<PAGE> 1
As filed with the Securities and Exchange Commission on July 2, 1998
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ANTEC CORPORATION
(Exact name of Registrant as specified in its charter)
3661
(Primary Standard Industrial Classification Code Number)
_____________________________________________
STATE OF DELAWARE 36-3892082
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5720 PEACHTREE PARKWAY, NW, NORCROSS, GEORGIA 30092 (770) 441-0007
(Address including zip code, and telephone number, including area code, of
registrant's principal executive offices)
_______________
JAMES E. KNOX
2850 WEST GOLF ROAD, ROLLING MEADOWS, ILLINOIS 60008 (847) 439-4444
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
_______________
With copies to:
STUART L. GOODMAN
SCHIFF HARDIN & WAITE, 7300 SEARS TOWER, CHICAGO, IL 60606 (312) 258-5500
_______________
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement.
_______________
IF THE ONLY SECURITIES BEING REGISTERED ON THIS FORM ARE BEING OFFERED PURSUANT
TO DIVIDEND OR INTEREST REINVESTMENT PLANS, PLEASE CHECK THE FOLLOWING BOX. [ ]
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON A
DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OTHER THAN SECURITIES OFFERED ONLY IN CONNECTION WITH
DIVIDEND OR INTEREST REINVESTMENT PLANS, CHECK THE FOLLOWING BOX. [X]
IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING
PURSUANT TO RULE 462(B) UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES
ACT"), PLEASE CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT REGISTRATION
STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT FOR THE SAME
OFFERING. [ ]
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(C) UNDER
THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT
REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT
FOR THE SAME OFFERING. [ ]
<PAGE> 2
IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE 434,
PLEASE CHECK THE FOLLOWING BOX. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===========================================================================================
TITLE OF SECURITIES AMOUNT PROPOSED PROPOSED AMOUNT OF
TO BE REGISTERED TO BE MAXIMUM MAXIMUM REGISTRATION
REGISTERED OFFERING PRICE AGGREGATE FEE
PER UNIT(1) OFFERING PRICE
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
4 1/2% Convertible
Subordinated Notes Due 2003 $115,000,000 100% $115,000,000 $33,925
- -------------------------------------------------------------------------------------------
Common Stock,
$.01 par value per share (2) 4,791,667 ______ ______ None (3)
===========================================================================================
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee.
(2) This number represents the number of shares of Common Stock, par value
$0.01 per share (the "Common Stock") as are initially issuable
upon conversion of the 4 1/2% Convertible Subordinated Notes Due 2003
(the "Notes") registered hereby and, pursuant to Rule 416 under the
Securities Act of 1933, such indeterminate number of shares of Common
Stock as may be issued from time to time upon conversion of the Notes by
reason of adjustment of the conversion price in certain contingencies
outlined in the prospectus.
(3) Pursuant to Rule 457(i) there is no filing fee with respect to the shares
of Common Stock issuable upon conversion of the Notes (the "Shares")
because no additional consideration will be received in connection with
the exercise of the conversion privilege. _______________
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 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
<PAGE> 3
PROSPECTUS
July 2, 1998
ANTEC CORPORATION
CONVERTIBLE SUBORDINATED NOTES
COMMON STOCK
SECURITIES OFFERED: UP TO $115,000,000 ORIGINAL PRINCIPAL AMOUNT 4 1/2%
CONVERTIBLE SUBORDINATED NOTES DUE MAY 15, 2003, HELD
BY VARIOUS SELLING SHAREHOLDERS.
4,791,667 SHARES OF COMMON STOCK, ISSUABLE BY ANTEC
UPON CONVERSION OF THE NOTES. ANTEC COMMON STOCK,
WHICH TRADES ON THE NASDAQ NATIONAL MARKET, CLOSED AT
$23.00 PER SHARE ON JULY 1, 1998.
CONVERSION RIGHTS: THE NOTES ARE CONVERTIBLE INTO COMMON STOCK AT AN
INITIAL CONVERSION PRICE OF $24.00 PER SHARE.
INTEREST PAYMENT DATES: MAY 15 AND NOVEMBER 15 EACH YEAR.
REDEMPTION: AT THE OPTION OF ANTEC BEGINNING MAY 15, 2001 AT
101.8%, SUBJECT TO A DECLINING REDEMPTION PREMIUM.
AT THE OPTION OF THE HOLDER UPON A "CHANGE IN CONTROL."
SECURITY: NONE. THE NOTES ARE UNSECURED OBLIGATIONS OF ANTEC.
SUBORDINATION: SUBORDINATED TO ALL "SENIOR INDEBTEDNESS" AND,
EFFECTIVELY, ALL OF THE LIABILITIES OF THE SUBSIDIARIES
OF ANTEC.
SEE "INVESTMENT CONSIDERATIONS" BEGINNING ON PAGE 3 FOR A DISCUSSION OF
CERTAIN INFORMATION THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE> 4
AVAILABLE INFORMATION
ANTEC Corporation ("ANTEC" or the "Company") files annual, quarterly and
special reports, proxy statements and other information with the Securities and
Exchange Commission (the "SEC"). You may read and copy any reports, statements
or other information ANTEC files at the SEC's public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois. Please call the
SEC at 1-800-SEC-0330 for further information on the public reference rooms.
ANTEC's SEC filings are also available to the public from commercial document
retrieval services and at the web site maintained by the SEC at
"http://www.sec.gov."
ANTEC filed a Registration Statement on Form S-3 to register with the SEC
the Notes and the Shares (the "Registration Statement"). This Prospectus is a
part of that Registration Statement and constitutes a prospectus of ANTEC. As
allowed by SEC rules, this Prospectus does not contain all the information that
can be found in the Registration Statement or the exhibits to the Registration
Statement.
THE STATEMENTS IN THIS PROSPECTUS THAT USE SUCH WORDS AS "BELIEVE,"
"EXPECT," "SEEKS," "INTEND," "ANTICIPATE," "CONTEMPLATE," "ESTIMATE," OR "PLAN"
OR SIMILAR EXPRESSIONS ARE FORWARD-LOOKING STATEMENTS. THE COMPANY'S BUSINESS
IS DEPENDENT UPON GENERAL ECONOMIC CONDITIONS AS WELL AS COMPETITIVE,
TECHNOLOGICAL, AND REGULATORY DEVELOPMENTS AND TRENDS SPECIFIC TO THE COMPANY'S
INDUSTRY AND CUSTOMERS. THESE CONDITIONS AND EVENTS COULD BE SUBSTANTIALLY
DIFFERENT THAN THE COMPANY BELIEVES OR EXPECTS AND THESE DIFFERENCES MAY CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE FORWARD-LOOKING STATEMENTS MADE OR
THE RESULTS WHICH COULD BE EXPECTED TO ACCOMPANY SUCH STATEMENTS. SPECIFIC
FACTORS WHICH COULD CAUSE SUCH MATERIAL DIFFERENCES INCLUDE, BUT ARE NOT
LIMITED TO: DESIGN OR MANUFACTURING DEFECTS IN THE COMPANY'S PRODUCTS WHICH
COULD CURTAIL SALES AND SUBJECT THE COMPANY TO SUBSTANTIAL COSTS FOR REMOVAL,
REPLACEMENT, AND REINSTALLATION OF SUCH PRODUCTS; MANUFACTURING OR PRODUCT
DEVELOPMENT PROBLEMS THAT THE COMPANY DOES NOT ANTICIPATE; AN INABILITY TO
ABSORB OR ADJUST COSTS IN RESPONSE TO LOWER SALES VOLUMES THAN THE COMPANY
ANTICIPATES; UNANTICIPATED COSTS OR INEFFICIENCIES FROM THE ONGOING
CONSOLIDATION OF CERTAIN OF THE COMPANY'S ACTIVITIES; LOSS OF KEY MANAGEMENT,
SALES OR TECHNICAL EMPLOYEES; DECISIONS BY THE COMPANY'S LARGER CUSTOMERS TO
CANCEL CONTRACTS OR ORDERS AS THEY ARE ENTITLED TO DO OR NOT TO ENTER INTO NEW
CONTRACTS OR ORDERS WITH THE COMPANY BECAUSE OF DISSATISFACTION, TECHNOLOGICAL
OR COMPETITIVE CHANGES OR CHANGES IN CONTROL OR OTHERWISE; AND INABILITY AS A
RESULT OF THE COMPANY'S INEXPERIENCE, TO DELIVER CONSTRUCTION SERVICES WITHIN
ANTICIPATED COSTS AND TIME FRAMES WHICH COULD CAUSE LOSS OF BUSINESS, OPERATING
LOSSES AND DAMAGE CLAIMS. THE ABOVE LISTING OF FACTORS IS REPRESENTATIVE OF THE
FACTORS WHICH COULD AFFECT THE COMPANY'S FORWARD-LOOKING STATEMENTS AND IS NOT
INTENDED AS AN ALL ENCOMPASSING LIST OF SUCH FACTORS. SOME OF THESE FACTORS,
AND OTHER FACTORS WHICH COULD HAVE SIMILAR IMPACTS, ARE DESCRIBED MORE FULLY
BELOW. IN PROVIDING FORWARD-LOOKING STATEMENTS THE COMPANY IS NOT UNDERTAKING
ANY OBLIGATION TO UPDATE THESE STATEMENTS PUBLICLY OR OTHERWISE, WHETHER AS A
RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
Some of the information that may need to be considered with respect to
the Notes is not physically included in this Prospectus, but rather is
"incorporated by reference" to documents that have been filed by ANTEC with the
SEC. The information that is incorporated by reference consists of:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;
(b) the Company's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1998;
(c) the proxy statement (other than the information contained in
"Compensation Committee Report on Executive Compensation" and
"Performance Graph") for the Company's Annual Meeting of Stockholders
held May 7, 1998; and
(d) the Company's Report on Form 8-K filed April 29, 1998.
All documents filed by ANTEC under the Securities Exchange Act of 1934
after the date of this Prospectus are incorporated by reference into this
Prospectus.
Any statement contained in a document that is incorporated by reference
shall be deemed to be modified or superseded for all purposes to the extent
that a statement contained herein (or in any other document that is
<PAGE> 5
subsequently filed with the SEC and incorporated by reference) modifies or is
contrary to such previous statement. All information contained or incorporated
by reference in this Prospectus relating to ANTEC and its subsidiaries has been
supplied by ANTEC.
The Company will provide, without charge, to each person (including any
beneficial owner) to whom this Prospectus is delivered, upon written or oral
request of such person, a copy of any and all of the information that has been
incorporated by reference in this Prospectus (not including exhibits to such
information unless such exhibits are specifically incorporated by reference
into such information). Such requests should be directed to: Secretary, ANTEC
Corporation, 5720 Peachtree Parkway, NW Norcross, GA 30092.
THE COMPANY
ANTEC is a leading developer, manufacturer and supplier of optical and
radio frequency ("RF") transmission equipment for the construction, rebuilding
and maintenance of broadband communications systems. ANTEC supplies equipment
and services for these systems primarily to cable television operators, earning
a reputation as a high-quality, one-stop provider of substantially all of the
equipment needed for a cable television system between the headend and the
home. The Company has developed a full line of technologically advanced fiber
optic products to capitalize on current and future upgrades of cable systems
employing hybrid-fiber coax ("HFC") technology capable of providing
state-of-the-art video, voice and data services. ANTEC has strong long-term
relationships with its customers, serving major domestic cable operators. To
capitalize on the growing worldwide telecommunications industry, the Company
has developed important relationships with domestic telephone and international
broadband communications providers. In 1997, the Company generated
approximately 76% of its net sales domestically and approximately 24% of its
net sales internationally.
From its inception in 1969 until its initial public offering in 1993,
ANTEC was primarily a distributor of cable television equipment and was owned
and operated by Anixter International, Inc. ("Anixter"). Since that time, the
Company has completed several important strategic acquisitions and formed joint
ventures designed to expand significantly the Company's product offerings and
provide state-of-the-art manufacturing capabilities. Currently, the Company
believes that it is the provider with the broadest offering of products and
services in its industry. As a result of these acquisitions, a substantial
component of the Company's sales consist of manufactured products which
typically carry higher gross margins than distributed products.
The Company manufactures products in the United States and Mexico in ISO
9001 certified facilities and through relationships with third party
manufacturers in China, Malaysia and Taiwan. In addition, through its Telewire
Division the Company distributes products manufactured by others. The Company
serves its customers through an efficient delivery network consisting of 25
sales and stocking locations in the United States, Argentina, Brazil, Canada,
China, Italy, Spain and the United Kingdom. For most customer needs, the
Company maintains complete inventories and is able to provide overnight as well
as staged delivery of products.
RECENT DEVELOPMENTS
On May 21, 1998, the Company entered into a new credit facility (the "New
Credit Facility"). The New Credit Facility permits ANTEC to borrow on a
revolving basis up to an amount equal to the sum of 85% of eligible domestic
accounts receivable plus 60% of eligible domestic inventory, limited in
aggregate amount outstanding at any time to $100.0 million; provided that at no
time may eligible inventory included in the Company's borrowing base exceed an
amount equal to 50% of the aggregate amount outstanding under the New Credit
Facility. The New Credit Facility provides for interest based upon LIBOR or ABR
plus, in either instance, a margin (starting at 200 basis points in the case of
a LIBOR-based loan and 100 basis points for an ABR-based loan) based upon
ANTEC's fixed charge coverage ratio, and is secured by substantially all of
ANTEC's (and its subsidiaries') assets in the United States and a pledge of 65%
of the stock of each of ANTEC's foreign subsidiaries. ANTEC's prior credit
facility was, with the exception of the stock of ANTEC's subsidiaries,
unsecured. The New Credit Facility contains various financial covenants,
including limitations on indebtedness; limitations on mergers, acquisitions,
consolidations, asset dispositions and asset transfers; limitations on
dividends, share repurchases, investments and certain other payments;
limitations on capital expenditures; a minimum fixed charge coverage ratio; a
minimum ratio for debt to total capital; and a minimum net worth. The Bank of
New York and Bank of America will co-manage the facility.
On June 4, 1998, ANTEC purchased 4,376,500 shares of Common Stock from
Anixter for $63,459,250. As a result, Anixter no longer is a shareholder of
ANTEC.
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<PAGE> 6
INVESTMENT CONSIDERATIONS
In addition to the other information contained in this Prospectus, the
following factors should be considered carefully by investors before purchasing
the securities offered hereby.
DEPENDENCE ON THE CABLE TELEVISION INDUSTRY AND CABLE TELEVISION CAPITAL
SPENDING
Approximately 60% of the Company's revenues come from sales of systems and
equipment to the domestic cable television industry. Demand for these products
depends primarily on capital spending by cable television operators for
constructing, rebuilding or upgrading their systems. Capital spending in the
cable industry has been cyclical. The amount of this capital spending, and,
therefore the Company's sales and profitability, will be affected by a variety
of factors, including general economic conditions, consolidation in the
industry, the financial condition of domestic cable television operators and
their access to financing, competition from direct-to-home ("DTH") or direct
broadcast satellite television providers, and wireless television providers and
telephone companies, satellite master antenna television ("SMATV") providers,
and Internet video providers, technological developments in the broadband
communications industry, and new legislation and regulation of cable television
operations as described below.
In recent years, cable television capital spending has been affected
significantly by new legislation and regulation, on the federal, state and
local levels, and many aspects of such regulation are currently the subject of
judicial proceedings and administrative or legislative proposals. From time to
time, the Federal Communications Commission ("FCC") has adopted technical
standards applicable to the equipment used by, and operations of, cable
television operators, and there may be changes in such standards in the future
which may affect cable television capital spending. During 1993 and 1994, the
FCC adopted rules under the Cable Television Consumer Protection and
Competition Act of 1992 (the "1992 Cable Act"), regulating rates that cable
television operators may charge for lower tiers of service and generally not
regulating the rates for higher tiers of service. In 1996, the
Telecommunications Act of 1996 (the "Telecom Act") was enacted to eliminate
certain governmental barriers to competition among local and long distance
telephone, cable television, broadcasting and wireless services. When fully
implemented by the FCC, the Telecom Act may significantly impact the
communications industry and alter federal, state and local laws and regulations
regarding the provision of cable and telephony services. Among other things,
the Telecom Act eliminates substantially all restrictions on the entry of
telephone companies and certain electric public utilities into the cable
television business. Telephone companies may now enter the cable television
business as traditional cable operators (subject to limitations on their
acquiring existing cable systems in their telephone service areas), as common
carrier conduits for programming supplied by others, as operators of wireless
distribution systems, or as hybrid common carrier/cable operator providers of
programming on so-called "open video systems." The FCC also recently adopted
rules affecting the ownership of and access to cable in multiple dwelling
units. The economic impact of the 1992 Cable Act, the Telecom Act and the rules
thereunder on the cable television industry and the Company is still uncertain.
However, the entrance of telephone companies into the cable industry and the
consolidation of cable companies and telephone companies, as the result of the
new Federal legislation discussed above, may negatively affect not only the
level of capital spending in the cable industry in general, but the portion
thereof received by the Company.
As for competition faced by cable television operators from wireless
television providers, the FCC has pending proposed rule changes which would
allow multichannel multipoint distribution service ("MMDS") providers to offer
two-way telecommunications services, which could lead to greater competition
from MMDS operators. Also, the FCC has recently completed auctions for radio
spectrum licenses for local multipoint distribution service ("LMDS"); these
broadband licenses could be used to provide video or high-speed
telecommunications transmissions, which could compete against cable television
systems.
TELECOMMUNICATIONS INDUSTRY COMPETITION AND TECHNOLOGICAL CHANGES
The Company will be significantly affected by the competition among cable
television, DTH, SMATV, MMDS, and LMDS operators, satellite television
providers and telephone companies, and other operators to provide video, voice
and data/Internet services. In particular, although cable television operators
have historically provided television services to the majority of U.S.
households, DTH or direct broadcast satellite television has attracted a
growing number of subscribers, and the regional telephone companies have begun
to offer competing cable and wireless cable services. This competitive
environment is characterized by rapid technological change, particularly with
respect to developments in digital compression and broadband access technology.
New digital technologies enable the compression of many channels into the
bandwidth currently used by one analog channel. In addition, new wireless
technologies may be used in the future to bypass existing distribution systems.
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<PAGE> 7
The Company's products and services compete with those of a substantial
number of domestic companies. The Company's top two competitors, General
Instruments and Scientific-Atlanta, have greater resources, financial and
otherwise, than the Company. The rapid technological changes occurring in the
Company's markets may lead to the entry of new competitors, including those
with substantially greater resources than the Company's. The Company's ability
to anticipate technological changes and to introduce enhanced products on a
timely basis will be a significant factor in the Company's ability to expand
and remain competitive. Actions by existing competitors and the entry of new
competitors may have an adverse impact on the Company's sales and
profitability. The industry is characterized by rapid technological change.
Technological changes also could lead to the obsolescence of some of the
Company's products, which could have a material adverse effect on the Company's
business.
A component of ANTEC's strategy for technological innovation involves the
products that ANTEC anticipates the joint venture the Company and Northern
Telecom formed in 1995 ("Arris") will develop. Arris designs, manufactures, and
sells products that enable the provision of telephone services over HFC systems
for video distribution. To date, Arris' products have been installed only on a
limited basis, and there is no certainty that these products will gain wide
acceptance or be profitable for either Arris or the Company. Arris has had
operating losses to date and those losses have been funded, partially by ANTEC,
but primarily by its partner, with debt. Should ANTEC ever decide not to fund
its share of Arris' losses above an agreed upon amount, ANTEC's interest in
Arris would be diluted if its partner decides to fund any further losses with
equity.
DEPENDENCE ON KEY CUSTOMERS
The cable industry is highly concentrated, with the majority of domestic
subscribers being served by approximately ten major domestic multi-system
operators ("MSOs"). Historically, a majority of the Company's sales have been
to relatively few customers. In 1997, over 36% of the Company's revenues were
obtained from sales to the ten largest MSOs. Traditionally, a significant
portion of the Company's revenue is derived from sales to Tele-Communications,
Inc. ("TCI"), aggregating $157.1 million, $153.7 million and $46.6 million for
the years ended December 31, 1995, 1996 and 1997, respectively. The October
1996 decision by TCI to cease accepting shipments of the products the Company
and its competitors traditionally sold to it for an indefinite period had a
material adverse effect on the Company's financial performance in 1997. A
similar decision by TCI or other large cable companies could have a material
adverse effect on the Company's business in the future. In addition, the
consolidation in the cable industry can have an adverse effect on the Company's
business as participants reduce capital expenditures. In 1997 for example, the
Company experienced a material slow-down in sales due in part to the impact of
trades, swaps and partnerships that occurred among domestic cable operators
throughout most of 1997. Recently TCI announced that it had agreed to be
acquired by AT&T Corp. The consequences, if any, to the Company of this
acquisition are not yet determinable.
The Company believes that transactions between suppliers like the Company
and operators in the cable television industry are highly relationship based.
Contracts with suppliers specify pricing, warranty and delivery terms, but do
not typically provide for minimum purchase amounts. As a result, even though
the Company has contractual relationships with a number of customers, there is
no certainty as to the amount of products that will be sold pursuant to those
contracts. For example, under the Company's joint venture regarding turn-key
contracts with TCI, the specific work to be performed and the type and supplier
of the equipment to be used, which may or may not be sold by the Company, will
be specified by TCI and governed by discrete project documentation to be agreed
upon by TCI and the joint venture for each segment or phase as the work
progresses. The benefit of such contracts to the Company depends on the Company
providing products that are needed to upgrade these systems.
LEVERAGE
The Company is highly leveraged. As of December 31, 1997, the Company's
total indebtedness as adjusted to give effect to the sale of the Notes and the
application of net proceeds therefrom, would have been approximately $139.3
million compared to stockholders' equity of $232.3 million. In addition, the
New Credit Facility provides, among other things, covenants limiting the
incurrence of additional debt and liens. The degree to which the Company is
leveraged and such covenants may adversely affect the Company's ability to
finance its future operations, to compete effectively against better
capitalized competitors and to withstand downturns in its business or the
economy generally, and could limit its ability to pursue business opportunities
that may be in the interests of the Company and its security holders.
OPERATING LOSSES
The Company recently has experienced significant operating losses. The
Company had an operating loss of approximately $23.1 million for the year ended
December 31, 1997, and recorded a non-recurring charge of $12 million in the
first quarter of 1998 in connection with the consolidation plan being
implemented concurrently
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<PAGE> 8
with the creation of the new President and Chief Operating Officer organization
in Atlanta. There can be no assurance that such losses will not continue
indefinitely.
RELIANCE ON KEY PERSONNEL
The future success of the Company depends in part on its ability to
attract and retain key executive, marketing, engineering and sales personnel.
Competition for qualified personnel in the cable industry is intense, and the
loss of certain key personnel could have a material adverse effect on the
Company. Even though the Company has entered into employment contracts with its
key executive officers, and it has a stock option program which is intended to
provide substantial incentives for its key employees to remain with the
Company, no assurances can be given that the Company will be able to retain its
key personal, or attract new key personnel.
SUBORDINATION
The Notes are subordinated in right of payment to all existing and future
Senior Indebtedness of the Company and, effectively, all existing and future
liabilities (including trade payables) of its subsidiaries. The Indenture (as
defined) does not restrict the incurrence of Senior Indebtedness or other
indebtedness by the Company or its subsidiaries. By reason of such
subordination of the Notes, in the event of the insolvency, bankruptcy,
liquidation, reorganization, dissolution or winding up of the business of the
Company or similar proceeding, or upon a default in payment with respect to any
indebtedness of the Company or an event of default with respect to such
indebtedness resulting in the acceleration thereof, the assets of the Company
will be available to pay the amounts due on the Notes only after all Senior
Indebtedness has been paid in full. The Notes rank pari passu with all other
unsecured, subordinated obligations of the Company. See "Description of
Notes--Subordination."
At December 31, 1997, after giving effect to the issuance of the Notes,
the incurrence of indebtedness under the New Credit Facility and the
application of the estimated net proceeds therefrom, approximately $39.3
million of outstanding indebtedness of the Company would have constituted
Senior Indebtedness. The Company had $75.8 million of current liabilities as of
December 31, 1997, a significant portion of which may reside at the Company's
subsidiaries. The Company's New Credit Facility provides for borrowing of up to
$100.0 million, subject to a borrowing base limitation. $70.0 million was
outstanding under the prior credit facility as of December 31, 1997.
Indebtedness under the New Credit Facility would be Senior Indebtedness.
LACK OF PUBLIC MARKET
The Notes are eligible for trading through the PORTAL Market. Although
the Company has been advised by Donaldson Lufkin & Jenrette that it is
currently making a market in the Notes, it is not obligated to do so and may
discontinue such market making at any time without notice. In addition, such
market making activity is subject to the limits imposed by the Securities Act
and the Exchange Act. Accordingly, there can be no assurance that any market
for the Notes will be maintained. If a trading market is not maintained,
holders of the Notes may experience difficulty in reselling, or an inability to
sell, the Notes. Future trading prices of the Notes will depend on many
factors, including, among other things, prevailing interest rates, the
Company's operating results and the market for similar securities. Depending
on prevailing interest rates, the market for similar securities and other
factors, including the financial condition of the Company, the Notes may trade
at a discount from their principal amount.
The Notes were sold in reliance upon exemptions from regulation under the
Securities Act and applicable state securities laws. Therefore, the Notes may
be transferred or resold only in compliance with the registration provisions of
the Securities Act and applicable state securities laws. The Notes and the
Shares are being registered to permit secondary trading of such securities by
the holders thereof (the "Selling Securityholders") by use of this Prospectus.
The Company may prohibit offers and sales of Notes and Shares pursuant to the
shelf registration statement filed under the Securities Act (the "Shelf
Registration Statement") to which this Prospectus relates at any time if (A)(i)
the Company is in possession of material non-public information relating to the
Company, (ii) the Company determines (based on advice of counsel) that such
prohibition is necessary in order to avoid a requirement to disclose such
material non-public information to the public and (iii) the Company determines
in good faith that public disclosure of such material non-public information
would not be in the best interests of the Company and its stockholders, or
(B)(i) the Company has made a public announcement relating to an acquisition or
business combination transaction including the Company and/or one or more of
its subsidiaries that is material to the Company and its subsidiaries taken as
a whole and (ii) the Company determines in good faith that (x) offers and sales
of Transfer Restricted Securities (as defined below) pursuant to the Shelf
Registration prior to the consummation of such transaction (or such earlier
date as the Company shall determine) is not in the best interests of the
Company and its stockholders or (y) it would be impracticable at the time to
obtain any financial statements relating to such acquisition or business
combination transaction that would
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<PAGE> 9
be required to be set forth in the Shelf Registration. The Company has agreed to
file this Registration Statement with the Commission and to use its reasonable
best efforts to cause this Registration Statement to become effective with
respect to the Notes and the Common Stock issuable upon conversion thereof. See
"Description of the Notes--Registration Rights; Liquidated Damages."
INTERNATIONAL OPERATIONS; FOREIGN CURRENCY RISKS
United States broadband system designs and equipment are increasingly
being employed in international markets, where cable television homes passed
penetration is relatively lower than in the United States. However, there can
be no assurance that international markets will continue to develop or that the
Company will receive additional contracts to supply its equipment in
international markets.
A significant portion of the Company's products is manufactured or
assembled in Mexico and other countries outside the United States. The
Company's sales of its equipment into international markets have been and are
expected in the future to be an important part of the Company's business. These
foreign operations are subject to the usual risks inherent in conducting
operations abroad, including risks with respect to currency exchange rates,
economic and political destabilization, restrictive actions and taxation by
foreign governments, nationalization, the laws and policies of the United
States affecting trade, foreign investment and loans, and foreign tax laws.
Even though all of the Company's international sales have been dollar
denominated, the Company's business could be adversely affected if relevant
currencies fluctuate relative to the United States dollar.
FRAUDULENT CONVEYANCE RISKS; PREFERENTIAL TRANSFER
Under applicable provisions of the federal bankruptcy law or comparable
provisions of state fraudulent transfer law, if the Company, at the time of
issuance of, or making any payment in respect of, the Notes, (a)(i) was or was
rendered insolvent thereby, was engaged in or about to engage in a business or
transaction for which its assets constituted unreasonably small capital, or
intended to incur, or believed that it would incur, debts beyond its ability to
pay such debts as they matured, and (ii) received less than reasonably
equivalent value or fair consideration for such issuance, or (b) issued the
Notes or made any payment thereunder with intent to hinder, defraud or delay
any of its creditors, the obligations of the Company under some or all of the
Notes could be voided or held to be unenforceable by a court, the obligations
of the Company under the Notes could be subordinated to claims of other
creditors or the holders would be required to return payments already received.
In any of the foregoing cases, there could be no assurance that the holders
would ultimately recover the amounts owing under the Notes.
The measure of insolvency for purposes of the foregoing will vary
depending upon the law applied in any such case. Generally, however, the
Company or its subsidiaries would be considered insolvent if the sum of its or
their debts, including contingent liabilities, was greater than all of its
assets at a fair valuation, if it had unreasonably small capital to conduct its
business, or if the present fair salable value of its assets were less than the
amount that would be required to pay the probable liability on its existing
debts, including contingent liabilities, as they become absolute and matured.
The Company was not insolvent at the time of or as a result of the initial
issuance of the Notes and believes that it will not engage in a business or
transaction for which its remaining assets would constitute unreasonably small
capital, and the Company has not and does not intend to incur or believe that
it will incur debts beyond its ability to pay such debts as they mature. There
can be no assurance, however, that a court passing on such questions would
agree with the Company's analysis.
USE OF PROCEEDS
Although the Company received proceeds in connection with the initial
private placement of the Notes, the Company will not receive any of the
proceeds from the sale of the Notes or the Shares by the Selling
Securityholders.
6
<PAGE> 10
RATIO OF EARNINGS TO FIXED CHARGES
The Company's ratio of earnings to fixed charges for each of the periods
indicated is as follows:
<TABLE>
<CAPTION>
Fiscal Year Ended Three Months Ended
December 31, March 31,
1997 1996 1995 1994 1993 1998 1997
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to
fixed charges (1) -- 3.2x 1.9x 4.9x 2.9x -- --
</TABLE>
(1) For purposes of the calculation of ratio of earnings to fixed charges,
earnings are defined as earnings before income taxes plus fixed charges.
Fixed charges consist of interest expense on all indebtedness and rental
expense. The fixed charges coverage deficiency amounted to approximately
$29.0 million for the year ended December 31, 1997 and $8.1 million and
$25.1 million for the three months ended March 31, 1998 and 1997,
respectively.
DESCRIPTION OF NOTES
Set forth below is a summary of certain provisions of the Notes. The Notes
were issued pursuant to an indenture (the "Indenture") dated as of May 8, 1998
by and between the Company and The Bank of New York as trustee (the "Trustee").
The following summary of the Notes, the Indenture and the Registration Rights
Agreement (as defined herein) does not purport to be complete and is subject
to, and is qualified in its entirety by reference to, all of the provisions of
the Indenture and the Registration Rights Agreement, including the definitions
therein of certain terms. Copies of the Indenture and the Registration Rights
Agreement may be obtained from the Company upon request. Capitalized terms used
herein without definition have the meanings ascribed to them in the Indenture
or the Registration Rights Agreement, as appropriate. As used in this section,
the "Company" refers to ANTEC Corporation, exclusive of its Subsidiaries.
Wherever particular provisions or defined terms of the Indenture (or the form
of Note which is part thereof) or the Registration Rights Agreement are
referred to in this summary, such provisions or defined terms are incorporated
by reference as a part of the statements made and such statements are qualified
in their entirety by such reference. Certain definitions of terms used in the
following summary are set forth under "Certain Definitions."
GENERAL
The Notes are general, unsecured obligations of the Company, limited in
aggregate principal amount to $115 million. The Notes are subordinated in right
of payment to all existing and future Senior Indebtedness, as described under
"Subordination" below. The Notes will be issued only in fully registered form,
without coupons, in denominations of $1,000 and integral multiples thereof.
The Notes will mature on May 15, 2003. The Notes bear interest at the rate
per annum stated on the cover page of this Prospectus from their date of
issuance, or from the most recent Interest Payment Date to which interest has
been paid or provided for, payable semi-annually in cash in arrears on May 15
and November 15 of each year, commencing November 15, 1998 to the persons in
whose names such Notes are registered at the close of business on May 1 and
November 1 immediately preceding such Interest Payment Dates. Principal of,
premium on, if any, interest on, and Liquidated Damages with respect to, the
Notes will be payable, the Notes will be convertible and the Notes may be
presented for registration of transfer or exchange, at the office or agency of
the Company maintained for such purpose, which office or agency shall be
maintained in New York, New York. Interest will be calculated on the basis of a
360-day year consisting of twelve 30-day months.
At the option of the Company, payment of interest and Liquidated Damages
may be made by check mailed to the holders of the Notes (the "Holders") at the
addresses set forth upon the registry books of the Company. No service charge
will be made for any registration of transfer or exchange of Notes, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. Until otherwise designated
by the Company, the Company's office or agency will be the corporate trust
office of the Trustee presently located in New York, New York.
The Indenture does not contain any financial covenants or any restrictions
on the payment of dividends, the issuance or repurchase of securities of the
Company or the incurrence of indebtedness, including Senior Indebtedness. The
Indenture contains no covenants or other provisions to afford protection to
Holders of Notes in the event of a
7
<PAGE> 11
highly leveraged transaction or a change of control of the Company, except to
the limited extent described under "Repurchase of Notes at the Option of the
Holder Upon a Change of Control."
CONVERSION RIGHTS
Each Holder of Notes has the right at any time prior to the close of
business on the Stated Maturity of the Notes, unless previously redeemed or
repurchased, at the Holder's option, to convert any portion of the principal
amount thereof that is $1,000 or an integral multiple thereof into shares of
Common Stock at the Conversion Price set forth on the cover page of this
Prospectus (subject to adjustment as described below). The right to convert a
Note called for redemption or delivered for repurchase and not withdrawn will
terminate at the close of business on the Business Day immediately prior to the
Redemption Date or Repurchase Date, as applicable, for such Note, unless the
Company subsequently fails to pay the applicable Redemption Price or Repurchase
Price, as the case may be.
In the case of any Note that has been converted into Common Stock after
any Record Date, but on or before the next Interest Payment Date, interest, the
stated due date of which is on such Interest Payment Date, shall be payable on
such Interest Payment Date notwithstanding such conversion, and such interest
shall be paid to the Holder of such Note who is a Holder on such Record Date.
Any Note converted after any Record Date but before the next Interest Payment
Date (other than Notes called for redemption) must be accompanied by payment of
an amount equal to the interest payable on such Interest Payment Date on the
principal amount of Notes being surrendered for conversion; provided that no
such payment shall be required with respect to interest payable on May 15,
2001. No fractional shares of Common Stock will be issued upon conversion but,
in lieu thereof, an appropriate amount will be paid in cash by the Company
based on the market price of Common Stock (determined in accordance with the
Indenture) at the close of business on the day of conversion. As a result of
the foregoing provisions, Holders who surrender Notes for conversion on a date
that is not an Interest Payment Date will not receive any interest for the
period from the Interest Payment Date next preceding the date of conversion to
the date of conversion or for any later period, except for Notes that are
called for redemption on a Redemption Date between a Record Date and the
corresponding Interest Payment Date as provided above.
The Conversion Price will be subject to adjustment in certain events,
including (a) any payment of a dividend (or other distribution) payable in
Common Stock on any class of Capital Stock of the Company, (b) any issuance to
all or substantially all holders of Common Stock of rights, options or warrants
entitling them to subscribe for or purchase Common Stock at less than the then
Current Market Price of Common Stock (determined in accordance with the
Indenture); provided, however, that if such rights, options or warrants are
only exercisable upon the occurrence of certain triggering events, then the
Conversion Price will not be adjusted until such triggering events occur, (c)
certain subdivisions, combinations or reclassifications of the outstanding
Common Stock, (d) any distribution to all or substantially all holders of
Common Stock of evidences of indebtedness, shares of Capital Stock (other than
Common Stock), cash or other assets (including securities, but excluding those
dividends, rights, options, warrants and distributions referred to above and
distributions in connection with the liquidation, dissolution or winding up of
the Company and excluding dividends and distributions paid exclusively in cash
and in mergers and consolidations to which the second succeeding paragraph
applies), (e) any distribution consisting exclusively of cash (excluding any
cash portion of distributions referred to in (d) above, or cash distributed
upon a merger or consolidation to which the second succeeding paragraph
applies) to all or substantially all holders of Common Stock in an aggregate
amount that, combined together with (i) all other such all-cash distributions
made within the then preceding 12 months in respect of which no adjustments
have been made and (ii) any cash and the fair market value of other
consideration paid or payable in respect of any tender offer by the Company or
any of its Subsidiaries for Common Stock concluded within the preceding 12
months in respect of which no adjustment has been made exceeds 15.0% of the
Company's market capitalization (defined as being the product of the then
Current Market Price of the Common Stock multiplied by the number of shares of
Common Stock then outstanding) on the record date of such distribution, and (f)
the completion of a tender offer made by the Company or any of its Subsidiaries
for Common Stock to the extent that the aggregate consideration, together with
(i) any cash and other consideration payable in a tender offer by the Company
or any of its Subsidiaries for Common Stock expiring with the 12 months
preceding the expiration of such tender offer in respect of which no adjustment
has been made and (ii) the aggregate amount of any such all-cash distributions
referred to in (e) above to all holders of Common Stock within the 12 months
preceding the expiration of such tender offer in respect of which no
adjustments have been made, exceeds 15.0% of the Company's market
capitalization on the expiration of such tender offer. In the event of a
distribution to all or substantially all of the holders of Common Stock of
rights, warrants or options to subscribe for or purchase any securities (other
than those referred to in (b) above), the Company may instead of making an
adjustment in the Conversion Price, provide that each Holder of a Note, who
converts the Note after the record date for such distribution and prior to the
expiration of such rights, shall be entitled to receive upon such conversion of
the Note, in addition to shares of Common Stock, an appropriate number of such
rights, warrants or options. No adjustment of the Conversion Price will be
required to be made until the cumulative adjustments amount to one percent or
more of the Conversion Price as last adjusted.
8
<PAGE> 12
The Company, from time to time and to the extent permitted by law, may
reduce the Conversion Price by any amount for any period of at least 20
Business Days, in which case the Company shall give at least 15 days notice of
such reduction to the Trustee and the Holders, if the Board of Directors has
made a determination that such reduction would be in the best interests of the
Company, which determination shall be conclusive. The Company may, at its
option, make such reductions in the Conversion Price, in addition to those set
forth above, as the Board of Directors deems advisable to avoid or diminish any
income tax to holders of Common Stock resulting from any dividend or
distribution of stock (or rights to acquire stock) or from any event treated as
such for United States Federal income tax purposes. See "Certain United States
Income Tax Considerations."
In case of any reclassification or change of outstanding shares of Common
Stock issuable upon conversion of the Notes (other than certain changes in par
value) or consolidation or merger of the Company with or into another Person or
any consolidation or merger of another Person with or into the Company (with
certain exceptions), or in case of any sale, transfer or conveyance of all or
substantially all of the assets of the Company, each Note then outstanding
will, without the consent of any Holder of Notes, become convertible only into
the kind and amount of securities, cash and other property receivable upon such
reclassification, change, consolidation, merger, sale, transfer or conveyance
by a holder of the number of shares of Common Stock into which such Note was
convertible immediately prior thereto after giving effect to any adjustment
required to be made as set forth above; provided that if the kind or amount of
securities, cash and other property is not the same for each share of Common
Stock held immediately prior to such reclassification, change, consolidation,
merger, sale, transfer, or conveyance, any Holder who fails to exercise any
right of election shall receive per share the kind and amount of securities,
cash or other property received per share by a plurality of such shares.
The Company will use all reasonable efforts to cause all registrations to
be made with, and to obtain any approvals by, any governmental authority under
any Federal or state law of the United States that may be required on the part
of the Company in connection with the conversion of the Notes into Common
Stock. If at any time during the two-year period following the date of the
original issuance of the Notes a registration statement under the Securities
Act covering the shares of Common Stock issuable upon conversion of the Notes
is not effective or is otherwise unavailable for effecting resales of such
shares, shares of Common Stock issued upon conversion of the Notes may not be
sold or otherwise transferred except in accordance with or pursuant to an
exemption from, or otherwise in a transaction not subject to, the registration
requirements of the Securities Act.
SUBORDINATION
The Notes are general, unsecured obligations of the Company, subordinated
in right of payment to all existing and future Senior Indebtedness. Adjusted to
give effect to the issuance of the Notes, the incurrence of indebtedness under
the New Credit Facility and the application of the estimated net proceeds
therefrom, including the Repurchase and the repayment of the Company's Existing
Credit Facility, the Company would have had outstanding $39.3 million of Senior
Indebtedness as of December 31, 1997. The Notes are effectively subordinated in
right of payment to all existing and future liabilities (including trade
payables) of the Company's subsidiaries. The Company had $75.8 million of
current liabilities as of December 31, 1997, a significant portion of which may
reside at the Company's subsidiaries. The Indenture does not restrict the
incurrence of Senior Indebtedness or other indebtedness by the Company or its
Subsidiaries or the ability of the Company to transfer assets or business
operations to its Subsidiaries, subject to the provisions described under
"Repurchase of Notes at the Option of the Holder Upon a Change of Control" and
"Limitation on Merger, Sale or Consolidation."
The Indenture provides that no payment may be made by the Company,
directly or through any Subsidiary, on account of the principal of, premium, if
any, or interest on and Liquidated Damages or any other obligations under or
with respect to, the Notes, or to acquire any of the Notes (including
repurchases of Notes at the option of the Holder) for cash or property (other
than Junior Securities), or on account of the redemption provisions of the
Notes (collectively, the "Subordinated Obligations"), (i) upon the maturity of
any Senior Indebtedness, by lapse of time, acceleration (unless waived) or
otherwise, unless and until all principal of, premium, if any, and interest on,
and fees, charges, expenses, indemnifications and all other amounts payable in
respect of Designated Senior Indebtedness are first paid in full, or (ii) in
the event of default in the payment of any principal of, premium, if any, or
interest on, any Designated Senior Indebtedness when it becomes due and
payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise (collectively, a "Payment Default"), unless and until
such Payment Default has been cured or waived or otherwise has ceased to exist.
The payment of cash, property or securities (other than Junior Securities) upon
conversion of a Note will constitute payment on a Note and therefore will be
subject to the subordination provisions in the Indenture.
Upon (i) the happening of an event of default (other than a Payment
Default) that permits, or would permit with (a) the passage of time, (b) the
giving of notice, (c) the making of any payment of the Notes then required to
be made or (d) any combination thereof (collectively, a "Non-Payment Default"),
the holders of Designated Senior
9
<PAGE> 13
Indebtedness or their representative immediately to accelerate the maturity of
such Designated Senior Indebtedness and (ii) written notice of such Non-Payment
Default being given to the Company and the Trustee by the holders of such
Designated Senior Indebtedness or their representative (a "Payment Notice"),
then, unless and until such Non-Payment Default has been cured or waived or
otherwise has ceased to exist, no payment (by setoff or otherwise) may be made
by or on behalf of the Company, directly or through any Subsidiary, on account
of the Subordinated Obligations, in any such case other than payments made with
Junior Securities. Notwithstanding the foregoing, unless (i) the Designated
Senior Indebtedness in respect of which such Non-Payment Default exists has been
declared due and payable in its entirety within 179 days after the Payment
Notice is delivered as set forth above (the "Payment Blockage Period"), and (ii)
such declaration has not been rescinded or waived, at the end of the Payment
Blockage Period, the Company shall be required to pay to the Holders of the
Notes all regularly scheduled payments on the Notes that were not paid during
the Payment Blockage Period due to the foregoing prohibitions (and upon the
making of such payments any acceleration of the Notes made during the Payment
Blockage Period shall be of no further force or effect) and to resume all other
payments as and when due on the Notes. Not more than one Payment Notice may be
given in any consecutive 365-day period, irrespective of the number of defaults
with respect to Senior Indebtedness during such period. In no event, however,
may the total number of days during which any Payment Blockage Period is or
Payment Blockage Periods are in effect exceed 179 days in the aggregate during
any consecutive 365-day period.
Upon any distribution of assets of the Company upon any dissolution,
winding up, total or partial liquidation or reorganization of the Company,
whether voluntary or involuntary, in bankruptcy, insolvency, receivership or a
similar proceeding or upon assignment for the benefit of the creditors or any
marshaling of assets or liabilities (i) the holders of all Senior Indebtedness
will first be entitled to receive payment in full before the Holders of the
Notes are entitled to receive any payment (other than Junior Securities) on
account of the Subordinated Obligations and (ii) any payment or distribution of
assets of the Company of any kind or character, whether in cash, property or
securities (other than Junior Securities) to which the Holders of the Notes or
the Trustee on behalf of the Holders would be entitled (by setoff or otherwise),
except for the subordination provisions contained in the Indenture, will be paid
by the liquidating trustee or agent or other person making such a payment or
distribution directly to the holders of Senior Indebtedness or their
representative to the extent necessary to make payment in full of all such
Senior Indebtedness remaining unpaid, after giving effect to any concurrent
payment or distribution, or provision therefor, to the holders of such Senior
Indebtedness.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company or any Subsidiary (other than Junior
Securities) shall be received by the Holders of the Notes or the Trustee on
behalf of the Holders or any Paying Agent at a time when such payment or
distribution is prohibited by the foregoing provisions, such payment or
distribution shall be held in trust for the benefit of the holders of Senior
Indebtedness, and shall be paid or delivered by such Holders or the Trustee or
such Paying Agent, as the case may be, to the holders of the Senior Indebtedness
remaining unpaid or unprovided for or their representative or representatives,
or to the trustee or trustees under any indenture pursuant to which any
instruments evidencing any of such Senior Indebtedness may have been issued,
ratably according to the aggregate amounts remaining unpaid on account of the
Senior Indebtedness held or represented by each, for application to the payment
of all Senior Indebtedness remaining unpaid, to the extent necessary to pay or
to provide for the payment of all such Senior Indebtedness in full after giving
effect to any concurrent payment or distribution, or provision therefor, to the
holders of such Senior Indebtedness.
No provision contained in the Indenture or the Notes affects the obligation
of the Company, which is absolute and unconditional, to pay, when due, principal
of, premium, if any, and interest on the Notes. The subordination provisions of
the Indenture and the Notes does not prevent the occurrence of any Default or
Event of Default under the Indenture or limit the rights of the Trustee or any
Holder of any Notes, subject to the preceding paragraphs, to pursue any other
rights or remedies with respect to the Notes.
The Company conducts certain of its operations through its Subsidiaries.
Accordingly, the Company's ability to meet its cash obligations in the future
in part will be dependent upon the ability of its Subsidiaries to make cash
distributions to the Company. The ability of its Subsidiaries to make
distributions to the Company is and will continue to be restricted by, among
other limitations, applicable provisions of the laws of national and state
governments and may be restricted by contractual provisions. The Indenture does
not limit the ability of the Company's Subsidiaries to incur such contractual
restrictions in the future. The right of the Company to participate in the
assets of any Subsidiary (and thus the ability of Holders of the Notes to
benefit indirectly from such assets) is generally subject to the prior claims
of creditors, including trade creditors, of that Subsidiary except to the
extent that the Company itself is recognized as a creditor of such Subsidiary,
in which case the Company's claims would still be subject to any security
interest of other non-subordinated or pari passu creditors of such Subsidiary.
Substantially all of the Company's domestic subsidiaries have guaranty the
indebtedness under the New Credit Facility. The Notes, therefor, are
effectively subordinated to obligations to creditors, including trade
creditors, of
10
<PAGE> 14
Subsidiaries of the Company with respect to the assets of the Subsidiaries
against which such creditors have a more direct claim.
As a result of these subordination provisions, in the event of the
liquidation, bankruptcy, reorganization, insolvency, receivership or similar
proceeding or an assignment for the benefit of the creditors of the Company or
any of its Subsidiaries or a marshaling of assets or liabilities of the Company
and its Subsidiaries, Holders of Notes may receive ratably less than other
creditors.
REDEMPTION AT THE COMPANY'S OPTION
The Notes are not subject to redemption prior to May 15, 2001 and will be
redeemable on and after such date at the option of the Company, in whole or in
part, upon not less than 30 nor more than 60 days' notice to each Holder, at
the following Redemption Prices (expressed as percentages of the principal
amount) if redeemed during the 12-month period commencing May 15 of the years
indicated below, in each case (subject to the right of Holders of record on a
Record Date to receive interest due on an Interest Payment Date that is on or
prior to such Redemption Date) together with accrued and unpaid interest and
Liquidated Damages, if any, to, but excluding, the Redemption Date:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2001 101.800%
2002 and thereafter 100.900%
</TABLE>
In the case of a partial redemption, the Trustee shall select the Notes or
portions thereof for redemption on a pro rata basis, by lot or in such other
manner it deems appropriate and fair. The Notes may be redeemed in part in
multiples of $1,000 only.
Notice of any redemption will be sent, by first-class mail, at least 30
days and not more than 60 days prior to the date fixed for redemption (the
"Redemption Date"), to the Holder of each Note to be redeemed to such Holder's
last address as then shown upon the registry books of the Registrar. The notice
of redemption must state the Redemption Date, the Redemption Price and the
amount of accrued interest and Liquidated Damages, if any, to be paid. Any
notice that relates to a Note to be redeemed in part only must state the
portion of the principal amount to be redeemed and must state that on and after
the Redemption Date, upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion thereof will be issued. On and
after the Redemption Date, interest will cease to accrue on the Notes or
portions thereof called for redemption, unless the Company defaults in its
obligations with respect thereto. The Notes do not have the benefit of any
sinking fund.
REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER UPON A CHANGE OF CONTROL
The Indenture provides that in the event that a Change of Control has
occurred, the Company is required to make an irrevocable and unconditional
(except as described below) offer (the "Repurchase Offer") to purchase all
Notes on the date ("Repurchase Date") that is no later than 45 Business Days
(except as described below) after the occurrence of such Change of Control at a
cash price (the "Repurchase Price") equal to 100% of the principal amount
thereof, together with accrued and unpaid interest and Liquidated Damages, if
any, to (but excluding) the Repurchase Date. A Holder of Notes may accept the
Repurchase Offer with respect to all or a portion of its Notes (provided that
the principal amount of such Notes must be $1,000 or an integral multiple
thereof). The Repurchase Offer shall be made within 25 Business Days following
a Change of Control and shall remain open for 20 Business Days following its
commencement except to the extent that a longer period is required by
applicable law (the "Repurchase Offer Period"). Upon expiration of the
Repurchase Offer Period, the Company shall purchase all Notes tendered in
response to the Repurchase Offer. If required by applicable law, the Repurchase
Date and the Repurchase Offer Period may be extended as so required.
On or before the Repurchase Date, the Company will (i) accept for payment
Notes or portions thereof properly tendered pursuant to the Repurchase Offer,
(ii) deposit with the Paying Agent cash sufficient to pay the Repurchase Price
(together with accrued and unpaid interest and Liquidated Damages, if any) of
all Notes so tendered and (iii) deliver to the Trustee the Notes so accepted,
together with an officers' certificate listing the Notes or portions thereof
being purchased by the Company. The Paying Agent will promptly mail to the
Holders of Notes so accepted payment in an amount equal to the Repurchase Price
(together with accrued and unpaid interest and Liquidated Damages, if any), and
the Trustee will promptly authenticate and mail or deliver to such Holders a
new Note or Notes equal in principal amount to any unpurchased portion of the
Notes surrendered. Any Notes not so accepted will be promptly mailed or
delivered by the Company to the Holder thereof. The Company will announce
publicly the results of the Repurchase Offer on or as soon as practicable after
the Repurchase Date.
11
<PAGE> 15
The phrase "all or substantially all" of the assets of the Company, as
included in the definition of Change of Control, is likely to be interpreted by
reference to applicable state law at the relevant time, and will be dependent
on the facts and circumstances existing at such time. As a result, there may be
a degree of uncertainty in ascertaining whether a sale or transfer of "all or
substantially all" of the assets of the Company has occurred.
The Change of Control purchase feature of the Notes may make more
difficult or discourage a takeover of the Company, and, thus, the removal of
incumbent management. The Change of Control purchase feature resulted from
negotiations between the Company and the Donaldson, Lufkin & Jenrette.
The provisions of the Indenture relating to a Change of Control may not
afford the Holders of the Notes protection in the event of a highly leveraged
transaction, reorganization, restructuring, merger, spin-off or similar
transaction that may adversely affect Holders, if such transaction does not
constitute a Change of Control. Moreover, certain events with respect to the
Company which may involve an actual change of control of the Company may not
constitute a Change of Control for purposes of the Indenture.
The right to require the Company to repurchase Notes as a result of the
occurrence of a Change of Control could create an event of default under Senior
Indebtedness as a result of which any repurchase could be blocked by the
subordination provisions of the Notes. Failure of the Company to repurchase the
Notes when required would result in an Event of Default with respect to the
Notes whether or not such repurchase is permitted by the subordination
provisions. See "--Subordination."
Except as described herein, no modification of the Indenture regarding the
provisions on repurchase at the option of any Holder of a Note upon a Change of
Control that adversely affects a Holder is permissible without the consent of
the Holder of the Note so affected. In the event of a Change of Control, if
Holders of in excess of two-thirds of the outstanding aggregate principal
amount of the Notes so determine at any time following the occurrence of such
Change of Control and before the close of business on the Business Day
immediately preceding the Repurchase Date, such event shall not be treated as a
Change of Control for purposes of the Indenture. In such event, (i) the Company
shall not be required to make the Repurchase Offer, (ii) to the extent the
Repurchase Offer has already been made, such Repurchase Offer shall be deemed
revoked and (iii) to the extent any Notes have been tendered in response to any
such revoked Repurchase Offer, such tender shall be rescinded and the Notes so
tendered shall be promptly returned to the Holders thereof. For purposes of any
such determination by the Holders of the outstanding Notes, Notes held by the
Company or an Affiliate of the Company (including any Person that would become
an Affiliate of the Company (or its successor) as a consequence of the event or
series of events that otherwise would be treated as a Change of Control for
purposes of the Indenture) shall be disregarded.
To the extent applicable, the Company will comply with the provisions of
Rule 13e-4 and 14e-1 or any other tender offer rules under the Exchange Act and
any other securities laws, and will file a Schedule 13e-4 or any other schedule
if required under such rules, in connection with any offer by the Company to
repurchase Notes at the option of the Holders upon a Change of Control.
LIMITATION ON MERGER, SALE OR CONSOLIDATION
The Indenture provides that the Company may not, directly or indirectly,
consolidate with or merge with or into, or sell, lease, convey or transfer all
or substantially all of its assets (on a consolidated basis), whether in a
single transaction or a series of related transactions, to another Person or
group of affiliated Persons (other than to its wholly owned Subsidiaries),
unless (i) either (a) in the case of a merger or consolidation, the Company is
the surviving entity or (b) the resulting, surviving or transferee entity is a
corporation organized under the laws of the United States, any state thereof or
the District of Columbia and expressly assumes by supplemental indenture all of
the obligations of the Company in connection with the Notes and the Indentures;
and (ii) no Default or Event of Default shall exist immediately before or after
giving effect to such transaction.
Upon any consolidation or merger or any transfer of all or substantially
all of the assets of the Company in accordance with the foregoing, the
successor corporation formed by such consolidation or into which the Company is
merged or to which such transfer is made, shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under the Indenture
with the same effect as if such successor corporation had been named therein as
the Company, and the Company will be released from its obligations under the
Indenture and the Notes, except as to any obligations that arise from or as a
result of such transaction.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise) of all or substantially all of the properties and assets of one or
more subsidiaries, which properties and assets, if held by the Company instead
of such subsidiary, would constitute all or substantially all of the properties
and assets of the Company, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.
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REPORTS
Whether or not the Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall deliver to the
Trustee, within 15 days after it is or would have been required to file such
with the Commission, annual and quarterly consolidated financial statements
substantially equivalent to financial statements that would have been included
in reports filed with the Commission if the Company were subject to the
requirements of Section 13 or 15(d) of the Exchange Act, including, with
respect to annual information only, a report thereon by the Company's certified
independent public accountants as such would be required in such reports to the
Commission and, in each case, together with a management's discussion and
analysis of financial condition and results of operations as such would be so
required. In addition, for so long as the Notes or the Common Stock into which
they are convertible are Transfer Restricted Securities, the Company will
continue to provide to Holders the information specified by Rule 144A(d)(4).
EVENTS OF DEFAULT AND REMEDIES
The Indenture defines an Event of Default as (i) the failure by the
Company to pay any installment of interest on the Notes as and when due and
payable and the continuance of any such failure for 30 days, (ii) the failure
by the Company to pay all or any part of the principal of, or premium, if any,
on the Notes when and as the same become due and payable at maturity,
redemption, by acceleration or otherwise, including, without limitation,
pursuant to any Repurchase Offer, (iii) the failure of the Company to perform
any conversion of Notes required under the Indenture and the continuance of any
such failure for 30 days, (iv) the failure by the Company to observe or perform
any other covenant or agreement contained in the Notes or the Indenture and,
subject to certain exceptions, the continuance of such failure for a period of
60 days after written notice is given to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in aggregate principal
amount of the Notes outstanding, (v) certain events of bankruptcy, insolvency
or reorganization in respect of the Company or any of its Significant
Subsidiaries, (vi) failure of the Company or any Significant Subsidiary to make
any payment at maturity, including any applicable grace period, in respect of
Indebtedness (other than non-recourse obligations) in an amount in excess of
$10 million, and continuance of such failure for 30 days after written notice
is given to the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in aggregate principal amount of Notes outstanding,
(vii) default by the Company or any Significant Subsidiary with respect to any
Indebtedness, which default results in the acceleration of Indebtedness in an
amount in excess of $10 million without such Indebtedness having been
discharged or such acceleration having been rescinded or annulled for 30 days
after written notice is given to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 25% in aggregate principal amount of
Notes outstanding and (viii) final unsatisfied judgments not covered by
insurance aggregating in excess of $10 million, at any one time rendered
against the Company or any of its Significant Subsidiaries and not stayed,
bonded or discharged within 60 days. The Indenture will provide that if a
Default occurs and is continuing, the Trustee must, within 90 days after the
Trustee's receiving actual notice of occurrence of such Default, give to the
Holders notice of such Default, but the Trustee shall be protected in
withholding such notice if it in good faith determines that the withholding of
such notice is in the interest of the Holders, except in the case of a Default
in the payment of the principal of, premium, if any, or interest on any of the
Notes when due or in the payment of any redemption or repurchase obligation.
The Indenture provides that if an Event of Default occurs and is
continuing (other than an Event of Default specified in clause (v) above with
respect to the Company), then in every such case, unless the principal of all
of the Notes shall have already become due and payable, either the Trustee or
the Holders of at least 25% in aggregate principal amount of the Notes then
outstanding, by notice in writing to the Company (and to the Trustee if given
by Holders), may declare all principal, premium, if any, accrued interest and
Liquidated Damages, if any, on or with respect to the Notes to be due and
payable immediately. If an Event of Default specified in clause (v) above with
respect to the Company occurs, all principal, premium, if any, accrued interest
and Liquidated Damages, if any, will be immediately due and payable on all
outstanding Notes without any declaration or other act on the part of the
Trustee or the Holders. The Holders of no less than a majority in aggregate
principal amount of Notes generally are authorized to rescind such acceleration
if all existing Events of Default, other than the non-payment of the principal
of, premium, if any, and interest on, and Liquidated Damages with respect to,
the Notes that have become due solely by such acceleration, have been cured or
waived.
Prior to the declaration of acceleration of the maturity of the Notes, the
Holders of a majority in aggregate principal amount of the Notes at the time
outstanding may waive on behalf of all the Holders any default, except a
default in the payment of principal of, interest on, or Liquidated Damages with
respect to, any Note not yet cured, or a default with respect to any covenant
or provision that cannot be modified or amended without the consent of the
Holder of each outstanding Note affected. Subject to the provisions of the
Indenture relating to the duties of the Trustee, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
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request, order or direction of any of the Holders, unless such Holders have
offered to the Trustee reasonable security or indemnity. Subject to all
provisions of the Indenture and applicable law, the Holders of a majority in
aggregate principal amount of the Notes at the time outstanding will have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee.
The Indenture provides that no Holder may pursue any remedy under the
Indenture, except for a default in the payment of principal, premium, if any,
or interest or Liquidated Damages, if any, on the Notes, unless the Holder
gives to the Trustee written notice of a continuing Event of Default, the
Holders of at least 25.0% in principal amount of the outstanding Notes make a
written request to the Trustee to pursue the remedy, such Holders offer to the
Trustee indemnity satisfactory to the Trustee against any loss, liability or
expense, the Trustee does not comply with the request within 60 days after the
receipt of the request and the offer of indemnity, and the Trustee shall not
have received a contrary direction from the Holders of a majority in principal
amount of the outstanding Notes.
AMENDMENTS AND SUPPLEMENTS
The Indenture contains provisions permitting the Company and the Trustee
to enter into a supplemental indenture for certain limited purposes without the
consent of the Holders. With the consent of the Holders of not less than a
majority in aggregate principal amount of the Notes at the time outstanding,
the Company and the Trustee are permitted to amend or supplement the Indenture
or any supplemental indenture or modify or waive the rights of the Holders;
provided that no such modification may, without the consent of each Holder
affected thereby: (i) change the Stated Maturity of any Note or reduce the
principal amount thereof or the rate (or extend the time for payment) of
interest thereon or any premium payable upon the redemption thereof, or change
the place of payment where, or the coin or currency in which, any Note or any
premium or the interest thereon is payable, or impair the right to institute
suit for the conversion of any Note or the enforcement of any such payment on
or after the due date thereof (including, in the case of redemption, on or
after the Redemption Date), or reduce the Repurchase Price, or alter the
Repurchase Offer (other than as set forth herein) or redemption provisions in a
manner adverse to the Holders, or (ii) reduce the percentage in principal
amount of the outstanding Notes, the consent of whose Holders is required for
any such amendment, supplemental indenture or waiver provided for in the
Indenture or (iii) adversely affect the right of such Holder to convert Notes
or alter, in a manner that adversely affects the right of such Holder, the
provisions relating to anti-dilution protection in respect thereof. A
supplemental indenture entered into in compliance with the "Limitation on
Merger, Sale or Consolidation" covenant would not require the consent of the
Holders of the Notes.
NO PERSONAL LIABILITY OF SHAREHOLDERS, OFFICERS, DIRECTORS AND EMPLOYEES
The Indenture provides that no shareholder, employee, officer, director or
partner, as such, past, present or future, of the Company or any successor
corporation shall have any personal liability in respect of the obligations of
the Company under the Indenture or the Notes by reason of his, her or its
status as such shareholder, employee, officer, director or partner.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange the Notes in accordance with the
Indenture. The Company or Trustee may require a Holder, among other things, to
furnish appropriate endorsements, legal opinions and transfer documents, and to
pay any taxes and fees required by law or permitted by the Indenture. The
Company is not required to transfer or exchange any Notes selected for
redemption. Also, the Company is not required to transfer or exchange any Notes
for a period of 15 days before the mailing of a Repurchase Offer or notice of
redemption.
The registered Holder of a Note may be treated as the owner of it for all
purposes.
BOOK ENTRY, DELIVERY AND FORM
Notes currently held by "qualified institutional buyers," as defined in
Rule 144A under the Securities Act ("QIBs"), are currently evidenced by one
U.S. Global Note, which was deposited on the date of the closing of the sale of
the Notes (the "Closing Date") with, or on behalf of, the Depository and
registered in the name of Cede and Co. ("Cede") as the Depository's nominee.
Any purchaser (a "Public Holder") of Notes pursuant to this Prospectus
will receive a beneficial interest in an unrestricted global note (the
"Registered Global Note") which will be deposited with, or on behalf of, the
Depository and registered in the name of Cede as the Depository's nominee.
Except as set forth below, the Registered Global Note may be transferred, in
whole or in part, only to another nominee of the Depository or to a successor
of the Depository or its nominee.
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A Public Holder may hold its interest in the Registered Global Note
directly through the Depository if such Public Holder is a participant in the
Depository, or indirectly through organizations which are participants in the
Depository (the "Participants"). Transfers between Participants will be
effected in the ordinary way in accordance with the Depository's rules and will
be settled in federal funds.
The Depository has advised the Company that it is a limited-purpose trust
company that was created to hold securities for its Participants and to
facilitate the clearance and settlement of transactions in such securities
between Participants through electronic book-entry changes in accounts of its
Participants. The Depository's Participants include securities brokers and
dealers (including the Donaldson, Lufkin & Jenrette), banks and trust
companies, clearing corporations and certain other organizations. Access to the
Depository's system is also available to other entities such as banks, brokers,
dealers and trust companies (collectively, "Indirect Participants") that clear
through or maintain a custodial relationship with a Participant, either
directly or indirectly. Public Holders who are not Participants may
beneficially own securities held by or on behalf of the Depository only through
Participants or Indirect Participants.
The Company expects that pursuant to procedures established by the
Depository, (i) upon deposit of the Registered Global Note, the Depository will
credit the accounts of Participants with an interest in the Registered Global
Note and (ii) ownership of the Notes evidenced by the Registered Global Note
will be shown on, and the transfer of ownership thereof will be effected only
through, records maintained by the Depository (with respect to the interests of
Participants), the Participants and the Indirect Participants. The laws of some
states require that certain persons take physical delivery in definitive form
of securities that they own and that security interests in negotiable
instruments can only be perfected by delivery of certificates representing the
instruments. Consequently, the ability to transfer Notes evidenced by the
Registered Global Note will be limited to such extent.
So long as the Depository or its nominee is the registered owner of a
Note, the Depository or such nominee, as the case may be, will be considered
the sole owner or holder of the Notes represented by the Registered Global Note
for all purposes under the Indenture. Except as provided below, owners of
beneficial interests in the Registered Global Note will not be entitled to have
Notes represented by such Registered Global Note registered in their names,
will not receive or be entitled to receive physical delivery of Certificated
Notes, and will not be considered the owners or holders thereof under the
Indenture for any purpose, including with respect to the giving of any
directions, instructions or approvals to the Trustee thereunder. As a result,
the ability of a Person having a beneficial interest in Notes represented by
the Registered Global Note to pledge such interest to Persons that do not
participate in the Depository's system, or to otherwise take actions with
respect to such interest, may be affected by the lack of a physical certificate
evidencing such interest.
Neither the Company nor the Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in the Registered Global Note by
the Depository, or for maintaining, supervising or reviewing any records of the
Depository relating to such beneficial ownership interests.
Payments with respect to the principal of, premium, if any, interest on,
and liquidated damages with respect to, the Registered Global Note registered
in the name of the Depository or its nominee on the applicable record date will
be payable by the Trustee to or at the direction of the Depository or its
nominee in its capacity as the registered Holder of the Registered Global Note
under the Indenture. Under the terms of the Indenture, the Company and the
Trustee may treat the Person in whose name the Registered Global Note is
registered as the owner thereof for the purpose of receiving such payments and
for any and all other purposes whatsoever. Consequently, neither the Company,
nor the Trustee has or will have any responsibility or liability for the
payment of such amounts to beneficial owners of the Registered Global Note
(including, principal, premium, if any, interest, or liquidated damages with
respect thereto), or to immediately credit the accounts of the relevant
Participants with such payment, in amounts proportionate to their respective
holdings in principal amount of beneficial interests in the Registered Global
Note as shown on the records of the Depository. Payments by the Participants
and the Indirect Participants to the beneficial owners of the Registered Global
Note will be governed by standing instructions and customary practice and will
be the responsibility of the Participants or the Indirect Participants.
Holders who desire to convert their Notes into Common Stock pursuant to
the terms of the Notes should contact their brokers or other Participants or
Indirect Participants to obtain information on procedures, including proper
forms and cut-off times, for submitting such requests.
If (i) the Company notifies the Trustee in writing that the Depository is
no longer willing or able to act as a Depository and a successor is not
appointed by the Company within 90 days or (ii) the Company, at its option,
notifies the Trustee in writing that it elects to cause the issuance of Notes
in definitive form under the Indenture, then, upon surrender by the Depository
of the Registered Global Note, Certificated Notes will be issued to each person
that
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the Depository identifies as the beneficial owner of the Notes represented by
the Registered Global Note. In addition, subject to certain conditions, any
Person having a beneficial interest in the Registered Global Note may, upon
request to the Trustee, exchange such beneficial interest for Notes in the form
of Certificated Notes. Upon any such issuance, the Trustee is required to
register such Certificated Notes in the name of such Person or Persons (or the
nominee of any thereof), and cause the same to be delivered thereto.
Neither the Company nor the Trustee shall be liable for any delay by the
Depository or any Participant or Indirect Participant in identifying the
beneficial owners of the Registered Global Note, and the Company and the
Trustee may conclusively rely on, and shall be protected in relying on,
instructions from the Depository for all purposes (including with respect to
the registration and delivery, and the respective principal amounts, of the
Notes to be issued).
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The Company and Donaldson, Lufkin & Jenrette entered into the Registration
Rights Agreement on May 8, 1998 (the "Registration Rights Agreement"). Pursuant
to the Registration Rights Agreement, the Company filed with the Commission the
Shelf Registration Statement on Form S-3 of which this Prospectus is a part to
cover resales of Transfer Restricted Securities by the holders thereof who
satisfy certain conditions relating to the provision of information in
connection with the Shelf Registration Statement. The Company will use its
reasonable best efforts to keep the Shelf Registration Statement effective
until the earlier of such date that is two years after the latest date of
initial issuance of the Notes or the date all Transfer Restricted Securities
covered by the Shelf Registration Statement have been sold or there cease to be
outstanding any Transfer Restricted Securities. For purposes of the foregoing,
"Transfer Restricted Securities" means each Note and share of Common Stock
issued upon conversion thereof until the earlier of the date on which such Note
or share of Common Stock has been effectively registered under the Securities
Act and disposed of in accordance with the Shelf Registration Statement or the
date on which such Note or share of Common Stock is distributed to the public
pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule
144(k) under the Securities Act (or any similar provisions then in force).
The Company will provide to each Holder of Transfer Restricted Securities
included in the Shelf Registration Statement copies of the prospectus contained
in the Shelf Registration Statement, notify each such Holder when the Shelf
Registration Statement has become effective and take certain other actions as
are required to permit resales of the Transfer Restricted Securities. A Holder
who sells Transfer Restricted Securities pursuant to the Shelf Registration
Statement generally will be required to be named as a selling securityholder in
the related prospectus and to deliver a prospectus to purchasers and will be
bound by the provisions of the Registration Rights Agreement which are
applicable to such Holder (including certain indemnification provisions).
Holders of the Transfer Restricted Securities will be required to make certain
representations to the Company (as described in the Registration Rights
Agreement) and will be required to deliver promptly information to be used in
connection with the Shelf Registration Statement in order to have their
Transfer Restricted Securities included in the Shelf Registration Statement. If
a Holder fails to provide such information within the prescribed time periods,
the Transfer Restricted Securities of such Holder will not be included in the
Shelf Registration Statement and the Holder will not be entitled to any
Liquidated Damages. A Holder's ability to sell such Transfer Restricted
Securities may be limited or the price at which such Transfer Restricted
Securities can be sold may be adversely affected if the Transfer Restricted
Securities are not included in the Shelf Registration Statement.
GOVERNING LAW
The Indenture and the Notes and the Registration Rights Agreement provide
that they are to be governed in accordance with the laws of the State of New
York, without regard to choice of laws provisions.
THE TRUSTEE
The Bank of New York is the Trustee under the Indenture. A successor
Trustee may be appointed in accordance with the terms of the Indenture.
The Indenture contains certain limitations on the rights of the Trustee,
in the event it becomes a creditor of the Company, to obtain payment of claims
in certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage in
other transactions with the Company and its Subsidiaries; provided, however,
that if it acquires any conflicting interest (as defined), it must eliminate
such conflict or resign.
In case an Event of Default shall occur (and shall not be cured or
waived), the Trustee will be required to use the degree of care of a prudent
person in the conduct of its own affairs in the exercise of its powers. Subject
to such
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provisions, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request of any of the Holders of
Notes, unless they shall have offered to the Trustee reasonable security or
indemnity.
ABSENCE OF PUBLIC MARKET; TRANSFER RESTRICTIONS
The Notes have not been registered under the Securities Act and will be
subject to significant restrictions on resale. There is no existing market for
the Notes and there can be no assurance as to the liquidity of any markets that
may develop for the Notes, the ability of the Holders to sell their Notes or at
what price Holders of the Notes will be able to sell their Notes. Future
trading prices of the Notes will depend upon many factors including, among
other things, prevailing interest rates, the Company's operating results, the
price of the Common Stock and the market for similar securities. Donaldson,
Lufkin & Jenrette has informed the Company that it is making a market in the
Notes offered hereby; however, Donaldson, Lufkin & Jenrette is not obligated
to do so and any such market making activity may be terminated at any time
without notice to the Holders of the Notes. The Notes are expected to be
eligible for trading on the PORTAL Market. The Company does not intend to apply
for listing of the Notes on any securities exchange.
CERTAIN DEFINITIONS
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.
"Capitalized Lease Obligation" means, as to any Person, the obligation of
such Person to pay rent or other amounts under a lease to which such Person is
a party that is required to be classified and accounted for as a capital lease
obligation under GAAP.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, rights to purchase (other than convertible or exchangeable
indebtedness), warrants, options, participation or other equivalents of or
interests (however designated) in stock issued by that Person.
"Change of Control" means (i) an event or series of events as a result of
which any "person" or "group" (as such terms are used in Sections 13(d)(3) and
14(d) of the Exchange Act) (excluding the Company or any wholly owned Subsidiary
thereof or any employee benefit plan of the Company or any such subsidiary) is
or becomes, directly or indirectly, the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, whether or not applicable) of more than
50.0% of the combined voting power of the then outstanding securities entitled
to vote generally in elections of directors, managers or trustees, as
applicable, of the Company or any successor entity ("Voting Stock"), (ii) the
completion of any consolidation or merger of the Company with or into any other
Person, or sale, conveyance, transfer or lease by the Company of all or
substantially all of its assets to any Person, or any merger of any other Person
into the Company in a single transaction or series of related transactions, and,
in the case of any such transaction or series of related transactions, the
outstanding Common Stock is changed or exchanged as a result, unless the
shareholders of the Company immediately before such transaction own, directly or
indirectly, immediately following such transaction, at least a majority of the
combined voting power of the outstanding voting securities of the Person
resulting from such transaction in substantially the same proportion as their
ownership of the Voting Stock immediately before such transaction, or (iii) such
time as the Continuing Directors do not constitute a majority of the Board of
Directors (or, if applicable, a successor corporation to the Company).
"Continuing Director" means at any date a member of the Company's Board of
Directors (i) who was a member of such board on the date of initial issuance of
the Notes or (ii) who was nominated or elected by at least a majority of the
directors who were such Continuing Directors at the time of such nomination or
election or whose election to the Company's Board of Directors was recommended
or endorsed by at least a majority of the directors who were such Continuing
Directors at the time of such nomination or election.
"Credit Facility" means that certain Credit and Guarantee Agreement, to be
entered into pursuant to a commitment letter dated as of April 21, 1998, among
the Company, the subsidiary guarantors party thereto, the various lenders party
thereto, Bank of America National Trust and Savings Association, as Collateral
Agent, and The Bank of New York, as administrative agent, as such agreement may
be amended, restated, modified, renewed, refunded, replaced or refinanced from
time to time thereafter, including any notes, guaranties, security or pledge
agreements, letters of credit and other documents or instruments executed
pursuant thereto and any exhibits or schedules to any of the foregoing, as the
same may be in effect from time to time, in each case, as such agreements may
be amended, modified, supplemented, renewed, refunded, replaced, refinanced,
extended or restated from time to time (whether with the original agents and
lenders or other agents and lenders or otherwise, and whether provided under
the original credit agreement or other credit agreements or otherwise),
including any appendices, exhibits or schedules to any of the foregoing.
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"Designated Senior Debt" means (i) any Indebtedness outstanding under the
Credit Facility and (ii) any other Senior Indebtedness, the principal amount of
which is $10 million or more and that has been designated by the Company as
"Designated Senior Debt."
"Indebtedness" of any Person means, without duplication, (a) all
liabilities and obligations, contingent or otherwise, of any such Person, (i)
in respect of borrowed money (whether or not the lender has recourse to all or
any portion of the assets of such person), (ii) evidenced by credit or loan
agreements, bonds, notes, debentures or similar instruments (including, without
limitation, notes or similar instruments given in connection with the
acquisition of any business, properties or assets of any kind), (iii) evidenced
by bankers' acceptances or similar instruments issued or accepted by banks,
(iv) for the payment of money relating to a Capitalized Lease Obligation or (v)
evidenced by a letter of credit, bank guarantee or a reimbursement obligation
of such Person with respect to any letter of credit; (b) all obligations of
such Person issued or assumed as the deferred purchase price of property or
services (but excluding trade accounts payable or accrued liabilities arising
in the ordinary course of business); (c) all net obligations of such Person
under Interest Swap and Hedging Obligations; (d) all liabilities of others of
the kind described in the preceding clauses, (a),(b) or (c) that such Person
has guaranteed or that is otherwise its legal liability, or which is secured by
a lien on property of such Person, and all obligations to purchase, redeem or
acquire any Capital Stock; and (e) any and all deferrals, renewals, extensions,
modifications, replacements, restatements, refinancings and refundings (whether
direct or indirect) of, or any indebtedness or obligation issued in exchange
for, any liability of the kind described in any of the preceding clauses (a),
(b), (c) or (d), or this clause (e), whether or not between or among the same
parties.
"Interest Swap and Hedging Obligations" means the obligations of any
Person under any interest rate or currency protection agreement, future
agreement, option agreement, swap agreement, cap agreement or other interest
rate or currency hedge agreement, collar agreement or other similar agreement
or arrangement to which such Person is a party or beneficiary.
"Junior Securities" means Capital Stock in the Company and any
Indebtedness of the Company, in each case that is 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 pursuant to the Indenture.
"Senior Indebtedness" means all obligations of the Company to pay the
principal of, premium, if any, interest (including all interest accruing
subsequent to the commencement of any bankruptcy or similar proceeding, whether
or not a claim for post-petition interest is allowed as a claim in any such
proceeding) and rent payable on or in connection with, and all letters of
credit, reimbursement obligations and fees, costs, expenses and other amounts
and liabilities accrued or due on or in connection with, the New Credit
Facility and any other Indebtedness of the Company, whether outstanding on the
date of the Indenture or thereafter created, incurred, assumed, guaranteed or
in effect guaranteed by the Company, unless the instrument creating or
evidencing such Indebtedness expressly provides that such Indebtedness is not
senior or superior in right of payment to the Notes or is pari passu with, or
subordinated to, the Notes; provided that in no event shall Senior Indebtedness
include (a) Indebtedness of the Company owed or owing to any Subsidiary of the
Company, (b) Indebtedness of the Company representing any account payable or
other accrued current liability or obligation incurred in the ordinary course
of business in connection with the obtaining of materials or services, (c) any
liability for taxes owed or owing by the Company or any Subsidiary of the
Company or (d) the Notes.
"Significant Subsidiary" means any Subsidiary which is a "significant
subsidiary" of the Company within the meaning of Rule 1-02(w) of Regulation S-X
promulgated by the Commission as in effect as of the Issue Date.
"Stated Maturity" when used with respect to any Note, means May 15, 2003.
"Subsidiary" with respect to any Person, means (i) a corporation a
majority of whose Capital Stock with voting power normally entitled to vote in
the election of directors is at the time, directly or indirectly, owned by such
Person, by such Person and one or more Subsidiaries of such Person or by one or
more Subsidiaries of such Person, (ii) a partnership in which such Person or a
Subsidiary of such Person is, at the time, a general partner and owns alone or
together with one or more Subsidiaries of such Person a majority of the
partnership interests, or (iii) any other Person (other than a corporation) in
which such Person, one or more Subsidiaries of such Person or such Person and
one or more Subsidiaries of such Person, directly or indirectly, at the date of
determination thereof, has at least a majority ownership interest.
18
<PAGE> 22
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company is 55,000,000 shares consisting
of 50,000,000 shares of Common Stock, par value $0.01 per share, and 5,000,000
shares of Preferred Stock, par value $1.00 per share (the "Preferred Stock"), in
such series and with such voting powers, designations, preferences and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof, as may be fixed from time to time by the Board of
Directors for each series. The following summary description of certain
provisions of the Company's Restated Certificate of Incorporation (the
"Certificate of Incorporation") and the By-laws does not purport to be complete
and is qualified in its entirety by reference to said provisions.
COMMON STOCK
Holders of Common Stock are entitled to one vote for each share held on
all matters submitted to a vote of stockholders and do not have cumulative
voting rights. Holders of a majority of the shares of Common Stock entitled to
vote in any election of Directors may elect all of the Directors standing for
election. Holders of Common Stock are entitled to receive ratably such
dividends, if any, as may be declared by the Board of Directors out of funds
legally available therefor, subject to any preferential dividend rights of
outstanding Preferred Stock. Upon the liquidation, dissolution or winding up of
the Company, the holders of Common Stock are entitled to receive ratably the
net assets of the Company available after the payment of all debts and other
liabilities and subject to the prior rights of any outstanding Preferred Stock.
Holders of Common Stock have no preemptive, subscription, redemption or
conversion rights.
The outstanding shares of Common Stock are, and the Common Stock issuable
upon conversion of the Notes will be, when issued and paid for, fully paid and
non-assessable.
The rights, preferences and privileges of holders of Common Stock are
subject to, and may be adversely affected by, the rights of the holders of
shares of any series of preferred stock which the Company may designate and
issue in the future.
PREFERRED STOCK
The Company has authorized 5,000,000 shares of preferred stock which may
be issued with such preferences and voting rights as the Board of Directors,
without further approval by the stockholders, may determine by duly adopted
resolution. See "Certain Charter and By-Law Provisions." No shares of ANTEC
Preferred Stock are currently issued and outstanding.
CERTAIN CHARTER AND BY-LAW PROVISIONS
Pursuant to the provisions of the Delaware General Corporation Law (the
"DGCL"), ANTEC has adopted provisions in its Certificate of Incorporation and
Bylaws which require ANTEC to indemnify its officers and directors to the
fullest extent permitted by law, and eliminate the personal liability of its
directors to ANTEC or its stockholders for monetary damages for breach of their
duty of due care except (i) for any breach of the duty of loyalty; (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
knowing violations of law; (iii) for liability under Section 174 of the DGCL
(relating to certain unlawful dividends, stock repurchases or stock
redemptions); or (iv) for any transaction from which the director derived any
improper personal benefit. These provisions do not eliminate a director's duty
of care. Moreover, the provisions do not apply to claims against a Director for
violation of certain laws, including Federal securities laws. The Company
believes that these provisions will assist the Company in attracting or
retaining qualified individuals to serve as Directors and officers.
The Company's Restated Certificate of Incorporation includes a provision
which allows the Board of Directors, without stockholder approval, to issue up
to 5,000,000 shares of preferred stock with voting, liquidation and conversion
rights that could be superior to and adversely affect the voting power of
holders of Common Stock. The issuance of preferred stock could have the effect
of delaying, deferring or preventing a change in control of the Company. The
Company has no present plans to issue any shares of preferred stock.
DELAWARE ANTI-TAKEOVER LAW
The Company is a Delaware corporation that is subject to Section 203 of
the DGCL ("Section 203"). Under Section 203 certain "business combinations"
between a Delaware corporation, whose stock generally is publicly traded or
held of record by more than 2,000 stockholders, and an "interested stockholder"
are prohibited for a three-year period following the date that such stockholder
became an interested stockholder, unless (i) the corporation
19
<PAGE> 23
has elected in its certificate of incorporation not to be governed by Section
203 (the Company has not made such election), (ii) the business combination was
approved by the board of directors of the corporation before the other party to
the business combination became an interested stockholder, (iii) upon
consummation of the transaction that made it an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the corporation
outstanding at the commencement of the transaction (excluding voting stock owned
by directors who are also officers or held in employee benefit plans in which
the employees do not have a confidential right to tender or vote stock held by
the plan) or (iv) the business combination is approved by the board of directors
of the corporation and ratified by two-thirds of the voting stock which the
interested stockholder did not own. The three-year prohibition also does not
apply to certain business combinations proposed by an interested stockholder
following the announcement or notification of certain extraordinary transactions
involving the corporation and a person who had not been an interested
stockholder during the previous three years or who became an interested
stockholder with the approval of a majority of the corporation's directors. The
term "business combination" is defined generally to include mergers or
consolidations between a Delaware corporation and an interested stockholder,
transactions with an interested stockholder involving the assets or stock of the
corporation or its majority-owned subsidiaries, and transactions which increase
an interested stockholder's percentage ownership of stock. The term "interested
stockholder" is defined generally as those stockholders who become beneficial
owners of 15% or more of a Delaware corporation's voting stock, together with
the affiliates or associates of that stockholder.
CERTAIN UNITED STATES INCOME TAX CONSIDERATIONS
The following is a summary of certain material United States federal
income tax considerations relating to the purchase, ownership and disposition
of the Notes and of the Common Stock into which Notes may be converted, but is
not intended and does not purport to be a complete analysis of all the
potential federal income or estate tax, or other tax considerations relating
thereto. This summary is based on the provisions of the Internal Revenue Code
of 1986, as amended (the "Code"), applicable Treasury Regulations promulgated
or proposed thereunder ("Treasury Regulations"), court decisions and current
administrative rulings and practice, all of which are subject to change,
possibly on a retroactive basis. For purposes of this section, the term
"Holders" assumes that each Holder is (i) an individual who is a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized under the laws of the United States or any state or
political subdivision thereof, (iii) an estate, the income of which is subject
to United States federal income taxation--regardless of source, or (iv) a trust
which is subject to the supervision of a court within the United States and the
control of a United States person. This summary deals only with holders that
will hold Notes and the Common Stock into which Notes may be converted as
capital assets, and does not address tax considerations applicable to investors
that may be subject to special tax rules such as banks, tax-exempt
organizations, insurance companies, dealers in securities or enterprises,
persons that will hold Notes as a position in a hedging, straddle or conversion
transaction, or persons that have a functional currency other than the U.S.
dollar. This summary discusses the tax considerations applicable to persons who
purchase Notes upon their initial offering and does not discuss the tax
considerations applicable to subsequent purchasers of Notes. The Company has
not sought any ruling from the Internal Revenue Service (the "IRS") with
respect to the statements made and the conclusions reached in this summary, and
there can be no assurance that the IRS will agree with such statements and
conclusions. INVESTORS CONSIDERING THE PURCHASE OF NOTES SHOULD CONSULT THEIR
OWN TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE UNITED STATES FEDERAL
INCOME AND ESTATE TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX
CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING
JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.
SALE, EXCHANGE, REDEMPTION OR RETIREMENT OF THE NOTES
Upon the sale, exchange, redemption or retirement at maturity or other
disposition of a Note, Holder generally will recognize capital gain or loss
equal to the difference between (i) the amount of cash proceeds and the fair
market value of any property received on the sale, exchange, redemption or
retirement or other disposition (except to the extent such amount is
attributable to accrued interest income, which is taxable as ordinary income)
and (ii) such Holder's adjusted tax basis in the Note. A Holder's adjusted tax
basis in a Note generally will equal the cost of the Note to such Holder, less
any principal payments received by such Holder. Such capital gain or loss will
be long-term capital gain or loss if the individual Holder's holding period for
the Note is more than one year at the time of sale, exchange, redemption or
retirement. Under current law 20% is the maximum rate of tax on long term
capital gains on most capital assets held by an individual for more than 18
months and 28% is the maximum rate of tax on most capital assets held by an
individual more than one year and up to 18 months.
20
<PAGE> 24
CONVERSION OF THE NOTES
A Holder generally will not recognize any income, gain or loss upon
conversion of a Note into Common Stock, except with respect to cash received in
lieu of a fractional share of Common Stock or attributable to accrued interest
on the converted Note. Such Holder's tax basis in the Common Stock received on
conversion of a Note will be the same as such Holder's adjusted tax basis in
the converted portion of the Note at the time of conversion (reduced by any
basis allocable to a fractional share interest), and the holding period for the
Common Stock received on conversion will generally include the holding period
of the portion of the Note converted.
Cash received in lieu of a fractional share of Common Stock upon conversion
will be treated as a payment in exchange for the fractional share of Common
Stock and thus generally will result in capital gain or loss (measured by the
difference between the cash received for the fractional share and the Holder's
adjusted tax basis in the fractional share).
SALE OF COMMON STOCK
Upon the sale or exchange of Common Stock, a Holder generally will
recognize capital gain or loss equal to the difference between (i) the amount of
cash and the fair market value of any property received upon the sale or
exchange and (ii) such Holder's adjusted tax basis in the Common Stock. Such
capital gain or loss will be long-term if the individual Holder's holding period
for the Common Stock is more than eighteen months at the time of the sale or
exchange. In 1997, legislation was enacted which, among other things, reduces to
20% the maximum rate of tax on long term capital gains on most capital assets
held by an individual for more than 18 months and under which gain on most
capital assets held by an individual more than one year and up to 18 months is
subject to tax at a maximum rate of 28%. Capital gain recognized by a corporate
Holder will continue to be subject to tax at ordinary income tax rates
applicable to corporations.
LIQUIDATED DAMAGES
Any Liquidated Damages resulting from the contingencies described in the
"Description of Notes-- Registration Rights; Liquidated Damages" will be
includable as ordinary income by each holder.
SELLING SECURITYHOLDERS
The Notes were originally acquired from the Company by Donaldson, Lufkin
& Jenrette on May 8, 1998. Donaldson, Lufkin & Jenrette has advised the
Company that it resold the Notes in transactions exempt from the registration
requirements of the Securities Act to "qualified institutional buyers" (as
defined in Rule 144A of the Securities Act). These subsequent purchasers, or
their transferees, pledgees, donees or successors, may from time to time offer
and sell any or all of the Notes and/or Shares pursuant to this Prospectus
provided that they are named herein as Selling Securityholders.
The Notes and the Shares are being registered pursuant to the Registration
Rights Agreement, which provides that the Company file the Shelf Registration
Statement with regard to the Notes and the Shares within 60 days of the date of
original issuance of the Notes and use its reasonable best efforts to cause
such Shelf Registration Statement to become effective within 120 days of the
original issuance of the Notes and to keep such Shelf Registration Statement
continuously effective until the earlier of such date that is two years after
the latest date of initial issuance of the Notes, or the date when all Transfer
Restricted Securities covered by such Shelf Registration Statement have been
sold pursuant thereto or there cease to be outstanding any Transfer Restricted
Securities. Although none of the Selling Securityholders has advised the
Company that it currently intends to sell all or any of the Notes or Shares
pursuant to this Prospectus, the Selling Securityholders may choose to sell the
Notes and/or Shares from time to time upon notice to the Company. See "Plan of
Distribution."
Prior to any use of this Prospectus in connection with an offering of the
Notes and/or Shares, this Prospectus will be supplemented to set forth the name
and number of shares beneficially owned by the Selling Securityholder intending
to sell such Notes and/or Shares and the number of Notes and/or Shares to be
offered. The Prospectus Supplement will also disclose whether any Selling
Securityholder selling in connection with such Prospectus Supplement has held
any position or office with, been employed by or otherwise has had a material
relationship with, the Company or any of its affiliates during the three years
prior to the date of the Prospectus Supplement.
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<PAGE> 25
PLAN OF DISTRIBUTION
The Notes and the Shares are being registered to permit public secondary
trading of such securities by the holders thereof from time to time after the
date of this Prospectus. The Company has agreed, among other things, to bear
all expenses (other than underwriting discounts and selling commissions) in
connection with the registration and sale of the Notes and the Shares covered
by this Prospectus.
The Company will not receive any of the proceeds from the offering of
Notes or the Shares by the Selling Securityholders. The Company has been
advised by the Selling Securityholders that the Selling Securityholders may
sell all or a portion of the Notes and Shares beneficially owned by them and
offered hereby from time to time on any exchange on which the securities are
listed on terms to be determined at the times of such sales. The Selling
Securityholders may also make private sales directly or through a broker or
brokers. Alternatively, any of the Selling Securityholders may from time to
time offer the Notes or the Shares beneficially owned by them through
underwriters, dealers or agents, who may receive compensation in the form of
underwriting discounts, commissions or concessions from the Selling
Securityholders and the purchasers of the Notes or Shares for whom they may act
as agent. The aggregate proceeds to the Selling Securityholders from the sale
of the Notes or Shares offered by them hereby will be the purchase price of
such Notes or Shares less discounts and commissions, if any. The Notes and the
Shares may be sold from time to time in one or more transactions at fixed
offering prices, which may be changed, or at varying prices determined at the
time of sale or at negotiated prices. Such prices will be determined by the
holders of such securities or by agreement between such holders and
underwriters or dealers who may receive fees or commissions in connection
therewith.
The outstanding Common Stock is listed for trading on the Nasdaq National
Market, and the Shares have been approved for listing on the Nasdaq National
Market. Although the Company has been advised by Donaldson, Lufkin & Jenrette
that it is currently making a market in the Notes, it is not obligated to do so
and may discontinue such market making at any time without notice.
Accordingly, there can be no assurance that any market for the Notes will be
maintained. The Company is, however, applying for listing the Notes on the
Nasdaq National Market. See "Investment Considerations- Lack of Public
Market."
The Selling Securityholders and any broker and any broker-dealers, agents
or underwriters that participate with the Selling Securityholders in the
distribution of the Notes or the Shares may be deemed to be "underwriters"
within the meaning of the Securities Act, in which event any commissions
received by such broker-dealers, agents or underwriters and any profit on the
resale of the Notes or the Shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
In addition, any securities covered by this Prospectus which qualify for
sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under
Rule 144 or Rule 144A rather than pursuant to this Prospectus. There is no
assurance that any Selling Securityholder will sell any or all of the Notes or
Shares described herein, and any Selling Securityholder may transfer, devise or
gift such securities by other means not described herein.
The Notes were initially issued and sold in transactions exempt from the
registration requirements of the Securities Act to persons reasonably believed
by Donaldson, Lufkin & Jenrette to be "qualified institutional buyers" (as
defined in Rule 144A under the Securities Act) or institutional "accredited
investors" (as defined in Rule 510(a)(1), (2), (3) or (7) under the Securities
Act). Pursuant to the Registration Rights Agreement, the Company has agreed to
indemnify Donaldson, Lufkin & Jenrette and each Selling Securityholder, and
each Selling Securityholder has agreed to indemnify the Company, Donaldson,
Lufkin & Jenrette and each other Selling Stockholder against certain
liabilities arising under the Securities Act.
The Company has agreed to use its reasonable best efforts to cause the
Shelf Registration Statement to which this Prospectus relates to become
effective within 120 days of the original issuance of the Notes and to use its
reasonable best efforts to keep the Shelf Registration Statement effective for
a period of two years from the effective date thereof, or until the Shelf
Registration is no longer required for transfer of the Notes or the Shares.
The Company may prohibit offers and sales of Notes and Shares pursuant to the
Shelf Registration Statement to which this Prospectus relates at any time if
(A)(i) the Company is in possession of material non-public information relating
to the Company, (ii) the Company determines (based on advice of counsel) that
such prohibition is necessary in order to avoid a requirement to disclose such
material non-public information to the public and (iii) the Company determines
in good faith that public disclosure of such material non-public information
would not be in the best interests of the Company and its stockholders, or
(B)(i) the Company has made a public announcement relating to an acquisition or
business combination transaction including the Company and/or one or more of
its subsidiaries that is material to the Company and its subsidiaries taken as
a whole and (ii) the Company determines in good faith that (x) offers and sales
of Transfer Restricted Securities pursuant to the Shelf Registration prior to
the consummation of such transaction (or such earlier date as the Company shall
determine) is not in the best interests of the Company
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<PAGE> 26
and its stockholders or (y) it would be impracticable at the time to obtain any
financial statements relating to such acquisition or business combination
transaction that would be required to be set forth in the Shelf Registration.
Expenses of preparing and filing the Shelf Registration Statement to which this
Prospectus relates and all post-effective amendments thereto will be borne by
the Company.
EXPERTS
The consolidated financial statements of ANTEC Corporation at December 31,
1996 and 1997 and for each of the three years in the period ended December 31,
1997 incorporated by reference in this Prospectus have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report incorporated
herein by reference, which as to the years 1995 and 1996 is based in part on
the report of KPMG Peat Marwick, independent auditors.
LEGAL MATTERS
Certain legal matters with respect to the legality of the issuance of the Notes
and Shares offered hereby will be passed upon for the Company by Schiff Hardin
& Waite, Chicago, Illinois.
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<PAGE> 27
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE COMPANY SINCE THAT DATE.
_______________
TABLE OF CONTENTS
PAGE
Available Information................................................... 1
Incorporation of Certain Information
by Reference.......................................................... 1
The Company............................................................. 2
Investment Considerations............................................... 3
Use of Proceeds......................................................... 6
Ratio of Earnings to Fixed Charges...................................... 7
Description of Notes.................................................... 7
Description of Capital Stock............................................ 19
Certain United States Income Tax
Considerations........................................................ 20
Selling Securityholders................................................. 21
Plan of Distribution.................................................... 22
Experts................................................................. 23
Legal Matters........................................................... 23
24
<PAGE> 28
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses in connection with the
issuance of the securities being registered. All of the amounts shown are
estimates except the SEC registration fee. Such expenses will be borne by the
Company.
The following table sets forth all expenses in connection with the distribution
of the Securities being registered. All amounts shown below are estimates,
except the registration fee:
<TABLE>
<CAPTION>
Amount
------
<S> <C>
Registration fee of Securities and Exchange Commission $33,925
NASDAQ Additional Share listing 17,500
Legal fees and expenses 7,500
Accountants' fees and expenses 5,000
Trustee's fees and expenses 5,000
Printing fees 500
Miscellaneous expenses 2,075
-------
Total $71,500
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law empowers a Delaware
corporation to indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of such corporation) by reason of the fact
that such person is or was a director, officer, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. A
corporation may indemnify such person against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
such person acted in good faith and in a manner such person 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 such person's conduct was unlawful. A Delaware corporation may
indemnify officers and directors in an action by or in the right of the
corporation to procure a judgment in its favor under the same conditions,
except that no indemnification is permitted without judicial approval if the
officer or director is adjudged to be liable to the corporation. Where a
present or former officer or director is successful on the merits or otherwise
in the defense of any action referred to above, the corporation must indemnify
such person against the expenses (including attorneys' fees) which such person
actually and reasonably incurred in connection therewith. The indemnification
provided is not deemed to be exclusive of any other rights to which an officer
or director may be entitled under any corporation's by-laws, agreement, vote or
otherwise.
ITEM 16. EXHIBITS
4.1 Form of Note (included in Exhibit 4.2)
4.2* Indenture between the Registrant and the Trustee dated as of May 8,
1998
4.3 Registration Rights Agreement dated as of May 8, 1998 between the
Registrant and Donaldson, Lufkin and Jenrette Securities
Corporation, and the Company
5.1 Opinion of Schiff Hardin & Waite
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<PAGE> 29
10.1 Credit Agreement
10.2 Purchase Agreement
12.1 Computation of Ratio of Earnings to Fixed Charges
23.1 Consent of Ernst and Young LLP
23.2 Consent of Counsel (included in Exhibit 5.1)
24.1 Powers of Attorney (included on signature page)
25.1 Statement of Eligibility of Trustee (Form T-1)
_____________
* Incorporated by reference to ANTEC Corporation's quarterly report on Form
10-Q for the quarterly period ended March 31, 1998, filed May 14, 1998, as
exhibit 10.28.
ITEM 17. UNDERTAKINGS
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 registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement; provided,
however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purposes of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
The undersigned Registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Act of 1934)
that is incorporated by reference in this Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
26
<PAGE> 30
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether such indemnification by it
is against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
27
<PAGE> 31
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has duly caused this Form S-3 Registration Statement to be
signed on its behalf by the undersigned thereunto duly authorized, in the City
of Norcross, and the State of Georgia, on the 30th day of June, 1998.
ANTEC CORPORATION
By: /s/ John M. Egan
----------------------
John M. Egan, Chairman,
Chief Executive Officer
and Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on June 30, 1998.
/s/ John M. Egan /s/ Lawrence A. Margolis
------------------------------- ------------------------------
John M. Egan Lawrence A. Margolis
Chairman, Chief Executive Executive Vice President, Chief
Officer and Director Financial Officer and Secretary
(Principal Executive Officer) (Principal Financial Officer)
/s/ Daniel Distel /s/ Rod F. Dammeyer
------------------------------ ------------------------------
Daniel Distel, Rod F. Dammeyer,
Vice President and Controller Vice Chairman, Director
(Principal Accounting Officer)
/s/ Robert J. Stanzione
------------------------------ ------------------------
Robert J. Stanzione, Ian Craig, Director
President, Chief Operating
Officer and Director
/s/ James L. Faust /s/ William H. Lambert
------------------------------- -------------------------------
James L. Faust, Director William H. Lambert, Director
/s/ John R. Petty /s/ Bill Schleyer
------------------------------ ------------------------
John R. Petty, Director Bill Schleyer, Director
/s/ Samuel K. Skinner
------------------------------- -------------------------------
Samuel K. Skinner, Director Bruce Van Wagner, Director
28
<PAGE> 32
POWER OF ATTORNEY
Each person whose signature appears above authorizes John M. Egan,
Lawrence A. Margolis or James E. Knox, severally, to execute in the name of
each such person, and file, any amendment to this Registration Statement
necessary or advisable to enable the registrant to comply with the Securities
Act of 1933, as amended, and any rules, regulations and requirements of the
Securities and Exchange Commission in respect thereof, in connection with the
registration of the securities which are the subject hereof, which amendment
may make such changes herein as either of the above-named attorneys deems
appropriate.
29
<PAGE> 1
Exhibit 4.3
4 1/2 % CONVERTIBLE SUBORDINATED NOTES DUE 2003
REGISTRATION RIGHTS AGREEMENT
DATED AS OF MAY 8, 1998
BY AND AMONG
ANTEC CORPORATION
AS THE COMPANY
AND
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION,
AS INITIAL PURCHASER
<PAGE> 2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is made and entered into as of May 8,
1998, by and among ANTEC Corporation, a Delaware corporation (the "Company"),
and Donaldson, Lufkin & Jenrette Securities Corporation, (the "Initial
Purchaser").
This Agreement is made pursuant to the Purchase Agreement, dated May 5,
1998, by and among the Company and the Initial Purchaser (the "Purchase
Agreement"). In order to induce the Initial Purchaser to enter into the
Purchase Agreement, the Company has agreed to provide the registration rights
provided for in this Agreement to the Initial Purchaser and its direct and
indirect transferees. The execution and delivery of this Agreement is a
condition to the closing of the transactions contemplated by the Purchase
Agreement.
The parties hereby agree as follows:
15. Definitions
As used in this Agreement, the following terms shall have the following
meanings:
Affiliate: As defined in Rule 144 of the Securities Act.
Agreement: This Registration Rights Agreement, as the same may be
amended, supplemented or modified from time to time in accordance with the terms
hereof.
Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday that
is not a day on which banking institutions in New York, New York are authorized
or obligated by law or executive order to close.
Closing Date: The Closing Date as defined in the Purchase Agreement.
Common Stock: Common Stock, par value $.01 per share, of the Company.
Commission: The Securities and Exchange Commission.
Company: ANTEC Corporation, a Delaware corporation, and any successor
corporation thereto.
controlling person: As defined in Section 6(a) hereof.
Damage Payment Date: Each of the semi-annual interest payment dates
provided in the Indenture.
Effectiveness Period: As defined in Section 2(a) hereof.
Effectiveness Target Date: The 120th day following the Closing Date.
<PAGE> 3
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated by the SEC thereunder.
Exempt Resales: The transactions in which the Initial Purchaser
proposes to sell the Notes to certain "qualified institutional buyers" as such
term is defined in Rule 144A of the Act.
Filing Date: The 60th day after the Closing Date.
Holder: Each registered holder of any Transfer Restricted Securities.
Indemnified Person: As defined in Section 6(a) hereof.
Indenture: The Indenture, dated the date hereof, between the Company
and the Trustee thereunder, pursuant to which the Notes are being issued, as
amended, modified or supplemented from time to time in accordance with the terms
thereof.
Liquidated Damages: As defined in Section 3(a) hereof.
Notes: The 4 1/2% Convertible Subordinated Notes due 2003 of the
Company issued pursuant to the Indenture (including any such Notes issued
pursuant to the exercise of the over-allotment option provided in the Purchase
Agreement).
Proceeding: An action, claim, suit or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated pursuant to the Securities
Act), as amended or supplemented by any prospectus supplement, with respect to
the terms of the offering of any portion of the Transfer Restricted Securities
covered by such Registration Statement, and all other amendments and supplements
to any such prospectus, including post-effective amendments, and all material
incorporated by reference or deemed to be incorporated by reference, if any, in
such prospectus.
Initial Purchaser: As defined in the preamble hereof.
Registration Default: As defined in Section 3(a) hereof.
Registration Statement: Any registration statement of the Company that
covers any of the Transfer Restricted Securities pursuant to the provisions of
this Agreement, including the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference, if any, in such registration statement.
Rule 144: Rule 144 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
<PAGE> 4
Rule 144A: Rule 144A promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 158: Rule 158 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 174: Rule 174 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 415: Rule 415 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 424: Rule 424 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
SEC: The Securities and Exchange Commission.
Securities Act or Act: The Securities Act of 1933, as amended, and the
rules and regulations promulgated by the SEC thereunder.
Shelf Registration: As defined in Section 2 hereof.
Special Counsel: Any special counsel to the holders of Transfer
Restricted Securities, for which holders of Transfer Restricted Securities will
be reimbursed pursuant to Section 5(b) hereof.
TIA: The Trust Indenture Act of 1939, as amended.
Transfer Restricted Securities: The Notes and the shares of Common
Stock into which the Notes are convertible, upon original issuance thereof, and
at all times subsequent thereto, until, in the case of any such Note or share
the earlier of, (i) the date on which it has been registered effectively
pursuant to the Securities Act and disposed of in accordance with the
Registration Statement relating to it, (ii) the date on which either such Note
or the shares of Common Stock issued upon conversion of such Note are
distributed to the public pursuant to Rule 144 or are saleable pursuant to Rule
144(k) or (iii) the date on which such security cease to be outstanding.
Trustee: The Bank of New York, the trustee under the Indenture.
underwritten registration or underwritten offering: A registration in
connection with which securities of the Company are sold to an underwriter for
reoffering to the public pursuant to an effective Registration Statement.
<PAGE> 5
16. Shelf Registration
(a) The Company shall mail as soon as practicable a questionnaire (the
"Questionnaire"), soliciting the information required by Items 507 and 508 of
Regulation S-K, to each of the Holders, and shall deliver a copy of such
Questionnaire to any Holder who so requests. As a condition to any Holder's
Transfer Restricted Securities being included in the Registration Statement
referred to below, such Holder shall submit a Questionnaire and shall amend and
submit to the Company a revised Questionnaire any time the information contained
therein ceases to be accurate and complete. The Company agrees to file with the
SEC on or prior to the Filing Date, a Registration Statement (the "Shelf
Registration") for an offering to be made on a continuous basis pursuant to Rule
415 covering all of the Transfer Restricted Securities held by Holders. Holders
shall be included as selling securityholders in such Registration Statement no
earlier than twenty days after they have fully completed and returned to the
Company the Questionnaire. The Shelf Registration shall be on Form S-3 under
the Securities Act or another appropriate form permitting registration of such
Transfer Restricted Securities for resale by the Holders in the manner or
manners reasonably designated by them (including, without limitation, one or
more underwritten offerings). The Company shall use its reasonable best
efforts, as described in Section 4, to cause the Shelf Registration to be
declared effective pursuant to the Securities Act on or prior to the
Effectiveness Target Date, and to keep the Shelf Registration continuously
effective under the Securities Act for 24 months after the latest date of
initial issuance of the Notes (the "Effectiveness Period"), or such shorter
period ending when either (l) all Transfer Restricted Securities covered by the
Shelf Registration have been sold in the manner set forth and as contemplated in
the Shelf Registration or (2) there cease to be outstanding any Transfer
Restricted Securities.
(b) The Company shall use all reasonable efforts to keep the Shelf
Registration continuously effective, for the period described in Section 2(a)
hereof, by supplementing and amending the Shelf Registration if required by the
rules, regulations or instructions applicable to the registration form used for
such Shelf Registration, if required by the Securities Act or if reasonably
requested by the holders of a majority in amount of the Transfer Restricted
Securities (determined on a fully converted basis) covered by such Registration
Statement or by any underwriter of such Transfer Restricted Securities.
(c) Notwithstanding anything to the contrary in this Section 2, but
subject to compliance with Section 3, the Company may, by delivering written
notice to the Holders, prohibit offers and sales of Transfer Restricted
Securities pursuant to the Shelf Registration at any time if (A)(i) the Company
is in possession of material non-public information relating to the Company,
(ii) the Company determines (based on advice of counsel) that such prohibition
is necessary in order to avoid a requirement to disclose such material
non-public information to the public and (iii) the Company determines in good
faith that public disclosure of such material non-public information would not
be in the best interests of the Company and its stockholders, or (B)(i) the
Company has made a public announcement relating to an acquisition or business
combination transaction including the Company and/or one or more of its
subsidiaries that is material to the Company and its subsidiaries taken as a
whole and (ii) the Company determines in good faith that (x) offers and sales of
Transfer Restricted Securities pursuant to the Shelf Registration prior to the
consummation of such transaction (or such earlier date as the Company shall
determine) is not in the best interests of the Company and its stockholders or
(y) it would be impracticable at the time to obtain any financial statements
relating to such acquisition or business combination transaction that would be
required to be set forth in the Shelf Registration; provided, however, that upon
(i) the public disclosure by the Company of the material non-public information
described in clause (A) of this paragraph or (ii) the
<PAGE> 6
consummation, abandonment or termination of, or the availability of the required
financial statements with respect to, a transaction described in clause (B) of
this paragraph, the suspension of the use of the Shelf Registration pursuant to
this Section 2(c) shall cease and the Company shall promptly comply with Section
4(b) hereof and notify Holders that dispositions of Transfer Restricted
Securities may be resumed.
17. Liquidated Damages
(a) The Company and the Initial Purchaser agree that the Holders of
Transfer Restricted Securities will suffer damages if the Company fails to
fulfill its obligations pursuant to Sections 2 and 4(b) hereof and that it would
not be possible to ascertain the extent of such damages. Accordingly, in the
event of such failure by the Company to fulfill such obligations, the Company
hereby agrees to pay liquidated damages ("Liquidated Damages") to each Holder of
Transfer Restricted Securities under the circumstances and to the extent set
forth below.
If (i) the Shelf Registration has not been filed with the SEC on or
prior to the Filing Date; or (ii) the Shelf Registration is not declared
effective by the SEC on or prior to the Effectiveness Target Date; or (iii) the
Shelf Registration has been declared effective by the SEC and such Shelf
Registration ceases to be effective or the Prospectus contained herein ceases to
be usable (including as a result of a prohibition against sales of Transfer
Restricted Securities pursuant to Section 2(c) hereof or a suspension of the use
of the Prospectus as described in the last paragraph of Section 4 hereof) at any
time during the Effectiveness Period for a period of time which shall exceed 90
days in the aggregate during any 365-day period (any of the foregoing, a
"Registration Default"), then the Company shall pay Liquidated Damages in cash
to each Holder of Transfer Restricted Securities immediately following the
occurrence of such Registration Default in an amount equal to $.05 per week per
$1,000 principal amount of Notes and, if applicable, $0.0012 per week per share
(subject to adjustment in the event of stock splits, stock recombinations, stock
dividends and the like) of Common Stock, constituting Transfer Restricted
Securities held by such Holder for each week or portion thereof that the
Registration Default continues. The amount of such Liquidated Damages will
increase by an additional $.05 per week per $1,000 principal amount of Notes
and, if applicable, $0.0012 per week per share (subject to adjustment as set
forth above) of Common Stock constituting Transfer Restricted Securities for
each subsequent 90-day period until all Registration Defaults have been cured;
provided, however, that Liquidated Damages shall not at any time exceed $.25 per
week per $1,000 principal amount of Notes or $0.006 per week per share (subject
to adjustment as set forth above) of Common Stock constituting Transfer
Restricted Securities. Following the cure of all Registration Defaults relating
to any Transfer Restricted Securities, the accrual of Liquidated Damages with
respect to such Transfer Restricted Securities will cease. A Registration
Default under clause (i) above shall be cured on the date that the Shelf
Registration is filed with the SEC; a Registration Default under clause (ii)
above shall be cured on the date that the Shelf Registration is declared
effective by the SEC; and a Registration Default under clause (iii) above shall
be cured on the date the Shelf Registration is declared effective or the
Prospectus contained therein again becomes usable consistent with applicable
law.
(b) The Company shall notify the Trustee as promptly as possible, but
in no event more than three Business Days after each and every date on which a
Registration Default occurs. Liquidated Damages shall be paid on each Payment
Date by the Company to the Holders of Transfer Restricted Securities as of the
immediately preceding Record Date (as defined in the Indenture) in the same
manner interest is paid to Holders of Notes pursuant to the Indenture. Each
obligation to pay Liquidated Damages shall be deemed to commence accruing on the
date of the applicable Registration Default and to cease accruing when all
Registration Defaults have been cured. In no event shall the Company pay
Liquidated
<PAGE> 7
Damages in excess of the applicable maximum weekly amount set forth above,
regardless of whether one or multiple Registration Defaults exist (e.g., subject
to increase as set forth above for each subsequent 90-day period, Liquidated
Damages shall equal $.05 per week per $1,000 principal amount of Notes during
the first 90-day period immediately following the occurrence of the first
Registration Default regardless of whether additional Registration Defaults
occur during such 90-day period).
18. Registration Procedures
In connection with the Company's registration obligations hereunder, the
Company shall use its reasonable best efforts to effect such registrations on
the appropriate form available for the sale of the Transfer Restricted
Securities to permit the sale of Transfer Restricted Securities in accordance
with the method or methods of disposition thereof (including, without
limitation, one or more underwritten offerings) specified by the holders of a
majority in amount of Transfer Restricted Securities (determined on a fully
converted basis), and pursuant thereto the Company shall as expeditiously as
possible:
(a) No fewer than five Business Days prior to the initial filing of a
Registration Statement or Prospectus and no fewer than two Business Days prior
to the filing of any amendment or supplement thereto (including, following its
filing with the Commission, any document that would be incorporated or deemed to
be incorporated therein by reference), furnish to the Holders of the Transfer
Restricted Securities, their Special Counsel and the managing underwriters, if
any, copies of all such documents proposed to be filed, which documents (other
than those incorporated or deemed to be incorporated by reference) will be
subject to the review and comment of such Holders, their Special Counsel and
such underwriters, if any, for a period of at least five Business Days and cause
the officers and directors of the Company, counsel to the Company and
independent certified public accountants to the Company to respond to such
inquiries as shall be necessary in connection with such Registration Statement,
in the opinion of respective counsel to such Holders and such underwriters, to
conduct a reasonable investigation within the meaning of the Securities Act.
The Company shall not file any such Registration Statement or related Prospectus
or any amendments or supplements thereto (other than any document that would be
incorporated or deemed to be incorporated in the Registration Statement by
reference) to which the Holders of a majority of the Transfer Restricted
Securities (determined on a fully converted basis), their Special Counsel, or
the managing underwriters, if any, shall reasonably object on a timely basis;
provided that the Company may assume, for the purposes of this subparagraph (a),
that objections to the inclusion of information specifically requested to be
included in the Registration Statement by the staff of the SEC, or in the
opinion of counsel to the Company required to be in the Registration Statement,
or specifically required by the Securities Act or other applicable law, shall
not be deemed to be reasonable; and provided further, that the Company shall not
be permitted to include in the Registration Statement any securities other than
the Transfer Restricted Securities;
(b) Prepare and file with the SEC such amendments, including
post-effective amendments, to each Registration Statement as may be necessary to
keep such Registration Statement continuously effective for the applicable time
period; cause, subject to Section 2(c) hereof, the related Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424; and comply with the provisions of the Securities Act
and the Exchange Act with respect to the disposition of all securities covered
by such Registration Statement during such period in accordance with the
intended methods of disposition by the sellers thereof set forth in such
Registration Statement as so amended or in such Prospectus as so supplemented;
<PAGE> 8
(c) Notify the Holders of Transfer Restricted Securities to be sold or
their Special Counsel and the managing underwriters, if any, promptly, and (if
requested by any such person) confirm such notice in writing, (i)(A) when a
Prospectus or any Prospectus supplement or post-effective amendment is proposed
to be filed, and (B) with respect to a Registration Statement or any
post-effective amendment, when the same has become effective, (ii) of any
request by the SEC or any other Federal or state governmental authority for
amendments or supplements to a Registration Statement or Prospectus or for
additional information, (iii) of the issuance by the SEC, any state securities
commission, any other governmental agency or any court of any stop order, order
or injunction suspending or enjoining the use or the effectiveness of a
Registration Statement or the initiation of any Proceeding for that purpose,
(iv) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Transfer Restricted Securities for sale in any jurisdiction, or the initiation
or threatening of any Proceeding for such purpose, and (v) of the happening of
any event that makes any statement made in such Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in such Registration Statement, Prospectus or documents so that, in the
case of the Registration Statement, it will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, not misleading, and that, in the
case of the Prospectus, it will not contain any untrue statement of a material
fact or omit to state any 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;
(d) Use all reasonable efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of any order enjoining or suspending the use or
effectiveness of a Registration Statement or the lifting of any suspension of
the qualification (or exemption from qualification) of any of the Transfer
Restricted Securities for sale in any jurisdiction, at the earliest practicable
moment;
(e) If requested by the managing underwriters, if any, or the Holders
of a majority in amount of the Transfer Restricted Securities (determined on a
fully converted basis) being sold in connection with such offering, (i) promptly
incorporate in a Prospectus supplement or post-effective amendment such
information as the managing underwriters, if any, and such Holders agree should
be included therein relating to the terms of the sale of the Transfer Restricted
Securities of such Holder in the Prospectus, including, without limitation,
information relating to the "Plan of Distribution" of the Transfer Restricted
Securities and (ii) make all required filings of such Prospectus supplement or
such post-effective amendment as soon as practicable after the Company has
received notification of the matters to be incorporated in such Prospectus
supplement or post-effective amendment; provided, however, that the Company
shall not be required to take any action pursuant to this Section 4(e) that
would, in the opinion of counsel for the Company, violate applicable law;
(f) Furnish to each Holder of Transfer Restricted Securities, their
Special Counsel and each managing underwriter, if any, without charge, at least
one conformed copy of each Registration Statement and each amendment thereto,
including financial statements (but excluding schedules, all documents
incorporated or deemed to be incorporated therein by reference and all exhibits,
unless reasonably requested in writing by such Holder, counsel or managing
underwriter);
(g) Deliver to each Holder of Transfer Restricted Securities, their
Special Counsel, and the underwriters, if any, without charge, as many copies of
the Prospectus or Prospectuses (including each form of prospectus) and each
amendment or supplement thereto as such persons reasonably request; and the
<PAGE> 9
Company hereby consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Holders of Transfer Restricted
Securities and the underwriters, if any, in connection with the offering and
sale of the Transfer Restricted Securities covered by such Prospectus and any
amendment or supplement thereto;
(h) Prior to any public offering of Transfer Restricted Securities, use
all reasonable efforts to register or qualify or cooperate with the Holders of
Transfer Restricted Securities to be sold, the underwriters, if any, and their
respective counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Transfer Restricted
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder or underwriter reasonably
requests in writing; use all reasonable efforts to keep each such registration
or qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective and use all reasonable
efforts to do any and all other acts or things necessary or advisable to enable
the disposition in such jurisdictions of the Transfer Restricted Securities
covered by the Registration Statement; provided, however, that the Company shall
not be required to qualify generally to do business in any jurisdiction where it
is not then so qualified or to take any action that would subject it to general
service of process in any such jurisdiction where it is not then so subject or
subject the Company to any tax in any such jurisdiction where it is not then so
subject;
(i) In connection with any sale or transfer of Transfer Restricted
Securities that will result in such securities no longer being Transfer
Restricted Securities, cooperate with the Holders and the managing underwriters,
if any, to facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold, which certificates shall
not bear any restrictive legends and shall be in a form eligible for deposit
with The Depository Trust Company and to enable such Transfer Restricted
Securities to be in such denominations and registered in such names as the
managing underwriters, if any, or Holders may request at least two Business Days
prior to any sale of Transfer Restricted Securities;
(j) Use all reasonable efforts to cause the offering of the Transfer
Restricted Securities covered by the Registration Statement to be registered
with or approved by such other governmental agencies or authorities within the
United States as may require such registration or approval, except as may be
required as a consequence of the nature of such selling Holder's business, in
which case the Company will cooperate in all reasonable respects with the filing
of such Registration Statement and the granting of such approvals as may be
necessary to enable the seller or sellers thereof or the underwriters, if any,
to consummate the disposition of such Transfer Restricted Securities; provided,
however, that the Company shall not be required to register the Transfer
Restricted Securities in any jurisdiction that would subject it to general
service of process in any such jurisdiction where it is not then so subject or
subject the Company to any tax in any such jurisdiction where it is not then so
subject or to require the Company to qualify to do business in any jurisdiction
where it is not then so qualified;
(k) Upon the occurrence of any event contemplated by Section 4(c)(vi)
hereof, as promptly as practicable, prepare a supplement or amendment,
including, if appropriate, a post-effective amendment, to each Registration
Statement or a supplement to the related Prospectus or any document incorporated
or deemed to be incorporated therein by reference, and file any other required
document so that, as thereafter delivered, such Prospectus will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
<PAGE> 10
(l) Prior to the effective date of the first Registration Statement
relating to the Transfer Restricted Securities, to provide a CUSIP number for
the Transfer Restricted Securities;
(m) Enter into such agreements (including an underwriting agreement in
form, scope and substance as is customary in underwritten offerings) and take
all such other reasonable actions in connection therewith (including those
reasonably requested by the managing underwriters, if any, or the Holders of a
majority in amount of the Transfer Restricted Securities being sold (determined
on a fully converted basis)) in order to expedite or facilitate the disposition
of such Transfer Restricted Securities, and, in such connection, if an
underwriting agreement is entered into, (i) make such representations and
warranties to the underwriters with respect to the business of the Company and
its subsidiaries (including with respect to businesses or assets acquired or to
be acquired by any of them), and the Registration Statement, Prospectus and
documents, if any, incorporated or deemed to be incorporated by reference
therein, in each case, in form, substance and scope as are customarily made by
issuers to underwriters in underwritten offerings, and confirm the same if and
when requested; (ii) use all reasonable efforts to obtain opinions of counsel to
the Company and updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the managing underwriters, if
any), addressed to each of the underwriters, covering the matters customarily
covered in opinions requested in underwritten offerings and such other matters
as may be reasonably requested by the underwriters; (iii) use all reasonable
efforts to obtain customary "cold comfort" letters and updates thereof from the
independent certified public accountants of the Company (and, if necessary, any
other independent certified public accountants of any subsidiary of the Company
or of any business acquired by the Company for which financial statements and
financial data is, or is required to be, included in the Registration
Statement), addressed (where reasonably possible) to each selling Holder of
Transfer Restricted Securities and each of the underwriters, such letters to be
in customary form and covering matters of the type customarily covered in "cold
comfort" letters in connection with underwritten offerings; (iv) the
underwriting agreement shall contain indemnification provisions and procedures
no less favorable to the selling Holders of Transfer Restricted Securities and
the underwriters than those set forth in Section 6 hereof (or such other
provisions and procedures acceptable to Holders of a majority in amount of the
Transfer Restricted Securities (determined on a fully converted basis) covered
by such Registration Statement and the managing underwriters); and (v) deliver
such documents and certificates as may be reasonably requested by the managing
underwriters, if any, to evidence the continued validity of the representations
and warranties made pursuant to clause (i) of this Section 4(m) and to evidence
compliance with any customary conditions contained in the underwriting
agreement;
(n) Make available for inspection by a representative of the Holders of
not less than a majority of the Transfer Restricted Securities (determined on a
fully converted basis) being sold, any underwriter participating in any such
disposition of Transfer Restricted Securities, if any, and any Special Counsel,
consultant or accountant retained by such selling Holders or underwriter, at the
offices where normally kept, during reasonable business hours, all financial and
other records, pertinent corporate documents and properties of the Company and
its subsidiaries as they may reasonably request (including with respect to
businesses and assets acquired or to be acquired to the extent that such
information is available to the Company), and cause the officers, directors,
agents and employees of the Company and its subsidiaries (including with respect
to businesses and assets acquired or to be acquired to the extent that such
information is available to the Company) to supply all information in each case
reasonably requested by any such representative, underwriter, attorney,
consultant or accountant in connection with such Registration Statement,
provided, however, that such persons shall first agree in writing with the
Company that any information that is reasonably and in good faith designated by
the Company in writing as confidential at the time of delivery of such
information shall be kept confidential by such persons, unless (i) disclosure of
such
<PAGE> 11
information is required by court or administrative order or is necessary to
respond to inquiries of regulatory authorities, (ii) disclosure of such
information is required by law (including any disclosure requirements pursuant
to Federal securities laws in connection with the filing of any Registration
Statement or the use of any Prospectus referred to in this Agreement), (iii)
such information becomes generally available to the public other than as a
result of a disclosure or failure to safeguard by any such person or (iv) such
information becomes available to any such person, from a source other than the
Company and such source is not bound by a confidentiality obligation;
(o) Cause the Indenture to be qualified under the TIA not later than
the effective date of the first Registration Statement relating to the Transfer
Restricted Securities; and in connection therewith, cooperate with the trustee
under the Indenture and the holders of the Transfer Restricted Securities 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 its
reasonable best efforts to cause such trustee to execute, all customary
documents as may be required to effect such changes, and all other forms and
documents required to be filed with the SEC to enable the Indenture to be so
qualified in a timely manner;
(p) Comply with applicable rules and regulations of the SEC and make
generally available to its security holders earning statements satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158, no later than 45
days after the end of any 12-month period (or 90 days after the end of any
12-month period if such period is a fiscal year) (i) commencing at the end of
any fiscal quarter in which Transfer Restricted Securities are sold to
underwriters in a firm commitment or reasonable efforts underwritten offering
and (ii) if not sold to underwriters in such an offering, commencing on the
first day of the first fiscal quarter after the effective date of a Registration
Statement, which statement shall cover said period, consistent with the
requirements of Rule 158; and
(q) Use all reasonable efforts to (i) list all shares of Common Stock
covered by such Shelf Registration Statement on any securities exchange on which
the Common Stock is then listed or (ii) authorize for quotation on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") or the
National Market System of NASDAQ all shares of Common Stock covered by such
Shelf Registration Statement if any of the Company's Common Stock is then so
authorized for quotation.
The Company may require each seller of Transfer Restricted Securities as
to which any registration is being effected to furnish to the Company such
information regarding the distribution of such Transfer Restricted Securities as
is required by law to be disclosed in the applicable Registration Statement and
the Company may exclude from such registration the Transfer Restricted
Securities of any seller who fails to furnish such information within a
reasonable time after receiving such request and the Transfer Restricted
Securities of such seller shall not be entitled to Liquidated Damages as a
result of the Company's exclusion from such registration. Each such Holder
agrees, by the acquisition of Transfer Restricted Securities, and agrees to
confirm such agreement in writing upon request of the Company, to notify the
Company as promptly as practicable of any inaccuracy or change in information
previously furnished by such Holder to the Company or of the occurrence of any
event as a result of which any Prospectus relating to such registration contains
or would contain an untrue statement of a material fact regarding such Holder or
such Holder's intended method of distribution of such Transfer Restricted
Securities, or omits to state any material fact regarding such Holder or such
Holder's intended method of distribution of such Transfer Restricted Securities,
necessary to make the statements therein, in light of the circumstances then
existing, not misleading and promptly to furnish to the Company any additional
information required to correct and update any previously furnished information
or required so that such Prospectus shall not contain, with
<PAGE> 12
respect to such Holder or the distribution of such Transfer Restricted
Securities, an untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances
then existing, not misleading.
If any such Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Company, then such Holder shall
have the right to require (i) the insertion therein of language, in form and
substance reasonably satisfactory to such Holder, to the effect that the holding
by such Holder of such securities is not to be construed as a recommendation by
such Holder of the investment quality of the Company's securities covered
thereby and that such holding does not imply that such Holder will assist in
meeting any future financial requirements of the Company, or (ii) in the event
that such reference to such Holder by name or otherwise is not required by the
Securities Act or any similar Federal statute then in force, the deletion of the
reference to such Holder in any amendment or supplement to the Registration
Statement filed or prepared subsequent to the time that such reference ceases to
be required.
Each Holder of Transfer Restricted Securities agrees by acquisition of
such Transfer Restricted Securities that, upon receipt of any notice from the
Company pursuant to Section 2(c) hereof or of the happening of any event of the
kind described in Section 4(c)(ii), 4(c)(iii), 4(c)(iv) or 4(c)(v) hereof, such
Holder will forthwith discontinue disposition of such Transfer Restricted
Securities covered by such Registration Statement or Prospectus until such
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 4(k) hereof, or until it is advised in writing by the
Company that the use of the applicable Prospectus may be resumed, and, in either
case, has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus, and,
if so directed by the Company, such 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
Securities at the time of receipt of such notice.
19. Registration Expenses
(a) All fees and expenses incident to the performance of or compliance
with this Agreement by the Company shall be borne by it whether or not any
Registration Statement is filed or becomes effective and whether or not any
securities are issued or sold pursuant to any Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with the
National Association of Securities Dealers, Inc. and (B) in compliance with
securities or Blue Sky laws (including, without limitation and in addition to
that provided for in (b) below, reasonable fees and disbursements of counsel for
the underwriters or Special Counsel for the Holders in connection with Blue Sky
qualifications of the Transfer Restricted Securities )), (ii) printing expenses
(including, without limitation, expenses of printing certificates for Transfer
Restricted Securities in a form eligible for deposit with The Depository Trust
Company and of printing Prospectuses if the printing of Prospectuses is
requested by the managing underwriters, if any), (iii) messenger, telephone and
delivery expenses, (iv) fees and disbursements of counsel for the Company and
Special Counsel for the Holders (plus any local counsel deemed appropriate by
the Holders of a majority in amount of the Transfer Restricted Securities
(determined on a fully converted basis)), in accordance with the provisions of
Section 5(b) hereof, (v) fees and disbursements of all independent certified
public accountants referred to in Section 4(m)(iii) hereof (including, without
limitation, the expenses of any special audit and "cold comfort" letters
required by or incident to such performance), (vi) Securities Act liability
insurance, if the Company so desires such insurance, and (vii) fees and expenses
of all other persons retained by the Company. In addition, the
<PAGE> 13
Company shall pay its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit, and the fees and expenses
incurred in connection with the listing of the securities to be registered on
any securities exchange or on NASDAQ. Notwithstanding the foregoing or anything
in this Agreement to the contrary, each Holder of the Transfer Restricted
Securities being registered shall pay all commissions, placement agent fees and
underwriting discounts and commissions with respect to any Transfer Restricted
Securities sold by it and the fees and disbursements of any counsel or other
advisors or experts retained by such Holders (severally or jointly), other than
Special Counsel and local counsel referred to in clause (iv) above.
(b) In connection with any registration hereunder, the Company shall
reimburse the Holders of the Transfer Restricted Securities being registered in
such registration for the reasonable fees and disbursements of not more than one
firm of attorneys representing the selling Holders (in addition to any local
counsel), if any such firm shall be chosen by the Holders of a majority in
amount of the Transfer Restricted Securities (determined on a fully converted
basis).
20. Indemnification
(a) The Company agrees to indemnify and hold harmless (i) the Initial
Purchaser, (ii) each Holder of Transfer Restricted Securities, (iii) each
person, if any, who controls (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) any of the foregoing (any of the persons
referred to in this clause (iii) being hereinafter referred to as a "controlling
person"), and (iv) the respective officers, directors, partners, employees,
representatives and agents of the Initial Purchaser, each Holder of Transfer
Restricted Securities, or any controlling person (any person referred to in
clause (i), (ii), (iii) or (iv) may hereinafter be referred to as an
"Indemnified Person"), 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, Prospectus
or form of Prospectus or in any amendment or supplement thereto or in any
preliminary Prospectus, 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 case of any Prospectus or form of Prospectus or
supplement thereto, in 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 any Indemnified Person
furnished in writing to the Company by or on behalf of such Indemnified Person
expressly for use therein, provided, however, that the indemnification contained
in this Section 6(a) with respect to a preliminary Prospectus shall not involve
to the benefit of any Indemnified Person (or to the benefit of any person
controlling such Indemnified Person) on account of any such loss, claim, damage,
judgment, liability or expense arising from the sale of the Transfer Restricted
Securities by such Indemnified Person to any person if the untrue statement or
alleged untrue statement or omission or alleged omission of a material fact
contained in a preliminary Prospectus was corrected in the Prospectus and, due
to the wrongful actions or wrongful inaction of the Indemnified Person, the
Indemnified Person did not send or give in a timely manner, a copy of the
Prospectus to such person (as then amended or supplemented) if the Company had
previously furnished sufficient copies thereof to the Indemnified Person in a
timely basis;
(b) In case any action shall be brought against any Indemnified Person,
based upon any Registration Statement or any such Prospectus or any amendment or
supplement thereto and with respect to which indemnity may be sought against the
Company, such Indemnified Person shall promptly notify the Company in writing
and the Company shall assume the defense thereof, including the employment of
<PAGE> 14
counsel reasonably satisfactory to such Indemnified Person and payment of all
fees and expenses. Any Indemnified Person shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Person, unless (i) the employment of such counsel shall have been
specifically authorized in writing by the Company, (ii) the Company shall have
failed to assume the defense and employ counsel or (iii) the named parties to
any such action (including any impeded parties) include both such Indemnified
Person and the Company and such Indemnified Person shall have been advised in
writing by counsel that the representation of such Indemnified Person and the
Company by the same counsel would be inappropriate under applicable standards of
professional conduct (whether or not such representation by the same counsel has
been proposed) due to an actual or reasonably anticipated material conflict of
interest between them (in which case the Company shall not have the right to
assume the defense of such action on behalf of such Indemnified Person, it being
understood, however, that the Company shall not, in connection with any one such
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) for all such Indemnified Persons,
which firm shall be designated in writing by such Indemnified Persons, and that
all such fees and expenses shall be reimbursed as they are incurred). The
Company shall not be liable for any settlement of any such action effected
without its written consent but if settled with the written consent of the
Company, the Company agrees to indemnify and hold harmless any Indemnified
Person from and against any loss or liability by reason of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement (i)
includes an unconditional release of such indemnified party from all liability
on claims that are or could have been the subject matter of such proceeding 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) In connection with any Registration Statement in which a Holder of
Transfer Restricted Securities is participating, such Holder of Transfer
Restricted Securities agrees, severally and not jointly, to indemnify and hold
harmless the Company, its directors, its officers and any person controlling the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, to the same extent as the foregoing indemnity from the Company to
each Indemnified Person but only with reference to information relating to such
Indemnified Person furnished in writing by or on behalf of such Indemnified
Person expressly for use in such Registration Statement. In case any action
shall be brought against the Company, any of its directors, any such officer or
any person controlling the Company based on such Registration Statement and in
respect of which indemnity may be sought against any Indemnified Person, the
Indemnified Person shall have the rights and duties given to the Company (except
that if the Company shall have assumed the defense thereof, such Indemnified
Person shall not be required to do so, but may employ separate counsel therein
and participate in defense thereof but the fees and expenses of such counsel
shall be at the expense of such Indemnified Person), and the Company, its
directors, any such officers and any person controlling the Company shall have
the rights and duties given to the Indemnified Person, by Section 6(b) hereof.
(d) If the indemnification provided for in this Section 6 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 Company on the one hand
<PAGE> 15
and each Indemnified Person on the other hand from the offering of the 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 Company and each such Indemnified Person 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 each such Indemnified Person 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 or such Indemnified Person and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Initial Purchaser agree that it would not be just
and equitable if contribution pursuant to this Section 6(d) were determined by
pro rata allocation (even if the Indemnified Persons 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 amount paid or payable by an indemnified party as a result of
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 6, no
Indemnified Person shall be required to contribute any amount in excess of the
amount by which the proceeds received by it in connection with the sale of the
Transfer Restricted Securities pursuant to this Agreement exceeds the amount of
any damages which such Indemnified Person has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Indemnified Persons' obligations to contribute pursuant to this Section 6(d) are
several in proportion to the respective amount of Notes included in any such
Registration Statement by each Indemnified Person and not joint.
21. Rules 144 and 144A
The Company shall use all reasonable efforts to file the reports
required to be filed by it under the Securities Act and the Exchange Act in a
timely manner and, if at any time it is not required to file such reports but in
the past had been required to or did file such reports, it will, upon the
request of any holder of Transfer Restricted Securities, make available other
information as required by, and so long as necessary to permit, sales of its
Transfer Restricted Securities pursuant to Rule 144 and Rule 144A.
Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to
require the Company to register any of its securities pursuant to the Exchange
Act.
22. Underwritten Registrations
(a) If any of the Transfer Restricted Securities covered by any Shelf
Registration are to be sold in an underwritten offering, the investment banker
or investment bankers and manager or managers that will administer the offering
will be selected by the Holders of a majority in amount of such Transfer
Restricted Securities (determined on a fully converted basis) included in such
offering, subject to the consent of the Company (which will not be unreasonably
withheld or delayed).
No person may participate in any underwritten registration hereunder
unless such person (i)
<PAGE> 16
agrees to sell such person's Transfer Restricted Securities on the basis
reasonably provided in any underwriting arrangements approved by the persons
entitled hereunder to approve such arrangements and (ii) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
(b) Each Holder of Transfer Restricted Securities agrees, if requested
(pursuant to a timely written notice) by the managing underwriters in an
underwritten offering, not to effect any private sale or distribution (including
a sale pursuant to Rule 144(k) and Rule 144A, but excluding non-public sales to
any of its affiliates, officers, directors, employees and controlling persons)
of any of the Notes, in the case of an offering of the Company's debt
securities, or the Common Stock, in the case of an offering of the Company's
equity securities, during the period beginning 10 days prior to, and ending 90
days after, the closing date of the underwritten offering.
The foregoing provisions of this Section 8(b) shall not apply to any
Holder of Transfer Restricted Securities if such Holder is prevented by
applicable statute or regulation from entering into any such agreement.
(c) The Initial Purchaser and all Holders of Transfer Restricted
Securities agree that, notwithstanding any other term or provision hereof, the
Company shall not be required to enter into any agreements (including
underwriting agreements) or take any other actions contemplated by Section 4(m)
hereof unless requested in writing by the holders of at least a majority of the
Transfer Restricted Securities (determined on a fully converted basis) sold to
the Initial Purchaser pursuant to the Purchase Agreement.
23. Miscellaneous
(a) Remedies. In the event of a breach by the Company, or by a holder
of Transfer Restricted Securities, of any of their obligations under this
Agreement, each holder of Transfer Restricted Securities or the Company, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. The Company and each holder of Transfer Restricted
Securities agree that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company shall not enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the holders of Transfer Restricted Securities in this Agreement or
otherwise conflicts with the provisions hereof.
(c) No Piggyback on Registrations. The Company shall not grant to any
of its security holders (other than the Holders of Transfer Restricted
Securities in such capacity) the right to include any of its securities in any
Shelf Registration provided for in this Agreement other than Transfer Restricted
Securities for a six-month period commencing on the date of the Purchase
Agreement.
(d) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, without the written consent of the Holders of a majority of
the then outstanding Transfer Restricted Securities (determined on a fully
converted basis);
<PAGE> 17
provided, however, that, for the purposes of this Agreement, Transfer Restricted
Securities that are owned, directly or indirectly, by either the Company or an
Affiliate of the Company are not deemed outstanding. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders of Transfer
Restricted Securities whose securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect the rights of other
Holders of Transfer Restricted Securities may be given by Holders of a majority
of the Transfer Restricted Securities (determined on a fully converted basis)
being sold by such Holders pursuant to such Registration Statement; provided,
however, that the provisions of this sentence may not be amended, modified, or
supplemented except in accordance with the provisions of the immediately
preceding sentence.
(e) Notices. All notices and other communications provided for herein
shall be made in writing by hand-delivery or next-day air courier:
(i) if to the Company, as provided in the Purchase Agreement,
(ii) if to the Initial Purchaser, as provided in the Purchase
Agreement, or
(iii) if to any other person who is then the registered Holder of
any Transfer Restricted Securities, to the address of such Holder as it appears
in the Note or Common Stock register of the Company.
Except as otherwise provided in this Agreement, all such communications
shall be deemed to have been duly given: when delivered by hand, if personally
delivered; one Business Day after being timely delivered to a next-day air
courier; five Business Days after being deposited in the mail, postage prepaid,
if mailed; when answered back, if telexed; and when receipt is acknowledged by
the recipient's telecopier machine, if telecopied.
(f) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of each of the
parties and shall inure to the benefit of each Holder of Transfer Restricted
Securities. The Company may not assign its rights or obligations hereunder
without the prior written consent of each Holder of Transfer Restricted
Securities. Notwithstanding the foregoing, no transferee shall have any of the
rights granted under this Agreement until such transferee shall acknowledge its
rights and obligations hereunder by a signed written statement of such
transferee's acceptance of such rights and obligations.
(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) Governing Law: Submission to Jurisdiction.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN
THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
(i) Severability. The remedies provided herein are cumulative and not
exclusive of any
<PAGE> 18
remedies provided by law. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
(j) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof. All
references made in this Agreement to "Section" and "paragraph" refer to such
Section or paragraph of this Agreement, unless expressly stated otherwise.
<PAGE> 19
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the date first written above.
ANTEC CORPORATION
By: _______________________________
Name:
Title:
The foregoing Registration Rights
Agreement is hereby confirmed
and accepted as of the date
first above written.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: Donaldson, Lufkin & Jenrette Securities Corporation
By: _____________________________________
Name:
Title:
<PAGE> 1
Exhibit 5.1
July 2, 1998
ANTEC Corporation
5720 Peachtree Parkway, NW
Norcross, Georgia 30092
Ladies and Gentlemen:
This opinion is rendered to you in connection with a registration
statement (the "Registration Statement") on Form S-3 filed today with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, for the registration of $115,000,000 principal amount of 4 1/2%
Convertible Subordinated Notes due 2003 (the "Notes") of ANTEC Corporation
("ANTEC") and 4,791,667 shares of Common Stock, par value $0.01 per share (the
"Common Stock") of ANTEC issuable upon conversion of the Notes (the "Shares").
We have acted as special counsel for ANTEC in connection with the issuance
and sale of the Notes and the preparation of the Registration Statement. For
purposes of this opinion, we have examined and relied upon the information set
forth in the Registration Statement and such other documents and records as we
have deemed necessary.
We have assumed that no issuance of the Shares as a result of the
anti-dilution provisions thereof will result in the issuance by ANTEC of shares
in excess of its then authorized Common Stock.
Based on the foregoing, we are of the opinion that:
1. The Notes were legally issued, fully paid and nonassessable and
are the binding obligations of ANTEC, except that enforcement
of rights and remedies created by the Notes is subject to
bankruptcy, reorganization, insolvency or similar laws of
general application affecting the rights and remedies of
creditors and that the 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.
2. When issued upon conversion of the Notes, the Shares will be
legally issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as part of the Registration
Statement and to the use of our name therein and in the related prospectus under
the caption "Legal Matters."
Very truly yours,
SCHIFF HARDIN & WAITE
By: /s/ Stuart L. Goodman
---------------------
Stuart L. Goodman
<PAGE> 1
Exhibit 10.1
CREDIT AND GUARANTEE AGREEMENT,
DATED AS OF MAY 21, 1998,
BY AND AMONG
ANTEC CORPORATION,
THE SUBSIDIARY GUARANTORS PARTY HERETO,
THE LENDERS PARTY HERETO,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, AS COLLATERAL AGENT
AND
THE BANK OF NEW YORK, AS ADMINISTRATIVE AGENT
<PAGE> 2
BNY CAPITAL MARKETS, INC.,
AS ARRANGER
-21-
<PAGE> 3
CREDIT AND GUARANTEE AGREEMENT, dated as of May 21, 1998, by and among
ANTEC CORPORATION, a Delaware corporation (the "BORROWER"), the Subsidiary
Guarantors (as defined below), the several banks and other parties from time to
time parties hereto (the "LENDERS"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION ("BANK OF AMERICA"), as collateral agent (in such capacity, the
"COLLATERAL AGENT") and THE BANK OF NEW YORK ("BNY"), as administrative agent
for each of the other Credit Parties hereto (in such capacity, the
"ADMINISTRATIVE AGENT" and, together with the Collateral Agent, the "AGENTS").
ARTICLE 1. DEFINITIONS AND RULES OF INTERPRETATION
1.1. DEFINITIONS
As used in this Agreement, terms defined in the preamble have the
meanings therein indicated, and the following terms have the following
meanings:
"ABR ADVANCES" means the Revolving Loans (or any portions thereof), at
such time as they (or such portions) are made and/or being maintained at a
rate of interest based upon the Alternate Base Rate.
"ACCOUNT DEBTOR" means a party that is obligated to the Borrower or a
Subsidiary Guarantor on or in respect of a Receivable.
"ACCOUNTANTS" means Ernst & Young, LLP (or any successor thereto), or
such other firm of certified public accountants of recognized national
standing selected by the Borrower and reasonably satisfactory to Required
Lenders.
"ACQUISITION" has the meaning set forth in Section 8.5.
"ACQUISITION CONSIDERATION" means with respect to any Acquisition, the
sum of (i) the cash consideration paid or agreed to be paid in connection
therewith, plus (ii) the fair market value of all non-cash consideration paid
or agreed to be paid in connection therewith, plus (iii) an amount equal to the
principal or stated amount of all liabilities assumed or incurred in connection
therewith during the fiscal year in which such Acquisition is made.
"ADDITIONAL PLEDGE AGREEMENT" has the meaning set forth in Section 7.9.
"ADJUSTED NET CASH PROCEEDS" means, with respect to any Disposition as
of any date of determination, the amount equal to the difference between
(i) the Net Cash Proceeds from such Disposition, and (ii) the Reinvested
Proceeds in connection with such Disposition.
"ADVANCE" means an ABR Advance or a Eurodollar Advance.
<PAGE> 4
"AFFECTED PRINCIPAL AMOUNT" means, in the event that (i) the Borrower
shall fail for any reason to borrow or convert after it shall have notified
the Administrative Agent of its intent to do so in any instance in which it
shall have requested a Eurodollar Advance pursuant to Section 2.2 or 3.3, an
amount equal to the principal amount of such Eurodollar Advance; (ii) a
Eurodollar Advance shall terminate for any reason prior to the last day of the
Interest Period applicable thereto, an amount equal to the principal amount of
such Eurodollar Advance; and (iii) the Borrower shall prepay or repay all or
any part of the principal amount of a Eurodollar Advance prior to the last day
of the Interest Period applicable thereto, an amount equal to the principal
amount of such Eurodollar Advance so prepaid or repaid.
"AFFILIATE" means as to any Person any other Person at the time
directly or indirectly controlling, controlled by or under direct or
indirect common control with such Person. For purposes of this definition,
"control" of a Person means the power, directly or indirectly, either to (i)
vote 10% or more of the securities having ordinary voting power for the
election of directors of such Person or (ii) direct or cause the direction of
the management and policies of such Person, whether by contract or otherwise.
"AGGREGATE REVOLVING COMMITMENT" means, at any time, the sum at such
time of the Revolving Commitments of all Lenders.
"AGGREGATE CREDIT EXPOSURE" means, at any time, the sum at such time
of (i) the outstanding principal balance of the Revolving Loans of all
Lenders, plus (ii) an amount equal to the Letter of Credit Exposure of all
Lenders.
"AGREEMENT" means this Credit and Guarantee Agreement.
"ALTERNATE BASE RATE" means on any date, a rate of interest per annum
equal to the higher of (i) the Federal Funds Effective Rate in effect on
such date plus 1/2 of 1% or (ii) the Prime Rate in effect on such date.
"ANIXTER REPURCHASE AGREEMENT" means the Stock Purchase Agreement,
dated as of April 2, 1998, between the Borrower and Anixter International, Inc.
"APPLICABLE MARGIN" means:
(A) For the period from the Effective Date through and including September
30, 1998, (i) in respect of ABR Advances, 1.00%, (ii) in respect of Eurodollar
Advances
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<PAGE> 5
and Letter of Credit Fees, 2.00%, and (iii) in respect of Commitment
Fees, 0.500%.
(B) Subject to clause (d) below, after September 30, 1998, at all times
during which the applicable Pricing Level set forth below is in effect: (i)
with respect to ABR Advances, the percentage set forth below under the heading
"ABR Margin" and adjacent to such Pricing Level, (ii) with respect to
Eurodollar Advances and Letter of Credit Fees, the percentage set forth below
under the heading "Eurodollar and LC Margin" and adjacent to such Pricing
Level, and (iii) with respect to the Commitment Fee, the percentage set forth
below under the heading "Commitment Fee" and adjacent to such Pricing Level:
<TABLE>
<CAPTION>
Eurodollar
Pricing ABR and LC Commitment
Level Margin Margin Fee
------- ------ ------ ---
<S> <C> <C> <C> <C> <C> <C>
I 0% 0.875% 0.200%
II 0% 1.000% 0.250%
III 0.250% 1.250% 0.300%
IV 0.500% 1.500% 0.350%
V 0.750% 1.750% 0.400%
VI 0.875% 1.875% 0.450%
VII 1.000% 2.000% 0.500%;
</TABLE>
provided, however, that if as of the last day of any fiscal quarter (commencing
with the fiscal quarter ending December 31, 1998), EBITDA for the Four Quarter
Trailing Period is less than $45,000,000, each of the Applicable Margins for
ABR Advances, Eurodollar Advances and Letter of Credit Fees set forth in this
clause (b) will be increased by 0.375%, such increase to be in effect for the
period from the date of delivery of the Compliance Certificate to the
Administrative Agent and the Lenders for such fiscal quarter until the fifth
day following the delivery of such Compliance Certificate to the Administrative
Agent and the Lenders (or if such fifth day is not a Business Day on
the immediately preceding Business Day) demonstrating that EBITDA for the
Four Quarter Trailing Period is greater than or equal to $45,000,000, such
increase to again become applicable if as of the last day of any fiscal quarter
thereafter, EBITDA for the Four Quarter Trailing Period ending on such date is
less than $45,000,000.
(C) Subject to clause (d) below after September 30, 1998, the Pricing
Level shall be based upon the Compliance Certificate most recently received by
the Administrative Agent. Thereafter any changes in the Applicable Margin
resulting from a change in the applicable Pricing Level shall be based upon the
Compliance Certificate most recently delivered pursuant to Section 7.1(c) and
shall become effective on the fifth day following the delivery of such
Compliance Certificate to the Administrative Agent and the Lenders (or if such
fifth day is not a Business Day on
<PAGE> 6
the immediately preceding Business Day).
(D) Notwithstanding anything to the contrary contained in this
definition, if the Borrower shall fail to deliver a Compliance Certificate to
the Administrative Agent on or prior to any date required hereby, Pricing
Level VII shall be in effect from and including such date to the fifth day
following the delivery of such Compliance Certificate to the Administrative
Agent and the Lenders (or if such fifth day is not a Business Day on the
immediately preceding Business Day).
"APPLICABLE PROCEEDS" means any and all proceeds of casualty insurance or
condemnation held by the Administrative Agent pursuant to the Loan Documents in
connection with a casualty or condemnation event for which the conditions for
use thereof by the Borrower or any Subsidiary, as set forth in the Loan
Documents, shall not have been satisfied.
"ARRIS" means Arris Interactive, L.L.C. (formerly Products Venture,
L.L.C.), a joint venture of the Borrower and Nortel in which the Borrower holds
a 25% equity interest on the Effective Date.
"ARRIS LOAN DOCUMENTS" means, collectively (i) the Secured Loan Agreement,
dated as of November 17, 1995, among Nortel, the Borrower and Arris, (ii) the
Pledge Agreement, dated as of November 17, 1995, between Nortel and the
Borrower, (iii) the Security Agreement, dated as of November 17, 1995, between
Nortel and Arris, (iv) and all other agreements, instruments and documents
executed or delivered in connection therewith.
"ARRIS OBLIGATIONS" means the obligations of the Borrower under the Arris
Loan Documents to participate (in an aggregate amount not in excess of
$10,000,000) in loans made by Nortel to Arris.
"ASSIGNMENT AND ACCEPTANCE AGREEMENT" means an assignment and acceptance
agreement substantially in the form of Exhibit F.
"BOARD OF GOVERNORS" means the Board of Governors of the Federal Reserve
System of the United States.
"BORROWER OBLIGATIONS" means, collectively, all of the obligations and
liabilities of the Borrower under the Loan Documents (including Reimbursement
Obligations), in each case whether fixed, contingent, now existing or hereafter
arising, created, assumed, incurred or acquired, and whether before or after
the occurrence of any Event of Default under Section 9.1(h) or (i) and
including any obligation or liability in respect of any breach of any
representation or warranty and all
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<PAGE> 7
post-petition interest and funding losses, whether or not allowed as a
claim in any proceeding arising in connection with such an event.
"BORROWING BASE AMOUNT" means, on any date of determination, an amount
equal to the sum of (i) 85% of Eligible Receivables and (ii) 60% of Eligible
Inventory, provided, however, that at no time shall the amount of Eligible
Inventory included in the Borrowing Base Amount exceed an amount equal to 50%
of the Aggregate Credit Exposure (after giving effect to any Extensions of
Credit and prepayments made on such date).
"BORROWING BASE CERTIFICATE" means a certificate substantially in the form
of Exhibit I.
"BORROWING DATE" means any Business Day on which (i) the Lenders make
Revolving Loans or (ii) the Issuer issues a Letter of Credit.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day on
which commercial banks located in New York City are authorized or required by
law or other governmental action to be closed, provided that when used in
connection with a Eurodollar Advance, the term shall also exclude any day on
which banks are not open for dealings in dollar deposits in the London
interbank market.
"CAPITAL EXPENDITURES" means, for any period, the sum of the aggregate of
all expenditures (whether paid in cash or other consideration or accrued as a
liability) by the Borrower and the Subsidiaries on a consolidated basis in
accordance with GAAP during such period for fixed or capital assets (excluding
any capitalized interest and any such asset acquired in connection with normal
replacement and maintenance programs properly charged to current operations and
excluding any replacement assets acquired with the proceeds of insurance).
"CAPITAL LEASE OBLIGATIONS" means, with respect to any Person, the
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, (a) which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP, or (b) which lease does not qualify as a
Tax Operating Lease. For purposes of this definition, "TAX OPERATING LEASE"
means any "synthetic lease", and any other lease (i) that is treated as a lease
for purposes of the Code, and (ii) the lessor under which is treated as the
owner of the assets subject to the lease for purposes of the Code.
"CAPITAL STOCK" means, as to any Person, all shares, interests,
partnership interests, limited liability company interests, participations,
rights in or other equivalents (however designated) of such Person's equity
(however designated) and any rights, warrants or options exchangeable for or
-26-
<PAGE> 8
convertible into such shares, interests, participations, rights or other equity.
"CASH COLLATERAL" has the meaning set forth in Section 2.7.
"CASH COLLATERAL ACCOUNT" has the meaning set forth in Section 2.7.
"CASH EQUIVALENTS" means Dollar denominated investments in (i) securities
issued or directly and fully guaranteed or insured by the United States or any
agency or instrumentality thereof (provided that the full faith and credit of
the United States is pledged in full support thereof) having maturities of not
more than one year from the date of acquisition, (ii) time deposits,
certificates of deposit and bankers acceptances maturing within 180 days from
the date of acquisition thereof issued or guaranteed by or placed with, and
money market deposit accounts issued or offered by, any domestic office of any
commercial bank having a combined capital surplus and undivided profits of not
less than $100,000,000 and whose (or whose parent company's) unsecured
non-credit supported short-term debt or commercial paper rating at the time of
such acquisition (x) from Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., or any successor thereto ("S&P") is at least A-1,
or the equivalent thereof, or (y) from Moody's Investors Service, Inc. or
any successor thereto ("MOODY'S") is at least P-1, or the equivalent thereof,
(iii) commercial paper maturing within 90 days from the date of acquisition
thereof and having, at such date of acquisition (x) from S&P is at least A-1,
or the equivalent thereof, or (y) from Moody's is at least P-1, or the
equivalent thereof, (iv) marketable direct obligations issued by any state of
the United States or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either S&P or Moody's, (v) normal business banking accounts,
and (vi) investments in money market funds substantially all the assets of
which are comprised of securities of the types described in clauses (i) through
(iv) above.
"CHANGE IN LAW" means (i) the adoption of any law, rule or regulation
after the Effective Date, (ii) the issuance or promulgation after the Effective
Date of any directive, guideline or request from any Governmental Authority
(whether or not having the force of law), or (iii) any change after the
Effective Date in the interpretation of any existing law, rule, regulation,
directive, guideline or request by any Governmental Authority charged with the
administration thereof.
"CHANGE OF CONTROL" means the occurrence of any of the following events:
(A) any person or group shall have become the beneficial owner of
voting shares entitled to exercise more than 25% of the total voting
power of all outstanding voting shares of the Borrower (including any
voting shares which are not then outstanding of
-27-
<PAGE> 9
which such person or group is deemed the beneficial owner);
(B) a change in the composition of the Managing Person of the
Borrower shall have occurred in which the individuals who constituted the
Managing Person of the Borrower at the beginning of the two year period
immediately preceding such change (together with any other director whose
election by the Managing Person of the Borrower or whose nomination for
election by the shareholders of the Borrower was approved by a vote of at
least a majority of the members of such Managing Person then in office who
either were members of such Managing Person at the beginning of such period
or whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the members of such Managing
Person then in office; or
(C) a "change of control", as such term is defined in the
Subordinated Indenture, and any similar circumstance which, under the
documentation evidencing or governing any Indebtedness of the Borrower of
$15,000,000 or more, results in an obligation of the Borrower to prepay,
purchase, offer to purchase, redeem or defease such Indebtedness.
For purposes of this definition, (i) the terms "person" and "group" shall
have the respective meanings ascribed thereto in Sections 13(d) and 14(d)(2) of
the Exchange Act, (ii) the term "beneficial owner" shall have the meaning
ascribed thereto in Rule 13d-3 under the Exchange Act, and (iii) the term
"voting shares" shall mean all outstanding shares of any class or classes
(however designated) of Capital Stock of the Borrower entitled to vote
generally in the election of members of the Managing Person thereof.
"CODE" means the Internal Revenue Code of 1986, as the same may be amended
from time to time, or any successor thereto, and the rules and regulations
issued thereunder, as from time to time in effect.
"COLLATERAL" means any and all "Collateral", as defined in any Security
Document.
"COMMITMENT FEE" has the meaning set forth in Section 3.2(a).
"COMMITMENT PERCENTAGE" means, as of any date and with respect to each
Lender, the percentage equal to a fraction (i) the numerator of which is the
Revolving Commitment of such Lender on such date (or, if there are no Revolving
Commitments on such date, on the last date upon which one or more Revolving
Commitments were in effect), and (ii) the denominator of which is sum of the
Revolving Commitments of all Lenders on such date (or, if there are no
Revolving Commitments on such date, on the last date upon which one or more
Revolving Commitments were in effect).
"COMMITMENTS" means, collectively, the Revolving Commitments and the
Letter of
<PAGE> 10
Credit Commitment, each, a "COMMITMENT".
"COMMITMENT TERMINATION DATE" means May 21, 2002, or such earlier date
upon which either the Revolving Commitments shall terminate or the Aggregate
Revolving Commitment shall otherwise equal zero.
"COMPLIANCE CERTIFICATE" has the meaning set forth in Section 7.1(c).
"CONVERSION DATE" means the date on which: (i) a Eurodollar Advance is
converted to an ABR Advance, (ii) an ABR Advance is converted to a Eurodollar
Advance or (iii) a Eurodollar Advance is converted to, or continued as, a new
Eurodollar Advance.
"CREDIT EXPOSURE" means, with respect to any Lender as of any date, the
sum as of such date of (i) the outstanding principal balance of such Lender's
Revolving Loans, plus (ii) such Lender's Letter of Credit Exposure.
"CREDIT PARTY" means the Administrative Agent, the Issuer, the Collateral
Agent or a Lender, as the case may be.
"CREDIT REQUEST" means a request for Revolving Loans or a Letter of Credit
substantially in the form of Exhibit B.
"CUSTOMARY LIEN" means any of the following: (i) any Lien imposed by law
for Taxes that are not yet due or are being contested in compliance with
Section 7.4, provided that enforcement of such Lien is stayed pending such
contest; (ii) carriers', warehousemen's, mechanics', materialmen's, repairmen's
and other like Liens imposed by law, arising in the ordinary course of business
and securing obligations that are not overdue by more than 30 days or are being
contested in compliance with Section 7.4, provided that enforcement of each
such Lien is stayed pending such contest; (iii) pledges and deposits made in
the ordinary course of business in compliance with workers' compensation,
unemployment insurance and other social security laws or regulations; (iv)
deposits and pledges to secure the performance of bids, tenders, contracts
(other than contracts for the payment of money), leases, statutory obligations,
surety and appeal bonds and other obligations of like nature arising in the
ordinary course of business; (v) judgment liens in respect of judgments that
would not cause an Event of Default under Section 9.1(j); (vi) zoning
ordinances, easements, rights of way, minor defects, irregularities, and other
similar encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do not
materially detract from the value of the affected property or interfere with
the ordinary conduct of business of the Borrower or any Subsidiary; and (vii)
Liens created under the Loan Documents.
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<PAGE> 11
"DEFAULT" means any event or condition which constitutes an Event of
Default or which, with the giving of notice, the lapse of time, or any other
condition, would, unless cured or waived, become an Event of Default.
"DISPOSITION" has the meaning set forth in Section 8.6.
"DISQUALIFIED STOCK" means any Capital Stock of any Person that, by its
terms (or by the terms of any security into which it is convertible or for
which it is exchangeable at the option of the holder thereof), 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, provided, however, that any Capital Stock
that would constitute Disqualified Stock solely because the holders thereof
have the right to require such Person to repurchase such Capital Stock upon the
occurrence of certain events shall not constitute Disqualified Stock if the
terms of such Capital Stock provide that the Borrower may not repurchase or
redeem any such Capital Stock pursuant to such provisions unless such
repurchase or redemption complies with Section 8.7 of this Agreement.
"DOLLARS" and "$" mean lawful currency of the United States of America.
"DOMESTIC SUBSIDIARY" means any Subsidiary that is not a Foreign
Subsidiary.
"EBITA" means, for any period, an amount equal to (i) net income of the
Borrower and its Subsidiaries, determined on a consolidated basis in accordance
with GAAP for such period, plus (ii) the sum of, without duplication, each of
the following with respect to the Borrower and its Subsidiaries to the extent
utilized in determining such net income for such period, (a) interest expense,
(b) income tax expense, (c) amortization, and (d) extraordinary losses from
sales, exchanges and other dispositions of property not in the ordinary course
of business, minus (iii) the sum of, without duplication, each of the following
with respect to the Borrower and its Subsidiaries, to the extent utilized in
determining such net income for such period: (a) interest income, (b) income
tax benefits and (c) extraordinary gains from sales, exchanges and other
dispositions of property not in the ordinary course of business; provided,
however, that, notwithstanding anything to the contrary contained herein, such
amount shall be subject to such adjustments (including adjustments with respect
to specific items referred to in clauses (i), (ii) and (iii) of this
definition) as the Borrower may request and the Administrative Agent, with the
consent of Required Lenders, shall approve.
"EBITDA" means, for any period, an amount equal to EBITA for such period
plus depreciation and other non-cash charges to the extent utilized in
determining such EBITA for such period.
"EFFECTIVE DATE" means the date on which the conditions set forth in
Article 5 have
<PAGE> 12
been satisfied (or waived in accordance with Section 11.1).
"ELIGIBLE INSTITUTION" means (i) any commercial bank, trust company,
banking association, insurance company, financial institution, mutual fund or
pension fund acceptable to the Administrative Agent, (ii) any Lender or any
Affiliate or Subsidiary thereof, or (iii) any commercial bank, trust company or
banking association having undivided capital surplus and retained earnings
exceeding $100,000,000.
"ELIGIBLE INVENTORY" means Inventory which is held for sale or lease or
furnished under any contract of service by the Borrower or any Subsidiary
Guarantor and which is at all times and shall continue to be acceptable to the
Agents in all respects in accordance with their reasonable credit judgment.
Standards of eligibility may be established and revised from time to time (upon
notice to the Lenders) by the Agents in their reasonable credit judgment,
provided, however, in general and without limiting the foregoing, the following
Inventory shall not be Eligible Inventory:
(A) Inventory which is obsolete, not in good condition, or not either
currently usable or currently salable in the ordinary course of the business of
the Borrower or such Subsidiary Guarantor, as the case may be;
(B) Inventory which the Agents determine, in the exercise of reasonable
discretion and in accordance with their customary business practices, to be
unacceptable due to age, type, category and/or quantity;
(C) Inventory which is not located on the Borrower's or such Subsidiary
Guarantor's, as the case may be, owned or leased premises in the United States;
and
(D) Inventory which is not subject to a perfected first priority
security interest in favor of the Administrative Agent.
"ELIGIBLE RECEIVABLE" means a Receivable payable in Dollars which is a
good and valid account representing an undisputed bona fide indebtedness
incurred by an Account Debtor for a fixed sum as set forth in the invoice
relating thereto with respect to an absolute sale and delivery upon the stated
terms of goods sold or services rendered and which is and at all times shall
continue to be acceptable to the Agents in all respects in accordance with
their reasonable credit judgment. Standards of eligibility may be established
and revised from time to time (upon notice to the Lenders) by the Agents in
their reasonable credit judgment, provided, however, in general and without
limiting the foregoing, the following Receivables shall not be Eligible
Receivables:
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<PAGE> 13
(A) Receivables which remain unpaid ninety (90) days after the original
date of the applicable invoice;
(B) Receivables owing by a single Account Debtor if 50% of the balance
owing by such Account Debtor remains unpaid 90 days after the original date of
the applicable invoice;
(C) Receivables with respect to which the Account Debtor is a director,
officer, employee, Subsidiary or Affiliate of the Borrower or such Subsidiary
Guarantor, as applicable (other than Telecommunications, Inc. and its
Subsidiaries);
(D) Receivables with respect to which the Account Debtor is not a resident
of the United States unless (i) such Account Debtor has supplied the Borrower
or such Subsidiary Guarantor, as applicable, with an irrevocable letter of
credit, issued by a financial institution satisfactory to the Agents,
sufficient to cover such Receivable, in form and substance satisfactory to the
Agents or (ii) the Borrower has requested the inclusion of such a Receivable
and has provided the Agents with a description of such Receivable and such
other information with respect thereto as the Agents shall reasonably request,
and the Agents and Required Lenders shall have consented to such inclusion;
(E) Receivables with respect to which the Account Debtor has (i) disputed
such Receivable or asserted a counterclaim or any other claim or defense or
(ii) a right of setoff, but only to the extent of such counterclaim or setoff;
(F) Receivables with respect to which the Account Debtor is the subject of
bankruptcy or a similar insolvency proceeding or has made an assignment for the
benefit of creditors or whose assets have been conveyed to a receiver or
trustee;
(G) Receivables with respect to which the Account Debtor's obligation to
pay is conditional upon the Account Debtor's approval or is otherwise subject
to any repurchase obligation or return right, as with sales made on a
bill-and-hold, guaranteed sale, sale-and-return, sale on approval (except with
respect to Receivables in connection with which Account Debtors are entitled to
return Inventory on the basis of the quality of such Inventory) or consignment
basis;
(H) Receivables not subject to a fully perfected first priority security
interest in favor of the Credit Parties or subject to any security interest or
Lien in favor of any Person other than the Lien of the Credit Parties;
(I) Receivables, the Account Debtor of which is a Governmental Authority;
<PAGE> 14
(J) Receivables with respect to which the Account Debtor's obligation
does not constitute its legal, valid and binding obligation, enforceable
against it in accordance with its terms;
(K) Receivables with respect to which the Borrower or pertinent
Subsidiary Guarantor has not yet shipped the applicable goods or performed the
applicable service; and
(L) Receivables which the Agents, exercising reasonable discretion, have
determined to be unacceptable.
"ENVIRONMENTAL LAWS" has the meaning set forth in Section 4.7.
"EQUITY ISSUANCE" means the issuance of any equity securities or the
receipt of any capital contribution, in each case by the Borrower, other than
(i) any issuance of equity securities to, or receipt of any such capital
contribution from, the Borrower, (ii) the issuance of stock in connection with
an Acquisition, (iii) the issuance of common stock pursuant to a stock option
plan, an employee stock purchase plan, or for executive compensation, in either
case in the ordinary course of business or (iv) the issuance of common stock in
connection with a conversion of Subordinated Notes pursuant to the conversion
provisions thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations issued thereunder, as
from time to time in effect.
"ERISA AFFILIATE" means any Person which is a member of any group of
organizations within the meaning of Sections 414(b) or (c) of the Code (or,
solely for purposes of potential liability under Section 302(c)(11) of ERISA
and Section 412(c)(11) of the Code and the lien created under Section 302(f) of
ERISA and Section 412(n) of the Code, Sections 414(m) or (o) of the Code) of
which the Borrower or any Subsidiary is a member.
"ERISA EVENT" means (i) a "reportable event", as defined in Section 4043
of ERISA with respect to a Pension Plan (other than an event for which the
30-day notice period is waived), (ii) the existence with respect to any Pension
Plan of an "accumulated funding deficiency" (as defined in Section 412 of the
Code or Section 302 of ERISA), whether or not waived; (iii) the filing pursuant
to Section 412(d) of the Code or Section 303(d) of ERISA of an application for
a waiver of the minimum funding standard with respect to any Pension Plan; (iv)
the incurrence by the Borrower or any of its ERISA Affiliates of any liability
under Title IV of ERISA with respect to the
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<PAGE> 15
termination of any Pension Plan; (v) the receipt by the Borrower or any
ERISA Affiliate from the PBGC or a plan administrator of any notice relating to
an intention to terminate any Pension Plan or Pension Plans or to appoint a
trustee to administer any Pension Plan; (vi) the incurrence by the Borrower or
any of its ERISA Affiliates of any liability with respect to the withdrawal or
partial withdrawal from any Pension Plan or Multiemployer Plan; or (vii) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"EURODOLLAR ADVANCES" means, collectively, the Revolving Loans (or any
portions thereof), at such time as they (or such portions) are made and/or
being maintained at a rate of interest based upon the Eurodollar Rate.
"EURODOLLAR RATE" means, with respect each Eurodollar Advance, a rate of
interest per annum, as determined by the Administrative Agent, obtained by
dividing (and then rounding to the nearest 1/16 of 1% or, if there is no
nearest 1/16 of 1%, then to the next higher 1/16 of 1%):
(A) the average (rounded upward, if necessary, to the next 1/16th of 1%)
of the respective rates per annum as reported by each Reference Lender to the
Administrative Agent, as quoted by such Reference Lender to leading banks in
the interbank eurodollar market as the rate at which such Reference Lender is
offering Dollar deposits in immediately available funds in an amount equal
approximately to the Eurodollar Advance of such Reference Lender to which such
Interest Period shall apply for a period equal to such Interest Period, as
quoted at approximately 11:00 a.m. London time, two Business Days prior to the
first day of such Interest Period, by
(B) a number equal to 1.00 minus the aggregate of the then stated
maximum rates during such Interest Period of all reserve requirements (including
marginal, emergency, supplemental and special reserves), expressed as a
decimal, established by the Board of Governors and any other banking authority
to which BNY and other major money center banks chartered under the laws of the
United States or any State thereof are subject, in respect of
eurocurrency funding (currently referred to as "eurocurrency liabilities" in
Regulation D) without benefit of credit for proration, exceptions or offsets
which may be available from time to time to BNY.
"EVENT OF DEFAULT" has the meaning set forth in Section 9.1.
"EVOLVE" means Evolve, Inc., a manufacturer of a remote control unit for
televisions.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from
time to time.
<PAGE> 16
"EXCLUDED TAX" means as to any Person, a Tax imposed by one of the
following jurisdictions or by any political subdivision or taxing authority
thereof: (i) the United States, (ii) the jurisdiction in which such Person is
organized, (iii) the jurisdiction in which such Person's principal office is
located, (iv) in the case of each Credit Party, any jurisdiction in which such
Credit Party is deemed to be doing business, (v) in the case of any Foreign
Credit Party, any withholding tax that is imposed on amounts payable to such
Foreign Credit Party at the time such Foreign Credit Party becomes a party to
this Agreement (or designates a new lending office) or is attributable to such
Foreign Credit Party's failure to comply with Section 3.7(c), except to the
extent that such Foreign Credit Party (or its assignor, if any) was entitled,
at the time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower with respect to such withholding tax
pursuant to Section 3.7; which Tax (a) is any income tax or franchise tax
imposed on all or part of the net income or net profits of such Person or (b)
represents interest, fees or penalties for payment of any such income tax or
franchise tax.
"EXISTING HEDGING AGREEMENTS" means, collectively, (i) the ISDA Master
Agreement, dated June 1, 1995, entered into by the Borrower and Bank of
America, and (ii) the ISDA Master Agreement, dated May 31, 1995, entered into
by the Borrower and The Chase Manhattan Bank (formerly, Chemical Bank).
"EXTENSIONS OF CREDIT" means, collectively, the Revolving Loans, the
Letters of Credit and any participations therein pursuant to Section 2.5(c).
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, a rate per annum
(expressed as a decimal, rounded upwards, if necessary, to the next higher
1/100 of 1%) equal to the weighted average of the rates on overnight federal
funds transactions with members of the Federal Reserve System arranged by
federal funds brokers on such day, as published by the Federal Reserve Bank of
New York on the Business Day next succeeding such day, provided that (i) if the
day for which such rate is to be determined is not a Business Day, the Federal
Funds Effective Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day, and (ii) if such rate is not so published for any day, the Federal Funds
Effective Rate for such day shall be the average of the quotations for such day
on such transactions received by BNY as determined by BNY and reported to the
Administrative Agent.
"FEDERAL RESERVE FORM" means a FR Form U-1 or FR Form G-3, as applicable,
duly completed by the Administrative Agent and executed by the Borrower, the
statements made in which shall be such, in the reasonable opinion of the
Administrative Agent, as to permit the transactions contemplated hereby in
accordance with Regulation U, together with all instruments,
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<PAGE> 17
certificates and other documents executed or delivered in connection therewith
or attached thereto.
"FEES" has the meaning set forth in Section 2.6(a).
"FINANCIAL OFFICER" means, as to any Person, the chief financial officer
of such Person or such other officer as shall be satisfactory to the
Administrative Agent.
"FIXED CHARGE COVERAGE RATIO" means, at any date of determination, the
ratio of (i) the sum of (x) EBITA plus (y) Rent Expense to (ii) the sum of (x)
interest expense of the Borrower and the Subsidiaries determined on a
consolidated basis in accordance with GAAP (including the interest component of
Capital Lease Obligations) plus (y) Rent Expense, in each case for Four Quarter
Trailing Period. Notwithstanding the foregoing, for purposes of calculating
the Fixed Charge Coverage Ratio for the fiscal quarter ending June 30, 1998,
EBITA shall be increased by the amount (not in excess of $12,000,000) of the
restructuring charge taken by the Borrower for the fiscal quarter ending March
31, 1998.
"FOREIGN CREDIT PARTY" means any Credit Party that is organized under the
laws of a jurisdiction other than the United States or any State thereof.
"FOREIGN SUBSIDIARY" means any Subsidiary that is a "controlled foreign
corporation" within the meaning of Section 957 of the Code.
"FOUR QUARTER TRAILING PERIOD" means, at any date of determination, the
period of the four fiscal quarters ending on such date, or, if such date is not
the last day of a fiscal quarter, the period of the most immediately completed
four fiscal quarters.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States.
"GOVERNMENTAL AUTHORITY" means 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.
"GUARANTEE" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or in effect
guaranteeing any return on any investment made by another Person, or any
Indebtedness, lease, dividend or other obligation (a "primary obligation") of
any other Person (a "primary obligor") in any manner, whether directly or
indirectly, including any obligation of the guarantor, direct or indirect (i)
to purchase any primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (A) for the
purchase or payment of any primary obligation or (B) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of a
<PAGE> 18
primary obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the beneficiary of any primary obligation
of the ability of a primary obligor to make payment of a primary obligation,
(iv) otherwise to assure or hold harmless the beneficiary of a primary
obligation against loss in respect thereof, and (v) in respect of the
liabilities of any partnership in which a secondary obligor is a general
partner, except to the extent that such liabilities of such partnership are
nonrecourse to such secondary obligor and its separate property, provided,
however, that the term "Guarantee" shall not include the endorsement of
instruments for deposit or collection in the ordinary course of business. The
amount of any Guarantee shall be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Guarantee is made or,
if not stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by the guarantor in good faith.
"GUARANTEE SUPPLEMENT" means a Guarantee Supplement in the form of Exhibit
H hereto.
"GUARANTOR OBLIGATIONS" means, with respect to each Subsidiary Guarantor,
all of the obligations and liabilities of such Subsidiary Guarantor under the
Loan Documents, whether fixed, contingent, now existing or hereafter arising,
created, assumed, incurred or acquired.
"HEDGING AGREEMENT" means any interest rate swap, cap or collar
arrangement or any other derivative product customarily offered by banks or
other financial institutions to their customers in order to reduce the exposure
of such customers to interest rate fluctuations.
"INDEBTEDNESS" means, as to any Person, at a particular time, all items
which constitute, without duplication, (i) indebtedness for borrowed money,
(ii) indebtedness in respect of the deferred purchase price of property (other
than trade payables incurred in the ordinary course of business), (iii)
indebtedness evidenced by notes, bonds, debentures or similar instruments, (iv)
obligations with respect to any conditional sale or title retention agreement,
(v) indebtedness arising under acceptance facilities and the amount available
to be drawn under all letters of credit issued for the account of such Person
and, without duplication, all drafts drawn thereunder to the extent such Person
shall not have reimbursed the issuer in respect of the issuer's payment
thereof, (vi) liabilities secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on property owned by such Person (other than carriers',
warehousemen's, mechanics', repairmen's or other like non-consensual statutory
Liens arising in the ordinary course of business), even though such Person has
not assumed or otherwise become liable for the payment thereof, (vii) Capital
Lease Obligations, (viii) all obligations of such Person in respect of
Disqualified Stock, and (x) all Guarantees by such Person of Indebtedness of
others. The Indebtedness of any Person shall include the Indebtedness of any
other entity (including any partnership in which such
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<PAGE> 19
Person is a general partner) to the extent such Person is liable therefor
as a result of such Person's ownership interest in or other relationship with
such entity, except to the extent the terms of such Indebtedness provide that
such Person is not liable therefor.
"INDEMNIFIED TAX" means as to any Person, any Tax, except (i) an Excluded
Tax imposed on such Person and (ii) any interest, fees or penalties for late
payment thereof imposed on such Person.
"INSOLVENT" means, with respect to any Person, (a) the sum of the assets,
at a fair valuation, of such Person does not exceed its debts, (b) such Person
has incurred debts beyond its ability to pay such debts as such debts mature,
(c) such Person believes that, in the ordinary course of its business during
the reasonably foreseeable future, it will incur debts beyond its ability to
pay such debts as such debts mature, and (d) such Person has insufficient
capital with which to conduct its business. For purposes of this definition
only, "debt" means any liability on a claim, and "claim" means any (i) right to
payment, whether such a right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured, or unsecured, or (ii) right to an equitable remedy for breach of
performance if such breach gives rise to a payment, whether such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured,
disputed, undisputed, secured, unsecured, liquidated or unliquidated.
"INTELLECTUAL PROPERTY" means all patents, trademarks, tradenames,
copyrights, trade secrets, confidential or proprietary technical and business
information and other similar property and all licenses related thereto.
"INTEREST PERIOD" means, as to each Eurodollar Advance, the period
commencing on, as the case may be, the Borrowing Date or Conversion Date with
respect thereto and ending one, two, three or six months thereafter, as
selected by the Borrower in its Credit Request or Notice of Conversion.
"INVENTORY" means inventory of the Borrower or any Subsidiary Guarantor
consisting of first quality finished products held for sale to customers in the
ordinary course of business, valued at the lower of average cost or market
value which approximates a first-in-first-out basis.
"INVESTMENTS" has the meaning set forth in Section in Section 8.4.
"ISSUER" means The First National Bank of Chicago and its successors and
assigns.
"LETTER OF CREDIT" has the meaning set forth in Section 2.5.
"LETTER OF CREDIT FEES" has the meaning set forth in Section 3.2(b).
<PAGE> 20
"LETTER OF CREDIT COMMITMENT" means the commitment of the Issuer to issue
Letters of Credit having an aggregate outstanding face amount up to $5,000,000.
"LETTER OF CREDIT EXPOSURE" means in respect of any Lender at any time, an
amount equal to (i) the sum (without duplication) at such time of (x) the
aggregate undrawn face amount of the outstanding Letters of Credit, (y) the
aggregate amount of unpaid drafts drawn on all Letters of Credit, and (z) the
aggregate unpaid Reimbursement Obligations, multiplied by (ii) such Lender's
Commitment Percentage at such time.
"LIEN" means any mortgage, pledge, hypothecation, assignment, encumbrance,
lien (statutory or other), or other security agreement or security interest of
any kind or nature whatsoever, including any conditional sale or other title
retention agreement and any capital or financing lease having substantially the
same economic effect as any of the foregoing.
"LINE OF BUSINESS" means the manufacture and distribution of
telecommunications and cable products and any business reasonably similar,
complimentary, ancillary or related thereto.
"LOAN DOCUMENTS" means, collectively, this Agreement, the Notes, the
Security Documents, each Secured Hedging Agreement and all other agreements,
instruments and documents executed or delivered in connection herewith.
"LOAN PARTIES" means, collectively, the Borrower, and each Subsidiary
Guarantor.
"MANAGING PERSON" means, with respect to any Person that is (i) a
corporation, its board of directors, (ii) a limited liability company, its
board of control, managing member or members, (iii) a limited partnership, its
general partner, (iv) a general partnership or a limited liability partnership,
its managing partner or executive committee or (v) any other Person, the
managing body thereof or other Person analogous to the foregoing.
"MARGIN STOCK" has the meaning set forth in Regulation U.
"MATERIAL ADVERSE" means, with respect to any change or effect, a material
adverse change in, or effect on, as the case may be, (i) the business, assets,
operations, prospects or condition, financial or otherwise, of (x) the Borrower
or (y) the Borrower and the Subsidiaries taken as a whole, (ii) the ability of
any Loan Party to perform its obligations under the Loan Documents to which it
is a party, (iii) the rights of, or benefits available to, the Credit Parties
under the Loan Documents, (iv) the legality or enforceability of any Loan
Document or (v) the perfection or priority of any Lien granted under any of the
Security Documents.
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<PAGE> 21
"MATERIAL AGREEMENTS" means, collectively, (i) the Anixter Repurchase
Agreement, (ii) the Bill of Sale and General Conveyance and Assumption of
Liabilities, dated as of June 1, 1993, between Anixter Bros., Inc. and the
Borrower, (iii) the Tax Allocation Agreement, dated as of July 16, 1993,
between Itel Corporation, the Borrower and certain of its Subsidiaries, (iv)
the Limited Liability Company Agreement of Products Venture L.L.C. (now Arris),
(v) the Products Distributor Agreement, dated November 15, 1995, between
Products Venture L.L.C. and the Borrower, and (vi) the Agreement, dated
February 27, 1998, among Nortel, the Borrower and Arris.
"MATERIAL FOREIGN SUBSIDIARY" means a Foreign Subsidiary as to which any
of the following tests are or have at any time on or after the Effective Date
been met: (i) the Borrower's and the other Subsidiaries' investments in and
advances to such Foreign Subsidiary are greater than
or equal to 5% of the total assets of the Borrower and the Subsidiaries on a
consolidated basis as of the last day of the most recently completed fiscal
year of the Borrower, (ii) such Foreign Subsidiary's proportionate share of the
total assets (after intercompany eliminations) of the Borrower and the
Subsidiaries on a consolidated basis is greater than or equal to 5% of the
total assets of the Borrower and the Subsidiaries on a consolidated basis as of
the last day of the most recently completed fiscal year of the Borrower, or
(iii) the income from continuing operations before income taxes, extraordinary
items and the cumulative effect of a change in accounting principles of such
Foreign Subsidiary is greater than or equal to 5% of such income of the
Borrower and the Subsidiaries on a consolidated basis as of the last day of the
most recently completed fiscal year of the Borrower.
"MATERIAL LIABILITIES" means, on any date, with respect to the Borrower,
any Subsidiary, or any combination thereof: (i) Indebtedness (other than
Indebtedness under the Loan Documents), (ii) the net termination obligations in
respect of one or more Hedging Agreements (calculated as if such Hedging
Agreements were terminated as of such date), and (iii) other liabilities, in
each case whether as principal, guarantor, surety or other obligor, in an
aggregate principal amount exceeding $500,000.
"MATURITY DATE" means May 21, 2002, or such earlier date on which the
Notes shall become due and payable, whether by acceleration or otherwise.
"MEXICAN SUBSIDIARY" means Texscan de Mexico, S.A. de C.V.
"MINIMUM AMOUNT" means in respect of (i) ABR Advances, $1,000,000 or such
amount plus a whole multiple of $500,000 in excess thereof, and (ii) Eurodollar
Advances, $2,500,000 or such amount plus a whole multiple of $1,000,000 in
excess thereof.
"MORTGAGE" means a mortgage, deed of trust, assignment of leases and
rents, leasehold mortgage or other security document granting a Lien on any
Mortgaged Property to secure the Obligations, as the case may be. Each
Mortgage shall be satisfactory in form and substance to the
<PAGE> 22
Administrative Agent.
"MORTGAGE DOCUMENT" has the meaning set forth in Section 7.11.
"MORTGAGED PROPERTY" means each parcel of real property and improvements
thereto owned or leased by a Loan Party with respect to which a Mortgage is
granted pursuant to Section 7.11.
"MULTIEMPLOYER PLAN" means a Pension Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"NET CASH PROCEEDS" means, cash proceeds received from a Disposition, an
Equity Issuance, a casualty loss or a condemnation after deduction of taxes
payable in cash in connection therewith and net of reasonable transaction
expenses.
"NET WORTH" means on any date of determination, all amounts which would,
in conformity with GAAP, be included under "shareholders' equity" (or any like
caption) on a consolidated balance sheet of the Borrower and the Subsidiaries
as at such date.
"NON-GUARANTOR SUBSIDIARY" at any time, any Subsidiary that is not a
Subsidiary Guarantor at such time.
"NORTEL" means Northern Telecom Inc.
"NOTES" means with respect to each Lender in respect of such Lender's
Revolving Loans, a promissory note, substantially in the form of Exhibit A,
payable to the order of such Lender, each such promissory note having been made
by the Borrower and dated the Effective Date, including all replacements
thereof and substitutions therefor.
"NOTICE OF CONVERSION" has the meaning set forth in Section 3.3(a).
"OBLIGATIONS means, collectively, the Borrower Obligations and the
Guarantor Obligations.
"ORGANIZATIONAL DOCUMENTS" means as to any Person which is (i) a
corporation, the certificate or articles of incorporation and by-laws of such
Person, (ii) a limited liability company, the limited liability company
agreement or similar agreement of such Person, (iii) a partnership, the
partnership agreement or similar agreement of such Person, or (iv) any other
form of entity or
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<PAGE> 23
organization, the organizational documents analogous to the foregoing.
"OTHER TAXES" means any and all current or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies that
arise from any payment made hereunder or from the execution, delivery,
registration or enforcement of, or any amendment, supplement or modification
of, or any waiver or consent under or in respect of, the Loan Documents or
otherwise with respect to, the Loan Documents.
"PAYMENT OFFICE" means the office of the Administrative Agent set forth in
Section 11.2(b).
"PBGC" means the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA, or any Governmental Authority succeeding to
the functions thereof.
"PENSION PLAN" means, at any date of determination, any employee pension
benefit plan (other than a Multiemployer Plan), the funding requirements of
which (under Section 302 of ERISA or Section 412 of the Code) are, or at any
time within the six years immediately preceding such date, were in whole or in
part, the responsibility of the Borrower or any ERISA Affiliate.
"PERFECTION CERTIFICATE" means a certificate in the form of Annex A to the
Security Agreement or any other form approved by the Administrative Agent.
"PERMITTED LIENS" has the meaning set forth in Section 8.2.
"PERMITTED TRANSACTION AMOUNT" means, for any period, an amount equal to
the sum without duplication of the following paid during such period: the
aggregate fair market value of all consideration paid by the Borrower or any
Subsidiary in connection with any one or more of the following (including in
the case of an Acquisition, the Acquisition Consideration therefor): (i) each
sale, assignment, lease, transfer or other disposition permitted by Section
8.6(b) (including each merger permitted by Section 8.3(b) which shall be
treated as such), (ii) each Acquisition permitted by Section 8.5(b) (including
each merger permitted by Section 8.3(b) which shall be treated as such) or
Section 8.5(c), (iii) each Investment permitted by Section 8.4(c) or (e), and
(iv) each Restricted Payment permitted by Section 8.7(c). For purposes of this
definition, any transaction or other event described in clauses (i), (ii),
(iii) or (iv) of the definition that is between the Borrower and any Subsidiary
or any two or more Subsidiaries, shall count only once.
"PERMITTED TRANSACTION ANNUAL LIMITATION" means, in respect of any fiscal
year, (i) from the Effective Date until the Fixed Charge Coverage Ratio has
been maintained at greater than or equal to 2.00:1.00 for two consecutive
fiscal quarters, an amount equal to the greater of (x) $5,000,000 and (y) the
Arris Obligations for such fiscal year; and (ii) thereafter for so long as the
Fixed Charge Coverage Ratio is greater than or equal to 2.00:1.00 as of the
last day of a fiscal
<PAGE> 24
quarter, an amount equal to $15,000,000, it being understood that if as of the
last day of any fiscal quarter, the Fixed Charge Coverage Ratio is less than
2.00:1.00, the dollar limitation set forth in clause (i) will again apply until
such time as the Fixed Charge Coverage Ratio has been maintained at greater
than or equal to 2.00:1.00 for two consecutive fiscal quarters.
Notwithstanding the foregoing, if during a fiscal year a decrease in the
Permitted Transaction Annual Limitation becomes effective:
(A) if the amount of the Permitted Transaction Annual Limitation
utilized by the Borrower on or before the effectiveness of such decrease
is less than the amount of the Permitted Transaction Annual Limitation as so
decreased, the Permitted Transaction Annual Limitation for the balance of
such fiscal year shall be an amount equal to the amount of the Permitted
Transaction Annual Limitation as so decreased minus the amount of the
Permitted Transaction Annual Limitation utilized by the Borrower on or before
the effectiveness of such decrease, and
(B) if the amount of the Permitted Transaction Annual Limitation
utilized by the Borrower on or before the effectiveness of the decrease
equals or exceeds the amount of the Permitted Transaction Annual Limitation
as so decreased, (1) the Permitted Transaction Annual Limitation for the
balance of such fiscal year shall be zero and (2) such excess shall be deemed
a utilization of the Permitted Transaction Annual Limitation in each
succeeding fiscal year until such excess shall have been fully utilized.
"PERMITTED TRANSACTION AGGREGATE LIMITATION" means, for the period from
the Effective Date through the Maturity Date, $35,000,000.
"PERSON" means a natural person, firm, partnership, limited liability
company, joint venture, corporation, association, business enterprise, joint
stock company, unincorporated association, trust, Governmental Authority or any
other entity, whether acting in an individual, fiduciary, or other capacity,
and for the purpose of the definition of "ERISA Affiliate", a trade or
business.
"PRICING LEVEL" means Pricing Level I, Pricing Level II, Pricing Level
III, Pricing Level IV, Pricing Level V, Pricing Level VI or Pricing Level VII,
as applicable.
"PRICING LEVEL I" means the applicable Pricing Level at any time when the
Fixed Charge Coverage Ratio is greater than 3.50:1.00.
"PRICING LEVEL II" means the applicable Pricing Level at any time when the
Fixed Charge Coverage Ratio is greater than 3.00:1.00 but less than or equal to
3.50:1.00.
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<PAGE> 25
"PRICING LEVEL III" means the applicable Pricing Level at any time when
the Fixed Charge Coverage Ratio is greater than 2.50:1.00 but less than or
equal to 3.00:1.00.
"PRICING LEVEL IV" means the applicable Pricing Level at any time when the
Fixed Charge Coverage Ratio is greater than 2.00:1.00 but less than or equal to
2.50:1.00.
"PRICING LEVEL V" means the applicable Pricing Level at any time when the
Fixed Charge Coverage Ratio is greater than 1.50:1.00 but less than or equal to
2.00:1.00.
"PRICING LEVEL VI" means the applicable Pricing Level at any time when the
Fixed Charge Coverage Ratio is greater than 1.25:1.00 but less than or equal to
1.50:1.00.
"PRICING LEVEL VII" means the applicable Pricing Level at any time when
the Fixed Charge Coverage Ratio is less than or equal to 1.25:1.00.
"PRIME RATE" means the rate of interest per annum publicly announced in
New York City by BNY from time to time as its prime commercial lending rate,
such rate to be adjusted automatically (without notice) on the effective date
of any change in such publicly announced rate.
"RECEIVABLE" means the right to payment arising as a result of, or in
connection with, a sale of Inventory or the performance of services by, and in
the ordinary course of business of, the Borrower or any Subsidiary Guarantor.
"REFERENCE LENDERS" means, collectively, BNY and Bank of America.
"REGULATION D, T, U AND X" means Regulations D, T, U and X, respectively,
of the Board of Governors as from time to time in effect and all official
rulings and interpretations thereunder or thereof.
"REIMBURSEMENT OBLIGATION" means, collectively, the obligation of the
Borrower to the Issuer with respect to each Letter of Credit and all documents,
instruments and other agreements related thereto, including the obligation of
the Borrower to reimburse the Issuer for amounts drawn under such Letter of
Credit.
"REINVESTED PROCEEDS" means, with respect to any Disposition as of any
date of determination, the amount of Net Cash Proceeds from such Disposition
that is used by the Borrower or any Subsidiary to acquire, during the
Reinvestment Period with respect to such Disposition, property that is to be
used in the Line of Business.
"REINVESTMENT PERIOD" means the period beginning on the date that proceeds
from a Disposition are received by the Borrower or any Subsidiary, as the case
may be, and ending on the
<PAGE> 26
earlier of (i) 365 days after the receipt of such proceeds, and (ii) the
occurrence of an Event of Default.
"RELATED PARTIES" means, with respect to any Person, such Person's
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person and such Person's Affiliates.
"REMAINING INTEREST PERIOD" means, in the event that (i) the Borrower
shall fail for any reason to borrow a Revolving Loan in respect of which it
shall have requested a Eurodollar Advance or convert an Advance to a Eurodollar
Advance after it shall have notified the Administrative Agent of its intent to
do so pursuant to Section 2.2 or 3.3, a period equal to the Interest Period
that the Borrower elected in respect of such Eurodollar Advance; (ii) a
Eurodollar Advance shall terminate for any reason prior to the last day of the
Interest Period applicable thereto, a period equal to the remaining portion of
such Interest Period if such Interest Period had not been so terminated; or
(iii) the Borrower shall prepay or repay all or any part of the principal
amount of a Eurodollar Advance prior to the last day of the Interest Period
applicable thereto, a period equal to the period from and including the date of
such prepayment or repayment to but excluding the last day of such Interest
Period.
"RENT EXPENSE" means, for any period, the aggregate rental expense
(including any contingent or percentage rental expense) of the Borrower and the
Subsidiaries on a consolidated basis paid or accrued during such period in
respect of all rent obligations under all operating leases for real or personal
property.
"REQUIRED LENDERS" means, at any time, one or more Lenders having the sum
of unused Revolving Commitments and Credit Exposures greater than or equal to
51% of the sum of the unused Aggregate Revolving Commitment and the Aggregate
Credit Exposure.
"RESTRICTED PAYMENT" has the meaning set forth in Section 8.7.
"REVOLVING COMMITMENT" means, in respect of any Lender, the maximum amount
of such Lender's Credit Exposure as set forth on the signature page of such
Lender adjacent to the heading "Revolving Commitment" or in an Assignment and
Acceptance Agreement or other document pursuant to which it became a Lender, as
such amount may be adjusted from time to time in accordance herewith.
"REVOLVING LOAN" and "REVOLVING LOANS" have the meaning set forth in
Section 2.1.
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<PAGE> 27
"SALE AND LEASEBACK TRANSACTION" has the meaning set forth in Section 8.9.
"SEC" means the Securities and Exchange Commission or any Governmental
Authority succeeding to the functions thereof.
"SECURED HEDGING AGREEMENT" means, collectively, (i) the Existing Hedging
Agreements and (ii) any Hedging Agreement entered into by the Borrower with a
counterparty that was a Lender (or an Affiliate thereof) at the time such
Hedging Agreement was entered into.
"SECURED PARTIES" has the meaning set forth in the Security Agreement.
"SECURITY AGREEMENT" means the Security Agreement, by and among the Loan
Parties party thereto and the Administrative Agent, substantially in the form
of Exhibit G.
"SECURITY DOCUMENTS" means, collectively, (i) upon the execution and
delivery thereof, the Security Agreement and each Mortgage Document, (ii) each
Additional Pledge Agreement, if any, executed and delivered pursuant to Section
7.9(b) and 7.14, and (iii) all other instruments and documents delivered
pursuant to Section 7.9, 7.10 or 7.11 to secure any of the Obligations.
"SPECIAL COUNSEL" means Emmet, Marvin & Martin, LLP, as, or such other
counsel selected by the Administrative Agent as, special counsel to the
Administrative Agent hereunder.
"STOCK RETIREMENT RESOLUTIONS" has the meaning set forth in Section
5.1(a).
"SUBSIDIARY" means, with respect to any Person (the "parent") at any date,
any other Person (i) the accounts of which would be consolidated with those of
the parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with
GAAP as of such date, (ii) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary
voting power or, in the case of a partnership, more than 50% of the general
partnership interests or more than 50% of the profits or losses of which are,
as of such date, owned, controlled or held by the parent or one or more
subsidiaries of the parent. Unless otherwise qualified, all references to
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary
or Subsidiaries of the Borrower.
"SUBSIDIARY GUARANTOR" means each Subsidiary party to this Agreement.
"SUBORDINATED INDENTURE" means the Indenture, dated as of May 8, 1998,
between the Borrower and The Bank of New York, as Trustee, pursuant to which
the Subordinated Notes were issued.
<PAGE> 28
"SUBORDINATED NOTES" means the 4 1/2% Convertible Subordinated Notes, due
2003, issued by the Borrower pursuant to the Subordinated Indenture.
"TAX" means any present or future tax, levy, impost, duty, charge, fee,
deduction or withholding of any nature and whatever called, by a Governmental
Authority, on whomsoever and wherever imposed, levied, collected, withheld or
assessed.
"TEXSCAN" means Texscan Corporation, a Delaware corporation and a Wholly
Owned Subsidiary of the Borrower.
"TOTAL DEBT" means, on any date of determination, the aggregate amount of
all indebtedness for borrowed money and Capital Lease Obligations of the
Borrower and the Subsidiaries determined on a consolidated basis in accordance
with GAAP.
"TOTAL PERCENTAGE" means, as of any date and with respect to each Lender,
the percentage equal to a fraction (i) the numerator of which is the sum of the
Revolving Commitment of such Lender on such date (or, if there are no Revolving
Commitments on such date, such Lender's Credit Exposure on such date), and (ii)
the denominator of which is the Aggregate Revolving Commitment on such date
(or, if there are no Revolving Commitments on such date, the Aggregate Credit
Exposure on such date).
"TRANSACTIONS" means, collectively, the transactions contemplated by the
Loan Documents and the Subordinated Indenture.
"UNCONSOLIDATED INVESTMENT" means, as of any date, any investment made by
the Borrower or any Subsidiary in any other Person that, pursuant to GAAP as in
effect on such date, would not be consolidated with the Borrower for financial
reporting purposes immediately after giving effect to such investment.
"UNITED STATES" means the United States of America.
"WHOLLY OWNED" means, with respect to any Subsidiary of any Person, 100%
of the outstanding Capital Stock of such Subsidiary is owned, directly or
indirectly, by such Person.
"WITHDRAWAL LIABILITY" means, with respect to any Person, liability of
such Person to a Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan, as such terms are defined in Part I of
Subtitle E of Title IV of ERISA.
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1.2. ACCOUNTING TERMS
As used in the Loan Documents and in any certificate, opinion or
other document made or delivered pursuant thereto, accounting terms not
defined in Section 1.1, and accounting terms partly defined in Section 1.1, to
the extent not defined, shall have the respective meanings given to them under
GAAP. If any change in GAAP would affect the computation of any financial
ratio or requirement set forth in this Agreement, the Credit Parties and the
Borrower shall negotiate in good faith to amend such ratio or requirement to
reflect such change in GAAP (subject to the approval of the Required Lenders),
provided that, until so amended, (i) such ratio or requirement shall continue
to be computed in accordance with GAAP prior to such change and (ii) the
Borrower shall provide to the Credit Parties financial statements and other
documents required under this Agreement (or such other items as the
Administrative Agent may reasonably request) setting forth a reconciliation
between calculations of such ratio or requirement before and after giving
effect to such change.
1.3. RULES OF INTERPRETATION
(A) Unless expressly provided in a Loan Document to the contrary,
(i) the words "hereof", "herein", "hereto" and "hereunder" and similar words
when used in each Loan Document shall refer to such Loan Document as a whole
and not to any particular provision thereof, (ii) section, subsection, schedule
and exhibit references contained therein shall refer to section, subsection,
schedule and exhibit thereof or thereto, (iii) the words "include" and
"including", shall mean that the same shall be "included, without limitation",
(iv) any definition of, or reference to, any agreement, instrument, certificate
or other document herein shall be construed as referring to such agreement,
instrument or other document as from time to time amended, supplemented or
otherwise modified, (v) any reference herein to any Person shall be construed
to include such Person's successors and assigns, (vi) the words "asset" and
"property" shall be construed to have the same meaning and to refer to any and
all tangible and intangible assets and properties, including cash, securities,
accounts and contract rights, (vii) words in the singular number include the
plural, and words used therein in the plural include the singular, (viii) any
reference to a time shall refer to such time in New York, (ix) in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding", and (x) references therein to a fiscal period shall
refer to that fiscal period of the Borrower.
(B) Article and Section headings have been inserted in the Loan
Documents for convenience only and shall not be construed to be a part thereof.
ARTICLE 2. AMOUNT AND TERMS OF EXTENSIONS OF CREDIT
2.1. REVOLVING LOANS
<PAGE> 30
Subject to the terms and conditions hereof, each Lender severally
agrees to make revolving credit loans in Dollars (each a "REVOLVING LOAN" and,
as the context may require, collectively with all other Revolving Loans of such
Lender and with the Revolving Loans of all other Lenders, the "REVOLVING
LOANS") to the Borrower from time to time on any Business Day during the period
from the Effective Date to the Commitment Termination Date, provided that after
giving effect thereto (i) such Lender's Credit Exposure would not exceed such
Lender's Revolving Commitment, and (ii) the Aggregate Credit Exposure would not
exceed the lesser of (x) Aggregate Revolving Commitment and (y) the Borrowing
Base Amount. During such period, the Borrower may borrow, prepay in whole or
in part and reborrow under the Revolving Commitments, all in accordance with
the terms and conditions of this Agreement. The outstanding principal balance
of each Revolving Loan shall be due and payable on the Maturity Date.
2.2. PROCEDURE FOR BORROWING
(A) CREDIT REQUEST. To request a Revolving Loan, the Borrower shall
notify the Administrative Agent by the delivery of a Credit Request, which
shall be sent by facsimile and shall be irrevocable (confirmed promptly, and in
any event within five Business Days, by the delivery to the Administrative
Agent of a Credit Request manually signed by the Borrower), no later than 11:00
a.m., three Business Days prior to the requested Borrowing Date, in the case of
Eurodollar Advances, and 11:00 a.m., on the requested Borrowing Date, in the
case of ABR Advances, specifying (A) the aggregate principal amount to be
borrowed, (B) the requested Borrowing Date, (C) whether such borrowing is to
consist of one or more Eurodollar Advances, ABR Advances, or a combination
thereof and (D) if the Revolving Loan is to consist of one or more Eurodollar
Advances, the amount and length of the Interest Period for each Eurodollar
Advance. The amount of each (i) Eurodollar Advance to be made on a Borrowing
Date, when aggregated with all amounts to be converted to, or continued as, a
Eurodollar Advance on such date and having the same Interest Period as such
first Eurodollar Advance, shall equal the Minimum Amount and (ii) each ABR
Advance made on each Borrowing Date shall equal the Minimum Amount or, if less,
the unused portion of the Aggregate Revolving Commitment.
(B) FUNDING BY LENDERS. Upon receipt of each Credit Request, the
Administrative Agent shall promptly notify each Lender thereof. Subject to its
receipt of the notice referred to in the preceding sentence, each Lender will
make the amount of its Commitment Percentage of the requested Revolving Loans
available to the Administrative Agent for the account of the Borrower at the
Payment Office not later than 1:00 p.m. on the relevant Borrowing Date
requested by the Borrower, in funds immediately available to the Administrative
Agent at such office. The amounts so made available to the Administrative
Agent on such Borrowing Date will then,
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subject to the satisfaction of the terms and conditions of this Agreement,
be made available on such date to the Borrower by the Administrative Agent at
the Payment Office by crediting the account of the Borrower on the books of the
Administrative Agent at such office with the aggregate of said amounts (in like
funds) received by the Administrative Agent.
(C) FAILURE TO FUND. Unless the Administrative Agent shall have
received notice prior to a proposed Borrowing Date (or, in the case of a
borrowing of ABR Advances, prior to 1:00 p.m. on such Borrowing Date) from a
Lender (by telephone or otherwise, such notice to be promptly confirmed by
facsimile or other writing) that such Lender will not make available to the
Administrative Agent such Lender's share of the requested Revolving Loans, the
Administrative Agent may assume that such Lender has made such share available
to the Administrative Agent on the Borrowing Date in accordance with this
Section and, in reliance upon such assumption, make available to the Borrower
on such Borrowing Date a corresponding amount. If and to the extent such
Lender shall not have so made such share available to the Administrative Agent,
such Lender and the Borrower severally agree to pay to the Administrative Agent
forthwith on demand such corresponding amount (to the extent not previously
paid by the other), together with interest thereon for each day from the date
such amount is made available to the Borrower to the date such amount is paid
to the Administrative Agent, at a rate per annum equal to, in the case of the
Borrower, the interest rate otherwise applicable to such Revolving Loan, and,
in the case of such Lender, at a rate of interest per annum equal to the
greater of the Federal Funds Effective Rate and a rate reasonably determined by
the Administrative Agent in accordance with banking industry rates on interbank
compensation. If such Lender shall pay to the Administrative Agent such
corresponding amount, such amount so paid shall constitute such Lender's
Revolving Loan as part of the relevant borrowing for purposes of this
Agreement. The failure of any Lender to provide such Lender's share of the
requested Loans shall not relieve any other Lender of its obligations hereunder
to provide its share of the requested Revolving Loans.
2.3. TERMINATION AND REDUCTION OF REVOLVING COMMITMENTS
(A) VOLUNTARY TERMINATION OR REDUCTIONS. The Borrower may, upon at
least three Business Days' prior written notice to the Administrative Agent,
(A) at any time when the Aggregate Credit Exposure shall be zero, terminate all
of the Commitments, and (B) at any time and from time to time when the
Aggregate Revolving Commitment shall exceed the Aggregate Credit Exposure
(after giving effect to any contemporaneous payment or payment of Revolving
Loans or Reimbursement Obligations), permanently reduce the Aggregate Revolving
Commitment by a sum not greater than the amount of such excess, provided,
however, that each such partial reduction shall be in the amount of $5,000,000
or such amount plus a whole multiple of $1,000,000 in excess thereof. Upon
receipt of each notice of a termination or reduction of the Commitments under
this Section 2.3(a), the Administrative Agent shall promptly notify each Lender
thereof.
(B) OTHER MANDATORY REDUCTIONS. The Aggregate Revolving Commitment
shall
<PAGE> 32
be permanently reduced at the times and in the amounts required by Section
2.4(b).
(C) REDUCTIONS OF LETTER OF CREDIT COMMITMENT. The Letter of Credit
Commitment shall not be reduced until such time as the Aggregate Revolving
Commitment shall equal such Letter of Credit Commitment, and thereafter shall
in each case be reduced, automatically, by a sum equal to the amount of each
such reduction in the Aggregate Revolving Commitment.
(D) REDUCTIONS IN GENERAL. Each reduction of the Aggregate Revolving
Commitment shall be made by reducing each Lender's Revolving Commitment by an
amount equal to such Lender's Commitment Percentage of such reduction.
Simultaneously with each reduction of the Aggregate Revolving Commitment, the
Borrower shall pay the Commitment Fee accrued on the amount by which the
Aggregate Revolving Commitment has been reduced.
2.4. PREPAYMENTS OF THE REVOLVING LOANS
(A) VOLUNTARY PREPAYMENTS. The Borrower shall have the right at any
time and from time to time to prepay all or any portion of the Revolving Loans
without premium or penalty (but subject to Section 3.5), by delivering to the
Administrative Agent an irrevocable written notice thereof no later than 11:00
a.m. on the proposed prepayment date, in the case of Revolving Loans consisting
of ABR Advances, and at least three Business Days prior to the proposed
prepayment date, in the case of Revolving Loans consisting of Eurodollar
Advances, specifying whether the Revolving Loans to be prepaid consist of ABR
Advances, Eurodollar Advances, or a combination thereof, the amount to be
prepaid and the date of prepayment, whereupon the amount specified in such
notice shall be due and payable on the date specified. Upon receipt of each
such notice, the Administrative Agent shall promptly notify each Lender
thereof. Each partial prepayment of the Revolving Loans pursuant to this
subsection shall be in an amount equal to the Minimum Amount, or, if less, the
outstanding principal balance of the Revolving Loans. After giving effect to
any partial prepayment with respect to Eurodollar Advances which were made
(whether as the result of a borrowing, a conversion or a continuation) on the
same date and which had the same Interest Period, the outstanding principal
balance of such Eurodollar Advances shall equal or exceed (subject to Section
3.3) the Minimum Amount.
(B) MANDATORY PREPAYMENTS AND COMMITMENT REDUCTIONS RELATING TO
DISPOSITIONS, EQUITY ISSUANCES AND THE RECEIPT OF APPLICABLE PROCEEDS. On or
before each date set forth below, the Aggregate Revolving Commitment shall be
permanently reduced and the Borrower shall prepay the aggregate unpaid
principal amount of the Revolving Loans and make deposits into the Cash
Collateral Account in the amounts set forth below and applicable to the date
specified:
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(I) on the last day of the Reinvestment Period for each Disposition
described in Section 8.6(c), by an amount equal to 100% of the Adjusted
Net Cash Proceeds with respect to such Disposition,
(II) upon receipt by the Borrower of Net Cash Proceeds attributable
to any Equity Issuance, by an amount equal to 100% of such Net Cash
Proceeds, and
(III) in an amount equal to all Applicable Proceeds (A) in excess of
amounts used to replace or repair any properties or (B) which are not
used or designated to replace or repair properties within six months
after receipt thereof, provided that the Borrower or the applicable
Subsidiary Guarantor shall have commenced the restoration or
replacement process (including the making of appropriate filings and
requests for approval) within 45 days after such casualty or after the
receipt of any such condemnation proceeds, as the case may be, and
diligently pursues the same through completion,
provided, however, that if on the date of such a reduction of the Aggregate
Revolving Commitment, the Aggregate Credit Exposure exceeds the Aggregate
Revolving Commitment after giving effect to such reduction and, if the
Revolving Loans have been paid in full and the Letter of Credit Exposure of all
Lenders is greater than zero, the Borrower shall deposit into the Cash
Collateral Account an amount in cash which would cause the balance on deposit
in the Cash Collateral Account to equal or exceed the Letter of Credit Exposure
of all Lenders.
(C) MANDATORY BORROWING BASE PREPAYMENT OF REVOLVING LOANS. If on any
day the Aggregate Credit Exposure exceeds the Borrowing Base Amount, the
Borrower shall, within one Business Day of such day, prepay the
Revolving Loans in an amount equal to the lesser of (i) such excess and (ii)
the Aggregate Credit Exposure. Until such excess has been prepaid, the
Borrower shall not be entitled to borrow additional Revolving Loans.
(D) OTHER MANDATORY PREPAYMENTS; CONTRIBUTION TO CASH COLLATERAL
ACCOUNT. Simultaneously with each reduction of the:
(I) Aggregate Revolving Commitment, (1) in the event that the
Letter of Credit Commitment shall exceed the Aggregate Revolving
Commitment as so reduced or terminated, the Letter of Credit Commitment
shall be automatically reduced by an amount equal to such excess, and (2)
the Borrower shall prepay the Revolving Loans by an amount equal to the
lesser of (A) the aggregate outstanding principal balance of the
Revolving Loans, or (B) the excess of the aggregate outstanding principal
balance of the Revolving Loans over the Aggregate Revolving Commitment as
so reduced or terminated; and
(II) Letter of Credit Commitment (including pursuant to clause (i)
above), in the event the aggregate Letter of Credit Exposure of all
Lenders exceeds the Letter of Credit Commitment as so reduced or
terminated, the Borrower shall immediately deposit
<PAGE> 34
into the Cash Collateral Account such amount, in cash, as would cause
the balance on deposit in the Cash Collateral Account to equal or exceed
the aggregate Letter of Credit Exposure of all Lenders.
(E) IN GENERAL. Simultaneously with each prepayment of a Eurodollar
Advance, the Borrower shall prepay all accrued interest on the amount prepaid
through the date of prepayment together with amounts due under Section 3.5.
2.5. LETTERS OF CREDIT
(A) AVAILABILITY; PROCEDURE. The Borrower may request the Issuer to
issue standby letters of credit (the "LETTERS OF CREDIT"; each, individually,
a "LETTER OF CREDIT") during the period from the Effective Date to the
fifteenth Business Day prior to the Maturity Date, provided that (i)
immediately after the issuance of each Letter of Credit the Letter of Credit
Exposure of all Lenders would not exceed the Letter of Credit Commitment, (ii)
the Aggregate Credit Exposure would not exceed the lesser of (x) the Aggregate
Revolving Commitment and (y) the Borrowing Base Amount, and (iii) no more than
20 Letters of Credit shall be outstanding. To request the issuance of a Letter
of Credit, the Borrower shall notify the Administrative Agent and the Issuer by
the delivery of a Credit Request, which shall be sent by facsimile and shall be
irrevocable (confirmed promptly, and in any event within five Business Days, by
the delivery to the Administrative Agent of a Credit Request manually signed by
the Borrower), at least three Business Days prior to the requested date of
issuance, specifying (A) the beneficiary of such Letter of Credit, (B) the
Borrower's proposal as to the conditions under which a drawing may be made
under such Letter of Credit and the documentation to be required in respect
thereof, (C) the maximum amount to be available under such Letter of Credit,
and (D) the requested dates of issuance and expiration. Such Credit Request
shall be accompanied by a duly completed application for such Letter of Credit
on such forms as may be made available from time to time by the Issuer and such
other certificates, documents (including a reimbursement agreement) and other
information as may be required by the Issuer in accordance with its customary
procedures (collectively, the "LETTER OF CREDIT DOCUMENTATION"). Upon receipt
of such Credit Request from the Borrower, the Administrative Agent shall
promptly notify each Lender thereof. Subject to the satisfaction of the terms
and conditions of this Agreement, the Issuer shall issue each requested Letter
of Credit, it being understood that unless the Issuer has been notified in
writing by another Credit Party prior to the issuance of a Letter of Credit
that the terms and conditions of this Agreement shall not have been satisfied,
the Issuer may assume that such terms and conditions have been satisfied. In
the event of any conflict between the provisions of this Agreement and any
Letter of Credit Documentation, the provisions of this Agreement shall control.
(B) TERMS OF LETTERS OF CREDIT. Each Letter of Credit shall (i) be
denominated in
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Dollars, (ii) be issued for the account of the Borrower and in support of
obligations, contingent or otherwise, of the Borrower or any Subsidiary arising
in the ordinary course of business, and (iii) have an expiration date which
shall be not later than the earlier of (A) twelve months after the date of
issuance thereof or (B) five Business Days before the Maturity Date, provided
that the expiration date of such Letter of Credit may be extended or such
Letter of Credit may be renewed, provided, further, that any renewal, or any
extension of any expiry date, of a Letter of Credit shall constitute the
issuance of such Letter of Credit for all purposes of this Agreement.
(C) LETTER OF CREDIT PARTICIPATIONS. Immediately upon the issuance of a
Letter of Credit, the Issuer shall be deemed to have sold and transferred to
each Lender, and each Lender shall be deemed to have irrevocably and
unconditionally purchased and received from the Issuer, without recourse or
warranty, an undivided interest and participation, to the extent of such
Lender's Commitment Percentage thereof, in such Letter of Credit and the
obligations of the Borrower with respect thereto and any security therefor and
any guaranty pertaining thereto at any time existing.
(D) DRAWINGS ON LETTERS OF CREDIT. The Issuer shall promptly notify (i)
the Administrative Agent (which shall promptly notify each Lender) of the
Issuer's receipt of a drawing request under any Letter of Credit, stating the
amount of such Lender's Commitment Percentage of such drawing request and the
date on which such request will be honored and (ii) the Administrative Agent
and the Borrower of the amount of such drawing request and the date on which
such request will be honored. Any failure of the Issuer to give or any delay
in the Issuer's giving any such notice shall not release or diminish the
obligations of the Borrower or any Lender hereunder. In determining whether to
pay under any Letter of Credit, the Issuer shall have no obligation to any
Lender or the Borrower other than to confirm that any documents required to be
delivered under such Letter of Credit have been delivered and that they appear
to comply on their face with the requirements of such Letter of Credit. In the
absence of gross negligence or willful misconduct on the part of the Issuer,
the Issuer shall have no liability to any Lender or the Borrower for any action
taken or omitted to be taken by it under or in connection with any Letter of
Credit, including any such action negligently taken or negligently omitted to
be taken by it.
(E) REIMBURSEMENT. The Borrower shall pay to the Administrative Agent for
the account of the Issuer on demand therefor, in Dollars in immediately
available funds, the amount of all Reimbursement Obligations owing to the
Issuer under any Letter of Credit, together with interest thereon as provided
in Section 3.1, irrespective of any claim, setoff, defense or other right which
the Borrower may have at any time against the Issuer or any other Person. In
the event that the Issuer makes any payment under any Letter of Credit and the
Borrower shall not have repaid such amount to the Issuer when due, the Issuer
shall promptly notify each Lender of such failure, and each Lender shall
promptly and unconditionally pay to the Administrative Agent, for the account
of the Issuer, the amount of such Lender's Commitment Percentage of such
payment in Dollars in immediately available funds on the Business Day the
Issuer so notifies such Lender if such notice is given prior to 12:00 Noon or,
if such notice is given after 12:00 Noon, such Lender shall make its
Commitment
<PAGE> 36
Percentage of such payment available to the Issuer prior to 12:00 Noon on
the next succeeding Business Day.
(F) LENDERS' OBLIGATIONS. If and to the extent any Lender shall not make
such Lender's Commitment Percentage of any Reimbursement Obligations available
to the Issuer when due in accordance with Section 2.5(e), such Lender agrees to
pay interest to the Issuer on such unpaid amount for each day from the date
such payment is due until the date such amount is paid in full to the Issuer at
the Federal Funds Effective Rate until (and including) the third Business Day
after the date due and thereafter at the Alternate Base Rate. The obligations
of the Lenders under this Section 2.5(f) are several and not joint or joint and
several, and the failure of any Lender to make available to the Issuer its
Commitment Percentage of any Reimbursement Obligations when due in accordance
with Section 2.5(e) shall not relieve any other Lender of its obligation
hereunder to make its Commitment Percentage of such Reimbursement Obligations
so available when so due, but no Lender shall be responsible for the failure of
any other Lender to make such other Lender's Commitment Percentage of such
Reimbursement Obligations so available when so due.
(G) RESCISSION. Whenever the Issuer receives a payment of a Reimbursement
Obligation from or on behalf of the Borrower as to which the Issuer has
received any payment from a Lender pursuant to Section 2.5(e), the Issuer shall
promptly pay to such Lender an amount equal to such Lender's Commitment
Percentage of such payment from or on behalf of the Borrower. If any payment
by or on behalf of the Borrower and received by the Issuer with respect to any
Letter of Credit is rescinded or must otherwise be returned by the Issuer for
any reason and the Issuer has paid to any Lender any portion thereof, each such
Lender shall forthwith pay over to the Issuer an amount equal to such Lender's
Commitment Percentage of the amount which must be so returned by the Issuer.
(H) EXPENSES. Each Lender, upon the demand of the Issuer, shall reimburse
the Issuer, to the extent the Issuer has not been reimbursed by the Borrower
after demand therefor, for the reasonable costs and expenses (including
reasonable attorneys' fees) incurred by the Issuer in connection with the
collection of amounts due under, and the preservation and enforcement of any
rights conferred by, any Letter of Credit or the performance of the Issuer's
obligations as issuer of the Letters of Credit under this Agreement in respect
thereof, to the extent of such Lender's Commitment Percentage of the amount of
such costs and expenses provided, however, that no Lender shall be liable for
the payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements to the
extent the same result solely from the gross negligence or willful misconduct
of the Issuer. The Issuer shall refund any costs and expenses reimbursed by
such Lender that are subsequently recovered from the Borrower in an amount
equal to such Lender's Commitment Percentage thereof.
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(I) OBLIGATIONS ABSOLUTE. The obligation of the Borrower to
reimburse the Issuer pursuant to this Section 2.5, and the obligation of each
Lender to make available to the Issuer the amounts set forth in this Section
2.5 shall be absolute, unconditional and irrevocable under any and all
circumstances, shall be made without reduction for any set-off, counterclaim or
other deduction of any nature whatsoever, may not be terminated, suspended or
delayed for any reason whatsoever, shall not be subject to any qualification or
exception and shall be made in accordance with the terms and conditions of this
Agreement under all circumstances, including any of the following
circumstances: (1) any lack of validity or enforceability of this Agreement or
any of the other Loan Documents, (2) the existence of any claim, setoff,
defense or other right which the Borrower may have at any time against a
beneficiary named in a Letter of Credit, any transferee of any Letter of Credit
(or any Person for whom any such transferee may be acting), the Issuer, any
Lender or any other Person, whether in connection with this Agreement, any
other Loan Document, any Letter of Credit, the transactions contemplated in the
Loan Documents or any unrelated transactions (including any underlying
transaction between the Borrower and the beneficiary named in any such Letter
of Credit), (3) any draft, certificate or any other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect, (4) the surrender or impairment of any Collateral for the performance
or observance of any of the terms of any of the Loan Documents, or (5) the
occurrence of any Default or Event of Default. Nothing contained in this
Section 2.5(i), however, shall require the Borrower or any Lender to reimburse
the Issuer for any amounts that become due by reason of the Issuer's gross
negligence or wilful misconduct.
2.6. PAYMENTS; PRO RATA TREATMENT AND SHARING OF SET-OFFS
(A) PAYMENTS GENERALLY. (I) Except as provided below, all payments,
including prepayments, of principal and interest on the Revolving Loans, of the
Commitment Fee, the Letter of Credit Fees and of all other amounts to be paid
by the Borrower under the Loan Documents (the Commitment Fee, the Letter of
Credit Fees together with all of such other fees, being sometimes hereinafter
collectively referred to as the "FEES") shall be made to the Administrative
Agent, prior to 1:00 p.m. on the date such payment is due, for the account of
the applicable Credit Parties at the Payment Office, in Dollars and in
immediately available funds, without set-off, offset, recoupment or
counterclaim. The failure of the Borrower to make any such payment by such
time shall not constitute a Default, provided that such payment is made on such
due date, but any such payment made after 1:00 p.m. on such due date shall be
deemed to have been made on the next Business Day for the purpose of
calculating interest on amounts outstanding on the Revolving Loans. As between
the Borrower and each Credit Party, any payment by the Borrower to the
Administrative Agent for the account of such Credit Party shall be deemed to be
payment by the Borrower to such Credit Party. Notwithstanding the foregoing,
all payments pursuant to Sections 3.5, 3.6, 3.7, and 11.4 shall be paid
directly to the Credit Party entitled thereto. If any payment under the Loan
Documents shall be due and payable on a day which is not a Business Day, the
due date thereof (except as otherwise provided
<PAGE> 38
with respect to Interest Periods) shall be extended to the next Business Day
and (except with respect to payments in respect of the Fees) interest shall be
payable at the applicable rate specified herein during such extension,
provided, however, that if such next Business Day would be after the Maturity
Date, such payment shall instead be due on the immediately preceding Business
Day.
(II) If at any time insufficient funds are received by and available to
the Administrative Agent to pay fully all amounts of principal, interest and
fees then due hereunder, such funds shall be applied (A) first, towards payment
of interest and fees then due under the Loan Documents, ratably among the
parties entitled thereto in accordance with the amounts of interest and fees
then due to such parties, and (B) second, towards payment of principal then due
under the Loan Documents, ratably among the parties entitled thereto in
accordance with the amounts of principal then due to such parties.
(B) SET-OFF. In addition to any rights and remedies of the Credit Parties
provided by law, upon and after the acceleration of all the obligations of the
Borrower under the Loan Documents to which it is a party, or at any time upon
the occurrence and during the continuance of an Event of Default under Sections
9.1(a) or (b), each Credit Party shall have the right, without prior notice to
any Loan Party, any such notice being expressly waived by each Loan Party to
the extent not prohibited by applicable law, to set-off and apply against any
indebtedness, whether matured or unmatured, of such Loan Party to such Credit
Party any amount owing from such Credit Party to such Loan Party, at, or at any
time after, the happening of any of the above-mentioned events. To the extent
not prohibited by applicable law, the aforesaid right of set-off may be
exercised by any Credit Party against such Loan Party or against any trustee in
bankruptcy, custodian, debtor in possession, assignee for the benefit of
creditors, receiver, or execution, judgment or attachment creditor of such Loan
Party, or against anyone else claiming through or against such Loan Party, or
such trustee in bankruptcy, custodian, debtor in possession, assignee for the
benefit of creditors, receiver, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set-off shall not have been
exercised by such Credit Party prior to the making, filing or issuance, or
service upon such Credit Party of, or of notice of, any such petition,
assignment for the benefit of creditors, appointment or application for the
appointment of a receiver, or issuance of execution, subpoena, order or
warrant. Each Credit Party agrees promptly to notify the Borrower and the
Administrative
Agent after any such set-off and application made by such Credit Party,
provided that the failure to give such notice shall not affect the validity of
such set-off and application.
(C) ADJUSTMENTS. If any Lender shall obtain any payment (whether
voluntary, involuntary, through the exercise of any right of set-off, or
otherwise) in respect of the principal of or interest on its Revolving Loans,
resulting in such Lender receiving payment of a greater proportion of the
aggregate principal amount of, or accrued interest on, such Revolving Loans
than the proportion
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<PAGE> 39
received by any other Lender, then the Lender receiving such greater proportion
shall promptly purchase, at face value for cash, participations in the
Revolving Loans to the extent necessary so that the benefit of such payment
shall be shared by the Lenders ratably in accordance with the aggregate amount
of principal of and accrued interest on their respective Revolving Loans,
provided, however, that (i) if all or any portion of such payment is thereafter
recovered, such participations shall be rescinded and the purchase price
returned, in each case to the extent of such recovery, and (ii) the provisions
of this Section 2.6(c) shall not be construed to apply to any payment made by
the Borrower pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Revolving Loans to any
assignee or participant, other than to the Borrower or any Subsidiary or
Affiliate thereof (as to which the provisions of this Section 2.6(c) shall
apply). The Borrower agrees that any Lender that purchased a participation
pursuant to this subsection may exercise such rights to payment (including the
right of set-off) with respect to such participation as fully as if such Lender
were the direct creditor of the Borrower in the amount of such participation.
2.7. CASH COLLATERAL ACCOUNT
At, or at any time before, the time the Borrower shall be required
to make a deposit into the Cash Collateral Account, the Administrative Agent
shall establish and maintain at its offices at One Wall Street, New York, New
York in the name of the Borrower but under the sole dominion and control of the
Administrative Agent, a cash collateral account designated as "ANTEC
Corporation/Cash Collateral Account" (the "CASH COLLATERAL ACCOUNT"). The
Borrower may from time to time make one or more deposits into the Cash
Collateral Account and shall from time to time make such deposits as are
required by this Agreement. The Borrower hereby pledges to the Administrative
Agent for the benefit of the Credit Parties, a Lien on and security interest in
the Cash Collateral Account and all sums at any time and from time to time on
deposit therein (the Cash Collateral Account, together with all sums on deposit
therein, being sometimes hereinafter collectively referred to as the "CASH
COLLATERAL"), as collateral security for the prompt payment in full when due,
whether at stated maturity, by acceleration or otherwise, of the Borrower
Obligations. The Borrower agrees that at any time and from time to time at its
expense, it will promptly execute and deliver to the Administrative Agent any
further instruments and documents, and take any further actions, that may be
necessary or that the Administrative Agent may reasonably request, in order to
perfect and protect any security interest granted or purported to be granted
hereby or to enable the Administrative Agent to exercise and enforce its rights
and remedies hereunder with respect to any Cash Collateral. The Borrower
agrees that it will not (i) sell or otherwise dispose of any of the Cash
Collateral, or (ii) create or permit to exist any Lien upon any of the Cash
Collateral, except for Permitted Liens. The Borrower hereby authorizes the
Administrative Agent, promptly after each drawing under any Letter of Credit
shall become due and payable, to apply any and all cash on deposit in the Cash
Collateral Account towards the reimbursement of the Issuer for all sums paid in
respect of such drawing, and all other Borrower Obligations which shall then be
due and owing.
<PAGE> 40
ARTICLE 3. INTEREST, FEES, YIELD PROTECTIONS, ETC.
3.1. INTEREST RATE AND PAYMENT DATES
(A) ADVANCES. Each (i) ABR Advance shall bear interest at a rate per
annum equal to the Alternate Base Rate plus the Applicable Margin and (ii)
Eurodollar Advance shall bear interest at a rate per annum equal to the
Eurodollar Rate for the applicable Interest Period plus the Applicable Margin.
(B) EVENT OF DEFAULT; LATE CHARGES. Notwithstanding the foregoing,
after the occurrence and during the continuance of an Event of Default, the
outstanding principal balance of the Revolving Loans shall bear interest at a
rate per annum equal to 2% plus the rate otherwise applicable to such Revolving
Loans as provided in subsection (a) above. If any interest, Reimbursement
Obligation, Fee or other amount payable under the Loan Documents is not paid
when due (whether at the stated maturity thereof, by acceleration or
otherwise), such overdue amount shall bear interest at a rate per annum equal
to the Alternate Base Rate plus 2%, from the date of such nonpayment until paid
in full (whether before or after the entry of a judgment thereon). All such
interest shall be payable on demand.
(C) PAYMENT OF INTEREST. Except as otherwise provided in subsection
(b) above, interest shall be payable in arrears on the following dates:
(I) in the case of an ABR Advance, on the last Business Day
of each March, June, September and December commencing on the first of
such days to occur after such ABR Advance is made or any Eurodollar
Advance is converted to an ABR Advance;
(II) in the case of a Eurodollar Advance, (A) on the last day
of the Interest Period applicable thereto and, if such Interest Period
is longer than three months, the last Business Day of each three month
interval occurring during such Interest Period and (B) on any prepayment
thereof; and
(III) in the case of all Advances and all Revolving Loans, the
Maturity Date.
(D) COMPUTATIONS. Interest on (i) ABR Advances to the extent based
on the Prime Rate shall be calculated on the basis of a 365 or 366- day year
(as the case may be), and (ii) ABR Advances to the extent based on the Federal
Funds Effective Rate and on Eurodollar Advances
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<PAGE> 41
shall be calculated on the basis of a 360-day year, in each case, for the
actual number of days elapsed. The Administrative Agent shall, as soon as
practicable, notify the Borrower and the Lenders of the effective date and the
amount of each such change in the Prime Rate, but any failure to so notify
shall not in any manner affect the obligation of the Borrower to pay interest
on the Revolving Loans in the amounts and on the dates required. Each
determination of a rate of interest by the Administrative Agent pursuant to the
Loan Documents shall be conclusive and binding on all parties hereto absent
manifest error. The Borrower acknowledges that to the extent interest payable
on ABR Advances is based on the Prime Rate, such rate is only one of the bases
for computing interest on loans made by the Lenders, and by basing interest
payable on ABR Advances on the Prime Rate, the Lenders have not committed to
charge, and the Borrower has not in any way bargained for, interest based on a
lower or the lowest rate at which the Lenders may now or in the future make
loans to other borrowers.
(E) REFERENCE LENDERS. If any Reference Lender shall for any reason no
longer be a Lender, such Reference Lender shall thereupon cease to be a
Reference Lender. If there shall be only one Reference Lender, the Borrower
(with the consent of the Administrative Agent) shall, by notice to the Lenders,
designate another Lender as a Reference Lender so that there shall at all times
be at least two Reference Lenders. Each Reference Lender shall use its best
efforts to furnish quotations of rates to the Administrative Agent on a timely
basis as contemplated hereby. If either of the Reference Lenders shall fail to
supply such rates to the Administrative Agent upon request, the rate of
interest shall, subject to the other provisions of this Agreement, be
determined on the basis of the quotations of the remaining Reference Lender or
Reference Lenders.
3.2. FEES
(A) COMMITMENT FEE. The Borrower agrees to pay to the Administrative
Agent, for the account of the Lenders in accordance with each Lender's
Commitment Percentage, a fee (the "COMMITMENT FEE"), during the period from the
Effective Date through the Commitment Termination Date, at a rate per annum
equal to the Applicable Margin on the average daily unused Aggregate Revolving
Commitment. The Commitment Fee shall be payable (i) quarterly in arrears on
the last Business Day of each March, June, September and December during such
period, commencing on the first such day following the Effective Date, (ii) on
the date of any reduction in the Aggregate Revolving Commitment (to the extent
of such reduction) and (iii) on the Maturity Date. The Commitment Fee shall be
calculated on the basis of a 360-day year, as the case may be, for the actual
number of days elapsed.
(B) LETTER OF CREDIT FEES. The Borrower agrees to pay to the
Administrative Agent, for the account of the Lenders in accordance with each
Lender's Commitment Percentage, commissions (the "LETTER OF CREDIT FEES") with
respect to the Letters of Credit for the period from and including the date of
issuance of each thereof through the expiration date thereof, at a rate per
annum equal to the Applicable Margin on the average daily maximum amount
available under any
<PAGE> 42
contingency to be drawn under such Letter of Credit. The Letter of
Credit Fees shall be (i) calculated on the basis of a 360-day year for the
actual number of days elapsed and (ii) payable quarterly in arrears on the last
Business Day of each March, June, September and December of each year,
commencing on the first such day following the Effective Date, and on the date
that the Revolving Commitments shall expire. In addition to the Letter of
Credit Fees, the Borrower agrees to pay to the Issuer, for its own account, its
standard fees and charges customarily charged to customers similar to the
Borrower with respect to any Letter of Credit.
(C) ADMINISTRATIVE AGENT'S AND ISSUER'S FEES. The Borrower agrees to
pay to the Administrative Agent and the Issuer, for their own respective
accounts, such other fees as have been agreed to in writing by the Borrower, the
Administrative Agent and the Issuer.
3.3. CONVERSIONS
(A) The Borrower may elect from time to time to convert one or more
Eurodollar Advances to ABR Advances by giving the Administrative Agent at least
one Business Day's prior irrevocable notice of such election, specifying the
amount to be converted, provided, that any such conversion of Eurodollar
Advances shall only be made on the last day of the Interest Period applicable
thereto. In addition, the Borrower may elect from time to time to (i) convert
ABR Advances comprising all or a portion of Revolving Loans to Eurodollar
Advances and (ii) continue Eurodollar Advances as new Eurodollar Advances by
selecting a new Interest Period therefor, in each case by giving the
Administrative Agent at least three Business Days' prior irrevocable notice of
such election, in the case of a conversion to, or continuation of, Eurodollar
Advances, specifying the amount to be so converted or continued and the initial
Interest Period relating thereto, provided that any such conversion of ABR
Advances to Eurodollar Advances shall only be made on a Business Day and any
such continuation of Eurodollar Advances as new Eurodollar Advances shall only
be made on the last day of the Interest Period applicable to the Eurodollar
Advances which are to be continued as such new Eurodollar Advances. Each such
notice (a "NOTICE OF CONVERSION") shall be substantially in the form of Exhibit
C, shall be irrevocable and shall be given by facsimile (confirmed promptly,
and in any event within five Business Days, by the delivery to the
Administrative Agent of a Notice of Conversion manually signed by the
Borrower). The Administrative Agent shall promptly provide the Lenders with
notice of each such election. Advances may be converted or continued pursuant
to this Section 3.3 in whole or in part, provided that the amount to be
converted to, or continued as, each Eurodollar Advance, when aggregated with
any Eurodollar Advance to be made on such date in accordance with Section 2.2
and having the same Interest Period as such first Eurodollar Advance, shall
equal the Minimum Amount.
(B) Notwithstanding anything in this Agreement to the contrary, upon
the
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occurrence and during the continuance of an Event of Default, the Borrower
shall have no right to elect to convert any existing ABR Advance to a new
Eurodollar Advance or to continue any existing Eurodollar Advance as a new
Eurodollar Advance. In such event, all ABR Advances shall be automatically
continued as ABR Advances and all Eurodollar Advances shall be automatically
converted to ABR Advances on the last day of the current Interest Period
applicable to such Eurodollar Advance.
(C) Each conversion or continuation shall be effected by each Lender
by applying the proceeds of its new ABR Advance or Eurodollar Advance, as
the case may be, to its Advances (or portion thereof) being converted (it being
understood that any such conversion or continuation shall not constitute a
borrowing for purposes of Articles 4, 5 or 6).
3.4. CONCERNING INTEREST PERIODS
(A) No Interest Period selected shall end after the Commitment
Termination Date.
(B) With respect to Eurodollar Advances, any Interest Period which
begins on the last Business Day of a calendar month (or on a day for which
there is no numerically corre sponding day in the calendar month at the end of
such Interest Period) shall end on the last Business Day of a calendar month.
(C) If an Interest Period would otherwise end on a day which is not a
Business Day, such Interest Period shall be extended to the next succeeding
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 Business Day.
(D) If the Borrower shall have failed to timely elect a Eurodollar
Advance under Section 2.2 or 3.3, as the case may be, in connection with any
borrowing of, conversion to, or continuation of, a Eurodollar Advance, such
borrowing or such Advance requested to be converted to, or continued as, a
Eurodollar Advance shall thereafter be an ABR Advance until such time, if any,
as the Borrower shall elect a new Eurodollar Advance pursuant to Section 3.3.
(E) The Borrower shall not be permitted to have more than eight
Eurodollar Advances outstanding at any one time, it being agreed that each
borrowing of a Eurodollar Advance pursuant to a single Credit Request shall
constitute the making of one Eurodollar Advance for the purpose of calculating
such limitation.
3.5. FUNDING LOSS
Notwithstanding anything contained herein to the contrary, if the
Borrower shall fail to borrow, convert or continue a Eurodollar Advance
on a Borrowing Date or Conversion Date after
<PAGE> 44
it shall have given notice to do so in which it shall have requested a
Eurodollar Advance, or if a Eurodollar Advance shall be terminated for any
reason prior to the last day of the Interest Period applicable thereto, or if,
while a Eurodollar Advance is outstanding, any repayment or prepayment of such
Eurodollar Advance is made for any reason (including as a result of
acceleration or illegality) on a date which is prior to the last day of the
Interest Period applicable thereto, the Borrower agrees to indemnify each
Lender against, and to pay on demand directly to such Lender, any loss or
expense suffered by such Lender as a result of such failure to borrow or
convert, termination or repayment, including, without limitation, an amount, if
greater than zero, equal to:
A x (B-C) x D
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where:
"A" equals such Lender's pro rata share of the Affected Principal Amount;
"B" equals the Eurodollar Rate (expressed as a decimal) applicable to such
Eurodollar Advances;
"C" equals the applicable Eurodollar Rate (expressed as a decimal) in effect on
or about the first day of the applicable Remaining Interest Period, based on
the applicable rates offered or bid, as the case may be, on or about such date,
for deposits in an amount equal approximately to such Lender's pro rata share
of the Affected Principal Amount with an Interest Period equal approximately to
the applicable Remaining Interest Period, as determined by such Lender; and
"D" equals the number of days from and including the first day of the
applicable Remaining Interest Period to but excluding the last day of such
Remaining Interest Period;
and any other out-of-pocket loss or expense (including any internal processing
charge customarily charged by such Lender) suffered by such Lender in
connection with such Eurodollar Advance, including, without limitation, in
liquidating or employing deposits acquired to fund or maintain the funding of
its pro rata share of the Affected Principal Amount, or redeploying funds
prepaid or repaid, in amounts which correspond to its pro rata share of the
Affected Principal Amount. Each determination by the Administrative Agent or a
Lender pursuant to this Section shall be conclusive and binding on the Borrower
absent manifest error. A statement setting forth the calculations of any
additional amounts payable pursuant to this Section submitted by a Lender to
the Borrower shall be conclusive absent manifest error.
3.6. INCREASED COSTS; ILLEGALITY, ETC.
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<PAGE> 45
(A) INCREASED COSTS. If any Change in Law shall impose, modify or make
applicable any reserve, special deposit, compulsory loan, assessment, increased
cost or similar requirement against assets held by, or deposits of, or advances
or loans by, or other credit extended by, or any other acquisition of funds by,
any office of any Credit Party in respect of its Eurodollar Advances which is
not otherwise included in the determination of a Eurodollar Rate or against any
Letters of Credit issued hereunder and the result thereof is to increase the
cost to any Credit Party of making, renewing, converting or maintaining its
Eurodollar Advances or its commitment to make such Eurodollar Advances, or to
reduce any amount receivable under the Loan Documents in respect of its
Eurodollar Advances, or to increase the cost to any Credit Party of issuing or
maintaining the Letters of Credit or participating therein, as the case may be,
or the cost to any Credit Party of performing its respective functions
hereunder with respect to the Letters of Credit, then, in any such case, the
Borrower shall pay such Credit Party such additional amounts as is sufficient
to compensate such Credit Party for such additional cost or reduction in such
amount receivable which such Credit Party deems to be material as determined by
such Credit Party.
(B) CAPITAL ADEQUACY. If any Credit Party determines that any Change in
Law relating to capital requirements has or would have the effect of reducing
the rate of return on such Credit Party's capital or on the capital of such
Credit Party's holding company, if any, on the Extensions of Credit to a level
below that which such Credit Party (or its holding company) would have achieved
or would thereafter be able to achieve but for such Change in Law (after taking
into account such Credit Party's (or such holding company's) policies regarding
capital adequacy), the Borrower shall pay to such Credit Party (or such holding
company) such additional amount or amounts as will compensate such Credit Party
(or such holding company) for such reduction.
(C) ILLEGALITY. Notwithstanding any other provision hereof, if any Lender
shall reasonably determine that any law, regulation, treaty or directive, or
any change therein or in the interpretation or application thereof, shall make
it unlawful for such Lender to make or maintain any Eurodollar Advance as
contemplated by this Agreement, such Lender shall promptly notify the Borrower
and the Administrative Agent thereof, and (i) the commitment of such Lender to
make such Eurodollar Advances or convert ABR Advances to Eurodollar Advances
shall forthwith be suspended, (ii) such Lender shall fund its portion of each
requested Eurodollar Advance as an ABR Advance and (iii) such Lender's
Revolving Loans then outstanding as such Eurodollar Advances, if any, shall be
converted automatically to ABR Advances on the last day of the then current
Interest Period applicable thereto or at such earlier time as may be required
by law. The commitment of any such Lender with respect to Eurodollar Advances
shall be suspended until such Lender shall notify the Administrative Agent and
the Borrower that the circumstances causing such suspension no longer exist.
Upon receipt of such notice by each of the Administrative Agent and the
Borrower, such Lender's commitment to make or maintain Eurodollar Advances
shall be reinstated.
(D) SUBSTITUTED INTEREST RATE. In the event that (i) the Administrative
Agent shall
<PAGE> 46
have determined (which determination shall be conclusive and binding upon
the Borrower) that by reason of circumstances affecting the interbank
eurodollar market either adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate applicable pursuant to Section 3.1 or (ii) the
Required Lenders shall have notified the Administrative Agent that they have
determined (which determination shall be conclusive and binding on the
Borrower) that the applicable Eurodollar Rate will not adequately and fairly
reflect the cost to such Lenders of maintaining or funding loans bearing
interest based on such Eurodollar Rate, with respect to any portion of the
Revolving Loans that the Borrower has requested be made as Eurodollar Advances
or Eurodollar Advances that will result from the requested conversion or
continuation of any portion of the Advances into or of Eurodollar Advances
(each, an "AFFECTED ADVANCE"), the Administrative Agent shall promptly notify
the Borrower and the Lenders (by telephone or otherwise, to be promptly
confirmed in writing) of such determination, on or, to the extent practicable,
prior to the requested Borrowing Date or Conversion Date for such Affected
Advances. If the Administrative Agent shall give such notice, (a) any Affected
Advances shall be made as ABR Advances, (b) the Advances (or any portion
thereof) that were to have been converted to Affected Advances shall be
converted to ABR Advances and (c) any outstanding Affected Advances shall be
converted, on the last day of the then current Interest Period with respect
thereto, to ABR Advances. Until any notice under clauses (i) or (ii), as the
case may be, of this subsection (d) has been withdrawn by the Administrative
Agent (by notice to the Borrower promptly upon either (x) the Administrative
Agent having determined that such circumstances affecting the interbank
eurodollar market no longer exist and that adequate and reasonable means do
exist for determining the Eurodollar Rate pursuant to Section 3.1 or (y) the
Administrative Agent having been notified by such Required Lenders that
circumstances no longer render the Advances (or any portion thereof) Affected
Advances), no further Eurodollar Advances shall be required to be made by the
Lenders, nor shall the Borrower have the right to convert all or any portion of
the Revolving Loans to or as Eurodollar Advances.
(E) PAYMENT; CERTIFICATES. Each payment pursuant to subsections (a)
or (b) above shall be made within 10 days after demand therefor, which demand
shall be accompanied by a certificate of the Credit Party demanding such
payment setting forth the calculations of the additional amounts payable
pursuant thereto. Each such certificate shall be conclusive absent manifest
error. No failure by any Credit Party to demand, and no delay in demanding,
compensation for any increased cost shall constitute a waiver of its right to
demand such compensation at any time.
3.7. TAXES
(A) PAYMENTS FREE OF TAXES. All payments by or on account of the
Borrower under any Loan Document to or for the account of a Credit Party
shall be made free and clear of, and without any deduction or withholding for
or on account of, any and all present or future Indemnified
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<PAGE> 47
Taxes or Other Taxes, provided that if the Borrower or any other Person is
required by any law, rule, regulation, order, directive, treaty or guideline to
make any deduction or withholding in respect of such Indemnified Tax or Other
Tax from any amount required to be paid by the Borrower to or on behalf of any
Credit Party under any Loan Document (each, a "REQUIRED PAYMENT"), then (i) the
Borrower shall notify the Administrative Agent and such Credit Party of any
such requirement or any change in any such requirement as soon as the Borrower
becomes aware thereof, (ii) the Borrower shall pay such Indemnified Tax or
Other Tax prior to the date on which penalties attach thereto, such payment to
be made (to the extent that the liability to pay is im posed on the Borrower)
for its own account or (to the extent that the liability to pay is imposed on
such Credit Party) on behalf and in the name of such Credit Party, (iii) the
Borrower shall pay to such Credit Party an additional amount such that such
Credit Party shall receive on the due date therefor an amount equal to the
Required Payment had no such deduction or withholding been made or required,
and (iv) the Borrower shall, within 30 days after paying such Indemnified Tax
or Other Tax, deliver to the Administrative Agent and such Credit Party
satisfactory evidence of such payment to the relevant Governmental Authority.
(B) REIMBURSEMENT FOR TAXES AND OTHER TAXES PAID BY CREDIT PARTY. The
Borrower shall reimburse each Credit Party, within ten days after written
demand therefor, for the full amount of all Indemnified Taxes or Other Taxes
paid by such Credit Party on or with respect to any payment by or on account of
any obligation of the Borrower under the Loan Documents (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable
under this Section 3.7) and any penalties, interest and reasonable expenses
arising therefrom or with respect thereto (other than any such penalties,
interest or expenses that are incurred by such Credit Party's unreasonably
taking or omitting to take action with respect to such Indemnified Taxes or
Other Taxes), whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability
delivered to the Borrower by a Credit Party shall be conclusive absent manifest
error. In the event that any Credit Party determines that it received a refund
or credit for Indemnified Taxes or Other Taxes paid by the Borrower under this
Section 3.7, such Credit Party shall promptly notify the Borrower of such fact
and shall remit to the Borrower the amount of such refund or credit.
(C) FOREIGN CREDIT PARTIES. Any Foreign Credit Party that is entitled
to an exemption from or reduction of withholding tax under the law of the
jurisdiction in which the Borrower is located, or any treaty to which such
jurisdiction is a party, with respect to payments under the Loan Documents
shall deliver to the Borrower (with a copy to the Administrative Agent), at the
time or times prescribed by applicable law, such properly completed and
executed documentation prescribed by applicable law (including Internal Revenue
Form 4224 or Form 1001) or reasonably requested by the Borrower as will permit
such payments to be made without withholding or at a reduced rate.
3.8. REGISTER
<PAGE> 48
The Administrative Agent will maintain a register for the
recordation of the names and addresses of the Lenders and the Revolving
Commitments of, and principal amount of the Revolving Loans owing to, each
Lender, and the Letters of Credit outstanding, from time to time (the
"REGISTER"). The entries in the Register shall be conclusive and binding for
all purposes, absent manifest error, and each Loan Party and each Credit Party
may treat each party whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES
In order to induce the Credit Parties to enter into this Agreement and
extend or participate in the Extensions of Credit provided herein, the Borrower
makes the following representations and warranties to the Credit Parties:
4.1. ORGANIZATION AND POWER
Except as provided on Schedule 4.1, each of the Borrower and each
Subsidiary (i) is duly organized or formed, validly existing and in good
standing under the laws of the jurisdiction of its organization, (ii) has all
requisite power and authority to own its property and to carry on its business
as now conducted, and (iii) is duly qualified to do business and is in good
standing in each jurisdiction in which the nature of the business conducted
therein or the property owned by it therein makes such qualification necessary,
except where such failure to qualify or be in good standing, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
effect.
4.2. AUTHORIZATION; ENFORCEABILITY
The Transactions are within the corporate, partnership or other
analogous powers of each of the Borrower and each Subsidiary party
thereto and have been duly authorized by its Managing Person and, if required,
by any other Person including holders of its Capital Stock. Each Loan Document
has been validly executed and delivered by each Loan Party party thereto and
constitutes a legal, valid and binding obligation of each such Loan Party,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors'
rights generally and subject to general principles of equity, regardless of
whether considered in a proceeding in equity or at law.
4.3. APPROVALS; NO CONFLICTS
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<PAGE> 49
The Transactions (i) do not require any consent or approval of,
registration or filing with, or any other action by, any Governmental Authority
or any other Person, except such as have been obtained or made and are in full
force and effect, (ii) will not violate any applicable law, rule or regulation
or the Organizational Documents of the Borrower or any Subsidiary or any order
of any Governmental Authority, (iii) will not violate or result in a default
under any indenture, agreement or other instrument binding upon the Borrower or
any Subsidiary or their assets, or give rise to a right thereunder to require
any payment to be made by the Borrower or any Subsidiary, and (iv) will not
result in the creation or imposition of any Lien on any asset of the Borrower
or any Subsidiary other than Permitted Liens.
4.4. FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE
(A) The Borrower has heretofore furnished to each Credit Party a
copy of its (A) Form 10-K for the fiscal year ending December 31, 1997,
containing the audited consolidated balance sheets of the Borrower and its
consolidated Subsidiaries as of December 31, 1996 and December 31, 1997, and
the related consolidated statements of operations, stockholder's equity and
cash flows for the periods then ended, and (B) Form 10-Q for the fiscal quarter
ended March 31, 1998, containing its unaudited consolidated balance sheet for
such fiscal quarter, together with the related statements of operations and
cash flows for the fiscal quarter then ended. Such financial statements
present fairly, in all material respects, the financial position and results of
operations and cash flows of the Borrower and consolidated Subsidiaries as of
such dates and for such periods in accordance with GAAP, subject to year-end
audit adjustments and the absence of footnotes in the case of the quarterly
statements referred to above. Except as fully reflected in such financial
statements, there are no material liabilities or obligations with respect to
the Borrower or any Subsidiary of any nature whatsoever (whether absolute,
contingent or otherwise and whether or not due).
(B) Since December 31, 1997, except for the Transactions and the
restructuring charge taken by the Borrower in the quarter ended March 31, 1998
in an amount not in excess of $12,000,000, each of the Borrower and each
Subsidiary has conducted its business only in the ordinary course and there has
been no Material Adverse change.
4.5. PROPERTIES
(A) Each of the Borrower and each Subsidiary has good and marketable
title to, or valid leasehold interests in, all of its property, real and
personal, material to its business, subject to no Liens, except Permitted Liens
and except for minor defects in title that do not interfere with its
ability to conduct its business as currently conducted or to utilize such
properties for their intended purposes.
(B) Each of the Borrower and each Subsidiary owns or is licensed to
use all Intellectual Property material to its business, and the use thereof by
the Borrower or any Subsidiary
<PAGE> 50
does not conflict with or infringe upon the valid rights of others, except
for any such conflicts or infringements that individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse effect.
4.6. LITIGATION
There are no actions, suits or proceedings at law or in equity or by
or before any Governmental Authority (whether purportedly on behalf of the
Borrower or any Subsidiary) pending or, to the knowledge of the Borrower,
threatened against the Borrower or any Subsidiary, or maintained by the
Borrower or any Subsidiary or which may affect the property of the Borrower or
any Subsidiary, (i) that, in the good faith opinion of the Borrower, would
reasonably be expected to have an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse effect or (ii) that involve any of the
Transactions.
4.7. ENVIRONMENTAL MATTERS
Except with respect to any other matters that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
effect, neither the Borrower nor any Subsidiary has (i) received written notice
or otherwise learned of any claim, demand, action, event, condition, report or
investigation indicating or concerning any potential or actual liability which
individually or in the aggregate could reasonably be expected to result in a
Material Adverse effect, arising in connection with any non-compliance with or
violation of the requirements of any applicable laws, rules, regulations,
codes, ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Substance (as defined below) or to health and safety matters (collectively,
"ENVIRONMENTAL LAWS"), (ii) to the best knowledge of the Borrower, any
threatened or actual liability in connection with the release or threatened
release of any Hazardous Substance into the environment which individually or
in the aggregate could reasonably be expected to result in a Material Adverse
effect, (iii) received notice of any federal or state investigation evaluating
whether any remedial action is needed to respond to a release or
threatened release of any Hazardous Substance into the environment for which
the Borrower or any of its Subsidiaries is or would be liable, which liability
could reasonably be expected to result in a Material Adverse effect, or (iv)
has received notice that the Borrower or any of its Subsidiaries is or may be
liable to any Person under any Environmental Law, which liability could
reasonably be expected to result in a Material Adverse effect. Each of the
Borrower and each of its Subsidiaries is in compliance with the financial
responsibility requirements of Environmental Laws to the extent applicable,
except in those cases in which
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the failure so to comply would not reasonably be expected to result in a
Material Adverse effect. For purposes hereof, "HAZARDOUS SUBSTANCE" shall mean
any hazardous or toxic substance, material, waste or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes,
radioactive materials or any other substance or waste regulated pursuant to any
Environmental Law.
4.8. COMPLIANCE WITH LAWS AND AGREEMENTS; NO DEFAULT
Each of the Borrower and each Subsidiary is in compliance with all
laws, regulations and orders of any Governmental Authority applicable to it
or its property and all indentures, agreements and other instruments binding
upon it or its property, except where the failure to do so, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
effect. No Default has occurred and is continuing or would result from the
incurrence of the obligations of Loan Parties under the Loan Documents or from
the grant or perfection of the Liens under the Security Documents.
4.9. INVESTMENT COMPANIES AND OTHER REGULATED ENTITIES
None of the Borrower, any Subsidiary nor any Person controlled by,
controlling, or under common control with, the Borrower or any Subsidiary, is
(i) an "investment company" as defined in, or subject to regulation under, the
Investment Company Act of 1940, as amended, (ii) a "holding company" as defined
in, or subject to regulation under, the Public Utility Holding Company Act of
1935 or the Federal Power Act, as amended, or (iii) subject to any statute or
regulation which prohibits or restricts the incurrence of Indebtedness for
borrowed money, including statutes or regulations relative to common or
contract carriers or to the sale of electricity, gas, steam, water, telephone,
telegraph or other public utility services.
4.10. FEDERAL RESERVE REGULATIONS
(A) Neither the Borrower nor any Subsidiary is engaged principally,
or as one of its important activities, in the business of extending credit
for the purpose of purchasing or carrying any Margin Stock. After giving
effect to each Transaction and the making of each Extension of Credit, Margin
Stock will constitute less than 25% of the assets (as determined by any
reasonable method) of the Borrower and the Subsidiaries.
(B) No part of the proceeds of any Extension of Credit will be used,
whether directly or indirectly, and whether immediately, incidentally or
ultimately, for any purpose that entails a violation of, or that is
inconsistent with, the provisions of Regulation U or X.
4.11. ERISA
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Each Pension Plan is in compliance with ERISA and the Code, where
applicable, in all material respects and no ERISA Event has occurred or is
reasonably expected to occur that, when taken together with all other such
ERISA Events for which liability is reasonably expected to occur, could
reasonably be expected to result in a Material Adverse effect. The present
value of all accumulated benefit obligations under each Pension Plan (based on
the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by more than $500,000 the fair
market value of the assets of such Pension Plan, and the present value of all
accumulated benefit obligations of all underfunded Pension Plans (based on the
assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed by more than $500,000 the fair market value of
the assets of all such underfunded Pension Plans.
4.12. TAXES
Each of the Borrower and each Subsidiary has timely filed or caused
to be filed all Federal, State and local income and franchise tax returns and
all other material tax returns required to have been filed by it, and has paid,
or caused to be paid, all Taxes required to have been paid by it, including
Taxes, which, if unpaid, could reasonably be expected to result in a Material
Adverse effect, except Taxes, the validity or amount thereof is being contested
in good faith by appropriate proceedings diligently conducted and for which the
Borrower or such Subsidiary, as applicable, has set aside on its books adequate
reserves, so long as the failure to make payment of which pending any such
contest, could not reasonably be expected to result in a Material Adverse
effect.
4.13. SUBSIDIARIES
As of the Effective Date, (i) the Borrower has only the Subsidiaries
set forth on, and the authorized, issued and outstanding Capital Stock of the
Borrower and the Subsidiaries is as set forth on, Schedule 4.13, (ii) the
Foreign Subsidiaries identified on Schedule 4.13 as Material Foreign
Subsidiaries are the only Material Foreign Subsidiaries, (iii) the ownership
interests in each Subsidiary of the Borrower are duly authorized, validly
issued, fully paid and nonassessable and are owned beneficially and of record
by the Persons set forth on such Schedule 4.13, free and clear of all Liens
(other than Permitted Liens). Except as set forth on Schedule 4.13, neither
the Borrower nor any of its Subsidiaries has issued any securities convertible
into, or options or warrants for, any common or preferred equity securities
thereof and there are no agreements, voting trusts or understandings binding
upon the Borrower or any Subsidiary with respect to the voting securities of
the Borrower or any Subsidiary or affecting in any manner the sale, pledge,
assignment or other disposition thereof, including any right of first refusal,
option, redemption, call or other right with respect
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thereto, whether similar or dissimilar to any of the foregoing.
4.14. ABSENCE OF CERTAIN RESTRICTIONS
No indenture, certificate of designation for preferred stock,
agreement or instrument to which the Borrower or any Subsidiary is a party
(other than this Agreement), prohibits or limits in any way, directly or
indirectly, the ability of any Subsidiary to make Restricted Payments or loans
to, to make any advance on behalf of, or to repay any Indebtedness to, the
Borrower or to another Subsidiary.
4.15. STATUS AS SENIOR INDEBTEDNESS
The Indebtedness of the Borrower under the Loan Documents and in
respect of Hedging Agreements entered into with a counterparty which at the
time thereof was a Lender or an Affiliate of a Lender constitutes "Senior
Indebtedness" as defined in the Subordinated Indenture.
4.16. LABOR RELATIONS
As of the Effective Date, there are no material controversies pending
between the Borrower or any Subsidiary and its employees which might result in
a Material Adverse effect.
4.17. INSURANCE
Schedule 4.17 sets forth a description of all insurance maintained
by or on behalf of the Borrower and the Subsidiaries as of the Effective
Date. As of the Effective Date, all premiums in respect of such insurance that
are due and payable have been paid.
4.18. YEAR 2000
All of the material computer software, computer firmware, computer
hardware (whether general or special purpose) and other similar or related
items of automated, computerized and/or software system(s) that are used or
relied on by the Borrower or any Subsidiary in the conduct of its business will
not malfunction, will not cease to function, will not generate incorrect data,
and will not produce incorrect results when processing, providing and/or
receiving, (i) date-related data into and between the twentieth and
twenty-first centuries and (ii) date-related data in connection with any valid
date in the twentieth and twenty-first centuries where such malfunction,
failure to function, production of incorrect data or production of incorrect
results, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse effect.
4.19. NO MISREPRESENTATION
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The Borrower has disclosed to each Credit Party all agreements,
instruments and corporate or other restrictions to which it or any Subsidiary
is subject, and all other matters known to it, that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse effect.
No certificate or report from time to time furnished by any of the Loan
Parties in connection with the Transactions contains or will contain a
misstatement of material fact, or omits or will omit to state a material fact
required to be stated in order to make the statements therein contained not
misleading in the light of the circumstances under which made, provided that
any projections or pro-forma financial information contained therein are based
upon good faith estimates and assumptions believed by the Borrower to be
reasonable at the time made, it being recognized by the Credit Parties that
such projections as to future events are not to be viewed as facts, and that
actual results during the period or periods covered thereby may differ from the
projected results.
4.20. FINANCIAL CONDITION
On and after each Borrowing Date and each date upon which a
Transaction shall be consummated, neither the Borrower nor any Subsidiary
Guarantor is Insolvent.
4.21. REPRESENTATIONS WITH RESPECT TO THE MORTGAGES
Upon the delivery to the Administrative Agent of each Mortgage and
on and after each Borrowing Date thereafter, (i) each of the representations
and warranties contained in such Mortgage is restated as of such date and (ii)
such Mortgage is effective to create, subject to the exceptions listed in each
title insurance policy covering such Mortgage, in favor of the Administrative
Agent, for the ratable benefit of the Secured Parties, a legal, valid and
enforceable Lien on all of the Loan Parties' right, title and interest in and
to the Mortgaged Properties thereunder and the proceeds thereof, and when such
Mortgage is duly recorded in the applicable governmental offices, such Mortgage
shall constitute a Lien on, and security interest in, all right, title and
interest of the Loan Parties in such Mortgaged Properties and the proceeds
thereof, in each case prior and superior in right to any other Person, other
than with respect to the rights of Persons pursuant to Permitted Liens.
4.22. VALIDITY AND PERFECTION OF SECURITY INTEREST
The Security Documents are effective to create in favor of the
Administrative Agent, for the ratable benefit of the Secured Parties, a legal,
valid and enforceable security interest in the Collateral and when (i)
financing statements in appropriate form are filed in the offices specified on
Schedule 6 to the Perfection Certificate, (ii) Collateral consisting of
Securities Certificates and Instruments (as defined in the Security Agreement)
are delivered to the Administrative Agent, and (iii) either the Security
Agreement or Grants of Security Interest (as defined in the Security
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Agreement) with respect to Patents, Trademarks and Copyrights (as defined in
the Security Agreement) are filed in the United States Patent and Trademark
Office or the United States Copyright Office, as the case may be, the security
interest granted to the Administrative Agent in the Security Agreement shall
constitute a fully perfected Lien on, and security interest in, all right,
title and interest of the Loan Parties in such Collateral, in each case prior
and superior in right to any other Person, other than with respect to Permitted
Liens.
ARTICLE 5. CONDITIONS TO EFFECTIVENESS
The effectiveness of this Agreement and the obligation of each Credit
Party to make the Extensions of Credit to be made by it on the first Business
Day on which Extensions of Credit are made, shall be subject to the
satisfaction of the following conditions precedent (or the waiver thereof in
accordance with Section 11.1):
5.1. EVIDENCE OF ACTION
The Administrative Agent shall have received a certificate, dated the
Effective Date, of the Secretary or Assistant Secretary or other analogous
counterpart of each Loan Party:
(A) attaching a true and complete copy of the (i) resolutions of
its Managing Person and of all other documents evidencing all necessary
corporate, partnership or other action (in form and substance satisfactory to
the Administrative Agent) taken to authorize the Loan Documents to which it is
a party and the transactions contemplated thereby and certifying that such
resolutions are in full force and effect, and (ii) in the case of the
Borrower, the April 7, 1998 resolutions of its Managing Person authorizing the
Anixter Repurchase Agreement and the transactions contemplated thereby and
directing the retirement of the Capital Stock of the Borrower acquired pursuant
thereto (the "STOCK RETIREMENT RESOLUTIONS") and certifying that the Stock
Retirement Resolutions are in full force and effect;
(B) attaching a true and complete copy of its Organizational
Documents;
(C) setting forth the incumbency of its officer or officers (or
other analogous counterpart) who may sign the Loan Documents, including
therein a signature specimen of such officer or officers (or other analogous
counterpart); and
(D) attaching a certificate of good standing of the Secretary of
State of the jurisdiction of its formation and of each other
jurisdiction in which it is qualified to do business, except (i) in the case of
Benefit Connections, Inc. a good standing certificate of the Secretary of State
of the jurisdiction of its formation and (ii) in the case of all Loan Parties
in respect of such other jurisdictions, when the failure to be in good standing
in such jurisdiction would not result in
<PAGE> 56
a Material Adverse effect.
5.2. THIS AGREEMENT
The Administrative Agent (or Special Counsel) shall have received, in
respect of each Person listed on the signature pages of this Agreement, either
(i) a counterpart signature page hereof signed on behalf of such Person, or
(ii) written evidence satisfactory to the Administrative Agent (which may
include a facsimile transmission of a signed signature page of this Agreement)
that a counterpart signature page hereof has been signed on behalf of such
Person.
5.3. NOTES
The Administrative Agent shall have received a Note for each Lender,
dated the Effective Date, duly executed by a duly authorized officer of the
Borrower.
5.4. OPINIONS OF COUNSEL TO THE LOAN PARTIES
The Administrative Agent shall have received a favorable opinions of
(i) Schiff Hardin & Waite, counsel to the Loan Parties, and (ii) James E. Knox,
General Counsel of the Borrower, addressed to the Credit Parties (and
permitting Special Counsel to rely thereon), dated the Effective Date,
substantially in the forms of Exhibit E-1 and E-2, respectively.
5.5. SECURITY DOCUMENTS, SEARCH REPORTS, ETC.
The Administrative Agent (or Special Counsel) shall have received a
counterpart of the Security Agreement, dated the Effective Date, signed by each
Loan Party party thereto (or a facsimile of a signature page thereof signed by
each Loan Party party thereto) together with the following:
(A) a completed Perfection Certificate, dated the Effective Date and
signed by both a Financial Officer and the general counsel of the Borrower,
together with all attachments contemplated thereby, including the results of a
search of the Uniform Commercial Code (or equivalent) filings and the results
of patent, trademark, tax and judgment lien searches made with respect to the
Borrower and each Subsidiary Guarantor in the jurisdictions contemplated by the
Perfection Certificate and such other jurisdictions as the Administrative Agent
may reasonably request, and copies of the financing statements (or similar
documents) disclosed by such search and evidence reasonably satisfactory to the
Administrative Agent that the Liens indicated by such financing statements (or
similar documents) are permitted by Section 8.2 or have been released;
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(B) one or more stock certificates, evidencing (i) 100% of the
issued and outstanding Capital Stock of each Domestic Subsidiary owned by
the Borrower or any Subsidiary Guarantor, and (ii) except with respect to the
Capital Stock of the Mexican Subsidiary which is to be pledged as provided in
Section 7.14, not less than 65% of the issued and outstanding Capital Stock of
each Material Foreign Subsidiary, in each case, together with undated stock
powers with respect thereto, executed in blank by the Borrower or such
Subsidiary Guarantor, as the case may be, and bearing a signature guarantee in
all respects satisfactory to the Administrative Agent;
(C) Instruments (as defined in the Security Agreement) constituting
Collateral, duly indorsed in blank by the Borrower or such Subsidiary
Guarantor, as the case may be;
(D) Grants of Security Interest with respect to Copyrights, Patents
and Trademarks (as defined in the Security Agreement), substantially in the
form of Annexes B-1, B-2 and B-3, respectively, to the Security Agreement;
(E) such Uniform Commercial Code Financing Statements, executed by the
appropriate Loan Party, as shall be reasonably requested by the Administrative
Agent; and
(F) such other documents as the Administrative Agent may require in
connection with the creation and perfection of the security interests intended
to be granted under the Security Documents.
5.6. APPROVALS AND CONSENTS
All approvals and consents of all Persons required to be obtained in
connection with the consummation of the Transactions have been obtained, all
required notices have been given and all required waiting periods have expired.
5.7. OFFICER'S CERTIFICATE
The Administrative Agent shall have received a certificate of the
President, a Vice President or a Financial Officer of the Borrower, dated the
Effective Date, in all respects satisfactory to the Administrative Agent:
(A) certifying that as of the Effective Date (i) no Default exists,
and (ii) the representations and warranties contained in the Loan Documents
are true and correct, and
(B) certifying that all approvals and consents of all Persons
required to be obtained in connection with the consummation of the
Transactions have been obtained, all required notices have been given and all
required waiting periods have expired.
<PAGE> 58
5.8. FINANCIAL OFFICER'S CERTIFICATE
The Administrative Agent shall have received a certificate signed by a
Financial Officer of the Borrower, in all respects reasonably satisfactory to
the Administrative Agent, dated the Effective Date, and (i) stating that the
Borrower is in compliance with all covenants on a pro-forma basis after giving
effect to the Transactions, and (ii) attaching a copy of a pro-forma consoli
dated balance sheet of the Borrower utilized for purposes of preparing such
certificate, which pro- forma consolidated balance sheet presents the
Borrower's good faith estimate of its pro-forma consolidated financial
condition at the date thereof, after giving effect to the Transactions.
5.9. COLLATERAL AUDIT
The Agents shall have received and be satisfied in all respects with
an audit of the Collateral.
5.10. CERTAIN AGREEMENTS
The Administrative Agent shall have received a fully executed copy
of (i) the Subordinated Indenture, (ii) the Anixter Repurchase Agreement, and
(iii) each of the Arris Loan Documents, in each case certified to be a true and
complete copy thereof by the Secretary or Assistant Secretary of the Borrower,
each of which shall be in form and substance satisfactory to the Administrative
Agent.
5.11. PROPERTY, PUBLIC LIABILITY AND OTHER INSURANCE
The Administrative Agent shall have received a certificate of all
insurance maintained by the Borrower and its Subsidiaries in form and substance
reasonably satisfactory to the Administrative Agent, together with the
endorsements required by Section 5.4 of the Security Agreement.
5.12. EVIDENCE OF TRANSFER OF ASSETS AND LIABILITIES OF HOME SATELLITE
SYSTEMS
The Administrative Agent shall have received such documents (each
in form and substance satisfactory to it) evidencing the transfer of all assets
and liabilities of Home Satellite Systems to one or more of the Borrower and
the Subsidiary Guarantors.
5.13. FEDERAL RESERVE FORMS
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The Administrative Agent shall have received a Federal Reserve Form
for each Lender.
5.14. FEES
The Administrative Agent shall have received all fees and other
amounts due and payable to the Administrative Agent under the Loan Documents on
or prior to the Effective Date, including, to the extent invoiced,
reimbursement or payment of the fees and disbursements of Special Counsel and
all other out-of-pocket expenses required to be reimbursed or paid by the
Borrower hereunder.
5.15. OTHER DOCUMENTS
The Administrative Agent shall have received such other documents,
each in form and substance reasonably satisfactory to it, as it shall reasonably
request.
The Administrative Agent shall notify the Borrower and each Credit Party of the
date upon which each of the conditions precedent set forth in this Section 5.1
have been satisfied (or waived in accordance with Section 11.1), and such
notice shall be conclusive and binding. Notwithstanding the foregoing, this
Agreement shall not become effective unless each of the foregoing conditions is
satisfied (or waived pursuant to Section 11.1) on or before June 30, 1998.
ARTICLE 6. CONDITIONS PRECEDENT TO EACH EXTENSION OF CREDIT
The obligation of each Credit Party to make any Extension of Credit (other
than a participation in a Letter of Credit) under this Agreement are subject to
the satisfaction on the Effective Date of the Conditions to Effectiveness set
forth in Article 5 and shall be subject to the satisfaction of the following
conditions precedent as of the date thereof:
6.1. COMPLIANCE
On each Borrowing Date and after giving effect to the Extensions of
Credit thereon (i) no Default shall have occurred or be continuing and (ii)
the representations and warranties contained in the Loan Documents (other than
representations and warranties contained in Section 4.4(a)) shall be true and
correct with the same effect as though such representations and warranties had
been made on such Borrowing Date, except to the extent such representations and
warranties specifically relate to an earlier date, in which case such
representations and warranties shall have been true and correct on and as of
such earlier date. Each Extension of Credit and each Credit Request therefor
shall constitute a certification by the Borrower as of such Borrowing Date that
(i) each of the foregoing matters is true and correct in all respects and (ii)
in the case of a requested Revolving Loan, the proceeds of which are to be used
to repurchase shares of Capital Stock of the Borrower pursuant to
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the Anixter Repurchase Agreement, that the Stock Retirement Resolutions are in
full force and effect and have not be amended or modified in any way.
6.2. CREDIT REQUEST
With respect to each Extension of Credit, the Administrative Agent
shall have received a Credit Request, executed by a duly authorized officer of
the Borrower.
6.3. LAW
Such Extension of Credit shall not be prohibited by any applicable
law, rule or regulation.
ARTICLE 7. AFFIRMATIVE COVENANTS
The Borrower agrees that, so long as any Commitment is in effect and until
the principal of, and interest on, each Revolving Loan, all Reimbursement
Obligations, all Fees and all other amounts payable under the Loan Documents
shall have been paid in full:
7.1. FINANCIAL STATEMENTS AND INFORMATION
The Borrower shall furnish or cause to be furnished to the
Administrative Agent and each Lender:
(A) within 90 days after the end of each fiscal year, a copy of
the audited consolidated balance sheet and related statements of operations,
stockholders' equity and cash flows as of the end of and for such year, setting
forth in each case in comparative form the figures for the previous fiscal
year, all reported on by the Accountants (without (x) a "going concern" or like
qualification or exception, (y) any qualification or exception as to the scope
of such audit or (z) any exception or qualification which relates to the
treatment or classification of any item and which, as a condition to the
removal of such qualification, would require an adjustment to such item, the
effect of which would be to cause the Borrower to be in default of any of its
obligations under Section 8.16) to the effect that such consolidated financial
statements present fairly in all material respects the financial condition and
results of operations of the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, it being
understood that the Borrower may satisfy its obligations under this subsection
(a) by furnishing copies of the Borrower's annual report on Form 10-K in
respect of such fiscal year, together with the financial statements required
to be attached thereto;
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(B) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year, a copy of its consolidated balance sheet and the
related consolidated statements of operations and cash flows as of the end of
and for such fiscal quarter and the then elapsed portion of the fiscal year,
setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet, as of
the end of) the previous fiscal year, certified by one of its Financial
Officers as presenting fairly in all material respects the financial condition
and results of operations of the Borrower and its consolidated Subsidiaries on
a consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes, it being
understood that the Borrower may satisfy its obligations under this subsection
(b) by furnishing copies of the Borrower's quarterly report on Form 10-Q in
respect of such fiscal quarter, together with the financial statements required
to be attached thereto;
(C) concurrently with any delivery of financial statements under
subsections (a) or (b) above, a certificate (a "COMPLIANCE CERTIFICATE") of a
Financial Officer of the Borrower, substantially in the form of Exhibit D, (i)
certifying as to whether a Default has occurred and, if so, specifying the
details thereof and any action taken or proposed to be taken with respect
thereto, (ii) setting forth reasonably detailed calculations demonstrating
compliance with Section 8.16 and (iii) stating whether any change in GAAP or in
the application thereof has occurred since the date of the audited financial
statements referred to in Section 4.4 and, if any such change has occurred,
specifying the effect of such change on the financial statements accompanying
such Compliance Certificate;
(D) concurrently with any delivery of financial statements under
subsection (a) above, a certificate of the Accountants stating whether they
obtained knowledge during the course of their examination of such financial
statements of any Default in the covenants contained in Section 8.16 (which
certificate may be limited to the extent required by accounting rules or
guidelines);
(E) concurrently with any delivery of financial statements under
subsection (a) above, a certificate executed by a Financial Officer and the
general counsel of the Borrower (i) setting forth the information required
pursuant to Section 2 of the Perfection Certificate or confirming that there
has been no change in such information since the date of such certificate or
the date of the most recent certificate delivered pursuant to this subsection
(e), (ii) certifying that all Uniform Commercial Code financing
statements or other appropriate filings, recordings or registrations, including
all refilings, rerecordings and re-registrations, containing a description of
the Collateral have been filed of record in each governmental, municipal or
other appropriate office in each jurisdiction identified pursuant to clause (i)
above to the extent necessary to protect and perfect the security interest of
the Administrative Agent for a period of not less than 18 months after the date
of such certificate (except as noted therein with respect to any continuation
statements to be filed within such period) and (iii) identifying in the format
of Schedules 5, 6 and 8, as applicable, Equity
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Interests (as defined in the Security Agreement), Instruments (as defined in
the Security Agreement) and Intellectual Property of the Borrower and each
Subsidiary Guarantor in existence on the date thereof and not then listed on
such Schedules or previously so identified to the Administrative Agent;
(F) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by the
Borrower or any Subsidiary with the SEC or with any national securities
exchange, or distributed by the Borrower to its shareholders generally, as the
case may be;
(G) not later than the 25th day of each month (or if such day is not a
Business Day, on the immediately preceding Business Day, a Borrowing Base
Certificate, signed by a Financial Officer of the Borrower, calculated as of
the last day of the preceding month;
(H) concurrently with the delivery of the Borrowing Base Certificate
pursuant to subsection (g) above, the following information as of the end of
the month for which such Borrowing Base Certificate is delivered, for each of
the Borrower and each Subsidiary or on a combined basis and in a format
acceptable to the Agents: (i) summary of the aging of all accounts receivables,
and (ii) a list of accounts payable and inventory (raw material, work in
process and finished goods); and
(I) promptly following any request therefor, such other information
regarding the Borrower or any Subsidiary, or compliance with the terms of this
Agreement, as any Credit Party may reasonably request.
7.2. NOTICE OF MATERIAL EVENTS
The Borrower shall furnish to the Administrative Agent and each
Lender, prompt written notice of the following together with a statement of a
Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and, if applicable,
any action taken or proposed to be taken with respect thereto:
(A) the occurrence of any Default;
(B) the filing or commencement of any action, suit or proceeding
by or before any Governmental Authority against or affecting the Borrower or any
Subsidiary that, if adversely determined, could in the good faith opinion of
the Borrower reasonably be expected to result in a Material Adverse effect;
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(C) any lapse, refusal to renew or extend or other termination of any
material license, permit, franchise or other authorization issued to the
Borrower or any Subsidiary by any Person or Governmental Authority, which
lapse, refusal or termination, could reasonably be expected to result in a
Material Adverse effect;
(D) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result
in a Material Adverse effect;
(E) the occurrence of any Equity Issuance resulting in Net Cash
Proceeds;
(F) the occurrence of any insured damage to any portion of any
Collateral or the commencement of any action or proceeding for the taking of any
Collateral or any part thereof or interest therein under power of eminent
domain or by condemnation or similar proceeding; or
(G) the occurrence of a Change of Control; or
(H) the occurrence of any other development that has or could
reasonably be expected to result in, a Material Adverse effect.
7.3. EXISTENCE; CONDUCT OF BUSINESS
The Borrower shall, and shall cause each Subsidiary to, do or cause
to be done all things necessary to preserve, renew and keep in full force and
effect (i) its legal existence (provided that the foregoing shall not prohibit
any merger, consolidation or dissolution not prohibited by Section 8.3), and
(ii) all rights, licenses, permits, privileges and franchises the absence of
which would reasonably be expected to have a Material Adverse effect.
7.4. PAYMENT OF OBLIGATIONS
The Borrower shall, and shall cause each Subsidiary to, pay and
discharge when due, its obligations, including obligations with respect to
Taxes, which, if unpaid, could reasonably be expected to result in a Material
Adverse effect, except where (i) the validity or amount thereof is being
contested in good faith by appropriate proceedings diligently conducted, (ii)
the Borrower or such Subsidiary has set aside on its books adequate reserves
with respect thereto in accordance with GAAP and (iii) the failure to make
payment pending such contest could not reasonably be expected to result in a
Material Adverse effect.
7.5. MAINTENANCE OF PROPERTIES
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The Borrower shall, and shall cause each Subsidiary to, maintain,
protect and keep in good repair, working order and condition (ordinary wear and
tear excepted) at all times, all of its property other than property, the loss
of which would not reasonably be expected to have a Material Adverse effect.
7.6. INSURANCE
The Borrower shall, and shall cause each Subsidiary to, maintain with
financially sound and reputable insurance companies, (i) insurance in at least
such amounts and against at least such risks (but including in any event public
liability, product liability and business interruption coverage) as are usually
insured against in the same general area by companies engaged in the same or a
similar business and (ii) such other insurance as is required pursuant to the
terms of any Security Document, and furnish to the Administrative Agent, upon
written request, full information as to the insurance carried.
7.7. BOOKS AND RECORDS: INSPECTION RIGHTS
The Borrower shall, and shall cause each Subsidiary to, keep proper
books of record and account in which full, true and correct entries are made
of all dealings and transactions in relation to its business and activities
and, at all reasonable times upon reasonable prior notice, permit
representatives of the Credit Parties to (i) visit the offices of the Borrower
and each Subsidiary, (ii) examine such books and records and Accountants'
reports relating thereto, (iii) make copies or extracts therefrom, (iv) discuss
the affairs of the Borrower and each such Subsidiary with the respective
officers thereof, (v) to examine and inspect the property of the Borrower and
each such Subsidiary and (vi) meet and discuss the affairs of the Borrower and
each such Subsidiary with the Accountants.
7.8. COMPLIANCE WITH LAWS
The Borrower shall, and shall cause each Subsidiary to, comply with
all laws, rules, regulations and orders of any Governmental Authority
applicable to it or its property, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse effect.
7.9. ADDITIONAL SUBSIDIARIES
(A) DOMESTIC SUBSIDIARIES. In the event that on or after the Effective
Date, any Person shall become a Domestic Subsidiary, or any Non-Guarantor
Subsidiary shall at any time be a
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Domestic Subsidiary, the Borrower shall (i) notify the Administrative Agent
in writing thereof within three Business Days thereof, (ii) cause such Person
to execute and deliver to the Administrative Agent a Guarantee Supplement and
to become a party to each applicable Security Document in the manner provided
therein within five Business Days thereafter and to promptly take such actions
to create and perfect Liens on such Person's assets to secure such Person's
obligations under the Loan Documents as the Administrative Agent or the
Required Lenders shall reasonably request, (iii) cause any shares of Capital
Stock of, or promissory notes evidencing Indebtedness of, such new Domestic
Subsidiary owned by or on behalf of any Loan Party to be pledged pursuant to
the Security Agreement within five Business Days thereafter, (iv) cause each
such new Domestic Subsidiary to deliver to the Administrative Agent any shares
of Capital Stock or promissory notes evidencing Indebtedness of any Domestic
Subsidiary or Material Foreign Subsidiary that are owned by or on behalf of
such new Domestic Subsidiary within five Business Days after such Subsidiary is
formed or acquired (except that, if any such Subsidiary is a Material Foreign
Subsidiary, shares of Capital Stock of such Person to be so pledged may be
limited as provided in subsection (b) below and, if requested by the
Administrative Agent with respect to the pledge of Capital Stock of a Material
Foreign Subsidiary, the Administrative Agent shall receive the documents
referred to in subsection (b)(iii) below), and (v) deliver to the
Administrative Agent a Perfection Certificate with respect to such Subsidiary,
such additional Financing Statements, Grants of Security Interest and Powers of
Attorney (as each such term is defined in the Security Agreement) certificates,
instruments and opinions as the Administrative Agent may request.
(B) MATERIAL FOREIGN SUBSIDIARIES. In the event that on or after the
Effective Date, any Person shall become a Material Foreign Subsidiary, the
Borrower shall (i) notify the Administrative Agent in writing thereof within
three Business Days thereof, (ii) cause the lesser of (x) 65% of the
outstanding shares of Capital Stock of such Material Foreign Subsidiary or (y)
all of such shares owned by the Loan Parties, together with all promissory
notes evidencing Indebtedness of such Material Foreign Subsidiary to any Loan
Party to be pledged pursuant to the Security Agreement within five Business
Days thereafter, provided, that if requested by the Administrative Agent with
respect to the pledge of Capital Stock of a Material Foreign Subsidiary,
deliver to the Administrative Agent an additional pledge agreement, in form and
substance reasonably satisfactory to the Administrative Agent (each an
"ADDITIONAL PLEDGE AGREEMENT") and an opinion of counsel (including counsel
practicing under the laws of the jurisdiction under which such Material Foreign
Subsidiary was formed) with respect to the enforceability of such Pledge
Agreement or Additional Pledge Agreement and the validity and perfection of the
Lien granted therein and (iii) deliver to the Administrative Agent such
certificates, instruments and opinions as the Administrative Agent may request.
7.10. ADDITIONAL COLLATERAL
If after the Effective Date, the Borrower or any other Loan Party
acquires any property which would constitute Collateral, the Borrower shall,
and shall cause each such Loan Party
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to, execute any and all documents, financing statements, agreements and
instruments, and take all such further actions (including the filing and
recording of financing statements, fixture filings, mortgages, deeds of trust
and other documents), that may be required under any applicable law, or which
the Administrative Agent or the Required Lenders may reasonably request, to
effectuate the Transactions or to grant, preserve, protect or perfect the Liens
created or intended to be created by the Security Documents or the validity or
priority of any such Lien, all at the expense of the Loan Parties.
7.11. MORTGAGES ON OWNED AND LEASED PROPERTIES
(A) Upon demand by the Administrative Agent or the Required Lenders,
the Borrower shall cause each Loan Party to execute and deliver to the
Administrative Agent, as applicable, fee or leasehold mortgages or deeds of
trust in favor of the Administrative Agent covering such of the Mortgaged
Properties as the Administrative Agent or the Required Lenders may determine.
(B) In such event, the Borrower shall promptly provide the
Administrative Agent, all at the expense of the Loan Parties, with originals
of the following items, each of which must, unless indicated otherwise, be
acceptable in form and substance to the Administrative Agent and its counsel in
their sole discretion (collectively, the "MORTGAGE DOCUMENTS"): (i)
counterparts of a Mortgage with respect to each Mortgaged Property duly signed
on behalf of the record owner or lessee, as applicable, of such Mortgaged
Property properly acknowledged and in recordable form, (ii) an original policy
or policies of title insurance issued by Chicago Title Insurance Company or
another nationally recognized title insurance company reasonably acceptable to
the Administrative Agent, insuring the Lien of each such Mortgage as a valid
first Lien on the Mortgaged Property described therein, free of any other Liens
except as permitted by Section 8.2, in form and substance reasonably acceptable
to the Administrative Agent, together with such endorsements, coinsurance and
reinsurance as the Administrative Agent or the Required Lenders may reasonably
request, (iii) such surveys as may be required pursuant to such Mortgages or as
the Administrative Agent or the Required Lenders may reasonably request or as
necessary for a title insurance company to "omit" the "survey exception" from
the policies of title insurance required above, (iv) a copy of the original
permanent certificate or temporary certificate of occupancy as the same may
have been amended or issued from time to time, covering each improvement
located upon the Mortgaged Properties, that were required to have been issued
by the appropriate Governmental Authority for such improvement, (v) written
confirmation from the applicable zoning commission or other appropriate
Governmental Authority stating that with respect to each Mortgaged Property as
built it complies with existing land use and zoning ordinances, regulations and
restrictions applicable to such Mortgaged Property, (vi) for each of the
Mortgaged Properties, a current appraisal of the land and the improvements
thereon prepared
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by an appraiser selected by the Administrative Agent, which appraisal must
indicate an appraised value satisfactory to the Administrative Agent and which
must be, in all other respects, satisfactory to the Administrative Agent, (vii)
to the extent requested by the Administrative Agent, an environmental audit
(which shall be a Phase I Audit, unless the initial findings indicate a need
for additional review) in form and substance satisfactory to it from an
environmental consulting firm acceptable to the Administrative Agent with
respect to any environmental hazards, conditions or liabilities (contingent or
otherwise) to which any Loan Party may be subject, (viii) UCC-1 Financing
Statements with respect to each Mortgaged Property duly signed on behalf of the
record owner or lessee, as applicable, of each of the Mortgaged Properties in
recordable form, covering all fixtures and appurtenances situated upon such
Mortgaged Properties, (ix) true and complete fully executed copies of all
leases on the Mortgaged Properties which must be satisfactory to the
Administrative Agent and must be subordinate to the Mortgage, (x) fully
executed original Estoppel Certificates from each existing tenant on the
Mortgaged Properties in form reasonably acceptable to the Administrative Agent,
(xi) certified copies of the current rent roll for each of the Mortgaged
Properties, (xii) Subordination, Non-disturbance and Attornment Agreements from
any tenant whose lease is not by its terms subordinate to the Mortgage, in form
acceptable to the Administrative Agent, (xiii) certificates of insurance
confirming fire, hazard and liability coverage in amounts satisfactory to the
Administrative Agent, naming the Administrative Agent as mortgagee, with true
and complete copies of such policies, (xiv) flood insurance policies or
evidence that the Mortgaged Properties are not located in Federal Flood Hazard
Areas, (xv) an opinion from the Borrower's counsel concerning the execution and
enforceability of the Mortgages and other documents required to be delivered by
the Loan Parties to the Administrative Agent in connection with the Mortgages,
any litigation, judgment or agreement adversely affecting any record owner or
lessee, as applicable, or the ability of such record owner or lessee, as
applicable, to perform their respective obligations under the Mortgages,
compliance of the Mortgaged Properties with all laws and governmental
ordinances, and other matters as may be required by the Administrative Agent or
its counsel, which opinion shall be in form and substance satisfactory to the
Administrative Agent and its counsel, (xvi) for each of the Mortgaged
Properties, a written indemnity from the Loan Parties in favor of the
Administrative Agent and the Required Lenders with respect to environmental
hazards and the Americans with Disabilities Act, (xvii) with respect to any
Mortgage which will be a leasehold mortgage, a certified copy of the ground
lease for such Mortgaged Property (the "GROUND LEASE") duly executed by the
ground landlord and ground tenant, (xviii) with respect to any Mortgage which
will be a leasehold mortgage, a duly executed three party agreement by and
between the ground landlord for such Mortgaged Property, the ground tenant and
the Administrative Agent, which agreement must provide, among other things,
that (1) the Ground Lease is fully subordinated to the Mortgage, (2) the
Administrative Agent receive notices of any default under the Ground Lease and
an opportunity to cure same, (3) the ground landlord is obligated to enter into
a new lease with the Administrative Agent or its assignee upon termination
thereof for any reason (upon the same terms and conditions of the Ground
Lease), (4) the ground landlord is obligated to extend the Ground Lease after
the current term of the Ground Lease if the Revolving Loans have not been fully
repaid and terminated within such current lease term, and (5) such other terms
as the Administrative Agent may reasonably deem appropriate, and (xix) any and
all
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other documents, financing statements, agreements and instruments that may
be required under any applicable law, or which the Administrative Agent or the
Required Lenders may reasonably request, to create and perfect a first mortgage
Lien against the Mortgaged Properties, all at the expense of the Loan Parties.
7.12. MAINTENANCE OF LICENSES
The Borrower shall do, and cause each Subsidiary to do, all things
necessary, to renew, extend and continue in effect all permits, licenses and
authorizations which may at any time and from time to time be necessary to
operate the business of the Borrower and the Subsidiaries in compliance with
all applicable laws and regulations, the failure to comply with which could
reasonably be expected to have a Material Adverse effect.
7.13. COLLATERAL AUDITS
The Borrower shall, and shall cause each Subsidiary to, cooperate
with the Collateral Agent in connection with the performance of collateral
audits which shall be made upon the request of the Collateral Agent or
Required Lenders and which shall be at the Borrower's expense.
7.14. CERTAIN ADDITIONAL PLEDGE AGREEMENTS
Not later than 30 days after the Effective Date, the Borrower shall
deliver or cause to be delivered to the Administrative Agent an Additional
Pledge Agreement, in form and substance satisfactory to the Administrative
Agent, duly executed by Texscan with respect to its interest in the Mexican
Subsidiary, and, if ANTEC International, Inc. has not as yet been dissolved,
its interest therein, together with such legal opinions and other documents set
forth in Section 7.9.
7.15. GOOD STANDING CERTIFICATE FOR BENEFIT CONNECTIONS, INC.
Not later than 120 days after the Effective Date, the Borrower shall
deliver or cause to be delivered to the Administrative Agent a certificate of
good standing with respect to Benefit Connections, Inc. issued by the Secretary
of State of the jurisdiction of its formation unless prior thereto Benefit
Connections, Inc. shall have been dissolved or merged with another Person in a
transaction permitted by Section 7.3 or 8.3, as the case may be, and the
Administrative Agent shall have received satisfactory evidence thereof.
ARTICLE 8. NEGATIVE COVENANTS
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The Borrower agrees that, so long as any Commitment is in effect and until
the principal of, and interest on, each Revolving Loan, all Reimbursement
Obligations, all Fees and all other amounts payable under the Loan Documents
shall have been paid in full:
8.1. INDEBTEDNESS
The Borrower shall not, and shall not permit any Subsidiary to,
create, incur, assume or suffer to exist any liability for Indebtedness, except:
(A) Indebtedness due under the Loan Documents;
(B) Indebtedness due in respect of the Subordinated Notes in a
principal amount not in excess of $115,000,000;
(C) Indebtedness of the Borrower or any Subsidiary existing on the
Effective Date as set forth on Schedule 8.1, but not any extensions, renewals
and replacements of any such Indebtedness;
(D) Indebtedness of the Borrower in respect of the Arris Obligations;
(E) Indebtedness of the Borrower to any Subsidiary Guarantor or of any
Subsidiary Guarantor to the Borrower or any other Subsidiary Guarantor; and
(F) other Indebtedness of the Borrower or any Subsidiary in an
aggregate outstanding principal amount not to exceed $20,000,000, of
which not more than $5,000,000 may consist of Capital Lease Obligations and the
proceeds of sale in respect of Sale and Leaseback Transactions.
8.2. NEGATIVE PLEDGE
The Borrower shall not, and shall not permit any Subsidiary to,
create, incur, assume or suffer to exist any Lien upon any of its property,
whether now owned or hereafter acquired, or assign or sell any income or
revenues (including accounts receivable) or rights in respect of any thereof,
except for the following (collectively, "PERMITTED LIENS"):
(A) any Customary Lien;
(B) any Lien on any property or asset of the Borrower or any
Subsidiary existing on the Effective Date and set forth on Schedule 8.2,
provided that (i) such Lien shall not apply to any other property or asset of
the Borrower or any Subsidiary and (ii) such Lien shall secure only those
obligations that it secures on the Effective Date;
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(C) Liens securing Capital Lease Obligations and Liens on property
(including, in the event such property constitutes Capital Stock of a newly
acquired Subsidiary, Liens on the property of such Subsidiary) acquired after
the Effective Date and either existing on such property when acquired,or
created contemporaneously with such acquisition, to secure the payment or
financing of the purchase price thereof, provided that such Liens attach only
to the property so purchased or acquired and, provided further, that the
Indebtedness secured by such Liens shall not exceed $5,000,000; and
(D) the Lien of Nortel on the interest of the Borrower in Arris,
provided, however, that such Lien shall not apply to any other property
or assets of, nor be recourse to, the Borrower or any Subsidiary.
8.3. FUNDAMENTAL CHANGES
The Borrower shall not, and shall not permit any Subsidiary to,
consolidate or merge into or with any other Person, or permit any other Person
to merge into or consolidate with it or any of the Subsidiaries, or sell,
transfer, lease or otherwise dispose of (in one transaction or in a series of
transactions) all or substantially all of its assets, or all or substantially
all of any class of the Capital Stock of any of the Subsidiaries (in each case,
whether now owned or hereafter acquired), or liquidate or dissolve, or permit
any Subsidiaries to do any of the foregoing, except that, so long as
immediately before and after giving effect thereto, no Default shall or would
exist:
(A) the Borrower may merge with any Subsidiary Guarantor, any
Subsidiary Guarantor may merge with the Borrower or any other Subsidiary
Guarantor, and any Non-Guarantor Subsidiary may merge with any other
Non-Guarantor Subsidiary provided that in connection with any merger involving
the Borrower, the Borrower shall be the survivor thereof;
(B) any Non-Guarantor Subsidiary may merge with any Subsidiary
Guarantor, and any Subsidiary Guarantor may merge with any Non-Guarantor
Subsidiary, provided that, (i) immediately after giving effect to any such
merger in which such Subsidiary Guarantor is the survivor, the Permitted
Transaction Amount (x) for the fiscal year in which such merger occurs shall
not exceed the Permitted Transaction Annual Limitation, and (y) for the period
from the Effective Date through the Maturity Date shall not exceed the
Permitted Transaction Aggregate Limitation, and such merger shall be treated as
an Acquisition for all purposes of Section 8.5(b) or 8.5(c), as the case may
be, and (ii) with respect to any merger in which such Subsidiary Guarantor is
not the survivor, such merger shall be treated as a sale, assignment, transfer
or other disposition for all purposes of Section 8.6(b) or a Disposition for
all purposes of Section 8.6(c), as the case may be;
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(C) the Borrower or any Subsidiary may merge with any Person that is
not a Subsidiary, provided that, (i) in connection with any such merger
involving the Borrower, the Borrower shall be the survivor thereof, (ii) with
respect to any such merger involving a Subsidiary in which, immediately after
giving effect thereto, the surviving Person is not a Subsidiary, such merger
shall be treated as a Disposition for all purposes of Section 8.6(c), and (iii)
with respect to any such merger involving a Loan Party in which, immediately
after giving effect thereto, the surviving Person is a Subsidiary, such merger
shall be treated as an Acquisition for all purposes of Section 8.5(c);
(D) the Borrower and the Subsidiaries may consummate any sale,
assignment, lease, transfer or other disposition permitted by Section 8.6;
(E) any Non-Guarantor Subsidiary may liquidate or dissolve if the
Borrower determines in good faith that such liquidation or dissolution is in
the best interests of the Borrower and is not materially disadvantageous to
the Lenders.
8.4. INVESTMENTS, LOANS, ADVANCES AND GUARANTEES
The Borrower shall not, and shall not permit any Subsidiary to, at any
time, purchase or otherwise acquire (including pursuant to any merger with any
Person that was not a Wholly Owned Subsidiary of the Borrower prior to such
merger), hold or invest in any Capital Stock, evidences of indebtedness or
other securities (including any option, warrant or other right to acquire any
of the foregoing and any derivative product) of, make or permit to exist any
loans to or advances on behalf of, incur any Guarantees in respect of any
obligations of, or make or permit to exist any investment or any other interest
in, any other Person (all of which are sometimes referred to herein as
"INVESTMENTS"), except:
(A) Investments in Cash Equivalents and in normal business banking
accounts or issued by, federally insured institutions in amounts not exceeding
the limits of such insurance;
(B) Investments existing on the Effective Date as set forth on
Schedule 8.4;
(C) Investments by the Borrower in any Subsidiary and Investments by
any Subsidiary in the Borrower or any other Subsidiary, provided that (i)
the proceeds of such Investment in the Borrower or any Subsidiary Guarantor
shall be received by the Borrower or such Subsidiary Guarantor, as the case may
be, (ii) immediately after giving effect to each Investment by the Borrower or
any Subsidiary Guarantor in any Non-Guarantor Subsidiary, the Permitted
Transaction Amount (x) for the fiscal year in which such Investment is made
shall not exceed the Permitted Transaction Annual Limitation, and (y) for the
period from the Effective Date through the Maturity Date shall not exceed the
Permitted Transaction Aggregate Limitation;
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(D) an equity Investment by the Borrower in Evolve in an aggregate
amount not in excess of $2,000,000, provided that, (i) immediately before and
after giving effect thereto, no Default shall or would exist, (ii) immediately
after giving effect thereto, all of the representations and warranties
contained in the Loan Documents shall be true and correct with the same effect
as though then made, (iii) neither the Borrower nor any Subsidiary shall have
any further obligations, contingent or otherwise, to make any other Investments
therein;
(E) Unconsolidated Investments made on or after the Effective Date,
provided that, (i) immediately before and after giving effect thereto, no
Default shall or would exist, (ii) immediately after giving effect thereto, all
of the representations and warranties contained in the Loan Documents shall be
true and correct with the same effect as though then made, (iii) the Person in
which such Unconsolidated Investment is made is engaged in the Line of
Business, and (iv) immediately after giving effect to each such Unconsolidated
Investment, the Permitted Transaction Amount (x) for the fiscal year in which
such Investment is made shall not exceed the Permitted Transaction Annual
Limitation, and (y) for the period from the Effective Date through the Maturity
Date shall not exceed the Permitted Transaction Aggregate Limitation;
(F) Acquisitions permitted by Section 8.5; and
(G) Guarantees permitted by Section 8.1 and Secured Hedging Agreements
permitted by Section 8.8.
8.5. ACQUISITIONS
The Borrower shall not, and shall not permit any Subsidiary to, at any
time, make any purchase or other acquisition (including by way of a dividend
received or otherwise and whether in a single transaction or in a series of
related transactions) of (i) any assets of any other Person that, taken
together, constitute a business unit, (ii) any Capital Stock of any other
Person if, immediately thereafter, such other Person would be a Subsidiary of
the Borrower, (iii) any assets of any other Person otherwise not in the
ordinary course of business, (iv) enter into any binding agreement to perform
any transaction described in clauses (i), (ii) or (iii) above which is not
contingent on obtaining the consent of the Required Lenders (each transaction
described in clauses (i), (ii), (iii) and (iv) above being referred to as an
"ACQUISITION"), or (v) make any deposit in connection with any potential
Acquisition, except:
(H) Acquisitions of Investments permitted by Section 8.4;
(I) Acquisitions by the Borrower or any Subsidiary from any other
Subsidiary
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and Acquisitions by any Subsidiary from the Borrower or any other
Subsidiary, provided that, immediately after giving effect to any Acquisition
between a Loan Party, as purchaser, and a Non-Guarantor Subsidiary, as seller,
the Permitted Transaction Amount (x) for the fiscal year in which such
Acquisition is made shall not exceed the Permitted Transaction Annual
Limitation, and (y) for the period from the Effective Date through the Maturity
Date shall not exceed the Permitted Transaction Aggregate Limitation; and
(J) other Acquisitions, provided that immediately after giving effect
thereto, the Permitted Transaction Amount (x) for the fiscal year in which such
Acquisition is made shall not exceed the Permitted Transaction Annual
Limitation, and (y) for the period from the Effective Date through the Maturity
Date shall not exceed the Permitted Transaction Aggregate Limitation, provided
further that:
(A) immediately before or after giving effect to each such
Acquisition, no Default shall or would exist, and immediately after
giving effect thereto, all of the representations and warranties
contained in the Loan Documents shall be true and correct with the same
effect as though then made,
(B) the Person or business acquired is engaged in the Line of
Business,
(C) the Borrower or Subsidiary Guarantor making the Acquisition
shall have complied with the provisions of Sections 7.9, 7.10, and 7.11
(if and to the extent applicable), and
(D) the Borrower shall have delivered to the Administrative Agent
and each Credit Party (1) notice thereof not less than ten days prior to
the consummation of such Acquisition, and (2) a certificate of a
Financial Officer thereof, in all respects reasonably satisfactory to the
Administrative Agent and dated the date of such consummation, certifying
that no Default has occurred and is continuing, and setting forth
reasonably detailed calculations demonstrating compliance with Section
8.16 on a pro-forma basis (after giving effect to such Acquisition and
based on the most recent financial statements delivered pursuant to
Section 7.1) and such other information, documents and other items as the
Administrative Agent or such Credit Party shall have reasonably
requested.
8.6. DISPOSITIONS
The Borrower shall not, and shall not permit any Subsidiary to, sell,
assign, lease, transfer or otherwise dispose of any property or assets, except:
(A) (i) sales of Inventory in the ordinary course of business, (ii)
sales or other dispositions of Unconsolidated Investments, (iii) sales,
assignments, transfers or other dispositions of
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any property or assets that, in the reasonable opinion of the Borrower or
such Subsidiary, as the case may be, are obsolete or no longer useful in the
conduct of its business, and (iv) sales or other dispositions of Cash
Equivalents;
(B) sales, assignments, transfers or other dispositions of any
property or assets by the Borrower to any Subsidiary or by any Subsidiary
to the Borrower or any other Subsidiary, provided that, immediately after
giving effect to any such transaction between a Loan Party and a Non-Guarantor
Subsidiary, the Permitted Transaction Amount (x) for the fiscal year in which
such sale, assignment, transfer or other disposition occurs shall not exceed
the Permitted Transaction Annual Limitation, and (y) for the period from the
Effective Date through the Maturity Date shall not exceed the Permitted
Transaction Aggregate Limitation; and
(C) sales, assignments, leases, transfers or other dispositions not
otherwise described in this Section 8.6 (each a "DISPOSITION"), provided that,
(i) immediately before and after giving effect to each such Disposition, no
Default shall or would exist, (ii) 75% of the total consideration received or
to be received therefor by the Borrower or any Subsidiary shall be payable in
cash or Cash Equivalents on or before the closing thereof and shall not be less
than the fair market value thereof as reasonably determined by the Managing
Person of the Borrower or such Subsidiary, as the case may be, and (iii) the
Administrative Agent and the Lenders shall have received (A) written notice
thereof not less than ten Business Days prior to each such Disposition, (B) a
certificate in respect thereof signed by a duly authorized officer of the
Borrower identifying the property or other asset subject to such Disposition,
together with estimates of items to be deducted therefrom in arriving at the
Net Cash Proceeds thereof, and (C) for any Disposition involving proceeds in
excess of $5,000,000, a certificate signed by a duly authorized officer of the
Borrower certifying that the consideration received or to be received by the
Borrower or such Subsidiary, as the case may be, for such property has been
determined by the Managing Person thereof to be not less than the fair market
value of such property and certifying as to the total consideration to be paid
in respect of such Disposition.
8.7. RESTRICTED PAYMENTS
The Borrower shall not, and shall not permit any Subsidiary to,
declare, pay or make any dividend or other distribution, direct or
indirect, on account of any Capital Stock issued by such Person now or
hereafter outstanding (other than a dividend payable solely in shares or other
units of such Capital Stock to the holders of such shares or other units) or
any redemption, retirement, sinking fund or similar payment, purchase or other
acquisition, direct or indirect, of any shares of any class of its Capital
Stock now or hereafter outstanding (collectively, "RESTRICTED PAYMENTS"),
except:
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(A) Restricted Payments made by any Subsidiary to the Borrower or any
Subsidiary Guarantor;
(B) repurchases by the Borrower of shares of its Capital Stock
pursuant to the Anixter Repurchase Agreement for an amount not in excess of
$64,000,000, provided that (i) immediately before and after giving effect
thereto, no Default shall or would exist and (ii) such repurchase is effected
with the proceeds of (x) the Subordinated Notes not used on the issuance
thereof to repay the Borrower's Indebtedness under its then existing credit
facility or prepay Revolving Loans and (y) Revolving Loans in an aggregate
amount not in excess of the an amount equal to $64,000,000 minus the amount
determined under clause (ii)(x) above; and
(C) other Restricted Payments made by the Borrower or any Subsidiary,
provided that, (i) immediately before and after giving effect thereto, no
Default shall or would exist, and (ii) immediately after giving effect to any
such Restricted Payment the Permitted Transaction Amount (x) for the fiscal
year in which such Restricted Payment is made shall not exceed the Permitted
Transaction Annual Limitation, and (y) for the period from the Effective Date
through the Maturity Date shall not exceed the Permitted Transaction Aggregate
Limitation.
8.8. HEDGING AGREEMENTS
The Borrower shall not, and shall not permit any Subsidiary to,
enter into any Hedging Agreements, other than Hedging Agreements in a
notional principal amount not in excess of the then Aggregate Revolving
Commitment entered into in the ordinary course of business to hedge or mitigate
risks to which the Borrower or any Subsidiary is exposed in the conduct of its
business or the management of its liabilities.
8.9. SALE AND LEASE-BACK TRANSACTIONS
The Borrower shall not, and shall not permit any Subsidiary to,
enter into an arrangement with any Person or group of Persons providing
for the renting or leasing by the Borrower or any Subsidiary of any property or
asset which has been or is to be sold or transferred by the Borrower or any
Subsidiary to any such Person (a "SALE AND LEASEBACK TRANSACTION") except to
the extent permitted by Section 8.1(f).
8.10. LINES OF BUSINESS
The Borrower shall not, and shall not permit any Subsidiary to,
engage in any business other than the Line of Business.
8.11. TRANSACTIONS WITH AFFILIATES
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The Borrower shall not, and shall not permit any Subsidiary to,
become a party to any transaction with an Affiliate, unless the
Borrower's or such Subsidiary's Managing Person shall have determined that the
terms and conditions relating thereto are as favorable to the Borrower or such
Subsidiary as those which would be obtainable at the time in a comparable
arms-length transaction with a Person other than an Affiliate.
8.12. AMENDMENTS, ETC. OF CERTAIN AGREEMENTS
The Borrower shall not, and shall not permit any Subsidiary to,
enter into or agree to any amendment, modification or waiver of any term
or condition of any of the Material Agreements or the Arris Loan Documents in
any way which could reasonably be expected to have a Material Adverse effect.
8.13. USE OF PROCEEDS
The Borrower shall not use the proceeds of the Extensions of Credit
for any purpose other than to (i) pay all of the Fees due hereunder, (ii)
pay the reasonable out-of-pocket fees and expenses incurred by the Borrower in
connection with the Loan Documents, (iii) finance working capital not
inconsistent with the provisions hereof, (iv) finance Capital Expenditures, (v)
repurchase shares of its Capital Stock pursuant to the Anixter Repurchase
Agreement so long as such shares are retired and the Administrative Agent shall
have received a certificate of a Financial Officer to such effect, and (vi) to
make Acquisitions and Investments permitted hereby provided, however, that no
part of such proceeds will be used, directly or indirectly, for a purpose which
violates any law, including the provisions of Regulation T, U or X.
8.14. RESTRICTIVE AGREEMENTS
The Borrower shall not, and shall not permit any Subsidiary to,
directly or indirectly, enter into, incur or permit to exist any
agreement or other arrangement that prohibits, restricts or imposes any
condition upon (i) the ability of the Borrower or any such Subsidiary to
create, incur or permit to exist any Lien upon any of its property or assets,
or (ii) the ability of any such Subsidiary to pay dividends or other
distributions with respect to any shares of its Capital Stock or to make or
repay loans or advances to the Borrower or any other Subsidiary of the Borrower
or to Guarantee Indebtedness of the Borrower or any other Subsidiary of the
Borrower, provided that the foregoing shall not apply to restrictions and
conditions imposed by applicable law or by this Agreement.
8.15. PREPAYMENTS OF INDEBTEDNESS; PAYMENTS OF SUBORDINATED INDEBTEDNESS
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The Borrower shall not, and shall not permit any Subsidiary to (i)
prepay or obligate itself to prepay, in whole or in part, any Indebtedness
(other than Indebtedness under the Loan Documents) or (ii) make any payment in
respect of principal of, or premium or interest on, or purchase, voluntarily
redeem or otherwise retire, or make any payment in respect of all or any part
of the Subordinated Notes except subject to the applicable subordination
provisions thereof.
8.16. FINANCIAL COVENANTS
(A) FIXED CHARGE COVERAGE RATIO. The Borrower shall not permit the
Fixed Charge Coverage Ratio, as of the last day of any fiscal quarter, to be
less than the ratio set forth below with respect to the applicable period set
forth below:
<TABLE>
<S> <C>
Effective Date through
December 30, 1998 1.00:1.00
December 31, 1998 through
December 30, 1999 1.50:1.00
December 31, 1999 through
December 30, 2000 2.00:1.00
December 31, 2000 and
thereafter 2.50:1.00.
</TABLE>
(B) MINIMUM NET WORTH. The Borrower shall maintain as of the last
day of each fiscal quarter, Net Worth in an amount not less than the sum of (i)
$215,000,000, plus (ii) 50% of the Borrower's consolidated net income (if
positive) for each fiscal year beginning with the fiscal year ending December
31, 1998 to such date of determination plus (iii) any increase to Net Worth
resulting from any Equity Issuance by the Borrower.
(C) RATIO OF TOTAL DEBT TO CAPITAL. The Borrower shall maintain at
all times a ratio of (i) Total Debt to (ii) the sum of (x) Total Debt and
(y) Net Worth of not greater than 0.45:1.00.
(D) CAPITAL EXPENDITURES. The Borrower shall not make any Capital
Expenditures (or incur any obligation to make any Capital Expenditure) or
permit any Subsidiary to do so, in any fiscal year in an aggregate amount in
excess of $12,500,000. Up to $2,500,000 of Capital Expenditures permitted for
a fiscal year may, to the extent not expended in such fiscal year, be carried
over and expended only in the immediately succeeding fiscal year.
8.17. DESIGNATED SENIOR INDEBTEDNESS
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The Borrower shall not designate any Indebtedness as "Designated
Senior Indebtedness" as defined in the Subordinated Indenture.
8.18. EQUITY ISSUANCES
The Borrower shall not permit any Subsidiary to issue Capital Stock.
ARTICLE 9. DEFAULTS
9.1. EVENTS OF DEFAULT
The following shall each constitute an "EVENT OF DEFAULT" hereunder:
(A) the failure of the Borrower to make (i) any payment of
principal on any Revolving Loan or in respect of any Reimbursement
Obligation, when due and payable; or (ii) any deposit into the Cash
Collateral Account when required hereby; or
(B) the failure of the Borrower to make any payment of interest,
Fees, expenses or other amounts payable under any Loan Document or
otherwise to the Administrative Agent with respect to the loan facilities
established hereunder within three Business Days of the date when due and
payable; or
(C) the failure of the Borrower to observe or perform any
covenant or agreement contained in Section 7.3(i), 7.7(i)-(v), 7.9,
7.10, 7.11, 7.14 or Article 8; or
(D) the failure of any Loan Party to observe or perform any other
term, covenant, or agreement contained in any Loan Document to which it
is a party and such failure shall have continued unremedied for a period
of 30 days after such Loan Party shall have obtained knowledge thereof;
or
(E) any representation or warranty made by any Loan Party (or
by an officer thereof on its behalf) in any Loan Document or in any
certificate, report, opinion (other than an opinion of counsel) or other
document delivered or to be delivered pursuant thereto, shall prove to
have been incorrect or misleading (whether because of misstatement or
omission) in any material respect when made; or
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(F) (i) the occurrence of an Event of Default under, and as such
term is defined in, the Subordinated Indenture, or (ii) the failure of
any Loan Party to make any payment (whether of principal or interest and
regardless of amount) in respect of Material Liabilities when due or
within any grace period for the payment thereof; or
(G) any event or condition occurs that results in any Material
Liability becoming or being declared to be due and payable prior to the
scheduled maturity thereof, or that enables or permits (with or without
the giving of notice, the lapse of time or both) the holder or holders of
any Material Liability or any trustee or agent on its or their behalf to
cause any Material Liability to be due and payable, or to require the
prepayment, repurchase, redemption or defeasance thereof, in each case
prior to the scheduled maturity thereof (in each case after giving effect
to any applicable grace period); or
(H) any Loan Party shall (i) suspend or discontinue its business
(except to the extent permitted by Section 7.3), (ii) make an assignment
for the benefit of creditors, (iii) generally not be paying its debts as
such debts become due, (iv) admit in writing its inability to pay its
debts as they become due, (v) file a voluntary petition in bankruptcy,
(vi) become insolvent (however such insolvency shall be evidenced), (vii)
file any petition or answer seeking for itself any reorganization,
arrangement, composition, readjustment of debt, liquidation or
dissolution or similar relief under any present or future statute, law or
regulation of any jurisdiction, (viii) petition or apply to any tribunal
for any receiver, custodian or any trustee for any substantial part of
its property, (ix) be the subject of any such proceeding filed against it
which remains undismissed for a period of 45 days, (x) file any answer
admitting or not contesting the material allegations of any such petition
filed against it or any order, judgment or decree approving such petition
in any such proceeding, (xi) seek, approve, consent to, or acquiesce in
any such proceeding, or in the appointment of any trustee, receiver,
sequestrator, custodian, liquidator, or fiscal agent for it, or any
substantial part of its property, or an order is entered appointing any
such trustee, receiver, custodian, liquidator or fiscal agent and such
order remains in effect for 45 days, or (xii) take any formal action for
the purpose of effecting any of the foregoing or looking to the
liquidation or dissolution of the Borrower, such Subsidiary or such other
Loan Party; or
(I) an (i) order or decree is entered by a court having jurisdiction
(A) adjudging any Loan Party bankrupt or insolvent, (B) approving as
properly filed a petition seeking reorganization, liquidation,
arrangement, adjustment or composition of or in respect of any Loan Party
under the bankruptcy or insolvency laws of any jurisdiction, (C)
appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of any Loan Party or of any
substantial part of the property of any thereof, or (D) ordering the
winding up or liquidation of the affairs of any Loan Party, and any such
decree or order continues unstayed and in effect for a period of 45 days
or (ii) order for relief is entered under the bankruptcy or insolvency
laws of any jurisdiction or any other; or
<PAGE> 80
(J) judgments or decrees against the Borrower or any Subsidiary
aggregating in excess of $500,000 (unless adequately insured by a solvent
unaffiliated insurance company which has acknowledged coverage) shall
remain unpaid, unstayed on appeal, undischarged, unbonded or undismissed
for a period of 30 days; or
(K) any Loan Document shall cease, for any reason, to be in full
force and effect (other than in accordance with its terms), or any Loan
Party shall so assert in writing or shall disavow any of its obligations
thereunder; or
(L) any Lien purported to be created under any Security Document
shall cease to be, or shall be asserted by any Loan Party not to be, a
valid and perfected Lien on, and security interest in, any Collateral,
with the priority required by the applicable Security Document, except as
a result of a Disposition thereof to the extent permitted under the Loan
Documents; or
(M) an ERISA Event shall have occurred that, in the opinion of
the Required Lenders, when taken together with all other ERISA Events that
have occurred, could reasonably be expected to result in liability of the
Borrower and the Subsidiaries in an aggregate amount exceeding (i)
$500,000 in any year or (ii) $1,000,000 for all period; or
(N) the occurrence of a Change of Control.
9.2. CONTRACT REMEDIES
(A) Upon the occurrence of an Event of Default or at any time
thereafter during the continuance thereof,
(I) in the case of an Event of Default specified in
Section 9.1(h) or 9.1(i), without declaration or notice to the
Borrower, all of the Commitments shall immediately and automatically
terminate, and the Revolving Loans, all accrued and unpaid interest
thereon and all other amounts owing under the Loan Documents shall
immediately become due and payable, and
(II) in all other cases, upon the direction of the Required
Lenders, the Administrative Agent shall, by notice to the Borrower,
declare all of the Commitments to be terminated forthwith, whereupon such
Commitments shall immediately terminate, and/or declare the Revolving
Loans, all accrued and unpaid interest thereon and all
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other amounts owing under the Loan Documents to be due and payable
forthwith, whereupon the same shall immediately become due and payable.
In the event that the Revolving Loans, all accrued and unpaid interest thereon
and all other amounts owing under the Loan Documents shall have been declared
due and payable pursuant to the provisions of this Section 9.2, (i) the
Administrative Agent (A) upon the direction of the Required Lenders, shall
proceed to enforce the rights of the holders of the Notes and the Reimbursement
Obligations by suit in equity, action at law and/or other appropriate
proceedings, whether for payment or the specific performance of any covenant or
agreement contained in the Loan Documents and (B) may exercise any and all
rights and remedies provided to the Administrative Agent by the Loan Documents
and (ii) the Borrower shall deposit in the Cash Collateral Account, Cash
Collateral in an amount equal to the Letter of Credit Exposure after giving
effect to all payments required under this Section 9.2(a). Except as otherwise
expressly provided in the Loan Documents, the Borrower expressly waives
presentment, demand, protest and all other notices of any kind in connection
with the Loan Documents. The Borrower hereby further expressly waives and
covenants not to assert any appraisement, valuation, stay, extension,
redemption or similar laws, now or at any time hereafter in force which might
delay, prevent or otherwise impede the performance or enforcement of any Loan
Document.
(B) In the event that all of the Commitments shall have been terminated or
the Revolving Loans, all accrued and unpaid interest thereon and all other
amounts owing under the Loan Documents shall have been declared due and payable
pursuant to the provisions of this Section 9.2, any funds received by any
Credit Party from or on behalf of the Borrower (except funds received by any
Lender as a result of a purchase from any other Lender pursuant to Section
2.6(c)) shall be remitted to, and applied by, the Administrative Agent in the
following manner and order:
(I) first, to the payment of interest on, and then the principal
portion of, any Revolving Loans which the Administrative Agent may have
advanced on behalf of any Lender for which the Administrative Agent has
not then been reimbursed by such Lender or any Loan Party;
(II) second, to reimburse the Agents, the Issuer and the Lenders, in
that order, for any expenses due from the Borrower pursuant to the
provisions of Section 11.4,
(III) third, to the payment of interest on, and then the principal
portion of, the Reimbursement Obligations,
(IV) fourth, to the payment of the Fees, pro rata according to the
Fees due and owing the Administrative Agent, the Issuer and the Lenders,
(V) fifth, to the payment of any other fees, expenses or other
amounts
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(other than the principal of and interest on the Revolving Loans)
payable by the Loan Parties to the Credit Parties under the Loan
Documents,
(VI) sixth, to the payment, pro rata according to the Total
Percentage of each Lender, of interest due on the Revolving Loans,
(VII) seventh, to the payment to the Lenders of, and on a pro rata
basis in accordance with, the unpaid principal amount of the Revolving
Loans and each amount then due and payable under each Secured Hedging
Agreement, and
(VIII) eighth, any remaining funds shall be paid to the Borrower or
as a court of competent jurisdiction shall direct.
ARTICLE 10. THE AGENTS
10.1. APPOINTMENT
Each of the Lenders hereby irrevocably appoints BNY as the
Administrative Agent and Bank of America as the Collateral Agent and
authorizes each Agent to take such actions on its behalf and to exercise such
powers as are delegated to it by the terms hereof, together with such actions
and powers as are reasonably incidental thereto.
10.2. INDIVIDUAL CAPACITY
Each Person serving as an Agent hereunder shall have the same
rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not an Agent, and such Person and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with the Borrower, any Subsidiary, or any Affiliate of the
Borrower as if it were not an Agent hereunder.
10.3. EXCULPATORY PROVISIONS
Neither Agent shall not have any duties or obligations except those
expressly set forth herein. Without limiting the generality of the foregoing,
(1) neither Agent shall be subject to any fiduciary or other implied duties,
regardless of whether a Default has occurred and is continuing, (2) neither
Agent shall have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby that such Agent is required to exercise in writing by the
Required Lenders (or such other number or percentage of the
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Lenders as shall be necessary under the circumstances as provided in
Section 11.1), (3) except as expressly set forth herein, neither Agent shall
have any duty to disclose, and shall not be liable for the failure to disclose,
any information relating to the Borrower or any Subsidiary that is communicated
to or obtained by the bank serving as such Agent or any of its Affiliates in
any capacity and (4) the sole responsibility of the Collateral Agent shall be
to conduct collateral audits and monitor the Borrowing Base Amount. Neither
Agent shall be liable for any action taken or not taken by it with the consent
or at the request of the Required Lenders (or such other number or percentage
of the Lenders as shall be necessary under the circumstances as provided in
Section 11.1) or in the absence of its own gross negligence or willful
misconduct. Neither Agent shall be deemed to have knowledge of any Default
unless and until written notice thereof is given to such Agent by the Borrower
or another Credit Party and neither Agent shall be responsible for or have any
duty to ascertain or inquire into (i) any statement, warranty or representation
made in or in connection with this Agreement, (ii) the contents of any
certificate, report or other document delivered hereunder or in connection
herewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement or any other
agreements, instrument or document, or (v) the satisfaction of any condition
set forth in Articles 5 or 6 or elsewhere herein, other than to confirm receipt
of items expressly required to be delivered to such Agent.
10.4. RELIANCE BY AGENTS
Each Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. Each Agent also may rely
upon any statement made to it orally or by telephone and believed by it to be
made by the proper Person, and shall not incur any liability for relying
thereon. Each Agent may consult with legal counsel (who may be counsel to the
Borrower), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts. Each Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Required Lenders as it deems appropriate and, if it so requests, it shall
first be indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action, refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of
the Required Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Credit Parties.
10.5. DELEGATION
Each Agent may perform any and all of its duties and exercise its
rights and powers by or through any one or more sub-agents appointed by such
Agent, provided that no such delegation
<PAGE> 84
shall serve as a release of such Agent or waiver by the Borrower of any
rights hereunder. Each Agent and any such sub-agent may perform any and all of
its duties and exercise its rights and powers through their respective Related
Parties. The exculpatory provisions of this Article 10 shall apply to any such
sub-agent and to the Related Parties of the Agents and any such sub-agent, and
shall apply to their respective activities in connection with the syndication
of the credit facilities provided for herein as well as activities as such
Agent.
10.6. RESIGNATION; SUCCESSOR AGENTS
Subject to the appointment and acceptance of a successor
Administrative Agent as provided in this Section 10.6, either Agent may resign
at any time by notifying the Lenders and the Borrower. Upon resignation of
Bank of America as Collateral Agent, the Person then serving as Administrative
Agent shall become the Collateral Agent. Upon any resignation of the
Administrative Agent, the Required Lenders shall have the right, in
consultation with the Borrower, to appoint a successor. If no successor shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation, then the retiring Administrative Agent may, on behalf of
the Lenders, appoint a successor Administrative Agent. Upon the acceptance of
its appointment as Administrative Agent hereunder by a successor, such
successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. The fees payable by the Borrower to a successor Administrative
Agent shall be the same as those payable to its predecessor unless otherwise
agreed between the Borrower and such successor. After an Agent's resignation
hereunder, the provisions of this Article and Section 11.1 shall continue in
effect for the benefit of such retiring Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or permitted to be
taken by any of them while it was acting as an Agent.
10.7. NON-RELIANCE ON OTHER CREDIT PARTIES; CREDIT DECISION
(A) Each Credit Party acknowledges that it has, independently and
without reliance upon either Agent or any other Credit Party and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Credit Party also
acknowledges that it will, independently and without reliance upon either Agent
or any other Credit Party and based on such documents and information as it
shall from time to time deem appropriate, continue to make its own decisions in
taking or not taking action under or based upon this Agreement, any related
agreement or any document furnished hereunder or thereunder.
(B) Each Credit Party acknowledges that neither of the Agents nor
any of their
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respective Related Persons, has made any representation or warranty to it, and
that no act by either Agent hereinafter taken, including any review of the
affairs of the Borrower and its Subsidiaries, shall be deemed to constitute any
representation or warranty by either Agent or any of their respective Related
Persons, to any other Credit Party.
(C) Except for notices, reports and other documents expressly herein
required to be furnished to the Credit Parties by either Agent, neither Agent
shall have any duty or responsibility to provide any other Credit Party
concerning the business, prospects, operations, property, financial or other
condition or creditworthiness of the Borrower or any of its Subsidiaries which
may come into the possession of either of the Agents or their respective
Related Persons.
ARTICLE 11. OTHER PROVISIONS
11.1. AMENDMENTS AND WAIVERS
(A) No failure to exercise and no delay in exercising, on the part
of any Credit Party, any right, remedy, power or privilege under any Loan
Document shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege under any Loan Document
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges
under the Loan Documents are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law. No waiver of any provision of
any Loan Document or consent to any departure by any Loan Party therefrom shall
in any event be effective unless the same shall be permitted by this Section
11.1, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. Without limiting the generality
of the foregoing, the making of an Extension of Credit shall not be construed
as a waiver of any Default, regardless of whether any Credit Party may have had
notice or knowledge of such Default at the time.
(B) Notwithstanding anything to the contrary contained in any Loan
Document, with the written consent of the Required Lenders, the Administrative
Agent and the appropriate parties to the Loan Documents (other than the other
Credit Parties) may, from time to time, enter into written amendments,
supplements or modifications thereof and, with the consent of the
Required Lenders, the Administrative Agent on behalf of the other Credit
Parties, may execute and deliver to any such parties a written instrument
waiving or consenting to the departure from, on such terms and conditions as
the Administrative Agent may specify in such instrument, any of the
requirements of the Loan Documents or any Default and its consequences;
provided, however, that no such amendment, supplement, modification, waiver or
consent shall:
(I) increase the Revolving Commitment of any Lender, without
such Lender's consent;
<PAGE> 86
(II) unless agreed to by each Credit Party affected thereby, (A)
reduce the principal amount of any Extension of Credit, or reduce the
rate of interest thereon, or reduce any fees or other obligations payable
under the Loan Documents, (B) extend any date (including the Revolving
Loan Maturity Date) fixed for the payment of any principal of or interest
on any Extension of Credit, any fees, or any other obligation payable
under the Loan Documents or (C) extend the expiration date of any Letter
of Credit beyond the Revolving Loan Maturity Date;
(III) unless agreed to by all of the Lenders, (A) increase the
Aggregate Revolving Commitment, (B) change the definition of "Required
Lenders" or any other provision hereof specifying the number or
percentage of Lenders required to waive, amend or modify any rights
hereunder or make any determination or grant any consent hereunder, (C)
change Section 2.6 in a manner that would alter the pro rata sharing of
payments required thereby, (D) consent to any assignment or delegation by
any Loan Party of any of its rights or obligations under any Loan
Document, (E) release any Subsidiary Guarantor from its obligations under
the Subsidiary Guarantee (except as expressly provided herein or as a
result of the termination of the existence of such Subsidiary Guarantor
in a transaction permitted by Sections 8.3, 8.4 or 8.6), or (F) release
any of the Collateral from the Liens of the Security Documents (except as
may be expressly permitted thereunder or in connection with a transaction
permitted by Sections 8.3, 8.4 or 8.6); and
(IV) unless agreed to by all of the Lenders and by each party to a
Secured Hedging Agreement which is no longer a Lender, (A) release any
Subsidiary Guarantor from its obligations under the Subsidiary Guarantee
(except as expressly provided herein or as a result of the termination of
the existence of such Subsidiary Guarantor in a transaction permitted by
Sections 8.3, 8.4 or 8.6), or (B) release any of the Collateral from the
Liens of the Security Documents (except as may be expressly permitted
thereunder or in connection with a transaction permitted by Sections 8.3,
8.4 or 8.6); and
(V) unless agreed to by an Agent or the Issuer, amend, modify or
otherwise affect the rights or duties of such Agent or the Issuer,
respectively, under the Loan Documents.
Any such amendment, supplement, modification, waiver or consent shall
apply equally to each Credit Party and shall be binding upon each Credit Party
and each Loan Party to the applicable Loan Document, and upon all future
holders of the Notes and the Reimbursement Obligations. In the case of any
waiver, the Credit Parties and each Loan Party to the applicable Loan
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<PAGE> 87
Document shall be restored to their former position and rights hereunder and
under the outstanding Notes and other Loan Documents to the extent provided for
in such waiver, and any Default waived shall not extend to any subsequent or
other Default, or impair any right consequent thereon.
11.2. NOTICES
All notices, requests and demands to or upon the respective parties
to the Loan Documents to be effective shall be in writing and, unless
otherwise expressly provided therein, shall be deemed to have been duly given
or made when delivered by hand, one Business Day after having been sent by
overnight courier service, or when deposited in the mail, first-class postage
prepaid, or, in the case of notice by facsimile, when sent, to the last address
(including telephone and facsimile numbers) for such party specified by such
party in a written notice delivered to the Administrative Agent and the
Borrower or, if no such written notice was so delivered, as follows:
(A) in the case of any Loan Party, to such Loan Party c/o ANTEC
Corporation, 5720 Peachtree Parkway, N.W., Norcross, GA 30092, Attention:
Lawrence A. Margolis, Executive Vice President, Telephone: (770) 441-0007,
Telecopy: (770) 441-2477;
(B) in the case of the Administrative Agent, to The Bank of New
York, Agency Function Administration, One Wall Street, 18th Floor, New
York, NY 10286; Attention: LaRue Brathwaite, Telephone: (212) 635-6986,
Facsimile (212) 635-6365 or 6366 or 6367; with a copy to: The Bank of New
York, One Wall Street, 19th Floor, New York, NY 10286, Attention: John C.
Lambert, Telephone: (212) 635-8204, Facsimile (212) 635-1208;
(C) in the case of the Collateral Agent, to Bank of America National
Trust and Savings Association, 231 South LaSalle Street, 5th Floor,
Chicago, Illinois 60697, Attention: Christine Tierney, Telephone: (312)
828-6316, Facsimile: (312) 828-1974;
(D) in the case of the Issuer, to The First National Bank of
Chicago, One First National Plaza, Suite 0324, Chicago, Illinois 60670,
Attention: Judy Cornwell, Telephone: (312) 732-6274, Facsimile: (312)
732-5296; and
(E) in the case of a Lender, at its address set forth on its
signature page hereto or, in the Assignment or Acceptance Agreement or
other instrument pursuant to which it became a Lender;
provided, however, that any notice, request or demand by the Borrower pursuant
to Sections 2.2, 2.3, 2.4, 2.5 or 3.3 shall not be effective until received.
Any party to a Loan Document may rely on signatures of the parties thereto
which are transmitted by facsimile or other electronic means as fully as if
originally signed.
<PAGE> 88
11.3. SURVIVAL
All covenants, agreements, representations and warranties made by the
Borrower herein and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of this Agreement and the making of any Extensions of Credit,
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that the Administrative Agent or any Lender may have had
notice or knowledge of any Default or incorrect representation or warranty at
the time any credit is extended hereunder.
11.4. EXPENSES; INDEMNITY
(A) The Borrower agrees, on demand therefor and whether any
Extension of Credit is made (i) to pay or reimburse each of the Agents, the
Issuer and their respective Related Parties for all reasonable out-of-pocket
expenses incurred thereby, including the reasonable fees, charges and
disbursements of counsel, in connection with the development, preparation,
execution, syndication and administration of, the Loan Documents (including any
amendment, supplement or other modification thereto (whether or not executed or
effective)), any documents prepared in connection therewith and the
consummation of the transactions contemplated thereby, (ii) to pay or reimburse
the Collateral Agent for all reasonable out-of-pocket expenses incurred in
connection with the collateral audits, and (iii) to pay or reimburse each
Credit Party for all of its costs and expenses, including reasonable fees and
disbursements of counsel, incurred in connection with (A) the protection or
enforcement of its rights under the Loan Documents, including any related
collection proceedings and any negotiation, restructuring or "work-out", and
(B) the enforcement of this Section.
(B) The Borrower shall, on demand therefor, indemnify each Credit
Party and each of their respective Related Parties (each, an "INDEMNIFIED
PERSON") against, and hold each Indemnified Person harmless from, any and all
losses, claims, damages, penalties, liabilities and related expenses, including
the fees, charges and disbursements of any counsel, incurred by or asserted
against any Indemnified Person in connection with or in any way arising out of
any Loan Document, any other Transaction Document or any Transaction, including
as a result of (i) any breach by the Borrower of the terms of any Loan
Document, the use of proceeds of any Extension of Credit or any action or
failure to act on the part of the Borrower, (ii) the consummation or proposed
consummation of the Transactions or any other transactions contemplated hereby,
(iii) any Extension of Credit or the use of the proceeds therefrom, (iv) any
actual or alleged presence or release of Hazardous Substance on or from any
property owned or operated by the Borrower or any of its Subsidiaries, or any
liability in respect of any Environmental Law related in any way to the
Borrower or any of its Subsidiaries,
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<PAGE> 89
(v) any action or failure to act on the part of the Borrower or (vi) any
actual or prospective claim, litigation, investigation or proceeding relating
to any of the foregoing, whether based on contract, tort or any other theory
and regardless of whether any Indemnified Person is a party thereto
(collectively, the "INDEMNIFIED LIABILITIES"), provided that such indemnity
shall not, as to any Indemnified Person, be available to the extent that such
losses, claims, damages, liabilities or related expenses resulted from the
gross negligence or wilful misconduct of such Indemnified Person.
(C) To the extent that the Borrower fails to pay any amount
required to be paid by it to the Administrative Agent or any of its Affiliates
under subsections (a) or (b) of this Section 11.4, each Lender severally
agrees, on demand therefor, to pay to the Administrative Agent such Lender's
Total Percentage of such amount (determined as of the time that the applicable
unreimbursed expense or Indemnified Liability is sought).
(D) To the extent permitted by applicable law, the Borrower shall not
assert, and hereby waives, any claim against any Indemnified Person for any
special, indirect, consequential or punitive damages (whether accrued and
whether known or suspected to exist in its favor) arising out of, in connection
with, or as a result of, the Loan Documents, the transactions contemplated
thereby or any Extension of Credit or the use of the proceeds thereof.
11.5. SUCCESSORS AND ASSIGNS
(A) The Loan Documents shall be binding upon and inure to the
benefit of each of the parties thereto, and their respective successors
and assigns, except that no Loan Party may assign or otherwise transfer any of
its rights or obligations hereunder without the prior written consent of each
Credit Party (and any such attempted assignment or transfer without such
consent shall be null and void).
(B) Each Lender may assign all or a portion of its rights and
obligations under the Loan Documents to (i) any Subsidiary or Affiliate of
such Lender, (ii) any other Lender, or (iii) with the consent of the Borrower,
the Administrative Agent and the Issuer (which consents shall not be
unreasonably withheld or delayed and, in the case of the Borrower's consent,
shall not be required during the continuance of an Event of Default), to any
other Eligible Institution, provided that:
(A) each such assignment shall be of a constant, and not a
varying, percentage of all of the assignor Lender's rights and
obligations under the Loan Documents;
(B) except in the case of an assignment to a Lender or an
Affiliate of a Lender or an assignment of the entire remaining amount of
the assigning Lender's Revolving Commitment, the amount of the Revolving
Commitment of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Acceptance Agreement with
respect to such assignment is delivered to the Administrative Agent) shall
not be less
<PAGE> 90
than $5,000,000; and
(C) the assignor and such assignee shall deliver to the
Administrative Agent three copies of an Assignment and Acceptance
Agreement executed by each of them, along with an assignment fee in the
sum of $3,500 for the account of the Administrative Agent and, if the
assignee is not then a Lender and is a Foreign Credit Party, the
documents required by Section 3.7(c).
Upon receipt of such number of executed copies of each such Assignment and
Acceptance Agreement together with the assignment fee therefor and the consents
required to such assignment, if required, the Administrative Agent shall record
the same and execute not less than two copies of such Assignment and Acceptance
Agreement in the appropriate place, deliver one such copy to the assignor and
one such copy to the assignee, and deliver one photocopy thereof, as executed,
to the Borrower. From and after the Assignment Effective Date specified in,
and as defined in, such Assignment and Acceptance Agreement, the assignee
thereunder shall, unless already a Lender, become a party hereto and shall, for
all purposes of the Loan Documents, be deemed a "Lender" and, to the extent
provided in such Assignment and Acceptance Agreement, the assignor Lender
thereunder shall be released from its obligations under this Agreement and the
other Loan Documents. The Borrower agrees that, if requested, in connection
with each such assignment, it shall at its own cost and expense execute and
deliver to the Administrative Agent or such assignee a Note, each payable to
the order of such assignee and dated the Effective Date. The Administrative
Agent shall be entitled to rely upon the representations and warranties made by
the assignee under each Assignment and Acceptance Agreement.
(C) Each Lender may grant participations in all or any part of its rights
and obligations under the Loan Documents to one or more Eligible Institutions,
provided that (i) such Lender's obligations under this Agreement and the other
Loan Documents shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties to this Agreement and the other Loan Documents
for the performance of such obligations, (iii) the Borrower and the Credit
Parties shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under the Loan Documents,
(iv) the granting of such participation does not require that any additional
loss, cost or expense be borne by the Borrower at any time, and (v) the voting
rights of any holder of any participation shall be limited to decisions that in
accordance with Section 11.1 require the consent of all of the Lenders.
(D) Subject to subsection (e) below, any Lender may at any time assign
all or any portion of its rights under any Loan Document to any Federal Reserve
Bank.
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<PAGE> 91
(E) Except to the extent of any assignment pursuant to subsection (b)
above, no Lender shall be relieved of any of its obligations under the Loan
Documents as a result of any assignment of or granting of participations in,
all or any part of its rights and obligations under the Loan Documents.
11.6. COUNTERPARTS; INTEGRATION
Each Loan Document (other than the Notes) may be executed by one or
more of the parties thereto on any number of separate counterparts and all
of said counterparts taken together shall be deemed to constitute one and the
same document. It shall not be necessary in making proof of any Loan Document
to produce or account for more than one counterpart signed by the party to be
charged. Delivery of an executed counterpart of a signature page of any Loan
Document by facsimile shall be effective as delivery of a manually executed
counterpart of such Loan Document. The Loan Documents and any separate letter
agreements between the Borrower and a Credit Party with respect to fees embody
the entire agreement and understanding among the Loan Parties and the Credit
Parties with respect to the subject matter thereof and supersede all prior
agreements and understandings among the Loan Parties and the Credit Parties
with respect to the subject matter thereof.
11.7. SEVERABILITY
Every provision of the Loan Documents is intended to be severable,
and if any term or provision thereof shall be invalid, illegal or
unenforceable for any reason, the validity, legality and enforceability of the
remaining provisions thereof shall not be affected or impaired thereby, and any
invalidity, illegality or unenforceability in any jurisdiction shall not affect
the validity, legality or enforceability of any such term or provision in any
other jurisdiction.
11.8. GOVERNING LAW
THE LOAN DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.
11.9. JURISDICTION; SERVICE OF PROCESS
Each party to a Loan Document hereby irrevocably submits to the
nonexclusive jurisdiction of any New York State or Federal court sitting in the
City of New York over any suit, action or proceeding arising out of or relating
to the Loan Documents. Each party to a Loan Document hereby irrevocably
waives, to the fullest extent permitted or not prohibited by law, any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding brought in such a court and any claim that any such suit,
action or proceeding brought in such a court has been brought in an
inconvenient forum. Each Loan Party hereby agrees that a final judgment in any
such suit, action or proceeding brought in such a court, after all appropriate
appeals,
<PAGE> 92
shall be conclusive and binding upon it and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that a Credit Party may
otherwise have to bring any action or proceeding relating to Loan Documents
against the Borrower or its properties in the courts of any jurisdiction. Each
party to a Loan Document hereby irrevocably consents to service of process in
the manner provided for notices in Section 11.2. Nothing in this Agreement
will affect the right of any party to a Loan Document to serve process in any
other manner permitted by law.
11.10. WAIVER OF TRIAL BY JURY
EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY
OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.10.
11.11. CONSENT OF BANK OF AMERICA AS COUNTERPARTY TO EXISTING HEDGING
AGREEMENT
By signing below, Bank of America consents to the termination of the
Terminating Bank Debt, the release of the guarantees and all Liens thereunder
and agrees that the Existing Hedging Agreement to which it is a party shall be
considered a Secured Hedging Agreement under the Loan Documents.
ARTICLE 12. SUBSIDIARY GUARANTEE
The Subsidiary Guarantors agree that, so long as any Commitment is
in effect and until the principal of, and interest on, each Revolving Loan, all
Reimbursement Obligations, all Fees and all other amounts payable under the
Loan Documents shall have been paid in full:
12.1. GUARANTEE
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<PAGE> 93
(A) Subject to Section 12.1(b), each Subsidiary Guarantor hereby
absolutely, irrevocably and unconditionally guarantees the full and prompt
payment when due (whether at stated maturity, by acceleration or otherwise) of
the Borrower Obligations. The agreements of each Subsidiary Guarantor under
this Article 12 constitute a guarantee of payment, and no Credit Party shall
have any obligation to enforce any Loan Document or exercise any right or
remedy with respect to any collateral security thereunder by any action,
including making or perfecting any claim against any Person or any collateral
security for any of the Borrower Obligations prior to being entitled to the
benefits of this Agreement. The Administrative Agent may, at its option,
proceed against the Subsidiary Guarantors, or any one or more of them, in the
first instance, to enforce the Guarantor Obligations without first proceeding
against the Borrower or any other Person, and without first resorting to any
other rights or remedies, as the Administrative Agent may deem advisable. In
furtherance hereof, if any Credit Party is prevented by law from collecting or
otherwise hindered from collecting or otherwise enforcing any Borrower
Obligation in accordance with its terms, such Credit Party shall be entitled to
receive hereunder from the Subsidiary Guarantors after demand therefor, the
sums that would have been otherwise due had such collection or enforcement not
been prevented or hindered.
(B) Notwithstanding anything to the contrary contained herein, the maximum
aggregate amount of the obligations of each Subsidiary Guarantor hereunder
shall not, as of any date of determination, exceed the lesser of (i) the
greatest amount that is valid and enforceable against such Subsidiary Guarantor
under principles of New York State contract law, and (ii) the greatest amount
that would not render such Subsidiary Guarantor's liability hereunder subject
to avoidance as a fraudulent transfer or conveyance under Section 548 of Title
11 of the United States Code or any provisions of applicable state law
(collectively, the "FRAUDULENT TRANSFER LAWS"), in each case after giving
effect to all other liabilities of such Subsidiary Guarantor, contingent or
otherwise, that are relevant under the Fraudulent Transfer Laws (specifically
excluding, however, any liability (A) in respect of intercompany indebtedness
to the Borrower or any affiliate or subsidiary of the Borrower, to the extent
that such intercompany indebtedness would be discharged in an amount equal to
the amount paid by such Subsidiary Guarantor hereunder, and (B) under any
guarantee of (1) senior unsecured indebtedness, or (2) indebtedness
subordinated in right of payment to any Borrower Obligation, in either case
that contains a limitation as to maximum liability similar to that set forth in
this Section 12.1(b) and pursuant to which the liability of such Subsidiary
Guarantor hereunder is included in the liabilities taken into account in
determining such maximum liability) and after giving effect as assets to the
value (as determined under the applicable provisions of the Fraudulent Transfer
Laws) of any rights to subrogation, contribution, reimbursement, indemnity or
similar rights of such Subsidiary Guarantor pursuant to applicable law or any
agreement providing for an equitable allocation among such Subsidiary Guarantor
and other affiliates or subsidiaries of the Borrower of obligations arising
under guarantees by such parties.
(C) Each Subsidiary Guarantor agrees that the Guarantor Obligations may at
any time and from time to time exceed the maximum aggregate amount of the
obligations of such
<PAGE> 94
Subsidiary Guarantor hereunder without impairing this Agreement or affecting
the rights and remedies of any Credit Party hereunder.
12.2. ABSOLUTE OBLIGATION
Subject to Section 12.5(c), no Subsidiary Guarantor shall be
released from liability hereunder unless and until the Commitments have
terminated and either (i) the Borrower shall have paid in full the outstanding
principal balance of the Revolving Loans, together with all accrued and unpaid
interest thereon, and all other amounts then due and owing under the Loan
Documents, or (ii) the Guarantor Obligations of such Subsidiary Guarantor shall
have been paid in full in cash. Each Subsidiary Guarantor acknowledges and
agrees that (a) no Credit Party has made any representation or warranty to such
Subsidiary Guarantor with respect to the Borrower, any of its Subsidiaries, any
Loan Document, or any agreement, instrument or document executed or delivered
in connection therewith, or any other matter whatsoever, and (b) such
Subsidiary Guarantor shall be liable hereunder, and such liability shall not be
affected or impaired, irrespective of (A) the validity or enforceability of any
Loan Document, or any agreement, instrument or document executed or delivered
in connection therewith, or the collectability of any of the Borrower
Obligations, (B) the preference or priority ranking with respect to any of the
Borrower Obligations, (C) the existence, validity, enforceability or perfection
of any security interest or collateral security under any Loan Document, or the
release, exchange, substitution or loss or impairment of any such security
interest or collateral security, (D) any failure, delay, neglect or omission by
any Credit Party to realize upon or protect any direct or indirect collateral
security, indebtedness, liability or obligation, any Loan Document, or any
agreement, instrument or document executed or delivered in connection
therewith, or any of the Borrower Obligations, (E) the existence or exercise of
any right of set- off by any Credit Party, (F) the existence, validity or
enforceability of any other guarantee with respect to any of the Borrower
Obligations, the liability of any other Person in respect of any of the
Borrower Obligations, or the release of any such Person or any other guarantor
of any of the Borrower Obligations, (G) any act or omission of any Credit Party
in connection with the administration of any Loan Document or any of the
Borrower Obligations, (H) the bankruptcy, insolvency, reorganization or
receivership of, or any other proceeding for the relief of debtors commenced by
or against, any Person, (I) the disaffirmance or rejection, or the purported
disaffirmance or purported rejection, of any of the Borrower Obligations, any
Loan Document, or any agreement, instrument or document executed or delivered
in connection therewith, in any bankruptcy, insolvency, reorganization or
receivership, or any other proceeding for the relief of debtor, relating to any
Person, (J) any law, regulation or decree now or hereafter in effect that might
in any manner affect any of the terms or provisions of any Loan Document, or
any agreement, instrument or document executed or delivered in connection
therewith or any of the Borrower Obligations, or that might cause or permit to
be invoked any alteration in the time, amount, manner or payment or performance
of any of the Borrower's obligations and liabilities
-113-
<PAGE> 95
(including the Borrower Obligations), (K) the merger or consolidation of the
Borrower into or with any Person, (L) the sale by the Borrower of all or any
part of its assets, (M) the fact that at any time and from time to time none of
the Borrower Obligations may be outstanding or owing to any Credit Party, (N)
any amendment or modification of, or supplement to, any Loan Document, or (O)
any other reason or circumstance that might otherwise constitute a defense
available to or a discharge of the Borrower in respect of its obligations or
liabilities (including the Borrower Obligations) or of such Subsidiary
Guarantor in respect of any of the Guarantor Obligations (other than by the
performance in full thereof).
12.3. REPAYMENT IN BANKRUPTCY, ETC.
If, at any time or times subsequent to the payment of all or any
part of the Borrower Obligations or the Guarantor Obligations, any Credit Party
shall be required to repay any amounts previously paid by or on behalf of the
Borrower or any Subsidiary Guarantor in reduction thereof by virtue of an order
of any court having jurisdiction in the premises, including as a result of an
adjudication that such amounts constituted preferential payments or fraudulent
conveyances, the Subsidiary Guarantors unconditionally agree to pay to the
Administrative Agent, within 10 days after demand, a sum in cash equal to the
amount of such repayment, together with interest on such amount from the date
of such repayment by such Credit Party to the date of payment to the
Administrative Agent at the applicable after-maturity rate set forth in Section
3.1(b).
12.4. ADDITIONAL SUBSIDIARY GUARANTORS
Upon the execution and delivery to the Administrative Agent of a
Guarantee Supplement by any Person, appropriately acknowledged, such
Person shall be a Subsidiary Guarantor.
12.5. MISCELLANEOUS
(A) Each Subsidiary Guarantor agrees that any statement of account
with respect to the Borrower Obligations from any Credit Party that binds the
Borrower shall also be binding upon such Subsidiary Guarantor, and that copies
of said statements of account maintained in the regular course of such Credit
Party's business may be used in evidence against such Subsidiary Guarantor in
order to establish its Guarantor Obligations.
(B) Subject to the limitations set forth in Section 12.1(b), the
Guarantor Obligations shall be joint and several.
(C) Notwithstanding anything to the contrary contained herein, on
and as of the date of any merger, consolidation, Acquisition or Disposition
permitted by Section 8.3, 8.5 or 8.6, as the case may be, that shall result in
any Subsidiary Guarantor ceasing to be a Subsidiary, such
<PAGE> 96
Subsidiary Guarantor shall, without the consent of any Credit Party, cease to
be a Subsidiary Guarantor and shall have no further liability hereunder.
-115-
<PAGE> 97
IN WITNESS WHEREOF, the parties hereto have caused this Credit and
Guarantee Agreement to be duly executed and delivered by their proper and
duly authorized officers as of the day and year first above written.
ANTEC CORPORATION
By:
----------------------------------
Name: Randall L. Talcott
Title: Treasurer
ANTEC LATIN AMERICA, INC.
ANTEC DIGITAL VIDEO INC.
ELECTRONIC CONNECTOR
CORPORATION OF ILLINOIS
ELECTRONIC SYSTEM PRODUCTS INC.
ENGINEERING TECHNOLOGIES GROUP INC.
ITEL HOLDINGS, INC.
KEPTEL, INC.
REGAL TECHNOLOGIES, LTD.
POWER GUARD, INC.
COMFAB TECHNOLOGIES, INC.
BENEFIT CONNECTIONS, INC.
ANTEC INTERNATIONAL HOLDINGS INC.
ANTEC PACIFIC INC.
ANTEC SPAIN INC.
SCIENTIFIC-ATLANTA LA VENTURE, INC.
TEXSCAN CORPORATION
AS TO EACH OF THE FOREGOING
By:
----------------------------------
Name: Randall L. Talcott
Title: Treasurer
<PAGE> 98
ANIXTER CATV INDUSTRIES
MSO SUPPLY COMPANY
TSX CORPORATION
TEXSCAN MSI CORPORATION
TEXSCAN TRADING COMPANY
AS TO EACH OF THE FOREGOING
By:
--------------------------------
Name: Randall L. Talcott
Title: Chief Financial Officer
<PAGE> 99
ANTEC CORPORATION CREDIT AND GUARANTEE AGREEMENT
THE BANK OF NEW YORK,
as Administrative Agent
By:
Name: John C. Lambert
Title: Vice President
Address for Notices
The Bank of New York
Agency Function Administration
One Wall Street
18th Floor
New York, NY 10286
Attention: LaRue Brathwaite
Telephone: (212) 635-6986
Facsimile: (212) 635-6365 or 6366
or 6367
with a copy to:
The Bank of New York
One Wall Street
19th Floor
New York, NY 10286
Attention: John C. Lambert
Telephone: (212) 635-8204
Facsimile: (212) 635-1208;
<PAGE> 100
ANTEC CORPORATION CREDIT AND GUARANTEE AGREEMENT
THE BANK OF NEW YORK COMPANY, INC.
By:
-----------------------------------
Name:
Title:
Commitment: $22,500,000
Address for Notices
The Bank of New York Company, Inc.
c/o The Bank of New York
The Bank of New York
Agency Function Administration
One Wall Street
18th Floor
New York, NY 10286
Attention: LaRue Brathwaite
Telephone: (212) 635-6986
Facsimile: (212) 635-6365 or 6366
or 6367
with a copy to:
The Bank of New York
One Wall Street
19th Floor
New York, NY 10286
Attention: John C. Lambert
Telephone: (212) 635-8204
Facsimile: (212) 635-1208
<PAGE> 101
ANTEC CORPORATION CREDIT AND GUARANTEE AGREEMENT
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By:
------------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as
Collateral Agent
By:
------------------------------------
Name:
Title:
Commitment: $22,500,000
Address for Notices
Bank of America National Trust
and Savings Association
231 South LaSalle Street
5th Floor
Chicago, Illinois 60697
Attention: Christine Tierney
Telephone: (312) 828-6316
Facsimile: (312) 828-1974
<PAGE> 102
ANTEC CORPORATION CREDIT AND GUARANTEE AGREEMENT
THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Issuer
By:
------------------------------------
Name:
Title:
Commitment: $20,000,000
Address for Notices
The First National Bank of Chicago
One First National Plaza
Suite 0324
Chicago, Illinois 60670
Attention: Judy Cornwell
Telephone: (312) 732-6274
Facsimile: (312) 732-5296
<PAGE> 103
ANTEC CORPORATION CREDIT AND GUARANTEE AGREEMENT
WACHOVIA BANK, N.A.
By:
------------------------------------
Name:
Title:
Commitment: $10,000,000
Address for Notices
Wachovia Bank, N.A.
191 Peachtree Street, N.E.
29th Floor
Atlanta, Georgia 30303
Attention: J. Timothy Toler
Telephone: (404) 332-6563
Facsimile: (404) 332-5016
<PAGE> 104
ANTEC CORPORATION CREDIT AND GUARANTEE AGREEMENT
CREDIT AGRICOLE INDOSUEZ
By:
------------------------------------
Name:
Title:
By:
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Name:
Title:
Commitment: $10,000,000
Address for Notices
Credit Agricole Indosuez
600 Travis Street
Suite 2340
Houston, Texas 77002
Attention: Ken Coulter
Telephone: (713) 223-7005
Facsimile: (713) 223-7029
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Exhibit 10.2
ANTEC CORPORATION
$100,000,000
4 1/2% CONVERTIBLE SUBORDINATED NOTES DUE 2003
Purchase Agreement
May 5, 1998
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
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$100,000,000
4 1/2% Convertible Subordinated Notes due 2003
of ANTEC CORPORATION
PURCHASE AGREEMENT
May 5, 1998
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
277 Park Avenue
New York, New York 10172
Dear Sirs:
ANTEC Corporation, a Delaware corporation (the "COMPANY"), proposes to
issue and sell to Donaldson, Lufkin & Jenrette Securities Corporation (the
"INITIAL PURCHASER") an aggregate of $100,000,000 in principal amount of its 4
1/2% Convertible Subordinated Notes due 2003 (the "FIRM NOTES"), subject to the
terms and conditions set forth herein. The Company also proposes to issue and
sell to the Initial Purchaser not more than an additional $15,000,000 principal
amount of 4 1/2% Convertible Subordinated Notes due 2003, of the Company (the
"ADDITIONAL NOTES"), if requested by the Initial Purchaser as provided in
Section 2 hereof. The Firm Notes and the Additional Notes are herein
collectively referred to as the "NOTES." The Firm Notes are to be issued
pursuant to the provisions of an indenture (the "INDENTURE"), to be dated as of
the Closing Date (as defined below), between the Company and The Bank of New
York, as trustee (the "TRUSTEE"), pursuant to which the Notes, as provided
therein, will be convertible at the option of the holders thereof, into shares
of Common Stock, par value $.01, of the Company (the "COMMON STOCK"). The Notes
and the Common Stock issuable upon conversion thereof are herein collectively
referred to as the "SECURITIES." The Securities and the Indenture are more
fully described in the Offering Memorandum (as hereinafter defined). Capitalized
terms used but not defined herein shall have the meanings given to such terms in
the Indenture.
24. OFFERING MEMORANDUM. The Notes will be offered and sold to the Initial
Purchaser pursuant to one or more exemptions from the registration requirements
under the Securities Act of 1933, as amended (the "ACT"). The Company has
prepared a preliminary offering
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memorandum, dated April 23, 1998 (the "PRELIMINARY OFFERING MEMORANDUM") and a
final offering memorandum, dated May 5, 1998 (the "OFFERING MEMORANDUM"),
relating to the Notes.
Upon original issuance thereof, and until such time as the same is no
longer required pursuant to the Indenture, the Notes (and all securities issued
in exchange therefor, in substitution thereof or upon conversion thereof) shall
bear the following legend:
"THE SECURITIES EVIDENCED HEREBY HAVE 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 AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1),
(2), (3) OR (7) OF THE SECURITIES ACT) (AN "IAI"), (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) TO AN IAI THAT, PRIOR TO
SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF
THIS SECURITY (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE)
AND, IF THE COMPANY SO REQUESTS, AN OPINION OF COUNSEL ACCEPTABLE TO
THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES
ACT, IT IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT (D) IN AN
OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF
THE SECURITIES ACT, (E) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144 UNDER 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)
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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 MEANINGS 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
SECURITY IN VIOLATION OF THE FOREGOING."
25. AGREEMENTS TO SELL AND PURCHASE. (a) On the basis of the representations,
warranties and covenants contained in this Agreement, and subject to the terms
and conditions contained herein, the Company agrees to issue and sell to the
Initial Purchaser, and the Initial Purchaser agrees to purchase from the
Company, an aggregate principal amount of $100,000,000 of Firm Notes at a
purchase price equal to 97% of the principal amount thereof (the "PURCHASE
PRICE").
(b) On the basis of the representations and warranties contained in
this Agreement, and subject to the terms and conditions hereof, the Company
agrees to issue and sell to the Initial Purchaser, and the Initial Purchaser
shall have the right, but not the obligation, to purchase from the Company from
time to time up to all of the Additional Notes at the Purchase Price.
Additional Notes may be purchased solely for the purpose of covering
over-allotments made in connection with the Offering of the Firm Notes. The
Initial Purchaser may exercise its right to purchase Additional Notes in whole
or in part from time to time by giving written notice thereof to the Company at
any time within 30 days after the date of this Agreement. Such notice shall
specify the aggregate principal amount of Additional Notes to be purchased
pursuant to such exercise and the date for payment and delivery thereof. The
date specified in any such notice shall be a business day (i) no earlier than
the Closing Date (as hereinafter defined), (ii) no later than ten business days
after such notice has been given and (iii) no earlier than two business days
after such notice has been given.
26. TERMS OF OFFERING. The Initial Purchaser has advised the Company that the
Initial Purchaser will make offers and sales (the "EXEMPT RESALES") of the Notes
purchased hereunder on the terms set forth in the Offering Memorandum, as
amended or supplemented, solely to persons whom the Initial Purchaser reasonably
believe to be "qualified institutional buyers" as defined in Rule 144A under the
Act ("QIBS"), (such persons being referred to herein as the "ELIGIBLE
PURCHASERS"). The Initial Purchaser will offer the Notes to Eligible Purchasers
initially at a price equal to 100% of the principal amount thereof. Such price
may
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be changed at any time without notice.
Holders (including subsequent transferees) of the Securities will have
the registration rights set forth in the registration rights agreement (the
"REGISTRATION RIGHTS AGREEMENT"), to be dated the Closing Date, in a form
resonably acceptable to the Initial Purchaser, for so long as such Securities
constitute "TRANSFER RESTRICTED SECURITIES" (as defined in the Registration
Rights Agreement). Pursuant to the Registration Rights Agreement, the Company
will agree to file with the Securities and Exchange Commission (the
"COMMISSION") under the circumstances set forth therein, a shelf registration
statement pursuant to Rule 415 under the Act (the "SHELF REGISTRATION
STATEMENT") relating to the resale by certain holders of the Securities and to
use its reasonable best efforts to cause such Registration Statement to be
declared and remain effective and usable for the periods specified in the
Registration Rights Agreement. This Agreement, the Indenture, the Notes and the
Registration Rights Agreement are hereinafter sometimes referred to collectively
as the "OPERATIVE DOCUMENTS."
27. DELIVERY AND PAYMENT.
a. Delivery of, and payment of the Purchase Price for, the Firm Notes
shall be made at the offices of Skadden, Arps, Slate, Meagher & Flom
LLP ("Skadden") or such other location as may be mutually acceptable.
Such delivery and payment shall be made at 9:00 a.m. New York City
time, on May 8, 1998 or at such other time on the same date or such
other date as shall be agreed upon by the Initial Purchaser and the
Company. The time and date of such delivery and the payment for the
Firm Notes are herein called the "Closing Date."
b. Delivery to the Initial Purchaser of and payment for any Additional
Notes to be purchased by the Initial Purchaser shall be made at the
offices of Skadden at 9:00 a.m., New York City time, on the date
specified in the exercise notice given by the Initial Purchaser
pursuant to Section 2(b) or such other time on the same or such other
date as the Initial Purchaser and the Company shall agree in writing.
The time and date of delivery and payment for any Additional Notes are
hereinafter referred to as an "OPTION CLOSING DATE."
c. One or more of the 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 Notes (collectively, the "GLOBAL
NOTE"), shall be delivered by the Company to the Initial Purchaser (or
as the Initial Purchaser directs) in each case with any transfer taxes
thereon duly paid by the Company against payment by the Initial
Purchaser of the Purchase Price thereof by wire transfer in same day
funds to the order of the Company. The Global Note
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shall be made available to the Initial Purchaser for inspection not
later than 9:30 a.m., New York City time, on the business day
immediately preceding the Closing Date.
28. AGREEMENTS OF THE COMPANY. The Company hereby agrees with the Initial
Purchaser as follows:
a. To advise the Initial Purchaser promptly and, if requested by the
Initial Purchaser, confirm such advice in writing, (i) of the issuance
by any state securities commission of any stop order suspending the
qualification or exemption from qualification of any Notes for
offering or sale in any jurisdiction designated by the Initial
Purchaser pursuant to Section 5(e) hereof, or the initiation of any
proceeding by any state securities commission or any other federal or
state regulatory authority for such purpose and (ii) of the happening
of any event during the period referred to in Section 5(c) below that
makes any statement of a material fact made in the Preliminary
Offering Memorandum or the Offering Memorandum untrue or that requires
any additions to or changes in the Preliminary Offering Memorandum or
the Offering Memorandum in order to make the statements therein not
misleading. The Company shall use its best efforts to prevent the
issuance of any stop order or order suspending the qualification or
exemption of any Notes under any state securities or Blue Sky laws
and, if at any time any state securities commission or other federal
or state regulatory authority shall issue an order suspending the
qualification or exemption of any Notes under any state securities or
Blue Sky laws, the Company shall use its reasonable best efforts to
obtain the withdrawal or lifting of such order at the earliest
possible time.
b. To furnish the Initial Purchaser and those persons identified by the
Initial Purchaser to the Company as many copies of the Preliminary
Offering Memorandum and the Offering Memorandum, any documents
incorporated by reference therein, and any amendments or supplements
thereto, as the Initial Purchaser may reasonably request for the time
period specified in Section 5(c). Subject to the Initial Purchaser's
compliance with its representations and warranties and agreements set
forth in Section 7 hereof, the Company consents to the use of the
Preliminary Offering Memorandum and the Offering Memorandum, any
documents incorporated by reference therein, and any amendments and
supplements thereto required pursuant hereto, by the Initial Purchaser
in connection with Exempt Resales.
c. During such period as in the opinion of counsel for the Initial
Purchaser an Offering Memorandum is required by law to be delivered in
connection with
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Exempt Resales by the Initial Purchaser, (i) not to make any amendment
or supplement to the Offering Memorandum of which the Initial
Purchaser shall not previously have been advised or to which the
Initial Purchaser shall reasonably object after being so advised and
(ii) to prepare promptly upon the Initial Purchaser's reasonable
request, any amendment or supplement to the Offering Memorandum which
may be necessary or advisable in connection with such Exempt Resales.
d. If, during the period referred to in Section 5(c) above, any event
shall occur or condition shall exist as a result of which, in the
opinion of counsel to the Initial Purchaser, it becomes necessary to
amend or supplement the Offering Memorandum in order to make the
statements therein, in the light of the circumstances when such
Offering Memorandum is delivered to an Eligible Purchaser, not
misleading, or if, in the opinion of counsel to the Initial Purchaser,
it is necessary to amend or supplement the Offering Memorandum to
comply with any applicable law, forthwith to prepare an appropriate
amendment or supplement to such Offering Memorandum so that the
statements therein, as so amended or supplemented, will not, in the
light of the circumstances when it is so delivered, be misleading, or
so that such Offering Memorandum will comply with applicable law, and
to furnish to the Initial Purchaser and such other persons as the
Initial Purchaser may designate such number of copies thereof as the
Initial Purchaser may reasonably request.
e. Prior to the sale of all Notes pursuant to Exempt Resales as
contemplated hereby, to cooperate with the Initial Purchaser and
counsel to the Initial Purchaser in connection with the registration
or qualification of the Notes for offer and sale to the Initial
Purchaser and pursuant to Exempt Resales under the securities or Blue
Sky laws of such United States jurisdictions as the Initial Purchaser
may request and to continue such registration or qualification in
effect so long as required for Exempt Resales and to file such
consents to service of process or other documents as may be necessary
in order to effect such registration or qualification; provided,
however, that the Company shall not be required in connection
therewith to qualify as a foreign corporation in any jurisdiction in
which it is not now so qualified or to take any action that would
subject it to general consent to service of process or taxation other
than as to matters and transactions relating to the Preliminary
Offering Memorandum, the Offering Memorandum or Exempt Resales, in any
jurisdiction in which it is not now so subject. The Company will
continue such qualification in effect so long as required by law for
distribution of the Notes.
f. So long as the Notes are outstanding, (i) to mail and make generally
available
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as soon as practicable after the end of each fiscal year to the record
holders of the Notes a financial report of the Company and its
subsidiaries on a consolidated basis (and a similar financial report
of all unconsolidated subsidiaries, if any), all such financial
reports to include a consolidated balance sheet, a consolidated
statement of operations, a consolidated statement of cash flows and a
consolidated statement of shareholders' equity as of the end of and
for such fiscal year, together with comparable information as of the
end of and for the preceding year, certified by the Company's
independent public accountants and (ii) to mail and make generally
available as soon as practicable after the end of each quarterly
period (except for the last quarterly period of each fiscal year) to
such holders, a consolidated balance sheet, a consolidated statement
of operations and a consolidated statement of cash flows (and similar
financial reports of all unconsolidated subsidiaries, if any) as of
the end of and for such period, and for the period from the beginning
of such year to the close of such quarterly period, together with
comparable information for the corresponding periods of the preceding
year.
g. So long as the Notes are outstanding, to furnish to the Initial
Purchaser as soon as available copies of all reports or other
communications furnished by the Company to its security holders or
furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company is listed and
such other publicly available information concerning the Company
and/or its subsidiaries as the Initial Purchaser may reasonably
request.
h. 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
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), to
make available to any holder of Securities in connection with any sale
thereof and any prospective purchaser of such Securities from such
holder, the information ("RULE 144A INFORMATION") required by Rule
144A(d)(4) under the Act.
i. Whether or not the transactions contemplated hereby are consummated or
this Agreement is terminated, to pay or cause to be paid all expenses
incident to the performance of the obligations of the Company under
this Agreement, including, without limitation: (i) the fees,
disbursements and expenses of counsel to the Company and accountants
of the Company in connection with the sale and delivery of the Notes
to the Initial Purchaser and pursuant to Exempt Resales, and all other
fees and expenses in connection with the preparation, printing, filing
and distribution of the Preliminary Offering Memorandum, the Offering
Memorandum, any documents incorporated by
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reference and all amendments and supplements to any of the foregoing
(including financial statements), including the mailing and delivering
of copies thereof to the Initial Purchaser and persons designated by
it in the quantities specified herein, (ii) all costs and expenses
related to the transfer and delivery of the Notes to the Initial
Purchaser and pursuant to Exempt Resales, including any transfer or
other taxes payable thereon, (iii) all costs of printing or producing
this Agreement, the other Operative Documents and any other agreements
or documents in connection with the offering, purchase, sale or
delivery of the Securities, (iv) all expenses in connection with the
registration or qualification of the Securities for offer and sale
under the securities or Blue Sky laws of the several states and all
costs of printing or producing any preliminary and supplemental Blue
Sky memoranda in connection therewith (including the filing fees and
fees and disbursements of counsel for the Initial Purchaser in
connection with such registration or qualification and memoranda
relating thereto), (v) the cost of printing certificates representing
the Securities, (vi) all expenses and listing fees in connection with
the application for quotation of the Notes in the National Association
of Securities Dealers, Inc. ("NASD") Automated Quotation System -
PORTAL ("PORTAL"), (vii) the fees and expenses of the Trustee and the
Trustee's counsel in connection with the Indenture and the Notes,
(viii) the costs and charges of any transfer agent, registrar and/or
depositary (including DTC), (ix) any fees charged by rating agencies
for the rating of the Notes, (x) all costs and expenses of the
Registration Statement, as set forth in the Registration Rights
Agreement, (xi) all expenses and listing fees in connection with the
application for listing the Common Stock on the NASDAQ National Market
and (xii) all other costs and expenses incident to the performance of
the obligations of the Company hereunder for which provision is not
otherwise made in this Section 5(i).
j. To use its best efforts to effect the inclusion of the Notes in PORTAL
and to maintain the listing of the Notes on PORTAL for so long as the
Notes are outstanding.
k. To obtain the approval of DTC for "book-entry" transfer of the Notes,
and to comply with all of its agreements set forth in the
representation letters of the Company to DTC relating to the approval
of the Notes by DTC for "book-entry" transfer.
l. To cause the Common Stock issuable upon conversion of the Notes to be
duly included for quotation on the Nasdaq Stock Market's National
Market (the "NASDAQ NATIONAL MARKET") prior to the Firm Closing Date
subject to notice of official issuance. The Company will ensure that
such Common Stock remains included for quotation on the Nasdaq
National Market or any
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other national securities exchange following the Firm Closing Date for
so long as any shares of Common Stock remain registered under the
Exchange Act.
m. The Company shall not, directly or indirectly, (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or
warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for, warrants, options or rights
to purchase or acquire, Common Stock ("Other Securities") or in any
other manner transfer all or a portion of the economic consequences
associated with the ownership of any Common Stock, or (ii) enter into
any swap or other arrangement that transfers all or a portion of the
economic consequences associated with the ownership of any Common
Stock (regardless of whether any of the transactions described in
clause (i) or (ii) is to be settled by the delivery of Common Stock,
or such Other Securities, in cash or otherwise), except to the Initial
Purchaser pursuant to this Agreement, for a period of 90 days after
the Closing Date without the prior written consent of the Initial
Purchaser. Notwithstanding the foregoing, during such period (i) the
Company may grant stock options pursuant to the Company's existing
stock option plan and (ii) the Company may issue shares of Common
Stock upon the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof. The Company also agrees not
to file, except pursuant to the Registration Rights Agreement, any
registration statement with respect to any shares of Comon Stock or
any securities convertible into or exercisable or exchangeable for
Common Stock for a period of 90 days after the Closing Date without
the prior written consent of Donaldson, Lufkin & Jenrette Securities
Corporation other than (i) registration statements in favor of
employees providing services to the Company on Form S-8 and (ii)
registration statements to the extent required pursuant to the
Company's currently existing registration rights agreements with TCI
TSX, Inc. and Anixter International Inc. The Company shall, prior to
or concurrently with the execution of this Agreement, deliver an
agreement executed by each of the Company's Chief Executive Officer,
Chief Operating Officer and Chief Financial Officer to the effect that
such person will not, during the period commencing on the date such
person signs such agreement and ending 90 days after the Closing Date
without the prior written consent of Donaldson, Lufkin & Jenrette
Securities Corporation, (A) engage in any of the transactions
described in the first sentence of this paragraph or (B) make any
demand for, or exercise any right with respect to, the registration of
any shares of Common Stock or any Other Securities.
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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 Notes to the Initial
Purchaser or pursuant to Exempt Resales in a manner that would require
the registration of any such sale of the Notes under the Act.
o. Not to claim voluntarily, and to resist actively any attempt to claim,
the benefit of any usury laws against the holders of any Notes.
p. To comply with all of its agreements set forth in the Registration
Rights Agreement.
q. To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by it prior to
or after the Closing Date or the Option Closing Date, as the case may
be, and to satisfy all conditions precedent to the delivery of the
Notes.
29. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. As of the date
hereof, the Company represents and warrants to, and agrees with, the Initial
Purchaser that:
a. The Preliminary Offering Memorandum and the Offering Memorandum
including the information incorporated by reference therein (the
"INCORPORATED DOCUMENTS") do not, and any supplement or amendment to
them will not, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that the
representations and warranties contained in this paragraph (a) shall
not apply to statements in or omissions from the Preliminary Offering
Memorandum or the Offering Memorandum (or any supplement or amendment
thereto) based upon information relating to the Initial Purchaser or
the Initial Purchaser's plan to distribute the Notes furnished to the
Company in writing by the Initial Purchaser expressly for use therein.
No stop order preventing the use of the Preliminary Offering
Memorandum or the Offering Memorandum, 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, has been issued. The Incorporated Documents,
at the time they were or hereafter are filed or last amended, as the
case may be, with the Commission, complied and will comply in all
material respects with the requirements of the Exchange Act.
b. Each of the Company and its subsidiaries has been duly incorporated,
is validly existing as a corporation in good standing under the laws
of its
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jurisdiction of incorporation and has the corporate power and
authority to carry on its business as described in the Preliminary
Offering Memorandum and the Offering Memorandum and to own, lease and
operate its properties, and each is duly qualified and is in good
standing as a foreign corporation authorized 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 have a material adverse effect on
the business, prospects, financial condition or results of operations
of the Company and its subsidiaries, taken as a whole (a "MATERIAL
ADVERSE EFFECT").
c. All outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid, non-assessable and
not subject to any preemptive or similar rights.
d. The entities listed on Schedule A hereto are the only subsidiaries,
direct or indirect, of the Company that constitute "significant
subsidiaries" as defined in Rule 1-02(w) of Regulation S-X (the
"Subsidiaries"). 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 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 in favor of
the Company's bank lenders under the Existing Credit Facility and the
New Credit Facility as defined and described in the Offering
Memorandum.
e. This Agreement has been duly authorized, executed and delivered by the
Company.
f. The Indenture has been duly authorized by the Company and, on the
Closing Date, will have been validly executed and delivered by the
Company. When the Indenture has been duly executed and delivered by
the Company, the Indenture will be a valid and binding agreement of
the Company, enforceable against the Company in accordance with its
terms except as (A) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (B) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of general
applicability. On the Closing Date, and on each Option Closing Date,
if any, the Indenture will conform in all material respects to the
requirements of the Trust Indenture Act of 1939, as amended (the "TIA"
or "TRUST INDENTURE ACT"), and the rules and regulations of the
Commission
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applicable to an Indenture which is qualified thereunder.
g. The Notes have been duly authorized and, on the Closing Date, and on
each Option Closing Date, if any, will have been validly issued,
executed and delivered by the Company. When the Notes have been
issued, executed and authenticated in accordance with the provisions
of the Indenture and delivered to and paid for by the Initial
Purchaser in accordance with the terms of this Agreement, the Notes
will be entitled to the benefits of the Indenture and will be valid
and binding obligations of the Company, enforceable in accordance with
their terms, except as (A) the enforceability thereof may be limited
by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (B) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of general
applicability. On the Closing Date, or on each Option Closing Date,
if any, the Notes will conform as to legal matters to the description
thereof contained in the Offering Memorandum.
h. The Notes are convertible into Common Stock in accordance with the
terms of the Indenture; the shares of Common Stock issuable upon
conversion of the Notes have been duly authorized and reserved for
issuance upon such conversion and, when issued upon such conversion,
will be validly issued, fully paid and nonassessable, will conform to
the description thereof contained in the Offering Memorandum and will
be duly authorized for listing on the Nasdaq National Market, subject
to notice of official issuance; the Company has the authorized and
outstanding capital stock as set forth in the Offering Memorandum; and
the stockholders of the Company or other holders of the Company's
securities have no preemptive or similar rights with respect to the
Notes or the Common Stock issuable upon the Notes.
i. The Registration Rights Agreement has been duly authorized by the
Company and, on the Closing Date will have been duly executed and
delivered by the Company. When the Registration Rights Agreement has
been duly executed and delivered, the Registration Rights Agreement
will be a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms except as (A) the
enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (B) the
availability of equitable remedies may be limited by equitable
principles of general applicability. On the Closing Date, or any
Option Closing Date, as the case may be, the Registration Rights
Agreement will conform as to legal matters to the description thereof
in the Offering Memorandum.
j. Neither the Company nor any of its subsidiaries is in violation of its
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respective charter or by-laws or in default in the performance of any
obligation, agreement, covenant or condition contained in any
indenture, loan agreement, mortgage, lease or other agreement or
instrument that is material to the Company and its subsidiaries, taken
as a whole, 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 and there exists no condition which, with the
passage of time or otherwise would constitute such a default under any
such document or instrument.
k. The execution, delivery and performance of this Agreement and the
other Operative Documents by the Company, the compliance by the
Company with all provisions hereof and thereof and the consummation of
the transactions contemplated hereby and thereby will not (i) require
any consent, approval, authorization or other order of, or
qualification with, any court or governmental body or agency (except
such as may be required under the securities or Blue Sky laws of the
various states), (ii) conflict with or constitute a breach of any of
the terms or provisions of, or a default under, the charter or by-laws
of the Company or any of its subsidiaries or any indenture, loan
agreement, mortgage, lease or other agreement or instrument that is
material to the Company and its subsidiaries, taken as a whole, 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, (iii) violate or conflict with any applicable law or any rule,
regulation, judgment, order or decree of any court or any governmental
body or agency having jurisdiction over the Company, any of its
subsidiaries or their respective property, (iv) result in the
imposition or creation of (or the obligation to create or impose) a
Lien under, any 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 (v) result in
the termination, suspension or revocation of any Authorization (as
defined below) of the Company or any of its subsidiaries or result in
any other impairment of the rights of the holder of any such
Authorization.
l. There are no legal or governmental proceedings pending or threatened
to which the Company or any of its subsidiaries is or could be a party
or to which any of their respective property is or could be subject,
which might result, singly or in the aggregate, in a Material Adverse
Effect.
m. Neither the Company nor any of its subsidiaries has violated any
foreign, federal, state or local law or regulation relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL
LAWS"), any provisions
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of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") or any provisions of the Foreign Corrupt Practices Act, or
the rules and regulations promulgated thereunder, except for such
violations which, singly or in the aggregate, would not have a
Material Adverse Effect.
n. There are no costs or liabilities associated with Environmental Laws
(including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws or any Authorization, any related constraints on
operating activities and any potential liabilities to third parties)
which would, singly or in the aggregate, have a Material Adverse
Effect.
o. Each of the Company and its subsidiaries has such permits, licenses,
consents, exemptions, franchises, authorizations and other approvals
(each, an "AUTHORIZATION") of, and has made all filings with and
notices to, all governmental or regulatory authorities and
self-regulatory organizations and all courts and other tribunals,
including without limitation, under any applicable Environmental Laws,
as are necessary to own, lease, license and operate its respective
properties and to conduct its business, except where the failure to
have any such Authorization or to make any such filing or notice would
not, singly or in the aggregate, have a Material Adverse Effect. Each
such Authorization is valid and in full force and effect and each of
the Company and its subsidiaries is in compliance with all the terms
and conditions thereof and with the rules and regulations of the
authorities and governing bodies having jurisdiction with respect
thereto; and no event has occurred (including, without limitation, the
receipt of any notice from any authority or governing body) which
allows or, after notice or lapse of time or both, would allow,
revocation, suspension or termination of any such Authorization or
results or, after notice or lapse of time or both, would result in any
other impairment of the rights of the holder of any such
Authorization; and such Authorizations contain no restrictions that
are burdensome to the Company or any of its subsidiaries; except where
such failure to be valid and in full force and effect or to be in
compliance, the occurrence of any such event or the presence of any
such restriction would not, singly or in the aggregate, have a
Material Adverse Effect.
p. The accountants, Ernst & Young LLP, that have certified the financial
statements and supporting schedules included in the Preliminary
Offering Memorandum and the Offering Memorandum are independent public
accountants with respect to the Company, as required by the Act and
the Exchange Act. The historical financial statements, together with
related schedules and notes, set forth in or incorporated by reference
into the Preliminary Offering Memorandum and the Offering Memorandum
comply
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<PAGE> 16
as to form in all material respects with the requirements applicable
to registration statements on Form S-3 under the Act.
q. The historical financial statements presented or incorporated by
reference in the Preliminary Offering Memorandum and the Offering
Memorandum, together with related schedules and notes forming part of
the Offering Memorandum (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 or incorporated by reference in the
Offering Memorandum at the respective dates or for the respective
periods to which they apply; such 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 therein; the supporting schedules, if
any, included in the Preliminary Offering Memorandum and the Offering
Memorandum present fairly in accordance with generally accepted
accounting principles the information required to be stated therein;
and the other financial and statistical information and data set forth
or incorporated by reference in the Preliminary Offering Memorandum
and the Offering Memorandum (and any amendment or supplement thereto)
are, in all material respects, accurately presented and prepared on a
basis consistent with such financial statements and the books and
records of the Company.
r. The pro forma financial statements included or incorporated by
reference in the Preliminary Offering Memorandum and the Offering
Memorandum have been prepared on a basis consistent with the
historical financial statements of the Company and its subsidiaries
and give effect to assumptions used in the preparation thereof on a
reasonable basis and in good faith and present fairly the historical
and proposed transactions contemplated by the Preliminary Offering
Memorandum and the Offering Memorandum; and such pro forma financial
statements comply as to form in all material respects with the
requirements applicable to pro forma financial statements included in
registration statements on Form S-3 under the Act. The other pro
forma financial and statistical information and data included in the
Preliminary Offering Memorandum and the Offering Memorandum are, in
all material respects, accurately presented and prepared on a basis
consistent with the pro forma financial statements.
s. The Company is not and, after giving effect to the offering and sale
of the Notes and the application of the net proceeds thereof as
described in the Offering Memorandum, will not be, an "investment
company," as such term is defined in the Investment Company Act of
1940, as amended.
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t. There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the
Company to file a registration statement under the Act with respect to
any securities of the Company or to require the Company to include
such securities with the Notes or the Common Stock registered pursuant
to any Shelf Registration Statement other than the currently existing
registration rights agreements in favor of TCI TSX, Inc. and Anixter
International Inc.
u. Neither the Company nor any of its subsidiaries nor any agent thereof
acting on the behalf of them has taken, and none of them will take,
any action that might cause this Agreement or the issuance or sale of
the Notes to violate 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.
v. No "nationally recognized statistical rating organization" as such
term is defined for purposes of Rule 436(g)(2) under the Act (i) has
imposed (or has informed the Company that it is considering imposing)
any condition (financial or otherwise) on the Company's retaining any
rating assigned to the Company, or any securities of the Company or
(ii) has indicated to the Company that it is considering (a) the
downgrading, suspension, or withdrawal of, or any review for a
possible change that does not indicate the direction of the possible
change in, any rating so assigned or (b) any change in the outlook for
any rating of the Company or any securities of the Company.
w. Since the respective dates as of which information is given in the
Offering Memorandum other than as set forth in the Offering Memorandum
(exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement), (i) there has not occurred any material
adverse change or any development involving a prospective material
adverse change in the condition, financial or otherwise, or the
earnings, business, management or operations of the Company and its
subsidiaries, taken as a whole, (ii) there has not been any material
adverse change or any development involving a prospective material
adverse change in the capital stock or in the long-term debt of the
Company or any of its subsidiaries and (iii) neither the Company nor
any of its subsidiaries has incurred any material liability or
obligation, direct or contingent.
x. All indebtedness of the Company that will be repaid with the proceeds
of the issuance and sale of the Securities was incurred, and the
indebtedness represented by the Notes is being incurred, for proper
purposes and in good
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<PAGE> 18
faith; and (i) the Company was at the time of the incurrence of such
indebtedness that will be repaid with the proceeds of the issuance and
sale of the Notes, and will be on the Closing Date or any Option
Closing Date, as the case may be (after giving effect to the
application of the proceeds from the issuance of the Notes) solvent;
and (ii) the Company had at the time of the incurrence of such
indebtedness that will be repaid with the proceeds of the issuance and
sale of the Notes, and will have on the Closing Date or any Option
Closing Date, as the case may be (after giving effect to the
application of the proceeds from the issuance of the Notes) sufficient
capital for carrying on its business and (iii) the Company was, at the
time of the incurrence of such indebtedness that will be repaid with
the proceeds of the issuance and sale of the Notes, and will be on the
Closing Date or any Option Closing Date, as the case may be (after
giving effect to the application of the proceeds from the issuance of
the Notes) able to pay its debts as they mature.
y. There are no outstanding subscriptions, rights, warrants, options,
calls, convertible securities, commitments of sale or liens related to
or entitling any person to purchase or otherwise to acquire any shares
of the capital stock of, or other ownership interest in, the Company
or any subsidiary thereof except as otherwise disclosed or
incorporated by reference in the Offering Memorandum or which have
been granted pursuant to the Company's stock option plans in an amount
not greater than 250,000 shares of Common Stock.
z. The Company and its subsidiaries own or possess, or can acquire on
reasonable terms, all patents, 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
("INTELLECTUAL PROPERTY") currently employed by them in connections
with the business now operated by them, except where the failure to
own or possess or otherwise be able to acquire such intellectual
property would not, singly or in the aggregate, have a Material
Adverse Effect.
aa. Except as disclosed or incorporated by reference in the Offering
Memorandum, no relationship, direct or indirect, exists between or
among the Company or any of its subsidiaries on the one hand, and the
directors, officers, stockholders, customers or suppliers of the
Company or any of its subsidiaries on the other hand, which would be
required by the Act to be described or incorporated by reference in
the Offering Memorandum if the Offering Memorandum were a prospectus
included in a registration statement on Form S-3 filed with the
Commission.
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<PAGE> 19
(bb) The Company and each of its subsidiaries maintains a system
of internal accounting controls sufficient to provide reasonable 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 asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(cc) All material tax returns required to be filed by the
Company and each of its subsidiaries in any jurisdiction have been filed, other
than those filings being contested in good faith, and all material taxes,
including withholding taxes, penalties and interest, assessments, fees and other
charges due pursuant to such returns or pursuant to any assessment received by
the Company or any of its subsidiaries have been paid, other than those being
contested in good faith and for which adequate reserves have been provided.
(dd) There is no (i) significant labor practice complaint,
grievance or arbitration proceeding pending or threatened against the Company or
any of its subsidiaries before the National Labor Relations Board or any state
or local labor relations board, (ii) strike, labor dispute, slowdown or stoppage
pending or threatened against the Company or any of its subsidiaries or (iii)
union representation question existing with respect to the employees of the
Company or any of its subsidiaries, except in the case of clauses (i), (ii) and
(iii) for such which, singly or in the aggregate, would not have a Material
Adverse Effect. To the best knowledge of the Company, no collective bargaining
organizing activities are taking place with respect to the Company or any of its
subsidiaries.
(ee) No action has been taken and no law, statute, rule or
regulation or order has been enacted, adopted or issued by any governmental
agency or body which prevents the execution, delivery and performance of any of
the Operative Documents, the issuance of the Notes, or the Common Stock issuable
upon conversion thereof, or suspends the sale of the Notes, or the Common Stock
issuable upon conversion thereof, in any jurisdiction referred to in Section
5(e); and no injunction, restraining order or other order or relief of any
nature by a federal or state court or other tribunal of competent jurisdiction
has been issued with respect to the Company or any of its subsidiaries which
would prevent or suspend the issuance or sale of the Notes, or the Common Stock
issuable upon conversion thereof, in any jurisdiction referred to in Section
5(e).
(ff) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its date, contains (including information
incorporated therein by reference) all the information specified in, and meeting
the requirements of, Rule 144A(d)(4) under the Act.
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<PAGE> 20
(gg) When the Notes are issued and delivered pursuant to this
Agreement, the Notes will not be of the same class (within the meaning of Rule
144A under the Act) as any security of the Company that is listed on a national
securities exchange registered under Section 6 of the Exchange Act or that is
quoted in a United States automated inter-dealer quotation system.
(hh) No form of general solicitation or general advertising (as
defined in Regulation D under the Act) was used by the Company or any of its
representatives (other than the Initial Purchaser, as to whom the Company makes
no representation) in connection with the offer and sale of the Notes and Common
Stock contemplated hereby, including, but not limited to, 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 Securities have been issued and sold by the
Company within the six-month period immediately prior to the date hereof.
(ii) Prior to the effectiveness of any Registration Statement,
the Indenture is not required to be qualified under the Trust Indenture Act.
(jj) No registration under the Act of the Securities is required
for the sale of the Securities to the Initial Purchaser as contemplated hereby
or for the Exempt Resales assuming the accuracy of the Initial Purchaser's
representations and warranties and agreements set forth in Section 7 hereof.
(kk) Each certificate signed by any officer of the Company and
delivered to the Initial Purchaser or counsel for the Initial Purchaser shall be
deemed to be a representation and warranty by the Company to the Initial
Purchaser as to the matters covered thereby.
The Company acknowledges that the Initial Purchaser and, for purposes
of the opinions to be delivered to the Initial Purchaser pursuant to Section 9
hereof, counsel to the Company and counsel to the Initial Purchaser will rely
upon the accuracy and truth of the foregoing representations and hereby consents
to such reliance.
30. INITIAL PURCHASER'S REPRESENTATIONS AND WARRANTIES. The Initial Purchaser
represents and warrants to, and agrees with, the Company:
a. Such Initial Purchaser is a QIB, with such knowledge and experience in
financial and business matters as is necessary in order to evaluate
the merits and risks of an investment in the Notes.
b. Such Initial Purchaser (A) is not acquiring the Securities with a view
to any
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<PAGE> 21
distribution thereof or with any present intention of offering or
selling any of the Securities in a transaction that would violate the
Act or the securities laws of any state of the United States or any
other applicable jurisdiction and (B) will be reoffering and reselling
the Securities only to QIBs in reliance on the exemption from the
registration requirements of the Act provided by Rule 144A under the
Act.
c. Assuming the accuracy of the Company's representations and warranties
set forth in this Agreement, 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 Securities pursuant hereto, including,
but not limited to, 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 agrees that, in connection with Exempt Resales,
such Initial Purchaser will solicit offers to buy the Securities only
from, and will offer to sell the Securities only to, persons such
Initial Purchaser reasonably believes are Eligible Purchasers.
e. The Initial Purchaser acknowledges that the Company and, for purposes
of the opinions to be delivered to each Initial Purchaser pursuant to
Section 9 hereof, counsel to the Company and counsel to the Initial
Purchaser will rely upon the accuracy and truth of the foregoing
representations and the Initial Purchaser hereby consents to such
reliance.
31. INDEMNIFICATION.
a. The Company agrees to indemnify and hold harmless the Initial
Purchaser, its directors, its officers, agents, representatives and
employees and each person, if any, who controls such 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, expenses and judgments (including, without limitation,
any legal or other expenses incurred in connection with investigating
or defending any matter, including any action, that could give rise to
any such losses, claims, damages, liabilities or judgments) caused by
any untrue statement or alleged untrue statement of a material fact
contained or incorporated by reference in the Offering Memorandum (or
any amendment or supplement thereto), the Preliminary Offering
Memorandum or any Rule 144A Information provided by the Company to any
holder or prospective purchaser of Securities pursuant to
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Section 5(h) 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 not misleading, except insofar as such
losses, claims, damages, liabilities, expenses or judgments are caused
by any such untrue statement or omission or alleged untrue statement
or omission based upon information relating to the Initial Purchaser
or the Initial Purchaser's plan to distribute the Notes contained in
the first paragraph on page (i) and paragraphs 4 and 8 under the
caption "Plan of Distribution" in the Offering Memorandum.
b. The Initial Purchaser agrees to indemnify and hold harmless the
Company, and its respective directors and officers and each person, if
any, who controls the Company (within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act), to the same extent as the
foregoing indemnity from the Company to the Initial Purchaser but only
with reference to information relating to the Initial Purchaser on
page (i) and paragraphs 4 and 8 under the caption "Plan of
Distribution" in the Offering Memorandum.
c. In case any action shall be commenced involving any person in respect
of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"INDEMNIFIED PARTY"), the indemnified party shall promptly notify the
person against whom such indemnity may be sought (the "INDEMNIFYING
PARTY") in writing and the indemnifying party shall assume the defense
of such action, including the employment of counsel reasonably
satisfactory to the indemnified party and the payment of all fees and
expenses of such counsel, as incurred (except that in the case of any
action in respect of which indemnity may be sought pursuant to both
Sections 8(a) and 8(b), the Initial Purchaser shall not be required to
assume the defense of such action pursuant to this Section 8(c), but
may employ separate counsel and participate in the defense thereof,
but the fees and expenses of such counsel, except as provided below,
shall be at the expense of the Initial Purchaser). Any indemnified
party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of the indemnified
party, unless (i) the employment of such counsel shall have been
specifically authorized in writing by the indemnifying party, (ii) the
indemnifying party shall have failed to assume the defense of such
action or employ counsel reasonably satisfactory to the indemnified
party or (iii) the named parties to any such action (including any
impleaded parties) include both the indemnified party and the
indemnifying party, and the indemnified party shall have been advised
by such counsel that there may be one or more legal defenses available
to it which are inconsistent with those available to the indemnifying
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<PAGE> 23
party (in which case the indemnifying party shall not have the right
to assume the defense of such action on behalf of the indemnified
party). In any such case, the indemnifying party shall not, in
connection with any one 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 indemnified parties and all such fees and
expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by Donaldson, Lufkin & Jenrette Securities
Corporation, in the case of the parties indemnified pursuant to
Section 8(a), and by the Company, in the case of parties indemnified
pursuant to Section 8(b). The indemnifying party shall indemnify and
hold harmless the indemnified party from and against any and all
losses, claims, damages, liabilities, expenses and judgments by reason
of any settlement of any action (i) effected with its written consent
or (ii) effected without its written consent if the settlement is
entered into more than twenty business days after the indemnifying
party shall have received a request from the indemnified party for
reimbursement for the fees and expenses of counsel (in any case where
such fees and expenses are at the expense of the indemnifying party)
and, prior to the date of such settlement, the indemnifying party
shall have failed to comply with such reimbursement request. 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.
d. To the extent the indemnification provided for in this Section 8 is
unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages, liabilities, expenses 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, expenses and judgments (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company,
on the one hand, and the Initial Purchaser, on the other hand, from
the offering of the Securities or (ii) if the allocation provided by
clause 8(d)(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
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8(d)(i) above but also the relative fault of the Company, on the one
hand, and the Initial Purchaser, on the other hand, in connection with
the statements or omissions which resulted in such losses, claims,
damages, liabilities, expenses or judgments, as well as any other
relevant equitable considerations. The relative benefits received by
the Company, on the one hand, and the Initial Purchaser, on the other
hand, shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Securities (after Initial
Purchaser's discounts or commissions, but before deducting expenses)
received by the Company, and the total discounts and commissions
received by the Initial Purchaser bear to the total price to investors
of the Securities, in each case as set forth in the table on the cover
page of the Offering Memorandum. The relative fault of the Company,
on the one hand, and the Initial Purchaser, on the other hand, shall
be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information
supplied by the Company, on the one hand, or the Initial Purchaser, on
the other hand, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.
The Company and the Initial Purchaser agree that it would not be
just and equitable if contribution pursuant to this Section 8(d) were determined
by pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities, expenses 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 incurred by such
indemnified party in connection with investigating or defending any matter,
including any action, that could have given rise to such losses, claims,
damages, liabilities, expenses or judgments. Notwithstanding the provisions of
this Section 8, the Initial Purchaser shall not be required to contribute any
amount in excess of the amount by which the total discounts and commissions
received by such Initial Purchaser exceeds the amount of any damages which the
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.
e. The remedies provided for in this Section 8 are not exclusive and
shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
32. CONDITIONS OF INITIAL PURCHASER'S OBLIGATIONS. The obligations of the
Initial
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Purchaser to purchase the Firm Notes under this Agreement on the Closing Date
and the Additional Notes, if any, on the Option Closing Date are subject to the
satisfaction of each of the following conditions:
a. All the representations and warranties of the Company contained in
this Agreement shall be true and correct as well as on the date of
this Agreement, on the Closing Date and on each Option Closing Date,
if any, with the same force and effect as if made on and as of the
Closing Date or on each Option Closing Date, if any.
b. On or after the date hereof, (i) there shall not have occurred any
downgrading, suspension or withdrawal of, nor shall any notice have
been given of any potential or intended downgrading, suspension or
withdrawal of, or of any review (or of any potential or intended
review) for a possible change that does not indicate the direction of
the possible change in, any rating of the Company or any securities of
the Company (including, without limitation, the placing of any of the
foregoing ratings on credit watch with negative or developing
implications or under review with an uncertain direction) by any
"nationally recognized statistical rating organization" as such term
is defined for purposes of Rule 436(g)(2) under the Act, (ii) there
shall not have occurred any change, nor shall any notice have been
given of any potential or intended change, in the outlook for any
rating of the Company or any securities of the Company by any such
rating organization and (iii) no such rating organization shall have
given notice that it has assigned (or is considering assigning) a
lower rating to the Notes than that on which the Notes were marketed.
c. Since the respective dates as of which information is given in the
Offering Memorandum other than as set forth in the Offering Memorandum
(exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement), (i) there shall not have occurred any change
or any development involving a prospective change in the condition,
financial or otherwise, or the earnings, business, management or
operations of the Company and its subsidiaries, taken as a whole, (ii)
there shall not have been any change or any development involving a
prospective change in the capital stock or in the long-term debt of
the Company or any of its subsidiaries and (iii) neither the Company
nor any of its subsidiaries shall have incurred any liability or
obligation, direct or contingent, the effect of which, in any such
case described in clause 9(c)(i), 9(c)(ii) or 9(c)(iii), in your
judgment, is material and adverse and, in your judgment, makes it
impracticable to market the Securities on the terms and in the manner
contemplated in the Offering Memorandum.
B-24
<PAGE> 26
d. You shall have received on the Closing Date a certificate dated the
Closing Date, and on each Option Closing Date, if any, dated such
Option Closing Date, signed by the President and the Chief Financial
Officer of the Company confirming the matters set forth in Sections
6(x), 6(w), 9(a), 9(b) and 9(m) and stating that each of the Company
has complied with all the agreements and satisfied all of the
conditions herein contained and required to be complied with or
satisfied on or prior to the Closing Date or Option Closing Date, as
the case may be.
e. You shall have received on the Closing Date and each Option Closing
Date, if any, an opinion (satisfactory to you and counsel for the
Initial Purchaser), dated the Closing Date or such Option Closing
Date, as the case may be, of Schiff Hardin & Waite, counsel for the
Company with respect to opinions (i) through (x), (xii), (xiii), and
(xv) through (xix), and of James Knox, General Counsel to the Company,
with respect to opinions (xi) and (xiv), to the effect that:
i. each of the Company and its Subsidiaries has been duly
incorporated, is validly existing as a corporation in good
standing under the laws of its respective jurisdiction of
incorporation and has the corporate power and authority to carry
on its business and to and own, lease and operate its properties
as described in the Offering Memorandum, except, in the case of a
Subsidiary, where the failure to be in good standing would not
have a Material Adverse Effect;
ii. the Company is duly qualified and is in good standing as a
foreign corporation authorized to do business in Delaware,
Georgia, Illinois, Michigan, Washington and Texas;
iii. all the outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid,
non-assessable and not subject to any preemptive or similar
rights created under the charter or bylaws of the Company or, to
the knowledge of such counsel, any other agreements binding on
the Company;
iv. to such counsel's knowledge, all of the outstanding shares of
capital stock of each of the Company's Subsidiaries are owned,
directly or indirectly, by the Company;
v. the Notes have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture
and delivered to and paid for by the Initial Purchaser in
accordance with
B-25
<PAGE> 27
the terms of this Agreement, will be entitled to the benefits
of the Indenture and will be valid and binding obligations of
the Company, enforceable in accordance with their terms except
as (A) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights
generally and (B) rights of acceleration and the availability
of equitable remedies may be limited by equitable principles of
general applicability;
vi. the Indenture has been duly authorized, executed and delivered
by the Company and is a valid and binding agreement of the
Company, enforceable against the Company in accordance with its
terms except as (A) the enforceability thereof may be limited
by bankruptcy, insolvency or similar laws affecting creditors'
rights generally and (B) rights of acceleration and the
availability of equitable remedies may be limited by equitable
principles of general applicability;
vii. the Notes are convertible into Common Stock in accordance with
the terms of the Indenture; the shares of Common Stock
initially issuable upon conversion of the Notes have been duly
authorized and reserved for issuance upon such conversion and,
when issued upon such conversion, will be validly issued, fully
paid and nonassessable and will conform to the description
thereof contained in the Offering Memorandum and will be duly
authorized for listings on the Nasdaq National Market, subject
to notice of official issuance; the Company has the authorized
and outstanding capital stock as set forth in the Offering
Memorandum; and the stockholders of the Company have no
preemptive or similar rights created under the charter or
bylaws of the Company or, to the knowledge of such counsel, any
other agreement or laws binding on the Company with respect to
the Notes or the Common Stock issuable upon the Notes.
viii. this Agreement has been duly authorized, executed and delivered
by the Company;
ix. The Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and is a valid and
binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as (A) the
enforceability thereof may be limited by bankruptcy, insolvency
or similar laws affecting creditors' rights generally and (B)
rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general
applicability;
B-26
<PAGE> 28
x. the statements under the captions "Description of Notes,"
"Description of Capital Stock," "Certain United States Tax
Consequences," and "Plan of Distribution" in the Offering
Memorandum, insofar as such statements constitute a summary of
the legal matters, documents or proceedings referred to
therein, fairly present in all material respects such legal
matters, documents and proceedings;
xi. neither the Company, nor to the knowledge of such counsel, any
of its subsidiaries is in violation of its respective charter
or by-laws and, to the best of such counsel's knowledge after
due inquiry, neither the Company nor any of its subsidiaries is
in default in the performance of any obligation, agreement,
covenant or condition contained in any indenture, loan
agreement, mortgage, lease or other agreement or instrument
that is material to the Company and its subsidiaries, taken as
a whole, 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,
xii. the execution, delivery and performance of this Agreement and
the other Operative Documents by the Company, the compliance by
the Company with all provisions hereof and thereof and the
consummation of the transactions contemplated hereby and
thereby will not (i) require any consent, approval,
authorization or other order of, or qualification with, any
court or governmental body or agency (except such as may be
required under the securities or Blue Sky laws of the various
states), (ii) conflict with or constitute a breach of any of
the terms or provisions of, or a default under, the charter or
by-laws of the Company or any of its Subsidiaries or the
indentures, loan agreements, mortgages, leases or other
agreements or instruments that have been identified to such
counsel including but not limited to those referred to on
Schedule B by the Company as being material to the Company and
its subsidiaries, taken as a whole ("Material Contracts"),
(iii) violate or conflict with any applicable law or any rule
or regulation or to such counsel's knowledge any judgment,
order or decree of any court or any governmental body or agency
having jurisdiction over the Company, any of its Subsidiaries
or their respective property (except that such counsel need not
express an opinion with respect to the federal securities laws
or other laws, rules, regulations or relating to
misrepresentations or fraud), (iv) result in the imposition or
creation of (or the obligation to create or impose) a Lien
under any Material Contract, or (v) result in the
B-27
<PAGE> 29
termination, suspension, revocation or impairment of any
Authorization known to such counsel of the Company or any of
its Subsidiaries.
xiii. to such counsel's knowledge there are no legal or governmental
proceedings pending or threatened to which the Company or any
of its subsidiaries is or could be a party or to which any of
their respective property is or could be subject, which might
result, singly or in the aggregate, in a Material Adverse
Effect.
xiv. to such counsel's knowledge, each of the Company and its
subsidiaries has such Authorizations of, and has made all
filings with and notices to, all governmental or regulatory
authorities and self-regulatory organizations and all courts
and other tribunals, including without limitation, under any
applicable Environmental Laws, as are necessary to own, lease,
license and operate its respective properties and to conduct
its business, except where the failure to have any such
Authorization or to make any such filing or notice would not,
singly or in the aggregate, have a Material Adverse Effect. To
such counsel's knowledge, each such Authorization is valid and
in full force and effect and each of the Company and its
subsidiaries is in compliance with all the terms and conditions
thereof and with the rules and regulations of the authorities
and governing bodies having jurisdiction with respect thereto;
and to such counsel's knowledge, no event has occurred
(including the receipt of any notice from any authority or
governing body) which allows or, after notice or lapse of time
or both, would allow, revocation, suspension or termination of
any such Authorization or results or, after notice or lapse of
time or both, would result in any other impairment of the
rights of the holder of any such Authorization, and such
Authorizations contain no restrictions that are burdensome to
the Company or any of its subsidiaries, except where such
failure to be valid and in full force and effect or to be in
compliance, the occurrence of any such event or the presence of
any such restriction would not, singly or in the aggregate,
have a Material Adverse Effect.
xv. the Company is not and, after giving effect to the offering and
sale of the Notes and the application of the net proceeds
thereof as described in the Offering Memorandum, will not be,
an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended;
xvi. to such counsel's knowledge there are no contracts, agreements
or
B-28
<PAGE> 30
understandings between the Company and any person granting such
person the right to require the Company to file a registration
statement under the Act with respect to any securities of the
Company or to require the Company to include such securities
with the Notes or the Common Stock to be issued upon conversion
thereof, registered pursuant to any Shelf Registration
Statement other than the registration rights agreements
currently in effect in favor of TCI TSX, Inc. and Anixter
International Inc.;
xvii. the Indenture complies as to form in all material respects with
the requirements of the TIA, and the rules and regulations of
the Commission applicable to an indenture which is qualified
thereunder. It is not necessary in connection with the offer,
sale and delivery of the Notes to the Initial Purchaser in the
manner contemplated by this Agreement or in connection with the
Exempt Resales to qualify the Indenture under the TIA.
xviii. no registration under the Act of the Securities is required for
the sale of the Securities to the Initial Purchaser as
contemplated by this Agreement or for the Exempt Resales
assuming that (i) each Initial Purchaser is a QIB, (ii) the
accuracy of, and compliance with, the Initial Purchaser's
representations and agreements contained in Section 7 of this
Agreement, (iii) the accuracy of the representations of the
Company set forth in Sections 5(h) of this Agreement.
xix. such counsel has no reason to believe that, as of the date of
the Offering Memorandum or as of the Closing Date or the Option
Closing Date, as the case may be, the Offering Memorandum and
any information incorporated by reference therein, as amended
or supplemented, if applicable (except for the financial
statements and other financial data included therein, as to
which such counsel need not express any belief) contains any
untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading.
The opinions of Schiff Hardin & Waite and Mr. Knox described in
Section 9(e) above shall be rendered to you at the request of the Company and
shall so state therein. In giving such opinion with respect to the matters
covered by Section 9(e)(xix), Schiff Hardin & Waite may state that their opinion
and belief are based upon their participation in the preparation of the Offering
Memorandum and any amendments or supplements thereto and review and discussion
of the contents thereof, but are without independent check or
B-29
<PAGE> 31
verification except as specified.
f. The Initial Purchaser shall have received on the Closing Date and on
each Option Closing Date, if any, an opinion, dated the Closing Date,
of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Initial
Purchaser, in form and substance reasonably satisfactory to the
Initial Purchaser.
g. The Initial Purchaser shall have received, at the time this Agreement
is executed and at the Closing Date and on each Option Closing Date,
letters dated the date hereof or the Closing Date and any Option
Closing Date, as the case may be, in form and substance satisfactory
to the Initial Purchaser from Ernst & Young LLP, independent public
accountants, containing the information and statements of the type
ordinarily included in accountants' "comfort letters" to the Initial
Purchaser with respect to the financial statements and certain
financial information contained in the Offering Memorandum.
h. The Notes shall have been approved by the NASD for trading and duly
listed in PORTAL.
(i) The Notes shall have been rated "B-" by Standard & Poor's
Corporation and "B2" by Moody's Investors Services, Inc.
(j) The Initial Purchaser shall have received a counterpart,
conformed as executed, of the Indenture which shall have been entered into by
the Company and the Trustee.
(k) The Company shall have executed the Registration Rights
Agreement and the Initial Purchaser shall have received an original copy
thereof, duly executed by the Company.
(l) All amounts outstanding under the Existing Credit Facility
(as defined in the Offering Memorandum) shall have been repaid and the Existing
Credit Facility shall have terminated and be of no further force and defect.
(m) The Company shall not have failed at or prior to the Closing
Date or any Option Closing Date, as the case may be, to perform or comply with
any of the agreements herein contained and required to be performed or complied
with by the Company, at or prior to the Closing Date or Option Closing Date, as
the case may be.
(n) The proceeds of the Offering (as defined in the Offering
Memorandum) shall have been applied in the manner and in the time periods set
forth in the Offering Memorandum under the caption "Use of Proceeds."
B-30
<PAGE> 32
33. EFFECTIVENESS OF AGREEMENT AND TERMINATION. This Agreement may be
terminated at any time on or prior to the Closing Date by the Initial Purchaser
by written notice to the Company if any of the following has occurred: (i) any
outbreak or escalation of hostilities or other national or international
calamity or crisis or change in economic conditions or in the financial markets
of the United States or elsewhere that, in the Initial Purchaser's judgment, is
material and adverse and, in the Initial Purchaser's judgment, makes it
impracticable to market the Securities on the terms and in the manner
contemplated in the Offering Memorandum, (ii) the suspension or material
limitation of trading in securities or other instruments on the New York Stock
Exchange, the American Stock Exchange, the Chicago Board of Options Exchange,
the Chicago Mercantile Exchange, the Chicago Board of Trade or the Nasdaq
National Market or limitation on prices for securities or other instruments on
any such exchange or the Nasdaq National Market, (iii) the suspension of trading
of any securities of the Company on any exchange or in the over-the-counter
market, (iv) 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 your opinion materially and adversely affects,
or will materially and adversely affect, the business, prospects, financial
condition or results of operations of the Company and its subsidiaries, taken as
a whole, (v) the declaration of a banking moratorium by either federal or New
York State authorities or (vi) the taking of any action by any federal, state or
local government or agency in respect of its monetary or fiscal affairs which in
your opinion has a material adverse effect on the financial markets in the
United States.
34. MISCELLANEOUS. Notices given pursuant to any provision of this Agreement
shall be addressed as follows: (i) if to the Company to ANTEC Corporation, 5720
Peachtree Parkway, NW, Norcross, GA 30092, telephone: (770) 441-0007 and (ii)
if to the Initial Purchaser, Donaldson, Lufkin & Jenrette Securities
Corporation, 277 Park Avenue, New York, New York 10172, Attention: Syndicate
Department, or in any case to such other address as the person to be notified
may have requested in writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company and the Initial Purchaser 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 Securities
regardless of (i) any investigation, or statement as to the results thereof,
made by or on behalf of the Initial Purchaser, the officers or directors of the
Initial Purchaser, any person controlling the Initial Purchaser, the Company,
the officers or directors of the Company or any person controlling the Company,
(ii) acceptance of the Securities and payment for them hereunder and (iii)
termination of this Agreement.
If for any reason the Notes are not delivered by or on behalf of the
Company as provided herein (other than as a result of any termination of this
Agreement pursuant to
B-31
<PAGE> 33
Section 10) the Company agrees to reimburse the Initial Purchaser for all
out-of-pocket expenses (including the fees and disbursements of counsel)
incurred by it. Notwithstanding any termination of this Agreement, the Company
shall be liable for all expenses which it has agreed to pay pursuant to Section
5(i) hereof. The Company also agrees, to reimburse the Initial Purchaser and
its officers, directors and each person, if any, who controls such Initial
Purchaser within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act for any and all fees and expenses (including without limitation the
fees and expenses of counsel) incurred by them in connection with enforcing
their rights under this Agreement (including, without limitation, pursuant to
Section 8 hereof).
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the Initial
Purchaser, the Initial Purchaser's directors and officers, any controlling
persons referred to herein, the directors of the Company 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 Securities from the Initial Purchaser merely because of such
purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York, including without limitation, New York General
Obligations Law Section 5-1401.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
B-32
<PAGE> 34
Please confirm that the foregoing correctly sets forth the agreement
among the Company and the Initial Purchaser.
Very truly yours,
ANTEC Corporation
By:
Name:
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
Name:
Title:
<PAGE> 35
SCHEDULE A
SUBSIDIARIES
Keptel, Inc.
Texscan Corporation
TSX Corporation
SCHEDULE B
<PAGE> 36
MATERIAL CONTRACTS
1. Tax Allocation Agreement dated July 16, 1993 by and between Itel
Corporation and the Company,
2. Bill of Sale and General Conveyance and Assumption of Liabilities by and
among Anixter Bros, Inc. (Anixter International, Inc.) and ANTEC, LTD.
(ANTEC) dated June 1, 1993,
3. Limited Liability Company Agreement of Products Venture L.L.C. (Arris Joint
Venture),
4. Agreement dated as of February 27, 1998 among Northern Telecom Inc., the
Company and Arris Interactive L.L.C., amending among other agreements the
Limited Liability Company Agreement of Products Venture L.L.C. (Arris
Joint Venture),
5. Products Distribution Agreement between Products Venture L.L.C. and the
Company (Arris Joint Venture),
6. Tele-Communications, Inc. Registration Rights Agreement (via TSX),
7. TCI Option Agreements (via TSX) for options to acquire an additional
854,341 shares of the Company,
8. The Amend and Restated Revolving Credit Agreement and amendments thereto,
9. Plan of Merger dated October 28, 1996, among the Company, TSX Corporation
and TSX Acquisition Corporation,
10. Registration Rights Agreement with Anixter International, and
11. Agreement and Plan of Merger dated as of July 27, 1994 between and among
the Company, ANTEC Acquisition Corporation and Keptel, Inc.
<PAGE> 1
Exhibit 12.1
Computation of
Ratio of Earnings to Fixed Charges
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
Fiscal Year Ended December 31, March 31,
------------------------------------------------- -------------------
1993 1994 1995 1996 1997 1997 1998
------ ------ ------- ------ ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Income (loss) from continuing
operations before taxes,
minority interests and
extraordinary charges $17,368 $40,238 $19,299 $42,443 ($28,978) ($25,093) ($8,033)
Fixed charges:
Interest expenses(a) 5,374 4,844 10,837 8,470 6,264 1,713 1,330
Rental expense 3,745 5,388 11,309 11,034 9,376 2,709 2,064
------- ------- ------- ------- ------- ------- ------
Income(loss) from continuing
operations before taxes,
minority interests and
extraordinary and fixed charges $26,487 $50,470 $41,445 $61,947 ($13,338) ($20,671) ($4,639)
======= ======= ======= ======= ======= ======= ======
Fixed charges:
Interest expense(a) $ 5,374 $ 4,844 $10,837 $ 8,470 $ 6,264 $ 1,713 $1,330
Rental expense 3,745 5,388 11,309 11,034 9,376 2,709 2,084
------- ------- ------- ------- ------- ------- ------
Total fixed charges $ 9,119 $10,232 $22,146 $19,504 $15,640 $ 4,422 $3,394
======= ======= ======= ======= ======= ======= ======
Ratio of earnings to
fixed charges(b) 2.90x 4.93x 1.87x 3.18x - - -
</TABLE>
(a) Interest expense includes amortization of issue costs related to outstanding
long-term debt.
(b) For purposes of the calculation of ratio of earnings to fixed charges,
earnings are defined as earnings before income taxes plus fixed charges.
Fixed charges consist of interest expense on all indebtness and rental
expense. The fixed charges coverage deficiency amounted to approximately
$29.0 million for the year ended December 31, 1997 and $25.1 million and
$8.1 million for the three months ended March 31, 1997 and 1998,
respectively.
<PAGE> 1
Exhibit 23.1
CONSENT OF THE INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related prospectus of ANTEC Corporation
for the registration of $115,000,000 4 1/2% Convertible Subordinated Notes due
2003 and to the incorporation by reference therein of our report dated January
30, 1998, with respect to the consolidated financial statements of ANTEC
Corporation included in its Annual Report (Form 10-K) for the year ended
December 31, 1997, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Chicago, Illinois
July 2, 1998
<PAGE> 1
Exhibit 25.1
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
____________
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York13-5160382
(State of incorporation(I.R.S. employer
if not a U.S. national bank)identification no.)
48 Wall Street, New York, N.Y.10286
(Address of principal executive offices)(Zip code)
____________
ANTEC CORPORATION
(Exact name of obligor as specified in its charter)
State of Delaware36-3892082
(State or other jurisdiction of(I.R.S. employer
incorporation or organization)identification no.)
5720 Peachtree Parkway, NW
Norcross, Georgia30092
(Address of principal executive offices)(Zip code)
______________________
4-1/2% Convertible Subordinated Notes Due 2003
(Title of the indenture securities)
<PAGE> 2
================================================================================
<PAGE> 3
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Name Address
- ----------------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York, N.Y. 10006, and
Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE
COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT
HERETO, PURSUANT TO RULE 7a-29 UNDER THE TRUST INDENTURE ACT OF
1939 (THE "ACT") AND 17 C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains
the authority to commence business and a grant of powers to
exercise corporate trust powers. (Exhibit 1 to Amendment No. 1
to Form T-1 filed with Registration Statement No. 33-6215,
Exhibits 1a and 1b to Form T-1 filed with Registration Statement
No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration
Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration Statement
No. 33-44051.)
7. A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority.
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 22nd day of June, 1998.
THE BANK OF NEW YORK
By: /s/ LUCILLE FIRRINCIELI
--------------------------
Name: LUCILLE FIRRINCIELI
Title: VICE PRESIDENT
<PAGE> 5
Exhibit 7
_______________________________________
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31,
1997, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin ................................ $ 5,742,986
Interest-bearing balances ........................ 1,342,769
Securities:
Held-to-maturity securities ...................... 1,099,736
Available-for-sale securities .................... 3,882,686
Federal funds sold and Securities pur-
chased under agreements to resell................. 2,568,530
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .......................................... 35,019,608
LESS: Allowance for loan and
lease losses .................................... 627,350
LESS: Allocated transfer risk
reserve.......................................... 0
Loans and leases, net of unearned
income, allowance, and reserve................... 34,392,258
Assets held in trading accounts ................... 2,521,451
Premises and fixed assets (including
capitalized leases) .............................. 659,209
Other real estate owned ........................... 11,992
Investments in unconsolidated
subsidiaries and associated
companies ........................................ 226,263
Customers' liability to this bank on
acceptances outstanding .......................... 1,187,449
Intangible assets ................................. 781,684
Other assets ...................................... 1,736,574
-----------
Total assets ...................................... $56,153,587
===========
LIABILITIES
Deposits:
In domestic offices .............................. $27,031,362
Noninterest-bearing .............................. 11,899,507
Interest-bearing ................................. 15,131,855
</TABLE>
<PAGE> 6
<TABLE>
<S> <C>
In foreign offices, Edge and
Agreement subsidiaries, and IBFs .............. 13,794,449
Noninterest-bearing ........................... 590,999
Interest-bearing .............................. 13,203,450
Federal funds purchased and Securities
sold under agreements to repurchase............ 2,338,881
Demand notes issued to the U.S.
Treasury ...................................... 173,851
Trading liabilities ............................ 1,695,216
Other borrowed money:
With remaining maturity of one year
or less ...................................... 1,905,330
With remaining maturity of more than
one year through three years.................. 0
With remaining maturity of more than
three years .................................. 25,664
Bank's liability on acceptances exe-
cuted and outstanding ......................... 1,195,923
Subordinated notes and debentures .............. 1,012,940
Other liabilities .............................. 2,018,960
-----------
Total liabilities .............................. 51,192,576
-----------
EQUITY CAPITAL
Common stock ................................... 1,135,284
Surplus ........................................ 731,319
Undivided profits and capital
reserves ...................................... 3,093,726
Net unrealized holding gains
(losses) on available-for-sale
securities .................................... 36,866
Cumulative foreign currency transla-
tion adjustments .............................. (36,184)
-----------
Total equity capital ........................... 4,961,011
-----------
Total liabilities and equity
capital ....................................... $56,153,587
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
/s/ Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Renyi
Alan R. Griffith Directors
J. Carter Bacot
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