UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended AUGUST 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-23818
MERIX CORPORATION
(Exact name of registrant as specified in its charter)
OREGON 93-1135197
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
1521 POPLAR LANE, FOREST GROVE, OREGON 97116
(Address of principal executive offices) (Zip Code)
(503) 359-9300
(Registrant's telephone number)
Indicate by check mark whether the Registrant (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and
(2) has been subject to the filing requirements for the
past 90 days. Yes [X] No [ ]
The number of shares of the Registrant's Common Stock
outstanding as of September 30, 1996 was 6,136,696
shares.
<PAGE>
MERIX CORPORATION
FORM 10-Q
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION PAGE
Item 1. Financial Statements:
Condensed Balance Sheets as of August 31, 1996 and
May 25, 1996................................................ 3
Condensed Statements of Income for the three months
ended August 31, 1996 and August 26, 1995................... 4
Condensed Statements of Cash Flows for the three
months ended August 31, 1996 and August 26, 1995............ 5
Notes to Condensed Financial Statements....................... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................... 7
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K................................ 11
Signature....................................................... 12
2
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<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
MERIX CORPORATION
CONDENSED BALANCE SHEETS
(UNAUDITED, IN THOUSANDS)
AUGUST 31, MAY 25,
1996 1996
--------------- --------------
ASSETS
<S> <C> <C>
Cash and short-term investments $ 15,674 $ 19,358
Accounts receivable, net 24,254 24,539
Inventories (Note 2) 6,455 6,435
Other current assets 1,199 589
--------------- --------------
Total current assets 47,582 50,921
Property, plant and equipment, net (Note 3) 59,280 55,576
Deferred income taxes 1,615 2,283
Goodwill, net 2,384 2,390
--------------- --------------
Total assets $ 110,861 $ 111,170
=============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 9,295 $ 7,456
Accrued compensation 3,496 4,502
Current portion of long-term debt 2,051 1,931
Other accrued liabilities 2,168 2,985
--------------- --------------
Total current liabilities 17,010 16,874
Commitments and contingencies (Note 4) - -
Long-term liability 1,273 1,273
Long-term debt 24,681 26,670
--------------- --------------
Total liabilities 42,964 44,817
Shareholders' equity 67,897 66,353
--------------- --------------
Total liabilities and shareholders' equity $ 110,861 $ 111,170
=============== ==============
The accompanying notes are an integral part of the condensed financial statements.
</TABLE>
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<TABLE>
<CAPTION>
MERIX CORPORATION
CONDENSED STATEMENTS OF INCOME
(UNAUDITED, IN THOUSANDS, EXCEPT EARNINGS PER SHARE DATA)
THREE MONTHS ENDED
-----------------------------------
AUGUST 31, AUGUST 26,
1996 1995
------------- -------------
<S> <C> <C>
Net sales $ 41,116 $ 27,713
Cost of sales 33,764 20,321
------------- -------------
Gross profit 7,352 7,392
------------- -------------
Engineering 1,650 1,086
Selling, general and administrative 3,432 2,126
------------- -------------
Total operating expense 5,082 3,212
------------- -------------
Operating income 2,270 4,180
Interest and other income (expense), net (244) 187
------------- -------------
Income before taxes 2,026 4,367
Income taxes 770 1,659
------------- -------------
Net income $ 1,256 $ 2,708
============= =============
Earnings per common and common
equivalent shares outstanding: $ 0.20 $ 0.42
Weighted average number of common and
common equivalent shares outstanding: 6,320 6,497
The accompanying notes are an integral part of the condensed financial statements.
</TABLE>
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<TABLE>
<CAPTION>
MERIX CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)
THREE MONTHS ENDED
----------------------------------
AUGUST 31, AUGUST 26,
1996 1995
------------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income.................................................. $ 1,256 $ 2,708
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization........................... 2,034 804
Deferred income taxes................................... 668 746
Amortization of unearned compensation................... 108 69
Other................................................... (11) (39)
Changes in assets and liabilities:
Accounts receivable.................................. 285 (2,082)
Inventories.......................................... (20) 896
Other current assets................................. (610) (993)
Accounts payable..................................... 1,839 635
Accrued compensation................................. (1,006) (1,517)
Other accrued liabilities............................ (648) 853
------------- ------------
Net cash provided by operating activities..................... 3,895 2,080
------------- ------------
Cash flows from investing activities:
Capital expenditures....................................... (5,727) (2,997)
Short-term investments:
Purchases................................................ (7,196) (8,000)
Maturities............................................... 3,160 6,038
Proceeds from sale of assets............................... 7 52
------------- ------------
Net cash used in investing activities......................... (9,756) (4,907)
------------- ------------
Cash flows from financing activities:
Exercise of stock options.................................. 11 58
Principal payments on long-term debt....................... (1,870) (59)
------------- ------------
Net cash used in financing activities......................... (1,859) (1)
------------- ------------
Decrease in cash and cash equivalents......................... (7,720) (2,828)
Cash and cash equivalents at beginning of period.............. 12,191 14,307
------------- ------------
Cash and cash equivalents at end of period.................... 4,471 11,479
Short-term investments........................................ 11,203 14,546
------------- ------------
Cash and short-term investments at end of period.............. $ 15,674 $ 26,025
============= ============
Noncash transactions:
Tax benefit related to stock-based compensation............. $ 169 $ 112
The accompanying notes are an integral part of the condensed financial statements.
</TABLE>
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MERIX CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have
been prepared pursuant to Securities and Exchange Commission rules and
regulations. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules
and regulations. These financial statements should be read in conjunction
with the audited financial statements and notes thereto included in the
Company's annual report on Form 10-K for the fiscal year ended May 25, 1996.
The financial information included herein reflects all adjustments
(consisting of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the results for interim
periods. The results of operations for the three months ended August 31,
1996 are not necessarily indicative of the results to be expected for the
full year.
Reclassifications from prior periods have been made to conform
with the current method of presentation.
NOTE 2. INVENTORIES
AUGUST 31, MAY 25,
1996 1996
----------- -----------
Raw materials............................ $ 2,180 $ 2,254
Work in process.......................... 3,279 3,104
Finished goods........................... 996 1,077
----------- -----------
Total................................ $ 6,455 $ 6,435
=========== ===========
NOTE 3. PROPERTY, PLANT AND EQUIPMENT
AUGUST 31, MAY 25,
1996 1996
----------- -----------
Land..................................... $ 2,190 $ 2,190
Buildings and grounds.................... 16,519 16,345
Machinery and equipment.................. 73,389 71,030
Construction in progress................. 15,286 12,166
----------- -----------
Total.................................... 107,384 101,731
Less accumulated depreciation............ (48,104) (46,155)
----------- -----------
Property, plant and equipment, net....... $59,280 $55,576
=========== ===========
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NOTE 4. COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Company is party to various
legal claims, actions and complaints, including actions involving patent
infringement and other intellectual property claims. The Company believes
that the disposition of these matters will not have a material adverse
effect on the Company's financial position and results of operations.
NOTE 5. ACCOUNTING FOR STOCK BASED COMPENSATION
In October 1995, the Financial Accounting Standards Board issued
SFAS No. 123, "Accounting for Stock-Based Compensation." SFAS 123 requires
expanded disclosures of stock-based compensation arrangements with
employees and encourages (but does not require) compensation cost to be
measured based on the fair value of the equity instrument awarded. SFAS 123
permits companies to continue to apply Accounting Principles Board (APB)
Opinion No. 25, "Accounting for Stock Issued to Employees," which
recognizes compensation cost based on the intrinsic value of the equity
instrument awarded. The Company will continue to apply APB Opinion No. 25
to its stock-based compensation awards to employees and will disclose the
required pro forma effect on net income and earnings per share of the
compensation cost related to stock-based awards as measured by the fair
value method in its 1997 annual report.
NOTE 6. SUBSEQUENT EVENT
On September 10, 1996, the Company completed a private placement
of $40 million of senior unsecured notes. The notes bear interest at 7.92%,
payable on a semi-annual basis, with payment of principal in five equal
annual installments commencing on September 15, 1999. Proceeds from the
notes were used to pay off $20 million outstanding under the Company's bank
line of credit and will be used to fund capital equipment purchases,
capacity expansion and possible acquisitions. The notes include financial
covenants with respect to minimum net worth, interest coverage and
financial leverage.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS)
This discussion and analysis is designed to be read in conjunction
with Management's Discussion and Analysis of Financial Condition and
Results of Operations set forth in the Company's Form 10-K for the fiscal
year ended May 25, 1996.
RESULTS OF OPERATIONS
Fiscal year. The Company's fiscal year is the 52 or 53 week period
ending the last Saturday in May. Fiscal years 1996 and 1995 were 52 week
years; fiscal year 1997 will be a 53 week year with the extra week
occurring in the quarter ended August 31, 1996.
Net Sales. Net sales for the first quarter of fiscal 1997 were
$41,116, an increase of 48% over net sales of $27,713 in the first quarter
of fiscal 1996. The increase in sales is due principally to the acquisition
of the Loveland and Soladyne manufacturing facilities in the second and
third quarters of fiscal 1996, respectively.
The Company's five largest customers comprised 72% and 73% of net
sales for the three month periods ended August 31, 1996 and August 26,
1995, respectively. Sales to some of the Company's five
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largest customers are expected to decline in the second quarter of fiscal
year 1997 as compared to the first quarter. The Company has stated that its
objective is to increase sales in the second quarter of fiscal 1997 as
compared to the first quarter and believes this can only be achieved by
increasing sales to new customers and to existing customers other than its
five largest customers. The Company is taking actions to increase sales by
broadening its customer base, and expects that a small number of customers
will continue to account for a substantial majority of its sales until
efforts to broaden its customer base are successful. There can be no
assurance that the Company's principal customers will continue to purchase
products and services from the Company at current levels, that the mix or
volume of products purchased will be in the same ratio or that actions to
broaden its customer base and increase sales to new and existing customers
will be successful. The loss of one or more principal customers or a change
in the mix of product sales could have a material adverse effect on the
Company's business, financial condition and results of operations.
Sales by product lines, market segments and major customers as a
percent of net sales are as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------------------
AUG. 31, 1996 AUG. 26, 1995
----------------- -----------------
<S> <C> <C> <C> <C>
PRODUCT LINES
Rigid 71% $29,121 75% $20,785
High Performance 27% 11,330 22% 6,097
Flexible 2% 665 3% 831
TOTAL 100% $41,116 100% $27,713
MARKET SEGMENTS
Computers 29% $11,792 15% $4,157
Communications 24% 10,060 31% 8,591
Test and Instruments 31% 12,646 40% 11,085
Contract Mfg. 14% 5,630 14% 3,880
Other 2% 988 0% -
TOTAL 100% $41,116 100% $27,713
LARGEST CUSTOMERS
Hewlett-Packard 22% $9,165 2% $554
Tektronix 19% 7,966 30% 8,314
Motorola 18% 7,484 19% 5,265
Teradyne 5% 2,102 15% 4,157
Storage Technology 8% 3,127 7% 1,940
Other 28% 11,272 27% 7,483
TOTAL 100% $41,116 100% $27,713
</TABLE>
The Company's 90 day backlog was approximately $17.6 million at
August 31, 1996, as compared to $19.9 million at May 25, 1996. Changes in
backlog reflect variations in customer ordering patterns, the decrease in
customer lead times, and the lower demand from some of the Company's
largest customers. A substantial portion of the Company's backlog is
typically scheduled for delivery within 60 days. Cancellation and
postponement charges generally vary depending upon the time of cancellation
or postponement and a certain portion of the Company's backlog is subject
to cancellation or postponement without significant penalty. The Company's
backlog is not necessarily indicative of future sales or earnings.
Gross Margins. The Company's gross margin was 17.9% in the three
months ended August 31, 1996 compared with 26.7% in the same period of the
prior year. Gross margin in the first quarter of fiscal 1997 decreased in
relation to the same quarter in the prior year principally due to lower
sales in relation to the level of fixed costs. A significant portion of the
Company's manufacturing costs are relatively fixed from quarter to quarter.
Fixed costs increased in the current quarter compared with those in the
same quarter in the prior year due principally to the acquisition of the
Loveland and Soladyne sites and due to
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recent capital investments to add manufacturing capacity and capability at
all manufacturing facilities. Accordingly, the level and mix of sales are
the major factors in determining the Company's quarterly gross margin.
Engineering. Engineering expenses were $1,650 and $1,086 in the
quarters ended August 31, 1996 and August 26, 1995, respectively, and were
4.0% and 3.9% of sales, respectively. Engineering expenses have increased
due to additional engineering staff as a result of the acquisition of the
Loveland and Soladyne operations. The Company believes that it is necessary
to continue to invest in engineering efforts to remain competitive, but
there can be no assurance that such investments will result in increased
sales or profits.
Selling, General and Administrative. Selling, general and
administrative expenses were $3,432 and $2,126 in the quarters ended in
August 31, 1996 and August 26, 1995, respectively, and were 8.3% and 7.7%
of sales, respectively. These expenses increased to support sales growth
and multiple manufacturing sites. On September 2, 1996, the Company moved
the administrative and support employees located in its temporary
administrative building into its new administration and training facility.
The Company expects the new building to increase operating expenses,
including depreciation, by approximately $100 per quarter.
Interest and Other Income (Expense), net. Interest and other
income (expense), net was $(244) and $187 for the three months ended August
31, 1996 and August 26, 1995, respectively. The change in other income in
the quarter ended August 31, 1996 from the same period in the prior year is
due principally to $319 in additional interest expense resulting from the
$20 million bank borrowing to fund the Loveland acquisition and to a
reduction in interest income of approximately $68 due to lower balances of
invested cash. The Company expects interest expense, net of additional
interest income, to increase approximately $260 per quarter beginning in
the second quarter of fiscal 1997 as a result of the $40 million private
placement.
Income Taxes. The Company estimates that its effective income tax
rate for the year ended May 31, 1996 will be 38 percent. Accordingly, it
has applied this rate for the three months ended August 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
Cash and short-term investments at August 31, 1996 were $15,674
compared with $19,358 at May 25, 1996. Working capital was $30,572 at
August 31, 1996 and $34,047 at May 25, 1996. The Company generated cash
from operations of $3,895 in the three months ended August 31, 1996 and
used $9,756 in investing activities. The Company purchased $7,196 in
short-term investments, principally U.S., state and local government
securities, and redeemed $3,160 of matured short-term investments. The
Company's policy is to hold such short-term investments to maturity.
During the first three months of fiscal year 1997, the Company had
$5,727 of capital expenditures, consisting of $4,765 for manufacturing
equipment and $962 for facilities. The capital expenditures for facilities
consisted principally of expenditures relating to completion of the new
administration and training building. On September 2, 1996, the Company
moved the administrative and support employees located in its temporary
administrative building into its new administration and training facility.
Final disbursements of approximately $400 relating to construction of the
building will be made in the second quarter.
On September 10, 1996, the Company completed a private placement
of $40 million of senior unsecured notes. The notes bear interest at 7.92%,
payable on a semi-annual basis, with payment of principal in five equal
annual installments commencing on September 15, 1999. Proceeds from the
notes were used to pay off $20 million outstanding under the Company's bank
line of credit, and will be used to fund capital equipment purchases,
capacity expansion and possible acquisitions. The notes include financial
covenants with respect to minimum net worth, interest coverage and
financial leverage.
9
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The Company's future needs for financial resources include amounts
to support investments in additional facilities and equipment. The Company
believes that its existing capital resources, including the proceeds from
the $40 million private placement, and cash generated from operations will
be sufficient to meet its working capital and capital expenditure
requirements through fiscal 1997. The Company intends to pursue possible
business acquisitions, but currently has no specific acquisition
commitments.
FORWARD-LOOKING STATEMENTS
Information set forth in this Quarterly Report on Form 10-Q
relating to the remainder of fiscal year 1997, including: anticipated
customer demand and sales; customer diversification; interest expense, net;
additional expense and capital expenditures related to the new
administrative and training facility; and the estimated effective tax rate
for fiscal 1997 constitute forward-looking statements. Information
contained in forward looking statements is based on current expectations,
is subject to change and may differ materially from actual results. From
time to time, information provided by the Company or statements made by its
employees may contain other forward-looking information that involves a
number of risks and uncertainties. Factors that could cause actual results
to differ materially from the forward-looking information include, but are
not limited to, the matters discussed in this Form 10-Q as well as the
following: anticipated customer demand, sales and net income; business
conditions and growth in the general economy and the interconnect industry;
production delays; product mix; the highly competitive interconnect
environment; cancellation or reduction of orders; effective utilization of
existing and new manufacturing resources; customer acceptance of new
technologies; environmental issues; pricing pressures by key customers;
costs and yield issues associated with production; capacity constraints;
availability of parts and supplies from third parties on a timely basis and
at reasonable prices; ability to execute financing strategies; and other
risks listed from time to time in the Company's Securities and Exchange
Commission reports or otherwise disclosed by the Company. Any
forward-looking statements should be considered in light of these factors.
10
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10.1: Note Purchase Agreement dated September 10, 1996
27: Financial Data Schedule
(b) Reports on Form 8-K:
None
11
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized this first day of October,
1996.
MERIX CORPORATION
By: JOSEPH HOWELL
------------------------------------
Joseph Howell
Senior Vice President and
Chief Financial Officer
(On behalf of the registrant as
Principal Financial Officer)
12
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EXHIBIT INDEX
Sequential
Exhibit Page No.
- --------------------------------------------------------------------------------
10.1: Note Purchase Agreement dated September 10, 1996
27: Financial Data Schedule
13
COMPOSITE CONFORMED COPY
================================================================================
MERIX CORPORATION
$40,000,000 7.92% Senior Notes due September 15, 2003
---------------
NOTE PURCHASE AGREEMENT
---------------
Dated September 10, 1996
================================================================================
<PAGE>
TABLE OF CONTENTS
Section Page
- ------- ----
1. AUTHORIZATION OF NOTES................................................. 1
2. SALE AND PURCHASE OF NOTES............................................. 1
3. CLOSING................................................................ 2
4. CONDITIONS TO CLOSING.................................................. 2
4.1. Representations and Warranties................................ 2
4.2. Performance; No Default....................................... 2
4.3. Officer's Certificate; Additional Documents................... 3
4.4. Opinions of Counsel........................................... 3
4.5. Purchase Permitted By Applicable Law, etc..................... 3
4.6. Sale of Other Notes........................................... 4
4.7. Payment of Special Counsel Fees............................... 4
4.8. Private Placement Number...................................... 4
4.9. Changes in Corporate Structure................................ 4
4.10. Proceedings and Documents..................................... 4
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................... 4
5.1. Organization; Power and Authority; Solvency................... 5
5.2. Authorization, etc............................................ 5
5.3. Disclosure.................................................... 5
5.4. No Subsidiaries............................................... 6
5.5. Financial Statements, etc..................................... 6
5.6. Compliance with Laws, Other Instruments, etc.................. 6
5.7. Consents, Authorizations, etc................................. 6
5.8. Litigation; Observance of Agreements, Statutes and Orders..... 7
5.9. Taxes......................................................... 7
5.10. Title to Property; Leases..................................... 7
5.11. Licenses, Permits, etc........................................ 8
5.12. ERISA......................................................... 8
5.13. Private Offering; Brokers..................................... 9
5.14. Use of Proceeds; Margin Regulations; Ranking of Notes......... 9
5.15. Schedule of Debt, Liens and Affiliates; Defaults; Liens, etc.. 10
5.16. Foreign Assets Control Regulations, etc....................... 10
5.17. Status under Certain Statutes................................. 11
5.18. Environmental Matters......................................... 11
5.19. Labor Relations, Suppliers, Distributors and Customers........ 11
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6. REPRESENTATIONS OF THE PURCHASER....................................... 12
6.1. Purchase for Investment....................................... 12
6.2. Source of Funds............................................... 12
7. INFORMATION AS TO THE COMPANY AND ITS SUBSIDIARIES..................... 13
7.1. Financial and Business Information............................ 13
7.2. Officer's Certificate......................................... 17
7.3. Inspection.................................................... 18
8. PREPAYMENT OF THE NOTES................................................ 18
8.1. Required Prepayments.......................................... 18
8.2. Optional Prepayments with Make-Whole Amount................... 19
8.3. Allocation of Partial Prepayments............................. 19
8.4. Maturity; Surrender........................................... 19
8.5. Purchase of Notes............................................. 20
8.6. Make-Whole Amount............................................. 20
9. AFFIRMATIVE COVENANTS.................................................. 21
9.1. Compliance with Law........................................... 21
9.2. Insurance..................................................... 22
9.3. Maintenance of Properties..................................... 22
9.4. Payment of Taxes and Claims................................... 22
9.5. Corporate Existence, etc...................................... 23
9.6. Further Assurances............................................ 23
10. NEGATIVE COVENANTS..................................................... 23
10.1. Transactions with Affiliates.................................. 23
10.2. Merger, Consolidation, etc.................................... 24
10.3. Liens......................................................... 25
10.4. Interest Charges Coverage Ratio............................... 27
10.5. Consolidated Net Worth........................................ 27
10.6. Limitations on Debt........................................... 27
10.7. Disposition of Certain Assets................................. 28
11. EVENTS OF DEFAULT...................................................... 29
12. REMEDIES ON DEFAULT, ETC............................................... 31
12.1. Acceleration.................................................. 31
12.2. Other Remedies................................................ 32
12.3. Rescission.................................................... 32
12.4. No Waivers or Election of Remedies, Expenses, etc............. 33
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.......................... 33
13.1. Registration of Notes......................................... 33
13.2. Transfer and Exchange of Notes................................ 33
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13.3. Replacement of Notes.......................................... 34
14. PAYMENTS ON NOTES...................................................... 35
14.1. Place of Payment.............................................. 35
14.2. Home Office Payment........................................... 35
15. EXPENSES, ETC.......................................................... 35
15.1. Transaction Expenses.......................................... 35
15.2. Survival...................................................... 36
17. AMENDMENT AND WAIVER................................................... 36
17.1. Requirements.................................................. 36
17.2. Solicitation of Holders of Notes.............................. 37
17.3. Binding Effect, etc........................................... 37
17.4. Notes Held by Company, etc.................................... 38
18. NOTICES................................................................ 38
19. REPRODUCTION OF DOCUMENTS.............................................. 39
20. CONFIDENTIAL INFORMATION............................................... 39
21. SUBSTITUTION OF PURCHASER.............................................. 40
22. MISCELLANEOUS.......................................................... 41
22.1. Successors and Assigns........................................ 41
22.2. Payments Due on Non-Business Days............................. 41
22.3. Severability.................................................. 41
22.4. Construction.................................................. 41
22.5. Counterparts; Headings........................................ 41
22.6. Governing Law................................................. 42
22.7. Consent to Jurisdiction....................................... 42
22.8. Waiver of Jury Trial.......................................... 42
22.9. Rule 144A..................................................... 43
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SCHEDULE A -- Information Relating to Purchasers
SCHEDULE B -- Defined Terms
SCHEDULE 3 -- Wire Instructions
SCHEDULE 4.3 -- Additional Documents
SCHEDULE 5.3 -- Exceptions to Disclosure Materials
SCHEDULE 5.5 -- Financial Statements
SCHEDULE 5.7 -- Consents, Authorizations, etc.
SCHEDULE 5.11 -- Licenses, Permits, etc.
SCHEDULE 5.14 -- Use of Proceeds
SCHEDULE 5.15 -- Debt, Liens, Affiliates and Transactions
with Affiliates
SCHEDULE 7.2(c) -- Information as to New Subsidiaries
* * * * *
EXHIBIT 1 -- Form of 7.92% Senior Note due September 15, 2003
EXHIBIT 4.4(a) -- Form of Opinion of Counsel for the Company
EXHIBIT 4.4(b) -- Form of Opinion of Special Counsel for
the Purchasers
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MERIX CORPORATION
1521 Poplar Lane
Forest Grove, Oregon 97116
$40,000,000 7.92% SENIOR NOTES DUE SEPTEMBER 15, 2003
September 10, 1996
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
MERIX CORPORATION, an Oregon corporation (the "COMPANY"), agrees
with you as follows:
1. AUTHORIZATION OF NOTES
The Company will authorize the issue and sale of $40,000,000
aggregate principal amount of its 7.92% Senior Notes due September 15, 2003
(the "NOTES", such term to include any such notes issued in substitution
therefor pursuant to Section 13 of this Agreement or the Other Agreements
(as hereinafter defined)). Interest on the Notes is payable semi-annually
in arrears on each March 15 and September 15, commencing March 15, 1997. In
no event shall the amount paid or agreed to be paid by the Company as
interest and premium on any Note exceed the highest lawful rate permissible
under any law applicable thereto. The Notes shall be substantially in the
form attached as Exhibit 1, with such changes therefrom, if any, as may be
approved by you and the Company. Certain capitalized terms used in this
Agreement are defined in Schedule B; references to a "Schedule" or an
"Exhibit" are, unless otherwise specified, to a Schedule or an Exhibit
attached to this Agreement.
2. SALE AND PURCHASE OF NOTES
Subject to the terms and conditions of this Agreement, the
Company will issue and sell to you and you will purchase from the Company,
at the Closing provided for in Section 3, Notes in the principal amount(s)
specified opposite your name in Schedule A at the purchase price of 100% of
the principal amount(s) thereof. Contemporaneously with entering into this
Agreement, the Company is entering into separate Note Purchase Agreements
(the "OTHER AGREEMENTS") identical with this Agreement with each of the
other purchasers named in
<PAGE>
Schedule A (the "OTHER PURCHASERS"), providing for the sale at such Closing
to each of the Other Purchasers of Notes in the principal amount(s)
specified opposite its name in Schedule A. Your obligation hereunder and
the obligations of the Other Purchasers under the Other Agreements are
several and not joint obligations and you shall have no obligation under
any Other Agreement and no liability to any Person for the performance or
non-performance by any Other Purchaser thereunder.
3. CLOSING
The sale and purchase of the Notes to be purchased by you and the
Other Purchasers shall occur at the offices of Choate, Hall & Stewart,
Exchange Place, 53 State Street, Boston, Massachusetts 02109, at 10:00
a.m., local time, at a closing (the "CLOSING") on September 10, 1996 or on
such other Business Day thereafter on or prior to September 30, 1996 as may
be agreed upon by the Company and you and the Other Purchasers. At the
Closing the Company will deliver to you the Notes to be purchased by you
dated the date of the Closing and in the denomination(s) and registered in
the name(s) specified on that portion of Schedule A applicable to you,
against delivery by you to the Company or its order of immediately
available funds in the amount of the purchase price therefor by wire
transfer of immediately available funds for the account of the Company in
accordance with the wire instructions listed on Schedule 3. If at the
Closing the Company shall fail to tender such Notes to you as provided
above in this Section 3, or any of the conditions specified in Section 4
shall not have been fulfilled to your satisfaction, you shall, at your
election, be relieved of all further obligations under this Agreement,
without thereby waiving any rights you may have by reason of such failure
or such nonfulfillment.
4. CONDITIONS TO CLOSING
Your obligation to purchase and pay for the Notes to be sold to
you at the Closing is subject to the fulfillment to your satisfaction,
prior to or at the Closing, of the following conditions:
4.1. REPRESENTATIONS AND WARRANTIES
The representations and warranties of the Company in this
Agreement and the other Operative Documents shall be correct when made and
at the time of the Closing.
4.2. PERFORMANCE; NO DEFAULT
The Company shall have performed and complied with all agreements
and conditions contained in this Agreement and the other Operative
Documents required to be performed or complied with by it prior to or at
the Closing, and after
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giving effect to the issue and sale of the Notes (and the application of
the proceeds thereof as contemplated by Schedule 5.14) (a) no Default or
Event of Default shall have occurred and be continuing and (b) no event
shall have occurred and no condition shall exist which has had a Material
Adverse Effect.
4.3. OFFICER'S CERTIFICATE; ADDITIONAL DOCUMENTS
(a) Officer's Certificate. The Company shall have delivered to
you an Officer's Certificate, dated the date of the Closing, certifying
that the conditions specified in Sections 4.1, 4.2 and 4.9 have been
fulfilled.
(b) Additional Documents. The Company shall have delivered, or
caused to be delivered, to you the items listed on Schedule 4.3, each of
which shall be in form and substance reasonably satisfactory to you.
4.4. OPINIONS OF COUNSEL
You shall have received opinions in form and substance
satisfactory to you, dated the date of the Closing from (a) Stoel Rives
LLP, counsel for the Company, covering the matters listed on Exhibit 4.4(a)
and covering such other matters incident to the transactions contemplated
hereby as you or your special counsel may reasonably request (and the
Company hereby instructs such counsel to deliver such opinion to you) and
(b) Choate, Hall & Stewart, your special counsel in connection with such
transactions, substantially in the form attached as Exhibit 4.4(b) and
covering such other matters incident to such transactions as you may
reasonably request.
4.5. PURCHASE PERMITTED BY APPLICABLE LAW, ETC.
On the date of the Closing your purchase of Notes shall (a) be
permitted by the laws and regulations of each jurisdiction to which you are
subject, without recourse to so-called "basket" provisions (such as Section
1405(a)(8) of the New York Insurance Law) permitting limited investments by
insurance companies without restriction as to the character of the
particular investment, (b) not violate any applicable law or regulation
(including, without limitation, Regulation G, T or X of the Board of
Governors of the Federal Reserve System) and (c) not subject you to any
tax, penalty or liability under or pursuant to any applicable law or
regulation, which law or regulation was not in effect on the date hereof.
If requested by you, you shall have received an Officer's Certificate
certifying as to such matters of fact as you may reasonably specify to
enable you to determine whether such purchase is so permitted.
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<PAGE>
4.6. SALE OF OTHER NOTES
Contemporaneously with the Closing the Company shall sell to the
Other Purchasers and the Other Purchasers shall purchase the Notes to be
purchased by them at the Closing as specified in Schedule A.
4.7. PAYMENT OF SPECIAL COUNSEL FEES
Without limiting the provisions of Section 15.1, the Company
shall have paid on or before the Closing the fees, charges and
disbursements of your special counsel referred to in Section 4.4 to the
extent reflected in a statement of such counsel rendered to the Company at
least one Business Day prior to the Closing.
4.8. PRIVATE PLACEMENT NUMBER
A private placement number issued by Standard & Poor's CUSIP
Service Bureau (in cooperation with the Securities Valuation Office of the
National Association of Insurance Commissioners) shall have been obtained
for the Notes.
4.9. CHANGES IN CORPORATE STRUCTURE
The Company shall not have changed its jurisdiction of
incorporation or been a party to any merger or consolidation and shall not
have succeeded to all or any substantial part of the liabilities of any
other entity, at any time following the date of the most recent financial
statements listed on Schedule 5.5.
4.10. PROCEEDINGS AND DOCUMENTS
All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be satisfactory to you and
your special counsel, and you and your special counsel shall have received
all such counterpart originals or certified or other copies of such
documents as you or they may reasonably request.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to you that, as of the date
hereof:
4
<PAGE>
5.1. ORGANIZATION; POWER AND AUTHORITY; SOLVENCY
The Company is a corporation duly organized and validly existing
under the laws of its jurisdiction of incorporation, and is duly qualified
as a foreign corporation and is in good standing in each jurisdiction in
which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Company has the corporate power and authority to own or
hold under lease the properties it purports to own or hold under lease, to
transact the business it transacts and proposes to transact, and to
execute, deliver and perform the Operative Documents to which it is a
party. The Company is Solvent.
5.2. AUTHORIZATION, ETC.
Each of the Operative Documents to which the Company is a party
has been duly authorized by all necessary corporate action on the part of
the Company, and constitutes, or upon execution and delivery thereof will
constitute, a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by (a) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and (b) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
5.3. DISCLOSURE
The Company, through its agent, Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("MERRILL LYNCH"), has delivered to you and each Other
Purchaser a copy of the Private Placement Memorandum, dated July 1996 (the
"MEMORANDUM"), relating to the transactions contemplated hereby. The
Memorandum fairly describes, in all material respects, the general nature
of the business and principal properties of the Company. Except as
disclosed in Schedule 5.3, this Agreement, the Memorandum, the documents,
certificates or other writings delivered to you by or on behalf of the
Company in connection with the transactions contemplated hereby and the
financial statements listed on Schedule 5.5, taken as a whole, do not
contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading in
light of the circumstances under which they were made. Since May 25, 1996,
there has been no change in the financial condition, operations, business
or properties of the Company except changes that individually or in the
aggregate have not had, and could not reasonably be expected to have, a
Material Adverse Effect. There is no fact known to the Company that could
reasonably be expected to have a Material Adverse Effect that has not been
set forth herein.
5
<PAGE>
5.4. NO SUBSIDIARIES
The Company does not have and has never had any Subsidiaries.
5.5. FINANCIAL STATEMENTS, ETC.
The Company has delivered to you copies of the financial
statements of the Company listed on Schedule 5.5. All of said financial
statements (including in each case the related schedules and notes) fairly
present in all material respects the financial position of the Company as
of the respective dates specified in such Schedule and the results of its
operations and cash flows for the respective periods so specified and have
been prepared in accordance with GAAP consistently applied throughout the
periods involved except as set forth in the notes thereto (subject, in the
case of any interim financial statements, to normal year-end adjustments).
5.6. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.
The execution, delivery and performance by the Company of the
Operative Documents to which it is a party will not (a) assuming the
application of the proceeds of the sale of the Notes in the manner set
forth in Schedule 5.14, contravene, result in any breach of, constitute a
default under, result in the creation of any Lien in respect of any
property of the Company under, or give any other Person the right to
require the Company to purchase or repay any Debt under, any indenture,
mortgage, deed of trust, loan, purchase or credit agreement, lease,
corporate charter or by-laws, or any other agreement or instrument to which
the Company is bound or by which the Company or any of its properties may
be bound or affected, (b) conflict with or result in a breach of any of the
terms, conditions or provisions of any order, judgment, decree, or ruling
of any court, arbitrator or Governmental Authority applicable to the
Company or (c) violate any provision of any statute or other rule or
regulation of any Governmental Authority applicable to the Company.
5.7. CONSENTS, AUTHORIZATIONS, ETC.
No consent, approval or authorization of, or registration, filing
or declaration with, or other action by, any Governmental Authority or any
other Person is required in connection with the execution, delivery or
performance by the Company of any of the Operative Documents to which it is
a party, other than those listed on Schedule 5.7, all of which have been
obtained and are unconditional, in full force and effect and not subject to
appeal or review.
6
<PAGE>
5.8. LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS
(a) There are no actions, suits or proceedings pending or, to the
knowledge of the Company, threatened against or affecting the Company or
any property of the Company in any court or before any arbitrator of any
kind or before or by any Governmental Authority that, individually or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect.
(b) The Company is not in default under any term of any agreement
or instrument to which it is a party or by which it (or any of its
properties) is bound, or any order, judgment, decree or ruling of any
court, arbitrator or Governmental Authority and is not in violation of any
applicable law, ordinance, rule or regulation (including, without
limitation, Environmental Laws) of any Governmental Authority, which
default or violation, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
5.9. TAXES
The Company has filed all tax returns that are required to have
been filed in any jurisdiction, and has paid all taxes shown to be due and
payable on such returns and all other taxes and assessments levied upon it
or any of its properties, assets, income, receipts, franchises or sales, to
the extent such taxes and assessments have become due and payable and
before they have become delinquent, except for any taxes and assessments
(a) the amount of which is not individually or in the aggregate Material or
(b) the amount, applicability or validity of which is currently being
contested in good faith by appropriate proceedings and with respect to
which the Company has established adequate reserves in accordance with
GAAP. The Company knows of no basis for any other tax or assessment that
could reasonably be expected to have a Material Adverse Effect. The
charges, accruals and reserves on the books of the Company in respect of
Federal, state or other taxes and assessments for all fiscal periods are
adequate. The Federal income tax liability of the Company has been
determined by the Internal Revenue Service and paid for all fiscal years of
the Company up to and including the fiscal year ended May 27, 1995. The
Company has not executed any waiver or waivers that would have the effect
of extending the applicable statute of limitations in respect of income tax
liabilities.
5.10. TITLE TO PROPERTY; LEASES
The Company has good and sufficient title to its properties that
individually or in the aggregate are Material, including all such
properties reflected in the most recent audited balance sheet listed on
Schedule 5.5 or purported to have been acquired by the Company after said
date (except as sold or otherwise disposed of in the ordinary course of
business), in each case free and clear of Liens prohibited by
7
<PAGE>
this Agreement. All leases that individually or in the aggregate are
Material are valid and subsisting and are in full force and effect in all
material respects.
5.11. LICENSES, PERMITS, ETC
Except as listed on Schedule 5.11, (a) the Company owns or
possesses all licenses, permits, franchises, authorizations, patents,
copyrights, service marks, trademarks and trade names, or rights thereto,
that individually or in the aggregate are Material, without known conflict
with the rights of others; (b) to the best knowledge of the Company, no
product or service of the Company infringes in any material respect any
license, permit, franchise, authorization, patent, copyright, service mark,
trademark, trade name or other right owned by any other Person; and (c) to
the best knowledge of the Company, there is no Material violation by any
Person of any right of the Company with respect to any patent, copyright,
service mark, trademark, trade name or other right owned or used by the
Company.
5.12. ERISA
(a) The Company and each ERISA Affiliate have operated and
administered each Plan in compliance with all applicable laws except for
such instances of noncompliance as have not resulted in and could not
reasonably be expected to result in a Material Adverse Effect. Neither the
Company nor any ERISA Affiliate has incurred any liability pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans (as defined in Section 3 of ERISA), and
no event, transaction or condition has occurred or exists that could
reasonably be expected to result in the incurrence of any such liability by
the Company or any ERISA Affiliate, or in the imposition of any Lien on any
of the rights, properties or assets of the Company or any ERISA Affiliate,
in either case pursuant to Title I or IV of ERISA or to such penalty or
excise tax provisions or to Section 401(a)(29) or 412 of the Code, other
than such liabilities or Liens as would not be individually or in the
aggregate Material.
(b) The present value of the aggregate benefit liabilities under
each of the Plans (other than Multiemployer Plans), determined as of the
end of such Plan's most recently ended plan year on the basis of the
actuarial assumptions specified for funding purposes in such Plan's most
recent actuarial valuation report, did not exceed the aggregate current
value of the assets of such Plan allocable to such benefit liabilities by
more than $1,000,000 in the case of any single Plan and by more than
$5,000,000 in the aggregate for all Plans. The term "BENEFIT LIABILITIES"
has the meaning specified in Section 4001 of ERISA and the terms "CURRENT
VALUE" and "PRESENT VALUE" have the meaning specified in Section 3 of
ERISA.
(c) The Company and its ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under
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<PAGE>
Section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are Material.
(d) The expected postretirement benefit obligation (determined as
of the last day of the Company's most recently ended fiscal year in
accordance with Financial Accounting Standards Board Statement No. 106,
without regard to liabilities attributable to continuation coverage
mandated by Section 4980B of the Code) of the Company is not Material.
(e) The execution and delivery of this Agreement and the issuance
and sale of the Notes hereunder will not involve any transaction that is
subject to the prohibitions of Section 406 of ERISA or in connection with
which a tax could be imposed pursuant to Section 4975(c)(1)(A)-(D) of the
Code. The representation by the Company in the first sentence of this
Section 5.12(e) is made in reliance upon and subject to the accuracy of
your representation in Section 6.2 as to the sources of the funds used to
pay the purchase price of the Notes to be purchased by you.
5.13. PRIVATE OFFERING; BROKERS
Neither the Company nor anyone acting on its behalf has offered
the Notes or any similar securities for sale to, or solicited any offer to
buy any of the same from, or otherwise approached or negotiated in respect
thereof with, any Person other than you, the Other Purchasers and not more
than 35 other Institutional Investors, each of which has been offered the
Notes at a private sale for investment. Neither the Company nor anyone
acting on its behalf has taken, or will take, any action that would subject
the issuance or sale of the Notes to the registration requirements of
Section 5 of the Securities Act. Neither the Company nor anyone acting on
its behalf has dealt with any broker, finder, commission agent or other
similar Person in connection with the sale of the Notes other than Merrill
Lynch or is under any obligation to pay any brokers' fee, finders' fee or
commission in connection therewith, other than a fee to Merrill Lynch,
which fee is the obligation solely of the Company.
5.14. USE OF PROCEEDS; MARGIN REGULATIONS; RANKING OF NOTES
(a) The Company will apply the proceeds of the sale of the Notes
on the date of the Closing as set forth in Schedule 5.14, and any remaining
balance will be used for general corporate purposes of the Company.
(b) No part of the proceeds from the sale of the Notes hereunder
will be used, directly or indirectly, for the purpose of buying or carrying
any margin stock within the meaning of Regulation G of the Board of
Governors of the Federal Reserve System (12 CFR 207), for the purpose of
reducing or retiring any Debt which was originally incurred to buy or carry
any margin stock, or for the purpose of
9
<PAGE>
buying or carrying or trading in any securities under such circumstances as
to involve the Company in a violation of Regulation X of said Board (12 CFR
224) or to involve any broker or dealer in a violation of Regulation T of
said Board (12 CFR 220). Margin stock does not constitute more than 5% of
the value of the assets of the Company, and the Company does not have any
present intention that margin stock will constitute more than 10% of the
value of such assets. As used in this Section, the terms "MARGIN STOCK" and
"PURPOSE OF BUYING OR CARRYING" shall have the meanings assigned to them in
said Regulation G.
(c) The Notes shall rank pari passu with all other senior
unsecured Debt of the Company.
5.15. SCHEDULE OF DEBT, LIENS AND AFFILIATES; DEFAULTS; LIENS, ETC.
(a) Schedule 5.15 sets forth a complete and correct list of (i)
all Debt of the Company to be outstanding immediately following the Closing
(other than that evidenced by the Notes); (ii) all Liens to which any of
the properties of the Company will be subject immediately following the
Closing (other than those of the kind described in clauses (a), (b), (d),
(e), (g), (h) and (i) of Section 10.3); and (iii) all Affiliates of the
Company and a description of all transactions involving more than $250,000
with such Affiliates (other than Tektronix, Inc.) which were consummated
during the 12-month period ended on the date hereof or which the Company is
now obligated or now intends to consummate at any time in the future.
(b) The Company is not in default and no waiver of default is
currently in effect in the payment of any principal of or interest on or
other amount due in respect of any Debt of the Company, and no event or
condition exists with respect to any Debt of the Company that would permit
(or that with notice or the lapse of time, or both, would permit) one or
more Persons to cause such Debt (or any payment in respect thereof) to
become due and payable before its stated maturity or before its regularly
scheduled dates of payment.
(c) Except as disclosed in Schedule 5.15, the Company has not
agreed or consented to cause or permit in the future (upon the happening of
a contingency or otherwise) any of its property, whether now owned or
hereafter acquired, to be subject to a Lien not permitted by Section 10.3.
5.16. FOREIGN ASSETS CONTROL REGULATIONS, ETC.
Neither the sale of the Notes by the Company hereunder nor its
use of the proceeds thereof nor the consummation of the transactions
contemplated hereby will violate the Trading with the Enemy Act, as
amended, or any of the foreign assets control regulations of the United
States Treasury Department (31 CFR, Subtitle B,
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Chapter V, as amended) or any enabling legislation or executive order
relating thereto.
5.17. STATUS UNDER CERTAIN STATUTES
The Company is not subject to regulation under the Investment
Company Act of 1940, as amended, the Public Utility Holding Company Act of
1935, as amended, or the Federal Power Act, as amended.
5.18. ENVIRONMENTAL MATTERS
(a) The Company has no knowledge of any claim and has not
received any notice of any claim, and no proceeding has been instituted
raising any claim against the Company or any real properties now or
formerly owned, leased, operated or used by it or any other assets,
alleging any damage to the environment or violation of any Environmental
Laws, except, in each case, such as could not reasonably be expected to
result in a Material Adverse Effect.
(b) The Company has no knowledge of any facts which would give
rise to any claim, public or private, of any violation of or any liability
under Environmental Laws or damage to the environment emanating from,
occurring on or in any way related to real properties now or formerly
owned, leased, operated or used by it or to any other assets or their use,
except, in each case, such as could not reasonably be expected to result in
a Material Adverse Effect.
(c) The Company has not stored any Hazardous Materials on real
properties now or formerly owned, leased, operated or used by it and has
not disposed of any Hazardous Materials in a manner contrary to any
Environmental Laws, in each case in any manner that could reasonably be
expected to result in a Material Adverse Effect.
(d) All buildings on all real properties now owned, leased,
operated or used by the Company are in compliance with applicable
Environmental Laws, except, in each case, where failure to comply could not
reasonably be expected to result in a Material Adverse Effect.
5.19. LABOR RELATIONS, SUPPLIERS, DISTRIBUTORS AND CUSTOMERS
No dispute involving employees of the Company or its
relationships with such employees has had, or could reasonably be expected
to have, a Material Adverse Effect. The relationships with the suppliers to
and distributors for and customers of the Company are satisfactory
commercial working relationships and, during the 12-month period ended on
the date hereof, no such supplier, distributor or customer has cancelled or
otherwise terminated its relationship with or decreased its
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services, supplies or materials to or its usage or purchase of the services
or products of the Company in a manner which has had, or could reasonably
be expected to have, a Material Adverse Effect. The Company is not aware of
any intention of any such supplier, distributor or customer to take any
such action.
6. REPRESENTATIONS OF THE PURCHASER
6.1. PURCHASE FOR INVESTMENT
You represent that you are purchasing the Notes for your own
account or for one or more separate accounts maintained by you or for the
account of one or more pension or trust funds and not with a view to the
distribution thereof, provided that the disposition of your or their
property shall at all times be within your or their control. You understand
that the Notes have not been registered under the Securities Act and may be
resold only if registered pursuant to the provisions of the Securities Act
or if an exemption from registration is available.
6.2. SOURCE OF FUNDS
You represent that at least one of the following statements is an
accurate representation as to each source of funds (a "Source") to be used
by you to pay the purchase price of the Notes to be purchased by you
hereunder:
(a) the Source is an "insurance company general account" as
defined in Section V(e) of Prohibited Transaction Exemption ("PTE")
95-60 (issued July 12, 1995) and, except as you have disclosed to the
Company in writing pursuant to this clause (a), the amount of reserves
and liabilities for the general account contract(s) held by or on
behalf of any employee benefit plan or group of plans maintained by
the same employer or employee organization do not exceed 10% of the
total reserves and liabilities of the general account (exclusive of
separate account liabilities) plus surplus as set forth in the NAIC
Annual Statement filed with the state of domicile of the insurer; or
(b) the Source is a separate account of an insurance company
maintained by you in which an employee benefit plan (or its related
trust) has an interest, which separate account is maintained solely in
connection with your fixed contractual obligations under which the
amounts payable, or credited, to such plan and to any participant or
beneficiary of such plan (including any annuitant) are not affected in
any manner by the investment performance of the separate account; or
(c) the Source is either (i) an insurance company pooled separate
account, within the meaning of PTE 90-1 (issued January 29, 1990), or
(ii) a bank collective investment fund, within the meaning of the PTE
91-38 (issued
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July 12, 1991) and, except as you have disclosed to the Company in
writing pursuant to this clause (c), no employee benefit plan or group
of plans maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such pooled
separate account or collective investment fund; or
(d) the Source constitutes assets of an "investment fund" (within
the meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of
the QPAM Exemption), no employee benefit plan's assets that are
included in such investment fund, when combined with the assets of all
other employee benefit plans established or maintained by the same
employer or by an affiliate (within the meaning of Section V(c)(1) of
the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total client
assets managed by such QPAM, the conditions of Part I(c) and (g) of
the QPAM Exemption are satisfied, neither the QPAM nor a person
controlling or controlled by the QPAM (applying the definition of
"control" in Section V(e) of the QPAM Exemption) owns a 5% or more
interest in the Company and (i) the identity of such QPAM and (ii) the
names of all employee benefit plans whose assets are included in such
investment fund have been disclosed to the Company in writing pursuant
to this clause (d); or
(e) the Source is a governmental plan; or
(f) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee
benefit plans, each of which has been identified to the Company in
writing pursuant to this clause (f); or
(g) the Source does not include assets of any employee benefit
plan, other than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "EMPLOYEE BENEFIT PLAN",
"GOVERNMENTAL PLAN", "PARTY IN INTEREST" and "SEPARATE ACCOUNT" shall have
the respective meanings assigned to such terms in Section 3 of ERISA, and
the term "QPAM EXEMPTION" means PTE 84-14 (issued March 13, 1984).
7. INFORMATION AS TO THE COMPANY AND ITS SUBSIDIARIES.
7.1. FINANCIAL AND BUSINESS INFORMATION
The Company shall deliver to each holder of Notes that is an
Institutional Investor:
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(a) Quarterly Statements -- within 60 days after the end of each
quarterly fiscal period in each fiscal year of the Company (other than
the last quarterly fiscal period of each such fiscal year), duplicate
copies of,
(i) a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income, shareholders' equity
and cash flows of the Company and its Subsidiaries, for such
quarter and (in the case of the second and third quarters) for
the portion of the fiscal year ending with such quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, and prepared in accordance with GAAP applicable to quarterly
financial statements generally, provided that delivery within the time
period specified above of copies of the Company's Quarterly Report on
Form 10-Q prepared in compliance with the requirements therefor and
filed with the SEC shall be deemed to satisfy the requirements of this
Section 7.1(a);
(b) Annual Statements -- within 105 days after the end of each
fiscal year of the Company, duplicate copies of,
(i) consolidated and, at such time as the Company has any
Subsidiaries, consolidating balance sheets of the Company and its
Subsidiaries, as at the end of such year, and
(ii) consolidated statements of income, shareholders' equity
and cash flows of the Company and, at such time as the Company
has any Subsidiaries, consolidating statements of income of the
Company and its Subsidiaries, for such year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, prepared in accordance
with GAAP, and accompanied by:
(A) an opinion on such consolidated financial statements of
independent certified public accountants of recognized national
standing, which opinion shall state that such consolidated
financial statements present fairly, in all material respects,
the consolidated financial position of the Persons being reported
upon and their consolidated results of operations and cash flows
and have been prepared in conformity with GAAP, and that the
examination of such accountants in connection with such financial
statements has been made
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in accordance with generally accepted auditing standards, and
that such audit provides a reasonable basis for such opinion in
the circumstances, and
(B) a letter of such accountants stating that they have
reviewed this Agreement and stating further whether, in making
their audit, they have become aware of any condition or event
that then constitutes a Default or an Event of Default, and, if
they are aware that any such condition or event then exists,
specifying the nature and period of the existence thereof (it
being understood that such accountants shall not be liable,
directly or indirectly, for any failure to obtain knowledge of
any Default or Event of Default unless such accountants should
have obtained knowledge thereof in making an audit in accordance
with generally accepted auditing standards or did not make such
an audit),
provided that the delivery within the time period specified above of
the Company's Annual Report on Form 10-K for such fiscal year
(together with the Company's annual report to shareholders, if any,
prepared pursuant to Rule 14a-3 under the Exchange Act) prepared in
accordance with the requirements therefor and filed with the SEC,
together with the accountant's letter described in clause (B) above,
shall be deemed to satisfy the requirements of this Section 7.1(b)
(other than the requirement to deliver consolidating financial
statements); provided further, that the consolidating financial
statements to be delivered pursuant to this Section 7.1(b) may be the
financial statements used by the Company in the preparation of the
consolidated financial statements of the Company and its Subsidiaries;
(c) SEC and Other Reports -- promptly upon their becoming
available, one copy of (i) each financial statement, report, notice or
proxy statement sent by the Company or any Subsidiary to public
securities holders generally, and (ii) each regular or periodic
report, each registration statement (without exhibits except as
expressly requested by such Institutional Investor), and each
prospectus and all amendments thereto filed by the Company or any
Subsidiary with the SEC and of all press releases and other statements
made available generally by the Company or any Subsidiary to the
public concerning developments that are Material;
(d) Notice of Default, Event of Default and/or Material Adverse
Effect -- promptly, and in any event within five Business Days, after
a Responsible Officer becomes aware (i) of the existence of any
Default or Event of Default, (ii) that any Person has given any notice
or taken any action with respect to a claimed default hereunder or
(iii) that any Person has given any notice or taken any action with
respect to a claimed default of the type
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referred to in Section 11(f), a written notice specifying the nature
and period of existence thereof and the action, if any, that the
Company and/or any of its Subsidiaries is taking and/or proposes to
take with respect thereto;
(e) ERISA Matters -- promptly, and in any event within five days
after a Responsible Officer becomes aware of any of the following, a
written notice setting forth the nature and period of existence
thereof and the action, if any, that the Company and/or any of the
ERISA Affiliates is taking and/or proposes to take with respect
thereto:
(i) with respect to any Plan, any reportable event, as
defined in Section 4043(b) of ERISA and the regulations
thereunder, for which notice thereof has not been waived pursuant
to such regulations as in effect on the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan, or the receipt by the
Company or any ERISA Affiliate of a notice from a Multiemployer
Plan that such action has been taken by the PBGC with respect to
such Multiemployer Plan; or
(iii) any event, transaction or condition that could result
in the incurrence of any liability by the Company or any ERISA
Affiliate pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit
plans, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate
pursuant to Title I or IV of ERISA or such penalty or excise tax
provisions, if such liability or Lien, taken together with any
other such liabilities or Liens then existing, could reasonably
be expected to have a Material Adverse Effect;
(f) Notices from Governmental Authorities -- promptly, and in any
event within 30 days of receipt thereof, copies of any notice to the
Company or any Subsidiary from any Governmental Authority relating to
any order, ruling, statute or other law or regulation that could
reasonably be expected to have a Material Adverse Effect; and
(g) Requested Information -- with reasonable promptness, such
other data and information relating to the business, operations,
affairs, financial condition, assets or properties of the Company or
any of its Subsidiaries or relating to the ability of the Company or
any of its Subsidiaries to perform its obligations under the Operative
Documents to which it is a party
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as from time to time may be reasonably requested by any such holder of
Notes.
7.2. OFFICER'S CERTIFICATE
Each set of financial statements delivered to a holder of Notes
pursuant to Section 7.1(a) or Section 7.1(b) hereof shall be accompanied by
a certificate of a Senior Financial Officer setting forth:
(a) Covenant Compliance -- the information (including detailed
calculations) required in order to establish whether the Company was
in compliance with the requirements of Sections 10.3, 10.4, 10.5 and
10.6 during the quarterly or annual period covered by the statements
then being furnished (including with respect to each such Section,
where applicable, the calculations of the maximum or minimum amount,
ratio or percentage, as the case may be, permissible under the terms
of such Sections, and the calculation of the amount, ratio or
percentage then in existence);
(b) Financial Statements; Events of Default -- a certification
that:
(i) such financial statements (A) have been prepared in
accordance with GAAP and (B) fairly present, in all material
respects, the financial position of the Persons being reported on
and their results of operations and cash flows as at the end of
and for the quarterly or annual period covered by such statements
(subject, in the case of the quarterly and consolidating
financial statements, to the omission of footnotes and to changes
resulting from normal year-end adjustments); and
(ii) such officer has reviewed the relevant terms of the
Operative Documents and has made, or caused to be made, under his
or her supervision, a review of the transactions and conditions
of the Company and its Subsidiaries from the beginning of the
quarterly or annual period covered by the statements then being
furnished to the date of the certificate and that such review
shall not have disclosed the existence during such period of any
condition or event that constitutes a Default or an Event of
Default, or, if any such condition or event existed or exists
(including, without limitation, any such event or condition
resulting from the failure of the Company or any Subsidiary to
comply with any Environmental Law), specifying the nature and
period of existence thereof and the action, if any, that the
Company and/or any of its Subsidiaries is taking and/or proposes
to take with respect thereto;
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(c) Additional Subsidiaries -- if there shall exist any
Subsidiary of the Company as of the date of such certificate which did
not exist as of the date of the last certificate delivered pursuant to
this Section 7.2, as to each such Subsidiary, the information called
for by Schedule 7.2(c) and containing a brief description of the
nature of each such Subsidiary's business.
7.3. INSPECTION
The Company shall permit the representatives of each holder of
Notes that is an Institutional Investor:
(a) No Default -- if no Default or Event of Default then exists,
at the expense of such holder and upon reasonable prior notice to the
Company, to visit the principal executive office of the Company, to
discuss the affairs, finances and accounts of the Company and its
Subsidiaries with the Company's officers, and (with the consent of the
Company, which consent will not be unreasonably withheld) its
independent public accountants, and (with the consent of the Company,
which consent will not be unreasonably withheld) to visit the other
offices and properties of the Company and each Subsidiary, all at such
reasonable times and as often as may be reasonably requested in
writing; and
(b) Default -- if a Default or Event of Default then exists, at
the expense of the Company to visit and inspect any of the offices or
properties of the Company or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to
make copies and extracts therefrom, and to discuss their respective
affairs, finances and accounts with their respective officers and
independent public accountants (and by this provision the Company
authorizes said accountants to discuss the affairs, finances and
accounts of the Company and its Subsidiaries), all at such times and
as often as may be requested.
8. PREPAYMENT OF THE NOTES
8.1. REQUIRED PREPAYMENTS
On September 15, 1999 and on each September 15 thereafter to and
including September 15, 2003, the Company will prepay $8,000,000 principal
amount (or such lesser principal amount as shall then be outstanding) of
the Notes at par and without payment of the Make-Whole Amount or any
premium, provided that upon any partial prepayment of the Notes pursuant to
Section 8.2 or purchase of the Notes permitted by Section 8.5, the
principal amount of each required prepayment of the Notes becoming due
under this Section 8.1 on and after the date of such prepayment
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or purchase shall be reduced in the same proportion as the aggregate unpaid
principal amount of the Notes is reduced as a result of such prepayment or
purchase.
8.2. OPTIONAL PREPAYMENTS WITH MAKE-WHOLE AMOUNT
The Company may, at its option, upon notice as provided below,
prepay at any time all, or from time to time any part (in an integral
multiple of $500,000 and a minimum of $4,000,000 or such lesser amount as
shall then be outstanding), of the Notes, at 100% of the principal amount
so prepaid, plus the Make-Whole Amount determined for the prepayment date
with respect to such principal amount. The Company will give each holder of
Notes written notice of each optional prepayment under this Section 8.2 not
less than 30 days and not more than 60 days prior to the date fixed for
such prepayment. Each such notice shall specify such date, the aggregate
principal amount of the Notes to be prepaid on such date, the principal
amount of each Note held by such holder to be prepaid (determined in
accordance with Section 8.3), and the interest to be paid on the prepayment
date with respect to such principal amount being prepaid, and shall be
accompanied by a certificate of a Senior Financial Officer as to the
estimated Make-Whole Amount due in connection with such prepayment
(calculated as if the date of such notice were the date of the prepayment),
setting forth the details of such computation. Two Business Days prior to
such prepayment, the Company shall deliver to each holder of Notes a
certificate of a Senior Financial Officer specifying the calculation of
such Make-Whole Amount as of the specified prepayment date.
8.3. ALLOCATION OF PARTIAL PREPAYMENTS
In the case of each partial prepayment of the Notes, the
principal amount of the Notes to be prepaid shall be allocated among all of
the Notes at the time outstanding in proportion, as nearly as practicable,
to the respective unpaid principal amounts thereof not theretofore called
for prepayment.
8.4. MATURITY; SURRENDER
In the case of each prepayment of Notes pursuant to this Section
8, the principal amount of each Note to be prepaid shall mature and become
due and payable on the date fixed for such prepayment, together with
interest on such principal amount accrued to such date and the applicable
Make-Whole Amount, if any. From and after such date, unless the Company
shall fail to pay such principal amount when so due and payable, together
with the interest and Make-Whole Amount, if any, as aforesaid, interest on
such principal amount shall cease to accrue. Any Note paid or prepaid in
full shall be surrendered to the Company and cancelled and shall not be
reissued, and no Note shall be issued in lieu of any prepaid principal
amount of any Note.
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8.5. PURCHASE OF NOTES
The Company will not and will not permit any Affiliate to
purchase, redeem, prepay or otherwise acquire, directly or indirectly, any
of the outstanding Notes except upon the payment or prepayment of the Notes
in accordance with the terms of this Agreement and the Notes. The Company
will promptly cancel all Notes acquired by it or any Affiliate pursuant to
any payment, prepayment or purchase of Notes pursuant to any provision of
this Agreement and no Notes may be issued in substitution or exchange for
any such Notes.
8.6. MAKE-WHOLE AMOUNT
The term "MAKE-WHOLE AMOUNT" means, with respect to any Note, an
amount equal to the excess, if any, of the Discounted Value of the
Remaining Scheduled Payments with respect to the Called Principal of such
Note over the amount of such Called Principal, provided that the Make-Whole
Amount may in no event be less than zero. For the purposes of determining
the Make-Whole Amount, the following terms have the following meanings:
"CALLED PRINCIPAL" means, with respect to any Note, the principal
of such Note that is to be prepaid pursuant to Section 8.2 or has
become or is declared to be immediately due and payable pursuant to
Section 12.1, as the context requires.
"DISCOUNTED VALUE" means, with respect to the Called Principal of
any Note, the amount obtained by discounting all Remaining Scheduled
Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment Yield with
respect to such Called Principal.
"REINVESTMENT YIELD" means, with respect to the Called Principal
of any Note, .50% (50 basis points) over the yield to maturity implied
by (a) the yields reported, as of 10:00 A.M. (New York City time) on
the second Business Day preceding the Settlement Date with respect to
such Called Principal, on the applicable display on the Bloomberg
Financial Markets Service for actively traded U.S. Treasury securities
having a maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date, or (b) if such yields are not
reported as of such time or the yields reported as of such time are
not ascertainable, the Treasury Constant Maturity Series Yields
reported, for the latest day for which such yields have been so
reported on or before the second Business Day preceding the Settlement
Date with respect to such Called Principal, in Federal Reserve
Statistical Release
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H.15 (519) (or any comparable successor publication) for actively
traded U.S. Treasury securities having a constant maturity equal to
the Remaining Average Life of such Called Principal as of such
Settlement Date. Such implied yield will be determined, if necessary,
by interpolating linearly between (x) the actively traded U.S.
Treasury bond with the maturity closest to and greater than the
Remaining Average Life and (y) the actively traded U.S. Treasury bond
with the maturity closest to and less than the Remaining Average Life.
"REMAINING AVERAGE LIFE" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (a) such Called Principal into (b) the sum
of the products obtained by multiplying (i) the principal component of
each Remaining Scheduled Payment with respect to such Called Principal
by (ii) the number of years (calculated to the nearest one-twelfth
year) that will elapse between the Settlement Date with respect to
such Called Principal and the scheduled due date of such Remaining
Scheduled Payment.
"REMAINING SCHEDULED PAYMENTS" means, with respect to the Called
Principal of any Note, all payments of such Called Principal and
interest thereon that would be due after the Settlement Date with
respect to such Called Principal if no payment of such Called
Principal were made prior to its scheduled due date, provided that if
such Settlement Date is not a date on which interest payments are due
to be made under the terms of the Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of
interest accrued to such Settlement Date and required to be paid on
such Settlement Date pursuant to Section 8.2 or 12.1.
"SETTLEMENT DATE" means, with respect to the Called Principal of
any Note, the date on which such Called Principal is to be prepaid
pursuant to Section 8.2 or has become or is declared to be immediately
due and payable pursuant to Section 12.1, as the context requires.
9. AFFIRMATIVE COVENANTS
The Company covenants that from and after the date hereof so long
as any of the Notes are outstanding:
9.1. COMPLIANCE WITH LAW
The Company will and will cause each of its Subsidiaries to
comply with all laws, ordinances or governmental rules or regulations to
which each of them is subject, including, without limitation, Environmental
Laws and ERISA, and will obtain and maintain in effect all licenses,
certificates, permits, franchises and other governmental authorizations
necessary to the ownership of their respective properties
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or to the conduct of their respective businesses, in each case to the
extent necessary to ensure that non-compliance with such laws, ordinances
or governmental rules or regulations or failures to obtain or maintain in
effect such licenses, certificates, permits, franchises and other
governmental authorizations could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
9.2. INSURANCE
The Company will and will cause each of its Subsidiaries to
maintain, with financially sound and reputable insurers, insurance with
respect to their respective properties and businesses against such
casualties and contingencies, of such types, on such terms and in such
amounts (including deductibles, co-insurance and self-insurance, if
adequate reserves are maintained with respect thereto) as is customary in
the case of entities of established reputations engaged in the same or a
similar business and similarly situated.
9.3. MAINTENANCE OF PROPERTIES
The Company will and will cause each of its Subsidiaries to
maintain and keep, or cause to be maintained and kept, their respective
properties in good repair, working order and condition (other than ordinary
wear and tear), so that the business carried on in connection therewith may
be properly conducted at all times, provided that this Section shall not
prevent the Company or any Subsidiary from discontinuing the operation and
the maintenance of any of its properties if such discontinuance is
desirable in the conduct of its business and the Company has concluded that
such discontinuance could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
9.4. PAYMENT OF TAXES AND CLAIMS
The Company will and will cause each of its Subsidiaries to file
all tax returns required to be filed in any jurisdiction and to pay and
discharge all taxes shown to be due and payable on such returns and all
other taxes, assessments, governmental charges, or levies imposed on them
or any of their properties, assets, income, receipts, franchises or sales,
to the extent such taxes and assessments have become due and payable and
before they have become delinquent and all claims for which sums have
become due and payable that have or might become a Lien on properties or
assets of the Company or any Subsidiary, provided that neither the Company
nor any Subsidiary need pay any such tax or assessment or claims if (a) the
amount, applicability or validity thereof is contested by the Company or
such Subsidiary on a timely basis in good faith and in appropriate
proceedings, and the Company or a Subsidiary has established adequate
reserves therefor in accordance with GAAP on the books of the Company or
such Subsidiary or (b) the nonpayment
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of all such taxes, assessments and claims in the aggregate could not
reasonably be expected to have a Material Adverse Effect.
9.5. CORPORATE EXISTENCE, ETC.
Subject to Section 10.2, the Company will at all times preserve
and keep in full force and effect its corporate existence. Subject to
Section 10.2, the Company will at all times preserve and keep in full force
and effect the corporate existence of each of its Subsidiaries (unless
merged into the Company or a Wholly-Owned Subsidiary) and all rights and
franchises of the Company and its Subsidiaries unless, in the good faith
judgment of the Company, the termination of or failure to preserve and keep
in full force and effect such corporate existence, right or franchise could
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
9.6. FURTHER ASSURANCES
From time to time hereafter, the Company will execute and
deliver, or will cause to be executed and delivered, such additional
agreements, documents and instruments and will take all such other actions
as the Required Holders may reasonably request for the purpose of
implementing or effectuating the provisions of the Operative Documents.
10. NEGATIVE COVENANTS
The Company covenants that from and after the date hereof so long
as any of the Notes are outstanding:
10.1. TRANSACTIONS WITH AFFILIATES
The Company will not, and will not permit any of its Subsidiaries
to, enter into directly or indirectly any transaction or Material group of
related transactions (including, without limitation, the purchase, lease,
sale or exchange of properties of any kind or the rendering of any service)
with any Affiliate (other than the Company or another Wholly-Owned
Subsidiary), except in the ordinary course and pursuant to the reasonable
requirements of the Company's or such Subsidiary's business and upon fair
and reasonable terms no less favorable to the Company or such Subsidiary
than would be obtainable in a comparable arm's-length transaction with a
Person not an Affiliate; provided that nothing herein shall prohibit the
Company from performing those agreements heretofore entered into with
Tektronix, Inc. and described in Schedule 5.15.
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10.2. MERGER, CONSOLIDATION, ETC
The Company will not consolidate with or merge into any other
Person or Transfer all or substantially all of its property in a single
transaction or series of transactions to any Person, provided that the
foregoing restriction does not apply to the consolidation or merger of the
Company with or into, or the Transfer of all or substantially all of its
property in a single transaction or series of transactions to, any other
Person so long as:
(a) the successor formed by such consolidation or the survivor of
such merger or the Person that acquires as a result of such Transfer all or
substantially all of the property of the Company, as the case may be (the
"SUCCESSOR CORPORATION"), shall be a Solvent corporation organized and
existing under the laws of the United States of America, any state thereof
or the District of Columbia, or Canada or any province thereof;
(b) if the Company is not the Successor Corporation, the
Successor Corporation shall have executed and delivered to each holder of
Notes its assumption of the due and punctual performance and observance of
each covenant and condition of this Agreement and each of the other
Operative Documents (pursuant to such agreements and instruments as shall
be reasonably satisfactory to the Required Holders), and the Company shall
have caused to be delivered to each holder of Notes an opinion of
independent counsel reasonably satisfactory to the Required Holders, to the
effect that all agreements or instruments effecting such assumption are
legal, valid and binding obligations of such Successor Corporation
enforceable against it in accordance with their respective terms and
covering such other matters as the Required Holders may reasonably request;
and
(c) immediately after giving effect to such transaction (i) no
Default or Event of Default would exist and (ii) the Company or the
Successor Corporation, as the case may be, would be able to incur at least
$1.00 of additional Debt under Section 10.6(a)(iv).
No such Transfer by the Company shall have the effect of releasing the
Company or any Successor Corporation that shall theretofore have become
such in the manner prescribed in this Section 10.2 from its liability under
this Agreement or any of the other Operative Documents.
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10.3. LIENS
The Company will not, and will not permit any of its Subsidiaries
to, directly or indirectly create, incur, assume or permit to exist (upon
the happening of a contingency or otherwise) any Lien on or with respect to
any property or asset (including, without limitation, any document or
instrument in respect of goods or accounts receivable) of the Company or
any Subsidiary, whether now owned or held or hereafter acquired, or any
income or profits therefrom, or assign or otherwise convey any right to
receive income or profits (unless it makes, or causes to be made, effective
provision whereby the Notes will be equally and ratably secured with any
and all other obligations thereby secured, such security to be pursuant to
an agreement reasonably satisfactory to the Required Holders and, in any
such case, the Notes shall have the benefit, to the fullest extent that,
and with such priority as, the holders of the Notes may be entitled under
applicable law, of an equitable Lien on such property), except:
(a) Liens for taxes, assessments or other governmental charges
the payment of which is not at the time required by Section 9.4;
(b) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other similar Liens, in each case,
incurred in the ordinary course of business for sums not yet due or the
payment of which is not at the time required by Section 9.4;
(c) any attachment or judgment Lien or Liens, unless the judgment
or judgments secured thereby constitute a Default or an Event of Default;
(d) Liens (other than any Lien imposed by ERISA or any
Environmental Law) incurred or deposits made in the ordinary course of
business (i) in connection with workers' compensation, unemployment
insurance and other types of social security or retirement benefits, or
(ii) to secure (or to obtain letters of credit that secure) the performance
of tenders, statutory obligations, surety bonds, appeal bonds, bids, leases
(other than Capital Leases), performance bonds, purchase, construction or
sales contracts and other similar obligations, in each case not incurred or
made in connection with the borrowing of money, the obtaining of advances
or credit or the payment of the deferred purchase price of property;
(e) leases or subleases granted to others, easements,
rights-of-way, reservations, restrictions and other similar charges or
encumbrances (including any minor survey exceptions and zoning
restrictions), in each case incidental to, and not interfering with, the
ordinary conduct of the business of the Company or any of its Subsidiaries,
provided that such Liens do not, in the aggregate, materially detract from
the value of such property;
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(f) Liens existing on the date of this Agreement and referred to
on Schedule 5.15 and any Lien renewing, extending or refunding any such
existing Lien, provided that (i) the principal amount of Debt secured by
such Lien immediately prior to such extension, renewal or refunding is not
increased and the maturity thereof is not reduced, (ii) such Lien is not
extended to any other property and (iii) immediately after such extension,
renewal or refunding, no Default or Event of Default would exist;
(g) any Lien created to secure all or any part of the purchase
price, or to secure Debt incurred or assumed to pay all or any part of the
purchase price or cost of construction, of assets (or any improvement
thereon) acquired or constructed by the Company or a Subsidiary after the
date of the Closing, provided that:
(i) any such Lien shall extend solely to such assets (or any
improvement thereon) so acquired or constructed,
(ii) the principal amount of the Debt secured by any such
Lien shall at no time exceed the fair market value of the assets
(or any improvement thereon) so acquired or constructed, and
(iii) any such Lien shall be created contemporaneously with,
or within 120 days after, the acquisition or construction of such
assets (or any improvement thereon);
(h) any Lien existing on any tangible property of a Person
immediately prior to its being consolidated with or merged into the Company
or a Subsidiary or its becoming a Subsidiary, or any Lien existing on any
tangible property acquired by the Company or any Subsidiary at the time
such tangible property is so acquired (whether or not the Debt secured
thereby shall have been assumed), provided that (i) no such Lien shall have
been created or assumed in contemplation of such consolidation or merger or
such Person's becoming a Subsidiary or such acquisition of tangible
property, (ii) any such Lien shall extend solely to the tangible property
so acquired and (iii) the principal amount of the Debt secured by any such
Lien shall at no time exceed the fair market value of such tangible
property;
(i) Liens on property of the Company or any of its Subsidiaries
securing Debt owing to the Company or to any Wholly-Owned Subsidiaries;
(j) other Liens not otherwise permitted by paragraphs (a) through
(i), provided that the aggregate principal amount of Debt secured by all
Liens incurred pursuant to this paragraph (j), together with the aggregate
principal amount of all Debt of Subsidiaries incurred pursuant to Section
10.6(a)(iii), shall at no time exceed 10% of Consolidated Net Worth.
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For the purposes of this Section 10.3, any Person becoming a
Subsidiary after the date of this Agreement shall be deemed to have
incurred all of its then outstanding Liens at the time it becomes a
Subsidiary, and any Person extending, renewing or refunding any Debt
secured by any Lien shall be deemed to have incurred such Lien at the time
of such extension, renewal or refunding.
10.4. INTEREST CHARGES COVERAGE RATIO
The Company will not permit the ratio, as of the end of any
fiscal quarter of the Company, of (a) Consolidated Income Available for
Interest Charges for the period of the four consecutive fiscal quarters
then ended to (b) Interest Charges for the period of the four consecutive
fiscal quarters then ended, to be less than 2.00 to 1.00.
10.5. CONSOLIDATED NET WORTH
The Company will not, at any time, permit Consolidated Net Worth
to be less than the sum of (a) $50,000,000 plus (b) an aggregate amount
equal to 50% of Consolidated Net Income (but, in each case, only if a
positive number) for each completed fiscal quarter of the Company beginning
with the fiscal quarter ended August 31, 1996.
10.6. LIMITATIONS ON DEBT
(a) The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, be liable or create, incur,
assume, guarantee or otherwise become liable with respect to, any Debt
other than:
(i) Debt evidenced by the Notes;
(ii) Debt outstanding on the date hereof and disclosed on
Schedule 5.15 and any extension, renewal or refunding of such Debt,
provided that, on the date of any such extension, renewal or refunding
and immediately after giving effect thereto and to the concurrent
retirement of any other Debt:
(A) no Default or Event of Default exists;
(B) the principal amount of the Debt which is to be
extended, renewed or refunded is not increased; and
(C) the maturity of the Debt which is to be extended,
renewed or refunded is not reduced;
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(iii) Debt incurred by any Wholly-Owned Subsidiary in addition to
that otherwise permitted by this Section 10.6, provided that, on the
date of any such incurrence and immediately after giving effect
thereto and to the concurrent retirement of any other Debt:
(A) no Default or Event of Default exists; and
(B) the total amount of all Debt of the Wholly-Owned
Subsidiaries of the Company (except Debt owed to the Company or
to a Wholly-Owned Subsidiary) and all Debt of the Company and/or
any of its Wholly-Owned Subsidiaries secured by Liens of the kind
described in clause (j) of Section 10.3, does not exceed 10% of
the Consolidated Net Worth;
(iv) Debt incurred by the Company in addition to that otherwise
permitted by this Section 10.6, provided that, on the date of any such
incurrence and immediately after giving effect thereto and to the
concurrent retirement of any other Debt:
(A) no Default or Event of Default exists; and
(B) Consolidated Debt does not exceed 50% of Consolidated
Total Capitalization;
(v) Debt incurred by the Company pursuant to a $30,000,000
committed line of credit facility with Bank of America Northwest,
N.A., as agent for the lenders; and
(vi) Debt owed to the Company or to a Wholly-Owned Subsidiary.
(b) For purposes of this Section 10.6, any Person becoming a
Subsidiary after the date hereof shall be deemed, at the time it becomes a
Subsidiary, to have incurred all of its then outstanding Debt, and any
Person extending, renewing or refunding any Debt shall be deemed to have
incurred such Debt at the time of such extension, renewal or refunding.
10.7. DISPOSITION OF CERTAIN ASSETS.
Except as permitted under Section 10.2, the Company will not
Transfer all or substantially all of its facilities currently located in
Forest Grove, Oregon or Loveland, Colorado to any Person or cause such
facilities to be relocated outside of the United States of America.
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11. EVENTS OF DEFAULT
An "EVENT OF DEFAULT" shall exist if any of the following
conditions or events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or
Make-Whole Amount, if any, on any Note when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise; or
(b) the Company defaults in the payment of any interest on any
Note for more than five Business Days after the same becomes due and
payable; or
(c) (i) the Company defaults in the performance of or compliance
with any term contained in Sections 7.1(d), 7.3, 8.5 or 10; or
(d) the Company defaults in the performance of or compliance with
any term contained herein (other than those referred to in paragraphs
(a), (b) and (c) of this Section 11) or in any other Operative
Document and such default is not remedied within 30 days after the
earlier of (i) a Responsible Officer obtaining knowledge of such
default and (ii) the Company receiving written notice of such default
from any holder of a Note (any such written notice to be identified as
a "notice of default" and to refer specifically to this paragraph (d)
of Section 11); or
(e) any representation or warranty made in writing by or on
behalf of the Company or by any officer of the Company in any
Operative Document or in any writing furnished in connection with the
transactions contemplated hereby proves to have been false or
incorrect in any material respect on the date as of which made; or
(f) (i) the Company or any Subsidiary is in default (as principal
or as guarantor or other surety) in the payment of any principal of or
premium or make-whole amount or interest or other amount due in
respect of Debt in an aggregate outstanding amount of at least
$5,000,000 beyond any period of grace provided with respect thereto,
or (ii) the Company or any Subsidiary is in default in the performance
of or compliance with any term of any evidence of any Debt in an
aggregate outstanding amount of at least $5,000,000 or of any
mortgage, indenture or other agreement relating thereto or any other
condition exists, and as a consequence of such default or condition
such Debt has become, or has been declared (or one or more Persons are
entitled to declare such Debt to be), due and payable before the
stated maturity thereof or before the regularly scheduled dates of
payment thereof, or (iii) as a
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consequence of the occurrence or continuation of any event or
condition, (x) the Company or any Subsidiary has become obligated to
purchase or repay before the regular maturity thereof or before the
regularly scheduled dates of payment therefor any Debt in an aggregate
outstanding amount of at least $5,000,000, or (y) one or more Persons
have the right to require the Company or any Subsidiary so to purchase
or repay any Debt in an aggregate outstanding amount of at least
$5,000,000; or
(g) the Company or any Subsidiary (i) is generally not paying, or
admits in writing its inability to pay, its debts as they become due,
(ii) files, or consents by answer or otherwise to the filing against
it of, a petition for relief or reorganization or arrangement or any
other petition in bankruptcy, for liquidation or to take advantage of
any bankruptcy, insolvency, reorganization, moratorium or other
similar law of any jurisdiction, (iii) makes an assignment for the
benefit of its creditors, (iv) consents to the appointment of a
custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property,
(v) is adjudicated as insolvent or to be liquidated, or (vi) takes
corporate action for the purpose of any of the foregoing; or
(h) a court or Governmental Authority of competent jurisdiction
enters an order appointing, without consent by the Company or any
Subsidiary, a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any substantial
part of its property, or constituting an order for relief or approving
a petition for relief or reorganization or any other petition in
bankruptcy or for liquidation or to take advantage of any bankruptcy
or insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of the Company or any Subsidiary, or any
such petition shall be filed against the Company or any Subsidiary and
such petition shall not be dismissed within 60 days; or
(i) a final judgment or judgments for the payment of money
aggregating in excess of $3,000,000 are rendered against one or more
of the Company or any Subsidiary and which judgments are not, within
60 days after entry thereof, bonded, discharged or stayed pending
appeal, or are not discharged within 60 days after the expiration of
such stay; or
(j) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is
sought or granted under Section 412 of the Code, (ii) a notice of
intent to terminate any Plan shall have been or is reasonably expected
to be filed with the PBGC or the PBGC shall have instituted
proceedings under ERISA Section 4042 to terminate or appoint a trustee
to administer any Plan or the PBGC shall have
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notified the Company or any ERISA Affiliate that a Plan may become a
subject of any such proceedings, (iii) the aggregate "amount of
unfunded benefit liabilities" (within the meaning of Section
4001(a)(18) of ERISA) under all Plans, determined in accordance with
Title IV of ERISA, shall exceed $5,000,000, (iv) the Company or any
ERISA Affiliate shall have incurred or is reasonably expected to incur
any liability pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit plans,
(v) the Company or any ERISA Affiliate withdraws from any
Multiemployer Plan, or (vi) the Company or any Subsidiary establishes
or amends any employee welfare benefit plan that provides
post-employment welfare benefits in a manner that would increase the
liability of the Company or any Subsidiary thereunder; and any such
event or events described in clauses (i) through (vi) above, either
individually or together with any other such event or events, could
reasonably be expected to have a Material Adverse Effect.
As used in Section 11(j), the terms "EMPLOYEE BENEFIT PLAN" and "EMPLOYEE
WELFARE BENEFIT PLAN" shall have the respective meanings assigned to such
terms in Section 3 of ERISA.
12. REMEDIES ON DEFAULT, ETC.
12.1. ACCELERATION
(a) If an Event of Default described in paragraph (g) or (h) of
Section 11 has occurred, all the Notes then outstanding shall automatically
become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing,
any holder or holders of more than 50% in principal amount of the Notes at
the time outstanding may at any time, at its or their option, by notice or
notices to the Company, declare all the Notes then outstanding to be
immediately due and payable.
(c) If any Event of Default described in paragraph (a) or (b) of
Section 11 has occurred and is continuing, any holder or holders of Notes
at the time outstanding affected by such Event of Default may at any time,
at its or their option, by notice or notices to the Company, declare all
the Notes held by it or them to be immediately due and payable.
Upon any Notes becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Notes will forthwith mature
and the entire unpaid principal amount of such Notes, plus (x) all accrued
and unpaid interest thereon and (y) the Make-Whole Amount determined in
respect of such principal amount (to the full extent permitted by
applicable law), shall all be immediately due
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and payable, in each and every case without presentment, demand, protest or
further notice, all of which are hereby waived. The Company acknowledges,
and the parties hereto agree, that each holder of a Note has the right to
maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for) and that the provision for
payment of a Make-Whole Amount by the Company in the event that the Notes
are prepaid or are accelerated as a result of an Event of Default, is
intended to provide compensation for the deprivation of such right under
such circumstances.
12.2. OTHER REMEDIES
If any Default or Event of Default has occurred and is
continuing, and irrespective of whether any Notes have become or have been
declared immediately due and payable under Section 12.1, the holder of any
Note at the time outstanding may proceed to protect and enforce the rights
of such holder by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement contained
herein or in any other Operative Document, or for an injunction against a
violation of any of the terms hereof or thereof, or in aid of the exercise
of any power granted hereby or thereby or by law or otherwise.
12.3. RESCISSION
At any time after any Notes have been declared due and payable
pursuant to clause (b) or (c) of Section 12.1, the holders of not less than
66-2/3% in principal amount of the Notes then outstanding, by written
notice to the Company delivered within 90 days after the date such Notes
have been so declared due and payable, may rescind and annul any such
declaration and its consequences if (a) the Company has paid all overdue
interest on the Notes, all principal of and Make-Whole Amount, if any, on
any Notes that are due and payable and are unpaid other than by reason of
such declaration, and all interest on such overdue principal and Make-Whole
Amount, if any, and (to the extent permitted by applicable law) any overdue
interest in respect of the Notes, at the Default Rate, (b) all Events of
Default and Defaults, other than non-payment of amounts that have become
due solely by reason of such declaration, have been cured or have been
waived pursuant to Section 17, and (c) no judgment or decree has been
entered for the payment of any monies due pursuant to this Agreement or any
of the other Operative Documents. No rescission and annulment under this
Section 12.3 will extend to or affect any subsequent Event of Default or
Default or impair any right consequent thereon.
12.4. NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC.
No course of dealing and no delay on the part of any holder of
any Note in exercising any right, power or remedy shall operate as a waiver
thereof or otherwise prejudice such holder's rights, powers or remedies. No
right, power or
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remedy conferred by this Agreement or by any other Operative Document upon
any holder of any Note shall be exclusive of any other right, power or
remedy referred to herein or in any of the other Operative Documents or now
or hereafter available at law, in equity, by statute or otherwise. Without
limiting the obligations of the Company under Section 15, the Company will
pay to the holder of each Note on demand such further amount as shall be
sufficient to cover all costs and expenses of such holder incurred in any
enforcement or collection under this Section 12, including, without
limitation, reasonable attorneys' fees, expenses and disbursements.
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
13.1. REGISTRATION OF NOTES
The Company shall keep at its principal executive office a
register for the registration and registration of transfers of Notes. The
name and address of each holder of one or more Notes, each transfer thereof
and the name and address of each transferee of one or more Notes shall be
registered in such register. Prior to due presentment for registration of
transfer, the Person in whose name any Note shall be registered shall be
deemed and treated as the owner and holder thereof for all purposes hereof,
and the Company shall not be affected by any notice or knowledge to the
contrary. The Company shall give to any holder of a Note that is an
Institutional Investor promptly upon request therefor, a complete and
correct copy of the names and addresses of all registered holders of Notes.
13.2. TRANSFER AND EXCHANGE OF NOTES
Upon surrender of any Note at the principal executive office of
the Company for registration of transfer or exchange (and in the case of a
surrender for registration of transfer, duly endorsed or accompanied by a
written instrument of transfer duly executed by the registered holder of
such Note or his attorney duly authorized in writing and accompanied by the
address for notices of each transferee of such Note or part thereof), the
Company shall execute and deliver, at the Company's expense (except as
provided below), one or more new Notes (as requested by the holder thereof)
in exchange therefor, in an aggregate principal amount equal to the unpaid
principal amount of the surrendered Note. Each such new Note shall be
payable to such Person as such holder may request and shall be
substantially in the form of Exhibit 1. Each such new Note shall be dated
and bear interest from the date to which interest shall have been paid on
the surrendered Note or dated the date of the surrendered Note if no
interest shall have been paid thereon. The Company may require payment of a
sum sufficient to cover any stamp tax or governmental charge imposed in
respect of any such transfer of Notes. Notes shall not be transferred in
denominations of less than $500,000, provided that if necessary to enable
the registration of transfer by a holder of its entire holding of Notes,
one Note may be in a denomination of less than $500,000. Any transferee, by
its acceptance of a Note
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registered in its name (or the name of its nominee), shall be deemed to
have made the representation set forth in Section 6.2. Each holder of a
Note hereby agrees not to transfer such Note to a competitor of the Company
without the Company's prior written consent, it being understood that no
financial institution or institutional investor shall be deemed to be a
competitor of the Company for purposes of this section 13.2.
13.3. REPLACEMENT OF NOTES
Upon receipt by the Company of evidence reasonably satisfactory
to it of the ownership of and the loss, theft, destruction or mutilation of
any Note (which evidence shall be, in the case of an Institutional
Investor, notice from such Institutional Investor of such ownership and
such loss, theft, destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of such
Note is, or is a nominee for, an original Purchaser or another holder
of a Note with a minimum net worth of at least $50,000,000, such
Person's own unsecured agreement of indemnity shall be deemed to be
satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense shall execute and deliver, in lieu thereof,
a new Note, dated and bearing interest from the date to which interest
shall have been paid on such lost, stolen, destroyed or mutilated Note or
dated the date of such lost, stolen, destroyed or mutilated Note if no
interest shall have been paid thereon.
14. PAYMENTS ON NOTES
14.1. PLACE OF PAYMENT
Subject to Section 14.2, payments of principal, Make-Whole
Amount, if any, and interest becoming due and payable on the Notes shall be
made in Forest Grove, Oregon, at the principal office of the Company in
such jurisdiction. The Company may at any time, by notice to each holder of
a Note, change the place of payment of the Notes so long as such place of
payment shall be either the principal office of the Company in such
jurisdiction or the principal office of a bank or trust company in such
jurisdiction.
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14.2. HOME OFFICE PAYMENT
So long as you or your nominee shall be the holder of any Note,
and notwithstanding anything contained in Section 14.1 or in such Note or
in any other Operative Document to the contrary, the Company will pay all
sums becoming due on such Note for principal, Make-Whole Amount, if any,
and interest by the method and at the address specified for such purpose
below your name in Schedule A, or by such other method or at such other
address as you shall have from time to time specified to the Company in
writing for such purpose, without the presentation or surrender of such
Note or the making of any notation thereon, except that upon written
request of the Company made concurrently with or reasonably promptly after
payment or prepayment in full of any Note, you shall surrender such Note
for cancellation, reasonably promptly after any such request, to the
Company at its principal executive office or at the place of payment most
recently designated by the Company pursuant to Section 14.1. Prior to any
sale or other disposition of any Note held by you or your nominee you will,
at your election, either endorse thereon the amount of principal paid
thereon and the last date to which interest has been paid thereon or
surrender such Note to the Company in exchange for a new Note or Notes
pursuant to Section 13.2. The Company will afford the benefits of this
Section 14.2 to any Institutional Investor that is the direct or indirect
transferee of any Note purchased by you under this Agreement and that has
made the same agreement relating to such Note as you have made in this
Section 14.2.
15. EXPENSES, ETC.
15.1. TRANSACTION EXPENSES
Whether or not the transactions contemplated hereby are
consummated, the Company will pay all costs and expenses (including
reasonable attorneys' fees of a special counsel and, if reasonably
required, local or other counsel) incurred by you and each Other Purchaser
or holder of a Note in connection with such transactions and in connection
with any amendments, waivers or consents under or in respect of this
Agreement or any other Operative Document (whether or not such amendment,
waiver or consent becomes effective), including, without limitation: (a)
the costs and expenses incurred in enforcing or defending (or determining
whether or how to enforce or defend) any rights under this Agreement or any
other Operative Document or in responding to any subpoena or other legal
process or informal investigative demand issued in connection with this
Agreement or any other Operative Document, or by reason of being a holder
of any Note, and (b) the costs and expenses, including financial advisors'
fees, incurred in connection with the insolvency or bankruptcy of the
Company or any Subsidiary or in connection with any work-out or
restructuring of the transactions contemplated hereby and/or by any other
Operative Document. The Company will pay, and will save you and each other
holder of a Note harmless
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from, all claims in respect of any fees, costs or expenses if any, of
brokers and finders (other than those retained by you).
15.2. SURVIVAL
The obligations of the Company under this Section 15 will survive
the payment or transfer of any Note, the enforcement, amendment or waiver
of any provision of this Agreement or any other Operative Document, and the
termination of this Agreement and each of the other Operative Documents.
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive
the execution and delivery of this Agreement and the other Operative
Documents, the purchase or transfer by you of any Note or portion thereof
or interest therein and the payment of any Note, and may be relied upon by
any subsequent holder of a Note, regardless of any investigation made at
any time by or on behalf of you or any other holder of a Note. All
statements contained in any certificate or other instrument delivered by or
on behalf of the Company pursuant to this Agreement shall be deemed
representations and warranties of the Company under this Agreement. Subject
to the preceding sentence, this Agreement and the other Operative Documents
embody the entire agreement and understanding between you and the Company
and supersede all prior agreements and understandings relating to the
subject matter hereof.
17. AMENDMENT AND WAIVER
17.1. REQUIREMENTS
This Agreement, the Notes and, unless explicitly provided
otherwise therein, each of the other Operative Documents may be amended,
and the observance of any term hereof or thereof may be waived (either
retroactively or prospectively), with (and only with) the written consent
of the Company and the Required Holders, except that (a) no amendment or
waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof,
or any defined term (as it is used therein), will be effective as to you
unless consented to by you in writing, and (b) no such amendment or waiver
may, without the written consent of the holder of each Note at the time
outstanding affected thereby, (i) subject to the provisions of Section 12
relating to acceleration or rescission, change the amount or time of any
prepayment or payment of principal of, or reduce the rate or change the
time of payment or method of computation of interest or of the Make-Whole
Amount on, the Notes, (ii) change the percentage of the principal amount of
the Notes the holders of which are required to consent to any such
amendment or waiver, or (iii) amend any of Sections 8, 11(a), 11(b), 12, 17
or 20.
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17.2. SOLICITATION OF HOLDERS OF NOTES
(a) Solicitation. The Company will provide each holder of the
Notes (irrespective of the amount of Notes then owned by it) with
sufficient information, sufficiently far in advance of the date a decision
is required, to enable such holder to make an informed and considered
decision with respect to any proposed amendment, waiver or consent in
respect of any of the provisions hereof or of any of the other Operative
Documents. The Company will deliver executed or true and correct copies of
each amendment, waiver or consent effected pursuant to the provisions of
this Section 17 to each holder of outstanding Notes promptly following the
date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.
(b) Payment. The Company will not directly or indirectly pay or
cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, or grant any security, to any holder
of Notes as consideration for or as an inducement to the entering into by
any holder of Notes or any waiver or amendment of any of the terms and
provisions hereof or of any of the other Operative Documents unless such
remuneration is concurrently paid, or security is concurrently granted, on
the same terms, ratably to each holder of Notes then outstanding even if
such holder did not consent to such waiver or amendment.
17.3. BINDING EFFECT, ETC.
Any amendment or waiver consented to as provided in this Section
17 applies equally to all holders of Notes and is binding upon them and
upon each future holder of any Note and upon the Company without regard to
whether such Note has been marked to indicate such amendment or waiver. No
such amendment or waiver will extend to or affect any obligation, covenant,
agreement, Default or Event of Default not expressly amended or waived or
impair any right consequent thereon. No course of dealing between the
Company and the holder of any Note nor any delay in exercising any rights
hereunder or under any of the other Operative Documents shall operate as a
waiver of any rights of any holder of such Note. As used herein or in any
of the other Operative Documents, the term "THIS AGREEMENT" and references
thereto (and analogous references to any other Operative Document) shall
mean this Agreement (or such other Operative Document) as it may from time
to time be amended or supplemented.
17.4. NOTES HELD BY COMPANY, ETC.
Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then
outstanding approved or consented to any amendment, waiver or consent to be
given under this Agreement or any other Operative Document, or have
directed the taking of any
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action provided herein or in any other Operative Document to be taken upon
the direction of the holders of a specified percentage of the aggregate
principal amount of Notes then outstanding, Notes directly or indirectly
owned by the Company or any of its Affiliates shall be deemed not to be
outstanding.
18. NOTICES
All notices and communications provided for hereunder or, unless
expressly provided otherwise therein, under any of the other Operative
Documents shall be in writing and sent (a) by telecopy if the sender on the
same day sends a confirming copy of such notice by a recognized overnight
delivery service (charges prepaid), (b) by registered or certified mail
with return receipt requested (postage prepaid), or (c) by a recognized
overnight delivery service (with charges prepaid). Any such notice must be
sent:
(i) if to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such other
address as you or it shall have specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at such
address as such other holder shall have specified to the Company in
writing, or
(iii) if to the Company, to it at its address set forth at the
beginning hereof to the attention of the Chief Financial Officer of
the Company, or at such other address as the Company shall have
specified to the holder of each Note in writing.
Notices under this Section 18 will be deemed given only when actually
received.
19. REPRODUCTION OF DOCUMENTS
This Agreement, each of the other Operative Documents and all
documents relating thereto, including, without limitation, (a) consents,
waivers and modifications that may hereafter be executed, (b) documents
received by you at the Closing (except the Notes themselves), and (c)
financial statements, certificates and other information previously or
hereafter furnished to you, may be reproduced by you by any photographic,
photostatic, microfilm, microcard, miniature photographic or other similar
process and you may destroy any original document so reproduced. The
Company agrees and stipulates that, to the extent permitted by applicable
law, any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by
you in the regular course of business) and any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence. This Section 19 shall not prohibit the Company or any other
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holder of Notes from contesting any such reproduction to the same extent
that it could contest the original, or from introducing evidence to
demonstrate the inaccuracy of any such reproduction.
20. CONFIDENTIAL INFORMATION
For the purposes of this Section 20, "CONFIDENTIAL INFORMATION"
means information delivered to you by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement or any of the other Operative Documents that is
proprietary in nature and that was clearly marked or labeled or otherwise
adequately identified when received by you as being confidential
information of the Company or such Subsidiary, provided that such term does
not include information that (a) was publicly known or otherwise known to
you prior to the time of such disclosure, (b) subsequently becomes publicly
known through no act or omission by you or any Person acting on your
behalf, (c) otherwise becomes known to you other than through disclosure by
the Company or any Subsidiary or (d) constitutes financial statements
delivered to you under Section 7.1 that are otherwise publicly available.
You will maintain the confidentiality of such Confidential Information in
accordance with procedures adopted by you in good faith to protect
confidential information of third parties delivered to you, provided that
you may deliver or disclose Confidential Information to (i) your directors,
officers, employees, agents, attorneys and affiliates (including anyone for
whom you act as investment advisor or manager) (to the extent such
disclosure reasonably relates to the administration of the investment
represented by your Notes), (ii) your financial advisors and other
professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this Section 20,
(iii) any other holder of any Note, (iv) any Institutional Investor to
which you sell or offer to sell such Note or any part thereof or any
participation therein (if such Person has agreed in writing prior to its
receipt of such Confidential Information to be bound by the provisions of
this Section 20), (v) any Person from which you offer to purchase any
security of the Company (if such Person has agreed in writing prior to its
receipt of such Confidential Information to be bound by the provisions of
this Section 20), (vi) any federal or state regulatory authority having
jurisdiction over you, (vii) the National Association of Insurance
Commissioners or any similar organization or any nationally recognized
rating agency that requires access to information about your investment
portfolio or (viii) any other Person to which such delivery or disclosure
may be necessary or appropriate (w) to effect compliance with any law,
rule, regulation or order applicable to you, (x) in response to any
subpoena or other legal process that requires disclosure of the
Confidential Information, (y) in connection with any litigation to which
you are a party that requires disclosure of the Confidential Information or
(z) if an Event of Default has occurred and is continuing, to the extent
you may reasonably determine such delivery and disclosure to be necessary
or appropriate in the enforcement or for the protection of the rights and
remedies under your Notes, this Agreement and the
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other Operative Documents. Each holder of a Note, by its acceptance of a
Note, will be deemed to have agreed to be bound by and to be entitled to
the benefits of this Section 20 as though it were a party to this
Agreement. On reasonable request by the Company in connection with the
delivery to any holder of a Note of information required to be delivered to
such holder under this Agreement or any of the other Operative Documents or
requested by such holder (other than a holder that is a party to this
Agreement or its nominee), such holder will enter into an agreement with
the Company embodying the provisions of this Section 20.
21. SUBSTITUTION OF PURCHASER
You shall have the right to substitute any one of your Affiliates
or any other Person for whom you act as an investment advisor or manager
(hereinafter a "SUBSTITUTE PURCHASER") as the purchaser of the Notes that
you have agreed to purchase hereunder, by written notice to the Company,
which notice shall be signed by both you and such Substitute Purchaser,
shall contain such Substitute Purchaser's agreement to be bound by this
Agreement and shall contain a confirmation by such Substitute Purchaser of
the accuracy with respect to it of the representations set forth in Section
6. Upon receipt of such notice, wherever the word "you" is used in this
Agreement (other than in this Section 21), such word shall be deemed to
refer to such Substitute Purchaser in lieu of you. In the event that such
Substitute Purchaser is so substituted as a purchaser hereunder and such
Substitute Purchaser thereafter transfers to you all of the Notes then held
by such Substitute Purchaser, upon receipt by the Company of notice of such
transfer, wherever the word "you" is used in this Agreement (other than in
this Section 21), such word shall no longer be deemed to refer to such
Substitute Purchaser, but shall refer to you, and you shall have all the
rights of an original holder of the Notes under this Agreement.
22. MISCELLANEOUS
22.1. SUCCESSORS AND ASSIGNS
All covenants and other agreements contained in this Agreement
and in each of the other Operative Documents by or on behalf of any of the
parties hereto and thereto bind and inure to the benefit of their
respective successors and assigns (including, without limitation, any
subsequent holder of a Note) whether so expressed or not.
22.2. PAYMENTS DUE ON NON-BUSINESS DAYS
Anything in this Agreement or in any of the other Operative
Documents to the contrary notwithstanding, any payment of principal of or
Make-Whole Amount or interest on any Note that is due on a date other than
a Business Day shall be made
40
<PAGE>
on the next succeeding Business Day without including the additional days
elapsed in the computation of the interest payable on such next succeeding
Business Day.
22.3. SEVERABILITY
Any provision of this Agreement or of any of the other Operative
Documents that is prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
thereof, and any such prohibition or unenforceability in any jurisdiction
shall (to the full extent permitted by law) not invalidate or render
unenforceable such provision in any other jurisdiction.
22.4. CONSTRUCTION
Each covenant contained herein or in any of the other Operative
Documents shall be construed (absent express provision to the contrary) as
being independent of each other covenant contained herein or therein, so
that compliance with any one covenant shall not (absent such an express
contrary provision) be deemed to excuse compliance with any other covenant.
Where any provision herein or in any of the other Operative Documents
refers to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether such
action is taken directly or indirectly by such Person.
22.5. COUNTERPARTS; HEADINGS
This Agreement and, unless expressly provided otherwise therein,
each of the other Operative Documents, may be executed in any number of
counterparts, each of which shall be an original but all of which together
shall constitute one instrument. Each such counterpart may consist of a
number of copies thereof, each signed by less than all, but together signed
by all, of the parties to such agreement or document. The headings in this
Agreement and in each of the other Operative Documents are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof
or thereof.
22.6. GOVERNING LAW
This Agreement and, unless expressly provided otherwise therein,
each of the other Operative Documents, shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the
law of The Commonwealth of Massachusetts excluding choice-of-law principles
of the law of such jurisdiction that would require the application of the
law of a jurisdiction other than such jurisdiction.
41
<PAGE>
22.7. CONSENT TO JURISDICTION
The Company, to the extent that it may lawfully do so, hereby
consents to service of process, and to be sued, in The Commonwealth of
Massachusetts and consents to the jurisdiction of the courts of The
Commonwealth of Massachusetts and the United States District Court for the
District of Massachusetts, as well as to the jurisdiction of all courts to
which an appeal may be taken from such courts, for the purpose of any suit,
action or other proceeding arising out of any of its obligations hereunder
or under any of the other Operative Documents or with respect to the
transactions contemplated hereby or thereby, and expressly waives any and
all objections it may have as to venue in any such courts. The Company
further agrees that a summons and complaint commencing an action or
proceeding in any of such courts shall be properly served and shall confer
personal jurisdiction if served personally or by certified mail to it at
the address of the Company set forth in Section 18 or as otherwise provided
under the laws of The Commonwealth of Massachusetts. Notwithstanding the
foregoing, the Company agrees that nothing contained in this Section 22.7
shall preclude the institution of any such suit, action or other proceeding
in any jurisdiction other than The Commonwealth of Massachusetts.
22.8. WAIVER OF JURY TRIAL
THE COMPANY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN
ANY SUIT, ACTION OR OTHER PROCEEDING INSTITUTED BY OR AGAINST IT IN RESPECT
OF ITS OBLIGATIONS HEREUNDER OR UNDER ANY OF THE OTHER OPERATIVE DOCUMENTS
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
22.9. RULE 144A
The Company will take, or will cause to be taken, such action as
any holder of Notes may reasonably request from time to time to facilitate
any sale or disposition by any such holder of any Notes without
registration under the Securities Act and/or any applicable securities laws
within the limitation of the exemptions provided by any rule or regulation
thereunder, including, without limitation, Rule 144A under the Securities
Act.
[The remainder of this page is left blank intentionally.]
42
<PAGE>
If you are in agreement with the foregoing, please sign the form
of agreement on the accompanying counterpart of this Agreement and return
it to the Company, whereupon the foregoing shall become a binding agreement
between you and the Company.
Very truly yours,
MERIX CORPORATION
By DEBORAH A. COLEMAN
--------------------------------
Deborah A. Coleman
CEO and Chair
By SAMUEL R. DESIMONE, JR.
--------------------------------
Samuel R. DeSimone, Jr.
V.P. of Corporate Development
and General Counsel
By VALERIE ROSENFELD
--------------------------------
Valerie Rosenfeld
V.P. and Treasurer
The foregoing is hereby
agreed to as of the date thereof.
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By DANA DONOVAN
--------------------------------
Dana Donovan
Senior Investment Officer
JOHN HANCOCK VARIABLE LIFE
INSURANCE COMPANY
By MARGARET STAPLETON
--------------------------------
Margaret Stapleton
Vice President
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By RICHARD C. MORRISON
--------------------------------
Richard C. Morrison
Managing Director
CM LIFE INSURANCE COMPANY
By MARYANN MCCARTHY
--------------------------------
MaryAnn McCarthy
Authorized Signatory
43
<PAGE>
SCHEDULE A
----------
INFORMATION RELATING TO PURCHASERS
Principal Amount(s) of
Name of Purchaser Notes to be Purchased
- ----------------- ---------------------
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY $8,000,000
1. All payments on account of the Notes or other obligations in
accordance with the provisions thereof shall be made by bank wire
transfer of immediately available funds for credit, not later than 12
noon, Boston time, to:
The First National Bank of Boston
ABA No. 011000390
Boston, Massachusetts 02110]
Account of: John Hancock Mutual Life Insurance Company
Private Placement Collection Account
Account Number: 541-55417
On Order of: Merix Corporation
PPN No. 590049 A* 3
2. Contemporaneous with the above wire transfer, advice setting forth:
(a) the full name, interest rate and maturity date of the Notes or
other obligations;
(b) allocation of payment between principal and interest and any
special payment; and
(c) name and address of Bank (or Trustee) from which wire transfer
was sent
shall be delivered or mailed to:
John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Securities Accounting Division T-10
Telecopy No.: (617) 572-0628
Schedule A
----------
<PAGE>
3. All notices with respect to prepayments, both scheduled and
unscheduled, whether partial or in full, and notice of maturity shall
be delivered or mailed to:
John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Securities Accounting Division T-10
Telecopy No.: (617) 572-0628
4. All other communications which shall include, but not be limited to,
financial statements and certificates of compliance with financial
covenants, shall be delivered or mailed to:
John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Bond and Corporate Finance Dept. T-57
Telecopy No.: (617) 572-1606
5. A copy of the foregoing notices relating to change in issuer's name,
address or principal place of business or location of collateral and a
copy of any legal opinions shall be delivered or mailed to:
John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Investment Law Division, T-50
Telecopy No.: (617) 572-9268
6. All Notes to be acquired by the purchaser named above shall be
registered in the name of:
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
7. Tax I.D. No. 04-1414660
Schedule A
----------
2
<PAGE>
Principal Amount(s) of
Name of Purchaser Notes to be Purchased
- ----------------- ---------------------
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
$13,000,000
1. All payments on account of the Notes or other obligations in
accordance with the provisions thereof shall be made by bank wire
transfer of immediately available funds for credit, not later than 12
noon, Boston time, to:
The First National Bank of Boston
ABA No. 011000390
Boston, Massachusetts 02110
Account of: John Hancock Mutual Life Insurance Company
Private Placement Collection Account
Account Number: 541-55417
On Order of: Merix Corporation
PPN No. 590049 A* 3
2. Contemporaneous with the above wire transfer, advice setting forth:
(a) the full name, interest rate and maturity date of the Notes or
other obligations;
(b) allocation of payment between principal and interest and any
special payment; and
(c) name and address of Bank (or Trustee) from which wire transfer
was sent
shall be delivered or mailed to:
John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Securities Accounting Division T-10
Telecopy No.: (617) 572-0628
Schedule A
----------
3
<PAGE>
3. All notices with respect to prepayments, both scheduled and
unscheduled, whether partial or in full, and notice of maturity shall
be delivered or mailed to:
John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Securities Accounting Division T-10
Telecopy No.: (617) 572-0628
4. All other communications which shall include, but not be limited to,
financial statements and certificates of compliance with financial
covenants, shall be delivered or mailed to:
John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Bond and Corporate Finance Dept. T-57
Telecopy No.: (617) 572-1606
5. A copy of the foregoing notices relating to change in issuer's name,
address or principal place of business or location of collateral and a
copy of any legal opinions shall be delivered or mailed to:
John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Investment Law Division, T-50
Telecopy No.: (617) 572-9268
6. All Notes to be acquired by the purchaser named above shall be
registered in the name of:
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
7. Tax I.D. No. 04-1414660
Schedule A
----------
4
<PAGE>
Principal Amount(s) of
Name of Purchaser Notes to be Purchased
- ----------------- ---------------------
JOHN HANCOCK VARIABLE LIFE
INSURANCE COMPANY $4,000,000
1. All payments on account of the Notes or other obligations in
accordance with the provisions thereof shall be made by bank wire
transfer of immediately available funds for credit, not later than 12
noon, Boston time, to:
The First National Bank of Boston
ABA No. 011000390
Boston, Massachusetts 02110
Account of: John Hancock Mutual Life Insurance Company
Private Placement Collection Account
Account Number: 541-55417
On Order of: Merix Corporation
PPN No. 590049 A* 3
2. Contemporaneous with the above wire transfer, advice setting forth:
(a) the full name, interest rate and maturity date of the Notes or
other obligations;
(b) allocation of payment between principal and interest and any
special payment; and
(c) name and address of Bank (or Trustee) from which wire transfer
was sent
shall be delivered or mailed to:
John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Securities Accounting Division T-10
Telecopy No.: (617) 572-0628
Schedule A
----------
5
<PAGE>
3. All notices with respect to prepayments, both scheduled and
unscheduled, whether partial or in full, and notice of maturity shall
be delivered or mailed to:
John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Securities Accounting Division T-10
Telecopy No.: (617) 572-0628
4. All other communications which shall include, but not be limited to,
financial statements and certificates of compliance with financial
covenants, shall be delivered or mailed to:
John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Bond and Corporate Finance Dept. T-57
Telecopy No.: (617) 572-1606
5. A copy of the foregoing notices relating to change in issuer's name,
address or principal place of business or location of collateral and a
copy of any legal opinions shall be delivered or mailed to:
John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Investment Law Division, T-50
Telecopy No.: (617) 572-9268
6. All Notes to be acquired by the purchaser named above shall be
registered in the name of:
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
7. Tax I.D. No. 04-2664016
Schedule A
----------
6
<PAGE>
Principal Amount of
Name of Purchaser Notes to be Purchased
MASSACHUSETTS MUTUAL LIFE $11,000,000
INSURANCE COMPANY
1295 State Street
Springfield, Massachusetts 01111-0001
Attn: Securities Investment Division - Richard C. Morrison
Law Division - Jaqueline M. Hummel, Esq.
Payments
- --------
All payments on account of the Notes shall be made by crediting in the form
of bank wire transfer of Federal or other immediately available funds not
later than 12 noon, local time, on the applicable due date (identifying
each payment as a payment of interest, principal, premium or other amount
on the Merix Corporation 7.92% Senior Notes due September 15, 2003, to:
Citibank, N.A.
111 Wall Street
New York, NY 10043
ABA No. 021000089
For MassMutual Long Term Pool
Account No. 4067-3488
Re: Description of security; principal, interest, premium or other amount split
With concurrent telephone advice of payment to the Securities Custody and
Collection Department of Massachusetts Mutual Life Insurance Company at
(413) 744-3878.
Notices
- -------
All notices and communications to be addressed as first provided above,
except notices with respect to payments and corporate actions to be
addressed to:
Attention: Securities Custody and Collection Department, F 381
Tax Identification No. 04-1590850
- ----------------------
Notes to be
Registered in the Name: MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
- -----------------------
Schedule A
----------
7
<PAGE>
Principal Amount of
Name of Purchaser Notes to be Purchased
- ----------------- ---------------------
MASSACHUSETTS MUTUAL LIFE $3,000,000
INSURANCE COMPANY
1295 State Street
Springfield, Massachusetts 01111-0001
Attn: Securities Investment Division - Richard C. Morrison
Law Division - Jaqueline M. Hummel, Esq.
Payments
- --------
All payments on account of the Notes shall be made by crediting in the form
of bank wire transfer of Federal or other immediately available funds not
later than 12 noon, local time, on the applicable due date (identifying
each payment as a payment of interest, principal, premium or other amount
on the Merix Corporation 7.92% Senior Notes due September 15, 2003, to:
Chase Manhattan Bank, N.A.
4 Chase MetroTech Center
New York, NY 10081
ABA No. 021000021
For MassMutual IFM Non-Traditional
Account No. 910-2509073
Re: Description of security; principal, interest, premium or other amount split
With concurrent telephone advice of payment to the Securities Custody and
Collection Department of Massachusetts Mutual Life Insurance Company at
(413) 744-3878.
Notices
- -------
All notices and communications to be addressed as first provided above,
except notices with respect to payments and corporate actions to be
addressed to:
Attention: Securities Custody and Collection Department, F 381
Tax Identification No. 04-1590850
- ----------------------
Notes to be
Registered in the Name: MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
- -----------------------
Schedule A
----------
8
<PAGE>
Principal Amount of
Name of Purchaser Notes to be Purchased
- ----------------- ---------------------
CM LIFE INSURANCE COMPANY $1,000,000
c/o MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
1295 State Street
Springfield, Massachusetts 01111-0001
Attn: Securities Investment Division - Richard C. Morrison
Law Division - Jaqueline M. Hummel, Esq.
Payments
- --------
All payments on account of the Notes shall be made by crediting in the form
of bank wire transfer of Federal or other immediately available funds not
later than 12 noon, local time, on the applicable due date (identifying
each payment as a payment of interest, principal, premium or other amount
on the Merix Corporation 7.92% Senior Notes due September 15, 2003, to:
Citibank, N.A.
111 Wall Street
New York, NY 10043
ABA No. 021000089
For Segment 43 - Universal Life
Account No. 4068-6561
Re: Description of security; principal, interest, premium or other amount split
With concurrent telephone advice of payment to the Securities Custody and
Collection Department of Massachusetts Mutual Life Insurance Company at
(413) 744-3878.
Notices
- -------
All notices and communications to be addressed as first provided above,
except notices with respect to payments and corporate actions to be
addressed to:
Attention: Securities Custody and Collection Department, F 381
Tax Identification No. 06-104138
- ----------------------
Notes to be
Registered in the Name: CM LIFE INSURANCE COMPANY
- -----------------------
Schedule A
----------
9
<PAGE>
SCHEDULE B
----------
DEFINED TERMS
As used herein, the following terms have the respective meanings
set forth below or set forth in the Section hereof following such term:
"AFFILIATE" means, at any time, and with respect to any Person,
(a) any other Person that at such time directly or indirectly through one
or more intermediaries Controls, or is Controlled by, or is under common
Control with, such first Person, and (b) any Person beneficially owning or
holding, directly or indirectly, 10% or more of any class of voting or
equity interests of the Company or any Subsidiary or any corporation of
which the Company and its Subsidiaries beneficially own or hold, in the
aggregate, directly or indirectly, 10% or more of any class of voting or
equity interests. As used in this definition, "CONTROL" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise. Unless the
context otherwise clearly requires, any reference to an "Affiliate" is a
reference to an Affiliate of the Company.
"BUSINESS DAY" means (a) for the purposes of Section 8.6 only,
any day other than a Saturday, a Sunday or a day on which commercial banks
in New York City are required or authorized to be closed, and (b) for the
purposes of any other provision of this Agreement, any day other than a
Saturday, a Sunday or a day on which commercial banks in Boston,
Massachusetts, New York, New York, or Portland, Oregon are required or
authorized to be closed.
"CAPITAL LEASE" means, at any time, a lease with respect to which
the lessee is required concurrently to recognize the acquisition of an
asset and the incurrence of a liability in accordance with GAAP.
"CAPITAL LEASE OBLIGATION" means, with respect to any Person and
a Capital Lease, the amount of the obligation of such Person as the lessee
under such Capital Lease which would, in accordance with GAAP, appear as a
liability on a balance sheet of such Person.
"CLOSING" is defined in Section 3.
"CODE" means the Internal Revenue Code of 1986, as amended from
time to time, and the rules and regulations promulgated thereunder from
time to time.
"COMPANY" means Merix Corporation, an Oregon corporation.
Schedule B
----------
<PAGE>
"CONFIDENTIAL INFORMATION" is defined in Section 20.
"CONSOLIDATED ASSETS" means, at any time, the total assets of the
Company and its Subsidiaries which would be shown as assets on a
consolidated balance sheet of the Company and its Subsidiaries as of such
time prepared in accordance with GAAP, after eliminating all amounts
properly attributable to minority interests, if any, in the stock and
surplus of Subsidiaries.
"CONSOLIDATED DEBT" means, at any time, the total of all Debt of
the Company and its Subsidiaries outstanding at such time, after
eliminating all offsetting debits and credits between the Company and its
Subsidiaries and all other items required to be eliminated in the course of
the preparation of consolidated financial statements of the Company and its
Subsidiaries in accordance with GAAP.
"CONSOLIDATED INCOME AVAILABLE FOR INTEREST CHARGES" means, with
reference to any period, Consolidated Net Income for such period plus all
amounts deducted in the computation thereof on account of (a) Interest
Charges and (b) taxes imposed on or measured by income or excess profits.
"CONSOLIDATED NET INCOME" means, with reference to any period,
the net income (or loss) of the Company and its Subsidiaries for such
period (taken as a cumulative whole), as determined in accordance with
GAAP, after eliminating all offsetting debits and credits between the
Company and its Subsidiaries and all other items required to be eliminated
in the course of the preparation of consolidated financial statements of
the Company and its Subsidiaries in accordance with GAAP, provided that all
extraordinary gains shall be excluded and all extraordinary losses shall be
included.
"CONSOLIDATED NET WORTH" means, at any time the sum of (a) the
par value (or value stated on the books of the Company) of the capital
stock (but excluding all capital stock Redeemable on or before September
30, 2003, treasury stock and capital stock subscribed and unissued) of the
Company and its Subsidiaries plus (b) the amount of the paid-in capital and
retained earnings of the Company and its Subsidiaries, in each case as such
amounts would be shown on a consolidated balance sheet of the Company and
its Subsidiaries as of such time prepared in accordance with GAAP, minus
the book value of all Restricted Investments.
"CONSOLIDATED TOTAL CAPITALIZATION" means, at any time, the sum
of Consolidated Net Worth and Consolidated Debt at such time.
Schedule B
----------
2
<PAGE>
"DEBT" means, with respect to any Person, without duplication,
(a) its liabilities for borrowed money;
(b) its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable arising in the ordinary
course of business but including, without limitation, all liabilities
created or arising under any conditional sale or other title retention
agreement with respect to any such property);
(c) its Capital Lease Obligations;
(d) its liabilities for borrowed money secured by any Lien with
respect to any property owned by such Person (whether or not it has assumed
or otherwise become liable for such liabilities);
(e) its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its account
by banks and other financial institutions (whether or not representing
obligations for borrowed money);
(f) Swaps of such Person;
(g) its redemption obligations in respect of Redeemable capital
stock;
(h) any Guaranty of such Person with respect to liabilities of a
type described in any of clauses (a) through (g) hereof.
Debt of any Person shall include all obligations of such Person of the
character described in clauses (a) through (h) to the extent such Person
remains legally liable in respect thereof notwithstanding that any such
obligation is deemed to be extinguished under GAAP. For purposes of
determining compliance with Section 10.3(j) clauses (iii) and (iv) of
Section 10.6(a), Debt shall be deemed not to include items (e), (f) or (g)
above, or Guaranties thereof.
"DEFAULT" means an event or condition the occurrence or existence
of which would, with the lapse of time or the giving of notice or both,
become an Event of Default.
"DEFAULT RATE" means that rate of interest that is 9.92% per
annum.
"DISPOSITION VALUE" means, at any time, with respect to any
property:
Schedule B
----------
3
<PAGE>
(a) in the case of property that does not constitute Subsidiary
Stock, the book value thereof, valued at the time of such disposition in
good faith by the Company, and
(b) in the case of property that constitutes Subsidiary Stock, an
amount equal to that percentage of book value of the assets of the
Subsidiary that issued such stock as is equal to the percentage that the
book value of such Subsidiary Stock represents of the book value of all of
the outstanding capital stock of such Subsidiary (assuming, in making such
calculations, that all Securities convertible into such capital stock are
so converted and giving full effect to all transactions that would occur or
be required in connection with such conversion) determined at the time of
the disposition thereof, in good faith by the Company.
"ENVIRONMENTAL LAWS" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including
but not limited to those related to hazardous substances or wastes, air
emissions and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the rules and regulations
promulgated thereunder from time to time in effect.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the
Company under Section 414 of the Code.
"EVENT OF DEFAULT" is defined in Section 11.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States of America.
"GOVERNMENTAL AUTHORITY" means (a) the government of (i) the
United States of America or any state or other political subdivision
thereof, or (ii) any jurisdiction in which the Company or any Subsidiary
conducts all or any part of its business, or which asserts jurisdiction
over any properties of the Company or any Subsidiary, or (b) any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of, or pertaining to, any such government.
Schedule B
----------
4
<PAGE>
"GUARANTY" means, with respect to any Person, any obligation
(except the endorsement in the ordinary course of business of negotiable
instruments for deposit or collection) of such Person guaranteeing or in
effect guaranteeing any indebtedness, dividend or other obligation of any
other Person in any manner, whether directly or indirectly, including
(without limitation) obligations incurred through an agreement, contingent
or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any
property constituting security therefor;
(b) to advance or supply funds (i) for the purchase or
payment of such indebtedness or obligation, or (ii) to maintain
any working capital or other balance sheet condition or any
income statement condition of any other Person or otherwise to
advance or make available funds for the purchase or payment of
such indebtedness or obligation;
(c) to lease properties or to purchase properties or
services primarily for the purpose of assuring the owner of such
indebtedness or obligation of the ability of any other Person to
make payment of the indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or
obligation against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor
under any Guaranty, the indebtedness or other obligations that are the
subject of such Guaranty shall be assumed to be direct obligations of such
obligor.
"HAZARDOUS MATERIAL" means any and all pollutants, toxic or
hazardous wastes or any other substances that might pose a hazard to health
or safety, the removal of which may be required or the generation,
manufacture, refining, production, processing, treatment, storage,
handling, transportation, transfer, use, disposal, release, discharge,
spillage, seepage, or filtration of which is or shall be restricted,
prohibited or penalized by any applicable law (including, without
limitation, asbestos, urea formaldehyde foam insulation and polychlorinated
biphenyls).
"HOLDER" means, with respect to any Note, the Person in whose
name such Note is registered in the register maintained by the Company
pursuant to Section 13.1.
"INSTITUTIONAL INVESTOR" means (a) any original purchaser of a
Note (and any Substitute Purchaser), (b) any holder of a Note holding more
than 5% of the
Schedule B
----------
5
<PAGE>
aggregate principal amount of the Notes then outstanding, and (c) any bank,
trust company, savings and loan association or other financial institution,
any pension plan, any investment company, any insurance company, any broker
or dealer, or any other similar financial institution or entity, regardless
of legal form.
"INTEREST CHARGES" means, with respect to any period, the sum
(without duplication) of the following (in each case, eliminating all
offsetting debits and credits between the Company and its Subsidiaries and
all other items required to be eliminated in the course of the preparation
of consolidated financial statements of the Company and its Subsidiaries in
accordance with GAAP): (a) all interest in respect of Debt of the Company
and its Subsidiaries (including imputed interest on Capital Lease
Obligations) deducted in determining Consolidated Net Income for such
period, together with all interest capitalized or deferred during such
period and not deducted in determining Consolidated Net Income for such
period and (b) all debt discount and expense amortized or required to be
amortized in the determination of Consolidated Net Income for such period.
"INVESTMENT" means any investment, made in cash or by delivery of
property, by the Company or any of its Subsidiaries (a) in any Person,
whether by acquisition of stock, Debt or other obligation or Security, or
by loan, Guaranty, advance, capital contribution or otherwise, or (b) in
any property.
"LIEN" means, with respect to any Person, any mortgage, lien,
pledge, adverse claim, charge, security interest or other encumbrance, or
any interest or title of any vendor, lessor, lender or other secured party
to or of such Person under any conditional sale or other title retention
agreement or Capital Lease, upon or with respect to any property or asset
of such Person (including in the case of stock, stockholder agreements,
voting trust agreements and all similar arrangements).
"MAKE-WHOLE AMOUNT" is defined in Section 8.6.
"MATERIAL" means material in relation to the business,
operations, affairs, financial condition, assets, properties, or prospects
of the Company or of the Company and its Subsidiaries taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a)
the business, operations, affairs, financial condition, assets or
properties of the Company or of the Company and its Subsidiaries taken as a
whole, or (b) the ability of the Company or any Subsidiary to perform its
obligations under any Operative Document to which it is a party, or (c) the
validity or enforceability of any Operative Document.
"MATERIAL SUBSIDIARY" is defined in Section 10.2.
Schedule B
----------
6
<PAGE>
"MEMORANDUM" is defined in Section 5.3.
"MERRILL LYNCH" is defined in Section 5.3.
"MULTIEMPLOYER PLAN" means any Plan that is a "multiemployer
plan" (as such term is defined in Section 4001(a)(3) of ERISA).
"NOTES" is defined in Section 1.
"OFFICER'S CERTIFICATE" means a certificate of a Senior Financial
Officer or of any other officer of the Company whose responsibilities
extend to the subject matter of such certificate.
"OPERATIVE DOCUMENTS" means this Agreement, the Other Agreements,
the Notes and each other agreement and instrument executed in connection
herewith and therewith, each as it may from time to time be amended,
modified or supplemented.
"OTHER AGREEMENTS" is defined in Section 2.
"OTHER PURCHASERS" is defined in Section 2.
"PBGC" means the Pension Benefit Guaranty Corporation referred to
and defined in ERISA or any successor thereto.
"PERSON" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"PLAN" means an "employee benefit plan" (as defined in Section
3(3) of ERISA) that is or, within the preceding five years, has been
established or maintained, or to which contributions are or, within the
preceding five years, have been made or required to be made, by the Company
or any ERISA Affiliate or with respect to which the Company or any ERISA
Affiliate may have any liability.
"PREFERRED STOCK" means any class of capital stock of any Person
that is preferred over any other class of capital stock of such corporation
as to the payment of dividends or the payment of any amount upon
liquidation or dissolution of such Person.
"PROPERTY" or "PROPERTIES" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible,
choate or inchoate.
Schedule B
----------
7
<PAGE>
"REDEEMABLE" means, with respect to the capital stock of any
Person, each share of such Person's capital stock that is:
(a) redeemable, payable or required to be purchased or otherwise
retired or extinguished, or convertible into Debt of such Person (i) at a
fixed or determinable date, whether by operation of sinking fund or
otherwise, (ii) at the option of any Person other than such Person, or
(iii) upon the occurrence of a condition not solely within the control of
such Person; or
(b) convertible into other Redeemable capital stock.
"REQUIRED HOLDERS" means, at any time, the holders of at least
66-2/3% in principal amount of the Notes at the time outstanding (exclusive
of Notes then owned by the Company or any of its Affiliates).
"RESPONSIBLE OFFICER" means any Senior Financial Officer and any
other officer of the Company with responsibility for the administration of
the relevant portion of this Agreement.
"RESTRICTED INVESTMENTS" means all Investments except those made
in compliance with the terms of the Merix Investment Policy dated June 1,
1994, as the same may be revised from time to time with the approval of the
Audit and Finance Committee of the Company's Board of Directors, provided
that, at the time of any such revision, a majority of the members of such
committee shall be independent directors.
"SEC" means the Securities and Exchange Commission or any
successor thereto.
"SECURITY" has the meaning set forth in Section 2(1) of the
Securities Act of 1933, as amended.
"SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time.
"SENIOR FINANCIAL OFFICER" means the chief financial officer,
treasurer or corporate controller of the Company.
"SOLVENT" as applied to any Person at any date means that on and
as of such date (a) the book value of the assets of such Person is greater
than the sum of the liabilities (determined in accordance with GAAP), and
known contingent liabilities of such Person, (b) to the best of such
Person's knowledge, the present fair salable value of the assets of such
Person is not less than the amount that will be required to
Schedule B
----------
8
<PAGE>
pay the probable liability of such Person on its debts as they become
absolute and matured, (c) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature and (d) such Person is
not engaged in business or a transaction, and is not about to engage in
business or a transaction, for which such Person's property would
constitute an unreasonably small capital. The amount of contingent
liabilities on and as of any date shall be computed as the amount that, in
the light of all the facts and circumstances existing on and as of such
date, represents the amount that can reasonably be expected to become an
actual or matured liability. As used in this definition of "Solvent",
"Person" means, where so required by the context in which the term
"Solvent" appears, such Person and its Subsidiaries taken as a whole.
"SUBSIDIARY" means, as to any Person, any corporation,
partnership, limited liability company, association or other business
entity in which such Person or one or more of its Subsidiaries or such
Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if
more than a 50% interest in the profits or capital thereof is owned by such
Person or one or more of its Subsidiaries or such Person and one or more of
its Subsidiaries (unless such partnership can and does ordinarily take
major business actions without the prior approval of such Person or one or
more of its Subsidiaries). Unless the context otherwise clearly requires,
any reference to a "Subsidiary" is a reference to a Subsidiary of the
Company.
"SUBSIDIARY STOCK" means, with respect to any Person, the stock
(or any options or warrants to purchase stock or other Securities
exchangeable for or convertible into stock) of any Subsidiary of such
Person.
"SUBSTITUTE PURCHASER" is defined in Section 21.
"SUCCESSOR CORPORATION" is defined in Section 10.2.
"SWAPS" means, with respect to any Person, payment obligations
with respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount
of the obligation under any Swap shall be the amount determined in respect
thereof as of the end of the then most recently ended fiscal quarter of
such Person, based on the assumption that such Swap had terminated at the
end of such fiscal quarter, and in making such determination, if any
agreement relating to such Swap provides for the netting of amounts payable
by and to such Person thereunder or if any such agreement provides
Schedule B
----------
9
<PAGE>
for the simultaneous payment of amounts by and to such Person, then in each
such case, the amount of such obligation shall be the net amount so
determined.
"TRANSFER" means, with respect to any Person, any transaction in
which such Person sells, conveys, transfers or leases (as lessor) any of
its property, including, without limitation, Subsidiary Stock.
"WHOLLY-OWNED SUBSIDIARY" means, at any time, any Subsidiary of
the Company all of the equity interests (except directors' qualifying
shares) of which are owned by any one or more of the Company and the
Company's other Wholly-Owned Subsidiaries at such time.
Schedule B
----------
10
<PAGE>
EXHIBIT 1
---------
[FORM OF NOTE]
MERIX CORPORATION
7.92% SENIOR NOTE DUE SEPTEMBER 15, 2003
No. [_____] [Date]
$[________] PPN 590049 A* 3
FOR VALUE RECEIVED, the undersigned, MERIX CORPORATION (herein
called the "Company"), a corporation organized and existing under the laws
of the State of Oregon, hereby promises to pay to [____________________], or
registered assigns, the principal sum of [____________________] DOLLARS on
September 15, 2003, with interest (computed on the basis of a 360-day year
of twelve 30-day months) (a) on the unpaid balance thereof at the rate of
7.92% per annum from the date hereof, payable semiannually, on the 15th day
of March and September in each year, commencing with [March 15, 1997/the
first such date next succeeding the date hereof], until the principal
hereof shall have become due and payable, and (b) to the extent permitted
by law, on any overdue payment (including any overdue prepayment) of
principal, any overdue payment of interest and any overdue payment of any
Make-Whole Amount (as defined in the Note Purchase Agreements referred to
below), payable semiannually as aforesaid (or, at the option of the
registered holder hereof, on demand), at the rate of 9.92% per annum.
Payments of principal of, interest on and any Make-Whole Amount
with respect to this Note are to be made in lawful money of the United
States of America at the principal office of the Company in Forest Grove,
Oregon, or at such other place as the Company shall have designated in
written notice to the holder of this Note as provided in the Note Purchase
Agreements referred to below.
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to those certain Note Purchase Agreements, dated
September 10, 1996 (as from time to time amended, the "Note Purchase
Agreements"), between the Company and the institutional investors named
therein and is entitled to the benefits thereof and of the other Operative
Documents referred to therein. Each holder of this Note will be deemed, by
its acceptance hereof, (a) to have made the representations set forth in
Section 6.2 of the Note Purchase Agreements and (b) to have agreed to the
confidentiality provisions set forth in Section 20 of the Note Purchase
Agreements.
Exhibit 1
---------
<PAGE>
This Note is a registered Note and, as provided in the Note
Purchase Agreements, upon surrender of this Note for registration of
transfer, duly endorsed, or accompanied by a written instrument of transfer
fully executed, by the registered holder hereof or such holder's attorney
duly authorized in writing, a new Note for a like principal amount will be
issued to, and registered in the name of, the transferee. Prior to due
presentment for registration of transfer, the Company may treat the person
in whose name this Note is registered as the owner hereof for the purpose
of receiving payment and for all other purposes, and the Company will not
be affected by any notice to the contrary.
The Company will made required prepayments of principal on the
dates and in the amounts specified in the Note Purchase Agreements. This
Note is also subject to optional prepayment, in whole or from time to time
in part, at the times and on the terms specified in the Note Purchase
Agreements, but not otherwise.
If an Event of Default, as defined in the Note Purchase
Agreements, occurs and is continuing, the principal of this Note may be
declared or otherwise become due and payable in the manner, at the price
(including any applicable Make-Whole Amount) and with the effect provided
in the Note Purchase Agreements.
This Note shall be construed and enforced in accordance with, and
shall be governed by, the law of The Commonwealth of Massachusetts
excluding choice-of-law principles of the law of such jurisdiction that
would require the application of the law of a jurisdiction other than such
jurisdiction.
[The remainder of this page is left blank intentionally.]
Exhibit 1
---------
2
<PAGE>
IN WITNESS WHEREOF, the Company has executed this Note as an
instrument under seal as of the date first above written.
MERIX CORPORATION
By ______________________________
(Title)
By ______________________________
(Title)
Exhibit 1
---------
3
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-24-1997
<PERIOD-END> AUG-31-1996
<CASH> 4,471
<SECURITIES> 11,203
<RECEIVABLES> 24,332
<ALLOWANCES> 78
<INVENTORY> 6,455
<CURRENT-ASSETS> 47,582
<PP&E> 107,384
<DEPRECIATION> 48,104
<TOTAL-ASSETS> 110,861
<CURRENT-LIABILITIES> 17,010
<BONDS> 0
0
0
<COMMON> 43,937
<OTHER-SE> 24,933
<TOTAL-LIABILITY-AND-EQUITY> 110,861
<SALES> 41,116
<TOTAL-REVENUES> 41,116
<CGS> 33,764
<TOTAL-COSTS> 33,764
<OTHER-EXPENSES> 1,650
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 383
<INCOME-PRETAX> 2,026
<INCOME-TAX> 770
<INCOME-CONTINUING> 1,256
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,256
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
</TABLE>
