS RELATED TO JACKSON'S CURRENT BORROWING FACILITY (TO BE TERMINATED)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Flex-O-Lite, Inc. Heller Financial, St. Louis County 04/07/94 The outstanding balance on this
Inc. Missouri line of credit will be paid off
4166 with the proceeds of the financing
transaction at which time the UCC
statement will be terminated.
- -----------------------------------------------------------------------------------------------------------------------------
Flex-O-Lite, Inc. Heller Financial, State of Missouri 04/05/94 Partial release filed on April 4,
Inc. 2389573 1997 (file number 2774624). The
outstanding balance on this line
of credit will be paid off with
the proceeds of the financing
transaction at which time the
UCC statement will be terminated.
- -----------------------------------------------------------------------------------------------------------------------------
Flex-O-Lite, Inc. Heller Financial, State of Texas 03/29/94 The outstanding balance on this
Inc. 9400056367 line of credit will be paid off
with the proceeds of the financing
transaction at which time the UCC
statement will be terminated.
- -----------------------------------------------------------------------------------------------------------------------------
Flex-O-Lite, Inc. Heller Financial, City of St. Louis, 04/04/94 The outstanding balance on this
Inc. Missouri line of credit will be paid off
2442 with the proceeds of the financing
transaction at which time the UCC
statement will be terminated.
- -----------------------------------------------------------------------------------------------------------------------------
Flex-O-Lite, Inc. Heller Financial, State of Indiana 04/04/94 Partial release filed on April 7,
Inc. 1904811 1997 (file number 2116643). The
outstanding balance on this line
of credit will be paid off with
the proceeds of the financing
transaction at which time the
UCC statement will be terminated.
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
DEBTOR/LESSEE SECURED PARTY/ JURISDICTION & DATE COMMENTS
LESSOR FILE NO.
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jackson Products, Inc. Heller Financial, State of Missouri 04/16/93 The outstanding balance on
Inc. 2251858 this line of credit will be
paid off with the proceeds of
the financial transaction at
which time the UCC statement
will be terminated. Following
are subsequent related filings:
01/20/95 file 2497173 (amend)
08/23/95 file 2575219 (amend)
11/21/96 file 2728402 (amend)
09/18/97 file 2831539 (amend)
10/27/97 file 2843881 (cont'n)
11/18/97 file 2851474 (amend)
- ----------------------------------------------------------------------------------------------------------------------------
Jackson Products, Inc. Heller Financial, State of Missouri 04/05/94 The outstanding balance on
Inc. 2389574 this line of credit will be
paid off with the proceeds of
the financial transaction at
which time the UCC statement
will be terminated. This filing
was amended on August 23, 1995
by file number 2575220.
- ----------------------------------------------------------------------------------------------------------------------------
Jackson Products, Inc. Heller Financial, State of Missouri 08/23/95 The outstanding balance on
Inc. 2575221 this line of credit will be
paid off with the proceeds of
the financial transaction at
which time the UCC statement
will be terminated.
- ----------------------------------------------------------------------------------------------------------------------------
Jackson Products, Inc. Heller Financial, State of Michigan 04/16/93 The outstanding balance on
Inc. 30106B this line of credit will be
paid off with the proceeds of
the financial transaction at
which time the UCC statement
will be terminated. A
continuation was filed on
October 30, 1997 (file 90085B)
- ----------------------------------------------------------------------------------------------------------------------------
Jackson Products, Inc. Heller Financial, State of Michigan 08/23/95 The outstanding balance on
Inc. 59814B this line of credit will be
paid off with the proceeds of
the financial transaction at
which time the UCC statement
will be terminated.
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
- 2 -
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
DEBTOR/LESSEE SECURED PARTY/ JURISDICTION & DATE COMMENTS
LESSOR FILE NO.
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jackson Products, Heller Financial, State of Michigan 10/02/95 The outstanding balance on this
Inc. Inc. 61077B line of credit will be paid off
with the proceeds of the financing
transaction at which time the UCC
statement will be terminated.
- --------------------------------------------------------------------------------------------------------------------------------
Jackson Products, Heller Financial, City of St. Louis, 04/04/94 The outstanding balance on this
Inc. Inc. Missouri line of credit will be paid off
2441 with the proceeds of the financing
transaction at which time the UCC
statement will be terminated. Following
are subsequent related filings:
01/23/95 file 441 (amend)
08/23/95 file 5405 (amend)
11/22/96 file 7691 (amend)
09/18/97 file 6398 (amend)
11/18/97 file 7752 (amend)
- --------------------------------------------------------------------------------------------------------------------------------
Jackson Products, Heller Financial, City of St. Louis, 08/23/95 The outstanding balance on this
Inc. Inc. Missouri line of credit will be paid off
5406 with the proceeds of the financing
transaction at which time the UCC
statement will be terminated.
- --------------------------------------------------------------------------------------------------------------------------------
Jackson Products, Heller Financial, St. Louis, County, 04/16/93 The outstanding balance on this
Inc. Inc. Missouri line of credit will be paid off
4641 with the proceeds of the financing
transaction at which time the UCC
statement will be terminated. Following
are subsequent related filings:
01/23/95 file 1024 (amend)
08/23/95 file 10752 (amend)
11/26/96 file 14255 (amend)
09/18/97 file 11238 (amend)
10/27/97 file 12838 (cont'n)
11/25/97 file 14265 (amend)
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
DEBTOR / LESSEE SECURED PARTY / JURISDICTION & DATE COMMENTS
LESSOR FILE NO.
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jackson Products, Heller Financial, St. Louis County, 04/07/94 The outstanding balance on this
Inc. Inc. Missouri line of credit will be paid off
4165 with the proceeds of the financing
transaction at which time the UCC
statement will be terminated. This
filing was amended on August 23, 1995
(file 10753)
- ----------------------------------------------------------------------------------------------------------------------------------
Jackson Products, Heller Financial, St. Louis County, 08/23/95 The outstanding balance on this
Inc. Inc. Missouri line of credit will be paid off
10725 with the proceeds of the financing
transaction at which time the UCC
statement will be terminated.
- ----------------------------------------------------------------------------------------------------------------------------------
Crystaloid Electronics National City Bank State of Ohio 06/09/87 Related to line of credit, expected to
Company Y39536 be terminated by Seller prior to
acquisition by Borrower. Following are
subsequent related filings:
05/27/92 file 1070114 (amend)
04/17/97 file 4179722801 (amendment)
- ----------------------------------------------------------------------------------------------------------------------------------
Crystaloid Electronics National City Bank State of Ohio 01/08/92 Related to line of credit, expected to
Company AH15892 be terminated by Seller prior to
acquisition by Borrower. Following are
subsequent related filings:
12/17/96 file 12179634501 (amend)
- ----------------------------------------------------------------------------------------------------------------------------------
Crystaloid Electronics Lindblom Family State of Ohio 05/17/94 Expected to be terminated by Seller
Company Limited Partnership AL00688 prior to acquisition by Borrower.
(by assignment from Following are subsequent related filings:
Kitco, Inc.) 01/22/96 file 1229618201 (assign)
- ----------------------------------------------------------------------------------------------------------------------------------
Crystaloid Electronics National City Bank State of Ohio 01/18/97 Related to line of credit, expected to
Company AM08991 be terminated by Seller prior to
acquisition by Borrower.
- ----------------------------------------------------------------------------------------------------------------------------------
Crystaloid Electronics National City Bank State of Ohio 01/15/98 Related to line of credit, expected to
Company AP0018436 be terminated by Seller prior to
acquisition by Borrower.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
DEBTOR/LESSEE SECURED PARTY/ JURISDICTION & DATE COMMENTS
LESSOR FILE NO.
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Crystaloid Electronics National City Bank Summit County, 06/08/87 Related to line of credit,
Company Ohio expected to be terminated by
396536 Seller prior to acquisition by
Borrower. Following are
subsequent related filings:
05/26/92 file 459295 (cont'n)
04/08/97 file 21000591
(cont'n)
- -------------------------------------------------------------------------------------------------------------------------
Crystaloid Electronics National City Bank Summit County, 01/06/92 Related to line of credit,
Company Ohio expected to be terminated by
455229 Seller prior to acquisition by
Borrower. Following are
subsequent related filings:
12/12/96 file 511165 (cont'n)
- -------------------------------------------------------------------------------------------------------------------------
Crystaloid Electronics National City Bank Summit County, 08/21/95 Related to line of credit,
Company Ohio expected to be terminated by
496499 Seller prior to acquisition by
Borrower.
- -------------------------------------------------------------------------------------------------------------------------
Crystaloid Electronics National City Bank Summit County, 01/09/98 Related to line of credit,
Company Ohio expected to be terminated by
21012276 Seller prior to acquisition by
Borrower.
- -------------------------------------------------------------------------------------------------------------------------
II. LIENS REMAINING AFTER CLOSING
- -------------------------------------------------------------------------------------------------------------------------
Flex-O-Lite, Inc. NBD Equipment State of Missouri 10/03/94 Equipment lease
Finance, Inc. 2458884
- -------------------------------------------------------------------------------------------------------------------------
Flex-O-Lite, Inc. NBD Equipment St. Louis County, 10/07/94 Equipment lease
Finance, Inc. Missouri
12492
- -------------------------------------------------------------------------------------------------------------------------
Jackson Products, Inc. NationsBanc State of Missouri 07/07/93 Equipment lease
Leasing Corporation 2272809
- -------------------------------------------------------------------------------------------------------------------------
Jackson Products, Inc. MDFC Equipment State of Missouri 02/14/95 Equipment lease
Leasing Corp. 2506729
- -------------------------------------------------------------------------------------------------------------------------
Jackson Products, Inc. MDFC Equipment State of Missouri 02/14/95 Equipment lease
Leasing Corp. 2506842
- -------------------------------------------------------------------------------------------------------------------------
Jackson Products, Inc. MDFC Equipment State of Missouri 10/24/95 Equipment lease
Leasing Corp. 2595839
- -------------------------------------------------------------------------------------------------------------------------
Jackson Products, Inc. Pitney Bowes State of Missouri 11/06/95 Equipment lease
Credit Corporation 2599595
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DEBTOR/LESSEE SECURED PARTY/ JURISDICTION & DATE COMMENTS
LESSOR FILE NO.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jackson Products, Inc. Ikon Office State of Missouri 11/03/974 Equipment lease
Solutions 2847783
- ------------------------------------------------------------------------------------------------------------------------------------
Jackson Products, Inc. NationsBank St Louis County, 06/07/93 Equipment lease
Leasing Corporation Missouri
6848
- ------------------------------------------------------------------------------------------------------------------------------------
Jackson Products, Inc. MDFC Equipment St Louis County, 10/20/95 Equipment lease
Leasing Corp. Missouri
13277
- ------------------------------------------------------------------------------------------------------------------------------------
Jackson Products, Inc. Ikon Office St Louis County, 11/05/975 Equipment lease
Solutions Missouri
13281
- ------------------------------------------------------------------------------------------------------------------------------------
Jackson Products, Inc. AT&T Credit State of Michigan 11/17/94 Equipment lease
Corporation 49127B
- ------------------------------------------------------------------------------------------------------------------------------------
Jackson Products, Inc. Jackson Products, State of Michigan 02/13/95 Equipment lease
Inc. C936505
- ------------------------------------------------------------------------------------------------------------------------------------
Jackson Products, Inc. MDFC Equipment State of Michigan 10/24/95 Equipment lease
Leasing Corp. D025519
- ------------------------------------------------------------------------------------------------------------------------------------
Jackson Products, Inc. MC Machinery State of Michigan 08/16/95 Equipment lease
Systems, Inc. D128737
- ------------------------------------------------------------------------------------------------------------------------------------
Crystaloid Electronics Copelco Capital, State of Ohio 06/16/95 Equipment lease
Company Inc. AL96061
- ------------------------------------------------------------------------------------------------------------------------------------
Crystaloid Electronics Associates Leasing, State of Ohio 10/18/95 Equipment lease
Company Inc. AM22797
- ------------------------------------------------------------------------------------------------------------------------------------
Crystaloid Electronics Associates Leasing, State of Ohio 11/20/95 Equipment lease
Company Inc. AM30457
- ------------------------------------------------------------------------------------------------------------------------------------
Crystaloid Electronics Associates Leasing, State of Ohio 09/20/01 Equipment lease
Company Inc. AM04427
- ------------------------------------------------------------------------------------------------------------------------------------
Crystaloid Electronics Associates Leasing, Summit County, 10/31/95 Equipment lease
Company Inc. Ohio
498549
- ------------------------------------------------------------------------------------------------------------------------------------
Crystaloid Electronics Associates Leasing, Summit County, 11/22/95 Equipment lease
Company Inc. Ohio
499245
- ------------------------------------------------------------------------------------------------------------------------------------
Crystaloid Electronics Associates Leasing, Summit County, 09/20/96 Equipment lease
Company Inc. Ohio
508637
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-6-
<PAGE>
SCHEDULE 10.3
-------------
INVESTMENTS
None.
<PAGE>
EXHIBIT 10.2
------------
REVOLVING CREDIT NOTE
---------------------
$19,500,000 April 22, 1998
FOR VALUE RECEIVED, the undersigned JACKSON PRODUCTS, INC., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of BANKBOSTON,
N.A., a national banking association (the "Bank"), at the Agent's head office as
defined in the Credit Agreement referred to below):
(a) prior to or on April 30, 2004 the principal amount of NINETEEN
MILLION FIVE HUNDRED THOUSAND DOLLARS ($19,500,000) or, if less, the
aggregate unpaid principal amount of Revolving Credit Loans advanced by the
Bank to the Borrower pursuant to the Revolving Credit and Acquisition Loan
Agreement dated as of April 22, 1998 (as amended and in effect from time to
time, the "Credit Agreement"), among the Borrower, the Bank and the other
parties thereto; and
(b) interest on the principal balance hereof from time to time
outstanding from the Closing Date under the Credit Agreement through and
including the maturity date hereof at the times and at the rate provided in
the Credit Agreement.
This Note evidences borrowings under and has been issued by the Borrower in
accordance with the terms of the Credit Agreement. The Bank and any holder
hereof is entitled to the benefits of the Credit Agreement, the Security
Documents and the other Loan Documents, and may enforce the agreements of the
Borrower contained therein, and any holder hereof may exercise the respective
remedies provided for thereby or otherwise available in respect thereof, all in
accordance with the respective terms thereof. All capitalized terms used in this
Note and not otherwise defined herein shall have the same meanings herein as in
the Credit Agreement.
The Borrower irrevocably authorizes the Bank to make or cause to be made,
at or about the time of the Drawdown Date of any Revolving Credit Loan or at the
time of receipt of any payment of principal of this Note, an appropriate
notation on the grid attached to this Note, or the continuation of such grid, or
any other similar record, including computer records, reflecting the making of
such Revolving Credit Loan or (as the case may be) the receipt of such payment.
The outstanding amount of the Revolving Credit Loans set forth on the grid
attached to this Note, or the continuation of such grid, or any other similar
record, including computer records, maintained by the Bank with respect to any
Revolving Credit Loans shall be prima facie evidence of the principal amount
----- -----
thereof owing and unpaid to the Bank, but the failure to record, or any error in
so recording, any such amount on any such grid, continuation or other record
<PAGE>
-2-
shall not limit or otherwise affect the obligation of the Borrower hereunder or
under the Credit Agreement to make payments of principal of and interest on this
Note when due.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note on the terms and conditions specified in the Credit Agreement.
If any one or more of the Events of Default shall occur, the entire unpaid
principal amount of this Note and all of the unpaid interest accrued thereon may
become or be declared due and payable in the manner and with the effect provided
in the Credit Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Bank or such holder, nor shall any delay, omission or waiver
on any one occasion be deemed a bar or waiver of the same or any other right on
any further occasion.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY
FEDERAL COURT SITTING THEREIN AND THE CONSENT TO THE NONEXCLUSIVE JURISDICTION
OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE
BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN (S)20 OF THE CREDIT AGREEMENT. THE
BORROWER HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR
CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS NOTE, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF ANY OF SUCH RIGHTS OR OBLIGATIONS.
THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT COURT.
<PAGE>
-3-
This Note shall be deemed to take effect as a sealed instrument under the
laws of The Commonwealth of Massachusetts.
<PAGE>
-4-
IN WITNESS WHEREOF, the undersigned has caused this Revolving Credit Note
to be signed in its corporate name and its corporate seal to be impressed
thereon by its duly authorized officer as of the day and year first above
written.
[Corporate Seal]
JACKSON PRODUCTS, INC.
By: /s/ Christopher T. Paule
-------------------------------------
Title: Chief Financial Officer,
Vice President & Secretary
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Amount of Amount of Balance of
Revolving Principal Paid Principal Notation Made By:
Date Credit Loan or Prepaid Unpaid
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 10.3
REVOLVING CREDIT NOTE
---------------------
$10,500,000 April 22, 1998
FOR VALUE RECEIVED, the undersigned JACKSON PRODUCTS, INC., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of MERCANTILE
BANK NATIONAL ASSOCIATION, a national banking association (the "Bank"), at the
Agent's head office as defined in the Credit Agreement referred to below):
(a) prior to or on April 30, 2004 the principal amount of TEN MILLION
FIVE HUNDRED THOUSAND DOLLARS ($10,500,000) or, if less, the aggregate
unpaid principal amount of Revolving Credit Loans advanced by the Bank to
the Borrower pursuant to the Revolving Credit and Acquisition Loan
Agreement dated as of April 22, 1998 (as amended and in effect from time to
time, the "Credit Agreement"), among the Borrower, the Bank and the other
parties thereto; and
(b) interest on the principal balance hereof from time to time
outstanding from the Closing Date under the Credit Agreement through and
including the maturity date hereof at the times and at the rate provided in
the Credit Agreement.
This Note evidences borrowings under and has been issued by the Borrower in
accordance with the terms of the Credit Agreement. The Bank and any holder
hereof is entitled to the benefits of the Credit Agreement, the Security
Documents and the other Loan Documents, and may enforce the agreements of the
Borrower contained therein, and any holder hereof may exercise the respective
remedies provided for thereby or otherwise available in respect thereof, all in
accordance with the respective terms thereof. All capitalized terms used in
this Note and not otherwise defined herein shall have the same meanings herein
as in the Credit Agreement.
The Borrower irrevocably authorizes the Bank to make or cause to be made,
at or about the time of the Drawdown Date of any Revolving Credit Loan or at the
time of receipt of any payment of principal of this Note, an appropriate
notation on the grid attached to this Note, or the continuation of such grid, or
any other similar record, including computer records, reflecting the making of
such Revolving Credit Loan or (as the case may be) the receipt of such payment.
The outstanding amount of the Revolving Credit Loans set forth on the grid
attached to this Note, or the continuation of such grid, or any other similar
record, including computer records, maintained by the Bank with respect to any
Revolving Credit Loans shall be prima facie evidence of the principal amount
----- -----
thereof owing and unpaid to the Bank, but the failure to record, or any error in
so recording, any such amount on any such grid, continuation or other record
<PAGE>
-2-
shall not limit or otherwise affect the obligation of the Borrower hereunder or
under the Credit Agreement to make payments of principal of and interest on this
Note when due.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note on the terms and conditions specified in the Credit Agreement.
If any one or more of the Events of Default shall occur, the entire unpaid
principal amount of this Note and all of the unpaid interest accrued thereon may
become or be declared due and payable in the manner and with the effect provided
in the Credit Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Bank or such holder, nor shall any delay, omission or waiver
on any one occasion be deemed a bar or waiver of the same or any other right on
any further occasion.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY
FEDERAL COURT SITTING THEREIN AND THE CONSENT TO THE NONEXCLUSIVE JURISDICTION
OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE
BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN (S)20 OF THE CREDIT AGREEMENT. THE
BORROWER HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR
CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS NOTE, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF ANY OF SUCH RIGHTS OR OBLIGATIONS.
THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT COURT.
<PAGE>
-3-
This Note shall be deemed to take effect as a sealed instrument under the
laws of The Commonwealth of Massachusetts.
<PAGE>
-4-
IN WITNESS WHEREOF, the undersigned has caused this Revolving Credit Note
to be signed in its corporate name and its corporate seal to be impressed
thereon by its duly authorized officer as of the day and year first above
written.
[Corporate Seal]
JACKSON PRODUCTS, INC.
By: /s/ Christopher T. Paule
-----------------------------------
Title: Chief Financial Officer
Vice President & Secretary
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Amount of Amount of Balance of
Revolving Principal Paid Principal Notation
Date Credit Loan or Prepaid Unpaid Made By:
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 10.4
ACQUISITION NOTE
----------------
$61,750,000 April 22, 1998
FOR VALUE RECEIVED, the undersigned JACKSON PRODUCTS, INC., a Delaware
corporation, (the "Borrower"), hereby promises to pay to the order of
BANKBOSTON, N.A., a national banking association (the "Bank") at the Agent's
Head Office (as defined in the Credit Agreement referred to below):
(a) prior to or on April 30, 2004 the principal amount of Sixty-One
Million Seven Hundred Fifty Thousand Dollars ($61,750,000), evidencing the
Acquisition Loan made by the Bank to the Borrower pursuant to the Revolving
Credit and Acquisition Loan Agreement dated as of April 22, 1998 (as
amended and in effect from time to time, the "Credit Agreement"), by and
among the Borrower, the Bank and the other parties thereto; and
(b) interest from the date hereof on the principal amount from time
to time outstanding to and including the maturity hereof at the rates and
terms and in all cases in accordance with the terms of the Credit
Agreement.
This Note evidences borrowings under and has been issued by the Borrower in
accordance with the terms of the Credit Agreement. The Bank and any holder
hereof is entitled to the benefits of the Credit Agreement, the Security
Documents and the other Loan Documents, and may enforce the agreements of the
Borrower contained therein, and any holder hereof may exercise the respective
remedies provided for thereby or otherwise available in respect thereof, all in
accordance with the respective terms thereof. All capitalized terms used in this
Note and not otherwise defined herein shall have the same meanings herein as in
the Credit Agreement.
The Borrower irrevocably authorizes the Bank to make or cause to be made,
at the time of receipt of any payment of principal of this Note, an appropriate
notation on the grid attached to this Note, or the continuation of such grid, or
any other similar record, including computer records, reflecting the receipt of
such payment. The outstanding amount of the Acquisition Loan set forth on the
grid attached to this Note, or the continuation of such grid, or any other
similar record, including computer records, maintained by the Bank with respect
to the Acquisition Loan shall be prima facie evidence of the principal amount of
----- -----
the Acquisition Loan owing and unpaid to the Bank, but the failure to record, or
any error in so recording, any such amount on any such grid, continuation or
other record shall not limit or otherwise affect the obligation of the Borrower
hereunder or under the Credit Agreement to make payments of principal of and
interest on this Note when due.
<PAGE>
-2-
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note on the terms and conditions specified in the Credit Agreement.
If any one or more of the Events of Default shall occur, the entire unpaid
principal amount of this Note and all of the unpaid interest accrued thereon may
become or be declared due and payable in the manner and with the effect provided
in the Credit Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Bank or such holder, nor shall any delay, omission or waiver
on any one occasion be deemed a bar or waiver of the same or any other right on
any future occasion.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY
FEDERAL COURT SITTING THEREIN AND THE CONSENT TO THE NONEXCLUSIVE JURISDICTION
OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE
BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN (S)20 OF THE CREDIT AGREEMENT. THE
BORROWER HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR
CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS NOTE, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF ANY OF SUCH RIGHTS OR OBLIGATIONS.
THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT COURT.
This Note shall be deemed to take effect as a sealed instrument under the
laws of The Commonwealth of Massachusetts.
<PAGE>
-3-
IN WITNESS WHEREOF, the undersigned has caused this Acquisition Note to be
signed in its corporate name and its corporate seal to be impressed thereon by
its duly authorized officer as of the day and year first above written.
[Corporate Seal]
JACKSON PRODUCTS, INC.
By: /s/ Christopher T. Paule
-----------------------------------
Title: Chief Financial Officer
Vice President & Secretary
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Amount of Amount of Balance of
Acquisition Principal Paid Principal Notation
Date Loan or Prepaid Unpaid Made By:
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 10.5
ACQUISITION NOTE
----------------
$33,250,000 April 22, 1998
FOR VALUE RECEIVED, the undersigned JACKSON PRODUCTS, INC., a Delaware
corporation, (the "Borrower"), hereby promises to pay to the order of MERCANTILE
BANK NATIONAL ASSOCIATION, a national banking association (the "Bank") at the
Agent's Head Office (as defined in the Credit Agreement referred to below):
(a) prior to or on April 30, 2004 the principal amount of Thirty-
Three Million Two Hundred Fifty Thousand Dollars ($33,250,000), evidencing
the Acquisition Loan made by the Bank to the Borrower pursuant to the
Revolving Credit and Acquisition Loan Agreement dated as of April 22, 1998
(as amended and in effect from time to time, the "Credit Agreement"), by
and among the Borrower, the Bank and the other parties thereto; and
(b) interest from the date hereof on the principal amount from time
to time outstanding to and including the maturity hereof at the rates and
terms and in all cases in accordance with the terms of the Credit
Agreement.
This Note evidences borrowings under and has been issued by the Borrower in
accordance with the terms of the Credit Agreement. The Bank and any holder
hereof is entitled to the benefits of the Credit Agreement, the Security
Documents and the other Loan Documents, and may enforce the agreements of the
Borrower contained therein, and any holder hereof may exercise the respective
remedies provided for thereby or otherwise available in respect thereof, all in
accordance with the respective terms thereof. All capitalized terms used in
this Note and not otherwise defined herein shall have the same meanings herein
as in the Credit Agreement.
The Borrower irrevocably authorizes the Bank to make or cause to be made,
at the time of receipt of any payment of principal of this Note, an appropriate
notation on the grid attached to this Note, or the continuation of such grid, or
any other similar record, including computer records, reflecting the receipt of
such payment. The outstanding amount of the Acquisition Loan set forth on the
grid attached to this Note, or the continuation of such grid, or any other
similar record, including computer records, maintained by the Bank with respect
to the Acquisition Loan shall be prima facie evidence of the principal amount of
----- -----
the Acquisition Loan owing and unpaid to the Bank, but the failure to record, or
any error in so recording, any such amount on any such grid, continuation or
other record shall not limit or otherwise affect the obligation of
<PAGE>
-2-
the Borrower hereunder or under the Credit Agreement to make payments of
principal of and interest on this Note when due.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note on the terms and conditions specified in the Credit Agreement.
If any one or more of the Events of Default shall occur, the entire unpaid
principal amount of this Note and all of the unpaid interest accrued thereon may
become or be declared due and payable in the manner and with the effect provided
in the Credit Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Bank or such holder, nor shall any delay, omission or waiver
on any one occasion be deemed a bar or waiver of the same or any other right on
any future occasion.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY
FEDERAL COURT SITTING THEREIN AND THE CONSENT TO THE NONEXCLUSIVE JURISDICTION
OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE
BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN (S)20 OF THE CREDIT AGREEMENT. THE
BORROWER HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR
CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS NOTE, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF ANY OF SUCH RIGHTS OR OBLIGATIONS.
THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT COURT.
<PAGE>
-3-
This Note shall be deemed to take effect as a sealed instrument under the
laws of The Commonwealth of Massachusetts.
<PAGE>
-4-
IN WITNESS WHEREOF, the undersigned has caused this Acquisition Note to be
signed in its corporate name and its corporate seal to be impressed thereon by
its duly authorized officer as of the day and year first above written.
[Corporate Seal]
JACKSON PRODUCTS, INC.
By: /s/ Christopher T. Paule
------------------------------
Title: Chief Financial Officer
Vice President & Secretary
<PAGE>
<TABLE>
<CAPTION>
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Amount of Amount of Balance of
Acquisition Principal Paid Principal Notation
Date Loan or Prepaid Unpaid Made By:
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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</TABLE>
<PAGE>
EXHIBIT 10.6
GUARANTY
--------
GUARANTY, dated as of April 22, 1998, by FLEX-O-LITE, INC., a delaware
corporation ("flex"), OSD ENVIZION, INC., a delaware corporation ("OSD"),
CRYSTALOID TECHNOLOGIES, INC., a delaware corporation ("crystaloid"), JACKSON
ACQUISITION, INC., a delaware corporation ("JAI"), AMERICAN ALLSAFE COMPANY, a
texas corporation ("Allsafe"), and SILENCIO/SAFETY DIRECT, INC., a Nevada
corporation ("Silencio", and together with Flex, OSD, Crystaloid, JAI and
Allsafe, the "Guarantors") in favor of (a) BANKBOSTON, N.A., a national banking
association, as agent (hereinafter, in such capacity, the "Agent") for itself
and the other lending institutions (hereinafter, collectively, the "Banks")
which are or may become parties to the Revolving Credit and Acquisition Loan
Agreement dated as of April 22, 1998 (as amended and in effect from time to
time, the Credit Agreement"), among JACKSON PRODUCTS, INC., a Delaware
corporation (the "Borrower"), the Banks, the Agent and MERCANTILE BANK NATIONAL
ASSOCIATION as Co-Agent and (b) each of the Banks.
WHEREAS, the Borrower and each of the Guarantors are members of a group of
related corporations, the success of any one of which is dependent in part on
the success of the other members of such group;
WHEREAS, each of the Guarantors expects to receive substantial direct and
indirect benefits from the extensions of credit to the Borrower by the Banks
pursuant to the Credit Agreement (which benefits are hereby acknowledged);
WHEREAS, it is a condition to the Banks' making any loans or otherwise
extending credit to the Borrower under the Credit Agreement that each of the
Guarantors execute and deliver to the Agent, for the benefit of the Banks and
the Agent, a guaranty substantially in the form hereof; and
WHEREAS, each of the Guarantors wishes to guaranty the Borrower's
obligations to the Banks and the Agent under or in respect of the Credit
Agreement as provided herein;
NOW, THEREFORE, each of the Guarantors hereby agrees with the Banks and the
Agent as follows:
1. DEFINITIONS. The term "Obligations" and all other capitalized terms
-----------
used herein without definition shall have the respective meanings provided
therefor in the Credit Agreement.
2. GUARANTY OF PAYMENT AND PERFORMANCE. Each of the Guarantors hereby
-----------------------------------
guarantees to the Banks and the Agent the full and punctual payment when due
(whether at stated maturity, by required prepayment, by acceleration
<PAGE>
-2-
or otherwise), as well as the performance, of all of the Obligations including
all such which would become due but for the operation of the automatic stay
pursuant to (S)362(a) of the Federal Bankruptcy Code and the operation of
(S)(S)502(b) and 506(b) of the Federal Bankruptcy Code. This Guaranty is an
absolute, unconditional and continuing guaranty by each of the Guarantors of the
full and punctual payment and performance of all of the Obligations and not of
their collectibility only and is in no way conditioned upon any requirement that
the Agent or any Bank first attempt to collect any of the Obligations from the
Borrower or resort to any collateral security or other means of obtaining
payment. Should the Borrower default in the payment or performance of any of the
Obligations, the obligations of each of the Guarantors hereunder with respect to
such Obligations in default shall, upon demand by the Agent, become immediately
due and payable to the Agent, for the benefit of the Banks and the Agent,
without demand or notice of any nature, all of which are expressly waived by the
Guarantors. Payments by each of the Guarantors hereunder may be required by the
Agent on any number of occasions. All payments by such Guarantors hereunder
shall be made to the Agent, in the manner and at the place of payment specified
therefor in the Credit Agreement, for the account of the Banks and the Agent and
shall be made without setoff or counterclaim and free and clear of and without
deduction for any taxes, levies, imposts, duties, charges, fees, deductions,
withholdings, compulsory loans, restrictions or conditions of any nature now or
hereafter imposed or levied by the United States or any jurisdiction or any
political subdivision thereof or taxing or other authority therein unless such
Guarantor is compelled by law to make such deduction or withholding.
3. GUARANTORS' AGREEMENT TO PAY ENFORCEMENT COSTS, ETC. Each of the
----------------------------------------------------
Guarantors further agrees, as the principal obligor and not as a guarantor only,
to pay to the Agent, on demand, all costs and expenses (including court costs
and reasonable legal expenses) incurred or expended by the Agent or any Bank in
connection with the Obligations, this Guaranty and the enforcement thereof,
together with interest on amounts recoverable under this (S)3 from the time when
such amounts become due until payment, whether before or after judgment, at the
rate of interest for overdue principal set forth in the Credit Agreement,
provided that if such interest exceeds the maximum amount permitted to be paid
- --------
under applicable law, then such interest shall be reduced to such maximum
permitted amount.
4. WAIVERS BY GUARANTORS; BANK'S FREEDOM TO ACT. Each of the Guarantors
--------------------------------------------
agrees that the Obligations will be paid and performed strictly in accordance
with their respective terms, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agent or any Bank with respect thereto. Each of the Guarantors
waives promptness, diligences, presentment, demand, protest, notice of
acceptance, notice of any Obligations incurred and all other notices of any
kind, all defenses which may be available by virtue of any valuation, stay,
moratorium law or other similar law now or hereafter in effect, any right to
require the marshalling of assets of the Borrower or any other entity or other
<PAGE>
-3-
person primarily or secondarily liable with respect to any of the Obligations,
and all suretyship defenses generally. Without limiting the generality of the
foregoing, each of the Guarantors agrees to the provisions of any instrument
evidencing, securing or otherwise executed in connection with any Obligation and
agrees that the obligations of each of the Guarantors hereunder shall not be
released or discharged, in whole or in part, or otherwise affected by (a) the
failure of the Agent or any Bank to assert any claim or demand or to enforce any
right or remedy against the Borrower or any other entity or other person
primarily or secondarily liable with respect to any of the Obligations; (b) any
extensions, compromise, refinancing, consolidation or renewals of any
Obligation; (c) any change in the time, place or manner of payment of any of the
Obligations or any rescissions, waivers, compromise, refinancing, consolidation
or other amendments or modifications of any of the terms or provisions of the
Credit Agreement, the Notes, the other Loan Documents or any other agreement
evidencing, securing or otherwise executed in connection with any of the
Obligations, (d) the addition, substitution or release of any entity or other
person primarily or secondarily liable for any Obligation; (e) the adequacy of
any rights which the Agent or any Bank may have against any collateral security
or other means of obtaining repayment of any of the Obligations; (f) the
impairment of any collateral securing any of the Obligations, including without
limitation the failure to perfect or preserve any rights which the Agent or any
Bank might have in such collateral security or the substitution, exchange,
surrender, release, loss or destruction of any such collateral security; or (g)
any other act or omission which might in any manner or to any extent vary the
risk of such Guarantor or otherwise operate as a release or discharge of such
Guarantor, all of which may be done without notice to such Guarantor. To the
fullest extent permitted by law, each of the Guarantors hereby expressly waives
any and all rights or defenses arising by reason of (i) any "one action" or
"anti-deficiency" law which would otherwise prevent the Agent or any Bank from
bringing any action, including any claim for a deficiency, or exercising any
other right or remedy (including any right of set-off), against such Guarantor
before or after the Agent's or such Bank's commencement or completion of any
foreclosure action, whether judicially, by exercise of power of sale or
otherwise, or (ii) any other law which in any other way would otherwise require
any election of remedies by the Agent or any Bank.
5. UNENFORCEABILITY OF OBLIGATIONS AGAINST BORROWER. If for any reason
------------------------------------------------
the Borrower has no legal existence or is under no legal obligation to discharge
any of the Obligations, or if any of the Obligations have become irrecoverable
from the Borrower by reason of the Borrower's insolvency, Bankruptcy or
reorganization or by other operation of law or for any other reason, this
Guaranty shall nevertheless be binding on each of the Guarantors to the same
extent as if such Guarantor at all times had been the principal obligor on all
such Obligations. In the event that acceleration of the time for payment of any
of the Obligations is stayed upon the insolvency, Bankruptcy or reorganization
of the Borrower, or for any other reason, all such amounts otherwise subject to
acceleration under the terms of the Credit Agreement, the
<PAGE>
-4-
Notes, the other Loan Documents or any other agreement evidencing, securing or
otherwise executed in connection with any Obligation shall be immediately due
and payable by such Guarantor.
6. SUBROGATION; SUBORDINATION.
--------------------------
6.1. WAIVER OF RIGHTS AGAINST BORROWER. Until the final payment
---------------------------------
and performance in full of all of the Obligations, none of the Guarantors
shall exercise and each of the Guarantors hereby waives any rights against
the Borrower arising as a result of payment by such Guarantor hereunder, by
way of subrogation, reimbursement, restitution, contribution or otherwise,
and will not prove any claim in competition with the Agent or any Bank in
respect of any payment hereunder in any Bankruptcy, insolvency or
reorganization case or proceedings of any nature; none of the Guarantors
will claim any setoff, recoupment or counterclaim against the Borrower in
respect of any liability of such Guarantor to the Borrower; and each of the
Guarantors waives any benefit of and any right to participate in any
collateral security which may be held by the Agent or any Bank.
6.2. SUBORDINATION. The payment of any amounts due with respect
-------------
to any indebtedness of the Borrower for money borrowed or credit received
now or hereafter owed to each of the Guarantors is hereby subordinated to
the prior payment in full of all of the Obligations. Each of the Guarantors
agrees that, after the occurrence of any default in the payment or
performance of any of the Obligations, such Guarantor will not demand, sue
for or otherwise attempt to collect any such indebtedness of the Borrower
to such Guarantor until all of the Obligations shall have been paid in
full. If, notwithstanding the foregoing sentence, such Guarantor shall
collect, enforce or receive any amounts in respect of such indebtedness
while any Obligations are still outstanding, such amounts shall be
collected, enforced and received by such Guarantor as trustee for the Banks
and the Agent and be paid over to the Agent, for the benefit of the Banks
and the Agent, on account of the Obligations without affecting in any
manner the liability of such Guarantor under the other provisions of this
Guaranty.
6.3. PROVISIONS SUPPLEMENTAL. The provisions of this (S)6 shall
-----------------------
be supplemental to and not in derogation of any rights and remedies of the
Banks and the Agent under any separate subordination agreement which the
Agent may at any time and from time to time enter into with any of the
Guarantors for the benefit of the Banks and the Agent.
7. SECURITY; SETOFF. Each of the Guarantors grants to each of the Agent
---------------
and the Banks, as security for the full and punctual payment and performance of
all of such Guarantor's obligations hereunder, a continuing lien on and security
interest in all securities or other property belonging to such Guarantor now or
hereafter held by the Agent or such Bank and in all deposits (general or
<PAGE>
-5-
special, time or demand, provisional or final) and other sums credited by or due
from the Agent or such Bank to such Guarantor or subject to withdrawal by such
Guarantor. Regardless of the adequacy of any collateral security or other means
of obtaining payment of any of the Obligations, each of the Agent and the Banks
is hereby authorized at any time and from time to time, without notice to the
Guarantors (any such notice being expressly waived by each of the Guarantors)
and to the fullest extent permitted by law, to set off and apply such deposits
and other sums against the obligations of such Guarantor under this Guaranty,
whether or not the Agent or such Bank shall have made any demand under this
Guaranty and although such obligations may be contingent or unmatured.
8. FURTHER ASSURANCES. Each of the Guarantors agrees that it will from
------------------
time to time, at the request of the Agent, do all such things and execute all
such documents as the Agent may consider necessary or desirable to give full
effect to this Guaranty and to perfect and preserve the rights and powers of the
Banks and the Agent hereunder. Each of the Guarantors acknowledges and confirms
that such Guarantor itself has established its own adequate means of obtaining
from the Borrower on a continuing basis all information desired by such
Guarantor concerning the financial condition of the Borrower and that such
Guarantor will look to the Borrower and not to the Agent or any Bank in order
for such Guarantor to keep adequately informed of changes in the Borrower's
financial condition.
9. TERMINATION; REINSTATEMENT. This Guaranty shall remain in full force
--------------------------
and effect until the Agent is given written notice of any of the Guarantors'
intention to discontinue this Guaranty, notwithstanding any intermediate or
temporary payment or settlement of the whole or any part of the Obligations. No
such notice shall be effective unless received and acknowledged by an officer of
the Agent at the address of the Agent for notices set forth in (S)21 of the
Credit Agreement. No such notice shall affect any rights of the Agent or any
Bank hereunder, including without limitation the rights set forth in (S)(S)4 and
6, with respect to any Obligations incurred or accrued prior to the receipt of
such notice or any Obligations incurred or accrued pursuant to any contract or
commitment in existence prior to such receipt, including, without limitation the
Credit Agreement and the Notes. This Guaranty shall continue to be effective or
be reinstated, notwithstanding any such notice, if at any time any payment made
or value received with respect to any Obligation is rescinded or must otherwise
be returned by the Agent or any Bank upon the insolvency, Bankruptcy or
reorganization of the Borrower, or otherwise, all as though such payment had not
been made or value received.
10. SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon each of
----------------------
the Guarantors, their successors and assigns, and shall inure to the benefit of
the Agent and the Banks and their respective successors, transferees and
assigns. Without limiting the generality of the foregoing sentence, each Bank
may assign or otherwise transfer the Credit Agreement, the Notes, the other Loan
Documents or any other agreement or note held by it evidencing,
<PAGE>
-6-
securing or otherwise executed in connection with the Obligations, or sell
participations in any interest therein, to any other entity or other person, and
such other entity or other person shall thereupon become vested, to the extent
set forth in the agreement evidencing such assignment, transfer or
participation, with all the rights in respect thereof granted to such Bank
herein, all in accordance with (S)20 of the Credit Agreement. No Guarantor may
assign any of its obligations hereunder.
11. AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
----------------------
this Guaranty nor consent to any departure by any of the Guarantors therefrom
shall be effective unless the same shall be in writing and signed by the Agent.
No failure on the part of the Agent or any Bank to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right.
12. NOTICES. All notices and other communications called for hereunder
-------
shall be made in writing and, unless otherwise specifically provided herein,
shall be deemed to have been duly made or given when delivered by hand or mailed
first class, postage prepaid, or, in the case of telegraphic or telexed notice,
when transmitted, answer back received, addressed as follows: if to a Guarantor,
at the address set forth beneath its signature hereto, and if to the Agent, at
the address for notices to the Agent set forth in (S)21 of the Credit Agreement,
or at such address as either party may designate in writing to the other.
13. GOVERNING LAW; CONSENT TO JURISDICTION. THE GUARANTY IS INTENDED TO
--------------------------------------
TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. Each of the
Guarantors agrees that any suit for the enforcement of this Guaranty may be
brought in the courts of The Commonwealth of Massachusetts or any federal court
sitting therein and consents to the nonexclusive jurisdiction of such court and
to service of process in any such suit being made upon such Guarantor by mail at
the address specified by reference in (S)12. Each of the Guarantors hereby
waives any objection that it may now or hereafter have to the venue of any such
suit or any such court or that such suit was brought in an inconvenient court.
14. WAIVER OF JURY TRIAL. EACH OF THE GUARANTORS HEREBY WAIVES ITS RIGHT
--------------------
TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE
IN CONNECTION WITH THIS GUARANTY, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE
PERFORMANCE OF ANY OF SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law,
each of the Guarantors hereby waives any right which it may have to claim or
recover in any litigation referred to in the preceding sentence any special,
exemplary, punitive or consequential damages or any damages other than, or in
addition to, actual damages. Each of
<PAGE>
-7-
the Guarantors (a) certifies that neither the Agent or any Bank nor any
representative, agent or attorney of the Agent or any Bank has represented,
expressly or otherwise, that the Agent or any Bank would not, in the event of
litigation, seek to enforce the foregoing waivers and (b) acknowledges that, in
entering into the Credit Agreement and the other Loan Documents to which the
Agent or any Bank is a party, the Agent and the Banks are relying upon, among
other things, the waivers and certifications contained in this (S)14.
15. MISCELLANEOUS. This Guaranty constitutes the entire agreement of each
-------------
of the Guarantors with respect to the matters set forth herein. The rights and
remedies herein provided are cumulative and not exclusive of any remedies
provided by law or any other agreement, and this Guaranty shall be in addition
to any other guaranty of or collateral security for any of the Obligations. The
invalidity or unenforceability of any one or more sections of this Guaranty
shall not affect the validity or enforceability of its remaining provisions.
Captions are for the ease of reference only and shall not affect the meaning of
the relevant provisions. The meanings of all defined terms used in this Guaranty
shall be equally applicable to the singular and plural forms of the terms
defined.
<PAGE>
IN WITNESS WHEREOF, each of the Guarantors has caused this Guaranty to be
executed and delivered as of the date first above written.
FLEX-O-LITE, INC.
By: /s/ Christopher T. Paule
-----------------------------------
Name: Christohper T. Paule
Title: Vice President
Address:
_______________________________________
_______________________________________
OSD ENVIZION, INC.
By: /s/ Christopher T. Paule
-----------------------------------
Name: Christohper T. Paule
Title: Vice President
Address:
________________________________________
________________________________________
CRYSTALOID TECHNOLOGIES, INC.
By: /s/ Christopher T. Paule
-----------------------------------
Name: Christohper T. Paule
Title: Vice President
Address:
________________________________________
________________________________________
<PAGE>
JACKSON ACQUISITION, INC.
By: /s/ Christopher T. Paule
-----------------------------------
Name: Christopher T. Paule
Title: Vice President
Address:
_______________________________________
_______________________________________
AMERICAN ALLSAFE COMPANY
By: /s/ Christopher T. Paule
-----------------------------------
Name: Christopher T. Paule
Title: Vice President
Address:
________________________________________
________________________________________
SILENCIO/SAFETY DIRECT, INC.
By: /s/ Christopher T. Paule
-----------------------------------
Name: Christopher T. Paule
Title: Vice President
Address:
_________________________________________
_________________________________________
<PAGE>
EXHIBIT 10.7
STOCK PLEDGE AGREEMENT
----------------------
STOCK PLEDGE AGREEMENT, dated as of April 22, 1998, by and between JACKSON
PRODUCTS, INC., a Delaware corporation (the "Pledgor"), and BANKBOSTON, N.A., a
national banking association, as agent (hereinafter, in such capacity, the
"Agent") for itself and the other lending institutions (hereinafter,
collectively, the "Banks") which are or may become parties to a Revolving Credit
and Acquisition Loan Agreement, dated as of April 22, 1998 (as amended and in
effect from time to time, the "Credit Agreement"), among the Pledgor, the Banks,
the Agent and Mercantile Bank National Association, as Co-Agent.
WHEREAS, the Pledgor is the direct legal and beneficial owner of all of the
issued and outstanding shares of each class of the capital stock of each of the
corporations described on Annex A (the "Subsidiaries"); and
----- -
WHEREAS, it is a condition precedent to the Banks' making any loans or
otherwise extending credit to the Pledgor under the Credit Agreement that the
Pledgor execute and deliver to the Agent, for the benefit of the Banks and the
Agent, a pledge agreement in substantially the form hereof; and
WHEREAS, the Pledgor wishes to grant pledges and security interests in
favor of the Agent, for the benefit of the Banks and the Agent, as herein
provided;
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. PLEDGE OF STOCK, ETC.
---------------------
1.1. PLEDGE OF STOCK. The Pledgor hereby pledges, assigns, grants a
---------------
security interest in, and delivers to the Agent, for the benefit of the
Banks and the Agent, (a) 100% of the shares of capital stock of each of its
Domestic Subsidiaries of every class owned by the Pledgor, as more fully
described on Annex A hereto, and (b) not less than 66% of the shares of
----- -
capital stock of each of its Foreign Subsidiaries of every class owned by
the Pledgor, as more fully described on Annex A hereto, to be held by the
----- -
Agent, for the benefit of the Banks and the Agent, subject to the terms and
conditions hereinafter set forth. The certificates for such shares,
accompanied by stock powers or other appropriate instruments of assignment
thereof duly executed in blank by the Pledgor, have been delivered to the
Agent.
<PAGE>
-2-
1.2. ADDITIONAL STOCK. In case the Pledgor shall acquire any
----------------
additional shares of the capital stock of any Subsidiary or corporation
which is the successor of any Subsidiary, or any securities exchangeable
for or convertible into shares of such capital stock of any class of any
Subsidiary, by purchase, stock dividend, stock split or otherwise, then the
Pledgor shall forthwith deliver to and pledge such shares or other
securities to the Agent, for the benefit of the Banks and the Agent, under
this Agreement and shall deliver to the Agent forthwith any certificates
therefor, accompanied by stock powers or other appropriate instruments of
assignment duly executed by the Pledgor in blank. The Pledgor agrees that
the Agent may from time to time attach as Annex A hereto an updated list of
----- -
the shares of capital stock or securities at the time pledged with the
Agent hereunder.
2. DEFINITIONS. The term "Obligations" and all other capitalized terms
-----------
used herein without definition shall have the respective meanings provided
therefor in the Credit Agreement. Terms used herein and not defined in the
Credit Agreement or otherwise defined herein that are defined in the
Massachusetts UCC have such defined meanings herein, unless the context
otherwise indicates or requires, and the following terms shall have the
following meanings:
Stock. Includes the shares of stock described in Annex A attached hereto
----- ----- -
and any additional shares of stock at the time pledged with the Agent hereunder.
Stock Collateral. The property at any time pledged to the Agent hereunder
----------------
(whether described herein or not) and all income therefrom, increases therein
and proceeds thereof, but excluding from the definition of "Stock Collateral"
any income, increases or proceeds received by the Pledgor to the extent
expressly permitted by (S)6.
3. SECURITY FOR OBLIGATIONS. This Agreement and the security interest in
------------------------
and pledge of the Stock Collateral hereunder are made with and granted to the
Agent, for the benefit of the Banks and the Agent, as security for the payment
and performance in full of all the Obligations.
4. LIQUIDATION, RECAPITALIZATION, ETC. Any sums or other property paid or
-----------------------------------
distributed upon or with respect to any of the Stock, whether by dividend or
redemption or upon the liquidation or dissolution of the issuer thereof or
otherwise, shall, except to the limited extent provided in (S)6, be paid over
and delivered to the Agent to be held by the Agent, for the benefit of the Banks
and the Agent, as security for the payment and performance in full of all of the
Obligations. In case, pursuant to the recapitalization or reclassification of
the capital of the issuer thereof or pursuant to the reorganization thereof, any
distribution of capital shall be made on or in respect of any of the Stock or
any property shall be distributed upon or with respect to any of the Stock, the
property so distributed shall be delivered to the Agent, for the benefit of the
<PAGE>
-3-
Banks and the Agent, to be held by it as security for the Obligations. Except to
the limited extent provided in (S)6, all sums of money and property paid or
distributed in respect of the Stock, whether as a dividend or upon such a
liquidation, dissolution, recapitalization or reclassification or otherwise,
that are received by the Pledgor shall, until paid or delivered to the Agent, be
held in trust for the Agent, for the benefit of the Banks and the Agent, as
security for the payment and performance in full of all of the Obligations.
5. WARRANTY OF TITLE; AUTHORITY. The Pledgor hereby represents and
----------------------------
warrants that: (a) the Pledgor is the sole record and beneficial owner of, the
Stock described in (S)1, subject to no pledges, liens, security interests,
charges, options, restrictions or other encumbrances except the pledge and
security interest created by this Agreement, (b) all of the Stock described in
(S)1 is validly issued, fully paid and non-assessable, (c) the Pledgor has full
power, authority and legal right to execute, deliver and perform its obligations
under this Agreement and to pledge and grant a security interest in all of the
Stock Collateral pursuant to this Agreement, and the execution, delivery and
performance hereof and the pledge of and granting of a security interest in the
Stock Collateral hereunder have been duly authorized by all necessary corporate
or other action and do not contravene any law, rule or regulation or any
provision of the Pledgor's charter documents or by-laws or of any judgment,
decree or order of any tribunal or of any agreement or instrument to which the
Pledgor is a party or by which it or any of its property is bound or affected or
constitute a default thereunder, and (d) the information set forth in Annex A
----- -
hereto relating to the Stock is true, correct and complete in all respects. The
Pledgor covenants that it will defend the rights of the Banks and the Agent and
security interest of the Agent, for the benefit of the Banks and the Agent, in
such Stock against the claims and demands of all other persons whomsoever. The
Pledgor further covenants that it will have the like title to and right to
pledge and grant a security interest in the Stock Collateral hereafter pledged
or in which a security interest is granted to the Agent hereunder and will
likewise defend the rights, pledge and security interest thereof and therein of
the Banks and the Agent.
6. DIVIDENDS, VOTING, ETC., PRIOR TO MATURITY. So long as no Event of
------------------------------------------
Default shall have occurred and be continuing, the Pledgor shall be entitled to
receive all cash dividends paid in respect of the Stock, and absent receipt of
an election from the Agent as provided below, to vote the Stock and to give
consents, waivers and ratifications in respect of the Stock; provided, however,
-------- -------
that no vote shall be cast or consent, waiver or ratification given by the
Pledgor if the effect thereof would in the reasonable judgment of the Agent
impair any of the Stock Collateral or be inconsistent with or result in any
violation of any of the provisions of the Credit Agreement, the Notes or any of
the other Loan Documents. All such rights of the Pledgor to receive cash
dividends shall cease in case an Event of Default shall have occurred and be
continuing. All such rights of the Pledgor to vote and give consents, waivers
and ratifications with respect to the Stock shall, at the Agent's option, as
evidenced by the Agent's
<PAGE>
-4-
notifying the Pledgor of such election, cease in case an Event of Default shall
have occurred and be continuing.
7. REMEDIES.
--------
7.1. IN GENERAL. If an Event of Default shall have occurred and be
----------
continuing, the Agent shall thereafter have the following rights and
remedies (to the extent permitted by applicable law) in addition to the
rights and remedies of a secured party under the Massachusetts UCC, all
such rights and remedies being cumulative, not exclusive, and enforceable
alternatively, successively or concurrently, at such time or times as the
Agent deems expedient:
(a) if the Agent so elects and gives notice of such election to
the Pledgor, the Agent may vote any or all shares of the Stock
(whether or not the same shall have been transferred into its name or
the name of its nominee or nominees) for any lawful purpose,
including, without limitation, if the Agent so elects, for the
liquidation of the assets of the issuer thereof, and give all
consents, waivers and ratifications in respect of the Stock and
otherwise act with respect thereto as though it were the outright
owner thereof (the Pledgor hereby irrevocably constituting and
appointing the Agent the proxy and attorney-in-fact of the Pledgor,
with full power of substitution, to do so);
(b) the Agent may demand, sue for, collect or make any
compromise or settlement the Agent deems suitable in respect of any
Stock Collateral;
(c) the Agent may sell, resell, assign and deliver, or
otherwise dispose of any or all of the Stock Collateral, for cash or
credit or both and upon such terms at such place or places, at such
time or times and to such entities or other persons as the Agent
thinks expedient, all without demand for performance by the Pledgor or
any notice or advertisement whatsoever except as expressly provided
herein or as may otherwise be required by law;
(d) the Agent may cause all or any part of the Stock held by it
to be transferred into its name or the name of its nominee or
nominees; and
7.2. SALE OF STOCK COLLATERAL. In the event of any disposition of
------------------------
the Stock Collateral as provided in clause (c) of (S)7.1, the Agent shall
give to the Pledgor at least five (5) Business Days prior written notice of
the time and place of any public sale of the Stock Collateral or of the
time after which any private sale or any other intended disposition is to
be made. The Pledgor hereby acknowledges that five (5) Business Days prior
written notice of such sale or sales shall be reasonable notice. The
<PAGE>
-5-
Agent may enforce its rights hereunder without any other notice and without
compliance with any other condition precedent now or hereunder imposed by
statute, rule of law or otherwise (all of which are hereby expressly waived
by the Pledgor, to the fullest extent permitted by law). The Agent may buy
any part or all of the Stock Collateral at any public sale and if any part
or all of the Stock Collateral is of a type customarily sold in a
recognized market or is of the type which is the subject of widely-
distributed standard price quotations, the Agent may buy at private sale
and may make payments thereof by any means. The Agent may apply the cash
proceeds actually received from any sale or other disposition to the
reasonable expenses of retaking, holding, preparing for sale, selling and
the like, to reasonable attorneys' fees, travel and all other expenses
which may be incurred by the Agent in attempting to collect the Obligations
or to enforce this Agreement or in the prosecution or defense of any action
or proceeding related to the subject matter of this Agreement, and then to
the Obligations in such order or preference as the Agent may determine
after proper allowance for Obligations not then due. Only after such
applications, and after payment by the Agent of any amount required by
(S)9-504(1)(c) of the Massachusetts UCC, need the Agent account to the
Pledgor for any surplus. To the extent that any of the Obligations are to
be paid or performed by a person other than the Pledgor, the Pledgor waives
and agrees not to assert any rights or privileges which it may have under
(S)9-112 of the Massachusetts UCC
7.3. PRIVATE SALES. The Pledgor recognizes that the Agent may be
-------------
unable to effect a public sale of the Stock by reason of certain
prohibitions contained in the Securities Act, federal banking laws, and
other applicable laws, but may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers. The Pledgor
agrees that any such private sales may be at prices and other terms less
favorable to the seller than if sold at public sales and that such private
sales shall not by reason thereof be deemed not to have been made in a
commercially reasonable manner. The Agent shall be under no obligation to
delay a sale of any of the Stock for the period of time necessary to permit
the issuer of such securities to register such securities for public sale
under the Securities Act, or such other federal banking or other applicable
laws, even if the issuer would agree to do so. Subject to the foregoing,
the Agent agrees that any sale of the Stock shall be made in a commercially
reasonable manner, and the Pledgor agrees to use its best efforts to cause
the issuer or issuers of the Stock contemplated to be sold, to execute and
deliver, and cause the directors and officers of such issuer to execute and
deliver, all at the Pledgor's expense, all such instruments and documents,
and to do or cause to be done all such other acts and things as may
reasonably be necessary or, in the reasonable opinion of the Agent,
advisable to exempt such Stock from registration under the provisions of
the Securities Act, and to make all amendments to such instruments and
documents which, in the opinion of the Agent, are
<PAGE>
-6-
reasonably necessary or advisable, all in conformity with the requirements
of the Securities Act and the rules and regulations of the Securities and
Exchange Commission applicable thereto. The Pledgor further agrees to use
its best efforts to cause such issuer or issuers to comply with the
provisions of the securities or "Blue Sky" laws of any jurisdiction which
the Agent shall designate and, if required, to cause such issuer or issuers
to make available to its security holders, as soon as practicable, an
earnings statement (which need not be audited) which will satisfy the
provisions of Section 11(a) of the Securities Act.
7.4. PLEDGOR'S AGREEMENTS, ETC. The Pledgor further agrees to do or
-------------------------
cause to be done all such other acts and things as may be reasonably
necessary to make any sales of any portion or all of the Stock pursuant to
this (S)7 valid and binding and in compliance with any and all applicable
laws (including, without limitation, the Securities Act, the Securities
Exchange Act of 1934, as amended, the rules and regulations of the
Securities and Exchange Commission applicable thereto and all applicable
state securities or "Blue Sky" laws), regulations, orders, writs,
injunctions, decrees or awards of any and all courts, arbitrators or
governmental instrumentalities, domestic or foreign, having jurisdiction
over any such sale or sales, all at the Pledgor's expense. The Pledgor
further agrees that a breach of any of the covenants contained in this (S)7
will cause irreparable injury to the Agent and the Banks, that the Agent
and the Banks have no adequate remedy at law in respect of such breach and,
as a consequence, agrees that each and every covenant contained in this
(S)7 shall be specifically enforceable against the Pledgor by the Agent and
the Pledgor hereby waives and agrees not to assert any defenses against an
action for specific performance of such covenants.
8. MARSHALLING. Neither the Agent nor any Bank shall be required to
-----------
marshal any present or future collateral security for (including but not limited
to this Agreement and the Stock Collateral), or other assurances of payment of,
the Obligations or any of them, or to resort to such collateral security or
other assurances of payment in any particular order. All of the Agent's rights
hereunder and of the Banks and the Agent in respect of such collateral security
and other assurances of payment shall be cumulative and in addition to all other
rights, however existing or arising. To the extent that it lawfully may, the
Pledgor hereby agrees that it will not invoke any law relating to the
marshalling of collateral that might cause delay in or impede the enforcement of
the Agent's rights under this Agreement or under any other instrument evidencing
any of the Obligations or under which any of the Obligations is outstanding or
by which any of the Obligations is secured or payment thereof is otherwise
assured, and to the extent that it lawfully may the Pledgor hereby irrevocably
waives the benefits of all such laws.
9. PLEDGOR'S OBLIGATIONS NOT AFFECTED. The obligations of the Pledgor
----------------------------------
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by (a) any exercise or nonexercise, or any waiver, by the Agent or
<PAGE>
-7-
any Bank of any right, remedy, power or privilege under or in respect of any of
the Obligations or any security thereof (including this Agreement); (b) any
amendment to or modification of the Credit Agreement, the Notes, the other Loan
Documents or any of the Obligations; (c) any amendment to or modification of any
instrument (other than this Agreement) securing any of the Obligations,
including, without limitation, any of the Security Documents; or (d) the taking
of additional security for, or any other assurances of payment of, any of the
Obligations or the release or discharge or termination of any security or other
assurances of payment or performance for any of the Obligations; whether or not
the Pledgor shall have notice or knowledge of any of the foregoing.
10. TRANSFER, ETC., BY PLEDGOR. Without the prior written consent of the
--------------------------
Agent (which consent will not be unreasonably withheld), the Pledgor will not
sell, assign, transfer or otherwise dispose of, grant any option with respect
to, or pledge or grant any security interest in or otherwise encumber or
restrict any of the Stock Collateral or any interest therein, except for the
pledge thereof and security interest therein provided for in this Agreement.
11. FURTHER ASSURANCES. The Pledgor will do all such acts, and will
------------------
furnish to the Agent all such financing statements, certificates, legal opinions
and other documents and will obtain all such governmental consents and corporate
approvals and will do or cause to be done all such other things as the Agent may
reasonably request from time to time in order to give full effect to this
Agreement and to secure the rights of the Banks and the Agent hereunder, all
without any cost or expense to the Agent or any Bank. If the Agent so elects, a
photocopy of this Agreement may at any time and from time to time be filed by
the Agent as a financing statement in any recording office in any jurisdiction.
12. AGENT'S EXONERATION. Under no circumstances shall the Agent be deemed
-------------------
to assume any responsibility for or obligation or duty with respect to any part
or all of the Stock Collateral of any nature or kind or any matter or
proceedings arising out of or relating thereto, other than (a) to exercise
reasonable care in the physical custody of the Stock Collateral and (b) after a
Default or an Event of Default shall have occurred and be continuing to act in a
commercially reasonable manner. Neither the Agent nor any Bank shall be required
to take any action of any kind to collect, preserve or protect its or the
Pledgor's rights in the Stock Collateral or against other parties thereto. The
Agent's prior recourse to any part or all of the Stock Collateral shall not
constitute a condition of any demand, suit or proceeding for payment or
collection of any of the Obligations.
13. NO WAIVER, ETC. Neither this Agreement nor any term hereof may be
---------------
changed, waived, discharged or terminated except by a written instrument
expressly referring to this Agreement and to the provisions so modified or
limited, and executed by the Agent, with the consent of the Majority Banks, and
the Pledgor. No act, failure or delay by the Agent shall constitute a waiver of
its rights and remedies hereunder or otherwise. No single or partial waiver by
the Agent of any default or right or remedy that it may have shall operate as a
<PAGE>
-8-
waiver of any other default, right or remedy or of the same default, right or
remedy on a future occasion. The Pledgor hereby waives presentment, notice of
dishonor and protest of all instruments, included in or evidencing any of the
Obligations or the Stock Collateral, and any and all other notices and demands
whatsoever (except as expressly provided herein or in the Credit Agreement).
14. NOTICE, ETC. All notices, requests and other communications hereunder
------------
shall be made in the manner set forth in (S)20 of the Credit Agreement.
15. TERMINATION. Upon final payment and performance in full of the
-----------
Obligations, this Agreement shall terminate and the Agent shall, at the
Pledgor's request and expense, return, free from any lien, all Stock Collateral
in the possession or control of the Agent as has not theretofore been disposed
of pursuant to the provisions hereof, together with any moneys and other
property at the time held by the Agent hereunder unless the Agent is required by
any agreement, instrument, law, regulation or order to turn such Stock
Collateral over to another party. The Agent, at the written request and expense
of the Pledgor, will promptly execute and deliver to the Pledgor the proper
instruments acknowledging the satisfaction and termination of this Agreement,
and will promptly duly assign, transfer and deliver to such Pledgor (without
recourse and without any representation or warranty) free from any lien granted
hereunder all of the Stock Collateral pledged and/or assigned by it hereunder
which has previously been delivered to the Agent except for any Stock Collateral
which has theretofore been sold or otherwise applied or released pursuant to
this Agreement.
16. OVERDUE AMOUNTS. Until paid, all amounts due and payable by the
---------------
Pledgor hereunder shall be a debt secured by the Stock Collateral and shall
bear, whether before or after judgment, interest at the rate of interest for
overdue principal set forth in the Credit Agreement.
17. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT IS INTENDED TO
--------------------------------------
TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. The Pledgor
agrees that any suit for the enforcement of this Agreement may be brought in the
courts of the Commonwealth of Massachusetts or any federal court sitting
therein and consents to the non-exclusive jurisdiction of such court and to
service of process in any such suit being made upon the Pledgor by mail at the
address specified in (S)20 of the Credit Agreement. The Pledgor hereby waives
any objection that it may now or hereafter have to the venue of any such suit or
any such court or that such suit is brought in an inconvenient court.
18. WAIVER OF JURY TRIAL. THE PLEDGOR WAIVES ITS RIGHT TO A JURY TRIAL
--------------------
WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION
WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF
ANY SUCH
<PAGE>
-9-
RIGHTS OR OBLIGATIONS. Except as prohibited by law, the Pledgor waives any right
which it may have to claim or recover in any litigation referred to in the
preceding sentence any special, exemplary, punitive or consequential damages or
any damages other than, or in addition to, actual damages. The Pledgor (a)
certifies that neither the Agent or any Bank nor any representative, agent or
attorney of the Agent or any Bank has represented, expressly or otherwise, that
the Agent or any Bank would not, in the event of litigation, seek to enforce the
foregoing waivers and (b) acknowledges that, in entering into the Credit
Agreement and the other Loan Documents to which the Agent is a party, the Agent
and the Banks are relying upon, among other things, the waivers and
certifications contained in this (S)18.
19. MISCELLANEOUS. The headings of each section of this Agreement are for
-------------
convenience only and shall not define or limit the provisions thereof. This
Agreement and all rights and obligations hereunder shall be binding upon the
Pledgor and its respective successors and assigns, and shall inure to the
benefit of the Agent and the Banks and their respective successors and assigns.
If any term of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall be in no way
affected thereby, and this Agreement shall be construed and be enforceable as if
such invalid, illegal or unenforceable term had not been included herein. The
Pledgor acknowledges receipt of a copy of this Agreement.
<PAGE>
IN WITNESS WHEREOF, intending to be legally bound, the Pledgor and the
Agent have caused this Agreement to be executed as of the date first above
written.
JACKSON PRODUCTS, INC.
By: /s/ Christopher T. Paule
-----------------------------------
Name:
Title:
BANKBOSTON, N.A., AS AGENT
By: /s/ Peter van der Horst
-----------------------------------
Peter van der Horst, Vice President
The undersigned Subsidiaries hereby join in the above Agreement for the
sole purpose of consenting to and being bound by the provisions of (S)(S)4.1, 6
and 7 thereof, the undersigned hereby agreeing to cooperate fully and in good
faith with the Agent and the Pledgor in carrying out such provisions.
OSD ENVIZION, INC.
By: /s/ Christopher T. Paule
-----------------------------------
Name:
Title:
FLEX-O-LITE, INC.
By: /s/ Christopher T. Paule
-----------------------------------
Name:
Title:
<PAGE>
-2-
CRYSTALOID TECHNOLOGIES, INC.
By: /s/ Christopher T. Paule
-----------------------------------
Name:
Title:
JACKSON ACQUISITION, INC.
By: /s/ Christopher T. Paule
-----------------------------------
Name:
Title:
<PAGE>
ANNEX A TO PLEDGE AGREEMENT
---------------------------
None of the issuers has any authorized, issued or outstanding shares of its
capital stock of any class or any commitments to issue any shares of its capital
stock of any class or any securities convertible into or exchangeable for any
shares of its capital stock of any class except as otherwise stated in this
Annex A.
- -------
<TABLE>
<CAPTION>
Number of Number of Number of Par or
Record Class of Authorized Issued Outstanding Liquidation
Issuer Owner Shares Shares Shares Shares Value
------ -------- -------- ---------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
OSD Envizion, Inc. Jackson Products, Common 1,000 1,000 1,000 $ .01
Inc.
Jackson Acquisition, Jackson Products, Common 1,000 1,000 1,000 $ .01
Inc. Inc.
Crystaloid Jackson Products, Common 1,000 1,000 1,000 $ .01
Technologies, Inc. Inc.
Flex-O-Lite, Inc. Jackson Products, Common 3,000 100 100 $10.00
Inc.
</TABLE>
<PAGE>
EXHIBIT 10.8
STOCK PLEDGE AGREEMENT
----------------------
(SUBSIDIARIES)
--------------
STOCK PLEDGE AGREEMENT, dated as of April 22, 1998, by and between FLEX-O-
LITE, INC., a Delaware corporation (the "Pledgor"), and BANKBOSTON, N.A., a
Massachusetts., as agent (hereinafter, in such capacity, the "Agent") for itself
and the other lending institutions (hereinafter, collectively, the "Banks")
which are or may become parties to a Revolving Credit and Acquisition Loan
Agreement, dated as of April 22, 1998 (as amended and in effect from time to
time, the "Credit Agreement"), among Jackson Products, Inc., a Delaware
corporation (the "Borrower"), the Banks, the Agent and Mercantile Bank National
Association, as Co-Agent.
WHEREAS, the Pledgor is the direct legal and beneficial owner of all of the
issued and outstanding shares of each class of the capital stock of each of the
corporations described on Annex A (the "Subsidiaries"); and
----- -
WHEREAS, it is a condition precedent to the Banks' making any loans or
otherwise extending credit to the Borrower under the Credit Agreement that the
Pledgor execute and deliver to the Agent, for the benefit of the Banks and the
Agent, a pledge agreement in substantially the form hereof; and
WHEREAS, the Pledgor wishes to grant pledges and security interests in
favor of the Agent, for the benefit of the Banks and the Agent, as herein
provided;
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. PLEDGE OF STOCK, ETC.
---------------------
1.1. PLEDGE OF STOCK. The Pledgor hereby pledges, assigns,
---------------
grants a security interest in, and delivers to the Agent, for the benefit
of the Banks and the Agent, (a) 100% of the shares of capital stock of each
of its Domestic Subsidiaries of every class owned by the Pledgor, as more
fully described on Annex A hereto, and (b) not less than 66% of the shares
of capital stock of each of its Foreign Subsidiaries of every class owned
by the Pledgor, as more fully described on Annex A hereto to be held by the
----- -
Agent, for the benefit of the Banks and the Agent, subject to the terms and
conditions hereinafter set forth. The certificates for such shares,
accompanied by stock powers or other appropriate instruments of assignment
thereof duly executed in blank by the Pledgor, have been delivered to the
Agent.
<PAGE>
-2-
1.2. ADDITIONAL STOCK. In case the Pledgor shall acquire any
----------------
additional shares of the capital stock of any Subsidiary or corporation
which is the successor of any Subsidiary, or any securities exchangeable
for or convertible into shares of such capital stock of any class of any
Subsidiary, by purchase, stock dividend, stock split or otherwise, then the
Pledgor shall forthwith deliver to and pledge such shares or other
securities to the Agent, for the benefit of the Banks and the Agent, under
this Agreement and shall deliver to the Agent forthwith any certificates
therefor, accompanied by stock powers or other appropriate instruments of
assignment duly executed by the Pledgor in blank. The Pledgor agrees that
the Agent may from time to time attach as Annex A hereto an updated list of
----- -
the shares of capital stock or securities at the time pledged with the
Agent hereunder.
2. DEFINITIONS. The term "Obligations" and all other capitalized terms
-----------
used herein without definition shall have the respective meanings provided
therefor in the Credit Agreement. Terms used herein and not defined in the
Credit Agreement or otherwise defined herein that are defined in the
Massachusetts UCC have such defined meanings herein, unless the context
otherwise indicates or requires, and the following terms shall have the
following meanings:
Stock. Includes the shares of stock described in Annex A attached hereto
----- ----- -
and any additional shares of stock at the time pledged with the Agent hereunder.
Stock Collateral. The property at any time pledged to the Agent hereunder
----------------
(whether described herein or not) and all income therefrom, increases therein
and proceeds thereof, but excluding from the definition of "Stock Collateral"
any income, increases or proceeds received by the Pledgor to the extent
expressly permitted by (S)6.
3. SECURITY FOR OBLIGATIONS. This Agreement and the security interest in
------------------------
and pledge of the Stock Collateral hereunder are made with and granted to the
Agent, for the benefit of the Banks and the Agent, as security for the payment
and performance in full of all the Obligations.
4. LIQUIDATION, RECAPITALIZATION, ETC. Any sums or other property paid or
----------------------------------
distributed upon or with respect to any of the Stock, whether by dividend or
redemption or upon the liquidation or dissolution of the issuer thereof or
otherwise, shall, except to the limited extent provided in (S)6, be paid over
and delivered to the Agent to be held by the Agent, for the benefit of the Banks
and the Agent, as security for the payment and performance in full of all of the
Obligations. In case, pursuant to the recapitalization or reclassification of
the capital of the issuer thereof or pursuant to the reorganization thereof, any
distribution of capital shall be made on or in respect of any of the Stock or
any property shall be distributed upon or with respect to any of the Stock, the
property so distributed shall be delivered to the Agent, for the benefit of the
<PAGE>
-3-
Banks and the Agent, to be held by it as security for the Obligations. Except to
the limited extent provided in (S)6, all sums of money and property paid or
distributed in respect of the Stock, whether as a dividend or upon such a
liquidation, dissolution, recapitalization or reclassification or otherwise,
that are received by the Pledgor shall, until paid or delivered to the Agent, be
held in trust for the Agent, for the benefit of the Banks and the Agent, as
security for the payment and performance in full of all of the Obligations.
5. WARRANTY OF TITLE; AUTHORITY. The Pledgor hereby represents and
----------------------------
warrants that: (a) the Pledgor is the sole record and beneficial owner of, the
Stock described in (S)1, subject to no pledges, liens, security interests,
charges, options, restrictions or other encumbrances except the pledge and
security interest created by this Agreement, (b) all of the Stock described in
(S)1 is validly issued, fully paid and non-assessable, (c) the Pledgor has full
power, authority and legal right to execute, deliver and perform its obligations
under this Agreement and to pledge and grant a security interest in all of the
Stock Collateral pursuant to this Agreement, and the execution, delivery and
performance hereof and the pledge of and granting of a security interest in the
Stock Collateral hereunder have been duly authorized by all necessary corporate
or other action and do not contravene any law, rule or regulation or any
provision of the Pledgor's charter documents or by-laws or of any judgment,
decree or order of any tribunal or of any agreement or instrument to which the
Pledgor is a party or by which it or any of its property is bound or affected or
constitute a default thereunder, and (d) the information set forth in Annex A
----- -
hereto relating to the Stock is true, correct and complete in all respects. The
Pledgor covenants that it will defend the rights of the Banks and the Agent and
security interest of the Agent, for the benefit of the Banks and the Agent, in
such Stock against the claims and demands of all other persons whomsoever. The
Pledgor further covenants that it will have the like title to and right to
pledge and grant a security interest in the Stock Collateral hereafter pledged
or in which a security interest is granted to the Agent hereunder and will
likewise defend the rights, pledge and security interest thereof and therein of
the Banks and the Agent.
6. DIVIDENDS, VOTING, ETC., PRIOR TO MATURITY. So long as no Event of
------------------------------------------
Default shall have occurred and be continuing, the Pledgor shall be entitled to
receive all cash dividends paid in respect of the Stock, and absent receipt of
an election from the Agent as provided below, to vote the Stock and to give
consents, waivers and ratifications in respect of the Stock; provided, however,
-------- -------
that no vote shall be cast or consent, waiver or ratification given by the
Pledgor if the effect thereof would in the reasonable judgment of the Agent
impair any of the Stock Collateral or be inconsistent with or result in any
violation of any of the provisions of the Credit Agreement, the Notes or any of
the other Loan Documents. All such rights of the Pledgor to receive cash
dividends shall cease in case an Event of Default shall have occurred and be
continuing. All such rights of the Pledgor to vote and give consents, waivers
and ratifications with respect to the Stock shall, at the Agent's option, as
evidenced by the Agent's
<PAGE>
-4-
notifying the Pledgor of such election, cease in case an Event of Default shall
have occurred and be continuing.
7. REMEDIES.
--------
7.1. IN GENERAL. If an Event of Default shall have occurred and
----------
be continuing, the Agent shall thereafter have the following rights and
remedies (to the extent permitted by applicable law) in addition to the
rights and remedies of a secured party under the Massachusetts UCC, all
such rights and remedies being cumulative, not exclusive, and enforceable
alternatively, successively or concurrently, at such time or times as the
Agent deems expedient:
(a) if the Agent so elects and gives notice of such
election to the Pledgor, the Agent may vote any or all shares of
the Stock (whether or not the same shall have been transferred
into its name or the name of its nominee or nominees) for any
lawful purpose, including, without limitation, if the Agent so
elects, for the liquidation of the assets of the issuer thereof,
and give all consents, waivers and ratifications in respect of
the Stock and otherwise act with respect thereto as though it
were the outright owner thereof (the Pledgor hereby irrevocably
constituting and appointing the Agent the proxy and attorney-in-
fact of the Pledgor, with full power of substitution, to do so);
(b) the Agent may demand, sue for, collect or make any
compromise or settlement the Agent deems suitable in respect of
any Stock Collateral;
(c) the Agent may sell, resell, assign and deliver, or
otherwise dispose of any or all of the Stock Collateral, for cash
or credit or both and upon such terms at such place or places, at
such time or times and to such entities or other persons as the
Agent thinks expedient, all without demand for performance by the
Pledgor or any notice or advertisement whatsoever except as
expressly provided herein or as may otherwise be required by law;
(d) the Agent may cause all or any part of the Stock held
by it to be transferred into its name or the name of its nominee
or nominees; and
7.2. SALE OF STOCK COLLATERAL. In the event of any disposition of
------------------------
the Stock Collateral as provided in clause (c) of (S)7.1, the Agent shall
give to the Pledgor at least five (5) Business Days prior written notice of
the time and place of any public sale of the Stock Collateral or of the
time after which any private sale or any other intended disposition is to
be made. The Pledgor hereby acknowledges that five (5) Business Days prior
written notice of such sale or sales shall be reasonable notice. The
<PAGE>
-5-
Agent may enforce its rights hereunder without any other notice and without
compliance with any other condition precedent now or hereunder imposed by
statute, rule of law or otherwise (all of which are hereby expressly waived
by the Pledgor, to the fullest extent permitted by law). The Agent may buy
any part or all of the Stock Collateral at any public sale and if any part
or all of the Stock Collateral is of a type customarily sold in a
recognized market or is of the type which is the subject of widely-
distributed standard price quotations, the Agent may buy at private sale
and may make payments thereof by any means. The Agent may apply the cash
proceeds actually received from any sale or other disposition to the
reasonable expenses of retaking, holding, preparing for sale, selling and
the like, to reasonable attorneys' fees, travel and all other expenses
which may be incurred by the Agent in attempting to collect the Obligations
or to enforce this Agreement or in the prosecution or defense of any action
or proceeding related to the subject matter of this Agreement, and then to
the Obligations in such order or preference as the Agent may determine
after proper allowance for Obligations not then due. Only after such
applications, and after payment by the Agent of any amount required by (S)
9-504(1)(c) of the Massachusetts. UCC, need the Agent
account to the Pledgor for any surplus. To the extent that any of the
Obligations are to be paid or performed by a person other than the Pledgor,
the Pledgor waives and agrees not to assert any rights or privileges which
it may have under (S)9-112 of the Massachusetts. UCC
7.3. PRIVATE SALES. The Pledgor recognizes that the Agent may be
-------------
unable to effect a public sale of the Stock by reason of certain
prohibitions contained in the Securities Act, federal banking laws, and
other applicable laws, but may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers. The Pledgor
agrees that any such private sales may be at prices and other terms less
favorable to the seller than if sold at public sales and that such private
sales shall not by reason thereof be deemed not to have been made in a
commercially reasonable manner. The Agent shall be under no obligation to
delay a sale of any of the Stock for the period of time necessary to permit
the issuer of such securities to register such securities for public sale
under the Securities Act, or such other federal banking or other applicable
laws, even if the issuer would agree to do so. Subject to the foregoing,
the Agent agrees that any sale of the Stock shall be made in a commercially
reasonable manner, and the Pledgor agrees to use its best efforts to cause
the issuer or issuers of the Stock contemplated to be sold, to execute and
deliver, and cause the directors and officers of such issuer to execute and
deliver, all at the Pledgor's expense, all such instruments and documents,
and to do or cause to be done all such other acts and things as may
reasonably be necessary or, in the reasonable opinion of the Agent,
advisable to exempt such Stock from registration under the provisions of
the Securities Act, and to make all amendments to such instruments and
documents which, in the opinion of the Agent, are
<PAGE>
-6-
reasonably necessary or advisable, all in conformity with the requirements
of the Securities Act and the rules and regulations of the Securities and
Exchange Commission applicable thereto. The Pledgor further agrees to use
its best efforts to cause such issuer or issuers to comply with the
provisions of the securities or "Blue Sky" laws of any jurisdiction which
the Agent shall designate and, if required, to cause such issuer or issuers
to make available to its security holders, as soon as practicable, an
earnings statement (which need not be audited) which will satisfy the
provisions of Section 11(a) of the Securities Act.
7.4. PLEDGOR'S AGREEMENTS, ETC. The Pledgor further agrees to do or
-------------------------
cause to be done all such other acts and things as may be reasonably
necessary to make any sales of any portion or all of the Stock pursuant to
this (S)7 valid and binding and in compliance with any and all applicable
laws (including, without limitation, the Securities Act, the Securities
Exchange Act of 1934, as amended, the rules and regulations of the
Securities and Exchange Commission applicable thereto and all applicable
state securities or "Blue Sky" laws), regulations, orders, writs,
injunctions, decrees or awards of any and all courts, arbitrators or
governmental instrumentalities, domestic or foreign, having jurisdiction
over any such sale or sales, all at the Pledgor's expense. The Pledgor
further agrees that a breach of any of the covenants contained in this (S)7
will cause irreparable injury to the Agent and the Banks, that the Agent
and the Banks have no adequate remedy at law in respect of such breach and,
as a consequence, agrees that each and every covenant contained in this
(S)7 shall be specifically enforceable against the Pledgor by the Agent and
the Pledgor hereby waives and agrees not to assert any defenses against an
action for specific performance of such covenants.
8. MARSHALLING. Neither the Agent nor any Bank shall be required to
-----------
marshal any present or future collateral security for (including but not limited
to this Agreement and the Stock Collateral), or other assurances of payment of,
the Obligations or any of them, or to resort to such collateral security or
other assurances of payment in any particular order. All of the Agent's rights
hereunder and of the Banks and the Agent in respect of such collateral security
and other assurances of payment shall be cumulative and in addition to all other
rights, however existing or arising. To the extent that it lawfully may, the
Pledgor hereby agrees that it will not invoke any law relating to the
marshalling of collateral that might cause delay in or impede the enforcement of
the Agent's rights under this Agreement or under any other instrument evidencing
any of the Obligations or under which any of the Obligations is outstanding or
by which any of the Obligations is secured or payment thereof is otherwise
assured, and to the extent that it lawfully may the Pledgor hereby irrevocably
waives the benefits of all such laws.
9. PLEDGOR'S OBLIGATIONS NOT AFFECTED. The obligations of the Pledgor
----------------------------------
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by (a) any exercise or nonexercise, or any waiver, by the Agent or
<PAGE>
-7-
any Bank of any right, remedy, power or privilege under or in respect of any of
the Obligations or any security thereof (including this Agreement); (b) any
amendment to or modification of the Credit Agreement, the Notes, the other Loan
Documents or any of the Obligations; (c) any amendment to or modification of any
instrument (other than this Agreement) securing any of the Obligations,
including, without limitation, any of the Security Documents; or (d) the taking
of additional security for, or any other assurances of payment of, any of the
Obligations or the release or discharge or termination of any security or other
assurances of payment or performance for any of the Obligations; whether or not
the Pledgor shall have notice or knowledge of any of the foregoing.
10. TRANSFER, ETC., BY PLEDGOR. Without the prior written consent of the
--------------------------
Agent (which consent will not be unreasonably withheld), the Pledgor will not
sell, assign, transfer or otherwise dispose of, grant any option with respect
to, or pledge or grant any security interest in or otherwise encumber or
restrict any of the Stock Collateral or any interest therein, except for the
pledge thereof and security interest therein provided for in this Agreement.
11. FURTHER ASSURANCES. The Pledgor will do all such acts, and will
------------------
furnish to the Agent all such financing statements, certificates, legal opinions
and other documents and will obtain all such governmental consents and corporate
approvals and will do or cause to be done all such other things as the Agent may
reasonably request from time to time in order to give full effect to this
Agreement and to secure the rights of the Banks and the Agent hereunder, all
without any cost or expense to the Agent or any Bank. If the Agent so elects, a
photocopy of this Agreement may at any time and from time to time be filed by
the Agent as a financing statement in any recording office in any jurisdiction.
12. AGENT'S EXONERATION. Under no circumstances shall the Agent be deemed
-------------------
to assume any responsibility for or obligation or duty with respect to any part
or all of the Stock Collateral of any nature or kind or any matter or
proceedings arising out of or relating thereto, other than (a) to exercise
reasonable care in the physical custody of the Stock Collateral and (b) after a
Default or an Event of Default shall have occurred and be continuing to act in a
commercially reasonable manner. Neither the Agent nor any Bank shall be required
to take any action of any kind to collect, preserve or protect its or the
Pledgor's rights in the Stock Collateral or against other parties thereto. The
Agent's prior recourse to any part or all of the Stock Collateral shall not
constitute a condition of any demand, suit or proceeding for payment or
collection of any of the Obligations.
13. NO WAIVER, ETC. Neither this Agreement nor any term hereof may be
--------------
changed, waived, discharged or terminated except by a written instrument
expressly referring to this Agreement and to the provisions so modified or
limited, and executed by the Agent, with the consent of the Majority Banks, and
the Pledgor. No act, failure or delay by the Agent shall constitute a waiver of
its rights and remedies hereunder or otherwise. No single or partial waiver by
the Agent of any default or right or remedy that it may have shall operate as a
<PAGE>
-8-
waiver of any other default, right or remedy or of the same default, right or
remedy on a future occasion. The Pledgor hereby waives presentment, notice of
dishonor and protest of all instruments, included in or evidencing any of the
Obligations or the Stock Collateral, and any and all other notices and demands
whatsoever (except as expressly provided herein or in the Credit Agreement).
14. NOTICE, ETC. All notices, requests and other communications hereunder
-----------
shall be made in the manner set forth in (S)20 of the Credit Agreement,
addressed as follows: if to the Pledgor, at the address set forth beneath its
signature hereto, and if to the Agent, at the address for notices to the Agent
set forth in (S)20 of the Credit Agreement, or at such other address as either
party may designate in writing to the other.
15. TERMINATION. Upon final payment and performance in full of the
-----------
Obligations, this Agreement shall terminate and the Agent shall, at the
Pledgor's request and expense, return, free of any lien, all Stock Collateral in
the possession or control of the Agent as has not theretofore been disposed of
pursuant to the provisions hereof, together with any moneys and other property
at the time held by the Agent hereunder unless the Agent is required by any
agreement, instrument, law, regulation or order to turn such Stock Collateral
over to another party. The Agent, at the written request and expense of the
Pledgor, will promptly execute and deliver to the Pledgor the proper instruments
acknowledging the satisfaction and termination of this Agreement, and will
promptly duly assign, transfer and deliver to such Pledgor (without recourse and
without any representation or warranty) free from any lien granted hereunder all
of the Stock Collateral pledged and/or assigned by it hereunder which has
previously been delivered to the Agent except for any Stock Collateral which has
theretofore been sold or otherwise applied or released pursuant to this
Agreement.
16. OVERDUE AMOUNTS. Until paid, all amounts due and payable by the
---------------
Pledgor hereunder shall be a debt secured by the Stock Collateral and shall
bear, whether before or after judgment, interest at the rate of interest for
overdue principal set forth in the Credit Agreement.
17. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT IS INTENDED TO
--------------------------------------
TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE MASSACHUSETTS. The Pledgor agrees that any
suit for the enforcement of this Agreement may be brought in the courts of The
Massachusetts. or any federal court sitting therein and consents to the non-
exclusive jurisdiction of such court and to service of process in any such suit
being made upon the Pledgor by mail at the address specified in (S)20 of the
Credit Agreement. The Pledgor hereby waives any objection that it may now or
hereafter have to the venue of any such suit or any such court or that such suit
is brought in an inconvenient court.
<PAGE>
-9-
18. WAIVER OF JURY TRIAL. THE PLEDGOR WAIVES ITS RIGHT TO A JURY TRIAL
--------------------
WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION
WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF
ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, the Pledgor waives
any right which it may have to claim or recover in any litigation referred to in
the preceding sentence any special, exemplary, punitive or consequential damages
or any damages other than, or in addition to, actual damages. The Pledgor (a)
certifies that neither the Agent or any Bank nor any representative, agent or
attorney of the Agent or any Bank has represented, expressly or otherwise, that
the Agent or any Bank would not, in the event of litigation, seek to enforce the
foregoing waivers and (b) acknowledges that, in entering into the Credit
Agreement and the other Loan Documents to which the Agent is a party, the Agent
and the Banks are relying upon, among other things, the waivers and
certifications contained in this (S)18.
19. MISCELLANEOUS. The headings of each section of this Agreement are for
-------------
convenience only and shall not define or limit the provisions thereof. This
Agreement and all rights and obligations hereunder shall be binding upon the
Pledgor and its respective successors and assigns, and shall inure to the
benefit of the Agent and the Banks and their respective successors and assigns.
If any term of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall be in no way
affected thereby, and this Agreement shall be construed and be enforceable as if
such invalid, illegal or unenforceable term had not been included herein. The
Pledgor acknowledges receipt of a copy of this Agreement.
<PAGE>
-10-
IN WITNESS WHEREOF, intending to be legally bound, the Pledgor and the
Agent have caused this Agreement to be executed as of the date first above
written.
FLEX-O-LITE, INC.
By: /s/ Christopher T. Paule
-----------------------------------
Name:
Title:
Address: ______________________________
_______________________________________
BANKBOSTON, N.A., AS AGENT
By: /s/ Peter van der Horst
----------------------------------
Peter van der Horst, Vice President
The undersigned Subsidiaries hereby join in the above Agreement for the
sole purpose of consenting to and being bound by the provisions of (S)(S)4.1, 6
and 7 thereof, the undersigned hereby agreeing to cooperate fully and in good
faith with the Agent and the Pledgor in carrying out such provisions.
FLEX-O-LITE, LTD.
By: /s/ Christopher T. Paule
-----------------------------------
Name:
Title:
Address: ______________________________
_______________________________________
<PAGE>
-11-
ANNEX A TO PLEDGE AGREEMENT
---------------------------
None of the issuers has any authorized, issued or outstanding shares of its
capital stock of any class or any commitments to issue any shares of its capital
stock of any class or any securities convertible into or exchangeable for any
shares of its capital stock of any class except as otherwise stated in this
Annex A.
- ----- -
<TABLE>
<CAPTION>
Number of Number of Number of Par or
Record Class of Authorized Issued Outstanding Liquidation
Issuer Owner Shares Shares Shares Shares Value
------ ------ -------- ---------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Flex-O-Lite,
Ltd.
</TABLE>
<PAGE>
EXHIBIT 10.9
STOCK PLEDGE AGREEMENT
----------------------
(SUBSIDIARIES)
--------------
STOCK PLEDGE AGREEMENT, dated as of April 22, 1998, by and between JACKSON
ACQUISITION, INC., a Delaware corporation (the "Pledgor"), and BANKBOSTON, N.A.,
a national banking association, as agent (hereinafter, in such capacity, the
"Agent") for itself and the other lending institutions (hereinafter,
collectively, the "Banks") which are or may become parties to a Revolving Credit
and Acquisition Loan Agreement, dated as of April 22, 1998 (as amended and in
effect from time to time, the "Credit Agreement"), among Jackson Products, Inc.,
a Delaware corporation (the "Borrower"), the Banks, the Agent and Mercantile
Bank National Association, as Co-Agent.
WHEREAS, the Pledgor is the direct legal and beneficial owner of all of the
issued and outstanding shares of each class of the capital stock of each of the
corporations described on Annex A (the "Subsidiaries"); and
----- -
WHEREAS, it is a condition precedent to the Banks' making any loans or
otherwise extending credit to the Borrower under the Credit Agreement that the
Pledgor execute and deliver to the Agent, for the benefit of the Banks and the
Agent, a pledge agreement in substantially the form hereof; and
WHEREAS, the Pledgor wishes to grant pledges and security interests in
favor of the Agent, for the benefit of the Banks and the Agent, as herein
provided;
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. PLEDGE OF STOCK, ETC.
---------------------
1.1. PLEDGE OF STOCK. The Pledgor hereby pledges, assigns, grants
---------------
a security interest in, and delivers to the Agent, for the benefit of the
Banks and the Agent, (a) 100% of the shares of capital stock of each of its
Domestic Subsidiaries of every class owned by the Pledgor, as more fully
described on Annex A hereto, and (b) not less than 66% of the shares of
----- -
capital stock of each of its Foreign Subsidiaries of every class owned by
the Pledgor, as more fully described on Annex A hereto to be held by the
Agent, for the benefit of the Banks and the Agent, subject to the terms and
conditions hereinafter set forth. The certificates for such shares,
accompanied by stock powers or other appropriate instruments of assignment
thereof duly executed in blank by the Pledgor, have been delivered to the
Agent.
<PAGE>
-2-
1.2. ADDITIONAL STOCK. In case the Pledgor shall acquire any
----------------
additional shares of the capital stock of any Subsidiary or corporation
which is the successor of any Subsidiary, or any securities exchangeable
for or convertible into shares of such capital stock of any class of any
Subsidiary, by purchase, stock dividend, stock split or otherwise, then the
Pledgor shall forthwith deliver to and pledge such shares or other
securities to the Agent, for the benefit of the Banks and the Agent, under
this Agreement and shall deliver to the Agent forthwith any certificates
therefor, accompanied by stock powers or other appropriate instruments of
assignment duly executed by the Pledgor in blank. The Pledgor agrees that
the Agent may from time to time attach as Annex A hereto an updated list of
----- -
the shares of capital stock or securities at the time pledged with the
Agent hereunder.
2. DEFINITIONS. The term "Obligations" and all other capitalized terms
-----------
used herein without definition shall have the respective meanings provided
therefor in the Credit Agreement. Terms used herein and not defined in the
Credit Agreement or otherwise defined herein that are defined in the
Massachusetts UCC have such defined meanings herein, unless the context
otherwise indicates or requires, and the following terms shall have the
following meanings:
Stock. Includes the shares of stock described in Annex A attached hereto
----- ----- -
and any additional shares of stock at the time pledged with the Agent hereunder.
Stock Collateral. The property at any time pledged to the Agent hereunder
----------------
(whether described herein or not) and all income therefrom, increases therein
and proceeds thereof, but excluding from the definition of "Stock Collateral"
any income, increases or proceeds received by the Pledgor to the extent
expressly permitted by (S)6.
3. SECURITY FOR OBLIGATIONS. This Agreement and the security interest in
------------------------
and pledge of the Stock Collateral hereunder are made with and granted to the
Agent, for the benefit of the Banks and the Agent, as security for the payment
and performance in full of all the Obligations.
4. LIQUIDATION, RECAPITALIZATION, ETC. Any sums or other property paid or
-----------------------------------
distributed upon or with respect to any of the Stock, whether by dividend or
redemption or upon the liquidation or dissolution of the issuer thereof or
otherwise, shall, except to the limited extent provided in (S)6, be paid over
and delivered to the Agent to be held by the Agent, for the benefit of the Banks
and the Agent, as security for the payment and performance in full of all of the
Obligations. In case, pursuant to the recapitalization or reclassification of
the capital of the issuer thereof or pursuant to the reorganization thereof, any
distribution of capital shall be made on or in respect of any of the Stock or
any property shall be distributed upon or with respect to any of the Stock, the
property so distributed shall be delivered to the Agent, for the benefit of the
<PAGE>
-3-
Banks and the Agent, to be held by it as security for the Obligations. Except to
the limited extent provided in (S)6, all sums of money and property paid or
distributed in respect of the Stock, whether as a dividend or upon such a
liquidation, dissolution, recapitalization or reclassification or otherwise,
that are received by the Pledgor shall, until paid or delivered to the Agent, be
held in trust for the Agent, for the benefit of the Banks and the Agent, as
security for the payment and performance in full of all of the Obligations.
5. WARRANTY OF TITLE; AUTHORITY. The Pledgor hereby represents and
----------------------------
warrants that: (a) the Pledgor is the sole record and beneficial owner of, the
Stock described in (S)1, subject to no pledges, liens, security interests,
charges, options, restrictions or other encumbrances except the pledge and
security interest created by this Agreement, (b) all of the Stock described in
(S)1 is validly issued, fully paid and non-assessable, (c) the Pledgor has full
power, authority and legal right to execute, deliver and perform its obligations
under this Agreement and to pledge and grant a security interest in all of the
Stock Collateral pursuant to this Agreement, and the execution, delivery and
performance hereof and the pledge of and granting of a security interest in the
Stock Collateral hereunder have been duly authorized by all necessary corporate
or other action and do not contravene any law, rule or regulation or any
provision of the Pledgor's charter documents or by-laws or of any judgment,
decree or order of any tribunal or of any agreement or instrument to which the
Pledgor is a party or by which it or any of its property is bound or affected or
constitute a default thereunder, and (d) the information set forth in Annex A
----- -
hereto relating to the Stock is true, correct and complete in all respects. The
Pledgor covenants that it will defend the rights of the Banks and the Agent and
security interest of the Agent, for the benefit of the Banks and the Agent, in
such Stock against the claims and demands of all other persons whomsoever. The
Pledgor further covenants that it will have the like title to and right to
pledge and grant a security interest in the Stock Collateral hereafter pledged
or in which a security interest is granted to the Agent hereunder and will
likewise defend the rights, pledge and security interest thereof and therein of
the Banks and the Agent.
6. DIVIDENDS, VOTING, ETC., PRIOR TO MATURITY. So long as no Event of
------------------------------------------
Default shall have occurred and be continuing, the Pledgor shall be entitled to
receive all cash dividends paid in respect of the Stock, and absent receipt of
an election from the Agent as provided below, to vote the Stock and to give
consents, waivers and ratifications in respect of the Stock; provided, however,
-------- --------
that no vote shall be cast or consent, waiver or ratification given by the
Pledgor if the effect thereof would in the reasonable judgment of the Agent
impair any of the Stock Collateral or be inconsistent with or result in any
violation of any of the provisions of the Credit Agreement, the Notes or any of
the other Loan Documents. All such rights of the Pledgor to receive cash
dividends shall cease in case an Event of Default shall have occurred and be
continuing. All such rights of the Pledgor to vote and give consents, waivers
and ratifications with respect to the Stock shall, at the Agent's option, as
evidenced by the Agent's
<PAGE>
-4-
notifying the Pledgor of such election, cease in case an Event of Default shall
have occurred and be continuing.
7. REMEDIES.
--------
7.1. IN GENERAL. If an Event of Default shall have occurred and
----------
be continuing, the Agent shall thereafter have the following rights and
remedies (to the extent permitted by applicable law) in addition to the
rights and remedies of a secured party under the national banking
association. UCC, all such rights and remedies being cumulative, not
exclusive, and enforceable alternatively, successively or concurrently, at
such time or times as the Agent deems expedient:
(a) if the Agent so elects and gives notice of such
election to the Pledgor, the Agent may vote any or all shares of
the Stock (whether or not the same shall have been transferred
into its name or the name of its nominee or nominees) for any
lawful purpose, including, without limitation, if the Agent so
elects, for the liquidation of the assets of the issuer thereof,
and give all consents, waivers and ratifications in respect of
the Stock and otherwise act with respect thereto as though it
were the outright owner thereof (the Pledgor hereby irrevocably
constituting and appointing the Agent the proxy and attorney-in-
fact of the Pledgor, with full power of substitution, to do so);
(b) the Agent may demand, sue for, collect or make any
compromise or settlement the Agent deems suitable in respect of
any Stock Collateral;
(c) the Agent may sell, resell, assign and deliver, or
otherwise dispose of any or all of the Stock Collateral, for cash
or credit or both and upon such terms at such place or places, at
such time or times and to such entities or other persons as the
Agent thinks expedient, all without demand for performance by the
Pledgor or any notice or advertisement whatsoever except as
expressly provided herein or as may otherwise be required by law;
(d) the Agent may cause all or any part of the Stock held
by it to be transferred into its name or the name of its nominee
or nominees; and
7.2. SALE OF STOCK COLLATERAL. In the event of any disposition of
------------------------
the Stock Collateral as provided in clause (c) of (S)7.1, the Agent shall
give to the Pledgor at least five (5) Business Days prior written notice of
the time and place of any public sale of the Stock Collateral or of the
time after which any private sale or any other intended disposition is to
be made. The Pledgor hereby acknowledges that five (5) Business Days prior
written notice of such sale or sales shall be reasonable notice. The
<PAGE>
-5-
Agent may enforce its rights hereunder without any other notice and without
compliance with any other condition precedent now or hereunder imposed by
statute, rule of law or otherwise (all of which are hereby expressly waived
by the Pledgor, to the fullest extent permitted by law). The Agent may buy
any part or all of the Stock Collateral at any public sale and if any part
or all of the Stock Collateral is of a type customarily sold in a
recognized market or is of the type which is the subject of widely-
distributed standard price quotations, the Agent may buy at private sale
and may make payments thereof by any means. The Agent may apply the cash
proceeds actually received from any sale or other disposition to the
reasonable expenses of retaking, holding, preparing for sale, selling and
the like, to reasonable attorneys' fees, travel and all other expenses
which may be incurred by the Agent in attempting to collect the Obligations
or to enforce this Agreement or in the prosecution or defense of any action
or proceeding related to the subject matter of this Agreement, and then to
the Obligations in such order or preference as the Agent may determine
after proper allowance for Obligations not then due. Only after such
applications, and after payment by the Agent of any amount required by (S)
9-504(1)(c) of the Massachusetts UCC, need the Agent account to the Pledgor
for any surplus. To the extent that any of the Obligations are to be paid
or performed by a person other than the Pledgor, the Pledgor waives and
agrees not to assert any rights or privileges which it may have under (S)9-
112 of the Massachusetts UCC
7.3. PRIVATE SALES. The Pledgor recognizes that the Agent may be
-------------
unable to effect a public sale of the Stock by reason of certain
prohibitions contained in the Securities Act, federal banking laws, and
other applicable laws, but may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers. The Pledgor
agrees that any such private sales may be at prices and other terms less
favorable to the seller than if sold at public sales and that such private
sales shall not by reason thereof be deemed not to have been made in a
commercially reasonable manner. The Agent shall be under no obligation to
delay a sale of any of the Stock for the period of time necessary to permit
the issuer of such securities to register such securities for public sale
under the Securities Act, or such other federal banking or other applicable
laws, even if the issuer would agree to do so. Subject to the foregoing,
the Agent agrees that any sale of the Stock shall be made in a commercially
reasonable manner, and the Pledgor agrees to use its best efforts to cause
the issuer or issuers of the Stock contemplated to be sold, to execute and
deliver, and cause the directors and officers of such issuer to execute and
deliver, all at the Pledgor's expense, all such instruments and documents,
and to do or cause to be done all such other acts and things as may
reasonably be necessary or, in the reasonable opinion of the Agent,
advisable to exempt such Stock from registration under the provisions of
the Securities Act, and to make all amendments to such instruments and
documents which, in the opinion of the Agent, are
<PAGE>
-6-
reasonably necessary or advisable, all in conformity with the requirements
of the Securities Act and the rules and regulations of the Securities and
Exchange Commission applicable thereto. The Pledgor further agrees to use
its best efforts to cause such issuer or issuers to comply with the
provisions of the securities or "Blue Sky" laws of any jurisdiction which
the Agent shall designate and, if required, to cause such issuer or issuers
to make available to its security holders, as soon as practicable, an
earnings statement (which need not be audited) which will satisfy the
provisions of Section 11(a) of the Securities Act.
7.4. PLEDGOR'S AGREEMENTS, ETC. The Pledgor further agrees to do or
-------------------------
cause to be done all such other acts and things as may be reasonably
necessary to make any sales of any portion or all of the Stock pursuant to
this (S)7 valid and binding and in compliance with any and all applicable
laws (including, without limitation, the Securities Act, the Securities
Exchange Act of 1934, as amended, the rules and regulations of the
Securities and Exchange Commission applicable thereto and all applicable
state securities or "Blue Sky" laws), regulations, orders, writs,
injunctions, decrees or awards of any and all courts, arbitrators or
governmental instrumentalities, domestic or foreign, having jurisdiction
over any such sale or sales, all at the Pledgor's expense. The Pledgor
further agrees that a breach of any of the covenants contained in this (S)7
will cause irreparable injury to the Agent and the Banks, that the Agent
and the Banks have no adequate remedy at law in respect of such breach and,
as a consequence, agrees that each and every covenant contained in this
(S)7 shall be specifically enforceable against the Pledgor by the Agent and
the Pledgor hereby waives and agrees not to assert any defenses against an
action for specific performance of such covenants.
8. MARSHALLING. Neither the Agent nor any Bank shall be required to
-----------
marshal any present or future collateral security for (including but not limited
to this Agreement and the Stock Collateral), or other assurances of payment of,
the Obligations or any of them, or to resort to such collateral security or
other assurances of payment in any particular order. All of the Agent's rights
hereunder and of the Banks and the Agent in respect of such collateral security
and other assurances of payment shall be cumulative and in addition to all other
rights, however existing or arising. To the extent that it lawfully may, the
Pledgor hereby agrees that it will not invoke any law relating to the
marshalling of collateral that might cause delay in or impede the enforcement of
the Agent's rights under this Agreement or under any other instrument evidencing
any of the Obligations or under which any of the Obligations is outstanding or
by which any of the Obligations is secured or payment thereof is otherwise
assured, and to the extent that it lawfully may the Pledgor hereby irrevocably
waives the benefits of all such laws.
9. PLEDGOR'S OBLIGATIONS NOT AFFECTED. The obligations of the Pledgor
----------------------------------
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by (a) any exercise or nonexercise, or any waiver, by the Agent or
<PAGE>
-7-
any Bank of any right, remedy, power or privilege under or in respect of any of
the Obligations or any security thereof (including this Agreement); (b) any
amendment to or modification of the Credit Agreement, the Notes, the other Loan
Documents or any of the Obligations; (c) any amendment to or modification of any
instrument (other than this Agreement) securing any of the Obligations,
including, without limitation, any of the Security Documents; or (d) the taking
of additional security for, or any other assurances of payment of, any of the
Obligations or the release or discharge or termination of any security or other
assurances of payment or performance for any of the Obligations; whether or not
the Pledgor shall have notice or knowledge of any of the foregoing.
10. TRANSFER, ETC., BY PLEDGOR. Without the prior written consent of the
--------------------------
Agent (which consent will not be unreasonably withheld), the Pledgor will not
sell, assign, transfer or otherwise dispose of, grant any option with respect
to, or pledge or grant any security interest in or otherwise encumber or
restrict any of the Stock Collateral or any interest therein, except for the
pledge thereof and security interest therein provided for in this Agreement.
11. FURTHER ASSURANCES. The Pledgor will do all such acts, and will
------------------
furnish to the Agent all such financing statements, certificates, legal opinions
and other documents and will obtain all such governmental consents and corporate
approvals and will do or cause to be done all such other things as the Agent may
reasonably request from time to time in order to give full effect to this
Agreement and to secure the rights of the Banks and the Agent hereunder, all
without any cost or expense to the Agent or any Bank. If the Agent so elects, a
photocopy of this Agreement may at any time and from time to time be filed by
the Agent as a financing statement in any recording office in any jurisdiction.
12. AGENT'S EXONERATION. Under no circumstances shall the Agent be deemed
-------------------
to assume any responsibility for or obligation or duty with respect to any part
or all of the Stock Collateral of any nature or kind or any matter or
proceedings arising out of or relating thereto, other than (a) to exercise
reasonable care in the physical custody of the Stock Collateral and (b) after a
Default or an Event of Default shall have occurred and be continuing to act in a
commercially reasonable manner. Neither the Agent nor any Bank shall be required
to take any action of any kind to collect, preserve or protect its or the
Pledgor's rights in the Stock Collateral or against other parties thereto. The
Agent's prior recourse to any part or all of the Stock Collateral shall not
constitute a condition of any demand, suit or proceeding for payment or
collection of any of the Obligations.
13. NO WAIVER, ETC. Neither this Agreement nor any term hereof may be
--------------
changed, waived, discharged or terminated except by a written instrument
expressly referring to this Agreement and to the provisions so modified or
limited, and executed by the Agent, with the consent of the Majority Banks, and
the Pledgor. No act, failure or delay by the Agent shall constitute a waiver of
its rights and remedies hereunder or otherwise. No single or partial waiver by
the Agent of any default or right or remedy that it may have shall operate as a
<PAGE>
-8-
waiver of any other default, right or remedy or of the same default, right or
remedy on a future occasion. The Pledgor hereby waives presentment, notice of
dishonor and protest of all instruments, included in or evidencing any of the
Obligations or the Stock Collateral, and any and all other notices and demands
whatsoever (except as expressly provided herein or in the Credit Agreement).
14. NOTICE, ETC. All notices, requests and other communications hereunder
-----------
shall be made in the manner set forth in (S)20 of the Credit Agreement,
addressed as follows: if to the Pledgor, at the address set forth beneath its
signature hereto, and if to the Agent, at the address for notices to the Agent
set forth in (S)20 of the Credit Agreement, or at such other address as either
party may designate in writing to the other.
15. TERMINATION. Upon final payment and performance in full of the
-----------
Obligations, this Agreement shall terminate and the Agent shall, at the
Pledgor's request and expense, return, free of any lien, all Stock Collateral in
the possession or control of the Agent as has not theretofore been disposed of
pursuant to the provisions hereof, together with any moneys and other property
at the time held by the Agent hereunder unless the Agent is required by any
agreement, instrument, law, regulation or order to turn such Stock Collateral
over to another party. The Agent, at the written request and expense of the
Pledgor, will promptly execute and deliver to the Pledgor the proper instruments
acknowledging the satisfaction and termination of this Agreement, and will
promptly duly assign, transfer and deliver to such Pledgor (without recourse and
without any representation or warranty) free from any lien granted hereunder all
of the Stock Collateral pledged and/or assigned by it hereunder which has
previously been delivered to the Agent except for any Stock Collateral which has
theretofore been sold or otherwise applied or released pursuant to this
Agreement.
16. OVERDUE AMOUNTS. Until paid, all amounts due and payable by the
---------------
Pledgor hereunder shall be a debt secured by the Stock Collateral and shall
bear, whether before or after judgment, interest at the rate of interest for
overdue principal set forth in the Credit Agreement.
17. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT IS INTENDED TO
--------------------------------------
TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. The Pledgor
agrees that any suit for the enforcement of this Agreement may be brought in the
courts of The Commonwealth of Massachusetts or any federal court sitting therein
and consents to the non-exclusive jurisdiction of such court and to service of
process in any such suit being made upon the Pledgor by mail at the address
specified in (S)20 of the Credit Agreement. The Pledgor hereby waives any
objection that it may now or hereafter have to the venue of any such suit or any
such court or that such suit is brought in an inconvenient court.
<PAGE>
-9-
18. WAIVER OF JURY TRIAL. THE PLEDGOR WAIVES ITS RIGHT TO A JURY TRIAL
--------------------
WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION
WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF
ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, the Pledgor waives
any right which it may have to claim or recover in any litigation referred to in
the preceding sentence any special, exemplary, punitive or consequential damages
or any damages other than, or in addition to, actual damages. The Pledgor (a)
certifies that neither the Agent or any Bank nor any representative, agent or
attorney of the Agent or any Bank has represented, expressly or otherwise, that
the Agent or any Bank would not, in the event of litigation, seek to enforce the
foregoing waivers and (b) acknowledges that, in entering into the Credit
Agreement and the other Loan Documents to which the Agent is a party, the Agent
and the Banks are relying upon, among other things, the waivers and
certifications contained in this (S)18.
19. MISCELLANEOUS. The headings of each section of this Agreement are for
-------------
convenience only and shall not define or limit the provisions thereof. This
Agreement and all rights and obligations hereunder shall be binding upon the
Pledgor and its respective successors and assigns, and shall inure to the
benefit of the Agent and the Banks and their respective successors and assigns.
If any term of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall be in no way
affected thereby, and this Agreement shall be construed and be enforceable as if
such invalid, illegal or unenforceable term had not been included herein. The
Pledgor acknowledges receipt of a copy of this Agreement.
<PAGE>
IN WITNESS WHEREOF, intending to be legally bound, the Pledgor and the
Agent have caused this Agreement to be executed as of the date first above
written.
JACKSON ACQUISITION, INC.
By: /s/ Christopher T. Paule
-----------------------------------
Name:
Title:
Address:________________________________
________________________________________
BANKBOSTON, N.A., AS AGENT
By: /s/ Peter van der Horst
----------------------------------
Peter van der Horst, Vice President
The undersigned Subsidiaries hereby join in the above Agreement for the
sole purpose of consenting to and being bound by the provisions of (S)(S)4.1, 6
and 7 thereof, the undersigned hereby agreeing to cooperate fully and in good
faith with the Agent and the Pledgor in carrying out such provisions.
AMERICAN ALLSAFE COMPANY
By: /s/ Christopher T. Paule
-----------------------------------
Name:
Title:
Address:_______________________________
_______________________________________
<PAGE>
SILENCIO/SAFETY DIRECT, INC.
By: /s/ Christopher T. Paule
-----------------------------------
Name:
Title:
Address:_______________________________
_______________________________________
<PAGE>
ANNEX A TO PLEDGE AGREEMENT
---------------------------
None of the issuers has any authorized, issued or outstanding shares of its
capital stock of any class or any commitments to issue any shares of its capital
stock of any class or any securities convertible into or exchangeable for any
shares of its capital stock of any class except as otherwise stated in this
Annex A.
- ----- -
<TABLE>
<CAPTION>
Number of Number of Number of Par or
Record Class of Authorized Issued Outstanding Liquidation
Issuer Owner Shares Shares Shares Shares Value
------ ------ ------- ---------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
American
Allsafe Company
Silencio/Safety
Direct, Inc.
</TABLE>
<PAGE>
EXHIBIT 10.10
SECURITY AGREEMENT
------------------
SECURITY AGREEMENT, dated as of April 22, 1998, between JACKSON PRODUCTS,
INC., a Delaware corporation (the "Borrower"), and BANKBOSTON, N.A., a national
banking association, as agent (hereinafter, in such capacity, the "Agent") for
itself and the other lending institutions (hereinafter, collectively, the
"Banks") which are or may become parties to a Revolving Credit and Acquisition
Loan Agreement, dated as of April 22, 1998 (as amended and in effect from time
to time, the "Credit Agreement"), among the Borrower, the Banks, the Agent and
Mercantile Bank National Association, as Co-Agent.
WHEREAS, it is a condition precedent to the Banks' making any loans or
otherwise extending credit to the Borrower under the Credit Agreement that the
Borrower execute and deliver to the Agent, for the benefit of the Banks and the
Agent, a security agreement in substantially the form hereof; and
WHEREAS, the Borrower wishes to grant security interests in favor of the
Agent, for the benefit of the Banks and the Agent, as herein provided;
NOW, THEREFORE, in consideration of the promises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. All capitalized terms used herein without definitions
-----------
shall have the respective meanings provided therefor in the Credit Agreement.
All terms defined in the Uniform Commercial Code of The Commonwealth of
Massachusetts and used herein shall have the same definitions herein as
specified therein.
2. GRANT OF SECURITY INTEREST.
--------------------------
2.1. COLLATERAL GRANTED. The Borrower hereby grants to the Agent, for
------------------
the benefit of the Banks and the Agent, to secure the payment and
performance in full of all of the Obligations, a security interest in and
so pledges and assigns to the Agent, for the benefit of the Banks and the
Agent, the following properties, assets and rights of the Borrower,
wherever located, whether now owned or hereafter acquired or arising, and
all proceeds and products thereof (all of the same being hereinafter called
the "Collateral"):
All personal and fixture property of every kind and nature
including without limitation all furniture, fixtures, equipment, raw
<PAGE>
-2-
materials, inventory, other goods, accounts, contract rights, rights
to the payment of money, insurance refund claims and all other
insurance claims and proceeds, tort claims, chattel paper, documents,
instruments, securities and other investment property, deposit
accounts, rights to proceeds of letters of credit and all general
intangibles including, without limitation, all tax refund claims,
license fees, patents, patent applications, trademarks, trademark
applications, trade names, copyrights, copyright applications, rights
to sue and recover for past infringement of patents, trademarks and
copyrights, computer programs, computer software, engineering
drawings, service marks, customer lists, goodwill, and all licenses,
permits, agreements of any kind or nature pursuant to which the
Borrower possesses, uses or has authority to possess or use property
(whether tangible or intangible) of others or others possess, use or
have authority to possess or use property (whether tangible or
intangible) of the Borrower, and all recorded data of any kind or
nature, regardless of the medium of recording including, without
limitation, all software, writings, plans, specifications and
schematics.
2.2. DELIVERY OF INSTRUMENTS, ETC.
----------------------------
(a) Pursuant to the terms hereof, the Borrower has endorsed,
assigned and delivered to the Agent all negotiable or non-negotiable
instruments, certificated securities and chattel paper pledged by it
hereunder, together with instruments of transfer or assignment duly
executed in blank as the Agent may have specified. In the event that
the Borrower shall, after the date of this Agreement, acquire any
other negotiable or non-negotiable instruments, certificated
securities or chattel paper to be pledged by it hereunder, the
Borrower shall forthwith endorse, assign and deliver the same to the
Agent, accompanied by such instruments of transfer or assignment duly
executed in blank as the Agent may from time to time specify.
(b) To the extent that any securities now or hereafter acquired
by the Borrower are uncertificated and are issued to the Borrower or
its nominee directly by the issuer thereof, the Borrower shall cause
the issuer to note on its books the security interest of the Agent in
such securities and shall cause the issuer, pursuant to an agreement
in form and substance satisfactory to the Agent, to agree to comply
with instructions from the Agent as to such securities, without
further consent of the Borrower or such nominee. To the extent that
any securities, whether certificated or uncertificated, or other
financial assets now or hereafter acquired by the Borrower are held by
the Borrower or its nominee through a securities intermediary, the
Borrower shall (i) cause such securities intermediary to note on its
books the security interest of
<PAGE>
-3-
the Agent in such securities or other financial assets and to confirm
such notation promptly to the Agent and (ii), at the request of the
Agent, cause such securities intermediary, pursuant to an agreement in
form and substance satisfactory to the Agent, to agree to comply with
entitlement orders or other instructions from the Agent as to such
securities or other financial assets, without further consent of the
Borrower or such nominee. The Agent agrees with the Borrower that the
Agent shall not give any such entitlement orders or instructions to
any such issuer or securities intermediary unless an Even of Default
has occurred and is continuing and the Agent has elected to exercise
its rights and remedies as contemplated by (S)14.
(c) To the extent that the Borrower is a beneficiary under any
written letter of credit now or hereafter issued in favor of the
Borrower, the Borrower shall deliver such letter of credit to the
Agent. The Agent shall from time to time, at the request and expense
of the Borrower, make such arrangements with the Borrower as are in
the Agent's reasonable judgment necessary and appropriate so that the
Borrower may make any drawing to which the Borrower is entitled under
such letter of credit, without impairment of the Agent's perfected
security interest in the Borrower's rights to proceeds of such letter
of credit or in the actual proceeds of such drawing. At the Agent's
request, the Borrower shall, for any letter of credit, whether or not
written, now or hereafter issued in favor of the Borrower as
beneficiary, execute and deliver to the issuer and any confirmer of
such letter of credit an assignment of proceeds from, in favor of the
Agent and satisfactory to the Agent and such issuer or (as the case
may be) such confirmer, requiring the proceeds of any drawing under
such letter of credit to be paid directly to the Agent for application
as provided in the Credit Agreement.
2.3. EXCLUDED COLLATERAL. Notwithstanding the foregoing provisions of
-------------------
this (S)2, such grant of security interest shall not extend to, and the
term "Collateral" shall not include, any chattel paper and general
intangibles which are now or hereafter held by the Borrower as licensee,
lessee or otherwise, to the extent that (a) such chattel paper and general
intangibles are not assignable or capable of being encumbered as a matter
of law or under the terms of the license, lease or other agreement
applicable thereto (but solely to the extent that any such restriction
shall be enforceable under applicable law), without the consent of the
licensor or lessor thereof or other applicable party thereto and (b) such
consent has not been obtained; provided, however, that the foregoing grant
-------- -------
of security interest shall extend to, and the term "Collateral" shall
include, (i) any and all proceeds of such chattel paper and general
intangibles to the extent that the assignment or encumbering of such
proceeds is not so restricted and (ii) upon any such licensor, lessor or
other applicable party
<PAGE>
-4-
consent with respect to any such otherwise excluded chattel paper or
general intangibles being obtained, thereafter such chattel paper or
general intangibles as well as any and all proceeds thereof might have
theretofore have been excluded from such grant of a security interest and
the term "Collateral".
2.4. STOCK PLEDGE AGREEMENT. Concurrently herewith the Borrower is
----------------------
executing and delivering to the Agent, for the benefit of the Banks and the
Agent, the Stock Pledge Agreement pursuant to which the Borrower is
pledging to the Agent, for the benefit of the Banks and the Agent, (a) 100%
of the shares of capital stock of each of the Borrower's Domestic
Subsidiaries and (b) not less than 66% of the Shares of capital stock of
each of the Borrower's Foreign Subsidiaries. Such pledge shall be governed
by the terms of such stock pledge agreement and not by the terms of this
Agreement.
2.5. PATENT AND TRADEMARK ASSIGNMENTS. Concurrently herewith the
--------------------------------
Borrower is also executing and delivering to the Agent, for the benefit of
the Banks and the Agent, the Patent Assignment and the Trademark Assignment
pursuant to which the Borrower is assigning to the Agent, for the benefit
of the Banks and the Agent, certain Collateral consisting of patents and
patent rights and trademarks, service marks and trademark and service
mark rights, together with the goodwill appurtenant thereto. The provisions
of the Patent Assignment and the Trademark Assignment are supplemental to
the provisions of this Agreement, and nothing contained in the Patent
Assignment or the Trademark Assignment shall derogate from any of the
rights or remedies of the Agent or any of the Banks hereunder. Nor shall
anything contained in the Patent Assignment or the Trademark Assignment be
deemed to prevent or extend the time of attachment or perfection of any
security interest in such Collateral created hereby.
3. TITLE TO COLLATERAL, ETC. The Borrower is the owner of the Collateral
-------------------------
free from any adverse lien, security interest or other encumbrance, except for
the security interest created by this Agreement and other liens permitted by the
Credit Agreement. None of the Collateral constitutes, or is the proceeds of,
"farm products" as defined in (S)9-109(3) of the Uniform Commercial Code of The
Commonwealth of Massachusetts. None of the account debtors in respect of any
accounts, chattel paper or general intangibles and none of the obligors in
respect of any instruments included in the Collateral is a governmental
authority subject to the Federal Assignment of Claims Act.
4. CONTINUOUS PERFECTION. The Borrower's place of business or, if more
---------------------
than one, chief executive office is indicated on the Perfection Certificate
delivered to the Agent herewith (the "Perfection Certificate"). The Borrower
will not change the same, or the name, identity or corporate structure of the
Borrower in any manner, without providing at least thirty (30) days prior
written notice to the Agent. The Collateral, to the extent not delivered to the
<PAGE>
-5-
Agent pursuant to (S)2.2, will be kept at those locations listed on the
Perfection Certificate and the Borrower will not remove the Collateral from such
locations, without providing at least thirty (30) days prior written notice to
the Agent.
5. NO LIENS. Except for the security interest herein granted and liens
--------
permitted by the Credit Agreement, the Borrower shall be the owner of the
Collateral free from any lien, security interest or other encumbrance, and the
Borrower shall defend the same against all claims and demands of all persons at
any time claiming the same or any interests therein adverse to the Agent or any
of the Banks. The Borrower shall not pledge, mortgage or create, or suffer to
exist a security interest in the Collateral in favor of any person other than
the Agent, for the benefit of the Banks and the Agent, except for liens
permitted by the Credit Agreement.
6. NO TRANSFERS. The Borrower will not sell or offer to sell or otherwise
------------
transfer the Collateral or any interest therein except as permitted by (S)10.5.2
of the Credit Agreement.
7. INSURANCE.
---------
7.1. MAINTENANCE OF INSURANCE. The Borrower will maintain with
------------------------
financially sound and reputable insurers insurance with respect to its
properties and business against such casualties and contingencies as shall
be in accordance with general practices of businesses engaged in similar
activities in similar geographic areas. Such insurance shall be in such
minimum amounts that the Borrower will not be deemed a co-insurer under
applicable insurance laws, regulations and policies and otherwise shall be
in such amounts, contain such terms, be in such forms and be for such
periods as may be reasonably satisfactory to the Agent. In addition, all
such insurance shall be payable to the Agent as loss payee under a
"standard" or "New York" loss payee clause for the benefit of the Banks and
the Agent. Without limiting the foregoing, the Borrower will (a) keep all
of its physical property insured with casualty or physical hazard insurance
on an "all risks" basis, with broad form flood and earthquake coverages and
electronic data processing coverage, with a full replacement cost
endorsement and an "agreed amount" clause in an amount equal to 100% of the
full replacement cost of such property, (b) maintain all such workers'
compensation or similar insurance as may be required by law and (c)
maintain, in amounts and with deductibles equal to those generally
maintained by businesses engaged in similar activities in similar
geographic areas, general public liability insurance against claims of
bodily injury, death or property damage occurring, on, in or about the
properties of the Borrower; business interruption insurance; and product
liability insurance.
7.2. INSURANCE PROCEEDS. The proceeds of any casualty insurance
------------------
in respect of any casualty loss of any of the Collateral shall, subject to
the rights, if any, of other parties with a prior interest in the
<PAGE>
-6-
property covered thereby, (a) so long as no Default or Event of Default has
occurred and is continuing, be disbursed to the Borrower for direct
application by the Borrower in accordance with (S)10.5.2 of the Credit
Agreement and (b) in all other circumstances, be held by the Agent as cash
collateral for the Obligations. The Agent may, at its sole option, disburse
from time to time all or any part of such proceeds so held as cash
collateral, upon such terms and conditions as the Agent may reasonably
prescribe, for direct application by the Borrower solely to the repair or
replacement of the Borrower's property so damaged or destroyed, or the
Agent may apply all or any part of such proceeds to the Obligations with
the Total Commitment (if not then terminated) being reduced by the amount
so applied to the Obligations.
7.3. NOTICE OF CANCELLATION, ETC. All policies of insurance shall
---------------------------
provide for at least thirty (30) days prior written cancellation notice to
the Agent. In the event of failure by the Borrower to provide and maintain
insurance as herein provided, the Agent may, at its option, provide such
insurance and charge the amount thereof to the Borrower. The Borrower shall
furnish the Agent with certificates of insurance and policies evidencing
compliance with the foregoing insurance provision.
8. MAINTENANCE OF COLLATERAL; COMPLIANCE WITH LAW. The Borrower will keep
----------------------------------------------
the Collateral in good order and repair and will not use the same in violation
of law or any policy of insurance thereon. The Agent, or its designee, may
inspect the Collateral at any reasonable time, wherever located. The Borrower
will pay promptly when due all taxes, assessments, governmental charges and
levies upon the Collateral or incurred in connection with the use or operation
of such Collateral or incurred in connection with this Agreement, (other than
such items contested in good faith and in accordance with (S)9.8 of the Credit
Agreement). The Borrower has at all times operated, and the Borrower will
continue to operate, its business in compliance with all applicable provisions
of the federal Fair Labor Standards Act, as amended, and with all applicable
provisions of federal, state and local statutes and ordinances dealing with the
control, shipment, storage or disposal of hazardous materials or substances.
9. COLLATERAL PROTECTION EXPENSES; PRESERVATION OF COLLATERAL.
----------------------------------------------------------
9.1. EXPENSES INCURRED BY AGENT. In its discretion, the Agent may
--------------------------
discharge taxes (other than taxes contested in good faith and in accordance
with (S)9.8 of the Credit Agreement) and other encumbrances at any time
levied or placed on any of the Collateral, make repairs thereto (after any
Event of Default has occurred and is continuing or if the Borrower's
failure to make such repairs will result in an Event of Default) and pay
any necessary filing fees. The Borrower agrees to reimburse the Agent on
demand for any and all expenditures so made. The Agent shall have no
obligation to the Borrower to make any such
<PAGE>
-7-
expenditures, nor shall the making thereof relieve the Borrower of any
default.
9.2. AGENT'S OBLIGATIONS AND DUTIES. Anything herein to the contrary
------------------------------
notwithstanding, the Borrower shall remain liable under each contract or
agreement comprised in the Collateral to be observed or performed by the
Borrower thereunder. Neither the Agent nor any Bank shall have any
obligation or liability under any such contract or agreement by reason of
or arising out of this Agreement or the receipt by the Agent or any Bank of
any payment relating to any of the Collateral, nor shall the Agent or any
Bank be obligated in any manner to perform any of the obligations of the
Borrower under or pursuant to any such contract or agreement, to make
inquiry as to the nature or sufficiency of any payment received by the
Agent or any Bank in respect of the Collateral or as to the sufficiency of
any performance by any party under any such contract or agreement, to
present or file any claim, to take any action to enforce any performance or
to collect the payment of any amounts which may have been assigned to the
Agent or to which the Agent or any Bank may be entitled at any time or
times. The Agent's sole duty with respect to the custody, safe keeping and
physical preservation of the Collateral in its possession, under (S)9-207
of the Uniform Commercial Code of The Commonwealth of Massachusetts or
otherwise, shall be to deal with such Collateral in the same manner as the
Agent deals with similar property for its own account.
10. SECURITIES AND DEPOSITS. The Agent may at any time, at its option,
-----------------------
transfer to itself or any nominee any securities constituting Collateral,
receive any income thereon and hold such income as additional Collateral or
apply it to the Obligations. Whether or not any Obligations are due, the Agent
may demand, sue for, collect, or make any settlement or compromise which it
deems desirable with respect to the Collateral. Regardless of the adequacy of
Collateral or any other security for the Obligations, any deposits or other sums
at any time credited by or due from the Agent or any Bank to the Borrower may at
any time be applied to or set off against any of the Obligations.
11. NOTIFICATION TO ACCOUNT DEBTORS AND OTHER OBLIGORS. If a Default or an
--------------------------------------------------
Event of Default shall have occurred and be continuing, the Borrower shall, at
the request of the Agent, notify account debtors on accounts, chattel paper and
general intangibles of the Borrower and obligors on instruments for which the
Borrower is an obligee of the security interest of the Agent in any account,
chattel paper, general intangible or instrument and that payment thereof is to
be made directly to the Agent or to any financial institution designated by the
Agent as the Agent's agent therefor, and the Agent may itself, if a Default or
an Event of Default shall have occurred and be continuing, without notice to or
demand upon the Borrower, so notify account debtors and obligors. After the
making of such a request or the giving of any such notification, the Borrower
shall hold any proceeds of collection of accounts, chattel paper, general
intangibles and instruments received by the Borrower as trustee for the Agent,
<PAGE>
-8-
for the benefit of the Banks and the Agent, without commingling the same with
other funds of the Borrower and shall turn the same over to the Agent in the
identical form received, together with any necessary endorsements or
assignments. The Agent shall apply the proceeds of collection of accounts,
chattel paper, general intangibles and instruments received by the Agent to the
Obligations, such proceeds to be immediately entered after final payment in cash
or solvent credits of the items giving rise to them.
12. FURTHER ASSURANCES. The Borrower, as its own expense, shall do, make,
------------------
execute and deliver all such additional and further acts, things, deeds,
assurances and instruments as the Agent may reasonably require more completely
to vest in and assure to the Agent and the Banks their respective rights
hereunder or in any of the Collateral, including, without limitation, (a)
executing, delivering and, where appropriate, filing financing statements and
continuation statements under the Uniform Commercial Code, (b) obtaining
governmental and other third party consents and approvals, including without
limitation any consent of any licensor, lessor or other applicable party
referred to in (S)2.3, (c) obtaining waivers from mortgagees and landlords and
(d) taking all actions required by Sections 8-313 and 8-321 of the Uniform
Commercial Code (1990) or Sections 8-106 and 9-115 of the Uniform Commercial
Code (1994), as applicable in each relevant jurisdiction, with respect to
certificated and uncertificated securities.
13. POWER OF ATTORNEY.
-----------------
13.1. APPOINTMENT AND POWERS OF AGENT. The Borrower hereby
-------------------------------
irrevocable constitutes and appoints the Agent and any officer or agent
thereof, with full power of substitution, as its true and lawful attorneys-
in-fact with full irrevocable power and authority in the place and stead of
the Borrower or in the Agent's own name, for the purpose of carrying out
the terms of this Agreement, to take any and all appropriate action and to
execute any and all documents and instruments that may be necessary or
desirable to accomplish the purposes of this Agreement and, without
limiting the generality of the foregoing, hereby gives said attorneys the
power and right, on behalf of the Borrower, without notice to or assent by
the Borrower to do the following:
(a) upon the occurrence and during the continuance of an
Event of Default, generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the
Collateral in such manner as is consistent with the Uniform
Commercial Code of The Commonwealth of Massachusetts and as fully
and completely as though the Agent were the absolute owner
thereof for all purposes, and to do at the Borrower' expense, at
any time, or from time to time, all acts and things which the
Agent deems necessary to protect, preserve or realize upon the
Collateral and the Agent's security interest therein, in order to
effect the intent of this Agreement, all as fully and effectively
as the
<PAGE>
-9-
Borrower might do, including, without limitation, (i) the filing
and prosecuting of registration and transfer applications with
the appropriate federal or local agencies or authorities with
respect to trademarks, copyrights and patentable inventions and
processes, (ii) upon written notice to the Borrower, the exercise
of voting rights with respect to voting securities, which rights
may be exercised, if the Agent so elects, with a view to causing
the liquidation in a commercially reasonable manner of assets of
the issuer of any such securities and (iii) the execution,
delivery and recording, in connection with any sale or other
disposition of any Collateral, of the endorsements, assignments
or other instruments of conveyance or transfer with respect to
such Collateral; and
(b) to file such financing statements with respect
hereto, with or without the Borrower's signature, or a photocopy
of this Agreement in substitution for a financing statement, as
the Agent may deem appropriate and to execute in the Borrower's
name such financing statements and amendments thereto and
continuation statements which may require the Borrower's
signature.
13.2. RATIFICATION BY BORROWER. To the extent permitted by law,
------------------------
the Borrower hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power
coupled with an interest and shall be irrevocable.
13.3. NO DUTY ON AGENT. The powers conferred on the Agent
----------------
hereunder are solely to protect the interests of the Agent and the Banks in
the Collateral and shall not impose any duty upon the Agent to exercise any
such powers. The Agent shall be accountable only for the amounts that it
actually receives as a result of the exercise of such powers and neither it
nor any of its officers, directors, employees or agents shall be
responsible to the Borrower for any act or failure to act, except for the
Agent's own gross negligence or willful misconduct.
14. REMEDIES. If an Event of Default shall have occurred and be
--------
continuing, the Agent may, without notice to or demand upon the Borrower,
declare this Agreement to be in default, and the Agent shall thereafter have in
any jurisdiction in which enforcement hereof is sought, in addition to all other
rights and remedies, the rights and remedies of a secured party under the
Uniform Commercial Code, including, without limitation, the right to take
possession of the Collateral, and for that purpose the Agent may, so far as the
Borrower can give authority therefor, enter upon any premises on which the
Collateral may be situated and remove the same therefrom. The Agent may in its
discretion require the Borrower to assemble all or any part of the Collateral at
such location or locations within the state(s) of the Borrower's principal
office(s) or at such other locations as the Agent may designate. Unless the
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market, the Agent shall give to the
Borrower at
<PAGE>
-10-
least five (5) Business Days prior written notice of the time and place of any
public sale of Collateral or of the time after which any private sale or any
other intended disposition is to be made. The Borrower hereby acknowledges that
five Business Days prior written notice of such sale or sales shall be
reasonable notice. In addition, the Borrower waives any and all rights that it
may have to a judicial hearing in advance of the enforcement of any of the
Agent's rights hereunder, including, without limitation, its right following an
Event of Default to take immediate possession of the Collateral and to exercise
its rights with respect thereto. To the extent that any of the Obligations are
to be paid or performed by a person other than the Borrower, the Borrower waives
and agrees not to assert any rights or privileges which it may have under
(S)9-112 of the Uniform Commercial Code of The Commonwealth of Massachusetts.
15. NO WAIVER, ETC. The Borrower waives demand, notice, protest, notice
---------------
of acceptance of this Agreement, notice of loans made, credit extended,
Collateral received or delivered or other action taken in reliance hereon and
all other demands and notices of any description. With respect to both the
Obligations and the Collateral, the Borrower assents to any extension or
postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of or failure to perfect any security interest
in any Collateral, to the addition or release of any party or person primarily
or secondarily liable, to the acceptance of partial payment thereon and the
settlement, compromising or adjusting of any thereof, all in such manner and at
such time or times as the Agent may deem advisable. The Agent shall have no duty
as to the collection or protection of the Collateral or any income thereon, nor
as to the preservation of rights against prior parties, nor as to the
preservation of any rights pertaining thereto beyond the safe custody thereof as
set forth in (S)9.2. The Agent shall not be deemed to have waived any of its
rights upon or under the Obligations or the Collateral unless such waiver shall
be in writing and signed by the Agent with the consent of the Majority Banks. No
delay or omission on the part of the Agent in exercising any right shall operate
as a waiver of such right or any other right. A waiver on any one occasion shall
not be construed as a bar to or waiver of any right on any future occasion. All
rights and remedies of the Agent with respect to the Obligations or the
Collateral, whether evidenced hereby or by any other instrument or papers, shall
be cumulative and may be exercised singularly, alternatively, successively or
concurrently at such time or at such time as the Agent deems expedient.
16. MARSHALLING. Neither the Agent nor any Bank shall be required to
-----------
marshal any present or future collateral security (including but not limited to
this Agreement and the Collateral) for, or other assurances of payment of, the
Obligations or any of them or to resort to such collateral security or other
assurances of payment in any particular order, and all of the rights of the
Agent hereunder and of the Agent or any Bank in respect of such collateral
security and other assurances of payment shall be cumulative and in addition to
all other rights, however existing or arising. To the extent that it lawfully
may, the Borrower hereby agrees that it will not invoke any law relating to the
<PAGE>
-11-
marshalling of collateral which might cause delay in or impede the enforcement
of the Agent's rights under this Agreement or under any other instrument
creating or evidencing any of the Obligations or under which any of the
Obligations is outstanding or by which any of the Obligations is secured or
payment thereof is otherwise assured, and, to the extent that it lawfully may,
the Borrower hereby irrevocably waives the benefits of all such laws.
17. PROCEEDS OF DISPOSITIONS; EXPENSES. The Borrower shall pay to the
----------------------------------
Agent on demand any and all reasonable expenses, including reasonable attorneys'
fees and disbursements, incurred or paid by the Agent in protecting, preserving
or enforcing the Agent's rights under or in respect of any of the Obligations or
any of the Collateral. After deducting all of said expenses, the residue of any
proceeds of collection or sale of the Obligations or Collateral shall, to the
extent actually received in cash, be applied to the payment of the Obligations
in such order or preference as is provided in the Credit Agreement, proper
allowance and provision being made for any Obligations not then due. Upon the
final payment and satisfaction in full of all of the Obligations and after
making any payments required by Section 9-504(1)(c) of the Uniform Commercial
Code of The Commonwealth of Massachusetts, any excess shall be returned to the
Borrower, and the Borrower shall remain liable for any deficiency in the payment
of the Obligations.
18. OVERDUE AMOUNTS. Until paid, all amounts due and payable by the
---------------
Borrower hereunder shall be a debt secured by the Collateral and shall bear,
whether before or after judgment, interest at the rate of interest for overdue
principal set forth in the Credit Agreement.
19. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT IS INTENDED TO
--------------------------------------
TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. The Borrower
agrees that any suit for the enforcement of this Agreement may be brought in the
courts of The Commonwealth of Massachusetts or any federal court sitting therein
and consents to the non-exclusive jurisdiction of such court and to service of
process in any such suit being made upon the Borrower by mail at the address
specified in (S)20 of the Credit Agreement. The Borrower hereby waives any
objection that it may now or hereafter have to the venue of any such suit or any
such court or that such suit is brought in an inconvenient court.
20. WAIVER OF JURY TRIAL. THE COMPANY WAIVES ITS RIGHT TO A JURY TRIAL
--------------------
WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION
WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF
ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, the Borrower waives
any right which it may have to claim or recover in any litigation referred to in
the preceding sentence any special, exemplary, punitive or consequential damages
or any damages other than, or in addition to, actual damages. The Borrower (a)
certifies that neither the Agent or any Bank nor any
<PAGE>
-12-
representative, agent or attorney of the Agent or any Bank has represented,
expressly or otherwise, that the Agent or any Bank would not, in the event of
litigation, seek to enforce the foregoing waivers and (b) acknowledges that, in
entering into the Credit Agreement and the other Loan Documents to which the
Agent or any Bank is a party, the Agent and the Banks are relying upon, among
other things, the waivers and certifications contained in this (S)20.
21. MISCELLANEOUS. The headings of each section of this Agreement are for
-------------
convenience only and shall not define or limit the provisions thereof. This
Agreement and all rights and obligations hereunder shall be binding upon the
Borrower and its respective successors and assigns, and shall inure to the
benefit of the Agent, the Banks and their respective successors and assigns. If
any term of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be
affected thereby, and this Agreement shall be construed and be enforceable as if
such invalid, illegal or unenforceable term had not been included herein. The
Borrower acknowledges receipt of a copy of this Agreement.
<PAGE>
IN WITNESS WHEREOF, intending to be legally bound, the Borrower has caused
this Security Agreement to be duly executed as of the date first above written.
JACKSON PRODUCTS, INC.
By: /s/ Christopher T. Paul
-----------------------
Title: Vice President
Accepted:
BANKBOSTON, N.A.,
as Agent
By: /s/ Peter van der Horst
------------------------------------
Peter van der Horst, Vice President
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 22 day of April, 1998, personally appeared Christopher T.
Paul to me known personally, and who, being by me duly sworn, deposes and says
that he is the VP and CFO of JACKSON PRODUCTS, INC., and that said instrument
was signed and sealed on behalf of said corporation by authority of its Board of
Directors, and said VP and CFO acknowledged said instrument to be the free act
and deed of said corporation.
/s/ Dawn M. Schoenig
----------------------
Notary Public
My commission expires: [August 3, 1999]
<PAGE>
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OF STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 21st day of April, 1998, personally appeared Peter van der
Horst to me known personally, and who, being by me duly sworn, deposes and says
that he is the Vice President of BANKBOSTON, N.A., and that said instrument was
signed and sealed on behalf of said corporation by authority of its Board of
Directors, and said Peter van der Horst acknowledged said instrument to be the
free act and deed of said corporation.
/s/ D. L. Figueroa-Thomas
-----------------------------
Notary Public
My commission expires: [February 21, 1999]
<PAGE>
EXHIBIT 10.11
SECURITY AGREEMENT
------------------
(SUBSIDIARIES)
--------------
SECURITY AGREEMENT, dated as of April 22, 1998, among FLEX-O-LITE, INC., a
Delaware corporation ("Flex"), OSD ENVIZION, INC., a Delaware corporation
("OSD"), CRYSTALOID TECHNOLOGIES, INC., a Delaware corporation ("Crystaloid"),
JACKSON ACQUISITION, INC., a Delaware corporation ("JAI"), AMERICAN ALLSAFE
COMPANY, a Texas corporation ("Allsafe"), SILENCIO/SAFETY DIRECT, INC., a Nevada
corporation ("Silencio"), and together with Flex, OSD, Crystaloid, JAI and
Allsafe, the "Subsidiaries") and BANKBOSTON, N.A., a national banking
association, as agent (hereinafter, in such capacity, the "Agent") for itself
and the other lending institutions (hereinafter, collectively, the "Banks")
which are or may become parties to the Credit Agreement (as hereinafter
defined).
WHEREAS, Jackson Products, Inc., a Delaware corporation (the "Borrower"),
has entered into a Revolving Credit and Acquisition Loan Agreement, dated as of
April 22, 1998 (as amended and in effect from time to time, the "Credit
Agreement"), with the Banks, the Agent and Mercantile Bank National Association,
as Co-Agent, pursuant to which the Banks, subject to the terms and conditions
contained therein, provide certain financial accommodations to the Borrower; and
WHEREAS, the Subsidiaries are expected to receive substantial direct and
indirect benefits from the making of Loans and other extensions of credit to the
Borrower by the Banks pursuant to the Credit Agreement (which benefits are
hereby acknowledged); and
WHEREAS, the Subsidiaries have executed and delivered to the Agent, for the
benefit of the Banks and the Agent, a Guaranty dated as of the date hereof (as
amended and in effect from time to time, the "Guaranty"), pursuant to which the
Subsidiaries guaranteed to the Agent and the Banks the payment and performance
of the Borrower's obligations to the Banks and the Agent under or in respect of
the Credit Agreement; and
WHEREAS, it is a condition to the further effectiveness of the Credit
Agreement that the Subsidiaries execute and deliver to the Agent, for the
benefit of the Banks and the Agent, a security agreement in substantially the
form hereof;
<PAGE>
-2-
NOW, THEREFORE, in consideration of the promises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. All capitalized terms used herein without definitions
-----------
shall have the respective meanings provided therefor in the Credit Agreement.
All terms defined in the Uniform Commercial Code of The Commonwealth of
Massachusetts and used herein shall have the same definitions herein as
specified therein.
2. GRANT OF SECURITY INTEREST.
--------------------------
2.1. COLLATERAL GRANTED. Each of the Subsidiaries hereby grants to
------------------
the Agent, for the benefit of the Banks and the Agent, to secure the
payment and performance in full of all of the Obligations (as defined in
the Credit Agreement), including all of the Subsidiaries' Obligations under
the Guaranty (collectively, the "Obligations"), a security interest in and
so pledges and assigns to the Agent, for the benefit of the Banks and the
Agent, the following properties, assets and rights of the Subsidiaries,
wherever located, whether now owned or hereafter acquired or arising, and
all proceeds and products thereof (all of the same being hereinafter called
the "Collateral"):
All personal and fixture property of every kind and nature
including without limitation all furniture, fixtures, all equipment
and accessions, raw materials, inventory and all other capital
assets, other goods, accounts, contract rights, rights to the
payment of money, insurance refund claims and all other insurance
claims and proceeds, tort claims, chattel paper, documents,
instruments, securities and other investment property (as such term
is defined in the Uniform Commercial Code), deposit accounts and all
general intangibles including, without limitation, all tax refund
claims, license fees, patents, patent applications, trademarks,
trademark applications, trade names, copyrights, copyright
applications, rights to sue and recover for past infringement of
patents, trademarks and copyrights, computer programs, computer
software, engineering drawings, service marks, customer lists,
goodwill, and all licenses, permits, agreements of any kind or
nature pursuant to which such Subsidiary possesses, uses or has
authority to possess or use property (whether tangible or
intangible) of others or others possess, use or have authority to
possess or use property (whether tangible or intangible) of such
Subsidiary, and all recorded data of any kind or nature, regardless
of the medium of recording including, without limitation, all
software, writings, plans, specifications and schematics.
<PAGE>
-3-
2.2. DELIVERY OF INSTRUMENTS, ETC.
----------------------------
(a) Pursuant to the terms hereof, each of the Subsidiaries has
endorsed, assigned and delivered to the Agent all negotiable or non-
negotiable instruments, certificated securities and chattel paper
pledged by it hereunder, together with instruments of transfer or
assignment duly executed in blank as the Agent may have specified.
In the event that any Subsidiary shall, after the date of this
Agreement, acquire any other negotiable or non-negotiable
instruments, certificated securities or chattel paper to be pledged
by it hereunder, such Subsidiary shall forthwith endorse, assign and
deliver the same to the Agent, accompanied by such instruments of
transfer or assignment duly executed in blank as the Agent may from
time to time specify.
(b) To the extent that any securities now or hereafter
acquired by any Subsidiary are uncertificated and are issued to such
Subsidiary or its nominee directly by the issuer thereof, such
Subsidiary shall cause the issuer to note on its books the security
interest of the Agent in such securities and shall cause the issuer,
pursuant to an agreement in form and substance satisfactory to the
Agent, to agree to comply with instructions from the Agent as to
such securities, without further consent of such Subsidiary or such
nominee. To the extent that any securities, whether certificated or
uncertificated, or other financial assets now or hereafter acquired
by any Subsidiary are held by such Subsidiary or its nominee through
a securities intermediary, such Subsidiary shall use reasonable
efforts to (i) cause such securities intermediary to note on its
books the security interest of the Agent in such securities or other
financial assets and to confirm such notation promptly to the Agent
and (ii), at the request of the Agent, cause such securities
intermediary, pursuant to an agreement in form and substance
satisfactory to the Agent, to agree to comply with entitlement
orders or other instructions from the Agent as to such securities or
other financial assets, without further consent of such Subsidiary
or such nominee. The Agent agrees with each of the Subsidiaries that
the Agent shall not give any such entitlement orders or instructions
to any such issuer or securities intermediary unless an Event of
Default has occurred and is continuing and the Agent has elected to
exercise its rights and remedies as contemplated by (S)14.
(c) To the extent that any Subsidiary is a beneficiary under
any written letter of credit now or hereafter issued in favor of
such Subsidiary, such Subsidiary shall deliver such letter of credit
to the Agent. The Agent shall from time to time, at the request and
expense of such Subsidiary, make such arrangements with such
Subsidiary as are in the Agent's reasonable judgment necessary
<PAGE>
-4-
and appropriate so that such Subsidiary may make any drawing to
which such Subsidiary is entitled under such letter of credit,
without impairment of the Agent's perfected security interest in
such Subsidiary's rights to proceeds of such letter of credit or in
the actual proceeds of such drawing. At the Agent's request, such
Subsidiary shall, for any letter of credit, whether or not written,
now or hereafter issued in favor of such Subsidiary as beneficiary,
execute and deliver to the issuer and any confirmer of such letter
of credit an assignment of proceeds form, in favor of the Agent and
satisfactory to the Agent and such issuer or (as the case may be)
such confirmer, requiring the proceeds of any drawing under such
letter of credit to be paid directly to the Agent for application as
provided in the Credit Agreement.
2.3. EXCLUDED COLLATERAL. Notwithstanding the foregoing provisions
-------------------
of this (S)2, such grant of security interest shall not extend to, and the
term "Collateral" shall not include, any chattel paper and general
intangibles which are now or hereafter held by any of the Subsidiaries as
licensee, lessee or otherwise, to the extent that (a) such chattel paper
and general intangibles are not assignable or capable of being encumbered
as a matter of law or under the terms of the license, lease or other
agreement applicable thereto (but solely to the extent that any such
restriction shall be enforceable under applicable law), without the consent
of the licensor or lessor thereof or other applicable party thereto and (b)
such consent has not been obtained provided, however, that the foregoing
-------- -------
grant of security interest shalextend to, and the term "Collateral" shall
include, (i) any and all proceeds of such chattel paper and general
intangibles to the extent that the assignment or encumbering of such
proceeds is not so restricted and (ii) upon any such licensor, lessor or
other applicable party consent with respect to any such otherwise excluded
chattel paper or general intangibles being obtained, thereafter such
chattel paper or general intangibles as well as any and all proceeds
thereof that might have theretofore have been excluded from such grant of a
security interest and the term "Collateral".
2.4. STOCK PLEDGE AGREEMENT. Concurrently herewith each of the
----------------------
Subsidiaries is executing and delivering to the Agent, for the benefit of
the Banks and the Agent, a Stock Pledge Agreement pursuant to which such
Subsidiary is pledging to the Agent, for the benefit of the Banks and the
Agent, (a) 100% of shares of the capital stock of each of its Domestic
Subsidiaries and (b) not less than 66% of the shares of capital stock of
each of its Foreign Subsidiaries. Such pledge shall be governed by the
terms of such stock pledge agreement and not by the terms of this
Agreement.
2.5. PATENT AND TRADEMARK ASSIGNMENTS. Concurrently herewith each of
--------------------------------
the Subsidiaries is also executing and delivering to the Agent, for the
benefit of the Banks and the Agent, the Patent Assignment
<PAGE>
-5-
and the Trademark Assignment pursuant to which the Borrower is assigning to
the Agent, for the benefit of the Banks and the Agent, certain Collateral
consisting of patents and patent rights and trademarks, service marks and
trademark and service mark rights, together with the goodwill appurtenant
thereto. The provisions of the Patent Assignment and the Trademark
Assignment are supplemental to the provisions of this Agreement, and
nothing contained in the Patent Assignment or the Trademark Assignment
shall derogate from any of the rights or remedies of the Agent or any of
the Banks hereunder. Nor shall anything contained in the Patent Assignment
or the Trademark Assignment be deemed to prevent or extend the time of
attachment or perfection of any security interest in such Collateral
created hereby.
3. TITLE TO COLLATERAL, ETC. Each of the Subsidiaries is the owner of the
-------------------------
Collateral free from any adverse lien, security interest or other encumbrance,
except for the security interest created by this Agreement and other liens
permitted by the Credit Agreement. None of the Collateral constitutes, or is the
proceeds of, "farm products" as defined in (S)9-109(3) of the Uniform Commercial
Code of The Commonwealth of Massachusetts. None of the account debtors in
respect of any accounts, chattel paper or general intangibles and none of the
obligors in respect of any instruments included in the Collateral is a
governmental authority subject to the Federal Assignment of Claims Act.
4. CONTINUOUS PERFECTION. Each Subsidiary's place of business or, if more
---------------------
than one, chief executive office is indicated on the Perfection Certificate
delivered to the Agent by each Subsidiary herewith (collectively, the
"Perfection Certificates"). None of the Subsidiaries will change the same, or
the name, identity or corporate structure of such Subsidiary in any manner,
without providing at least thirty (30) days prior written notice to the Agent.
The Collateral, to the extent not delivered to the Agent pursuant to (S)2.2,
will be kept at those locations listed on the Perfection Certificate and none of
the Subsidiaries will remove the Collateral from such locations, without
providing at least thirty (30) days prior written notice to the Agent.
5. NO LIENS. Except for the security interest herein granted and liens
--------
permitted by the Credit Agreement, each of the Subsidiaries shall be the owner
of its respective Collateral free from any lien, security interest or other
encumbrance, and such Subsidiary shall defend the same against all claims and
demands of all persons at any time claiming the same or any interests therein
adverse to the Agent or any of the Banks. No Subsidiary shall pledge, mortgage
or create, or suffer to exist a security interest in the Collateral in favor of
any person other than the Agent, for the benefit of the Banks and the Agent,
except for liens permitted by the Credit Agreement.
6. NO TRANSFERS. No Subsidiary will sell or offer to sell or otherwise
------------
transfer the Collateral or any interest therein except as permitted by (S)10.5.2
of the Credit Agreement.
<PAGE>
-6-
7. INSURANCE.
---------
7.1. MAINTENANCE OF INSURANCE. Each of the Subsidiaries will
------------------------
maintain with financially sound and reputable insurers insurance with
respect to its properties and business against such casualties and
contingencies as shall be in accordance with general practices of
businesses engaged in similar activities in similar geographic areas. Such
insurance shall be in such minimum amounts that such Subsidiary will not be
deemed a co-insurer under applicable insurance laws, regulations and
policies and otherwise shall be in such amounts, contain such terms, be in
such forms and be for such periods as may be reasonably satisfactory to the
Agent. In addition, all such insurance shall be payable to the Agent as
loss payee under a "standard" or "New York" loss payee clause for the
benefit of the Banks and the Agent. Without limiting the foregoing, such
Subsidiary will (a) keep all of its physical property insured with casualty
or physical hazard insurance on an "all risks" basis, with broad form flood
and earthquake coverages and electronic data processing coverage, with a
full replacement cost endorsement and an "agreed amount" clause in an
amount equal to 100% of the full replacement cost of such property, (b)
maintain all such workers' compensation or similar insurance as may be
required by law and (c) maintain, in amounts and with deductibles equal to
those generally maintained by businesses engaged in similar activities in
similar geographic areas, general public liability insurance against claims
of bodily injury, death or property damage occurring, on, in or about the
properties of such Subsidiary; business interruption insurance; and product
liability insurance.
7.2. INSURANCE PROCEEDS. The proceeds of any casualty insurance in
------------------
respect of any casualty loss of any of the Collateral shall, subject to the
rights, if any, of other parties with a prior interest in the property
covered thereby, (a) so long as no Event of Default has occurred and is
continuing, be disbursed to the appropriate Subsidiary for direct
application by such Subsidiary in accordance with (S)10.5.2 of the Credit
Agreement and (b) in all other circumstances, be held by the Agent as cash
collateral for the Obligations. The Agent may, at its sole option, disburse
from time to time all or any part of such proceeds so held as cash
collateral, upon such terms and conditions as the Agent may reasonably
prescribe, for direct application by such Subsidiary solely to the repair
or replacement of such Subsidiary's property so damaged or destroyed, or
the Agent may apply all or any part of such proceeds to the Obligations
with the Total Commitment (if not then terminated) being reduced by the
amount so applied to the Obligations.
7.3. NOTICE OF CANCELLATION, ETC. All policies of insurance shall
----------------------------
provide for at least thirty (30) days prior written cancellation notice to
the Agent. In the event of failure by any of the Subsidiaries to provide
and maintain insurance as herein provided, the Agent may, at its option,
<PAGE>
-7-
provide such insurance and charge the amount thereof to such Subsidiary.
Each of the Subsidiaries shall furnish the Agent with certificates of
insurance and policies evidencing compliance with the foregoing insurance
provision.
8. MAINTENANCE OF COLLATERAL; COMPLIANCE WITH LAW. Each of the
----------------------------------------------
Subsidiaries will keep the Collateral in good order and repair and will not use
the same in violation of law or any policy of insurance thereon. The Agent, or
its designee, may inspect the Collateral at any reasonable time, wherever
located. Each of the Subsidiaries will pay promptly when due all taxes,
assessments, governmental charges and levies upon the Collateral or incurred in
connection with the use or operation of such Collateral or incurred in
connection with this Agreement, (other than such items contessted in good faith
in accordance with (S)9.8 of the Credit Agreement). Each of the Subsidiaries has
at all times operated, and such Subsidiary will continue to operate, its
business in compliance with all applicable provisions of the federal Fair Labor
Standards Act, as amended, and with all applicable provisions of federal, state
and local statutes and ordinances dealing with the control, shipment, storage or
disposal of hazardous materials or substances.
9. COLLATERAL PROTECTION EXPENSES; PRESERVATION OF COLLATERAL.
----------------------------------------------------------
9.1. EXPENSES INCURRED BY AGENT. In its discretion, the Agent may
--------------------------
discharge taxes and other encumbrances at any time levied or placed on any
of the Collateral (other than any taxes or encumbrances contested in good
faith and in accordance with (S)9.8 of the Credit Agreement), make repairs
thereto (after any Event of Default has occurred and is continuing or if
the Borrower's failure to make such repairs will result in an Event of
Default) and pay any necessary filing fees. Each of the Subsidiaries agrees
to reimburse the Agent on demand for any and all expenditures so made. The
Agent shall have no obligation to any Subsidiary to make any such
expenditures, nor shall the making thereof relieve any Subsidiary of any
default.
9.2. AGENT'S OBLIGATIONS AND DUTIES. Anything herein to the
------------------------------
contrary notwithstanding, each of the Subsidiaries shall remain liable
under each contract or agreement comprised in the Collateral to be observed
or performed by such Subsidiary thereunder. Neither the Agent nor any Bank
shall have any obligation or liability under any such contract or agreement
by reason of or arising out of this Agreement or the receipt by the Agent
or any Bank of any payment relating to any of the Collateral, nor shall the
Agent or any Bank be obligated in any manner to perform any of the
obligations of any Subsidiary under or pursuant to any such contract or
agreement, to make inquiry as to the nature or sufficiency of any payment
received by the Agent or any Bank in respect of the Collateral or as to the
sufficiency of any performance by any party under any such contract or
agreement, to present or file any claim, to take any action to enforce any
performance or to collect the payment of
<PAGE>
-8-
any amounts which may have been assigned to the Agent or to which the Agent
or any Bank may be entitled at any time or times. The Agent's sole duty
with respect to the custody, safe keeping and physical preservation of the
Collateral in its possession, under (S)9-207 of the Uniform Commercial Code
of The Commonwealth of Massachusetts or otherwise, shall be to deal with
such Collateral in the same manner as the Agent deals with similar property
for its own account.
10. SECURITIES AND DEPOSITS. The Agent may at any time, at its option,
-----------------------
transfer to itself or any nominee any securities constituting Collateral,
receive any income thereon and hold such income as additional Collateral or
apply it to the Obligations. Whether or not any Obligations are due, the Agent
may demand, sue for, collect, or make any settlement or compromise which it
deems desirable with respect to the Collateral. Regardless of the adequacy of
Collateral or any other security for the Obligations, any deposits or other sums
at any time credited by or due from the Agent or any Bank to any of the
Subsidiaries may at any time be applied to or set off against any of the
Obligations.
11. NOTIFICATION TO ACCOUNT DEBTORS AND OTHER OBLIGORS. If a Default or an
--------------------------------------------------
Event of Default shall have occurred and be continuing, each of the Subsidiaries
shall, at the request of the Agent, notify account debtors on accounts, chattel
paper and general intangibles of such Subsidiary and obligors on instruments for
which such Subsidiary is an obligee of the security interest of the Agent in any
account, chattel paper, general intangible or instrument and that payment
thereof is to be made directly to the Agent or to any financial institution
designated by the Agent as the Agent's agent therefor, and the Agent may itself,
if a Default or an Event of Default shall have occurred and be continuing,
without notice to or demand upon any of the Subsidiaries, so notify account
debtors and obligors. After the making of such a request or the giving of any
such notification, each of the Subsidiaries shall hold any proceeds of
collection of accounts, chattel paper, general intangibles and instruments
received by such Subsidiary as trustee for the Agent, for the benefit of the
Banks and the Agent, without commingling the same with other funds of such
Subsidiary and shall turn the same over to the Agent in the identical form
received, together with any necessary endorsements or assignments. The Agent
shall apply the proceeds of collection of accounts, chattel paper, general
intangibles and instruments received by the Agent to the Obligations, such
proceeds to be immediately entered after final payment in cash or solvent
credits of the items giving rise to them.
12. FURTHER ASSURANCES. Each of the Subsidiaries, at its own expense,
------------------
shall do, make, execute and deliver all such additional and further acts,
things, deeds, assurances and instruments as the Agent may reasonably require
more completely to vest in and assure to the Agent and the Banks their
respective rights hereunder or in any of the Collateral, including, without
limitation, (a) executing, delivering and, where appropriate, filing financing
statements and continuation statements under the Uniform Commercial Code, (b)
obtaining
<PAGE>
-9-
governmental and other third party consents and approvals, including without
limitation any consent of any licensor, lessor or other applicable party
referred to in (S)2.3, (c) obtaining waivers from mortgagees and landlords and
(d) taking all actions required by Sections 8-313 and 8-321 of the Uniform
Commercial Code, as applicable in each relevant jurisdiction, with respect to
certificated and uncertificated securities.
13. POWER OF ATTORNEY.
-----------------
13.1. APPOINTMENT AND POWERS OF AGENT. Each of the Subsidiaries
-------------------------------
hereby irrevocably constitutes and appoints the Agent and any
officer or agent thereof, with full power of substitution, as its
true and lawful attorneys-in-fact with full irrevocable power and
authority in the place and stead of such Subsidiary or in the
Agent's own name, for the purpose of carrying out the terms of this
Agreement, to take any and all appropriate action and to execute any
and all documents and instruments that may be necessary or desirable
to accomplish the purposes of this Agreement and, without limiting
the generality of the foregoing, hereby gives said attorneys the
power and right, on behalf of such Subsidiary, without notice to or
assent by such Subsidiary, to do the following:
(a) upon the occurrence and during the continuance of an
Event of Default, generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the
Collateral in such manner as is consistent with the Uniform
Commercial Code of The Commonwealth of Massachusetts and as fully
and completely as though the Agent were the absolute owner thereof
for all purposes, and to do at such Subsidiary's expense, at any
time, or from time to time, all acts and things which the Agent
deems necessary to protect, preserve or realize upon the Collateral
and the Agent's security interest therein, in order to effect the
intent of this Agreement, all as fully and effectively as such
Subsidiary might do, including, without limitation, (i) the filing
and prosecuting of registration and transfer applications with the
appropriate federal or local agencies or authorities with respect to
trademarks, copyrights and patentable inventions and processes, (ii)
upon written notice to such Subsidiary, the exercise of voting
rights with respect to voting securities, which rights may be
exercised, if the Agent so elects, with a view to causing the
liquidation in a commercially reasonable manner of assets of the
issuer of any such securities and (iii) the execution, delivery and
recording, in connection with any sale or other disposition of any
Collateral, of the endorsements, assignments or other instruments of
conveyance or transfer with respect to such Collateral; and
(b) to file such financing statements with respect hereto,
with or without such Subsidiary's signature, or a photocopy of this
<PAGE>
-10-
Agreement in substitution for a financing statement, as the Agent
may deem appropriate and to execute in such Subsidiary's name such
financing statements and amendments thereto and continuation
statements which may require such Subsidiary's signature.
13.2. RATIFICATION BY SUBSIDIARIES. To the extent permitted by law,
----------------------------
each of the Subsidiaries hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. This power of attorney is
a power coupled with an interest and shall be irrevocable.
13.3. NO DUTY ON AGENT. The powers conferred on the Agent hereunder
----------------
are solely to protect the interests of the Agent and the Banks in the
Collateral and shall not impose any duty upon the Agent to exercise any
such powers. The Agent shall be accountable only for the amounts that it
actually receives as a result of the exercise of such powers and neither it
nor any of its officers, directors, employees or agents shall be
responsible to any of the Subsidiaries for any act or failure to act,
except for the Agent's own gross negligence or willful misconduct.
14. REMEDIES. If an Event of Default shall have occurred and be
--------
continuing, the Agent may, without notice to or demand upon any of the
Subsidiaries, declare this Agreement to be in default, and the Agent shall
thereafter have in any jurisdiction in which enforcement hereof is sought, in
addition to all other rights and remedies, the rights and remedies of a secured
party under the Uniform Commercial Code, including, without limitation, the
right to take possession of the Collateral, and for that purpose the Agent may,
so far as each of the Subsidiaries can give authority therefor, enter upon any
premises on which the Collateral may be situated and remove the same therefrom.
The Agent may in its discretion require any of the Subsidiaries to assemble all
or any part of the Collateral at such location or locations within the state(s)
of such Subsidiary's principal office(s) or at such other locations as the Agent
may designate. Unless the Collateral is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market, the
Agent shall give to such Subsidiary at least five (5) Business Days prior
written notice of the time and place of any public sale of Collateral or of the
time after which any private sale or any other intended disposition is to be
made. Each of the Subsidiaries hereby acknowledges that five (5) Business Days
prior written notice of such sale or sales shall be reasonable notice. In
addition, each of the Subsidiaries waives any and all rights that it may have to
a judicial hearing in advance of the enforcement of any of the Agent's rights
hereunder, including, without limitation, its right following an Event of
Default to take immediate possession of the Collateral and to exercise its
rights with respect thereto. To the extent that any of the Obligations are to be
paid or performed by a person other than a Subsidiary, each of the Subsidiaries
waives and agrees not to assert any rights or privileges which it may have under
(S)9-112 of the Uniform Commercial Code of The Commonwealth of Massachusetts.
<PAGE>
-11-
15. NO WAIVER, ETC. Each of the Subsidiaries waives demand, notice,
---------------
protest, notice of acceptance of this Agreement, notice of loans made, credit
extended, Collateral received or delivered or other action taken in reliance
hereon and all other demands and notices of any description. With respect to
both the Obligations and the Collateral, each of the Subsidiaries assents to any
extension or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of or failure to perfect any security interest
in any Collateral, to the addition or release of any party or person primarily
or secondarily liable, to the acceptance of partial payment thereon and the
settlement, compromising or adjusting of any thereof, all in such manner and at
such time or times as the Agent may deem advisable. The Agent shall have no duty
as to the collection or protection of the Collateral or any income thereon, nor
as to the preservation of rights against prior parties, nor as to the
preservation of any rights pertaining thereto beyond the safe custody thereof as
set forth in (S)9.2. The Agent shall not be deemed to have waived any of its
rights upon or under the Obligations or the Collateral unless such waiver shall
be in writing and signed by the Agent with the consent of the Majority Banks. No
delay or omission on the part of the Agent in exercising any right shall operate
as a waiver of such right or any other right. A waiver on any one occasion shall
not be construed as a bar to or waiver of any right on any future occasion. All
rights and remedies of the Agent with respect to the Obligations or the
Collateral, whether evidenced hereby or by any other instrument or papers, shall
be cumulative and may be exercised singularly, alternatively, successively or
concurrently at such time or at such times as the Agent deems expedient.
16. MARSHALLING. Neither the Agent nor any Bank shall be required to
-----------
marshal any present or future collateral security (including but not limited to
this Agreement and the Collateral) for, or other assurances of payment of, the
Obligations or any of them or to resort to such collateral security or other
assurances of payment in any particular order, and all of the rights of the
Agent hereunder and of the Agent or any Bank in respect of such collateral
security and other assurances of payment shall be cumulative and in addition to
all other rights, however existing or arising. To the extent that it lawfully
may, each of the Subsidiaries hereby agrees that it will not invoke any law
relating to the marshalling of collateral which might cause delay in or impede
the enforcement of the Agent's rights under this Agreement or under any other
instrument creating or evidencing any of the Obligations or under which any of
the Obligations is outstanding or by which any of the Obligations is secured or
payment thereof is otherwise assured, and, to the extent that it lawfully may,
each of the Subsidiaries hereby irrevocably waives the benefits of all such
laws.
17. PROCEEDS OF DISPOSITIONS; EXPENSES. Each of the Subsidiaries shall pay
----------------------------------
to the Agent on demand any and all reasonable expenses, including reasonable
attorneys' fees and disbursements, incurred or paid by the Agent in protecting,
preserving or enforcing the Agent's rights under or in respect of any of the
Obligations or any of the Collateral. After deducting all of said expenses, the
residue of any proceeds of collection or sale of the Obligations or Collateral
shall, to the extent actually received in cash, be applied to the payment of
the
<PAGE>
-12-
Obligations in such order or preference as is provided in the Credit Agreement,
proper allowance and provision being made for any Obligations not then due. Upon
the final payment and satisfaction in full of all of the Obligations and after
making any payments required by Section 9-504(1)(c) of the Uniform Commercial
Code of The Commonwealth of Massachusetts, any excess shall be returned to the
appropriate Subsidiary. Such Subsidiary shall remain liable for any deficiency
in the payment of the Obligations after all proceeds of Collateral have been
applied.
18. OVERDUE AMOUNTS. Until paid, all amounts due and payable by each of
---------------
the Subsidiaries hereunder shall be a debt secured by the Collateral and shall
bear, whether before or after judgment, interest at the rate of interest for
overdue principal set forth in the Credit Agreement.
19. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT IS INTENDED TO
--------------------------------------
TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. Each of the
Subsidiaries agrees that any suit for the enforcement of this Agreement may be
brought in the courts of The Commonwealth of Massachusetts or any federal court
sitting therein and consents to the non-exclusive jurisdiction of such court and
to service of process in any such suit being made upon such Subsidiary by mail
at the address set forth below its signature hereto or at such other address as
such Subsidiary may designate in writing to the Agent. Each of the Subsidiaries
hereby waives any objection that it may now or hereafter have to the venue of
any such suit or any such court or that such suit is brought in an inconvenient
court.
20. WAIVER OF JURY TRIAL. EACH OF THE SUBSIDIARIES WAIVES ITS RIGHT TO A
--------------------
JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE
PERFORMANCE OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, each
of the Subsidiaries waives any right which it may have to claim or recover in
any litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. Each of the Subsidiaries (a) certifies that neither the Agent or
any Bank nor any representative, agent or attorney of the Agent or any Bank has
represented, expressly or otherwise, that the Agent or any Bank would not, in
the event of litigation, seek to enforce the foregoing waivers and (b)
acknowledges that, in entering into the Credit Agreement and the other Loan
Documents to which the Agent or any Bank is a party, the Agent and the Banks are
relying upon, among other things, the waivers and certifications contained in
this (S)20.
21. MISCELLANEOUS. The headings of each section of this Agreement are for
-------------
convenience only and shall not define or limit the provisions thereof. This
Agreement and all rights and obligations hereunder shall be binding upon each
<PAGE>
-13-
of the Subsidiaries and its respective successors and assigns, and shall inure
to the benefit of the Agent, the Banks and their respective successors and
assigns. If any term of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be
affected thereby, and this Agreement shall be construed and be enforceable as if
such invalid, illegal or unenforceable term had not been included herein. Each
of the Subsidiaries acknowledges receipt of a copy of this Agreement.
<PAGE>
IN WITNESS WHEREOF, intending to be legally bound, each of the Subsidiaries
has caused this Agreement to be duly executed as of the date first above
written.
FLEX-O-LITE, INC.
By: /s/ Christopher T. Paule
-------------------------
Name: Christopher T. Paule
Title: Vice President
Address:
_____________________________
_____________________________
OSD ENVIZION, INC.
By: /s/ Christopher T. Paule
-------------------------
Name: Christopher T. Paule
Title: Vice President
Address:
_____________________________
_____________________________
CRYSTALOID TECHNOLOGIES, INC.
By: /s/ Christopher T. Paule
-------------------------
Name: Christopher T. Paule
Title: Vice President
Address:
____________________________
____________________________
<PAGE>
JACKSON ACQUISITION, INC.
By: /s/ Christopher T. Paule
--------------------------
Name: Christopher T. Paule
Title: Vice President
Address:
______________________________
______________________________
AMERICAN ALLSAFE COMPANY
By: /s/ Christopher T. Paule
--------------------------
Name: Christopher T. Paule
Title: Vice President
Address:
______________________________
______________________________
<PAGE>
SILENCIO/SAFETY DIRECT, INC.
By: /s/ Christopher T. Paule
---------------------------
Name: Christopher T. Paule
Title: Vice President
Address:
_______________________________
_______________________________
ACCEPTED:
BANKBOSTON, N.A.,
AS AGENT
By: /s/ Peter van der Horst
---------------------------
Peter van der Horst, Vice
President
<PAGE>
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 22 day of April, 1998, personally appeared Christopher T.
Paule to me known personally, and who, being by me duly sworn, deposes and says
that he is the VP & CFO of Flex-O-Lite, Inc., and that said instrument was
signed and sealed on behalf of said corporation by authority of its Board of
Directors, and said Vice President & CFO acknowledged said instrument to be the
free act and deed of said corporation.
/s/ Dawn M. Schoenig
--------------------
Notary Public
My commission expires: August 8/3/99
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 22 day of April, 1998, personally appeared Christopher T.
Paule to me known personally, and who, being by me duly sworn, deposes and says
that he is the VP & CFO of OSD Envizion, Inc., and that said instrument was
signed and sealed on behalf of said corporation by authority of its Board of
Directors, and said VP & CFO acknowledged said instrument to be the free act and
deed of said corporation.
/s/ Dawn M. Schoenig
--------------------
Notary Public
My commission expires: August 8/3/99
<PAGE>
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 22 day of April, 1998, personally appeared Christopher T.
Paule to me known personally, and who, being by me duly sworn, deposes and says
that he is the VP & CFO of Crystaloid Technologies, Inc., and that said
instrument was signed and sealed on behalf of said corporation by authority of
its Board of Directors, and said VP & CFO acknowledged said instrument to be the
free act and deed of said corporation.
/s/ Dawn M. Schoenig
--------------------
Notary Public
My commission expires: August 8/3/99
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 22 day of April, 1998, personally appeared Christopher T.
Paule to me known personally, and who, being by me duly sworn, deposes and says
that he is the VP & CFO of Jackson Acquisition, Inc., and that said instrument
was signed and sealed on behalf of said corporation by authority of its Board of
Directors, and said VP & CFO acknowledged said instrument to be the free act and
deed of said corporation.
/s/ Dawn M. Schoenig
--------------------
Notary Public
My commission expires: August 8/3/99
<PAGE>
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 22 day of April, 1998, personally appeared Christopher T.
Paule to me known personally, and who, being by me duly sworn, deposes and says
that he is the VP & CFO of American Allsafe Company, and that said instrument
was signed and sealed on behalf of said corporation by authority of its Board of
Directors, and said VP & CFO acknowledged said instrument to be the free act and
deed of said corporation.
/s/ Dawn M. Schoenig
--------------------
Notary Public
My commission expires: August 8/3/99
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 22 day of April, 1998, personally appeared Christopher T.
Paule to me known personally, and who, being by me duly sworn, deposes and says
that he is the VP & CFO of Silencio/Safety Direct, Inc., and that
said instrument was signed and sealed on behalf of said corporation by authority
of its Board of Directors, and said VP & CFO acknowledged said
instrument to be the free act and deed of said corporation.
/s/ Dawn M. Schoenig
--------------------
Notary Public
My commission expires: August 8/3/99
<PAGE>
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 22 day of April, 1998, personally appeared Peter van der
Horst, to me known personally, and who, being by me duly sworn, deposes and says
that he is a Vice President of BankBoston, N.A. (the "Agent"), and that said
instrument was signed and sealed on behalf of said Agent by authority of its
Board of Directors, and said Peter van der Horst acknowledged said instrument to
be the free act and deed of the Agent.
_________________________
Notary Public
My commission expires:
<PAGE>
EXHIBIT 10.12
BINGHAM DRAFT
04/20/98
--------
PATENT COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT
---------------------------------------------------
PATENT COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT, dated as of April 22,
1998, between JACKSON PRODUCTS, INC., a Delaware corporation having its
principal place of business at 2997 Clarkson Road, Chesterfield, Missouri 63017
(the "Assignor"), and BANKBOSTON, N.A., as agent (hereinafter, in such capacity,
the "Agent"), for itself and other lending institutions (hereinafter,
collectively, the "Banks") which are, or may in the future become, parties to
that certain Revolving Credit and Acquisition Loan Agreement, dated as of April
22, 1998 (as amended and in effect from time to time, the "Credit Agreement"),
among the Assignor, the Banks, the Agent and Mercantile Bank National
Association, as Co-agent.
WHEREAS, it is a condition precedent to the Banks' making any loans or
otherwise extending credit to the Assignor under the Credit Agreement that the
Assignor execute and deliver to the Agent, for the benefit of the Banks and the
Agent, a patent agreement in substantially the form hereof;
WHEREAS, the Assignor has executed and delivered to the Agent, for the
benefit of the Banks and the Agent, a Security Agreement, dated as of april 22,
1998 (the "Security Agreement"), pursuant to which the Assignor has granted to
the Agent, for the benefit of the Banks and the Agent, a security interest in
all of the Assignor's personal property and fixture assets, including without
limitation the patents and patent applications listed on Schedule A attached
-------- -
hereto, all to secure the payment and performance of the Obligations (as defined
in the Credit Agreement); and
WHEREAS, this Patent Agreement is supplemental to the provisions contained
in the Security Agreement;
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
(S)1. DEFINITIONS. Capitalized terms used herein and not otherwise
-----------
defined herein shall have the respective meanings provided therefor in the
Credit Agreement and the Security Agreement. In addition, the following terms
shall have the meanings set forth in this (S)1 or elsewhere in this Patent
Agreement referred to below:
Patent Agreement. This Patent Collateral Assignment and Security
----------------
Agreement, as amended and in effect from time to time.
Patent Collateral. All of the Assignor's right, title and interest in and
-----------------
to all of the Patents, the Patent License Rights, and all other Patent Rights,
and all additions, improvements, and accessions to, all substitutions for and
replacements of, and all
<PAGE>
-2-
products and Proceeds (including insurance proceeds) of any and all of the
foregoing, and all books and records and technical information and data
describing or used in connection with any and all such rights, interests, assets
or property.
Patent License Rights. Any and all past, present or future rights and
---------------------
interests of the Assignor pursuant to any and all past, present and future
licensing agreements in favor of the Assignor, or to which the Assignor is a
party, pertaining to any Patents, or Patent Rights, owned or used by third
parties in the past, present or future, including the right in the name of the
Assignor or the Agent to enforce, and sue and recover for, any past, present or
future breach or violation of any such agreement.
Patent Rights. Any and all past, present or future rights in, to and
-------------
associated with the Patents throughout the world, whether arising under federal
law, state law, common law, foreign law, or otherwise, including, but not
limited to, the following: all such rights arising out of or associated with
the Patents; the right (but not the obligation) to register claims under any
federal, state or foreign patent law or regulation; the right (but not the
obligation) to sue or bring opposition or bring cancellation proceedings in the
name of the Assignor or the Agent for any and all past, present and future
infringements of or any other damages or injury to the Patents or the Patent
Rights, and the rights to damages or profits due or accrued arising out of or in
connection with any such past, present or future infringement, damage or injury;
and the Patent License Rights.
Patents. All patents and patent applications, whether United States or
-------
foreign, that are owned by the Assignor or in which the Assignor has any right,
title or interest, now or in the future, including but not limited to:
(a) the patents and patent applications listed on Schedule A attached
-------- -
hereto (as the same may be amended pursuant hereto from time to time);
(b) all letters patent of the United States or any other country, and
all applications for letters patent of the United States or any other
country;
(c) all re-issues, continuations, divisions, continuations-in-part,
renewals or extensions thereof;
(d) the inventions disclosed or claimed therein, including the right
to make, use, practice and/or sell (or license or otherwise transfer or
dispose of) the inventions disclosed or claimed therein; and
(e) the right (but not the obligation) to make and prosecute
applications for such Patents.
Proceeds. Any consideration received from the sale, exchange, license,
--------
lease or other disposition or transfer of any right, interest, asset or property
which constitutes all or any part of the Patent Collateral, any value received
as a consequence of the ownership, possession, use or practice of any Patent
Collateral, and any payment received from any insurer or other person or entity
as a result of the destruction or the
<PAGE>
-3-
loss, theft or other involuntary conversion of whatever nature of any right,
interest, asset or property which constitutes all or any part of the Patent
Collateral.
PTO. The United States Patent and Trademark Office.
---
(S)2. GRANT OF SECURITY INTEREST. To secure the payment and performance in
--------------------------
full of all of the Obligations, the Assignor hereby grants, assigns, transfers
and conveys to the Agent, for the benefit of the Banks and the Agent, BY WAY OF
COLLATERAL SECURITY, all of the Patent Collateral. NEITHER THE AGENT NOR ANY OF
THE BANKS ASSUMES ANY LIABILITY ARISING IN ANY WAY BY REASON OF ITS HOLDING SUCH
COLLATERAL SECURITY.
(S)3. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Assignor represents,
-----------------------------------------
warrants and covenants that:
(a) to the best of the Assignor's knowledge, Schedule A attached
-------- -
hereto sets forth a true and complete list of all the patents, rights to
patents and patent applications now owned, licensed, controlled or used by
the Assignor;
(b) to the best of the Assignor's knowledge, the issued Patents are
subsisting and have not been adjudged invalid or unenforceable, in whole or
in part, and there is no litigation or proceeding pending concerning the
validity or enforceability of the issued Patents;
(c) to the best of the Assignor's knowledge, each of the issued
Patents is valid and enforceable;
(d) to the best of the Assignor's knowledge, there is no infringement
by others of the issued Patents or Patent Rights;
(e) to the best of the Assignor's knowledge, no claim has been made
that the use of any of the Patents does or may violate the rights of any
third person, and there is no infringement by the Assignor of the patent
rights of others;
(f) the Assignor is the sole and exclusive owner of the entire and
unencumbered right, title and interest in and to each of the Patents (other
than ownership and other rights reserved by third party owners with respect
to Patents which the Assignor is licensed to practice or use), free and
clear of any liens, charges, encumbrances and adverse claims, including
without limitation pledges, assignments, licenses, shop rights and
covenants by the Assignor not to sue third persons, other than the security
agreement and mortgage created by the Security Agreement and this Patent
Agreement;
(g) the Assignor has the unqualified right to enter into this Patent
Agreement and perform its terms and will comply with the covenants herein
contained;
(h) this Patent Agreement, together with the Security Agreement, will
create in favor of the Agent, for the benefit of the Banks, a valid and
perfected
<PAGE>
-4-
first priority security interest in the Patent Collateral upon making the
filings referred to in clause (i) of this (S)3; and
(i) except for the filing of financing statements under the Uniform
Commercial Code and the filing of this Patent Agreement with the PTO, no
authorization, approval or other action by, and no notice to or filing
with, any governmental or regulatory authority, agency or office is
required either (i) for the grant by the Assignor or the effectiveness of
the security interest and assignment granted hereby or for the execution,
delivery and performance of this Patent Agreement by the Assignor, or (ii)
for the perfection of or the exercise by the Agent of any of its rights and
remedies hereunder.
(S)4. NO TRANSFER OR INCONSISTENT AGREEMENTS. Without the Agent's prior
--------------------------------------
written consent, the Assignor will not (a) mortgage, pledge, assign, encumber,
grant a security interest in, transfer, license or alienate any of the Patent
Collateral, or (b) enter into any agreement (for example, a license agreement)
that is inconsistent with the Assignor's obligations under this Patent Agreement
or the Security Agreement.
(S)5. AFTER-ACQUIRED PATENTS, ETC.
---------------------------
(S)5.1. AFTER-ACQUIRED PATENTS. If, before the Obligations shall have
----------------------
been finally paid and satisfied in full, the Assignor shall obtain any right,
title or interest in or to any other or new patents, patent applications or
patentable inventions, or become entitled to the benefit of any patent
application or patent or any reissue, division, continuation, renewal,
extension, or continuation-in-part of any of the Patent Collateral or any
improvement on any of the Patent Collateral, the provisions of this Patent
Agreement shall automatically apply thereto and the Assignor shall promptly give
to the Agent notice thereof in writing and execute and deliver to the Agent such
documents or instruments as the Agent may reasonably request further to transfer
title thereto to the Agent, for the benefit of the Banks and the Agent.
(S)5.2. AMENDMENT TO SCHEDULE. The Assignor authorizes the Agent to
---------------------
modify this Patent Agreement, without the necessity of the Assignor's further
approval or signature, by amending Schedule A attached hereto to include any
-------- -
future or other Patents or Patent Rights under (S)(S)2 or 5 hereof.
(S)6. PATENT PROSECUTION.
------------------
(S)6.1. ASSIGNOR RESPONSIBLE. The Assignor shall assume full and complete
--------------------
responsibility for the prosecution, grant, enforcement or any other necessary or
desirable actions in connection with the Patent Collateral, and shall hold the
Agent and the Banks harmless from any and all costs, damages, liabilities and
expenses which may be incurred by the Agent or any of the Banks in connection
with the Agent's title to any of the Patent Collateral or any other action or
failure to act in connection with this Patent Agreement or the transactions
contemplated hereby. In respect of such responsibility, the Assignor shall
retain patent counsel reasonably acceptable to the Agent.
<PAGE>
-5-
(S)6.2. ASSIGNOR'S DUTIES, ETC. The Assignor shall have the duty,
----------------------
through patent counsel reasonably acceptable to the Agent, to prosecute
diligently any patent applications of the Patents pending as of the date of this
Patent Agreement or thereafter, to make application for unpatented but
reasonably patentable inventions and to preserve and maintain all rights in the
Patents, including without limitation the payment when due of all maintenance
fees and other fees, taxes and other expenses which shall be incurred or which
shall accrue with respect to any of the Patents. Any expenses incurred in
connection with such applications and actions shall be borne by the Assignor.
The Assignor shall not abandon any filed patent application, or any pending
patent application or patent, without the consent of the Agent, which consent
shall not be unreasonably withheld. The Agent hereby appoints the Assignor as
its agent for all matters referred to in the foregoing provisions of this (S)6
and agrees to execute any documents necessary to confirm such appointment. Upon
the occurrence and during the continuance of an Event of Default, the Agent may
terminate such agency by providing written notice of termination to the
Assignor.
(S)6.3. ASSIGNOR'S ENFORCEMENT RIGHTS. The Assignor shall have the right,
-----------------------------
with the consent of the Agent which shall not be unreasonably withheld, to bring
suit or other action in the Assignor's own name to enforce the Patents and the
Patent Rights. The Agent shall be required to join in such suit or action as may
be necessary to assure the Assignor's ability to bring and maintain any such
suit or action in any proper forum so long as the Agent is completely satisfied
that such joinder will not subject the Agent or any of the Banks to any risk of
liability. The Assignor shall promptly, upon demand, reimburse and indemnify the
Agent and the Banks for all damages, costs and expenses, including legal fees,
incurred by the Agent and any of the Banks pursuant to this (S)6.
(S)6.4. PROTECTION OF PATENTS, ETC. In general, the Assignor shall take
--------------------------
any and all such actions (including but not limited to institution and
maintenance of suits, proceedings or actions) as may be necessary or appropriate
to properly maintain, protect, preserve, care for and enforce the Patent
Collateral. The Assignor shall not take or fail to take any action, nor permit
any action to be taken or not taken by others under its control, which would
affect the validity, grant or enforcement of any of the Patent Collateral.
(S)6.5. NOTIFICATION BY ASSIGNOR. Promptly upon obtaining knowledge
------------------------
thereof, the Assignor will notify the Agent in writing of the institution of, or
any final adverse determination in, any proceeding in the PTO or any similar
office or agency of the United States or any foreign country, or any court,
regarding the validity of any of the Patents or the Assignor's rights, title or
interests in and to any of the Patent Collateral, and of any event which does or
reasonably could materially adversely affect the value of any of the Patent
Collateral, the ability of the Assignor or the Agent to dispose of any of the
Patent Collateral or the rights and remedies of the Agent and the Banks in
relation thereto (including but not limited to the levy of any legal process
against any of the Patent Collateral).
(S)7. LICENSE BACK TO ASSIGNOR. Unless and until there shall have occurred
-------------------------
and be continuing an Event of Default and the Agent has notified the Assignor
that the license granted hereunder is terminated, the Agent hereby grants to
<PAGE>
-6-
the Assignor the sole and exclusive, nontransferable, royalty-free, worldwide
right and license under the Patents to make, have made for it, use, sell and
otherwise practice the inventions disclosed and claimed in the Patents for the
Assignor's own benefit and account and for none other; provided, however, that
the foregoing right and license shall be no greater in scope than, and limited
by, the rights assigned to the Agent, for the benefit of the Banks and the
Agent, by the Assignor hereby. The Assignor agrees not to sell, assign,
transfer, encumber or sublicense its interest in the license granted to the
Assignor in this (S)7 without the prior written consent of the Agent. Any such
sublicenses granted on or after the date hereof shall be terminable by the Agent
upon termination of the Assignor's license hereunder.
(S)8. REMEDIES. If any Event of Default shall have occurred and be
--------
continuing, then at the discretion of the Agent, or upon instructions by the
Majority Banks to the Agent, and upon notice by the Agent to the Assignor: (a)
the Assignor's license with respect to the Patents as set forth in (S)7 hereof
shall terminate; (b) the Assignor shall immediately cease and desist from the
practice, manufacture, use and sale of the inventions claimed, disclosed or
covered by the Patents; and (c) the Agent shall have, in addition to all other
rights and remedies given it by this Patent Agreement, the Credit Agreement, the
Security Agreement, and the other Loan Documents, those allowed by law and the
rights and remedies of a secured party under the Uniform Commercial Code as
enacted in the Commonwealth of Massachusetts and, without limiting the
generality of the foregoing, the Agent may immediately, without demand of
performance and without other notice (except as set forth next below) or demand
whatsoever to the Assignor, all of which are hereby expressly waived, and
without advertisement, sell or license at public or private sale or otherwise
realize upon the whole or from time to time any part of the Patent Collateral,
or any interest which the Assignor may have therein, and after deducting from
the proceeds of sale or other disposition of the Patent Collateral all expenses
(including all reasonable expenses for broker's fees and legal services), shall
apply the residue of such proceeds toward the payment of the Obligations as set
forth in the Security Agreement. Notice of any sale, license or other
disposition of any of the Patent Collateral shall be given to the Assignor at
least fifteen (15) days before the time that any intended public sale or other
disposition of such Patent Collateral is to be made or after which any private
sale or other disposition of such Patent Collateral may be made, which the
Assignor hereby agrees shall be reasonable notice of such public or private sale
or other disposition. At any such sale or other disposition, the Agent may, to
the extent permitted under applicable law, purchase or license the whole or any
part of the Patent Collateral or interests therein sold, licensed or otherwise
disposed of.
(S)9. COLLATERAL PROTECTION. If the Assignor shall fail to do any act that
---------------------
it has covenanted to do hereunder, or if any representation or warranty of the
Assignor shall be breached, the Agent, in its own name or that of the Assignor
(in the sole discretion of the Agent), may (but shall not be obligated to) do
such act or remedy such breach (or cause such act to be done or such breach to
be remedied), and the Assignor agrees promptly to reimburse the Agent for any
cost or expense incurred by the Agent in so doing.
<PAGE>
-7-
(S)10. POWER OF ATTORNEY. If any Event of Default shall have occurred and
-----------------
be continuing, the Assignor does hereby make, constitute and appoint the Agent
(and any officer or agent of the Agent as the Agent may select in its exclusive
discretion) as the Assignor's true and lawful attorney-in-fact, with the power
to endorse the Assignor's name on all applications, documents, papers and
instruments necessary for the Agent to use any of the Patent Collateral, to
practice, make, use or sell the inventions disclosed or claimed in any of the
Patent Collateral, to grant or issue any exclusive or nonexclusive license of
any of the Patent Collateral to any third person, or necessary for the Agent to
assign, pledge, convey or otherwise transfer title in or dispose of the Patent
Collateral or any part thereof or interest therein to any third person, and, in
general, to execute and deliver any instruments or documents and do all other
acts which the Assignor is obligated to execute and do hereunder. The Assignor
hereby ratifies all that such attorney shall lawfully do or cause to be done by
virtue hereof, and releases the Agent from any claims, liabilities, causes of
action or demands arising out of or in connection with any action taken or
omitted to be taken by the Agent under this power of attorney (except for the
Agent's gross negligence or willful misconduct). This power of attorney shall be
irrevocable for the duration of this Patent Agreement.
(S)11. FURTHER ASSURANCES. The Assignor shall, at any time and from time
------------------
to time, and at its expense, make, execute, acknowledge and deliver, and file
and record as necessary or appropriate with governmental or regulatory
authorities, agencies or offices, such agreements, assignments, documents and
instruments, and do such other and further acts and things (including, without
limitation, obtaining consents of third parties), as the Agent may request or as
may be necessary or appropriate in order to implement and effect fully the
intentions, purposes and provisions of this Patent Agreement, or to assure and
confirm to the Agent the grant, perfection and priority of the Agent's security
interest in any of the Patent Collateral.
(S)12. TERMINATION. At such time as all of the Obligations have been
-----------
finally paid and satisfied in full, this Patent Agreement shall terminate and
the Agent shall, upon the written request and at the expense of the Assignor,
execute and deliver to the Assignor all deeds, assignments and other instruments
as may be necessary or proper to reassign and reconvey to and re-vest in the
Assignor the entire right, title and interest to the Patent Collateral
previously granted, assigned, transferred and conveyed to the Agent and the
Banks by the Assignor pursuant to this Patent Agreement, as fully as if this
Patent Agreement had not been made, subject to any disposition of all or any
part thereof which may have been made by the Agent and the Banks pursuant hereto
or the Security Agreement.
(S)13. COURSE OF DEALING. No course of dealing among the Assignor, the
-----------------
Banks and the Agent, nor any failure to exercise, nor any delay in exercising,
on the part of the Agent or any of the Banks, any right, power or privilege
hereunder or under the Security Agreement shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
or thereunder preclude any other or further exercise thereof or the exercise of
any other right, power or privilege.
(S)14. EXPENSES. Any and all fees, costs and expenses, of whatever kind or
--------
nature, including the reasonable attorneys' fees and legal expenses incurred by
the
<PAGE>
-8-
Agent in connection with the preparation of this Patent Agreement and all other
documents relating hereto, the consummation of the transactions contemplated
hereby or the enforcement hereof, the filing or recording of any documents
(including all taxes in connection therewith) in public offices, the payment or
discharge of any taxes, counsel fees, maintenance fees, encumbrances or
otherwise protecting, maintaining or preserving any of the Patent Collateral, or
in defending or prosecuting any actions or proceedings arising out of or related
to any of the Patent Collateral, shall be borne and paid by the Assignor.
(S)15. OVERDUE AMOUNTS. Until paid, all amounts due and payable by the
---------------
Assignor hereunder shall be a debt secured by the Patent Collateral and other
Collateral and shall bear, whether before or after judgment, interest at the
rate of interest for overdue principal set forth in the Credit Agreement.
(S)16. NO ASSUMPTION OF LIABILITY; INDEMNIFICATION. NOTWITHSTANDING
-------------------------------------------
ANYTHING TO THE CONTRARY CONTAINED HEREIN, NEITHER THE AGENT NOR ANY BANK
ASSUMES ANY LIABILITIES OF THE ASSIGNOR WITH RESPECT TO ANY CLAIM OR CLAIMS
REGARDING THE ASSIGNOR'S OWNERSHIP OR PURPORTED OWNERSHIP OF, OR RIGHTS OR
PURPORTED RIGHTS ARISING FROM, ANY OF THE PATENT COLLATERAL OR ANY PRACTICE,
USE, LICENSE OR SUBLICENSE THEREOF, OR ANY PRACTICE, MANUFACTURE, USE OR SALE OF
ANY OF THE INVENTIONS DISCLOSED OR CLAIMED THEREIN, WHETHER ARISING OUT OF ANY
PAST, CURRENT OR FUTURE EVENT, CIRCUMSTANCE, ACT OR OMISSION OR OTHERWISE. ALL
OF SUCH LIABILITIES SHALL BE EXCLUSIVELY BORNE BY THE ASSIGNOR, AND THE ASSIGNOR
SHALL INDEMNIFY THE AGENT AND THE BANKS FOR ANY AND ALL COSTS, EXPENSES, DAMAGES
AND CLAIMS, INCLUDING LEGAL FEES, INCURRED BY THE AGENT OR ANY BANK WITH RESPECT
TO SUCH LIABILITIES.
(S)17. RIGHTS AND REMEDIES CUMULATIVE. All of the Agent's and the Banks'
------------------------------
rights and remedies with respect to the Patent Collateral, whether established
hereby or by the Security Agreement or by any other agreements or by law, shall
be cumulative and may be exercised singularly or concurrently. This Patent
Agreement is supplemental to the Security Agreement, and nothing contained
herein shall in any way derogate from any of the rights or remedies of the Agent
and the Banks contained therein. Nothing contained in this Patent Agreement
shall be deemed to extend the time of attachment or perfection of or otherwise
impair the security interest in any of the Patent Collateral granted to the
Agent for the benefit of the Banks and the Agent under the Security Agreement.
(S)18. NOTICES. All notices and other communications made or required to
-------
be given pursuant to this Patent Agreement shall be in writing and shall be
delivered in hand, mailed by United States registered or certified first-class
mail, postage prepaid, or sent by telegraph, telecopy or telex and confirmed by
delivery via courier or postal service, addressed as follows: if to the
Assignor, at the address set forth beneath its signature hereto, and if to the
Agent, at the address for notices to the Agent set forth in (S)20 of the Credit
Agreement, or at such address as either party may designate in
<PAGE>
-9-
writing to the other. Any such notice or demand shall be deemed to have been
duly given or made and to have become effective (a) if delivered by hand to a
responsible officer of the party to which it is directed, at the time of the
receipt thereof by such officer, (b) if sent by registered or certified first-
class mail, postage prepaid, two (2) Business Days after the posting thereof,
and (c) if sent by telegraph, telecopy, or telex, at the time of the dispatch
thereof, if in normal business hours in the country of receipt, or otherwise at
the opening of business on the following Business Day.
(S)19. AMENDMENT AND WAIVER. This Patent Agreement is subject to
--------------------
modification only by a writing signed by the Agent (with the consent of the
Banks or Majority Banks as provided in the Credit Agreement) and the Assignor,
except as provided in (S)5.2 hereof. The Agent shall not be deemed to have
waived any right hereunder unless such waiver shall be in writing and signed by
the Agent and the Banks or Majority Banks as provided in the Credit Agreement. A
waiver on any one occasion shall not be construed as a bar to or waiver of any
right on any future occasion.
(S)20. GOVERNING LAW; CONSENT TO JURISDICTION. THIS PATENT AGREEMENT IS
--------------------------------------
INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. The
Assignor agrees that any suit for the enforcement of this Patent Agreement may
be brought in the courts of The Commonwealth of Massachusetts or any federal
court sitting therein and consents to the non-exclusive jurisdiction of such
court and to service of process in any such suit being made upon the Assignor by
mail at the address specified in (S)18 hereof. The Assignor hereby waives any
objection that it may now or hereafter have to the venue of any such suit or any
such court or that such suit is brought in an inconvenient court.
(S)21. WAIVER OF JURY TRIAL. THE ASSIGNOR WAIVES ITS RIGHT TO A JURY TRIAL
--------------------
WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION
WITH THIS PATENT AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE
PERFORMANCE OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, the
Assignor waives any right which it may have to claim or recover in any
litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. The Assignor (a) certifies that neither the Agent or any Bank
nor any representative, agent or attorney of the Agent or any Bank has
represented, expressly or otherwise, that the Agent or any Bank would not, in
the event of litigation, seek to enforce the foregoing waivers, and (b)
acknowledges that, in entering into the Credit Agreement and the other Loan
Documents to which the Agent or any Bank is a party, the Agent and the Banks are
relying upon, among other things, the waivers and certifications contained in
this (S)21.
(S)22. MISCELLANEOUS. The headings of each section of this Patent
-------------
Agreement are for convenience only and shall not define or limit the provisions
thereof. This Patent Agreement and all rights and obligations hereunder shall be
binding upon the Assignor and its respective successors and assigns, and shall
inure to the benefit of the Agent, the Banks and their respective successors and
assigns. In the event of any
<PAGE>
-10-
irreconcilable conflict between the provisions of this Patent Agreement and the
Credit Agreement, or between this Patent Agreement and the Security Agreement,
the provisions of the Credit Agreement or the Security Agreement, as the case
may be, shall control. If any term of this Patent Agreement shall be held to be
invalid, illegal or unenforceable, the validity of all other terms hereof shall
in no way be affected thereby, and this Patent Agreement shall be construed and
be enforceable as if such invalid, illegal or unenforceable term had not been
included herein. The Assignor acknowledges receipt of a copy of this Patent
Agreement.
<PAGE>
-11-
IN WITNESS WHEREOF, this Patent Collateral Assignment and Security
Agreement has been executed as of the day and year first above written.
JACKSON PRODUCTS, INC.
By: /s/ Christopher T. Paule
------------------------------------
Title: Vice President & CFO
Address: ______________________________
______________________________
BANKBOSTON, N.A., as Agent
By: /s/ Peter van der Horst
------------------------------------
Peter van der Horst, Vice President
<PAGE>
-12-
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 22 day of April, 1998, personally appeared Christopher T.
Paule to me known personally, and who, being by me duly sworn, deposes and says
that (s)he is the Vice President & CFO of Jackson Products, Inc., and that said
instrument was signed and sealed on behalf of said corporation by authority of
its Board of Directors, and said Vice President & CFO acknowledged said
instrument to be the free act and deed of said corporation.
/s/ Dawn M. Schoenig
-------------------------------
Notary Public
My commission expires: [August 3, 1999]
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 21 day of April, 1998, personally appeared Peter van der
Horst to me known personally, and who, being by me duly sworn, deposes and says
that (s)he is a Vice President of BankBoston, N.A. (the "Agent"), and that
said instrument was signed and sealed on behalf of said Agent by authority of
its Board of Directors, and said Vice President acknowledged said instrument
to be the free act and deed of said Agent.
/s/ D. L. Figueroa-Thomas
------------------------------------
Notary Public
My commission expires: [February 21, 1999]
<PAGE>
SCHEDULE A
----------
ISSUED AND PENDING PATENTS
--------------------------
PATENTS ISSUED BY U.S. PATENT
-----------------------------
AND TRADEMARK OFFICE
--------------------
Patent No. Issue Date Inventor(s) Title
- ---------- ---------- ----------- -----
PATENTS PENDING WITH U.S. PATENT
--------------------------------
AND TRADEMARK OFFICE
--------------------
<PAGE>
EXHIBIT 10.13
BINGHAM DRAFT
04/20/98
--------
PATENT COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT
---------------------------------------------------
PATENT COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT, dated as of April 22,
1998, between FLEX-O-LITE, INC., a Delaware corporation having its principal
place of business at 2997 Clarkson Road, Chesterfield, Missouri 63017 (the
"Assignor"), and BANKBOSTON, N.A., as agent (hereinafter, in such capacity, the
"Agent"), for itself and other lending institutions (hereinafter, collectively,
the "Banks") which are, or may in the future become, parties to that certain
Revolving Credit and Acquisition Loan Agreement, dated as of April 22, 1998 (as
amended and in effect from time to time, the "Credit Agreement"), among the
Assignor, the Banks, the Agent and Mercantile Bank National Association, as Co-
Agent.
WHEREAS, it is a condition precedent to the Banks' making any loans or
otherwise extending credit to the Assignor under the Credit Agreement that the
Assignor execute and deliver to the Agent, for the benefit of the Banks and the
Agent, a patent agreement in substantially the form hereof;
WHEREAS, the Assignor has executed and delivered to the Agent, for the
benefit of the Banks and the Agent, a Security Agreement, dated as of April 22,
1998 (the "Security Agreement"), pursuant to which the Assignor has granted to
the Agent, for the benefit of the Banks and the Agent, a security interest in
all of the Assignor's personal property and fixture assets, including without
limitation the patents and patent applications listed on Schedule A attached
-------- -
hereto, all to secure the payment and performance of the Obligations (as defined
in the Credit Agreement); and
WHEREAS, this Patent Agreement is supplemental to the provisions contained
in the Security Agreement;
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
(S)1. DEFINITIONS. Capitalized terms used herein and not otherwise defined
-----------
herein shall have the respective meanings provided therefor in the Credit
Agreement and the Security Agreement. In addition, the following terms shall
have the meanings set forth in this (S)1 or elsewhere in this Patent Agreement
referred to below:
Patent Agreement. This Patent Collateral Assignment and Security
----------------
Agreement, as amended and in effect from time to time.
Patent Collateral. All of the Assignor's right, title and interest in and
-----------------
to all of the Patents, the Patent License Rights, and all other Patent Rights,
and all additions, improvements, and accessions to, all substitutions for and
replacements of, and all
<PAGE>
-2-
products and Proceeds (including insurance proceeds) of any and all of the
foregoing, and all books and records and technical information and data
describing or used in connection with any and all such rights, interests, assets
or property.
Patent License Rights. Any and all past, present or future rights and
---------------------
interests of the Assignor pursuant to any and all past, present and future
licensing agreements in favor of the Assignor, or to which the Assignor is a
party, pertaining to any Patents, or Patent Rights, owned or used by third
parties in the past, present or future, including the right in the name of the
Assignor or the Agent to enforce, and sue and recover for, any past, present or
future breach or violation of any such agreement.
Patent Rights. Any and all past, present or future rights in, to and
-------------
associated with the Patents throughout the world, whether arising under federal
law, state law, common law, foreign law, or otherwise, including, but not
limited to, the following: all such rights arising out of or associated with
the Patents; the right (but not the obligation) to register claims under any
federal, state or foreign patent law or regulation; the right (but not the
obligation) to sue or bring opposition or bring cancellation proceedings in the
name of the Assignor or the Agent for any and all past, present and future
infringements of or any other damages or injury to the Patents or the Patent
Rights, and the rights to damages or profits due or accrued arising out of or in
connection with any such past, present or future infringement, damage or injury;
and the Patent License Rights.
Patents. All patents and patent applications, whether United States or
-------
foreign, that are owned by the Assignor or in which the Assignor has any right,
title or interest, now or in the future, including but not limited to:
(a) the patents and patent applications listed on Schedule A attached
-------- -
hereto (as the same may be amended pursuant hereto from time to time);
(b) all letters patent of the United States or any other country, and
all applications for letters patent of the United States or any other
country;
(c) all re-issues, continuations, divisions, continuations-in-part,
renewals or extensions thereof;
(d) the inventions disclosed or claimed therein, including the right
to make, use, practice and/or sell (or license or otherwise transfer or
dispose of) the inventions disclosed or claimed therein; and
(e) the right (but not the obligation) to make and prosecute
applications for such Patents.
Proceeds. Any consideration received from the sale, exchange, license,
--------
lease or other disposition or transfer of any right, interest, asset or property
which constitutes all or any part of the Patent Collateral, any value received
as a consequence of the ownership, possession, use or practice of any Patent
Collateral, and any payment received from any insurer or other person or entity
as a result of the destruction or the
<PAGE>
-3-
loss, theft or other involuntary conversion of whatever nature of any right,
interest, asset or property which constitutes all or any part of the Patent
Collateral.
PTO. The United States Patent and Trademark Office.
---
(S)2. GRANT OF SECURITY INTEREST. To secure the payment and performance in
--------------------------
full of all of the Obligations, the Assignor hereby grants, assigns, transfer
and conveys to the Agent, for the benefit of the Banks and the Agent, BY WAY OF
COLLATERAL SECURITY, all of the Patent Collateral. NEITHER THE AGENT NOR ANY OF
THE BANKS ASSUMES ANY LIABILITY ARISING IN ANY WAY BY REASON OF ITS HOLDING SUCH
COLLATERAL SECURITY.
(S)3. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Assignor represents,
-----------------------------------------
warrants and covenants that:
(a) to the best of the Assignor's knowledge, Schedule A attached
-------- -
hereto sets forth a true and complete list of all the patents, rights to
patents and patent applications now owned, licensed, controlled or used by
the Assignor;
(b) to the best of the Assignor's knowledge, the issued Patents are
subsisting and have not been adjudged invalid or unenforceable, in whole or
in part, and there is no litigation or proceeding pending concerning the
validity or enforceability of the issued Patents;
(c) to the best of the Assignor's knowledge, each of the issued
Patents is valid and enforceable;
(d) to the best of the Assignor's knowledge, there is no infringement
by others of the issued Patents or Patent Rights;
(e) to the best of the Assignor's knowledge, no claim has been made
that the use of any of the Patents does or may violate the rights of any
third person, and there is no infringement by the Assignor of the patent
rights of others;
(f) the Assignor is the sole and exclusive owner of the entire and
unencumbered right, title and interest in and to each of the Patents (other
than ownership and other rights reserved by third party owners with respect
to Patents which the Assignor is licensed to practice or use), free and
clear of any liens, charges, encumbrances and adverse claims, including
without limitation pledges, assignments, licenses, shop rights and
covenants by the Assignor not to sue third persons, other than the security
agreement and mortgage created by the Security Agreement and this Patent
Agreement;
(g) the Assignor has the unqualified right to enter into this Patent
Agreement and perform its terms and will comply with the covenants herein
contained;
(h) this Patent Agreement, together with the Security Agreement, will
create in favor of the Agent, for the benefit of the Banks, a valid and
perfected
<PAGE>
-4-
first priority security interest in the Patent Collateral upon making the
filings referred to in clause (i) of this (S)3; and
(i) except for the filing of financing statements under the Uniform
Commercial Code and the filing of this Patent Agreement with the PTO, no
authorization, approval or other action by, and no notice to or filing
with, any governmental or regulatory authority, agency or office is
required either (i) for the grant by the Assignor or the effectiveness of
the security interest and assignment granted hereby or for the execution,
delivery and performance of this Patent Agreement by the Assignor, or (ii)
for the perfection of or the exercise by the Agent of any of its rights and
remedies hereunder.
(S)4. NO TRANSFER OR INCONSISTENT AGREEMENTS. Without the Agent's prior
--------------------------------------
written consent, the Assignor will not (a) mortgage, pledge, assign, encumber,
grant a security interest in, transfer, license or alienate any of the Patent
Collateral, or (b) enter into any agreement (for example, a license agreement)
that is inconsistent with the Assignor's obligations under this Patent Agreement
or the Security Agreement.
(S)5. AFTER-ACQUIRED PATENTS, ETC.
---------------------------
(S)5.1. AFTER-ACQUIRED PATENTS. If, before the Obligations shall have
----------------------
been finally paid and satisfied in full, the Assignor shall obtain any right,
title or interest in or to any other or new patents, patent applications or
patentable inventions, or become entitled to the benefit of any patent
application or patent or any reissue, division, continuation, renewal,
extension, or continuation-in-part of any of the Patent Collateral or any
improvement on any of the Patent Collateral, the provisions of this Patent
Agreement shall automatically apply thereto and the Assignor shall promptly give
to the Agent notice thereof in writing and execute and deliver to the Agent such
documents or instruments as the Agent may reasonably request further to transfer
title thereto to the Agent, for the benefit of the Banks and the Agent.
(S)5.2. AMENDMENT TO SCHEDULE. The Assignor authorizes the Agent to
---------------------
modify this Patent Agreement, without the necessity of the Assignor's further
approval or signature, by amending Schedule A attached hereto to include any
-------- -
future or other Patents or Patent Rights under (S)(S)2 or 5 hereof.
(S)6. PATENT PROSECUTION.
------------------
(S)6.1. ASSIGNOR RESPONSIBLE. The Assignor shall assume full and complete
--------------------
responsibility for the prosecution, grant, enforcement or any other necessary or
desirable actions in connection with the Patent Collateral, and shall hold the
Agent and the Banks harmless from any and all costs, damages, liabilities and
expenses which may be incurred by the Agent or any of the Banks in connection
with the Agent's title to any of the Patent Collateral or any other action or
failure to act in connection with this Patent Agreement or the transactions
contemplated hereby. In respect of such responsibility, the Assignor shall
retain patent counsel reasonably acceptable to the Agent.
<PAGE>
-5-
(S)6.2. ASSIGNOR'S DUTIES, ETC. The Assignor shall have the duty, through
----------------------
patent counsel reasonably acceptable to the Agent, to prosecute diligently any
patent applications of the Patents pending as of the date of this Patent
Agreement or thereafter, to make application for unpatented but reasonably
patentable inventions and to preserve and maintain all rights in the Patents,
including without limitation the payment when due of all maintenance fees and
other fees, taxes and other expenses which shall be incurred or which shall
accrue with respect to any of the Patents. Any expenses incurred in connection
with such applications and actions shall be borne by the Assignor. The Assignor
shall not abandon any filed patent application, or any pending patent
application or patent, without the consent of the Agent, which consent shall not
be unreasonably withheld. The Agent hereby appoints the Assignor as its agent
for all matters referred to in the foregoing provisions of this (S)6 and agrees
to execute any documents necessary to confirm such appointment. Upon the
occurrence and during the continuance of an Event of Default, the Agent may
terminate such agency by providing written notice of termination to the
Assignor.
(S)6.3. ASSIGNOR'S ENFORCEMENT RIGHTS. The Assignor shall have the right,
-----------------------------
with the consent of the Agent which shall not be unreasonably withheld, to bring
suit or other action in the Assignor's own name to enforce the Patents and the
Patent Rights. The Agent shall be required to join in such suit or action as may
be necessary to assure the Assignor's ability to bring and maintain any such
suit or action in any proper forum so long as the Agent is completely satisfied
that such joinder will not subject the Agent or any of the Banks to any risk of
liability. The Assignor shall promptly, upon demand, reimburse and indemnify the
Agent and the Banks for all damages, costs and expenses, including legal fees,
incurred by the Agent and any of the Banks pursuant to this (S)6.
(S)6.4. PROTECTION OF PATENTS, ETC. In general, the Assignor shall take
--------------------------
any and all such actions (including but not limited to institution and
maintenance of suits, proceedings or actions) as may be necessary or appropriate
to properly maintain, protect, preserve, care for and enforce the Patent
Collateral. The Assignor shall not take or fail to take any action, nor permit
any action to be taken or not taken by others under its control, which would
affect the validity, grant or enforcement of any of the Patent Collateral.
(S)6.5. NOTIFICATION BY ASSIGNOR. Promptly upon obtaining knowledge
------------------------
thereof, the Assignor will notify the Agent in writing of the institution of, or
any final adverse determination in, any proceeding in the PTO or any similar
office or agency of the United States or any foreign country, or any court,
regarding the validity of any of the Patents or the Assignor's rights, title or
interests in and to any of the Patent Collateral, and of any event which does or
reasonably could materially adversely affect the value of any of the Patent
Collateral, the ability of the Assignor or the Agent to dispose of any of the
Patent Collateral or the rights and remedies of the Agent and the Banks in
relation thereto (including but not limited to the levy of any legal process
against any of the Patent Collateral).
(S)7. LICENSE BACK TO ASSIGNOR. Unless and until there shall have occurred
-------------------------
and be continuing an Event of Default and the Agent has notified the Assignor
that the license granted hereunder is terminated, the Agent hereby grants to
<PAGE>
-6-
the Assignor the sole and exclusive, nontransferable, royalty-free, worldwide
right and license under the Patents to make, have made for it, use, sell and
otherwise practice the inventions disclosed and claimed in the Patents for the
Assignor's own benefit and account and for none other; provided, however, that
the foregoing right and license shall be no greater in scope than, and limited
by, the rights assigned to the Agent, for the benefit of the Banks and the
Agent, by the Assignor hereby. The Assignor agrees not to sell, assign,
transfer, encumber or sublicense its interest in the license granted to the
Assignor in this (S)7 without the prior written consent of the Agent. Any such
sublicenses granted on or after the date hereof shall be terminable by the Agent
upon termination of the Assignor's license hereunder.
(S)8. REMEDIES. If any Event of Default shall have occurred and be
--------
continuing, then at the discretion of the Agent, or upon instructions by the
Majority Banks to the Agent, and upon notice by the Agent to the Assignor: (a)
the Assignor's license with respect to the Patents as set forth in (S)7 hereof
shall terminate; (b) the Assignor shall immediately cease and desist from the
practice, manufacture, use and sale of the inventions claimed, disclosed or
covered by the Patents; and (c) the Agent shall have, in addition to all other
rights and remedies given it by this Patent Agreement, the Credit Agreement, the
Security Agreement, and the other Loan Documents, those allowed by law and the
rights and remedies of a secured party under the Uniform Commercial Code as
enacted in the Commonwealth of Massachusetts and, without limiting the
generality of the foregoing, the Agent may immediately, without demand of
performance and without other notice (except as set forth next below) or demand
whatsoever to the Assignor, all of which are hereby expressly waived, and
without advertisement, sell or license at public or private sale or otherwise
realize upon the whole or from time to time any part of the Patent Collateral,
or any interest which the Assignor may have therein, and after deducting from
the proceeds of sale or other disposition of the Patent Collateral all expenses
(including all reasonable expenses for broker's fees and legal services), shall
apply the residue of such proceeds toward the payment of the Obligations as set
forth in the Security Agreement. Notice of any sale, license or other
disposition of any of the Patent Collateral shall be given to the Assignor at
least fifteen (15) days before the time that any intended public sale or other
disposition of such Patent Collateral is to be made or after which any private
sale or other disposition of such Patent Collateral may be made, which the
Assignor hereby agrees shall be reasonable notice of such public or private sale
or other disposition. At any such sale or other disposition, the Agent may, to
the extent permitted under applicable law, purchase or license the whole or any
part of the Patent Collateral or interests therein sold, licensed or otherwise
disposed of.
(S)9. COLLATERAL PROTECTION. If the Assignor shall fail to do any act
---------------------
that it has covenanted to do hereunder, or if any representation or warranty of
the Assignor shall be breached, the Agent, in its own name or that of the
Assignor (in the sole discretion of the Agent), may (but shall not be obligated
to) do such act or remedy such breach (or cause such act to be done or such
breach to be remedied), and the Assignor agrees promptly to reimburse the Agent
for any cost or expense incurred by the Agent in so doing.
<PAGE>
-7-
(S)10. POWER OF ATTORNEY. If any Event of Default shall have occurred and
-----------------
be continuing, the Assignor does hereby make, constitute and appoint the Agent
(and any officer or agent of the Agent as the Agent may select in its exclusive
discretion) as the Assignor's true and lawful attorney-in-fact, with the power
to endorse the Assignor's name on all applications, documents, papers and
instruments necessary for the Agent to use any of the Patent Collateral, to
practice, make, use or sell the inventions disclosed or claimed in any of the
Patent Collateral, to grant or issue any exclusive or nonexclusive license of
any of the Patent Collateral to any third person, or necessary for the Agent to
assign, pledge, convey or otherwise transfer title in or dispose of the Patent
Collateral or any part thereof or interest therein to any third person, and, in
general, to execute and deliver any instruments or documents and do all other
acts which the Assignor is obligated to execute and do hereunder. The Assignor
hereby ratifies all that such attorney shall lawfully do or cause to be done by
virtue hereof, and releases the Agent from any claims, liabilities, causes of
action or demands arising out of or in connection with any action taken or
omitted to be taken by the Agent under this power of attorney (except for the
Agent's gross negligence or willful misconduct). This power of attorney shall be
irrevocable for the duration of this Patent Agreement.
(S)11. FURTHER ASSURANCES. The Assignor shall, at any time and from time
------------------
to time, and at its expense, make, execute, acknowledge and deliver, and file
and record as necessary or appropriate with governmental or regulatory
authorities, agencies or offices, such agreements, assignments, documents and
instruments, and do such other and further acts and things (including, without
limitation, obtaining consents of third parties), as the Agent may request or as
may be necessary or appropriate in order to implement and effect fully the
intentions, purposes and provisions of this Patent Agreement, or to assure and
confirm to the Agent the grant, perfection and priority of the Agent's security
interest in any of the Patent Collateral.
(S)12. TERMINATION. At such time as all of the Obligations have been
-----------
finally paid and satisfied in full, this Patent Agreement shall terminate and
the Agent shall, upon the written request and at the expense of the Assignor,
execute and deliver to the Assignor all deeds, assignments and other instruments
as may be necessary or proper to reassign and reconvey to and re-vest in the
Assignor the entire right, title and interest to the Patent Collateral
previously granted, assigned, transferred and conveyed to the Agent and the
Banks by the Assignor pursuant to this Patent Agreement, as fully as if this
Patent Agreement had not been made, subject to any disposition of all or any
part thereof which may have been made by the Agent and the Banks pursuant hereto
or the Security Agreement.
(S)13. COURSE OF DEALING. No course of dealing among the Assignor, the
-----------------
Banks and the Agent, nor any failure to exercise, nor any delay in exercising,
on the part of the Agent or any of the Banks, any right, power or privilege
hereunder or under the Security Agreement shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
or thereunder preclude any other or further exercise thereof or the exercise of
any other right, power or privilege.
(S)14. EXPENSES. Any and all fees, costs and expenses, of whatever kind or
--------
nature, including the reasonable attorneys' fees and legal expenses incurred by
the
<PAGE>
-8-
Agent in connection with the preparation of this Patent Agreement and all other
documents relating hereto, the consummation of the transactions contemplated
hereby or the enforcement hereof, the filing or recording of any documents
(including all taxes in connection therewith) in public offices, the payment or
discharge of any taxes, counsel fees, maintenance fees, encumbrances or
otherwise protecting, maintaining or preserving any of the Patent Collateral, or
in defending or prosecuting any actions or proceedings arising out of or related
to any of the Patent Collateral, shall be borne and paid by the Assignor.
(S)15. OVERDUE AMOUNTS. Until paid, all amounts due and payable by the
---------------
Assignor hereunder shall be a debt secured by the Patent Collateral and other
Collateral and shall bear, whether before or after judgment, interest at the
rate of interest for overdue principal set forth in the Credit Agreement.
(S)16. NO ASSUMPTION OF LIABILITY; INDEMNIFICATION. NOTWITHSTANDING
-------------------------------------------
ANYTHING TO THE CONTRARY CONTAINED HEREIN, NEITHER THE AGENT NOR ANY BANK
ASSUMES ANY LIABILITIES OF THE ASSIGNOR WITH RESPECT TO ANY CLAIM OR CLAIMS
REGARDING THE ASSIGNOR'S OWNERSHIP OR PURPORTED OWNERSHIP OF, OR RIGHTS OR
PURPORTED RIGHTS ARISING FROM, ANY OF THE PATENT COLLATERAL OR ANY PRACTICE,
USE, LICENSE OR SUBLICENSE THEREOF, OR ANY PRACTICE, MANUFACTURE, USE OR SALE OF
ANY OF THE INVENTIONS DISCLOSED OR CLAIMED THEREIN, WHETHER ARISING OUT OF ANY
PAST, CURRENT OR FUTURE EVENT, CIRCUMSTANCE, ACT OR OMISSION OR OTHERWISE. ALL
OF SUCH LIABILITIES SHALL BE EXCLUSIVELY BORNE BY THE ASSIGNOR, AND THE ASSIGNOR
SHALL INDEMNIFY THE AGENT AND THE BANKS FOR ANY AND ALL COSTS, EXPENSES, DAMAGES
AND CLAIMS, INCLUDING LEGAL FEES, INCURRED BY THE AGENT OR ANY BANK WITH RESPECT
TO SUCH LIABILITIES.
(S)17. RIGHTS AND REMEDIES CUMULATIVE. All of the Agent's and the Banks'
------------------------------
rights and remedies with respect to the Patent Collateral, whether established
hereby or by the Security Agreement or by any other agreements or by law, shall
be cumulative and may be exercised singularly or concurrently. This Patent
Agreement is supplemental to the Security Agreement, and nothing contained
herein shall in any way derogate from any of the rights or remedies of the Agent
and the Banks contained therein. Nothing contained in this Patent Agreement
shall be deemed to extend the time of attachment or perfection of or otherwise
impair the security interest in any of the Patent Collateral granted to the
Agent for the benefit of the Banks and the Agent under the Security Agreement.
(S)18. NOTICES. All notices and other communications made or required to
-------
be given pursuant to this Patent Agreement shall be in writing and shall be
delivered in hand, mailed by United States registered or certified first-class
mail, postage prepaid, or sent by telegraph, telecopy or telex and confirmed by
delivery via courier or postal service, addressed as follows: if to the
Assignor, at the address set forth beneath its signature hereto, and if to the
Agent, at the address for notices to the Agent set forth in (S)20 of the Credit
Agreement, or at such address as either party may designate in
<PAGE>
-9-
writing to the other. Any such notice or demand shall be deemed to have been
duly given or made and to have become effective (a) if delivered by hand to a
responsible officer of the party to which it is directed, at the time of the
receipt thereof by such officer, (b) if sent by registered or certified first-
class mail, postage prepaid, two (2) Business Days after the posting thereof,
and (c) if sent by telegraph, telecopy, or telex, at the time of the dispatch
thereof, if in normal business hours in the country of receipt, or otherwise at
the opening of business on the following Business Day.
(S)19. AMENDMENT AND WAIVER. This Patent Agreement is subject to
--------------------
modification only by a writing signed by the Agent (with the consent of the
Banks or Majority Banks as provided in the Credit Agreement) and the Assignor,
except as provided in (S)5.2 hereof. The Agent shall not be deemed to have
waived any right hereunder unless such waiver shall be in writing and signed by
the Agent and the Banks or Majority Banks as provided in the Credit Agreement. A
waiver on any one occasion shall not be construed as a bar to or waiver of any
right on any future occasion.
(S)20. GOVERNING LAW; CONSENT TO JURISDICTION. THIS PATENT AGREEMENT IS
--------------------------------------
INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. The
Assignor agrees that any suit for the enforcement of this Patent Agreement may
be brought in the courts of The Commonwealth of Massachusetts or any federal
court sitting therein and consents to the non-exclusive jurisdiction of such
court and to service of process in any such suit being made upon the Assignor by
mail at the address specified in (S)18 hereof. The Assignor hereby waives any
objection that it may now or hereafter have to the venue of any such suit or any
such court or that such suit is brought in an inconvenient court.
(S)21. WAIVER OF JURY TRIAL. THE ASSIGNOR WAIVES ITS RIGHT TO A JURY TRIAL
--------------------
WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION
WITH THIS PATENT AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE
PERFORMANCE OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, the
Assignor waives any right which it may have to claim or recover in any
litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. The Assignor (a) certifies that neither the Agent or any Bank
nor any representative, agent or attorney of the Agent or any Bank has
represented, expressly or otherwise, that the Agent or any Bank would not, in
the event of litigation, seek to enforce the foregoing waivers, and (b)
acknowledges that, in entering into the Credit Agreement and the other Loan
Documents to which the Agent or any Bank is a party, the Agent and the Banks are
relying upon, among other things, the waivers and certifications contained in
this (S)21.
(S)22. MISCELLANEOUS. The headings of each section of this Patent
-------------
Agreement are for convenience only and shall not define or limit the provisions
thereof. This Patent Agreement and all rights and obligations hereunder shall be
binding upon the Assignor and its respective successors and assigns, and shall
inure to the benefit of the Agent, the Banks and their respective successors and
assigns. In the event of any
<PAGE>
-10-
irreconcilable conflict between the provisions of this Patent Agreement and the
Credit Agreement, or between this Patent Agreement and the Security Agreement,
the provisions of the Credit Agreement or the Security Agreement, as the case
may be, shall control. If any term of this Patent Agreement shall be held to be
invalid, illegal or unenforceable, the validity of all other terms hereof shall
in no way be affected thereby, and this Patent Agreement shall be construed and
be enforceable as if such invalid, illegal or unenforceable term had not been
included herein. The Assignor acknowledges receipt of a copy of this Patent
Agreement.
<PAGE>
IN WITNESS WHEREOF, this Patent Collateral Assignment and Security
Agreement has been executed as of the day and year first above written.
FLEX-O-LITE, INC.
By:/s/ Christopher T. Paule
------------------------------------
Title: Vice President & CFO
Address: ________________________
________________________
BANKBOSTON, N.A., as Agent
By:/s/ Peter van der Horst
-----------------------------------
Peter van der Horst, Vice President
<PAGE>
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 22nd day of April, 1998, personally appeared Christopher T.
Paule to me known personally, and who, being by me duly sworn, deposes and says
that he is the Vice President & CFO of Flex-O-Lite, Inc., and that said
instrument was signed and sealed on behalf of said corporation by authority of
its Board of Directors, and said Vice President & CFO acknowledged said
instrument to be the free act and deed of said corporation.
/s/ Dawn M. Schoenig
-------------------------------
Notary Public
My commission expires: [August 3, 1999]
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 21 day of April, 1998, personally appeared Peter van der
Horst to me known personally, and who, being by me duly sworn, deposes and says
that (s)he is a Vice President of BankBoston, N.A. (the "Agent"), and that
said instrument was signed and sealed on behalf of said Agent by authority of
its Board of Directors, and said Vice President acknowledged said instrument
to be the free act and deed of said Agent.
/s/ D.L. Figueroa-Thomas
------------------------------------
Notary Public
My commission expires: [February 21, 1999]
<PAGE>
SCHEDULE A
----------
ISSUED AND PENDING PATENTS
--------------------------
PATENTS ISSUED BY U.S. PATENT
-----------------------------
AND TRADEMARK OFFICE
--------------------
Patent No. Issue Date Inventor(s) Title
- ---------- ---------- ----------- -----
PATENTS PENDING WITH U.S. PATENT
--------------------------------
AND TRADEMARK OFFICE
--------------------
<PAGE>
EXHIBIT 10.14
BINGHAM DRAFT
04/20/98
--------
PATENT COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT
---------------------------------------------------
PATENT COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT, dated as of April 22,
1998, between OSD ENVIZION, INC., a Delaware corporation having its principal
place of business at 2997 Clarkson Road, Chesterfield, Missouri 63017 (the
"Assignor"), and BANKBOSTON, N.A., as agent (hereinafter, in such capacity, the
"Agent"), for itself and other lending institutions (hereinafter, collectively,
the "Banks") which are, or may in the future become, parties to that certain
Revolving Credit and Acquisition Loan Agreement, dated as of april 22, 1998 (as
amended and in effect from time to time, the "Credit Agreement"), among the
Assignor, the Banks, the Agent and Mercantile Bank National Association, as Co-
agent.
WHEREAS, it is a condition precedent to the Banks' making any loans or
otherwise extending credit to the Assignor under the Credit Agreement that the
Assignor execute and deliver to the Agent, for the benefit of the Banks and the
Agent, a patent agreement in substantially the form hereof;
WHEREAS, the Assignor has executed and delivered to the Agent, for the
benefit of the Banks and the Agent, a Security Agreement, dated as of April 22,
1998 (the "Security Agreement"), pursuant to which the Assignor has granted to
the Agent, for the benefit of the Banks and the Agent, a security interest in
all of the Assignor's personal property and fixture assets, including without
limitation the patents and patent applications listed on Schedule A attached
-------- -
hereto, all to secure the payment and performance of the Obligations (as defined
in the Credit Agreement); and
WHEREAS, this Patent Agreement is supplemental to the provisions contained
in the Security Agreement;
NOW, therefore, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
(S)1. DEFINITIONS. Capitalized terms used herein and not otherwise defined
-----------
herein shall have the respective meanings provided therefor in the Credit
Agreement and the Security Agreement. In addition, the following terms shall
have the meanings set forth in this (S)1 or elsewhere in this Patent Agreement
referred to below:
Patent Agreement. This Patent Collateral Assignment and Security
----------------
Agreement, as amended and in effect from time to time.
Patent Collateral. All of the Assignor's right, title and interest in and
-----------------
to all of the Patents, the Patent License Rights, and all other Patent Rights,
and all additions, improvements, and accessions to, all substitutions for and
replacements of, and all
<PAGE>
-2-
products and Proceeds (including insurance proceeds) of any and all of the
foregoing, and all books and records and technical information and data
describing or used in connection with any and all such rights, interests, assets
or property.
Patent License Rights. Any and all past, present or future rights and
---------------------
interests of the Assignor pursuant to any and all past, present and future
licensing agreements in favor of the Assignor, or to which the Assignor is a
party, pertaining to any Patents, or Patent Rights, owned or used by third
parties in the past, present or future, including the right in the name of the
Assignor or the Agent to enforce, and sue and recover for, any past, present or
future breach or violation of any such agreement.
Patent Rights. Any and all past, present or future rights in, to and
-------------
associated with the Patents throughout the world, whether arising under federal
law, state law, common law, foreign law, or otherwise, including, but not
limited to, the following: all such rights arising out of or associated with
the Patents; the right (but not the obligation) to register claims under any
federal, state or foreign patent law or regulation; the right (but not the
obligation) to sue or bring opposition or bring cancellation proceedings in the
name of the Assignor or the Agent for any and all past, present and future
infringements of or any other damages or injury to the Patents or the Patent
Rights, and the rights to damages or profits due or accrued arising out of or in
connection with any such past, present or future infringement, damage or injury;
and the Patent License Rights.
Patents. All patents and patent applications, whether United States or
-------
foreign, that are owned by the Assignor or in which the Assignor has any right,
title or interest, now or in the future, including but not limited to:
(a) the patents and patent applications listed on Schedule A attached
----------
hereto (as the same may be amended pursuant hereto from time to time);
(b) all letters patent of the United States or any other country, and
all applications for letters patent of the United States or any other
country;
(c) all re-issues, continuations, divisions, continuations-in-part,
renewals or extensions thereof;
(d) the inventions disclosed or claimed therein, including the right
to make, use, practice and/or sell (or license or otherwise transfer or
dispose of) the inventions disclosed or claimed therein; and
(e) the right (but not the obligation) to make and prosecute
applications for such Patents.
Proceeds. Any consideration received from the sale, exchange, license,
--------
lease or other disposition or transfer of any right, interest, asset or property
which constitutes all or any part of the Patent Collateral, any value received
as a consequence of the ownership, possession, use or practice of any Patent
Collateral, and any payment received from any insurer or other person or entity
as a result of the destruction or the
<PAGE>
-3-
loss, theft or other involuntary conversion of whatever nature of any right,
interest, asset or property which constitutes all or any part of the Patent
Collateral.
PTO. The United States Patent and Trademark Office.
---
(S)2. GRANT OF SECURITY INTEREST. To secure the payment and performance in
--------------------------
full of all of the Obligations, the Assignor hereby grants, assigns, transfers
and conveys to the Agent, for the benefit of the Banks and the Agent, BY WAY OF
COLLATERAL SECURITY, all of the Patent Collateral. NEITHER THE AGENT NOR ANY OF
THE BANKS ASSUMES ANY LIABILITY ARISING IN ANY WAY BY REASON OF ITS HOLDING SUCH
COLLATERAL SECURITY.
(S)3. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Assignor represents,
-----------------------------------------
warrants and covenants that:
(a) to the best of the Assignor's knowledge, Schedule A attached
----------
hereto sets forth a true and complete list of all the patents, rights to
patents and patent applications now owned, licensed, controlled or used by
the Assignor;
(b) to the best of the Assignor's knowledge, the issued Patents are
subsisting and have not been adjudged invalid or unenforceable, in whole or
in part, and there is no litigation or proceeding pending concerning the
validity or enforceability of the issued Patents;
(c) to the best of the Assignor's knowledge, each of the issued
Patents is valid and enforceable;
(d) to the best of the Assignor's knowledge, there is no infringement
by others of the issued Patents or Patent Rights;
(e) to the best of the Assignor's knowledge, no claim has been made
that the use of any of the Patents does or may violate the rights of any
third person, and there is no infringement by the Assignor of the patent
rights of others;
(f) the Assignor is the sole and exclusive owner of the entire and
unencumbered right, title and interest in and to each of the Patents (other
than ownership and other rights reserved by third party owners with respect
to Patents which the Assignor is licensed to practice or use), free and
clear of any liens, charges, encumbrances and adverse claims, including
without limitation pledges, assignments, licenses, shop rights and
covenants by the Assignor not to sue third persons, other than the security
agreement and mortgage created by the Security Agreement and this Patent
Agreement;
(g) the Assignor has the unqualified right to enter into this Patent
Agreement and perform its terms and will comply with the covenants herein
contained;
(h) this Patent Agreement, together with the Security Agreement, will
create in favor of the Agent, for the benefit of the Banks, a valid and
perfected
<PAGE>
-4-
first priority security interest in the Patent Collateral upon making the
filings referred to in clause (i) of this (S)3; and
(i) except for the filing of financing statements under the Uniform
Commercial Code and the filing of this Patent Agreement with the PTO, no
authorization, approval or other action by, and no notice to or filing
with, any governmental or regulatory authority, agency or office is
required either (i) for the grant by the Assignor or the effectiveness of
the security interest and assignment granted hereby or for the execution,
delivery and performance of this Patent Agreement by the Assignor, or (ii)
for the perfection of or the exercise by the Agent of any of its rights and
remedies hereunder.
(S)4. NO TRANSFER OR INCONSISTENT AGREEMENTS. Without the Agent's prior
--------------------------------------
written consent, the Assignor will not (a) mortgage, pledge, assign, encumber,
grant a security interest in, transfer, license or alienate any of the Patent
Collateral, or (b) enter into any agreement (for example, a license agreement)
that is inconsistent with the Assignor's obligations under this Patent Agreement
or the Security Agreement.
(S)5. AFTER-ACQUIRED PATENTS, ETC.
---------------------------
(S)5.1. AFTER-ACQUIRED PATENTS. If, before the Obligations shall have been
----------------------
finally paid and satisfied in full, the Assignor shall obtain any right, title
or interest in or to any other or new patents, patent applications or patentable
inventions, or become entitled to the benefit of any patent application or
patent or any reissue, division, continuation, renewal, extension, or
continuation-in-part of any of the Patent Collateral or any improvement on any
of the Patent Collateral, the provisions of this Patent Agreement shall
automatically apply thereto and the Assignor shall promptly give to the Agent
notice thereof in writing and execute and deliver to the Agent such documents or
instruments as the Agent may reasonably request further to transfer title
thereto to the Agent, for the benefit of the Banks and the Agent.
(S)5.2. AMENDMENT TO SCHEDULE. The Assignor authorizes the Agent to modify
---------------------
this Patent Agreement, without the necessity of the Assignor's further approval
or signature, by amending Schedule A attached hereto to include any future or
other Patents or Patent Rights under (S)(S)2 or 5 hereof.
(S)6. PATENT PROSECUTION.
------------------
(S)6.1. ASSIGNOR RESPONSIBLE. The Assignor shall assume full and complete
--------------------
responsibility for the prosecution, grant, enforcement or any other necessary or
desirable actions in connection with the Patent Collateral, and shall hold the
Agent and the Banks harmless from any and all costs, damages, liabilities and
expenses which may be incurred by the Agent or any of the Banks in connection
with the Agent's title to any of the Patent Collateral or any other action or
failure to act in connection with this Patent Agreement or the transactions
contemplated hereby. In respect of such responsibility, the Assignor shall
retain patent counsel reasonably acceptable to the Agent.
<PAGE>
-5-
(S)6.2. ASSIGNOR'S DUTIES, ETC. The Assignor shall have the duty, through
----------------------
patent counsel reasonably acceptable to the Agent, to prosecute diligently any
patent applications of the Patents pending as of the date of this Patent
Agreement or thereafter, to make application for unpatented but reasonably
patentable inventions and to preserve and maintain all rights in the Patents,
including without limitation the payment when due of all maintenance fees and
other fees, taxes and other expenses which shall be incurred or which shall
accrue with respect to any of the Patents. Any expenses incurred in connection
with such applications and actions shall be borne by the Assignor. The Assignor
shall not abandon any filed patent application, or any pending patent
application or patent, without the consent of the Agent, which consent shall not
be unreasonably withheld. The Agent hereby appoints the Assignor as its agent
for all matters referred to in the foregoing provisions of this (S)6 and agrees
to execute any documents necessary to confirm such appointment. Upon the
occurrence and during the continuance of an Event of Default, the Agent may
terminate such agency by providing written notice of termination to the
Assignor.
(S)6.3. ASSIGNOR'S ENFORCEMENT RIGHTS. The Assignor shall have the right,
-----------------------------
with the consent of the Agent which shall not be unreasonably withheld, to bring
suit or other action in the Assignor's own name to enforce the Patents and the
Patent Rights. The Agent shall be required to join in such suit or action as may
be necessary to assure the Assignor's ability to bring and maintain any such
suit or action in any proper forum so long as the Agent is completely satisfied
that such joinder will not subject the Agent or any of the Banks to any risk of
liability. The Assignor shall promptly, upon demand, reimburse and indemnify the
Agent and the Banks for all damages, costs and expenses, including legal fees,
incurred by the Agent and any of the Banks pursuant to this (S)6.
(S)6.4. PROTECTION OF PATENTS, ETC. In general, the Assignor shall take
--------------------------
any and all such actions (including but not limited to institution and
maintenance of suits, proceedings or actions) as may be necessary or appropriate
to properly maintain, protect, preserve, care for and enforce the Patent
Collateral. The Assignor shall not take or fail to take any action, nor permit
any action to be taken or not taken by others under its control, which would
affect the validity, grant or enforcement of any of the Patent Collateral.
(S)6.5. NOTIFICATION BY ASSIGNOR. Promptly upon obtaining knowledge
------------------------
thereof, the Assignor will notify the Agent in writing of the institution of, or
any final adverse determination in, any proceeding in the PTO or any similar
office or agency of the United States or any foreign country, or any court,
regarding the validity of any of the Patents or the Assignor's rights, title or
interests in and to any of the Patent Collateral, and of any event which does or
reasonably could materially adversely affect the value of any of the Patent
Collateral, the ability of the Assignor or the Agent to dispose of any of the
Patent Collateral or the rights and remedies of the Agent and the Banks in
relation thereto (including but not limited to the levy of any legal process
against any of the Patent Collateral).
(S)7. LICENSE BACK TO ASSIGNOR. Unless and until there shall have occurred
------------------------
and be continuing an Event of Default and the Agent has notified the Assignor
that the license granted hereunder is terminated, the Agent hereby grants to
<PAGE>
-6-
the Assignor the sole and exclusive, nontransferable, royalty-free, worldwide
right and license under the Patents to make, have made for it, use, sell and
otherwise practice the inventions disclosed and claimed in the Patents for the
Assignor's own benefit and account and for none other; provided, however, that
the foregoing right and license shall be no greater in scope than, and limited
by, the rights assigned to the Agent, for the benefit of the Banks and the
Agent, by the Assignor hereby. The Assignor agrees not to sell, assign,
transfer, encumber or sublicense its interest in the license granted to the
Assignor in this (S)7 without the prior written consent of the Agent. Any such
sublicenses granted on or after the date hereof shall be terminable by the Agent
upon termination of the Assignor's license hereunder.
(S)8. REMEDIES. If any Event of Default shall have occurred and be
--------
continuing, then at the discretion of the Agent, or upon instructions by the
Majority Banks to the Agent, and upon notice by the Agent to the Assignor: (a)
the Assignor's license with respect to the Patents as set forth in (S)7 hereof
shall terminate; (b) the Assignor shall immediately cease and desist from the
practice, manufacture, use and sale of the inventions claimed, disclosed or
covered by the Patents; and (c) the Agent shall have, in addition to all other
rights and remedies given it by this Patent Agreement, the Credit Agreement, the
Security Agreement, and the other Loan Documents, those allowed by law and the
rights and remedies of a secured party under the Uniform Commercial Code as
enacted in the Commonwealth of Massachusetts and, without limiting the
generality of the foregoing, the Agent may immediately, without demand of
performance and without other notice (except as set forth next below) or demand
whatsoever to the Assignor, all of which are hereby expressly waived, and
without advertisement, sell or license at public or private sale or otherwise
realize upon the whole or from time to time any part of the Patent Collateral,
or any interest which the Assignor may have therein, and after deducting from
the proceeds of sale or other disposition of the Patent Collateral all expenses
(including all reasonable expenses for broker's fees and legal services), shall
apply the residue of such proceeds toward the payment of the Obligations as set
forth in the Security Agreement. Notice of any sale, license or other
disposition of any of the Patent Collateral shall be given to the Assignor at
least fifteen (15) days before the time that any intended public sale or other
disposition of such Patent Collateral is to be made or after which any private
sale or other disposition of such Patent Collateral may be made, which the
Assignor hereby agrees shall be reasonable notice of such public or private sale
or other disposition. At any such sale or other disposition, the Agent may, to
the extent permitted under applicable law, purchase or license the whole or any
part of the Patent Collateral or interests therein sold, licensed or otherwise
disposed of.
(S)9. COLLATERAL PROTECTION. If the Assignor shall fail to do any act that
---------------------
it has covenanted to do hereunder, or if any representation or warranty of the
Assignor shall be breached, the Agent, in its own name or that of the Assignor
(in the sole discretion of the Agent), may (but shall not be obligated to) do
such act or remedy such breach (or cause such act to be done or such breach to
be remedied), and the Assignor agrees promptly to reimburse the Agent for any
cost or expense incurred by the Agent in so doing.
<PAGE>
-7-
(S)10. POWER OF ATTORNEY. If any Event of Default shall have occurred and
-----------------
be continuing, the Assignor does hereby make, constitute and appoint the Agent
(and any officer or agent of the Agent as the Agent may select in its exclusive
discretion) as the Assignor's true and lawful attorney-in-fact, with the power
to endorse the Assignor's name on all applications, documents, papers and
instruments necessary for the Agent to use any of the Patent Collateral, to
practice, make, use or sell the inventions disclosed or claimed in any of the
Patent Collateral, to grant or issue any exclusive or nonexclusive license of
any of the Patent Collateral to any third person, or necessary for the Agent to
assign, pledge, convey or otherwise transfer title in or dispose of the Patent
Collateral or any part thereof or interest therein to any third person, and, in
general, to execute and deliver any instruments or documents and do all other
acts which the Assignor is obligated to execute and do hereunder. The Assignor
hereby ratifies all that such attorney shall lawfully do or cause to be done by
virtue hereof, and releases the Agent from any claims, liabilities, causes of
action or demands arising out of or in connection with any action taken or
omitted to be taken by the Agent under this power of attorney (except for the
Agent's gross negligence or willful misconduct). This power of attorney shall be
irrevocable for the duration of this Patent Agreement.
(S)11. FURTHER ASSURANCES. The Assignor shall, at any time and from time
------------------
to time, and at its expense, make, execute, acknowledge and deliver, and file
and record as necessary or appropriate with governmental or regulatory
authorities, agencies or offices, such agreements, assignments, documents and
instruments, and do such other and further acts and things (including, without
limitation, obtaining consents of third parties), as the Agent may request or as
may be necessary or appropriate in order to implement and effect fully the
intentions, purposes and provisions of this Patent Agreement, or to assure and
confirm to the Agent the grant, perfection and priority of the Agent's security
interest in any of the Patent Collateral.
(S)12. TERMINATION. At such time as all of the Obligations have been
-----------
finally paid and satisfied in full, this Patent Agreement shall terminate and
the Agent shall, upon the written request and at the expense of the Assignor,
execute and deliver to the Assignor all deeds, assignments and other instruments
as may be necessary or proper to reassign and reconvey to and re-vest in the
Assignor the entire right, title and interest to the Patent Collateral
previously granted, assigned, transferred and conveyed to the Agent and the
Banks by the Assignor pursuant to this Patent Agreement, as fully as if this
Patent Agreement had not been made, subject to any disposition of all or any
part thereof which may have been made by the Agent and the Banks pursuant hereto
or the Security Agreement.
(S)13. COURSE OF DEALING. No course of dealing among the Assignor, the
-----------------
Banks and the Agent, nor any failure to exercise, nor any delay in exercising,
on the part of the Agent or any of the Banks, any right, power or privilege
hereunder or under the Security Agreement shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
or thereunder preclude any other or further exercise thereof or the exercise of
any other right, power or privilege.
(S)14. EXPENSES. Any and all fees, costs and expenses, of whatever kind or
--------
nature, including the reasonable attorneys' fees and legal expenses incurred by
the
<PAGE>
-8-
Agent in connection with the preparation of this Patent Agreement and all
other documents relating hereto, the consummation of the transactions
contemplated hereby or the enforcement hereof, the filing or recording of any
documents (including all taxes in connection therewith) in public offices, the
payment or discharge of any taxes, counsel fees, maintenance fees, encumbrances
or otherwise protecting, maintaining or preserving any of the Patent Collateral,
or in defending or prosecuting any actions or proceedings arising out of or
related to any of the Patent Collateral, shall be borne and paid by the
Assignor.
(S)15. OVERDUE AMOUNTS. Until paid, all amounts due and payable by the
---------------
Assignor hereunder shall be a debt secured by the Patent Collateral and other
Collateral and shall bear, whether before or after judgment, interest at the
rate of interest for overdue principal set forth in the Credit Agreement.
(S)16. NO ASSUMPTION OF LIABILITY; INDEMNIFICATION. NOTWITHSTANDING
-------------------------------------------
ANYTHING TO THE CONTRARY CONTAINED HEREIN, NEITHER THE AGENT NOR ANY BANK
ASSUMES ANY LIABILITIES OF THE ASSIGNOR WITH RESPECT TO ANY CLAIM OR CLAIMS
REGARDING THE ASSIGNOR'S OWNERSHIP OR PURPORTED OWNERSHIP OF, OR RIGHTS OR
PURPORTED RIGHTS ARISING FROM, ANY OF THE PATENT COLLATERAL OR ANY PRACTICE,
USE, LICENSE OR SUBLICENSE THEREOF, OR ANY PRACTICE, MANUFACTURE, USE OR SALE OF
ANY OF THE INVENTIONS DISCLOSED OR CLAIMED THEREIN, WHETHER ARISING OUT OF ANY
PAST, CURRENT OR FUTURE EVENT, CIRCUMSTANCE, ACT OR OMISSION OR OTHERWISE. ALL
OF SUCH LIABILITIES SHALL BE EXCLUSIVELY BORNE BY THE ASSIGNOR, AND THE ASSIGNOR
SHALL INDEMNIFY THE AGENT AND THE BANKS FOR ANY AND ALL COSTS, EXPENSES, DAMAGES
AND CLAIMS, INCLUDING LEGAL FEES, INCURRED BY THE AGENT OR ANY BANK WITH RESPECT
TO SUCH LIABILITIES.
(S)17. RIGHTS AND REMEDIES CUMULATIVE. All of the Agent's and the Banks'
------------------------------
rights and remedies with respect to the Patent Collateral, whether established
hereby or by the Security Agreement or by any other agreements or by law, shall
be cumulative and may be exercised singularly or concurrently. This Patent
Agreement is supplemental to the Security Agreement, and nothing contained
herein shall in any way derogate from any of the rights or remedies of the Agent
and the Banks contained therein. Nothing contained in this Patent Agreement
shall be deemed to extend the time of attachment or perfection of or otherwise
impair the security interest in any of the Patent Collateral granted to the
Agent for the benefit of the Banks and the Agent under the Security Agreement.
(S)18. NOTICES. All notices and other communications made or required to
-------
be given pursuant to this Patent Agreement shall be in writing and shall be
delivered in hand, mailed by United States registered or certified first-class
mail, postage prepaid, or sent by telegraph, telecopy or telex and confirmed by
delivery via courier or postal service, addressed as follows: if to the
Assignor, at the address set forth beneath its signature hereto, and if to the
Agent, at the address for notices to the Agent set forth in (S)20 of the Credit
Agreement, or at such address as either party may designate in
<PAGE>
-9-
writing to the other. Any such notice or demand shall be deemed to have been
duly given or made and to have become effective (a) if delivered by hand to a
responsible officer of the party to which it is directed, at the time of the
receipt thereof by such officer, (b) if sent by registered or certified first-
class mail, postage prepaid, two (2) Business Days after the posting thereof,
and (c) if sent by telegraph, telecopy, or telex, at the time of the dispatch
thereof, if in normal business hours in the country of receipt, or otherwise at
the opening of business on the following Business Day.
(S)19. AMENDMENT AND WAIVER. This Patent Agreement is subject to
--------------------
modification only by a writing signed by the Agent (with the consent of the
Banks or Majority Banks as provided in the Credit Agreement) and the Assignor,
except as provided in (S)5.2 hereof. The Agent shall not be deemed to have
waived any right hereunder unless such waiver shall be in writing and signed by
the Agent and the Banks or Majority Banks as provided in the Credit Agreement. A
waiver on any one occasion shall not be construed as a bar to or waiver of any
right on any future occasion.
(S)20. GOVERNING LAW; CONSENT TO JURISDICTION. THIS PATENT AGREEMENT IS
--------------------------------------
INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. The
Assignor agrees that any suit for the enforcement of this Patent Agreement may
be brought in the courts of The Commonwealth of Massachusetts or any federal
court sitting therein and consents to the non-exclusive jurisdiction of such
court and to service of process in any such suit being made upon the Assignor by
mail at the address specified in (S)18 hereof. The Assignor hereby waives any
objection that it may now or hereafter have to the venue of any such suit or any
such court or that such suit is brought in an inconvenient court.
(S)21. WAIVER OF JURY TRIAL. THE ASSIGNOR WAIVES ITS RIGHT TO A JURY TRIAL
--------------------
WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION
WITH THIS PATENT AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE
PERFORMANCE OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, the
Assignor waives any right which it may have to claim or recover in any
litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. The Assignor (a) certifies that neither the Agent or any Bank
nor any representative, agent or attorney of the Agent or any Bank has
represented, expressly or otherwise, that the Agent or any Bank would not, in
the event of litigation, seek to enforce the foregoing waivers, and (b)
acknowledges that, in entering into the Credit Agreement and the other Loan
Documents to which the Agent or any Bank is a party, the Agent and the Banks are
relying upon, among other things, the waivers and certifications contained in
this (S)21.
(S)22. MISCELLANEOUS. The headings of each section of this Patent
-------------
Agreement are for convenience only and shall not define or limit the provisions
thereof. This Patent Agreement and all rights and obligations hereunder shall be
binding upon the Assignor and its respective successors and assigns, and shall
inure to the benefit of the Agent, the Banks and their respective successors and
assigns. In the event of any
<PAGE>
-10-
irreconcilable conflict between the provisions of this Patent Agreement and the
Credit Agreement, or between this Patent Agreement and the Security Agreement,
the provisions of the Credit Agreement or the Security Agreement, as the case
may be, shall control. If any term of this Patent Agreement shall be held to be
invalid, illegal or unenforceable, the validity of all other terms hereof shall
in no way be affected thereby, and this Patent Agreement shall be construed and
be enforceable as if such invalid, illegal or unenforceable term had not been
included herein. The Assignor acknowledges receipt of a copy of this Patent
Agreement.
<PAGE>
IN WITNESS WHEREOF, this Patent Collateral Assignment and Security
Agreement has been executed as of the day and year first above written.
OSD ENVIZION, INC.
By: /s/ Christopher T. Paule
-------------------------------------
Title: Vice President & CFO
Address: __________________________
__________________________
BANKBOSTON, N.A., as Agent
By: /s/ Peter van der Horst
-------------------------------------
Peter van der Horst, Vice President
<PAGE>
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 22nd day of April, 1998, personally appeared Christopher T.
Paule to me known personally, and who, being by me duly sworn, deposes and says
that he is the Vice President & CFO of OSD Envizion, Inc., and that said
instrument was signed and sealed on behalf of said corporation by authority of
its Board of Directors, and said Vice President & CFO acknowledged said
instrument to be the free act and deed of said corporation.
/s/ Dawn M. Schoenig
------------------------------------------
Notary Public
My commission expires: August 3, 1999
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 21 day of April, 1998, personally appeared Peter van der
Horst to me known personally, and who, being by me duly sworn, deposes and says
that (s)he is a Vice President of BankBoston, N.A. (the "Agent"), and that said
instrument was signed and sealed on behalf of said Agent by authority of its
Board of Directors, and said Vice President acknowledged said instrument to be
the free act and deed of said Agent.
/s/ D.L. Figueroa-Thomas
------------------------------------------
Notary Public
My commission expires: February 21, 1999
<PAGE>
SCHEDULE A
----------
ISSUED AND PENDING PATENTS
--------------------------
PATENTS ISSUED BY U.S. PATENT
-----------------------------
AND TRADEMARK OFFICE
--------------------
Patent No. Issue Date Inventor(s) Title
- ---------- ---------- ----------- -----
PATENTS PENDING WITH U.S. PATENT
--------------------------------
AND TRADEMARK OFFICE
--------------------
<PAGE>
EXHIBIT 10.15
BINGHAM DRAFT
04/20/98
--------
PATENT COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT
---------------------------------------------------
PATENT COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT, dated as of April 22,
1998, between AMERICAN ALLSAFE COMPANY, a Texas corporation having its principal
place of business at 2997 Clarkson Road, Chesterfield, Missouri 63017 (the
"Assignor"), and BANKBOSTON, N.A., as agent (hereinafter, in such capacity, the
"Agent"), for itself and other lending institutions (hereinafter, collectively,
the "Banks") which are, or may in the future become, parties to that certain
Revolving Credit and Acquisition Loan Agreement, dated as of April 22, 1998 (as
amended and in effect from time to time, the "Credit Agreement"), among the
Assignor, the Banks, the Agent and Mercantile Bank National Association, as Co-
Agent.
WHEREAS, it is a condition precedent to the Banks' making any loans or
otherwise extending credit to the Assignor under the Credit Agreement that the
Assignor execute and deliver to the Agent, for the benefit of the Banks and the
Agent, a patent agreement in substantially the form hereof;
WHEREAS, the Assignor has executed and delivered to the Agent, for the
benefit of the Banks and the Agent, a Security Agreement, dated as of April 22,
1998 (the "Security Agreement"), pursuant to which the Assignor has granted to
the Agent, for the benefit of the Banks and the Agent, a security interest in
all of the Assignor's personal property and fixture assets, including without
limitation the patents and patent applications listed on Schedule A attached
-------- -
hereto, all to secure the payment and performance of the Obligations (as defined
in the Credit Agreement); and
WHEREAS, this Patent Agreement is supplemental to the provisions contained
in the Security Agreement;
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
(S)1. DEFINITIONS. Capitalized terms used herein and not otherwise defined
-----------
herein shall have the respective meanings provided therefor in the Credit
Agreement and the Security Agreement. In addition, the following terms shall
have the meanings set forth in this (S)1 or elsewhere in this Patent Agreement
referred to below:
Patent Agreement. This Patent Collateral Assignment and Security
----------------
Agreement, as amended and in effect from time to time.
Patent Collateral. All of the Assignor's right, title and interest in
-----------------
and to all of the Patents, the Patent License Rights, and all other Patent
Rights, and all additions, improvements, and accessions to, all substitutions
for and replacements of, and all
<PAGE>
-2-
products and Proceeds (including insurance proceeds) of any and all of the
foregoing, and all books and records and technical information and data
describing or used in connection with any and all such rights, interests, assets
or property.
Patent License Rights. Any and all past, present or future rights and
---------------------
interests of the Assignor pursuant to any and all past, present and future
licensing agreements in favor of the Assignor, or to which the Assignor is a
party, pertaining to any Patents, or Patent Rights, owned or used by third
parties in the past, present or future, including the right in the name of the
Assignor or the Agent to enforce, and sue and recover for, any past, present or
future breach or violation of any such agreement.
Patent Rights. Any and all past, present or future rights in, to and
-------------
associated with the Patents throughout the world, whether arising under federal
law, state law, common law, foreign law, or otherwise, including, but not
limited to, the following: all such rights arising out of or associated with the
Patents; the right (but not the obligation) to register claims under any
federal, state or foreign patent law or regulation; the right (but not the
obligation) to sue or bring opposition or bring cancellation proceedings in the
name of the Assignor or the Agent for any and all past, present and future
infringements of or any other damages or injury to the Patents or the Patent
Rights, and the rights to damages or profits due or accrued arising out of or in
connection with any such past, present or future infringement, damage or injury;
and the Patent License Rights.
Patents. All patents and patent applications, whether United States or
-------
foreign, that are owned by the Assignor or in which the Assignor has any right,
title or interest, now or in the future, including but not limited to:
(a) the patents and patent applications listed on Schedule A attached
-------- -
hereto (as the same may be amended pursuant hereto from time to time);
(b) all letters patent of the United States or any other country, and
all applications for letters patent of the United States or any other
country;
(c) all re-issues, continuations, divisions, continuations-in-part,
renewals or extensions thereof;
(d) the inventions disclosed or claimed therein, including the right
to make, use, practice and/or sell (or license or otherwise transfer or
dispose of) the inventions disclosed or claimed therein; and
(e) the right (but not the obligation) to make and prosecute
applications for such Patents.
Proceeds. Any consideration received from the sale, exchange, license,
--------
lease or other disposition or transfer of any right, interest, asset or property
which constitutes all or any part of the Patent Collateral, any value received
as a consequence of the ownership, possession, use or practice of any Patent
Collateral, and any payment received from any insurer or other person or entity
as a result of the destruction or the
<PAGE>
-3-
loss, theft or other involuntary conversion of whatever nature of any right,
interest, asset or property which constitutes all or any part of the Patent
Collateral.
PTO. The United States Patent and Trademark Office.
---
(S)2. GRANT OF SECURITY INTEREST. To secure the payment and performance in
--------------------------
full of all of the Obligations, the Assignor hereby grants, assigns, transfers
and conveys to the Agent, for the benefit of the Banks and the Agent, BY WAY OF
COLLATERAL SECURITY, all of the Patent Collateral. NEITHER THE AGENT NOR ANY OF
THE BANKS ASSUMES ANY LIABILITY ARISING IN ANY WAY BY REASON OF ITS HOLDING SUCH
COLLATERAL SECURITY.
(S)3. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Assignor represents,
-----------------------------------------
warrants and covenants that:
(a) to the best of the Assignor's knowledge, Schedule A attached
-------- -
hereto sets forth a true and complete list of all the patents, rights to
patents and patent applications now owned, licensed, controlled or used by
the Assignor;
(b) to the best of the Assignor's knowledge, the issued Patents are
subsisting and have not been adjudged invalid or unenforceable, in whole or
in part, and there is no litigation or proceeding pending concerning the
validity or enforceability of the issued Patents;
(c) to the best of the Assignor's knowledge, each of the issued
Patents is valid and enforceable;
(d) to the best of the Assignor's knowledge, there is no infringement
by others of the issued Patents or Patent Rights;
(e) to the best of the Assignor's knowledge, no claim has been made
that the use of any of the Patents does or may violate the rights of any
third person, and there is no infringement by the Assignor of the patent
rights of others;
(f) the Assignor is the sole and exclusive owner of the entire and
unencumbered right, title and interest in and to each of the Patents (other
than ownership and other rights reserved by third party owners with respect
to Patents which the Assignor is licensed to practice or use), free and
clear of any liens, charges, encumbrances and adverse claims, including
without limitation pledges, assignments, licenses, shop rights and
covenants by the Assignor not to sue third persons, other than the security
agreement and mortgage created by the Security Agreement and this Patent
Agreement;
(g) the Assignor has the unqualified right to enter into this Patent
Agreement and perform its terms and will comply with the covenants herein
contained;
(h) this Patent Agreement, together with the Security Agreement, will
create in favor of the Agent, for the benefit of the Banks, a valid and
perfected
<PAGE>
-4-
first priority security interest in the Patent Collateral upon making the
filings referred to in clause (i) of this (S)3; and
(i) except for the filing of financing statements under the Uniform
Commercial Code and the filing of this Patent Agreement with the PTO, no
authorization, approval or other action by, and no notice to or filing
with, any governmental or regulatory authority, agency or office is
required either (i) for the grant by the Assignor or the effectiveness of
the security interest and assignment granted hereby or for the execution,
delivery and performance of this Patent Agreement by the Assignor, or (ii)
for the perfection of or the exercise by the Agent of any of its rights and
remedies hereunder.
(S)4. NO TRANSFER OR INCONSISTENT AGREEMENTS. Without the Agent's prior
--------------------------------------
written consent, the Assignor will not (a) mortgage, pledge, assign, encumber,
grant a security interest in, transfer, license or alienate any of the Patent
Collateral, or (b) enter into any agreement (for example, a license agreement)
that is inconsistent with the Assignor's obligations under this Patent Agreement
or the Security Agreement.
(S)5. AFTER-ACQUIRED PATENTS, ETC.
---------------------------
(S)5.1. AFTER-ACQUIRED PATENTS. If, before the Obligations shall have been
----------------------
finally paid and satisfied in full, the Assignor shall obtain any right, title
or interest in or to any other or new patents, patent applications or patentable
inventions, or become entitled to the benefit of any patent application or
patent or any reissue, division, continuation, renewal, extension, or
continuation-in-part of any of the Patent Collateral or any improvement on any
of the Patent Collateral, the provisions of this Patent Agreement shall
automatically apply thereto and the Assignor shall promptly give to the Agent
notice thereof in writing and execute and deliver to the Agent such documents or
instruments as the Agent may reasonably request further to transfer title
thereto to the Agent, for the benefit of the Banks and the Agent.
(S)5.2. AMENDMENT TO SCHEDULE. The Assignor authorizes the Agent to modify
---------------------
this Patent Agreement, without the necessity of the Assignor's further approval
or signature, by amending Schedule A attached hereto to include any future or
----------
other Patents or Patent Rights under (S)(S)2 or 5 hereof.
(S)6. PATENT PROSECUTION.
------------------
(S)6.1. ASSIGNOR RESPONSIBLE. The Assignor shall assume full and complete
--------------------
responsibility for the prosecution, grant, enforcement or any other necessary or
desirable actions in connection with the Patent Collateral, and shall hold the
Agent and the Banks harmless from any and all costs, damages, liabilities and
expenses which may be incurred by the Agent or any of the Banks in connection
with the Agent's title to any of the Patent Collateral or any other action or
failure to act in connection with this Patent Agreement or the transactions
contemplated hereby. In respect of such responsibility, the Assignor shall
retain patent counsel reasonably acceptable to the Agent.
<PAGE>
-5-
(S)6.2. ASSIGNOR'S DUTIES, ETC. The Assignor shall have the duty, through
----------------------
patent counsel reasonably acceptable to the Agent, to prosecute diligently any
patent applications of the Patents pending as of the date of this Patent
Agreement or thereafter, to make application for unpatented but reasonably
patentable inventions and to preserve and maintain all rights in the Patents,
including without limitation the payment when due of all maintenance fees and
other fees, taxes and other expenses which shall be incurred or which shall
accrue with respect to any of the Patents. Any expenses incurred in connection
with such applications and actions shall be borne by the Assignor. The Assignor
shall not abandon any filed patent application, or any pending patent
application or patent, without the consent of the Agent, which consent shall not
be unreasonably withheld. The Agent hereby appoints the Assignor as its agent
for all matters referred to in the foregoing provisions of this (S)6 and agrees
to execute any documents necessary to confirm such appointment. Upon the
occurrence and during the continuance of an Event of Default, the Agent may
terminate such agency by providing written notice of termination to the
Assignor.
(S)6.3. ASSIGNOR'S ENFORCEMENT RIGHTS. The Assignor shall have the right,
-----------------------------
with the consent of the Agent which shall not be unreasonably withheld, to bring
suit or other action in the Assignor's own name to enforce the Patents and the
Patent Rights. The Agent shall be required to join in such suit or action as may
be necessary to assure the Assignor's ability to bring and maintain any such
suit or action in any proper forum so long as the Agent is completely satisfied
that such joinder will not subject the Agent or any of the Banks to any risk of
liability. The Assignor shall promptly, upon demand, reimburse and indemnify the
Agent and the Banks for all damages, costs and expenses, including legal fees,
incurred by the Agent and any of the Banks pursuant to this (S)6.
(S)6.4. PROTECTION OF PATENTS, ETC. In general, the Assignor shall take any
--------------------------
and all such actions (including but not limited to institution and maintenance
of suits, proceedings or actions) as may be necessary or appropriate to properly
maintain, protect, preserve, care for and enforce the Patent Collateral. The
Assignor shall not take or fail to take any action, nor permit any action to be
taken or not taken by others under its control, which would affect the validity,
grant or enforcement of any of the Patent Collateral.
(S)6.5. NOTIFICATION BY ASSIGNOR. Promptly upon obtaining knowledge
------------------------
thereof, the Assignor will notify the Agent in writing of the institution of, or
any final adverse determination in, any proceeding in the PTO or any similar
office or agency of the United States or any foreign country, or any court,
regarding the validity of any of the Patents or the Assignor's rights, title or
interests in and to any of the Patent Collateral, and of any event which does or
reasonably could materially adversely affect the value of any of the Patent
Collateral, the ability of the Assignor or the Agent to dispose of any of the
Patent Collateral or the rights and remedies of the Agent and the Banks in
relation thereto (including but not limited to the levy of any legal process
against any of the Patent Collateral).
(S)7. LICENSE BACK TO ASSIGNOR. Unless and until there shall have
------------------------
occurred and be continuing an Event of Default and the Agent has notified the
Assignor that the license granted hereunder is terminated, the Agent hereby
grants to
<PAGE>
-6-
the Assignor the sole and exclusive, nontransferable, royalty-free, worldwide
right and license under the Patents to make, have made for it, use, sell and
otherwise practice the inventions disclosed and claimed in the Patents for the
Assignor's own benefit and account and for none other; provided, however, that
the foregoing right and license shall be no greater in scope than, and limited
by, the rights assigned to the Agent, for the benefit of the Banks and the
Agent, by the Assignor hereby. The Assignor agrees not to sell, assign,
transfer, encumber or sublicense its interest in the license granted to the
Assignor in this (S)7 without the prior written consent of the Agent. Any such
sublicenses granted on or after the date hereof shall be terminable by the Agent
upon termination of the Assignor's license hereunder.
(S)8. REMEDIES. If any Event of Default shall have occurred and be
--------
continuing, then at the discretion of the Agent, or upon instructions by the
Majority Banks to the Agent, and upon notice by the Agent to the Assignor: (a)
the Assignor's license with respect to the Patents as set forth in (S)7 hereof
shall terminate; (b) the Assignor shall immediately cease and desist from the
practice, manufacture, use and sale of the inventions claimed, disclosed or
covered by the Patents; and (c) the Agent shall have, in addition to all other
rights and remedies given it by this Patent Agreement, the Credit Agreement, the
Security Agreement, and the other Loan Documents, those allowed by law and the
rights and remedies of a secured party under the Uniform Commercial Code as
enacted in the Commonwealth of Massachusetts and, without limiting the
generality of the foregoing, the Agent may immediately, without demand of
performance and without other notice (except as set forth next below) or demand
whatsoever to the Assignor, all of which are hereby expressly waived, and
without advertisement, sell or license at public or private sale or otherwise
realize upon the whole or from time to time any part of the Patent Collateral,
or any interest which the Assignor may have therein, and after deducting from
the proceeds of sale or other disposition of the Patent Collateral all expenses
(including all reasonable expenses for broker's fees and legal services), shall
apply the residue of such proceeds toward the payment of the Obligations as set
forth in the Security Agreement. Notice of any sale, license or other
disposition of any of the Patent Collateral shall be given to the Assignor at
least fifteen (15) days before the time that any intended public sale or other
disposition of such Patent Collateral is to be made or after which any private
sale or other disposition of such Patent Collateral may be made, which the
Assignor hereby agrees shall be reasonable notice of such public or private sale
or other disposition. At any such sale or other disposition, the Agent may, to
the extent permitted under applicable law, purchase or license the whole or any
part of the Patent Collateral or interests therein sold, licensed or otherwise
disposed of.
(S)9. COLLATERAL PROTECTION. If the Assignor shall fail to do any act that
---------------------
it has covenanted to do hereunder, or if any representation or warranty of the
Assignor shall be breached, the Agent, in its own name or that of the Assignor
(in the sole discretion of the Agent), may (but shall not be obligated to) do
such act or remedy such breach (or cause such act to be done or such breach to
be remedied), and the Assignor agrees promptly to reimburse the Agent for any
cost or expense incurred by the Agent in so doing.
<PAGE>
-7-
(S)10. POWER OF ATTORNEY. If any Event of Default shall have occurred and
-----------------
be continuing, the Assignor does hereby make, constitute and appoint the Agent
(and any officer or agent of the Agent as the Agent may select in its exclusive
discretion) as the Assignor's true and lawful attorney-in-fact, with the power
to endorse the Assignor's name on all applications, documents, papers and
instruments necessary for the Agent to use any of the Patent Collateral, to
practice, make, use or sell the inventions disclosed or claimed in any of the
Patent Collateral, to grant or issue any exclusive or nonexclusive license of
any of the Patent Collateral to any third person, or necessary for the Agent to
assign, pledge, convey or otherwise transfer title in or dispose of the Patent
Collateral or any part thereof or interest therein to any third person, and, in
general, to execute and deliver any instruments or documents and do all other
acts which the Assignor is obligated to execute and do hereunder. The Assignor
hereby ratifies all that such attorney shall lawfully do or cause to be done by
virtue hereof, and releases the Agent from any claims, liabilities, causes of
action or demands arising out of or in connection with any action taken or
omitted to be taken by the Agent under this power of attorney (except for the
Agent's gross negligence or willful misconduct). This power of attorney shall be
irrevocable for the duration of this Patent Agreement.
(S)11. FURTHER ASSURANCES. The Assignor shall, at any time and from time to
------------------
time, and at its expense, make, execute, acknowledge and deliver, and file and
record as necessary or appropriate with governmental or regulatory authorities,
agencies or offices, such agreements, assignments, documents and instruments,
and do such other and further acts and things (including, without limitation,
obtaining consents of third parties), as the Agent may request or as may be
necessary or appropriate in order to implement and effect fully the intentions,
purposes and provisions of this Patent Agreement, or to assure and confirm to
the Agent the grant, perfection and priority of the Agent's security interest in
any of the Patent Collateral.
(S)12. TERMINATION. At such time as all of the Obligations have been
-----------
finally paid and satisfied in full, this Patent Agreement shall terminate and
the Agent shall, upon the written request and at the expense of the Assignor,
execute and deliver to the Assignor all deeds, assignments and other instruments
as may be necessary or proper to reassign and reconvey to and re-vest in the
Assignor the entire right, title and interest to the Patent Collateral
previously granted, assigned, transferred and conveyed to the Agent and the
Banks by the Assignor pursuant to this Patent Agreement, as fully as if this
Patent Agreement had not been made, subject to any disposition of all or any
part thereof which may have been made by the Agent and the Banks pursuant hereto
or the Security Agreement.
(S)13. COURSE OF DEALING. No course of dealing among the Assignor, the
-----------------
Banks and the Agent, nor any failure to exercise, nor any delay in exercising,
on the part of the Agent or any of the Banks, any right, power or privilege
hereunder or under the Security Agreement shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
or thereunder preclude any other or further exercise thereof or the exercise of
any other right, power or privilege.
(S)14. EXPENSES. Any and all fees, costs and expenses, of whatever kind or
--------
nature, including the reasonable attorneys' fees and legal expenses incurred by
the
<PAGE>
-8-
Agent in connection with the preparation of this Patent Agreement and all other
documents relating hereto, the consummation of the transactions contemplated
hereby or the enforcement hereof, the filing or recording of any documents
(including all taxes in connection therewith) in public offices, the payment or
discharge of any taxes, counsel fees, maintenance fees, encumbrances or
otherwise protecting, maintaining or preserving any of the Patent Collateral, or
in defending or prosecuting any actions or proceedings arising out of or related
to any of the Patent Collateral, shall be borne and paid by the Assignor.
(S)15. OVERDUE AMOUNTS. Until paid, all amounts due and payable by the
---------------
Assignor hereunder shall be a debt secured by the Patent Collateral and other
Collateral and shall bear, whether before or after judgment, interest at the
rate of interest for overdue principal set forth in the Credit Agreement.
(S)16. NO ASSUMPTION OF LIABILITY; INDEMNIFICATION. NOTWITHSTANDING
-------------------------------------------
ANYTHING TO THE CONTRARY CONTAINED HEREIN, NEITHER THE AGENT NOR ANY BANK
ASSUMES ANY LIABILITIES OF THE ASSIGNOR WITH RESPECT TO ANY CLAIM OR CLAIMS
REGARDING THE ASSIGNOR'S OWNERSHIP OR PURPORTED OWNERSHIP OF, OR RIGHTS OR
PURPORTED RIGHTS ARISING FROM, ANY OF THE PATENT COLLATERAL OR ANY PRACTICE,
USE, LICENSE OR SUBLICENSE THEREOF, OR ANY PRACTICE, MANUFACTURE, USE OR SALE OF
ANY OF THE INVENTIONS DISCLOSED OR CLAIMED THEREIN, WHETHER ARISING OUT OF ANY
PAST, CURRENT OR FUTURE EVENT, CIRCUMSTANCE, ACT OR OMISSION OR OTHERWISE. ALL
OF SUCH LIABILITIES SHALL BE EXCLUSIVELY BORNE BY THE ASSIGNOR, AND THE ASSIGNOR
SHALL INDEMNIFY THE AGENT AND THE BANKS FOR ANY AND ALL COSTS, EXPENSES, DAMAGES
AND CLAIMS, INCLUDING LEGAL FEES, INCURRED BY THE AGENT OR ANY BANK WITH RESPECT
TO SUCH LIABILITIES.
(S)17. RIGHTS AND REMEDIES CUMULATIVE. All of the Agent's and the Banks'
------------------------------
rights and remedies with respect to the Patent Collateral, whether established
hereby or by the Security Agreement or by any other agreements or by law, shall
be cumulative and may be exercised singularly or concurrently. This Patent
Agreement is supplemental to the Security Agreement, and nothing contained
herein shall in any way derogate from any of the rights or remedies of the Agent
and the Banks contained therein. Nothing contained in this Patent Agreement
shall be deemed to extend the time of attachment or perfection of or otherwise
impair the security interest in any of the Patent Collateral granted to the
Agent for the benefit of the Banks and the Agent under the Security Agreement.
(S)18. NOTICES. All notices and other communications made or required to be
-------
given pursuant to this Patent Agreement shall be in writing and shall be
delivered in hand, mailed by United States registered or certified first-class
mail, postage prepaid, or sent by telegraph, telecopy or telex and confirmed by
delivery via courier or postal service, addressed as follows: if to the
Assignor, at the address set forth beneath its signature hereto, and if to the
Agent, at the address for notices to the Agent set forth in (S)20 of the Credit
Agreement, or at such address as either party may designate in
<PAGE>
-9-
writing to the other. Any such notice or demand shall be deemed to have been
duly given or made and to have become effective (a) if delivered by hand to a
responsible officer of the party to which it is directed, at the time of the
receipt thereof by such officer, (b) if sent by registered or certified first-
class mail, postage prepaid, two (2) Business Days after the posting thereof,
and (c) if sent by telegraph, telecopy, or telex, at the time of the dispatch
thereof, if in normal business hours in the country of receipt, or otherwise at
the opening of business on the following Business Day.
(S)19. AMENDMENT AND WAIVER. This Patent Agreement is subject to
--------------------
modification only by a writing signed by the Agent (with the consent of the
Banks or Majority Banks as provided in the Credit Agreement) and the Assignor,
except as provided in (S)5.2 hereof. The Agent shall not be deemed to have
waived any right hereunder unless such waiver shall be in writing and signed by
the Agent and the Banks or Majority Banks as provided in the Credit Agreement. A
waiver on any one occasion shall not be construed as a bar to or waiver of any
right on any future occasion.
(S)20. GOVERNING LAW; CONSENT TO JURISDICTION. THIS PATENT AGREEMENT IS
--------------------------------------
INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. The
Assignor agrees that any suit for the enforcement of this Patent Agreement may
be brought in the courts of The Commonwealth of Massachusetts or any federal
court sitting therein and consents to the non-exclusive jurisdiction of such
court and to service of process in any such suit being made upon the Assignor by
mail at the address specified in (S)18 hereof. The Assignor hereby waives any
objection that it may now or hereafter have to the venue of any such suit or any
such court or that such suit is brought in an inconvenient court.
(S)21. WAIVER OF JURY TRIAL. THE ASSIGNOR WAIVES ITS RIGHT TO A JURY TRIAL
--------------------
WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION
WITH THIS PATENT AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE
PERFORMANCE OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, the
Assignor waives any right which it may have to claim or recover in any
litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. The Assignor (a) certifies that neither the Agent or any Bank
nor any representative, agent or attorney of the Agent or any Bank has
represented, expressly or otherwise, that the Agent or any Bank would not, in
the event of litigation, seek to enforce the foregoing waivers, and (b)
acknowledges that, in entering into the Credit Agreement and the other Loan
Documents to which the Agent or any Bank is a party, the Agent and the Banks are
relying upon, among other things, the waivers and certifications contained in
this (S)21.
(S)22. MISCELLANEOUS. The headings of each section of this Patent Agreement
-------------
are for convenience only and shall not define or limit the provisions thereof.
This Patent Agreement and all rights and obligations hereunder shall be binding
upon the Assignor and its respective successors and assigns, and shall inure to
the benefit of the Agent, the Banks and their respective successors and assigns.
In the event of any
<PAGE>
-10-
irreconcilable conflict between the provisions of this Patent Agreement and the
Credit Agreement, or between this Patent Agreement and the Security Agreement,
the provisions of the Credit Agreement or the Security Agreement, as the case
may be, shall control. If any term of this Patent Agreement shall be held to be
invalid, illegal or unenforceable, the validity of all other terms hereof shall
in no way be affected thereby, and this Patent Agreement shall be construed and
be enforceable as if such invalid, illegal or unenforceable term had not been
included herein. The Assignor acknowledges receipt of a copy of this Patent
Agreement.
<PAGE>
IN WITNESS WHEREOF, this Patent Collateral Assignment and Security
Agreement has been executed as of the day and year first above written.
AMERICAN ALLSAFE COMPANY
By:/s/ Christopher T. Paule
-------------------------------
Title: Vice President & CFO
Address: _____________________
_____________________
BANKBOSTON, N.A., as Agent
By: /s/ Peter van der Horst
-------------------------------
Peter van der Horst, Vice President
<PAGE>
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 22nd day of April, 1998, personally appeared Christopher T.
Paule to me known personally, and who, being by me duly sworn, deposes and says
that he is the Vice President & CFO of American Allsafe Company, and that said
instrument was signed and sealed on behalf of said corporation by authority of
its Board of Directors, and said Vice President & CFO acknowledged said
instrument to be the free act and deed of said corporation.
/s/ Dawn M. Schoenig
-------------------------------
Notary Public
My commission expires: August 3, 1999
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 21 day of April, 1998, personally appeared Peter van der
Horst to me known personally, and who, being by me duly sworn, deposes and says
that (s)he is a Vice President of BankBoston, N.A. (the "Agent"), and that
said instrument was signed and sealed on behalf of said Agent by authority of
its Board of Directors, and said Vice President acknowledged said instrument
to be the free act and deed of said Agent.
/s/ D.L. Figueroa-Thomas
------------------------------------
Notary Public
My commission expires: February 21, 1999
<PAGE>
SCHEDULE A
----------
ISSUED AND PENDING PATENTS
--------------------------
PATENTS ISSUED BY U.S. PATENT
-----------------------------
AND TRADEMARK OFFICE
--------------------
Patent No. Issue Date Inventor(s) Title
- --------- ---------- ----------- -----
PATENTS PENDING WITH U.S. PATENT
--------------------------------
AND TRADEMARK OFFICE
--------------------
<PAGE>
EXHIBIT 10.16
BINGHAM DRAFT
04/20/98
--------
PATENT COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT
---------------------------------------------------
PATENT COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT, dated as of April 22,
1998, between SILENCIO/SAFETY DIRECT, INC., a Nevada corporation having its
principal place of business at 2997 Clarkson Road, Chesterfield, Missouri 63017
(the "Assignor"), and BANKBOSTON, N.A., as agent (hereinafter, in such capacity,
the "Agent"), for itself and other lending institutions (hereinafter,
collectively, the "Banks") which are, or may in the future become, parties to
that certain Revolving Credit and Acquisition Loan Agreement, dated as of April
22, 1998 (as amended and in effect from time to time, the "Credit Agreement"),
among the Assignor, the Banks, the Agent and Mercantile Bank National
Association, as Co-Agent.
WHEREAS, it is a condition precedent to the Banks' making any loans or
otherwise extending credit to the Assignor under the Credit Agreement that the
Assignor execute and deliver to the Agent, for the benefit of the Banks and the
Agent, a patent agreement in substantially the form hereof;
WHEREAS, the Assignor has executed and delivered to the Agent, for the
benefit of the Banks and the Agent, a Security Agreement, dated as of April 22,
1998 (the "Security Agreement"), pursuant to which the Assignor has granted to
the Agent, for the benefit of the Banks and the Agent, a security interest in
all of the Assignor's personal property and fixture assets, including without
limitation the patents and patent applications listed on Schedule A attached
-------- -
hereto, all to secure the payment and performance of the Obligations (as defined
in the Credit Agreement); and
WHEREAS, this Patent Agreement is supplemental to the provisions
contained in the Security Agreement;
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
(S)1. DEFINITIONS. Capitalized terms used herein and not otherwise defined
-----------
herein shall have the respective meanings provided therefor in the Credit
Agreement and the Security Agreement. In addition, the following terms shall
have the meanings set forth in this (S)1 or elsewhere in this Patent Agreement
referred to below:
Patent Agreement. This Patent Collateral Assignment and Security
----------------
Agreement, as amended and in effect from time to time.
Patent Collateral. All of the Assignor's right, title and interest in
-----------------
and to all of the Patents, the Patent License Rights, and all other Patent
Rights, and all additions, improvements, and accessions to, all substitutions
for and replacements of, and all
<PAGE>
-2-
products and Proceeds (including insurance proceeds) of any and all of the
foregoing, and all books and records and technical information and data
describing or used in connection with any and all such rights, interests, assets
or property.
Patent License Rights. Any and all past, present or future rights and
---------------------
interests of the Assignor pursuant to any and all past, present and future
licensing agreements in favor of the Assignor, or to which the Assignor is a
party, pertaining to any Patents, or Patent Rights, owned or used by third
parties in the past, present or future, including the right in the name of the
Assignor or the Agent to enforce, and sue and recover for, any past, present or
future breach or violation of any such agreement.
Patent Rights. Any and all past, present or future rights in, to and
-------------
associated with the Patents throughout the world, whether arising under federal
law, state law, common law, foreign law, or otherwise, including, but not
limited to, the following: all such rights arising out of or associated with
the Patents; the right (but not the obligation) to register claims under any
federal, state or foreign patent law or regulation; the right (but not the
obligation) to sue or bring opposition or bring cancellation proceedings in the
name of the Assignor or the Agent for any and all past, present and future
infringements of or any other damages or injury to the Patents or the Patent
Rights, and the rights to damages or profits due or accrued arising out of or in
connection with any such past, present or future infringement, damage or injury;
and the Patent License Rights.
Patents. All patents and patent applications, whether United States or
-------
foreign, that are owned by the Assignor or in which the Assignor has any right,
title or interest, now or in the future, including but not limited to:
(a) the patents and patent applications listed on Schedule A attached
-------- -
hereto (as the same may be amended pursuant hereto from time to time);
(b) all letters patent of the United States or any other country, and
all applications for letters patent of the United States or any other
country;
(c) all re-issues, continuations, divisions, continuations-in-part,
renewals or extensions thereof;
(d) the inventions disclosed or claimed therein, including the right
to make, use, practice and/or sell (or license or otherwise transfer or
dispose of) the inventions disclosed or claimed therein; and
(e) the right (but not the obligation) to make and prosecute
applications for such Patents.
Proceeds. Any consideration received from the sale, exchange, license,
--------
lease or other disposition or transfer of any right, interest, asset or property
which constitutes all or any part of the Patent Collateral, any value received
as a consequence of the ownership, possession, use or practice of any Patent
Collateral, and any payment received from any insurer or other person or entity
as a result of the destruction or the
<PAGE>
-3-
loss, theft or other involuntary conversion of whatever nature of any right,
interest, asset or property which constitutes all or any part of the Patent
Collateral.
PTO. The United States Patent and Trademark Office.
---
(S)2. GRANT OF SECURITY INTEREST. To secure the payment and performance in
--------------------------
full of all of the Obligations, the Assignor hereby grants, assigns, transfers
and conveys to the Agent, for the benefit of the Banks and the Agent, BY WAY OF
COLLATERAL SECURITY, all of the Patent Collateral. NEITHER THE AGENT NOR ANY OF
THE BANKS ASSUMES ANY LIABILITY ARISING IN ANY WAY BY REASON OF ITS HOLDING SUCH
COLLATERAL SECURITY.
(S)3. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Assignor represents,
-----------------------------------------
warrants and covenants that:
(a) to the best of the Assignor's knowledge, Schedule A attached
-------- -
hereto sets forth a true and complete list of all the patents, rights to
patents and patent applications now owned, licensed, controlled or used by
the Assignor;
(b) to the best of the Assignor's knowledge, the issued Patents are
subsisting and have not been adjudged invalid or unenforceable, in whole or
in part, and there is no litigation or proceeding pending concerning the
validity or enforceability of the issued Patents;
(c) to the best of the Assignor's knowledge, each of the issued
Patents is valid and enforceable;
(d) to the best of the Assignor's knowledge, there is no
infringement by others of the issued Patents or Patent Rights;
(e) to the best of the Assignor's knowledge, no claim has been made
that the use of any of the Patents does or may violate the rights of any
third person, and there is no infringement by the Assignor of the patent
rights of others;
(f) the Assignor is the sole and exclusive owner of the entire and
unencumbered right, title and interest in and to each of the Patents (other
than ownership and other rights reserved by third party owners with respect
to Patents which the Assignor is licensed to practice or use), free and
clear of any liens, charges, encumbrances and adverse claims, including
without limitation pledges, assignments, licenses, shop rights and
covenants by the Assignor not to sue third persons, other than the security
agreement and mortgage created by the Security Agreement and this Patent
Agreement;
(g) the Assignor has the unqualified right to enter into this
Patent Agreement and perform its terms and will comply with the covenants
herein contained;
(h) this Patent Agreement, together with the Security Agreement,
will create in favor of the Agent, for the benefit of the Banks, a valid
and perfected
<PAGE>
-4-
first priority security interest in the Patent Collateral upon making the
filings referred to in clause (i) of this (S)3; and
(i) except for the filing of financing statements under the
Uniform Commercial Code and the filing of this Patent Agreement with the
PTO, no authorization, approval or other action by, and no notice to or
filing with, any governmental or regulatory authority, agency or office is
required either (i) for the grant by the Assignor or the effectiveness of
the security interest and assignment granted hereby or for the execution,
delivery and performance of this Patent Agreement by the Assignor, or (ii)
for the perfection of or the exercise by the Agent of any of its rights and
remedies hereunder.
(S)4. NO TRANSFER OR INCONSISTENT AGREEMENTS. Without the Agent's prior
-- -------- -- ------------ ----------
written consent, the Assignor will not (a) mortgage, pledge, assign, encumber,
grant a security interest in, transfer, license or alienate any of the Patent
Collateral, or (b) enter into any agreement (for example, a license agreement)
that is inconsistent with the Assignor's obligations under this Patent Agreement
or the Security Agreement.
(S)5. AFTER-ACQUIRED PATENTS, ETC.
---------------------------
(S)5.1. AFTER-ACQUIRED PATENTS. If, before the Obligations shall have been
----------------------
finally paid and satisfied in full, the Assignor shall obtain any right, title
or interest in or to any other or new patents, patent applications or patentable
inventions, or become entitled to the benefit of any patent application or
patent or any reissue, division, continuation, renewal, extension, or
continuation-in-part of any of the Patent Collateral or any improvement on any
of the Patent Collateral, the provisions of this Patent Agreement shall
automatically apply thereto and the Assignor shall promptly give to the Agent
notice thereof in writing and execute and deliver to the Agent such documents or
instruments as the Agent may reasonably request further to transfer title
thereto to the Agent, for the benefit of the Banks and the Agent.
(S)5.2. AMENDMENT TO SCHEDULE. The Assignor authorizes the Agent to modify
---------------------
this Patent Agreement, without the necessity of the Assignor's further approval
or signature, by amending Schedule A attached hereto to include any future or
-------- -
other Patents or Patent Rights under (S)(S)2 or 5 hereof.
(S)6. PATENT PROSECUTION.
------------------
(S)6.1. ASSIGNOR RESPONSIBLE. The Assignor shall assume full and complete
--------------------
responsibility for the prosecution, grant, enforcement or any other necessary or
desirable actions in connection with the Patent Collateral, and shall hold the
Agent and the Banks harmless from any and all costs, damages, liabilities and
expenses which may be incurred by the Agent or any of the Banks in connection
with the Agent's title to any of the Patent Collateral or any other action or
failure to act in connection with this Patent Agreement or the transactions
contemplated hereby. In respect of such responsibility, the Assignor shall
retain patent counsel reasonably acceptable to the Agent.
<PAGE>
-5-
(S)6.2. ASSIGNOR'S DUTIES, ETC. The Assignor shall have the duty, through
----------------------
patent counsel reasonably acceptable to the Agent, to prosecute diligently any
patent applications of the Patents pending as of the date of this Patent
Agreement or thereafter, to make application for unpatented but reasonably
patentable inventions and to preserve and maintain all rights in the Patents,
including without limitation the payment when due of all maintenance fees and
other fees, taxes and other expenses which shall be incurred or which shall
accrue with respect to any of the Patents. Any expenses incurred in connection
with such applications and actions shall be borne by the Assignor. The Assignor
shall not abandon any filed patent application, or any pending patent
application or patent, without the consent of the Agent, which consent shall not
be unreasonably withheld. The Agent hereby appoints the Assignor as its agent
for all matters referred to in the foregoing provisions of this (S)6 and agrees
to execute any documents necessary to confirm such appointment. Upon the
occurrence and during the continuance of an Event of Default, the Agent may
terminate such agency by providing written notice of termination to the
Assignor.
(S)6.3. ASSIGNOR'S ENFORCEMENT RIGHTS. The Assignor shall have the right,
-----------------------------
with the consent of the Agent which shall not be unreasonably withheld, to bring
suit or other action in the Assignor's own name to enforce the Patents and the
Patent Rights. The Agent shall be required to join in such suit or action as may
be necessary to assure the Assignor's ability to bring and maintain any such
suit or action in any proper forum so long as the Agent is completely satisfied
that such joinder will not subject the Agent or any of the Banks to any risk of
liability. The Assignor shall promptly, upon demand, reimburse and indemnify the
Agent and the Banks for all damages, costs and expenses, including legal fees,
incurred by the Agent and any of the Banks pursuant to this (S)6.
(S)6.4. PROTECTION OF PATENTS, ETC. In general, the Assignor shall take any
--------------------------
and all such actions (including but not limited to institution and maintenance
of suits, proceedings or actions) as may be necessary or appropriate to properly
maintain, protect, preserve, care for and enforce the Patent Collateral. The
Assignor shall not take or fail to take any action, nor permit any action to be
taken or not taken by others under its control, which would affect the validity,
grant or enforcement of any of the Patent Collateral.
(S)6.5. NOTIFICATION BY ASSIGNOR. Promptly upon obtaining knowledge
------------------------
thereof, the Assignor will notify the Agent in writing of the institution of, or
any final adverse determination in, any proceeding in the PTO or any similar
office or agency of the United States or any foreign country, or any court,
regarding the validity of any of the Patents or the Assignor's rights, title or
interests in and to any of the Patent Collateral, and of any event which does or
reasonably could materially adversely affect the value of any of the Patent
Collateral, the ability of the Assignor or the Agent to dispose of any of the
Patent Collateral or the rights and remedies of the Agent and the Banks in
relation thereto (including but not limited to the levy of any legal process
against any of the Patent Collateral).
(S)7. LICENSE BACK TO ASSIGNOR. Unless and until there shall have
------------------------
occurred and be continuing an Event of Default and the Agent has notified the
Assignor that the license granted hereunder is terminated, the Agent hereby
grants to
<PAGE>
-6-
the Assignor the sole and exclusive, nontransferable, royalty-free, worldwide
right and license under the Patents to make, have made for it, use, sell and
otherwise practice the inventions disclosed and claimed in the Patents for the
Assignor's own benefit and account and for none other; provided, however, that
the foregoing right and license shall be no greater in scope than, and limited
by, the rights assigned to the Agent, for the benefit of the Banks and the
Agent, by the Assignor hereby. The Assignor agrees not to sell, assign,
transfer, encumber or sublicense its interest in the license granted to the
Assignor in this (S)7 without the prior written consent of the Agent. Any such
sublicenses granted on or after the date hereof shall be terminable by the Agent
upon termination of the Assignor's license hereunder.
(S)8. REMEDIES. If any Event of Default shall have occurred and be
--------
continuing, then at the discretion of the Agent, or upon instructions by the
Majority Banks to the Agent, and upon notice by the Agent to the Assignor: (a)
the Assignor's license with respect to the Patents as set forth in (S)7 hereof
shall terminate; (b) the Assignor shall immediately cease and desist from the
practice, manufacture, use and sale of the inventions claimed, disclosed or
covered by the Patents; and (c) the Agent shall have, in addition to all other
rights and remedies given it by this Patent Agreement, the Credit Agreement, the
Security Agreement, and the other Loan Documents, those allowed by law and the
rights and remedies of a secured party under the Uniform Commercial Code as
enacted in the Commonwealth of Massachusetts and, without limiting the
generality of the foregoing, the Agent may immediately, without demand of
performance and without other notice (except as set forth next below) or demand
whatsoever to the Assignor, all of which are hereby expressly waived, and
without advertisement, sell or license at public or private sale or otherwise
realize upon the whole or from time to time any part of the Patent Collateral,
or any interest which the Assignor may have therein, and after deducting from
the proceeds of sale or other disposition of the Patent Collateral all expenses
(including all reasonable expenses for broker's fees and legal services), shall
apply the residue of such proceeds toward the payment of the Obligations as set
forth in the Security Agreement. Notice of any sale, license or other
disposition of any of the Patent Collateral shall be given to the Assignor at
least fifteen (15) days before the time that any intended public sale or other
disposition of such Patent Collateral is to be made or after which any private
sale or other disposition of such Patent Collateral may be made, which the
Assignor hereby agrees shall be reasonable notice of such public or private sale
or other disposition. At any such sale or other disposition, the Agent may, to
the extent permitted under applicable law, purchase or license the whole or any
part of the Patent Collateral or interests therein sold, licensed or otherwise
disposed of.
(S)9. COLLATERAL PROTECTION. If the Assignor shall fail to do any act that
---------------------
it has covenanted to do hereunder, or if any representation or warranty of the
Assignor shall be breached, the Agent, in its own name or that of the Assignor
(in the sole discretion of the Agent), may (but shall not be obligated to) do
such act or remedy such breach (or cause such act to be done or such breach to
be remedied), and the Assignor agrees promptly to reimburse the Agent for any
cost or expense incurred by the Agent in so doing.
<PAGE>
-7-
(S)10. POWER OF ATTORNEY. If any Event of Default shall have occurred and
-----------------
be continuing, the Assignor does hereby make, constitute and appoint the Agent
(and any officer or agent of the Agent as the Agent may select in its exclusive
discretion) as the Assignor's true and lawful attorney-in-fact, with the power
to endorse the Assignor's name on all applications, documents, papers and
instruments necessary for the Agent to use any of the Patent Collateral, to
practice, make, use or sell the inventions disclosed or claimed in any of the
Patent Collateral, to grant or issue any exclusive or nonexclusive license of
any of the Patent Collateral to any third person, or necessary for the Agent to
assign, pledge, convey or otherwise transfer title in or dispose of the Patent
Collateral or any part thereof or interest therein to any third person, and, in
general, to execute and deliver any instruments or documents and do all other
acts which the Assignor is obligated to execute and do hereunder. The Assignor
hereby ratifies all that such attorney shall lawfully do or cause to be done by
virtue hereof, and releases the Agent from any claims, liabilities, causes of
action or demands arising out of or in connection with any action taken or
omitted to be taken by the Agent under this power of attorney (except for the
Agent's gross negligence or willful misconduct). This power of attorney shall be
irrevocable for the duration of this Patent Agreement.
(S)11. FURTHER ASSURANCES. The Assignor shall, at any time and from time to
------------------
time, and at its expense, make, execute, acknowledge and deliver, and file and
record as necessary or appropriate with governmental or regulatory authorities,
agencies or offices, such agreements, assignments, documents and instruments,
and do such other and further acts and things (including, without limitation,
obtaining consents of third parties), as the Agent may request or as may be
necessary or appropriate in order to implement and effect fully the intentions,
purposes and provisions of this Patent Agreement, or to assure and confirm to
the Agent the grant, perfection and priority of the Agent's security interest in
any of the Patent Collateral.
(S)12. TERMINATION. At such time as all of the Obligations have been
-----------
finally paid and satisfied in full, this Patent Agreement shall terminate and
the Agent shall, upon the written request and at the expense of the Assignor,
execute and deliver to the Assignor all deeds, assignments and other instruments
as may be necessary or proper to reassign and reconvey to and re-vest in the
Assignor the entire right, title and interest to the Patent Collateral
previously granted, assigned, transferred and conveyed to the Agent and the
Banks by the Assignor pursuant to this Patent Agreement, as fully as if this
Patent Agreement had not been made, subject to any disposition of all or any
part thereof which may have been made by the Agent and the Banks pursuant hereto
or the Security Agreement.
(S)13. COURSE OF DEALING. No course of dealing among the Assignor, the
-----------------
Banks and the Agent, nor any failure to exercise, nor any delay in exercising,
on the part of the Agent or any of the Banks, any right, power or privilege
hereunder or under the Security Agreement shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
or thereunder preclude any other or further exercise thereof or the exercise of
any other right, power or privilege.
(S)14. EXPENSES. Any and all fees, costs and expenses, of whatever kind or
--------
nature, including the reasonable attorneys' fees and legal expenses incurred by
the
<PAGE>
-8-
Agent in connection with the preparation of this Patent Agreement and all other
documents relating hereto, the consummation of the transactions contemplated
hereby or the enforcement hereof, the filing or recording of any documents
(including all taxes in connection therewith) in public offices, the payment or
discharge of any taxes, counsel fees, maintenance fees, encumbrances or
otherwise protecting, maintaining or preserving any of the Patent Collateral, or
in defending or prosecuting any actions or proceedings arising out of or related
to any of the Patent Collateral, shall be borne and paid by the Assignor.
(S)15. OVERDUE AMOUNTS. Until paid, all amounts due and payable by the
---------------
Assignor hereunder shall be a debt secured by the Patent Collateral and other
Collateral and shall bear, whether before or after judgment, interest at the
rate of interest for overdue principal set forth in the Credit Agreement.
(S)16. NO ASSUMPTION OF LIABILITY; INDEMNIFICATION. NOTWITHSTANDING
-------------------------------------------
ANYTHING TO THE CONTRARY CONTAINED HEREIN, NEITHER THE AGENT NOR ANY BANK
ASSUMES ANY LIABILITIES OF THE ASSIGNOR WITH RESPECT TO ANY CLAIM OR CLAIMS
REGARDING THE ASSIGNOR'S OWNERSHIP OR PURPORTED OWNERSHIP OF, OR RIGHTS OR
PURPORTED RIGHTS ARISING FROM, ANY OF THE PATENT COLLATERAL OR ANY PRACTICE,
USE, LICENSE OR SUBLICENSE THEREOF, OR ANY PRACTICE, MANUFACTURE, USE OR SALE OF
ANY OF THE INVENTIONS DISCLOSED OR CLAIMED THEREIN, WHETHER ARISING OUT OF ANY
PAST, CURRENT OR FUTURE EVENT, CIRCUMSTANCE, ACT OR OMISSION OR OTHERWISE. ALL
OF SUCH LIABILITIES SHALL BE EXCLUSIVELY BORNE BY THE ASSIGNOR, AND THE ASSIGNOR
SHALL INDEMNIFY THE AGENT AND THE BANKS FOR ANY AND ALL COSTS, EXPENSES, DAMAGES
AND CLAIMS, INCLUDING LEGAL FEES, INCURRED BY THE AGENT OR ANY BANK WITH RESPECT
TO SUCH LIABILITIES.
(S)17. RIGHTS AND REMEDIES CUMULATIVE. All of the Agent's and the Banks'
------------------------------
rights and remedies with respect to the Patent Collateral, whether established
hereby or by the Security Agreement or by any other agreements or by law, shall
be cumulative and may be exercised singularly or concurrently. This Patent
Agreement is supplemental to the Security Agreement, and nothing contained
herein shall in any way derogate from any of the rights or remedies of the Agent
and the Banks contained therein. Nothing contained in this Patent Agreement
shall be deemed to extend the time of attachment or perfection of or otherwise
impair the security interest in any of the Patent Collateral granted to the
Agent for the benefit of the Banks and the Agent under the Security Agreement.
(S)18. NOTICES. All notices and other communications made or required to be
-------
given pursuant to this Patent Agreement shall be in writing and shall be
delivered in hand, mailed by United States registered or certified first-class
mail, postage prepaid, or sent by telegraph, telecopy or telex and confirmed by
delivery via courier or postal service, addressed as follows: if to the
Assignor, at the address set forth beneath its signature hereto, and if to the
Agent, at the address for notices to the Agent set forth in (S)20 of the Credit
Agreement, or at such address as either party may designate in
<PAGE>
-9-
writing to the other. Any such notice or demand shall be deemed to have been
duly given or made and to have become effective (a) if delivered by hand to a
responsible officer of the party to which it is directed, at the time of the
receipt thereof by such officer, (b) if sent by registered or certified first-
class mail, postage prepaid, two (2) Business Days after the posting thereof,
and (c) if sent by telegraph, telecopy, or telex, at the time of the dispatch
thereof, if in normal business hours in the country of receipt, or otherwise at
the opening of business on the following Business Day.
(S)19. AMENDMENT AND WAIVER. This Patent Agreement is subject to
--------------------
modification only by a writing signed by the Agent (with the consent of the
Banks or Majority Banks as provided in the Credit Agreement) and the Assignor,
except as provided in (S)5.2 hereof. The Agent shall not be deemed to have
waived any right hereunder unless such waiver shall be in writing and signed by
the Agent and the Banks or Majority Banks as provided in the Credit Agreement. A
waiver on any one occasion shall not be construed as a bar to or waiver of any
right on any future occasion.
(S)20. GOVERNING LAW; CONSENT TO JURISDICTION. THIS PATENT AGREEMENT IS
--------------------------------------
INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. The
Assignor agrees that any suit for the enforcement of this Patent Agreement may
be brought in the courts of The Commonwealth of Massachusetts or any federal
court sitting therein and consents to the non-exclusive jurisdiction of such
court and to service of process in any such suit being made upon the Assignor by
mail at the address specified in (S)18 hereof. The Assignor hereby waives any
objection that it may now or hereafter have to the venue of any such suit or any
such court or that such suit is brought in an inconvenient court.
(S)21. WAIVER OF JURY TRIAL. THE ASSIGNOR WAIVES ITS RIGHT TO A JURY TRIAL
--------------------
WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION
WITH THIS PATENT AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE
PERFORMANCE OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, the
Assignor waives any right which it may have to claim or recover in any
litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. The Assignor (a) certifies that neither the Agent or any Bank
nor any representative, agent or attorney of the Agent or any Bank has
represented, expressly or otherwise, that the Agent or any Bank would not, in
the event of litigation, seek to enforce the foregoing waivers, and (b)
acknowledges that, in entering into the Credit Agreement and the other Loan
Documents to which the Agent or any Bank is a party, the Agent and the Banks are
relying upon, among other things, the waivers and certifications contained in
this (S)21.
(S)22. MISCELLANEOUS. The headings of each section of this Patent Agreement
-------------
are for convenience only and shall not define or limit the provisions thereof.
This Patent Agreement and all rights and obligations hereunder shall be binding
upon the Assignor and its respective successors and assigns, and shall inure to
the benefit of the Agent, the Banks and their respective successors and assigns.
In the event of any
<PAGE>
-10-
irreconcilable conflict between the provisions of this Patent Agreement and the
Credit Agreement, or between this Patent Agreement and the Security Agreement,
the provisions of the Credit Agreement or the Security Agreement, as the case
may be, shall control. If any term of this Patent Agreement shall be held to be
invalid, illegal or unenforceable, the validity of all other terms hereof shall
in no way be affected thereby, and this Patent Agreement shall be construed and
be enforceable as if such invalid, illegal or unenforceable term had not been
included herein. The Assignor acknowledges receipt of a copy of this Patent
Agreement.
<PAGE>
IN WITNESS WHEREOF, this Patent Collateral Assignment and Security
Agreement has been executed as of the day and year first above written.
SILENCIO/SAFETY DIRECT, INC.
By: /s/ Christopher T. Paule
--------------------------------
Title:
Address: _____________________
_____________________
BANKBOSTON, N.A., as Agent
By: /s/ Peter van der Horst
--------------------------------
Peter van der Horst, Vice President
<PAGE>
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 22nd day of April, 1998, personally appeared Christopher T.
Paule to me known personally, and who, being by me duly sworn, deposes and says
that he is the Vice President & CFO of Silencio/Safety Direct, Inc., and that
said instrument was signed and sealed on behalf of said corporation by authority
of its Board of Directors, and said Vice President & CFO acknowledged said
instrument to be the free act and deed of said corporation.
/s/ Maryann T. D'Amato
------------------------------------------
Notary Public
My commission expires: November 3, 1998
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 21 day of April, 1998, personally appeared Peter van der
Horst to me known personally, and who, being by me duly sworn, deposes and says
that (s)he is a Vice President of BankBoston, N.A. (the "Agent"), and that
said instrument was signed and sealed on behalf of said Agent by authority of
its Board of Directors, and said Vice President acknowledged said instrument
to be the free act and deed of said Agent.
/s/ D.L. Figueroa-Thomas
------------------------------------------
Notary Public
My commission expires: February 21, 1999
<PAGE>
SCHEDULE A
----------
ISSUED AND PENDING PATENTS
--------------------------
PATENTS ISSUED BY U.S. PATENT
-----------------------------
AND TRADEMARK OFFICE
--------------------
Patent No. Issue Date Inventor(s) Title
- --------- ---------- ----------- -----
PATENTS PENDING WITH U.S. PATENT
--------------------------------
AND TRADEMARK OFFICE
--------------------
<PAGE>
EXHIBIT 10.17
BINGHAM DRAFT
04/20/98
--------
PATENT COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT
---------------------------------------------------
PATENT COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT, dated as of April 22,
1998, between CRYSTALOID TECHNOLOGIES, INC., a Delaware corporation having its
principal place of business at 2997 Clarkson Road, Chesterfield, Missouri 63017
(the "Assignor"), and BANKBOSTON, N.A., as agent (hereinafter, in such capacity,
the "Agent"), for itself and other lending institutions (hereinafter,
collectively, the "Banks") which are, or may in the future become, parties to
that certain Revolving Credit and Acquisition Loan Agreement, dated as of April
22, 1998 (as amended and in effect from time to time, the "Credit Agreement"),
among the Assignor, the Banks, the Agent and Mercantile Bank National
Association, as Co-Agent.
WHEREAS, it is a condition precedent to the Banks' making any loans or
otherwise extending credit to the Assignor under the Credit Agreement that the
Assignor execute and deliver to the Agent, for the benefit of the Banks and the
Agent, a patent agreement in substantially the form hereof;
WHEREAS, the Assignor has executed and delivered to the Agent, for the
benefit of the Banks and the Agent, a Security Agreement, dated as of April 22,
1998 (the "Security Agreement"), pursuant to which the Assignor has granted to
the Agent, for the benefit of the Banks and the Agent, a security interest in
all of the Assignor's personal property and fixture assets, including without
limitation the patents and patent applications listed on Schedule A attached
-------- -
hereto, all to secure the payment and performance of the Obligations (as defined
in the Credit Agreement); and
WHEREAS, this Patent Agreement is supplemental to the provisions contained
in the Security Agreement;
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
(S)1. DEFINITIONS. Capitalized terms used herein and not otherwise defined
-----------
herein shall have the respective meanings provided therefor in the Credit
Agreement and the Security Agreement. In addition, the following terms shall
have the meanings set forth in this (S)1 or elsewhere in this Patent Agreement
referred to below:
Patent Agreement. This Patent Collateral Assignment and Security
------ ---------
Agreement, as amended and in effect from time to time.
Patent Collateral. All of the Assignor's right, title and interest in and
------ ----------
to all of the Patents, the Patent License Rights, and all other Patent Rights,
and all additions, improvements, and accessions to, all substitutions for and
replacements of, and all
<PAGE>
-2-
products and Proceeds (including insurance proceeds) of any and all of the
foregoing, and all books and records and technical information and data
describing or used in connection with any and all such rights, interests, assets
or property.
Patent License Rights. Any and all past, present or future rights and
------ ------- ------
interests of the Assignor pursuant to any and all past, present and future
licensing agreements in favor of the Assignor, or to which the Assignor is a
party, pertaining to any Patents, or Patent Rights, owned or used by third
parties in the past, present or future, including the right in the name of the
Assignor or the Agent to enforce, and sue and recover for, any past, present or
future breach or violation of any such agreement.
Patent Rights. Any and all past, present or future rights in, to and
------ ------
associated with the Patents throughout the world, whether arising under federal
law, state law, common law, foreign law, or otherwise, including, but not
limited to, the following: all such rights arising out of or associated with
the Patents; the right (but not the obligation) to register claims under any
federal, state or foreign patent law or regulation; the right (but not the
obligation) to sue or bring opposition or bring cancellation proceedings in the
name of the Assignor or the Agent for any and all past, present and future
infringements of or any other damages or injury to the Patents or the Patent
Rights, and the rights to damages or profits due or accrued arising out of or in
connection with any such past, present or future infringement, damage or injury;
and the Patent License Rights.
Patents. All patents and patent applications, whether United States or
-------
foreign, that are owned by the Assignor or in which the Assignor has any right,
title or interest, now or in the future, including but not limited to:
(a) the patents and patent applications listed on Schedule A attached
-------- -
hereto (as the same may be amended pursuant hereto from time to time);
(b) all letters patent of the United States or any other country, and
all applications for letters patent of the United States or any other
country;
(c) all re-issues, continuations, divisions, continuations-in-part,
renewals or extensions thereof;
(d) the inventions disclosed or claimed therein, including the right
to make, use, practice and/or sell (or license or otherwise transfer or
dispose of) the inventions disclosed or claimed therein; and
(e) the right (but not the obligation) to make and prosecute
applications for such Patents.
Proceeds. Any consideration received from the sale, exchange, license,
--------
lease or other disposition or transfer of any right, interest, asset or property
which constitutes all or any part of the Patent Collateral, any value received
as a consequence of the ownership, possession, use or practice of any Patent
Collateral, and any payment received from any insurer or other person or entity
as a result of the destruction or the
<PAGE>
-3-
loss, theft or other involuntary conversion of whatever nature of any right,
interest, asset or property which constitutes all or any part of the Patent
Collateral.
PTO. The United States Patent and Trademark Office.
---
(S)2. GRANT OF SECURITY INTEREST. To secure the payment and performance in
--------------------------
full of all of the Obligations, the Assignor hereby grants, assigns, transfers
and conveys to the Agent, for the benefit of the Banks and the Agent, BY WAY OF
COLLATERAL SECURITY, all of the Patent Collateral. NEITHER THE AGENT NOR ANY OF
THE BANKS ASSUMES ANY LIABILITY ARISING IN ANY WAY BY REASON OF ITS HOLDING SUCH
COLLATERAL SECURITY.
(S)3. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Assignor represents,
-----------------------------------------
warrants and covenants that:
(a) to the best of the Assignor's knowledge, Schedule A attached
-------- -
hereto sets forth a true and complete list of all the patents, rights to
patents and patent applications now owned, licensed, controlled or used by
the Assignor;
(b) to the best of the Assignor's knowledge, the issued Patents
are subsisting and have not been adjudged invalid or unenforceable, in
whole or in part, and there is no litigation or proceeding pending
concerning the validity or enforceability of the issued Patents;
(c) to the best of the Assignor's knowledge, each of the issued
Patents is valid and enforceable;
(d) to the best of the Assignor's knowledge, there is no
infringement by others of the issued Patents or Patent Rights;
(e) to the best of the Assignor's knowledge, no claim has been
made that the use of any of the Patents does or may violate the rights of
any third person, and there is no infringement by the Assignor of the
patent rights of others;
(f) the Assignor is the sole and exclusive owner of the entire
and unencumbered right, title and interest in and to each of the Patents
(other than ownership and other rights reserved by third party owners with
respect to Patents which the Assignor is licensed to practice or use), free
and clear of any liens, charges, encumbrances and adverse claims, including
without limitation pledges, assignments, licenses, shop rights and
covenants by the Assignor not to sue third persons, other than the security
agreement and mortgage created by the Security Agreement and this Patent
Agreement;
(g) the Assignor has the unqualified right to enter into this
Patent Agreement and perform its terms and will comply with the covenants
herein contained;
(h) this Patent Agreement, together with the Security Agreement,
will create in favor of the Agent, for the benefit of the Banks, a valid
and perfected
<PAGE>
-4-
first priority security interest in the Patent Collateral upon making the
filings referred to in clause (i) of this (S)3; and
(i) except for the filing of financing statements under the
Uniform Commercial Code and the filing of this Patent Agreement with the
PTO, no authorization, approval or other action by, and no notice to or
filing with, any governmental or regulatory authority, agency or office is
required either (i) for the grant by the Assignor or the effectiveness of
the security interest and assignment granted hereby or for the execution,
delivery and performance of this Patent Agreement by the Assignor, or (ii)
for the perfection of or the exercise by the Agent of any of its rights and
remedies hereunder.
(S)4. NO TRANSFER OR INCONSISTENT AGREEMENTS. Without the Agent's prior
--------------------------------------
written consent, the Assignor will not (a) mortgage, pledge, assign, encumber,
grant a security interest in, transfer, license or alienate any of the Patent
Collateral, or (b) enter into any agreement (for example, a license agreement)
that is inconsistent with the Assignor's obligations under this Patent Agreement
or the Security Agreement.
(S)5. AFTER-ACQUIRED PATENTS, ETC.
---------------------------
(S)5.1. AFTER-ACQUIRED PATENTS. If, before the Obligations shall have been
----------------------
finally paid and satisfied in full, the Assignor shall obtain any right, title
or interest in or to any other or new patents, patent applications or patentable
inventions, or become entitled to the benefit of any patent application or
patent or any reissue, division, continuation, renewal, extension, or
continuation-in-part of any of the Patent Collateral or any improvement on any
of the Patent Collateral, the provisions of this Patent Agreement shall
automatically apply thereto and the Assignor shall promptly give to the Agent
notice thereof in writing and execute and deliver to the Agent such documents or
instruments as the Agent may reasonably request further to transfer title
thereto to the Agent, for the benefit of the Banks and the Agent.
(S)5.2. AMENDMENT TO SCHEDULE. The Assignor authorizes the Agent to modify
---------------------
this Patent Agreement, without the necessity of the Assignor's further approval
or signature, by amending Schedule A attached hereto to include any future or
----------
other Patents or Patent Rights under (S)(S)2 or 5 hereof.
(S)6. PATENT PROSECUTION.
------------------
(S)6.1. ASSIGNOR RESPONSIBLE. The Assignor shall assume full and complete
--------------------
responsibility for the prosecution, grant, enforcement or any other necessary or
desirable actions in connection with the Patent Collateral, and shall hold the
Agent and the Banks harmless from any and all costs, damages, liabilities and
expenses which may be incurred by the Agent or any of the Banks in connection
with the Agent's title to any of the Patent Collateral or any other action or
failure to act in connection with this Patent Agreement or the transactions
contemplated hereby. In respect of such responsibility, the Assignor shall
retain patent counsel reasonably acceptable to the Agent.
<PAGE>
-5-
(S)6.2. ASSIGNOR'S DUTIES, ETC. The Assignor shall have the duty, through
----------------------
patent counsel reasonably acceptable to the Agent, to prosecute diligently any
patent applications of the Patents pending as of the date of this Patent
Agreement or thereafter, to make application for unpatented but reasonably
patentable inventions and to preserve and maintain all rights in the Patents,
including without limitation the payment when due of all maintenance fees and
other fees, taxes and other expenses which shall be incurred or which shall
accrue with respect to any of the Patents. Any expenses incurred in connection
with such applications and actions shall be borne by the Assignor. The Assignor
shall not abandon any filed patent application, or any pending patent
application or patent, without the consent of the Agent, which consent shall not
be unreasonably withheld. The Agent hereby appoints the Assignor as its agent
for all matters referred to in the foregoing provisions of this (S)6 and agrees
to execute any documents necessary to confirm such appointment. Upon the
occurrence and during the continuance of an Event of Default, the Agent may
terminate such agency by providing written notice of termination to the
Assignor.
(S)6.3. ASSIGNOR'S ENFORCEMENT RIGHTS. The Assignor shall have the right,
-----------------------------
with the consent of the Agent which shall not be unreasonably withheld, to bring
suit or other action in the Assignor's own name to enforce the Patents and the
Patent Rights. The Agent shall be required to join in such suit or action as may
be necessary to assure the Assignor's ability to bring and maintain any such
suit or action in any proper forum so long as the Agent is completely satisfied
that such joinder will not subject the Agent or any of the Banks to any risk of
liability. The Assignor shall promptly, upon demand, reimburse and indemnify the
Agent and the Banks for all damages, costs and expenses, including legal fees,
incurred by the Agent and any of the Banks pursuant to this (S)6.
(S)6.4. PROTECTION OF PATENTS, ETC. In general, the Assignor shall take
--------------------------
any and all such actions (including but not limited to institution and
maintenance of suits, proceedings or actions) as may be necessary or appropriate
to properly maintain, protect, preserve, care for and enforce the Patent
Collateral. The Assignor shall not take or fail to take any action, nor permit
any action to be taken or not taken by others under its control, which would
affect the validity, grant or enforcement of any of the Patent Collateral.
(S)6.5. NOTIFICATION BY ASSIGNOR. Promptly upon obtaining knowledge
------------------------
thereof, the Assignor will notify the Agent in writing of the institution of, or
any final adverse determination in, any proceeding in the PTO or any similar
office or agency of the United States or any foreign country, or any court,
regarding the validity of any of the Patents or the Assignor's rights, title or
interests in and to any of the Patent Collateral, and of any event which does or
reasonably could materially adversely affect the value of any of the Patent
Collateral, the ability of the Assignor or the Agent to dispose of any of the
Patent Collateral or the rights and remedies of the Agent and the Banks in
relation thereto (including but not limited to the levy of any legal process
against any of the Patent Collateral).
(S)7. LICENSE BACK TO ASSIGNOR. Unless and until there shall have
------------------------
occurred and be continuing an Event of Default and the Agent has notified the
Assignor that the license granted hereunder is terminated, the Agent hereby
grants to
<PAGE>
-6-
the Assignor the sole and exclusive, nontransferable, royalty-free, worldwide
right and license under the Patents to make, have made for it, use, sell and
otherwise practice the inventions disclosed and claimed in the Patents for the
Assignor's own benefit and account and for none other; provided, however, that
the foregoing right and license shall be no greater in scope than, and limited
by, the rights assigned to the Agent, for the benefit of the Banks and the
Agent, by the Assignor hereby. The Assignor agrees not to sell, assign,
transfer, encumber or sublicense its interest in the license granted to the
Assignor in this (S)7 without the prior written consent of the Agent. Any such
sublicenses granted on or after the date hereof shall be terminable by the Agent
upon termination of the Assignor's license hereunder.
(S)8. REMEDIES. If any Event of Default shall have occurred and be
--------
continuing, then at the discretion of the Agent, or upon instructions by the
Majority Banks to the Agent, and upon notice by the Agent to the Assignor: (a)
the Assignor's license with respect to the Patents as set forth in (S)7 hereof
shall terminate; (b) the Assignor shall immediately cease and desist from the
practice, manufacture, use and sale of the inventions claimed, disclosed or
covered by the Patents; and (c) the Agent shall have, in addition to all other
rights and remedies given it by this Patent Agreement, the Credit Agreement, the
Security Agreement, and the other Loan Documents, those allowed by law and the
rights and remedies of a secured party under the Uniform Commercial Code as
enacted in the Commonwealth of Massachusetts and, without limiting the
generality of the foregoing, the Agent may immediately, without demand of
performance and without other notice (except as set forth next below) or demand
whatsoever to the Assignor, all of which are hereby expressly waived, and
without advertisement, sell or license at public or private sale or otherwise
realize upon the whole or from time to time any part of the Patent Collateral,
or any interest which the Assignor may have therein, and after deducting from
the proceeds of sale or other disposition of the Patent Collateral all expenses
(including all reasonable expenses for broker's fees and legal services), shall
apply the residue of such proceeds toward the payment of the Obligations as set
forth in the Security Agreement. Notice of any sale, license or other
disposition of any of the Patent Collateral shall be given to the Assignor at
least fifteen (15) days before the time that any intended public sale or other
disposition of such Patent Collateral is to be made or after which any private
sale or other disposition of such Patent Collateral may be made, which the
Assignor hereby agrees shall be reasonable notice of such public or private sale
or other disposition. At any such sale or other disposition, the Agent may, to
the extent permitted under applicable law, purchase or license the whole or any
part of the Patent Collateral or interests therein sold, licensed or otherwise
disposed of.
(S)9. COLLATERAL PROTECTION. If the Assignor shall fail to do any act that
---------------------
it has covenanted to do hereunder, or if any representation or warranty of the
Assignor shall be breached, the Agent, in its own name or that of the Assignor
(in the sole discretion of the Agent), may (but shall not be obligated to) do
such act or remedy such breach (or cause such act to be done or such breach to
be remedied), and the Assignor agrees promptly to reimburse the Agent for any
cost or expense incurred by the Agent in so doing.
<PAGE>
-7-
(S)10. POWER OF ATTORNEY. If any Event of Default shall have occurred and
-----------------
be continuing, the Assignor does hereby make, constitute and appoint the Agent
(and any officer or agent of the Agent as the Agent may select in its exclusive
discretion) as the Assignor's true and lawful attorney-in-fact, with the power
to endorse the Assignor's name on all applications, documents, papers and
instruments necessary for the Agent to use any of the Patent Collateral, to
practice, make, use or sell the inventions disclosed or claimed in any of the
Patent Collateral, to grant or issue any exclusive or nonexclusive license of
any of the Patent Collateral to any third person, or necessary for the Agent to
assign, pledge, convey or otherwise transfer title in or dispose of the Patent
Collateral or any part thereof or interest therein to any third person, and, in
general, to execute and deliver any instruments or documents and do all other
acts which the Assignor is obligated to execute and do hereunder. The Assignor
hereby ratifies all that such attorney shall lawfully do or cause to be done by
virtue hereof, and releases the Agent from any claims, liabilities, causes of
action or demands arising out of or in connection with any action taken or
omitted to be taken by the Agent under this power of attorney (except for the
Agent's gross negligence or willful misconduct). This power of attorney shall be
irrevocable for the duration of this Patent Agreement.
(S)11. FURTHER ASSURANCES. The Assignor shall, at any time and from time
------------------
to time, and at its expense, make, execute, acknowledge and deliver, and file
and record as necessary or appropriate with governmental or regulatory
authorities, agencies or offices, such agreements, assignments, documents and
instruments, and do such other and further acts and things (including, without
limitation, obtaining consents of third parties), as the Agent may request or as
may be necessary or appropriate in order to implement and effect fully the
intentions, purposes and provisions of this Patent Agreement, or to assure and
confirm to the Agent the grant, perfection and priority of the Agent's security
interest in any of the Patent Collateral.
(S)12. TERMINATION. At such time as all of the Obligations have been
-----------
finally paid and satisfied in full, this Patent Agreement shall terminate and
the Agent shall, upon the written request and at the expense of the Assignor,
execute and deliver to the Assignor all deeds, assignments and other instruments
as may be necessary or proper to reassign and reconvey to and re-vest in the
Assignor the entire right, title and interest to the Patent Collateral
previously granted, assigned, transferred and conveyed to the Agent and the
Banks by the Assignor pursuant to this Patent Agreement, as fully as if this
Patent Agreement had not been made, subject to any disposition of all or any
part thereof which may have been made by the Agent and the Banks pursuant hereto
or the Security Agreement.
(S)13. COURSE OF DEALING. No course of dealing among the Assignor, the
-----------------
Banks and the Agent, nor any failure to exercise, nor any delay in exercising,
on the part of the Agent or any of the Banks, any right, power or privilege
hereunder or under the Security Agreement shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
or thereunder preclude any other or further exercise thereof or the exercise of
any other right, power or privilege.
(S)14. EXPENSES. Any and all fees, costs and expenses, of whatever kind or
--------
nature, including the reasonable attorneys' fees and legal expenses incurred by
the
<PAGE>
-8-
Agent in connection with the preparation of this Patent Agreement and all other
documents relating hereto, the consummation of the transactions contemplated
hereby or the enforcement hereof, the filing or recording of any documents
(including all taxes in connection therewith) in public offices, the payment or
discharge of any taxes, counsel fees, maintenance fees, encumbrances or
otherwise protecting, maintaining or preserving any of the Patent Collateral, or
in defending or prosecuting any actions or proceedings arising out of or related
to any of the Patent Collateral, shall be borne and paid by the Assignor.
(S)15. OVERDUE AMOUNTS. Until paid, all amounts due and payable by the
---------------
Assignor hereunder shall be a debt secured by the Patent Collateral and other
Collateral and shall bear, whether before or after judgment, interest at the
rate of interest for overdue principal set forth in the Credit Agreement.
(S)16. NO ASSUMPTION OF LIABILITY; INDEMNIFICATION. NOTWITHSTANDING
-------------------------------------------
ANYTHING TO THE CONTRARY CONTAINED HEREIN, NEITHER THE AGENT NOR ANY BANK
ASSUMES ANY LIABILITIES OF THE ASSIGNOR WITH RESPECT TO ANY CLAIM OR CLAIMS
REGARDING THE ASSIGNOR'S OWNERSHIP OR PURPORTED OWNERSHIP OF, OR RIGHTS OR
PURPORTED RIGHTS ARISING FROM, ANY OF THE PATENT COLLATERAL OR ANY PRACTICE,
USE, LICENSE OR SUBLICENSE THEREOF, OR ANY PRACTICE, MANUFACTURE, USE OR SALE OF
ANY OF THE INVENTIONS DISCLOSED OR CLAIMED THEREIN, WHETHER ARISING OUT OF ANY
PAST, CURRENT OR FUTURE EVENT, CIRCUMSTANCE, ACT OR OMISSION OR OTHERWISE. ALL
OF SUCH LIABILITIES SHALL BE EXCLUSIVELY BORNE BY THE ASSIGNOR, AND THE ASSIGNOR
SHALL INDEMNIFY THE AGENT AND THE BANKS FOR ANY AND ALL COSTS, EXPENSES, DAMAGES
AND CLAIMS, INCLUDING LEGAL FEES, INCURRED BY THE AGENT OR ANY BANK WITH RESPECT
TO SUCH LIABILITIES.
(S)17. RIGHTS AND REMEDIES CUMULATIVE. All of the Agent's and the Banks'
------------------------------
rights and remedies with respect to the Patent Collateral, whether established
hereby or by the Security Agreement or by any other agreements or by law, shall
be cumulative and may be exercised singularly or concurrently. This Patent
Agreement is supplemental to the Security Agreement, and nothing contained
herein shall in any way derogate from any of the rights or remedies of the Agent
and the Banks contained therein. Nothing contained in this Patent Agreement
shall be deemed to extend the time of attachment or perfection of or otherwise
impair the security interest in any of the Patent Collateral granted to the
Agent for the benefit of the Banks and the Agent under the Security Agreement.
(S)18. NOTICES. All notices and other communications made or required to
-------
be given pursuant to this Patent Agreement shall be in writing and shall be
delivered in hand, mailed by United States registered or certified first-class
mail, postage prepaid, or sent by telegraph, telecopy or telex and confirmed by
delivery via courier or postal service, addressed as follows: if to the
Assignor, at the address set forth beneath its signature hereto, and if to the
Agent, at the address for notices to the Agent set forth in (S)20 of the Credit
Agreement, or at such address as either party may designate in
<PAGE>
-9-
writing to the other. Any such notice or demand shall be deemed to have been
duly given or made and to have become effective (a) if delivered by hand to a
responsible officer of the party to which it is directed, at the time of the
receipt thereof by such officer, (b) if sent by registered or certified first-
class mail, postage prepaid, two (2) Business Days after the posting thereof,
and (c) if sent by telegraph, telecopy, or telex, at the time of the dispatch
thereof, if in normal business hours in the country of receipt, or otherwise at
the opening of business on the following Business Day.
(S)19. AMENDMENT AND WAIVER. This Patent Agreement is subject to
--------------------
modification only by a writing signed by the Agent (with the consent of the
Banks or Majority Banks as provided in the Credit Agreement) and the Assignor,
except as provided in (S)5.2 hereof. The Agent shall not be deemed to have
waived any right hereunder unless such waiver shall be in writing and signed by
the Agent and the Banks or Majority Banks as provided in the Credit Agreement. A
waiver on any one occasion shall not be construed as a bar to or waiver of any
right on any future occasion.
(S)20. GOVERNING LAW; CONSENT TO JURISDICTION. THIS PATENT AGREEMENT IS
--------------------------------------
INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. The
Assignor agrees that any suit for the enforcement of this Patent Agreement may
be brought in the courts of The Commonwealth of Massachusetts or any federal
court sitting therein and consents to the non-exclusive jurisdiction of such
court and to service of process in any such suit being made upon the Assignor by
mail at the address specified in (S)18 hereof. The Assignor hereby waives any
objection that it may now or hereafter have to the venue of any such suit or any
such court or that such suit is brought in an inconvenient court.
(S)21. WAIVER OF JURY TRIAL. THE ASSIGNOR WAIVES ITS RIGHT TO A JURY TRIAL
--------------------
WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION
WITH THIS PATENT AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE
PERFORMANCE OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, the
Assignor waives any right which it may have to claim or recover in any
litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. The Assignor (a) certifies that neither the Agent or any Bank
nor any representative, agent or attorney of the Agent or any Bank has
represented, expressly or otherwise, that the Agent or any Bank would not, in
the event of litigation, seek to enforce the foregoing waivers, and (b)
acknowledges that, in entering into the Credit Agreement and the other Loan
Documents to which the Agent or any Bank is a party, the Agent and the Banks are
relying upon, among other things, the waivers and certifications contained in
this (S)21.
(S)22. MISCELLANEOUS. The headings of each section of this Patent
-------------
Agreement are for convenience only and shall not define or limit the provisions
thereof. This Patent Agreement and all rights and obligations hereunder shall be
binding upon the Assignor and its respective successors and assigns, and shall
inure to the benefit of the Agent, the Banks and their respective successors and
assigns. In the event of any
<PAGE>
-10-
irreconcilable conflict between the provisions of this Patent Agreement and the
Credit Agreement, or between this Patent Agreement and the Security Agreement,
the provisions of the Credit Agreement or the Security Agreement, as the case
may be, shall control. If any term of this Patent Agreement shall be held to be
invalid, illegal or unenforceable, the validity of all other terms hereof shall
in no way be affected thereby, and this Patent Agreement shall be construed and
be enforceable as if such invalid, illegal or unenforceable term had not been
included herein. The Assignor acknowledges receipt of a copy of this Patent
Agreement.
<PAGE>
IN WITNESS WHEREOF, this Patent Collateral Assignment and Security
Agreement has been executed as of the day and year first above written.
CRYSTALOID TECHNOLOGIES, INC.
By: /s/ Christopher T. Paule
-----------------------------------
Title: Vice President & CFO
Address: _____________________
_____________________
BANKBOSTON, N.A., as Agent
By: /s/ Peter van der Horst
-----------------------------------
Peter van der Horst, Vice President
<PAGE>
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
)ss.
COUNTY OF NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 22nd day of April, 1998, personally appeared Christopher T.
Paule to me known personally, and who, being by me duly sworn, deposes and says
that (s)he is the Vice President & CFO of Crystaloid Technologies, Inc., and
that said instrument was signed and sealed on behalf of said corporation by
authority of its Board of Directors, and said Vice President & CFO acknowledged
said instrument to be the free act and deed of said corporation.
/s/ Dawn M. Schoenig
-------------------------------
Notary Public
My commission expires: August 3, 1999
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK)
)ss.
COUNTY OF NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 21 day of April, 1998, personally appeared Peter van der
Horst to me known personally, and who, being by me duly sworn, deposes and says
that (s)he is a Vice President of BankBoston, N.A. (the "Agent"), and that
said instrument was signed and sealed on behalf of said Agent by authority of
its Board of Directors, and said Vice President acknowledged said instrument
to be the free act and deed of said Agent.
/s/ D.L. Figueroa-Thomas
------------------------------------
Notary Public
My commission expires: February 21, 1999
<PAGE>
SCHEDULE A
----------
ISSUED AND PENDING PATENTS
--------------------------
PATENTS ISSUED BY U.S. PATENT
-----------------------------
AND TRADEMARK OFFICE
--------------------
Patent No. Issue Date Inventor(s) Title
- --------- ---------- ----------- -----
PATENTS PENDING WITH U.S. PATENT
--------------------------------
AND TRADEMARK OFFICE
--------------------
<PAGE>
EXHIBIT 10.18
BINGHAM DRAFT
04/20/98
--------
TRADEMARK COLLATERAL
--------- ----------
SECURITY AND PLEDGE AGREEMENT
-------- --- ------ ---------
TRADEMARK COLLATERAL SECURITY AND PLEDGE AGREEMENT, dated as of April 22,
1998, between JACKSON PRODUCTS, INC., a Delaware corporation having its
principal place of business at 2997 Clarkson Road, Chesterfield, Missouri 63017
(the "Assignor"), and BANKBOSTON, N.A., as agent (hereinafter, in such capacity,
the "Agent") for itself and other lending institutions (hereinafter,
collectively, the "Banks") which are, or may in the future become, parties to a
Revolving Credit and Acquisition Loan Agreement dated as of April 22, 1998 (as
amended and in effect from time to time, the "Credit Agreement"), among the
Assignor, the Banks, the Agent and Mercantile Bank National Association, as Co-
Agent.
WHEREAS, it is a condition precedent to the Banks' making any loans or
otherwise extending credit to the Assignor under the Credit Agreement that the
Assignor execute and deliver to the Agent, for the benefit of the Banks and the
Agent, a trademark agreement in substantially the form hereof;
WHEREAS, the Assignor has executed and delivered to the Agent, for the
benefit of the Banks and the Agent, the Security Agreement (as defined in the
Credit Agreement), pursuant to which the Assignor has granted to the Agent, for
the benefit of the Banks and the Agent, a security interest in all of the
Assignor's personal property and fixture assets, including, without limitation,
the trademarks, service marks, trademark and service mark registrations, and
trademark and service mark registration applications listed on Schedule A
-------- -
attached hereto, all to secure the payment and performance of the Obligations
(as defined in the Credit Agreement); and
WHEREAS, this Trademark Agreement is supplemental to the provisions
contained in the Security Agreement;
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
(S)1. DEFINITIONS. Capitalized terms used herein and not otherwise
-----------
defined herein shall have the respective meanings provided therefor in the
Credit Agreement and the Security Agreement. In addition, the following terms
shall have the meanings set forth in this (S)1 or elsewhere in this Trademark
Agreement referred to below:
Assignment of Marks. See (S)2.1 hereof.
---------- -- -----
Associated Goodwill. All goodwill of the Assignor and its business,
---------- --------
products and services appurtenant to, associated with or symbolized by the
Trademarks and the use thereof.
<PAGE>
-2-
Pledged Trademarks. All of the Assignor's right, title and interest in
------- ----------
and to all of the Trademarks, the Trademark Registrations, the Trademark License
Rights, the Trademark Rights, the Associated Goodwill, the Related Assets, and
all accessions to, substitutions for, replacements of, and all products and
proceeds of any and all of the foregoing.
PTO. The United States Patent and Trademark Office.
---
Related Assets. All assets, rights and interests of the Assignor that
------- ------
uniquely reflect or embody the Associated Goodwill, including the following:
(a) all patents, inventions, copyrights, trade secrets, confidential
information, formulae, methods or processes, compounds, recipes, know-how,
methods and operating systems, drawings, descriptions, formulations,
manufacturing and production and delivery procedures, quality control
procedures, product and service specifications, catalogs, price lists, and
advertising materials, relating to the manufacture, production, delivery,
provision and sale of goods or services under or in association with any of
the Trademarks; and
(b) the following documents and things in the possession or under the
control of the Assignor, or subject to its demand for possession or
control, related to the production, delivery, provision and sale by the
Assignor, or any affiliate, franchisee, licensee or contractor, of products
or services sold by or under the authority of the Assignor in connection
with the Trademarks or Trademark Rights, whether prior to, on or subsequent
to the date hereof:
(i) all lists, contracts, ancillary documents and other
information that identify, describe or provide information with
respect to any customers, dealers or distributors of the Assignor, its
affiliates or franchisees or licensees or contractors, for products or
services sold under or in connection with the Trademarks or Trademark
Rights, including all lists and documents containing information
regarding each customer's, dealer's or distributor's name and address,
credit, payment, discount, delivery and other sale terms, and history,
pattern and total of purchases by brand, product, style, size and
quantity;
(ii) all agreements (including franchise agreements), product
and service specification documents and operating, production and
quality control manuals relating to or used in the design,
manufacture, production, delivery, provision and sale of products or
services under or in connection with the Trademarks or Trademark
Rights;
(iii) all documents and agreements relating to the identity and
locations of all sources of supply, all terms of purchase and
delivery, for all materials, components, raw materials and other
supplies and services used in the manufacture, production, provision,
delivery and sale of
<PAGE>
-3-
products or services under or in connection with the Trademarks or
Trademark Rights; and
(iv) all agreements and documents constituting or concerning
the present or future, current or proposed advertising and promotion
by the Assignor (or any of its affiliates, franchisees, licensees or
contractors) of products or services sold under or in connection with
the Trademarks or Trademark Rights.
Trademark Agreement. This Trademark Collateral Security and Pledge
--------- ---------
Agreement, as amended and in effect from time to time.
Trademark License Rights. Any and all past, present or future rights and
--------- --------------
interests of the Assignor pursuant to any and all past, present and future
franchising or licensing agreements in favor of the Assignor, or to which the
Assignor is a party, pertaining to any Trademarks, Trademark Registrations, or
Trademark Rights owned or used by third parties in the past, present or future,
including the right (but not the obligation) in the name of the Assignor or the
Agent to enforce, and sue and recover for, any breach or violation of any such
agreement to which the Assignor is a party.
Trademark Registrations. All past, present or future federal, state,
--------- -------------
local and foreign registrations of the Trademarks, all past, present and future
applications for any such registrations (and any such registrations thereof upon
approval of such applications), together with the right (but not the obligation)
to apply for such registrations (and prosecute such applications) in the name of
the Assignor or the Agent, and to take any and all actions necessary or
appropriate to maintain such registrations in effect and renew and extend such
registrations.
Trademark Rights. Any and all past, present or future rights in, to and
--------- ------
associated with the Trademarks throughout the world, whether arising under
federal law, state law, common law, foreign law or otherwise, including the
following: all such rights arising out of or associated with the Trademark
Registrations; the right (but not the obligation) to register claims under any
state, federal or foreign trademark law or regulation; the right (but not the
obligation) to sue or bring opposition or cancellation proceedings in the name
of the Assignor or the Agent for any and all past, present and future
infringements or dilution of or any other damages or injury to the Trademarks,
the Trademark Rights, or the Associated Goodwill, and the rights to damages or
profits due or accrued arising out of or in connection with any such past,
present or future infringement, dilution, damage or injury; and the Trademark
License Rights.
Trademarks. All of the trademarks, service marks, designs, logos,
----------
indicia, trade names, corporate names, company names, business names, fictitious
business names, trade styles, elements of package or trade dress, and other
source and product or service identifiers, used or associated with or
appurtenant to the products, services and businesses of the Assignor, that (i)
are set forth on Schedule A hereto, or (ii) have been adopted, acquired, owned,
-------- -
held or used by the Assignor or are now owned, held or used by the Assignor, in
the Assignor's business, or with the Assignor's products and services, or in
which the Assignor has any right, title or interest, or (iii) are in the
<PAGE>
-4-
future adopted, acquired, owned, held and used by the Assignor in the Assignor's
business or with the Assignor's products and services, or in which the Assignor
in the future acquires any right, title or interest.
use. With respect to any Trademark, all uses of such Trademark by, for
---
or in connection with the Assignor or its business or for the direct or indirect
benefit of the Assignor or its business, including all such uses by the Assignor
itself, by any of the affiliates of the Assignor, or by any franchisee, licensee
or contractor of the Assignor.
Unless otherwise provided herein, the rules of interpretation set forth
in (S)1.2 of the Credit Agreement shall be applicable to this Trademark
Agreement.
(S)2. GRANT OF SECURITY INTEREST.
----- -- -------- --------
(S)2.1. SECURITY INTEREST; ASSIGNMENT OF MARKS. As collateral security
-------- -------- ---------- -- -----
for the payment and performance in full of all of the Obligations, the Assignor
hereby unconditionally grants to the Agent, for the benefit of the Banks and the
Agent, a continuing security interest in and first priority lien on the Pledged
Trademarks, and pledges and mortgages (but does not transfer title to) the
Pledged Trademarks to the Agent for the benefit of the Banks and the Agent. In
addition, the Assignor has executed in blank and delivered to the Agent an
assignment of federally registered trademarks in substantially the form of
Exhibit 1 attached hereto (the "Assignment of Marks"). The Assignor hereby
- ------- -
authorizes the Agent to complete as assignee and record with the PTO the
Assignment of Marks upon the occurrence and during the continuance of an Event
of Default and the proper exercise of the Agent's remedies under this Trademark
Agreement and the Security Agreement.
(S)2.2. CONDITIONAL ASSIGNMENT. In addition to, and not by way of
----------- ----------
limitation of, the grant, pledge and mortgage of the Pledged Trademarks provided
in (S)2.1 hereof, the Assignor grants, assigns, transfers, conveys and sets over
to the Agent, for the benefit of the Banks and the Agent, the Assignor's entire
right, title and interest in and to the Pledged Trademarks; provided that such
grant, assignment, transfer and conveyance shall be and become of force and
effect only (i) upon or after the occurrence and during the continuance of an
Event of Default and (ii) either (A) upon the written demand of the Agent at any
time during such continuance or (B) immediately and automatically (without
notice or action of any kind by the Agent) upon an Event of Default for which
acceleration of the Loans is automatic under the Credit Agreement or upon the
sale or other disposition of or foreclosure upon the Collateral pursuant to the
Security Agreement and applicable law (including the transfer or other
disposition of the Collateral by the Assignor to the Agent or its nominee in
lieu of foreclosure).
(S)2.3. SUPPLEMENTAL TO SECURITY AGREEMENT. Pursuant to the Security
------------ -- -------- ---------
Agreement the Assignor has granted to the Agent, for the benefit of the Banks
and the Agent, a continuing security interest in and lien on the Collateral
(including the Pledged Trademarks). The Security Agreement, and all rights and
interests of the Agent in and to the Collateral (including the Pledged
Trademarks) thereunder, are hereby ratified and confirmed in all respects. In no
event shall this Trademark Agreement, the grant, assignment, transfer and
conveyance of the Pledged Trademarks
<PAGE>
-5-
hereunder, or the recordation of this Trademark Agreement (or any document
hereunder) with the PTO, adversely affect or impair, in any way or to any
extent, the Security Agreement, the security interest of the Agent in the
Collateral (including the Pledged Trademarks) pursuant to the Security Agreement
and this Trademark Agreement, the attachment and perfection of such security
interest under the Uniform Commercial Code (including the security interest in
the Pledged Trademarks), or any present or future rights and interests of the
Agent in and to the Collateral under or in connection with the Security
Agreement, this Trademark Agreement or the Uniform Commercial Code. Any and all
rights and interests of the Agent in and to the Pledged Trademarks (and any and
all obligations of the Assignor with respect to the Pledged Trademarks) provided
herein, or arising hereunder or in connection herewith, shall only supplement
and be cumulative and in addition to the rights and interests of the Agent (and
the obligations of the Assignor) in, to or with respect to the Collateral
(including the Pledged Trademarks) provided in or arising under or in connection
with the Security Agreement and shall not be in derogation thereof.
(S)3. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Assignor represents,
--------------- ---------- --- ---------
warrants and covenants that:
(a) to the best of the Assignor's knowledge, Schedule A attached
-------- -
hereto sets forth a true and complete list of all Trademarks and Trademark
Registrations now owned, licensed, controlled or used by the Assignor;
(b) to the best of the Assignor's knowledge, the Trademarks and
Trademark Registrations are subsisting and have not been adjudged invalid
or unenforceable, in whole or in part, and there is no litigation or
proceeding pending concerning the validity or enforceability of the
Trademarks or Trademark Registrations;
(c) to the best of the Assignor's knowledge, each of the
Trademarks and Trademark Registrations is valid and enforceable;
(d) to the best of the Assignor's knowledge, there is no
infringement by others of the Trademarks, Trademark Registrations or
Trademark Rights;
(e) to the best of the Assignor's knowledge, no claim has been
made that the use of any of the Trademarks does or may violate the rights
of any third person, and there is no infringement by the Assignor of the
trademark rights of others;
(f) the Assignor is the sole and exclusive owner of the entire
and unencumbered right, title and interest in and to each of the Trademarks
(other than ownership and other rights reserved by third party owners with
respect to Trademarks that the Assignor is licensed to use), free and clear
of any liens, charges, encumbrances and adverse claims, including pledges,
assignments, licenses, registered user agreements and covenants by the
Assignor not to sue third persons, other than the security interest and
assignment created by the Security Agreement and this Trademark Agreement;
<PAGE>
-6-
(g) the Assignor has the unqualified right to enter into this
Trademark Agreement and to perform its terms and will comply with the
covenants herein contained;
(h) the Assignor has used, and will continue to use, proper
statutory and other appropriate proprietary notices in connection with its
use of the Trademarks;
(i) the Assignor has used, and will continue to use for the
duration of this Trademark Agreement, consistent standards of quality in
its manufacture and provision of products and services sold or provided
under the Trademarks;
(j) this Trademark Agreement, together with the Security
Agreement, will create in favor of the Agent a valid and perfected first
priority security interest in the Pledged Trademarks upon making the
filings referred to in clause (k) of this (S)3; and
(k) except for the filing of financing statements under the
Uniform Commercial Code and the recording of this Trademark Agreement with
the PTO, no authorization, approval or other action by, and no notice to or
filing with, any governmental or regulatory authority, agency or office is
required either (A) for the grant by the Assignor or the effectiveness of
the security interest and assignment granted hereby or for the execution,
delivery and performance of this Trademark Agreement by the Assignor, or
(B) for the perfection of or the exercise by the Agent of any of its rights
and remedies hereunder.
(S)4. INSPECTION RIGHTS. The Assignor hereby grants to each of the Agent
---------- ------
and the Banks and its employees and agents the right to visit the Assignor's
plants and facilities that manufacture, inspect or store products sold under any
of the Trademarks, and to inspect the products and quality control records
relating thereto at reasonable times during regular business hours.
(S)5. NO TRANSFER OR INCONSISTENT AGREEMENTS. Without the Agent's prior
-- -------- -- ------------ ----------
written consent, the Assignor will not (a) mortgage, pledge, assign, encumber,
grant a security interest in, transfer, license or alienate any of the Pledged
Trademarks, or (b) enter into any agreement (for example, a license agreement)
that is inconsistent with the Assignor's obligations under this Trademark
Agreement or the Security Agreement.
(S)6. AFTER-ACQUIRED TRADEMARKS, ETC.
-------------- ---------- ---
(S)6.1. AFTER-ACQUIRED TRADEMARKS. If, before the Obligations shall have
-------------- ----------
been finally paid and satisfied in full, the Assignor shall obtain any right,
title or interest in or to any other or new Trademarks, Trademark Registrations
or Trademark Rights, the provisions of this Trademark Agreement shall
automatically apply thereto and the Assignor shall promptly provide to the Agent
notice thereof in writing and execute and
<PAGE>
-7-
deliver to the Agent such documents or instruments as the Agent may reasonably
request further to implement, preserve or evidence the Agent's interest therein.
(S)6.2. AMENDMENT TO SCHEDULE. The Assignor authorizes the Agent to modify
--------- -- --------
this Trademark Agreement and the Assignment of Marks, without the necessity of
the Assignor's further approval or signature, by amending Exhibit A attached
------- -
hereto and the Annex to the Assignment of Marks to include any future or other
-----
Trademarks, Trademark Registrations or Trademark Rights under (S)(S)2 or 6
hereof.
(S)7. TRADEMARK PROSECUTION.
---------------------
(S)7.1. ASSIGNOR RESPONSIBLE. The Assignor shall assume full and complete
-------- -----------
responsibility for the prosecution, defense, enforcement or any other necessary
or desirable actions in connection with the Pledged Trademarks, and shall hold
each of the Agent and the Banks harmless from any and all costs, damages,
liabilities and expenses that may be incurred by the Agent or any Bank in
connection with the Agent's interest in the Pledged Trademarks or any other
action or failure to act in connection with this Trademark Agreement or the
transactions contemplated hereby. In respect of such responsibility, the
Assignor shall retain trademark counsel reasonably acceptable to the Agent.
(S)7.2. ASSIGNOR'S DUTIES, ETC. The Assignor shall have the right and the
---------- ------ ---
duty, through trademark counsel reasonably acceptable to the Agent, to prosecute
diligently any trademark registration applications of the Trademarks pending as
of the date of this Trademark Agreement or thereafter, to preserve and maintain
all rights in the Trademarks and Trademark Registrations, including the filing
of appropriate renewal applications and other instruments to maintain in effect
the Trademark Registrations and the payment when due of all registration renewal
fees and other fees, taxes and other expenses that shall be incurred or that
shall accrue with respect to any of the Trademarks or Trademark Registrations.
Any expenses incurred in connection with such applications and actions shall be
borne by the Assignor. The Assignor shall not abandon any filed trademark
registration application, or any Trademark Registration or Trademark, without
the consent of the Agent, which consent shall not be unreasonably withheld.
(S)7.3. ASSIGNOR'S ENFORCEMENT RIGHTS. The Assignor shall have the right
---------- ----------- ------
and the duty to bring suit or other action in the Assignor's own name to
maintain and enforce the Trademarks, the Trademark Registrations and the
Trademark Rights. The Assignor may require the Agent to join in such suit or
action as necessary to assure the Assignor's ability to bring and maintain any
such suit or action in any proper forum if (but only if) the Agent is completely
satisfied that such joinder will not subject the Agent or any Bank to any risk
of liability. The Assignor shall promptly, upon demand, reimburse and indemnify
the Agent for all damages, costs and expenses, including legal fees, incurred by
the Agent pursuant to this (S)7.3.
(S)7.4. PROTECTION OF TRADEMARKS, ETC. In general, the Assignor shall take
---------- -- ---------- ---
any and all such actions (including institution and maintenance of suits,
proceedings or actions) as may be necessary or appropriate to properly maintain,
protect, preserve,
<PAGE>
-8-
care for and enforce the Pledged Trademarks. The Assignor shall not take or fail
to take any action, nor permit any action to be taken or not taken by others
under its control, that would adversely affect the validity, grant or
enforcement of the Pledged Trademarks.
(S)7.5. NOTIFICATION BY ASSIGNOR. Promptly upon obtaining knowledge
------------ -- --------
thereof, the Assignor will notify the Agent in writing of the institution of, or
any final adverse determination in, any proceeding in the PTO or any similar
office or agency of the United States or any foreign country, or any court,
regarding the validity of any of the Trademarks or Trademark Registrations or
the Assignor's rights, title or interests in and to the Pledged Trademarks, and
of any event that does or reasonably could materially adversely affect the value
of any of the Pledged Trademarks, the ability of the Assignor or the Agent to
dispose of any of the Pledged Trademarks or the rights and remedies of the Agent
in relation thereto (including but not limited to the levy of any legal process
against any of the Pledged Trademarks).
(S)8. REMEDIES. Upon the occurrence and during the continuance of an
--------
Event of Default, the Agent shall have, in addition to all other rights and
remedies given it by this Trademark Agreement (including, without limitation,
those set forth in (S)2.2 hereof, the Credit Agreement, the Security Agreement
and the other Loan Documents), those allowed by law and the rights and remedies
of a secured party under the Uniform Commercial Code as enacted in the
Commonwealth of Massachusetts, and, without limiting the generality of the
foregoing, the Agent may immediately, without demand of performance and without
other notice (except as set forth next below) or demand whatsoever to the
Assignor, all of which are hereby expressly waived, sell or license at public or
private sale or otherwise realize upon the whole or from time to time any part
of the Pledged Trademarks, or any interest that the Assignor may have therein,
and after deducting from the proceeds of sale or other disposition of the
Pledged Trademarks all expenses incurred by the Agent in attempting to enforce
this Trademark Agreement (including all reasonable expenses for broker's fees
and legal services), shall apply the residue of such proceeds toward the payment
of the Obligations as set forth in or by reference in the Security Agreement.
Notice of any sale, license or other disposition of the Pledged Trademarks shall
be given to the Assignor at least fifteen (15) days before the time that any
intended public sale or other public disposition of the Pledged Trademarks is to
be made or after which any private sale or other private disposition of the
Pledged Trademarks may be made, which the Assignor hereby agrees shall be
reasonable notice of such public or private sale or other disposition. At any
such sale or other disposition, the Agent may, to the extent permitted under
applicable law, purchase or license the whole or any part of the Pledged
Trademarks or interests therein sold, licensed or otherwise disposed of.
(S)9. COLLATERAL PROTECTION. If the Assignor shall fail to do any act
---------- ----------
that it has covenanted to do hereunder, or if any representation or warranty of
the Assignor shall be breached, the Agent, in its own name or that of the
Assignor (in the sole discretion of the Agent), may (but shall not be obligated
to) do such act or remedy such breach (or cause such act to be done or such
breach to be remedied), and the Assignor agrees promptly to reimburse the Agent
for any cost or expense incurred by the Agent in so doing.
<PAGE>
-9-
(S)10. POWER OF ATTORNEY. If any Event of Default shall have occurred and
----- -- --------
be continuing, the Assignor does hereby make, constitute and appoint the Agent
(and any officer or agent of the Agent as the Agent may select in its exclusive
discretion) as the Assignor's true and lawful attorney-in-fact, with full power
of substitution and with the power to endorse the Assignor's name on all
applications, documents, papers and instruments necessary for the Agent to use
the Pledged Trademarks, or to grant or issue any exclusive or nonexclusive
license of any of the Pledged Trademarks to any third person, or to take any and
all actions necessary for the Agent to assign, pledge, convey or otherwise
transfer title in or dispose of any of the Pledged Trademarks or any interest of
the Assignor therein to any third person, and, in general, to execute and
deliver any instruments or documents and do all other acts that the Assignor is
obligated to execute and do hereunder. The Assignor hereby ratifies all that
such attorney shall lawfully do or cause to be done by virtue hereof and
releases each of the Agent and the Banks from any claims, liabilities, causes of
action or demands arising out of or in connection with any action taken or
omitted to be taken by the Agent under this power of attorney (except for the
Agent's gross negligence or willful misconduct). This power of attorney is
coupled with an interest and shall be irrevocable for the duration of this
Trademark Agreement.
(S)11. FURTHER ASSURANCES. The Assignor shall, at any time and from time
------- ----------
to time, and at its expense, make, execute, acknowledge and deliver, and file
and record as necessary or appropriate with governmental or regulatory
authorities, agencies or offices, such agreements, assignments, documents and
instruments, and do such other and further acts and things (including, without
limitation, obtaining consents of third parties), as the Agent may request or as
may be necessary or appropriate in order to implement and effect fully the
intentions, purposes and provisions of this Trademark Agreement, or to assure
and confirm to the Agent the grant, perfection and priority of the Agent's
security interest in the Pledged Trademarks.
(S)12. TERMINATION. At such time as all of the Obligations have been
-----------
finally paid and satisfied in full, this Trademark Agreement shall terminate and
the Agent shall, upon the written request and at the expense of the Assignor,
execute and deliver to the Assignor all deeds, assignments and other instruments
as may be necessary or proper to reassign and reconvey to and re-vest in the
Assignor the entire right, title and interest to the Pledged Trademarks
previously granted, assigned, transferred and conveyed to the Agent by the
Assignor pursuant to this Trademark Agreement, as fully as if this Trademark
Agreement had not been made, subject to any disposition of all or any part
thereof that may have been made by the Agent pursuant hereto or the Security
Agreement.
(S)13. COURSE OF DEALING. No course of dealing between the Assignor and
------ -- -------
the Agent, nor any failure to exercise, nor any delay in exercising, on the part
of the Agent, any right, power or privilege hereunder or under the Security
Agreement or any other agreement shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or privilege hereunder or
thereunder preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.
<PAGE>
-10-
(S)14. EXPENSES. Any and all fees, costs and expenses, of whatever kind
--------
or nature, including the reasonable attorneys' fees and expenses incurred by the
Agent in connection with the preparation of this Trademark Agreement and all
other documents relating hereto, the consummation of the transactions
contemplated hereby or the enforcement hereof, the filing or recording of any
documents (including all taxes in connection therewith) in public offices, the
payment or discharge of any taxes, counsel fees, maintenance or renewal fees,
encumbrances, or otherwise protecting, maintaining or preserving the Pledged
Trademarks, or in defending or prosecuting any actions or proceedings arising
out of or related to the Pledged Trademarks, shall be borne and paid by the
Assignor.
(S)15. OVERDUE AMOUNTS. Until paid, all amounts due and payable by the
------- -------
Assignor hereunder shall be a debt secured by the Pledged Trademarks and other
Collateral and shall bear, whether before or after judgment, interest at the
rate of interest for overdue principal set forth in the Credit Agreement.
(S)16. NO ASSUMPTION OF LIABILITY; INDEMNIFICATION. NOTWITHSTANDING
-- ---------- -- ---------- ---------------
ANYTHING TO THE CONTRARY CONTAINED HEREIN, NEITHER THE AGENT NOR ANY BANK
ASSUMES ANY LIABILITIES OF THE ASSIGNOR WITH RESPECT TO ANY CLAIM OR CLAIMS
REGARDING THE ASSIGNOR'S OWNERSHIP OR PURPORTED OWNERSHIP OF, OR RIGHTS OR
PURPORTED RIGHTS ARISING FROM, ANY OF THE PLEDGED TRADEMARKS OR ANY USE, LICENSE
OR SUBLICENSE THEREOF, WHETHER ARISING OUT OF ANY PAST, CURRENT OR FUTURE EVENT,
CIRCUMSTANCE, ACT OR OMISSION OR OTHERWISE. ALL OF SUCH LIABILITIES SHALL BE
EXCLUSIVELY THE RESPONSIBILITY OF THE ASSIGNOR, AND THE ASSIGNOR SHALL INDEMNIFY
THE AGENT AND THE BANKS FOR ANY AND ALL COSTS, EXPENSES, DAMAGES AND CLAIMS,
INCLUDING LEGAL FEES, INCURRED BY THE AGENT OR ANY BANK WITH RESPECT TO SUCH
LIABILITIES.
(S)17. NOTICES. All notices and other communications made or required to
-------
be given pursuant to this Trademark Agreement shall be in writing and shall be
delivered in hand, mailed by United States registered or certified first-class
mail, postage prepaid, or sent by telegraph, telecopy or telex and confirmed by
delivery via courier or postal service, addressed as set forth in (S)20 of the
Credit Agreement. Any such notice or demand shall be deemed to have been duly
given or made and to have become effective (a) if delivered by hand to a
responsible officer of the party to which it is directed, at the time of the
receipt thereof by such officer, (b) if sent by registered or certified first-
class mail, postage prepaid, two (2) Business Days after the posting thereof,
and (c) if sent by telegraph, telecopy, or telex, at the time of the dispatch
thereof, if in normal business hours in the country of receipt, or otherwise at
the opening of business on the following Business Day.
(S)18. AMENDMENT AND WAIVER. This Trademark Agreement is subject to
--------- --- ------
modification only by a writing signed by the Agent (with the consent of the
Banks or Majority Banks as provided in the Credit Agreement) and the Assignor,
except as provided in (S)6.2 hereof. The Agent shall not be deemed to have
waived any right
<PAGE>
-11-
hereunder unless such waiver shall be in writing and signed by the Agent and the
Banks or Majority Banks as provided in the Credit Agreement. A waiver on any one
occasion shall not be construed as a bar to or waiver of any right on any future
occasion.
(S)19. GOVERNING LAW; CONSENT TO JURISDICTION. THIS TRADEMARK AGREEMENT
------------- ------- -- ------------
IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
The Assignor agrees that any suit for the enforcement of this Trademark
Agreement may be brought in the courts of the Commonwealth of Massachusetts or
any federal court sitting therein and consents to the non-exclusive jurisdiction
of such court and to service of process in any such suit being made upon the
Assignor by mail at the address specified in (S)17 hereof. The Assignor hereby
waives any objection that it may now or hereafter have to the venue of any such
suit or any such court or that such suit is brought in an inconvenient court.
(S)20. WAIVER OF JURY TRIAL. THE ASSIGNOR WAIVES ITS RIGHT TO A JURY
------ -- ---- -----
TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS TRADEMARK AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR
THE PERFORMANCE OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law,
the Assignor waives any right which it may have to claim or recover in any
litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. The Assignor (a) certifies that neither the Agent or any Bank
nor any representative, agent or attorney of the Agent or any Bank has
represented, expressly or otherwise, that the Agent or any Bank would not, in
the event of litigation, seek to enforce the foregoing waivers, and (b)
acknowledges that, in entering into the Credit Agreement and the other Loan
Documents to which the Agent or any Bank is a party, the Agent and the Banks are
relying upon, among other things, the waivers and certifications contained in
this (S)20.
(S)21. MISCELLANEOUS. The headings of each section of this Trademark
-------------
Agreement are for convenience only and shall not define or limit the provisions
thereof. This Trademark Agreement and all rights and obligations hereunder
shall be binding upon the Assignor and its respective successors and assigns,
and shall inure to the benefit of the Agent, the Banks and their respective
successors and assigns. In the event of any irreconcilable conflict between the
provisions of this Trademark Agreement and the Credit Agreement, or between this
Trademark Agreement and the Security Agreement, the provisions of the Credit
Agreement or the Security Agreement, as the case may be, shall control. If any
term of this Trademark Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be
affected thereby, and this Trademark Agreement shall be construed and be
enforceable as if such invalid, illegal or unenforceable term had not been
included herein. The Assignor acknowledges receipt of a copy of this Trademark
Agreement.
<PAGE>
-12-
IN WITNESS WHEREOF, this Trademark Collateral Security and Pledge Agreement
has been executed as of the day and year first above written.
JACKSON PRODUCTS, INC.
By: /s/ Christopher T. Paule
-----------------------------------
Title:
BANKBOSTON, N.A., AS AGENT
By: /s/ Peter van der Horst
-----------------------------------
Peter van der Horst, Vice President
<PAGE>
-13-
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 22nd day of April, 1998, personally appeared Christopher T.
Paule to me known personally, and who, being by me duly sworn, deposes and says
that he is the VP & CFO of Jackson Products, Inc., and that said instrument was
signed and sealed on behalf of said corporation by authority of its Board of
Directors, and said VP & CFO acknowledged said instrument to be the free act and
deed of said corporation.
/s/ Maryann T. D'Amato
---------------------------------
Notary Public
My commission expires: November 3, 1998
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 21nd day of April, 1998, personally appeared Peter van der
Horst to me known personally, and who, being by me duly sworn, deposes and says
that he is a Vice President of BankBoston, N.A. (the "Agent"), and that said
instrument was signed and sealed on behalf of said Agent by authority of its
Board of Directors, and said Peter van derHorst acknowledged said instrument to
be the free act and deed of said Agent.
/s/ D.L. Figueroa-Thomas
---------------------------------
Notary Public
My commission expires: February 21, 1999
<PAGE>
SCHEDULE A
----------
TRADEMARKS AND TRADEMARK REGISTRATIONS
--------------------------------------
<TABLE>
<CAPTION>
Trademark REGISTRATIONS --
or United States Patent and Trademark Office
Service Mark Registration No. Registration Date
------------ ---------------- -----------------
<S> <C> <C>
</TABLE>
<TABLE>
<CAPTION>
Trademark PENDING APPLICATIONS --
or United States Patent and Trademark Office
Service Mark Serial No. Filing Date
------------ ---------- ------------
<S> <C> <C>
</TABLE>
<PAGE>
EXHIBIT 10.19
BINGHAM DRAFT
04/20/98
--------
TRADEMARK COLLATERAL
--------------------
SECURITY AND PLEDGE AGREEMENT
-----------------------------
TRADEMARK COLLATERAL SECURITY AND PLEDGE AGREEMENT, dated as of April 22,
1998, between FLEX-O-LITE, INC., a Delaware corporation having its principal
place of business at 2997 Clarkson Road, Chesterfield, Missouri 63017 (the
"Assignor"), and BANKBOSTON, N.A., as agent (hereinafter, in such capacity, the
"Agent") for itself and other lending institutions (hereinafter, collectively,
the "Banks") which are, or may in the future become, parties to a Revolving
Credit and Acquisition Loan Agreement dated as of April 22, 1998 (as amended and
in effect from time to time, the "Credit Agreement"), among the Assignor, the
Banks, the Agent and Mercantile Bank National Association, as Co-Agent.
WHEREAS, it is a condition precedent to the Banks' making any loans or
otherwise extending credit to the Assignor under the Credit Agreement that the
Assignor execute and deliver to the Agent, for the benefit of the Banks and the
Agent, a trademark agreement in substantially the form hereof;
WHEREAS, the Assignor has executed and delivered to the Agent, for the
benefit of the Banks and the Agent, the Security Agreement (as defined in the
Credit Agreement), pursuant to which the Assignor has granted to the Agent, for
the benefit of the Banks and the Agent, a security interest in all of the
Assignor's personal property and fixture assets, including, without limitation,
the trademarks, service marks, trademark and service mark registrations, and
trademark and service mark registration applications listed on Schedule A
-------- -
attached hereto, all to secure the payment and performance of the Obligations
(as defined in the Credit Agreement); and
WHEREAS, this Trademark Agreement is supplemental to the provisions
contained in the Security Agreement;
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
(S)1. DEFINITIONS. Capitalized terms used herein and not otherwise
-----------
defined herein shall have the respective meanings provided therefor in the
Credit Agreement and the Security Agreement. In addition, the following terms
shall have the meanings set forth in this (S)1 or elsewhere in this Trademark
Agreement referred to below:
Assignment of Marks. See (S)2.1 hereof.
-------------------
Associated Goodwill. All goodwill of the Assignor and its business,
-------------------
products and services appurtenant to, associated with or symbolized by the
Trademarks and the use thereof.
<PAGE>
-2-
Pledged Trademarks. All of the Assignor's right, title and interest in
------------------
and to all of the Trademarks, the Trademark Registrations, the Trademark License
Rights, the Trademark Rights, the Associated Goodwill, the Related Assets, and
all accessions to, substitutions for, replacements of, and all products and
proceeds of any and all of the foregoing.
PTO. The United States Patent and Trademark Office.
---
Related Assets. All assets, rights and interests of the Assignor that
--------------
uniquely reflect or embody the Associated Goodwill, including the following:
(a) all patents, inventions, copyrights, trade secrets, confidential
information, formulae, methods or processes, compounds, recipes, know-how,
methods and operating systems, drawings, descriptions, formulations,
manufacturing and production and delivery procedures, quality control
procedures, product and service specifications, catalogs, price lists, and
advertising materials, relating to the manufacture, production, delivery,
provision and sale of goods or services under or in association with any of
the Trademarks; and
(b) the following documents and things in the possession or under the
control of the Assignor, or subject to its demand for possession or
control, related to the production, delivery, provision and sale by the
Assignor, or any affiliate, franchisee, licensee or contractor, of products
or services sold by or under the authority of the Assignor in connection
with the Trademarks or Trademark Rights, whether prior to, on or subsequent
to the date hereof:
(i) all lists, contracts, ancillary documents and other
information that identify, describe or provide information with
respect to any customers, dealers or distributors of the Assignor, its
affiliates or franchisees or licensees or contractors, for products or
services sold under or in connection with the Trademarks or Trademark
Rights, including all lists and documents containing information
regarding each customer's, dealer's or distributor's name and address,
credit, payment, discount, delivery and other sale terms, and history,
pattern and total of purchases by brand, product, style, size and
quantity;
(ii) all agreements (including franchise agreements), product
and service specification documents and operating, production and
quality control manuals relating to or used in the design,
manufacture, production, delivery, provision and sale of products or
services under or in connection with the Trademarks or Trademark
Rights;
(iii) all documents and agreements relating to the identity and
locations of all sources of supply, all terms of purchase and
delivery, for all materials, components, raw materials and other
supplies and services used in the manufacture, production, provision,
delivery and sale of
<PAGE>
-3-
products or services under or in connection with the Trademarks or
Trademark Rights; and
(iv) all agreements and documents constituting or concerning the
present or future, current or proposed advertising and promotion by
the Assignor (or any of its affiliates, franchisees, licensees or
contractors) of products or services sold under or in connection with
the Trademarks or Trademark Rights.
Trademark Agreement. This Trademark Collateral Security and Pledge
-------------------
Agreement, as amended and in effect from time to time.
Trademark License Rights. Any and all past, present or future rights and
------------------------
interests of the Assignor pursuant to any and all past, present and future
franchising or licensing agreements in favor of the Assignor, or to which the
Assignor is a party, pertaining to any Trademarks, Trademark Registrations, or
Trademark Rights owned or used by third parties in the past, present or future,
including the right (but not the obligation) in the name of the Assignor or the
Agent to enforce, and sue and recover for, any breach or violation of any such
agreement to which the Assignor is a party.
Trademark Registrations. All past, present or future federal, state, local
-----------------------
and foreign registrations of the Trademarks, all past, present and future
applications for any such registrations (and any such registrations thereof upon
approval of such applications), together with the right (but not the obligation)
to apply for such registrations (and prosecute such applications) in the name of
the Assignor or the Agent, and to take any and all actions necessary or
appropriate to maintain such registrations in effect and renew and extend such
registrations.
Trademark Rights. Any and all past, present or future rights in, to and
----------------
associated with the Trademarks throughout the world, whether arising under
federal law, state law, common law, foreign law or otherwise, including the
following: all such rights arising out of or associated with the Trademark
Registrations; the right (but not the obligation) to register claims under any
state, federal or foreign trademark law or regulation; the right (but not the
obligation) to sue or bring opposition or cancellation proceedings in the name
of the Assignor or the Agent for any and all past, present and future
infringements or dilution of or any other damages or injury to the Trademarks,
the Trademark Rights, or the Associated Goodwill, and the rights to damages or
profits due or accrued arising out of or in connection with any such past,
present or future infringement, dilution, damage or injury; and the Trademark
License Rights.
Trademarks. All of the trademarks, service marks, designs, logos, indicia,
----------
trade names, corporate names, company names, business names, fictitious business
names, trade styles, elements of package or trade dress, and other source and
product or service identifiers, used or associated with or appurtenant to the
products, services and businesses of the Assignor, that (i) are set forth on
Schedule A hereto, or (ii) have been adopted, acquired, owned, held or used by
- ----------
the Assignor or are now owned, held or used by the Assignor, in the Assignor's
business, or with the Assignor's products and services, or in which the Assignor
has any right, title or interest, or (iii) are in the
<PAGE>
-4-
future adopted, acquired, owned, held and used by the Assignor in the Assignor's
business or with the Assignor's products and services, or in which the Assignor
in the future acquires any right, title or interest.
use. With respect to any Trademark, all uses of such Trademark by, for
---
or in connection with the Assignor or its business or for the direct or indirect
benefit of the Assignor or its business, including all such uses by the Assignor
itself, by any of the affiliates of the Assignor, or by any franchisee, licensee
or contractor of the Assignor.
Unless otherwise provided herein, the rules of interpretation set forth in
(S)1.2 of the Credit Agreement shall be applicable to this Trademark Agreement.
(S)2. GRANT OF SECURITY INTEREST.
--------------------------
(S)2.1. SECURITY INTEREST; ASSIGNMENT OF MARKS. As collateral security
--------------------------------------
for the payment and performance in full of all of the Obligations, the Assignor
hereby unconditionally grants to the Agent, for the benefit of the Banks and the
Agent, a continuing security interest in and first priority lien on the Pledged
Trademarks, and pledges and mortgages (but does not transfer title to) the
Pledged Trademarks to the Agent for the benefit of the Banks and the Agent. In
addition, the Assignor has executed in blank and delivered to the Agent an
assignment of federally registered trademarks in substantially the form of
Exhibit 1 attached hereto (the "Assignment of Marks"). The Assignor hereby
- ---------
authorizes the Agent to complete as assignee and record with the PTO the
Assignment of Marks upon the occurrence and during the continuance of an Event
of Default and the proper exercise of the Agent's remedies under this Trademark
Agreement and the Security Agreement.
(S)2.2. CONDITIONAL ASSIGNMENT. In addition to, and not by way of
----------------------
limitation of, the grant, pledge and mortgage of the Pledged Trademarks provided
in (S)2.1 hereof, the Assignor grants, assigns, transfers, conveys and sets over
to the Agent, for the benefit of the Banks and the Agent, the Assignor's entire
right, title and interest in and to the Pledged Trademarks; provided that such
--------
grant, assignment, transfer and conveyance shall be and become of force and
effect only (i) upon or after the occurrence and during the continuance of an
Event of Default and (ii) either (A) upon the written demand of the Agent at any
time during such continuance or (B) immediately and automatically (without
notice or action of any kind by the Agent) upon an Event of Default for which
acceleration of the Loans is automatic under the Credit Agreement or upon the
sale or other disposition of or foreclosure upon the Collateral pursuant to the
Security Agreement and applicable law (including the transfer or other
disposition of the Collateral by the Assignor to the Agent or its nominee in
lieu of foreclosure).
(S)2.3. SUPPLEMENTAL TO SECURITY AGREEMENT. Pursuant to the Security
----------------------------------
Agreement the Assignor has granted to the Agent, for the benefit of the Banks
and the Agent, a continuing security interest in and lien on the Collateral
(including the Pledged Trademarks). The Security Agreement, and all rights and
interests of the Agent in and to the Collateral (including the Pledged
Trademarks) thereunder, are hereby ratified and confirmed in all respects. In no
event shall this Trademark Agreement, the grant, assignment, transfer and
conveyance of the Pledged Trademarks
<PAGE>
-5-
hereunder, or the recordation of this Trademark Agreement (or any document
hereunder) with the PTO, adversely affect or impair, in any way or to any
extent, the Security Agreement, the security interest of the Agent in the
Collateral (including the Pledged Trademarks) pursuant to the Security Agreement
and this Trademark Agreement, the attachment and perfection of such security
interest under the Uniform Commercial Code (including the security interest in
the Pledged Trademarks), or any present or future rights and interests of the
Agent in and to the Collateral under or in connection with the Security
Agreement, this Trademark Agreement or the Uniform Commercial Code. Any and all
rights and interests of the Agent in and to the Pledged Trademarks (and any and
all obligations of the Assignor with respect to the Pledged Trademarks) provided
herein, or arising hereunder or in connection herewith, shall only supplement
and be cumulative and in addition to the rights and interests of the Agent (and
the obligations of the Assignor) in, to or with respect to the Collateral
(including the Pledged Trademarks) provided in or arising under or in connection
with the Security Agreement and shall not be in derogation thereof.
(S)3. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Assignor represents,
-----------------------------------------
warrants and covenants that:
(a) to the best of the Assignor's knowledge, Schedule A attached
----------
hereto sets forth a true and complete list of all Trademarks and Trademark
Registrations now owned, licensed, controlled or used by the Assignor;
(b) to the best of the Assignor's knowledge, the Trademarks and
Trademark Registrations are subsisting and have not been adjudged invalid
or unenforceable, in whole or in part, and there is no litigation or
proceeding pending concerning the validity or enforceability of the
Trademarks or Trademark Registrations;
(c) to the best of the Assignor's knowledge, each of the
Trademarks and Trademark Registrations is valid and enforceable;
(d) to the best of the Assignor's knowledge, there is no
infringement by others of the Trademarks, Trademark Registrations or
Trademark Rights;
(e) to the best of the Assignor's knowledge, no claim has been
made that the use of any of the Trademarks does or may violate the rights
of any third person, and there is no infringement by the Assignor of the
trademark rights of others;
(f) the Assignor is the sole and exclusive owner of the entire
and unencumbered right, title and interest in and to each of the Trademarks
(other than ownership and other rights reserved by third party owners with
respect to Trademarks that the Assignor is licensed to use), free and clear
of any liens, charges, encumbrances and adverse claims, including pledges,
assignments, licenses, registered user agreements and covenants by the
Assignor not to sue third persons, other than the security interest and
assignment created by the Security Agreement and this Trademark Agreement;
<PAGE>
-6-
(g) the Assignor has the unqualified right to enter into this
Trademark Agreement and to perform its terms and will comply with the
covenants herein contained;
(h) the Assignor has used, and will continue to use, proper
statutory and other appropriate proprietary notices in connection with its
use of the Trademarks;
(i) the Assignor has used, and will continue to use for the
duration of this Trademark Agreement, consistent standards of quality in
its manufacture and provision of products and services sold or provided
under the Trademarks;
(j) this Trademark Agreement, together with the Security
Agreement, will create in favor of the Agent a valid and perfected first
priority security interest in the Pledged Trademarks upon making the
filings referred to in clause (k) of this (S)3; and
(k) except for the filing of financing statements under the
Uniform Commercial Code and the recording of this Trademark Agreement with
the PTO, no authorization, approval or other action by, and no notice to or
filing with, any governmental or regulatory authority, agency or office is
required either (A) for the grant by the Assignor or the effectiveness of
the security interest and assignment granted hereby or for the execution,
delivery and performance of this Trademark Agreement by the Assignor, or
(B) for the perfection of or the exercise by the Agent of any of its rights
and remedies hereunder.
(S)4. INSPECTION RIGHTS. The Assignor hereby grants to each of the Agent
-----------------
and the Banks and its employees and agents the right to visit the Assignor's
plants and facilities that manufacture, inspect or store products sold under any
of the Trademarks, and to inspect the products and quality control records
relating thereto at reasonable times during regular business hours.
(S)5. NO TRANSFER OR INCONSISTENT AGREEMENTS. Without the Agent's prior
--------------------------------------
written consent, the Assignor will not (a) mortgage, pledge, assign, encumber,
grant a security interest in, transfer, license or alienate any of the Pledged
Trademarks, or (b) enter into any agreement (for example, a license agreement)
that is inconsistent with the Assignor's obligations under this Trademark
Agreement or the Security Agreement.
(S)6. AFTER-ACQUIRED TRADEMARKS, ETC.
------------------------------
(S)6.1. AFTER-ACQUIRED TRADEMARKS. If, before the Obligations shall have
-------------------------
been finally paid and satisfied in full, the Assignor shall obtain any right,
title or interest in or to any other or new Trademarks, Trademark Registrations
or Trademark Rights, the provisions of this Trademark Agreement shall
automatically apply thereto and the Assignor shall promptly provide to the Agent
notice thereof in writing and execute and
<PAGE>
-7-
deliver to the Agent such documents or instruments as the Agent may reasonably
request further to implement, preserve or evidence the Agent's interest therein.
(S)6.2. AMENDMENT TO SCHEDULE. The Assignor authorizes the Agent to modify
---------------------
this Trademark Agreement and the Assignment of Marks, without the necessity of
the Assignor's further approval or signature, by amending Exhibit A attached
------- -
hereto and the Annex to the Assignment of Marks to include any future or other
-----
Trademarks, Trademark Registrations or Trademark Rights under (S)(S)2 or 6
hereof.
(S)7. TRADEMARK PROSECUTION.
---------------------
(S)7.1. ASSIGNOR RESPONSIBLE. The Assignor shall assume full and complete
--------------------
responsibility for the prosecution, defense, enforcement or any other necessary
or desirable actions in connection with the Pledged Trademarks, and shall hold
each of the Agent and the Banks harmless from any and all costs, damages,
liabilities and expenses that may be incurred by the Agent or any Bank in
connection with the Agent's interest in the Pledged Trademarks or any other
action or failure to act in connection with this Trademark Agreement or the
transactions contemplated hereby. In respect of such responsibility, the
Assignor shall retain trademark counsel reasonably acceptable to the Agent.
(S)7.2. ASSIGNOR'S DUTIES, ETC. The Assignor shall have the right and the
-----------------------
duty, through trademark counsel reasonably acceptable to the Agent, to prosecute
diligently any trademark registration applications of the Trademarks pending as
of the date of this Trademark Agreement or thereafter, to preserve and maintain
all rights in the Trademarks and Trademark Registrations, including the filing
of appropriate renewal applications and other instruments to maintain in effect
the Trademark Registrations and the payment when due of all registration renewal
fees and other fees, taxes and other expenses that shall be incurred or that
shall accrue with respect to any of the Trademarks or Trademark Registrations.
Any expenses incurred in connection with such applications and actions shall be
borne by the Assignor. The Assignor shall not abandon any filed trademark
registration application, or any Trademark Registration or Trademark, without
the consent of the Agent, which consent shall not be unreasonably withheld.
(S)7.3. ASSIGNOR'S ENFORCEMENT RIGHTS. The Assignor shall have the right
-----------------------------
and the duty to bring suit or other action in the Assignor's own name to
maintain and enforce the Trademarks, the Trademark Registrations and the
Trademark Rights. The Assignor may require the Agent to join in such suit or
action as necessary to assure the Assignor's ability to bring and maintain any
such suit or action in any proper forum if (but only if) the Agent is completely
satisfied that such joinder will not subject the Agent or any Bank to any risk
of liability. The Assignor shall promptly, upon demand, reimburse and indemnify
the Agent for all damages, costs and expenses, including legal fees, incurred by
the Agent pursuant to this (S)7.3.
(S)7.4. PROTECTION OF TRADEMARKS, ETC. In general, the Assignor shall
-----------------------------
take any and all such actions (including institution and maintenance of suits,
proceedings or actions) as may be necessary or appropriate to properly maintain,
protect, preserve,
<PAGE>
-8-
care for and enforce the Pledged Trademarks. The Assignor shall not take or fail
to take any action, nor permit any action to be taken or not taken by others
under its control, that would adversely affect the validity, grant or
enforcement of the Pledged Trademarks.
(S)7.5. NOTIFICATION BY ASSIGNOR. Promptly upon obtaining knowledge
------------------------
thereof, the Assignor will notify the Agent in writing of the institution of, or
any final adverse determination in, any proceeding in the PTO or any similar
office or agency of the United States or any foreign country, or any court,
regarding the validity of any of the Trademarks or Trademark Registrations or
the Assignor's rights, title or interests in and to the Pledged Trademarks, and
of any event that does or reasonably could materially adversely affect the value
of any of the Pledged Trademarks, the ability of the Assignor or the Agent to
dispose of any of the Pledged Trademarks or the rights and remedies of the Agent
in relation thereto (including but not limited to the levy of any legal process
against any of the Pledged Trademarks).
(S)8. REMEDIES. Upon the occurrence and during the continuance of an
--------
Event of Default, the Agent shall have, in addition to all other rights and
remedies given it by this Trademark Agreement (including, without limitation,
those set forth in (S)2.2 hereof, the Credit Agreement, the Security Agreement
and the other Loan Documents), those allowed by law and the rights and remedies
of a secured party under the Uniform Commercial Code as enacted in the
Commonwealth of Massachusetts, and, without limiting the generality of the
foregoing, the Agent may immediately, without demand of performance and without
other notice (except as set forth next below) or demand whatsoever to the
Assignor, all of which are hereby expressly waived, sell or license at public or
private sale or otherwise realize upon the whole or from time to time any part
of the Pledged Trademarks, or any interest that the Assignor may have therein,
and after deducting from the proceeds of sale or other disposition of the
Pledged Trademarks all expenses incurred by the Agent in attempting to enforce
this Trademark Agreement (including all reasonable expenses for broker's fees
and legal services), shall apply the residue of such proceeds toward the payment
of the Obligations as set forth in or by reference in the Security Agreement.
Notice of any sale, license or other disposition of the Pledged Trademarks shall
be given to the Assignor at least fifteen (15) days before the time that any
intended public sale or other public disposition of the Pledged Trademarks is to
be made or after which any private sale or other private disposition of the
Pledged Trademarks may be made, which the Assignor hereby agrees shall be
reasonable notice of such public or private sale or other disposition. At any
such sale or other disposition, the Agent may, to the extent permitted under
applicable law, purchase or license the whole or any part of the Pledged
Trademarks or interests therein sold, licensed or otherwise disposed of.
(S)9. COLLATERAL PROTECTION. If the Assignor shall fail to do any act
---------------------
that it has covenanted to do hereunder, or if any representation or warranty of
the Assignor shall be breached, the Agent, in its own name or that of the
Assignor (in the sole discretion of the Agent), may (but shall not be obligated
to) do such act or remedy such breach (or cause such act to be done or such
breach to be remedied), and the Assignor agrees promptly to reimburse the Agent
for any cost or expense incurred by the Agent in so doing.
<PAGE>
-9-
(S)10. POWER OF ATTORNEY. If any Event of Default shall have occurred and
-----------------
be continuing, the Assignor does hereby make, constitute and appoint the Agent
(and any officer or agent of the Agent as the Agent may select in its exclusive
discretion) as the Assignor's true and lawful attorney-in-fact, with full power
of substitution and with the power to endorse the Assignor's name on all
applications, documents, papers and instruments necessary for the Agent to use
the Pledged Trademarks, or to grant or issue any exclusive or nonexclusive
license of any of the Pledged Trademarks to any third person, or to take any and
all actions necessary for the Agent to assign, pledge, convey or otherwise
transfer title in or dispose of any of the Pledged Trademarks or any interest of
the Assignor therein to any third person, and, in general, to execute and
deliver any instruments or documents and do all other acts that the Assignor is
obligated to execute and do hereunder. The Assignor hereby ratifies all that
such attorney shall lawfully do or cause to be done by virtue hereof and
releases each of the Agent and the Banks from any claims, liabilities, causes of
action or demands arising out of or in connection with any action taken or
omitted to be taken by the Agent under this power of attorney (except for the
Agent's gross negligence or willful misconduct). This power of attorney is
coupled with an interest and shall be irrevocable for the duration of this
Trademark Agreement.
(S)11. FURTHER ASSURANCES. The Assignor shall, at any time and from time
------------------
to time, and at its expense, make, execute, acknowledge and deliver, and file
and record as necessary or appropriate with governmental or regulatory
authorities, agencies or offices, such agreements, assignments, documents and
instruments, and do such other and further acts and things (including, without
limitation, obtaining consents of third parties), as the Agent may request or as
may be necessary or appropriate in order to implement and effect fully the
intentions, purposes and provisions of this Trademark Agreement, or to assure
and confirm to the Agent the grant, perfection and priority of the Agent's
security interest in the Pledged Trademarks.
(S)12. TERMINATION. At such time as all of the Obligations have been
-----------
finally paid and satisfied in full, this Trademark Agreement shall terminate and
the Agent shall, upon the written request and at the expense of the Assignor,
execute and deliver to the Assignor all deeds, assignments and other instruments
as may be necessary or proper to reassign and reconvey to and re-vest in the
Assignor the entire right, title and interest to the Pledged Trademarks
previously granted, assigned, transferred and conveyed to the Agent by the
Assignor pursuant to this Trademark Agreement, as fully as if this Trademark
Agreement had not been made, subject to any disposition of all or any part
thereof that may have been made by the Agent pursuant hereto or the Security
Agreement.
(S)13. COURSE OF DEALING. No course of dealing between the Assignor and
-----------------
the Agent, nor any failure to exercise, nor any delay in exercising, on the part
of the Agent, any right, power or privilege hereunder or under the Security
Agreement or any other agreement shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or privilege hereunder or
thereunder preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.
<PAGE>
-10-
(S)14. EXPENSES. Any and all fees, costs and expenses, of whatever kind
--------
or nature, including the reasonable attorneys' fees and expenses incurred by the
Agent in connection with the preparation of this Trademark Agreement and all
other documents relating hereto, the consummation of the transactions
contemplated hereby or the enforcement hereof, the filing or recording of any
documents (including all taxes in connection therewith) in public offices, the
payment or discharge of any taxes, counsel fees, maintenance or renewal fees,
encumbrances, or otherwise protecting, maintaining or preserving the Pledged
Trademarks, or in defending or prosecuting any actions or proceedings arising
out of or related to the Pledged Trademarks, shall be borne and paid by the
Assignor.
(S)15. OVERDUE AMOUNTS. Until paid, all amounts due and payable by the
---------------
Assignor hereunder shall be a debt secured by the Pledged Trademarks and other
Collateral and shall bear, whether before or after judgment, interest at the
rate of interest for overdue principal set forth in the Credit Agreement.
(S)16. NO ASSUMPTION OF LIABILITY; INDEMNIFICATION. NOTWITHSTANDING
-------------------------------------------
ANYTHING TO THE CONTRARY CONTAINED HEREIN, NEITHER THE AGENT NOR ANY BANK
ASSUMES ANY LIABILITIES OF THE ASSIGNOR WITH RESPECT TO ANY CLAIM OR CLAIMS
REGARDING THE ASSIGNOR'S OWNERSHIP OR PURPORTED OWNERSHIP OF, OR RIGHTS OR
PURPORTED RIGHTS ARISING FROM, ANY OF THE PLEDGED TRADEMARKS OR ANY USE, LICENSE
OR SUBLICENSE THEREOF, WHETHER ARISING OUT OF ANY PAST, CURRENT OR FUTURE EVENT,
CIRCUMSTANCE, ACT OR OMISSION OR OTHERWISE. ALL OF SUCH LIABILITIES SHALL BE
EXCLUSIVELY THE RESPONSIBILITY OF THE ASSIGNOR, AND THE ASSIGNOR SHALL INDEMNIFY
THE AGENT AND THE BANKS FOR ANY AND ALL COSTS, EXPENSES, DAMAGES AND CLAIMS,
INCLUDING LEGAL FEES, INCURRED BY THE AGENT OR ANY BANK WITH RESPECT TO SUCH
LIABILITIES.
(S)17. NOTICES. All notices and other communications made or required to
-------
be given pursuant to this Trademark Agreement shall be in writing and shall be
delivered in hand, mailed by United States registered or certified first-class
mail, postage prepaid, or sent by telegraph, telecopy or telex and confirmed by
delivery via courier or postal service, addressed as set forth in (S)20 of the
Credit Agreement. Any such notice or demand shall be deemed to have been duly
given or made and to have become effective (a) if delivered by hand to a
responsible officer of the party to which it is directed, at the time of the
receipt thereof by such officer, (b) if sent by registered or certified first-
class mail, postage prepaid, two (2) Business Days after the posting thereof,
and (c) if sent by telegraph, telecopy, or telex, at the time of the dispatch
thereof, if in normal business hours in the country of receipt, or otherwise at
the opening of business on the following Business Day.
(S)18. AMENDMENT AND WAIVER. This Trademark Agreement is subject to
--------------------
modification only by a writing signed by the Agent (with the consent of the
Banks or Majority Banks as provided in the Credit Agreement) and the Assignor,
except as provided in (S)6.2 hereof. The Agent shall not be deemed to have
waived any right
<PAGE>
-11-
hereunder unless such waiver shall be in writing and signed by the Agent and the
Banks or Majority Banks as provided in the Credit Agreement. A waiver on any one
occasion shall not be construed as a bar to or waiver of any right on any future
occasion.
(S)19. GOVERNING LAW; CONSENT TO JURISDICTION. THIS TRADEMARK AGREEMENT
--------------------------------------
IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
The Assignor agrees that any suit for the enforcement of this Trademark
Agreement may be brought in the courts of the Commonwealth of Massachusetts or
any federal court sitting therein and consents to the non-exclusive jurisdiction
of such court and to service of process in any such suit being made upon the
Assignor by mail at the address specified in (S)17 hereof. The Assignor hereby
waives any objection that it may now or hereafter have to the venue of any such
suit or any such court or that such suit is brought in an inconvenient court.
(S)20. WAIVER OF JURY TRIAL. THE ASSIGNOR WAIVES ITS RIGHT TO A JURY
--------------------
TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS TRADEMARK AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR
THE PERFORMANCE OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law,
the Assignor waives any right which it may have to claim or recover in any
litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. The Assignor (a) certifies that neither the Agent or any Bank
nor any representative, agent or attorney of the Agent or any Bank has
represented, expressly or otherwise, that the Agent or any Bank would not, in
the event of litigation, seek to enforce the foregoing waivers, and (b)
acknowledges that, in entering into the Credit Agreement and the other Loan
Documents to which the Agent or any Bank is a party, the Agent and the Banks are
relying upon, among other things, the waivers and certifications contained in
this (S)20.
(S)21. MISCELLANEOUS. The headings of each section of this Trademark
-------------
Agreement are for convenience only and shall not define or limit the provisions
thereof. This Trademark Agreement and all rights and obligations hereunder
shall be binding upon the Assignor and its respective successors and assigns,
and shall inure to the benefit of the Agent, the Banks and their respective
successors and assigns. In the event of any irreconcilable conflict between the
provisions of this Trademark Agreement and the Credit Agreement, or between this
Trademark Agreement and the Security Agreement, the provisions of the Credit
Agreement or the Security Agreement, as the case may be, shall control. If any
term of this Trademark Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be
affected thereby, and this Trademark Agreement shall be construed and be
enforceable as if such invalid, illegal or unenforceable term had not been
included herein. The Assignor acknowledges receipt of a copy of this Trademark
Agreement.
<PAGE>
-12-
IN WITNESS WHEREOF, this Trademark Collateral Security and Pledge Agreement
has been executed as of the day and year first above written.
FLEX-O-LITE, INC.
By: /s/ Christopher T. Paule
-----------------------------------
Title: Christopher T. Paule
Vice President & CFO
BANKBOSTON, N.A., AS AGENT
By: /s/ Peter van der Horst
-----------------------------------
Peter van der Horst, Vice President
<PAGE>
-13-
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 22 day of April, 1998, personally appeared Christopher T.
Paule to me known personally, and who, being by me duly sworn, deposes and says
that he is the VP & CFO of Flex-O-Lite, Inc., and that said instrument was
signed and sealed on behalf of said corporation by authority of its Board of
Directors, and said VP & CFO acknowledged said instrument to be the free act and
deed of said corporation.
/s/ Dawn M. Schoenig
------------------------------------
Notary Public
My commission expires: [August 3, 1999]
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 21 day of April, 1998, personally appeared Peter van der
Horst to me known personally, and who, being by me duly sworn, deposes and says
that he is a Vice President of BankBoston, N.A. (the "Agent"), and that said
instrument was signed and sealed on behalf of said Agent by authority of its
Board of Directors, and said Peter van der Horst acknowledged said instrument to
be the free act and deed of said Agent.
/s/ D.L. Figueroa-Thomas
------------------------------------
Notary Public
My commission expires: [February 21, 1999]
<PAGE>
-14-
SCHEDULE A
----------
TRADEMARKS AND TRADEMARK REGISTRATIONS
--------------------------------------
<TABLE>
<CAPTION>
Trademark REGISTRATIONS --
or United States Patent and Trademark Office
Service Mark Registration No. Registration Date
------------ --------------- -----------------
<S> <C> <C>
<CAPTION>
Trademark PENDING APPLICATIONS --
or United States Patent and Trademark Office
Service Mark Serial No. Filing Date
------------ ---------- -----------
<S> <C> <C>
</TABLE>
<PAGE>
EXHIBIT 10.20
TRADEMARK COLLATERAL
--------- ----------
SECURITY AND PLEDGE AGREEMENT
-------- --- ------ ---------
TRADEMARK COLLATERAL SECURITY AND PLEDGE AGREEMENT, dated as of April 22,
1998, between OSD ENVIZION, INC., a Delaware corporation having its principal
place of business at 2997 Clarkson Road, Chesterfield, Missouri 63017 (the
"Assignor"), and BANKBOSTON, N.A., as agent (hereinafter, in such capacity, the
"Agent") for itself and other lending institutions (hereinafter, collectively,
the "Banks") which are, or may in the future become, parties to a Revolving
Credit and Acquisition Loan Agreement dated as of April 22, 1998 (as amended and
in effect from time to time, the "Credit Agreement"), among the Assignor, the
Banks, the Agent and Mercantile Bank National Association, as Co-Agent.
WHEREAS, it is a condition precedent to the Banks' making any loans or
otherwise extending credit to the Assignor under the Credit Agreement that the
Assignor execute and deliver to the Agent, for the benefit of the Banks and the
Agent, a trademark agreement in substantially the form hereof;
WHEREAS, the Assignor has executed and delivered to the Agent, for the
benefit of the Banks and the Agent, the Security Agreement (as defined in the
Credit Agreement), pursuant to which the Assignor has granted to the Agent, for
the benefit of the Banks and the Agent, a security interest in all of the
Assignor's personal property and fixture assets, including, without limitation,
the trademarks, service marks, trademark and service mark registrations, and
trademark and service mark registration applications listed on Schedule A
-------- -
attached hereto, all to secure the payment and performance of the Obligations
(as defined in the Credit Agreement); and
WHEREAS, this Trademark Agreement is supplemental to the provisions
contained in the Security Agreement;
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
(S)1. DEFINITIONS. Capitalized terms used herein and not otherwise
-----------
defined herein shall have the respective meanings provided therefor in the
Credit Agreement and the Security Agreement. In addition, the following terms
shall have the meanings set forth in this (S)1 or elsewhere in this Trademark
Agreement referred to below:
Assignment of Marks. See (S)2.1 hereof.
---------- -- -----
Associated Goodwill. All goodwill of the Assignor and its business,
---------- --------
products and services appurtenant to, associated with or symbolized by the
Trademarks and the use thereof.
<PAGE>
-2-
Pledged Trademarks. All of the Assignor's right, title and interest in and
------- ----------
to all of the Trademarks, the Trademark Registrations, the Trademark License
Rights, the Trademark Rights, the Associated Goodwill, the Related Assets, and
all accessions to, substitutions for, replacements of, and all products and
proceeds of any and all of the foregoing.
PTO. The United States Patent and Trademark Office.
---
Related Assets. All assets, rights and interests of the Assignor that
------- ------
uniquely reflect or embody the Associated Goodwill, including the following:
(a) all patents, inventions, copyrights, trade secrets, confidential
information, formulae, methods or processes, compounds, recipes, know-how,
methods and operating systems, drawings, descriptions, formulations,
manufacturing and production and delivery procedures, quality control
procedures, product and service specifications, catalogs, price lists, and
advertising materials, relating to the manufacture, production, delivery,
provision and sale of goods or services under or in association with any of
the Trademarks; and
(b) the following documents and things in the possession or under the
control of the Assignor, or subject to its demand for possession or
control, related to the production, delivery, provision and sale by the
Assignor, or any affiliate, franchisee, licensee or contractor, of products
or services sold by or under the authority of the Assignor in connection
with the Trademarks or Trademark Rights, whether prior to, on or subsequent
to the date hereof:
(i) all lists, contracts, ancillary documents and other
information that identify, describe or provide information with
respect to any customers, dealers or distributors of the Assignor, its
affiliates or franchisees or licensees or contractors, for products or
services sold under or in connection with the Trademarks or Trademark
Rights, including all lists and documents containing information
regarding each customer's, dealer's or distributor's name and address,
credit, payment, discount, delivery and other sale terms, and history,
pattern and total of purchases by brand, product, style, size and
quantity;
(ii) all agreements (including franchise agreements), product
and service specification documents and operating, production and
quality control manuals relating to or used in the design,
manufacture, production, delivery, provision and sale of products or
services under or in connection with the Trademarks or Trademark
Rights;
(iii) all documents and agreements relating to the identity and
locations of all sources of supply, all terms of purchase and
delivery, for all materials, components, raw materials and other
supplies and services used in the manufacture, production, provision,
delivery and sale of
<PAGE>
-3-
products or services under or in connection with the Trademarks or
Trademark Rights; and
(iv) all agreements and documents constituting or concerning the
present or future, current or proposed advertising and promotion by
the Assignor (or any of its affiliates, franchisees, licensees or
contractors) of products or services sold under or in connection with
the Trademarks or Trademark Rights.
Trademark Agreement. This Trademark Collateral Security and Pledge
-------------------
Agreement, as amended and in effect from time to time.
Trademark License Rights. Any and all past, present or future rights and
------------------------
interests of the Assignor pursuant to any and all past, present and future
franchising or licensing agreements in favor of the Assignor, or to which the
Assignor is a party, pertaining to any Trademarks, Trademark Registrations, or
Trademark Rights owned or used by third parties in the past, present or future,
including the right (but not the obligation) in the name of the Assignor or the
Agent to enforce, and sue and recover for, any breach or violation of any such
agreement to which the Assignor is a party.
Trademark Registrations. All past, present or future federal, state,
-----------------------
local and foreign registrations of the Trademarks, all past, present and future
applications for any such registrations (and any such registrations thereof upon
approval of such applications), together with the right (but not the obligation)
to apply for such registrations (and prosecute such applications) in the name of
the Assignor or the Agent, and to take any and all actions necessary or
appropriate to maintain such registrations in effect and renew and extend such
registrations.
Trademark Rights. Any and all past, present or future rights in, to and
----------------
associated with the Trademarks throughout the world, whether arising under
federal law, state law, common law, foreign law or otherwise, including the
following: all such rights arising out of or associated with the Trademark
Registrations; the right (but not the obligation) to register claims under any
state, federal or foreign trademark law or regulation; the right (but not the
obligation) to sue or bring opposition or cancellation proceedings in the name
of the Assignor or the Agent for any and all past, present and future
infringements or dilution of or any other damages or injury to the Trademarks,
the Trademark Rights, or the Associated Goodwill, and the rights to damages or
profits due or accrued arising out of or in connection with any such past,
present or future infringement, dilution, damage or injury; and the Trademark
License Rights.
Trademarks. All of the trademarks, service marks, designs, logos, indicia,
----------
trade names, corporate names, company names, business names, fictitious business
names, trade styles, elements of package or trade dress, and other source and
product or service identifiers, used or associated with or appurtenant to the
products, services and businesses of the Assignor, that (i) are set forth on
Schedule A hereto, or (ii) have been adopted, acquired, owned, held or used by
- -------- -
the Assignor or are now owned, held or used by the Assignor, in the Assignor's
business, or with the Assignor's products and services, or in which the Assignor
has any right, title or interest, or (iii) are in the
<PAGE>
-4-
future adopted, acquired, owned, held and used by the Assignor in the Assignor's
business or with the Assignor's products and services, or in which the Assignor
in the future acquires any right, title or interest.
use. With respect to any Trademark, all uses of such Trademark by, for or
---
in connection with the Assignor or its business or for the direct or indirect
benefit of the Assignor or its business, including all such uses by the Assignor
itself, by any of the affiliates of the Assignor, or by any franchisee, licensee
or contractor of the Assignor.
Unless otherwise provided herein, the rules of interpretation set forth in
(S)1.2 of the Credit Agreement shall be applicable to this Trademark Agreement.
(S)2. GRANT OF SECURITY INTEREST.
--------------------------
(S)2.1. SECURITY INTEREST; ASSIGNMENT OF MARKS. As collateral security for
--------------------------------------
the payment and performance in full of all of the Obligations, the Assignor
hereby unconditionally grants to the Agent, for the benefit of the Banks and the
Agent, a continuing security interest in and first priority lien on the Pledged
Trademarks, and pledges and mortgages (but does not transfer title to) the
Pledged Trademarks to the Agent for the benefit of the Banks and the Agent. In
addition, the Assignor has executed in blank and delivered to the Agent an
assignment of federally registered trademarks in substantially the form of
Exhibit 1 attached hereto (the "Assignment of Marks"). The Assignor hereby
- ------- -
authorizes the Agent to complete as assignee and record with the PTO the
Assignment of Marks upon the occurrence and during the continuance of an Event
of Default and the proper exercise of the Agent's remedies under this Trademark
Agreement and the Security Agreement.
(S)2.2. CONDITIONAL ASSIGNMENT. In addition to, and not by way of
----------------------
limitation of, the grant, pledge and mortgage of the Pledged Trademarks provided
in (S)2.1 hereof, the Assignor grants, assigns, transfers, conveys and sets over
to the Agent, for the benefit of the Banks and the Agent, the Assignor's entire
right, title and interest in and to the Pledged Trademarks; provided that such
--------
grant, assignment, transfer and conveyance shall be and become of force and
effect only (i) upon or after the occurrence and during the continuance of an
Event of Default and (ii) either (A) upon the written demand of the Agent at any
time during such continuance or (B) immediately and automatically (without
notice or action of any kind by the Agent) upon an Event of Default for which
acceleration of the Loans is automatic under the Credit Agreement or upon the
sale or other disposition of or foreclosure upon the Collateral pursuant to the
Security Agreement and applicable law (including the transfer or other
disposition of the Collateral by the Assignor to the Agent or its nominee in
lieu of foreclosure).
(S)2.3. SUPPLEMENTAL TO SECURITY AGREEMENT. Pursuant to the Security
----------------------------------
Agreement the Assignor has granted to the Agent, for the benefit of the Banks
and the Agent, a continuing security interest in and lien on the Collateral
(including the Pledged Trademarks). The Security Agreement, and all rights and
interests of the Agent in and to the Collateral (including the Pledged
Trademarks) thereunder, are hereby ratified and confirmed in all respects. In no
event shall this Trademark Agreement, the grant, assignment, transfer and
conveyance of the Pledged Trademarks
<PAGE>
-5-
hereunder, or the recordation of this Trademark Agreement (or any document
hereunder) with the PTO, adversely affect or impair, in any way or to any
extent, the Security Agreement, the security interest of the Agent in the
Collateral (including the Pledged Trademarks) pursuant to the Security Agreement
and this Trademark Agreement, the attachment and perfection of such security
interest under the Uniform Commercial Code (including the security interest in
the Pledged Trademarks), or any present or future rights and interests of the
Agent in and to the Collateral under or in connection with the Security
Agreement, this Trademark Agreement or the Uniform Commercial Code. Any and all
rights and interests of the Agent in and to the Pledged Trademarks (and any and
all obligations of the Assignor with respect to the Pledged Trademarks) provided
herein, or arising hereunder or in connection herewith, shall only supplement
and be cumulative and in addition to the rights and interests of the Agent (and
the obligations of the Assignor) in, to or with respect to the Collateral
(including the Pledged Trademarks) provided in or arising under or in connection
with the Security Agreement and shall not be in derogation thereof.
(S)3. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Assignor represents,
-----------------------------------------
warrants and covenants that:
(a) to the best of the Assignor's knowledge, Schedule A attached
-------- -
hereto sets forth a true and complete list of all Trademarks and Trademark
Registrations now owned, licensed, controlled or used by the Assignor;
(b) to the best of the Assignor's knowledge, the Trademarks and
Trademark Registrations are subsisting and have not been adjudged invalid
or unenforceable, in whole or in part, and there is no litigation or
proceeding pending concerning the validity or enforceability of the
Trademarks or Trademark Registrations;
(c) to the best of the Assignor's knowledge, each of the
Trademarks and Trademark Registrations is valid and enforceable;
(d) to the best of the Assignor's knowledge, there is no
infringement by others of the Trademarks, Trademark Registrations or
Trademark Rights;
(e) to the best of the Assignor's knowledge, no claim has been
made that the use of any of the Trademarks does or may violate the rights
of any third person, and there is no infringement by the Assignor of the
trademark rights of others;
(f) the Assignor is the sole and exclusive owner of the entire
and unencumbered right, title and interest in and to each of the Trademarks
(other than ownership and other rights reserved by third party owners with
respect to Trademarks that the Assignor is licensed to use), free and clear
of any liens, charges, encumbrances and adverse claims, including pledges,
assignments, licenses, registered user agreements and covenants by the
Assignor not to sue third persons, other than the security interest and
assignment created by the Security Agreement and this Trademark Agreement;
<PAGE>
-6-
(g) the Assignor has the unqualified right to enter into this
Trademark Agreement and to perform its terms and will comply with the
covenants herein contained;
(h) the Assignor has used, and will continue to use, proper
statutory and other appropriate proprietary notices in connection with its
use of the Trademarks ;
(i) the Assignor has used, and will continue to use for the
duration of this Trademark Agreement, consistent standards of quality in
its manufacture and provision of products and services sold or provided
under the Trademarks;
(j) this Trademark Agreement, together with the Security
Agreement, will create in favor of the Agent a valid and perfected first
priority security interest in the Pledged Trademarks upon making the
filings referred to in clause (k) of this (S)3; and
(k) except for the filing of financing statements under the
Uniform Commercial Code and the recording of this Trademark Agreement with
the PTO, no authorization, approval or other action by, and no notice to or
filing with, any governmental or regulatory authority, agency or office is
required either (A) for the grant by the Assignor or the effectiveness of
the security interest and assignment granted hereby or for the execution,
delivery and performance of this Trademark Agreement by the Assignor, or
(B) for the perfection of or the exercise by the Agent of any of its rights
and remedies hereunder.
(S)4. INSPECTION RIGHTS. The Assignor hereby grants to each of the Agent
-----------------
and the Banks and its employees and agents the right to visit the Assignor's
plants and facilities that manufacture, inspect or store products sold under any
of the Trademarks, and to inspect the products and quality control records
relating thereto at reasonable times during regular business hours.
(S)5. NO TRANSFER OR INCONSISTENT AGREEMENTS. Without the Agent's prior
--------------------------------------
written consent, the Assignor will not (a) mortgage, pledge, assign, encumber,
grant a security interest in, transfer, license or alienate any of the Pledged
Trademarks, or (b) enter into any agreement (for example, a license agreement)
that is inconsistent with the Assignor's obligations under this Trademark
Agreement or the Security Agreement.
(S)6. AFTER-ACQUIRED TRADEMARKS, ETC.
------------------------------
(S)6.1. AFTER-ACQUIRED TRADEMARKS. If, before the Obligations shall have
-------------------------
been finally paid and satisfied in full, the Assignor shall obtain any right,
title or interest in or to any other or new Trademarks, Trademark Registrations
or Trademark Rights, the provisions of this Trademark Agreement shall
automatically apply thereto and the Assignor shall promptly provide to the Agent
notice thereof in writing and execute and
<PAGE>
-7-
deliver to the Agent such documents or instruments as the Agent may reasonably
request further to implement, preserve or evidence the Agent's interest therein.
(S)6.2. AMENDMENT TO SCHEDULE. The Assignor authorizes the Agent to modify
---------------------
this Trademark Agreement and the Assignment of Marks, without the necessity of
the Assignor's further approval or signature, by amending Exhibit A attached
------- -
hereto and the Annex to the Assignment of Marks to include any future or other
-----
Trademarks, Trademark Registrations or Trademark Rights under (S)(S)2 or 6
hereof.
(S)7. TRADEMARK PROSECUTION.
---------------------
(S)7.1. ASSIGNOR RESPONSIBLE. The Assignor shall assume full and complete
--------------------
responsibility for the prosecution, defense, enforcement or any other necessary
or desirable actions in connection with the Pledged Trademarks, and shall hold
each of the Agent and the Banks harmless from any and all costs, damages,
liabilities and expenses that may be incurred by the Agent or any Bank in
connection with the Agent's interest in the Pledged Trademarks or any other
action or failure to act in connection with this Trademark Agreement or the
transactions contemplated hereby. In respect of such responsibility, the
Assignor shall retain trademark counsel reasonably acceptable to the Agent.
(S)7.2. ASSIGNOR'S DUTIES, ETC. The Assignor shall have the right and the
----------------------
duty, through trademark counsel reasonably acceptable to the Agent, to prosecute
diligently any trademark registration applications of the Trademarks pending as
of the date of this Trademark Agreement or thereafter, to preserve and maintain
all rights in the Trademarks and Trademark Registrations, including the filing
of appropriate renewal applications and other instruments to maintain in effect
the Trademark Registrations and the payment when due of all registration renewal
fees and other fees, taxes and other expenses that shall be incurred or that
shall accrue with respect to any of the Trademarks or Trademark Registrations.
Any expenses incurred in connection with such applications and actions shall be
borne by the Assignor. The Assignor shall not abandon any filed trademark
registration application, or any Trademark Registration or Trademark, without
the consent of the Agent, which consent shall not be unreasonably withheld.
(S)7.3. ASSIGNOR'S ENFORCEMENT RIGHTS. The Assignor shall have the right
-----------------------------
and the duty to bring suit or other action in the Assignor's own name to
maintain and enforce the Trademarks, the Trademark Registrations and the
Trademark Rights. The Assignor may require the Agent to join in such suit or
action as necessary to assure the Assignor's ability to bring and maintain any
such suit or action in any proper forum if (but only if) the Agent is completely
satisfied that such joinder will not subject the Agent or any Bank to any risk
of liability. The Assignor shall promptly, upon demand, reimburse and indemnify
the Agent for all damages, costs and expenses, including legal fees, incurred by
the Agent pursuant to this (S)7.3.
(S)7.4. PROTECTION OF TRADEMARKS, ETC. In general, the Assignor shall take
-----------------------------
any and all such actions (including institution and maintenance of suits,
proceedings or actions) as may be necessary or appropriate to properly maintain,
protect, preserve,
<PAGE>
-8-
care for and enforce the Pledged Trademarks. The Assignor shall not take or fail
to take any action, nor permit any action to be taken or not taken by others
under its control, that would adversely affect the validity, grant or
enforcement of the Pledged Trademarks.
(S)7.5. NOTIFICATION BY ASSIGNOR. Promptly upon obtaining knowledge
------------ -- --------
thereof, the Assignor will notify the Agent in writing of the institution of, or
any final adverse determination in, any proceeding in the PTO or any similar
office or agency of the United States or any foreign country, or any court,
regarding the validity of any of the Trademarks or Trademark Registrations or
the Assignor's rights, title or interests in and to the Pledged Trademarks, and
of any event that does or reasonably could materially adversely affect the value
of any of the Pledged Trademarks, the ability of the Assignor or the Agent to
dispose of any of the Pledged Trademarks or the rights and remedies of the Agent
in relation thereto (including but not limited to the levy of any legal process
against any of the Pledged Trademarks).
(S)8. REMEDIES. Upon the occurrence and during the continuance of an
--------
Event of Default, the Agent shall have, in addition to all other rights and
remedies given it by this Trademark Agreement (including, without limitation,
those set forth in (S)2.2 hereof, the Credit Agreement, the Security Agreement
and the other Loan Documents), those allowed by law and the rights and remedies
of a secured party under the Uniform Commercial Code as enacted in the
Commonwealth of Massachusetts, and, without limiting the generality of the
foregoing, the Agent may immediately, without demand of performance and without
other notice (except as set forth next below) or demand whatsoever to the
Assignor, all of which are hereby expressly waived, sell or license at public or
private sale or otherwise realize upon the whole or from time to time any part
of the Pledged Trademarks, or any interest that the Assignor may have therein,
and after deducting from the proceeds of sale or other disposition of the
Pledged Trademarks all expenses incurred by the Agent in attempting to enforce
this Trademark Agreement (including all reasonable expenses for broker's fees
and legal services), shall apply the residue of such proceeds toward the payment
of the Obligations as set forth in or by reference in the Security Agreement.
Notice of any sale, license or other disposition of the Pledged Trademarks shall
be given to the Assignor at least fifteen (15) days before the time that any
intended public sale or other public disposition of the Pledged Trademarks is to
be made or after which any private sale or other private disposition of the
Pledged Trademarks may be made, which the Assignor hereby agrees shall be
reasonable notice of such public or private sale or other disposition. At any
such sale or other disposition, the Agent may, to the extent permitted under
applicable law, purchase or license the whole or any part of the Pledged
Trademarks or interests therein sold, licensed or otherwise disposed of.
(S)9. COLLATERAL PROTECTION. If the Assignor shall fail to do any act
---------- ----------
that it has covenanted to do hereunder, or if any representation or warranty of
the Assignor shall be breached, the Agent, in its own name or that of the
Assignor (in the sole discretion of the Agent), may (but shall not be obligated
to) do such act or remedy such breach (or cause such act to be done or such
breach to be remedied), and the Assignor agrees promptly to reimburse the Agent
for any cost or expense incurred by the Agent in so doing.
<PAGE>
-9-
(S)10. POWER OF ATTORNEY. If any Event of Default shall have occurred
-----------------
and be continuing, the Assignor does hereby make, constitute and appoint the
Agent (and any officer or agent of the Agent as the Agent may select in its
exclusive discretion) as the Assignor's true and lawful attorney-in-fact, with
full power of substitution and with the power to endorse the Assignor's name on
all applications, documents, papers and instruments necessary for the Agent to
use the Pledged Trademarks, or to grant or issue any exclusive or nonexclusive
license of any of the Pledged Trademarks to any third person, or to take any and
all actions necessary for the Agent to assign, pledge, convey or otherwise
transfer title in or dispose of any of the Pledged Trademarks or any interest of
the Assignor therein to any third person, and, in general, to execute and
deliver any instruments or documents and do all other acts that the Assignor is
obligated to execute and do hereunder. The Assignor hereby ratifies all that
such attorney shall lawfully do or cause to be done by virtue hereof and
releases each of the Agent and the Banks from any claims, liabilities, causes of
action or demands arising out of or in connection with any action taken or
omitted to be taken by the Agent under this power of attorney (except for the
Agent's gross negligence or willful misconduct). This power of attorney is
coupled with an interest and shall be irrevocable for the duration of this
Trademark Agreement.
(S)11. FURTHER ASSURANCES. The Assignor shall, at any time and from time
------------------
to time, and at its expense, make, execute, acknowledge and deliver, and file
and record as necessary or appropriate with governmental or regulatory
authorities, agencies or offices, such agreements, assignments, documents and
instruments, and do such other and further acts and things (including, without
limitation, obtaining consents of third parties), as the Agent may request or as
may be necessary or appropriate in order to implement and effect fully the
intentions, purposes and provisions of this Trademark Agreement, or to assure
and confirm to the Agent the grant, perfection and priority of the Agent's
security interest in the Pledged Trademarks.
(S)12. TERMINATION. At such time as all of the Obligations have been
-----------
finally paid and satisfied in full, this Trademark Agreement shall terminate and
the Agent shall, upon the written request and at the expense of the Assignor,
execute and deliver to the Assignor all deeds, assignments and other instruments
as may be necessary or proper to reassign and reconvey to and re-vest in the
Assignor the entire right, title and interest to the Pledged Trademarks
previously granted, assigned, transferred and conveyed to the Agent by the
Assignor pursuant to this Trademark Agreement, as fully as if this Trademark
Agreement had not been made, subject to any disposition of all or any part
thereof that may have been made by the Agent pursuant hereto or the Security
Agreement.
(S)13. COURSE OF DEALING. No course of dealing between the Assignor and
-----------------
the Agent, nor any failure to exercise, nor any delay in exercising, on the part
of the Agent, any right, power or privilege hereunder or under the Security
Agreement or any other agreement shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or privilege hereunder or
thereunder preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.
<PAGE>
-10-
(S)14. EXPENSES. Any and all fees, costs and expenses, of whatever kind
--------
or nature, including the reasonable attorneys' fees and expenses incurred by the
Agent in connection with the preparation of this Trademark Agreement and all
other documents relating hereto, the consummation of the transactions
contemplated hereby or the enforcement hereof, the filing or recording of any
documents (including all taxes in connection therewith) in public offices, the
payment or discharge of any taxes, counsel fees, maintenance or renewal fees,
encumbrances, or otherwise protecting, maintaining or preserving the Pledged
Trademarks, or in defending or prosecuting any actions or proceedings arising
out of or related to the Pledged Trademarks, shall be borne and paid by the
Assignor.
(S)15. OVERDUE AMOUNTS. Until paid, all amounts due and payable by the
---------------
Assignor hereunder shall be a debt secured by the Pledged Trademarks and other
Collateral and shall bear, whether before or after judgment, interest at the
rate of interest for overdue principal set forth in the Credit Agreement.
(S)16. NO ASSUMPTION OF LIABILITY; INDEMNIFICATION. NOTWITHSTANDING
-------------------------------------------
ANYTHING TO THE CONTRARY CONTAINED HEREIN, NEITHER THE AGENT NOR ANY BANK
ASSUMES ANY LIABILITIES OF THE ASSIGNOR WITH RESPECT TO ANY CLAIM OR CLAIMS
REGARDING THE ASSIGNOR'S OWNERSHIP OR PURPORTED OWNERSHIP OF, OR RIGHTS OR
PURPORTED RIGHTS ARISING FROM, ANY OF THE PLEDGED TRADEMARKS OR ANY USE, LICENSE
OR SUBLICENSE THEREOF, WHETHER ARISING OUT OF ANY PAST, CURRENT OR FUTURE EVENT,
CIRCUMSTANCE, ACT OR OMISSION OR OTHERWISE. ALL OF SUCH LIABILITIES SHALL BE
EXCLUSIVELY THE RESPONSIBILITY OF THE ASSIGNOR, AND THE ASSIGNOR SHALL INDEMNIFY
THE AGENT AND THE BANKS FOR ANY AND ALL COSTS, EXPENSES, DAMAGES AND CLAIMS,
INCLUDING LEGAL FEES, INCURRED BY THE AGENT OR ANY BANK WITH RESPECT TO SUCH
LIABILITIES.
(S)17. NOTICES. All notices and other communications made or required to
-------
be given pursuant to this Trademark Agreement shall be in writing and shall be
delivered in hand, mailed by United States registered or certified first-class
mail, postage prepaid, or sent by telegraph, telecopy or telex and confirmed by
delivery via courier or postal service, addressed as set forth in (S)20 of the
Credit Agreement. Any such notice or demand shall be deemed to have been duly
given or made and to have become effective (a) if delivered by hand to a
responsible officer of the party to which it is directed, at the time of the
receipt thereof by such officer, (b) if sent by registered or certified first-
class mail, postage prepaid, two (2) Business Days after the posting thereof,
and (c) if sent by telegraph, telecopy, or telex, at the time of the dispatch
thereof, if in normal business hours in the country of receipt, or otherwise at
the opening of business on the following Business Day.
(S)18. AMENDMENT AND WAIVER. This Trademark Agreement is subject to
--------------------
modification only by a writing signed by the Agent (with the consent of the
Banks or Majority Banks as provided in the Credit Agreement) and the Assignor,
except as provided in (S)6.2 hereof. The Agent shall not be deemed to have
waived any right
<PAGE>
-11-
hereunder unless such waiver shall be in writing and signed by the Agent and the
Banks or Majority Banks as provided in the Credit Agreement. A waiver on any one
occasion shall not be construed as a bar to or waiver of any right on any future
occasion.
(S)19. GOVERNING LAW; CONSENT TO JURISDICTION. THIS TRADEMARK AGREEMENT
--------------------------------------
IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
The Assignor agrees that any suit for the enforcement of this Trademark
Agreement may be brought in the courts of the Commonwealth of Massachusetts or
any federal court sitting therein and consents to the non-exclusive jurisdiction
of such court and to service of process in any such suit being made upon the
Assignor by mail at the address specified in (S)17 hereof. The Assignor hereby
waives any objection that it may now or hereafter have to the venue of any such
suit or any such court or that such suit is brought in an inconvenient court.
(S)20. WAIVER OF JURY TRIAL. THE ASSIGNOR WAIVES ITS RIGHT TO A JURY
--------------------
TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS TRADEMARK AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR
THE PERFORMANCE OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law,
the Assignor waives any right which it may have to claim or recover in any
litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. The Assignor (a) certifies that neither the Agent or any Bank
nor any representative, agent or attorney of the Agent or any Bank has
represented, expressly or otherwise, that the Agent or any Bank would not, in
the event of litigation, seek to enforce the foregoing waivers, and (b)
acknowledges that, in entering into the Credit Agreement and the other Loan
Documents to which the Agent or any Bank is a party, the Agent and the Banks are
relying upon, among other things, the waivers and certifications contained in
this (S)20.
(S)21. MISCELLANEOUS. The headings of each section of this Trademark
-------------
Agreement are for convenience only and shall not define or limit the provisions
thereof. This Trademark Agreement and all rights and obligations hereunder
shall be binding upon the Assignor and its respective successors and assigns,
and shall inure to the benefit of the Agent, the Banks and their respective
successors and assigns. In the event of any irreconcilable conflict between the
provisions of this Trademark Agreement and the Credit Agreement, or between this
Trademark Agreement and the Security Agreement, the provisions of the Credit
Agreement or the Security Agreement, as the case may be, shall control. If any
term of this Trademark Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be
affected thereby, and this Trademark Agreement shall be construed and be
enforceable as if such invalid, illegal or unenforceable term had not been
included herein. The Assignor acknowledges receipt of a copy of this Trademark
Agreement.
<PAGE>
-12-
IN WITNESS WHEREOF, this Trademark Collateral Security and Pledge Agreement
has been executed as of the day and year first above written.
OSD ENVIZION, INC.
By: /s/ Christopher T. Paule
-----------------------------------
Title: Vice President
BANKBOSTON, N.A., AS AGENT
By: /s/ Peter van der Horst
----------------------------------
Peter van der Horst, Vice President
<PAGE>
-13-
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 22nd day of April, 1998, personally appeared Christopher T.
Paule to me known personally, and who, being by me duly sworn, deposes and says
that he is the VP & CFO of OSD Envizion, Inc., and that said instrument was
signed and sealed on behalf of said corporation by authority of its Board of
Directors, and said VP & CFO acknowledged said instrument to be the free act and
deed of said corporation.
/s/ Dawn M. Schoenig
------------------------------------
Notary Public
My commission expires: August 3, 1999
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 21 day of April, 1998, personally appeared Peter van der
Horst to me known personally, and who, being by me duly sworn, deposes and says
that he is a Vice President of BankBoston, N.A. (the "Agent"), and that said
instrument was signed and sealed on behalf of said Agent by authority of its
Board of Directors, and said Peter van derHorst acknowledged said instrument to
be the free act and deed of said Agent.
/s/ D.L. Figueroa-Thomas
------------------------------------
Notary Public
My commission expires: February 21, 1999
<PAGE>
SCHEDULE A
----------
TRADEMARKS AND TRADEMARK REGISTRATIONS
--------------------------------------
Trademark REGISTRATIONS --
or United States Patent and Trademark Office
Service Mark Registration No. Registration Date
- ------------ ---------------- -----------------
Trademark PENDING APPLICATIONS --
or United States Patent and Trademark Office
Service Mark Serial No. Filing Date
- ------------ ---------- -----------
<PAGE>
EXHIBIT 10.21
BINGHAM DRAFT
04/20/98
--------
TRADEMARK COLLATERAL
--------------------
SECURITY AND PLEDGE AGREEMENT
-----------------------------
TRADEMARK COLLATERAL SECURITY AND PLEDGE AGREEMENT, dated as of April 22,
1998, between AMERICAN ALLSAFE COMPANY, a Texas corporation having its principal
place of business at 2997 Clarkson Road, Chesterfield, Missouri 63017 (the
"Assignor"), and BANKBOSTON, N.A., as agent (hereinafter, in such capacity, the
"Agent") for itself and other lending institutions (hereinafter, collectively,
the "Banks") which are, or may in the future become, parties to a Revolving
Credit and Acquisition Loan Agreement dated as of April 22, 1998 (as amended and
in effect from time to time, the "Credit Agreement"), among the Assignor, the
Banks, the Agent and Mercantile Bank National Association, as Co-Agent.
WHEREAS, it is a condition precedent to the Banks' making any loans or
otherwise extending credit to the Assignor under the Credit Agreement that the
Assignor execute and deliver to the Agent, for the benefit of the Banks and the
Agent, a trademark agreement in substantially the form hereof;
WHEREAS, the Assignor has executed and delivered to the Agent, for the
benefit of the Banks and the Agent, the Security Agreement (as defined in the
Credit Agreement), pursuant to which the Assignor has granted to the Agent, for
the benefit of the Banks and the Agent, a security interest in all of the
Assignor's personal property and fixture assets, including, without limitation,
the trademarks, service marks, trademark and service mark registrations, and
trademark and service mark registration applications listed on Schedule A
-------- -
attached hereto, all to secure the payment and performance of the Obligations
(as defined in the Credit Agreement); and
WHEREAS, this Trademark Agreement is supplemental to the provisions
contained in the Security Agreement;
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
(S)1. DEFINITIONS. Capitalized terms used herein and not otherwise
-----------
defined herein shall have the respective meanings provided therefor in the
Credit Agreement and the Security Agreement. In addition, the following terms
shall have the meanings set forth in this (S)1 or elsewhere in this Trademark
Agreement referred to below:
Assignment of Marks. See (S)2.1 hereof.
-------------------
Associated Goodwill. All goodwill of the Assignor and its business,
-------------------
products and services appurtenant to, associated with or symbolized by the
Trademarks and the use thereof.
<PAGE>
-2-
Pledged Trademarks. All of the Assignor's right, title and interest in
------------------
and to all of the Trademarks, the Trademark Registrations, the Trademark License
Rights, the Trademark Rights, the Associated Goodwill, the Related Assets, and
all accessions to, substitutions for, replacements of, and all products and
proceeds of any and all of the foregoing.
PTO. The United States Patent and Trademark Office.
---
Related Assets. All assets, rights and interests of the Assignor that
--------------
uniquely reflect or embody the Associated Goodwill, including the following:
(a) all patents, inventions, copyrights, trade secrets, confidential
information, formulae, methods or processes, compounds, recipes, know-how,
methods and operating systems, drawings, descriptions, formulations,
manufacturing and production and delivery procedures, quality control
procedures, product and service specifications, catalogs, price lists, and
advertising materials, relating to the manufacture, production, delivery,
provision and sale of goods or services under or in association with any of
the Trademarks; and
(b) the following documents and things in the possession or under the
control of the Assignor, or subject to its demand for possession or
control, related to the production, delivery, provision and sale by the
Assignor, or any affiliate, franchisee, licensee or contractor, of products
or services sold by or under the authority of the Assignor in connection
with the Trademarks or Trademark Rights, whether prior to, on or subsequent
to the date hereof:
(i) all lists, contracts, ancillary documents and other
information that identify, describe or provide information with
respect to any customers, dealers or distributors of the Assignor, its
affiliates or franchisees or licensees or contractors, for products or
services sold under or in connection with the Trademarks or Trademark
Rights, including all lists and documents containing information
regarding each customer's, dealer's or distributor's name and address,
credit, payment, discount, delivery and other sale terms, and history,
pattern and total of purchases by brand, product, style, size and
quantity;
(ii) all agreements (including franchise agreements), product
and service specification documents and operating, production and
quality control manuals relating to or used in the design,
manufacture, production, delivery, provision and sale of products or
services under or in connection with the Trademarks or Trademark
Rights;
(iii) all documents and agreements relating to the identity and
locations of all sources of supply, all terms of purchase and
delivery, for all materials, components, raw materials and other
supplies and services used in the manufacture, production, provision,
delivery and sale of
<PAGE>
-3-
products or services under or in connection with the Trademarks or
Trademark Rights; and
(iv) all agreements and documents constituting or concerning the
present or future, current or proposed advertising and promotion by
the Assignor (or any of its affiliates, franchisees, licensees or
contractors) of products or services sold under or in connection with
the Trademarks or Trademark Rights.
Trademark Agreement. This Trademark Collateral Security and Pledge
-------------------
Agreement, as amended and in effect from time to time.
Trademark License Rights. Any and all past, present or future rights and
------------------------
interests of the Assignor pursuant to any and all past, present and future
franchising or licensing agreements in favor of the Assignor, or to which the
Assignor is a party, pertaining to any Trademarks, Trademark Registrations, or
Trademark Rights owned or used by third parties in the past, present or future,
including the right (but not the obligation) in the name of the Assignor or the
Agent to enforce, and sue and recover for, any breach or violation of any such
agreement to which the Assignor is a party.
Trademark Registrations. All past, present or future federal, state,
-----------------------
local and foreign registrations of the Trademarks, all past, present and future
applications for any such registrations (and any such registrations thereof upon
approval of such applications), together with the right (but not the obligation)
to apply for such registrations (and prosecute such applications) in the name of
the Assignor or the Agent, and to take any and all actions necessary or
appropriate to maintain such registrations in effect and renew and extend such
registrations.
Trademark Rights. Any and all past, present or future rights in, to and
----------------
associated with the Trademarks throughout the world, whether arising under
federal law, state law, common law, foreign law or otherwise, including the
following: all such rights arising out of or associated with the Trademark
Registrations; the right (but not the obligation) to register claims under any
state, federal or foreign trademark law or regulation; the right (but not the
obligation) to sue or bring opposition or cancellation proceedings in the name
of the Assignor or the Agent for any and all past, present and future
infringements or dilution of or any other damages or injury to the Trademarks,
the Trademark Rights, or the Associated Goodwill, and the rights to damages or
profits due or accrued arising out of or in connection with any such past,
present or future infringement, dilution, damage or injury; and the Trademark
License Rights.
Trademarks. All of the trademarks, service marks, designs, logos,
----------
indicia, trade names, corporate names, company names, business names, fictitious
business names, trade styles, elements of package or trade dress, and other
source and product or service identifiers, used or associated with or
appurtenant to the products, services and businesses of the Assignor, that (i)
are set forth on Schedule A hereto, or (ii) have been adopted, acquired, owned,
-------- -
held or used by the Assignor or are now owned, held or used by the Assignor, in
the Assignor's business, or with the Assignor's products and services, or in
which the Assignor has any right, title or interest, or (iii) are in the
<PAGE>
-4-
future adopted, acquired, owned, held and used by the Assignor in the Assignor's
business or with the Assignor's products and services, or in which the Assignor
in the future acquires any right, title or interest.
use. With respect to any Trademark, all uses of such Trademark by, for
---
or in connection with the Assignor or its business or for the direct or indirect
benefit of the Assignor or its business, including all such uses by the Assignor
itself, by any of the affiliates of the Assignor, or by any franchisee, licensee
or contractor of the Assignor.
Unless otherwise provided herein, the rules of interpretation set forth in
(S)1.2 of the Credit Agreement shall be applicable to this Trademark Agreement.
(S)2. GRANT OF SECURITY INTEREST.
--------------------------
(S)2.1. SECURITY INTEREST; ASSIGNMENT OF MARKS. As collateral security for
--------------------------------------
the payment and performance in full of all of the Obligations, the Assignor
hereby unconditionally grants to the Agent, for the benefit of the Banks and the
Agent, a continuing security interest in and first priority lien on the Pledged
Trademarks, and pledges and mortgages (but does not transfer title to) the
Pledged Trademarks to the Agent for the benefit of the Banks and the Agent. In
addition, the Assignor has executed in blank and delivered to the Agent an
assignment of federally registered trademarks in substantially the form of
Exhibit 1 attached hereto (the "Assignment of Marks"). The Assignor hereby
- ------- -
authorizes the Agent to complete as assignee and record with the PTO the
Assignment of Marks upon the occurrence and during the continuance of an Event
of Default and the proper exercise of the Agent's remedies under this Trademark
Agreement and the Security Agreement.
(S)2.2. CONDITIONAL ASSIGNMENT. In addition to, and not by way of
----------------------
limitation of, the grant, pledge and mortgage of the Pledged Trademarks provided
in (S)2.1 hereof, the Assignor grants, assigns, transfers, conveys and sets over
to the Agent, for the benefit of the Banks and the Agent, the Assignor's entire
right, title and interest in and to the Pledged Trademarks; provided that such
--------
grant, assignment, transfer and conveyance shall be and become of force and
effect only (i) upon or after the occurrence and during the continuance of an
Event of Default and (ii) either (A) upon the written demand of the Agent at any
time during such continuance or (B) immediately and automatically (without
notice or action of any kind by the Agent) upon an Event of Default for which
acceleration of the Loans is automatic under the Credit Agreement or upon the
sale or other disposition of or foreclosure upon the Collateral pursuant to the
Security Agreement and applicable law (including the transfer or other
disposition of the Collateral by the Assignor to the Agent or its nominee in
lieu of foreclosure).
(S)2.3. SUPPLEMENTAL TO SECURITY AGREEMENT. Pursuant to the Security
----------------------------------
Agreement the Assignor has granted to the Agent, for the benefit of the Banks
and the Agent, a continuing security interest in and lien on the Collateral
(including the Pledged Trademarks). The Security Agreement, and all rights and
interests of the Agent in and to the Collateral (including the Pledged
Trademarks) thereunder, are hereby ratified and confirmed in all respects. In no
event shall this Trademark Agreement, the grant, assignment, transfer and
conveyance of the Pledged Trademarks
<PAGE>
-5-
hereunder, or the recordation of this Trademark Agreement (or any document
hereunder) with the PTO, adversely affect or impair, in any way or to any
extent, the Security Agreement, the security interest of the Agent in the
Collateral (including the Pledged Trademarks) pursuant to the Security Agreement
and this Trademark Agreement, the attachment and perfection of such security
interest under the Uniform Commercial Code (including the security interest in
the Pledged Trademarks), or any present or future rights and interests of the
Agent in and to the Collateral under or in connection with the Security
Agreement, this Trademark Agreement or the Uniform Commercial Code. Any and all
rights and interests of the Agent in and to the Pledged Trademarks (and any and
all obligations of the Assignor with respect to the Pledged Trademarks) provided
herein, or arising hereunder or in connection herewith, shall only supplement
and be cumulative and in addition to the rights and interests of the Agent (and
the obligations of the Assignor) in, to or with respect to the Collateral
(including the Pledged Trademarks) provided in or arising under or in connection
with the Security Agreement and shall not be in derogation thereof.
(S)3. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Assignor represents,
-----------------------------------------
warrants and covenants that:
(a) to the best of the Assignor's knowledge, Schedule A attached
-------- -
hereto sets forth a true and complete list of all Trademarks and Trademark
Registrations now owned, licensed, controlled or used by the Assignor;
(b) to the best of the Assignor's knowledge, the Trademarks and
Trademark Registrations are subsisting and have not been adjudged invalid
or unenforceable, in whole or in part, and there is no litigation or
proceeding pending concerning the validity or enforceability of the
Trademarks or Trademark Registrations;
(c) to the best of the Assignor's knowledge, each of the Trademarks
and Trademark Registrations is valid and enforceable;
(d) to the best of the Assignor's knowledge, there is no infringement
by others of the Trademarks, Trademark Registrations or Trademark Rights;
(e) to the best of the Assignor's knowledge, no claim has been made
that the use of any of the Trademarks does or may violate the rights of any
third person, and there is no infringement by the Assignor of the trademark
rights of others;
(f) the Assignor is the sole and exclusive owner of the entire and
unencumbered right, title and interest in and to each of the Trademarks
(other than ownership and other rights reserved by third party owners with
respect to Trademarks that the Assignor is licensed to use), free and clear
of any liens, charges, encumbrances and adverse claims, including pledges,
assignments, licenses, registered user agreements and covenants by the
Assignor not to sue third persons, other than the security interest and
assignment created by the Security Agreement and this Trademark Agreement;
<PAGE>
-6-
(g) the Assignor has the unqualified right to enter into this
Trademark Agreement and to perform its terms and will comply with the
covenants herein contained;
(h) the Assignor has used, and will continue to use, proper statutory
and other appropriate proprietary notices in connection with its use of the
Trademarks;
(i) the Assignor has used, and will continue to use for the duration
of this Trademark Agreement, consistent standards of quality in its
manufacture and provision of products and services sold or provided under
the Trademarks;
(j) this Trademark Agreement, together with the Security Agreement,
will create in favor of the Agent a valid and perfected first priority
security interest in the Pledged Trademarks upon making the filings
referred to in clause (k) of this (S)3; and
(k) except for the filing of financing statements under the Uniform
Commercial Code and the recording of this Trademark Agreement with the PTO,
no authorization, approval or other action by, and no notice to or filing
with, any governmental or regulatory authority, agency or office is
required either (A) for the grant by the Assignor or the effectiveness of
the security interest and assignment granted hereby or for the execution,
delivery and performance of this Trademark Agreement by the Assignor, or
(B) for the perfection of or the exercise by the Agent of any of its rights
and remedies hereunder.
(S)4. INSPECTION RIGHTS. The Assignor hereby grants to each of the Agent
-----------------
and the Banks and its employees and agents the right to visit the Assignor's
plants and facilities that manufacture, inspect or store products sold under any
of the Trademarks, and to inspect the products and quality control records
relating thereto at reasonable times during regular business hours.
(S)5. NO TRANSFER OR INCONSISTENT AGREEMENTS. Without the Agent's prior
--------------------------------------
written consent, the Assignor will not (a) mortgage, pledge, assign, encumber,
grant a security interest in, transfer, license or alienate any of the Pledged
Trademarks, or (b) enter into any agreement (for example, a license agreement)
that is inconsistent with the Assignor's obligations under this Trademark
Agreement or the Security Agreement.
(S)6. AFTER-ACQUIRED TRADEMARKS, ETC.
------------------------------
(S)6.1. AFTER-ACQUIRED TRADEMARKS. If, before the Obligations shall have
-------------------------
been finally paid and satisfied in full, the Assignor shall obtain any right,
title or interest in or to any other or new Trademarks, Trademark Registrations
or Trademark Rights, the provisions of this Trademark Agreement shall
automatically apply thereto and the Assignor shall promptly provide to the Agent
notice thereof in writing and execute and
<PAGE>
-7-
deliver to the Agent such documents or instruments as the Agent may reasonably
request further to implement, preserve or evidence the Agent's interest therein.
(S)6.2. AMENDMENT TO SCHEDULE. The Assignor authorizes the Agent to modify
---------------------
this Trademark Agreement and the Assignment of Marks, without the necessity of
the Assignor's further approval or signature, by amending Exhibit A attached
------- -
hereto and the Annex to the Assignment of Marks to include any future or other
-----
Trademarks, Trademark Registrations or Trademark Rights under (S)(S)2 or 6
hereof.
(S)7. TRADEMARK PROSECUTION.
---------------------
(S)7.1. ASSIGNOR RESPONSIBLE. The Assignor shall assume full and complete
--------------------
responsibility for the prosecution, defense, enforcement or any other necessary
or desirable actions in connection with the Pledged Trademarks, and shall hold
each of the Agent and the Banks harmless from any and all costs, damages,
liabilities and expenses that may be incurred by the Agent or any Bank in
connection with the Agent's interest in the Pledged Trademarks or any other
action or failure to act in connection with this Trademark Agreement or the
transactions contemplated hereby. In respect of such responsibility, the
Assignor shall retain trademark counsel reasonably acceptable to the Agent.
(S)7.2. ASSIGNOR'S DUTIES, ETC. The Assignor shall have the right and the
----------------------
duty, through trademark counsel reasonably acceptable to the Agent, to prosecute
diligently any trademark registration applications of the Trademarks pending as
of the date of this Trademark Agreement or thereafter, to preserve and maintain
all rights in the Trademarks and Trademark Registrations, including the filing
of appropriate renewal applications and other instruments to maintain in effect
the Trademark Registrations and the payment when due of all registration renewal
fees and other fees, taxes and other expenses that shall be incurred or that
shall accrue with respect to any of the Trademarks or Trademark Registrations.
Any expenses incurred in connection with such applications and actions shall be
borne by the Assignor. The Assignor shall not abandon any filed trademark
registration application, or any Trademark Registration or Trademark, without
the consent of the Agent, which consent shall not be unreasonably withheld.
(S)7.3. ASSIGNOR'S ENFORCEMENT RIGHTS. The Assignor shall have the right
-----------------------------
and the duty to bring suit or other action in the Assignor's own name to
maintain and enforce the Trademarks, the Trademark Registrations and the
Trademark Rights. The Assignor may require the Agent to join in such suit or
action as necessary to assure the Assignor's ability to bring and maintain any
such suit or action in any proper forum if (but only if) the Agent is completely
satisfied that such joinder will not subject the Agent or any Bank to any risk
of liability. The Assignor shall promptly, upon demand, reimburse and indemnify
the Agent for all damages, costs and expenses, including legal fees, incurred by
the Agent pursuant to this (S)7.3.
(S)7.4. PROTECTION OF TRADEMARKS, ETC. In general, the Assignor shall take
-----------------------------
any and all such actions (including institution and maintenance of suits,
proceedings or actions) as may be necessary or appropriate to properly maintain,
protect, preserve,
<PAGE>
-8-
care for and enforce the Pledged Trademarks. The Assignor shall not take or fail
to take any action, nor permit any action to be taken or not taken by others
under its control, that would adversely affect the validity, grant or
enforcement of the Pledged Trademarks.
(S)7.5. NOTIFICATION BY ASSIGNOR. Promptly upon obtaining knowledge
------------------------
thereof, the Assignor will notify the Agent in writing of the institution of, or
any final adverse determination in, any proceeding in the PTO or any similar
office or agency of the United States or any foreign country, or any court,
regarding the validity of any of the Trademarks or Trademark Registrations or
the Assignor's rights, title or interests in and to the Pledged Trademarks, and
of any event that does or reasonably could materially adversely affect the value
of any of the Pledged Trademarks, the ability of the Assignor or the Agent to
dispose of any of the Pledged Trademarks or the rights and remedies of the Agent
in relation thereto (including but not limited to the levy of any legal process
against any of the Pledged Trademarks).
(S)8. REMEDIES. Upon the occurrence and during the continuance of an
--------
Event of Default, the Agent shall have, in addition to all other rights and
remedies given it by this Trademark Agreement (including, without limitation,
those set forth in (S)2.2 hereof, the Credit Agreement, the Security Agreement
and the other Loan Documents), those allowed by law and the rights and remedies
of a secured party under the Uniform Commercial Code as enacted in the
Commonwealth of Massachusetts, and, without limiting the generality of the
foregoing, the Agent may immediately, without demand of performance and without
other notice (except as set forth next below) or demand whatsoever to the
Assignor, all of which are hereby expressly waived, sell or license at public or
private sale or otherwise realize upon the whole or from time to time any part
of the Pledged Trademarks, or any interest that the Assignor may have therein,
and after deducting from the proceeds of sale or other disposition of the
Pledged Trademarks all expenses incurred by the Agent in attempting to enforce
this Trademark Agreement (including all reasonable expenses for broker's fees
and legal services), shall apply the residue of such proceeds toward the payment
of the Obligations as set forth in or by reference in the Security Agreement.
Notice of any sale, license or other disposition of the Pledged Trademarks shall
be given to the Assignor at least fifteen (15) days before the time that any
intended public sale or other public disposition of the Pledged Trademarks is to
be made or after which any private sale or other private disposition of the
Pledged Trademarks may be made, which the Assignor hereby agrees shall be
reasonable notice of such public or private sale or other disposition. At any
such sale or other disposition, the Agent may, to the extent permitted under
applicable law, purchase or license the whole or any part of the Pledged
Trademarks or interests therein sold, licensed or otherwise disposed of.
(S)9. COLLATERAL PROTECTION. If the Assignor shall fail to do any act
---------------------
that it has covenanted to do hereunder, or if any representation or warranty of
the Assignor shall be breached, the Agent, in its own name or that of the
Assignor (in the sole discretion of the Agent), may (but shall not be obligated
to) do such act or remedy such breach (or cause such act to be done or such
breach to be remedied), and the Assignor agrees promptly to reimburse the Agent
for any cost or expense incurred by the Agent in so doing.
<PAGE>
-9-
(S)10. POWER OF ATTORNEY. If any Event of Default shall have occurred and
-----------------
be continuing, the Assignor does hereby make, constitute and appoint the Agent
(and any officer or agent of the Agent as the Agent may select in its exclusive
discretion) as the Assignor's true and lawful attorney-in-fact, with full power
of substitution and with the power to endorse the Assignor's name on all
applications, documents, papers and instruments necessary for the Agent to use
the Pledged Trademarks, or to grant or issue any exclusive or nonexclusive
license of any of the Pledged Trademarks to any third person, or to take any and
all actions necessary for the Agent to assign, pledge, convey or otherwise
transfer title in or dispose of any of the Pledged Trademarks or any interest of
the Assignor therein to any third person, and, in general, to execute and
deliver any instruments or documents and do all other acts that the Assignor is
obligated to execute and do hereunder. The Assignor hereby ratifies all that
such attorney shall lawfully do or cause to be done by virtue hereof and
releases each of the Agent and the Banks from any claims, liabilities, causes of
action or demands arising out of or in connection with any action taken or
omitted to be taken by the Agent under this power of attorney (except for the
Agent's gross negligence or willful misconduct). This power of attorney is
coupled with an interest and shall be irrevocable for the duration of this
Trademark Agreement.
(S)11. FURTHER ASSURANCES. The Assignor shall, at any time and from time
------------------
to time, and at its expense, make, execute, acknowledge and deliver, and file
and record as necessary or appropriate with governmental or regulatory
authorities, agencies or offices, such agreements, assignments, documents and
instruments, and do such other and further acts and things (including, without
limitation, obtaining consents of third parties), as the Agent may request or as
may be necessary or appropriate in order to implement and effect fully the
intentions, purposes and provisions of this Trademark Agreement, or to assure
and confirm to the Agent the grant, perfection and priority of the Agent's
security interest in the Pledged Trademarks.
(S)12. TERMINATION. At such time as all of the Obligations have been
-----------
finally paid and satisfied in full, this Trademark Agreement shall terminate and
the Agent shall, upon the written request and at the expense of the Assignor,
execute and deliver to the Assignor all deeds, assignments and other instruments
as may be necessary or proper to reassign and reconvey to and re-vest in the
Assignor the entire right, title and interest to the Pledged Trademarks
previously granted, assigned, transferred and conveyed to the Agent by the
Assignor pursuant to this Trademark Agreement, as fully as if this Trademark
Agreement had not been made, subject to any disposition of all or any part
thereof that may have been made by the Agent pursuant hereto or the Security
Agreement.
(S)13. COURSE OF DEALING. No course of dealing between the Assignor and
-----------------
the Agent, nor any failure to exercise, nor any delay in exercising, on the part
of the Agent, any right, power or privilege hereunder or under the Security
Agreement or any other agreement shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or privilege hereunder or
thereunder preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.
<PAGE>
-10-
(S)14. EXPENSES. Any and all fees, costs and expenses, of whatever kind
--------
or nature, including the reasonable attorneys' fees and expenses incurred by the
Agent in connection with the preparation of this Trademark Agreement and all
other documents relating hereto, the consummation of the transactions
contemplated hereby or the enforcement hereof, the filing or recording of any
documents (including all taxes in connection therewith) in public offices, the
payment or discharge of any taxes, counsel fees, maintenance or renewal fees,
encumbrances, or otherwise protecting, maintaining or preserving the Pledged
Trademarks, or in defending or prosecuting any actions or proceedings arising
out of or related to the Pledged Trademarks, shall be borne and paid by the
Assignor.
(S)15. OVERDUE AMOUNTS. Until paid, all amounts due and payable by the
---------------
Assignor hereunder shall be a debt secured by the Pledged Trademarks and other
Collateral and shall bear, whether before or after judgment, interest at the
rate of interest for overdue principal set forth in the Credit Agreement.
(S)16. NO ASSUMPTION OF LIABILITY; INDEMNIFICATION. NOTWITHSTANDING
-------------------------------------------
ANYTHING TO THE CONTRARY CONTAINED HEREIN, NEITHER THE AGENT NOR ANY BANK
ASSUMES ANY LIABILITIES OF THE ASSIGNOR WITH RESPECT TO ANY CLAIM OR CLAIMS
REGARDING THE ASSIGNOR'S OWNERSHIP OR PURPORTED OWNERSHIP OF, OR RIGHTS OR
PURPORTED RIGHTS ARISING FROM, ANY OF THE PLEDGED TRADEMARKS OR ANY USE, LICENSE
OR SUBLICENSE THEREOF, WHETHER ARISING OUT OF ANY PAST, CURRENT OR FUTURE EVENT,
CIRCUMSTANCE, ACT OR OMISSION OR OTHERWISE. ALL OF SUCH LIABILITIES SHALL BE
EXCLUSIVELY THE RESPONSIBILITY OF THE ASSIGNOR, AND THE ASSIGNOR SHALL INDEMNIFY
THE AGENT AND THE BANKS FOR ANY AND ALL COSTS, EXPENSES, DAMAGES AND CLAIMS,
INCLUDING LEGAL FEES, INCURRED BY THE AGENT OR ANY BANK WITH RESPECT TO SUCH
LIABILITIES.
(S)17. NOTICES. All notices and other communications made or required to
-------
be given pursuant to this Trademark Agreement shall be in writing and shall be
delivered in hand, mailed by United States registered or certified first-class
mail, postage prepaid, or sent by telegraph, telecopy or telex and confirmed by
delivery via courier or postal service, addressed as set forth in (S)20 of the
Credit Agreement. Any such notice or demand shall be deemed to have been duly
given or made and to have become effective (a) if delivered by hand to a
responsible officer of the party to which it is directed, at the time of the
receipt thereof by such officer, (b) if sent by registered or certified first-
class mail, postage prepaid, two (2) Business Days after the posting thereof,
and (c) if sent by telegraph, telecopy, or telex, at the time of the dispatch
thereof, if in normal business hours in the country of receipt, or otherwise at
the opening of business on the following Business Day.
(S)18. AMENDMENT AND WAIVER. This Trademark Agreement is subject to
--------------------
modification only by a writing signed by the Agent (with the consent of the
Banks or Majority Banks as provided in the Credit Agreement) and the Assignor,
except as provided in (S)6.2 hereof. The Agent shall not be deemed to have
waived any right
<PAGE>
-11-
hereunder unless such waiver shall be in writing and signed by the Agent and the
Banks or Majority Banks as provided in the Credit Agreement. A waiver on any one
occasion shall not be construed as a bar to or waiver of any right on any future
occasion.
(S)19. GOVERNING LAW; CONSENT TO JURISDICTION. THIS TRADEMARK AGREEMENT
--------------------------------------
IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
The Assignor agrees that any suit for the enforcement of this Trademark
Agreement may be brought in the courts of the Commonwealth of Massachusetts or
any federal court sitting therein and consents to the non-exclusive jurisdiction
of such court and to service of process in any such suit being made upon the
Assignor by mail at the address specified in (S)17 hereof. The Assignor hereby
waives any objection that it may now or hereafter have to the venue of any such
suit or any such court or that such suit is brought in an inconvenient court.
(S)20. WAIVER OF JURY TRIAL. THE ASSIGNOR WAIVES ITS RIGHT TO A JURY
--------------------
TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS TRADEMARK AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR
THE PERFORMANCE OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law,
the Assignor waives any right which it may have to claim or recover in any
litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. The Assignor (a) certifies that neither the Agent or any Bank
nor any representative, agent or attorney of the Agent or any Bank has
represented, expressly or otherwise, that the Agent or any Bank would not, in
the event of litigation, seek to enforce the foregoing waivers, and (b)
acknowledges that, in entering into the Credit Agreement and the other Loan
Documents to which the Agent or any Bank is a party, the Agent and the Banks are
relying upon, among other things, the waivers and certifications contained in
this (S)20.
(S)21. MISCELLANEOUS. The headings of each section of this Trademark
-------------
Agreement are for convenience only and shall not define or limit the provisions
thereof. This Trademark Agreement and all rights and obligations hereunder
shall be binding upon the Assignor and its respective successors and assigns,
and shall inure to the benefit of the Agent, the Banks and their respective
successors and assigns. In the event of any irreconcilable conflict between the
provisions of this Trademark Agreement and the Credit Agreement, or between this
Trademark Agreement and the Security Agreement, the provisions of the Credit
Agreement or the Security Agreement, as the case may be, shall control. If any
term of this Trademark Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be
affected thereby, and this Trademark Agreement shall be construed and be
enforceable as if such invalid, illegal or unenforceable term had not been
included herein. The Assignor acknowledges receipt of a copy of this Trademark
Agreement.
<PAGE>
-12-
IN WITNESS WHEREOF, this Trademark Collateral Security and Pledge Agreement
has been executed as of the day and year first above written.
AMERICAN ALLSAFE COMPANY
By: /s/ Christopher T. Paule
------------------------
Title: Vice President
BANKBOSTON, N.A., as Agent
By: /s/ Peter van der Horst
----------------------------------
Peter van der Horst, Vice President
<PAGE>
-13-
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
)
COUNTY OF NEW YORK ) ss.
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 22 day of April, 1998, personally appeared Christopher T.
Paule to me known personally, and who, being by me duly sworn, deposes and says
that he is the Vice President & CFO of American Allsafe Company, and that said
instrument was signed and sealed on behalf of said corporation by authority of
its Board of Directors, and said Vice President & CFO acknowledged said
instrument to be the free act and deed of said corporation.
/s/ Dawn M. Schoenig
----------------------------------------
Notary Public
My commission expires: [August 3, 1999]
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
)
COUNTY OF NEW YORK ) ss.
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 21 day of April, 1998, personally appeared Peter van der
Horst to me known personally, and who, being by me duly sworn, deposes and says
that he is a Vice President of BankBoston, N.A. (the "Agent"), and that
said instrument was signed and sealed on behalf of said Agent by authority of
its Board of Directors, and said Peter van der Horst acknowledged said
instrument to be the free act and deed of said Agent.
/s/ D. L. Figueroa-Thomas
-------------------------------------------
Notary Public
My commission expires: [February 21, 1999]
<PAGE>
SCHEDULE A
----------
TRADEMARKS AND TRADEMARK REGISTRATIONS
--------------------------------------
<TABLE>
<CAPTION>
Trademark REGISTRATIONS --
or United States Patent and Trademark Office
Service Mark Registration No. Registration Date
- ------------ ----------------- -----------------
<S> <C> <C>
</TABLE>
<TABLE>
<CAPTION>
Trademark PENDING APPLICATIONS --
or United States Patent and Trademark Office
Service Mark Serial No. Filing Date
- ------------ --------- -----------
<S> <C> <C>
</TABLE>
<PAGE>
EXHIBIT 10.22
BINGHAM DRAFT
04/20/98
TRADEMARK COLLATERAL
--------------------
SECURITY AND PLEDGE AGREEMENT
-----------------------------
TRADEMARK COLLATERAL SECURITY AND PLEDGE AGREEMENT, dated as of April 22,
1998, between SILENCIO/SAFETY DIRECT, INC., a Nevada corporation having its
principal place of business at 2997 Clarkson Road, Chesterfield, Missouri 63017
(the "Assignor"), and BANKBOSTON, N.A., as agent (hereinafter, in such capacity,
the "Agent") for itself and other lending institutions (hereinafter,
collectively, the "Banks") which are, or may in the future become, parties to a
Revolving Credit and Acquisition Loan Agreement dated as of April 22, 1998 (as
amended and in effect from time to time, the "Credit Agreement"), among the
Assignor, the Banks, the Agent and Mercantile Bank National Association, as Co-
Agent.
WHEREAS, it is a condition precedent to the Banks' making any loans or
otherwise extending credit to the Assignor under the Credit Agreement that the
Assignor execute and deliver to the Agent, for the benefit of the Banks and the
Agent, a trademark agreement in substantially the form hereof;
WHEREAS, the Assignor has executed and delivered to the Agent, for the
benefit of the Banks and the Agent, the Security Agreement (as defined in the
Credit Agreement), pursuant to which the Assignor has granted to the Agent, for
the benefit of the Banks and the Agent, a security interest in all of the
Assignor's personal property and fixture assets, including, without limitation,
the trademarks, service marks, trademark and service mark registrations, and
trademark and service mark registration applications listed on Schedule A
-------- -
attached hereto, all to secure the payment and performance of the Obligations
(as defined in the Credit Agreement); and
WHEREAS, this Trademark Agreement is supplemental to the provisions
contained in the Security Agreement;
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
(S)1. DEFINITIONS. Capitalized terms used herein and not otherwise
-----------
defined herein shall have the respective meanings provided therefor in the
Credit Agreement and the Security Agreement. In addition, the following terms
shall have the meanings set forth in this (S)1 or elsewhere in this Trademark
Agreement referred to below:
Assignment of Marks. See (S)2.1 hereof.
-------------------
Associated Goodwill. All goodwill of the Assignor and its business,
-------------------
products and services appurtenant to, associated with or symbolized by the
Trademarks and the use thereof.
<PAGE>
-2-
Pledged Trademarks. All of the Assignor's right, title and interest in
------------------
and to all of the Trademarks, the Trademark Registrations, the Trademark License
Rights, the Trademark Rights, the Associated Goodwill, the Related Assets, and
all accessions to, substitutions for, replacements of, and all products and
proceeds of any and all of the foregoing.
PTO. The United States Patent and Trademark Office.
---
Related Assets. All assets, rights and interests of the Assignor that
--------------
uniquely reflect or embody the Associated Goodwill, including the following:
(a) all patents, inventions, copyrights, trade secrets, confidential
information, formulae, methods or processes, compounds, recipes, know-how,
methods and operating systems, drawings, descriptions, formulations,
manufacturing and production and delivery procedures, quality control
procedures, product and service specifications, catalogs, price lists, and
advertising materials, relating to the manufacture, production, delivery,
provision and sale of goods or services under or in association with any of
the Trademarks; and
(b) the following documents and things in the possession or under the
control of the Assignor, or subject to its demand for possession or
control, related to the production, delivery, provision and sale by the
Assignor, or any affiliate, franchisee, licensee or contractor, of products
or services sold by or under the authority of the Assignor in connection
with the Trademarks or Trademark Rights, whether prior to, on or subsequent
to the date hereof:
(i) all lists, contracts, ancillary documents and other
information that identify, describe or provide information with
respect to any customers, dealers or distributors of the Assignor, its
affiliates or franchisees or licensees or contractors, for products or
services sold under or in connection with the Trademarks or Trademark
Rights, including all lists and documents containing information
regarding each customer's, dealer's or distributor's name and address,
credit, payment, discount, delivery and other sale terms, and history,
pattern and total of purchases by brand, product, style, size and
quantity;
(ii) all agreements (including franchise agreements), product
and service specification documents and operating, production and
quality control manuals relating to or used in the design,
manufacture, production, delivery, provision and sale of products or
services under or in connection with the Trademarks or Trademark
Rights;
(iii) all documents and agreements relating to the identity and
locations of all sources of supply, all terms of purchase and
delivery, for all materials, components, raw materials and other
supplies and services used in the manufacture, production, provision,
delivery and sale of
<PAGE>
-3-
products or services under or in connection with the Trademarks or
Trademark Rights; and
(iv) all agreements and documents constituting or concerning the
present or future, current or proposed advertising and promotion by
the Assignor (or any of its affiliates, franchisees, licensees or
contractors) of products or services sold under or in connection with
the Trademarks or Trademark Rights.
Trademark Agreement. This Trademark Collateral Security and Pledge
-------------------
Agreement, as amended and in effect from time to time.
Trademark License Rights. Any and all past, present or future rights and
------------------------
interests of the Assignor pursuant to any and all past, present and future
franchising or licensing agreements in favor of the Assignor, or to which the
Assignor is a party, pertaining to any Trademarks, Trademark Registrations, or
Trademark Rights owned or used by third parties in the past, present or future,
including the right (but not the obligation) in the name of the Assignor or the
Agent to enforce, and sue and recover for, any breach or violation of any such
agreement to which the Assignor is a party.
Trademark Registrations. All past, present or future federal, state,
-----------------------
local and foreign registrations of the Trademarks, all past, present and future
applications for any such registrations (and any such registrations thereof upon
approval of such applications), together with the right (but not the obligation)
to apply for such registrations (and prosecute such applications) in the name of
the Assignor or the Agent, and to take any and all actions necessary or
appropriate to maintain such registrations in effect and renew and extend such
registrations.
Trademark Rights. Any and all past, present or future rights in, to and
----------------
associated with the Trademarks throughout the world, whether arising under
federal law, state law, common law, foreign law or otherwise, including the
following: all such rights arising out of or associated with the Trademark
Registrations; the right (but not the obligation) to register claims under any
state, federal or foreign trademark law or regulation; the right (but not the
obligation) to sue or bring opposition or cancellation proceedings in the name
of the Assignor or the Agent for any and all past, present and future
infringements or dilution of or any other damages or injury to the Trademarks,
the Trademark Rights, or the Associated Goodwill, and the rights to damages or
profits due or accrued arising out of or in connection with any such past,
present or future infringement, dilution, damage or injury; and the Trademark
License Rights.
Trademarks. All of the trademarks, service marks, designs, logos,
----------
indicia, trade names, corporate names, company names, business names, fictitious
business names, trade styles, elements of package or trade dress, and other
source and product or service identifiers, used or associated with or
appurtenant to the products, services and businesses of the Assignor, that (i)
are set forth on Schedule A hereto, or (ii) have been adopted, acquired, owned,
-------- -
held or used by the Assignor or are now owned, held or used by the Assignor, in
the Assignor's business, or with the Assignor's products and services, or in
which the Assignor has any right, title or interest, or (iii) are in the
<PAGE>
-4-
future adopted, acquired, owned, held and used by the Assignor in the Assignor's
business or with the Assignor's products and services, or in which the Assignor
in the future acquires any right, title or interest.
use. With respect to any Trademark, all uses of such Trademark by, for
---
or in connection with the Assignor or its business or for the direct or indirect
benefit of the Assignor or its business, including all such uses by the Assignor
itself, by any of the affiliates of the Assignor, or by any franchisee, licensee
or contractor of the Assignor.
Unless otherwise provided herein, the rules of interpretation set forth
in (S)1.2 of the Credit Agreement shall be applicable to this Trademark
Agreement.
(S)2. GRANT OF SECURITY INTEREST.
--------------------------
(S)2.1. SECURITY INTEREST; ASSIGNMENT OF MARKS. As collateral security
--------------------------------------
for the payment and performance in full of all of the Obligations, the Assignor
hereby unconditionally grants to the Agent, for the benefit of the Banks and the
Agent, a continuing security interest in and first priority lien on the Pledged
Trademarks, and pledges and mortgages (but does not transfer title to) the
Pledged Trademarks to the Agent for the benefit of the Banks and the Agent. In
addition, the Assignor has executed in blank and delivered to the Agent an
assignment of federally registered trademarks in substantially the form of
Exhibit 1 attached hereto (the "Assignment of Marks").
- ------- -
The Assignor hereby authorizes the Agent to complete as assignee and record with
the PTO the Assignment of Marks upon the occurrence and during the continuance
of an Event of Default and the proper exercise of the Agent's remedies under
this Trademark Agreement and the Security Agreement.
(S)2.2. CONDITIONAL ASSIGNMENT. In addition to, and not by way of
----------------------
limitation of, the grant, pledge and mortgage of the Pledged Trademarks provided
in (S)2.1 hereof, the Assignor grants, assigns, transfers, conveys and sets over
to the Agent, for the benefit of the Banks and the Agent, the Assignor's entire
right, title and interest in and to the Pledged Trademarks; provided that such
--------
grant, assignment, transfer and conveyance shall be and become of force and
effect only (i) upon or after the occurrence and during the continuance of an
Event of Default and (ii) either (A) upon the written demand of the Agent at any
time during such continuance or (B) immediately and automatically (without
notice or action of any kind by the Agent) upon an Event of Default for which
acceleration of the Loans is automatic under the Credit Agreement or upon the
sale or other disposition of or foreclosure upon the Collateral pursuant to the
Security Agreement and applicable law (including the transfer or other
disposition of the Collateral by the Assignor to the Agent or its nominee in
lieu of foreclosure).
(S)2.3. SUPPLEMENTAL TO SECURITY AGREEMENT. Pursuant to the Security
----------------------------------
Agreement the Assignor has granted to the Agent, for the benefit of the Banks
and the Agent, a continuing security interest in and lien on the Collateral
(including the Pledged Trademarks). The Security Agreement, and all rights and
interests of the Agent in and to the Collateral (including the Pledged
Trademarks) thereunder, are hereby ratified and confirmed in all respects. In no
event shall this Trademark Agreement, the grant, assignment, transfer and
conveyance of the Pledged Trademarks
<PAGE>
-5-
hereunder, or the recordation of this Trademark Agreement (or any document
hereunder) with the PTO, adversely affect or impair, in any way or to any
extent, the Security Agreement, the security interest of the Agent in the
Collateral (including the Pledged Trademarks) pursuant to the Security Agreement
and this Trademark Agreement, the attachment and perfection of such security
interest under the Uniform Commercial Code (including the security interest in
the Pledged Trademarks), or any present or future rights and interests of the
Agent in and to the Collateral under or in connection with the Security
Agreement, this Trademark Agreement or the Uniform Commercial Code. Any and all
rights and interests of the Agent in and to the Pledged Trademarks (and any and
all obligations of the Assignor with respect to the Pledged Trademarks) provided
herein, or arising hereunder or in connection herewith, shall only supplement
and be cumulative and in addition to the rights and interests of the Agent (and
the obligations of the Assignor) in, to or with respect to the Collateral
(including the Pledged Trademarks) provided in or arising under or in connection
with the Security Agreement and shall not be in derogation thereof.
(S)3. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Assignor represents,
-----------------------------------------
warrants and covenants that:
(a) to the best of the Assignor's knowledge, Schedule A attached
-------- -
hereto sets forth a true and complete list of all Trademarks and Trademark
Registrations now owned, licensed, controlled or used by the Assignor;
(b) to the best of the Assignor's knowledge, the Trademarks and
Trademark Registrations are subsisting and have not been adjudged invalid
or unenforceable, in whole or in part, and there is no litigation or
proceeding pending concerning the validity or enforceability of the
Trademarks or Trademark Registrations;
(c) to the best of the Assignor's knowledge, each of the
Trademarks and Trademark Registrations is valid and enforceable;
(d) to the best of the Assignor's knowledge, there is no
infringement by others of the Trademarks, Trademark Registrations or
Trademark Rights;
(e) to the best of the Assignor's knowledge, no claim has been
made that the use of any of the Trademarks does or may violate the rights
of any third person, and there is no infringement by the Assignor of the
trademark rights of others;
(f) the Assignor is the sole and exclusive owner of the entire
and unencumbered right, title and interest in and to each of the Trademarks
(other than ownership and other rights reserved by third party owners with
respect to Trademarks that the Assignor is licensed to use), free and clear
of any liens, charges, encumbrances and adverse claims, including pledges,
assignments, licenses, registered user agreements and covenants by the
Assignor not to sue third persons, other than the security interest and
assignment created by the Security Agreement and this Trademark Agreement;
<PAGE>
-6-
(g) the Assignor has the unqualified right to enter into this
Trademark Agreement and to perform its terms and will comply with the
covenants herein contained;
(h) the Assignor has used, and will continue to use, proper
statutory and other appropriate proprietary notices in connection with its
use of the Trademarks;
(i) the Assignor has used, and will continue to use for the
duration of this Trademark Agreement, consistent standards of quality in
its manufacture and provision of products and services sold or provided
under the Trademarks;
(j) this Trademark Agreement, together with the Security
Agreement, will create in favor of the Agent a valid and perfected first
priority security interest in the Pledged Trademarks upon making the
filings referred to in clause (k) of this (S)3; and
(k) except for the filing of financing statements under the
Uniform Commercial Code and the recording of this Trademark Agreement with
the PTO, no authorization, approval or other action by, and no notice to or
filing with, any governmental or regulatory authority, agency or office is
required either (A) for the grant by the Assignor or the effectiveness of
the security interest and assignment granted hereby or for the execution,
delivery and performance of this Trademark Agreement by the Assignor, or
(B) for the perfection of or the exercise by the Agent of any of its rights
and remedies hereunder.
(S)4. INSPECTION RIGHTS. The Assignor hereby grants to each of the Agent
-----------------
and the Banks and its employees and agents the right to visit the Assignor's
plants and facilities that manufacture, inspect or store products sold under any
of the Trademarks, and to inspect the products and quality control records
relating thereto at reasonable times during regular business hours.
(S)5. NO TRANSFER OR INCONSISTENT AGREEMENTS. Without the Agent's prior
--------------------------------------
written consent, the Assignor will not (a) mortgage, pledge, assign, encumber,
grant a security interest in, transfer, license or alienate any of the Pledged
Trademarks, or (b) enter into any agreement (for example, a license agreement)
that is inconsistent with the Assignor's obligations under this Trademark
Agreement or the Security Agreement.
(S)6. AFTER-ACQUIRED TRADEMARKS, ETC.
------------------------------
(S)6.1. AFTER-ACQUIRED TRADEMARKS. If, before the Obligations shall have
-------------------------
been finally paid and satisfied in full, the Assignor shall obtain any right,
title or interest in or to any other or new Trademarks, Trademark Registrations
or Trademark Rights, the provisions of this Trademark Agreement shall
automatically apply thereto and the Assignor shall promptly provide to the Agent
notice thereof in writing and execute and
<PAGE>
-7-
deliver to the Agent such documents or instruments as the Agent may reasonably
request further to implement, preserve or evidence the Agent's interest therein.
(S)6.2. AMENDMENT TO SCHEDULE. The Assignor authorizes the Agent to
---------------------
modify this Trademark Agreement and the Assignment of Marks, without the
necessity of the Assignor's further approval or signature, by amending Exhibit A
------- -
attached hereto and the Annex to the Assignment of Marks to include any future
-----
or other Trademarks, Trademark Registrations or Trademark Rights under (S)(S)2
or 6 hereof.
(S)7. TRADEMARK PROSECUTION.
---------------------
(S)7.1. ASSIGNOR RESPONSIBLE. The Assignor shall assume full and complete
--------------------
responsibility for the prosecution, defense, enforcement or any other necessary
or desirable actions in connection with the Pledged Trademarks, and shall hold
each of the Agent and the Banks harmless from any and all costs, damages,
liabilities and expenses that may be incurred by the Agent or any Bank in
connection with the Agent's interest in the Pledged Trademarks or any other
action or failure to act in connection with this Trademark Agreement or the
transactions contemplated hereby. In respect of such responsibility, the
Assignor shall retain trademark counsel reasonably acceptable to the Agent.
(S)7.2. ASSIGNOR'S DUTIES, ETC. The Assignor shall have the right and the
----------------------
duty, through trademark counsel reasonably acceptable to the Agent, to prosecute
diligently any trademark registration applications of the Trademarks pending as
of the date of this Trademark Agreement or thereafter, to preserve and maintain
all rights in the Trademarks and Trademark Registrations, including the filing
of appropriate renewal applications and other instruments to maintain in effect
the Trademark Registrations and the payment when due of all registration renewal
fees and other fees, taxes and other expenses that shall be incurred or that
shall accrue with respect to any of the Trademarks or Trademark Registrations.
Any expenses incurred in connection with such applications and actions shall be
borne by the Assignor. The Assignor shall not abandon any filed trademark
registration application, or any Trademark Registration or Trademark, without
the consent of the Agent, which consent shall not be unreasonably withheld.
(S)7.3. ASSIGNOR'S ENFORCEMENT RIGHTS. The Assignor shall have the right
-----------------------------
and the duty to bring suit or other action in the Assignor's own name to
maintain and enforce the Trademarks, the Trademark Registrations and the
Trademark Rights. The Assignor may require the Agent to join in such suit or
action as necessary to assure the Assignor's ability to bring and maintain any
such suit or action in any proper forum if (but only if) the Agent is completely
satisfied that such joinder will not subject the Agent or any Bank to any risk
of liability. The Assignor shall promptly, upon demand, reimburse and indemnify
the Agent for all damages, costs and expenses, including legal fees, incurred by
the Agent pursuant to this (S)7.3.
(S)7.4. PROTECTION OF TRADEMARKS, ETC. In general, the Assignor shall
-----------------------------
take any and all such actions (including institution and maintenance of suits,
proceedings or actions) as may be necessary or appropriate to properly maintain,
protect, preserve,
<PAGE>
-8-
care for and enforce the Pledged Trademarks. The Assignor shall not take or fail
to take any action, nor permit any action to be taken or not taken by others
under its control, that would adversely affect the validity, grant or
enforcement of the Pledged Trademarks.
(S)7.5. NOTIFICATION BY ASSIGNOR. Promptly upon obtaining knowledge
------------------------
thereof, the Assignor will notify the Agent in writing of the institution of, or
any final adverse determination in, any proceeding in the PTO or any similar
office or agency of the United States or any foreign country, or any court,
regarding the validity of any of the Trademarks or Trademark Registrations or
the Assignor's rights, title or interests in and to the Pledged Trademarks, and
of any event that does or reasonably could materially adversely affect the value
of any of the Pledged Trademarks, the ability of the Assignor or the Agent to
dispose of any of the Pledged Trademarks or the rights and remedies of the Agent
in relation thereto (including but not limited to the levy of any legal process
against any of the Pledged Trademarks).
(S)8. REMEDIES. Upon the occurrence and during the continuance of an
--------
Event of Default, the Agent shall have, in addition to all other rights and
remedies given it by this Trademark Agreement (including, without limitation,
those set forth in (S)2.2 hereof, the Credit Agreement, the Security Agreement
and the other Loan Documents), those allowed by law and the rights and remedies
of a secured party under the Uniform Commercial Code as enacted in the
Commonwealth of Massachusetts, and, without limiting the generality of the
foregoing, the Agent may immediately, without demand of performance and without
other notice (except as set forth next below) or demand whatsoever to the
Assignor, all of which are hereby expressly waived, sell or license at public or
private sale or otherwise realize upon the whole or from time to time any part
of the Pledged Trademarks, or any interest that the Assignor may have therein,
and after deducting from the proceeds of sale or other disposition of the
Pledged Trademarks all expenses incurred by the Agent in attempting to enforce
this Trademark Agreement (including all reasonable expenses for broker's fees
and legal services), shall apply the residue of such proceeds toward the payment
of the Obligations as set forth in or by reference in the Security Agreement.
Notice of any sale, license or other disposition of the Pledged Trademarks shall
be given to the Assignor at least fifteen (15) days before the time that any
intended public sale or other public disposition of the Pledged Trademarks is to
be made or after which any private sale or other private disposition of the
Pledged Trademarks may be made, which the Assignor hereby agrees shall be
reasonable notice of such public or private sale or other disposition. At any
such sale or other disposition, the Agent may, to the extent permitted under
applicable law, purchase or license the whole or any part of the Pledged
Trademarks or interests therein sold, licensed or otherwise disposed of.
(S)9. COLLATERAL PROTECTION. If the Assignor shall fail to do any act
---------------------
that it has covenanted to do hereunder, or if any representation or warranty of
the Assignor shall be breached, the Agent, in its own name or that of the
Assignor (in the sole discretion of the Agent), may (but shall not be obligated
to) do such act or remedy such breach (or cause such act to be done or such
breach to be remedied), and the Assignor agrees promptly to reimburse the Agent
for any cost or expense incurred by the Agent in so doing.
<PAGE>
-9-
(S)10. POWER OF ATTORNEY. If any Event of Default shall have occurred and
-----------------
be continuing, the Assignor does hereby make, constitute and appoint the Agent
(and any officer or agent of the Agent as the Agent may select in its exclusive
discretion) as the Assignor's true and lawful attorney-in-fact, with full power
of substitution and with the power to endorse the Assignor's name on all
applications, documents, papers and instruments necessary for the Agent to use
the Pledged Trademarks, or to grant or issue any exclusive or nonexclusive
license of any of the Pledged Trademarks to any third person, or to take any and
all actions necessary for the Agent to assign, pledge, convey or otherwise
transfer title in or dispose of any of the Pledged Trademarks or any interest of
the Assignor therein to any third person, and, in general, to execute and
deliver any instruments or documents and do all other acts that the Assignor is
obligated to execute and do hereunder. The Assignor hereby ratifies all that
such attorney shall lawfully do or cause to be done by virtue hereof and
releases each of the Agent and the Banks from any claims, liabilities, causes of
action or demands arising out of or in connection with any action taken or
omitted to be taken by the Agent under this power of attorney (except for the
Agent's gross negligence or willful misconduct). This power of attorney is
coupled with an interest and shall be irrevocable for the duration of this
Trademark Agreement.
(S)11. FURTHER ASSURANCES. The Assignor shall, at any time and from time
------------------
to time, and at its expense, make, execute, acknowledge and deliver, and file
and record as necessary or appropriate with governmental or regulatory
authorities, agencies or offices, such agreements, assignments, documents and
instruments, and do such other and further acts and things (including, without
limitation, obtaining consents of third parties), as the Agent may request or as
may be necessary or appropriate in order to implement and effect fully the
intentions, purposes and provisions of this Trademark Agreement, or to assure
and confirm to the Agent the grant, perfection and priority of the Agent's
security interest in the Pledged Trademarks.
(S)12. TERMINATION. At such time as all of the Obligations have been
-----------
finally paid and satisfied in full, this Trademark Agreement shall terminate and
the Agent shall, upon the written request and at the expense of the Assignor,
execute and deliver to the Assignor all deeds, assignments and other instruments
as may be necessary or proper to reassign and reconvey to and re-vest in the
Assignor the entire right, title and interest to the Pledged Trademarks
previously granted, assigned, transferred and conveyed to the Agent by the
Assignor pursuant to this Trademark Agreement, as fully as if this Trademark
Agreement had not been made, subject to any disposition of all or any part
thereof that may have been made by the Agent pursuant hereto or the Security
Agreement.
(S)13. COURSE OF DEALING. No course of dealing between the Assignor and
-----------------
the Agent, nor any failure to exercise, nor any delay in exercising, on the part
of the Agent, any right, power or privilege hereunder or under the Security
Agreement or any other agreement shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or privilege hereunder or
thereunder preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.
<PAGE>
-10-
(S)14. EXPENSES. Any and all fees, costs and expenses, of whatever kind
--------
or nature, including the reasonable attorneys' fees and expenses incurred by the
Agent in connection with the preparation of this Trademark Agreement and all
other documents relating hereto, the consummation of the transactions
contemplated hereby or the enforcement hereof, the filing or recording of any
documents (including all taxes in connection therewith) in public offices, the
payment or discharge of any taxes, counsel fees, maintenance or renewal fees,
encumbrances, or otherwise protecting, maintaining or preserving the Pledged
Trademarks, or in defending or prosecuting any actions or proceedings arising
out of or related to the Pledged Trademarks, shall be borne and paid by the
Assignor.
(S)15. OVERDUE AMOUNTS. Until paid, all amounts due and payable by the
---------------
Assignor hereunder shall be a debt secured by the Pledged Trademarks and other
Collateral and shall bear, whether before or after judgment, interest at the
rate of interest for overdue principal set forth in the Credit Agreement.
(S)16. NO ASSUMPTION OF LIABILITY; INDEMNIFICATION. NOTWITHSTANDING
-------------------------------------------
ANYTHING TO THE CONTRARY CONTAINED HEREIN, NEITHER THE AGENT NOR ANY BANK
ASSUMES ANY LIABILITIES OF THE ASSIGNOR WITH RESPECT TO ANY CLAIM OR CLAIMS
REGARDING THE ASSIGNOR'S OWNERSHIP OR PURPORTED OWNERSHIP OF, OR RIGHTS OR
PURPORTED RIGHTS ARISING FROM, ANY OF THE PLEDGED TRADEMARKS OR ANY USE, LICENSE
OR SUBLICENSE THEREOF, WHETHER ARISING OUT OF ANY PAST, CURRENT OR FUTURE EVENT,
CIRCUMSTANCE, ACT OR OMISSION OR OTHERWISE. ALL OF SUCH LIABILITIES SHALL BE
EXCLUSIVELY THE RESPONSIBILITY OF THE ASSIGNOR, AND THE ASSIGNOR SHALL INDEMNIFY
THE AGENT AND THE BANKS FOR ANY AND ALL COSTS, EXPENSES, DAMAGES AND CLAIMS,
INCLUDING LEGAL FEES, INCURRED BY THE AGENT OR ANY BANK WITH RESPECT TO SUCH
LIABILITIES.
(S)17. NOTICES. All notices and other communications made or required to
-------
be given pursuant to this Trademark Agreement shall be in writing and shall be
delivered in hand, mailed by United States registered or certified first-class
mail, postage prepaid, or sent by telegraph, telecopy or telex and confirmed by
delivery via courier or postal service, addressed as set forth in (S)20 of the
Credit Agreement. Any such notice or demand shall be deemed to have been duly
given or made and to have become effective (a) if delivered by hand to a
responsible officer of the party to which it is directed, at the time of the
receipt thereof by such officer, (b) if sent by registered or certified first-
class mail, postage prepaid, two (2) Business Days after the posting thereof,
and (c) if sent by telegraph, telecopy, or telex, at the time of the dispatch
thereof, if in normal business hours in the country of receipt, or otherwise at
the opening of business on the following Business Day.
(S)18. AMENDMENT AND WAIVER. This Trademark Agreement is subject to
--------------------
modification only by a writing signed by the Agent (with the consent of the
Banks or Majority Banks as provided in the Credit Agreement) and the Assignor,
except as provided in (S)6.2 hereof. The Agent shall not be deemed to have
waived any right
<PAGE>
-11-
hereunder unless such waiver shall be in writing and signed by the Agent and the
Banks or Majority Banks as provided in the Credit Agreement. A waiver on any one
occasion shall not be construed as a bar to or waiver of any right on any future
occasion.
(S)19. GOVERNING LAW; CONSENT TO JURISDICTION. THIS TRADEMARK AGREEMENT
--------------------------------------
IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
The Assignor agrees that any suit for the enforcement of this Trademark
Agreement may be brought in the courts of the Commonwealth of Massachusetts or
any federal court sitting therein and consents to the non-exclusive jurisdiction
of such court and to service of process in any such suit being made upon the
Assignor by mail at the address specified in (S)17 hereof. The Assignor hereby
waives any objection that it may now or hereafter have to the venue of any such
suit or any such court or that such suit is brought in an inconvenient court.
(S)20. WAIVER OF JURY TRIAL. THE ASSIGNOR WAIVES ITS RIGHT TO A JURY
--------------------
TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS TRADEMARK AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR
THE PERFORMANCE OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law,
the Assignor waives any right which it may have to claim or recover in any
litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. The Assignor (a) certifies that neither the Agent or any Bank
nor any representative, agent or attorney of the Agent or any Bank has
represented, expressly or otherwise, that the Agent or any Bank would not, in
the event of litigation, seek to enforce the foregoing waivers, and (b)
acknowledges that, in entering into the Credit Agreement and the other Loan
Documents to which the Agent or any Bank is a party, the Agent and the Banks are
relying upon, among other things, the waivers and certifications contained in
this (S)20.
(S)21. MISCELLANEOUS. The headings of each section of this Trademark
-------------
Agreement are for convenience only and shall not define or limit the provisions
thereof. This Trademark Agreement and all rights and obligations hereunder
shall be binding upon the Assignor and its respective successors and assigns,
and shall inure to the benefit of the Agent, the Banks and their respective
successors and assigns. In the event of any irreconcilable conflict between the
provisions of this Trademark Agreement and the Credit Agreement, or between this
Trademark Agreement and the Security Agreement, the provisions of the Credit
Agreement or the Security Agreement, as the case may be, shall control. If any
term of this Trademark Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be
affected thereby, and this Trademark Agreement shall be construed and be
enforceable as if such invalid, illegal or unenforceable term had not been
included herein. The Assignor acknowledges receipt of a copy of this Trademark
Agreement.
<PAGE>
-12-
IN WITNESS WHEREOF, this Trademark Collateral Security and Pledge Agreement
has been executed as of the day and year first above written.
SILENCIO/SAFETY DIRECT, INC.
By: /s/ Christopher T. Paule
-----------------------------------
Title: Vice President
BANKBOSTON, N.A., as Agent
By: /s/ Peter van der Horst
-----------------------------------
Peter van der Horst, Vice President
<PAGE>
-13-
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 22 day of April, 1998, personally appeared Christopher T.
Paule to me known personally, and who, being by me duly sworn, deposes and says
that he is the Vice President & CFO of Silencio/Safety Direct, Inc., and that
said instrument was signed and sealed on behalf of said corporation by authority
of its Board of Directors, and said Vice President & CFO acknowledged said
instrument to be the free act and deed of said corporation.
/s/ Dawn M. Schoenig
-------------------------------
Notary Public
My commission expires: [August 3, 1999]
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 21 day of April, 1998, personally appeared Peter van der
Horst to me known personally, and who, being by me duly sworn, deposes and says
that he is a Vice President of BankBoston, N.A. (the "Agent"), and that said
instrument was signed and sealed on behalf of said Agent by authority of its
Board of Directors, and said Peter van der Horst acknowledged said instrument to
be the free act and deed of said Agent.
/s/ D. L. Figueroa-Thomas
-----------------------------------
Notary Public
My commission expires: [February 21, 1999]
<PAGE>
SCHEDULE A
----------
TRADEMARKS AND TRADEMARK REGISTRATIONS
--------------------------------------
<TABLE>
<CAPTION>
Trademark REGISTRATIONS --
or United States Patent and Trademark Office
Service Mark Registration No. Registration Date
- ------------ ---------------- -----------------
<S> <C> <C>
</TABLE>
<TABLE>
<CAPTION>
Trademark PENDING APPLICATIONS --
or United States Patent and Trademark Office
Service Mark Serial No. Filing Date
- ------------ ---------- -----------
<S> <C> <C>
</TABLE>
<PAGE>
EXHIBIT 10.23
BINGHAM DRAFT
04/20/98
TRADEMARK COLLATERAL
--------------------
SECURITY AND PLEDGE AGREEMENT
-----------------------------
TRADEMARK COLLATERAL SECURITY AND PLEDGE AGREEMENT, dated as of April 22,
1998, between CRYSTALOID TECHNOLOGIES, INC., a Delaware corporation having its
principal place of business at 2997 Clarkson Road, Chesterfield, Missouri 63017
(the "Assignor"), and BANKBOSTON, N.A., as agent (hereinafter, in such capacity,
the "Agent") for itself and other lending institutions (hereinafter,
collectively, the "Banks") which are, or may in the future become, parties to a
Revolving Credit and Acquisition Loan Agreement dated as of April 22, 1998 (as
amended and in effect from time to time, the "Credit Agreement"), among the
Assignor, the Banks, the Agent and Mercantile Bank National Association, as Co-
Agent.
WHEREAS, it is a condition precedent to the Banks' making any loans or
otherwise extending credit to the Assignor under the Credit Agreement that the
Assignor execute and deliver to the Agent, for the benefit of the Banks and the
Agent, a trademark agreement in substantially the form hereof;
WHEREAS, the Assignor has executed and delivered to the Agent, for the
benefit of the Banks and the Agent, the Security Agreement (as defined in the
Credit Agreement), pursuant to which the Assignor has granted to the Agent, for
the benefit of the Banks and the Agent, a security interest in all of the
Assignor's personal property and fixture assets, including, without limitation,
the trademarks, service marks, trademark and service mark registrations, and
trademark and service mark registration applications listed on Schedule A
-------- -
attached hereto, all to secure the payment and performance of the Obligations
(as defined in the Credit Agreement); and
WHEREAS, this Trademark Agreement is supplemental to the provisions
contained in the Security Agreement;
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
(S)1. DEFINITIONS. Capitalized terms used herein and not otherwise
-----------
defined herein shall have the respective meanings provided therefor in the
Credit Agreement and the Security Agreement. In addition, the following terms
shall have the meanings set forth in this (S)1 or elsewhere in this Trademark
Agreement referred to below:
Assignment of Marks. See (S)2.1 hereof.
-------------------
Associated Goodwill. All goodwill of the Assignor and its business,
-------------------
products and services appurtenant to, associated with or symbolized by the
Trademarks and the use thereof.
<PAGE>
-2-
Pledged Trademarks. All of the Assignor's right, title and interest in
------------------
and to all of the Trademarks, the Trademark Registrations, the Trademark License
Rights, the Trademark Rights, the Associated Goodwill, the Related Assets, and
all accessions to, substitutions for, replacements of, and all products and
proceeds of any and all of the foregoing.
PTO. The United States Patent and Trademark Office.
---
Related Assets. All assets, rights and interests of the Assignor that
--------------
uniquely reflect or embody the Associated Goodwill, including the following:
(a) all patents, inventions, copyrights, trade secrets, confidential
information, formulae, methods or processes, compounds, recipes, know-how,
methods and operating systems, drawings, descriptions, formulations,
manufacturing and production and delivery procedures, quality control
procedures, product and service specifications, catalogs, price lists, and
advertising materials, relating to the manufacture, production, delivery,
provision and sale of goods or services under or in association with any of
the Trademarks; and
(b) the following documents and things in the possession or under the
control of the Assignor, or subject to its demand for possession or
control, related to the production, delivery, provision and sale by the
Assignor, or any affiliate, franchisee, licensee or contractor, of products
or services sold by or under the authority of the Assignor in connection
with the Trademarks or Trademark Rights, whether prior to, on or subsequent
to the date hereof:
(i) all lists, contracts, ancillary documents and other
information that identify, describe or provide information with
respect to any customers, dealers or distributors of the Assignor, its
affiliates or franchisees or licensees or contractors, for products or
services sold under or in connection with the Trademarks or Trademark
Rights, including all lists and documents containing information
regarding each customer's, dealer's or distributor's name and address,
credit, payment, discount, delivery and other sale terms, and history,
pattern and total of purchases by brand, product, style, size and
quantity;
(ii) all agreements (including franchise agreements), product
and service specification documents and operating, production and
quality control manuals relating to or used in the design,
manufacture, production, delivery, provision and sale of products or
services under or in connection with the Trademarks or Trademark
Rights;
(iii) all documents and agreements relating to the identity and
locations of all sources of supply, all terms of purchase and
delivery, for all materials, components, raw materials and other
supplies and services used in the manufacture, production, provision,
delivery and sale of
<PAGE>
-3-
products or services under or in connection with the Trademarks or
Trademark Rights; and
(iv) all agreements and documents constituting or concerning the
present or future, current or proposed advertising and promotion by
the Assignor (or any of its affiliates, franchisees, licensees or
contractors) of products or services sold under or in connection with
the Trademarks or Trademark Rights.
Trademark Agreement. This Trademark Collateral Security and Pledge
-------------------
Agreement, as amended and in effect from time to time.
Trademark License Rights. Any and all past, present or future rights and
------------------------
interests of the Assignor pursuant to any and all past, present and future
franchising or licensing agreements in favor of the Assignor, or to which the
Assignor is a party, pertaining to any Trademarks, Trademark Registrations, or
Trademark Rights owned or used by third parties in the past, present or future,
including the right (but not the obligation) in the name of the Assignor or the
Agent to enforce, and sue and recover for, any breach or violation of any such
agreement to which the Assignor is a party.
Trademark Registrations. All past, present or future federal, state,
-----------------------
local and foreign registrations of the Trademarks, all past, present and future
applications for any such registrations (and any such registrations thereof upon
approval of such applications), together with the right (but not the obligation)
to apply for such registrations (and prosecute such applications) in the name of
the Assignor or the Agent, and to take any and all actions necessary or
appropriate to maintain such registrations in effect and renew and extend such
registrations.
Trademark Rights. Any and all past, present or future rights in, to and
----------------
associated with the Trademarks throughout the world, whether arising under
federal law, state law, common law, foreign law or otherwise, including the
following: all such rights arising out of or associated with the Trademark
Registrations; the right (but not the obligation) to register claims under any
state, federal or foreign trademark law or regulation; the right (but not the
obligation) to sue or bring opposition or cancellation proceedings in the name
of the Assignor or the Agent for any and all past, present and future
infringements or dilution of or any other damages or injury to the Trademarks,
the Trademark Rights, or the Associated Goodwill, and the rights to damages or
profits due or accrued arising out of or in connection with any such past,
present or future infringement, dilution, damage or injury; and the Trademark
License Rights.
Trademarks. All of the trademarks, service marks, designs, logos,
----------
indicia, trade names, corporate names, company names, business names, fictitious
business names, trade styles, elements of package or trade dress, and other
source and product or service identifiers, used or associated with or
appurtenant to the products, services and businesses of the Assignor, that (i)
are set forth on Schedule A hereto, or (ii) have been adopted, acquired, owned,
-------- -
held or used by the Assignor or are now owned, held or used by the Assignor, in
the Assignor's business, or with the Assignor's products and services, or in
which the Assignor has any right, title or interest, or (iii) are in the
<PAGE>
-4-
future adopted, acquired, owned, held and used by the Assignor in the Assignor's
business or with the Assignor's products and services, or in which the Assignor
in the future acquires any right, title or interest.
use. With respect to any Trademark, all uses of such Trademark by, for
---
or in connection with the Assignor or its business or for the direct or indirect
benefit of the Assignor or its business, including all such uses by the Assignor
itself, by any of the affiliates of the Assignor, or by any franchisee, licensee
or contractor of the Assignor.
Unless otherwise provided herein, the rules of interpretation set forth in
(S)1.2 of the Credit Agreement shall be applicable to this Trademark Agreement.
(S)2. GRANT OF SECURITY INTEREST.
--------------------------
(S)2.1. SECURITY INTEREST; ASSIGNMENT OF MARKS. As collateral security for
--------------------------------------
the payment and performance in full of all of the Obligations, the Assignor
hereby unconditionally grants to the Agent, for the benefit of the Banks and the
Agent, a continuing security interest in and first priority lien on the Pledged
Trademarks, and pledges and mortgages (but does not transfer title to) the
Pledged Trademarks to the Agent for the benefit of the Banks and the Agent. In
addition, the Assignor has executed in blank and delivered to the Agent an
assignment of federally registered trademarks in substantially the form of
Exhibit 1 attached hereto (the "Assignment of Marks"). The Assignor
- ------- -
hereby authorizes the Agent to complete as assignee and record with the PTO the
Assignment of Marks upon the occurrence and during the continuance of an Event
of Default and the proper exercise of the Agent's remedies under this Trademark
Agreement and the Security Agreement.
(S)2.2. CONDITIONAL ASSIGNMENT. In addition to, and not by way of
----------------------
limitation of, the grant, pledge and mortgage of the Pledged Trademarks provided
in (S)2.1 hereof, the Assignor grants, assigns, transfers, conveys and sets over
to the Agent, for the benefit of the Banks and the Agent, the Assignor's entire
right, title and interest in and to the Pledged Trademarks; provided that such
--------
grant, assignment, transfer and conveyance shall be and become of force and
effect only (i) upon or after the occurrence and during the continuance of an
Event of Default and (ii) either (A) upon the written demand of the Agent at any
time during such continuance or (B) immediately and automatically (without
notice or action of any kind by the Agent) upon an Event of Default for which
acceleration of the Loans is automatic under the Credit Agreement or upon the
sale or other disposition of or foreclosure upon the Collateral pursuant to the
Security Agreement and applicable law (including the transfer or other
disposition of the Collateral by the Assignor to the Agent or its nominee in
lieu of foreclosure).
(S)2.3. SUPPLEMENTAL TO SECURITY AGREEMENT. Pursuant to the Security
----------------------------------
Agreement the Assignor has granted to the Agent, for the benefit of the Banks
and the Agent, a continuing security interest in and lien on the Collateral
(including the Pledged Trademarks). The Security Agreement, and all rights and
interests of the Agent in and to the Collateral (including the Pledged
Trademarks) thereunder, are hereby ratified and confirmed in all respects. In no
event shall this Trademark Agreement, the grant, assignment, transfer and
conveyance of the Pledged Trademarks
<PAGE>
-5-
hereunder, or the recordation of this Trademark Agreement (or any document
hereunder) with the PTO, adversely affect or impair, in any way or to any
extent, the Security Agreement, the security interest of the Agent in the
Collateral (including the Pledged Trademarks) pursuant to the Security Agreement
and this Trademark Agreement, the attachment and perfection of such security
interest under the Uniform Commercial Code (including the security interest in
the Pledged Trademarks), or any present or future rights and interests of the
Agent in and to the Collateral under or in connection with the Security
Agreement, this Trademark Agreement or the Uniform Commercial Code. Any and all
rights and interests of the Agent in and to the Pledged Trademarks (and any and
all obligations of the Assignor with respect to the Pledged Trademarks) provided
herein, or arising hereunder or in connection herewith, shall only supplement
and be cumulative and in addition to the rights and interests of the Agent (and
the obligations of the Assignor) in, to or with respect to the Collateral
(including the Pledged Trademarks) provided in or arising under or in connection
with the Security Agreement and shall not be in derogation thereof.
(S)3. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Assignor
-----------------------------------------
represents, warrants and covenants that:
(a) to the best of the Assignor's knowledge, Schedule A attached
-------- -
hereto sets forth a true and complete list of all Trademarks and Trademark
Registrations now owned, licensed, controlled or used by the Assignor;
(b) to the best of the Assignor's knowledge, the Trademarks and
Trademark Registrations are subsisting and have not been adjudged invalid
or unenforceable, in whole or in part, and there is no litigation or
proceeding pending concerning the validity or enforceability of the
Trademarks or Trademark Registrations;
(c) to the best of the Assignor's knowledge, each of the
Trademarks and Trademark Registrations is valid and enforceable;
(d) to the best of the Assignor's knowledge, there is no
infringement by others of the Trademarks, Trademark Registrations or
Trademark Rights;
(e) to the best of the Assignor's knowledge, no claim has been
made that the use of any of the Trademarks does or may violate the rights
of any third person, and there is no infringement by the Assignor of the
trademark rights of others;
(f) the Assignor is the sole and exclusive owner of the entire
and unencumbered right, title and interest in and to each of the Trademarks
(other than ownership and other rights reserved by third party owners with
respect to Trademarks that the Assignor is licensed to use), free and clear
of any liens, charges, encumbrances and adverse claims, including pledges,
assignments, licenses, registered user agreements and covenants by the
Assignor not to sue third persons, other than the security interest and
assignment created by the Security Agreement and this Trademark Agreement;
<PAGE>
-6-
(g) the Assignor has the unqualified right to enter into this
Trademark Agreement and to perform its terms and will comply with the
covenants herein contained;
(h) the Assignor has used, and will continue to use, proper
statutory and other appropriate proprietary notices in connection with its
use of the Trademarks;
(i) the Assignor has used, and will continue to use for the
duration of this Trademark Agreement, consistent standards of quality in
its manufacture and provision of products and services sold or provided
under the Trademarks ;
(j) this Trademark Agreement, together with the Security
Agreement, will create in favor of the Agent a valid and perfected first
priority security interest in the Pledged Trademarks upon making the
filings referred to in clause (k) of this (S)3; and
(k) except for the filing of financing statements under the
Uniform Commercial Code and the recording of this Trademark Agreement with
the PTO, no authorization, approval or other action by, and no notice to or
filing with, any governmental or regulatory authority, agency or office is
required either (A) for the grant by the Assignor or the effectiveness of
the security interest and assignment granted hereby or for the execution,
delivery and performance of this Trademark Agreement by the Assignor, or
(B) for the perfection of or the exercise by the Agent of any of its rights
and remedies hereunder.
(S)4. INSPECTION RIGHTS. The Assignor hereby grants to each of the Agent
-----------------
and the Banks and its employees and agents the right to visit the Assignor's
plants and facilities that manufacture, inspect or store products sold under any
of the Trademarks, and to inspect the products and quality control records
relating thereto at reasonable times during regular business hours.
(S)5. NO TRANSFER OR INCONSISTENT AGREEMENTS. Without the Agent's prior
--------------------------------------
written consent, the Assignor will not (a) mortgage, pledge, assign, encumber,
grant a security interest in, transfer, license or alienate any of the Pledged
Trademarks, or (b) enter into any agreement (for example, a license agreement)
that is inconsistent with the Assignor's obligations under this Trademark
Agreement or the Security Agreement.
(S)6. AFTER-ACQUIRED TRADEMARKS, ETC.
------------------------------
(S)6.1. AFTER-ACQUIRED TRADEMARKS. If, before the Obligations shall have
-------------------------
been finally paid and satisfied in full, the Assignor shall obtain any right,
title or interest in or to any other or new Trademarks, Trademark Registrations
or Trademark Rights, the provisions of this Trademark Agreement shall
automatically apply thereto and the Assignor shall promptly provide to the Agent
notice thereof in writing and execute and
<PAGE>
-7-
deliver to the Agent such documents or instruments as the Agent may reasonably
request further to implement, preserve or evidence the Agent's interest therein.
(S)6.2. AMENDMENT TO SCHEDULE. The Assignor authorizes the Agent to modify
---------------------
this Trademark Agreement and the Assignment of Marks, without the necessity of
the Assignor's further approval or signature, by amending Exhibit A attached
------- -
hereto and the Annex to the Assignment of Marks to include any future or other
-----
Trademarks, Trademark Registrations or Trademark Rights under (S)(S)2 or 6
hereof.
(S)7. TRADEMARK PROSECUTION.
---------------------
(S)7.1. ASSIGNOR RESPONSIBLE. The Assignor shall assume full and complete
--------------------
responsibility for the prosecution, defense, enforcement or any other necessary
or desirable actions in connection with the Pledged Trademarks, and shall hold
each of the Agent and the Banks harmless from any and all costs, damages,
liabilities and expenses that may be incurred by the Agent or any Bank in
connection with the Agent's interest in the Pledged Trademarks or any other
action or failure to act in connection with this Trademark Agreement or the
transactions contemplated hereby. In respect of such responsibility, the
Assignor shall retain trademark counsel reasonably acceptable to the Agent.
(S)7.2. ASSIGNOR'S DUTIES, ETC. The Assignor shall have the right and the
----------------------
duty, through trademark counsel reasonably acceptable to the Agent, to prosecute
diligently any trademark registration applications of the Trademarks pending as
of the date of this Trademark Agreement or thereafter, to preserve and maintain
all rights in the Trademarks and Trademark Registrations, including the filing
of appropriate renewal applications and other instruments to maintain in effect
the Trademark Registrations and the payment when due of all registration renewal
fees and other fees, taxes and other expenses that shall be incurred or that
shall accrue with respect to any of the Trademarks or Trademark Registrations.
Any expenses incurred in connection with such applications and actions shall be
borne by the Assignor. The Assignor shall not abandon any filed trademark
registration application, or any Trademark Registration or Trademark, without
the consent of the Agent, which consent shall not be unreasonably withheld.
(S)7.3. ASSIGNOR'S ENFORCEMENT RIGHTS. The Assignor shall have the right
-----------------------------
and the duty to bring suit or other action in the Assignor's own name to
maintain and enforce the Trademarks, the Trademark Registrations and the
Trademark Rights. The Assignor may require the Agent to join in such suit or
action as necessary to assure the Assignor's ability to bring and maintain any
such suit or action in any proper forum if (but only if) the Agent is completely
satisfied that such joinder will not subject the Agent or any Bank to any risk
of liability. The Assignor shall promptly, upon demand, reimburse and indemnify
the Agent for all damages, costs and expenses, including legal fees, incurred by
the Agent pursuant to this (S)7.3.
(S)7.4. PROTECTION OF TRADEMARKS, ETC. In general, the Assignor shall take
-----------------------------
any and all such actions (including institution and maintenance of suits,
proceedings or actions) as may be necessary or appropriate to properly maintain,
protect, preserve,
<PAGE>
-8-
care for and enforce the Pledged Trademarks. The Assignor shall not take or fail
to take any action, nor permit any action to be taken or not taken by others
under its control, that would adversely affect the validity, grant or
enforcement of the Pledged Trademarks.
(S)7.5. NOTIFICATION BY ASSIGNOR. Promptly upon obtaining knowledge
------------------------
thereof, the Assignor will notify the Agent in writing of the institution of, or
any final adverse determination in, any proceeding in the PTO or any similar
office or agency of the United States or any foreign country, or any court,
regarding the validity of any of the Trademarks or Trademark Registrations or
the Assignor's rights, title or interests in and to the Pledged Trademarks, and
of any event that does or reasonably could materially adversely affect the value
of any of the Pledged Trademarks, the ability of the Assignor or the Agent to
dispose of any of the Pledged Trademarks or the rights and remedies of the Agent
in relation thereto (including but not limited to the levy of any legal process
against any of the Pledged Trademarks).
(S)8. REMEDIES. Upon the occurrence and during the continuance of an
--------
Event of Default, the Agent shall have, in addition to all other rights and
remedies given it by this Trademark Agreement (including, without limitation,
those set forth in (S)2.2 hereof, the Credit Agreement, the Security Agreement
and the other Loan Documents), those allowed by law and the rights and remedies
of a secured party under the Uniform Commercial Code as enacted in the
Commonwealth of Massachusetts, and, without limiting the generality of the
foregoing, the Agent may immediately, without demand of performance and without
other notice (except as set forth next below) or demand whatsoever to the
Assignor, all of which are hereby expressly waived, sell or license at public or
private sale or otherwise realize upon the whole or from time to time any part
of the Pledged Trademarks, or any interest that the Assignor may have therein,
and after deducting from the proceeds of sale or other disposition of the
Pledged Trademarks all expenses incurred by the Agent in attempting to enforce
this Trademark Agreement (including all reasonable expenses for broker's fees
and legal services), shall apply the residue of such proceeds toward the payment
of the Obligations as set forth in or by reference in the Security Agreement.
Notice of any sale, license or other disposition of the Pledged Trademarks shall
be given to the Assignor at least fifteen (15) days before the time that any
intended public sale or other public disposition of the Pledged Trademarks is to
be made or after which any private sale or other private disposition of the
Pledged Trademarks may be made, which the Assignor hereby agrees shall be
reasonable notice of such public or private sale or other disposition. At any
such sale or other disposition, the Agent may, to the extent permitted under
applicable law, purchase or license the whole or any part of the Pledged
Trademarks or interests therein sold, licensed or otherwise disposed of.
(S)9. COLLATERAL PROTECTION. If the Assignor shall fail to do any act
---------------------
that it has covenanted to do hereunder, or if any representation or warranty of
the Assignor shall be breached, the Agent, in its own name or that of the
Assignor (in the sole discretion of the Agent), may (but shall not be obligated
to) do such act or remedy such breach (or cause such act to be done or such
breach to be remedied), and the Assignor agrees promptly to reimburse the Agent
for any cost or expense incurred by the Agent in so doing.
<PAGE>
-9-
(S)10. POWER OF ATTORNEY. If any Event of Default shall have occurred and
-----------------
be continuing, the Assignor does hereby make, constitute and appoint the Agent
(and any officer or agent of the Agent as the Agent may select in its exclusive
discretion) as the Assignor's true and lawful attorney-in-fact, with full power
of substitution and with the power to endorse the Assignor's name on all
applications, documents, papers and instruments necessary for the Agent to use
the Pledged Trademarks, or to grant or issue any exclusive or nonexclusive
license of any of the Pledged Trademarks to any third person, or to take any and
all actions necessary for the Agent to assign, pledge, convey or otherwise
transfer title in or dispose of any of the Pledged Trademarks or any interest of
the Assignor therein to any third person, and, in general, to execute and
deliver any instruments or documents and do all other acts that the Assignor is
obligated to execute and do hereunder. The Assignor hereby ratifies all that
such attorney shall lawfully do or cause to be done by virtue hereof and
releases each of the Agent and the Banks from any claims, liabilities, causes of
action or demands arising out of or in connection with any action taken or
omitted to be taken by the Agent under this power of attorney (except for the
Agent's gross negligence or willful misconduct). This power of attorney is
coupled with an interest and shall be irrevocable for the duration of this
Trademark Agreement.
(S)11. FURTHER ASSURANCES. The Assignor shall, at any time and from time
------------------
to time, and at its expense, make, execute, acknowledge and deliver, and file
and record as necessary or appropriate with governmental or regulatory
authorities, agencies or offices, such agreements, assignments, documents and
instruments, and do such other and further acts and things (including, without
limitation, obtaining consents of third parties), as the Agent may request or as
may be necessary or appropriate in order to implement and effect fully the
intentions, purposes and provisions of this Trademark Agreement, or to assure
and confirm to the Agent the grant, perfection and priority of the Agent's
security interest in the Pledged Trademarks.
(S)12. TERMINATION. At such time as all of the Obligations have been
-----------
finally paid and satisfied in full, this Trademark Agreement shall terminate and
the Agent shall, upon the written request and at the expense of the Assignor,
execute and deliver to the Assignor all deeds, assignments and other instruments
as may be necessary or proper to reassign and reconvey to and re-vest in the
Assignor the entire right, title and interest to the Pledged Trademarks
previously granted, assigned, transferred and conveyed to the Agent by the
Assignor pursuant to this Trademark Agreement, as fully as if this Trademark
Agreement had not been made, subject to any disposition of all or any part
thereof that may have been made by the Agent pursuant hereto or the Security
Agreement.
(S)13. COURSE OF DEALING. No course of dealing between the Assignor and
-----------------
the Agent, nor any failure to exercise, nor any delay in exercising, on the part
of the Agent, any right, power or privilege hereunder or under the Security
Agreement or any other agreement shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or privilege hereunder or
thereunder preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.
<PAGE>
-10-
(S)14. EXPENSES. Any and all fees, costs and expenses, of whatever kind
--------
or nature, including the reasonable attorneys' fees and expenses incurred by the
Agent in connection with the preparation of this Trademark Agreement and all
other documents relating hereto, the consummation of the transactions
contemplated hereby or the enforcement hereof, the filing or recording of any
documents (including all taxes in connection therewith) in public offices, the
payment or discharge of any taxes, counsel fees, maintenance or renewal fees,
encumbrances, or otherwise protecting, maintaining or preserving the Pledged
Trademarks, or in defending or prosecuting any actions or proceedings arising
out of or related to the Pledged Trademarks, shall be borne and paid by the
Assignor.
(S)15. OVERDUE AMOUNTS. Until paid, all amounts due and payable by the
---------------
Assignor hereunder shall be a debt secured by the Pledged Trademarks and other
Collateral and shall bear, whether before or after judgment, interest at the
rate of interest for overdue principal set forth in the Credit Agreement.
(S)16. NO ASSUMPTION OF LIABILITY; INDEMNIFICATION. NOTWITHSTANDING
-------------------------------------------
ANYTHING TO THE CONTRARY CONTAINED HEREIN, NEITHER THE AGENT NOR ANY BANK
ASSUMES ANY LIABILITIES OF THE ASSIGNOR WITH RESPECT TO ANY CLAIM OR CLAIMS
REGARDING THE ASSIGNOR'S OWNERSHIP OR PURPORTED OWNERSHIP OF, OR RIGHTS OR
PURPORTED RIGHTS ARISING FROM, ANY OF THE PLEDGED TRADEMARKS OR ANY USE, LICENSE
OR SUBLICENSE THEREOF, WHETHER ARISING OUT OF ANY PAST, CURRENT OR FUTURE EVENT,
CIRCUMSTANCE, ACT OR OMISSION OR OTHERWISE. ALL OF SUCH LIABILITIES SHALL BE
EXCLUSIVELY THE RESPONSIBILITY OF THE ASSIGNOR, AND THE ASSIGNOR SHALL INDEMNIFY
THE AGENT AND THE BANKS FOR ANY AND ALL COSTS, EXPENSES, DAMAGES AND CLAIMS,
INCLUDING LEGAL FEES, INCURRED BY THE AGENT OR ANY BANK WITH RESPECT TO SUCH
LIABILITIES.
(S)17. NOTICES. All notices and other communications made or required to
-------
be given pursuant to this Trademark Agreement shall be in writing and shall be
delivered in hand, mailed by United States registered or certified first-class
mail, postage prepaid, or sent by telegraph, telecopy or telex and confirmed by
delivery via courier or postal service, addressed as set forth in (S)20 of the
Credit Agreement. Any such notice or demand shall be deemed to have been duly
given or made and to have become effective (a) if delivered by hand to a
responsible officer of the party to which it is directed, at the time of the
receipt thereof by such officer, (b) if sent by registered or certified first-
class mail, postage prepaid, two (2) Business Days after the posting thereof,
and (c) if sent by telegraph, telecopy, or telex, at the time of the dispatch
thereof, if in normal business hours in the country of receipt, or otherwise at
the opening of business on the following Business Day.
(S)18. AMENDMENT AND WAIVER. This Trademark Agreement is subject to
--------------------
modification only by a writing signed by the Agent (with the consent of the
Banks or Majority Banks as provided in the Credit Agreement) and the Assignor,
except as provided in (S)6.2 hereof. The Agent shall not be deemed to have
waived any right
<PAGE>
-11-
hereunder unless such waiver shall be in writing and signed by the Agent and the
Banks or Majority Banks as provided in the Credit Agreement. A waiver on any one
occasion shall not be construed as a bar to or waiver of any right on any future
occasion.
(S)19. GOVERNING LAW; CONSENT TO JURISDICTION. THIS TRADEMARK AGREEMENT
--------------------------------------
IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
The Assignor agrees that any suit for the enforcement of this Trademark
Agreement may be brought in the courts of the Commonwealth of Massachusetts or
any federal court sitting therein and consents to the non-exclusive jurisdiction
of such court and to service of process in any such suit being made upon the
Assignor by mail at the address specified in (S)17 hereof. The Assignor hereby
waives any objection that it may now or hereafter have to the venue of any such
suit or any such court or that such suit is brought in an inconvenient court.
(S)20. WAIVER OF JURY TRIAL. THE ASSIGNOR WAIVES ITS RIGHT TO A JURY
--------------------
TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS TRADEMARK AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR
THE PERFORMANCE OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law,
the Assignor waives any right which it may have to claim or recover in any
litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. The Assignor (a) certifies that neither the Agent or any Bank
nor any representative, agent or attorney of the Agent or any Bank has
represented, expressly or otherwise, that the Agent or any Bank would not, in
the event of litigation, seek to enforce the foregoing waivers, and (b)
acknowledges that, in entering into the Credit Agreement and the other Loan
Documents to which the Agent or any Bank is a party, the Agent and the Banks are
relying upon, among other things, the waivers and certifications contained in
this (S)20.
(S)21. MISCELLANEOUS. The headings of each section of this Trademark
-------------
Agreement are for convenience only and shall not define or limit the provisions
thereof. This Trademark Agreement and all rights and obligations hereunder
shall be binding upon the Assignor and its respective successors and assigns,
and shall inure to the benefit of the Agent, the Banks and their respective
successors and assigns. In the event of any irreconcilable conflict between the
provisions of this Trademark Agreement and the Credit Agreement, or between this
Trademark Agreement and the Security Agreement, the provisions of the Credit
Agreement or the Security Agreement, as the case may be, shall control. If any
term of this Trademark Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be
affected thereby, and this Trademark Agreement shall be construed and be
enforceable as if such invalid, illegal or unenforceable term had not been
included herein. The Assignor acknowledges receipt of a copy of this Trademark
Agreement.
<PAGE>
-12-
IN WITNESS WHEREOF, this Trademark Collateral Security and Pledge Agreement
has been executed as of the day and year first above written.
CRYSTALOID TECHNOLOGIES, INC.
By: /s/ Christopher T. Paule
-----------------------------------
Title: Vice President
BANKBOSTON, N.A., as Agent
By: /s/ Peter van der Horst
----------------------------------
Peter van der Horst, Vice President
<PAGE>
-13-
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 22nd day of April, 1998, personally appeared Christopher T.
Paule to me known personally, and who, being by me duly sworn, deposes and says
that (s)he is the [Vice President] of Crystaloid Technologies, Inc., and that
said instrument was signed and sealed on behalf of said corporation by authority
of its Board of Directors, and said [Vice President] acknowledged said
instrument to be the free act and deed of said corporation.
/s/ Dawn M. Schoenig
-------------------------------
Notary Public
My commission expires: [August 3, 1999]
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 21 day of April, 1998, personally appeared Peter van der
Horst to me known personally, and who, being by me duly sworn, deposes and says
that (s)he is a [Vice President] of BankBoston, N.A. (the "Agent"), and that
said instrument was signed and sealed on behalf of said Agent by authority of
its Board of Directors, and said [Vice President] acknowledged said instrument
to be the free act and deed of said Agent.
/s/ D.L. Figueroa-Thomas
-----------------------------------
Notary Public
My commission expires: [February 21, 1999]
<PAGE>
ANNEX
-----
TRADEMARKS AND TRADEMARK REGISTRATIONS
--------------------------------------
<TABLE>
<CAPTION>
Trademark REGISTRATIONS --
or United States Patent and Trademark Office
Service Mark Registration No. Registration Date
-------------- ------------------ -------------------
<S> <C> <C>
</TABLE>
<TABLE>
<CAPTION>
Trademark PENDING APPLICATIONS --
or United States Patent and Trademark Office
Service Mark Serial No. Filing Date
------------- ---------- -----------
<S> <C> <C>
</TABLE>
<PAGE>
EXHIBIT 10.24
DIRECTORS INDEMNIFICATION AGREEMENT
-----------------------------------
THIS INDEMNIFICATION AGREEMENT, dated as of August 16, 1995 ("the
Agreement"), between Jackson Products, Inc., a Delaware corporation, (the
- ---------
"Company" or "Indemnitor"), and [Director] (the "Indemnitee").
------- ---------- ----------
WITNESSETH
WHEREAS, highly competent persons are becoming more reluctant to serve
corporations as directors or in other capacities unless they are provided with
adequate protection through insurance and indemnification against inordinate
risks of claims and actions against them arising out of their service to and
activities on behalf of the corporation; and
WHEREAS, the current difficulties or virtual impossibility of obtaining
adequate insurance and uncertainties relating to indemnification have increased
the difficulty of attracting and retaining such persons; and
WHEREAS, the Board of Directors of the Indemnitor has determined that the
inability to attract and retain such persons is detrimental to the best
interests of the Indemnitor's stockholders and that the Indemnitor should act to
assure such persons that there will be increased certainty of such protection in
the future; and
WHEREAS, it is reasonable, prudent and necessary for the Indemnitor
contractually to obligate itself to indemnify such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the
Indemnitor free from undue concern that they will not be so indemnified; and
WHEREAS, this Agreement is being entered into as part of the Indemnitee's
total consideration for serving as a director; and
WHEREAS, Indemnitee is willing to serve, continue to serve and to take on
additional service for or on behalf of the Indemnitor on the condition that he
be so indemnified;
NOW THEREFORE, in consideration of the premises and the covenants contained
herein, the Indemnitor and Indemnitee do hereby covenant and agree as follows:
<PAGE>
SECTION 1. Service by Indemnitee.
---------------------
Indemnitee agrees to serve as director of the Indemnitor and agrees to the
indemnification provisions provided for herein. Indemnitee may at any time and
for any reason resign or be terminated from such position (subject to any other
contractual obligation or other obligation imposed by operation of law), in
which event the Indemnitor shall have no obligation under this Agreement to
continue Indemnitee in any such position.
SECTION 2. Indemnification.
---------------
The Indemnitor shall indemnify Indemnitee to the fullest extent permitted
by applicable law in effect on the date hereof or as such laws may from time to
time be amended.
SECTION 3. Action or Proceeding Other Than an Action by or in the Right of
---------------------------------------------------------------
the Indemnitor.
- --------------
Indemnitee shall be entitled to the indemnification rights provided in this
Section 3 if he is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative in nature, other than an action by or
in the right of the Indemnitor, by reason of the fact that he is or was a
director, officer, employee, agent or fiduciary of the Indemnitor or is or was
serving at the request of the Indemnitor as a director, officer, employee, agent
or fiduciary of any other entity or by reason of anything done or not done by
him in any such capacity, including, but not limited to, the extent of any
liability, cost, or expense that any director has incurred as a personal obligor
or guarantor for any obligation of the Indemnitor. Pursuant to this Section 3,
Indemnitee shall be indemnified against expenses (including attorney's fees),
costs, judgments, penalties, fines and amounts paid in settlements actually and
reasonably incurred by him in connection with such action, suit or proceeding
(including, but not limited to, the investigation, defense or appeal thereof),
if he acted in good faith and in any manner he reasonably believed to be in or
not opposed to the best interests of the Indemnitor, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful; provided, however, the Indemnitor shall not be obligated to
indemnify the Indemnitee in connection with any actions, suits or proceedings
initiated by the Indemnities if the indemnification relates to any "short-swing"
disgorgement or similar liability arising under Section 16(b) of the Securities
Exchange Act of 1934, as amended, or any rules or regulations promulgated
thereunder.
SECTION 4. Actions by or in the Right of the Company. Indemnitee shall be
-----------------------------------------
entitled to the indemnification rights provided in this Section 4 if he is a
person who was or is made a party or is threatened to be made a party to any
threatened, pending or completed action or suit brought by or in the right of
the Indemnitor to procure a judgment in its favor by reason of the fact that he
is or was a director, officer, employee, agent or fiduciary of the Indemnitor or
is or was serving at the request of the Indemnitor as a director, officer,
-2-
<PAGE>
employee, agent or fiduciary of any other entity by reason of anything done or
not done by him in any such capacity. Pursuant to this Section 4, Indemnitee
shall be indemnified against expenses (including attorney's fees) and costs
actually and reasonably incurred by him in connection with such action or suit
(including, but not limited to the investigation, defense, settlement or appeal
thereof) if he acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Indemnitor; provided, however,
that no such indemnification shall be made in respect of any claim, issue or
matter as to which applicable law expressly prohibits such indemnification by
reason of an adjudication of liability of Indemnitee to the Indemnitor, unless,
and only to the extent that, the Court of Chancery of the State of Delaware or
the court in which such action or suit was brought shall determine upon
application that, despite such adjudication of liability but in view of all the
circumstances of the case, Indemnitee is fairly and reasonably entitled to
indemnification for such expenses and costs as such court shall deem proper.
SECTION 5. Indemnification for Costs, Charges and Expenses of Successful
-------------------------------------------------------------
Party.
- -----
Notwithstanding the other provisions of this Agreement, to the extent that
Indemnitee has served as a witness on behalf of the Indemnitor or has been
successful on the merits or otherwise, including, without limitation, the
dismissal of an action without prejudice, in defense of any action, suit or
proceeding referred to in Section 3 and 4 hereof, or in defense of any claim,
issue or matter therein, he shall be indemnified against all costs, charges and
expenses (including attorneys' fees) actually and reasonably incurred by him or
on his behalf in connection therewith.
SECTION 6. Partial Indemnification.
-----------------------
If Indemnitee is only partially successful in the defense, investigation,
settlement or appeal of any action, suit, investigation or proceeding described
in Section 3 or 4 hereof, and as a result is not entitled under Section 5 hereof
to indemnification by the Indemnitor for the total amount of the expenses
(including attorneys' fees), costs, judgments, penalties, fines and amounts paid
in settlement actually and reasonably incurred by him, the Indemnitor shall
nevertheless indemnify Indemnitee, as a matter of right pursuant to Section 5
hereof, to the extent Indemnitee has been partially successful.
SECTION 7. Determination of Entitlement to Indemnification.
-----------------------------------------------
Upon written request by Indemnitee for indemnification pursuant to Section
3 or 4 hereof, the entitlement of Indemnitee to indemnification pursuant to the
terms of this Agreement shall be determined by the following person or persons
who shall be empowered to make such determination: (a) the Board of Directors
of the Indemnitor by a majority vote of a quorum consisting of Disinterested
Directors (as hereinafter defined); or (b) if such a quorum is not obtainable
or, even if obtainable, if the Board of Directors of the Indemnitor by the
majority vote of Disinterested Directors so directs, by Independent Counsel (as
hereinafter defined) in a written opinion to the Board of Directors, a copy of
which shall be
-3-
<PAGE>
delivered to Indemnitee; or (c) by the stockholders of the Indemnitor. Such
Independent Counsel shall be selected by the Board of Directors and approved by
Indemnitee. Upon failure of the Board of Directors to so select such Independent
Counsel or upon failure of Indemnitee to so approve, such Independent Counsel
shall be selected by the Chancellor of the State of Delaware or such other
person as the Chancellor shall designate to make such selection. Such
determination of entitlement to indemnification shall be made no later than 60
days after receipt by the Indemnitor of a written request for indemnification.
Such request shall include documentation or information which is necessary for
such determination and which is reasonably available to Indemnitee. Any costs or
expenses (including attorney's fees) incurred by Indemnitee in connection with
his request for indemnification hereunder shall be borne by the Indemnitor. The
Indemnitor hereby indemnifies and agrees to hold Indemnitee harmless therefrom
irrespective of the outcome of the determination of Indemnitee's entitlement to
indemnification. If the person making such determination shall determine that
Indemnitee is entitled to indemnification as to part (but not all) of the
application for indemnification, such person shall reasonably prorate such
partial indemnification among such claims, issues or matters.
SECTION 8. Presumptions and Effect of Certain Proceedings.
----------------------------------------------
The Secretary of the Indemnitor shall, promptly upon receipt of
Indemnitee's request for indemnification, advise in writing the Board of
Directors of the Indemnitor or such other person or persons empowered to make
the determination as provided in Section 7 that Indemnitee has made such request
for indemnification. Indemnitee shall be presumed to be entitled to
indemnification hereunder and the Indemnitor shall have the burden of proof in
the making of any determination contrary to such presumption. If the person or
persons so empowered to make such determination shall have failed to make the
requested indemnification within 60 days after receipt by the Indemnitor of such
request, the requisite determination of entitlement to indemnification shall be
deemed to have been made and Indemnitee shall be absolutely entitled to such
indemnification, absent actual and material fraud in the request for
indemnification. The termination of any action, suit, investigation or
proceeding described in Section 3 or 4 hereof by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
---------------
itself (a) create a presumption that Indemnitee did not act in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the Indemnitor and, with respect to any criminal action or
proceeding, that Indemnitee had reasonable cause to believe that his conduct was
unlawful or (b) otherwise adversely affect the rights of Indemnitee to
indemnification except as may be provided herein.
SECTION 9. Advancement of Expenses and Costs.
---------------------------------
All reasonable expenses and costs incurred by Indemnitee (including
attorneys' fees, retainers and advances of disbursements required of Indemnitee)
shall be paid by the Indemnitor in advance of the final disposition of such
action, suit or proceeding at the request of Indemnitee within twenty days after
the receipt by the Indemnitor of a statement or
-4-
<PAGE>
statements from Indemnitee requesting such advance or advances from time to
time. Indemnitee's entitlement to such expenses shall include those incurred in
connection with any proceeding by Indemnitee seeking an adjudication pursuant to
this Agreement. Such statement or statements shall reasonably evidence the
expenses and costs incurred by him in connection therewith and shall include or
be accompanied by an undertaking by or on behalf of Indemnitee to repay such
amount if it is ultimately determined that Indemnitee is not entitled to be
indemnified against such expenses and costs by the Indemnitor as provided by
this Agreement or otherwise.
SECTION 10. Remedies of Indemnitee in Cases of Determination not to
-------------------------------------------------------
Indemnify or to Advance Expenses.
- --------------------------------
In the event that a determination is made that Indemnitee is not entitled
to indemnification hereunder or if payment has not been timely made following a
determination of entitlement to indemnification pursuant to Section 7 and 8, or
if expenses are not advanced pursuant to Section 9, Indemnitee shall be entitled
to a final adjudication in an appropriate court of the State of New York or any
other court of competent jurisdiction of his entitlement to such indemnification
or advance. The Indemnitor shall not oppose Indemnitee's right to seek any such
adjudication or any other claim. Such judicial proceeding shall be made de novo
-------
and Indemnitee shall not be prejudiced by reason of a determination (if so made)
that he is not entitled to indemnification. If a determination is made or
deemed to have been made pursuant to the terms of Section 7 or Section 8 hereof
that Indemnitee is entitled to indemnification, the Indemnitor shall be bound by
such determination and is precluded from asserting that such determination has
not been made or that the procedure by which such determination was made is not
valid, binding and enforceable. The Indemnitor further agrees to stipulate in
any such court that the Indemnitor is bound by all the provisions of this
Agreement and is precluded from making any assertion to the contrary. If the
court shall determine that Indemnitee is entitled to any indemnification
hereunder, the Indemnitor shall pay all reasonable expenses (including
attorneys' fees) and costs actually incurred by Indemnitee in connection with
such adjudication (including, but not limited to, any appellate proceedings).
SECTION 11. Other Rights to Indemnification.
-------------------------------
The indemnification and advancement of expenses (including attorneys' fees)
and costs provided by this Agreement shall not be deemed exclusive of any other
rights to which Indemnitee may now or in the future be entitled under any
provision of the By-Laws of the Indemnitor, this agreement, provisions of the
Certificate of Incorporation of the Indemnitor, vote of stockholders or
Disinterested Directors of the Indemnitor, provision of law or otherwise.
-5-
<PAGE>
SECTION 12. Attorneys' Fees and Other Expenses to Enforce Agreement.
-------------------------------------------------------
In the event that Indemnitee is subject to or intervenes in any proceeding
in which the validity or enforceability of this Agreement is at issue or seeks
an adjudication or award in arbitration to enforce his rights under, or to
recover damages for breach of, this Agreement, Indemnitee, if he prevails in
whole or in part in such action, shall be entitled to recover from the
Indemnitor, and shall be indemnified by the Indemnitor against, any actual
expenses for attorneys' fees and disbursements reasonably incurred by him.
SECTION 13. Duration of Agreement.
---------------------
This Agreement shall continue until and terminate upon the later of (a) 10
years after Indemnitee has ceased to occupy any of the positions or have any of
the relationships described in Section 3 or 4 of this Agreement or (b) the final
termination of all pending or threatened actions, suits, proceedings or
investigations with respect to Indemnitee. This Agreement shall be binding upon
the Indemnitor and its successors and assigns and shall inure to the benefit of
Indemnitee and his spouse, assigns, heirs, devisees, executors, administrators
or other legal representatives.
SECTION 14. Severability.
------------
If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable for any reason whatsoever (a) the validity,
legality and enforceability of the remaining provisions of this Agreement
(including without limitation, all portions of any paragraphs of this Agreement
containing any such provision held to be invalid, illegal or unenforceable, that
are not themselves invalid, illegal or unenforceable) shall not in any way be
affected or impaired thereby and (b) to the fullest extent possible, the
provisions of this Agreement (including, without limitation, all portions of any
paragraph of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that are not themselves invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable.
SECTION 15. Identical Counterparts.
----------------------
This Agreement may be executed in one or more counterparts, each of which
shall for all purposes be deemed to be an original, but all of which together
shall constitute one and the same Agreement. Only one such counterpart signed
by the party against whom enforceability is sought needs to be produced to
evidence the existence of this Agreement.
SECTION 16. Headings.
--------
-6-
<PAGE>
The headings of the paragraphs of this Agreement are inserted for
convenience only and shall not be deemed to constitute part of this Agreement or
to affect the construction thereof.
SECTION 17. Definitions.
-----------
For purposes of this Agreement:
(a) "Disinterested Director" shall mean a director of the Indemnitor who
----------------------
is not or was not a party to the action, suit, investigation or proceeding in
respect of which indemnification is being sought by Indemnitee.
(b) "Independent Counsel" shall mean a law firm or a member of a law firm
-------------------
that neither is presently nor in the past five years has been retained to
represent (i) the Company or Indemnitee in any matter material to either such
party or (ii) any other party to the action, suit, investigation or proceeding
giving rise to a claim for indemnification hereunder. Notwithstanding the
foregoing, the term "Independent Counsel" shall not include any person who,
under the applicable standards of professional conduct then prevailing, would
have a conflict of interest in representing either the Company or Indemnitee in
an action to determine Indemnitee's right to indemnification under this
Agreement.
SECTION 18. Modification and Waiver.
-----------------------
No supplement, modification or amendment of this Agreement shall be binding
unless executed in writing by all of the parties hereto. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
SECTION 19. Notice by Indemnitee.
--------------------
Indemnitee agrees promptly to notify the Indemnitor in writing upon being
served with any summons, citation, subpoena, complaint, indictment, information
or other document relating to any matter which may be subject to indemnification
covered hereunder, either civil, criminal or investigative.
SECTION 20. Notices.
-------
All notices, requests, demands and other communications hereunder shall be
in writing and shall be deemed to have been duly given if (i) delivered by hand
and receipted for by the party to whom said notice or other communication shall
have been directed or if (ii) mailed by certified or registered mail with
postage prepaid on the third business day after the date on which it is so
mailed, to the following addresses:
-7-
<PAGE>
(a) if to Indemnitee, to:
[Director]
c/o The Jordan Company
9 West 57th Street
New York, New York 10019
(b) if to the Company, to:
Jackson Products, Inc.
c/o The Jordan Company
9 West 57th Street
New York, New York 10019
or to such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.
SECTION 21. Governing Law.
-------------
The parties agree that this Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of New York.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
JACKSON PRODUCTS, INC.
By: _____________________________________
Name:
Title:
INDEMNITEE:
_________________________________________
[Director]
-9-
<PAGE>
EXHIBIT 10.25
MANAGEMENT CONSULTING AGREEMENT
THIS MANAGEMENT CONSULTING AGREEMENT ("Agreement"), is executed as of the
16th day of August, 1995, by and among TJC MANAGEMENT CORPORATION, a Delaware
corporation (the "Consultant") and JACKSON PRODUCTS, INC., a Delaware
corporation ("Jackson") and Flex-O-Lite, Inc. (together with Jackson, the
"Company").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Consultant has and/or has access to personnel who are highly
skilled in the field of rendering advice to businesses and financial advice to
the Company; and
WHEREAS, the Company desires to retain Consultant to provide business and
financial advice to the Company;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein set forth, the parties hereto do hereby agree as follows:
1. The Company hereby retains the Consultant, through the Consultant's own
personnel or through personnel available to the Consultant, to render consulting
services from time to time to the Company and its subsidiaries (whether now
existing or hereafter acquired), in connection with their financial and business
affairs, their relationships with their lenders, stockholders and other third-
party associates or affiliates, and the expansion of their businesses. The term
of this Agreement shall commence the date hereof and continue until December 31,
2005, unless extended, or sooner terminated, as provided in paragraph 3 below.
The Consultant's personnel shall be reasonably available to the Company's
managers, auditors and other personnel for consultation and advice, subject to
Consultant's reasonable convenience and scheduling. Services may be rendered at
the Consultant's offices or at such other locations selected by the Consultant
as the Company and the Consultant shall from time to time agree.
2. (a) The Company shall pay the Consultant a management fee equal to, on
a per annum basis, the higher of (i) $550,000 or (ii) 2.5% of the Company's
EBITDA (as defined in the Second Amended and Restated Credit Agreement, dated as
of August 16, 1995, among Jackson Products, Inc., Jackson Holding Company, the
Lenders named therein and Heller Financial, Inc. as Agent, as in effect on the
date hereof; the "Credit Agreement") for the fiscal year. The Company shall pay
the Consultant such management fee in quarterly installments equal to the higher
of (i) $137,500 or (ii) 0.625% of EBITDA for such quarter on each of
<PAGE>
March 31, June 30, September 30 and December 31 of each year, commencing
September 30, 1995, provided that the amount of such fee payable on September
30, 1995 shall accrue from the date of this Agreement at the annual rate of
$550,000 per annum. The management fee will be recalculated, as set forth in
clauses (i) and (ii) above, promptly and as soon as practicable, as of the
beginning of each fiscal quarter.
(b) In addition to the above quarterly payments, the Company shall pay to
the Consultant, (i) an investment banking and sponsorship fee of up to two
percent (2%) of the aggregate consideration paid (including assumed or
refinanced indebtedness, non-competition, earnout, contingent purchase price,
incentive arrangements and similar payments) (A) by the Company in connection
with the acquisition by the Company of all or substantially all of the
outstanding capital stock, warrants, options or other rights to acquire or sell
capital stock, or all or substantially all of the business or assets of another
individual, corporation, partnership or other business entity or (B) to the
Company in connection with the sale by the Company of all or substantially all
of the Company's outstanding capital stock, warrants, options, or other rights
to acquire or sell stock, or all or substantially all of the business or assets
of the Company or one of its subsidiaries (each of the transactions described in
clauses (A) and (B), a "Transaction"), including, but not limited to, any
Transaction negotiated for the Company involving any affiliate of the Company or
the Consultant, including, but not limited to, any Transaction involving, The
Jordan Company, Jordan/Zalaznick Capital Company or any affiliates of any of the
foregoing (collectively, the "Jordan Affiliates"); and (ii) a financial
consulting fee of up to one percent (1%) of the amount obtained or made
available pursuant to any debt, equity or other financing (including without
limitation, any refinancing) by the Company with the assistance of Consultant,
including, but not limited to, any financing obtained for the Company from one
or more of the Jordan Affiliates, provided, that in no event shall a fee be
payable under Section 2(b)(ii) hereunder (x) with respect to borrowings under
the Credit Agreement or (y) with respect to financings referred to in Section
2(b)(ii) made in connection with the consummation of a Transaction. In
addition, prior to paying any fee pursuant to this paragraph (b) the Board of
Directors of the Company (including the disinterested directors) must approve
the applicable Transaction or financing and in payment of such fee as in the
best interests of the Corporation.
(c) In addition, the Company shall pay to the Consultant a closing fee of
$2.75 million upon the consummation of the merger of Jackson Acquisition Corp.
and Jackson Holding Company in lieu of any fee otherwise payable under Section
2(a) and Section 2(b).
-2-
<PAGE>
3. The Company shall reimburse Consultant for reasonable out-of-pocket
expenses and any reasonable, direct, allocable costs incurred by the Consultant
and its personnel in performing services hereunder to the Company and its
subsidiaries upon the Consultant's rendering of a statement therefor, together
with supporting data as the Company shall reasonably require.
4. Notwithstanding the foregoing, the Company shall not pay the fees
under Section 2 and such fees shall accrue pursuant to the second sentence of
this Section 4, (a) if any payment or financial covenant default under either
---------
(i) the Credit Agreement or (ii) the Note Agreement of even date herewith by and
among the Company and the other parties listed on the signature pages thereto,
has occurred and is continuing (regardless of whether such Agreements are then
in effect), (b) if and to the extent expressly prohibited by the provisions of
any credit, stock, financing or other agreements or instruments binding upon the
Company, its subsidiaries or properties, (c) if the Company has not paid
interest on any interest payment date or has postponed or not made any principal
payments with respect to any of their indebtedness on any scheduled payment
dates, or (d) if the Company has not paid dividends on any dividend payment date
as set forth in its certificate of incorporation or as declared by its Board of
Directors, or has postponed or not made any redemptions on any redemption date
as set forth in its certificate of incorporation or any certificate of
designation with respect to its preferred stock, if any. Any payments otherwise
owed hereunder, which are not made for any of the above-mentioned reasons, shall
not be cancelled but rather shall accrue, without interest, and shall be payable
by the Company promptly when, and to the extent, that the Company is no longer
prohibited from making such payments and when the Company has become current
with respect to such principal or interest payments, has become current with
respect to such dividends and has made such redemptions with respect to such
preferred stock, if any. This Section 4 will not, in any event, restrict or
limit the Company's obligations under Section 3, 8 and 9, which will be absolute
and not subject to set-off.
5. This Agreement shall be automatically renewed for successive one-year
terms starting December 31, 2005 unless either party hereto, within sixty (60)
days prior to the scheduled renewal date, notifies the other party as to its
election to terminate this Agreement. Notwithstanding the foregoing, this
Agreement may be terminated by not less than ninety (90) days' prior written
notice from the Company to the Consultant at any time after (a) substantially
all of the stock or substantially all of the assets of the Company are sold to
any entity unaffiliated with the Consultant and/or a majority of the Company's
stockholders immediately prior to such sale or (b) the Company is merged or
consolidated into another entity
-3-
<PAGE>
unaffiliated with the Consultant and/or a majority of the Company's stockholders
immediately prior to such merger and the Company is not the survivor of such
transaction.
6. The Consultant shall have no liability to the Company on account of (a)
any advice which it renders to the Company, provided the Consultant believed in
good faith that such advice was useful or beneficial to the Company at the time
it was rendered, or (b) the Consultant's inability to obtain financing or
achieve other results desired by the Company or Consultant's failure to render
services to the Company at any particular time or from time to time, or (c) the
failure of any transaction to meet the financial, operating or other
expectations of the Company. The Company's sole remedy for any claim under this
Agreement shall be termination of this Agreement.
7. Notwithstanding anything contained in this Agreement to the contrary,
the Company agrees and acknowledges that the Consultant, the Jordan Affiliates
and their shareholders, employees, directors and affiliates intend to engage and
participate in acquisitions and business transactions outside of the scope of
the relationship created by this Agreement and neither the Consultant, any of
the Jordan Affiliates nor any of their shareholders, employees, directors or
affiliates shall be under any obligation whatsoever (except to the extent that
fiduciary duty principles under Delaware corporate law may be applicable to
individual directors and officers of the Company) to make such acquisitions,
business transactions or other opportunities through the Company or offer such
acquisitions, business transactions or other opportunities to the Company.
8. The Company will, to the fullest extent permitted by applicable law,
indemnify and hold harmless the Consultant, its affiliates and associates, each
of the Jordan Affiliates, and each of the respective owners, partners, officers,
directors, employees and agents of each of the foregoing, from and against any
loss, liability, damage, claim or expenses (including the fees and expenses of
counsel) arising as a result or in connection with this Agreement or the
Consultant's services hereunder.
9. Any payments paid by the Company under this Agreement shall not be
subject to set-off and shall be increased by the amount, if any, of any taxes
(other than income taxes) or other governmental charges levied in respect of
such payments, so that the Consultant is made whole for such taxes or charges.
10. a. This Agreement sets forth the entire understanding of the parties
with respect to the Consultant's rendering of services to the Company. This
Agreement may not be modified,
-4-
<PAGE>
waived, terminated or amended except expressly by an instrument in writing
signed by the Consultant and the Company.
b. This Agreement may be assigned by either party hereto without the
consent of the other party, provided, however, such assignment shall not relieve
such party from its obligations hereunder. Any assignment of this Agreement
shall be binding upon and inure to the benefit of the parties and their
respective successors and assigns.
c. In the event that any provision of this Agreement shall be held to
be void or unenforceable in whole or in part, the remaining provisions of this
Agreement and the remaining portion of any provision held void or unenforceable
in part shall continue in full force and effect.
d. Except as otherwise specifically provided herein, notice given
hereunder shall be deemed sufficient if delivered personally or sent by
registered or certified mail to the address of the party for whom intended at
the principal executive offices of such party, or at such other address as such
party may hereinafter specify by written notice to the other party.
e. Subsidiaries will be jointly and severally liable and obligated
hereunder with respect to each obligation, responsibility and liability of the
Company, as if a direct obligation of the Subsidiaries.
f. No waiver by either party of any breach of any provision of this
Agreement shall be deemed a continuing waiver or a waiver of any preceding or
succeeding breach of such provision or of any other provision herein contained.
g. The Consultant and its personnel shall, for purposes of this
Agreement, be independent contractors with respect to the Company.
h. This Agreement shall be governed by the internal laws (and not the
law of conflicts) of the State of New York.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
TJC MANAGEMENT CORPORATION
By: /s/ David W. Zalaznick
--------------------------
Name: David W. Zalaznick
Title: President
JACKSON PRODUCTS, INC.
By: /s/ Christopher T. Paule
--------------------------
Name: Christopher T. Paule
Title: Vice President
FLEX-O-LITE, INC.
By: /s/ Christopher T. Paule
--------------------------
Name: Christopher T. Paule
Title: Vice President
-6-
<PAGE>
EXHIBIT 10.26
EMPLOYMENT AND NON-INTERFERENCE AGREEMENT
-----------------------------------------
This Employment and Non-Interference Agreement, dated as of August 16, 1995
(this "Agreement"), by and between Robert H. Elkin (the "Executive") and Jackson
---------
Acquisition Corp., a Delaware corporation (the "Company");
-------
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company wishes to obtain the future services of the Executive
for the Company; and
WHEREAS, the Executive is willing, upon the terms and conditions herein set
forth, to provide services hereunder; and
WHEREAS, the Company wishes to secure the Executive's non-interference,
upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Nature of Employment
--------------------
Subject to Section 3, the Company hereby employs Executive, and Executive
---------
agrees to accept such employment, during the Term of Employment (as defined in
Section 3(a)), as Chief Executive Officer and President of the Company to
- ------------
undertake such duties and responsibilities as may be reasonably assigned to
Executive from time to time by the Board of Directors of the Company or the
appropriately authorized and designated officers of the Parent.
2. Extent of Employment
--------------------
(a) During the Term of Employment, the Executive shall perform his
obligations hereunder faithfully and to the best of his ability at the principal
executive offices of the Company, under the direction of the Board of Directors
of the Company, and shall abide by the rules, customs and usages from time to
time established by each of Parent and the Company.
(b) During the Term of Employment, the Executive shall devote all of his
business time, energy and skill as may be reasonably necessary for the
performance of his duties, responsibilities and obligations hereunder (except
for vacation
<PAGE>
periods and reasonable periods of illness or other incapacity), consistent with
past practices and norms in similar positions.
(c) Nothing contained herein shall require Executive to follow any
directive or to perform any act which would violate any laws, ordinances,
regulations or rules of any governmental, regulatory or administrative body,
agent or authority, any court or judicial authority, or any public, private or
industry regulatory authority (collectively, the "Regulations"). Executive shall
-----------
act in good faith in accordance with all Regulations.
3. Term of Employment; Termination
-------------------------------
(a) The "Term of Employment" shall commence on the date hereof and shall
------------------
continue for a term of five years; provided that, (i) such term shall continue
for the twelve month period following such five year period, and for each twelve
month period thereafter, unless at least 180 days prior to the scheduled
expiration date, either the Executive or the Company notifies the other of its
decision not to continue such term and (ii) should the Executive's employment by
the Company be earlier terminated pursuant to Section 3(b) or by the Executive
------------
pursuant to Section 3(c), the Term of Employment shall end on the date of such
------------
earlier termination.
(b) Subject to the payments contemplated by Section 3(f), Term of
------------
Employment may be terminated at any time by the Company:
(i) upon the death of Executive;
(ii) in the event that because of physical or mental disability
Executive is unable to perform, and does not perform, in the view of the
Company and as certified in writing by a competent medical physician, his
duties hereunder for a continuous period of six consecutive months or any
120 working days out of any consecutive twelve month period;
(iii) for Cause (as defined in Section 3(d)) or Material Breach (as
------------
defined in Section 3(e));
------------
(iv) upon the continuous poor or unacceptable performance of the
Executive's duties to the Company, in the sole judgment of the Board of
Directors of the Company, which has remained uncured for a period of 90
days after delivery of notice by the Company to the Executive of such
dissatisfaction with Executive's performance; or
(v) for any other reason or no reason, it being understood that no
reason is required.
-2-
<PAGE>
Executive acknowledges that no representations or promises have been made
concerning the grounds for termination or the future operation of the Company's
business, and that nothing contained herein or otherwise stated by or on behalf
of the Company modifies or amends the right of the Company to terminate
Executive at any time, with or without Material Breach or Cause. Termination
shall become effective upon the delivery by the Company to the Executive of
notice specifying such termination and the reasons therefor (i.e., Section
----
3(b)(i)-(v)), subject to the requirements for advance notice and an opportunity
to cure provided in this Agreement, if and to the extent applicable.
(c) Subject to the payments contemplated by Section 3(f), the Term of
------------
Employment may be terminated at any time by the Executive:
(i) upon the death of Executive;
(ii) in the event that because of physical or mental disability the
Executive is unable to perform, and does not perform, in the view of the
Company, and as certified by a competent medical physician, his duties
hereunder for six consecutive months or any 120 working days out of any
consecutive twelve month period; or
(iii) as a result of a material reduction in Executive's authority,
perquisites, salary, position or responsibilities (other than such a
reduction which affects all of the Company's senior executives on a
substantially equal or proportionate basis), the relocation of the
Company's primary place of business or the relocation of Executive by the
Company to another Company office more than 50 miles from St. Louis,
Missouri, or the Company's willful, material violation of its obligations
under this Agreement, in each case, after 60 days' prior written notice to
the Company and its Board of Directors and the Company's failure thereafter
to cure such reduction or violation;
(d) For the purposes of this Section 3, "Cause" shall mean any of the
--------- -----
following:
(i) Executive's commission or conviction of any crime or criminal
offense involving monies or other property, or any felony;
(ii) Executive's commission or conviction of fraud or embezzlement;
or
(iii) Executive's material and knowing violation of any obligations
imposed upon Executive, personally, as opposed
-3-
<PAGE>
to upon the Company, whether as a stockholder or otherwise, under this
Agreement, the Management Subscription Agreement, dated August 16, 1995, by
and among the Company and the signatories thereto, and the Second Amended
and Restated Credit Agreement, dated as of August 16, 1995, among Jackson
Products, Inc., Jackson Holding Company, the Lenders named therein and
Heller Financial, Inc., as Agent (the "Credit Agreement"), the Stockholders
----------------
Agreement, dated as of August 16, 1995, by and among the Company and the
shareholders named therein, the Note Agreement, dated as of August 16,
1995, between the Company and the signatories thereto, the Certificate of
Incorporation or By-Laws of the Company; provided, that the Executive has
--------
been given notice and 90 days from such notice fails to cure the violation;
(e) For the purposes of this Section 3, "Material Breach" shall mean any
--------- ---------------
of the following:
(i) Executive's breach of any of his fiduciary duties to the
Company or its stockholders or making of a willful misrepresentation or
omission which breach, misrepresentation or omission would reasonably be
expected to materially adversely affect the business, properties, assets,
condition (financial or other) or prospects of the Company;
(ii) Executive's willful, continual and material neglect or failure
to discharge his duties, responsibilities or obligations prescribed by this
Agreement or any other agreement between the Executive and the Company
(other than arising solely due to physical or mental disability);
(iii) Executive's habitual drunkenness or substance abuse which
materially interferes with Executive's ability to discharge his duties,
responsibilities or obligations prescribed by this Agreement or any other
agreement between the Executive and the Company;
(iv) Executive's violation of any non-competition or confidentiality
agreement with the Company, including without limitation, those set forth
in Sections 7 and 8 of this Agreement, or any other agreements with the
---------- -
Company; and
(v) Executive's gross neglect of his duties and responsibilities,
as determined by the Company's Board of Directors;
in each case, for purposes of clauses (i) through (v), after the Company or the
Board of Directors has provided Executive with 60 days' written notice of such
circumstances and the possibility of
-4-
<PAGE>
a Material Breach, and Executive fails to cure such circumstances and Material
Breach within those 60 days.
(f) In the event Executive's employment is terminated by the Company under
any circumstances described in Section 3(b)(v) or by Executive under the
---------------
circumstances described in Section 3(c)(iii), the Company will pay to Executive
-----------------
the full amounts to which he would be entitled under Section 4(a) and customary
------------
benefits through the Term of Employment. In the event Executive's employment is
terminated by the Company under the circumstances described in Section 3(b)(iv),
----------------
the Company will pay to Executive the full amounts to which he would be entitled
under Section 4(a) and customary benefits for the period from the effectiveness
------------
of termination through the first anniversary of the date of such termination.
In the event Executive's employment is terminated by the Company under the
circumstances described in Section 3(b)(i) or (ii) or by the Executive under
--------------- ----
Section 3(c)(i) or (ii), the Company will pay to the Executive the full amounts
- -----------------------
to which he would be entitled under Section 4(a) and customary benefits for the
------------
period from the effectiveness of termination through (y) the first anniversary
of the date of such termination, or (z) the third anniversary of the date of
this Agreement, whichever is greater. In the event Executive's employment is
terminated by the Company under any circumstances described in Section 3(b)(iii)
-----------------
or by Executive as a result of resignation or voluntary termination due to any
circumstance other than the material reductions, violations or relocation
described in Section 3(c)(iii) above, there will be no amounts owing by the
-----------------
Company to the Executive, under Section 4 or any other part of this Agreement,
---------
from and after the effectiveness of termination. If the Company makes the
payments required by this Section 3(f), such payments will constitute severance
------------
and liquidated damages, and the Company will not be obligated to pay any further
amounts to Executive under this Agreement or otherwise be liable to Executive in
connection with any termination.
(g) All determinations pursuant to this Section 3 shall be made by the
---------
Company's Board of Directors (not including Executive) of the Company, in its
sole discretion, whose decision shall be final, conclusive and binding.
(h) Termination of the Term of Employment will not terminate Sections 7,
----------
8, 10 through 21, or any other provisions not associated specifically with the
- - -- --
Term of Employment.
(i) In the event the Term of Employment is terminated and the Company is
obligated to make payments pursuant to Section 3(f), Executive will not be
------------
obligated to seek or obtain alternative employment; provided, however, if he
-------- -------
nevertheless thereafter obtains alternative employment, then if and to the
-5-
<PAGE>
extent Executive obtains such employment, the Company's payment obligations
under Section 3(f), including its obligation to provide insurance coverage, if
------------
any, will be mitigated and reduced by and to the extent of Executive's
compensation under such alternative employment during the period for which
payments are owed by the Company pursuant to Section 3(f). Moreover, in the
------------
event that, after the Restricted Period pursuant to Section 8(a), Executive is
------------
employed by or engaged in a Competitive Business as contemplated by Section
-------
8(a)(i), then the Company will thereupon cease and will be no longer obligated
- -------
to make payments under Section 3(f).
------------
(j) In the event the Term of Employment is terminated and the Company is
obligated to make payments pursuant to Section 3(f), Executive hereby waives any
------------
and all claims against the Company, and their respective officers, directors,
employees, agents, or representatives, stockholders and affiliates relating to
this Agreement and to his employment during the term hereof other than those
payments to be made pursuant to Section 3(f).
4. Compensation. During the Term of Employment, the Company shall pay
------------
compensation to Executive as follows:
(a) As base compensation for his services hereunder, in biweekly
installments, a base salary at a rate of $325,000 per annum, as increased on an
annual basis to reflect the increase in the United States Cost of Living Index
for All Urban Consumer (CPI-U) for the St. Louis, Missouri area (the "CPI-U
Index"). The July 1995 CPI-U Index shall provide the basis for calculations of
such increases. Notwithstanding the minimum increase set forth above, the Board
of Directors, in its sole discretion, may establish a higher compensation level.
(b) An annual bonus compensation of up to sixty-five percent of his annual
base compensation based on Executive's performance as determined and approved by
the Board of Directors, in its sole discretion. Such bonus will be at the full
discretion of the Board of Directors, and may not be paid at all. Executive
acknowledges that no bonus has been agreed upon or promised. If the Board of
Directors decides to pay a bonus, it is to be paid within 30 days after the
issuance of audited financial statements for the Company. The Board of
Directors in its sole discretion may establish a higher bonus level based on the
performance of Executive.
(c) During the Term of Employment the Executive shall receive an
automobile allowance of, after the effect of federal and state income taxes and
FICA, $1000 per month.
-6-
<PAGE>
5. Reimbursement of Expenses
-------------------------
During the Term of Employment, the Company shall reimburse Executive for
documented travel, entertainment and other expenses reasonably incurred by
Executive in connection with the performance of his duties hereunder and, in
each case, in accordance with the rules, customs and usages promulgated by the
Company from time to time in effect.
6. Benefits
--------
During the Term of Employment, the Executive shall be entitled to
perquisites, paid vacations and benefits (including health, short and long term
disability, pension and life insurance benefits consistent with past practice,
or as increased from time to time) established from time to time, by the Board
of Directors for executives of the Company, subject to the policies and
procedures in effect regarding participation in such benefits.
7. Confidential Information
------------------------
(a) During and after the Term of Employment, Executive will not, directly
or indirectly in one or a series of transactions, disclose to any person, or use
or otherwise exploit for the Executive's own benefit or for the benefit of
anyone other than the Company, any Confidential Information (as defined in
Section 9), whether prepared by Executive or not; provided, however, that any
- --------- -------- -------
Confidential Information may be disclosed to officers, representatives,
employees and agents of the Company who need to know such Confidential
Information in order to perform the services or conduct the operations required
or expected of them in the Business (as defined in Section 9). Executive shall
---------
use his best efforts to prevent the removal of any Confidential Information from
the premises of the Company, except as required in his normal course of
employment by the Company. Executive shall use commercially reasonable efforts
to cause all persons or entities to whom any Confidential Information shall be
disclosed by him hereunder to observe the terms and conditions set forth herein
as though each such person or entity was bound hereby. Executive shall have no
obligation hereunder to keep confidential any Confidential Information if and to
the extent disclosure of any thereof is specifically required by law; provided,
--------
however, that in the event disclosure is required by applicable law, the
- -------
Executive shall provide the Company with prompt notice of such requirement,
prior to making any disclosure, so that the Company may seek an appropriate
protective order. At the request of the Company, Executive agrees to deliver to
the Company, at any time during the Term of Employment, or thereafter, all
Confidential Information which he may possess or control. Executive agrees that
all Confidential
-7-
<PAGE>
Information of the Company (whether now or hereafter existing) conceived,
discovered or made by him during the Term of Employment exclusively belongs to
the Company (and not to Executive). Executive will promptly disclose such
Confidential Information to the Company and perform all actions reasonably
requested by the Company to establish and confirm such exclusive ownership.
(b) The terms of this Section 7 shall survive the termination of this
---------
Agreement regardless of who terminates this Agreement, or the reasons therefor.
8. Non-Interference
----------------
(a) Executive acknowledges that the services to be provided give him the
opportunity to have special knowledge of the Company and its Confidential
Information and the capabilities of individuals employed by or affiliated with
the Company and that interference in these relationships would cause irreparable
injury to the Company. In consideration of this Agreement, Executive covenants
and agrees that:
(i) From the date hereof through the date that is 24 months after the
termination of the Term of Employment (the "Restricted Period"), Executive
-----------------
will not, without the express written approval of the Board of Directors of
the Company, anywhere in the Market, directly or indirectly, in one or a
series of transactions, own, manage, operate, control, invest or acquire an
interest in, or otherwise engage or participate in, whether as a
proprietor, partner, stockholder, lender, director, officer, employee,
joint venturer, investor, lessor, supplier, customer, agent, representative
or other participant, in any business which competes, directly or
indirectly, with the Business in the Market ("Competitive Business")
--------------------
without regard to (A) whether the Competitive Business has its office,
manufacturing or other business facilities within or without the Market,
(B) whether any of the activities of the Executive referred to above occur
or are performed within or without the Market or (C) whether the Executive
resides, or reports to an office, within or without the Market; provided,
--------
however, that (x) the Executive may, anywhere in the Market, directly or
-------
indirectly, in one or a series of transactions, own, invest or acquire an
interest in up to five percent (5%) of the capital stock of a corporation
whose capital stock is traded publicly, or that (y) Executive may accept
employment with a successor company to the Company.
(ii) During the Restricted Period (which shall not be reduced by any
period of violation of this Agreement by
-8-
<PAGE>
Executive or period which is required for litigation to enforce the rights
hereunder), Executive will not without the express prior written approval
of the Board of Directors of the Company (A) directly or indirectly, in one
or a series of transactions, recruit, solicit or otherwise induce or
influence any proprietor, partner, stockholder, lender, director, officer,
employee, sales agent, joint venturer, investor, lessor, supplier,
customer, agent, representative or any other person which has a business
relationship with the Company or had a business relationship with the
Company within the 24 month period preceding the date of the incident in
question, to discontinue, reduce or modify such employment, agency or
business relationship with the Company, or (B) employ or seek to employ or
cause any Competitive Business to employ or seek to employ any person or
agent who is then (or was at any time within 24 months prior to the date
the Executive or the Competitive Business employs or seeks to employ such
person) employed or retained by the Company. Notwithstanding the foregoing,
nothing herein shall prevent the Executive from providing a letter of
recommendation to an employee with respect to a future employment
opportunity.
(iii) The scope and term of this Section 8 would not preclude
---------
Executive from earning a living with an entity that is not a Competitive
Business.
(b) In the event that Executive breaches his obligations in any material
respect under Section 7 or this Section 8, the Company, in addition to pursuing
--------- ---------
all available remedies under this Agreement, at law or otherwise, and without
limiting its right to pursue the same shall cease all payments to the Executive
under this Agreement or any other agreement.
(c) The terms of this Section 8 shall survive the termination of this
---------
Agreement regardless of who terminates this Agreement, or the reasons therefor.
9. Definitions
-----------
"Business" means any business conducted, or engaged in, by the Company
--------
prior to the date hereof or at any time during the Term of Employment.
"Cause" is defined in Section 3(c).
----- ------------
"Companies" means Parent and its successors or any of its direct or
---------
indirect subsidiaries (including the Company), now or hereafter existing.
"Company" is defined in the introduction.
-------
-9-
<PAGE>
"Competitive Business" is defined in Section 8(a)(i).
-------------------- ---------------
"Confidential Information" means any confidential information including,
------------------------
without limitation, any study, data, calculations, software storage media or
other compilation of information, patent, patent application, copyright,
trademark, trade name, service mark, service name, "know-how", trade secrets,
customer lists, details of client or consultant contracts, pricing policies,
operational methods, marketing plans or strategies, product development
techniques or plans, business acquisition plans or any portion or phase of any
scientific or technical information, ideas, discoveries, designs, computer
programs (including source of object codes), processes, procedures, formulas,
improvements or other proprietary or intellectual property of the Company,
whether or not in written or tangible form, and whether or not registered, and
including all files, records, manuals, books, catalogues, memoranda, notes,
summaries, plans, reports, records, documents and other evidence thereof. The
term "Confidential Information" does not include, and there shall be no
------------------------
obligation hereunder with respect to, information that becomes generally
available to the public other than as a result of a disclosure by the Executive
not permissible hereunder.
"Executive" means Robert H. Elkin or his estate, if deceased.
---------
"Market" means any county in the United States of America and each similar
------
jurisdiction in any other country in which the Business was conducted by or
engaged in by the Company prior to the date hereof or is conducted or engaged
in, or is proposed to be conducted or engaged in, by the Company at any time
during the Term of Employment.
"Regulations" is defined in Section 2(c).
----------- ------------
"Restricted Period" is defined in Section 8(a)(i).
----------------- ---------------
"Term of Employment" is defined in Section 3(a).
------------------ ------------
10. Notice
------
Any notice, request, demand or other communication required or permitted to
be given under this Agreement shall be given in writing and if delivered
personally, or sent by certified or registered mail, return receipt requested,
as follows (or to such other addressee or address as shall be set forth in a
notice given in the same manner):
If to Executive: Robert H. Elkin
14 Chippenham Lane
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<PAGE>
Clarkson Valley, Missouri 63005
If to Company: Jackson Acquisition Corp.
c/o The Jordan Company
9 West 57th Street, 40th Floor
New York, New York 10019
Attn: A. Richard Caputo, Jr.
Any such notices shall be deemed to be given on the date personally delivered or
such return receipt is issued.
11. Executive's Representation
--------------------------
Executive hereby warrants and represents to the Company that Executive has
carefully reviewed this Agreement and has consulted with such advisors as
Executive considers appropriate in connection with this Agreement, and is not
subject to any covenants, agreements or restrictions, including without
limitation any covenants, agreements or restrictions arising out of Executive's
prior employment which would be breached or violated by Executive's execution of
this Agreement or by Executive's performance of his duties hereunder.
12. Other Matters
-------------
Executive agrees and acknowledges that the obligations owed to Executive
under this Agreement are solely the obligations of the Company, and that none of
the Companies' stockholders, directors, officers, affiliates, representatives,
agents or lenders will have any obligations or liabilities in respect of this
Agreement and the subject matter hereof.
13. Validity
--------
If, for any reason, any provision hereof shall be determined to be invalid
or unenforceable, the validity and effect of the other provisions hereof shall
not be affected thereby.
14. Severability
------------
Whenever possible, each provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or any other jurisdiction, but this Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been
-11-
<PAGE>
contained herein. If any court determines that any provision of Section 8 or any
---------
other provision hereof is unenforceable and therefore acts to reduce the scope
or duration of such provision, the provision in its reduced form shall then be
enforceable.
15. Waiver of Breach; Specific Performance
--------------------------------------
The waiver by the Company or Executive of a breach of any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any other breach of such other party. Each of the parties (and third party
beneficiaries) to this Agreement will be entitled to enforce its respective
rights under this Agreement and to exercise all other rights existing in its
favor. The parties hereto agree and acknowledge that money damages may not be
an adequate remedy for any breach of the provisions of Sections 7 and 8 of this
---------- -
Agreement and that any party (and third party beneficiaries) may in its sole
discretion apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive relief, including temporary restraining
orders, preliminary injunctions and permanent injunctions in order to enforce or
prevent any violations of the provisions of this Agreement. In the event either
party takes legal action to enforce any of the terms or provisions of this
Agreement, the nonprevailing party shall pay the successful party's costs and
expenses, including but not limited to, attorneys' fees, incurred in such
action.
16. Assignment; Third Parties
-------------------------
Neither the Executive nor the Company may assign, transfer, pledge,
hypothecate, encumber or otherwise dispose of this Agreement or any of his or
its respective rights or obligations hereunder, without the prior written
consent of the other. The parties agree and acknowledge that each of the
Companies and the stockholders and investors therein are intended to be third
party beneficiaries of, and have rights and interests in respect of, Executive's
agreements set forth in Sections 7 and 8.
---------- -
17. Amendment; Entire Agreement
---------------------------
This Agreement may not be changed orally but only by an agreement in
writing agreed to by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought. This Agreement embodies the
entire agreement and understanding of the parties hereto in respect of the
subject matter of this Agreement, and supersedes and replaces all prior
Agreements, understandings and commitments with respect to such subject matter.
-12-
<PAGE>
18. Litigation
----------
THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT THAT NO DOCTRINE OF
CHOICE OF LAW SHALL BE USED TO APPLY ANY LAW OTHER THAN THAT OF NEW YORK, AND NO
DEFENSE, COUNTERCLAIM OR RIGHT OF SET-OFF GIVEN OR ALLOWED BY THE LAWS OF ANY
OTHER STATE OR JURISDICTION, OR ARISING OUT OF THE ENACTMENT, MODIFICATION OR
REPEAL OF ANY LAW, REGULATION, ORDINANCE OR DECREE OF ANY FOREIGN JURISDICTION,
BE INTERPOSED IN ANY ACTION HEREON. SUBJECT TO SECTION 19, EXECUTIVE AND THE
----------
COMPANY AGREE THAT ANY ACTION OR PROCEEDING TO ENFORCE OR ARISING OUT OF THIS
AGREEMENT MAY BE COMMENCED IN THE COURTS OF THE STATE OF NEW YORK OR THE UNITED
STATES DISTRICT COURTS IN NEW YORK. EXECUTIVE AND THE COMPANY CONSENT TO SUCH
JURISDICTION, AGREE THAT VENUE WILL BE PROPER IN SUCH COURTS AND WAIVE ANY
OBJECTIONS BASED UPON FORUM NON CONVENIENS. THE CHOICE OF FORUM SET FORTH IN
--------------------
THIS SECTION 18 SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT
----------
OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO
ENFORCE SAME IN ANY OTHER JURISDICTION.
19. Arbitration
-----------
THE EXECUTIVE AND THE COMPANY AGREE THAT ANY DISPUTE BETWEEN OR AMONG THE
PARTIES TO THIS AGREEMENT RELATING TO OR IN RESPECT OF THIS AGREEMENT, ITS
NEGOTIATION, EXECUTION, PERFORMANCE, SUBJECT MATTER, OR ANY COURSE OF CONDUCT OR
DEALING OR ACTIONS UNDER OR IN RESPECT OF THIS AGREEMENT, INCLUDING, WITHOUT
LIMITATION ANY CLAIM UNDER THE SECURITIES ACT, THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED, ANY OTHER STATE OR FEDERAL LAW RELATING TO SECURITIES OR FRAUD
OR BOTH, THE RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT, AS AMENDED, OR
FEDERAL OR STATE COMMON LAW, SHALL BE SETTLED BY FINAL, BINDING AND NON-
APPEALABLE ARBITRATION IN NEW YORK, NEW YORK BY THREE ARBITRATORS. EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED IN THIS SECTION 19, THE ARBITRATION SHALL BE
----------
CONDUCTED IN ACCORDANCE WITH THE VOLUNTARY LABOR ARBITRATION RULES OF THE
AMERICAN ARBITRATION ASSOCIATION (THE "ASSOCIATION") THEN IN EFFECT. ONE OF THE
ARBITRATORS SHALL BE APPOINTED BY THE COMPANY, ONE SHALL BE APPOINTED BY THE
EXECUTIVE, AND THE THIRD SHALL BE APPOINTED BY THE FIRST TWO ARBITRATORS. IF
THE FIRST TWO ARBITRATORS CANNOT AGREE ON THE THIRD ARBITRATOR WITHIN 60 DAYS OF
THE APPOINTMENT OF THE SECOND ARBITRATOR, THEN THE THIRD ARBITRATOR SHALL BE
APPOINTED BY THE ASSOCIATION. UPON THE CONCLUSION OF ARBITRATION, EXECUTIVE OR
THE COMPANY MAY APPLY TO ANY COURT OF THE TYPE DESCRIBED IN SECTION 18 TO
----------
ENFORCE THE DECISION PURSUANT TO SUCH ARBITRATION. IN CONNECTION WITH THE
FOREGOING, THE PARTIES HEREBY WAIVE ANY RIGHTS TO A JURY TRIAL TO RESOLVE ANY
DISPUTES OR CLAIMS RELATING TO THIS AGREEMENT.
20. Further Action
--------------
-13-
<PAGE>
Executive and the Company agree to perform any further acts and to execute
and deliver any documents which may be reasonable to carry out the provisions
hereof.
21. Counterparts
------------
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
-14-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands as of the day
and year first written above.
EXECUTIVE:
/s/ Robert H. Elkin
---------------------------------
Name: Robert H. Elkin
JACKSON ACQUISITION CORP.
By /s/ A. Richard Caputo, Jr.
------------------------------
Name: A. Richard Caputo, Jr.
Title: Vice President
-15-
<PAGE>
EXHIBIT 10.27
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------------
THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (this "Amendment"), dated as
---------
of April 22, 1998, is entered into by Jackson Products, Inc. (the "Company") and
Robert H. Elkin ("Executive"). Capitalized terms used herein, but not otherwise
---------
defined herein, shall have the meaning given such terms in the Employment
Agreement (the "Agreement"), dated as of August 16, 1995, between the Company
---------
and Executive.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and Executive entered into an Employment Agreement
dated as of August 16, 1995, in which Executive agreed to serve as the Chief
Executive Officer and President of the Company; and
WHEREAS, the Company and Executive, in recognition of the services provided
by Executive to the Company, wish to amend the Agreement and the Management
Subscription Agreement, dated as of August 16, 1995, between the Company, the
Executive and the other signatories thereto (the "Management Subscription
-----------------------
Agreement"), in each case in the manner set forth herein;
- ---------
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained in the Agreement and intending to be legally bound hereby, the parties
hereto agree as follows:
1. The Preamble of the Agreement is hereby amended by deleting the words
"Flex-O-Lite, Inc." and substituting therefor "Jackson Products, Inc."
2. Section 3(a) of the Agreement is amended and restated in its entirety
as follows:
(a) The "Term of Employment" shall commence on the date hereof and
------------------
shall continue until December 31, 2001 (the "Initial Term"); provided,
------------ --------
that, (i) such term shall continue for the twelve month period following
such Initial Term, and for each twelve month period thereafter (each, an
"Additional Term"), unless at least 180 days prior to the scheduled
---------------
expiration date of the Initial Term or any Additional Term, either the
Executive or the Company notifies the other of its decision not to continue
such term and (ii) should the Executive's employment by the Company be
earlier terminated pursuant to Section 3(b) or by the Executive pursuant to
------------
Section 3(c), the Term of Employment shall end on the date of such earlier
------------
termination.
3. The first sentence of Section 4(a) of the Agreement is hereby amended
and restated in its entirety as follows:
<PAGE>
(a) As base compensation for his services hereunder, in biweekly
installments, commencing on April 22, 1998, a base salary at a rate of
$414,000 per annum, as increased on an annual basis to reflect the increase
in the United States Cost of Living Index for All Urban Consumer (CPI-U)
for the St. Louis, Missouri area (the "CPI-U Index") or at the discretion
-----------
of the Board of Directors.
4. The first sentence of Section 4(b) of the Agreement is hereby amended
by deleting the word "sixty-five" and substituting therefor "seventy-five."
5. Section 4(b) of the Agreement is hereby further amended by adding the
following prior to the last sentence thereof:
Notwithstanding the foregoing, Executive and the Company agree that an
amount representing 30% of the bonus available to Executive for the 1998
fiscal year shall be deemed to be earned by Executive. Such amount shall
otherwise be payable to Executive in accordance with the provisions of this
Section 4(b).
------------
6. Section 12 of the Agreement is hereby amended by adding the following
as the final sentence thereof:
The Company agrees and acknowledges that, so long as Executive is an
employee of the Company, it shall not pay any management fees to TJC
Management Corporation pursuant to Section 2(a) of the Second Amended and
------------
Restated Management Consulting Agreement, dated as of April 22, 1998,
between the Company and TJC Management Corporation in excess of $750,000
per annum.
7. Solely with respect to Messrs. Elkin and Paule, Section 10(j) of the
Management Subscription Agreement is hereby amended by deleting the number "5.0"
and substituting therefor "6.0."
8. Except as herein amended, the Agreement shall remain in full force and
effect and is ratified in all respects. On and after the effectiveness of this
Amendment, each reference in the Agreement to "this Agreement," "hereunder,"
"hereof," "herein," or words of like import, and each reference to the Agreement
in any other agreements, documents or instruments executed and delivered
pursuant to the Agreement, shall mean and be a reference to the Agreement, as
amended by this Amendment.
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has signed this Amendment as of
the date first above written.
JACKSON PRODUCTS, INC.
By: /s/ A. Richard Caputo, Jr.
---------------------------
Name: A. Richard Caputo, Jr.
Title: Vice President
/s/ Robert H. Elkin
--------------------------------
Robert H. Elkin
<PAGE>
EXHIBIT 10.28
EMPLOYMENT AND NON-INTERFERENCE AGREEMENT
-----------------------------------------
This Employment and Non-Interference Agreement, dated as of August 16, 1995
(this "Agreement"), by and between Christopher T. Paule (the "Executive") and
---------
Jackson Acquisition Corp., a Delaware corporation (the "Company");
-------
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company wishes to obtain the future services of the Executive
for the Company; and
WHEREAS, the Executive is willing, upon the terms and conditions herein set
forth, to provide services hereunder; and
WHEREAS, the Company wishes to secure the Executive's non-interference,
upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Nature of Employment
--------------------
Subject to Section 3, the Company hereby employs Executive, and Executive
---------
agrees to accept such employment, during the Term of Employment (as defined in
Section 3(a)), as Chief Financial Officer of the Company to undertake such
- ------------
duties and responsibilities as may be reasonably assigned to Executive from time
to time by the Board of Directors of the Company or the appropriately authorized
and designated officers of the Parent.
2. Extent of Employment
--------------------
(a) During the Term of Employment, the Executive shall perform his
obligations hereunder faithfully and to the best of his ability at the principal
executive offices of the Company, under the direction of the Board of Directors
of the Company, and shall abide by the rules, customs and usages from time to
time established by each of Parent and the Company.
(b) During the Term of Employment, the Executive shall devote all of his
business time, energy and skill as may be reasonably necessary for the
performance of his duties,
<PAGE>
responsibilities and obligations hereunder (except for vacation periods and
reasonable periods of illness or other incapacity), consistent with past
practices and norms in similar positions.
(c) Nothing contained herein shall require Executive to follow any
directive or to perform any act which would violate any laws, ordinances,
regulations or rules of any governmental, regulatory or administrative body,
agent or authority, any court or judicial authority, or any public, private or
industry regulatory authority (collectively, the "Regulations"). Executive shall
-----------
act in good faith in accordance with all Regulations.
3. Term of Employment; Termination
-------------------------------
(a) The "Term of Employment" shall commence on the date hereof and shall
------------------
continue for a term of five years; provided that, (i) such term shall continue
for the twelve month period following such five year period, and for each twelve
month period thereafter, unless at least 180 days prior to the scheduled
expiration date, either the Executive or the Company notifies the other of its
decision not to continue such term and (ii) should the Executive's employment by
the Company be earlier terminated pursuant to Section 3(b) or by the Executive
------------
pursuant to Section 3(c), the Term of Employment shall end on the date of such
------------
earlier termination.
(b) Subject to the payments contemplated by Section 3(f), Term of
------------
Employment may be terminated at any time by the Company:
(i) upon the death of Executive;
(ii) in the event that because of physical or mental disability
Executive is unable to perform, and does not perform, in the view of the
Company and as certified in writing by a competent medical physician, his
duties hereunder for a continuous period of three consecutive months or any
sixty working days out of any consecutive six month period;
(iii) for Cause (as defined in Section 3(d)) or Material Breach (as
------------
defined in Section 3(e));
------------
(iv) upon the continuous poor or unacceptable performance of the
Executive's duties to the Company, in the sole judgment of the Board of
Directors of the Company, which has remained uncured for a period of 90
days after delivery of notice by the Company to the Executive of such
dissatisfaction with Executive's performance; or
-2-
<PAGE>
(v) for any other reason or no reason, it being understood that no
reason is required.
Executive acknowledges that no representations or promises have been made
concerning the grounds for termination or the future operation of the Company's
business, and that nothing contained herein or otherwise stated by or on behalf
of the Company modifies or amends the right of the Company to terminate
Executive at any time, with or without Material Breach or Cause. Termination
shall become effective upon the delivery by the Company to the Executive of
notice specifying such termination and the reasons therefor (i.e., Section
----
3(b)(i)-(v)), subject to the requirements for advance notice and an opportunity
to cure provided in this Agreement, if and to the extent applicable.
(c) Subject to the payments contemplated by Section 3(f), the Term of
------------
Employment may be terminated at any time by the Executive:
(i) upon the death of Executive;
(ii) in the event that because of physical or mental disability the
Executive is unable to perform, and does not perform, in the view of the
Company, and as certified by a competent medical physician, his duties
hereunder for continuous period of three consecutive months or any sixty
working days out of any consecutive six month period; or
(iii) as a result of a material reduction in Executive's authority,
perquisites, salary, position or responsibilities (other than such a
reduction which affects all of the Company's senior executives on a
substantially equal or proportionate basis), the relocation of the
Company's primary place of business or the relocation of Executive by the
Company to another Company office more than 50 miles from St. Louis,
Missouri, or the Company's willful, material violation of its obligations
under this Agreement, in each case, after 60 days' prior written notice to
the Company and its Board of Directors and the Company's failure thereafter
to cure such reduction or violation;
(d) For the purposes of this Section 3, "Cause" shall mean any of the
--------- -----
following:
(i) Executive's commission or conviction of any crime or criminal
offense involving monies or other property, or any felony;
(ii) Executive's commission or conviction of fraud or embezzlement;
or
-3-
<PAGE>
(iii) Executive's material and knowing violation of any obligations
imposed upon Executive, personally, as opposed to upon the Company, whether
as a stockholder or otherwise, under this Agreement, the Management
Subscription Agreement, dated August 16, 1995, by and among the Company and
the signatories thereto, and the Second Amended and Restated Credit
Agreement, dated as of August 16, 1995, among Jackson Products, Inc.,
Jackson Holding Company, the Lenders named therein and Heller Financial,
Inc., as Agent (the "Credit Agreement"), the Stockholders Agreement, dated
----------------
as of August 16, 1995, by and among the Company and the shareholders named
therein, the Note Purchase Agreement, dated as of August 16, 1995, between
the Company and the signatories thereto, the Certificate of Incorporation
or By-Laws of the Company; provided, that the Executive has been given
--------
notice and 90 days from such notice fails to cure the violation;
(e) For the purposes of this Section 3, "Material Breach" shall mean any
--------- ---------------
of the following:
(i) Executive's breach of any of his fiduciary duties to the Company
or its stockholders or making of a willful misrepresentation or omission
which breach, misrepresentation or omission would reasonably be expected to
materially adversely affect the business, properties, assets, condition
(financial or other) or prospects of the Company;
(ii) Executive's willful, continual and material neglect or failure
to discharge his duties, responsibilities or obligations prescribed by this
Agreement or any other agreement between the Executive and the Company
(other than arising solely due to physical or mental disability);
(iii) Executive's habitual drunkenness or substance abuse which
materially interferes with Executive's ability to discharge his duties,
responsibilities or obligations prescribed by this Agreement or any other
agreement between the Executive and the Company;
(iv) Executive's violation of any non-competition or confidentiality
agreement with the Company, including without limitation, those set forth
in Sections 7 and 8 of this Agreement, or any other agreements with the
---------- -
Company; and
(v) Executive's gross neglect of his duties and responsibilities, as
determined by the Company's Board of Directors;
-4-
<PAGE>
in each case, for purposes of clauses (i) through (v), after the Company or the
Board of Directors has provided Executive with 60 days' written notice of such
circumstances and the possibility of a Material Breach, and Executive fails to
cure such circumstances and Material Breach within those 60 days.
(f) In the event Executive's employment is terminated by the Company under
any circumstances described in Section 3(b)(v) or by Executive under the
---------------
circumstances described in Section 3(c)(iii), the Company will pay to Executive
-----------------
the full amounts to which he would be entitled under Section 4(a) and customary
------------
benefits through the Term of Employment. In the event Executive's employment is
terminated by the Company under the circumstances described in Section 3(b)(iv),
----------------
the Company will pay to Executive the full amounts to which he would be entitled
under Section 4(a) and customary benefits for the period from the effectiveness
------------
of termination through the date six months after the date of such termination.
In the event Executive's employment is terminated by the Company under the
circumstances described in Section 3(b)(i) or (ii) or by the Executive under
--------------- ----
Section 3(c)(i) or (ii), the Company will pay to the Executive the full amounts
- -----------------------
to which he would be entitled under Section 4(a) and customary benefits for the
------------
period from the effectiveness of termination through (y) the first anniversary
of the date of such termination, or (z) the third anniversary of the date of
this Agreement, whichever is greater. In the event Executive's employment is
terminated by the Company under any circumstances described in Section 3(b)(iii)
-----------------
or by Executive as a result of resignation or voluntary termination due to any
circumstance other than the material reductions, violations or relocation
described in Section 3(c)(iii) above, there will be no amounts owing by the
-----------------
Company to the Executive, under Section 4 or any other part of this Agreement,
---------
from and after the effectiveness of termination. If the Company makes the
payments required by this Section 3(f), such payments will constitute severance
------------
and liquidated damages, and the Company will not be obligated to pay any further
amounts to Executive under this Agreement or otherwise be liable to Executive in
connection with any termination.
(g) All determinations pursuant to this Section 3 shall be made by the
---------
Company's Board of Directors (not including Executive) of the Company, in its
sole discretion, whose decision shall be final, conclusive and binding.
(h) Termination of the Term of Employment will not terminate Sections 7,
----------
8, 10 through 21, or any other provisions not associated specifically with the
- - -- --
Term of Employment.
(i) In the event the Term of Employment is terminated and the Company is
obligated to make payments pursuant to Section
-------
-5-
<PAGE>
3(f), Executive will not be obligated to seek or obtain alternative employment;
- ----
provided, however, if he nevertheless thereafter obtains alternative employment,
- -------- -------
then if and to the extent Executive obtains such employment, the Company's
payment obligations under Section 3(f), including its obligation to provide
------------
insurance coverage, if any, will be mitigated and reduced by and to the extent
of Executive's compensation under such alternative employment during the period
for which payments are owed by the Company pursuant to Section 3(f). Moreover,
------------
in the event that, after the Restricted Period pursuant to Section 8(a),
------------
Executive is employed by or engaged in a Competitive Business as contemplated by
Section 8(a)(i), then the Company will thereupon cease and will be no longer
- ---------------
obligated to make payments under Section 3(f).
------------
(j) In the event the Term of Employment is terminated and the Company is
obligated to make payments pursuant to Section 3(f), Executive hereby waives any
------------
and all claims against the Company, and their respective officers, directors,
employees, agents, or representatives, stockholders and affiliates relating to
this Agreement and to his employment during the term hereof other than those
payments to be made pursuant to Section 3(f).
------------
4. Compensation. During the Term of Employment, the Company shall pay
------------
compensation to Executive as follows:
(a) As base compensation for his services hereunder, in biweekly
installments, a base salary at a rate of $115,000 per annum, as increased on an
annual basis to reflect the increase in the United States Cost of Living Index
for All Urban Consumer (CPI-U) for the St. Louis, Missouri area (the "CPI-U
Index"). The July 1995 CPI-U Index shall provide the basis for calculations of
such increases. Notwithstanding the minimum increase set forth above, the Board
of Directors, in its sole discretion, may establish a higher compensation level.
(b) An annual bonus compensation of up to fifty percent of his annual base
compensation based on Executive's performance as determined and approved by the
Board of Directors, in its sole discretion. Such bonus will be at the full
discretion of the Board of Directors, and may not be paid at all. Executive
acknowledges that no bonus has been agreed upon or promised. If the Board of
Directors decides to pay a bonus, it is to be paid within 30 days after the
issuance of audited financial statements for the Company. The Board of
Directors in its sole discretion may establish a higher bonus level based on the
performance of Executive.
-6-
<PAGE>
5. Reimbursement of Expenses
-------------------------
During the Term of Employment, the Company shall reimburse Executive for
documented travel, entertainment and other expenses reasonably incurred by
Executive in connection with the performance of his duties hereunder and, in
each case, in accordance with the rules, customs and usages promulgated by the
Company from time to time in effect.
6. Benefits
--------
During the Term of Employment, the Executive shall be entitled to
perquisites, paid vacations and benefits (including health, short and long term
disability, pension and life insurance benefits consistent with past practice,
or as increased from time to time) established from time to time, by the Board
of Directors for executives of the Company, subject to the policies and
procedures in effect regarding participation in such benefits.
7. Confidential Information
------------------------
(a) During and after the Term of Employment, Executive will not, directly
or indirectly in one or a series of transactions, disclose to any person, or use
or otherwise exploit for the Executive's own benefit or for the benefit of
anyone other than the Company, any Confidential Information (as defined in
Section 9), whether prepared by Executive or not; provided, however, that any
- --------- -------- -------
Confidential Information may be disclosed to officers, representatives,
employees and agents of the Company who need to know such Confidential
Information in order to perform the services or conduct the operations required
or expected of them in the Business (as defined in Section 9). Executive shall
---------
use his best efforts to prevent the removal of any Confidential Information from
the premises of the Company, except as required in his normal course of
employment by the Company. Executive shall use commercially reasonable efforts
to cause all persons or entities to whom any Confidential Information shall be
disclosed by him hereunder to observe the terms and conditions set forth herein
as though each such person or entity was bound hereby. Executive shall have no
obligation hereunder to keep confidential any Confidential Information if and to
the extent disclosure of any thereof is specifically required by law; provided,
--------
however, that in the event disclosure is required by applicable law, the
- -------
Executive shall provide the Company with prompt notice of such requirement,
prior to making any disclosure, so that the Company may seek an appropriate
protective order. At the request of the Company, Executive agrees to deliver to
the Company, at any time during the Term of Employment, or thereafter, all
Confidential Information which he may possess or control. Executive agrees that
all Confidential
-7-
<PAGE>
Information of the Company (whether now or hereafter existing) conceived,
discovered or made by him during the Term of Employment exclusively belongs to
the Company (and not to Executive). Executive will promptly disclose such
Confidential Information to the Company and perform all actions reasonably
requested by the Company to establish and confirm such exclusive ownership.
(b) The terms of this Section 7 shall survive the termination of this
---------
Agreement regardless of who terminates this Agreement, or the reasons therefor.
8. Non-Interference
----------------
(a) Executive acknowledges that the services to be provided give him the
opportunity to have special knowledge of the Company and its Confidential
Information and the capabilities of individuals employed by or affiliated with
the Company and that interference in these relationships would cause irreparable
injury to the Company. In consideration of this Agreement, Executive covenants
and agrees that:
(i) From the date hereof through the date that is 24 months after the
termination of the Term of Employment (the "Restricted Period"), Executive
-----------------
will not, without the express written approval of the Board of Directors of
the Company, anywhere in the Market, directly or indirectly, in one or a
series of transactions, own, manage, operate, control, invest or acquire an
interest in, or otherwise engage or participate in, whether as a
proprietor, partner, stockholder, lender, director, officer, employee,
joint venturer, investor, lessor, supplier, customer, agent, representative
or other participant, in any business which competes, directly or
indirectly, with the Business in the Market ("Competitive Business")
--------------------
without regard to (A) whether the Competitive Business has its office,
manufacturing or other business facilities within or without the Market,
(B) whether any of the activities of the Executive referred to above occur
or are performed within or without the Market or (C) whether the Executive
resides, or reports to an office, within or without the Market; provided,
--------
however, that (x) the Executive may, anywhere in the Market, directly or
-------
indirectly, in one or a series of transactions, own, invest or acquire an
interest in up to five percent (5%) of the capital stock of a corporation
whose capital stock is traded publicly, or that (y) Executive may accept
employment with a successor company to the Company.
(ii) During the Restricted Period (which shall not be reduced by any
period of violation of this Agreement by
-8-
<PAGE>
Executive or period which is required for litigation to enforce the rights
hereunder), Executive will not without the express prior written approval
of the Board of Directors of the Company (A) directly or indirectly, in one
or a series of transactions, recruit, solicit or otherwise induce or
influence any proprietor, partner, stockholder, lender, director, officer,
employee, sales agent, joint venturer, investor, lessor, supplier,
customer, agent, representative or any other person which has a business
relationship with the Company or had a business relationship with the
Company within the 24 month period preceding the date of the incident in
question, to discontinue, reduce or modify such employment, agency or
business relationship with the Company, or (B) employ or seek to employ or
cause any Competitive Business to employ or seek to employ any person or
agent who is then (or was at any time within 24 months prior to the date
the Executive or the Competitive Business employs or seeks to employ such
person) employed or retained by the Company. Notwithstanding the foregoing,
nothing herein shall prevent the Executive from providing a letter of
recommendation to an employee with respect to a future employment
opportunity.
(iii) The scope and term of this Section 8 would not preclude
---------
Executive from earning a living with an entity that is not a Competitive
Business.
(b) In the event that Executive breaches his obligations in any material
respect under Section 7 or this Section 8, the Company, in addition to pursuing
--------- ---------
all available remedies under this Agreement, at law or otherwise, and without
limiting its right to pursue the same shall cease all payments to the Executive
under this Agreement or any other agreement.
(c) The terms of this Section 8 shall survive the termination of this
---------
Agreement regardless of who terminates this Agreement, or the reasons therefor.
9. Definitions
-----------
"Business" means any business conducted, or engaged in, by the Company
--------
prior to the date hereof or at any time during the Term of Employment.
"Cause" is defined in Section 3(c).
----- ------------
"Companies" means Parent and its successors or any of its direct or
---------
indirect subsidiaries (including the Company), now or hereafter existing.
"Company" is defined in the introduction.
-------
-9-
<PAGE>
"Competitive Business" is defined in Section 8(a)(i).
-------------------- ---------------
"Confidential Information" means any confidential information including,
------------------------
without limitation, any study, data, calculations, software storage media or
other compilation of information, patent, patent application, copyright,
trademark, trade name, service mark, service name, "know-how", trade secrets,
customer lists, details of client or consultant contracts, pricing policies,
operational methods, marketing plans or strategies, product development
techniques or plans, business acquisition plans or any portion or phase of any
scientific or technical information, ideas, discoveries, designs, computer
programs (including source of object codes), processes, procedures, formulas,
improvements or other proprietary or intellectual property of the Company,
whether or not in written or tangible form, and whether or not registered, and
including all files, records, manuals, books, catalogues, memoranda, notes,
summaries, plans, reports, records, documents and other evidence thereof. The
term "Confidential Information" does not include, and there shall be no
------------------------
obligation hereunder with respect to, information that becomes generally
available to the public other than as a result of a disclosure by the Executive
not permissible hereunder.
"Executive" means Christopher T. Paule or his estate, if deceased.
---------
"Market" means any county in the United States of America and each similar
------
jurisdiction in any other country in which the Business was conducted by or
engaged in by the Company prior to the date hereof or is conducted or engaged
in, or is proposed to be conducted or engaged in, by the Company at any time
during the Term of Employment.
"Regulations" is defined in Section 2(c).
----------- ------------
"Restricted Period" is defined in Section 8(a)(i).
----------------- ---------------
"Term of Employment" is defined in Section 3(a).
------------------ ------------
10. Notice
------
Any notice, request, demand or other communication required or permitted to
be given under this Agreement shall be given in writing and if delivered
personally, or sent by certified or registered mail, return receipt requested,
as follows (or to such other addressee or address as shall be set forth in a
notice given in the same manner):
If to Executive: Christopher T. Paule
710 North Fifth Street
-10-
<PAGE>
St. Charles, Missouri 63301
If to Company: Jackson Acquisition Corp.
c/o The Jordan Company
9 West 57th Street, 40th Floor
New York, New York 10019
Attn: A. Richard Caputo, Jr.
Any such notices shall be deemed to be given on the date personally delivered or
such return receipt is issued.
11. Executive's Representation
--------------------------
Executive hereby warrants and represents to the Company that Executive has
carefully reviewed this Agreement and has consulted with such advisors as
Executive considers appropriate in connection with this Agreement, and is not
subject to any covenants, agreements or restrictions, including without
limitation any covenants, agreements or restrictions arising out of Executive's
prior employment which would be breached or violated by Executive's execution of
this Agreement or by Executive's performance of his duties hereunder.
12. Other Matters
-------------
Executive agrees and acknowledges that the obligations owed to Executive
under this Agreement are solely the obligations of the Company, and that none of
the Companies' stockholders, directors, officers, affiliates, representatives,
agents or lenders will have any obligations or liabilities in respect of this
Agreement and the subject matter hereof.
13. Validity
--------
If, for any reason, any provision hereof shall be determined to be invalid
or unenforceable, the validity and effect of the other provisions hereof shall
not be affected thereby.
14. Severability
------------
Whenever possible, each provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or any other jurisdiction, but this Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been
-11-
<PAGE>
contained herein. If any court determines that any provision of Section 8 or any
---------
other provision hereof is unenforceable and therefore acts to reduce the scope
or duration of such provision, the provision in its reduced form shall then be
enforceable.
15. Waiver of Breach; Specific Performance
--------------------------------------
The waiver by the Company or Executive of a breach of any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any other breach of such other party. Each of the parties (and third party
beneficiaries) to this Agreement will be entitled to enforce its respective
rights under this Agreement and to exercise all other rights existing in its
favor. The parties hereto agree and acknowledge that money damages may not be
an adequate remedy for any breach of the provisions of Sections 7 and 8 of this
---------- -
Agreement and that any party (and third party beneficiaries) may in its sole
discretion apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive relief, including temporary restraining
orders, preliminary injunctions and permanent injunctions in order to enforce or
prevent any violations of the provisions of this Agreement. In the event either
party takes legal action to enforce any of the terms or provisions of this
Agreement, the nonprevailing party shall pay the successful party's costs and
expenses, including but not limited to, attorneys' fees, incurred in such
action.
16. Assignment; Third Parties
-------------------------
Neither the Executive nor the Company may assign, transfer, pledge,
hypothecate, encumber or otherwise dispose of this Agreement or any of his or
its respective rights or obligations hereunder, without the prior written
consent of the other. The parties agree and acknowledge that each of the
Companies and the stockholders and investors therein are intended to be third
party beneficiaries of, and have rights and interests in respect of, Executive's
agreements set forth in Sections 7 and 8.
---------- -
17. Amendment; Entire Agreement
---------------------------
This Agreement may not be changed orally but only by an agreement in
writing agreed to by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought. This Agreement embodies the
entire agreement and understanding of the parties hereto in respect of the
subject matter of this Agreement, and supersedes and replaces all prior
Agreements, understandings and commitments with respect to such subject matter.
-12-
<PAGE>
18. Litigation
----------
THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT THAT NO DOCTRINE OF
CHOICE OF LAW SHALL BE USED TO APPLY ANY LAW OTHER THAN THAT OF NEW YORK, AND NO
DEFENSE, COUNTERCLAIM OR RIGHT OF SET-OFF GIVEN OR ALLOWED BY THE LAWS OF ANY
OTHER STATE OR JURISDICTION, OR ARISING OUT OF THE ENACTMENT, MODIFICATION OR
REPEAL OF ANY LAW, REGULATION, ORDINANCE OR DECREE OF ANY FOREIGN JURISDICTION,
BE INTERPOSED IN ANY ACTION HEREON. SUBJECT TO SECTION 19, EXECUTIVE AND THE
----------
COMPANY AGREE THAT ANY ACTION OR PROCEEDING TO ENFORCE OR ARISING OUT OF THIS
AGREEMENT MAY BE COMMENCED IN THE COURTS OF THE STATE OF NEW YORK OR THE UNITED
STATES DISTRICT COURTS IN NEW YORK. EXECUTIVE AND THE COMPANY CONSENT TO SUCH
JURISDICTION, AGREE THAT VENUE WILL BE PROPER IN SUCH COURTS AND WAIVE ANY
OBJECTIONS BASED UPON FORUM NON CONVENIENS. THE CHOICE OF FORUM SET FORTH IN
--------------------
THIS SECTION 18 SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT
----------
OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO
ENFORCE SAME IN ANY OTHER JURISDICTION.
19. Arbitration
-----------
THE EXECUTIVE AND THE COMPANY AGREE THAT ANY DISPUTE BETWEEN OR AMONG THE
PARTIES TO THIS AGREEMENT RELATING TO OR IN RESPECT OF THIS AGREEMENT, ITS
NEGOTIATION, EXECUTION, PERFORMANCE, SUBJECT MATTER, OR ANY COURSE OF CONDUCT OR
DEALING OR ACTIONS UNDER OR IN RESPECT OF THIS AGREEMENT, INCLUDING, WITHOUT
LIMITATION ANY CLAIM UNDER THE SECURITIES ACT, THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED, ANY OTHER STATE OR FEDERAL LAW RELATING TO SECURITIES OR FRAUD
OR BOTH, THE RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT, AS AMENDED, OR
FEDERAL OR STATE COMMON LAW, SHALL BE SETTLED BY FINAL, BINDING AND NON-
APPEALABLE ARBITRATION IN NEW YORK, NEW YORK BY THREE ARBITRATORS. EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED IN THIS SECTION 19, THE ARBITRATION SHALL BE
----------
CONDUCTED IN ACCORDANCE WITH THE VOLUNTARY LABOR ARBITRATION RULES OF THE
AMERICAN ARBITRATION ASSOCIATION (THE "ASSOCIATION") THEN IN EFFECT. ONE OF THE
ARBITRATORS SHALL BE APPOINTED BY THE COMPANY, ONE SHALL BE APPOINTED BY THE
EXECUTIVE, AND THE THIRD SHALL BE APPOINTED BY THE FIRST TWO ARBITRATORS. IF
THE FIRST TWO ARBITRATORS CANNOT AGREE ON THE THIRD ARBITRATOR WITHIN 60 DAYS OF
THE APPOINTMENT OF THE SECOND ARBITRATOR, THEN THE THIRD ARBITRATOR SHALL BE
APPOINTED BY THE ASSOCIATION. UPON THE CONCLUSION OF ARBITRATION, EXECUTIVE OR
THE COMPANY MAY APPLY TO ANY COURT OF THE TYPE DESCRIBED IN SECTION 18 TO
----------
ENFORCE THE DECISION PURSUANT TO SUCH ARBITRATION. IN CONNECTION WITH THE
FOREGOING, THE PARTIES HEREBY WAIVE ANY RIGHTS TO A JURY TRIAL TO RESOLVE ANY
DISPUTES OR CLAIMS RELATING TO THIS AGREEMENT.
20. Further Action
--------------
-13-
<PAGE>
Executive and the Company agree to perform any further acts and to execute
and deliver any documents which may be reasonable to carry out the provisions
hereof.
21. Counterparts
------------
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
-14-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands as of the day
and year first written above.
EXECUTIVE:
/s/ Christopher T. Paule
-----------------------------------
Name: Christopher T. Paule
JACKSON ACQUISITION CORP.
By /s/ A. Richard Caputo, Jr.
---------------------------------
Name: A. Richard Caputo, Jr.
Title: Vice President
-15-
<PAGE>
EXHIBIT 10.29
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------------
THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (this "Amendment"), dated as
---------
of April 22, 1998, is entered into by Jackson Products, Inc. (the "Company") and
Christopher T. Paule ("Executive"). Capitalized terms used herein, but not
---------
otherwise defined herein, shall have the meaning given such terms in the
Employment Agreement (the "Agreement"), dated as of August 16, 1995, between the
---------
Company and Executive.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and Executive entered into an Employment Agreement
dated as of August 16, 1995, in which Executive agreed to serve as the Chief
Financial Officer of the Company; and
WHEREAS, the Company and Executive, in recognition of the services provided
by Executive to the Company, wish to amend the Agreement and the Management
Subscription Agreement, dated as of August 16, 1995, between the Company, the
Executive and the other signatories thereto (the "Management Subscription
-----------------------
Agreement"), in each case in the manner set forth herein;
- ---------
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained in the Agreement and intending to be legally bound hereby, the parties
hereto agree as follows:
1. The Preamble to the Agreement is hereby amended by deleting the words
"Flex-O-Lite, Inc." and substituting therefor "Jackson Products, Inc."
2. Section 3(a) of the Agreement is amended and restated in its entirety
as follows:
(a) The "Term of Employment" shall commence on the date hereof and
------------------
shall continue until December 31, 2001 (the "Initial Term"); provided,
------------ --------
that, (i) such term shall continue for the twelve month period following
such Initial Term, and for each twelve month period thereafter (each, an
"Additional Term"), unless at least 180 days prior to the scheduled
----------------
expiration date of the Initial Term or any Additional Term, either the
Executive or the Company notifies the other of its decision not to continue
such term and (ii) should the Executive's employment by the Company be
earlier terminated pursuant to Section 3(b) or by the Executive pursuant to
------------
Section 3(c), the Term of Employment shall end on the date of such earlier
------------
termination.
3. The first sentence of Section 4(a) of the Agreement is hereby amended
and restated in its entirety as follows:
<PAGE>
(a) As base compensation for his services hereunder, in biweekly
installments, commencing on April 22, 1998, a base salary at a rate of
$176,000 per annum, as increased on an annual basis to reflect the increase
in the United States Cost of Living Index for All Urban Consumer (CPI-U)
for the St. Louis, Missouri area (the "CPI-U Index") or at the discretion
-----------
of the Board of Directors.
4. The first sentence of Section 4(b) of the Agreement is hereby amended
by deleting the word "fifty" and substituting therefor "sixty."
5. Section 4(b) of the Agreement is hereby further amended by adding the
following prior to the last sentence thereof:
Notwithstanding the foregoing, Executive and the Company agree that an
amount representing 30% of the bonus available to Executive for the 1998
fiscal year shall be deemed to be earned by Executive. Such amount shall
otherwise be payable to Executive in accordance with the provisions of this
Section 4(b).
------------
6. Solely with respect to Messrs. Elkin and Paule, Section 10(j) the
Management Subscription Agreement is hereby amended by deleting the number "5.0"
and substituting therefor "6.0."
7. Except as herein amended, the Agreement shall remain in full force and
effect and is ratified in all respects. On and after the effectiveness of this
Amendment, each reference in the Agreement to "this Agreement," "hereunder,"
"hereof," "herein," or words of like import, and each reference to the Agreement
in any other agreements, documents or instruments executed and delivered
pursuant to the Agreement, shall mean and be a reference to the Agreement, as
amended by this Amendment.
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has signed this Amendment as of
the date first above written.
JACKSON PRODUCTS, INC.
By: /s/ A. Richard Caputo, Jr.
-------------------------------
Name: A. Richard Caputo, Jr.
Title: Vice President
/s/ Christopher T. Paule
--------------------------------
Christopher T. Paule
<PAGE>
EXHIBIT 10.30
EMPLOYMENT AND NON-INTERFERENCE AGREEMENT
-----------------------------------------
This Employment and Non-Interference Agreement, dated as of August 16, 1995
(this "Agreement"), by and between Allan A. Huning (the "Executive") and Flex-O-
---------
Lite, Inc., a Delaware corporation (the "Company");
-------
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company wishes to obtain the future services of the Executive
for the Company; and
WHEREAS, the Executive is willing, upon the terms and conditions herein set
forth, to provide services hereunder; and
WHEREAS, the Company wishes to secure the Executive's non-interference,
upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Nature of Employment
--------------------
Subject to Section 3, the Company hereby employs Executive, and Executive
---------
agrees to accept such employment, during the Term of Employment (as defined in
Section 3(a)), as President of the Company to undertake such duties and
- ------------
responsibilities as may be reasonably assigned to Executive from time to time by
the Board of Directors of the Company or the appropriately authorized and
designated officers of the Parent.
2. Extent of Employment
--------------------
(a) During the Term of Employment, the Executive shall perform his
obligations hereunder faithfully and to the best of his ability at the principal
executive offices of the Company, under the direction of the Board of Directors
of the Company, and shall abide by the rules, customs and usages from time to
time established by each of Parent and the Company.
(b) During the Term of Employment, the Executive shall devote all of his
business time, energy and skill as may be reasonably necessary for the
performance of his duties,
<PAGE>
responsibilities and obligations hereunder (except for vacation periods and
reasonable periods of illness or other incapacity), consistent with past
practices and norms in similar positions.
(c) Nothing contained herein shall require Executive to follow any
directive or to perform any act which would violate any laws, ordinances,
regulations or rules of any governmental, regulatory or administrative body,
agent or authority, any court or judicial authority, or any public, private or
industry regulatory authority (collectively, the "Regulations"). Executive shall
-----------
act in good faith in accordance with all Regulations.
3. Term of Employment; Termination
-------------------------------
(a) The "Term of Employment" shall commence on the date hereof and shall
------------------
continue for a term of five years; provided that, (i) such term shall continue
for the twelve month period following such five year period, and for each twelve
month period thereafter, unless at least 180 days prior to the scheduled
expiration date, either the Executive or the Company notifies the other of its
decision not to continue such term and (ii) should the Executive's employment by
the Company be earlier terminated pursuant to Section 3(b) or by the Executive
------------
pursuant to Section 3(c), the Term of Employment shall end on the date of such
------------
earlier termination.
(b) Subject to the payments contemplated by Section 3(f), Term of
------------
Employment may be terminated at any time by the Company:
(i) upon the death of Executive;
(ii) in the event that because of physical or mental disability
Executive is unable to perform, and does not perform, in the view of the
Company and as certified in writing by a competent medical physician, his
duties hereunder for a continuous period of three consecutive months or any
sixty working days out of any consecutive six month period;
(iii) for Cause (as defined in Section 3(d)) or Material Breach (as
-------------
defined in Section 3(e));
------------
(iv) upon the continuous poor or unacceptable performance of the
Executive's duties to the Company, in the sole judgment of the Board of
Directors of the Company, which has remained uncured for a period of 90
days after delivery of notice by the Company to the Executive of such
dissatisfaction with Executive's performance; or
-2-
<PAGE>
(v) for any other reason or no reason, it being understood that no
reason is required.
Executive acknowledges that no representations or promises have been made
concerning the grounds for termination or the future operation of the Company's
business, and that nothing contained herein or otherwise stated by or on behalf
of the Company modifies or amends the right of the Company to terminate
Executive at any time, with or without Material Breach or Cause. Termination
shall become effective upon the delivery by the Company to the Executive of
notice specifying such termination and the reasons therefor (i.e., Section
----
3(b)(i)-(v)), subject to the requirements for advance notice and an opportunity
to cure provided in this Agreement, if and to the extent applicable.
(c) Subject to the payments contemplated by Section 3(f), the Term of
------------
Employment may be terminated at any time by the Executive:
(i) upon the death of Executive;
(ii) in the event that because of physical or mental disability the
Executive is unable to perform, and does not perform, in the view of the
Company, and as certified by a competent medical physician, his duties
hereunder for continuous period of three consecutive months or any sixty
working days out of any consecutive six month period; or
(iii) as a result of a material reduction in Executive's authority,
perquisites, salary, position or responsibilities (other than such a
reduction which affects all of the Company's senior executives on a
substantially equal or proportionate basis), the relocation of the
Company's primary place of business or the relocation of Executive by the
Company to another Company office more than 50 miles from St. Louis,
Missouri, or the Company's willful, material violation of its obligations
under this Agreement, in each case, after 60 days' prior written notice to
the Company and its Board of Directors and the Company's failure thereafter
to cure such reduction or violation;
(d) For the purposes of this Section 3, "Cause" shall mean any of the
--------- -----
following:
(i) Executive's commission or conviction of any crime or criminal
offense involving monies or other property, or any felony;
(ii) Executive's commission or conviction of fraud or embezzlement;
or
-3-
<PAGE>
(iii) Executive's material and knowing violation of any obligations
imposed upon Executive, personally, as opposed to upon the Company, whether
as a stockholder or otherwise, under this Agreement, the Management
Subscription Agreement, dated August 16, 1995, by and among the Company and
the signatories thereto, and the Second Amended and Restated Credit
Agreement, dated as of August 16, 1995, among Jackson Products, Inc.,
Jackson Holding Company, the Lenders named therein and Heller Financial,
Inc., as Agent (the "Credit Agreement"), the Stockholders Agreement, dated
----------------
as of August 16, 1995, by and among the Company and the shareholders named
therein, the Note Purchase Agreement, dated as of August 16, 1995, between
the Company and the signatories thereto, the Certificate of Incorporation
or By-Laws of the Company; provided, that the Executive has been given
--------
notice and 90 days from such notice fails to cure the violation;
(e) For the purposes of this Section 3, "Material Breach" shall mean any
--------- ---------------
of the following:
(i) Executive's breach of any of his fiduciary duties to the Company
or its stockholders or making of a willful misrepresentation or omission
which breach, misrepresentation or omission would reasonably be expected to
materially adversely affect the business, properties, assets, condition
(financial or other) or prospects of the Company;
(ii) Executive's willful, continual and material neglect or failure
to discharge his duties, responsibilities or obligations prescribed by this
Agreement or any other agreement between the Executive and the Company
(other than arising solely due to physical or mental disability);
(iii) Executive's habitual drunkenness or substance abuse which
materially interferes with Executive's ability to discharge his duties,
responsibilities or obligations prescribed by this Agreement or any other
agreement between the Executive and the Company;
(iv) Executive's violation of any non-competition or confidentiality
agreement with the Company, including without limitation, those set forth
in Sections 7 and 8 of this Agreement, or any other agreements with the
---------- -
Company; and
(v) Executive's gross neglect of his duties and responsibilities, as
determined by the Company's Board of Directors;
-4-
<PAGE>
in each case, for purposes of clauses (i) through (v), after the Company or the
Board of Directors has provided Executive with 60 days' written notice of such
circumstances and the possibility of a Material Breach, and Executive fails to
cure such circumstances and Material Breach within those 60 days.
(f) In the event Executive's employment is terminated by the Company under
any circumstances described in Section 3(b)(v) or by Executive under the
---------------
circumstances described in Section 3(c)(iii), the Company will pay to Executive
-----------------
the full amounts to which he would be entitled under Section 4(a) and customary
------------
benefits through the Term of Employment. In the event Executive's employment is
terminated by the Company under the circumstances described in Section 3(b)(iv),
----------------
the Company will pay to Executive the full amounts to which he would be entitled
under Section 4(a) and customary benefits for the period from the effectiveness
------------
of termination through the date six months after the date of such termination.
In the event Executive's employment is terminated by the Company under the
circumstances described in Section 3(b)(i) or (ii) or by the Executive under
--------------- ----
Section 3(c)(i) or (ii), the Company will pay to the Executive the full amounts
- -----------------------
to which he would be entitled under Section 4(a) and customary benefits for the
------------
period from the effectiveness of termination through (y) the first anniversary
of the date of such termination, or (z) the third anniversary of the date of
this Agreement, whichever is greater. In the event Executive's employment is
terminated by the Company under any circumstances described in Section 3(b)(iii)
-----------------
or by Executive as a result of resignation or voluntary termination due to any
circumstance other than the material reductions, violations or relocation
described in Section 3(c)(iii) above, there will be no amounts owing by the
-----------------
Company to the Executive, under Section 4 or any other part of this Agreement,
---------
from and after the effectiveness of termination. If the Company makes the
payments required by this Section 3(f), such payments will constitute severance
------------
and liquidated damages, and the Company will not be obligated to pay any further
amounts to Executive under this Agreement or otherwise be liable to Executive in
connection with any termination.
(g) All determinations pursuant to this Section 3 shall be made by the
---------
Company's Board of Directors (not including Executive) of the Company, in its
sole discretion, whose decision shall be final, conclusive and binding.
(h) Termination of the Term of Employment will not terminate Sections 7,
----------
8, 10 through 21, or any other provisions not associated specifically with the
- - -- --
Term of Employment.
(i) In the event the Term of Employment is terminated and the Company is
obligated to make payments pursuant to Section
-------
-5-
<PAGE>
3(f), Executive will not be obligated to seek or obtain alternative employment;
- ----
provided, however, if he nevertheless thereafter obtains alternative employment,
- -------- -------
then if and to the extent Executive obtains such employment, the Company's
payment obligations under Section 3(f), including its obligation to provide
------------
insurance coverage, if any, will be mitigated and reduced by and to the extent
of Executive's compensation under such alternative employment during the period
for which payments are owed by the Company pursuant to Section 3(f). Moreover,
------------
in the event that, after the Restricted Period pursuant to Section 8(a),
------------
Executive is employed by or engaged in a Competitive Business as contemplated by
Section 8(a)(i), then the Company will thereupon cease and will be no longer
- ---------------
obligated to make payments under Section 3(f).
------------
(j) In the event the Term of Employment is terminated and the Company is
obligated to make payments pursuant to Section 3(f), Executive hereby waives any
------------
and all claims against the Company, and their respective officers, directors,
employees, agents, or representatives, stockholders and affiliates relating to
this Agreement and to his employment during the term hereof other than those
payments to be made pursuant to Section 3(f).
------------
4. Compensation. During the Term of Employment, the Company shall pay
------------
compensation to Executive as follows:
(a) As base compensation for his services hereunder, in biweekly
installments, a base salary at a rate of $132,500 per annum, as increased on an
annual basis to reflect the increase in the United States Government Cost of
Living Index for All Urban Consumer (CPI-U) for the St. Louis, Missouri area
(the "CPI-U Index"). The July 1995 CPI-U Index shall provide the basis for
calculations of such increases. Notwithstanding the minimum increase set forth
above, the Board of Directors, in its sole discretion, may establish a higher
compensation level.
(b) An annual bonus compensation of up to fifty percent of his annual base
compensation based on Executive's performance as determined and approved by the
Board of Directors, in its sole discretion. Such bonus will be at the full
discretion of the Board of Directors, and may not be paid at all. Executive
acknowledges that no bonus has been agreed upon or promised. If the Board of
Directors decides to pay a bonus, it is to be paid within 30 days after the
issuance of audited financial statements for the Company. The Board of
Directors in its sole discretion may establish a higher bonus level based on the
performance of Executive.
-6-
<PAGE>
5. Reimbursement of Expenses
-------------------------
During the Term of Employment, the Company shall reimburse Executive for
documented travel, entertainment and other expenses reasonably incurred by
Executive in connection with the performance of his duties hereunder and, in
each case, in accordance with the rules, customs and usages promulgated by the
Company from time to time in effect.
6. Benefits
--------
During the Term of Employment, the Executive shall be entitled to
perquisites, paid vacations and benefits (including health, short and long term
disability, pension and life insurance benefits consistent with past practice,
or as increased from time to time) established from time to time, by the Board
of Directors for executives of the Company, subject to the policies and
procedures in effect regarding participation in such benefits.
7. Confidential Information
------------------------
(a) During and after the Term of Employment, Executive will not, directly
or indirectly in one or a series of transactions, disclose to any person, or use
or otherwise exploit for the Executive's own benefit or for the benefit of
anyone other than the Company, any Confidential Information (as defined in
Section 9), whether prepared by Executive or not; provided, however, that any
- --------- -------- -------
Confidential Information may be disclosed to officers, representatives,
employees and agents of the Company who need to know such Confidential
Information in order to perform the services or conduct the operations required
or expected of them in the Business (as defined in Section 9). Executive shall
---------
use his best efforts to prevent the removal of any Confidential Information from
the premises of the Company, except as required in his normal course of
employment by the Company. Executive shall use commercially reasonable efforts
to cause all persons or entities to whom any Confidential Information shall be
disclosed by him hereunder to observe the terms and conditions set forth herein
as though each such person or entity was bound hereby. Executive shall have no
obligation hereunder to keep confidential any Confidential Information if and to
the extent disclosure of any thereof is specifically required by law; provided,
--------
however, that in the event disclosure is required by applicable law, the
- -------
Executive shall provide the Company with prompt notice of such requirement,
prior to making any disclosure, so that the Company may seek an appropriate
protective order. At the request of the Company, Executive agrees to deliver to
the Company, at any time during the Term of Employment, or thereafter, all
Confidential Information which he may possess or control. Executive agrees that
all Confidential
-7-
<PAGE>
Information of the Company (whether now or hereafter existing) conceived,
discovered or made by him during the Term of Employment exclusively belongs to
the Company (and not to Executive). Executive will promptly disclose such
Confidential Information to the Company and perform all actions reasonably
requested by the Company to establish and confirm such exclusive ownership.
(b) The terms of this Section 7 shall survive the termination of this
---------
Agreement regardless of who terminates this Agreement, or the reasons therefor.
8. Non-Interference
----------------
(a) Executive acknowledges that the services to be provided give him the
opportunity to have special knowledge of the Company and its Confidential
Information and the capabilities of individuals employed by or affiliated with
the Company and that interference in these relationships would cause irreparable
injury to the Company. In consideration of this Agreement, Executive covenants
and agrees that:
(i) From the date hereof through the date that is 24 months after the
termination of the Term of Employment (the "Restricted Period"), Executive
-----------------
will not, without the express written approval of the Board of Directors of
the Company, anywhere in the Market, directly or indirectly, in one or a
series of transactions, own, manage, operate, control, invest or acquire an
interest in, or otherwise engage or participate in, whether as a
proprietor, partner, stockholder, lender, director, officer, employee,
joint venturer, investor, lessor, supplier, customer, agent, representative
or other participant, in any business which competes, directly or
indirectly, with the Business in the Market ("Competitive Business")
--------------------
without regard to (A) whether the Competitive Business has its office,
manufacturing or other business facilities within or without the Market,
(B) whether any of the activities of the Executive referred to above occur
or are performed within or without the Market or (C) whether the Executive
resides, or reports to an office, within or without the Market; provided,
--------
however, that (x) the Executive may, anywhere in the Market, directly or
-------
indirectly, in one or a series of transactions, own, invest or acquire an
interest in up to five percent (5%) of the capital stock of a corporation
whose capital stock is traded publicly, or that (y) Executive may accept
employment with a successor company to the Company.
(ii) During the Restricted Period (which shall not be reduced by any
period of violation of this Agreement by
-8-
<PAGE>
Executive or period which is required for litigation to enforce the rights
hereunder), Executive will not without the express prior written approval
of the Board of Directors of the Company (A) directly or indirectly, in one
or a series of transactions, recruit, solicit or otherwise induce or
influence any proprietor, partner, stockholder, lender, director, officer,
employee, sales agent, joint venturer, investor, lessor, supplier,
customer, agent, representative or any other person which has a business
relationship with the Company or had a business relationship with the
Company within the 24 month period preceding the date of the incident in
question, to discontinue, reduce or modify such employment, agency or
business relationship with the Company, or (B) employ or seek to employ or
cause any Competitive Business to employ or seek to employ any person or
agent who is then (or was at any time within 24 months prior to the date
the Executive or the Competitive Business employs or seeks to employ such
person) employed or retained by the Company. Notwithstanding the foregoing,
nothing herein shall prevent the Executive from providing a letter of
recommendation to an employee with respect to a future employment
opportunity.
(ii) The scope and term of this Section 8 would not preclude Executive
---------
from earning a living with an entity that is not a Competitive Business.
(b) In the event that Executive breaches his obligations in any material
respect under Section 7 or this Section 8, the Company, in addition to pursuing
--------- ---------
all available remedies under this Agreement, at law or otherwise, and without
limiting its right to pursue the same shall cease all payments to the Executive
under this Agreement or any other agreement.
(c) The terms of this Section 8 shall survive the termination of this
---------
Agreement regardless of who terminates this Agreement, or the reasons therefor.
9. Definitions
-----------
"Business" means any business conducted, or engaged in, by the Company
--------
prior to the date hereof or at any time during the Term of Employment.
"Cause" is defined in Section 3(c).
----- ------------
"Companies" means Parent and its successors or any of its direct or
---------
indirect subsidiaries (including the Company), now or hereafter existing.
"Company" is defined in the introduction.
-------
-9-
<PAGE>
"Competitive Business" is defined in Section 8(a)(i).
-------------------- ---------------
"Confidential Information" means any confidential information including,
------------------------
without limitation, any study, data, calculations, software storage media or
other compilation of information, patent, patent application, copyright,
trademark, trade name, service mark, service name, "know-how", trade secrets,
customer lists, details of client or consultant contracts, pricing policies,
operational methods, marketing plans or strategies, product development
techniques or plans, business acquisition plans or any portion or phase of any
scientific or technical information, ideas, discoveries, designs, computer
programs (including source of object codes), processes, procedures, formulas,
improvements or other proprietary or intellectual property of the Company,
whether or not in written or tangible form, and whether or not registered, and
including all files, records, manuals, books, catalogues, memoranda, notes,
summaries, plans, reports, records, documents and other evidence thereof. The
term "Confidential Information" does not include, and there shall be no
------------------------
obligation hereunder with respect to, information that becomes generally
available to the public other than as a result of a disclosure by the Executive
not permissible hereunder.
"Executive" means Allan A. Huning or his estate, if deceased.
---------
"Market" means any county in the United States of America and each similar
------
jurisdiction in any other country in which the Business was conducted by or
engaged in by the Company prior to the date hereof or is conducted or engaged
in, or is proposed to be conducted or engaged in, by the Company at any time
during the Term of Employment.
"Regulations" is defined in Section 2(c).
----------- ------------
"Restricted Period" is defined in Section 8(a)(i).
----------------- ---------------
"Term of Employment" is defined in Section 3(a).
------------------ ------------
10. Notice
------
Any notice, request, demand or other communication required or permitted to
be given under this Agreement shall be given in writing and if delivered
personally, or sent by certified or registered mail, return receipt requested,
as follows (or to such other addressee or address as shall be set forth in a
notice given in the same manner):
If to Executive: Allan A. Huning
3931 Branwen Ct.
-10-
<PAGE>
Florissant, Missouri 63034
If to Company: Jackson Acquisition Corp.
c/o The Jordan Company
9 West 57th Street, 40th Floor
New York, New York 10019
Attn: A. Richard Caputo, Jr.
Any such notices shall be deemed to be given on the date personally delivered or
such return receipt is issued.
11. Executive's Representation
--------------------------
Executive hereby warrants and represents to the Company that Executive has
carefully reviewed this Agreement and has consulted with such advisors as
Executive considers appropriate in connection with this Agreement, and is not
subject to any covenants, agreements or restrictions, including without
limitation any covenants, agreements or restrictions arising out of Executive's
prior employment which would be breached or violated by Executive's execution of
this Agreement or by Executive's performance of his duties hereunder.
12. Other Matters
-------------
Executive agrees and acknowledges that the obligations owed to Executive
under this Agreement are solely the obligations of the Company, and that none of
the Companies' stockholders, directors, officers, affiliates, representatives,
agents or lenders will have any obligations or liabilities in respect of this
Agreement and the subject matter hereof.
13. Validity
--------
If, for any reason, any provision hereof shall be determined to be invalid
or unenforceable, the validity and effect of the other provisions hereof shall
not be affected thereby.
14. Severability
------------
Whenever possible, each provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or any other jurisdiction, but this Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been
-11-
<PAGE>
contained herein. If any court determines that any provision of Section 8 or any
---------
other provision hereof is unenforceable and therefore acts to reduce the scope
or duration of such provision, the provision in its reduced form shall then be
enforceable.
15. Waiver of Breach; Specific Performance
--------------------------------------
The waiver by the Company or Executive of a breach of any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any other breach of such other party. Each of the parties (and third party
beneficiaries) to this Agreement will be entitled to enforce its respective
rights under this Agreement and to exercise all other rights existing in its
favor. The parties hereto agree and acknowledge that money damages may not be
an adequate remedy for any breach of the provisions of Sections 7 and 8 of this
---------- -
Agreement and that any party (and third party beneficiaries) may in its sole
discretion apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive relief, including temporary restraining
orders, preliminary injunctions and permanent injunctions in order to enforce or
prevent any violations of the provisions of this Agreement. In the event either
party takes legal action to enforce any of the terms or provisions of this
Agreement, the nonprevailing party shall pay the successful party's costs and
expenses, including but not limited to, attorneys' fees, incurred in such
action.
16. Assignment; Third Parties
-------------------------
Neither the Executive nor the Company may assign, transfer, pledge,
hypothecate, encumber or otherwise dispose of this Agreement or any of his or
its respective rights or obligations hereunder, without the prior written
consent of the other. The parties agree and acknowledge that each of the
Companies and the stockholders and investors therein are intended to be third
party beneficiaries of, and have rights and interests in respect of, Executive's
agreements set forth in Sections 7 and 8.
---------- -
17. Amendment; Entire Agreement
---------------------------
This Agreement may not be changed orally but only by an agreement in
writing agreed to by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought. This Agreement embodies the
entire agreement and understanding of the parties hereto in respect of the
subject matter of this Agreement, and supersedes and replaces all prior
Agreements, understandings and commitments with respect to such subject matter.
-12-
<PAGE>
18. Litigation
----------
THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT THAT NO DOCTRINE OF
CHOICE OF LAW SHALL BE USED TO APPLY ANY LAW OTHER THAN THAT OF NEW YORK, AND NO
DEFENSE, COUNTERCLAIM OR RIGHT OF SET-OFF GIVEN OR ALLOWED BY THE LAWS OF ANY
OTHER STATE OR JURISDICTION, OR ARISING OUT OF THE ENACTMENT, MODIFICATION OR
REPEAL OF ANY LAW, REGULATION, ORDINANCE OR DECREE OF ANY FOREIGN JURISDICTION,
BE INTERPOSED IN ANY ACTION HEREON. SUBJECT TO SECTION 19, EXECUTIVE AND THE
----------
COMPANY AGREE THAT ANY ACTION OR PROCEEDING TO ENFORCE OR ARISING OUT OF THIS
AGREEMENT MAY BE COMMENCED IN THE COURTS OF THE STATE OF NEW YORK OR THE UNITED
STATES DISTRICT COURTS IN NEW YORK. EXECUTIVE AND THE COMPANY CONSENT TO SUCH
JURISDICTION, AGREE THAT VENUE WILL BE PROPER IN SUCH COURTS AND WAIVE ANY
OBJECTIONS BASED UPON FORUM NON CONVENIENS. THE CHOICE OF FORUM SET FORTH IN
--------------------
THIS SECTION 18 SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT
----------
OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO
ENFORCE SAME IN ANY OTHER JURISDICTION.
19. Arbitration
-----------
THE EXECUTIVE AND THE COMPANY AGREE THAT ANY DISPUTE BETWEEN OR AMONG THE
PARTIES TO THIS AGREEMENT RELATING TO OR IN RESPECT OF THIS AGREEMENT, ITS
NEGOTIATION, EXECUTION, PERFORMANCE, SUBJECT MATTER, OR ANY COURSE OF CONDUCT OR
DEALING OR ACTIONS UNDER OR IN RESPECT OF THIS AGREEMENT, INCLUDING, WITHOUT
LIMITATION ANY CLAIM UNDER THE SECURITIES ACT, THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED, ANY OTHER STATE OR FEDERAL LAW RELATING TO SECURITIES OR FRAUD
OR BOTH, THE RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT, AS AMENDED, OR
FEDERAL OR STATE COMMON LAW, SHALL BE SETTLED BY FINAL, BINDING AND NON-
APPEALABLE ARBITRATION IN NEW YORK, NEW YORK BY THREE ARBITRATORS. EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED IN THIS SECTION 19, THE ARBITRATION SHALL BE
----------
CONDUCTED IN ACCORDANCE WITH THE VOLUNTARY LABOR ARBITRATION RULES OF THE
AMERICAN ARBITRATION ASSOCIATION (THE "ASSOCIATION") THEN IN EFFECT. ONE OF THE
ARBITRATORS SHALL BE APPOINTED BY THE COMPANY, ONE SHALL BE APPOINTED BY THE
EXECUTIVE, AND THE THIRD SHALL BE APPOINTED BY THE FIRST TWO ARBITRATORS. IF
THE FIRST TWO ARBITRATORS CANNOT AGREE ON THE THIRD ARBITRATOR WITHIN 60 DAYS OF
THE APPOINTMENT OF THE SECOND ARBITRATOR, THEN THE THIRD ARBITRATOR SHALL BE
APPOINTED BY THE ASSOCIATION. UPON THE CONCLUSION OF ARBITRATION, EXECUTIVE OR
THE COMPANY MAY APPLY TO ANY COURT OF THE TYPE DESCRIBED IN SECTION 18 TO
----------
ENFORCE THE DECISION PURSUANT TO SUCH ARBITRATION. IN CONNECTION WITH THE
FOREGOING, THE PARTIES HEREBY WAIVE ANY RIGHTS TO A JURY TRIAL TO RESOLVE ANY
DISPUTES OR CLAIMS RELATING TO THIS AGREEMENT.
20. Further Action
--------------
-13-
<PAGE>
Executive and the Company agree to perform any further acts and to execute
and deliver any documents which may be reasonable to carry out the provisions
hereof.
21. Counterparts
------------
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
-14-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands as of the day
and year first written above.
EXECUTIVE:
/s/ Allan A. Huning
-----------------------------
Name: Allan A. Huning
FLEX-O-LITE, INC.
By /s/ A. Richard Caputo, Jr.
----------------------------
Name: A. Richard Caputo, Jr.
Title: Vice President
-15-
<PAGE>
EXHIBIT 10.31
EMPLOYMENT AND NON-INTERFERENCE AGREEMENT
-----------------------------------------
This Employment and Non-Interference Agreement, dated as of April 22, 1998
(this "Agreement"), by and between Mark R. Hefty (the "Executive") and Jackson
--------- ---------
Products, Inc., a Delaware corporation (the "Company").
-------
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company wishes to obtain the future services of the Executive
for the Company; and
WHEREAS, the Executive is willing, upon the terms and conditions herein set
forth, to provide services hereunder; and
WHEREAS, the Company wishes to secure the Executive's non-interference,
upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Nature of Employment
--------------------
Subject to Section 3, the Company hereby employs Executive, and Executive
---------
agrees to accept such employment, during the Term of Employment (as defined in
Section 3(a)), as President and Chief Operating Officer of the Company to
- -------------
undertake such duties and responsibilities as may be reasonably assigned to
Executive from time to time by the Board of Directors of the Company.
2. Extent of Employment
--------------------
(a) During the Term of Employment, the Executive shall perform his
obligations hereunder faithfully and to the best of his ability at the principal
executive offices of the Company, under the direction of the Board of Directors
of the Company, and shall abide by the rules, customs and usages from time to
time established by the Company.
(b) During the Term of Employment, the Executive shall devote all of his
business time, energy and skill as may be reasonably necessary for the
performance of his duties, responsibilities and obligations hereunder (except
for vacation periods and reasonable periods of illness or other incapacity),
consistent with past practices and norms in similar positions.
<PAGE>
(c) Nothing contained herein shall require Executive to follow any
directive or to perform any act which would violate any laws, ordinances,
regulations or rules of any governmental, regulatory or administrative body,
agent or authority, any court or judicial authority, or any public, private or
industry regulatory authority (collectively, the "Regulations"). Executive
-----------
shall act in good faith in accordance with all Regulations.
3. Term of Employment; Termination
-------------------------------
(a) The "Term of Employment" shall commence on the date hereof and shall
------------------
continue until April 22, 2001 (the "Initial Term"); provided, that, (i) such
------------ --------
term shall continue for the twelve month period following such Initial Term, and
for each twelve month period thereafter (each, an "Additional Term"), unless at
---------------
least 180 days prior to the scheduled expiration date of the Initial Term or any
Additional Term, either the Executive or the Company notifies the other of its
decision not to continue such term and (ii) should the Executive's employment by
the Company be earlier terminated pursuant to Section 3(b) or by the Executive
------------
pursuant to Section 3(c), the Term of Employment shall end on the date of such
------------
earlier termination.
(b) Subject to the payments contemplated by Section 3(f), Term of
------------
Employment may be terminated at any time by the Company:
(i) upon the death of Executive;
(ii) in the event that because of physical or mental disability
Executive is unable to perform, and does not perform, in the view of the
Company and as certified in writing by a competent medical physician, his
duties hereunder for a continuous period of three consecutive months or any
sixty working days out of any consecutive six month period;
(iii) for Cause (as defined in Section 3(d)) or Material Breach (as
------------
defined in Section 3(e));
-------------
(iv) upon the continuous poor or unacceptable performance of the
Executive's duties to the Company, in the sole judgment of the Board of
Directors of the Company, which has remained uncured for a period of 90
days after delivery of notice by the Company to the Executive of such
dissatisfaction with Executive's performance; or
(v) for any other reason or no reason, it being understood that no
reason is required.
Executive acknowledges that no representations or promises have been made
concerning the grounds for termination or the future operation of the Company's
business,
-2-
<PAGE>
and that nothing contained herein or otherwise stated by or on behalf of the
Company modifies or amends the right of the Company to terminate Executive at
any time, with or without Material Breach or Cause. Termination shall become
effective upon the delivery by the Company to the Executive of notice specifying
such termination and the reasons therefor (i.e., Section 3(b)(i)-(v)), subject
---
to the requirements for advance notice and an opportunity to cure provided in
this Agreement, if and to the extent applicable.
(c) Subject to the payments contemplated by Section 3(f), the Term of
------------
Employment may be terminated at any time by the Executive:
(i) upon the death of Executive;
(ii) in the event that because of physical or mental disability the
Executive is unable to perform, and does not perform, in the view of the
Company, and as certified by a competent medical physician, his duties
hereunder for continuous period of three consecutive months or any sixty
working days out of any consecutive six month period; or
(iii) as a result of a material reduction in Executive's authority,
perquisites, salary, position or responsibilities (other than such a
reduction which affects all of the Company's senior executives on a
substantially equal or proportionate basis), the relocation of the
Company's primary place of business or the relocation of Executive by the
Company to another Company office more than 50 miles from St. Louis,
Missouri, or the Company's willful, material violation of its obligations
under this Agreement, in each case, after 60 days' prior written notice to
the Company and its Board of Directors and the Company's failure thereafter
to cure such reduction or violation;
(d) For the purposes of this Section 3, "Cause" shall mean any of the
--------- -----
following:
(i) Executive's commission or conviction of any crime or criminal
offense involving monies or other property, or any felony;
(ii) Executive's commission or conviction of fraud or embezzlement;
or
(iii) Executive's material and knowing violation of any obligations
imposed upon Executive, personally, as opposed to upon the Company, whether
as a stockholder or otherwise, under this Agreement, the Management
Subscription Agreement, dated August 16, 1995, by and among the Company and
the signatories thereto, the Revolving Credit and Acquisition Loan
Agreement, dated as of April 22, 1998, among the Company, the Lenders party
thereto and BankBoston, N.A., as Agent (the "Credit Agreement"), the
----------------
Stockholders Agreement, dated as of August 16, 1995, by and among the
Company and the shareholders named therein, the Certificate
-3-
<PAGE>
of Incorporation or By-Laws of the Company; provided, that the Executive
--------
has been given notice and 90 days from such notice fails to cure the
violation;
(e) For the purposes of this Section 3, "Material Breach" shall mean any
--------- ---------------
of the following:
(i) Executive's breach of any of his fiduciary duties to the Company
or its stockholders or making of a willful misrepresentation or omission
which breach, misrepresentation or omission would reasonably be expected to
materially adversely affect the business, properties, assets, condition
(financial or other) or prospects of the Company;
(ii) Executive's willful, continual and material neglect or failure
to discharge his duties, responsibilities or obligations prescribed by this
Agreement or any other agreement between the Executive and the Company
(other than arising solely due to physical or mental disability);
(iii) Executive's habitual drunkenness or substance abuse which
materially interferes with Executive's ability to discharge his duties,
responsibilities or obligations prescribed by this Agreement or any other
agreement between the Executive and the Company;
(iv) Executive's violation of any non-competition or confidentiality
agreement with the Company, including without limitation, those set forth
in Sections 7 and 8 of this Agreement, or any other agreements with the
---------- -
Company; and
(v) Executive's gross neglect of his duties and responsibilities, as
determined by the Company's Board of Directors;
in each case, for purposes of clauses (i) through (v), after the Company or the
Board of Directors has provided Executive with 60 days' written notice of such
circumstances and the possibility of a Material Breach, and Executive fails to
cure such circumstances and Material Breach within those 60 days.
(f) In the event Executive's employment is terminated by the Company under
any circumstances described in Section 3(b)(v) or by Executive under the
---------------
circumstances described in Section 3(c)(iii), the Company will pay to Executive
-----------------
the full amounts to which he would be entitled under Section 4(a) and customary
------------
benefits through the Term of Employment. In the event Executive's employment is
terminated by the Company under the circumstances described in Section 3(b)(iv),
----------------
the Company will pay to Executive the full amounts to which he would be entitled
under Section 4(a) and customary benefits for the period from the effectiveness
------------
of termination through the date six months after the date of such termination.
In the event Executive's employment is terminated by the Company under the
circumstances described in Section 3(b)(i) or (ii) or by the Executive under
--------------- ----
Section 3(c)(i) or (ii), the
- -----------------------
-4-
<PAGE>
Company will pay to the Executive the full amounts to which he would be entitled
under Section 4(a) and customary benefits for the period from the effectiveness
------------
of termination through (y) the first anniversary of the date of such
termination, or (z) the third anniversary of the date of this Agreement,
whichever is greater. In the event Executive's employment is terminated by the
Company under any circumstances described in Section 3(b)(iii) or by Executive
-----------------
as a result of resignation or voluntary termination due to any circumstance
other than the material reductions, violations or relocation described in
Section 3(c)(iii) above, there will be no amounts owing by the Company to the
- -----------------
Executive, under Section 4 or any other part of this Agreement, from and after
---------
the effectiveness of termination. If the Company makes the payments required by
this Section 3(f), such payments will constitute severance and liquidated
------------
damages, and the Company will not be obligated to pay any further amounts to
Executive under this Agreement or otherwise be liable to Executive in connection
with any termination.
(g) All determinations pursuant to this Section 3 shall be made by the
---------
Company's Board of Directors (not including Executive) of the Company, in its
sole discretion, whose decision shall be final, conclusive and binding.
(h) Termination of the Term of Employment will not terminate Sections 7,
----------
8, 10 through 21, or any other provisions not associated specifically with the
- - -- --
Term of Employment.
(i) In the event the Term of Employment is terminated and the Company is
obligated to make payments pursuant to Section 3(f), Executive will not be
------------
obligated to seek or obtain alternative employment; provided, however, if he
-------- -------
nevertheless thereafter obtains alternative employment, then if and to the
extent Executive obtains such employment, the Company's payment obligations
under Section 3(f), including its obligation to provide insurance coverage, if
------------
any, will be mitigated and reduced by and to the extent of Executive's
compensation under such alternative employment during the period for which
payments are owed by the Company pursuant to Section 3(f). Moreover, in the
------------
event that, after the Restricted Period pursuant to Section 8(a), Executive is
------------
employed by or engaged in a Competitive Business as contemplated by Section
-------
8(a)(i), then the Company will thereupon cease and will be no longer obligated
- -------
to make payments under Section 3(f).
------------
(j) In the event the Term of Employment is terminated and the Company is
obligated to make payments pursuant to Section 3(f), Executive hereby waives any
------------
and all claims against the Company, and their respective officers, directors,
employees, agents, or representatives, stockholders and affiliates relating to
this Agreement and to his employment during the term hereof other than those
payments to be made pursuant to Section 3(f).
------------
4. Compensation. During the Term of Employment, the Company shall pay
------------
compensation to Executive as follows:
-5-
<PAGE>
(a) As base compensation for his services hereunder, in biweekly
installments, commencing on April 22, 1998, a base salary at a rate of $175,000
per annum, as increased on an annual basis to reflect the increase in the United
States Cost of Living Index for All Urban Consumer (CPI-U) for the St. Louis,
Missouri area (the "CPI-U Index"). The July 1995 CPI-U Index shall provide the
-----------
basis for calculations of such increases. Notwithstanding the minimum increase
set forth above, the Board of Directors, in its sole discretion, may establish a
higher compensation level.
(b) An annual bonus compensation of up to [FIFTY PERCENT] of his annual
base compensation based on Executive's performance as determined and approved by
the Board of Directors, in its sole discretion. Such bonus will be at the full
discretion of the Board of Directors, and may not be paid at all. Executive
acknowledges that no bonus has been agreed upon or promised. If the Board of
Directors decides to pay a bonus, it is to be paid within 30 days after the
issuance of audited financial statements for the Company. The Board of
Directors in its sole discretion may establish a higher bonus level based on the
performance of Executive.
5. Reimbursement of Expenses
-------------------------
During the Term of Employment, the Company shall reimburse Executive for
documented travel, entertainment and other expenses reasonably incurred by
Executive in connection with the performance of his duties hereunder and, in
each case, in accordance with the rules, customs and usages promulgated by the
Company from time to time in effect.
6. Benefits
--------
During the Term of Employment, the Executive shall be entitled to
perquisites, paid vacations and benefits (including health, short and long term
disability, pension and life insurance benefits consistent with past practice,
or as increased from time to time) established from time to time, by the Board
of Directors for executives of the Company, subject to the policies and
procedures in effect regarding participation in such benefits.
7. Confidential Information
------------------------
(a) During and after the Term of Employment, Executive will not, directly
or indirectly in one or a series of transactions, disclose to any person, or use
or otherwise exploit for the Executive's own benefit or for the benefit of
anyone other than the Company, any Confidential Information (as defined in
Section 9), whether prepared by Executive or not; provided, however, that any
- --------- -------- -------
Confidential Information may be disclosed to officers, representatives,
employees and agents of the Company who need to know such Confidential
Information in order to perform the services or conduct the operations required
or expected of them in the Business (as defined in Section 9). Executive shall
---------
use his best efforts to prevent the removal of any Confidential Information from
the premises of the Company, except as required in his normal course of
employment by the Company. Executive shall use
-6-
<PAGE>
commercially reasonable efforts to cause all persons or entities to whom any
Confidential Information shall be disclosed by him hereunder to observe the
terms and conditions set forth herein as though each such person or entity was
bound hereby. Executive shall have no obligation hereunder to keep confidential
any Confidential Information if and to the extent disclosure of any thereof is
specifically required by law; provided, however, that in the event disclosure is
-------- -------
required by applicable law, the Executive shall provide the Company with prompt
notice of such requirement, prior to making any disclosure, so that the Company
may seek an appropriate protective order. At the request of the Company,
Executive agrees to deliver to the Company, at any time during the Term of
Employment, or thereafter, all Confidential Information which he may possess or
control. Executive agrees that all Confidential Information of the Company
(whether now or hereafter existing) conceived, discovered or made by him during
the Term of Employment exclusively belongs to the Company (and not to
Executive). Executive will promptly disclose such Confidential Information to
the Company and perform all actions reasonably requested by the Company to
establish and confirm such exclusive ownership.
(b) The terms of this Section 7 shall survive the termination of this
---------
Agreement regardless of who terminates this Agreement, or the reasons therefor.
8. Non-Interference
----------------
(a) Executive acknowledges that the services to be provided give him the
opportunity to have special knowledge of the Company and its Confidential
Information and the capabilities of individuals employed by or affiliated with
the Company and that interference in these relationships would cause irreparable
injury to the Company. In consideration of this Agreement, Executive covenants
and agrees that:
(i) From the date hereof through the date that is 24 months after the
termination of the Term of Employment (the "Restricted Period"), Executive
-----------------
will not, without the express written approval of the Board of Directors of
the Company, anywhere in the Market, directly or indirectly, in one or a
series of transactions, own, manage, operate, control, invest or acquire an
interest in, or otherwise engage or participate in, whether as a
proprietor, partner, stockholder, lender, director, officer, employee,
joint venturer, investor, lessor, supplier, customer, agent, representative
or other participant, in any business which competes, directly or
indirectly, with the Business in the Market ("Competitive Business")
--------------------
without regard to (A) whether the Competitive Business has its office,
manufacturing or other business facilities within or without the Market,
(B) whether any of the activities of the Executive referred to above occur
or are performed within or without the Market or (C) whether the Executive
resides, or reports to an office, within or without the Market; provided,
--------
however, that (x) the Executive may, anywhere in the Market, directly or
-------
indirectly, in one or a series of transactions, own, invest or acquire an
interest in up to five percent (5%) of the capital stock of a corporation
whose capital stock is traded
-7-
<PAGE>
publicly, or that (y) Executive may accept employment with a successor
company to the Company.
(ii) During the Restricted Period (which shall not be reduced by any
period of violation of this Agreement by Executive or period which is
required for litigation to enforce the rights hereunder), Executive will
not without the express prior written approval of the Board of Directors of
the Company (A) directly or indirectly, in one or a series of transactions,
recruit, solicit or otherwise induce or influence any proprietor, partner,
stockholder, lender, director, officer, employee, sales agent, joint
venturer, investor, lessor, supplier, customer, agent, representative or
any other person which has a business relationship with the Company or had
a business relationship with the Company within the 24 month period
preceding the date of the incident in question, to discontinue, reduce or
modify such employment, agency or business relationship with the Company,
or (B) employ or seek to employ or cause any Competitive Business to employ
or seek to employ any person or agent who is then (or was at any time
within 24 months prior to the date the Executive or the Competitive
Business employs or seeks to employ such person) employed or retained by
the Company. Notwithstanding the foregoing, nothing herein shall prevent
the Executive from providing a letter of recommendation to an employee with
respect to a future employment opportunity.
(iii) The scope and term of this Section 8 would not preclude
---------
Executive from earning a living with an entity that is not a Competitive
Business.
(b) In the event that Executive breaches his obligations in any material
respect under Section 7 or this Section 8, the Company, in addition to pursuing
--------- ---------
all available remedies under this Agreement, at law or otherwise, and without
limiting its right to pursue the same shall cease all payments to the Executive
under this Agreement or any other agreement.
(c) The terms of this Section 8 shall survive the termination of this
---------
Agreement regardless of who terminates this Agreement, or the reasons therefor.
9. Definitions
-----------
"Business" means any business conducted, or engaged in, by the Company
--------
prior to the date hereof or at any time during the Term of Employment.
"Cause" is defined in Section 3(c).
----- ------------
"Companies" means Parent and its successors or any of its direct or
---------
indirect subsidiaries (including the Company), now or hereafter existing.
"Company" is defined in the introduction.
-------
-8-
<PAGE>
"Competitive Business" is defined in Section 8(a)(i).
-------------------- ---------------
"Confidential Information" means any confidential information including,
------------------------
without limitation, any study, data, calculations, software storage media or
other compilation of information, patent, patent application, copyright,
trademark, trade name, service mark, service name, "know-how", trade secrets,
customer lists, details of client or consultant contracts, pricing policies,
operational methods, marketing plans or strategies, product development
techniques or plans, business acquisition plans or any portion or phase of any
scientific or technical information, ideas, discoveries, designs, computer
programs (including source of object codes), processes, procedures, formulas,
improvements or other proprietary or intellectual property of the Company,
whether or not in written or tangible form, and whether or not registered, and
including all files, records, manuals, books, catalogues, memoranda, notes,
summaries, plans, reports, records, documents and other evidence thereof. The
term "Confidential Information" does not include, and there shall be no
------------------------
obligation hereunder with respect to, information that becomes generally
available to the public other than as a result of a disclosure by the Executive
not permissible hereunder.
"Executive" means Mark R. Hefty or his estate, if deceased.
---------
"Market" means any county in the United States of America and each similar
------
jurisdiction in any other country in which the Business was conducted by or
engaged in by the Company prior to the date hereof or is conducted or engaged
in, or is proposed to be conducted or engaged in, by the Company at any time
during the Term of Employment.
"Regulations" is defined in Section 2(c).
----------- ------------
"Restricted Period" is defined in Section 8(a)(i).
----------------- ---------------
"Term of Employment" is defined in Section 3(a).
------------------ ------------
10. Notice
------
Any notice, request, demand or other communication required or permitted to
be given under this Agreement shall be given in writing and if delivered
personally, or sent by certified or registered mail, return receipt requested,
as follows (or to such other addressee or address as shall be set forth in a
notice given in the same manner):
If to Executive: Mark R. Hefty
_______________________
_______________________
-9-
<PAGE>
If to Company: Jackson Products, Inc.
c/o The Jordan Company
9 West 57th Street, 40th Floor
New York, New York 10019
Attn: A. Richard Caputo, Jr.
Any such notices shall be deemed to be given on the date personally delivered or
such return receipt is issued.
11. Executive's Representation
--------------------------
Executive hereby warrants and represents to the Company that Executive has
carefully reviewed this Agreement and has consulted with such advisors as
Executive considers appropriate in connection with this Agreement, and is not
subject to any covenants, agreements or restrictions, including without
limitation any covenants, agreements or restrictions arising out of Executive's
prior employment which would be breached or violated by Executive's execution of
this Agreement or by Executive's performance of his duties hereunder.
12. Other Matters
-------------
Executive agrees and acknowledges that the obligations owed to Executive
under this Agreement are solely the obligations of the Company, and that none of
the Companies' stockholders, directors, officers, affiliates, representatives,
agents or lenders will have any obligations or liabilities in respect of this
Agreement and the subject matter hereof.
13. Validity
--------
If, for any reason, any provision hereof shall be determined to be invalid
or unenforceable, the validity and effect of the other provisions hereof shall
not be affected thereby.
14. Severability
------------
Whenever possible, each provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or any other jurisdiction, but this Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein. If any court determines that any
provision of Section 8 or any other provision hereof is unenforceable and
---------
therefore acts to reduce the scope or duration of such provision, the provision
in its reduced form shall then be enforceable.
-10-
<PAGE>
15. Waiver of Breach; Specific Performance
--------------------------------------
The waiver by the Company or Executive of a breach of any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any other breach of such other party. Each of the parties (and third party
beneficiaries) to this Agreement will be entitled to enforce its respective
rights under this Agreement and to exercise all other rights existing in its
favor. The parties hereto agree and acknowledge that money damages may not be
an adequate remedy for any breach of the provisions of Sections 7 and 8 of this
---------- -
Agreement and that any party (and third party beneficiaries) may in its sole
discretion apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive relief, including temporary restraining
orders, preliminary injunctions and permanent injunctions in order to enforce or
prevent any violations of the provisions of this Agreement. In the event either
party takes legal action to enforce any of the terms or provisions of this
Agreement, the nonprevailing party shall pay the successful party's costs and
expenses, including but not limited to, attorneys' fees, incurred in such
action.
16. Assignment; Third Parties
-------------------------
Neither the Executive nor the Company may assign, transfer, pledge,
hypothecate, encumber or otherwise dispose of this Agreement or any of his or
its respective rights or obligations hereunder, without the prior written
consent of the other. The parties agree and acknowledge that each of the
Companies and the stockholders and investors therein are intended to be third
party beneficiaries of, and have rights and interests in respect of, Executive's
agreements set forth in Sections 7 and 8.
---------- -
17. Amendment; Entire Agreement
---------------------------
This Agreement may not be changed orally but only by an agreement in
writing agreed to by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought. This Agreement embodies the
entire agreement and understanding of the parties hereto in respect of the
subject matter of this Agreement, and supersedes and replaces all prior
Agreements, understandings and commitments with respect to such subject matter.
18. Litigation
----------
THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT THAT NO DOCTRINE OF
CHOICE OF LAW SHALL BE USED TO APPLY ANY LAW OTHER THAN THAT OF NEW YORK, AND NO
DEFENSE, COUNTERCLAIM OR RIGHT OF SET-OFF GIVEN OR ALLOWED BY THE LAWS OF ANY
OTHER STATE OR JURISDICTION, OR ARISING OUT OF THE ENACTMENT, MODIFICATION OR
REPEAL OF ANY LAW, REGULATION, ORDINANCE OR
-11-
<PAGE>
DECREE OF ANY FOREIGN JURISDICTION, BE INTERPOSED IN ANY ACTION HEREON. SUBJECT
TO SECTION 19, EXECUTIVE AND THE COMPANY AGREE THAT ANY ACTION OR PROCEEDING TO
----------
ENFORCE OR ARISING OUT OF THIS AGREEMENT MAY BE COMMENCED IN THE COURTS OF THE
STATE OF NEW YORK OR THE UNITED STATES DISTRICT COURTS IN NEW YORK. EXECUTIVE
AND THE COMPANY CONSENT TO SUCH JURISDICTION, AGREE THAT VENUE WILL BE PROPER IN
SUCH COURTS AND WAIVE ANY OBJECTIONS BASED UPON FORUM NON CONVENIENS. THE CHOICE
--------------------
OF FORUM SET FORTH IN THIS SECTION 18 SHALL NOT BE DEEMED TO PRECLUDE THE
----------
ENFORCEMENT OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION
UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER JURISDICTION.
19. Arbitration
-----------
THE EXECUTIVE AND THE COMPANY AGREE THAT ANY DISPUTE BETWEEN OR AMONG THE
PARTIES TO THIS AGREEMENT RELATING TO OR IN RESPECT OF THIS AGREEMENT, ITS
NEGOTIATION, EXECUTION, PERFORMANCE, SUBJECT MATTER, OR ANY COURSE OF CONDUCT OR
DEALING OR ACTIONS UNDER OR IN RESPECT OF THIS AGREEMENT, INCLUDING, WITHOUT
LIMITATION ANY CLAIM UNDER THE SECURITIES ACT, THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED, ANY OTHER STATE OR FEDERAL LAW RELATING TO SECURITIES OR FRAUD
OR BOTH, THE RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT, AS AMENDED, OR
FEDERAL OR STATE COMMON LAW, SHALL BE SETTLED BY FINAL, BINDING AND NON-
APPEALABLE ARBITRATION IN NEW YORK, NEW YORK BY THREE ARBITRATORS. EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED IN THIS SECTION 19, THE ARBITRATION SHALL BE
----------
CONDUCTED IN ACCORDANCE WITH THE VOLUNTARY LABOR ARBITRATION RULES OF THE
AMERICAN ARBITRATION ASSOCIATION (THE "ASSOCIATION") THEN IN EFFECT. ONE OF THE
ARBITRATORS SHALL BE APPOINTED BY THE COMPANY, ONE SHALL BE APPOINTED BY THE
EXECUTIVE, AND THE THIRD SHALL BE APPOINTED BY THE FIRST TWO ARBITRATORS. IF
THE FIRST TWO ARBITRATORS CANNOT AGREE ON THE THIRD ARBITRATOR WITHIN 60 DAYS OF
THE APPOINTMENT OF THE SECOND ARBITRATOR, THEN THE THIRD ARBITRATOR SHALL BE
APPOINTED BY THE ASSOCIATION. UPON THE CONCLUSION OF ARBITRATION, EXECUTIVE OR
THE COMPANY MAY APPLY TO ANY COURT OF THE TYPE DESCRIBED IN SECTION 18 TO
----------
ENFORCE THE DECISION PURSUANT TO SUCH ARBITRATION. IN CONNECTION WITH THE
FOREGOING, THE PARTIES HEREBY WAIVE ANY RIGHTS TO A JURY TRIAL TO RESOLVE ANY
DISPUTES OR CLAIMS RELATING TO THIS AGREEMENT.
20. Further Action
--------------
-12-
<PAGE>
Executive and the Company agree to perform any further acts and to execute
and deliver any documents which may be reasonable to carry out the provisions
hereof.
21. Counterparts
------------
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
-13-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands as of the day
and year first written above.
EXECUTIVE:
/s/ Mark R. Hefty
-----------------------------------
Name: Mark R. Hefty
JACKSON PRODUCTS, INC.
By: /s/ Christopher T. Paule
--------------------------------
Name: Christopher T. Paule
Title: Vice President
-14-
<PAGE>
EXHIBIT 10.32
EMPLOYMENT AND NON-INTERFERENCE AGREEMENT
-----------------------------------------
This Employment and Non-Interference Agreement, dated as of April 23, 1998
(this "Agreement"), by and among Edward D. Surjan, Jr. (the "Executive"),
--------- ---------
Crystaloid Technologies, Inc., a Delaware corporation (the "Company") and a
-------
wholly-owned subsidiary of Jackson Products, Inc., a Delaware corporation (the
"Parent"), and Parent.
------
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company wishes to obtain the future services of the Executive
for the Company; and
WHEREAS, the Executive is willing, upon the terms and conditions herein set
forth, to provide services hereunder; and
WHEREAS, Parent and the Company wishes to secure the Executive's non-
interference, upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Nature of Employment
--------------------
Subject to Section 3, the Company hereby employs Executive, and Executive
---------
agrees to accept such employment, during the Term of Employment (as defined in
Section 3(a)), as President of the Company and to undertake such duties and
- -------------
responsibilities as may be reasonably assigned to Executive from time to time by
the Board of Directors of the Company or the appropriately authorized and
designated officers of the Company or the Parent.
2. Extent of Employment
--------------------
(a) During the Term of Employment, the Executive shall perform his
obligations hereunder faithfully and to the best of his ability at the principal
executive offices of the Company in Hudson, Ohio, under the direction of the
Board of Directors of the Company, and shall abide by the rules, customs and
usages from time to time established by each of the Parent and the Company.
(b) During the Term of Employment, the Executive shall devote
substantially all of his business time, energy and skill as may be reasonably
necessary for the performance of
<PAGE>
his duties, responsibilities and obligations hereunder (except for vacation
periods and reasonable periods of illness or other incapacity), consistent with
past practices and norms in similar positions.
(c) Nothing contained herein shall require Executive to follow any
directive or to perform any act which would violate any laws, ordinances,
regulations or rules of any governmental, regulatory or administrative body,
agent or authority, any court or judicial authority, or any public, private or
industry regulatory authority (collectively, the "Regulations"). Executive
-----------
shall act in good faith in accordance with all Regulations.
3. Term of Employment; Termination
-------------------------------
(a) The "Term of Employment" shall commence on the date hereof and shall
------------------
continue for a term of four years (the "Initial Term"), subject to automatic
------------
renewal for additional periods of one (1) year after the Initial Term (the
"Additional Terms") unless at least ninety (90) days prior to the scheduled
----------------
expiration date of the Initial Term or subsequent Additional Term, either the
Executive or the Company notifies the other of its decision not to renew. Should
the Executive's employment by the Company be earlier terminated pursuant to
Section 3(b) or by the Executive pursuant to Section 3(c), the Term of
- ------------ ------------
Employment shall end on the date of such earlier termination.
(b) Subject to the payments contemplated by Section 3(e), the Term of
------------
Employment may be terminated at any time by the Company:
(i) upon the death of Executive;
(ii) in the event that because of physical or mental disability
Executive is unable to perform, and does not perform, substantially all of
his duties hereunder for a continuous period of ninety (90) days as
certified in writing by an experienced, recognized physician specializing
in such disabilities, which physician shall be reasonably acceptable to the
Company and the Executive;
(iii) for Cause (as defined in Section 3(d));
-------------
(iv) upon the continuous poor or unacceptable performance of the
Executive's duties to the Company, in the sole judgment of the Board of
Directors of the Company, which has remained uncured for a period of thirty
(30) days after delivery of written notice by the Company to the Executive
of such dissatisfaction with Executive's performance and specifying the
Company's points of dissatisfaction; or
(v) for any other reason or no reason, it being understood that no
reason is required.
-2-
<PAGE>
Executive acknowledges that no representations or promises have been made
concerning the grounds for termination or the future operation of the Company's
business, and that nothing contained herein or otherwise stated by or on behalf
of the Company modifies or amends the right of the Company to terminate
Executive at any time, with or without Cause. Termination shall become
effective upon the delivery by the Company to the Executive of notice specifying
such termination and the reasons therefor (i.e., Section 3(b)(i)-(v)), subject
----
to the requirements for advance notice and an opportunity to cure provided in
this Agreement, if and to the extent applicable.
(c) Subject to the payments contemplated by Section 3(e), the Term of
------------
Employment may be terminated at any time by the Executive:
(i) upon the death of Executive;
(ii) in the event that because of physical or mental disability
Executive is unable to perform, and does not perform, substantially all of
his duties hereunder for a continuous period of ninety (90) days as
certified in writing by an experienced, recognized physician specializing
in such disabilities, which physician shall be reasonably acceptable to the
Company and the Executive;
(iii) as a result of a material reduction in Executive's authority,
perquisites, salary, position or responsibilities (other than such a
reduction which affects all of the Company's senior executives on a
substantially equal or proportionate basis) or the Company's willful,
material violation of its obligations under this Agreement, in each case,
after thirty (30) days prior written notice to the Company and its Board of
Directors and the Company's failure thereafter to cure such reduction or
violation; or
(iv) voluntarily or for any reason not referred to in clauses (i)
through (iii), or no reason, in each case, after ninety (90) days prior
written notice to the Company.
(d) For the purposes of this Section 3:
---------
"Cause" shall mean any of the following: (i) Executive's conviction for
-----
any crime or criminal offense involving the unlawful theft or conversion of
substantial monies or other property or any other felony (other than a criminal
offense arising solely under a statutory provision imposing criminal liability
on the Executive on a per se basis due to the offices held by the Executive),
--- --
including fraud or embezzlement; (ii) Executive's breach of any of his fiduciary
duties to the Company or its stockholders or making of a willful
misrepresentation or omission which breach, misrepresentation or omission would
reasonably be expected to materially adversely affect the business, properties,
assets, condition (financial or other) or prospects of the Parent or the
Company; (iii) Executive's willful, continual and material neglect or failure to
discharge his duties, responsibilities or obligations prescribed by Sections 1
----------
and 2 (other than arising solely due to physical or mental disability); (iv)
-
Executive's habitual drunkenness or substance abuse which materially interferes
with
-3-
<PAGE>
Executive's ability to discharge his duties, responsibilities or obligations
prescribed by Sections 1 and 2; (v) Executive's willful and material breach of
---------- -
any non-competition or confidentiality agreement with the Company, including
without limitation, those set forth in Sections 7 and 8 of this Agreement; and
---------- -
(vi) Executive's gross neglect of his duties and responsibilities, as determined
by the Company.
(e) In the event Executive's employment is terminated pursuant to Section
-------
3(b)(i), 3(b)(ii), 3(b)(v), 3(c)(i), 3(c)(ii) or 3(c)(iii), the Company will pay
- ------- -------- ------- ------- -------- ---------
to Executive (or his estate or representative) the full amounts to which he
would be entitled under Section 4(a) and customary benefits as provided for in
------------
Section 6 for the period from the date of termination to the second anniversary
- ---------
of such termination. In the event Executive's employment is terminated pursuant
to Section 3(b)(iv), the Company will pay to Executive the full amounts to which
----------------
he would be entitled under Section 4(a) and customary benefits as provided for
------------
in Section 6 for the period from the date of termination until thirty (30) days
---------
after the date of such termination. In the event Executive's employment is
terminated pursuant to Section 3(b)(iii) or 3(c)(iv), there will be no amounts
----------------- --------
owing by the Company to the Executive under Section 4 or any other provision of
---------
this Agreement, from and after the date of termination. If the Company makes any
payments required by this Section 3(e), such payments will constitute severance
------------
and liquidated damages, and the Company will not be obligated to pay any further
amounts to Executive under this Agreement or otherwise be liable to Executive in
connection with his termination.
(f) All determinations pursuant to this Section 3 (other than pursuant to
---------
Section 3(b)(ii) or 3(c)(ii)) shall be made by the Company's Board of Directors,
- ---------------- --------
in its sole discretion, whose decision shall be final, conclusive and binding.
(g) Termination of the Term of Employment will not terminate the parties'
respective obligations under Sections 7, 8, 10 through 20, or any other
---------- - -- --
provisions not associated specifically with the Term of Employment.
(h) In the event the Term of Employment is terminated and the Company is
obligated to make payments pursuant to Section 3(e), Executive will not be
------------
obligated to seek or obtain alternative employment; provided, however, if he
-------- -------
nevertheless thereafter obtains alternative employment, then if and to the
extent Executive obtains such employment, the Company's obligation to provide
insurance coverage and benefits, if any, under Section 3(e), will be mitigated
------------
and reduced by and to the extent of Executive's insurance coverage and benefits
under such alternative employment during the period for which such insurance and
benefits are owed by the Company pursuant to Section 3(e). Moreover, in the
------------
event that, after the Restricted Period pursuant to Section 8(a), Executive is
------------
employed by or engaged in a Competitive Business as contemplated by Section
-------
8(a)(i), then the Company will thereupon cease and will be no longer obligated
- -------
to make any payments otherwise required under Section 3(e).
------------
-4-
<PAGE>
(i) In the event the Term of Employment is terminated and the Company is
obligated to make payments pursuant to Section 3(e), Executive hereby waives any
------------
and all claims against the Company, the Parent and their respective officers,
directors, employees, agents, or representatives, stockholders and affiliates
relating to his employment during the term hereof and this Agreement.
4. Compensation.
------------
(a) During the Term of Employment, the Company shall pay compensation to
Executive as base compensation for his services hereunder, in bi-weekly
installments, a base salary at a rate of $90,000 per annum. Such amounts may be
adjusted at the discretion of the Company based upon a review of Executive's
performance by the Company which will take place on or about April 1 of each
year.
(b) An annual bonus compensation based on Executive's performance as
determined and approved by the Board of Directors. Such bonus will be at the
full discretion of the Board of Directors, and may not be paid at all.
Executive acknowledges that no bonus has been agreed upon or promised. If the
Board of Directors decides to pay a bonus, it is to be paid within thirty (30)
days after the issuance of audited financial statements for the Company.
5. Reimbursement of Expenses
-------------------------
During the Term of Employment, the Company shall reimburse Executive for
documented travel, entertainment and other expenses reasonably incurred by
Executive in connection with the performance of his duties hereunder and, in
each case, in accordance with the rules, customs and usages promulgated by the
Company from time to time in effect.
6. Benefits
--------
During the Term of Employment, the Executive shall be entitled to
perquisites, paid vacations and benefits (including health, short and long term
disability, pension and life insurance benefits consistent with past practice,
or as increased from time to time) established from time to time, by the Board
of Directors for executives of the Company, subject to the policies and
procedures in effect regarding participation in such benefits.
7. Confidential Information
------------------------
(a) Executive acknowledges that his employment hereunder gives him access
to Confidential Information relating to the Companies' Business and its
customers which must remain confidential. Executive acknowledges that this
information is valuable, special, and a unique asset of the Companies' Business,
and that it has been and will be developed by the Companies at considerable
effort and expense, and if it were to be known and used by others
-5-
<PAGE>
engaged in a Competitive Business, it would be harmful and detrimental to the
interests of the Companies. In consideration of the foregoing and this
Agreement, Executive hereby agrees and covenants that, during and after the Term
of Employment, Executive will not, directly or indirectly in one or a series of
transactions, disclose to any person, or use or otherwise exploit for the
Executive's own benefit or for the benefit of anyone other than the Companies,
any Confidential Information (as defined in Section 9), whether prepared by
---------
Executive or not; provided, however, that any Confidential Information may be
-------- -------
disclosed to officers, representatives, employees and agents of the Companies
who need to know such Confidential Information in order to perform the services
or conduct the operations required or expected of them in the Business (as
defined in Section 9). Executive shall use his best efforts to prevent the
---------
removal of any Confidential Information from the premises of the Company, except
as required in his normal course of employment by the Company. Executive shall
use commercially reasonable efforts to cause all persons or entities to whom any
Confidential Information shall be disclosed by him hereunder to observe the
terms and conditions set forth herein as though each such person or entity was
bound hereby. Executive shall have no obligation hereunder to keep confidential
any Confidential Information if and to the extent disclosure of any thereof is
specifically required by law; provided, however, that in the event disclosure is
-------- -------
required by applicable law, the Executive shall provide the Company with prompt
notice of such requirement, prior to making any disclosure, so that the Company
may seek an appropriate protective order. At the request of the Company,
Executive agrees to deliver to the Company, at any time during the Term of
Employment, or thereafter, all Confidential Information which he may possess or
control. Executive agrees that all Confidential Information of the Companies and
its subsidiaries (whether now or hereafter existing) conceived, discovered or
made by him during the Term of Employment exclusively belongs to the Companies
(and not to Executive). Executive will promptly disclose such Confidential
Information to the Company and perform all actions reasonably requested by the
Company to establish and confirm such exclusive ownership.
(b) The terms of this Section 7 shall survive the termination of this
---------
Agreement regardless of who terminates this Agreement, or the reasons therefor.
8. Non-Interference
----------------
(a) Executive acknowledges that the services to be provided give him the
opportunity to have special knowledge of the Companies and its Confidential
Information and the capabilities of individuals employed by or affiliated with
the Company and that interference in these relationships would cause irreparable
injury to the Company. In consideration of this Agreement, Executive covenants
and agrees that:
(i) From the date hereof through the date that is 24 months after the
termination of the Term of Employment (the "Restricted Period"), Executive
-----------------
will not, without the express written approval of the Board of Directors of
the Company, anywhere in the Market, directly or indirectly, in one or a
series of transactions, own, manage, operate, control, invest or acquire an
interest in, or otherwise engage or
-6-
<PAGE>
participate in, whether as a proprietor, partner, stockholder, lender,
director, officer, employee, joint venturer, investor, lessor, supplier,
customer, agent, representative or other participant, in any business which
competes, directly or indirectly, with the Business in the Market
("Competitive Business") without regard to (A) whether the Competitive
--------------------
Business has its office, manufacturing or other business facilities within
or without the Market, (B) whether any of the activities of the Executive
referred to above occur or are performed within or without the Market or
(C) whether the Executive resides, or reports to an office, within or
without the Market; provided, however, that (x) the Executive may, anywhere
-------- -------
in the Market, directly or indirectly, in one or a series of transactions,
own, invest or acquire an interest in up to one percent (1%) of the capital
stock of a corporation whose capital stock is traded publicly, or that (y)
Executive may accept employment with a successor company to the Company.
(ii) During the Restricted Period (which shall not be reduced by any
period of violation of this Agreement by Executive or period which is
required for litigation to enforce the rights hereunder), Executive will
not without the express prior written approval of the Board of Directors of
the Company (A) directly or indirectly, in one or a series of transactions,
recruit, solicit or otherwise induce or influence any proprietor, partner,
stockholder, lender, director, officer, employee, sales agent, joint
venturer, investor, lessor, supplier, customer, agent, representative or
any other person which has a business relationship with the Company or had
a business relationship with the Company within the 24 month period
preceding the date of the incident in question, to discontinue, reduce or
modify such employment, agency or business relationship with the Company,
or (B) employ or seek to employ or cause any Competitive Business to employ
or seek to employ any person or agent who is then (or was at any time
within 24 months prior to the date the Executive or the Competitive
Business employs or seeks to employ such person) employed or retained by
the Company. Notwithstanding the foregoing, nothing herein shall prevent
the Executive from providing a letter of recommendation to an employee with
respect to a future employment opportunity.
(iii) The scope and term of this Section 8 would not preclude
---------
Executive from earning a living with an entity that is not a Competitive
Business.
(b) In the event that Executive breaches his obligations in any material
respect under Section 7 or this Section 8, the Company, in addition to pursuing
--------- ---------
all available remedies under this Agreement, at law or otherwise, and without
limiting its right to pursue the same shall cease all payments to the Executive
under this Agreement or any other agreement.
-7-
<PAGE>
(c) The terms of this Section 8 shall survive the termination of this
---------
Agreement regardless of who terminates this Agreement, or the reasons therefor.
9. Definitions
-----------
"Business" means any business conducted, or engaged in, by the Companies
--------
prior to the date hereof or at any time during the Term of Employment.
"Cause" is defined in Section 3(c).
----- ------------
"Companies" means Parent and its successors or any of its direct or
---------
indirect subsidiaries (including the Company), now or hereafter existing.
"Company" is defined in the introduction.
-------
"Competitive Business" is defined in Section 8(a)(i).
-------------------- ---------------
"Confidential Information" means any confidential information including,
------------------------
without limitation, any study, data, calculations, software storage media or
other compilation of information, patent, patent application, copyright,
trademark, trade name, service mark, service name, "know-how", trade secrets,
customer lists, details of client or consultant contracts, pricing policies,
operational methods, marketing plans or strategies, product development
techniques or plans, business acquisition plans or any portion or phase of any
scientific or technical information, ideas, discoveries, designs, computer
programs (including source of object codes), processes, procedures, formulas,
improvements or other proprietary or intellectual property of the Companies,
whether or not in written or tangible form, and whether or not registered, and
including all files, records, manuals, books, catalogues, memoranda, notes,
summaries, plans, reports, records, documents and other evidence thereof. The
term "Confidential Information" does not include, and there shall be no
------------------------
obligation hereunder with respect to, information that becomes generally
available to the public other than as a result of a disclosure by the Executive
not permissible hereunder or information acquired by the Executive completely
independently, related in no way to the Business and due in no part whatsoever
to his position with the Company.
"Executive" means Edward D. Surjan, Jr. or his estate, if deceased.
---------
"Market" means any county in the United States of America and each similar
------
jurisdiction in any other country in which the Business was conducted by or
engaged in by the Companies prior to the date hereof or is conducted or engaged
in, or is proposed to be conducted or engaged in, by the Companies at any time
during the Term of Employment.
"Parent" is defined in the introduction.
------
"Regulations" is defined in Section 2(c).
----------- ------------
-8-
<PAGE>
"Restricted Period" is defined in Section 8(a)(i).
----------------- ---------------
"Term of Employment" is defined in Section 3(a).
------------------ ------------
10. Notice
------
Any notice, request, demand or other communication required or permitted to
be given under this Agreement shall be given in writing and if delivered
personally, or sent by certified or registered mail, return receipt requested,
as follows (or to such other addressee or address as shall be set forth in a
notice given in the same manner):
If to Executive: Edward D. Surjan, Jr.
3026 Warrington Road
Shaker Heights, Ohio 44120
If to Company: Crystaloid Technologies, Inc.
c/o Jackson Products, Inc.
2997 Clarkson Road
Chesterfield, Missouri 63017
Attention: Christopher T. Paule
Facsimile: (314) 207-2800
with a copy to:
Mayer, Brown & Platt
1675 Broadway, Suite 1900
New York, New York 10019
Attention: James B. Carlson
Facsimile: (212) 262-1910
Any such notices shall be deemed to be given on the date personally delivered or
such return receipt is issued.
11. Previous Agreements; Executive's Representation
-----------------------------------------------
(a) Executive hereby cancels, voids and renders without force or effect
any previous employment or severance agreement by and between Executive and the
Company.
(b) Executive hereby warrants and represents to the Company that Executive
has carefully reviewed this Agreement and has consulted with such advisors as
Executive considers appropriate in connection with this Agreement, and is not
subject to any covenants, agreements or restrictions, including without
limitation any covenants, agreements or restrictions arising out of Executive's
prior employment which would be breached or violated
-9-
<PAGE>
by Executive's execution of this Agreement or by Executive's performance of his
duties hereunder.
12. Other Matters
-------------
Executive agrees and acknowledges that the obligations owed to Executive
under this Agreement are solely the obligations of the Company, and that none of
the Companies' stockholders, directors, officers, affiliates, representatives,
agents or lenders will have any obligations or liabilities in respect of this
Agreement and the subject matter hereof.
13. Validity
--------
If, for any reason, any provision hereof shall be determined to be invalid
or unenforceable, the validity and effect of the other provisions hereof shall
not be affected thereby.
14. Severability
------------
Whenever possible, each provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or any other jurisdiction, but this Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein. If any court determines that any
provision of Section 8 or any other provision hereof is unenforceable and
---------
therefore acts to reduce the scope or duration of such provision, the provision
in its reduced form shall then be enforceable.
15. Waiver of Breach; Specific Performance
--------------------------------------
The waiver by the Company or Executive of a breach of any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any other breach of such other party. Each of the parties (and third party
beneficiaries) to this Agreement will be entitled to enforce its respective
rights under this Agreement and to exercise all other rights existing in its
favor. The parties hereto agree and acknowledge that money damages may not be
an adequate remedy for any breach of the provisions of Sections 7 and 8 of this
---------- -
Agreement and that any party (and third party beneficiaries) may in its sole
discretion apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive relief, including temporary restraining
orders, preliminary injunctions and permanent injunctions in order to enforce or
prevent any violations of the provisions of this Agreement.
-10-
<PAGE>
16. Assignment; Third Parties
-------------------------
Neither the Executive nor the Company may assign, transfer, pledge,
hypothecate, encumber or otherwise dispose of this Agreement or any of his or
its respective rights or obligations hereunder, without the prior written
consent of the other; provided, however, that the Company may, upon prior
-------- -------
written notice (i) assign any or all of its rights and interests hereunder to
one or more of its affiliates, (ii) designate one or more of its affiliates to
perform its obligations hereunder (in any or all of which cases the Company
nonetheless shall remain responsible for the performance of all of its
obligations hereunder) and (iii) grant a security interest in respect of its
rights hereunder to its lenders. The parties agree and acknowledge that each of
the Companies and their respective lenders are intended to be third party
beneficiaries of, and have rights and interests in respect of, Executive's
agreements set forth in Sections 7 and 8.
---------- -
17. Amendment; Entire Agreement
---------------------------
This Agreement may not be changed orally but only by an agreement in
writing agreed to by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought. This Agreement embodies the
entire agreement and understanding of the parties hereto in respect of the
subject matter of this Agreement, and supersedes and replaces all prior
Agreements, understandings and commitments with respect to such subject matter.
18. Litigation
----------
THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MISSOURI, EXCEPT THAT NO DOCTRINE OF
CHOICE OF LAW SHALL BE USED TO APPLY ANY LAW OTHER THAN THAT OF MISSOURI, AND NO
DEFENSE, COUNTERCLAIM OR RIGHT OF SET-OFF GIVEN OR ALLOWED BY THE LAWS OF ANY
OTHER STATE OR JURISDICTION, OR ARISING OUT OF THE ENACTMENT, MODIFICATION OR
REPEAL OF ANY LAW, REGULATION, ORDINANCE OR DECREE OF ANY FOREIGN JURISDICTION,
BE INTERPOSED IN ANY ACTION HEREON. EXECUTIVE AND THE COMPANY AGREE THAT ANY
ACTION OR PROCEEDING TO ENFORCE OR ARISING OUT OF THIS AGREEMENT MAY BE
COMMENCED IN THE COURTS OF THE STATE OF MISSOURI OR THE UNITED STATES DISTRICT
COURTS IN ST. LOUIS, MISSOURI. EXECUTIVE AND THE COMPANY CONSENT TO SUCH
JURISDICTION, AGREE THAT VENUE WILL BE PROPER IN SUCH COURTS AND WAIVE ANY
OBJECTIONS BASED UPON FORUM NON CONVENIENS. THE CHOICE OF FORUM SET FORTH IN
--------------------
THIS SECTION 18 SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT
----------
OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO
ENFORCE SAME IN ANY OTHER JURISDICTION.
-11-
<PAGE>
19. Further Action
--------------
Executive and the Company agree to perform any further acts and to execute
and deliver any documents which may be reasonable to carry out the provisions
hereof.
20. Counterparts
------------
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
-12-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands as of the day
and year first written above.
EXECUTIVE:
/s/ Edward D. Surjan, Jr.
---------------------------------------
Name: Edward D. Surjan, Jr.
CRYSTALOID TECHNOLOGIES, INC.
By /s/ Christopher T. Paule
-------------------------------------
Name: Christopher T. Paule
Title: Vice President
JACKSON PRODUCTS, INC.
By /s/ Christopher T. Paule
-------------------------------------
Name: Christopher T. Paule
Title: Vice President
-13-
<PAGE>
EXHIBIT 10.33
EMPLOYMENT AND NON-INTERFERENCE AGREEMENT
-----------------------------------------
This Employment and Non-Interference Agreement, dated as of April 23, 1998
(this "Agreement"), by and between Edward M. Stiles (the "Executive") and
---------
Crystaloid Technologies, Inc., a Delaware corporation (the "Company"), and a
-------
wholly-owned subsidiary of Jackson Products, Inc., a Delaware corporation (the
"Parent");
------
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company wishes to obtain the future services of the Executive
for the Company; and
WHEREAS, the Executive is willing, upon the terms and conditions herein set
forth, to provide services hereunder; and
WHEREAS, the Company wishes to secure the Executive's non-interference,
upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Nature of Employment
--------------------
Subject to Section 3, the Company hereby employs Executive, and Executive
---------
agrees to accept such employment, during the Term of Employment (as defined in
Section 3(a)), as Director of Engineering of the Company and to undertake such
- -------------
duties and responsibilities as may be reasonably assigned to Executive from time
to time by the Board of Directors of the Company or the appropriately authorized
and designated officers of the Company or the Parent.
2. Extent of Employment
--------------------
(a) During the Term of Employment, the Executive shall perform his
obligations hereunder faithfully and to the best of his ability at the principal
executive offices of the Company, under the direction of the Board of Directors
of the Company, and shall abide by the rules, customs and usages from time to
time established by each of the Parent and the Company.
(b) During the Term of Employment, the Executive shall devote all of his
business time, energy and skill as may be reasonably necessary for the
performance of his duties,
<PAGE>
responsibilities and obligations hereunder (except for vacation periods and
reasonable periods of illness or other incapacity), consistent with past
practices and norms in similar positions.
(c) Nothing contained herein shall require Executive to follow any
directive or to perform any act which would violate any laws, ordinances,
regulations or rules of any governmental, regulatory or administrative body,
agent or authority, any court or judicial authority, or any public, private or
industry regulatory authority (collectively, the "Regulations"). Executive
-----------
shall act in good faith in accordance with all Regulations.
3. Term of Employment; Termination
-------------------------------
(a) The "Term of Employment" shall commence on the date hereof and shall
------------------
continue for a term of two years. Should the Executive's employment by the
Company be earlier terminated pursuant to Section 3(b) or by the Executive
------------
pursuant to Section 3(c), the Term of Employment shall end on the date of such
------------
earlier termination.
(b) Subject to the payments contemplated by Section 3(e), the Term of
------------
Employment may be terminated at any time by the Company:
(i) upon the death of Executive;
(ii) in the event that because of physical or mental disability
Executive is unable to perform, and does not perform, substantially all of
his duties hereunder for a continuous period of ninety (90) days, or an
experienced, recognized physician specializing in such disabilities
certifies as to the foregoing in writing;
(iii) for Cause (as defined in Section 3(d));
-------------
(iv) upon the continuous poor or unacceptable performance of
the Executive's duties to the Company, in the sole judgment of the Board of
Directors of the Company, which has remained uncured for a period of thirty
(30) days after delivery of notice by the Company to the Executive of such
dissatisfaction with Executive's performance; or
(v) for any other reason or no reason, it being understood
that no reason is required.
Executive acknowledges that no representations or promises have been made
concerning the grounds for termination or the future operation of the Company's
business, and that nothing contained herein or otherwise stated by or on behalf
of the Company modifies or amends the right of the Company to terminate
Executive at any time, with or without Cause. Termination shall become
effective upon the delivery by the Company to the Executive of notice specifying
such termination and the reasons therefor (i.e., Section 3(b)(i)-
----
-2-
<PAGE>
(v)), subject to the requirements for advance notice and an opportunity to cure
provided in this Agreement, if and to the extent applicable.
(c) Subject to the payments contemplated by Section 3(e), the Term of
------------
Employment may be terminated at any time by the Executive:
(i) upon the death of Executive;
(ii) in the event that because of physical or mental disability
Executive is unable to perform, and does not perform substantially all of
his duties hereunder for a continuous period of ninety (90) days, or an
experienced, recognized physician specializing in such disabilities
certifies as to the foregoing in writing;
(iii) as a result of a material reduction in Executive's
authority, perquisites, salary, position or responsibilities (other than
such a reduction which affects all of the Company's senior executives on a
substantially equal or proportionate basis) or the Company's willful,
material violation of its obligations under this Agreement, in each case,
after thirty (30) days prior written notice to the Company and its Board of
Directors and the Company's failure thereafter to cure such reduction or
violation; or
(iv) voluntarily or for any reason not referred to in clauses
(i) through (iii), or no reason, in each case, after ninety (90) days prior
written notice to the Company.
(d) For the purposes of this Section 3:
---------
"Cause" shall mean any of the following: (i) Executive's commission of any
-----
crime or criminal offense involving the unlawful theft or conversion of
substantial monies or other property or any other felony (other than a criminal
offense arising solely under a statutory provision imposing criminal liability
on the Executive on a per se basis due to the offices held by the Executive),
--- --
including fraud or embezzlement, in each case upon a determination by the
Company that such a crime has been committed; (ii) Executive's breach of any of
his fiduciary duties to the Company or its stockholders or making of a willful
misrepresentation or omission which breach, misrepresentation or omission would
reasonably be expected to materially adversely affect the business, properties,
assets, condition (financial or other) or prospects of the Parent or the
Company; (iii) Executive's willful, continual and material neglect or failure to
discharge his duties, responsibilities or obligations prescribed by Sections 1
----------
and 2 (other than arising solely due to physical or mental disability); (iv)
-
Executive's habitual drunkenness or substance abuse which materially interferes
with Executive's ability to discharge his duties, responsibilities or
obligations prescribed by Sections 1 and 2; (v) Executive's willful and material
---------- -
breach of any non-competition or confidentiality agreement with the Company,
including without limitation, those set forth in Sections 7 and 8 of this
---------- -
Agreement; and (vi) Executive's gross neglect of his duties and
responsibilities, as determined by the Company.
-3-
<PAGE>
(e) In the event Executive's employment is terminated pursuant to
Section 3(b)(i), 3(b)(ii), 3(b)(v), 3(c)(i), 3(c)(ii) or 3(c)(iii), the Company
- --------------- -------- ------- ------- -------- ---------
will pay to Executive (or his estate or representative) the full amounts to
which he would be entitled under Section 4(a) and customary benefits for the
------------
period from the date of termination to the first anniversary of such
termination. In the event Executive's employment is terminated pursuant to
Section 3(b)(iv), the Company will pay to Executive the full amounts to which he
- ----------------
would be entitled under Section 4(a) and customary benefits for the period from
------------
the date of termination until thirty (30) days after the date of such
termination. In the event Executive's employment is terminated pursuant to
Section 3(b)(iii) or 3(c)(iv), there will be no amounts owing by the Company to
- ----------------- --------
the Executive under Section 4 or any other provision of this Agreement, from and
---------
after the date of termination. If the Company makes any payments required by
this Section 3(e), such payments will constitute severance and liquidated
------------
damages, and the Company will not be obligated to pay any further amounts to
Executive under this Agreement or otherwise be liable to Executive in connection
with his termination.
(f) All determinations pursuant to this Section 3 (other than pursuant to
---------
Section 3(b)(ii) or 3(c)(ii)) shall be made by the Company's Board of Directors,
- ---------------- --------
in its sole discretion, whose decision shall be final, conclusive and binding.
(g) Termination of the Term of Employment will not terminate the parties'
respective obligations under Sections 7, 8, 10 through 20, or any other
---------- - -- --
provisions not associated specifically with the Term of Employment.
(h) In the event the Term of Employment is terminated and the Company is
obligated to make payments pursuant to Section 3(e), Executive will not be
------------
obligated to seek or obtain alternative employment; provided, however, if he
-------- -------
nevertheless thereafter obtains alternative employment, then if and to the
extent Executive obtains such employment, the Company's payment obligations
under Section 3(e), including its obligation to provide insurance coverage, if
------------
any, will be mitigated and reduced by and to the extent of Executive's
compensation under such alternative employment during the period for which
payments are owed by the Company pursuant to Section 3(e). Moreover, in the
------------
event that, after the Restricted Period pursuant to Section 8(a), Executive is
------------
employed by or engaged in a Competitive Business as contemplated by Section
-------
8(a)(i), then the Company will thereupon cease and will be no longer obligated
- -------
to make any payments otherwise required under Section 3(e).
------------
(i) In the event the Term of Employment is terminated and the Company is
obligated to make payments pursuant to Section 3(e), Executive hereby waives any
------------
and all claims against the Company, the Parent and their respective officers,
directors, employees, agents, or representatives, stockholders and affiliates
relating to his employment during the term hereof and this Agreement.
4. Compensation. During the Term of Employment, the Company shall pay
------------
compensation to Executive as base compensation for his services hereunder, in
bi-weekly
-4-
<PAGE>
installments per annum, a base salary at a rate of $61,000 per annum. Such
amounts may be adjusted annually at the discretion of the Company based upon an
annual review of Executive's performance by the Company which will take place on
or about January 1 of each year.
5. Reimbursement of Expenses
-------------------------
During the Term of Employment, the Company shall reimburse Executive for
documented travel, entertainment and other expenses reasonably incurred by
Executive in connection with the performance of his duties hereunder and, in
each case, in accordance with the rules, customs and usages promulgated by the
Company from time to time in effect.
6. Benefits
--------
During the Term of Employment, the Executive shall be entitled to
perquisites, paid vacations and benefits (including health, short and long term
disability, pension and life insurance benefits consistent with past practice,
or as increased from time to time) established from time to time, by the Board
of Directors for executives of the Company, subject to the policies and
procedures in effect regarding participation in such benefits.
7. Confidential Information
------------------------
(a) Executive acknowledges that his employment hereunder gives him
access to Confidential Information relating to the Company's Business and its
customers which must remain confidential. Executive acknowledges that this
information is valuable, special, and a unique asset of the Company's Business,
and that it has been and will be developed by the Company at considerable effort
and expense, and if it were to be known and used by others engaged in a
Competitive Business, it would be harmful and detrimental to the interests of
the Company. In consideration of the foregoing and this Agreement, Executive
hereby agrees and covenants that, during and after the Term of Employment,
Executive will not, directly or indirectly in one or a series of transactions,
disclose to any person, or use or otherwise exploit for the Executive's own
benefit or for the benefit of anyone other than the Company, any Confidential
Information (as defined in Section 9), whether prepared by Executive or not;
---------
provided, however, that any Confidential Information may be disclosed to
- -------- -------
officers, representatives, employees and agents of the Company who need to know
such Confidential Information in order to perform the services or conduct the
operations required or expected of them in the Business (as defined in
Section 9). Executive shall use his best efforts to prevent the removal of any
Confidential Information from the premises of the Company, except as required in
his normal course of employment by the Company. Executive shall use commercially
reasonable efforts to cause all persons or entities to whom any Confidential
Information shall be disclosed by him hereunder to observe the terms and
conditions set forth herein as though each such person or entity was bound
hereby. Executive shall have no obligation hereunder to keep confidential any
Confidential Information if and to the extent disclosure of any thereof is
specifically required by law;
-5-
<PAGE>
provided, however, that in the event disclosure is required by applicable law,
- -------- -------
the Executive shall provide the Company with prompt notice of such requirement,
prior to making any disclosure, so that the Company may seek an appropriate
protective order. At the request of the Company, Executive agrees to deliver to
the Company, at any time during the Term of Employment, or thereafter, all
Confidential Information which he may possess or control. Executive agrees that
all Confidential Information of the Company (whether now or hereafter existing)
conceived, discovered or made by him during the Term of Employment exclusively
belongs to the Company (and not to Executive). Executive will promptly disclose
such Confidential Information to the Company and perform all actions reasonably
requested by the Company to establish and confirm such exclusive ownership.
(b) The terms of this Section 7 shall survive the termination of this
---------
Agreement regardless of who terminates this Agreement, or the reasons therefor.
8. Non-Interference
----------------
(a) Executive acknowledges that the services to be provided give him the
opportunity to have special knowledge of the Companies and its Confidential
Information and the capabilities of individuals employed by or affiliated with
the Company and that interference in these relationships would cause irreparable
injury to the Company. In consideration of this Agreement, Executive covenants
and agrees that:
(i) From the date hereof through the date that is 18 months after the
termination of the Term of Employment (the "Restricted Period"), Executive
-----------------
will not, without the express written approval of the Board of Directors of
the Company, anywhere in the Market, directly or indirectly, in one or a
series of transactions, own, manage, operate, control, invest or acquire an
interest in, or otherwise engage or participate in, whether as a
proprietor, partner, stockholder, lender, director, officer, employee,
joint venturer, investor, lessor, supplier, customer, agent, representative
or other participant, in any business which competes, directly or
indirectly, with the Business in the Market ("Competitive Business")
--------------------
without regard to (A) whether the Competitive Business has its office,
manufacturing or other business facilities within or without the Market,
(B) whether any of the activities of the Executive referred to above occur
or are performed within or without the Market or (C) whether the Executive
resides, or reports to an office, within or without the Market; provided,
--------
however, that (x) the Executive may, anywhere in the Market, directly or
-------
indirectly, in one or a series of transactions, own, invest or acquire an
interest in up to one percent (1%) of the capital stock of a corporation
whose capital stock is traded publicly, or that (y) Executive may accept
employment with a successor company to the Company.
(ii) During the Restricted Period (which shall not be reduced by any
period of violation of this Agreement by Executive or period which is
required for litigation to enforce the rights hereunder), Executive will
not without the express prior written
-6-
<PAGE>
approval of the Board of Directors of the Company (A) directly or
indirectly, in one or a series of transactions, recruit, solicit or
otherwise induce or influence any proprietor, partner, stockholder, lender,
director, officer, employee, sales agent, joint venturer, investor, lessor,
supplier, customer, agent, representative or any other person which has a
business relationship with the Company or had a business relationship with
the Company within the 24 month period preceding the date of the incident
in question, to discontinue, reduce or modify such employment, agency or
business relationship with the Company, or (B) employ or seek to employ or
cause any Competitive Business to employ or seek to employ any person or
agent who is then (or was at any time within 24 months prior to the date
the Executive or the Competitive Business employs or seeks to employ such
person) employed or retained by the Company. Notwithstanding the foregoing,
nothing herein shall prevent the Executive from providing a letter of
recommendation to an employee with respect to a future employment
opportunity.
(iii) The scope and term of this Section 8 would not preclude
---------
Executive from earning a living with an entity that is not a Competitive
Business.
(b) In the event that Executive breaches his obligations in any material
respect under Section 7 or this Section 8, the Company, in addition to pursuing
--------- ---------
all available remedies under this Agreement, at law or otherwise, and without
limiting its right to pursue the same shall cease all payments to the Executive
under this Agreement or any other agreement.
(c) The terms of this Section 8 shall survive the termination of this
---------
Agreement regardless of who terminates this Agreement, or the reasons therefor.
9. Definitions
-----------
"Business" means any business conducted, or engaged in, by the Companies
--------
prior to the date hereof or at any time during the Term of Employment.
"Cause" is defined in Section 3(c).
----- ------------
"Companies" means Parent and its successors or any of its direct or
---------
indirect subsidiaries (including the Company), now or hereafter existing.
"Company" is defined in the introduction.
-------
"Competitive Business" is defined in Section 8(a)(i).
-------------------- ---------------
"Confidential Information" means any confidential information including,
------------------------
without limitation, any study, data, calculations, software storage media or
other compilation of information, patent, patent application, copyright,
trademark, trade name, service mark,
-7-
<PAGE>
service name, "know-how", trade secrets, customer lists, details of client or
consultant contracts, pricing policies, operational methods, marketing plans or
strategies, product development techniques or plans, business acquisition plans
or any portion or phase of any scientific or technical information, ideas,
discoveries, designs, computer programs (including source of object codes),
processes, procedures, formulas, improvements or other proprietary or
intellectual property of the Companies, whether or not in written or tangible
form, and whether or not registered, and including all files, records, manuals,
books, catalogues, memoranda, notes, summaries, plans, reports, records,
documents and other evidence thereof. The term "Confidential Information" does
------------------------
not include, and there shall be no obligation hereunder with respect to,
information that becomes generally available to the public other than as a
result of a disclosure by the Executive not permissible hereunder.
"Executive" means Edward M. Stiles or his estate, if deceased.
---------
"Market" means any county in the United States of America and each similar
------
jurisdiction in any other country in which the Business was conducted by or
engaged in by the Companies prior to the date hereof or is conducted or engaged
in, or is proposed to be conducted or engaged in, by the Companies at any time
during the Term of Employment.
"Parent" is defined in the introduction.
------
"Regulations" is defined in Section 2(c).
----------- ------------
"Restricted Period" is defined in Section 8(a)(i).
----------------- ---------------
"Term of Employment" is defined in Section 3(a).
------------------ ------------
10. Notice
------
Any notice, request, demand or other communication required or permitted to
be given under this Agreement shall be given in writing and if delivered
personally, or sent by certified or registered mail, return receipt requested,
as follows (or to such other addressee or address as shall be set forth in a
notice given in the same manner):
If to Executive: _______________________________
_______________________________
_______________________________
_______________________________
If to Company: Crystaloid Technologies, Inc.
c/o Jackson Products, Inc.
2997 Clarkson Road
Chesterfield, Missouri 63017
Attention: Christopher T. Paule
-8-
<PAGE>
Facsimile: (314) 207-2800
with a copy to:
Mayer, Brown & Platt
1675 Broadway, Suite 1900
New York, New York 10019
Attention: James B. Carlson
Facsimile: (212) 262-1910
Any such notices shall be deemed to be given on the date personally delivered or
such return receipt is issued.
11. Previous Agreements; Executive's Representation
-----------------------------------------------
(a) Executive hereby cancels, voids and renders without force or effect
any previous employment or severance agreement by and between Executive and the
Company.
(b) Executive hereby warrants and represents to the Company that Executive
has carefully reviewed this Agreement and has consulted with such advisors as
Executive considers appropriate in connection with this Agreement, and is not
subject to any covenants, agreements or restrictions, including without
limitation any covenants, agreements or restrictions arising out of Executive's
prior employment which would be breached or violated by Executive's execution of
this Agreement or by Executive's performance of his duties hereunder.
12. Other Matters
-------------
Executive agrees and acknowledges that the obligations owed to Executive
under this Agreement are solely the obligations of the Company, and that none of
the Companies' stockholders, directors, officers, affiliates, representatives,
agents or lenders will have any obligations or liabilities in respect of this
Agreement and the subject matter hereof.
13. Validity
--------
If, for any reason, any provision hereof shall be determined to be invalid
or unenforceable, the validity and effect of the other provisions hereof shall
not be affected thereby.
14. Severability
------------
Whenever possible, each provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable
-9-
<PAGE>
law or rule in any jurisdiction, such invalidity, illegality or unenforceability
will not affect any other provision or any other jurisdiction, but this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision had never been contained
herein. If any court determines that any provision of Section 8 or any other
---------
provision hereof is unenforceable and therefore acts to reduce the scope or
duration of such provision, the provision in its reduced form shall then be
enforceable.
15. Waiver of Breach; Specific Performance
--------------------------------------
The waiver by the Company or Executive of a breach of any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any other breach of such other party. Each of the parties (and third party
beneficiaries) to this Agreement will be entitled to enforce its respective
rights under this Agreement and to exercise all other rights existing in its
favor. The parties hereto agree and acknowledge that money damages may not be
an adequate remedy for any breach of the provisions of Sections 7 and 8 of this
---------- -
Agreement and that any party (and third party beneficiaries) may in its sole
discretion apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive relief, including temporary restraining
orders, preliminary injunctions and permanent injunctions in order to enforce or
prevent any violations of the provisions of this Agreement.
16. Assignment; Third Parties
-------------------------
Neither the Executive nor the Company may assign, transfer, pledge,
hypothecate, encumber or otherwise dispose of this Agreement or any of his or
its respective rights or obligations hereunder, without the prior written
consent of the other. The parties agree and acknowledge that each of the
Companies and the stockholders and investors therein are intended to be third
party beneficiaries of, and have rights and interests in respect of, Executive's
agreements set forth in Sections 7 and 8.
---------- -
17. Amendment; Entire Agreement
---------------------------
This Agreement may not be changed orally but only by an agreement in
writing agreed to by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought. This Agreement embodies the
entire agreement and understanding of the parties hereto in respect of the
subject matter of this Agreement, and supersedes and replaces all prior
Agreements, understandings and commitments with respect to such subject matter.
18. Litigation
----------
THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MISSOURI, EXCEPT THAT NO DOCTRINE OF
CHOICE OF LAW SHALL BE USED TO APPLY
-10-
<PAGE>
ANY LAW OTHER THAN THAT OF MISSOURI, AND NO DEFENSE, COUNTERCLAIM OR RIGHT OF
SET-OFF GIVEN OR ALLOWED BY THE LAWS OF ANY OTHER STATE OR JURISDICTION, OR
ARISING OUT OF THE ENACTMENT, MODIFICATION OR REPEAL OF ANY LAW, REGULATION,
ORDINANCE OR DECREE OF ANY FOREIGN JURISDICTION, BE INTERPOSED IN ANY ACTION
HEREON. EXECUTIVE AND THE COMPANY AGREE THAT ANY ACTION OR PROCEEDING TO ENFORCE
OR ARISING OUT OF THIS AGREEMENT MAY BE COMMENCED IN THE COURTS OF THE STATE OF
MISSOURI OR THE UNITED STATES DISTRICT COURTS IN ST. LOUIS, MISSOURI. EXECUTIVE
AND THE COMPANY CONSENT TO SUCH JURISDICTION, AGREE THAT VENUE WILL BE PROPER IN
SUCH COURTS AND WAIVE ANY OBJECTIONS BASED UPON FORUM NON CONVENIENS. THE CHOICE
--------------------
OF FORUM SET FORTH IN THIS SECTION 18 SHALL NOT BE DEEMED TO PRECLUDE THE
----------
ENFORCEMENT OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION
UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER JURISDICTION.
19. Further Action
--------------
Executive and the Company agree to perform any further acts and to execute
and deliver any documents which may be reasonable to carry out the provisions
hereof.
20. Counterparts
------------
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
-11-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands as of the day
and year first written above.
EXECUTIVE:
/s/ Edward M. Stiles
-----------------------------------
Name: Edward M. Stiles
CRYSTALOID TECHNOLOGIES, INC.
By /s/ Christopher T. Paule
----------------------------------
Name: Christopher T. Paule
Title: Vice President
JACKSON PRODUCTS, INC.
By /s/ Christopher T. Paule
-----------------------------------
Name: Christopher T. Paule
Title: Vice President
-12-
<PAGE>
EXHIBIT 10.34
EMPLOYMENT AND NON-INTERFERENCE AGREEMENT
-----------------------------------------
This Employment and Non-Interference Agreement, dated as of April 23, 1998
(this "Agreement"), by and between Michael A. Fout (the "Executive") and
---------
Crystaloid Technologies, Inc., a Delaware corporation (the "Company"), and a
-------
wholly-owned subsidiary of Jackson Products, Inc., a Delaware corporation (the
"Parent");
------
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company wishes to obtain the future services of the Executive
for the Company; and
WHEREAS, the Executive is willing, upon the terms and conditions herein set
forth, to provide services hereunder; and
WHEREAS, the Company wishes to secure the Executive's non-interference,
upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Nature of Employment
--------------------
Subject to Section 3, the Company hereby employs Executive, and Executive
---------
agrees to accept such employment, during the Term of Employment (as defined in
Section 3(a)), as Vice President-Operations of the Company and to undertake such
- ------------
duties and responsibilities as may be reasonably assigned to Executive from time
to time by the Board of Directors of the Company or the appropriately authorized
and designated officers of the Company or the Parent.
2. Extent of Employment
--------------------
(a) During the Term of Employment, the Executive shall perform his
obligations hereunder faithfully and to the best of his ability at the principal
executive offices of the Company, under the direction of the Board of Directors
of the Company, and shall abide by the rules, customs and usages from time to
time established by each of the Parent and the Company.
(b) During the Term of Employment, the Executive shall devote all of his
business time, energy and skill as may be reasonably necessary for the
performance of his duties,
<PAGE>
responsibilities and obligations hereunder (except for vacation periods and
reasonable periods of illness or other incapacity), consistent with past
practices and norms in similar positions.
(c) Nothing contained herein shall require Executive to follow any
directive or to perform any act which would violate any laws, ordinances,
regulations or rules of any governmental, regulatory or administrative body,
agent or authority, any court or judicial authority, or any public, private or
industry regulatory authority (collectively, the "Regulations"). Executive
-----------
shall act in good faith in accordance with all Regulations.
3. Term of Employment; Termination
-------------------------------
(a) The "Term of Employment" shall commence on the date hereof and shall
------------------
continue for a term of two years. Should the Executive's employment by the
Company be earlier terminated pursuant to Section 3(b) or by the Executive
------------
pursuant to Section 3(c), the Term of Employment shall end on the date of such
------------
earlier termination.
(b) Subject to the payments contemplated by Section 3(e), the Term of
------------
Employment may be terminated at any time by the Company:
(i) upon the death of Executive;
(ii) in the event that because of physical or mental disability
Executive is unable to perform, and does not perform, substantially all of
his duties hereunder for a continuous period of ninety (90) days, or an
experienced, recognized physician specializing in such disabilities
certifies as to the foregoing in writing;
(iii) for Cause (as defined in Section 3(d));
------------
(iv) upon the continuous poor or unacceptable performance of the
Executive's duties to the Company, in the sole judgment of the Board of
Directors of the Company, which has remained uncured for a period of thirty
(30) days after delivery of notice by the Company to the Executive of such
dissatisfaction with Executive's performance; or
(v) for any other reason or no reason, it being understood that no
reason is required.
Executive acknowledges that no representations or promises have been made
concerning the grounds for termination or the future operation of the Company's
business, and that nothing contained herein or otherwise stated by or on behalf
of the Company modifies or amends the right of the Company to terminate
Executive at any time, with or without Cause. Termination shall become
effective upon the delivery by the Company to the Executive of notice specifying
such termination and the reasons therefor (i.e., Section 3(b)(i)-
---
-2-
<PAGE>
(v)), subject to the requirements for advance notice and an opportunity to cure
provided in this Agreement, if and to the extent applicable.
(c) Subject to the payments contemplated by Section 3(e), the Term of
------------
Employment may be terminated at any time by the Executive:
(i) upon the death of Executive;
(ii) in the event that because of physical or mental disability
Executive is unable to perform, and does not perform substantially all of
his duties hereunder for a continuous period of ninety (90) days, or an
experienced, recognized physician specializing in such disabilities
certifies as to the foregoing in writing;
(iii) as a result of a material reduction in Executive's authority,
perquisites, salary, position or responsibilities (other than such a
reduction which affects all of the Company's senior executives on a
substantially equal or proportionate basis) or the Company's willful,
material violation of its obligations under this Agreement, in each case,
after thirty (30) days prior written notice to the Company and its Board of
Directors and the Company's failure thereafter to cure such reduction or
violation; or
(iv) voluntarily or for any reason not referred to in clauses (i)
through (iii), or no reason, in each case, after ninety (90) days prior
written notice to the Company.
(d) For the purposes of this Section 3:
---------
"Cause" shall mean any of the following: (i) Executive's commission of any
-----
crime or criminal offense involving the unlawful theft or conversion of
substantial monies or other property or any other felony (other than a criminal
offense arising solely under a statutory provision imposing criminal liability
on the Executive on a per se basis due to the offices held by the Executive),
--- --
including fraud or embezzlement, in each case upon a determination by the
Company that such a crime has been committed; (ii) Executive's breach of any of
his fiduciary duties to the Company or its stockholders or making of a willful
misrepresentation or omission which breach, misrepresentation or omission would
reasonably be expected to materially adversely affect the business, properties,
assets, condition (financial or other) or prospects of the Parent or the
Company; (iii) Executive's willful, continual and material neglect or failure to
discharge his duties, responsibilities or obligations prescribed by Sections 1
----------
and 2 (other than arising solely due to physical or mental disability); (iv)
-
Executive's habitual drunkenness or substance abuse which materially interferes
with Executive's ability to discharge his duties, responsibilities or
obligations prescribed by Sections 1 and 2; (v) Executive's willful and material
---------- -
breach of any non-competition or confidentiality agreement with the Company,
including without limitation, those set forth in Sections 7 and 8 of this
---------- -
Agreement; and (vi) Executive's gross neglect of his duties and
responsibilities, as determined by the Company.
-3-
<PAGE>
(e) In the event Executive's employment is terminated pursuant to Section
-------
3(b)(i), 3(b)(ii), 3(b)(v), 3(c)(i), 3(c)(ii) or 3(c)(iii), the Company will pay
- ------- -------- ------- ------- -------- ---------
to Executive (or his estate or representative) the full amounts to which he
would be entitled under Section 4(a) and customary benefits for the period from
------------
the date of termination to the first anniversary of such termination. In the
event Executive's employment is terminated pursuant to Section 3(b)(iv), the
----------------
Company will pay to Executive the full amounts to which he would be entitled
under Section 4(a) and customary benefits for the period from the date of
------------
termination until thirty (30) days after the date of such termination. In the
event Executive's employment is terminated pursuant to Section 3(b)(iii) or
-----------------
3(c)(iv), there will be no amounts owing by the Company to the Executive under
- --------
Section 4 or any other provision of this Agreement, from and after the date of
- ---------
termination. If the Company makes any payments required by this Section 3(e),
------------
such payments will constitute severance and liquidated damages, and the Company
will not be obligated to pay any further amounts to Executive under this
Agreement or otherwise be liable to Executive in connection with his
termination.
(f) All determinations pursuant to this Section 3 (other than pursuant to
---------
Section 3(b)(ii) or 3(c)(ii)) shall be made by the Company's Board of Directors,
- ---------------- --------
in its sole discretion, whose decision shall be final, conclusive and binding.
(g) Termination of the Term of Employment will not terminate the parties'
respective obligations under Sections 7, 8, 10 through 20, or any other
---------- - -- --
provisions not associated specifically with the Term of Employment.
(h) In the event the Term of Employment is terminated and the Company is
obligated to make payments pursuant to Section 3(e), Executive will not be
------------
obligated to seek or obtain alternative employment; provided, however, if he
-------- -------
nevertheless thereafter obtains alternative employment, then if and to the
extent Executive obtains such employment, the Company's payment obligations
under Section 3(e), including its obligation to provide insurance coverage, if
------------
any, will be mitigated and reduced by and to the extent of Executive's
compensation under such alternative employment during the period for which
payments are owed by the Company pursuant to Section 3(e). Moreover, in the
------------
event that, after the Restricted Period pursuant to Section 8(a), Executive is
------------
employed by or engaged in a Competitive Business as contemplated by Section
-------
8(a)(i), then the Company will thereupon cease and will be no longer obligated
- -------
to make any payments otherwise required under Section 3(e).
------------
(i) In the event the Term of Employment is terminated and the Company is
obligated to make payments pursuant to Section 3(e), Executive hereby waives any
------------
and all claims against the Company, the Parent and their respective officers,
directors, employees, agents, or representatives, stockholders and affiliates
relating to his employment during the term hereof and this Agreement.
4. Compensation. During the Term of Employment, the Company shall pay
------------
compensation to Executive as base compensation for his services hereunder, in
bi-weekly
-4-
<PAGE>
installments per annum, a base salary at a rate of $90,000 per annum. Such
amounts may be adjusted annually at the discretion of the Company based upon an
annual review of Executive's performance by the Company which will take place on
or about September 1 of each year.
5. Reimbursement of Expenses
-------------------------
During the Term of Employment, the Company shall reimburse Executive for
documented travel, entertainment and other expenses reasonably incurred by
Executive in connection with the performance of his duties hereunder and, in
each case, in accordance with the rules, customs and usages promulgated by the
Company from time to time in effect.
6. Benefits
--------
During the Term of Employment, the Executive shall be entitled to
perquisites, paid vacations and benefits (including health, short and long term
disability, pension and life insurance benefits consistent with past practice,
or as increased from time to time) established from time to time, by the Board
of Directors for executives of the Company, subject to the policies and
procedures in effect regarding participation in such benefits.
7. Confidential Information
------------------------
(a) Executive acknowledges that his employment hereunder gives him access
to Confidential Information relating to the Company's Business and its customers
which must remain confidential. Executive acknowledges that this information is
valuable, special, and a unique asset of the Company's Business, and that it has
been and will be developed by the Company at considerable effort and expense,
and if it were to be known and used by others engaged in a Competitive Business,
it would be harmful and detrimental to the interests of the Company. In
consideration of the foregoing and this Agreement, Executive hereby agrees and
covenants that, during and after the Term of Employment, Executive will not,
directly or indirectly in one or a series of transactions, disclose to any
person, or use or otherwise exploit for the Executive's own benefit or for the
benefit of anyone other than the Company, any Confidential Information (as
defined in Section 9), whether prepared by Executive or not; provided, however,
--------- -------- -------
that any Confidential Information may be disclosed to officers, representatives,
employees and agents of the Company who need to know such Confidential
Information in order to perform the services or conduct the operations required
or expected of them in the Business (as defined in Section 9). Executive shall
---------
use his best efforts to prevent the removal of any Confidential Information from
the premises of the Company, except as required in his normal course of
employment by the Company. Executive shall use commercially reasonable efforts
to cause all persons or entities to whom any Confidential Information shall be
disclosed by him hereunder to observe the terms and conditions set forth herein
as though each such person or entity was bound hereby. Executive shall have no
obligation hereunder to keep confidential any Confidential Information if and to
the extent disclosure of any thereof is specifically required by law;
-5-
<PAGE>
provided, however, that in the event disclosure is required by applicable law,
- -------- -------
the Executive shall provide the Company with prompt notice of such requirement,
prior to making any disclosure, so that the Company may seek an appropriate
protective order. At the request of the Company, Executive agrees to deliver to
the Company, at any time during the Term of Employment, or thereafter, all
Confidential Information which he may possess or control. Executive agrees that
all Confidential Information of the Company (whether now or hereafter existing)
conceived, discovered or made by him during the Term of Employment exclusively
belongs to the Company (and not to Executive). Executive will promptly disclose
such Confidential Information to the Company and perform all actions reasonably
requested by the Company to establish and confirm such exclusive ownership.
(b) The terms of this Section 7 shall survive the termination of this
---------
Agreement regardless of who terminates this Agreement, or the reasons therefor.
8. Non-Interference
----------------
(a) Executive acknowledges that the services to be provided give him the
opportunity to have special knowledge of the Companies and its Confidential
Information and the capabilities of individuals employed by or affiliated with
the Company and that interference in these relationships would cause irreparable
injury to the Company. In consideration of this Agreement, Executive covenants
and agrees that:
(i) From the date hereof through the date that is 24 months after the
termination of the Term of Employment (the "Restricted Period"), Executive
-----------------
will not, without the express written approval of the Board of Directors of
the Company, anywhere in the Market, directly or indirectly, in one or a
series of transactions, own, manage, operate, control, invest or acquire an
interest in, or otherwise engage or participate in, whether as a
proprietor, partner, stockholder, lender, director, officer, employee,
joint venturer, investor, lessor, supplier, customer, agent, representative
or other participant, in any business which competes, directly or
indirectly, with the Business in the Market ("Competitive Business")
--------------------
without regard to (A) whether the Competitive Business has its office,
manufacturing or other business facilities within or without the Market,
(B) whether any of the activities of the Executive referred to above occur
or are performed within or without the Market or (C) whether the Executive
resides, or reports to an office, within or without the Market; provided,
--------
however, that (x) the Executive may, anywhere in the Market, directly or
-------
indirectly, in one or a series of transactions, own, invest or acquire an
interest in up to one percent (1%) of the capital stock of a corporation
whose capital stock is traded publicly, or that (y) Executive may accept
employment with a successor company to the Company.
(ii) During the Restricted Period (which shall not be reduced by any
period of violation of this Agreement by Executive or period which is
required for litigation to enforce the rights hereunder), Executive will
not without the express prior written
-6-
<PAGE>
approval of the Board of Directors of the Company (A) directly or
indirectly, in one or a series of transactions, recruit, solicit or
otherwise induce or influence any proprietor, partner, stockholder, lender,
director, officer, employee, sales agent, joint venturer, investor, lessor,
supplier, customer, agent, representative or any other person which has a
business relationship with the Company or had a business relationship with
the Company within the 24 month period preceding the date of the incident
in question, to discontinue, reduce or modify such employment, agency or
business relationship with the Company, or (B) employ or seek to employ or
cause any Competitive Business to employ or seek to employ any person or
agent who is then (or was at any time within 24 months prior to the date
the Executive or the Competitive Business employs or seeks to employ such
person) employed or retained by the Company. Notwithstanding the foregoing,
nothing herein shall prevent the Executive from providing a letter of
recommendation to an employee with respect to a future employment
opportunity.
(iii) The scope and term of this Section 8 would not preclude
---------
Executive from earning a living with an entity that is not a Competitive
Business.
(b) In the event that Executive breaches his obligations in any material
respect under Section 7 or this Section 8, the Company, in addition to pursuing
--------- ---------
all available remedies under this Agreement, at law or otherwise, and without
limiting its right to pursue the same shall cease all payments to the Executive
under this Agreement or any other agreement.
(c) The terms of this Section 8 shall survive the termination of this
---------
Agreement regardless of who terminates this Agreement, or the reasons therefor.
9. Definitions
-----------
"Business" means any business conducted, or engaged in, by the Companies
--------
prior to the date hereof or at any time during the Term of Employment.
"Cause" is defined in Section 3(c).
----- ------------
"Companies" means Parent and its successors or any of its direct or
---------
indirect subsidiaries (including the Company), now or hereafter existing.
"Company" is defined in the introduction.
-------
"Competitive Business" is defined in Section 8(a)(i).
-------------------- ---------------
"Confidential Information" means any confidential information including,
------------------------
without limitation, any study, data, calculations, software storage media or
other compilation of information, patent, patent application, copyright,
trademark, trade name, service mark,
-7-
<PAGE>
service name, "know-how", trade secrets, customer lists, details of client or
consultant contracts, pricing policies, operational methods, marketing plans or
strategies, product development techniques or plans, business acquisition plans
or any portion or phase of any scientific or technical information, ideas,
discoveries, designs, computer programs (including source of object codes),
processes, procedures, formulas, improvements or other proprietary or
intellectual property of the Companies, whether or not in written or tangible
form, and whether or not registered, and including all files, records, manuals,
books, catalogues, memoranda, notes, summaries, plans, reports, records,
documents and other evidence thereof. The term "Confidential Information" does
------------------------
not include, and there shall be no obligation hereunder with respect to,
information that becomes generally available to the public other than as a
result of a disclosure by the Executive not permissible hereunder.
"Executive" means Michael A. Fout or his estate, if deceased.
---------
"Market" means any county in the United States of America and each similar
------
jurisdiction in any other country in which the Business was conducted by or
engaged in by the Companies prior to the date hereof or is conducted or engaged
in, or is proposed to be conducted or engaged in, by the Companies at any time
during the Term of Employment.
"Parent" is defined in the introduction.
------
"Regulations" is defined in Section 2(c).
----------- ------------
"Restricted Period" is defined in Section 8(a)(i).
----------------- ---------------
"Term of Employment" is defined in Section 3(a).
------------------ ------------
10. Notice
------
Any notice, request, demand or other communication required or permitted to
be given under this Agreement shall be given in writing and if delivered
personally, or sent by certified or registered mail, return receipt requested,
as follows (or to such other addressee or address as shall be set forth in a
notice given in the same manner):
If to Executive: _______________________________
_______________________________
_______________________________
_______________________________
If to Company: Crystaloid Technologies, Inc.
c/o Jackson Products, Inc.
2997 Clarkson Road
Chesterfield, Missouri 63017
Attention: Christopher T. Paule
-8-
<PAGE>
Facsimile: (314) 207-2800
with a copy to:
Mayer, Brown & Platt
1675 Broadway, Suite 1900
New York, New York 10019
Attention: James B. Carlson
Facsimile: (212) 262-1910
Any such notices shall be deemed to be given on the date personally delivered or
such return receipt is issued.
11. Previous Agreements; Executive's Representation
-----------------------------------------------
(a) Executive hereby cancels, voids and renders without force or effect
any previous employment or severance agreement by and between Executive and the
Company.
(b) Executive hereby warrants and represents to the Company that Executive
has carefully reviewed this Agreement and has consulted with such advisors as
Executive considers appropriate in connection with this Agreement, and is not
subject to any covenants, agreements or restrictions, including without
limitation any covenants, agreements or restrictions arising out of Executive's
prior employment which would be breached or violated by Executive's execution of
this Agreement or by Executive's performance of his duties hereunder.
12. Other Matters
-------------
Executive agrees and acknowledges that the obligations owed to Executive
under this Agreement are solely the obligations of the Company, and that none of
the Companies' stockholders, directors, officers, affiliates, representatives,
agents or lenders will have any obligations or liabilities in respect of this
Agreement and the subject matter hereof.
13. Validity
--------
If, for any reason, any provision hereof shall be determined to be invalid
or unenforceable, the validity and effect of the other provisions hereof shall
not be affected thereby.
14. Severability
------------
Whenever possible, each provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable
-9-
<PAGE>
law or rule in any jurisdiction, such invalidity, illegality or unenforceability
will not affect any other provision or any other jurisdiction, but this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision had never been contained
herein. If any court determines that any provision of Section 8 or any other
---------
provision hereof is unenforceable and therefore acts to reduce the scope or
duration of such provision, the provision in its reduced form shall then be
enforceable.
15. Waiver of Breach; Specific Performance
--------------------------------------
The waiver by the Company or Executive of a breach of any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any other breach of such other party. Each of the parties (and third party
beneficiaries) to this Agreement will be entitled to enforce its respective
rights under this Agreement and to exercise all other rights existing in its
favor. The parties hereto agree and acknowledge that money damages may not be
an adequate remedy for any breach of the provisions of Sections 7 and 8 of this
---------- -
Agreement and that any party (and third party beneficiaries) may in its sole
discretion apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive relief, including temporary restraining
orders, preliminary injunctions and permanent injunctions in order to enforce or
prevent any violations of the provisions of this Agreement.
16. Assignment; Third Parties
-------------------------
Neither the Executive nor the Company may assign, transfer, pledge,
hypothecate, encumber or otherwise dispose of this Agreement or any of his or
its respective rights or obligations hereunder, without the prior written
consent of the other. The parties agree and acknowledge that each of the
Companies and the stockholders and investors therein are intended to be third
party beneficiaries of, and have rights and interests in respect of, Executive's
agreements set forth in Sections 7 and 8.
---------- -
17. Amendment; Entire Agreement
---------------------------
This Agreement may not be changed orally but only by an agreement in
writing agreed to by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought. This Agreement embodies the
entire agreement and understanding of the parties hereto in respect of the
subject matter of this Agreement, and supersedes and replaces all prior
Agreements, understandings and commitments with respect to such subject matter.
18. Litigation
----------
THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MISSOURI, EXCEPT THAT NO DOCTRINE OF
CHOICE OF LAW SHALL BE USED TO APPLY
-10-
<PAGE>
ANY LAW OTHER THAN THAT OF MISSOURI, AND NO DEFENSE, COUNTERCLAIM OR RIGHT OF
SET-OFF GIVEN OR ALLOWED BY THE LAWS OF ANY OTHER STATE OR JURISDICTION, OR
ARISING OUT OF THE ENACTMENT, MODIFICATION OR REPEAL OF ANY LAW, REGULATION,
ORDINANCE OR DECREE OF ANY FOREIGN JURISDICTION, BE INTERPOSED IN ANY ACTION
HEREON. EXECUTIVE AND THE COMPANY AGREE THAT ANY ACTION OR PROCEEDING TO ENFORCE
OR ARISING OUT OF THIS AGREEMENT MAY BE COMMENCED IN THE COURTS OF THE STATE OF
MISSOURI OR THE UNITED STATES DISTRICT COURTS IN ST. LOUIS, MISSOURI. EXECUTIVE
AND THE COMPANY CONSENT TO SUCH JURISDICTION, AGREE THAT VENUE WILL BE PROPER IN
SUCH COURTS AND WAIVE ANY OBJECTIONS BASED UPON FORUM NON CONVENIENS. THE CHOICE
--------------------
OF FORUM SET FORTH IN THIS SECTION 18 SHALL NOT BE DEEMED TO PRECLUDE THE
----------
ENFORCEMENT OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION
UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER JURISDICTION.
19. Further Action
--------------
Executive and the Company agree to perform any further acts and to execute
and deliver any documents which may be reasonable to carry out the provisions
hereof.
20. Counterparts
------------
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
-11-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands as of the day
and year first written above.
EXECUTIVE:
/s/ Michael A. Fout
---------------------------------
Name: Michael A. Fout
CRYSTALOID TECHNOLOGIES, INC.
By /s/ Christopher T. Paule
-------------------------------
Name: Christopher T. Paule
Title: Vice President
JACKSON PRODUCTS, INC.
By /s/ Christopher T. Paule
-------------------------------
Name: Christopher T. Paule
Title: Vice President
-12-
<PAGE>
EXHIBIT 10.35
EMPLOYMENT AND NON-INTERFERENCE AGREEMENT
-----------------------------------------
This Employment and Non-Interference Agreement, dated as of April 23, 1998
(this "Agreement"), by and between Gregory J. Putman (the "Executive") and
---------
Crystaloid Technologies, Inc., a Delaware corporation (the "Company"), and a
-------
wholly-owned subsidiary of Jackson Products, Inc., a Delaware corporation (the
"Parent");
------
W I T N E S S E T H:
-------------------
WHEREAS, the Company wishes to obtain the future services of the Executive
for the Company; and
WHEREAS, the Executive is willing, upon the terms and conditions herein set
forth, to provide services hereunder; and
WHEREAS, the Company wishes to secure the Executive's non-interference,
upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Nature of Employment
--------------------
Subject to Section 3, the Company hereby employs Executive, and Executive
---------
agrees to accept such employment, during the Term of Employment (as defined in
Section 3(a)), as Controller of the Company and to undertake such duties and
- ------------
responsibilities as may be reasonably assigned to Executive from time to time by
the Board of Directors of the Company or the appropriately authorized and
designated officers of the Company or the Parent.
2. Extent of Employment
--------------------
(a) During the Term of Employment, the Executive shall perform his
obligations hereunder faithfully and to the best of his ability at the principal
executive offices of the Company, under the direction of the Board of Directors
of the Company, and shall abide by the rules, customs and usages from time to
time established by each of the Parent and the Company.
(b) During the Term of Employment, the Executive shall devote all of his
business time, energy and skill as may be reasonably necessary for the
performance of his duties,
<PAGE>
responsibilities and obligations hereunder (except for vacation periods and
reasonable periods of illness or other incapacity), consistent with past
practices and norms in similar positions.
(c) Nothing contained herein shall require Executive to follow any
directive or to perform any act which would violate any laws, ordinances,
regulations or rules of any governmental, regulatory or administrative body,
agent or authority, any court or judicial authority, or any public, private or
industry regulatory authority (collectively, the "Regulations"). Executive
-----------
shall act in good faith in accordance with all Regulations.
3. Term of Employment; Termination
-------------------------------
(a) The "Term of Employment" shall commence on the date hereof and shall
------------------
continue for a term of two years. Should the Executive's employment by the
Company be earlier terminated pursuant to Section 3(b) or by the Executive
-----------
pursuant to Section 3(c), the Term of Employment shall end on the date of such
------------
earlier termination.
(b) Subject to the payments contemplated by Section 3(e), the Term of
------------
Employment may be terminated at any time by the Company:
(i) upon the death of Executive;
(ii) in the event that because of physical or mental disability
Executive is unable to perform, and does not perform, substantially all of
his duties hereunder for a continuous period of ninety (90) days, or an
experienced, recognized physician specializing in such disabilities
certifies as to the foregoing in writing;
(iii) for Cause (as defined in Section 3(d));
-------------
(iv) upon the continuous poor or unacceptable performance of the
Executive's duties to the Company, in the sole judgment of the Board of
Directors of the Company, which has remained uncured for a period of thirty
(30) days after delivery of notice by the Company to the Executive of such
dissatisfaction with Executive's performance; or
(v) for any other reason or no reason, it being understood that no
reason is required.
Executive acknowledges that no representations or promises have been made
concerning the grounds for termination or the future operation of the Company's
business, and that nothing contained herein or otherwise stated by or on behalf
of the Company modifies or amends the right of the Company to terminate
Executive at any time, with or without Cause. Termination shall become effective
upon the delivery by the Company to the Executive of notice specifying such
termination and the reasons therefor (i.e., Section 3(b)(i)-
----
-2-
<PAGE>
(v)), subject to the requirements for advance notice and an opportunity to cure
provided in this Agreement, if and to the extent applicable.
(c) Subject to the payments contemplated by Section 3(e), the Term of
------------
Employment may be terminated at any time by the Executive:
(i) upon the death of Executive;
(ii) in the event that because of physical or mental disability
Executive is unable to perform, and does not perform substantially all of
his duties hereunder for a continuous period of ninety (90) days, or an
experienced, recognized physician specializing in such disabilities
certifies as to the foregoing in writing;
(iii) as a result of a material reduction in Executive's authority,
perquisites, salary, position or responsibilities (other than such a
reduction which affects all of the Company's senior executives on a
substantially equal or proportionate basis) or the Company's willful,
material violation of its obligations under this Agreement, in each case,
after thirty (30) days prior written notice to the Company and its Board of
Directors and the Company's failure thereafter to cure such reduction or
violation; or
(iv) voluntarily or for any reason not referred to in clauses (i)
through (iii), or no reason, in each case, after ninety (90) days prior
written notice to the Company.
(d) For the purposes of this Section 3:
---------
"Cause" shall mean any of the following: (i) Executive's commission of any
-----
crime or criminal offense involving the unlawful theft or conversion of
substantial monies or other property or any other felony (other than a criminal
offense arising solely under a statutory provision imposing criminal liability
on the Executive on a per se basis due to the offices held by the Executive),
--- --
including fraud or embezzlement, in each case upon a determination by the
Company that such a crime has been committed; (ii) Executive's breach of any of
his fiduciary duties to the Company or its stockholders or making of a willful
misrepresentation or omission which breach, misrepresentation or omission would
reasonably be expected to materially adversely affect the business, properties,
assets, condition (financial or other) or prospects of the Parent or the
Company; (iii) Executive's willful, continual and material neglect or failure to
discharge his duties, responsibilities or obligations prescribed by Sections 1
----------
and 2 (other than arising solely due to physical or mental disability); (iv)
-
Executive's habitual drunkenness or substance abuse which materially interferes
with Executive's ability to discharge his duties, responsibilities or
obligations prescribed by Sections 1 and 2; (v) Executive's willful and material
---------- -
breach of any non-competition or confidentiality agreement with the Company,
including without limitation, those set forth in Sections 7 and 8 of this
---------- -
Agreement; and (vi) Executive's gross neglect of his duties and
responsibilities, as determined by the Company.
-3-
<PAGE>
(e) In the event Executive's employment is terminated pursuant to Section
-------
3(b)(i), 3(b)(ii), 3(b)(v), 3(c)(i), 3(c)(ii) or 3(c)(iii), the Company will pay
- ------- -------- ------- ------- -------- ---------
to Executive (or his estate or representative) the full amounts to which he
would be entitled under Section 4(a) and customary benefits for the period from
------------
the date of termination to the first anniversary of such termination. In the
event Executive's employment is terminated pursuant to Section 3(b)(iv), the
----------------
Company will pay to Executive the full amounts to which he would be entitled
under Section 4(a) and customary benefits for the period from the date of
------------
termination until thirty (30) days after the date of such termination. In the
event Executive's employment is terminated pursuant to Section 3(b)(iii) or
-----------------
3(c)(iv), there will be no amounts owing by the Company to the Executive under
- --------
Section 4 or any other provision of this Agreement, from and after the date of
- ---------
termination. If the Company makes any payments required by this Section 3(e),
------------
such payments will constitute severance and liquidated damages, and the Company
will not be obligated to pay any further amounts to Executive under this
Agreement or otherwise be liable to Executive in connection with his
termination.
(f) All determinations pursuant to this Section 3 (other than pursuant to
---------
Section 3(b)(ii) or 3(c)(ii)) shall be made by the Company's Board of Directors,
- ---------------- --------
in its sole discretion, whose decision shall be final, conclusive and binding.
(g) Termination of the Term of Employment will not terminate the parties'
respective obligations under Sections 7, 8, 10 through 20, or any other
---------- - -- --
provisions not associated specifically with the Term of Employment.
(h) In the event the Term of Employment is terminated and the Company is
obligated to make payments pursuant to Section 3(e), Executive will not be
------------
obligated to seek or obtain alternative employment; provided, however, if he
-------- -------
nevertheless thereafter obtains alternative employment, then if and to the
extent Executive obtains such employment, the Company's payment obligations
under Section 3(e), including its obligation to provide insurance coverage, if
------------
any, will be mitigated and reduced by and to the extent of Executive's
compensation under such alternative employment during the period for which
payments are owed by the Company pursuant to Section 3(e). Moreover, in the
------------
event that, after the Restricted Period pursuant to Section 8(a), Executive is
------------
employed by or engaged in a Competitive Business as contemplated by Section
-------
8(a)(i), then the Company will thereupon cease and will be no longer obligated
- -------
to make any payments otherwise required under Section 3(e).
------------
(i) In the event the Term of Employment is terminated and the Company is
obligated to make payments pursuant to Section 3(e), Executive hereby waives any
------------
and all claims against the Company, the Parent and their respective officers,
directors, employees, agents, or representatives, stockholders and affiliates
relating to his employment during the term hereof and this Agreement.
4. Compensation. During the Term of Employment, the Company shall pay
------------
compensation to Executive as base compensation for his services hereunder, in
bi-weekly
-4-
<PAGE>
installments per annum, a base salary at a rate of $52,000 per annum. Such
amounts may be adjusted annually at the discretion of the Company based upon an
annual review of Executive's performance by the Company which will take place on
or about January 1 of each year.
5. Reimbursement of Expenses
-------------------------
During the Term of Employment, the Company shall reimburse Executive for
documented travel, entertainment and other expenses reasonably incurred by
Executive in connection with the performance of his duties hereunder and, in
each case, in accordance with the rules, customs and usages promulgated by the
Company from time to time in effect.
6. Benefits
--------
During the Term of Employment, the Executive shall be entitled to
perquisites, paid vacations and benefits (including health, short and long term
disability, pension and life insurance benefits consistent with past practice,
or as increased from time to time) established from time to time, by the Board
of Directors for executives of the Company, subject to the policies and
procedures in effect regarding participation in such benefits.
7. Confidential Information
------------------------
(a) Executive acknowledges that his employment hereunder gives him access
to Confidential Information relating to the Company's Business and its customers
which must remain confidential. Executive acknowledges that this information is
valuable, special, and a unique asset of the Company's Business, and that it has
been and will be developed by the Company at considerable effort and expense,
and if it were to be known and used by others engaged in a Competitive Business,
it would be harmful and detrimental to the interests of the Company. In
consideration of the foregoing and this Agreement, Executive hereby agrees and
covenants that, during and after the Term of Employment, Executive will not,
directly or indirectly in one or a series of transactions, disclose to any
person, or use or otherwise exploit for the Executive's own benefit or for the
benefit of anyone other than the Company, any Confidential Information (as
defined in Section 9), whether prepared by Executive or not; provided, however,
--------- -------- -------
that any Confidential Information may be disclosed to officers, representatives,
employees and agents of the Company who need to know such Confidential
Information in order to perform the services or conduct the operations required
or expected of them in the Business (as defined in Section 9). Executive shall
---------
use his best efforts to prevent the removal of any Confidential Information from
the premises of the Company, except as required in his normal course of
employment by the Company. Executive shall use commercially reasonable efforts
to cause all persons or entities to whom any Confidential Information shall be
disclosed by him hereunder to observe the terms and conditions set forth herein
as though each such person or entity was bound hereby. Executive shall have no
obligation hereunder to keep confidential any Confidential Information if and to
the extent disclosure of any thereof is specifically required by law;
-5-
<PAGE>
provided, however, that in the event disclosure is required by applicable law,
- -------- -------
the Executive shall provide the Company with prompt notice of such requirement,
prior to making any disclosure, so that the Company may seek an appropriate
protective order. At the request of the Company, Executive agrees to deliver to
the Company, at any time during the Term of Employment, or thereafter, all
Confidential Information which he may possess or control. Executive agrees that
all Confidential Information of the Company (whether now or hereafter existing)
conceived, discovered or made by him during the Term of Employment exclusively
belongs to the Company (and not to Executive). Executive will promptly disclose
such Confidential Information to the Company and perform all actions reasonably
requested by the Company to establish and confirm such exclusive ownership.
(b) The terms of this Section 7 shall survive the termination of this
---------
Agreement regardless of who terminates this Agreement, or the reasons therefor.
8. Non-Interference
----------------
(a) Executive acknowledges that the services to be provided give him the
opportunity to have special knowledge of the Companies and its Confidential
Information and the capabilities of individuals employed by or affiliated with
the Company and that interference in these relationships would cause irreparable
injury to the Company. In consideration of this Agreement, Executive covenants
and agrees that:
(i) From the date hereof through the date that is 18 months after the
termination of the Term of Employment (the "Restricted Period"), Executive
-----------------
will not, without the express written approval of the Board of Directors of
the Company, anywhere in the Market, directly or indirectly, in one or a
series of transactions, own, manage, operate, control, invest or acquire an
interest in, or otherwise engage or participate in, whether as a
proprietor, partner, stockholder, lender, director, officer, employee,
joint venturer, investor, lessor, supplier, customer, agent, representative
or other participant, in any business which competes, directly or
indirectly, with the Business in the Market ("Competitive Business")
--------------------
without regard to (A) whether the Competitive Business has its office,
manufacturing or other business facilities within or without the Market,
(B) whether any of the activities of the Executive referred to above occur
or are performed within or without the Market or (C) whether the Executive
resides, or reports to an office, within or without the Market; provided,
--------
however, that (x) the Executive may, anywhere in the Market, directly or
-------
indirectly, in one or a series of transactions, own, invest or acquire an
interest in up to one percent (1%) of the capital stock of a corporation
whose capital stock is traded publicly, or that (y) Executive may accept
employment with a successor company to the Company.
(ii) During the Restricted Period (which shall not be reduced by any
period of violation of this Agreement by Executive or period which is
required for litigation to enforce the rights hereunder), Executive will
not without the express prior written
-6-
<PAGE>
approval of the Board of Directors of the Company (A) directly or
indirectly, in one or a series of transactions, recruit, solicit or
otherwise induce or influence any proprietor, partner, stockholder, lender,
director, officer, employee, sales agent, joint venturer, investor, lessor,
supplier, customer, agent, representative or any other person which has a
business relationship with the Company or had a business relationship with
the Company within the 24 month period preceding the date of the incident
in question, to discontinue, reduce or modify such employment, agency or
business relationship with the Company, or (B) employ or seek to employ or
cause any Competitive Business to employ or seek to employ any person or
agent who is then (or was at any time within 24 months prior to the date
the Executive or the Competitive Business employs or seeks to employ such
person) employed or retained by the Company. Notwithstanding the foregoing,
nothing herein shall prevent the Executive from providing a letter of
recommendation to an employee with respect to a future employment
opportunity.
(iii) The scope and term of this Section 8 would not preclude
---------
Executive from earning a living with an entity that is not a Competitive
Business.
(b) In the event that Executive breaches his obligations in any material
respect under Section 7 or this Section 8, the Company, in addition to pursuing
--------- ---------
all available remedies under this Agreement, at law or otherwise, and without
limiting its right to pursue the same shall cease all payments to the Executive
under this Agreement or any other agreement.
(c) The terms of this Section 8 shall survive the termination of this
---------
Agreement regardless of who terminates this Agreement, or the reasons therefor.
9. Definitions
-----------
"Business" means any business conducted, or engaged in, by the Companies
--------
prior to the date hereof or at any time during the Term of Employment.
"Cause" is defined in Section 3(c).
----- ------------
"Companies" means Parent and its successors or any of its direct or
---------
indirect subsidiaries (including the Company), now or hereafter existing.
"Company" is defined in the introduction.
-------
"Competitive Business" is defined in Section 8(a)(i).
-------------------- ---------------
"Confidential Information" means any confidential information including,
------------------------
without limitation, any study, data, calculations, software storage media or
other compilation of information, patent, patent application, copyright,
trademark, trade name, service mark,
-7-
<PAGE>
service name, "know-how", trade secrets, customer lists, details of client or
consultant contracts, pricing policies, operational methods, marketing plans or
strategies, product development techniques or plans, business acquisition plans
or any portion or phase of any scientific or technical information, ideas,
discoveries, designs, computer programs (including source of object codes),
processes, procedures, formulas, improvements or other proprietary or
intellectual property of the Companies, whether or not in written or tangible
form, and whether or not registered, and including all files, records, manuals,
books, catalogues, memoranda, notes, summaries, plans, reports, records,
documents and other evidence thereof. The term "Confidential Information" does
------------------------
not include, and there shall be no obligation hereunder with respect to,
information that becomes generally available to the public other than as a
result of a disclosure by the Executive not permissible hereunder.
"Executive" means Gregory J. Putman or his estate, if deceased.
---------
"Market" means any county in the United States of America and each similar
------
jurisdiction in any other country in which the Business was conducted by or
engaged in by the Companies prior to the date hereof or is conducted or engaged
in, or is proposed to be conducted or engaged in, by the Companies at any time
during the Term of Employment.
"Parent" is defined in the introduction.
------
"Regulations" is defined in Section 2(c).
----------- ------------
"Restricted Period" is defined in Section 8(a)(i).
----------------- ---------------
"Term of Employment" is defined in Section 3(a).
------------------ ------------
10. Notice
------
Any notice, request, demand or other communication required or permitted to
be given under this Agreement shall be given in writing and if delivered
personally, or sent by certified or registered mail, return receipt requested,
as follows (or to such other addressee or address as shall be set forth in a
notice given in the same manner):
If to Executive: _______________________________
_______________________________
_______________________________
_______________________________
If to Company: Crystaloid Technologies, Inc.
c/o Jackson Products, Inc.
2997 Clarkson Road
Chesterfield, Missouri 63017
Attention: Christopher T. Paule
-8-
<PAGE>
Facsimile: (314) 207-2800
with a copy to:
Mayer, Brown & Platt
1675 Broadway, Suite 1900
New York, New York 10019
Attention: James B. Carlson
Facsimile: (212) 262-1910
Any such notices shall be deemed to be given on the date personally delivered or
such return receipt is issued.
11. Previous Agreements; Executive's Representation
-----------------------------------------------
(a) Executive hereby cancels, voids and renders without force or effect
any previous employment or severance agreement by and between Executive and the
Company.
(b) Executive hereby warrants and represents to the Company that Executive
has carefully reviewed this Agreement and has consulted with such advisors as
Executive considers appropriate in connection with this Agreement, and is not
subject to any covenants, agreements or restrictions, including without
limitation any covenants, agreements or restrictions arising out of Executive's
prior employment which would be breached or violated by Executive's execution of
this Agreement or by Executive's performance of his duties hereunder.
12. Other Matters
-------------
Executive agrees and acknowledges that the obligations owed to Executive
under this Agreement are solely the obligations of the Company, and that none of
the Companies' stockholders, directors, officers, affiliates, representatives,
agents or lenders will have any obligations or liabilities in respect of this
Agreement and the subject matter hereof.
13. Validity
--------
If, for any reason, any provision hereof shall be determined to be invalid
or unenforceable, the validity and effect of the other provisions hereof shall
not be affected thereby.
14. Severability
------------
Whenever possible, each provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable
-9-
<PAGE>
law or rule in any jurisdiction, such invalidity, illegality or unenforceability
will not affect any other provision or any other jurisdiction, but this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision had never been contained
herein. If any court determines that any provision of Section 8 or any other
---------
provision hereof is unenforceable and therefore acts to reduce the scope or
duration of such provision, the provision in its reduced form shall then be
enforceable.
15. Waiver of Breach; Specific Performance
--------------------------------------
The waiver by the Company or Executive of a breach of any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any other breach of such other party. Each of the parties (and third party
beneficiaries) to this Agreement will be entitled to enforce its respective
rights under this Agreement and to exercise all other rights existing in its
favor. The parties hereto agree and acknowledge that money damages may not be
an adequate remedy for any breach of the provisions of Sections 7 and 8 of this
---------- -
Agreement and that any party (and third party beneficiaries) may in its sole
discretion apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive relief, including temporary restraining
orders, preliminary injunctions and permanent injunctions in order to enforce or
prevent any violations of the provisions of this Agreement.
16. Assignment; Third Parties
-------------------------
Neither the Executive nor the Company may assign, transfer, pledge,
hypothecate, encumber or otherwise dispose of this Agreement or any of his or
its respective rights or obligations hereunder, without the prior written
consent of the other. The parties agree and acknowledge that each of the
Companies and the stockholders and investors therein are intended to be third
party beneficiaries of, and have rights and interests in respect of, Executive's
agreements set forth in Sections 7 and 8.
---------- -
17. Amendment; Entire Agreement
---------------------------
This Agreement may not be changed orally but only by an agreement in
writing agreed to by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought. This Agreement embodies the
entire agreement and understanding of the parties hereto in respect of the
subject matter of this Agreement, and supersedes and replaces all prior
Agreements, understandings and commitments with respect to such subject matter.
18. Litigation
----------
THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MISSOURI, EXCEPT THAT NO DOCTRINE OF
CHOICE OF LAW SHALL BE USED TO APPLY
-10-
<PAGE>
ANY LAW OTHER THAN THAT OF MISSOURI, AND NO DEFENSE, COUNTERCLAIM OR RIGHT OF
SET-OFF GIVEN OR ALLOWED BY THE LAWS OF ANY OTHER STATE OR JURISDICTION, OR
ARISING OUT OF THE ENACTMENT, MODIFICATION OR REPEAL OF ANY LAW, REGULATION,
ORDINANCE OR DECREE OF ANY FOREIGN JURISDICTION, BE INTERPOSED IN ANY ACTION
HEREON. EXECUTIVE AND THE COMPANY AGREE THAT ANY ACTION OR PROCEEDING TO ENFORCE
OR ARISING OUT OF THIS AGREEMENT MAY BE COMMENCED IN THE COURTS OF THE STATE OF
MISSOURI OR THE UNITED STATES DISTRICT COURTS IN ST. LOUIS, MISSOURI. EXECUTIVE
AND THE COMPANY CONSENT TO SUCH JURISDICTION, AGREE THAT VENUE WILL BE PROPER IN
SUCH COURTS AND WAIVE ANY OBJECTIONS BASED UPON FORUM NON CONVENIENS. THE CHOICE
--------------------
OF FORUM SET FORTH IN THIS SECTION 18 SHALL NOT BE DEEMED TO PRECLUDE THE
----------
ENFORCEMENT OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION
UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER JURISDICTION.
19. Further Action
--------------
Executive and the Company agree to perform any further acts and to execute
and deliver any documents which may be reasonable to carry out the provisions
hereof.
20. Counterparts
------------
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
-11-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands as of the day
and year first written above.
EXECUTIVE:
/s/ Gregory J. Putman
-------------------------------------
Name: Gregory J. Putman
CRYSTALOID TECHNOLOGIES, INC.
By /s/ Christopher T. Paule
-----------------------------------
Name: Christopher T. Paule
Title: Vice President
JACKSON PRODUCTS, INC.
By /s/ Christopher T. Paule
-----------------------------------
Name: Christopher T. Paule
Title: Vice President
-12-
<PAGE>
EXHIBIT 10.36
EMPLOYMENT AND NON-INTERFERENCE AGREEMENT
-----------------------------------------
This Employment and Non-Interference Agreement, dated as of May 6, 1998
(this "Agreement"), by and between Lincoln M. Kennedy (the "Executive") and
--------- ---------
American Allsafe Company, a Delaware corporation (the "Company"), and a wholly-
-------
owned subsidiary of Jackson Products, Inc., a Delaware corporation (the
"Parent").
------
W I T N E S S E T H:
-------------------
WHEREAS, the Company wishes to obtain the future services of the Executive
for the Company; and
WHEREAS, the Executive is willing, upon the terms and conditions herein set
forth, to provide services hereunder; and
WHEREAS, the Company wishes to secure the Executive's non-interference,
upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Nature of Employment
--------------------
Subject to Section 3, the Company hereby employs Executive, and Executive
---------
agrees to accept such employment, during the Term of Employment (as defined in
Section 3(a)), as President and Chief Operating Officer of the Company and to
- ------------
undertake such duties and responsibilities as may be reasonably assigned to
Executive from time to time by the Board of Directors of the Company or the
appropriately authorized and designated officers of the Company or the Parent.
2. Extent of Employment
--------------------
(a) During the Term of Employment, the Executive shall perform his
obligations hereunder faithfully and to the best of his ability at the principal
executive offices of the Company as directed by Robert H. Elkin, Chairman and
Chief Executive Officer of the Parent, and under the direction of the Board of
Directors of the Company while reporting to Mr. Elkin, and shall abide by the
rules, customs and usages from time to time established by each of the Parent
and the Company.
(b) During the Term of Employment, the Executive shall devote all of his
business time, energy and skill as may be reasonably necessary for the
performance of his duties,
<PAGE>
responsibilities and obligations hereunder (except for vacation periods and
reasonable periods of illness or other incapacity), consistent with past
practices and norms in similar positions.
(c) Nothing contained herein shall require Executive to follow any
directive or to perform any act which would violate any laws, ordinances,
regulations or rules of any governmental, regulatory or administrative body,
agent or authority, any court or judicial authority, or any public, private or
industry regulatory authority (collectively, the "Regulations"). Executive
-----------
shall act in good faith in accordance with all Regulations.
3. Term of Employment; Termination
-------------------------------
(a) The "Term of Employment" shall commence on the date hereof and shall
------------------
continue for a term of three years (the "Initial Term"), subject to automatic
------------
renewal for additional periods of one (1) year after the Initial Term (the
"Additional Terms") unless at least ninety (90) days prior to the scheduled
----------------
expiration date of the Initial Term or subsequent Additional Term, either the
Executive or the Company notifies the other of its decision not to renew. Should
the Executive's employment by the Company be earlier terminated pursuant to
Section 3(b) or by the Executive pursuant to Section 3(c), the Term of
- ------------ ------------
Employment shall end on the date of such earlier termination.
(b) Subject to the payments contemplated by Section 3(e), the Term of
------------
Employment may be terminated at any time by the Company:
(i) upon the death of Executive;
(ii) in the event that because of physical or mental disability
Executive is unable to perform, and does not perform, substantially all of
his duties hereunder for a continuous period of ninety (90) days, or as
certified in writing by an experienced, recognized physician specializing
in such disabilities, which physician shall be reasonably acceptable to the
Company and the Executive;
(iii) for Cause (as defined in Section 3(d));
-------------
(iv) upon the continuous poor or unacceptable performance of the
Executive's duties to the Company, in the sole judgment of the Board of
Directors of the Company, which has remained uncured for a period of thirty
(30) days after delivery of notice by the Company to the Executive of such
dissatisfaction with Executive's performance; or
(v) for any other reason or no reason, it being understood that no
reason is required.
Executive acknowledges that no representations or promises have been made
concerning the grounds for termination or the future operation of the Company's
business,
-2-
<PAGE>
and that nothing contained herein or otherwise stated by or on behalf of the
Company modifies or amends the right of the Company to terminate Executive at
any time, with or without Cause. Termination shall become effective upon the
delivery by the Company to the Executive of notice specifying such termination
and the reasons therefor (i.e., Section 3(b)(i)-(v)), subject to the
----
requirements for advance notice and an opportunity to cure provided in this
Agreement, if and to the extent applicable.
(c) Subject to the payments contemplated by Section 3(e), the Term of
------------
Employment may be terminated at any time by the Executive:
(i) upon the death of Executive;
(ii) in the event that because of physical or mental disability
Executive is unable to perform, and does not perform, substantially all of
his duties hereunder for a continuous period of ninety (90) days, or as
certified in writing by an experienced, recognized physician specializing
in such disabilities, which physician shall be reasonably acceptable to the
Company and the Executive;
(iii) as a result of a material reduction in Executive's authority,
perquisites, salary, position or responsibilities (other than such a
reduction which affects all of the Company's senior executives on a
substantially equal or proportionate basis) or the Company's willful,
material violation of its obligations under this Agreement, in each case,
after thirty (30) days prior written notice to the Company and its Board of
Directors and the Company's failure thereafter to cure such reduction or
violation; or
(iv) voluntarily or for any reason not referred to in clauses (i)
through (iii), or no reason, in each case, after ninety (90) days prior
written notice to the Company.
(d) For the purposes of this Section 3:
---------
"Cause" shall mean any of the following: (i) Executive's commission of any
-----
crime or criminal offense involving the unlawful theft or conversion of
substantial monies or other property or any other felony (other than a criminal
offense arising solely under a statutory provision imposing criminal liability
on the Executive on a per se basis due to the offices held by the Executive),
--- --
including fraud or embezzlement; (ii) Executive's breach of any of his fiduciary
duties to the Company or its stockholders or making of a willful
misrepresentation or omission which breach, misrepresentation or omission would
reasonably be expected to materially adversely affect the business, properties,
assets, condition (financial or other) or prospects of the Parent or the
Company; (iii) Executive's willful, continual and material neglect or failure to
discharge his duties, responsibilities or obligations prescribed by Sections 1
----------
and 2 (other than arising solely due to physical or mental disability); (iv)
-
Executive's habitual drunkenness or substance abuse which materially interferes
with Executive's ability to discharge his duties, responsibilities or
obligations prescribed by Sections 1 and 2; (v) Executive's willful and material
---------- -
breach of any non-competition or
-3-
<PAGE>
confidentiality agreement with the Company, including without limitation, those
set forth in Sections 7 and 8 of this Agreement; and (vi) Executive's gross
---------- -
neglect of his duties and responsibilities, as determined by the Company.
(e) In the event Executive's employment is terminated pursuant to Section
-------
3(b)(i), 3(b)(ii), 3(b)(v), 3(c)(i), 3(c)(ii) or 3(c)(iii), the Company will pay
- ------- -------- ------- ------- -------- ---------
to Executive (or his estate or representative) the full amounts to which he
would be entitled under Section 4(a) and customary benefits for the period from
------------
the date of termination to the first anniversary of such termination. In the
event Executive's employment is terminated pursuant to Section 3(b)(iv), the
----------------
Company will pay to Executive the full amounts to which he would be entitled
under Section 4(a) and customary benefits for the period from the date of
------------
termination until thirty (30) days after the date of such termination. In the
event Executive's employment is terminated pursuant to Section 3(b)(iii) or
-----------------
3(c)(iv), there will be no amounts owing by the Company to the Executive under
- --------
Section 4 or any other provision of this Agreement, from and after the date of
- ---------
termination. If the Company makes any payments required by this Section 3(e),
------------
such payments will constitute severance and liquidated damages, and the Company
will not be obligated to pay any further amounts to Executive under this
Agreement or otherwise be liable to Executive in connection with his
termination.
(f) All determinations pursuant to this Section 3 (other than pursuant to
---------
Section 3(b)(ii) or 3(c)(ii)) shall be made by the Company's Board of Directors,
- ---------------- --------
in its sole discretion, whose decision shall be final, conclusive and binding.
(g) Termination of the Term of Employment will not terminate the parties'
respective obligations under Sections 7, 8, 10 through 20, or any other
---------- - -- --
provisions not associated specifically with the Term of Employment.
(h) In the event the Term of Employment is terminated and the Company is
obligated to make payments pursuant to Section 3(e), Executive will not be
------------
obligated to seek or obtain alternative employment; provided, however, if he
-------- -------
nevertheless thereafter obtains alternative employment, then if and to the
extent Executive obtains such employment, the Company's payment obligations
under Section 3(e), including its obligation to provide insurance coverage, if
------------
any, will be mitigated and reduced by and to the extent of Executive's
compensation under such alternative employment during the period for which
payments are owed by the Company pursuant to Section 3(e). Moreover, in the
------------
event that, after the Restricted Period pursuant to Section 8(a), Executive is
------------
employed by or engaged in a Competitive Business as contemplated by Section
-------
8(a)(i), then the Company will thereupon cease and will be no longer obligated
- -------
to make any payments otherwise required under Section 3(e).
------------
(i) In the event the Term of Employment is terminated and the Company is
obligated to make payments pursuant to Section 3(e), Executive hereby waives any
------------
and all claims against the Company, the Parent and their respective officers,
directors, employees, agents,
-4-
<PAGE>
or representatives, stockholders and affiliates relating to his employment
during the term hereof and this Agreement.
4. Compensation.
------------
(a) During the Term of Employment, the Company shall pay compensation to
Executive as base compensation for his services hereunder a base salary at a
rate of $153,300 per annum. Such amounts may be adjusted upward annually at the
discretion of the Company based upon an annual review of Executive's performance
by the Company beginning on May 1, 1999.
(b) An annual bonus compensation based on Executive's performance as
determined and approved by the Board of Directors. Such bonus will be at the
full discretion of the Board of Directors, and may not be paid at all.
Executive acknowledges that no bonus has been agreed upon or promised. If the
Board of Directors decides to pay a bonus, it is to be paid within thirty (30)
days after the issuance of audited financial statements for the Company.
(c) During the Term of Employment, Executive shall receive a monthly
automobile allowance of $475 (before the effect of federal and state income
taxes and FICA).
5. Reimbursement of Expenses
-------------------------
During the Term of Employment, the Company shall reimburse Executive for
documented travel, entertainment and other expenses reasonably incurred by
Executive in connection with the performance of his duties hereunder and, in
each case, in accordance with the rules, customs and usages promulgated by the
Company from time to time in effect.
6. Benefits
--------
During the Term of Employment, the Executive shall be entitled to
perquisites, paid vacations and benefits (including health, short and long term
disability, pension and life insurance benefits consistent with past practice,
or as increased from time to time) established from time to time, by the Board
of Directors for executives of the Company, subject to the policies and
procedures in effect regarding participation in such benefits.
7. Confidential Information
------------------------
(a) Executive acknowledges that his employment hereunder gives him access
to Confidential Information relating to the Companies' Business and its
customers which must remain confidential. Executive acknowledges that this
information is valuable, special, and a unique asset of the Companies' Business,
and that it has been and will be developed by the Companies at considerable
effort and expense, and if it were to be known and used by others engaged in a
Competitive Business, it would be harmful and detrimental to the interests of
-5-
<PAGE>
the Companies. In consideration of the foregoing and this Agreement, Executive
hereby agrees and covenants that, during and after the Term of Employment,
Executive will not, directly or indirectly in one or a series of transactions,
disclose to any person, or use or otherwise exploit for the Executive's own
benefit or for the benefit of anyone other than the Companies, any Confidential
Information (as defined in Section 9), whether prepared by Executive or not;
---------
provided, however, that any Confidential Information may be disclosed to
- -------- -------
officers, representatives, employees and agents of the Companies who need to
know such Confidential Information in order to perform the services or conduct
the operations required or expected of them in the Business (as defined in
Section 9). Executive shall use his best efforts to prevent the removal of any
- ---------
Confidential Information from the premises of the Companies, except as required
in his normal course of employment by the Company. Executive shall use
commercially reasonable efforts to cause all persons or entities to whom any
Confidential Information shall be disclosed by him hereunder to observe the
terms and conditions set forth herein as though each such person or entity was
bound hereby. Executive shall have no obligation hereunder to keep confidential
any Confidential Information if and to the extent disclosure of any thereof is
specifically required by law; provided, however, that in the event disclosure is
-------- -------
required by applicable law, the Executive shall provide the Companies with
prompt notice of such requirement, prior to making any disclosure, so that the
Companies may seek an appropriate protective order. At the request of the
Companies, Executive agrees to deliver to the Companies, at any time during the
Term of Employment, or thereafter, all Confidential Information which he may
possess or control. Executive agrees that all Confidential Information of the
Companies (whether now or hereafter existing) conceived, discovered or made by
him during the Term of Employment exclusively belongs to the Company (and not to
Executive). Executive will promptly disclose such Confidential Information to
the Companies and perform all actions reasonably requested by the Companies to
establish and confirm such exclusive ownership.
(b) The terms of this Section 7 shall survive the termination of this
---------
Agreement regardless of who terminates this Agreement, or the reasons therefor.
8. Non-Interference
----------------
(a) Executive acknowledges that the services to be provided give him the
opportunity to have special knowledge of the Companies and its Confidential
Information and the capabilities of individuals employed by or affiliated with
the Company and that interference in these relationships would cause irreparable
injury to the Company. In consideration of this Agreement, Executive covenants
and agrees that:
(i) From the date hereof through the date that is 24 months after the
termination of the Term of Employment (the "Restricted Period"), Executive
-----------------
will not, without the express written approval of the Board of Directors of
the Company, anywhere in the Market, directly or indirectly, in one or a
series of transactions, own, manage, operate, control, invest or acquire an
interest in, or otherwise engage or participate in, whether as a
proprietor, partner, stockholder, lender, director, officer,
-6-
<PAGE>
employee, joint venturer, investor, lessor, supplier, customer, agent,
representative or other participant, in any business which competes,
directly or indirectly, with the Business in the Market ("Competitive
-----------
Business") without regard to (A) whether the Competitive Business has its
--------
office, manufacturing or other business facilities within or without the
Market, (B) whether any of the activities of the Executive referred to
above occur or are performed within or without the Market or (C) whether
the Executive resides, or reports to an office, within or without the
Market; provided, however, that (x) the Executive may, anywhere in the
-------- -------
Market, directly or indirectly, in one or a series of transactions, own,
invest or acquire an interest in up to one percent (1%) of the capital
stock of a corporation whose capital stock is traded publicly, or that (y)
Executive may accept employment with a successor company to the Company.
(ii) During the Restricted Period (which shall not be reduced by any
period of violation of this Agreement by Executive or period which is
required for litigation to enforce the rights hereunder), Executive will
not without the express prior written approval of the Board of Directors of
the Company (A) directly or indirectly, in one or a series of transactions,
recruit, solicit or otherwise induce or influence any proprietor, partner,
stockholder, lender, director, officer, employee, sales agent, joint
venturer, investor, lessor, supplier, customer, agent, representative or
any other person which has a business relationship with the Companies or
had a business relationship with the Companies within the 24 month period
preceding the date of the incident in question, to discontinue, reduce or
modify such employment, agency or business relationship with the Companies,
or (B) employ or seek to employ or cause any Competitive Business to employ
or seek to employ any person or agent who is then (or was at any time
within 24 months prior to the date the Executive or the Competitive
Business employs or seeks to employ such person) employed or retained by
the Companies. Notwithstanding the foregoing, nothing herein shall prevent
the Executive from providing a letter of recommendation to an employee with
respect to a future employment opportunity.
(ii) The scope and term of this Section 8 would not preclude
Executive from earning a living with an entity that is not a Competitive
Business.
(b) In the event that Executive breaches his obligations in any material
respect under Section 7 or this Section 8, the Company, in addition to pursuing
--------- ---------
all available remedies under this Agreement, at law or otherwise, and without
limiting its right to pursue the same shall cease all payments to the Executive
under this Agreement or any other agreement.
(c) The terms of this Section 8 shall survive the termination of this
---------
Agreement regardless of who terminates this Agreement, or the reasons therefor.
-7-
<PAGE>
9. Definitions
-----------
"Business" means any business conducted, or engaged in, by the Companies
--------
prior to the date hereof or at any time during the Term of Employment.
"Cause" is defined in Section 3(c).
----- ------------
"Companies" means Parent and its successors or any of its direct or
---------
indirect subsidiaries (including the Company), now or hereafter existing.
"Company" is defined in the introduction.
-------
"Competitive Business" is defined in Section 8(a)(i).
-------------------- ---------------
"Confidential Information" means any confidential information including,
------------------------
without limitation, any study, data, calculations, software storage media or
other compilation of information, patent, patent application, copyright,
trademark, trade name, service mark, service name, "know-how," trade secrets,
customer lists, details of client or consultant contracts, pricing policies,
operational methods, marketing plans or strategies, product development
techniques or plans, business acquisition plans or any portion or phase of any
scientific or technical information, ideas, discoveries, designs, computer
programs (including source of object codes), processes, procedures, formulas,
improvements or other proprietary or intellectual property of the Companies,
whether or not in written or tangible form, and whether or not registered, and
including all files, records, manuals, books, catalogues, memoranda, notes,
summaries, plans, reports, records, documents and other evidence thereof. The
term "Confidential Information" does not include, and there shall be no
------------------------
obligation hereunder with respect to, information that becomes generally
available to the public other than as a result of a disclosure by the Executive
not permissible hereunder.
"Executive" means Lincoln M. Kennedy or his estate, if deceased.
---------
"Market" means any county in the United States of America and each similar
------
jurisdiction in any other country in which the Business was conducted by or
engaged in by the Companies prior to the date hereof or is conducted or engaged
in, or is proposed to be conducted or engaged in, by the Companies at any time
during the Term of Employment.
"Parent" is defined in the introduction.
------
"Regulations" is defined in Section 2(c).
----------- ------------
"Restricted Period" is defined in Section 8(a)(i).
----------------- ---------------
"Term of Employment" is defined in Section 3(a).
------------------ ------------
-8-
<PAGE>
10. Notice
------
Any notice, request, demand or other communication required or permitted to
be given under this Agreement shall be given in writing and if delivered
personally, or sent by certified or registered mail, return receipt requested,
as follows (or to such other addressee or address as shall be set forth in a
notice given in the same manner):
If to Executive: Lincoln M. Kennedy
84 Timberlane Drive
Williamsville, New York 14221
Facsimile: (716) 689-7729
If to Company: American Allsafe Company
c/o Jackson Products, Inc.
2997 Clarkson Road
Chesterfield, Missouri 63017
Attention: Christopher T. Paule
Facsimile: (314) 207-2800
with a copy to:
Mayer, Brown & Platt
1675 Broadway, Suite 1900
New York, New York 10019
Attention: James B. Carlson
Facsimile: (212) 262-1910
Any such notices shall be deemed to be given on the date personally delivered or
such return receipt is issued.
11. Previous Agreements; Executive's Representation
-----------------------------------------------
(a) Executive hereby cancels, voids and renders without force or effect
any previous employment or severance agreement by and between Executive and the
Company.
(b) Executive hereby warrants and represents to the Company that Executive
has carefully reviewed this Agreement and has consulted with such advisors as
Executive considers appropriate in connection with this Agreement, and is not
subject to any covenants, agreements or restrictions, including without
limitation any covenants, agreements or restrictions arising out of Executive's
prior employment which would be breached or violated by Executive's execution of
this Agreement or by Executive's performance of his duties hereunder.
-9-
<PAGE>
12. Other Matters
-------------
Executive agrees and acknowledges that the obligations owed to Executive
under this Agreement are solely the obligations of the Company, and that none of
the Companies' stockholders, directors, officers, affiliates, representatives,
agents or lenders will have any obligations or liabilities in respect of this
Agreement and the subject matter hereof, except as may be expressly provided by
applicable law.
13. Validity
--------
If, for any reason, any provision hereof shall be determined to be invalid
or unenforceable, the validity and effect of the other provisions hereof shall
not be affected thereby.
14. Severability
------------
Whenever possible, each provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or any other jurisdiction, but this Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein. If any court determines that any
provision of Section 8 or any other provision hereof is unenforceable and
---------
therefore acts to reduce the scope or duration of such provision, the provision
in its reduced form shall then be enforceable.
15. Waiver of Breach; Specific Performance
--------------------------------------
The waiver by the Company or Executive of a breach of any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any other breach of such other party. Each of the parties (and third party
beneficiaries) to this Agreement will be entitled to enforce its respective
rights under this Agreement and to exercise all other rights existing in its
favor. The parties hereto agree and acknowledge that money damages may not be
an adequate remedy for any breach of the provisions of Sections 7 and 8 of this
---------- -
Agreement and that any party (and third party beneficiaries) may in its sole
discretion apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive relief, including temporary restraining
orders, preliminary injunctions and permanent injunctions in order to enforce or
prevent any violations of the provisions of this Agreement.
16. Assignment; Third Parties
-------------------------
Neither the Executive nor the Company may assign, transfer, pledge,
hypothecate, encumber or otherwise dispose of this Agreement or any of his or
its respective rights or
-10-
<PAGE>
obligations hereunder, without the prior written consent of the other. The
parties agree and acknowledge that each of the Companies and the stockholders
and lenders therein are intended to be third party beneficiaries of, and have
rights and interests in respect of, Executive's agreements set forth in Sections
--------
7 and 8.
- - -
17. Amendment; Entire Agreement
---------------------------
This Agreement may not be changed orally but only by an agreement in
writing agreed to by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought. This Agreement embodies the
entire agreement and understanding of the parties hereto in respect of the
subject matter of this Agreement, and supersedes and replaces all prior
Agreements, understandings and commitments with respect to such subject matter.
18. Litigation
----------
THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MISSOURI, EXCEPT THAT NO DOCTRINE OF
CHOICE OF LAW SHALL BE USED TO APPLY ANY LAW OTHER THAN THAT OF MISSOURI, AND NO
DEFENSE, COUNTERCLAIM OR RIGHT OF SET-OFF GIVEN OR ALLOWED BY THE LAWS OF ANY
OTHER STATE OR JURISDICTION, OR ARISING OUT OF THE ENACTMENT, MODIFICATION OR
REPEAL OF ANY LAW, REGULATION, ORDINANCE OR DECREE OF ANY FOREIGN JURISDICTION,
BE INTERPOSED IN ANY ACTION HEREON. EXECUTIVE AND THE COMPANY AGREE THAT ANY
ACTION OR PROCEEDING TO ENFORCE OR ARISING OUT OF THIS AGREEMENT MAY BE
COMMENCED IN THE COURTS OF THE STATE OF MISSOURI OR THE UNITED STATES DISTRICT
COURTS IN ST. LOUIS, MISSOURI. EXECUTIVE AND THE COMPANY CONSENT TO SUCH
JURISDICTION, AGREE THAT VENUE WILL BE PROPER IN SUCH COURTS AND WAIVE ANY
OBJECTIONS BASED UPON FORUM NON CONVENIENS. THE CHOICE OF FORUM SET FORTH IN
--------------------
THIS SECTION 18 SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT
----------
OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO
ENFORCE SAME IN ANY OTHER JURISDICTION.
19. Further Action
--------------
Executive and the Company agree to perform any further acts and to execute
and deliver any documents which may be reasonable to carry out the provisions
hereof.
20. Counterparts
------------
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
-11-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands as of the day
and year first written above.
EXECUTIVE:
/s/ Lincoln M. Kennedy
------------------------------------------------
Name: Lincoln M. Kennedy
AMERICAN ALLSAFE COMPANY
By /s/ Christopher T. Paule
---------------------------------------------
Name: Christopher T. Paule
Title: Vice President
-12-
<PAGE>
EXHIBIT 10.37
STOCK APPRECIATION RIGHTS AGREEMENT
-----------------------------------
This Stock Appreciation Rights Agreement, dated as of April 22, 1998, by
and between Jackson Products, Inc., a Delaware corporation (the "Company"), and
-------
Robert H. Elkin ("Executive").
---------
WHEREAS, the Company desires to provide stock appreciation rights to
Executive as an incentive for Executive to remain in the service of the Company
by allowing Executive to realize 1.75% of the appreciation of the value of the
Company's Common Stock from April 22, 1998 through the first Cash-Out Event,
subject and according to the provisions set forth herein; and
WHEREAS, in consideration of (1) the mutual covenants and agreements
herein set forth, (2) the Executive's continued service with the Company, and
(3) the special benefits accruing to the Company and Executive hereunder and in
connection herewith, the parties hereto agree as follows:
1. Definitions.
-----------
"Asset Sale" is defined in the definitions of Cash-Out Event.
----------
"Board of Directors" means the Company's Board of Directors or any
------------------
properly constituted committee thereof. Any determinations by the Board of
Directors hereunder will be final, non-appealable, binding and conclusive.
"Business Combination" is defined in the definition of Cash-Out Event.
--------------------
"Cash-Out Event" means (a) the closing of any merger, combination,
--------------
consolidation or similar business transaction involving the Company in which the
holders of Common Stock immediately prior to such closing are not the holders,
directly or indirectly, of a majority of the ordinary voting securities of the
surviving person in such transaction immediately after such closing (a "Business
--------
Combination"); (b) the closing of any sale or transfer by the Company of all or
- -----------
substantially all of its assets to an acquiring person in which the holders of
Common Stock immediately prior to such closing are not the holders of a majority
of the ordinary voting securities of the acquiring person immediately after such
closing (an "Asset Sale"); or (c) the closing of any sale by the holders of
----------
Common Stock of an amount of Common Stock that equals or exceeds a majority of
the shares of Common Stock immediately prior to such closing to a person in
which the holders of the Common Stock immediately prior to such closing are not
the holders of a majority of the ordinary voting securities of such person
immediately after such closing (a "Stock Sale").
----------
<PAGE>
"Cash-Out Value" means the net aggregate consideration received by the
--------------
holders of Common Stock in connection with a Cash-Out Event, after deduction of
any transaction costs incurred by or paid by the Company and its stockholders in
connection with the Cash-Out Event, including but not limited to any
termination, severance or other payments made in connection with the Cash-Out
Event in respect of employment, stock appreciation right or similar arrangements
with the employees of the Companies.
"Cause" means any of the following: (i) Executive's commission or
-----
conviction of any crime or criminal offense involving monies or other property;
(ii) Executive's commission or conviction of fraud or embezzlement; (iii)
Executive's breach of any of Executive's fiduciary duties to the Company or its
stockholders or making of a willful misrepresentation or omission which breach,
misrepresentation or omission would reasonably be expected to materially
adversely affect the business, properties, assets, condition (financial or
other) or prospects of the Company, provided, that, the Executive has been given
notice and 60 days from such notice fails to cure the breach, misrepresentation
or omission; (iv) Executive's willful and continual neglect or failure to
discharge Executive's duties, responsibilities or obligations (other than
arising solely due to physical or mental disability) prescribed by this
Agreement or any other agreement between the Executive and the Company,
provided, that Executive has been given notice and 60 days from such notice
fails to cure the neglect or failure; (v) Executive's habitual drunkenness or
substance abuse, which materially interferes with Executive's ability to
discharge Executive's duties, responsibilities and obligations prescribed by
this Agreement or any other agreement between the Executive and the Company,
provided that Executive has been given notice and 60 days from such notice fails
to cure such drunkenness or abuse; (vi) Executive's violation of any non-
competition or confidentiality agreement with the Company in any agreement with
the Company provided, that Executive has been given notice and 60 days from such
notice fails to cure the violation; or (vii) Executive's gross neglect of his
duties and responsibilities, as determined by the Board of Directors of the
Company, provided, that Executive has been given notice and 60 days from such
notice fails to cure the neglect.
"Common Stock" means the common stock, par value $.01 per share, of the
------------
Company.
"Companies" means the Company and its successors or any of its direct or
---------
indirect subsidiaries, now or hereafter existing.
"Cost" means with respect to the stock appreciation right, $1.00.
----
"Credit Agreement" means the Revolving Credit and Acquisition Loan
----------------
Agreement, dated as of April 22, 1998, as amended from time to time, by and
among the Company, BankBoston, N.A., as agent for itself and the other lending
banks, and the other parties listed on the signature pages thereto, including
all exhibits and schedules thereto, each as amended, supplemented or revised
from time to time.
"Determination Period" means the last four consecutive completed fiscal
--------------------
quarters as set forth on the audited financial statements of the Company
immediately preceding the exercise of
2
<PAGE>
the stock appreciation right for which Fair Market Value shall be used to
determine the Exercise Payment.
"EBITDA" the net income of the Company plus taxes, net interest expense,
------ ----
depreciation and amortization, each of which shall be determined in accordance
with GAAP and in accordance with the Company's books and records.
"Employment Agreement" means the Employment Agreement, dated as of August
--------------------
16, 1995, between the Company and the Executive, as amended, supplemented or
revised from time to time.
"Exercise Payment" is defined in Section 3(b).
---------------- ------------
"Fair Market Value" means, for any Determination Period, an amount equal
-----------------
to (i) 6.0 multiplied by EBITDA for the Determination Period less (ii) the
----
aggregate amount of all indebtedness and capitalized leases of the Companies
(including, without limitation, the Credit Agreement and the Indenture)
outstanding immediately prior to the closing date of the Cash-Out Event
(including, without limitation, interest and premiums accrued but unpaid
immediately prior to such date) all determined in accordance with GAAP less
----
(iii) the aggregate amount of preferred stock of the Company immediately prior
to the date of the exercise of the stock appreciation rights including accrued,
but unpaid, dividends, all determined in accordance with GAAP immediately prior
to the such date plus (iv) cash or cash equivalents held by the Companies
----
immediately prior to the date of the exercise of the stock appreciation rights;
provided, however, that Fair Market Value shall in no event be less than Cost.
- -------- -------
"Financing Agreements" means any senior or subordinated debt, preferred
--------------------
stock, common or other capital stock, lease or other financing agreements,
instruments and documents, including without limitation the Credit Agreement and
the Indenture, binding upon the Company or any of its subsidiaries, or their
respective properties and assets, from time to time in effect.
"GAAP" means the generally accepted accounting principals in the United
----
States of America in effect from time to time, applied on a consistent basis
both as to classification of items and to amounts.
"Indenture" means the Indenture, dated as of April 22, 1998, by and among
---------
the Company, its subsidiaries and State Street Bank and Trust Company, as
Trustee.
"Management Subscription Agreement" means the Management Subscription
---------------------------------
Agreement, dated as of August 16, 1995, by and among the Company and the other
parties listed on the signature pages thereto, including all exhibits and
schedules thereto, each as amended, supplemented or revised from time to time.
"Starting Value" means $40.0 million.
--------------
3
<PAGE>
"Stockholders Agreement" means the Stockholders Agreement, dated as of
----------------------
August 16, 1995, among the Company, the stockholders of the Company and the
other parties listed on the signature pages thereto, including all exhibits and
schedules thereto, each as amended, supplemented or revised from time to time.
"Stock Sale" is defined in the definition of Cash-Out Event.
----------
"Stop Payment Event" shall mean Executive's conduct at termination
------------------
involving actions, omissions or circumstances involving Cause (as defined in the
Employment Agreement).
"Three Year Junior Note" means a promissory note of the Company in the
----------------------
form attached as Exhibit A.
---------
"Vested Percentage Interest" shall mean the amount specified on Annex A
-------------------------- -------
for the relevant period.
2. Grant.
-----
(a) The Company hereby grants to the Executive a stock appreciation right
relating to the Company in respect of the Measurement Period. Such stock
appreciation right corresponds as set forth herein to, with respect to an
exercise in connection with a Cash-Out Event, the amount calculated in
accordance with Section 3.
---------
(b) Subject to the provisions of Section 6, the initial term of the stock
---------
appreciation right granted hereunder shall be until the tenth anniversary of the
date hereof, after which it shall be automatically renewed annually for
successive one-year periods so long as Executive's Employment Agreement with the
Company remains in full force and effect.
(c) The parties agree and acknowledge that this Agreement does not confer
upon Executive or the stock appreciation right any rights or interests as a
stockholder of the Company, and that no fiduciary duties are owed by the Company
or their respective directors, officers and stockholders in respect of the
rights granted hereunder. Executive further agrees and acknowledges that the
Company is not, and shall not be, restricted or limited in any manner from
entering into or modifying any Financing Agreements that restrict or limit
payments hereunder, incurring indebtedness, engaging in Cash-Out Events,
allocating amounts, determining rates or otherwise making determinations in
respect of indebtedness or EBITDA, making other adjustments pursuant to this
Agreement, issuing shares or other stock appreciation or similar rights,
irrespective of any dilution or other effect thereof, or otherwise taking
actions that may affect the stock appreciation right granted hereunder.
3. Exercise Pursuant to a Cash-Out Event. Upon the consummation of a
-------------------------------------
Cash-Out Event, the Company will, within five (5) business days after the Cash
Out Event, pay to Executive the Exercise Payment. Executive agrees and
acknowledges that all decisions regarding
4
<PAGE>
a Cash-Out Event, including timing, terms and conditions and the consideration
relating thereto, are at the sole and absolute discretion of the Company or the
Board of Directors.
The "Exercise Payment" shall mean an amount equal to the product of: (i)
-------
the Vested Percentage Interest as of the date of the Cash-Out Event multiplied
----------
by (ii) an amount equal to (x) the Cash-Out Value minus (y) the Starting Value.
- -- -----
4. Exercise Pursuant to Termination of Employment. Subject to the
----------------------------------------------
provisions of Section 6, if the employment by the Company of the Executive is
---------
terminated at any time for any reason other than Cause or voluntary termination
by the Executive before the consummation of a Cash-Out Event, then the Company
may, at the Company's option, exercise all, but not less than all, of the stock
appreciation right granted hereunder, and receive an amount equal to the product
-------
of (i) the Vested Percentage Interest multiplied by (ii) an amount equal to (x)
-------------
the Fair Market Value minus (y) the Starting Value. Executive acknowledges and
-----
agrees that all or any portion of the Exercise Payment under this Section 4 may
---------
be paid by the Company, at the Company's option, in Three Year Junior Notes.
5. Limitations of Payment and Other Matters.
----------------------------------------
(a) In the event that, in connection with any Cash-Out Event, the holders
of Common Stock receive consideration in a form other than cash, then Executive,
upon exercise of his stock appreciation right, will receive payment in the same
form and subject to the same conditions as the holders of Common Stock.
(b) All payments in respect of the exercise or purchase of stock
appreciation right hereunder will be subject to the withholding and payment of
applicable payroll, withholding and other taxes and other governmental charges,
and will be further subject to set-off for any obligations or liabilities of or
claims by the Company against Executive.
(c) In the event of the termination of Executive at any time prior to the
closing of the payments upon the exercise of the stock appreciation rights
(including without limitation payments under any Three Year Junior Note) in
connection with a Stop Payment Event, then, notwithstanding such exercise, the
Company may, at any time prior to such closing, exercise its rights under
Section 6, which exercise by the Company will take precedence over, and nullify,
- ---------
the Executive's exercise of his stock appreciation right.
(d) Notwithstanding anything to the contrary contained in this Agreement,
all payments upon exercise of the stock appreciation right or repurchase of such
right pursuant to Section 5, including issuances of and payments by the Company
---------
on, the Three Year Junior Notes, shall be subject to (i) applicable restrictions
contained in any applicable law, (ii) restrictions contained in the Company's
and its subsidiaries' Financing Agreements, including the Credit Agreement and
the Indenture, each as amended and in effect from time to time, and any Senior
Indebtedness (as defined in the Three Year Junior Notes) and (iii) the
availability of cash to make any lump sum cash payments. If any such
restrictions or unavailability prohibit Exercise Payments or the
5
<PAGE>
repurchase of the stock appreciation right hereunder which the Company is
otherwise entitled or required to make, the Company may make such Exercise
Payments or repurchases as soon as it is permitted to do so under such
restrictions. The inability of the Company to make payments pursuant to the
immediately preceding sentence will not constitute a breach hereunder or entitle
Executive to accelerate or otherwise demand payment therefor, or negate or
otherwise affect, or permit the recision of, the exercise or repurchase of stock
appreciation right or any other provision of this Agreement.
(e) In the event of any reorganization of the Company, whether voluntary
or involuntary, or in bankruptcy, insolvency, receivership or similar proceeding
relating to the Company, all payments in respect of the exercise or purchase of
stock appreciation right hereunder will be subject to the prior payment in full
in cash of all amounts due under the Financing Agreements.
6. Termination of Employment. If Executive's employment by the Company
-------------------------
is terminated at any time prior to the expiration of the stock appreciation
rights granted hereunder circumstances involving Cause or a voluntary
termination by the Executive, then the Company shall have an option,
irrespective of any prior exercise of the stock appreciation right, exercisable
upon 30 days' notice given at any time and exercisable within six months after
such termination, to purchase from Executive or his transferee(s) all the
Executive's stock appreciation rights, irrespective of the amount of time
elapsed from the date of this Agreement at a purchase price equal to Cost.
7. Right of Set-Off. The Company, in addition to any other rights or
----------------
remedies available to the Company, shall be entitled to set-off and reduce any
amounts payable to the Executive hereunder for (a) any obligations or
liabilities of the Executive to the Company or (b) any claims by the Company
against the Executive under this Agreement, the Management Subscription
Agreement, the Stockholders Agreement, the Employment Agreement or any other
agreement, written or oral, between the Company and the Executive, in each case,
after such obligation, liability or claim becomes a final decision of a court of
competent jurisdiction which is not subject to appeal.
8. Transfers, etc.
--------------
(a) Stock appreciation right shall not be transferable by Executive
otherwise than by will or by the laws of descent and distribution. During the
lifetime of Executive a stock appreciation right shall be exercisable only by
the Executive or by the Executive's guardian or legal representative.
(b) Executive shall not have the rights of a stockholder as to securities
to be delivered upon exercise of the stock appreciation right until such
securities shall have been delivered to Executive by the Company.
6
<PAGE>
9. Stockholder Approval. This Agreement has been or will be approved by
--------------------
the requisite majority of the Company's stockholders for purposes of Section
280(G)(b)(5)(B) of the Internal Revenue Code.
10. Heirs, etc. This Agreement shall be binding on the Executive, his
----------
heirs and personal representatives and the Companies and their respective
successors and assigns.
11. Counterparts. This Agreement may be executed in two or more
------------
counterparts, any one of which shall be deemed an original without reference to
the others.
12. Employment. This Agreement is not, and shall not be construed in any
----------
way, as an employment agreement for the benefit of Executive.
13. Amendments. This Agreement may not be amended or modified, and no
----------
waivers hereunder may be granted, except with the approval of each of the
parties hereto and the holder(s) of a majority of the outstanding Common Stock
of the Company.
14. Notice. Any notice, request, demand or other communication required
------
or permitted to be given under this Agreement shall be given in writing and if
delivered personally, or sent by certified or registered mail, return receipt
requested, as follows (or to such other addressee or address as shall be set
forth in a notice given in the same manner):
If to Executive: Robert H. Elkin
141 Chippenham Lane
Chesterfield, Missouri 63005
If to Company: If to the Company to:
Jackson Products, Inc.
2997 Clarkson Road
Chesterfield, Missouri 63017
Telephone: (314) 207-2715
Telecopier: (314) 207-2800
Attention: Christopher T. Paule
with a copy to:
James B. Carlson
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
Telephone: 212-506-2500
Telecopier: 212-262-1910
7
<PAGE>
Any such notices shall be deemed to be given on the date personally delivered or
such return receipt is issued.
15. Executive's Representation. Executive hereby warrants and represents
--------------------------
to the Company that Executive has carefully reviewed and considered the
provisions of this Agreement, and in connection therewith, has consulted with
such advisors as he considers appropriate, and that Executive is not subject to
any covenants, agreements or restrictions, including without limitation any
covenants, agreements or restrictions which would be breached or violated by
Executive's execution of this Agreement.
16. Company Obligations. Executive agrees and acknowledges that this
-------------------
Agreement and the Company's obligations hereunder are solely obligations and
liabilities of the Company. None of the Company's directors, officers,
employees, stockholders and affiliates or any other persons shall be obligated
on liable in respect of this Agreement, and Executive hereby releases them from
any such obligation of liability.
17. Entire Agreement. This Agreement and the Management Subscription
----------------
Agreement, as applicable, reflect the entire agreement among the parties
relating to the subject matter of this Agreement, and supersede and terminate
all prior agreements, obligations, commitments or understandings relating to
such subject matter.
18. Severability. If, for any reason, any provision hereof shall be
------------
determined to be invalid or unenforceable, the validity and effect of the other
provisions hereof shall not be affected thereby. Whenever possible, each
provision of this Agreement shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of this Agreement
is held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision or any other jurisdiction,
but this Agreement shall be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision had never
been contained herein. If any court determines that any provision hereof is
unenforceable because of the power to reduce the scope or duration of such
provision, as the case may be and, in its reduced form, such provision shall
then be enforceable.
19. Waiver of Breach; Enforcement. The waiver by the Company, the
-----------------------------
Company or Executive of a breach of any provision of this Agreement by the other
party shall not operate or be construed as a waiver of any other breach of such
other party. Each of the parties (and third party beneficiaries) to this
Agreement shall be entitled to enforce its rights under this breach of any
provision of this Agreement and to exercise all other rights existing in its
favor. Executive shall pay to the Company any costs (including legal fees and
expenses) incurred by Parent to enforce or protect its rights hereunder.
20. Litigation. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED
----------
AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
8
<PAGE>
STATE OF NEW YORK, AND NO DOCTRINE OF CHOICE OF LAW SHALL BE USED TO APPLY ANY
LAW OTHER THAN THAT OF NEW YORK, AND NO DEFENSE, COUNTERCLAIM OR RIGHT OF SET-
OFF GIVEN OR ALLOWED BY THE LAWS OF ANY OTHER STATE OR JURISDICTION, OR ARISING
OUT OF THE ENACTMENT, MODIFICATION OR REPEAL OF ANY LAW, REGULATION, ORDINANCE
OR DECREE OF ANY FOREIGN JURISDICTION, BE INTERPOSED IN ANY ACTION HEREON. THE
PARTIES AGREE THAT ANY ACTION OR PROCEEDING TO ENFORCE OR ARISING OUT OF THIS
AGREEMENT MAY BE COMMENCED IN THE STATE COURTS, OR IN THE UNITED STATES DISTRICT
COURTS IN NEW YORK, NEW YORK. THE PARTIES CONSENT TO SUCH JURISDICTION, AGREE
THAT VENUE WILL BE PROPER IN SUCH COURTS AND WAIVE ANY OBJECTIONS BASED UPON
FORUM NON CONVENIENS. THE CHOICE OF FORUM SET FORTH IN THIS SECTION 20 SHALL NOT
- ----- --- ---------- ----------
BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY ACTION UNDER THIS AGREEMENT IN ANY
OTHER JURISDICTION.
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands as of the day
and year first above written.
EXECUTIVE
/s/ Robert H. Elkin
-------------------------------
Name: Robert H. Elkin
JACKSON PRODUCTS, INC.
By:/s/ A. Richard Caputo, Jr.
----------------------------
Name: A. Richard Caputo, Jr.
Title: Vice President
10
<PAGE>
Annex A
-------
Date Vested Percentage Interest
---- --------------------------
Before August 16, 1998 0%
On or after August 16, 1998 1.75%
<PAGE>
Exhibit A
---------
Three Year Junior Note
----------------------
<PAGE>
EXHIBIT 10.38
STOCK APPRECIATION RIGHTS AGREEMENT
-----------------------------------
This Stock Appreciation Rights Agreement, dated as of April 22, 1998, by
and between Jackson Products, Inc., a Delaware corporation (the "Company"), and
-------
Christopher T. Paule ("Executive").
---------
WHEREAS, the Company desires to provide stock appreciation rights to
Executive as an incentive for Executive to remain in the service of the Company
by allowing Executive to realize 0.875% of the appreciation of the value of the
Company's Common Stock from April 22, 1998 through the first Cash-Out Event,
subject and according to the provisions set forth herein; and
WHEREAS, in consideration of (1) the mutual covenants and agreements
herein set forth, (2) the Executive's continued service with the Company, and
(3) the special benefits accruing to the Company and Executive hereunder and in
connection herewith, the parties hereto agree as follows:
1. Definitions.
-----------
"Asset Sale" is defined in the definitions of Cash-Out Event.
----------
"Board of Directors" means the Company's Board of Directors or any
------------------
properly constituted committee thereof. Any determinations by the Board of
Directors hereunder will be final, non-appealable, binding and conclusive.
"Business Combination" is defined in the definition of Cash-Out Event.
--------------------
"Cash-Out Event" means (a) the closing of any merger, combination,
--------------
consolidation or similar business transaction involving the Company in which the
holders of Common Stock immediately prior to such closing are not the holders,
directly or indirectly, of a majority of the ordinary voting securities of the
surviving person in such transaction immediately after such closing (a "Business
--------
Combination"); (b) the closing of any sale or transfer by the Company of all or
- -----------
substantially all of its assets to an acquiring person in which the holders of
Common Stock immediately prior to such closing are not the holders of a majority
of the ordinary voting securities of the acquiring person immediately after such
closing (an "Asset Sale"); or (c) the closing of any sale by the holders of
----------
Common Stock of an amount of Common Stock that equals or exceeds a majority of
the shares of Common Stock immediately prior to such closing to a person in
which the holders of the Common Stock immediately prior to such closing are not
the holders of a majority of the ordinary voting securities of such person
immediately after such closing (a "Stock Sale").
----------
<PAGE>
"Cash-Out Value" means the net aggregate consideration received by the
--------------
holders of Common Stock in connection with a Cash-Out Event, after deduction of
any transaction costs incurred by or paid by the Company and its stockholders in
connection with the Cash-Out Event, including but not limited to any
termination, severance or other payments made in connection with the Cash-Out
Event in respect of employment, stock appreciation right or similar arrangements
with the employees of the Companies.
"Cause" means any of the following: (i) Executive's commission or
-----
conviction of any crime or criminal offense involving monies or other property;
(ii) Executive's commission or conviction of fraud or embezzlement; (iii)
Executive's breach of any of Executive's fiduciary duties to the Company or its
stockholders or making of a willful misrepresentation or omission which breach,
misrepresentation or omission would reasonably be expected to materially
adversely affect the business, properties, assets, condition (financial or
other) or prospects of the Company, provided, that, the Executive has been given
notice and 60 days from such notice fails to cure the breach, misrepresentation
or omission; (iv) Executive's willful and continual neglect or failure to
discharge Executive's duties, responsibilities or obligations (other than
arising solely due to physical or mental disability) prescribed by this
Agreement or any other agreement between the Executive and the Company,
provided, that Executive has been given notice and 60 days from such notice
fails to cure the neglect or failure; (v) Executive's habitual drunkenness or
substance abuse, which materially interferes with Executive's ability to
discharge Executive's duties, responsibilities and obligations prescribed by
this Agreement or any other agreement between the Executive and the Company,
provided that Executive has been given notice and 60 days from such notice fails
to cure such drunkenness or abuse; (vi) Executive's violation of any non-
competition or confidentiality agreement with the Company in any agreement with
the Company provided, that Executive has been given notice and 60 days from such
notice fails to cure the violation; or (vii) Executive's gross neglect of his
duties and responsibilities, as determined by the Board of Directors of the
Company, provided, that Executive has been given notice and 60 days from such
notice fails to cure the neglect.
"Common Stock" means the common stock, par value $.01 per share, of the
------------
Company.
"Companies" means the Company and its successors or any of its direct or
---------
indirect subsidiaries, now or hereafter existing.
"Cost" means with respect to the stock appreciation right, $1.00.
----
"Credit Agreement" means the Revolving Credit and Acquisition Loan
----------------
Agreement, dated as of April 22, 1998, as amended from time to time, by and
among the Company, BankBoston, N.A., as agent for itself and the other lending
banks, and the other parties listed on the signature pages thereto, including
all exhibits and schedules thereto, each as amended, supplemented or revised
from time to time.
"Determination Period" means the last four consecutive completed fiscal
--------------------
quarters as set forth on the audited financial statements of the Company
immediately preceding the exercise of
2
<PAGE>
the stock appreciation right for which Fair Market Value shall be used to
determine the Exercise Payment.
"EBITDA" the net income of the Company plus taxes, net interest expense,
------ ----
depreciation and amortization, each of which shall be determined in accordance
with GAAP and in accordance with the Company's books and records.
"Employment Agreement" means the Employment Agreement, dated as of August
--------------------
16, 1995, between the Company and the Executive, as amended, supplemented or
revised from time to time.
"Exercise Payment" is defined in Section 3(b).
---------------- ------------
"Fair Market Value" means, for any Determination Period, an amount equal
-----------------
to (i) 6.0 multiplied by EBITDA for the Determination Period less (ii) the
----
aggregate amount of all indebtedness and capitalized leases of the Companies
(including, without limitation, the Credit Agreement and the Indenture)
outstanding immediately prior to the closing date of the Cash-Out Event
(including, without limitation, interest and premiums accrued but unpaid
immediately prior to such date) all determined in accordance with GAAP less
----
(iii) the aggregate amount of preferred stock of the Company immediately prior
to the date of the exercise of the stock appreciation rights including accrued,
but unpaid, dividends, all determined in accordance with GAAP immediately prior
to the such date plus (iv) cash or cash equivalents held by the Companies
----
immediately prior to the date of the exercise of the stock appreciation rights;
provided, however, that Fair Market Value shall in no event be less than Cost.
- -------- -------
"Financing Agreements" means any senior or subordinated debt, preferred
--------------------
stock, common or other capital stock, lease or other financing agreements,
instruments and documents, including without limitation the Credit Agreement and
the Indenture, binding upon the Company or any of its subsidiaries, or their
respective properties and assets, from time to time in effect.
"GAAP" means the generally accepted accounting principals in the United
----
States of America in effect from time to time, applied on a consistent basis
both as to classification of items and to amounts.
"Indenture" means the Indenture, dated as of April 22, 1998, by and among
---------
the Company, its subsidiaries and State Street Bank and Trust Company, as
Trustee.
"Management Subscription Agreement" means the Management Subscription
---------------------------------
Agreement, dated as of August 16, 1995, by and among the Company and the other
parties listed on the signature pages thereto, including all exhibits and
schedules thereto, each as amended, supplemented or revised from time to time.
"Starting Value" means $40.0 million.
--------------
3
<PAGE>
"Stockholders Agreement" means the Stockholders Agreement, dated as of
----------------------
August 16, 1995, among the Company, the stockholders of the Company and the
other parties listed on the signature pages thereto, including all exhibits and
schedules thereto, each as amended, supplemented or revised from time to time.
"Stock Sale" is defined in the definition of Cash-Out Event.
----------
"Stop Payment Event" shall mean Executive's conduct at termination
------------------
involving actions, omissions or circumstances involving Cause (as defined in the
Employment Agreement).
"Three Year Junior Note" means a promissory note of the Company in the
----------------------
form attached as Exhibit A.
---------
"Vested Percentage Interest" shall mean the amount specified on Annex A
-------------------------- -------
for the relevant period.
2. Grant.
-----
(a) The Company hereby grants to the Executive a stock appreciation right
relating to the Company in respect of the Measurement Period. Such stock
appreciation right corresponds as set forth herein to, with respect to an
exercise in connection with a Cash-Out Event, the amount calculated in
accordance with Section 3.
---------
(b) Subject to the provisions of Section 6, the initial term of the stock
---------
appreciation right granted hereunder shall be until the tenth anniversary of the
date hereof, after which it shall be automatically renewed annually for
successive one-year periods so long as Executive's Employment Agreement with the
Company remains in full force and effect.
(c) The parties agree and acknowledge that this Agreement does not confer
upon Executive or the stock appreciation right any rights or interests as a
stockholder of the Company, and that no fiduciary duties are owed by the Company
or their respective directors, officers and stockholders in respect of the
rights granted hereunder. Executive further agrees and acknowledges that the
Company is not, and shall not be, restricted or limited in any manner from
entering into or modifying any Financing Agreements that restrict or limit
payments hereunder, incurring indebtedness, engaging in Cash-Out Events,
allocating amounts, determining rates or otherwise making determinations in
respect of indebtedness or EBITDA, making other adjustments pursuant to this
Agreement, issuing shares or other stock appreciation or similar rights,
irrespective of any dilution or other effect thereof, or otherwise taking
actions that may affect the stock appreciation right granted hereunder.
3. Exercise Pursuant to a Cash-Out Event. Upon the consummation of a
-------------------------------------
Cash-Out Event, the Company will, within five (5) business days after the Cash
Out Event, pay to Executive the Exercise Payment. Executive agrees and
acknowledges that all decisions regarding
4
<PAGE>
a Cash-Out Event, including timing, terms and conditions and the consideration
relating thereto, are at the sole and absolute discretion of the Company or the
Board of Directors.
The "Exercise Payment" shall mean an amount equal to the product of: (i)
-------
the Vested Percentage Interest as of the date of the Cash-Out Event multiplied
----------
by (ii) an amount equal to (x) the Cash-Out Value minus (y) the Starting Value.
- -- -----
4. Exercise Pursuant to Termination of Employment. Subject to the
----------------------------------------------
provisions of Section 6, if the employment by the Company of the Executive is
---------
terminated at any time for any reason other than Cause or voluntary termination
by the Executive before the consummation of a Cash-Out Event, then the Company
may, at the Company's option, exercise all, but not less than all, of the stock
appreciation right granted hereunder, and receive an amount equal to the product
-------
of (i) the Vested Percentage Interest multiplied by (ii) an amount equal to (x)
-------------
the Fair Market Value minus (y) the Starting Value. Executive acknowledges and
-----
agrees that all or any portion of the Exercise Payment under this Section 4 may
---------
be paid by the Company, at the Company's option, in Three Year Junior Notes.
5. Limitations of Payment and Other Matters.
----------------------------------------
(a) In the event that, in connection with any Cash-Out Event, the holders
of Common Stock receive consideration in a form other than cash, then Executive,
upon exercise of his stock appreciation right, will receive payment in the same
form and subject to the same conditions as the holders of Common Stock.
(b) All payments in respect of the exercise or purchase of stock
appreciation right hereunder will be subject to the withholding and payment of
applicable payroll, withholding and other taxes and other governmental charges,
and will be further subject to set-off for any obligations or liabilities of or
claims by the Company against Executive.
(c) In the event of the termination of Executive at any time prior to the
closing of the payments upon the exercise of the stock appreciation rights
(including without limitation payments under any Three Year Junior Note) in
connection with a Stop Payment Event, then, notwithstanding such exercise, the
Company may, at any time prior to such closing, exercise its rights under
Section 6, which exercise by the Company will take precedence over, and nullify,
- ---------
the Executive's exercise of his stock appreciation right.
(d) Notwithstanding anything to the contrary contained in this Agreement,
all payments upon exercise of the stock appreciation right or repurchase of such
right pursuant to Section 5, including issuances of and payments by the Company
---------
on, the Three Year Junior Notes, shall be subject to (i) applicable restrictions
contained in any applicable law, (ii) restrictions contained in the Company's
and its subsidiaries' Financing Agreements, including the Credit Agreement and
the Indenture, each as amended and in effect from time to time, and any Senior
Indebtedness (as defined in the Three Year Junior Notes) and (iii) the
availability of cash to make any lump sum cash payments. If any such
restrictions or unavailability prohibit Exercise Payments or the
5
<PAGE>
repurchase of the stock appreciation right hereunder which the Company is
otherwise entitled or required to make, the Company may make such Exercise
Payments or repurchases as soon as it is permitted to do so under such
restrictions. The inability of the Company to make payments pursuant to the
immediately preceding sentence will not constitute a breach hereunder or entitle
Executive to accelerate or otherwise demand payment therefor, or negate or
otherwise affect, or permit the recision of, the exercise or repurchase of stock
appreciation right or any other provision of this Agreement.
(e) In the event of any reorganization of the Company, whether voluntary
or involuntary, or in bankruptcy, insolvency, receivership or similar proceeding
relating to the Company, all payments in respect of the exercise or purchase of
stock appreciation right hereunder will be subject to the prior payment in full
in cash of all amounts due under the Financing Agreements.
6. Termination of Employment. If Executive's employment by the Company
-------------------------
is terminated at any time prior to the expiration of the stock appreciation
rights granted hereunder circumstances involving Cause or a voluntary
termination by the Executive, then the Company shall have an option,
irrespective of any prior exercise of the stock appreciation right, exercisable
upon 30 days' notice given at any time and exercisable within six months after
such termination, to purchase from Executive or his transferee(s) all the
Executive's stock appreciation rights, irrespective of the amount of time
elapsed from the date of this Agreement at a purchase price equal to Cost.
7. Right of Set-Off. The Company, in addition to any other rights or
----------------
remedies available to the Company, shall be entitled to set-off and reduce any
amounts payable to the Executive hereunder for (a) any obligations or
liabilities of the Executive to the Company or (b) any claims by the Company
against the Executive under this Agreement, the Management Subscription
Agreement, the Stockholders Agreement, the Employment Agreement or any other
agreement, written or oral, between the Company and the Executive, in each case,
after such obligation, liability or claim becomes a final decision of a court of
competent jurisdiction which is not subject to appeal.
8. Transfers, etc.
--------------
(a) Stock appreciation right shall not be transferable by Executive
otherwise than by will or by the laws of descent and distribution. During the
lifetime of Executive a stock appreciation right shall be exercisable only by
the Executive or by the Executive's guardian or legal representative.
(b) Executive shall not have the rights of a stockholder as to securities
to be delivered upon exercise of the stock appreciation right until such
securities shall have been delivered to Executive by the Company.
6
<PAGE>
9. Stockholder Approval. This Agreement has been or will be approved by
--------------------
the requisite majority of the Company's stockholders for purposes of Section
280(G)(b)(5)(B) of the Internal Revenue Code.
10. Heirs, etc. This Agreement shall be binding on the Executive, his
----------
heirs and personal representatives and the Companies and their respective
successors and assigns.
11. Counterparts. This Agreement may be executed in two or more
------------
counterparts, any one of which shall be deemed an original without reference to
the others.
12. Employment. This Agreement is not, and shall not be construed in any
----------
way, as an employment agreement for the benefit of Executive.
13. Amendments. This Agreement may not be amended or modified, and no
----------
waivers hereunder may be granted, except with the approval of each of the
parties hereto and the holder(s) of a majority of the outstanding Common Stock
of the Company.
14. Notice. Any notice, request, demand or other communication required
------
or permitted to be given under this Agreement shall be given in writing and if
delivered personally, or sent by certified or registered mail, return receipt
requested, as follows (or to such other addressee or address as shall be set
forth in a notice given in the same manner):
If to Executive: Christopher T. Paule
710 North Fifth Street
St. Charles, Missouri 63301
If to Company: If to the Company to:
Jackson Products, Inc.
2997 Clarkson Road
Chesterfield, Missouri 63017
Telephone: (314) 207-2715
Telecopier: (314) 207-2800
Attention: Christopher T. Paule
with a copy to:
James B. Carlson
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
Telephone: 212-506-2500
Telecopier: 212-262-1910
7
<PAGE>
Any such notices shall be deemed to be given on the date personally delivered or
such return receipt is issued.
15. Executive's Representation. Executive hereby warrants and represents
--------------------------
to the Company that Executive has carefully reviewed and considered the
provisions of this Agreement, and in connection therewith, has consulted with
such advisors as he considers appropriate, and that Executive is not subject to
any covenants, agreements or restrictions, including without limitation any
covenants, agreements or restrictions which would be breached or violated by
Executive's execution of this Agreement.
16. Company Obligations. Executive agrees and acknowledges that this
-------------------
Agreement and the Company's obligations hereunder are solely obligations and
liabilities of the Company. None of the Company's directors, officers,
employees, stockholders and affiliates or any other persons shall be obligated
on liable in respect of this Agreement, and Executive hereby releases them from
any such obligation of liability.
17. Entire Agreement. This Agreement and the Management Subscription
----------------
Agreement, as applicable, reflect the entire agreement among the parties
relating to the subject matter of this Agreement, and supersede and terminate
all prior agreements, obligations, commitments or understandings relating to
such subject matter.
18. Severability. If, for any reason, any provision hereof shall be
------------
determined to be invalid or unenforceable, the validity and effect of the other
provisions hereof shall not be affected thereby. Whenever possible, each
provision of this Agreement shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of this Agreement
is held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision or any other jurisdiction,
but this Agreement shall be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision had never
been contained herein. If any court determines that any provision hereof is
unenforceable because of the power to reduce the scope or duration of such
provision, as the case may be and, in its reduced form, such provision shall
then be enforceable.
19. Waiver of Breach; Enforcement. The waiver by the Company, the
-----------------------------
Company or Executive of a breach of any provision of this Agreement by the other
party shall not operate or be construed as a waiver of any other breach of such
other party. Each of the parties (and third party beneficiaries) to this
Agreement shall be entitled to enforce its rights under this breach of any
provision of this Agreement and to exercise all other rights existing in its
favor. Executive shall pay to the Company any costs (including legal fees and
expenses) incurred by Parent to enforce or protect its rights hereunder.
20. Litigation. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED
----------
AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
8
<PAGE>
STATE OF NEW YORK, AND NO DOCTRINE OF CHOICE OF LAW SHALL BE USED TO APPLY ANY
LAW OTHER THAN THAT OF NEW YORK, AND NO DEFENSE, COUNTERCLAIM OR RIGHT OF SET-
OFF GIVEN OR ALLOWED BY THE LAWS OF ANY OTHER STATE OR JURISDICTION, OR ARISING
OUT OF THE ENACTMENT, MODIFICATION OR REPEAL OF ANY LAW, REGULATION, ORDINANCE
OR DECREE OF ANY FOREIGN JURISDICTION, BE INTERPOSED IN ANY ACTION HEREON. THE
PARTIES AGREE THAT ANY ACTION OR PROCEEDING TO ENFORCE OR ARISING OUT OF THIS
AGREEMENT MAY BE COMMENCED IN THE STATE COURTS, OR IN THE UNITED STATES DISTRICT
COURTS IN NEW YORK, NEW YORK. THE PARTIES CONSENT TO SUCH JURISDICTION, AGREE
THAT VENUE WILL BE PROPER IN SUCH COURTS AND WAIVE ANY OBJECTIONS BASED UPON
FORUM NON CONVENIENS. THE CHOICE OF FORUM SET FORTH IN THIS SECTION 20 SHALL NOT
- ----- --- ---------- ----------
BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY ACTION UNDER THIS AGREEMENT IN ANY
OTHER JURISDICTION.
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands as of the day
and year first above written.
EXECUTIVE
________________________________
Name: Christopher T. Paule
JACKSON PRODUCTS, INC.
By:_____________________________
Name: A. Richard Caputo, Jr.
Title: Vice President
10
<PAGE>
Annex A
-------
Date Vested Percentage Interest
---- --------------------------
Before April 22, 1999 0%
On or after April 22, 1999 0.290%
On or after April 22, 2000 0.580%
On or after April 22, 2001 0.875%
<PAGE>
Exhibit A
---------
Three Year Junior Note
----------------------
<PAGE>
EXHIBIT 10.39
STOCK APPRECIATION RIGHTS AGREEMENT
-----------------------------------
This Stock Appreciation Rights Agreement, dated as of April 22, 1998, by
and between Jackson Products, Inc., a Delaware corporation (the "Company"), and
-------
Mark R. Hefty ("Executive").
---------
WHEREAS, the Company desires to provide stock appreciation rights to
Executive as an incentive for Executive to remain in the service of the Company
by allowing Executive to realize 0.375% of the appreciation of the value of the
Company's Common Stock from April 22, 1998 through the first Cash-Out Event,
subject and according to the provisions set forth herein; and
WHEREAS, in consideration of (1) the mutual covenants and agreements
herein set forth, (2) the Executive's continued service with the Company, and
(3) the special benefits accruing to the Company and Executive hereunder and in
connection herewith, the parties hereto agree as follows:
1. Definitions.
-----------
"Asset Sale" is defined in the definitions of Cash-Out Event.
----------
"Board of Directors" means the Company's Board of Directors or any
------------------
properly constituted committee thereof. Any determinations by the Board of
Directors hereunder will be final, non-appealable, binding and conclusive.
"Business Combination" is defined in the definition of Cash-Out Event.
--------------------
"Cash-Out Event" means (a) the closing of any merger, combination,
--------------
consolidation or similar business transaction involving the Company in which the
holders of Common Stock immediately prior to such closing are not the holders,
directly or indirectly, of a majority of the ordinary voting securities of the
surviving person in such transaction immediately after such closing (a "Business
--------
Combination"); (b) the closing of any sale or transfer by the Company of all or
- -----------
substantially all of its assets to an acquiring person in which the holders of
Common Stock immediately prior to such closing are not the holders of a majority
of the ordinary voting securities of the acquiring person immediately after such
closing (an "Asset Sale"); or (c) the closing of any sale by the holders of
----------
Common Stock of an amount of Common Stock that equals or exceeds a majority of
the shares of Common Stock immediately prior to such closing to a person in
which the holders of the Common Stock immediately prior to such closing are not
the holders of a majority of the ordinary voting securities of such person
immediately after such closing (a "Stock Sale").
----------
<PAGE>
"Cash-Out Value" means the net aggregate consideration received by the
--------------
holders of Common Stock in connection with a Cash-Out Event, after deduction of
any transaction costs incurred by or paid by the Company and its stockholders in
connection with the Cash-Out Event, including but not limited to any
termination, severance or other payments made in connection with the Cash-Out
Event in respect of employment, stock appreciation right or similar arrangements
with the employees of the Companies.
"Cause" means any of the following: (i) Executive's commission or
-----
conviction of any crime or criminal offense involving monies or other property;
(ii) Executive's commission or conviction of fraud or embezzlement; (iii)
Executive's breach of any of Executive's fiduciary duties to the Company or its
stockholders or making of a willful misrepresentation or omission which breach,
misrepresentation or omission would reasonably be expected to materially
adversely affect the business, properties, assets, condition (financial or
other) or prospects of the Company, provided, that, the Executive has been given
notice and 60 days from such notice fails to cure the breach, misrepresentation
or omission; (iv) Executive's willful and continual neglect or failure to
discharge Executive's duties, responsibilities or obligations (other than
arising solely due to physical or mental disability) prescribed by this
Agreement or any other agreement between the Executive and the Company,
provided, that Executive has been given notice and 60 days from such notice
fails to cure the neglect or failure; (v) Executive's habitual drunkenness or
substance abuse, which materially interferes with Executive's ability to
discharge Executive's duties, responsibilities and obligations prescribed by
this Agreement or any other agreement between the Executive and the Company,
provided that Executive has been given notice and 60 days from such notice fails
to cure such drunkenness or abuse; (vi) Executive's violation of any non-
competition or confidentiality agreement with the Company in any agreement with
the Company provided, that Executive has been given notice and 60 days from such
notice fails to cure the violation; or (vii) Executive's gross neglect of his
duties and responsibilities, as determined by the Board of Directors of the
Company, provided, that Executive has been given notice and 60 days from such
notice fails to cure the neglect.
"Common Stock" means the common stock, par value $.01 per share, of the
------------
Company.
"Companies" means the Company and its successors or any of its direct or
---------
indirect subsidiaries, now or hereafter existing.
"Cost" means with respect to the stock appreciation right, $1.00.
----
"Credit Agreement" means the Revolving Credit and Acquisition Loan
----------------
Agreement, dated as of April 22, 1998, as amended from time to time, by and
among the Company, BankBoston, N.A., as agent for itself and the other lending
banks, and the other parties listed on the signature pages thereto, including
all exhibits and schedules thereto, each as amended, supplemented or revised
from time to time.
"Determination Period" means the last four consecutive completed fiscal
--------------------
quarters as set forth on the audited financial statements of the Company
immediately preceding the exercise of
2
<PAGE>
the stock appreciation right for which Fair Market Value shall be used to
determine the Exercise Payment.
"EBITDA" the net income of the Company plus taxes, net interest expense,
------ ----
depreciation and amortization, each of which shall be determined in accordance
with GAAP and in accordance with the Company's books and records.
"Employment Agreement" means the Employment Agreement, dated as of April
--------------------
__, 1998, between the Company and the Executive, as amended, supplemented or
revised from time to time.
"Exercise Payment" is defined in Section 3(b).
---------------- ------------
"Fair Market Value" means, for any Determination Period, an amount equal
-----------------
to (i) 6.0 multiplied by EBITDA for the Determination Period less (ii) the
----
aggregate amount of all indebtedness and capitalized leases of the Companies
(including, without limitation, the Credit Agreement and the Indenture)
outstanding immediately prior to the closing date of the Cash-Out Event
(including, without limitation, interest and premiums accrued but unpaid
immediately prior to such date) all determined in accordance with GAAP less
----
(iii) the aggregate amount of preferred stock of the Company immediately prior
to the date of the exercise of the stock appreciation rights including accrued,
but unpaid, dividends, all determined in accordance with GAAP immediately prior
to the such date plus (iv) cash or cash equivalents held by the Companies
----
immediately prior to the date of the exercise of the stock appreciation rights;
provided, however, that Fair Market Value shall in no event be less than Cost.
- -------- -------
"Financing Agreements" means any senior or subordinated debt, preferred
--------------------
stock, common or other capital stock, lease or other financing agreements,
instruments and documents, including without limitation the Credit Agreement and
the Indenture, binding upon the Company or any of its subsidiaries, or their
respective properties and assets, from time to time in effect.
"GAAP" means the generally accepted accounting principals in the United
----
States of America in effect from time to time, applied on a consistent basis
both as to classification of items and to amounts.
"Indenture" means the Indenture, dated as of April 22, 1998, by and among
---------
the Company, its subsidiaries and State Street Bank and Trust Company, as
Trustee.
"Management Subscription Agreement" means the Management Subscription
---------------------------------
Agreement, dated as of August 16, 1995, by and among the Company and the other
parties listed on the signature pages thereto, including all exhibits and
schedules thereto, each as amended, supplemented or revised from time to time.
"Starting Value" means $40.0 million.
--------------
3
<PAGE>
"Stockholders Agreement" means the Stockholders Agreement, dated as of
----------------------
August 16, 1995, among the Company, the stockholders of the Company and the
other parties listed on the signature pages thereto, including all exhibits and
schedules thereto, each as amended, supplemented or revised from time to time.
"Stock Sale" is defined in the definition of Cash-Out Event.
----------
"Stop Payment Event" shall mean Executive's conduct at termination
------------------
involving actions, omissions or circumstances involving Cause (as defined in the
Employment Agreement).
"Three Year Junior Note" means a promissory note of the Company in the
----------------------
form attached as Exhibit A.
---------
"Vested Percentage Interest" shall mean the amount specified on Annex A
-------------------------- -------
for the relevant period.
2. Grant.
-----
(a) The Company hereby grants to the Executive a stock appreciation right
relating to the Company in respect of the Measurement Period. Such stock
appreciation right corresponds as set forth herein to, with respect to an
exercise in connection with a Cash-Out Event, the amount calculated in
accordance with Section 3.
---------
(b) Subject to the provisions of Section 6, the initial term of the stock
---------
appreciation right granted hereunder shall be until the tenth anniversary of the
date hereof, after which it shall be automatically renewed annually for
successive one-year periods so long as Executive's Employment Agreement with the
Company remains in full force and effect.
(c) The parties agree and acknowledge that this Agreement does not confer
upon Executive or the stock appreciation right any rights or interests as a
stockholder of the Company, and that no fiduciary duties are owed by the Company
or their respective directors, officers and stockholders in respect of the
rights granted hereunder. Executive further agrees and acknowledges that the
Company is not, and shall not be, restricted or limited in any manner from
entering into or modifying any Financing Agreements that restrict or limit
payments hereunder, incurring indebtedness, engaging in Cash-Out Events,
allocating amounts, determining rates or otherwise making determinations in
respect of indebtedness or EBITDA, making other adjustments pursuant to this
Agreement, issuing shares or other stock appreciation or similar rights,
irrespective of any dilution or other effect thereof, or otherwise taking
actions that may affect the stock appreciation right granted hereunder.
3. Exercise Pursuant to a Cash-Out Event. Upon the consummation of a
-------------------------------------
Cash-Out Event, the Company will, within five (5) business days after the Cash
Out Event, pay to Executive the Exercise Payment. Executive agrees and
acknowledges that all decisions regarding
4
<PAGE>
a Cash-Out Event, including timing, terms and conditions and the consideration
relating thereto, are at the sole and absolute discretion of the Company or the
Board of Directors.
The "Exercise Payment" shall mean an amount equal to the product of: (i)
-------
the Vested Percentage Interest as of the date of the Cash-Out Event multiplied
----------
by (ii) an amount equal to (x) the Cash-Out Value minus (y) the Starting Value.
- -- -----
4. Exercise Pursuant to Termination of Employment. Subject to the
----------------------------------------------
provisions of Section 6, if the employment by the Company of the Executive is
---------
terminated at any time for any reason other than Cause or voluntary termination
by the Executive before the consummation of a Cash-Out Event, then the Company
may, at the Company's option, exercise all, but not less than all, of the stock
appreciation right granted hereunder, and receive an amount equal to the product
-------
of (i) the Vested Percentage Interest multiplied by (ii) an amount equal to (x)
-------------
the Fair Market Value minus (y) the Starting Value. Executive acknowledges and
-----
agrees that all or any portion of the Exercise Payment under this Section 4 may
---------
be paid by the Company, at the Company's option, in Three Year Junior Notes.
5. Limitations of Payment and Other Matters.
----------------------------------------
(a) In the event that, in connection with any Cash-Out Event, the holders
of Common Stock receive consideration in a form other than cash, then Executive,
upon exercise of his stock appreciation right, will receive payment in the same
form and subject to the same conditions as the holders of Common Stock.
(b) All payments in respect of the exercise or purchase of stock
appreciation right hereunder will be subject to the withholding and payment of
applicable payroll, withholding and other taxes and other governmental charges,
and will be further subject to set-off for any obligations or liabilities of or
claims by the Company against Executive.
(c) In the event of the termination of Executive at any time prior to the
closing of the payments upon the exercise of the stock appreciation rights
(including without limitation payments under any Three Year Junior Note) in
connection with a Stop Payment Event, then, notwithstanding such exercise, the
Company may, at any time prior to such closing, exercise its rights under
Section 6, which exercise by the Company will take precedence over, and nullify,
- ---------
the Executive's exercise of his stock appreciation right.
(d) Notwithstanding anything to the contrary contained in this Agreement,
all payments upon exercise of the stock appreciation right or repurchase of such
right pursuant to Section 5, including issuances of and payments by the Company
---------
on, the Three Year Junior Notes, shall be subject to (i) applicable restrictions
contained in any applicable law, (ii) restrictions contained in the Company's
and its subsidiaries' Financing Agreements, including the Credit Agreement and
the Indenture, each as amended and in effect from time to time, and any Senior
Indebtedness (as defined in the Three Year Junior Notes) and (iii) the
availability of cash to make any lump sum cash payments. If any such
restrictions or unavailability prohibit Exercise Payments or the
5
<PAGE>
repurchase of the stock appreciation right hereunder which the Company is
otherwise entitled or required to make, the Company may make such Exercise
Payments or repurchases as soon as it is permitted to do so under such
restrictions. The inability of the Company to make payments pursuant to the
immediately preceding sentence will not constitute a breach hereunder or entitle
Executive to accelerate or otherwise demand payment therefor, or negate or
otherwise affect, or permit the recision of, the exercise or repurchase of stock
appreciation right or any other provision of this Agreement.
(e) In the event of any reorganization of the Company, whether voluntary
or involuntary, or in bankruptcy, insolvency, receivership or similar proceeding
relating to the Company, all payments in respect of the exercise or purchase of
stock appreciation right hereunder will be subject to the prior payment in full
in cash of all amounts due under the Financing Agreements.
6. Termination of Employment. If Executive's employment by the Company
-------------------------
is terminated at any time prior to the expiration of the stock appreciation
rights granted hereunder circumstances involving Cause or a voluntary
termination by the Executive, then the Company shall have an option,
irrespective of any prior exercise of the stock appreciation right, exercisable
upon 30 days' notice given at any time and exercisable within six months after
such termination, to purchase from Executive or his transferee(s) all the
Executive's stock appreciation rights, irrespective of the amount of time
elapsed from the date of this Agreement at a purchase price equal to Cost.
7. Right of Set-Off. The Company, in addition to any other rights or
----------------
remedies available to the Company, shall be entitled to set-off and reduce any
amounts payable to the Executive hereunder for (a) any obligations or
liabilities of the Executive to the Company or (b) any claims by the Company
against the Executive under this Agreement, the Management Subscription
Agreement, the Stockholders Agreement, the Employment Agreement or any other
agreement, written or oral, between the Company and the Executive, in each case,
after such obligation, liability or claim becomes a final decision of a court of
competent jurisdiction which is not subject to appeal.
8. Transfers, etc.
--------------
(a) Stock appreciation right shall not be transferable by Executive
otherwise than by will or by the laws of descent and distribution. During the
lifetime of Executive a stock appreciation right shall be exercisable only by
the Executive or by the Executive's guardian or legal representative.
(b) Executive shall not have the rights of a stockholder as to securities
to be delivered upon exercise of the stock appreciation right until such
securities shall have been delivered to Executive by the Company.
6
<PAGE>
9. Stockholder Approval. This Agreement has been or will be approved by
--------------------
the requisite majority of the Company's stockholders for purposes of Section
280(G)(b)(5)(B) of the Internal Revenue Code.
10. Heirs, etc. This Agreement shall be binding on the Executive, his
----------
heirs and personal representatives and the Companies and their respective
successors and assigns.
11. Counterparts. This Agreement may be executed in two or more
------------
counterparts, any one of which shall be deemed an original without reference to
the others.
12. Employment. This Agreement is not, and shall not be construed in any
----------
way, as an employment agreement for the benefit of Executive.
13. Amendments. This Agreement may not be amended or modified, and no
----------
waivers hereunder may be granted, except with the approval of each of the
parties hereto and the holder(s) of a majority of the outstanding Common Stock
of the Company.
14. Notice. Any notice, request, demand or other communication required
------
or permitted to be given under this Agreement shall be given in writing and if
delivered personally, or sent by certified or registered mail, return receipt
requested, as follows (or to such other addressee or address as shall be set
forth in a notice given in the same manner):
If to Executive: ________________________
________________________
________________________
If to Company: If to the Company to:
Jackson Products, Inc.
2997 Clarkson Road
Chesterfield, Missouri 63017
Telephone: (314) 207-2715
Telecopier: (314) 207-2800
Attention: Christopher T. Paule
with a copy to:
James B. Carlson
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
Telephone: 212-506-2500
Telecopier: 212-262-1910
7
<PAGE>
Any such notices shall be deemed to be given on the date personally delivered or
such return receipt is issued.
15. Executive's Representation. Executive hereby warrants and represents
--------------------------
to the Company that Executive has carefully reviewed and considered the
provisions of this Agreement, and in connection therewith, has consulted with
such advisors as he considers appropriate, and that Executive is not subject to
any covenants, agreements or restrictions, including without limitation any
covenants, agreements or restrictions which would be breached or violated by
Executive's execution of this Agreement.
16. Company Obligations. Executive agrees and acknowledges that this
-------------------
Agreement and the Company's obligations hereunder are solely obligations and
liabilities of the Company. None of the Company's directors, officers,
employees, stockholders and affiliates or any other persons shall be obligated
on liable in respect of this Agreement, and Executive hereby releases them from
any such obligation of liability.
17. Entire Agreement. This Agreement and the Management Subscription
----------------
Agreement, as applicable, reflect the entire agreement among the parties
relating to the subject matter of this Agreement, and supersede and terminate
all prior agreements, obligations, commitments or understandings relating to
such subject matter.
18. Severability. If, for any reason, any provision hereof shall be
------------
determined to be invalid or unenforceable, the validity and effect of the other
provisions hereof shall not be affected thereby. Whenever possible, each
provision of this Agreement shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of this Agreement
is held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision or any other jurisdiction,
but this Agreement shall be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision had never
been contained herein. If any court determines that any provision hereof is
unenforceable because of the power to reduce the scope or duration of such
provision, as the case may be and, in its reduced form, such provision shall
then be enforceable.
19. Waiver of Breach; Enforcement. The waiver by the Company, the
-----------------------------
Company or Executive of a breach of any provision of this Agreement by the other
party shall not operate or be construed as a waiver of any other breach of such
other party. Each of the parties (and third party beneficiaries) to this
Agreement shall be entitled to enforce its rights under this breach of any
provision of this Agreement and to exercise all other rights existing in its
favor. Executive shall pay to the Company any costs (including legal fees and
expenses) incurred by Parent to enforce or protect its rights hereunder.
20. Litigation. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED
----------
AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
8
<PAGE>
STATE OF NEW YORK, AND NO DOCTRINE OF CHOICE OF LAW SHALL BE USED TO APPLY ANY
LAW OTHER THAN THAT OF NEW YORK, AND NO DEFENSE, COUNTERCLAIM OR RIGHT OF SET-
OFF GIVEN OR ALLOWED BY THE LAWS OF ANY OTHER STATE OR JURISDICTION, OR ARISING
OUT OF THE ENACTMENT, MODIFICATION OR REPEAL OF ANY LAW, REGULATION, ORDINANCE
OR DECREE OF ANY FOREIGN JURISDICTION, BE INTERPOSED IN ANY ACTION HEREON. THE
PARTIES AGREE THAT ANY ACTION OR PROCEEDING TO ENFORCE OR ARISING OUT OF THIS
AGREEMENT MAY BE COMMENCED IN THE STATE COURTS, OR IN THE UNITED STATES DISTRICT
COURTS IN NEW YORK, NEW YORK. THE PARTIES CONSENT TO SUCH JURISDICTION, AGREE
THAT VENUE WILL BE PROPER IN SUCH COURTS AND WAIVE ANY OBJECTIONS BASED UPON
FORUM NON CONVENIENS. THE CHOICE OF FORUM SET FORTH IN THIS SECTION 20 SHALL NOT
- -------------------- ----------
BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY ACTION UNDER THIS AGREEMENT IN ANY
OTHER JURISDICTION.
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands as of the day
and year first above written.
EXECUTIVE
_______________________________
Name: Mark R. Hefty
JACKSON PRODUCTS, INC.
By:____________________________
Name: A. Richard Caputo, Jr.
Title: Vice President
10
<PAGE>
Annex A
-------
Date Vested Percentage Interest
---- --------------------------
Before April 22, 1999 0%
On or after April 22, 1999 0.125%
On or after April 22, 2000 0.250%
On or after April 22, 2001 0.375%
<PAGE>
Exhibit A
---------
Three Year Junior Note
----------------------
<PAGE>
EXHIBIT 10.40
STOCK APPRECIATION RIGHTS AGREEMENT
-----------------------------------
This Stock Appreciation Rights Agreement (this "Agreement"), dated as of
---------
April 23, 1998, by and among Jackson Products, Inc., a Delaware corporation
("Jackson"), Crystaloid Technologies, Inc., a Delaware corporation and a
-------
subsidiary of Jackson (the "Company"), and Edward D. Surjan, Jr. (the
-------
"Executive").
---------
WHEREAS, Jackson desires to provide stock appreciation rights to Executive
as an incentive for Executive to remain in the service of the Company and its
subsidiaries by allowing Executive to realize 5.74% of the appreciation of the
equity value (as determined herein) of the Company during the next five years,
subject and according to the provisions set forth herein;
NOW, THEREFORE, in consideration of (1) the mutual covenants and agreements
herein set forth, (2) the Executive's continued service with the Company, and
(3) the special benefits accruing to Jackson, the Company and Executive
hereunder and in connection herewith, the parties hereto agree as follows:
1. Definitions.
-----------
"Base Compensation" means, with respect to the Executive, $90,000 for the
-----------------
first year of this Agreement and the Executive's annual base salary at the
highest rate calculated on a per annum basis during the 12 month period
preceding the date of termination at any time thereafter.
"Benefits" means health insurance plans and related fringe benefit
--------
programs, if any, maintained by the Company for the benefit of the Executive in
the Executive's capacity as an employee of the Company.
"Board of Directors" means Jackson's Board of Directors or any properly
------------------
constituted committee thereof. Any determinations by the Board of Directors
hereunder will be final, non-appealable, binding and conclusive.
"Business" means (a) the design, production, manufacture, distribution and
--------
sale of liquid crystal displays and modules or (b) any similar or incidental
business conducted by, or engaged in, or proposed to be conducted by or engaged
in, by the Companies prior to the date hereof or at any time during Executive's
term of employment with the Company or Jackson.
"Cause" means any of the following: (i) Executive's commission of any
-----
crime or criminal offense involving the unlawful theft or conversion of
substantial monies or other property, or any other felony (other than a criminal
offense arising solely under a statutory provision imposing criminal liability
on the Executive on a per se basis due to the offices held by the Executive),
--- --
including fraud or embezzlement; (ii) Executive's breach of any of his fiduciary
duties to the Company or its stockholders or making of a willful
misrepresentation or
<PAGE>
omission which breach, misrepresentation or omission would reasonably be
expected to materially adversely affect the business, properties, assets,
condition (financial or other) or prospects of Jackson or the Company; (iii)
Executive's willful, continual and material neglect or failure to discharge his
duties, responsibilities or obligations to the Company (other than those arising
solely due to Disability); (iv) Executive's habitual drunkenness or substance
abuse which materially interferes with Executive's ability to discharge his
duties, responsibilities or obligations to the Company; (v) Executive's willful
and material breach of any non-competition or confidentiality agreement with the
Companies, including Executive's violation of Sections 9 or 10 hereof, or any
----------------
other agreements with the Company or Jackson, including the Employment
Agreement; or (vi) Executive's gross neglect of his duties and responsibilities,
as determined by the Company.
"Common Stock" means the common stock, par value $.01 per share, of the
------------
Company.
"Companies" means Jackson, its successors and its direct or indirect
---------
subsidiaries (including the Company), now or hereafter existing.
"Competitive Business" is defined in Section 10(a)(i).
-------------------- ----------------
"Confidential Information" means any confidential information including,
------------------------
without limitation, any study, data, calculations, software storage media or
other compilation of information, patent, patent application, copyright,
trademark, trade name, service mark, service name, "know-how", trade secrets,
customer lists, details of client or consultant contracts, pricing policies,
operational methods, marketing plans or strategies, product development
techniques or plans, business acquisition plans or any portion or phase of any
scientific or technical information, ideas, discoveries, designs, computer
programs (including source of object codes), processes, procedures, formulae,
improvements or other proprietary or intellectual property of the Companies,
whether or not in written or tangible form, and whether or not registered, and
including all files, records, manuals, books, catalogues, memoranda, notes,
summaries, plans, reports, records, documents and other evidence thereof. The
term "Confidential Information" does not include, and there shall be no
------------------------
obligation hereunder with respect to, information that becomes generally
available to the public other than as a result of a disclosure by the Executive
not permissible hereunder or under the Employment Agreement or information
acquired by the Executive completely independently, related in no way to the
Business and due in no part whatsoever to his position with the Company.
"Cost" means with respect to the stock appreciation right, $1.00.
----
"Determination Period" means the eight consecutive completed fiscal
--------------------
quarters as set forth on the audited financial statements of the Company for the
2001 and 2002 fiscal years.
"Determined Value" means an amount equal to (i) 3.0 times EBITDA of the
----------------
Company for the Determination Period, less (ii) JPI Cost.
----
2
<PAGE>
"Disability" means due to physical or mental disability Executive is unable
----------
to perform, and does not perform, substantially all of Executive's duties as an
employee of the Company for a continuous period of 90 days as certified in
writing by an experienced, recognized physician specializing in such
disabilities, which physician shall be reasonably acceptable to the Company and
the Executive. Subject to the foregoing, determination of Disability shall be
made in the reasonable judgment of the Board of Directors and subject to
interpretation and administration in a manner consistent with the Company's Long
Term Disability Policy as in effect at the date hereof and with applicable law,
including the Americans with Disabilities Act.
"EBITDA" means for any period, the net income of the Company plus taxes,
------ ----
net interest expense, depreciation and amortization, each of which shall be
determined in accordance with GAAP and in accordance with the Company's books
and records.
"Employment Agreement" means the Employment and Non-Interference Agreement,
--------------------
dated as of the date hereof, between the Executive and the Company.
"Exercise Payment" is defined in Section 3(b).
---------------- ------------
"Financing Agreements" means any senior or subordinated debt, preferred
--------------------
stock, common or other capital stock, lease or other financing agreements,
instruments and documents binding upon the Companies or any of their
subsidiaries, or their respective properties and assets, from time to time in
effect.
"GAAP" means the generally accepted accounting principals in the United
----
States of America in effect from time to time, applied on a consistent basis
both as to classification of items and to amounts.
"JPI Cost" means the sum of: (i) $6.5 million plus (ii) the amount of any
-------- ----
indebtedness of the Company and its subsidiaries at the end of the Determination
Period, including but not limited to, all intercompany loans from Jackson to the
Company or any of its subsidiaries; plus (iii) the aggregate amount of all
----
capital expenditures of the Company and its subsidiaries (other than capital
expenditures related to maintenance) for the period from the date of this
Agreement through the end of the Determination Period which are funded by
Jackson through means other than intercompany loans; plus (iv) the aggregate
----
transaction costs incurred by the Company and its subsidiaries in connection
with any acquisitions for the period from the date of this Agreement through the
end of the Determination Period which are funded by Jackson by means other than
intercompany loans; plus (v) the fair market value (as determined in good faith
----
by the Board of Directors) of any assets or businesses transferred by Jackson or
any of its subsidiaries to the Company as of the end of the Determination
Period.
"Market" means any county in the United States of America and each similar
------
jurisdiction in any other country in which the Business was conducted by or
engaged in by the Companies prior to the date hereof or is conducted or engaged
in, or is proposed to be conducted or engaged in, by the Companies at any time
during the Employee's term of employment with the Company.
3
<PAGE>
"Payment Date" is defined in Section 2(b).
------------ ------------
"Percentage Interest" means 5.74%.
-------------------
"Restricted Period" is defined in Section 10(a)(i).
----------------- -----------------
"Stop Payment Event" shall mean Executive's conduct at termination
------------------
involving actions, omissions or circumstances involving Cause or as set forth in
Section 3(b)(iv) of the Employment Agreement.
- ----------------
"Three Year Junior Note" means a promissory note of the Company in
----------------------
substantially the form attached hereto as Exhibit A.
---------
2. Grant.
-----
(a) The Company hereby grants to the Executive a stock appreciation right
relating to the Company in respect of the Determination Period.
(b) Subject to Section 6, any Determined Value which is payable to the
---------
Executive with respect to the Determination Period shall be paid on the sixth
anniversary of this Agreement (the "Payment Date").
------------
(c) The parties agree and acknowledge that this Agreement does not confer
upon Executive or the stock appreciation right any rights or interests as a
stockholder of the Company, and that no fiduciary duties are owed by the Company
or their respective directors, officers and stockholders in respect of such
stock appreciation right. Executive further agrees and acknowledges that the
Company is not, and shall not be, restricted or limited in any manner from
entering into or modifying any Financing Agreements that restrict or limit
payments hereunder, incurring indebtedness, allocating amounts, determining
rates or otherwise making determinations in respect of indebtedness or EBITDA,
making other adjustments pursuant to this Agreement, issuing shares or other
stock appreciation or similar rights, irrespective of any dilution or other
effect thereof, or otherwise taking actions that may affect the stock
appreciation right granted hereunder.
3. Exercise at end of Determination Period.
---------------------------------------
(a) At the end of the Determination Period, Jackson will, within thirty
(30) days after such date, give notice thereof to Executive and Executive shall,
within sixty (60) days following such date, exercise all, but not less than all,
of the Executive's stock appreciation right granted hereunder. Any Determined
Value which is payable to the Executive as a result of such exercise shall be
paid as set forth in Section 2(b). The Executive acknowledges and agrees that
------------
all or any portion of the Determined Value may be paid by Jackson, at Jackson's
option, in Three Year Junior Notes.
4
<PAGE>
(b) With respect to an exercise at the end of the Determination Period
pursuant to Section 3(a), Jackson shall pay Executive an amount equal to the
------------
product of: (i) the Percentage Interest, multiplied by (ii) the Determined
- ------- -------------
Value (the "Exercise Payment").
----------------
4. Exercise Pursuant to Termination of Employment. Subject to the
----------------------------------------------
provisions of Section 6, if the employment by the Company of the Executive is
---------
terminated at any time for any of the reasons specified in Section 3(b)(i), (ii)
--------------- ----
or (v) or Sections 3(c)(i), (ii) or (iii) of the Employment Agreement then the
--- ---------------- ---- -----
Executive (or, solely in the case of death, the person or persons to whom the
Executive's rights with respect to the stock appreciation right shall have
lawfully passed by will or by applicable law) may, at the Executive's or their
option, exercise all, but not less than all, of the stock appreciation right
granted hereunder, and receive the Exercise Payment described below:
(a) If the termination occurs before the second anniversary of this
Agreement, the Exercise Payment shall be equal to Cost, payable on the Payment
Date and in the manner set forth in Section 3(a).
------------
(b) If the termination occurs after the second anniversary of this
Agreement and before the third anniversary of this Agreement, the Exercise
Payment shall be equal to 25% of the Determined Value payable on the Payment
Date and in the manner set forth in Section 3(a).
------------
(c) If the termination occurs after the third anniversary of this
Agreement and before the fourth anniversary of this Agreement, the Exercise
Payment shall be equal to for 50% of the Determined Value payable on the Payment
Date and in the manner set forth in Section 3(a).
------------
(d) If the termination occurs after the fourth anniversary of this
Agreement and before the fifth anniversary of this Agreement, the Exercise
Payment shall be equal to 75% of the Determined Value payable on the Payment
Date and in the manner set forth in Section 3(a).
------------
(e) If the exercise is upon or after termination of employment and the
termination occurs after the fifth anniversary of this Agreement, the Exercise
Payment shall be equal to the Determined Value, payable on the Payment Date in
the manner set forth in Section 3(a).
------------
Upon termination, Jackson will, within ninety (90) days after such date,
give notice thereof and Executive or such persons who may exercise the stock
appreciation right shall, in order to exercise the foregoing stock appreciation
right, notify Jackson of its or their exercise of such stock appreciation right
within six months following termination of employment.
5. Limitations of Payment and Other Matters.
----------------------------------------
(a) All payments in respect of the exercise or purchase of stock
appreciation right hereunder will be subject to the withholding and payment of
applicable payroll, withholding and other taxes and other governmental charges,
and will be further subject to set-off for any obligations or liabilities of or
claims by the Companies against Executive.
5
<PAGE>
(b) In the event of the termination of Executive at any time prior to the
payment in full of the Exercise Payment (including without limitation payments
under any Three Year Junior Note) in connection with a Stop Payment Event, then,
notwithstanding any prior exercise of the stock appreciation right granted
hereunder, Jackson may exercise its rights under Section 6, which exercise by
---------
Jackson will take precedence over, and nullify, the Executive's exercise of his
stock appreciation right.
(c) Notwithstanding anything to the contrary contained in this Agreement,
all payments upon exercise of the stock appreciation right or repurchase of such
right pursuant to Section 6, including issuances of and payments by the Company
---------
on, the Three Year Junior Notes, shall be subject to (i) restrictions contained
in any applicable law, (ii) restrictions contained in any of the Financing
Agreements, each as amended and in effect from time to time, and any Senior
Indebtedness (as defined in the Three Year Junior Notes) and (iii) the
availability of cash to make any lump sum cash payments. If any such
restrictions or unavailability prohibit Exercise Payments or the repurchase of
the stock appreciation right hereunder which Jackson is otherwise entitled or
required to make, Jackson may make such Exercise Payments or repurchases as soon
as it is permitted to do so under such restrictions. The inability of Jackson
to make payments pursuant to the immediately preceding sentence will not
constitute a breach hereunder or entitle Executive to accelerate or otherwise
demand payment therefor, or negate or otherwise affect, or permit the recision
of, the exercise or repurchase of stock appreciation right or any other
provision of this Agreement.
(d) In the event of any reorganization of the Company, whether voluntary
or involuntary, or in bankruptcy, insolvency, receivership or similar proceeding
relating to the Company, all payments in respect of the exercise or purchase of
stock appreciation right hereunder will be subject to the prior payment in full
in cash of all amounts due under the Financing Agreements.
6. Termination of Employment. If Executive's employment is terminated at
-------------------------
any time prior to the expiration of the stock appreciation rights under any
circumstances involving Cause or as set forth in Section 3(b)(iv) of the
----------------
Employment Agreement (but not in any other circumstances, including death and
disability), then Jackson shall have an option, irrespective of any prior
exercise of the stock appreciation right, exercisable upon 30 days' notice given
at any time and exercisable within 180 days after such termination, to purchase
from Executive or his transferee(s) all the Executive's stock appreciation
rights, irrespective of the amount of time elapsed from the date of this
Agreement, at a purchase price equal to Cost.
7. Transfers. The stock appreciation right shall not be transferable by
---------
Executive other than by will or by the laws of descent and distribution. During
the lifetime of Executive a stock appreciation right shall be exercisable only
by the Executive or by the Executive's guardian or legal representative.
8. Stockholder Approval. This Agreement has been approved by Jackson, the
--------------------
Company's sole stockholder, for purposes of Section 280(G)(b)(5)(B) of the
Internal Revenue Code.
6
<PAGE>
9. Confidential Information. During and after Executive's term of
------------------------
employment with the Company or Jackson, Executive will not, directly or
indirectly in one or a series of transactions, disclose to any person, or use or
otherwise exploit for Executive's own benefit or for the benefit of anyone other
than the Companies, any Confidential Information; provided, however, that any
-------- -------
Confidential Information may be disclosed to officers, representatives,
employees and agents of the Companies who need to know such Confidential
Information in order to perform the services or conduct the operations required
or expected of them in the Business. Executive shall use commercially
reasonable efforts to cause all persons or entities to whom any Confidential
Information shall be disclosed by him hereunder to observe the terms and
conditions set forth herein as though each such person or entity was bound
hereby. Executive shall have no obligation hereunder to keep confidential any
Confidential Information if and to the extent disclosure of any therefor is
specifically required by law; provided, however, that in the event disclosure is
-------- -------
required by applicable law, Executive shall provide the Company with prompt
notice of such requirement, prior to making any disclosure, so that the Company
may seek an appropriate protective order. At the request of the Company,
Executive agrees to deliver to the Company, at any time during his term of
employment with the Company or Jackson, or thereafter, all Confidential
Information which he may possess or control. Executive agrees that all
Confidential Information of the Companies and its subsidiaries (whether now or
hereafter existing) conceived, discovered or made by him during such term of
employment exclusively belongs to the Companies (and not to Executive).
Executive will promptly disclose such Confidential Information to the Company
and perform all actions reasonably requested by the Company to establish and
confirm such exclusive ownership.
10. Non-Competition and Non-Interference.
------------------------------------
(a) Executive acknowledges that services provided by Executive to the
Company and Jackson are unique and that obtaining or use of same by a
Competitive Business (as herein defined) would cause irreparable injury to the
Companies. In consideration of the grant of stock appreciation rights by
Jackson hereunder, Executive covenants and agrees that:
(i) From the date hereof through the date that is 24 months after the
end of his term of employment with the Company or Jackson (the "Restricted
----------
Period"), Executive will not, without the express written approval of the
------
Board of Directors of Jackson, anywhere in the Market, directly or
indirectly, in one or a series of transactions, own, manage, operate,
control, invest or acquire an interest in, or otherwise engage or
participate in, whether as a proprietor, partner, stockholder, lender,
director, officer, employee, joint venturer, investor, lessor, supplier,
customer, agent, representative or other participant, in any business which
competes, directly or indirectly, with the Business in the Market
("Competitive Business") without regard to (A) whether the Competitive
----------------------
Business has its office, manufacturing or other business facilities within
or without the Market, (B) whether any of the activities of Executive
referred to above occur or are performed within or without the Market or
(C) whether Executive resides, or reports to an office, within or without
the Market; provided, however, that (x) Executive may, anywhere in the
-------- -------
Market, directly or indirectly, in one or a series of transactions, own,
7
<PAGE>
invest or acquire an interest in up to one percent (1%) of the capital
stock of a corporation whose capital stock is traded publicly, or that (y)
Executive may accept employment with a successor company to the Company.
(ii) The Company covenants and agrees to provide Benefits and pay
Base Compensation to the Executive during any applicable Restricted Period.
(iii) During the Restricted Period (which shall not be reduced by any
period of violation of this Agreement by Executive or period which is
required for litigation to enforce the rights hereunder), Executive will
not without the express prior written approval of the Board of Directors of
Jackson (A) directly or indirectly, in one or a series of transactions,
recruit, solicit or otherwise induce or influence any proprietor, partner,
stockholder, lender, director, officer, employee, sales agent, joint
venturer, investor, lessor, supplier, customer, agent, representative or
any other person which has a business relationship with any of the
Companies within the 24 month period preceding the date of the incident in
question, to discontinue, reduce or modify such employment, agency or
business relationship with any of the Companies, or (B) employ or seek to
employ or cause any Competitive Business to employ or seek to employ any
person or agent who is then (or was at any time within 24 months prior to
the date Executive or the Competitive Business employs or seeks to employ
such person) employed or retained by any of the Companies. Notwithstanding
the foregoing, nothing herein shall prevent Executive from providing a
letter of recommendation to an employee with respect to a future employment
opportunity.
(b) In the event that Executive breaches his obligations in any material
respect under Sections 9 or 10, Jackson, in addition to pursuing all available
---------- --
remedies under this Agreement, at law or otherwise, and without limiting its
right to pursue the same shall cease all payments to the Executive under Section
-------
3.
- -
11. Specific Performance. All the parties hereto agree that their rights
--------------------
under Section 9 and 10 are special and unique and that violation thereof would
----------------
not be adequately compensated by money damages and each grants the others the
right to specifically enforce (including injunctive relief where appropriate)
the terms of this Agreement.
12. Heirs, etc. This Agreement shall be binding on the Executive, his
----------
heirs and personal representatives and on Jackson and the Company and their
respective successors and assigns.
13. Counterparts. This Agreement may be executed in two or more
------------
counterparts, any one of which shall be deemed an original without reference to
the others.
14. Employment. This Agreement is not, and shall not be construed in any
----------
way, as an employment agreement for the benefit of Executive.
8
<PAGE>
15. Amendments. This Agreement may not be amended or modified, and no
----------
waivers hereunder may be granted, except with the approval of each of the
parties hereto and the holder(s) of a majority of the common stock of the
Company (which, until the parties are otherwise notified, will be Jackson).
16. Notice. Any notice, request, demand or other communication required
------
or permitted to be given under this Agreement shall be given in writing and if
delivered personally, or sent by certified or registered mail, return receipt
requested, as follows (or to such other addressee or address as shall be set
forth in a notice given in the same manner):
If to Executive: Edward. D. Surjan, Jr.
3026 Warrington Road
Shaker Heights, Ohio 44120
If to Company: Crystaloid Technologies, Inc.
c/o Jackson Products, Inc.
2997 Clarkson Road
Chesterfield, Missouri 63017
Attn: Christopher T. Paule
Telephone: (314) 207-2715
Telecopier: (314) 207-2800
with a copy to: James B. Carlson
Mayer, Brown & Platt
1675 Broadway, Suite 1900
New York, New York 10019
Telephone: (212) 506-2500
Telecopier: (212) 262-1910
Any such notices shall be deemed to be given on the date personally delivered or
such return receipt is issued.
17. Executive's Representation. Executive hereby warrants and represents
--------------------------
to Jackson and the Company that Executive is not subject to any covenants,
agreements or restrictions, including without limitation any covenants,
agreements or restrictions which would be breached or violated by Executive's
execution, delivery and performance of his obligations under this Agreement.
18. Obligations. Executive agrees and acknowledges that this Agreement
-----------
and the obligations of Jackson and the Company hereunder are solely obligations
and liabilities of Jackson and the Company. None of the directors, officers,
employees, stockholders and affiliates or any other persons of Jackson of the
Company shall be obligated or liable in respect of this Agreement, and Executive
hereby releases each of them from any such obligation of liability.
9
<PAGE>
19. Validity. If, for any reason, any provision hereof shall be
--------
determined to be invalid or unenforceable, the validity and effect of the other
provisions hereof shall not be affected thereby.
20. Severability. Whenever possible, each provision of this Agreement
------------
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein. If any
court determines that any provision hereof is unenforceable because of the power
to reduce the scope or duration of such provision, as the case may be and, in
its reduced form, such provision shall then be enforceable.
21. Waiver of Breach; Enforcement. The waiver by Jackson, the Company or
-----------------------------
Executive of a breach of any provision of this Agreement by the other party
shall not operate or be construed as a waiver of any other breach of such other
party. Each of the parties (and third party beneficiaries) to this Agreement
shall be entitled to enforce its rights under any provision of this Agreement
and to exercise all other rights existing in its favor.
22. Litigation. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED
----------
AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF MISSOURI,
EXCEPT THAT NO DOCTRINE OF CHOICE OF LAW SHALL BE USED TO APPLY ANY LAW OTHER
THAN THAT OF MISSOURI, AND NO DEFENSE, COUNTERCLAIM OR RIGHT OF SET-OFF GIVEN OR
ALLOWED BY THE LAWS OF ANY OTHER STATE OR JURISDICTION, OR ARISING OUT OF THE
ENACTMENT, MODIFICATION OR REPEAL OF ANY LAW, REGULATION, ORDINANCE OR DECREE OF
ANY FOREIGN JURISDICTION, BE INTERPOSED IN ANY ACTION HEREON. THE PARTIES AGREE
THAT ANY ACTION OR PROCEEDING TO ENFORCE OR ARISING OUT OF THIS AGREEMENT MAY BE
COMMENCED IN THE STATE COURTS, OR IN THE UNITED STATES DISTRICT COURTS IN ST.
LOUIS, MISSOURI. THE PARTIES CONSENT TO SUCH JURISDICTION, AGREE THAT VENUE
WILL BE PROPER IN SUCH COURTS AND WAIVE ANY OBJECTIONS BASED UPON FORUM NON
----- ---
CONVENIENS. THE CHOICE OF FORUM SET FORTH IN THIS SECTION 22 SHALL NOT BE DEEMED
- ---------- ----------
TO PRECLUDE THE ENFORCEMENT OF ANY ACTION UNDER THIS AGREEMENT AND TO ENFORCE
SAME IN ANY OTHER JURISDICTION.
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands as of the day
and year first above written.
EXECUTIVE
_____________________________________
Edward D. Surjan, Jr.
JACKSON PRODUCTS, INC.
By:
__________________________________
Name: Christopher T. Paule
Title: Vice President
CRYSTALOID TECHNOLOGIES, INC.
By:
__________________________________
Name: Christopher T. Paule
Title: Vice President
11
<PAGE>
EXHIBIT 10.41
STOCK APPRECIATION RIGHTS AGREEMENT
-----------------------------------
This Stock Appreciation Rights Agreement (this "Agreement"), dated as of
---------
April 23, 1998, by and among Jackson Products, Inc., a Delaware corporation
("Jackson"), Crystaloid Technologies, Inc., a Delaware corporation and a
-------
subsidiary of Jackson (the "Company"), and Edward M. Stiles (the "Executive").
------- ---------
WHEREAS, Jackson desires to provide stock appreciation rights to Executive
as an incentive for Executive to remain in the service of the Company and its
subsidiaries by allowing Executive to realize 2.00% of the appreciation of the
equity value (as determined herein) of the Company during the next five years,
subject and according to the provisions set forth herein;
NOW, THEREFORE, in consideration of (1) the mutual covenants and agreements
herein set forth, (2) the Executive's continued service with the Company, and
(3) the special benefits accruing to Jackson, the Company and Executive
hereunder and in connection herewith, the parties hereto agree as follows:
1. Definitions.
-----------
"Base Compensation" means, with respect to the Executive, $57,000 for the
-----------------
first year of this Agreement and the Executive's annual base salary at the
highest rate calculated on a per annum basis during the 12 month period
preceding the date of termination at any time thereafter.
"Benefits" means health insurance plans and related fringe benefit
--------
programs, if any, maintained by the Company for the benefit of the Executive in
the Executive's capacity as an employee of the Company.
"Board of Directors" means Jackson's Board of Directors or any properly
------------------
constituted committee thereof. Any determinations by the Board of Directors
hereunder will be final, non-appealable, binding and conclusive.
"Business" means (a) the design, production, manufacture, distribution and
--------
sale of liquid crystal displays and modules or (b) any similar or incidental
business conducted by, or engaged in, or proposed to be conducted by or engaged
in, by the Companies prior to the date hereof or at any time during Executive's
term of employment with the Company or Jackson.
"Cause" means any of the following: (i) Executive's commission of any
-----
crime or criminal offense involving the unlawful theft or conversion of
substantial monies or other property, or any other felony (other than a criminal
offense arising solely under a statutory provision imposing criminal liability
on the Executive on a per se basis due to the offices held by the Executive),
--- --
including fraud or embezzlement; (ii) Executive's breach of any of his fiduciary
duties to the Company or its stockholders or making of a willful
misrepresentation or
<PAGE>
omission which breach, misrepresentation or omission would reasonably be
expected to materially adversely affect the business, properties, assets,
condition (financial or other) or prospects of Jackson or the Company; (iii)
Executive's willful, continual and material neglect or failure to discharge his
duties, responsibilities or obligations to the Company (other than those arising
solely due to Disability); (iv) Executive's habitual drunkenness or substance
abuse which materially interferes with Executive's ability to discharge his
duties, responsibilities or obligations to the Company; (v) Executive's willful
and material breach of any non-competition or confidentiality agreement with the
Companies, including Executive's violation of Sections 9 or 10 hereof, or any
----------------
other agreements with the Company or Jackson, including the Employment
Agreement; or (vi) Executive's gross neglect of his duties and responsibilities,
as determined by the Company.
"Common Stock" means the common stock, par value $.01 per share, of the
------------
Company.
"Companies" means Jackson, its successors and its direct or indirect
---------
subsidiaries (including the Company), now or hereafter existing.
"Competitive Business" is defined in Section 10(a)(i).
-------------------- ----------------
"Confidential Information" means any confidential information including,
------------------------
without limitation, any study, data, calculations, software storage media or
other compilation of information, patent, patent application, copyright,
trademark, trade name, service mark, service name, "know-how", trade secrets,
customer lists, details of client or consultant contracts, pricing policies,
operational methods, marketing plans or strategies, product development
techniques or plans, business acquisition plans or any portion or phase of any
scientific or technical information, ideas, discoveries, designs, computer
programs (including source of object codes), processes, procedures, formulae,
improvements or other proprietary or intellectual property of the Companies,
whether or not in written or tangible form, and whether or not registered, and
including all files, records, manuals, books, catalogues, memoranda, notes,
summaries, plans, reports, records, documents and other evidence thereof. The
term "Confidential Information" does not include, and there shall be no
------------------------
obligation hereunder with respect to, information that becomes generally
available to the public other than as a result of a disclosure by the Executive
not permissible hereunder or under the Employment Agreement or information
acquired by the Executive completely independently, related in no way to the
Business and due in no part whatsoever to his position with the Company.
"Cost" means with respect to the stock appreciation right, $1.00.
----
"Determination Period" means the eight consecutive completed fiscal
--------------------
quarters as set forth on the audited financial statements of the Company for the
2001 and 2002 fiscal years.
"Determined Value" means an amount equal to (i) 3.0 times EBITDA of the
----------------
Company for the Determination Period, less (ii) JPI Cost.
----
2
<PAGE>
"Disability" means due to physical or mental disability Executive is unable
----------
to perform, and does not perform, substantially all of Executive's duties as an
employee of the Company for a continuous period of 90 days as certified in
writing by an experienced, recognized physician specializing in such
disabilities, which physician shall be reasonably acceptable to the Company and
the Executive. Subject to the foregoing, determination of Disability shall be
made in the reasonable judgment of the Board of Directors and subject to
interpretation and administration in a manner consistent with the Company's Long
Term Disability Policy as in effect at the date hereof and with applicable law,
including the Americans with Disabilities Act.
"EBITDA" means for any period, the net income the Company plus taxes, net
------ ----
interest expense, depreciation and amortization, each of which shall be
determined in accordance with GAAP and in accordance with the Company's books
and records.
"Employment Agreement" means the Employment and Non-Interference Agreement,
--------------------
dated as of the date hereof, between the Executive and the Company.
"Exercise Payment" is defined in Section 3(b).
---------------- ------------
"Financing Agreements" means any senior or subordinated debt, preferred
--------------------
stock, common or other capital stock, lease or other financing agreements,
instruments and documents binding upon the Companies or any of their
subsidiaries, or their respective properties and assets, from time to time in
effect.
"GAAP" means the generally accepted accounting principals in the United
----
States of America in effect from time to time, applied on a consistent basis
both as to classification of items and to amounts.
"JPI Cost" means the sum of: (i) $6.5 million plus (ii) the amount of any
-------- ----
indebtedness of the Company and its subsidiaries at the end of the Determination
Period, including but not limited to, all intercompany loans from Jackson to the
Company or any of its subsidiaries; plus (iii) the aggregate amount of all
----
capital expenditures of the Company and its subsidiaries (other than capital
expenditures related to maintenance) for the period from the date of this
Agreement through the end of the Determination Period which are funded by
Jackson through means other than intercompany loans; plus (iv) the aggregate
----
transaction costs incurred by the Company and its subsidiaries in connection
with any acquisitions for the period from the date of this Agreement through the
end of the Determination Period which are funded by Jackson by means other than
intercompany loans; plus (v) the fair market value (as determined in good faith
----
by the Board of Directors) of any assets or businesses transferred by Jackson or
any of its subsidiaries to the Company as of the end of the Determination
Period.
"Market" means any county in the United States of America and each similar
------
jurisdiction in any other country in which the Business was conducted by or
engaged in by the Companies prior to the date hereof or is conducted or engaged
in, or is proposed to be conducted or engaged in, by the Companies at any time
during the Employee's term of employment with the Company.
3
<PAGE>
"Payment Date" is defined in Section 2(b).
------------ ------------
"Percentage Interest" means 2.00%.
-------------------
"Restricted Period" is defined in Section 10(a)(i).
----------------- -----------------
"Stop Payment Event" shall mean Executive's conduct at termination
------------------
involving actions, omissions or circumstances involving Cause or as set forth in
Section 3(b)(iv) of the Employment Agreement.
- ----------------
"Three Year Junior Note" means a promissory note of the Company in
----------------------
substantially the form attached hereto as Exhibit A.
---------
2. Grant.
-----
(a) The Company hereby grants to the Executive a stock appreciation right
relating to the Company in respect of the Determination Period.
(b) Subject to Section 6, any Determined Value which is payable to the
---------
Executive with respect to the Determination Period shall be paid on the sixth
anniversary of this Agreement (the "Payment Date").
------------
(c) The parties agree and acknowledge that this Agreement does not confer
upon Executive or the stock appreciation right any rights or interests as a
stockholder of the Company, and that no fiduciary duties are owed by the Company
or their respective directors, officers and stockholders in respect of such
stock appreciation right. Executive further agrees and acknowledges that the
Company is not, and shall not be, restricted or limited in any manner from
entering into or modifying any Financing Agreements that restrict or limit
payments hereunder, incurring indebtedness, allocating amounts, determining
rates or otherwise making determinations in respect of indebtedness or EBITDA,
making other adjustments pursuant to this Agreement, issuing shares or other
stock appreciation or similar rights, irrespective of any dilution or other
effect thereof, or otherwise taking actions that may affect the stock
appreciation right granted hereunder.
3. Exercise at end of the Determination Period.
-------------------------------------------
(a) At the end of the Determination Period, Jackson will, within thirty
(30) days after such date, give notice thereof to Executive and Executive shall,
within sixty (60) days following such date, exercise all, but not less than all,
of the Executive's stock appreciation right granted hereunder. Any Determined
Value which is payable to the Executive as a result of such exercise shall be
paid as set forth in Section 2(b). The Executive acknowledges and agrees that
------------
all or any portion of the Determined Value may be paid by Jackson, at Jackson's
option, in Three Year Junior Notes.
4
<PAGE>
(b) With respect to an exercise at the end of the Determination Period
pursuant to Section 3(a), Jackson shall pay Executive an amount equal to the
------------
product of: (i) the Percentage Interest, multiplied by (ii) the Determined
- ------- -------------
Value (the "Exercise Payment").
----------------
4. Exercise Pursuant to Termination of Employment. Subject to the
----------------------------------------------
provisions of Section 6, if the employment by the Company of the Executive is
---------
terminated at any time for any of the reasons specified in Section 3(b)(i), (ii)
--------------- ----
or (v) or Sections 3(c)(i), (ii) or (iii) of the Employment Agreement then the
--- ---------------- ---- -----
Executive (or, solely in the case of death, the person or persons to whom the
Executive's rights with respect to the stock appreciation right shall have
lawfully passed by will or by applicable law) may, at the Executive's or their
option, exercise all, but not less than all, of the stock appreciation right
granted hereunder, and receive the Exercise Payment described below:
(a) If the termination occurs before the second anniversary of this
Agreement, the Exercise Payment shall be equal to Cost, payable on the Payment
Date and in the manner set forth in Section 3(a).
------------
(b) If the termination occurs after the second anniversary of this
Agreement and before the third anniversary of this Agreement, the Exercise
Payment shall be equal to 25% of the Determined Value payable on the Payment
Date and in the manner set forth in Section 3(a).
------------
(c) If the termination occurs after the third anniversary of this
Agreement and before the fourth anniversary of this Agreement, the Exercise
Payment shall be equal to 50% of the Determined Value payable on the Payment
Date and in the manner set forth in Section 3(a).
------------
(d) If the termination occurs after the fourth anniversary of this
Agreement and before the fifth anniversary of this Agreement, the Exercise
Payment shall be equal to 75% of the Determined Value payable on the Payment
Date and in the manner set forth in Section 3(a).
------------
(e) If the exercise is upon or after termination of employment and the
termination occurs after the fifth anniversary of this Agreement, the Exercise
Payment shall be equal to the Determined Value, payable on the Payment Date in
the manner set forth in Section 3(a).
------------
Upon termination, Jackson will, within ninety (90) days after such date,
give notice thereof and Executive or such persons who may exercise the stock
appreciation right shall, in order to exercise the foregoing stock appreciation
right, notify Jackson of its or their exercise of such stock appreciation right
within six months following termination of employment.
5. Limitations of Payment and Other Matters.
----------------------------------------
(a) All payments in respect of the exercise or purchase of stock
appreciation right hereunder will be subject to the withholding and payment of
applicable payroll, withholding and other taxes and other governmental charges,
and will be further subject to set-off for any obligations or liabilities of or
claims by the Companies against Executive.
5
<PAGE>
(b) In the event of the termination of Executive at any time prior to the
payment in full of the Exercise Payment (including without limitation payments
under any Three Year Junior Note) in connection with a Stop Payment Event, then,
notwithstanding any prior exercise of the stock appreciation right granted
hereunder, Jackson may exercise its rights under Section 6, which exercise by
---------
Jackson will take precedence over, and nullify, the Executive's exercise of his
stock appreciation right.
(c) Notwithstanding anything to the contrary contained in this Agreement,
all payments upon exercise of the stock appreciation right or repurchase of such
right pursuant to Section 6, including issuances of and payments by the Company
---------
on, the Three Year Junior Notes, shall be subject to (i) restrictions contained
in any applicable law, (ii) restrictions contained in any of the Financing
Agreements, each as amended and in effect from time to time, and any Senior
Indebtedness (as defined in the Three Year Junior Notes) and (iii) the
availability of cash to make any lump sum cash payments. If any such
restrictions or unavailability prohibit Exercise Payments or the repurchase of
the stock appreciation right hereunder which Jackson is otherwise entitled or
required to make, Jackson may make such Exercise Payments or repurchases as soon
as it is permitted to do so under such restrictions. The inability of Jackson
to make payments pursuant to the immediately preceding sentence will not
constitute a breach hereunder or entitle Executive to accelerate or otherwise
demand payment therefor, or negate or otherwise affect, or permit the recision
of, the exercise or repurchase of stock appreciation right or any other
provision of this Agreement.
(d) In the event of any reorganization of the Company, whether voluntary
or involuntary, or in bankruptcy, insolvency, receivership or similar proceeding
relating to the Company, all payments in respect of the exercise or purchase of
stock appreciation right hereunder will be subject to the prior payment in full
in cash of all amounts due under the Financing Agreements.
6. Termination of Employment. If Executive's employment is terminated at
-------------------------
any time prior to the expiration of the stock appreciation rights under any
circumstances involving Cause or as set forth in Section 3(b)(iv) of the
----------------
Employment Agreement (but not in any other circumstances, including death and
disability), then Jackson shall have an option, irrespective of any prior
exercise of the stock appreciation right, exercisable upon 30 days' notice given
at any time and exercisable within 180 days after such termination, to purchase
from Executive or his transferee(s) all the Executive's stock appreciation
rights, irrespective of the amount of time elapsed from the date of this
Agreement, at a purchase price equal to Cost.
7. Transfers. The stock appreciation right shall not be transferable by
---------
Executive other than by will or by the laws of descent and distribution. During
the lifetime of Executive a stock appreciation right shall be exercisable only
by the Executive or by the Executive's guardian or legal representative.
8. Stockholder Approval. This Agreement has been approved by Jackson, the
--------------------
Company's sole stockholder, for purposes of Section 280(G)(b)(5)(B) of the
Internal Revenue Code.
6
<PAGE>
9. Confidential Information. During and after Executive's term of
------------------------
employment with the Company or Jackson, Executive will not, directly or
indirectly in one or a series of transactions, disclose to any person, or use or
otherwise exploit for Executive's own benefit or for the benefit of anyone other
than the Companies, any Confidential Information; provided, however, that any
-------- -------
Confidential Information may be disclosed to officers, representatives,
employees and agents of the Companies who need to know such Confidential
Information in order to perform the services or conduct the operations required
or expected of them in the Business. Executive shall use commercially
reasonable efforts to cause all persons or entities to whom any Confidential
Information shall be disclosed by him hereunder to observe the terms and
conditions set forth herein as though each such person or entity was bound
hereby. Executive shall have no obligation hereunder to keep confidential any
Confidential Information if and to the extent disclosure of any therefor is
specifically required by law; provided, however, that in the event disclosure is
-------- -------
required by applicable law, Executive shall provide the Company with prompt
notice of such requirement, prior to making any disclosure, so that the Company
may seek an appropriate protective order. At the request of the Company,
Executive agrees to deliver to the Company, at any time during his term of
employment with the Company or Jackson, or thereafter, all Confidential
Information which he may possess or control. Executive agrees that all
Confidential Information of the Companies and its subsidiaries (whether now or
hereafter existing) conceived, discovered or made by him during such term of
employment exclusively belongs to the Companies (and not to Executive).
Executive will promptly disclose such Confidential Information to the Company
and perform all actions reasonably requested by the Company to establish and
confirm such exclusive ownership.
10. Non-Competition and Non-Interference.
------------------------------------
(a) Executive acknowledges that services provided by Executive to the
Company and Jackson are unique and that obtaining or use of same by a
Competitive Business (as herein defined) would cause irreparable injury to the
Companies. In consideration of the grant of stock appreciation rights by
Jackson hereunder, Executive covenants and agrees that:
(i) From the date hereof through the date that is 18 months after the
end of his term of employment with the Company or Jackson (the "Restricted
----------
Period"), Executive will not, without the express written approval of the
------
Board of Directors of Jackson, anywhere in the Market, directly or
indirectly, in one or a series of transactions, own, manage, operate,
control, invest or acquire an interest in, or otherwise engage or
participate in, whether as a proprietor, partner, stockholder, lender,
director, officer, employee, joint venturer, investor, lessor, supplier,
customer, agent, representative or other participant, in any business which
competes, directly or indirectly, with the Business in the Market
("Competitive Business") without regard to (A) whether the Competitive
--------------------
Business has its office, manufacturing or other business facilities within
or without the Market, (B) whether any of the activities of Executive
referred to above occur or are performed within or without the Market or
(C) whether Executive resides, or reports to an office, within or without
the Market; provided, however, that (x) Executive may, anywhere in the
-------- -------
Market, directly or indirectly, in one or a series of transactions, own,
7
<PAGE>
invest or acquire an interest in up to one percent (1%) of the capital
stock of a corporation whose capital stock is traded publicly, or that (y)
Executive may accept employment with a successor company to the Company.
(ii) The Company covenants and agrees to provide Benefits and pay
Base Compensation to the Executive during any applicable Restricted Period.
(iii) During the Restricted Period (which shall not be reduced by any
period of violation of this Agreement by Executive or period which is
required for litigation to enforce the rights hereunder), Executive will
not without the express prior written approval of the Board of Directors of
Jackson (A) directly or indirectly, in one or a series of transactions,
recruit, solicit or otherwise induce or influence any proprietor, partner,
stockholder, lender, director, officer, employee, sales agent, joint
venturer, investor, lessor, supplier, customer, agent, representative or
any other person which has a business relationship with any of the
Companies within the 24 month period preceding the date of the incident in
question, to discontinue, reduce or modify such employment, agency or
business relationship with any of the Companies, or (B) employ or seek to
employ or cause any Competitive Business to employ or seek to employ any
person or agent who is then (or was at any time within 24 months prior to
the date Executive or the Competitive Business employs or seeks to employ
such person) employed or retained by any of the Companies. Notwithstanding
the foregoing, nothing herein shall prevent Executive from providing a
letter of recommendation to an employee with respect to a future employment
opportunity.
(b) In the event that Executive breaches his obligations in any material
respect under Sections 9 or 10, Jackson, in addition to pursuing all available
---------- --
remedies under this Agreement, at law or otherwise, and without limiting its
right to pursue the same shall cease all payments to the Executive under Section
-------
3.
- -
11. Specific Performance. All the parties hereto agree that their rights
--------------------
under Section 9 and 10 are special and unique and that violation thereof would
----------------
not be adequately compensated by money damages and each grants the others the
right to specifically enforce (including injunctive relief where appropriate)
the terms of this Agreement.
12. Heirs, etc. This Agreement shall be binding on the Executive, his
----------
heirs and personal representatives and on Jackson and the Company and their
respective successors and assigns.
13. Counterparts. This Agreement may be executed in two or more
------------
counterparts, any one of which shall be deemed an original without reference to
the others.
14. Employment. This Agreement is not, and shall not be construed in any
----------
way, as an employment agreement for the benefit of Executive.
8
<PAGE>
15. Amendments. This Agreement may not be amended or modified, and no
----------
waivers hereunder may be granted, except with the approval of each of the
parties hereto and the holder(s) of a majority of the common stock of the
Company (which, until the parties are otherwise notified, will be Jackson).
16. Notice. Any notice, request, demand or other communication required
------
or permitted to be given under this Agreement shall be given in writing and if
delivered personally, or sent by certified or registered mail, return receipt
requested, as follows (or to such other addressee or address as shall be set
forth in a notice given in the same manner):
If to Executive: Edward. M. Stiles
________________________
________________________
If to Company: Crystaloid Technologies, Inc.
c/o Jackson Products, Inc.
2997 Clarkson Road
Chesterfield, Missouri 63017
Attn: Christopher T. Paule
Telephone: (314) 207-2715
Telecopier: (314) 207-2800
with a copy to: James B. Carlson
Mayer, Brown & Platt
1675 Broadway, Suite 1900
New York, New York 10019
Telephone: (212) 506-2500
Telecopier: (212) 262-1910
Any such notices shall be deemed to be given on the date personally delivered or
such return receipt is issued.
17. Executive's Representation. Executive hereby warrants and represents
--------------------------
to Jackson and the Company that Executive is not subject to any covenants,
agreements or restrictions, including without limitation any covenants,
agreements or restrictions which would be breached or violated by Executive's
execution, delivery and performance of his obligations under this Agreement.
18. Obligations. Executive agrees and acknowledges that this Agreement
-----------
and the obligations of Jackson and the Company hereunder are solely obligations
and liabilities of Jackson and the Company. None of the directors, officers,
employees, stockholders and affiliates or any other persons of Jackson of the
Company shall be obligated or liable in respect of this Agreement, and Executive
hereby releases each of them from any such obligation of liability.
9
<PAGE>
19. Validity. If, for any reason, any provision hereof shall be
--------
determined to be invalid or unenforceable, the validity and effect of the other
provisions hereof shall not be affected thereby.
20. Severability. Whenever possible, each provision of this Agreement
------------
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein. If any
court determines that any provision hereof is unenforceable because of the power
to reduce the scope or duration of such provision, as the case may be and, in
its reduced form, such provision shall then be enforceable.
21. Waiver of Breach; Enforcement. The waiver by Jackson, the Company or
-----------------------------
Executive of a breach of any provision of this Agreement by the other party
shall not operate or be construed as a waiver of any other breach of such other
party. Each of the parties (and third party beneficiaries) to this Agreement
shall be entitled to enforce its rights under any provision of this Agreement
and to exercise all other rights existing in its favor.
22. Litigation. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED
----------
AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF MISSOURI,
EXCEPT THAT NO DOCTRINE OF CHOICE OF LAW SHALL BE USED TO APPLY ANY LAW OTHER
THAN THAT OF MISSOURI, AND NO DEFENSE, COUNTERCLAIM OR RIGHT OF SET-OFF GIVEN OR
ALLOWED BY THE LAWS OF ANY OTHER STATE OR JURISDICTION, OR ARISING OUT OF THE
ENACTMENT, MODIFICATION OR REPEAL OF ANY LAW, REGULATION, ORDINANCE OR DECREE OF
ANY FOREIGN JURISDICTION, BE INTERPOSED IN ANY ACTION HEREON. THE PARTIES AGREE
THAT ANY ACTION OR PROCEEDING TO ENFORCE OR ARISING OUT OF THIS AGREEMENT MAY BE
COMMENCED IN THE STATE COURTS, OR IN THE UNITED STATES DISTRICT COURTS IN ST.
LOUIS, MISSOURI. THE PARTIES CONSENT TO SUCH JURISDICTION, AGREE THAT VENUE
WILL BE PROPER IN SUCH COURTS AND WAIVE ANY OBJECTIONS BASED UPON FORUM NON
----- ---
CONVENIENS. THE CHOICE OF FORUM SET FORTH IN THIS SECTION 22 SHALL NOT BE DEEMED
- ---------- ----------
TO PRECLUDE THE ENFORCEMENT OF ANY ACTION UNDER THIS AGREEMENT AND TO ENFORCE
SAME IN ANY OTHER JURISDICTION.
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands as of the day
and year first above written.
EXECUTIVE
_____________________________________
Edward M. Stiles
JACKSON PRODUCTS, INC.
By:__________________________________
Name: Christopher T. Paule
Title: Vice President
CRYSTALOID TECHNOLOGIES, INC.
By:__________________________________
Name: Christopher T. Paule
Title: Vice President
11
<PAGE>
EXHIBIT 10.42
STOCK APPRECIATION RIGHTS AGREEMENT
-----------------------------------
This Stock Appreciation Rights Agreement (this "Agreement"), dated as of
---------
April 23, 1998, by and among Jackson Products, Inc., a Delaware corporation
("Jackson"), Crystaloid Technologies, Inc., a Delaware corporation and a
- ---------
subsidiary of Jackson (the "Company"), and Michael A. Fout (the "Executive").
------- ---------
WHEREAS, Jackson desires to provide stock appreciation rights to Executive
as an incentive for Executive to remain in the service of the Company and its
subsidiaries by allowing Executive to realize 4.50% of the appreciation of the
equity value (as determined herein) of the Company during the next five years,
subject and according to the provisions set forth herein;
NOW, THEREFORE, in consideration of (1) the mutual covenants and agreements
herein set forth, (2) the Executive's continued service with the Company, and
(3) the special benefits accruing to Jackson, the Company and Executive
hereunder and in connection herewith, the parties hereto agree as follows:
1. Definitions.
-----------
"Base Compensation" means, with respect to the Executive, $90,000 for the
-----------------
first year of this Agreement and the Executive's annual base salary at the
highest rate calculated on a per annum basis during the 12 month period
preceding the date of termination at any time thereafter.
"Benefits" means health insurance plans and related fringe benefit
--------
programs, if any, maintained by the Company for the benefit of the Executive in
the Executive's capacity as an employee of the Company.
"Board of Directors" means Jackson's Board of Directors or any properly
------------------
constituted committee thereof. Any determinations by the Board of Directors
hereunder will be final, non-appealable, binding and conclusive.
"Business" means (a) the design, production, manufacture, distribution and
--------
sale of liquid crystal displays and modules or (b) any similar or incidental
business conducted by, or engaged in, or proposed to be conducted by or engaged
in, by the Companies prior to the date hereof or at any time during Executive's
term of employment with the Company or Jackson.
"Cause" means any of the following: (i) Executive's commission of any
-----
crime or criminal offense involving the unlawful theft or conversion of
substantial monies or other property, or any other felony (other than a criminal
offense arising solely under a statutory provision imposing criminal liability
on the Executive on a per se basis due to the offices held by the Executive),
--- --
including fraud or embezzlement; (ii) Executive's breach of any of his fiduciary
duties to the Company or its stockholders or making of a willful
misrepresentation or
<PAGE>
omission which breach, misrepresentation or omission would reasonably be
expected to materially adversely affect the business, properties, assets,
condition (financial or other) or prospects of Jackson or the Company; (iii)
Executive's willful, continual and material neglect or failure to discharge his
duties, responsibilities or obligations to the Company (other than those arising
solely due to Disability); (iv) Executive's habitual drunkenness or substance
abuse which materially interferes with Executive's ability to discharge his
duties, responsibilities or obligations to the Company; (v) Executive's willful
and material breach of any non-competition or confidentiality agreement with the
Companies, including Executive's violation of Sections 9 or 10 hereof, or any
----------------
other agreements with the Company or Jackson, including the Employment
Agreement; or (vi) Executive's gross neglect of his duties and responsibilities,
as determined by the Company.
"Common Stock" means the common stock, par value $.01 per share, of the
------------
Company.
"Companies" means Jackson, its successors and its direct or indirect
---------
subsidiaries (including the Company), now or hereafter existing.
"Competitive Business" is defined in Section 10(a)(i).
-------------------- ----------------
"Confidential Information" means any confidential information including,
------------------------
without limitation, any study, data, calculations, software storage media or
other compilation of information, patent, patent application, copyright,
trademark, trade name, service mark, service name, "know-how", trade secrets,
customer lists, details of client or consultant contracts, pricing policies,
operational methods, marketing plans or strategies, product development
techniques or plans, business acquisition plans or any portion or phase of any
scientific or technical information, ideas, discoveries, designs, computer
programs (including source of object codes), processes, procedures, formulae,
improvements or other proprietary or intellectual property of the Companies,
whether or not in written or tangible form, and whether or not registered, and
including all files, records, manuals, books, catalogues, memoranda, notes,
summaries, plans, reports, records, documents and other evidence thereof. The
term "Confidential Information" does not include, and there shall be no
------------------------
obligation hereunder with respect to, information that becomes generally
available to the public other than as a result of a disclosure by the Executive
not permissible hereunder or under the Employment Agreement or information
acquired by the Executive completely independently, related in no way to the
Business and due in no part whatsoever to his position with the Company.
"Cost" means with respect to the stock appreciation right, $1.00.
----
"Determination Period" means the eight consecutive completed fiscal
--------------------
quarters as set forth on the audited financial statements of the Company for the
2001 and 2002 fiscal years.
"Determined Value" means an amount equal to (i) 3.0 times EBITDA of the
----------------
Company for the Determination Period, less (ii) JPI Cost.
----
2
<PAGE>
"Disability" means due to physical or mental disability Executive is unable
----------
to perform, and does not perform, substantially all of Executive's duties as an
employee of the Company for a continuous period of 90 days as certified in
writing by an experienced, recognized physician specializing in such
disabilities, which physician shall be reasonably acceptable to the Company and
the Executive. Subject to the foregoing, determination of Disability shall be
made in the reasonable judgment of the Board of Directors and subject to
interpretation and administration in a manner consistent with the Company's Long
Term Disability Policy as in effect at the date hereof and with applicable law,
including the Americans with Disabilities Act.
"EBITDA" means for any period, the net income of the Company plus taxes,
------ ----
net interest expense, depreciation and amortization, each of which shall be
determined in accordance with GAAP and in accordance with the Company's books
and records.
"Employment Agreement" means the Employment and Non-Interference Agreement,
--------------------
dated as of the date hereof, between the Executive and the Company.
"Exercise Payment" is defined in Section 3(b).
---------------- ------------
"Financing Agreements" means any senior or subordinated debt, preferred
--------------------
stock, common or other capital stock, lease or other financing agreements,
instruments and documents binding upon the Companies or any of their
subsidiaries, or their respective properties and assets, from time to time in
effect.
"GAAP" means the generally accepted accounting principals in the United
----
States of America in effect from time to time, applied on a consistent basis
both as to classification of items and to amounts.
"JPI Cost" means the sum of: (i) $6.5 million plus (ii) the amount of any
-------- ----
indebtedness of the Company and its subsidiaries at the end of the Determination
Period, including but not limited to, all intercompany loans from Jackson to the
Company or any of its subsidiaries; plus (iii) the aggregate amount of all
----
capital expenditures of the Company and its subsidiaries (other than capital
expenditures related to maintenance) for the period from the date of this
Agreement through the end of the Determination Period which are funded by
Jackson through means other than intercompany loans; plus (iv) the aggregate
----
transaction costs incurred by the Company and its subsidiaries in connection
with any acquisitions for the period from the date of this Agreement through the
end of the Determination Period which are funded by Jackson by means other than
intercompany loans; plus (v) the fair market value (as determined in good faith
----
by the Board of Directors) of any assets or businesses transferred by Jackson or
any of its subsidiaries to the Company as of the end of the Determination
Period.
"Market" means any county in the United States of America and each similar
------
jurisdiction in any other country in which the Business was conducted by or
engaged in by the Companies prior to the date hereof or is conducted or engaged
in, or is proposed to be conducted or engaged in, by the Companies at any time
during the Employee's term of employment with the Company.
3
<PAGE>
"Payment Date" is defined in Section 2(b).
------------ ------------
"Percentage Interest" means 4.50%.
-------------------
"Restricted Period" is defined in Section 10(a)(i).
----------------- -----------------
"Stop Payment Event" shall mean Executive's conduct at termination
------------------
involving actions, omissions or circumstances involving Cause or as set forth in
Section 3(b)(iv) of the Employment Agreement.
- ----------------
"Three Year Junior Note" means a promissory note of the Company in
----------------------
substantially the form attached hereto as Exhibit A.
---------
2. Grant.
-----
(a) The Company hereby grants to the Executive a stock appreciation right
relating to the Company in respect of the Determination Period.
(b) Subject to Section 6, any Determined Value which is payable to the
---------
Executive with respect to the Determination Period shall be paid on the sixth
anniversary of this Agreement (the "Payment Date").
------------
(c) The parties agree and acknowledge that this Agreement does not confer
upon Executive or the stock appreciation right any rights or interests as a
stockholder of the Company, and that no fiduciary duties are owed by the Company
or their respective directors, officers and stockholders in respect of such
stock appreciation right. Executive further agrees and acknowledges that the
Company is not, and shall not be, restricted or limited in any manner from
entering into or modifying any Financing Agreements that restrict or limit
payments hereunder, incurring indebtedness, allocating amounts, determining
rates or otherwise making determinations in respect of indebtedness or EBITDA,
making other adjustments pursuant to this Agreement, issuing shares or other
stock appreciation or similar rights, irrespective of any dilution or other
effect thereof, or otherwise taking actions that may affect the stock
appreciation right granted hereunder.
3. Exercise at end of Determination Period.
---------------------------------------
(a) At the end of the Determination Period, Jackson will, within thirty
(30) days after such date, give notice thereof to Executive and Executive shall,
within sixty (60) days following such date, exercise all, but not less than all,
of the Executive's stock appreciation right granted hereunder. Any Determined
Value which is payable to the Executive as a result of such exercise shall be
paid as set forth in Section 2(b). The Executive acknowledges and agrees that
------------
all or any portion of the Determined Value may be paid by Jackson, at Jackson's
option, in Three Year Junior Notes.
4
<PAGE>
(b) With respect to an exercise at the end of the Determination Period
pursuant to Section 3(a), Jackson shall pay Executive an amount equal to the
------------
product of: (i) the Percentage Interest, multiplied by (ii) the Determined
- ------- -------------
Value (the "Exercise Payment").
----------------
4. Exercise Pursuant to Termination of Employment. Subject to the
----------------------------------------------
provisions of Section 6, if the employment by the Company of the Executive is
---------
terminated at any time for any of the reasons specified in Section 3(b)(i), (ii)
--------------- ----
or (v) or Sections 3(c)(i), (ii) or (iii) of the Employment Agreement then the
--- ---------------- ---- -----
Executive (or, solely in the case of death, the person or persons to whom the
Executive's rights with respect to the stock appreciation right shall have
lawfully passed by will or by applicable law) may, at the Executive's or their
option, exercise all, but not less than all, of the stock appreciation right
granted hereunder, and receive the Exercise Payment described below:
(a) If the termination occurs before the second anniversary of this
Agreement, the Exercise Payment shall be equal to Cost, payable on the Payment
Date and in the manner set forth in Section 3(a).
------------
(b) If the termination occurs after the second anniversary of this
Agreement and before the third anniversary of this Agreement, the Exercise
Payment shall be equal to 25% of the Determined Value payable on the Payment
Date and in the manner set forth in Section 3(a).
------------
(c) If the termination occurs after the third anniversary of this
Agreement and before the fourth anniversary of this Agreement, the Exercise
Payment shall be equal to 50% of the Determined Value payable on the Payment
Date and in the manner set forth in Section 3(a).
------------
(d) If the termination occurs after the fourth anniversary of this
Agreement and before the fifth anniversary of this Agreement, the Exercise
Payment shall be equal to for 75% of the Determined Value payable on the Payment
Date and in the manner set forth in Section 3(a).
------------
(e) If the exercise is upon or after termination of employment and the
termination occurs after the fifth anniversary of this Agreement, the Exercise
Payment shall be equal to the Determined Value, payable on the Payment Date in
the manner set forth in Section 3(a).
------------
Upon termination, Jackson will, withing ninety (90) days after such date,
give notice thereof and Executive or such persons who may exercise the stock
appreciation right shall, in order to exercise the foregoing stock appreciation
right, notify Jackson of its or their exercise of such stock appreciation right
within six months following termination of employment.
5. Limitations of Payment and Other Matters.
----------------------------------------
(a) All payments in respect of the exercise or purchase of stock
appreciation right hereunder will be subject to the withholding and payment of
applicable payroll, withholding and other taxes and other governmental charges,
and will be further subject to set-off for any obligations or liabilities of or
claims by the Companies against Executive.
5
<PAGE>
(b) In the event of the termination of Executive at any time prior to the
payment in full of the Exercise Payment (including without limitation payments
under any Three Year Junior Note) in connection with a Stop Payment Event, then,
notwithstanding any prior exercise of the stock appreciation right granted
hereunder, Jackson may exercise its rights under Section 6, which exercise by
---------
Jackson will take precedence over, and nullify, the Executive's exercise of his
stock appreciation right.
(c) Notwithstanding anything to the contrary contained in this Agreement,
all payments upon exercise of the stock appreciation right or repurchase of such
right pursuant to Section 6, including issuances of and payments by the Company
---------
on, the Three Year Junior Notes, shall be subject to (i) restrictions contained
in any applicable law, (ii) restrictions contained in any of the Financing
Agreements, each as amended and in effect from time to time, and any Senior
Indebtedness (as defined in the Three Year Junior Notes) and (iii) the
availability of cash to make any lump sum cash payments. If any such
restrictions or unavailability prohibit Exercise Payments or the repurchase of
the stock appreciation right hereunder which Jackson is otherwise entitled or
required to make, Jackson may make such Exercise Payments or repurchases as soon
as it is permitted to do so under such restrictions. The inability of Jackson
to make payments pursuant to the immediately preceding sentence will not
constitute a breach hereunder or entitle Executive to accelerate or otherwise
demand payment therefor, or negate or otherwise affect, or permit the recision
of, the exercise or repurchase of stock appreciation right or any other
provision of this Agreement.
(d) In the event of any reorganization of the Company, whether voluntary
or involuntary, or in bankruptcy, insolvency, receivership or similar proceeding
relating to the Company, all payments in respect of the exercise or purchase of
stock appreciation right hereunder will be subject to the prior payment in full
in cash of all amounts due under the Financing Agreements.
6. Termination of Employment. If Executive's employment is terminated at
-------------------------
any time prior to the expiration of the stock appreciation rights under any
circumstances involving Cause or as set forth in Section 3(b)(iv) of the
----------------
Employment Agreement (but not in any other circumstances, including death and
disability), then Jackson shall have an option, irrespective of any prior
exercise of the stock appreciation right, exercisable upon 30 days' notice given
at any time and exercisable within 180 days after such termination, to purchase
from Executive or his transferee(s) all the Executive's stock appreciation
rights, irrespective of the amount of time elapsed from the date of this
Agreement, at a purchase price equal to Cost.
7. Transfers. The stock appreciation right shall not be transferable by
---------
Executive other than by will or by the laws of descent and distribution. During
the lifetime of Executive a stock appreciation right shall be exercisable only
by the Executive or by the Executive's guardian or legal representative.
8. Stockholder Approval. This Agreement has been approved by Jackson, the
--------------------
Company's sole stockholder, for purposes of Section 280(G)(b)(5)(B) of the
Internal Revenue Code.
6
<PAGE>
9. Confidential Information. During and after Executive's term of
------------------------
employment with the Company or Jackson, Executive will not, directly or
indirectly in one or a series of transactions, disclose to any person, or use or
otherwise exploit for Executive's own benefit or for the benefit of anyone other
than the Companies, any Confidential Information; provided, however, that any
-------- -------
Confidential Information may be disclosed to officers, representatives,
employees and agents of the Companies who need to know such Confidential
Information in order to perform the services or conduct the operations required
or expected of them in the Business. Executive shall use commercially
reasonable efforts to cause all persons or entities to whom any Confidential
Information shall be disclosed by him hereunder to observe the terms and
conditions set forth herein as though each such person or entity was bound
hereby. Executive shall have no obligation hereunder to keep confidential any
Confidential Information if and to the extent disclosure of any therefor is
specifically required by law; provided, however, that in the event disclosure is
-------- -------
required by applicable law, Executive shall provide the Company with prompt
notice of such requirement, prior to making any disclosure, so that the Company
may seek an appropriate protective order. At the request of the Company,
Executive agrees to deliver to the Company, at any time during his term of
employment with the Company or Jackson, or thereafter, all Confidential
Information which he may possess or control. Executive agrees that all
Confidential Information of the Companies and its subsidiaries (whether now or
hereafter existing) conceived, discovered or made by him during such term of
employment exclusively belongs to the Companies (and not to Executive).
Executive will promptly disclose such Confidential Information to the Company
and perform all actions reasonably requested by the Company to establish and
confirm such exclusive ownership.
10. Non-Competition and Non-Interference.
------------------------------------
(a) Executive acknowledges that services provided by Executive to the
Company and Jackson are unique and that obtaining or use of same by a
Competitive Business (as herein defined) would cause irreparable injury to the
Companies. In consideration of the grant of stock appreciation rights by
Jackson hereunder, Executive covenants and agrees that:
(i) From the date hereof through the date that is 24 months after the
end of his term of employment with the Company or Jackson (the "Restricted
----------
Period"), Executive will not, without the express written approval of the
------
Board of Directors of Jackson, anywhere in the Market, directly or
indirectly, in one or a series of transactions, own, manage, operate,
control, invest or acquire an interest in, or otherwise engage or
participate in, whether as a proprietor, partner, stockholder, lender,
director, officer, employee, joint venturer, investor, lessor, supplier,
customer, agent, representative or other participant, in any business which
competes, directly or indirectly, with the Business in the Market
("Competitive Business") without regard to (A) whether the Competitive
----------------------
Business has its office, manufacturing or other business facilities within
or without the Market, (B) whether any of the activities of Executive
referred to above occur or are performed within or without the Market or
(C) whether Executive resides, or reports to an office, within or without
the Market; provided, however, that (x) Executive may, anywhere in the
-------- -------
Market, directly or indirectly, in one or a series of transactions, own,
7
<PAGE>
invest or acquire an interest in up to one percent (1%) of the capital
stock of a corporation whose capital stock is traded publicly, or that (y)
Executive may accept employment with a successor company to the Company.
(ii) The Company covenants and agrees to provide Benefits and pay
Base Compensation to the Executive during any applicable Restricted Period.
(iii) During the Restricted Period (which shall not be reduced by any
period of violation of this Agreement by Executive or period which is
required for litigation to enforce the rights hereunder), Executive will
not without the express prior written approval of the Board of Directors of
Jackson (A) directly or indirectly, in one or a series of transactions,
recruit, solicit or otherwise induce or influence any proprietor, partner,
stockholder, lender, director, officer, employee, sales agent, joint
venturer, investor, lessor, supplier, customer, agent, representative or
any other person which has a business relationship with any of the
Companies within the 24 month period preceding the date of the incident in
question, to discontinue, reduce or modify such employment, agency or
business relationship with any of the Companies, or (B) employ or seek to
employ or cause any Competitive Business to employ or seek to employ any
person or agent who is then (or was at any time within 24 months prior to
the date Executive or the Competitive Business employs or seeks to employ
such person) employed or retained by any of the Companies. Notwithstanding
the foregoing, nothing herein shall prevent Executive from providing a
letter of recommendation to an employee with respect to a future employment
opportunity.
(b) In the event that Executive breaches his obligations in any material
respect under Sections 9 or 10, Jackson, in addition to pursuing all available
---------- --
remedies under this Agreement, at law or otherwise, and without limiting its
right to pursue the same shall cease all payments to the Executive under Section
-------
3.
- -
11. Specific Performance. All the parties hereto agree that their rights
--------------------
under Section 9 and 10 are special and unique and that violation thereof would
----------------
not be adequately compensated by money damages and each grants the others the
right to specifically enforce (including injunctive relief where appropriate)
the terms of this Agreement.
12. Heirs, etc. This Agreement shall be binding on the Executive, his
----------
heirs and personal representatives and on Jackson and the Company and their
respective successors and assigns.
13. Counterparts. This Agreement may be executed in two or more
------------
counterparts, any one of which shall be deemed an original without reference to
the others.
14. Employment. This Agreement is not, and shall not be construed in any
----------
way, as an employment agreement for the benefit of Executive.
8
<PAGE>
15. Amendments. This Agreement may not be amended or modified, and no
----------
waivers hereunder may be granted, except with the approval of each of the
parties hereto and the holder(s) of a majority of the common stock of the
Company (which, until the parties are otherwise notified, will be Jackson).
16. Notice. Any notice, request, demand or other communication required
------
or permitted to be given under this Agreement shall be given in writing and if
delivered personally, or sent by certified or registered mail, return receipt
requested, as follows (or to such other addressee or address as shall be set
forth in a notice given in the same manner):
If to Executive: Michael A. Fout
________________________
________________________
If to Company: Crystaloid Technologies, Inc.
c/o Jackson Products, Inc.
2997 Clarkson Road
Chesterfield, Missouri 63017
Attn: Christopher T. Paule
Telephone: (314) 207-2715
Telecopier: (314) 207-2800
with a copy to: James B. Carlson
Mayer, Brown & Platt
1675 Broadway, Suite 1900
New York, New York 10019
Telephone: (212) 506-2500
Telecopier: (212) 262-1910
Any such notices shall be deemed to be given on the date personally delivered or
such return receipt is issued.
17. Executive's Representation. Executive hereby warrants and represents
--------------------------
to Jackson and the Company that Executive is not subject to any covenants,
agreements or restrictions, including without limitation any covenants,
agreements or restrictions which would be breached or violated by Executive's
execution, delivery and performance of his obligations under this Agreement.
18. Obligations. Executive agrees and acknowledges that this Agreement
-----------
and the obligations of Jackson and the Company hereunder are solely obligations
and liabilities of Jackson and the Company. None of the directors, officers,
employees, stockholders and affiliates or any other persons of Jackson of the
Company shall be obligated or liable in respect of this Agreement, and Executive
hereby releases each of them from any such obligation of liability.
9
<PAGE>
19. Validity. If, for any reason, any provision hereof shall be
--------
determined to be invalid or unenforceable, the validity and effect of the other
provisions hereof shall not be affected thereby.
20. Severability. Whenever possible, each provision of this Agreement
------------
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein. If any
court determines that any provision hereof is unenforceable because of the power
to reduce the scope or duration of such provision, as the case may be and, in
its reduced form, such provision shall then be enforceable.
21. Waiver of Breach; Enforcement. The waiver by Jackson, the Company or
-----------------------------
Executive of a breach of any provision of this Agreement by the other party
shall not operate or be construed as a waiver of any other breach of such other
party. Each of the parties (and third party beneficiaries) to this Agreement
shall be entitled to enforce its rights under any provision of this Agreement
and to exercise all other rights existing in its favor.
22. Litigation. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED
----------
AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF MISSOURI,
EXCEPT THAT NO DOCTRINE OF CHOICE OF LAW SHALL BE USED TO APPLY ANY LAW OTHER
THAN THAT OF MISSOURI, AND NO DEFENSE, COUNTERCLAIM OR RIGHT OF SET-OFF GIVEN OR
ALLOWED BY THE LAWS OF ANY OTHER STATE OR JURISDICTION, OR ARISING OUT OF THE
ENACTMENT, MODIFICATION OR REPEAL OF ANY LAW, REGULATION, ORDINANCE OR DECREE OF
ANY FOREIGN JURISDICTION, BE INTERPOSED IN ANY ACTION HEREON. THE PARTIES AGREE
THAT ANY ACTION OR PROCEEDING TO ENFORCE OR ARISING OUT OF THIS AGREEMENT MAY BE
COMMENCED IN THE STATE COURTS, OR IN THE UNITED STATES DISTRICT COURTS IN ST.
LOUIS, MISSOURI. THE PARTIES CONSENT TO SUCH JURISDICTION, AGREE THAT VENUE
WILL BE PROPER IN SUCH COURTS AND WAIVE ANY OBJECTIONS BASED UPON FORUM NON
----- ---
CONVENIENS. THE CHOICE OF FORUM SET FORTH IN THIS SECTION 22 SHALL NOT BE DEEMED
- ---------- ----------
TO PRECLUDE THE ENFORCEMENT OF ANY ACTION UNDER THIS AGREEMENT AND TO ENFORCE
SAME IN ANY OTHER JURISDICTION.
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands as of the day
and year first above written.
EXECUTIVE
___________________________________
Michael A. Fout
JACKSON PRODUCTS, INC.
By:
________________________________
Name: Christopher T. Paule
Title: Vice President
CRYSTALOID TECHNOLOGIES, INC.
By:
________________________________
Name: Christopher T. Paule
Title: Vice President
11
<PAGE>
Exhibit 12
JACKSON PRODUCTS, INC. AND SUBSIDIARIES
Calculation of Ratio of Earnings to Fixed Charges
(Regulation S-K.65)
<TABLE>
<CAPTION>
January 1 April 1, January 1, August 17,
1993 to 1993 to 1995 to 1995 to
March 31, December 31, August 16, December 31, Pro forma
1993 1993 1994 1995 1995 1996 1997 1997
===================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Pretax loss $(1,797) $(2,628) $(1,123) $(2,705) $(4,368) $(16,017) $(9,679) $(13,475)
Interest expense 2,030 3,468 6,563 5,193 4,361 11,241 11,983 16,647
Amortization of deferred
financing fees 99 467 765 525 340 1,076 1,261 990
Amortization of debt
discount -- 71 113 86 20 65 67 103
Rental expenses 7 24 324 346 178 433 487 487
---------------------------------------------------------------------------------------------------
Fixed charges 2,136 4,030 7,765 6,150 4,899 12,815 13,798 18,227
---------------------------------------------------------------------------------------------------
Total Earnings per 6-K 339 1,402 6,642 3,445 531 (3,202) 4,119 4,752
Ratio 0.16 0.35 0.86 0.56 0.11 (0.25) 0.30 0.26
Dollar deficiency (1,797) (2,628) (1,123) (2,705) (4,368) (16,017) (9,679) (13,475)
January 1 January 1,
1997 to 1998 to Pro forma
March 31, March 31, March 31,
1997 1998 1998
==================================
<S> <C> <C> <C>
Pretax loss $(4,341) $(1,240) $(1,642)
Interest expense 2,992 2,979 4,161
Amortization of deferred
financing fees 318 309 288
Amortization of debt
discount 16 17 26
Rental expenses 113 115 115
----------------------------------
Fixed charges 3,439 3,420 4,590
----------------------------------
Total Earnings per 6-K (902) 2,180 2,948
Ratio (0.26) 0.64 0.64
Dollar deficiency (4,341) (1,240) (1,642)
</TABLE>
<PAGE>
EXHIBIT 22
SUBSIDIARIES
1. Flex-O-Lite, Inc., a Delaware corporation.
a. Flex-O-Lite Canada Ltd., an Ontario corporation.
2. OSD Envizion, Inc., a Delaware corporation.
3. Lansec Holdings GmbH, a German corporation.
a. Lansec SARL, a French corporation
b. Lansec Benelux B.V., a Netherlands corporation
c. Lansec GmbH, a German corporation
d. Lansec Safety Products, Ltd., a United Kingdom corporation
4. Crystaloid Technologies, Inc., a Delaware corporation.
5. American Allsafe Company, a Delaware corporation
a. Silencio / Safety Direct, Inc., a Nevada corporation
6. Jackson Products Pty, an Australian corporation.
<PAGE>
EXHIBIT 24
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of New
York, State of New York, on May 29, 1998.
JACKSON PRODUCTS, INC.
By /s/ A. Richard Caputo, Jr.
-------------------------------------------
A. Richard Caputo, Jr.
Vice President and Director
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints A. Richard Caputo, Jr. and Christopher T. Paule, and each of them, the
true and lawful attorneys-in-fact and agents of the undersigned, with full power
of substitution and resubstitution, for and in the name, place and stead of the
undersigned and to file the same, with all exhibits thereto, in any and all
capabilities, to sign any and all amendments and any registration statement
filed pursuant to Rule 462(b) of the Securities Act of 1933, as amended
(including post-effective amendments thereto and other documents in connection
therewith), with the Securities and Exchange Commission, and hereby grants to
such attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done,
as fully to all intents and purposes as the undersigned might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this registration statement has been signed by the following persons in
the capacities indicated on May 29, 1998.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Robert H. Elkin Chairman, President, Chief Executive
- --------------------------------------
Robert H. Elkin Officer, and a Director (Principal
Executive Officer)
/s/ Christopher T. Paule Vice President, Chief Financial
- --------------------------------------
Christopher T. Paule Officer and Secretary (Principal
Financial and Accounting Officer)
/s/ A. Richard Caputo, Jr. Vice President and Director
- --------------------------------------
A. Richard Caputo, Jr.
/s/ Jonathan F.Boucher Director
- --------------------------------------
Jonathan F. Boucher
Director
- --------------------------------------
John W. Jordan II
- -------------------------------------- Director
David W. Zalaznick
</TABLE>
II-4
